**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.20549**

**FORM 10-Q**

**(Mark One)**
| x                                                                                                                                                                                                                                                                        | ** ** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                     | ** ** | ** **                                                                                    |   |   |
| **For the  quarterly period ended March 31, 2007**                                                                                                                                                                                                                       |
| ** **                                                                                                                                                                                                                                                               |
| **or**                                                                                                                                                                                                                                                                   |
| ** **                                                                                                                                                                                                                                                               |
| o                                                                                                                                                                                                                                                                        | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| ** **                                                                                                                                                                                                                                                               |
| **For the transition period from                       to****                ** |

 
| Commission  File Number | ** ** | **Registrant, State of Incorporation  Address of Principal Executive Offices and Telephone Number** | ** ** | **I.R.S.  Employer  Identification  No.** |
|-------------------------|------------|-----------------------------------------------------------------------------------------------------|------------|-------------------------------------------|
|                    |       |                                                                                                |       |                                      |
| **333-112055**          | ** ** | **VISANT  HOLDING CORP.**                                                                           | ** ** | **90-0207875**                            |
|                    |       | (Incorporated in  Delaware)                                                                         |       |                                      |
|                    |       |                                                                                                |       |                                      |
|                    | ** ** | **357  Main Street  Armonk, New York 10504**                                                        |       |                                      |
|                    |       | Telephone:**(914) 595-8200**                                                                        |       |                                      |
|                    |       |                                                                                                |       |                                      |
| **333-120386**          | ** ** | **VISANT  CORPORATION**                                                                             | ** ** | **90-0207604**                            |
|                    |       | (Incorporated in  Delaware)                                                                         |       |                                      |
|                    |       |                                                                                                |       |                                      |
|                    | ** ** | **357  Main Street  Armonk, New York 10504**                                                        |       |                                      |
|                    |       | Telephone: **(914) 595-8200**                                                                       |       |                                      |

 

Indicate by checkmark whether each registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports) and (2) has been subject to such filing requirement for the past90 days.   Yes  x     No  o

Indicate by check markwhether any of the registrants is a large accelerated filer, an acceleratedfiler, or a non-accelerated filer. (See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act). (Check one):

Large accelerated filer  o      Accelerated filer  o   Non-accelerated filer  x

Indicate by check mark whether any of the registrantsis a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o     No  x

As of May 7, 2007, there were 5,976,659 shares ofClass A Common Stock, par value $.01 per share, and one share ofClass C Common Stock, par value $.01 per share, of Visant Holding Corp.outstanding and 1,000 shares of common stock, par value $.01 per share, of VisantCorporation outstanding (all of which are owned beneficially by Visant HoldingCorp.).

Visant Corporationmeets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form10-Q and is therefore filing this Form 10-Q with the reduced disclosure formatspecified in General Instruction (H)(2) to Form 10-Q.

 

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**FILINGFORMAT**

This Quarterly Report onForm 10-Q is a combined report being filed separately by two registrants:  Visant Holding Corp. (“Holdings”) and VisantCorporation, a wholly owned subsidiary of Holdings (“Visant”).  Unless the context indicates otherwise, anyreference in this report to the “Company”, “we”, “our”, “us” or “Holdings”refers to Visant Holding Corp., together with Visant Corporation and itsconsolidated subsidiaries.

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**TABLE OFCONTENTS**
| **PART I – FINANCIAL  INFORMATION** | ** ** | ** **                                                                                                    |
|------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------|
| ** **                               | ** ** | ** **                                                                                                    | ** ** | ** ** |
| ITEM 1.                                  |       | Financial Statements  (Unaudited)                                                                             |   |   |
|                                     |       |                                                                                                          |   |   |
|                                     | ** ** | **Visant Holding Corp. and subsidiaries:**                                                                    | ** ** | ** ** |
|                                     |       |                                                                                                          |   |   |
|                                     |       | Condensed  Consolidated Statements of Operations for the three months ended March 31,  2007 and April 1, 2006 |   |   |
|                                     |       |                                                                                                          |   |   |
|                                     |       | Condensed  Consolidated Balance Sheets as of March 31, 2007 and December 30, 2006                             |   |   |
|                                     |       |                                                                                                          |   |   |
|                                     |       | Condensed  Consolidated Statements of Cash Flows for the three months ended March 31,  2007 and April 1, 2006 |   |   |
|                                     |       |                                                                                                          |   |   |
|                                     | ** ** | **Visant Corporation and subsidiaries:**                                                                      | ** ** | ** ** |
|                                     |       |                                                                                                          |   |   |
|                                     |       | Condensed  Consolidated Statements of Operations for the three months ended March 31,  2007 and April 1, 2006 |   |   |
|                                     |       |                                                                                                          |   |   |
|                                     |       | Condensed  Consolidated Balance Sheets as of March 31, 2007 and December 30, 2006                             |   |   |
|                                     |       |                                                                                                          |   |   |
|                                     |       | Condensed  Consolidated Statements of Cash Flows for the three months ended March 31,  2007 and April 1, 2006 |   |   |
|                                     |       |                                                                                                          |   |   |
|                                     |       | Notes to  Condensed Consolidated Financial Statements                                                         |   |   |
|                                     |       |                                                                                                          |   |   |
| ITEM 2.                                  |       | Management’s Discussion  and Analysis of Financial Condition and Results of Operations                   |   |   |
|                                     |       |                                                                                                          |   |   |
| ITEM 3.                                  |       | Quantitative  and Qualitative Disclosures About Market Risk                                                   |   |   |
|                                     |       |                                                                                                          |   |   |
| ITEM 4.                                  |       | Controls and Procedures                                                                                       |   |   |
|                                     |       |                                                                                                          |   |   |
| **PART II – OTHER  INFORMATION**    | ** ** | ** **                                                                                                    |
|                                     |       |                                                                                                          |   |   |
| ITEM 1.                                  |       | Legal Proceedings                                                                                             |   |   |
|                                     |       |                                                                                                          |   |   |
| ITEM  1A.                                |       | Risk  Factors                                                                                                 |   |   |
|                                     |       |                                                                                                          |   |   |
| ITEM 2.                                  |       | Unregistered  Sales of Equity Securities and Use of Proceeds                                                  |   |   |
|                                     |       |                                                                                                          |   |   |
| ITEM 3.                                  |       | Defaults Upon  Senior Securities                                                                              |   |   |
|                                     |       |                                                                                                          |   |   |
| ITEM 4.                                  |       | Submission of  Matters to a Vote of Security Holders                                                          |   |   |
|                                     |       |                                                                                                          |   |   |
| ITEM 5.                                  |       | Other Information                                                                                             |   |   |
|                                     |       |                                                                                                          |   |   |
| ITEM  6.                                 |       | Exhibits                                                                                                      |   |   |
|                                     |       |                                                                                                          |   |   |
| Signatures                               |       |                                                                                                          |   |   |

 

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##### **PARTI.   FINANCIAL INFORMATION**

###### **ITEM1.  FINANCIAL STATEMENTS**

**VISANT HOLDING CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**
| ** **                                       | ** ** | **March 31,** | ** **  | **April 1,** | ** ** |
|--------------------------------------------------|------------|--------------------|-------------|-------------------|------------|
| **In thousands**                            | ** ** | **2007**           | ** **  | **2006**          | ** ** |
| **Net sales**                                    | ** ** | **$**              | **255,850** | ** **        | **$**      | **227,986** | ** ** |
| Cost of products sold                            |       | 128,070            |        | 110,788           |       |
| **Gross  profit**                                | ** ** | **127,780**        | ** **  | **117,198**       | ** ** |
| Selling and  administrative expenses             |       | 103,742            |        | 91,945            |       |
| Loss (gain) on disposal  of fixed assets         |       | 391                |        | (25               | )          |
| Special charges                                  |       | —             |        | 2,744             |       |
| **Operating  income**                            | ** ** | **23,647**         | ** **  | **22,534**        | ** ** |
| Interest expense, net                            | ** ** | **38,508**         | ** **  | **30,978**        | ** ** |
| Loss before income  taxes                        | ** ** | **(14,861**        | **)**       | **(8,444**        | **)**      |
| Benefit from income  taxes                       |       | (5,249             | )           | (4,066            | )          |
| **Loss  from continuing operations**             | ** ** | **(9,612**         | **)**       | **(4,378**        | **)**      |
| Income from  discontinued operations, net of tax |       | 8,373              |        | 3,242             |       |
| **Net loss**                                     | ** ** | **$**              | **(1,239**  | **)**             | **$**      | **(1,136** | **)** |

 

*Theaccompanying notes are an integral part of the condensed consolidated financialstatements.*

1

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**VISANTHOLDING CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)**
| ** **                                                                                                                              | ** ** | **March 31,** | ** **    | **December 30,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|---------------|-----------------------|------------|
| **In thousands, except share amounts**                                                                              | ** ** | **2007**           | ** **    | **2006**              | ** ** |
| **ASSETS**                                                                                                                              | ** ** | ** **         | ** **    | ** **            | ** ** |
| Cash and cash  equivalents                                                                                                              |       | $                  | 16,377        |                  | $          | 18,778 |   |
| Accounts receivable,  net                                                                                                               |       | 138,049            |          | 144,681               |       |
| Inventories, net                                                                                                                        |       | 139,129            |          | 105,333               |       |
| Salespersons  overdrafts, net of allowance of $13,073 and $12,621, respectively                                                         |       | 28,096             |          | 27,292                |       |
| Prepaid expenses and  other current assets                                                                                              |       | 24,146             |          | 19,791                |       |
| Income tax receivable                                                                                                                   |       | 8,605              |          | 10,311                |       |
| Deferred income taxes                                                                                                                   |       | 12,330             |          | 11,850                |       |
| Current assets of  discontinued operations                                                                                              |       | 65,213             |          | 56,649                |       |
| **Total  current assets**                                                                                                               | ** ** | **431,945**        | ** **    | **394,685**           | ** ** |
| Property, plant and equipment                                                                                                           |       | 319,937            |          | 305,703               |       |
| Less accumulated  depreciation                                                                                                          |       | (151,774           | )             | (145,122              | )          |
| Property, plant  and equipment, net                                                                                                     |       | 168,163            |          | 160,581               |       |
| Goodwill                                                                                                                                |       | 924,370            |          | 919,638               |       |
| Intangibles, net                                                                                                                        |       | 534,294            |          | 530,669               |       |
| Deferred financing  costs, net                                                                                                          |       | 46,483             |          | 48,782                |       |
| Other assets                                                                                                                            |       | 13,674             |          | 13,181                |       |
| Long-term assets of  discontinued operations                                                                                            |       | 268,931            |          | 265,519               |       |
| **Total  assets**                                                                                                                       | ** ** | **$**              | **2,387,860** | ** **            | **$**      | **2,333,055** | ** ** |
|                                                                                                                                    |       |               |          |                  |       |
| **LIABILITIES  AND STOCKHOLDERS’ DEFICIT**                                                                                         | ** ** | ** **         | ** **    | ** **            | ** ** |
| Accounts payable                                                                                                                        |       | $                  | 54,283        |                  | $          | 56,436 |   |
| Accrued employee  compensation and related taxes                                                                                        |       | 32,617             |          | 41,256                |       |
| Commissions payable                                                                                                                     |       | 31,753             |          | 21,671                |       |
| Customer deposits                                                                                                                       |       | 219,612            |          | 171,258               |       |
| Interest payable                                                                                                                        |       | 30,262             |          | 13,227                |       |
| Other accrued  liabilities                                                                                                              |       | 26,569             |          | 23,637                |       |
| Current liabilities of  discontinued operations                                                                                         |       | 26,541             |          | 34,849                |       |
| **Total  current liabilities**                                                                                                          | ** ** | **421,637**        | ** **    | **362,334**           | ** ** |
|                                                                                                                                    |       |               |          |                  |       |
| Long-term debt                                                                                                                          |       | 1,775,841          |          | 1,770,657             |       |
| Deferred income taxes                                                                                                                   |       | 168,854            |          | 175,200               |       |
| Pension liabilities,  net                                                                                                               |       | 20,255             |          | 21,484                |       |
| Other noncurrent  liabilities                                                                                                           |       | 30,487             |          | 33,356                |       |
| Long-term liabilities  of discontinued operations                                                                                       |       | 7,086              |          | 6,696                 |       |
| **Total  liabilities**                                                                                                                  | ** ** | **2,424,160**      | ** **    | **2,369,727**         | ** ** |
| ** **                                                                                                                              | ** ** | ** **         | ** **    | ** **            | ** ** |
| Mezzanine equity                                                                                                                        |       | 9,755              |          | 9,717                 |       |
| ** **                                                                                                                              | ** ** | ** **         | ** **    | ** **            | ** ** |
| Common stock:                                                                                                                           |       |               |          |                  |       |
| Class A $.01 par  value; authorized 7,000,000 shares; issued and outstanding: 5,976,659 at  March 31, 2007 and December 30, 2006        |       |               |          |                  |       |
| Class B $.01 par  value; non-voting; authorized 2,724,759 shares; issued and outstanding: none  at March 31, 2007 and December 30, 2006 |       |               |          |                  |       |
| Class C $.01 par  value; authorized 1 share; issued and outstanding: 1 share at March 31, 2007 and  December 30, 2006                   |       | 60                 |          | 60                    |       |
| Additional  paid-in-capital                                                                                                             |       | 175,516            |          | 175,427               |       |
| Accumulated deficit                                                                                                                     |       | (222,752           | )             | (222,993              | )          |
| Accumulated other  comprehensive income                                                                                                 |       | 1,121              |          | 1,117                 |       |
| **Total  stockholders’ deficit**                                                                                                   | ** ** | **(46,055**        | **)**         | **(46,389**           | **)**      |
| **Total liabilities and  stockholders’ deficit**                                                                                   | ** ** | **$**              | **2,387,860** | ** **            | **$**      | **2,333,055** | ** ** |

 

*Theaccompanying notes are an integral part of the condensed consolidated financialstatements.*

2

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**VISANT HOLDING CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**
| ** **                                                                       | ** ** | **Three months ended** | ** ** |
|----------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                       | ** ** | **March 31,**               | ** ** | **April 1,** | ** ** |
| **In thousands**                                                            | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|                                                                             | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Net loss                                                                         |       | $                                | (1,239     | ) | $ | (1,136 | ) |
| Adjustments to  reconcile net loss to net cash provided by operating activities: |       |                             |       |   |   |
| Income from discontinued operations                                              |       | (8,373                           | )          | (3,242 | ) |
| Depreciation                                                                     |       | 8,796                            |       | 7,471 |   |
| Amortization of intangible assets                                                |       | 11,897                           |       | 12,668 |   |
| Amortization of debt discount, premium and deferred  financing costs             |       | 7,487                            |       | 6,759 |   |
| Other amortization                                                               |       | 167                              |       | 201 |   |
| Deferred income taxes                                                            |       | (6,420                           | )          | (7,157 | ) |
| Loss (gain) on sale of assets                                                    |       | 391                              |       | (25 | ) |
| Stock-based compensation                                                         |       | 129                              |       | 40 |   |
| Loss on asset impairments                                                        |       | —                           |       | 2,341 |   |
| Changes in assets and liabilities:                                               |       |                             |       |   |   |
| Accounts receivable                                                              |       | 10,428                           |       | 3,682 |   |
| Inventories                                                                      |       | (30,518                          | )          | (36,129 | ) |
| Salespersons overdrafts                                                          |       | (787                             | )          | (2,305 | ) |
| Prepaid expenses and other current assets                                        |       | (4,597                           | )          | (5,254 | ) |
| Accounts payable and accrued expenses                                            |       | (10,636                          | )          | (44 | ) |
| Customer deposits                                                                |       | 48,277                           |       | 47,310 |   |
| Commissions payable                                                              |       | 9,567                            |       | 9,834 |   |
| Income taxes payable/ receivable                                                 |       | 5,518                            |       | 2,736 |   |
| Interest payable                                                                 |       | 17,104                           |       | 9,895 |   |
| Other                                                                            |       | (1,609                           | )          | 706 |   |
| **Net cash provided by operating activities of  continuing operations**          |       | 55,582                           |       | 48,351 |   |
| **Net cash used in operating activities of  discontinued operations**            |       | (7,737                           | )          | (1,500 | ) |
| **Net cash provided by operating activities**                                    | ** ** | **47,845**                       | ** ** | **46,851** | ** ** |
| Purchases of  property, plant and equipment                                      |       | (20,012                          | )          | (12,489 | ) |
| Proceeds from  sale of property and equipment                                    |       | 281                              |       | 74 |   |
| Acquisition of  businesses, net of cash acquired                                 |       | (27,486                          | )          | — |   |
| Other investing  activities, net                                                 |       | —                           |       | (2 | ) |
| **Net cash used in investing activities of  continuing operations**              |       | (47,217                          | )          | (12,417 | ) |
| **Net cash used in investing activities of  discontinued operations**            |       | (3,138                           | )          | (7,452 | ) |
| **Net cash used in investing activities**                                        | ** ** | **(50,355**                      | **)**      | **(19,869** | **)** |
| **Net cash provided by (used in) financing  activities**                         | ** ** | **—**                       | ** ** | **—** | ** ** |
| Effect of  exchange rate changes on cash and cash equivalents                    |       | 109                              |       | 6 |   |
| (Decrease)  increase in cash and cash equivalents                                |       | (2,401                           | )          | 26,988 |   |
| Cash and cash  equivalents, beginning of period                                  |       | 18,778                           |       | 20,706 |   |
| **Cash  and cash equivalents, end of period**                                    | ** ** | **$**                            | **16,377** | ** ** | **$** | **47,694** | ** ** |
|                                                                             | ** ** | ** **                       | ** ** | ** ** | ** ** |
| ***Summary  of Non Cash Financing Items:***                                      | ** ** | ** **                       | ** ** | ** ** | ** ** |
| *Receivable from issuance of long-term debt*                                     | * *   | *$*                              | *—*   | * * | *$* | *(342,125* | *)* |
| *Deferred financing costs*                                                       | * *   | *—*                         | * *   | *(9,300* | *)* |
| *Payables related to financing costs*                                            | * *   | *—*                         | * *   | *1,425* | * * |
| *Issuance of long-term debt*                                                     | * *   | *—*                         | * *   | *350,000* | * * |
| ***Non  cash items, net***                                                       | * *   | *$*                              | *—*   | * * | *$* | *—* | * * |

 

*Theaccompanying notes are an integral part of the condensed consolidated financialstatements.*

3

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**VISANT CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**
| ** **                                       | ** ** | **March 31,** | ** **  | **April 1,** | ** ** |
|--------------------------------------------------|------------|--------------------|-------------|-------------------|------------|
| **In thousands**                            | ** ** | **2007**           | ** **  | **2006**          | ** ** |
| **Net  sales**                                   | ** ** | **$**              | **255,850** | ** **        | **$**      | **227,986** | ** ** |
| Cost of products  sold                           |       | 128,070            |        | 110,788           |       |
| **Gross profit**                                 | ** ** | **127,780**        | ** **  | **117,198**       | ** ** |
| Selling and  administrative expenses             |       | 103,557            |        | 91,866            |       |
| Loss (gain) on  disposal of fixed assets         |       | 391                |        | (25               | )          |
| Special charges                                  |       | —             |        | 2,744             |       |
| **Operating income**                             | ** ** | **23,832**         | ** **  | **22,613**        | ** ** |
| Interest  expense, net                           | ** ** | **25,235**         | ** **  | **26,170**        | ** ** |
| Loss before  income taxes                        | ** ** | **(1,403**         | **)**       | **(3,557**        | **)**      |
| Benefit from  income taxes                       |       | (294               | )           | (2,070            | )          |
| **Loss from continuing operations**              | ** ** | **(1,109**         | **)**       | **(1,487**        | **)**      |
| Income from  discontinued operations, net of tax |       | 8,373              |        | 3,242             |       |
| **Net  income**                                  | ** ** | **$**              | **7,264**   | ** **        | **$**      | **1,755** | ** ** |

 

*Theaccompanying notes are an integral part of the condensed consolidated financialstatements.*

4

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**VISANTCORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)**
| ** **                                                                                                                               | ** ** | **March 31,** | ** **    | **December 30,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|---------------|-----------------------|------------|
| **In thousands, except share amounts**                                                                               | ** ** | **2007**           | ** **    | **2006**              | ** ** |
| **ASSETS**                                                                                                                               | ** ** | ** **         |          |                  |       |
| Cash and cash  equivalents                                                                                                               |       | $                  | 16,002        |                  | $          | 18,043 |   |
| Accounts  receivable, net                                                                                                                |       | 138,049            |          | 144,681               |       |
| Inventories, net                                                                                                                         |       | 139,129            |          | 105,333               |       |
| Salespersons  overdrafts, net of allowance of $13,073 and $12,621, respectively                                                          |       | 28,096             |          | 27,292                |       |
| Prepaid expenses  and other current assets                                                                                               |       | 24,361             |          | 20,309                |       |
| Income tax  receivable                                                                                                                   |       | 746                |          | 1,097                 |       |
| Deferred income  taxes                                                                                                                   |       | 12,330             |          | 11,850                |       |
| Current assets  of discontinued operations                                                                                               |       | 65,213             |          | 56,649                |       |
| **Total current assets**                                                                                                                 | ** ** | **423,926**        | ** **    | **385,254**           | ** ** |
| Property, plant  and equipment                                                                                                           |       | 319,937            |          | 305,703               |       |
| Less accumulated  depreciation                                                                                                           |       | (151,774           | )             | (145,122              | )          |
| Property, plant and equipment, net                                                                                                       |       | 168,163            |          | 160,581               |       |
| Goodwill                                                                                                                                 |       | 924,370            |          | 919,638               |       |
| Intangibles, net                                                                                                                         |       | 534,294            |          | 530,669               |       |
| Deferred  financing costs, net                                                                                                           |       | 33,711             |          | 35,557                |       |
| Other assets                                                                                                                             |       | 13,674             |          | 13,181                |       |
| Long-term assets  of discontinued operations                                                                                             |       | 268,931            |          | 265,519               |       |
| **Total assets**                                                                                                                         | ** ** | **$**              | **2,367,069** | ** **            | **$**      | **2,310,399** | ** ** |
|                                                                                                                                     |       |               |          |                  |       |
| **LIABILITIES AND STOCKHOLDER’S EQUITY**                                                                                            | ** ** | ** **         |          |                  |       |
| Accounts payable                                                                                                                         |       | $                  | 54,283        |                  | $          | 56,436 |   |
| Accrued employee  compensation and related taxes                                                                                         |       | 32,617             |          | 41,256                |       |
| Commissions  payable                                                                                                                     |       | 31,753             |          | 21,671                |       |
| Customer  deposits                                                                                                                       |       | 219,612            |          | 171,258               |       |
| Income taxes  payable                                                                                                                    |       | 4,430              |          | —                |       |
| Interest payable                                                                                                                         |       | 20,050             |          | 10,650                |       |
| Other accrued  liabilities                                                                                                               |       | 26,569             |          | 23,637                |       |
| Current  liabilities of discontinued operations                                                                                          |       | 26,541             |          | 34,849                |       |
| **Total current liabilities**                                                                                                            | ** ** | **415,855**        | ** **    | **359,757**           | ** ** |
|                                                                                                                                     |       |               |          |                  |       |
| Long-term debt                                                                                                                           |       | 1,216,500          |          | 1,216,500             |       |
| Deferred income  taxes                                                                                                                   |       | 190,460            |          | 194,925               |       |
| Pension  liabilities, net                                                                                                                |       | 20,255             |          | 21,484                |       |
| Other noncurrent  liabilities                                                                                                            |       | 30,487             |          | 33,356                |       |
| Long-term  liabilities of discontinued operations                                                                                        |       | 7,086              |          | 6,696                 |       |
| **Total liabilities**                                                                                                                    | ** ** | **1,880,643**      | ** **    | **1,832,718**         | ** ** |
| ** **                                                                                                                               |       |               |          |                  |       |
| Common stock:                                                                                                                            |       |               |          |                  |       |
| Common stock $.01 par value; authorized 2,000,000  shares; issued and outstanding: 1,000 shares at March 31, 2007 and December  30, 2006 |       | —             |          | —                |       |
| Additional  paid-in-capital                                                                                                              |       | 648,597            |          | 648,599               |       |
| Accumulated  deficit                                                                                                                     |       | (163,292           | )             | (172,035              | )          |
| Accumulated  other comprehensive income                                                                                                  |       | 1,121              |          | 1,117                 |       |
| **Total stockholder’s equity**                                                                                                      | ** ** | **486,426**        | ** **    | **477,681**           | ** ** |
| **Total  liabilities and stockholder’s equity**                                                                                     | ** ** | **$**              | **2,367,069** | ** **            | **$**      | **2,310,399** | ** ** |

 

*Theaccompanying notes are an integral part of the condensed consolidated financialstatements.*

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**VISANTCORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**
| ** **                                                                         | ** ** | **Three months ended** | ** ** |
|------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                         | ** ** | **March 31,**               | ** ** | **April 1,** | ** ** |
| **In thousands**                                                              | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|                                                                               | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Net income                                                                         |       | $                                | 7,264      |   | $ | 1,755 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                             |       |   |   |
| Income from discontinued operations                                                |       | (8,373                           | )          | (3,242 | ) |
| Depreciation                                                                       |       | 8,796                            |       | 7,471 |   |
| Amortization of intangible assets                                                  |       | 11,897                           |       | 12,668 |   |
| Amortization of debt discount, premium and deferred  financing costs               |       | 1,849                            |       | 1,944 |   |
| Other amortization                                                                 |       | 167                              |       | 201 |   |
| Deferred income taxes                                                              |       | (4,539                           | )          | (5,422 | ) |
| Loss (gain) on sale of assets                                                      |       | 391                              |       | (25 | ) |
| Loss on asset impairments                                                          |       | —                           |       | 2,341 |   |
| Changes in assets and liabilities:                                                 |       |                             |       |   |   |
| Accounts receivable                                                                |       | 10,428                           |       | 3,682 |   |
| Inventories                                                                        |       | (30,518                          | )          | (36,129 | ) |
| Salespersons overdrafts                                                            |       | (787                             | )          | (2,305 | ) |
| Prepaid expenses and other current assets                                          |       | (4,597                           | )          | (5,078 | ) |
| Accounts payable and accrued expenses                                              |       | (10,636                          | )          | (44 | ) |
| Customer deposits                                                                  |       | 48,277                           |       | 47,310 |   |
| Commissions payable                                                                |       | 9,567                            |       | 9,834 |   |
| Income taxes payable/ receivable                                                   |       | 8,593                            |       | 2,996 |   |
| Interest payable                                                                   |       | 9,469                            |       | 9,895 |   |
| Other                                                                              |       | (1,306                           | )          | 500 |   |
| **Net cash provided by operating activities of  continuing operations**            |       | 55,942                           |       | 48,352 |   |
| **Net cash used in operating activities of  discontinued operations**              |       | (7,737                           | )          | (1,500 | ) |
| **Net cash provided by operating activities**                                      | ** ** | **48,205**                       | ** ** | **46,852** | ** ** |
| Purchases of  property, plant and equipment                                        |       | (20,012                          | )          | (12,489 | ) |
| Proceeds from  sale of property and equipment                                      |       | 281                              |       | 74 |   |
| Acquisition of  business, net of cash acquired                                     |       | (27,486                          | )          | — |   |
| Other investing  activities, net                                                   |       | —                           |       | (2 | ) |
| **Net cash used in investing activities of  continuing operations**                |       | (47,217                          | )          | (12,417 | ) |
| **Net cash used in investing activities of  discontinued operations**              |       | (3,138                           | )          | (7,452 | ) |
| **Net cash used in investing activities**                                          | ** ** | **(50,355**                      | **)**      | **(19,869** | **)** |
| **Net cash provided by (used in) financing  activities**                           | ** ** | **—**                       | ** ** | **—** | ** ** |
| Effect of  exchange rate changes on cash and cash equivalents                      |       | 109                              |       | 6 |   |
| (Decrease)  increase in cash and cash equivalents                                  |       | (2,041                           | )          | 26,989 |   |
| Cash and cash  equivalents, beginning of period                                    |       | 18,043                           |       | 19,874 |   |
| **Cash and cash equivalents, end  of period**                                      | ** ** | **$**                            | **16,002** | ** ** | **$** | **46,863** | ** ** |

 

*Theaccompanying notes are an integral part of the condensed consolidated financialstatements.*

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**VISANT HOLDING CORP.VISANT CORPORATIONNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**1.  Overview and Basis of Presentation**

***Overview***

The Company is amarketing and publishing services enterprise servicing the school affinity,direct marketing, fragrance and cosmetics sampling and educational publishingmarkets.  The Company was formed throughthe October 2004 consolidation of Jostens, Inc. (“Jostens”), Von HoffmannHoldings Inc. (“Von Hoffmann”) and AHC I Acquisition Corp. (“Arcade”).  These subsidiaries are currently integratedinto three reportable segments: Scholastic, Yearbook and Marketing and Publishing Services.

***Basis ofPresentation***

Theunaudited condensed consolidated financial statements included herein are thoseof:

·                  VisantHolding Corp. and its wholly-owned subsidiaries (“Holdings”) which includeVisant Corporation (“Visant”); and

·                  Visant and itswholly-owned subsidiaries.

Thereare no significant differences between the results of operations and financialcondition of Visant Corporation and those of Visant Holding Corp., other thancertain indebtedness of Holdings. Holdings has 10.25% senior discount notes, which had an accreted valueof $209.3 million and $204.2 million as of March 31, 2007 and December 30,2006, respectively, and $350.0 million principal amount of 8.75% senior notesas of March 31, 2007 and December 30, 2006.

All intercompany balances and transactions have beeneliminated in consolidation.

Theaccompanying unaudited condensed consolidated financial statements of Holdingsand Visant, and their respective subsidiaries, are presented pursuant to therules and regulations of the U.S. Securities and Exchange Commission (the “SEC”)in accordance with disclosure requirements for the quarterly report on Form10-Q.  In the opinion of management, alladjustments (consisting of normal recurring adjustments) considered necessaryfor a fair presentation have been included. Operating results for the interim periods presented are not necessarilyindicative of the results that may be expected for the full year.  These financial statements should be read inconjunction with the consolidated financial statements and footnotes includedin Holdings’ and Visant’s Annual Report on Form 10-K for the fiscal year endedDecember 30, 2006.

The preparation ofthe financial statements in conformity with accounting principles generallyaccepted in the United States requires the management to make estimates andassumptions that affect the amounts reported in the financial statements andaccompanying notes.  Actual results coulddiffer from those estimates.

**2.    Significant Accounting Policies**

***Revenue Recognition***

TheSEC’s Staff Accounting Bulletin (“SAB”) SAB No. 104, *RevenueRecognition*, provides guidance on the application of accountingprinciples generally accepted in the United States to selected revenuerecognition issues. In accordance with SAB No. 104, the Company recognizesrevenue when the earnings process is complete, evidenced by an agreementbetween the Company and the customer, delivery and acceptance has occurred,collectibility is probable and pricing is fixed or determinable. Revenue isrecognized when (1) products are shipped (if shipped FOB shipping point), (2)products are delivered (if shipped FOB destination) or (3) as services areperformed as determined by contractual agreement, but in all cases only whenrisk of loss has transferred to the customer and the Company has no furtherperformance obligations.

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***Cost of Products Sold***

Cost of products soldprimarily include the cost of paper and other materials, direct and indirectlabor and related benefit costs, depreciation of production assets and shippingand handling costs.

***Shipping and Handling***

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

***Selling and Administrative Expenses***

Selling and administrativeexpenses primarily include salaries and related benefits of sales andadministrative personnel, sales commissions, amortization of intangibles andprofessional fees such as audit and consulting fees.

***Advertising***

The Company expenses advertising costs as incurred.  Selling and administrative expenses includedadvertising expense of $1.9 million for the quarter ended March 31, 2007 and$1.4 million for the quarter ended April 1, 2006.

***Warranty Costs***

Provisions for warranty costs related to Jostens’scholastic products, particularly class rings due to their lifetime warranty,are recorded based on historical information and current trends inmanufacturing costs.  The provisionrelated to the lifetime warranty is based on the number of rings manufacturedin the prior school year consistent with industry standards. The provision forthe lifetime warranty on rings was approximately $0.1 million and $0.2 millionfor the quarters ended March 31, 2007 and April 1, 2006, respectively.  Warranty repair costs for rings manufacturedin the current school year are expensed as incurred. Accrued warranty costsincluded in the condensed consolidated balance sheets were approximately $0.6million for March 31, 2007 and December 30, 2006.

***Stock-based Compensation***

Effective January 1, 2006, the Company adoptedStatement of Financial Accounting Standards (“SFAS”) SFAS No. 123R  (revised 2004), *Share BasedPayment* (“SFAS 123R”), which requires the recognition ofcompensation expense related to all equity awards granted including awardsmodified, repurchased, or cancelled based on the fair values of the awards atthe grant date.  For each of the threemonth periods ended March 31, 2007 and April 1, 2006, the Company recognizedtotal compensation expense related to stock options of $0.1 million, which isincluded in selling, general and administrative expenses.  Refer to Note 15, *Stock-basedCompensation*, for further details.

***MezzanineEquity***

Certain management stockholder agreements contain arepurchase feature whereby Holdings is obligated, under certain circumstancessuch as death and disability (as defined in the agreements), to repurchase thecommon shares from the holder and settle amounts in cash.  In accordance with SAB No. 107, *Share-Based Payment*, such equity instruments are consideredtemporary equity and have been classified as mezzanine equity in the balancesheets as of March 31, 2007 and December 30, 2006.

***Recent Accounting Pronouncements***

Effectivebeginning of fiscal 2007, we adopted FASB Interpretation No. 48, *Accounting for Uncertainty in Income Taxes* (“FIN 48”), whichclarifies the accounting for uncertainty in income taxes recognized in anenterprise’s financial statements in accordance with SFAS No. 109, *Accounting for Income Taxes*. FIN 48 requires applying a “more likely than not” threshold to therecognition and derecognition of tax positions. In connection with the adoption of FIN 48 effective at the beginning ofthe quarter, the Company made a change in accounting principle for the classificationof interest income on tax refunds.  Inaddition, upon adoption of FIN 48 all interest and penalties on income taxassessments has been recorded as income tax expense and included as part of theCompany’s unrecognized tax benefit liability. Refer to Note 13, *Income Taxes,*forfurther details.

8

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In September 2006,the FASB issued SFAS No. 157, *Fair Value Measurements*(“SFAS No. 157”), that establishes a framework for measuring fair value andrequires enhanced disclosures about fair value measurements. SFAS No. 157requires companies to disclose the fair value of their financial instrumentsaccording to a fair value hierarchy as defined in the standard.  SFAS No. 157 is effective for financialstatements issued for fiscal years beginning after November 15, 2007, andinterim periods within those fiscal years. We are currently assessing the impact of SFAS No. 157 on our financialstatements.

In September 2006,the FASB issued SFAS No. 158, *Employers’ Accounting forDefined Benefit Pension and Other Postretirement Plans* (“SFAS No.158”)*.* SFAS No. 158 requires the recognition of the funded status of abenefit plan in the balance sheet; the recognition in other comprehensiveincome of gains or losses and prior service costs or credits arising during theperiod but which are not included as components of periodic benefit cost; themeasurement of defined benefit plan assets and obligations as of the balancesheet date; and disclosure of additional information about the effects onperiodic benefit cost for the following fiscal year arising from delayedrecognition in the current period. In addition, SFAS No. 158 amends SFASNo. 87, *Employers’ Accounting for Pensions*,and SFAS No. 106, *Employers’ Accounting forPostretirement Benefits Other Than Pensions*, to include guidanceregarding selection of assumed discount rates for use in measuring the benefitobligation.  The new guidance will beeffective for us the first fiscal year ending after June 15, 2007.  We are currently assessing the impact of SFASNo. 158 on our financial statements.

InFebruary 2007, the FASB issued SFAS No. 159 *The Fair Value Option forFinancial Assets and Financial Liabilities* (“SFAS No. 159”).  SFAS No. 159 permits entities to measure manyfinancial assets and financial liabilities at fair value.  Unrealized gains and losses on items forwhich the fair value option has been elected are reported in earnings.  SFAS No. 159 is effective for fiscal yearsbeginning after November 15, 2007.  Weare currently assessing the impact of SFAS No. 159 on our financial statements.

**3.    The Transactions**

On October 4, 2004, an affiliate of Kohlberg KravisRoberts & Co. L.P. (“KKR”) and affiliates of DLJ Merchant BankingPartners completed transactions which created a marketing and publishingservices enterprise, servicing the school affinity products, direct marketing,fragrance and cosmetics sampling and educational publishing market segmentsthrough the consolidation of Jostens, Von Hoffmann and Arcade (the “Transactions”).

Prior to the Transactions, Von Hoffmann and Arcade wereeach controlled by affiliates of DLJ Merchant Banking Partners II, L.P. (“DLJMBPII”) and DLJ Merchant Banking Partners III, L.P. (“DLJMBP III”) ownedapproximately 82.5% of Holdings’ outstanding equity, with the remainder held byother co-investors and certain members of management.  Upon consummation of the Transactions, anaffiliate of KKR invested $256.1 million and was issued equity interestsrepresenting approximately 49.6% of the voting interest and 45.0% of theeconomic interest of Holdings and affiliates of DLJMBP III held equityinterests representing approximately 41.0% of the voting interest and 45.0% ofthe economic interest of Holdings, with the remainder held by otherco-investors and certain members of management. After giving effect to the issuance of equity to additional members ofmanagement, as of May 7, 2007, affiliates of KKR and DLJMBP III (the “Sponsors”)held approximately 49.0% and 41.0%, respectively, of the voting interest ofHoldings, while each continued to hold approximately 44.6% of the economicinterest of Holdings.  As of May 7, 2007,the other co-investors held approximately 8.4% of the voting interest and 9.1%of the economic interest of Holdings, and members of management held approximately1.6% of the voting interest and approximately 1.7% of the economic interest ofHoldings.

**4.  Restructuring Activity and Other Special Charges**

***RestructuringActivity***

During the threemonths ended March 31, 2007, the Company did not record any specialcharges.  During the three months endedApril 1, 2006, the Company recorded $0.4 million of special charges relating toseverance and related benefits costs and $2.3 million related to an impairmentloss to reduce the value of the former Jostens corporate office buildings.  The Scholastic and Yearbook segments eachrecorded $0.1 million of severance costs and related benefits associated with aheadcount reduction of eight Scholastic employees and two Yearbook employees,respectively.  The Marketing and PublishingServices segment recorded charges of $0.2 million related to severance coststhat reduced headcount by three employees.

9

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Restructuringaccruals of $0.9 million and $1.4 million as of March 31, 2007 and December 30,2006, respectively, are included in other accrued liabilities in the condensedconsolidated balance sheets.  Theaccruals include amounts provided for severance related to reductions incorporate and administrative employees from Jostens and the Marketing andPublishing Services segment.

On acumulative basis through March 31, 2007, the Company incurred $17.5 million ofemployee severance costs related to initiatives during the period from 2004 toMarch 31, 2007, which affected an aggregate of 254 employees.  As of March 31, 2007, the Company had paid$16.6 million in cash related to these initiatives.

Changes in the restructuring accruals during thefirst three months of 2007 were as follows:
| In thousands             | ** ** | **2006  Initiatives** | ** ** | **2005  Initiatives** | ** ** | **2004  Initiatives** | ** ** | **Total** | ** ** |
|-------------------------------|------------|-----------------------|------------|-----------------------|------------|-----------------------|------------|-----------|------------|
| Balance at  December 30, 2006 |       | $                     | 513        |                  | $          | 111                   |       | $         | 755        |   | $ | 1,379 |   |
| Restructuring charges         |       | —                |       | —                |       | —                |       | —    |       |
| Severance paid                |       | (241                  | )          | (72                   | )          | (163                  | )          | (476      | )          |
| Balance at March 31,  2007    | ** ** | **$**                 | **272**    | ** **            | **$**      | **39**                | ** ** | **$**     | **592**    | ** ** | **$** | **903** | ** ** |

 

The Company expects themajority of the remaining severance related to the 2004, 2005 and 2006 initiativesto be paid during the remainder of 2007.

**5.   Acquisitions**

On March 16, 2007, theCompany acquired all of the outstanding capital stock of Neff for approximately$30.5 million in cash, including cash on hand of $3.0 million, and subject to aworking capital adjustment.  Neff is aleading single source provider of custom award programs and apparel, includingchenille letters and letter jackets, to the scholastic market segment.  The acquisition is a continuation of ourefforts to focus on the school affinity business.  Theresults of these acquired operations have been included in the CondensedConsolidated Financial Statements since that date.

The acquisition wasaccounted for as a purchase in accordance with the provisions of SFAS No. 141, *Business Combinations* (“SFAS 141”).  The cost of the acquisition was allocated tothe tangible and intangible assets acquired and liabilities assumed based upontheir relative fair values as of the date of the acquisition.  The estimates utilized to determine thepurchase price allocation are subject to change due to certain working capitaladjustments.

The allocation of thepurchase price was as follows:

| In thousands              | ** ** | ** ** | ** ** |
|--------------------------------|------------|------------|------------|
| Current assets                 |       | $          | 10,945     |   |
| Property, plant  and equipment |       | 1,399      |       |
| Intangible  assets             |       | 15,500     |       |
| Goodwill                       |       | 6,992      |       |
| Long-term assets               |       | 131        |       |
| Current  liabilities           |       | (4,438     | )          |
| Long-term  liabilities         |       | (48        | )          |
|                           | ** ** | **$**      | **30,481** | ** ** |

 

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In connection with the purchase accounting related to the acquisition ofNeff, the intangible assets and goodwill approximated $22.5 million, whichconsisted of:
| In thousands       | ** ** | ** ** | ** ** |
|-------------------------|------------|------------|------------|
| Customer  relationships |       | $          | 7,900      |   |
| Tradenames              |       | 6,300      |       |
| Restrictive  covenants  |       | 1,300      |       |
| Goodwill                |       | 6,992      |       |
|                    | ** ** | **$**      | **22,492** | ** ** |

 

Customer relationships will be amortized over a ten-year period.  The restrictive covenants will be amortizedover the average life of the agreements, which is approximately two years.

The results of operationsfrom this acquisition are reported as part of the Scholastic segment, and assuch, all of its goodwill will be allocated to that segment.   None of the goodwill will be amortizable fortax purposes.

During 2006, the Companyacquired all of the assets and assumed certain liabilities of the Dixon Weboperation of the Sleepeck Printing Company, a provider of innovative marketingservices and products located in Dixon, Illinois.  The business now operates under the nameDixon Direct Corp.  The Company alsoacquired substantially all of the assets and assumed certain liabilities of theVertis, Inc. fragrance sampling business. The acquired fragrance business currently operates under the ArcadeMarketing name.  Both acquisitions, withan aggregate purchase price of approximately $54.8 million, were all cashtransactions.   The results of theseacquired operations have been included in the Condensed Consolidated FinancialStatements since their acquisition and are both reported in the Marketing andPublishing Services Segment.  Thepurchase price allocations of these acquisitions resulted in goodwill ofapproximately $15.3 million, substantially all of which will be fullyamortizable for tax purposes.

These acquisitions, bothindividually and in the aggregate, were not material to the Company’soperations, financial positions or cash flows.

**6.    Discontinued Operations**

During the secondquarter of 2006, the Company consummated the sale of its Jostens Photographybusinesses, which previously comprised a reportable segment. The sale closed on June 30, 2006 with theCompany recognizing net proceeds of $64.1 million.   As of December 2006 the Company’s VonHoffmann Holdings Inc., Von Hoffmann Corporation and Anthology, Inc. businesses(the “Von Hoffmann businesses”) were held as assets for sale and wereaccordingly reflected as such as of March 31, 2007.  On January 3, 2007, the Company entered intoa Stock Purchase Agreement (the “Von Hoffmann Stock Purchase Agreement”) withR.R. Donnelley & Sons Company providing for the sale of the Von Hoffmannbusinesses, which previously comprised the Educational Textbook segment and aportion of the Marketing and Publishing Services segment.  The regulatory review of the proposedtransaction through a second request by the Federal Trade Commission has beencompleted and we expect to close the transaction on or about May 16, 2007.  The operations of the Von Hoffmann businessesare reported as discontinued operations in the consolidated financialstatements for all periods presented.

The results of theJostens Photography and the Von Hoffmann businesses have been reclassified onthe condensed consolidated statement of operations and are included in thecaption titled “Income from discontinued operations, net”.  Previously theresults of these businesses included certain allocated corporate costs, whichhave been reallocated to the remaining continuing operations.

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Included in the income from discontinued operations in the condensedconsolidated statements of operations are the following:
|                                                      | ** ** | **March 31,** | ** ** | **April 1,** | ** ** |
|------------------------------------------------------|------------|--------------------|------------|-------------------|------------|
| **In thousands**                                | ** ** | **2007**           | ** ** | **2006**          | ** ** |
| Net sales from  discontinued operations              |       | $                  | 71,731     |              | $          | 85,053 |   |
|                                                 |       |               |       |              |       |
| Pretax income  from discontinued operations          |       | 13,804             |       | 5,480             |       |
| Income tax  provision from discontinued operations   |       | 5,431              |       | 2,238             |       |
| **Income from discontinued  operations, net of tax** | ** ** | **$**              | **8,373**  | ** **        | **$**      | **3,242** | ** ** |

 

The Jostens Photography and Von Hoffmann businesseshave been classified in the condensed consolidated balance sheets asdiscontinued operations. The major classes of assets and liabilities of thediscontinued operations are summarized as follows:
|                                                           | ** ** | **March 31,** | ** **  | **December 30,** | ** ** |
|-----------------------------------------------------------|------------|--------------------|-------------|-----------------------|------------|
| **In thousands**                                     | ** ** | **2007**           | ** **  | **2006**              | ** ** |
| **Assets:**                                               |       |               |        |                  |       |
| Accounts receivable, net                                  |       | $                  | 40,869      |                  | $          | 32,338 |   |
| Inventories, net                                          |       | 24,637             |        | 22,809                |       |
| Prepaid expenses and other current assets                 |       | (293               | )           | 1,502                 |       |
| **Total current assets of discontinued operations**       | ** ** | **65,213**         | ** **  | **56,649**            | ** ** |
|                                                      |       |               |        |                  |       |
| Property, plant and equipment, net                        |       | 94,979             |        | 91,567                |       |
| Goodwill                                                  |       | 173,952            |        | 173,952               |       |
| **Total assets of discontinued operations**               | ** ** | **$**              | **334,144** | ** **            | **$**      | **322,168** | ** ** |
|                                                      |       |               |        |                  |       |
| **Liabilities:**                                          |       |               |        |                  |       |
| Accounts payable                                          |       | $                  | 13,095      |                  | $          | 13,641 |   |
| Accrued employee compensation and related taxes           |       | 6,713              |        | 5,797                 |       |
| Commissions payable                                       |       | 455                |        | 456                   |       |
| Customer deposits                                         |       | 996                |        | 1,291                 |       |
| Other accrued liabilities                                 |       | 5,282              |        | 13,664                |       |
| **Total current liabilities of discontinued  operations** |       | 26,541             |        | 34,849                |       |
|                                                      |       |               |        |                  |       |
| Other noncurrent liabilities                              |       | 7,086              |        | 6,696                 |       |
| **Total  liabilities of discontinued operations**         | ** ** | **$**              | **33,627**  | ** **            | **$**      | **41,545** | ** ** |

 

AtDecember 30, 2006, other accrued liabilities included $1.7 million related tothe Jostens Recognition business, which was discontinued in 2001. Based onthe nature of the liabilities, the Company does not believe it is likely tohave any ongoing liabilities, and therefore, there are no amounts related tothe Jostens Recognition businesses at March 31, 2007.

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**7.    Comprehensive (Loss) Income**

The following amounts were included in determining comprehensive loss forHoldings as of the dates indicated:
|                                              | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|
| ** **                                   | ** ** | **March 31,**               | ** ** | **April 1,** | ** ** |
| **In thousands**                        | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| Net loss                                     |       | $                                | (1,239     | ) | $ | (1,136 | ) |
| Change in  cumulative translation adjustment |       | 4                                |       | (57 | ) |
| Comprehensive loss                           | ** ** | **$**                            | **(1,235** | **)** | **$** | **(1,193** | **)** |

 

The following amounts were included in determining comprehensive incomefor Visant as of the dates indicated:
|                                              | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|
| ** **                                   | ** ** | **March 31,**               | ** ** | **April 1,** | ** ** |
| **In thousands**                        | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| Net income                                   |       | $                                | 7,264      |   | $ | 1,755 |   |
| Change in  cumulative translation adjustment |       | 4                                |       | (57 | ) |
| Comprehensive income                         | ** ** | **$**                            | **7,268**  | ** ** | **$** | **1,698** | ** ** |

 

**8.   Accounts Receivable and Inventories**

Accountsreceivable, net, was comprised of the following:
|                                  | ** ** | **March 31,** | ** **  | **December 30,** | ** ** |
|----------------------------------|------------|--------------------|-------------|-----------------------|------------|
| **In thousands**            | ** ** | **2007**           | ** **  | **2006**              | ** ** |
| Trade  receivables               |       | $                  | 150,503     |                  | $          | 154,685 |   |
| Allowance for  doubtful accounts |       | (2,928             | )           | (2,726                | )          |
| Allowance for  sales returns     |       | (9,526             | )           | (7,278                | )          |
| Accounts receivable,  net        | ** ** | **$**              | **138,049** | ** **            | **$**      | **144,681** | ** ** |

 

Netinventories were comprised of the following:
|                             | ** ** | **March 31,** | ** **  | **December 30,** | ** **  |
|-----------------------------|------------|--------------------|-------------|-----------------------|-------------|
| **In thousands**       | ** ** | **2007**           | ** **  | **2006**              | ** **  |
| Raw materials  and supplies |       | $                  | 33,618      |                  | $           | 31,814 |   |
| Work-in-process             |       | 60,934             |        | 34,142                |        |
| Finished goods              |       | 44,569             |        | 39,369                |        |
|                        |       | 139,121            |        | 105,325               |        |
| LIFO reserve                |       | 8                  |        | 8                     |        |
| Inventories, net            | ** ** | **$**              | **139,129** | ** **            | **105,333** | ** ** |
|                             |            |                    |             |                       |             |  |  |

 

***Precious Metals Consignment Arrangement***

The Company has aprecious metals consignment agreement with a major financial institutionwhereby it currently has the ability to obtain up to $32.5 million in consignedinventory.  As required by the terms of the consignment agreement, theCompany does not take title to consigned inventory until payment. Accordingly, the Company does not include the value of consigned inventory orthe corresponding liability in its financial statements.  The value ofconsigned inventory at March 31, 2007 and December 30, 2006, was $17.2 millionand $16.4 million, respectively.  Theconsignment agreement does not have a stated term, and therefore it can be terminatedby either party upon 60 days written notice. Additionally, the Company expensed consignment fees related to thisfacility of $0.1 million and $0.2 million for the three months ended March 31,2007 and April 1, 2006, respectively.

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**9.   Goodwill and Other Intangible Assets, net**

The change in thecarrying amount of goodwill is as follows:
|                                      | ** ** | **March 31,** | ** **  |
|--------------------------------------|------------|--------------------|-------------|
| **In thousands**                | ** ** | **2007**           | ** **  |
| Balance at  beginning of period      |       | $                  | 919,638     |   |
| Goodwill  acquired during the period |       | 6,999              |        |
| Reduction in goodwill                |       | (2,258             | )           |
| Currency  translation                |       | (9                 | )           |
| Balance at end of  period            | ** ** | **$**              | **924,370** | ** ** |

 

Goodwill of $7.0 millionacquired during the three months ended March 31, 2007 relates to theacquisition of Neff, which is included in the Scholastic reporting segment fromthe date of acquisition.  The reductionin goodwill of $2.3 million resulted from the adoption of FIN 48 for apre-acquisition tax uncertainty  inconnection with the Jostens merger transaction in July 2003.

As of March 31,2007, goodwill had been allocated to reporting segments as follows:
| In thousands                  | ** ** | ** ** | ** **  |
|------------------------------------|------------|------------|-------------|
| Scholastic                         |       | $          | 300,262     |   |
| Yearbook                           |       | 391,848    |        |
| Marketing and  Publishing Services |       | 232,260    |        |
|                               | ** ** | **$**      | **924,370** | ** ** |

 

Information regardingother intangible assets, net as of the dates indicated, is as follows:
|                                 | ** ** | ** **           | ** ** | **March 31, 2007** | ** **  | **December 30, 2006** | ** ** |
|---------------------------------|------------|----------------------|------------|------------------------------|-------------|---------------------------------|------------|
| ** **                      | ** ** | ** **           | ** ** | **Gross**                    | ** **  | ** **                      | ** ** | ** ** | ** ** | **Gross** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                      | ** ** | **Estimated**        | ** ** | **carrying**                 | ** **  | **Accumulated**                 | ** ** | ** ** | ** ** | **carrying** | ** ** | **Accumulated** | ** ** | ** ** | ** ** |
| **In thousands**           | ** ** | **useful life** | ** ** | **amount**                   | ** **  | **amortization**                | ** ** | **Net** | ** ** | **amount** | ** ** | **amortization** | ** ** | **Net** | ** ** |
| School  relationships           |       | 10  years            |       | $                            | 330,000     |                            | $          | (121,379 | ) | $ | 208,621 |   | $ | 330,000 |   | $ | (113,161 | ) | $ | 216,839 |   |
| Internally  developed software  |       | 2 to  5 years        |       | 12,200                       |        | (10,909                         | )          | 1,291 |   | 12,200 |   | (10,454 | ) | 1,746 |   |
| Patented/unpatented  technology |       | 3  years             |       | 19,767                       |        | (15,310                         | )          | 4,457 |   | 19,767 |   | (15,109 | ) | 4,658 |   |
| Customer  relationships         |       | 4 to  40 years       |       | 44,409                       |        | (10,299                         | )          | 34,110 |   | 36,509 |   | (9,746 | ) | 26,763 |   |
| Other                           |       | 3 to  10 years       |       | 62,710                       |        | (27,375                         | )          | 35,335 |   | 61,410 |   | (24,927 | ) | 36,483 |   |
| ** **                      | ** ** | ** **           |       | 469,086                      |        | (185,272                        | )          | 283,814 |   | 459,886 |   | (173,397 | ) | 286,489 |   |
| Tradenames                      |       | Indefinite           |       | 250,480                      | ** **  | ** **                      |       | 250,480 |   | 244,180 |   | — |   | 244,180 |   |
| ** **                      | ** ** | ** **           | ** ** | **$**                        | **719,566** | ** **                      | **$**      | **(185,272** | **)** | **$** | **534,294** | ** ** | **$** | **704,066** | ** ** | **$** | **(173,397** | **)** | **$** | **530,669** | ** ** |

 

Amortizationexpense related to other intangible assets was $11.9 million and $12.7 millionfor the three months ended March 31, 2007 and April 1, 2006, respectively.

Based onintangible assets in service as of March 31, 2007, estimated amortizationexpense for the remainder of 2007 and each of the five succeeding fiscal yearsis $36.0 million, $45.2 million, $40.8 million, $39.9 million, $38.3 millionand $36.5 million, respectively.

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**10.    Long-Term Debt**

Long-term debt consists of the following:
|                                                                                                                                                                                                                                                                               | ** ** | **March 31,** | ** **    | **December 30,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|---------------|-----------------------|------------|
| **In thousands**                                                                                                                                                                                                                                                         | ** ** | **2007**           | ** **    | **2006**              | ** ** |
| **Holdings:**                                                                                                                                                                                                                                                                 |       |               |          |                  |       |
| Senior discount notes, 10.25% fixed rate, net of  discount of $37,859 and $43,043 at March 31, 2007 and December 30, 2006,  respectively, with semi-annual interest accretion through December 1, 2008,  thereafter semi-annual and payable at  maturity - December 2013 |       | $             | 209,341       |                  | $     | 204,157 |   |
| Senior notes, 8.75% fixed rate, with semi-annual  interest payments of $15.3 million, principal due and payable at maturity - December  2013                                                                                                                                  |       | 350,000            |          | 350,000               |       |
| **Visant:**                                                                                                                                                                                                                                                                   |       |               |          |                  |       |
| Borrowings under our senior secured credit facility:                                                                                                                                                                                                                          |       |               |          |                  |       |
| Term Loan C, variable rate, 7.33% at March 31, 2007 and  7.37% at December 30, 2006, with semi-annual principal and interest payments  through October 1, 2011                                                                                                                |       | 716,500            |          | 716,500               |       |
| Senior subordinated notes, 7.625% fixed rate, with semi-annual  interest payments of $19.1 million, principal due and payable at maturity -  October 2012                                                                                                                     |       | 500,000            |          | 500,000               |       |
|                                                                                                                                                                                                                                                                          | ** ** | **1,775,841**      | ** **    | **1,770,657**         | ** ** |
| Less current portion                                                                                                                                                                                                                                                          |       | —             |          | —                |       |
| ** **                                                                                                                                                                                                                                                                    | ** ** | **$**              | **1,775,841** | ** **            | **$**      | **1,770,657** | ** ** |

 

In connection with the Transactions, Visant entered intosenior secured credit facilities, providing for an aggregate amount of $1,270million, including a $250 million revolving credit facility, and issued $500 million aggregate principalamount of 7.625% senior subordinated notes.  Also in connection with the Transactions, Jostens, Von Hoffmann andArcade repaid their existing indebtedness having an aggregate face value of$1,392.6 million, including the redemption value of certain remainingredeemable preferred stock.

Visant’sobligations under the senior secured credit facilities are unconditionally andirrevocably guaranteed jointly and severally by Visant Secondary HoldingsCorp., a direct wholly-owned subsidiary of Holdings and the direct parent ofVisant, and by Visant’s material current and future domestic subsidiaries.  The obligations of Visant’s principalCanadian operating subsidiary under the senior secured credit facilities areunconditionally and irrevocably guaranteed jointly and severally by VisantSecondary Holdings Corp., Visant, Visant’s material current and future domesticsubsidiaries and Visant’s other current and future Canadian subsidiaries.  Visant’s obligations under the senior securedcredit facilities, and the guarantees of those obligations, are secured bysubstantially all of Visant’s assets and substantially all of the assets ofVisant Secondary Holdings Corp. and Visant’s material current and futuredomestic subsidiaries, including but not limited to:

·            all ofVisant’s capital stock and the capital stock of each of Visant’s existing andfuture direct and indirect subsidiaries, except that with respect to foreignsubsidiaries such lien and pledge is limited to 65% of the capital stock of “first-tier”foreign subsidiaries; and

·            substantiallyall of Visant’s material existing and future domestic subsidiaries’ tangibleand intangible assets.

The obligations ofJostens Canada Ltd. under the senior secured credit facilities, and theguarantees of those obligations, are secured by the collateral referred to inthe prior paragraph and substantially all of the tangible and intangible assetsof Jostens Canada Ltd. and each of Visant’s other current and future Canadiansubsidiaries.

Amounts borrowed under the term loan facilitiesthat are repaid or prepaid may not be reborrowed.  Visant’s senior secured facilities allow us,subject to certain conditions, to incur additional term loans under the termloan C facility, or under a new term facility, in either case in an aggregateprincipal amount of up to $300 million, which additional term loans will have thesame security and guarantees as the term C loan facility.

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The senior secured credit facilities require Visant tomeet a maximum total leverage ratio, a minimum interest coverage ratio and amaximum capital expenditures limitation. In addition, the senior secured credit facilities contain certainrestrictive covenants which will, among other things, limit Visant’s and itssubsidiaries’ ability to incur additional indebtedness, pay dividends, prepaysubordinated debt, make investments, merge or consolidate, change the business,amend the terms of Visant’s subordinated debt and engage in certain otheractivities customarily restricted in such agreements.  It also contains certain customary events ofdefault, subject to grace periods, as appropriate.

The dividendrestrictions under the Visant senior secured credit facilities apply only toVisant and Visant Secondary Holdings Corp., and essentially prohibit alldividends other than (1) for dividends paid on or after April 30, 2009 and usedby Holdings to make regularly-scheduled cash interest payments on its seniordiscount notes, subject to compliance with the interest coverage covenant aftergiving effect to such dividends, (2) for other dividends so long as the amountthereof does not exceed $50 million plus an additional amount based on Visant’snet income and the amount of any capital contributions received by Visant afterOctober 4, 2004, and (3) pursuant to other customary exceptions, includingredemptions of stock made with other, substantially similar stock or withproceeds of concurrent issuances of substantially similar stock.

The indentures governingVisant’s senior subordinated notes and Holdings’ senior discount notes andsenior notes also contain numerous covenants including, among other things, restrictionson the ability to:  incur or guaranteeadditional indebtedness or issue disqualified or preferred stock; pay dividendsor make other equity distributions; repurchase or redeem capital stock; makeinvestments or other restricted payments; sell assets or consolidate or mergewith or into other companies; create limitations on the ability of restrictedsubsidiaries to make dividends or distributions to its parent company; engagein transactions with affiliates; and create liens.

Visant’s senior subordinated notes areguaranteed, jointly and severally, on a senior subordinated unsecured basis, byeach of Visant’s material current and future domestic subsidiaries. Theindenture governing Visant’s senior subordinated notes restricts Visant and itsrestricted subsidiaries from paying dividends or making any other distributionson account of Visant’s or any restricted subsidiary’s equity interests(including any dividend or distribution payable in connection with any mergeror consolidation) other than (1) dividends or distributions by Visant payablein equity interests of Visant or in options, warrants or other rights topurchase equity interests or (2) dividends or distributions by a restrictedsubsidiary, subject to certain exceptions.

The indentures governingHoldings’ senior discount notes and senior notes restrict Holdings and itsrestricted subsidiaries from declaring or paying dividends or making any otherdistribution (including any payment by Holdings or any restricted subsidiary ofHoldings in connection with any merger or consolidation involving Holdings orany of its restricted subsidiaries) on account of Holdings’ or any of itsrestricted subsidiaries’ equity interests (other than dividends ordistributions payable in certain equity interests and dividends payable toHoldings or any restricted subsidiary of Holdings), subject to certainexceptions.

Visant’s senior securedcredit facilities and the Visant and Holdings notes contain certaincross-default and cross-acceleration provisions whereby a default under oracceleration of other debt obligations would cause a default under oracceleration of the senior secured credit facilities and the notes.

A failure tocomply with the covenants under the senior secured credit facilities, subjectto certain grace periods, would constitute a default under the senior securedcredit facilities, which could result in an acceleration of the loans and otherobligations owing thereunder.  As ofMarch 31, 2007, the Company was in compliance with all covenants under itsmaterial debt obligations.

As of March 31, 2007,there was $16.4 million outstanding in the form of letters of credit, leaving$233.6 million available under the Visant $250 million revolving creditfacility.

**11.   Derivative Financial Instruments and HedgingActivities**

The Company may enter into or purchase derivative financial instrumentsprincipally to manage interest rate, foreign currency exchange, and commoditiesexposures.  Forward foreign currencyexchange contracts may be used to hedge the impact of currency fluctuationsprimarily on inventory purchases denominated in Euros.  At March 31, 2007, there were no contractsrelated to these activities outstanding.

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**12.    Commitments and Contingencies**

***Forward Purchase Contracts***

The Company is subject to market risk associated withchanges in the price of precious metals. To mitigate the commodity price risk,the Company may from time to time enter into forward contracts to purchasegold, platinum and silver based upon the estimated ounces needed to satisfyprojected customer demand. The purchase commitment at March 31, 2007 was $4.1million with delivery dates occurring throughout 2007.  These forward purchase contracts areconsidered normal purchases and therefore not subject to the requirements ofSFAS No. 133, *Accounting for Derivatives and HedgingActivities*. The fair market value of the open precious metal forwardcontracts at March 31, 2007 was $4.7 million based on quoted futures prices foreach contract.

***Environmental***

Our operations aresubject to a wide variety of federal, state, local and foreign laws andregulations governing emissions to air, discharges to water, the generation,handling, storage, transportation, treatment and disposal of hazardoussubstances and other materials, and employee health and safety matters.  Compliance with such laws and regulations hasbecome more stringent and, accordingly, more costly over time.

Also, as an owner andoperator of real property or a generator of hazardous substances, we may besubject to environmental cleanup liability, regardless of fault, pursuant tothe Comprehensive Environmental Response, Compensation and Liability Act oranalogous state laws, as well as to claims for harm to health or property orfor natural resource damages arising out of contamination or exposure tohazardous substances.  Some of ourcurrent or past operations have involved metalworking and plating, printing,and other activities that have resulted in environmental conditions that havegiven rise to liabilities.

As part of ourenvironmental management program, we have been involved in environmentalremediation on a property formerly owned and operated by Jostens for jewelrymanufacturing.  Although Jostens nolonger owns the site, Jostens managed the remediation project, which began in2000.  As of March 31, 2007, Jostens hadmade payments totaling $8.1 million for remediation at this site.  During 2001, Jostens received reimbursementfrom its insurance carrier in the amount of $2.7 million, net of legalcosts.  In July 2006, the State ofIllinois Environmental Protection Agency issued a “No Further Remediation”letter with respect to this site. Jostens has certain ongoing monitoring obligations.  We do not expect the cost of such ongoingmonitoring to be material.

While Jostens may have anadditional right of contribution or reimbursement under insurance policies,amounts recoverable from other entities with respect to a particular site are notconsidered until recoveries are deemed probable.

***LegalProceedings***

In communications withU.S. Customs and Border Protection (“Customs”), we learned of an allegedinaccuracy of the tariff classification for certain of Jostens’ imports fromMexico.  Jostens promptly filed withCustoms a voluntary disclosure to limit its monetary exposure.  The effect of these tariff classificationerrors is that back duties and fees (or “loss of revenue”) may be owed oncertain imports.  Additionally, Customsmay impose interest on the loss of revenue, if any is determined.  A review of Jostens’ import practices hasrevealed that during the relevant period, Jostens’ merchandise qualified forduty-free tariff treatment under the North American Free Trade Agreement (“NAFTA”),in which case there should be no loss of revenue or interest payment owed toCustoms. However, Customs’ allegations indicate that Jostens committed atechnical oversight in claiming the preferential tariff treatment.  Through its prior disclosure to Customs,Jostens addressed this technical oversight and asserted that the merchandisedid in fact qualify for duty-free tariff treatment under NAFTA and that thereis no associated loss of revenue.  In aseries of communications received from Customs in December 2006, Jostensreceived a pre-penalty notice that Customs is disputing the validity of Jostens’prior disclosure and asserting a loss of revenue in the amount of $2.9 millionfor duties owed on entries made in 2002 and 2003 and in a separate communicationwas advised that Customs is contemplating a monetary penalty in the amount ofapproximately $5.8 million (two times the alleged loss of revenue).  In order to obtain the benefits of theorderly continuation and conclusion of administrative proceedings, Jostensagreed to a two year waiver of the statute of limitations with respect to theentries made in 2002 and 2003 that otherwise would have expired at the end of2007 and 2008, respectively.  Jostens haselected to continue to address this matter by filing a petition in response tothe pre-penalty notice.  This petitionwas filed in January 2007 disputing Customs’ claims and advancing its argumentsto support that no loss of revenue or penalty should be issued against theCompany, or in the alternative, that any penalty based on a purely technicalviolation should be reduced to a nominal fixed amount reflective of the natureof the violation.  The penalty proceedingis in the early stages, and it is not clear what Customs’ final position willbe with respect to the alleged tariff classification errors or that Jostenswill not be foreclosed under statute from making post-entry NAFTA claims forthe subject imports.  Jostens intends tocontinue to vigorously defend its position and has recorded no accrual for anypotential liability.  However, Jostensmay not be successful in its defense, and the disposition of this matter mayhave a material effect on our business, financial condition and results ofoperations.

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We are also aparty to other litigation arising in the normal course of business. Weregularly analyze current information and, as necessary, provide accruals forprobable liabilities on the eventual disposition of these matters. We do notbelieve the effect on our business, financial condition and results ofoperations, if any, for the disposition of these matters will be material.

**13.    Income Taxes**

The Company hasrecorded an income tax benefit for the first quarter of 2007 based on its bestestimate of the consolidated effective tax rate applicable for the entireyear.  The estimated full-yearconsolidated effective tax rates were 36.8% and 36.6% for Holdings and Visant,respectively, before consideration of the effect of $0.2 million of interestaccruals on unrecognized tax benefits. The combined effect of the annual estimated consolidated tax rates andthe provision for interest on unrecognized tax benefits resulted in effectivetax rates for the quarter of 35.3% and 21.0% for Holdings and Visant,respectively.  The annual estimatedeffective tax rates for 2007 were favorably affected by an increase in the rateof deduction for the domestic manufacturing deduction.

For the comparablethree-month period ended April 1, 2006, the effective rates of income taxbenefit for Holdings and Visant were 48.2% and 58.2%, respectively.  These rates reflect the favorable effect ofthe reduction of the deferred tax valuation allowance by $0.6 million duringthe 2005 first quarter because the Company estimated that a portion of the taxbenefit attributable to capital loss carryforwards would be realized as aresult of anticipated property dispositions during 2006.

In June 2006, theFASB issued FIN 48 that requires application of a “more-likely-than-not”threshold to the financial statement recognition and derecognition of taxpositions taken by the Company on its income tax filings.  Using the more-likely-than-not standard undercurrent tax law, FIN 48 requires that tax benefit recognition be adjusted toreflect the largest amount of benefit that is greater than 50% likely of beingrealized upon ultimate settlement.

In connection withthe adoption of FIN 48, the Company made a change in accounting principle forthe classification of interest income on tax refunds and tax-related interestexpense and penalties.  Under theprevious policy the Company recorded interest income on tax refunds as interestincome.  Under the new policy anyinterest income in connection with income tax refunds will be recorded as areduction of income tax expense. In addition, the Company’s previous accountingpolicy was to report tax-related interest expense and penalties either asincome tax expense in the case of uncertain tax positions or as interestexpense in the case of routine tax assessments. Upon adoption of FIN 48, all interest and penalties on income taxassessments will be recorded as income tax expense and included as part of theCompany’s unrecognized tax benefit liability.

The unrecognizedtax benefit liability at December 31, 2006, the date of adoption of FIN 48, was$12.4 million including $1.9 million of gross interest and penaltyaccruals.  In connection with theadoption, the Company recorded a $1.4 million increase to beginning retainedearnings and a $2.3 million decrease to goodwill, with a correspondingreduction of $3.7 million in the existing reserve balance for uncertain taxpositions.  These adjustments wererequired to adjust from the Company’s previous method of accounting for incometax loss contingencies under SFAS No. 5 to the method prescribed under FIN48.  The adjustment to goodwill relatesto a pre-acquisition tax uncertainty in connection with the Jostens mergertransaction in July 2003.  As of January1, 2007, the date of adoption of FIN 48, the amount of the Company’sunrecognized tax benefits that, if recognized, would affect the effective taxrate was $6.1 million excluding gross interest and penalty accruals of $1.9million.  During the quarter ended March31, 2007, there were no material changes to the unrecognized tax benefitliability recorded at the time FIN 48 was adopted.

As of the date ofadoption of FIN 48, the Company’s income tax filings for 2003 to 2006 aresubject to examination in the U.S federal tax jurisdiction.  The Internal Revenue Service is examining twopre-acquisition tax filings for one of the Company’s subsidiaries for periodsin 2004.  The Company is also subject toexamination in state and foreign tax jurisdictions for periods 2002 to 2006,none of which was individually material. The Company has filed appeals for a Canadian federal examination of taxyears 1996 and 1997.  Though subject touncertainty, the Company believes it has made appropriate provisions for alloutstanding issues for all open years and all jurisdictions.  During the next twelve months it is possiblethat the unrecognized tax benefit liability could decrease by approximately$4.4 million if the 2003 tax year is not examined.  The tax uncertainty relates to apre-acquisition tax period and any such adjustment would decrease goodwill.

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**14.  ** **Pension and Other PostretirementBenefit Plans**

Net periodic benefit cost for pension and otherpostretirement benefit plans is presented below:
|                                          | ** ** | **Pension benefits**        | ** ** | **Postretirement benefits** | ** ** |
|------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                               | ** ** | **Three months ended** | ** ** | **Three months ended** | ** ** |
| ** **                               | ** ** | **March 31,**               | ** ** | **April 1,**                | ** ** | **March 31,** | ** ** | **April 1,** | ** ** |
| **In thousands**                    | ** ** | **2007**                         | ** ** | **2006**                         | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service cost                             |       | $                                | 1,602      |                             | $          | 1,651 |   | $ | 3 |   | $ | 5 |   |
| Interest cost                            |       | 3,903                            |       | 3,747                            |       | 38 |   | 49 |   |
| Expected return  on plan assets          |       | (6,044                           | )          | (5,653                           | )          | — |   | — |   |
| Amortization of  prior year service cost |       | (199                             | )          | (120                             | )          | (69 | ) | (70 | ) |
| Amortization of  net actuarial loss      |       | —                           |       | 1                                |       | 9 |   | 24 |   |
| Net periodic benefit  income expense     | ** ** | **$**                            | **(738**   | **)**                            | **$**      | **(374** | **)** | **$** | **(19** | **)** | **$** | **8** | ** ** |

 

Asof December 31, 2006, the Company did not expect to contribute to its qualifiedpension plans in 2007 due to the funded status of the plans. This estimate hasnot changed as of March 31, 2007. For the three months ended March 31, 2007,the Company did not make any contributions to the qualified pension plans andcontributed $0.5 million and $0.1 million to its nonqualified pension plans andpostretirement welfare plans, respectively. These payments to the nonqualified and postretirement welfare plans areconsistent with the expected amounts disclosed as of December 31, 2006.

**15.  Stock-based Compensation**

The 2003 Stock IncentivePlan (the “2003 Plan”) was approved by the Board of Directors and effective asof October 30, 2003. The 2003 Plan permits us to grant key employees andcertain other persons stock options and stock awards and provides for a totalof 288,023 shares of common stock for issuance of options and awards toemployees of the Company and a total of 10,000 shares of common stock forissuance of options and awards to directors and other persons providingservices to the Company. The maximum grant to any one person shall not exceedin the aggregate 70,400 shares.  We donot currently intend to make any additional grants under the 2003 Plan.  Option grants consist of “time options”,which vest and become exercisable in annual installments over the first fiveyears following the date of grant and/or “performance options”, which vest andbecome exercisable over the first five years following the date of grant atvarying levels based on the achievement of certain EBITDA targets, and in anyevent by the eighth anniversary of the date of grant.  The performance vesting includes certaincarryforward provisions if targets are not achieved in a particular fiscal yearand performance in a subsequent fiscal year satisfies cumulative performancetargets, subject to certain conditions. Upon the occurrence of a “change incontrol” (as defined in the 2003 Plan), the unvested portion of any time optionwill immediately become vested and exercisable, and the vesting andexercisability of the unvested portion of any performance option may acceleratedepending on the timing of the change of control and return on the equityinvestment by DLJMBP III in the Company as provided under the 2003 Plan.  A “change in control” under the 2003 Plan isdefined as: (i) any person or other entity (other than any of Holdings’subsidiaries), including any “person” as defined in Section 13(d)(3) of theExchange Act, other than certain of the DLJMBP Funds or affiliated partiesthereof becoming the beneficial owner, directly or indirectly, in a singletransaction or a series of related transactions, by way of merger,consolidation or other business combination, securities of Holdingsrepresenting more than 51% of the total combined voting power of all classes ofcapital stock of Holdings (or its successor) normally entitled to vote for theelection of directors of Holdings or (ii) the sale of all or substantially allof the property or assets of Holdings to any unaffiliated person or entityother than one of Holdings’ subsidiaries is consummated.  The Transactions did not constitute a changeof control under the 2003 Plan. Options issued under the 2003 Plan expire onthe tenth anniversary of the grant date. The shares underlying the options aresubject to certain transfer and other restrictions set forth in that certainStockholders Agreement dated July 29, 2003, by and among the Company andcertain holders of the capital stock of the Company. Participants under the2003 Plan also agree to certain restrictive covenants with respect toconfidential information of the Company and non-competition in connection withtheir receipt of options.

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All outstanding optionsto purchase Holdings common stock continued following the closing of theTransactions. In connection with the Transactions, all outstanding options topurchase Von Hoffmann and Arcade common stock were cancelled and extinguished.Consideration paid in respect of the Von Hoffmann options was an amount equalto the difference between the per share merger consideration in theTransactions and the exercise price therefor. No consideration was paid inrespect of the Arcade options.

In connection with the closing of the Transactions, weestablished the 2004 Stock Option Plan, which permits us to grant key employeesand certain other persons of the Company and its subsidiaries variousequity-based awards, including stock options and restricted stock. The plan,currently known as the Third Amended and Restated 2004 Stock Option Plan forKey Employees of Visant Holding Corp. and Subsidiaries (the “2004 Plan”),provides for issuance of a total of 510,230 shares of Holdings Class ACommon Stock. As of March 31, 2007 there were 58,559 shares available for grantunder the 2004 Plan.  Shares related togrants that are forfeited, terminated, cancelled or expire unexercised becomeavailable for new grants. Under his employment agreement, Mr. Marc L.Reisch, the Chairman of our Board of Directors and our Chief Executive Officerand President, received awards of stock options and restricted stock under the2004 Plan. Additional members of management have also received grants under the2004 Plan. Option grants consist of “time options”, which vest and becomeexercisable in annual installments through 2009, and/or “performance options”,which vest and become exercisable following the date of grant based upon theachievement of certain EBITDA and other performance targets, and in any eventby the eighth anniversary of the date of grant. The performance vesting includes certain carryforward provisions iftargets are not achieved in a particular fiscal year and performance in asubsequent fiscal year satisfies cumulative performance targets. Upon theoccurrence of a “change in control” (as defined under the 2004 Plan), theunvested portion of any time option will immediately become vested andexercisable, and the vesting and exercisability of the unvested portion of anyperformance option may accelerate if certain EBITDA or other performancemeasures have been satisfied. A “change in control” under the 2004 Plan isdefined as: (i) the sale (in one or a series of transactions) of all orsubstantially all of the assets of Holdings to an unaffiliated person; (ii) asale (in one transaction or a series of transactions) resulting in more than50% of the voting stock of Holdings being held by an unaffiliated person; (iii)a merger, consolidation, recapitalization or reorganization of Holdings with orinto an unaffiliated person; if and only if any such event listed in (i)through (iii) above results in the inability of the Sponsors, or any member ofmembers of the Sponsors, to designate or elect a majority of the Board (or theboard of directors of the resulting entity or its parent company). The optionexercise period is determined at the time of grant of the option but may notextend beyond the end of the calendar year that is ten calendar years after thedate of the option is granted.  Alloptions, restricted shares and any common stock for which such equity awardsare exercised or with respect to which restrictions lapse are governed by a managementstockholders’ agreement and sale participation agreement.  As of March 31, 2007, there were 170,763options vested under the 2004 Plan and 167,269 unvested and subject to vesting.

Effective January 1, 2006, the Company adopted SFASNo. 123R, which requires the recognition of compensation expense related to allequity awards based on the fair values of the awards at the grant date.  Prior to the adoption of SFAS No. 123R, theCompany used the minimum value method in its SFAS No. 123 pro forma disclosureand therefore applied the prospective transition method as of the effectivedate.  Under the prospective transitionmethod, the Company would recognize compensation expense for equity awardsgranted, modified and canceled subsequent to the date of adoption.

On April 4, 2006,the Company declared and paid a special cash dividend of $57.03 per share tothe common stockholders of Holdings.  Inconnection with the special cash dividend, on April 4, 2006, the exerciseprices of issued and outstanding options as of April 4, 2006 under the 2003Plan and the 2004 Plan were reduced by an amount equal to the dividend.  The 2003 and 2004 Plans and underlying stockoption agreements contain provisions that provide for anti-dilutive protectionin the case of certain extraordinary corporate transactions, such as thespecial dividend, and the incremental compensation cost, defined as thedifference in the fair value of the modified award immediately before and afterthe modification, was calculated as zero. As a result of the above modification, all stock option awardspreviously accounted for under APB No. 25 will be prospectively accounted forunder SFAS No. 123R.  Accordingly, noincremental compensation cost was recognized as a result of the modification.

For each of thethree month periods ended March 31, 2007 and April 1, 2006, the Companyrecognized total compensation expense related to stock options of $0.1 million,which is included in selling, general and administrative expenses.  For the period ended March 31, 2007, nooptions were granted, exercised or vested.

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The followingtable summarizes stock option activity for Holdings:

|                                               | ** ** | ** ** | ** ** | **Weighted -**     | ** ** |
|-----------------------------------------------|------------|------------|------------|-------------------------|------------|
| ** **                                    | ** ** | ** ** | ** ** | **average**             | ** ** |
| **Shares in thousands**             | ** ** | **Shares** | ** ** | **exercise price** | ** ** |
| Outstanding at  December 30, 2006             |       | 397        |       | $                       | 41.21      | * |
| Granted                                       |       | —     |       | $                       | —     |   |
| Forfeited                                     |       | (2         | )          | $                       | 73.79      |   |
| Cancelled                                     |       | (2         | )          | $                       | 43.73      |   |
| Outstanding at  March 31, 2007                |       | 393        |       | $                       | 41.01      |   |
| Vested or  expected to vest at March 31, 2007 |       | 393        |       | $                       | 41.01      |   |
| Exercisable at March  31, 2007                |       | 224        |       | $                       | 37.93      |   |

 

----

* Weighted average exercise price at December 30, 2006 has beenadjusted to reflect the special dividend declared in April 2006.

The weighted average remaining contractual life ofoutstanding options at March 31, 2007 was approximately 8.2 years.

**16.   Business Segments**

As of December2006, the Von Hoffmann businesses were held as assets for sale.  On January 3, 2007, the Company entered intothe Von Hoffmann Stock Purchase Agreement with R.R. Donnelley & SonsCompany providing for the sale of the Von Hoffmann businesses, which previouslycomprised the Educational Textbook segment and a portion of the Marketing andPublishing Services segment.  Theregulatory review of the proposed transaction through a second request by theFederal Trade Commission has been completed and we expect to close thetransaction on or about May 16, 2007. The operations of the Von Hoffmann businesses are reported asdiscontinued operations in the consolidated financial statements for allperiods presented. (see Note 6 ).

As described inNote 5, on March 16, 2007, the Company acquired all of the outstanding capitalstock of Neff Holding Company and its wholly owned subsidiary Neff Motivation,Inc. Neff is a leading single source provider of custom award programs andapparel, including chenille letters and letter jackets, to the scholasticmarket segment.  Neff operates as adirect subsidiary of Visant under the Neff brand name and its results arereported as part of the Scholastic segment.

As a result of theforegoing, our three reportable segments as of March 31, 2007 consist of:

·       *Scholastic—*providesservices related to the marketing, sale and production of class rings and anarray of graduation products and other scholastic products to students andadministrators primarily in high schools, colleges, and other post-secondaryinstitutions;

·       *Yearbook—*providesservices related to the publication, marketing, sale and production of schoolyearbooks; and

·       *Marketingand Publishing Services—*produces multi-sensory and interactiveadvertising sampling systems, primarily for the fragrance, cosmetics andpersonal care market segments, and provides innovative products and services tothe direct marketing sector. The group also produces book covers and othercomponents for educational publishers.

21

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The following table presents information of Holdingsby business segment:
|                                      | ** **   | **Three months ended** | ** **   |
|--------------------------------------|--------------|----------------------------------|--------------|
| ** **                           | ** **   | **March 31,**               | ** **   | **April 1,** | ** ** |
| **In thousands**                | ** **   | **2007**                         | ** **   | **2006** | ** ** |
| ***Net  sales***                     | *** *** | *** ***                     | *** *** | *** *** | *** *** |
| Scholastic                           |         | $                                | 140,305      |   | $ | 134,383 |   |
| Yearbook                             |         | 7,851                            |         | 8,295 |   |
| Marketing and  Publishing Services   |         | 108,051                          |         | 85,360 |   |
| Inter-segment  eliminations          |         | (357                             | )            | (52 | ) |
| ** **                           | ** **   | **$**                            | **255,850**  | ** ** | **$** | **227,986** | ** ** |
| ** **                           | ** **   | ** **                       | ** **   | ** ** | ** ** |
| ***Operating  income***              | *** *** | *** ***                     | *** *** | *** *** | *** *** |
| Scholastic                           |         | $                                | 22,492       |   | $ | 20,053 |   |
| Yearbook                             |         | (17,119                          | )            | (14,011 | ) |
| Marketing and  Publishing Services   |         | 18,274                           |         | 16,492 |   |
| ** **                           | ** **   | **$**                            | **23,647**   | ** ** | **$** | **22,534** | ** ** |
| ** **                           | ** **   | ** **                       | ** **   | ** ** | ** ** |
| ***Depreciation  and Amortization*** | *** *** | *** ***                     | *** *** | *** *** | *** *** |
| Scholastic                           |         | $                                | 6,920        |   | $ | 7,299 |   |
| Yearbook                             |         | 8,477                            |         | 8,559 |   |
| Marketing and  Publishing Services   |         | 5,463                            |         | 4,482 |   |
| ** **                           | ** **   | **$**                            | **20,860**   | ** ** | **$** | **20,340** | ** ** |

 

**17.    Related Party Transactions**

***ManagementServices Agreement***

In connection with theTransactions, we entered into a management services agreement with the Sponsorspursuant to which the Sponsors provide certain structuring, consulting andmanagement advisory services to us. Under the Agreement, during the term the Sponsorsreceive an annual advisory fee of $3.0 million, that is payable quarterly andwhich increases by 3% per year.  We paid$0.8 million as advisory fees to the Sponsors for the three months ended March31, 2007 and April 1, 2006, respectively. The management services agreement also provides that we will indemnifythe Sponsors and their affiliates, directors, officers and representatives forlosses relating to the services contemplated by the management servicesagreement and the engagement of the Sponsors pursuant to, and the performanceby the Sponsors of the services contemplated by, the management servicesagreement.

**18.    Condensed Consolidating GuarantorInformation**

As discussed inNote 10, *Long-Term Debt*, Visant’s obligationsunder the senior secured credit facilities and the 7.625% senior subordinatednotes are guaranteed by certain of its 100% wholly-owned subsidiaries on afull, unconditional and joint and several basis.  The following tables present condensedconsolidating financial information for Visant, as issuer, and its guarantorand non-guarantor subsidiaries.

22

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**CONDENSEDCONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)**

**Threemonths ended March 31, 2007**
| ** **                                 | ** ** | ** ** | ** **  | ** **     | ** ** | **Non-**       | ** ** | ** **       | ** ** | ** ** | ** ** |
|--------------------------------------------|------------|------------|-------------|----------------|------------|----------------|------------|------------------|------------|------------|------------|
| ** **                                 | ** ** | **Visant** | ** **  | **Guarantors** | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**  | ** ** |
| **Net  sales**                             | ** ** | **$**      | **—**  | ** **     | **$**      | **252,288**    | ** ** | **$**            | **10,365** | ** ** | **$**      | **(6,803** | **)** | **$** | **255,850** | ** ** |
| Cost of products  sold                     |       | (2,234     | )           | 130,585        |       | 6,333          |       | (6,614           | )          | 128,070    |       |
| Gross profit                               |       | 2,234      |        | 121,703        |       | 4,032          |       | (189             | )          | 127,780    |       |
| Selling and  administrative expenses       |       | (219       | )           | 100,762        |       | 3,014          |       | —           |       | 103,557    |       |
| Loss on sale of  assets                    |       | —     |        | 391            |       | —         |       | —           |       | 391        |       |
| **Operating  income**                      | ** ** | **2,453**  | ** **  | **20,550**     | ** ** | **1,018**      | ** ** | **(189**         | **)**      | **23,832** | ** ** |
| Net interest  expense                      |       | 25,888     |        | 25,404         |       | 16             |       | (26,073          | )          | 25,235     |       |
| Equity earnings  in subsidiary, net of tax |       | (5,651     | )           | (649           | )          | —         |       | 6,300            |       | —     |       |
| (Loss) income  before income taxes         |       | (17,784    | )           | (4,205         | )          | 1,002          |       | 19,584           |       | (1,403     | )          |
| Provision for  (benefit from) income taxes |       | 910        |        | (1,483         | )          | 353            |       | (74              | )          | (294       | )          |
| (Loss) income  from continuing operations  |       | (18,694    | )           | (2,722         | )          | 649            |       | 19,658           |       | (1,109     | )          |
| Income from  discontinued operations, net  |       | —     |        | 8,373          |       | —         |       | —           |       | 8,373      |       |
| **Net (loss) income**                      | ** ** | **$**      | **(18,694** | **)**          | **$**      | **5,651**      | ** ** | **$**            | **649**    | ** ** | **$**      | **19,658** | ** ** | **$** | **7,264** | ** ** |

 

**CONDENSEDCONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)**

**Threemonths ended April 1, 2006**
| ** **                                 | ** ** | ** ** | ** **  | ** **     | ** ** | **Non-**       | ** ** | ** **       | ** ** | ** ** | ** ** |
|--------------------------------------------|------------|------------|-------------|----------------|------------|----------------|------------|------------------|------------|------------|------------|
| ** **                                 | ** ** | **Visant** | ** **  | **Guarantors** | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**  | ** ** |
| **Net  sales**                             | ** ** | **$**      | **—**  | ** **     | **$**      | **222,582**    | ** ** | **$**            | **8,954**  | ** ** | **$**      | **(3,550** | **)** | **$** | **227,986** | ** ** |
| Cost of products  sold                     |       | (1,122     | )           | 109,947        |       | 5,556          |       | (3,593           | )          | 110,788    |       |
| Gross profit                               |       | 1,122      |        | 112,635        |       | 3,398          |       | 43               |       | 117,198    |       |
| Selling and  administrative expenses       |       | (933       | )           | 89,374         |       | 3,425          |       | —           |       | 91,866     |       |
| Loss (gain) on  sale of assets             |       | 5          |        | (34            | )          | 4              |       | —           |       | (25        | )          |
| Special charges                            |       | —     |        | 2,744          |       | —         |       | —           |       | 2,744      |       |
| **Operating  income (loss)**               | ** ** | **2,050**  | ** **  | **20,551**     | ** ** | **(31**        | **)**      | **43**           | ** ** | **22,613** | ** ** |
| Net interest  expense                      |       | 24,621     |        | 27,820         |       | 190            |       | (26,461          | )          | 26,170     |       |
| Equity loss in  subsidiary, net of tax     |       | 1,189      |        | 18             |       | —         |       | (1,207           | )          | —     |       |
| Loss before  income taxes                  |       | (23,760    | )           | (7,287         | )          | (221           | )          | 27,711           |       | (3,557     | )          |
| Provision for  (benefit from) income taxes |       | 972        |        | (3,017         | )          | (42            | )          | 17               |       | (2,070     | )          |
| Loss from  continuing operations           |       | (24,732    | )           | (4,270         | )          | (179           | )          | 27,694           |       | (1,487     | )          |
| Income from  discontinued operations, net  |       | —     |        | 3,081          |       | 161            |       | —           |       | 3,242      |       |
| **Net (loss) income**                      | ** ** | **$**      | **(24,732** | **)**          | **$**      | **(1,189**     | **)**      | **$**            | **(18**    | **)**      | **$**      | **27,694** | ** ** | **$** | **1,755** | ** ** |

 

23

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**CONDENSEDCONSOLIDATING BALANCE SHEET (UNAUDITED)**

**March31, 2007**
| ** **                                        | ** ** | ** **    | ** **    | ** **     | ** ** | **Non-**       | ** ** | ** **       | ** ** | ** **    | ** ** |
|---------------------------------------------------|------------|---------------|---------------|----------------|------------|----------------|------------|------------------|------------|---------------|------------|
| ** **                                        | ** ** | **Visant**    | ** **    | **Guarantors** | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**     | ** ** |
| **ASSETS**                                        | ** ** | ** **    | ** **    | ** **     | ** ** | ** **     | ** ** | ** **       | ** ** | ** **    | ** ** |
| Cash and cash  equivalents                        |       | $             | 1,073         |           | $          | 3,529          |       | $                | 11,400     |          | $          | — |   | $ | 16,002 |   |
| Accounts  receivable, net                         |       | 1,423         |          | 126,224        |       | 10,402         |       | —           |       | 138,049       |       |
| Inventories, net                                  |       | —        |          | 136,735        |       | 2,771          |       | (377             | )          | 139,129       |       |
| Salespersons  overdrafts, net                     |       | —        |          | 26,830         |       | 1,266          |       | —           |       | 28,096        |       |
| Prepaid expenses  and other current assets        |       | 2,305         |          | 20,593         |       | 1,248          |       | 215              |       | 24,361        |       |
| Income tax  receivable                            |       | —        |          | 746            |       | —         |       | —           |       | 746           |       |
| Intercompany  receivable (payable)                |       | 21,065        |          | 15,278         |       | —         |       | (36,343          | )          | —        |       |
| Deferred income  taxes                            |       | (943          | )             | 13,198         |       | 75             |       | —           |       | 12,330        |       |
| Current assets  of discontinued operations        |       | —        |          | 65,213         |       | —         |       | —           |       | 65,213        |       |
| **Total current assets**                          | ** ** | **24,923**    | ** **    | **408,346**    | ** ** | **27,162**     | ** ** | **(36,505**      | **)**      | **423,926**   | ** ** |
| Property, plant,  and equipment, net              |       | 1,221         |          | 166,836        |       | 106            |       | —           |       | 168,163       |       |
| Goodwill                                          |       | —        |          | 902,383        |       | 21,987         |       | —           |       | 924,370       |       |
| Intangibles, net                                  |       | —        |          | 524,426        |       | 9,868          |       | —           |       | 534,294       |       |
| Deferred  financing costs, net                    |       | 33,711        |          | —         |       | —         |       | —           |       | 33,711        |       |
| Intercompany  receivable (payable)                |       | 1,236,403     |          | 143,745        |       | 301            |       | (1,380,449       | )          | —        |       |
| Other assets                                      |       | 40            |          | 13,276         |       | 358            |       | —           |       | 13,674        |       |
| Investment in  subsidiaries                       |       | 496,246       |          | 73,170         |       | —         |       | (569,416         | )          | —        |       |
| Long-term assets  of discontinued operations      |       | —        |          | 268,931        |       | —         |       | —           |       | 268,931       |       |
| ** **                                        | ** ** | **$**         | **1,792,544** | ** **     | **$**      | **2,501,113**  | ** ** | **$**            | **59,782** | ** **    | **$**      | **(1,986,370** | **)** | **$** | **2,367,069** | ** ** |
|                                              |       |          |          |           |       |           |       |             |       |          |       |
| **LIABILITIES  AND STOCKHOLDER’S EQUITY**    | ** ** | ** **    | ** **    | ** **     | ** ** | ** **     | ** ** | ** **       | ** ** | ** **    | ** ** |
| Accounts payable                                  |       | $             | 3,705         |           | $          | 44,632         |       | $                | 5,946      |          | $          | — |   | $ | 54,283 |   |
| Accrued employee  compensation                    |       | 4,189         |          | 25,710         |       | 2,718          |       | —           |       | 32,617        |       |
| Commissions  payable                              |       | —        |          | 30,892         |       | 861            |       | —           |       | 31,753        |       |
| Customer  deposits                                |       | —        |          | 213,789        |       | 5,823          |       | —           |       | 219,612       |       |
| Income taxes  payable                             |       | 1,069         |          | 3,317          |       | 191            |       | (147             | )          | 4,430         |       |
| Interest payable                                  |       | 19,367        |          | 675            |       | 8              |       | —           |       | 20,050        |       |
| Intercompany  payable (receivable)                |       | —        |          | 36,128         |       | —         |       | (36,128          | )          | —        |       |
| Other accrued  liabilities                        |       | 2,036         |          | 21,226         |       | 3,307          |       | —           |       | 26,569        |       |
| Current  liabilities of discontinued operations   |       | 251           |          | 26,290         |       | —         |       | —           |       | 26,541        |       |
| **Total current liabilities**                     | ** ** | **30,617**    | ** **    | **402,659**    | ** ** | **18,854**     | ** ** | **(36,275**      | **)**      | **415,855**   | ** ** |
| Long-term debt,  less current maturities          |       | 1,216,500     |          | —         |       | —         |       | —           |       | 1,216,500     |       |
| Intercompany  payable (receivable)                |       | 296,308       |          | 1,365,490      |       | (32,299        | )          | (1,629,499       | )          | —        |       |
| Deferred income  taxes                            |       | (1,081        | )             | 191,827        |       | (286           | )          | —           |       | 190,460       |       |
| Pension  liabilities, net                         |       | (315          | )             | 20,570         |       | —         |       | —           |       | 20,255        |       |
| Other noncurrent  liabilities                     |       | 12,909        |          | 17,235         |       | 343            |       | —           |       | 30,487        |       |
| Long-term  liabilities of discontinued operations |       | —        |          | 7,086          |       | —         |       | —           |       | 7,086         |       |
| **Total liabilities**                             | ** ** | **1,554,938** | ** **    | **2,004,867**  | ** ** | **(13,388**    | **)**      | **(1,665,774**   | **)**      | **1,880,643** | ** ** |
| **Stockholder’s  equity**                    | ** ** | **237,606**   | ** **    | **496,246**    | ** ** | **73,170**     | ** ** | **(320,596**     | **)**      | **486,426**   | ** ** |
| ** **                                        | ** ** | **$**         | **1,792,544** | ** **     | **$**      | **2,501,113**  | ** ** | **$**            | **59,782** | ** **    | **$**      | **(1,986,370** | **)** | **$** | **2,367,069** | ** ** |

 

24

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**CONDENSEDCONSOLIDATING BALANCE SHEET (UNAUDITED)**

**December30, 2006**
| ** **                                        | ** ** | ** **    | ** **    | ** **     | ** ** | **Non-**       | ** ** | ** **       | ** ** | ** **    | ** ** |
|---------------------------------------------------|------------|---------------|---------------|----------------|------------|----------------|------------|------------------|------------|---------------|------------|
| ** **                                        | ** ** | **Visant**    | ** **    | **Guarantors** | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**     | ** ** |
| **ASSETS**                                        | ** ** | ** **    | ** **    | ** **     | ** ** | ** **     | ** ** | ** **       | ** ** | ** **    | ** ** |
| Cash and cash  equivalents                        |       | $             | 1,707         |           | $          | 4,275          |       | $                | 12,061     |          | —     |   | $ | 18,043 |   |
| Accounts  receivable, net                         |       | 1,943         |          | 128,162        |       | 14,576         |       | —           |       | 144,681       |       |
| Inventories, net                                  |       | —        |          | 103,411        |       | 2,111          |       | (189             | )          | 105,333       |       |
| Salespersons  overdrafts, net                     |       | —        |          | 26,431         |       | 861            |       | —           |       | 27,292        |       |
| Prepaid expenses  and other current assets        |       | 2,697         |          | 15,814         |       | 1,280          |       | 518              |       | 20,309        |       |
| Income tax  receivable                            |       | 1,097         |          | —         |       | —         |       | —           |       | 1,097         |       |
| Intercompany  receivable (payable)                |       | 36,180        |          | 9,881          |       | —         |       | (46,061          | )          | —        |       |
| Deferred income  taxes                            |       | (963          | )             | 12,738         |       | 75             |       | —           |       | 11,850        |       |
| Current assets  of discontinued operations        |       | —        |          | 56,649         |       | —         |       | —           |       | 56,649        |       |
| **Total current assets**                          | ** ** | **42,661**    | ** **    | **357,361**    | ** ** | **30,964**     | ** ** | **(45,732**      | **)**      | **385,254**   | ** ** |
| Property, plant,  and equipment, net              |       | 1,279         |          | 159,227        |       | 75             |       | —           |       | 160,581       |       |
| Goodwill                                          |       | —        |          | 897,642        |       | 21,996         |       | —           |       | 919,638       |       |
| Intangibles, net                                  |       | —        |          | 520,713        |       | 9,956          |       | —           |       | 530,669       |       |
| Deferred  financing costs, net                    |       | 35,557        |          | —         |       | —         |       | —           |       | 35,557        |       |
| Intercompany  receivable (payable)                |       | 1,256,090     |          | 106,377        |       | —         |       | (1,362,467       | )          | —        |       |
| Other assets                                      |       | 40            |          | 13,065         |       | 76             |       | —           |       | 13,181        |       |
| Investment in  subsidiaries                       |       | 489,114       |          | 72,521         |       | —         |       | (561,635         | )          | —        |       |
| Long-term assets  of discontinued operations      |       | (80           | )             | 265,599        |       | —         |       | —           |       | 265,519       |       |
| ** **                                        | ** ** | **$**         | **1,824,661** | ** **     | **$**      | **2,392,505**  | ** ** | **$**            | **63,067** | ** **    | **$**      | **(1,969,834** | **)** | **$** | **2,310,399** | ** ** |
|                                              |       |          |          |           |       |           |       |             |       |          |       |
| **LIABILITIES  AND STOCKHOLDER’S EQUITY**    | ** ** | ** **    | ** **    | ** **     | ** ** | ** **     | ** ** | ** **       | ** ** | ** **    | ** ** |
| Accounts payable                                  |       | $             | 2,562         |           | $          | 48,249         |       | $                | 5,390      |          | $          | 235 |   | $ | 56,436 |   |
| Accrued employee  compensation                    |       | 6,759         |          | 32,931         |       | 1,566          |       | —           |       | 41,256        |       |
| Commissions  payable                              |       | —        |          | 20,605         |       | 1,066          |       | —           |       | 21,671        |       |
| Customer  deposits                                |       | —        |          | 166,250        |       | 5,008          |       | —           |       | 171,258       |       |
| Income taxes  payable                             |       | (8,664        | )             | 5,668          |       | 3,069          |       | (73              | )          | —        |       |
| Interest payable                                  |       | 9,987         |          | 663            |       | —         |       | —           |       | 10,650        |       |
| Current portion  of long-term debt                |       | —        |          | —         |       | —         |       | —           |       | —        |       |
| Intercompany  payable (receivable)                |       | 17,787        |          | 23,242         |       | 4,749          |       | (45,778          | )          | —        |       |
| Other accrued  liabilities                        |       | 2,025         |          | 18,497         |       | 3,115          |       | —           |       | 23,637        |       |
| Current  liabilities of discontinued operations   |       | 955           |          | 28,301         |       | 5,593          |       | —           |       | 34,849        |       |
| **Total current liabilities**                     | ** ** | **31,411**    | ** **    | **344,406**    | ** ** | **29,556**     | ** ** | **(45,616**      | **)**      | **359,757**   | ** ** |
| Long-term debt,  less current maturities          |       | 1,216,500     |          | —         |       | —         |       | —           |       | 1,216,500     |       |
| Intercompany  payable (receivable)                |       | 305,332       |          | 1,317,506      |       | (38,874        | )          | (1,583,964       | )          | —        |       |
| Deferred income  taxes                            |       | (988          | )             | 196,195        |       | (282           | )          | —           |       | 194,925       |       |
| Pension  liabilities, net                         |       | —        |          | 21,484         |       | —         |       | —           |       | 21,484        |       |
| Other noncurrent  liabilities                     |       | 16,106        |          | 17,104         |       | 146            |       | —           |       | 33,356        |       |
| Long-term  liabilities of discontinued operations |       |          |          | 6,696          |       | —         |       | —           |       | 6,696         |       |
| **Total liabilities**                             | ** ** | **1,568,361** | ** **    | **1,903,391**  | ** ** | **(9,454**     | **)**      | **(1,629,580**   | **)**      | **1,832,718** | ** ** |
| **Stockholder’s  equity**                    | ** ** | **256,300**   | ** **    | **489,114**    | ** ** | **72,521**     | ** ** | **(340,254**     | **)**      | **477,681**   | ** ** |
| ** **                                        | ** ** | **$**         | **1,824,661** | ** **     | **$**      | **2,392,505**  | ** ** | **$**            | **63,067** | ** **    | **$**      | **(1,969,834** | **)** | **$** | **2,310,399** | ** ** |

 

25

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**CONDENSEDCONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)**

** Three months ended March 31, 2007**
| ** **                                                    | ** ** | ** **  | ** ** | ** **     | ** ** | **Non-**       | ** ** | ** **       | ** ** | ** **  | ** ** |
|---------------------------------------------------------------|------------|-------------|------------|----------------|------------|----------------|------------|------------------|------------|-------------|------------|
| ** **                                                    | ** ** | **Visant**  | ** ** | **Guarantors** | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**   | ** ** |
| Net (loss)  income                                            |       | $           | (18,694    | )              | $          | 5,651          |       | $                | 649        |        | $          | 19,658 |   | $ | 7,264 |   |
| Other cash  provided by (used in) operating activities        |       | 46,700      |       | 23,019         |       | (1,383         | )          | (19,658          | )          | 48,678      |       |
| Net cash used in  discontinued operations                     |       | (309        | )          | (7,428         | )          | —         |       | —           |       | (7,737      | )          |
| **Net  cash provided by (used in) operating activities**      | ** ** | **27,697**  | ** ** | **21,242**     | ** ** | **(734**       | **)**      | **—**       | ** ** | **48,205**  | ** ** |
| Purchases of  property, plant, and equipment                  |       | (16         | )          | (19,960        | )          | (36            | )          | —           |       | (20,012     | )          |
| Proceeds from  sale of property and equipment                 |       | —      |       | 281            |       | —         |       | —           |       | 281         |       |
| Acquisition of  business, net of cash acquired                |       | (27,486     | )          | —         |       | —         |       | —           |       | (27,486     | )          |
| Net cash used in  discontinued operations                     |       | —      |       | (3,138         | )          | —         |       | —           |       | (3,138      | )          |
| **Net  cash used in investing activities**                    | ** ** | **(27,502** | **)**      | **(22,817**    | **)**      | **(36**        | **)**      | **—**       | ** ** | **(50,355** | **)**      |
| Intercompany  payable (receivable)                            |       | 2,172       |       | (2,172         | )          | —         |       | —           |       | —      |       |
| **Net  cash provided by (used in) financing activities**      | ** ** | **2,172**   | ** ** | **(2,172**     | **)**      | **—**     | ** ** | **—**       | ** ** | **—**  | ** ** |
| Effect of  exchange rate changes on cash and cash equivalents |       | —      |       | —         |       | 109            |       | —           |       | 109         |       |
| Increase  (decrease) in cash and cash equivalents             |       | 2,367       |       | (3,747         | )          | (661           | )          | —           |       | (2,041      | )          |
| Cash and cash  equivalents, beginning of period               |       | 1,707       |       | 4,275          |       | 12,061         |       | —           |       | 18,043      |       |
| **Cash and cash equivalents, end  of period**                 | ** ** | **$**       | **4,074**  | ** **     | **$**      | **528**        | ** ** | **$**            | **11,400** | ** **  | **—** | ** ** | **$** | **16,002** | ** ** |
|                                                               |            |             |            |                |            |                |            |                  |            |             |            |  |  |  |  |  |

 

**CONDENSEDCONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)**

**Threemonths ended April 1, 2006**
| ** **                                                    | ** ** | ** ** | ** ** | ** **     | ** ** | **Non-**       | ** ** | ** **       | ** ** | ** **  | ** ** |
|---------------------------------------------------------------|------------|------------|------------|----------------|------------|----------------|------------|------------------|------------|-------------|------------|
| ** **                                                    | ** ** | **Visant** | ** ** | **Guarantors** | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**   | ** ** |
| Net (loss)  income                                            |       | $          | (24,732    | )              | $          | (1,189         | )          | $                | (18        | )           | $          | 27,694 |   | $ | 1,755 |   |
| Other cash  provided by operating activities                  |       | 21,839     |       | 51,078         |       | 1,318          |       | (27,638          | )          | 46,597      |       |
| Net cash  provided by (used in) discontinued operations       |       | —     |       | 1,339          |       | (2,839         | )          | —           |       | (1,500      | )          |
| **Net cash (used in) provided by operating  activities**      | ** ** | **(2,893** | **)**      | **51,228**     | ** ** | **(1,539**     | **)**      | **56**           | ** ** | **46,852**  | ** ** |
| Purchases of  property, plant, and equipment                  |       | (843       | )          | (11,622        | )          | (24            | )          | —           |       | (12,489     | )          |
| Proceeds from  sale of property and equipment                 |       | 3          |       | 70             |       | 1              |       | —           |       | 74          |       |
| Other investing  activities, net                              |       | —     |       | (2             | )          | —         |       | —           |       | (2          | )          |
| Net cash used in  discontinued operations                     |       | —     |       | (7,452         | )          | —         |       | —           |       | (7,452      | )          |
| **Net cash used in investing activities**                     | ** ** | **(840**   | **)**      | **(19,006**    | **)**      | **(23**        | **)**      | **—**       | ** ** | **(19,869** | **)**      |
| Intercompany  payable (receivable)                            |       | 30,002     |       | (30,003        | )          | —         |       | 1                |       | —      |       |
| **Net cash (used in) provided by financing  activities**      | ** ** | **30,002** | ** ** | **(30,003**    | **)**      | **—**     | ** ** | **1**            | ** ** | **—**  | ** ** |
| Effect of  exchange rate changes on cash and cash equivalents |       | —     |       | —         |       | 6              |       | —           |       | 6           |       |
| Increase  (decrease) in cash and cash equivalents             |       | 26,269     |       | 2,219          |       | (1,556         | )          | 57               |       | 26,989      |       |
| Cash and cash  equivalents, beginning of period               |       | 13,029     |       | (1,454         | )          | 8,299          |       | —           |       | 19,874      |       |
| **Cash and cash equivalents, end  of period**                 | ** ** | **$**      | **39,298** | ** **     | **$**      | **765**        | ** ** | **$**            | **6,743**  | ** **  | **$**      | **57** | ** ** | **$** | **46,863** | ** ** |

 

26

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**ITEM2.     MANAGEMENT’S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

Except where otherwise indicated, management’s discussion and analysis offinancial condition and results of operations is provided with respect toHoldings, which has materially the same financial condition and results ofoperations as Visant.  This discussionand analysis should be read in conjunction with our condensed consolidatedfinancial statements and notes thereto.

**CAUTIONARYNOTE REGARDING FORWARD-LOOKING STATEMENTS**

This reportcontains forward-looking statements including, without limitation, statementsconcerning the conditions in our industry, expected cost savings, ouroperations, our economic performance and financial condition, including, inparticular, statements relating to our business and growth strategy and productdevelopment efforts. These forward-looking statements are not historical facts,but only predictions and generally can by identified by the use of statementsthat include such words as “may”, “might”, “should”, “estimate”, “project”, “plan”,“anticipate”, “expect”, “intend”, “outlook”, “believe” and other similar expressions that are intended toidentify forward-looking statements and information. These forward-lookingstatements are based on estimates and assumptions by our management that,although we believe to be reasonable, are inherently uncertain and subject to anumber of risks and uncertainties. These risks and uncertainties include,without limitation, those identified under Item 1A. *Risk Factors*included in our 2006 Annual Report on Form 10-K for the fiscal year endedDecember 30, 2006 and elsewhere in this report.

The following list represents some, butnot necessarily all, of the factors that could cause actual results to differfrom historical results or those anticipated or predicted by theseforward-looking statements:

·                  our substantial indebtedness;

·                  our inability to implement ourbusiness strategy and achieve anticipated cost savings in a timely andeffective manner;

·                  competition from other companies;

·                  the seasonality of our businesses;

·                  the loss of significant customers orcustomer relationships;

·                  fluctuations in raw material prices;

·                  our reliance on a limited number ofsuppliers;

·                  our reliance on numerous complexinformation systems;

·                  the reliance of our businesses onlimited production facilities;

·                  the amount of capital expendituresrequired for our businesses;

·                  labor disturbances;

·                  environmental regulations;

·                  foreign currency fluctuations andforeign exchange rates;

·                  the outcome of litigation;

·                  our dependency on the sale of schooltextbooks;

27

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·                  control by our stockholders;

·                  Jostens, Inc.’s reliance onindependent sales representatives;

·                  the failure of our sampling systemsto comply with U.S. postal regulations; and

·                  the textbook adoption cycle andlevels of government funding for education spending.

Wecaution you that the foregoing list of important factors is not exclusive. Inaddition, in light of these risks and uncertainties, the matters referred to inthe forward-looking statements contained in this report may not in fact occur.Forward-looking statements speak only as of the date they are made and weundertake no obligation to update publicly or revise any of them in light ofnew information, future events or otherwise, except as required by law.

**GENERAL**

Weare a leading marketing and publishing services enterprise servicing the schoolaffinity, direct marketing, fragrance and cosmetics sampling and educationalpublishing markets. We were formed through the October 2004 consolidationof Jostens, Von Hoffmann and Arcade (the “Transactions”).

Asof December 2006, our Von Hoffmann Holdings Inc., Von Hoffmann Corporation andAnthology, Inc. businesses were held as assets for sale.  On January 3, 2007, the Company entered intoa Stock Purchase Agreement with R.R. Donnelley & Sons Company providing forthe sale of Von Hoffmann Holdings Inc., Von Hoffmann Corporation and Anthology,Inc., which previously comprised the Educational Textbook segment and a portionof the Marketing and Publishing Services segment.  The regulatory review of the proposedtransaction through a second request by the Federal Trade Commission has beencompleted and we expect to close the transaction on or about May 16, 2007.  The operations of the Von Hoffmann businessesare reported as discontinued operations in the consolidated financialstatements for all periods presented.

On March 16, 2007, the Company acquired all of theoutstanding capital stock of Neff Holding Company and its wholly ownedsubsidiary Neff Motivation, Inc (“Neff”). Neff is a leading single sourceprovider of custom award programs and apparel, including chenille letters andletter jackets, to the scholastic market segment.  Neff operates as a direct subsidiary ofVisant under the Neff brand name and its results are reported as part of theScholastic segment from the date of acquisition.

Our threereportable segments as of March 31, 2007 consist of:

·*Scholastic*—provides services related to the marketing, saleand production of class rings and an array of graduation products and otherscholastic products to students and administrators primarily in high schools,colleges and other post-secondary institutions;

·*Yearbook—*providesservices related to the publication, marketing, sale and production of schoolyearbooks; and

·*Marketing and PublishingServices*—produces multi-sensory and interactive advertising samplingsystems, primarily for the fragrance, cosmetics and personal care marketsegments, and provides innovative products and services to the direct marketingsector. The group also produces book covers and other components for educationalpublishers.

**CompanyBackground**

On October 4, 2004, an affiliate of Kohlberg KravisRoberts & Co. L.P. (“KKR”) and affiliates of DLJ Merchant BankingPartners completed transactions which created a marketing and publishingservices enterprise, servicing the school affinity products, direct marketing,fragrance and cosmetics sampling and educational publishing market segmentsthrough the consolidation of Jostens, Von Hoffmann and Arcade (the “Transactions”).

Prior to the Transactions, Von Hoffmann and Arcade wereeach controlled by affiliates of DLJ Merchant Banking Partners II, L.P. (“DLJMBPII”) and DLJ Merchant Banking Partners III, L.P. (“DLJMBP III”) ownedapproximately 82.5% of our outstanding equity, with the remainder held by otherco-investors and certain members of management. Upon consummation of the Transactions, an affiliate of KKR invested$256.1 million and was issued equity interests representing approximately49.6% of our voting interest and 45.0% of our economic interest and affiliatesof DLJMBP III held equity interests representing approximately 41.0% ofHoldings’ voting interest and 45.0% of Holdings’ economic interest, with theremainder held by other co-investors and certain members of management.  After giving effect to the issuance of equityto additional members of management, as of May 7, 2007, affiliates of KKR andDLJMBP III (the “Sponsors”) held approximately 49.0% and 41.0%, respectively,of Holdings’ voting interest, while each continued to hold approximately 44.6%of Holdings’ economic interest. As of May 7, 2007, the other co-investors heldapproximately 8.4% of the voting interest and 9.1% of the economic interest ofHoldings and members of management held approximately 1.6% of the votinginterest and approximately 1.7% of the economic interest of Holdings.

28

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**CRITICALACCOUNTING POLICIES**

The preparation ofinterim financial statements involves the use of certain estimates that differfrom those used in the preparation of the annual financial statements, the mostsignificant of which relates to income taxes. For purposes of preparing our interim financial statements, we utilizean estimated annual effective tax rate based on estimates of the componentsthat impact the tax rate.  Thosecomponents are re-evaluated each interim period and, if changes in ourestimates are significant, we modify our estimate of the annual effective taxrate and make any required adjustments in the interim period.

There have been nomaterial changes to our critical accounting policies and estimates as describedin Item 7 of our Annual Report on Form 10-K for the fiscal year ended December30, 2006.

**RecentAccounting Pronouncements**

Effectivebeginning of fiscal 2007, we adopted FASB Interpretation No. 48, *Accounting for Uncertainty in Income Taxes*(“FIN 48”), whichclarifies the accounting for uncertainty in income taxes recognized in anenterprise’s financial statements in accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 109, *Accounting for IncomeTaxes*.  FIN 48 requires applyinga “more likely than not” threshold to the recognition and derecognition of taxpositions.  In connection with theadoption of FIN 48 effective as of January 1, 2007, the Company made a changein accounting principle for the classification of interest income on taxrefunds.  In addition, upon adoption ofFIN 48 all interest and penalties on income tax assessments will be recorded asincome tax expense and included as part of the Company’s unrecognized taxbenefit liability.  The Company’sunrecognized tax benefit liability at March 31, 2007 is included in othernoncurrent liabilities and totaled $12.7 million, including $2.2 million ofgross interest and penalty accruals. Refer to Note 13.

In September 2006,the FASB issued SFAS No. 157, *Fair Value Measurements*(“SFAS No. 157), that establishes a framework for measuring fair value andrequires enhanced disclosures about fair value measurements. SFAS No. 157requires companies to disclose the fair value of their financial instrumentsaccording to a fair value hierarchy as defined in the standard.  SFAS No. 157 is effective for financialstatements issued for fiscal years beginning after November 15, 2007, andinterim periods within those fiscal years. We are currently assessing the impact of SFAS No. 157 on our financialstatements.

In September 2006,the FASB issued SFAS No. 158, *Employers’ Accounting forDefined Benefit Pension and Other Postretirement Plans* (“SFAS No.158”)*.* SFAS No. 158 requires the recognition of the funded status of abenefit plan in the balance sheet; the recognition in other comprehensiveincome of gains or losses and prior service costs or credits arising during theperiod but which are not included as components of periodic benefit cost; themeasurement of defined benefit plan assets and obligations as of the balancesheet date; and disclosure of additional information about the effects onperiodic benefit cost for the following fiscal year arising from delayedrecognition in the current period. In addition, SFAS No. 158 amends SFASNo. 87, *Employers’ Accounting for Pensions*,and SFAS No. 106, *Employers’ Accounting forPostretirement Benefits Other Than Pensions*, to include guidanceregarding selection of assumed discount rates for use in measuring the benefitobligation.  The new guidance will beeffective for us in the first fiscal year ending after June 15, 2007.  We are currently assessing the impact of SFASNo. 158 on our financial statements.

InFebruary 2007, the FASB issued SFAS No. 159 *The Fair Value Option forFinancial Assets and Financial Liabilities* (“SFAS No. 159”).  SFAS No. 159 permits entities to measure manyfinancial assets and financial liabilities at fair value.  Unrealized gains and losses on items forwhich the fair value option has been elected are reported in earnings.  SFAS No. 159 is effective for fiscal yearsbeginning after November 15, 2007.  Weare currently assessing the impact of SFAS No. 159 on our financial statements.

29

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**RESULTSOF OPERATIONS**

**ThreeMonths Ended March 31, 2007 Compared to the Three Months Ended April 1, 2006**

The followingtable sets forth selected information derived from Holdings’ condensedconsolidated statements of operations for the three-month periods ended March31, 2007 and April 1, 2006.

|                                                  | ** **   | **Three months ended** | ** **   | ** **        | ** **   | ** **        | ** **   |
|--------------------------------------------------|--------------|----------------------------------|--------------|-------------------|--------------|-------------------|--------------|
| ** **                                       | ** **   | **March 31,**               | ** **   | **April 1,** | ** **   | ** **        | ** **   | ** ** | ** ** |
| **In thousands**                            | ** **   | **2007**                         | ** **   | **2006**          | ** **   | **$ Change** | ** **   | **% Change** | ** ** |
| Net sales                                        |         | $                                | 255,850      |              | $            | 227,986           |         | $ | 27,864 |   | 12.2 | % |
|                                             |         |                             |         |              |         |              |         |   |   |
| Gross profit                                     |         | 127,780                          |         | 117,198           |         | 10,582            |         | 9.0 | % |
| *% of net sales*                                 | *** *** | ***49.9***                       | ***%***      | ***51.4***        | ***%***      | *** ***      | *** *** | *** *** | *** *** |
| * *                                         |         |                             |         |              |         |              |         |   |   |
| Selling and administrative  expenses             |         | 103,742                          |         | 91,945            |         | 11,797            |         | 12.8 | % |
| *% of net sales*                                 | *** *** | ***40.5***                       | ***%***      | ***40.3***        | ***%***      | *** ***      | *** *** | *** *** | *** *** |
| *** ***                                     | *** *** | *** ***                     | *** *** | *** ***      | *** *** | *** ***      | *** *** | *** *** | *** *** |
| Loss (gain) on  disposal of assets               |         | 391                              |         | (25               | )            | 416               |         | NM |   |
| *** ***                                     |         |                             |         |              |         |              |         |   |   |
| Special charges                                  |         | —                           |         | 2,744             |         | (2,744            | )            | NM |   |
|                                             |         |                             |         |              |         |              |         |   |   |
| Operating income                                 |         | 23,647                           |         | 22,534            |         | 1,113             |         | 4.9 | % |
| *% of net sales*                                 | *** *** | ***9.2***                        | ***%***      | ***9.9***         | ***%***      | *** ***      | *** *** | *** *** | *** *** |
| *** ***                                     |         |                             |         |              |         |              |         |   |   |
| Interest  expense, net                           |         | 38,508                           |         | 30,978            |         | 7,530             |         | 24.3 | % |
|                                             |         |                             |         |              |         |              |         |   |   |
| Benefit from  income taxes                       |         | (5,249                           | )            | (4,066            | )            | (1,183            | )            | (29.1 | )% |
|                                             |         |                             |         |              |         |              |         |   |   |
| Income from  discontinued operations, net of tax |         | 8,373                            |         | 3,242             |         | 5,131             |         | 158.3 | % |
|                                             |         |                             |         |              |         |              |         |   |   |
| Net loss                                         |         | $                                | (1,239       | )                 | $            | (1,136            | )            | $ | (103 | ) | (9.1 | )% |

 

----

NM = Notmeaningful

The followingtable sets forth selected segment information derived from Holdings’ condensedconsolidated statements of operations for the three-month periods ended March31, 2007 and April 1, 2006.  Foradditional financial information about our operating segments, see Note 16, *Business Segments,* to the condensed consolidated financialstatements.
|                                   | ** ** | **Three months ended** | ** ** | ** **        | ** ** | ** **        | ** ** |
|-----------------------------------|------------|----------------------------------|------------|-------------------|------------|-------------------|------------|
| ** **                        | ** ** | **March 31,**               | ** ** | **April 1,** | ** ** | ** **        | ** ** | ** ** | ** ** |
| **In thousands**             | ** ** | **2007**                         | ** ** | **2006**          | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Net sales                         |       |                             |       |              |       |              |       |   |   |
| Scholastic                        |       | $                                | 140,305    |              | $          | 134,383           |       | $ | 5,922 |   | 4.4 | % |
| Yearbook                          |       | 7,851                            |       | 8,295             |       | (444              | )          | (5.4 | )% |
| Marketing and Publishing Services |       | 108,051                          |       | 85,360            |       | 22,691            |       | 26.6 | % |
| Inter-segment eliminations        |       | (357                             | )          | (52               | )          | NM                |       | NM |   |
| Net sales                         |       | $                                | 255,850    |              | $          | 227,986           |       | $ | 27,864 |   | 12.2 | % |
|                              |       |                             |       |              |       |              |       |   |   |
| Operating income                  |       |                             |       |              |       |              |       |   |   |
| Scholastic                        |       | $                                | 22,492     |              | $          | 20,053            |       | $ | 2,439 |   | 12.2 | % |
| Yearbook                          |       | (17,119                          | )          | (14,011           | )          | (3,108            | )          | (22.2 | )% |
| Marketing and Publishing Services |       | 18,274                           |       | 16,492            |       | 1,782             |       | 10.8 | % |
| Operating income                  |       | $                                | 23,647     |              | $          | 22,534            |       | $ | 1,113 |   | 4.9 | % |

----

NM = Not meaningful

*NetSales. *Consolidatednet sales increased $27.9 million, or 12.2%, to $255.9 million for the threemonths ended March 31, 2007 from $228.0 million for the corresponding period in2006.

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The net sales ofthe Scholastic segment increased $5.9 million, or 4.4%, to $140.3 million forthe first quarter of 2007 from $134.4 million for the first quarter of2006.  The increase was primarily attributableto increased volume of graduation products and the impact price increases forour jewelry and graduation products.

Yearbook net salesdecreased $0.4 million, or 5.4%, to $7.9 million for the quarter ended March31, 2007 compared to $8.3 million in the first quarter of 2006.  The decrease was due mainly to a shift intiming of shipments to the second quarter in 2007 compared to 2006.

The net sales ofthe continuing operations of the Marketing and Publishing Services segmentincreased $22.7 million, or 26.6%, to $108.1 million during the first quarterof 2007 from $85.4 million for the first quarter of 2006.  The increase was attributable to businessesacquired in 2006 and increased volume in both our sampling and direct marketingbusinesses.

*GrossProfit.*  Gross profitincreased $10.6 million, or 9.0%, to $127.8 million for the three months endedMarch 31, 2007 from $117.2 million for the same period in 2006.  As a percentage of net sales, gross profitmargin decreased to 49.9% for the three months ended March 31, 2007 from 51.4%for the same period in 2006.  Thedecrease is attributable to:

·                  changes in mix of work in Marketing andPublishing Services that included higher material costs in the first quarter of2007; and

·                  timing of certain Yearbook expenses with thesecond quarter of 2007.

These decreases were partially offset by:

·                  cost savings realized from continuedimprovements in plant efficiency and cost reduction initiatives; and

·                  general price increases primarily in theScholastic segment.

*Sellingand Administrative Expenses.* Selling and administrative expenses increased $11.8 million, or 12.8%,to $103.7 million for the three months ended March 31, 2007 from $91.9 millionfor the corresponding period in 2006.  Asa percentage of net sales, selling and administrative expenses increased 0.2%to 40.5% for the first quarter of 2007 from 40.3% for the same period in2006.  The increase in selling andadministrative expenses as a percentage of net sales was the result of:

·                  higher commissions in the Scholastic segmentassociated with increased graduation products net sales, which have a highercommission structure than other Scholastic products;

·                  development costs in the Yearbook segmentrelated to growth initiatives; and

·                  higher information technology costs in theScholastic and Yearbook segments.

These increaseswere partially offset by lower amortization expense from the 2003 Jostensmerger purchase accounting adjustments.

*Special Charges. *Therewere no special charges recorded during the first quarter of 2007.  During the first quarter of 2006, the Companyrecorded $0.4 million of special charges relating to severance and relatedbenefits costs and $2.3 million related to an impairment loss to reduce thevalue of the former Jostens corporate office buildings.  The Scholastic and Yearbook segments eachrecorded $0.1 million of severance costs and related benefits associated with aheadcount reduction of eight Scholastic employees and two Yearbook employees,respectively.  The Marketing and PublishingServices segment recorded charges of $0.2 million related to severance coststhat reduced headcount by three employees.

*OperatingIncome. *As a result ofthe aforementioned items,**consolidatedoperating income increased $1.1 million, or 4.9%, to $23.6 million for thethree months ended March 31, 2007 from $22.5 million for the comparable periodin 2006.  As a percentage of net sales,operating income decreased to 9.2% for the first quarter of 2007 from 9.9% forthe same period in 2006.  This was mainlyattributable to the increase in volume in our Marketing and Publishing Servicessegment, which historically has lower margins than our Scholastic and Yearbooksegments.

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*NetInterest Expense. *Netinterest expense was comprised of the following:
| ** **                                  | ** ** | **Three months ended** | ** ** | ** **        | ** ** | ** **        | ** ** |
|---------------------------------------------|------------|----------------------------------|------------|-------------------|------------|-------------------|------------|
| ** **                                  | ** ** | **March 31,**               | ** ** | **April 1,** | ** ** | ** **        | ** ** | ** ** | ** ** |
| **In thousands**                       | ** ** | **2007**                         | ** ** | **2006**          | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| **Holdings:**                               | ** ** | ** **                       | ** ** | ** **        | ** ** | ** **        | ** ** | ** ** | ** ** |
| Interest expense                            |       | $                                | 7,635      |              | $          | —            |       | $ | 7,635 |   | 100.0 | % |
| Amortization of debt  discount, premium and |       |                             |       |              |       | —            |       |   |   |
| deferred financing  costs                   |       | 5,638                            |       | 4,815             |       | 823               |       | 17.1 | % |
| Interest income                             |       | —                           |       | (7                | )          | 7                 |       | 100.0 | % |
| Holdings interest  expense, net             | ** ** | **$**                            | **13,273** | ** **        | **$**      | **4,808**         |       | 8,465 |   | 176.1 | % |
| **Visant:**                                 | ** ** | ** **                       | ** ** | ** **        | ** ** | ** **        | ** ** | ** ** | ** ** |
| Interest expense                            |       | $                                | 23,598     |              | $          | 24,598            |       | (1,000 | ) | (4.1 | )% |
| Amortization of debt  discount, premium and |       |                             |       |              |       |              |       |   |   |
| deferred financing  costs                   |       | 1,849                            |       | 1,944             |       | (95               | )          | (4.9 | )% |
| Interest income                             |       | (212                             | )          | (372              | )          | 160               |       | (43.0 | )% |
| Visant interest  expense, net               | ** ** | **$**                            | **25,235** | ** **        | **$**      | **26,170**        |       | (935 | ) | (3.6 | )% |
| Interest expense, net                       | ** ** | **$**                            | **38,508** | ** **        | **$**      | **30,978**        |       | 7,530 |   | 24.3 | % |
|                                             |            |                                  |            |                   |            |                   |            |  |  |  |  |  |

 

Net interest expense increased $7.5 million, or 24.3%,to $38.5 million for the three months ended March 31, 2007 as compared to $31.0million for the comparable prior year period.  The increase was due mainlyto Holdings’ 8.75% senior notes issued in 2006.

*IncomeTaxes.*  The Company hasrecorded an income tax benefit for the first quarter of 2007 based on its bestestimate of the consolidated effective tax rate applicable for the entireyear.  The estimated full-yearconsolidated effective tax rates were 36.8% and 36.6% for Holdings and Visant,respectively, before consideration of the effect of $0.2 million of interestaccruals on unrecognized tax benefits. The combined effect of the annual estimated consolidated tax rates andthe provision for interest on unrecognized tax benefits resulted in effectivetax rates for the quarter of 35.3% and 21.0% for Holdings and Visant,respectively.  The annual estimatedeffective tax rates for 2007 were favorably affected by an increase in the rateof deduction for the U.S domestic manufacturing deduction.

Forthe comparable three-month period ended April 1, 2006, the effectives rates ofincome tax benefit for Holdings and Visant were 48.2% and 58.2%,respectively.  These rates reflect thefavorable effect of the reduction of the deferred tax valuation allowance by$0.6 million during the prior year quarter because the Company estimated that aportion of the tax benefit attributable to capital loss carryforwards wasrealized as a result of anticipated property dispositions during 2006.

Asdescribed in Note 13, *Income Taxes,*to the condensed consolidated financial statements, the Company adopted FIN 48as of the beginning of the current quarter. Upon adoption of FIN 48, all interest and penalties in connection withincome tax assessments or refunds will be recorded as income tax expense orbenefit, as applicable, and included as part of the Company’s unrecognized taxbenefit liability.

*Incomefrom Discontinued Operations. *Duringthe second quarter of 2006, we consummated the sale of our Jostens Photographybusinesses, which previously was a reportable segment.  First quarter results in 2006 for the JostensPhotography businesses were a loss of $2.1 million.

As of March 31,2007 the Company’s Von Hoffmann Holdings Inc., Von Hoffmann Corporation andAnthology, Inc. businesses (the “Von Hoffmann businesses”) were operationsrecorded in income from discontinued operations.  The Von Hoffmann businesses previouslycomprised the Educational Textbook segment and a portion of the Marketing andPublishing Services segment.  Net incomefrom the Von Hoffmann businesses for the first quarter of 2007 and 2006 were$7.4 million and $5.3 million, respectively.

We also had incomeof $1.0 million for the three months ended March 31, 2007 from the JostensRecognition business, which was discontinued in 2001.  The income in 2007 resulted from the reversalof an accrual for potential exposure for which the Company does not believe itis likely to have an ongoing liability, therefore, there are no amounts relatedto the Jostens Recognition at March 31, 2007.

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*NetLoss. *As a result of the aforementioned items, net lossincreased $0.1 million, or 9.1%, to $1.2 million for the three monthsended March 31, 2007 compared to net loss of $1.1 million for thesame period in 2006.

**LIQUIDITY AND CAPITAL RESOURCES**

The followingtable presents cash flow activity of Holdings for the first three months offiscal 2007 and 2006 and should be read in conjunction with our condensedconsolidated statements of cash flows.

|                                                         | ** ** | **Three months ended** | ** ** |
|---------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                              | ** ** | **March 31,**               | ** ** | **April 1,** | ** ** |
| **In thousands**                                   | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| Net cash  provided by operating activities              |       | $                                | 47,845     |   | $ | 46,851 |   |
| Net cash used in  investing activities                  |       | (50,355                          | )          | (19,869 | ) |
| Net cash  provided by (used in) financing activities    |       | —                           |       | — |   |
| Effect of  exchange rate change on cash                 |       | 109                              |       | 6 |   |
|  (Decrease) increase in cash and cash  equivalents | ** ** | **$**                            | **(2,401** | **)** | **$** | **26,988** | ** ** |

 

For the threemonths ended March 31, 2007, operating activities generated cash of $47.8million compared with cash generated by operating activities of $46.8 millionfor the same prior year period.  Theincrease is due to higher interest payable during the three months ended March31, 2007 compared to the corresponding prior year period related to interest onthe 8.75% senior notes due 2013. Included in the cash flows from operating activities is cash used indiscontinued operations of $7.7 million and $1.5 million for the three-monthperiods ended March 31, 2007 and April 1, 2006, respectively.  Consequently, the cash provided by continuingoperations was $55.6 million and $48.4 million for the first three months of2007 and 2006, respectively.

Net cash used ininvesting activities for the three months ended March 31, 2007 was $50.4million, compared with $19.9 million used in investing activities for thecomparable 2006 period.  The $30.5million increased usage related to the acquisition of Neff in March 2006 andincreased capital expenditures in our Marketing and Publishing Servicessegment.  Included in the cash flows frominvesting activities is cash used in discontinued operations of $3.1 millionand $7.5 million for the three-month periods ended March 31, 2007 and April 1,2006, respectively.  Consequently, thecash used in continuing operations was $47.2 million and $12.4 million for thefirst three months of 2007 and 2006, respectively.

There were nofinancing activities during the first quarter of 2007 and 2006.

As of March 31,2007, we had cash and cash equivalents of $16.0 million.  Our principalsources of liquidity are cash flows from operating activities and availableborrowings under Visant’s senior secured credit facilities, which included$233.6 million of additional availability under Visant’s revolving creditfacility as of March 31, 2007.  We use cash primarily for debt serviceobligations, capital expenditures and to fund other working capitalrequirements.  We intend to fund ongoing operations through cash generatedby operations and borrowings under the revolving credit facility.

As of March 31,2007, we were in compliance with all covenants under our material debtobligations.

Our ability tomake scheduled payments of principal, or to pay the interest on, or torefinance our indebtedness, or to fund planned capital expenditures will dependon our future performance.  Based uponthe current level of operations, we believe that cash flows from operations,available cash and short-term investments, together with borrowings availableunder Visant’s senior secured credit facilities, are adequate to meet ourliquidity needs for the next twelve months. In addition, based on market and other considerations, we may decide toraise additional funds through debt or equity financings.  Furthermore, to the extent we make futureacquisitions, we may require new sources of funding, including additional debtor equity financings or some combination thereof.

#### **ITEM 3.           QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

There have been nomaterial changes in our exposure to market risk during the quarter ended March31,2007.  For additional information,refer to Item 7A of our 2006 Annual Report on Form 10-K.

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#### **ITEM 4.           CONTROLSAND PROCEDURES**

Our management is responsible for establishing andmaintaining adequate internal control over financial reporting, as defined inRule 13a-15(f) under the Securities Exchange Act of 1934, asamended (“the Exchange Act”).

Our management, under the supervision of our ChiefExecutive Officer and Vice President, Finance, evaluated the effectiveness ofour disclosure controls and procedures (as defined in Rule 13a-15(e) underthe Exchange Act) as of the end of the period covered by this report. Basedupon that evaluation, our Chief Executive Officer and Vice President, Finance concludedthat our disclosure controls and procedures are effective as of the end of theperiod covered by this report.

During the quarterended March 31, 2007, there was no change in our internal control overfinancial reporting that materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting.

**PART II.  OTHER INFORMATION**

#### **ITEM 1.          LEGALPROCEEDINGS**

Duringthe three months ended March 31, 2007, there were no developments of materialpending legal proceedings to which we or any of our subsidiaries are a party.

#### **ITEM 1A.       RISKFACTORS**

There have been nomaterial changes in our risk factors during the quarter ended March 31,2007.  For additional information, referto Item 1A of our 2006 Annual Report on Form 10-K.

#### **ITEM 2.          UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

None.

#### **ITEM 3.          DEFAULTSUPON SENIOR SECURITIES**

None.

#### **ITEM 4.          SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS**

By Action ofStockholders Taken by Written Consent on March 6, 2007, a majority of thestockholders of Holdings approved the acquisition of Neff.

#### **ITEM 5.          OTHERINFORMATION**

(a)          The Company makes thefollowing disclosure that otherwise would be made on a Form 8-K:

OnMay 10, 2007, Holdings and Visant entered into a Change in Control SeveranceAgreement (the “CIC Agreements”) with each of Paul Carousso, Vice President,Finance, and Marie Hlavaty, Vice President, General Counsel (each an “Executive”).  The CIC Agreements provide for severancepayments and benefits to the Executive if his or her employment is terminatedwithout Cause or if the Executive resigns with Good Reason (as such terms aredefined in the CIC Agreements) following a Change in Control (as defined in theCIC Agreements).  The CIC Agreements areeffective through December 31, 2009 (subject to extension), provided that theCIC Agreements shall remain in effect for a period of two years following aChange in Control during the term.

Theseverance payments and benefits include an amount equal to one times the sum of(i) the Executive’s then current annual base salary and (ii) the higher of (a)an amount equal to the Executive’s annual cash bonus at target for the year oftermination or (b) an amount equal to the average bonus rate paid to theExecutive for the two years prior to termination multiplied by the Executive’sthen current annual base salary, payable over the twelve months following thedate of termination (subject to deferral for a period of time under Section409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), as maybe necessary to prevent any accelerated or additional tax under Section409A).  In addition, the Executive wouldbe entitled to a lump sum amount equal to his or her annual target bonus forthe year of termination, 

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provided iftermination is prior to September 30th, the amount shall be pro-rated forportion of year the Executive was employed, payable at the time payments areotherwise made under the bonus plan. The Executive would be entitled tocontinued coverage under the Company’s group health benefits for twelve months(or earlier if otherwise covered by subsequent employer comparable benefits)(or if plans are terminated or coverage is not permissible under law, a cashstipend in an equivalent amount to what the Company would otherwise pay forsuch Executive’s group health premium). The Executive would be entitled to any other vested and accrued benefitsunder plans in which he or she participates.

Theseverance payments and benefits to be paid under the terms of the CIC Agreementsare subject to the Executive entering into a severance agreement, including ageneral waiver and release of claims against the Company and its affiliates,and the Executive’s continued compliance with the restrictive covenants towhich the Executives are otherwise bound pursuant to other agreements in placewith the Company.

                Copies of the CIC Agreements arefiled as Exhibits 10.1 and 10.2 to this Form 10-Q and the foregoing isqualified by the terms of the CIC Agreements.

(b)  Not applicable.

#### **ITEM 6.          EXHIBITS**

**(a)****                                 **Exhibits

10.1                           Changein Control Severance Agreement, dated May 10, 2007, by and among Visant HoldingCorp., Visant Corporation and Paul B. Carousso.*

10.2                           Changein Control Severance Agreement, dated May 10, 2007, by and among Visant HoldingCorp., Visant Corporation and Marie D. Hlavaty.*

31.1                           Certificationof President and Chief Executive Officer pursuant to Section 302 of theSarbanes-Oxley Act of 2002 for Visant Holding Corp.

31.2                          Certificationof Vice President, Finance pursuant to Section 302 of the Sarbanes-Oxley Act of2002 for Visant Holding Corp.

31.3                          Certificationof President and Chief Executive Officer pursuant to Section 302 of theSarbanes-Oxley Act of 2002 for Visant Corporation.

31.4                          Certificationof Vice President, Finance pursuant to Section 302 of the Sarbanes-Oxley Act of2002 for Visant Corporation.

32.1                          Certificationof President and Chief Executive Officer pursuant to Section 906 of theSarbanes-Oxley Act of 2002 for Visant Holding Corp.

32.2                          Certification of Vice President, Financepursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Visant HoldingCorp.

32.3                          Certificationof President and Chief Executive Officer pursuant to Section 906 of theSarbanes-Oxley Act of 2002 for Visant Corporation.

32.4                          Certification of Vice President, Financepursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for VisantCorporation.

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* Management contract or compensatory plan or arrangement.

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**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|                     | ** ** | **VISANT  HOLDING CORP.**                       |
|---------------------|------------|-------------------------------------------------|
|                |       |                                            |
|                |       |                                            |
| Date: May 14,  2007 |       | /s/ Marc L.  Reisch                             |
|                |       | Marc L. Reisch                                  |
|                | * *   | *President  and*                                |
|                | * *   | *Chief Executive  Officer*                      |
|                |       | (principal  executive officer)                  |
|                |       |                                            |
| Date: May 14,  2007 |       | /s/ Paul B.  Carousso                           |
|                |       | Paul B. Carousso                                |
|                | * *   | *Vice  President, Finance*                      |
|                | * *   | *(principal  financial and accounting officer)* |

 

**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|                     | ** ** | **VISANT  CORPORATION**                         |
|---------------------|------------|-------------------------------------------------|
|                |       |                                            |
|                |       |                                            |
| Date: May 14,  2007 |       | /s/ Marc L.  Reisch                             |
|                |       | Marc L. Reisch                                  |
|                | * *   | *President  and*                                |
|                | * *   | *Chief  Executive Officer*                      |
|                |       | (principal  executive officer)                  |
|                |       |                                            |
| Date: May 14,  2007 |       | /s/ Paul B.  Carousso                           |
|                |       | Paul B. Carousso                                |
|                | * *   | *Vice  President, Finance*                      |
|                | * *   | *(principal  financial and accounting officer)* |

 

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