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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | -------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------



| |  | For the Quarterly Period Ended June 28, 2003
| |  | --------------------------------------------



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | --------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------



Commission file number 1-5064





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Jostens, Inc.

(Exact name of Registrant as specified in its charter)



|Minnesota                                                     |  | 41-0343440                             
|------------------------------------------------------------- |  | ---------------------------------------
|(State or other jurisdiction of incorporation or organization |  | (I.R.S. employer identification number)
|                                                              | 
|5501 Norman Center Drive, Minneapolis, Minnesota              |  | 55437                                  
|(Address of principal executive offices)                      |  | (Zip code)                             



Registrants
telephone number: (952) 830-3300



---



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



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



On August 8, 2003, there were 1,000 shares of the Registrants common
stock outstanding.

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##### Table of Contents

Jostens, Inc. and Subsidiaries



|                                |  |                                                                                                                    |  | Page
|------------------------------- |  | ------------------------------------------------------------------------------------------------------------------ |  | ----
|                                | 
|Part I    Financial Information |  |                                                                                                                   
|                                |  |                                                                                                                   
|Item 1.                         |  | Financial Statements (Unaudited)                                                                                   |  |     
|                                |  |                                                                                                                   
|                                |  | Condensed Consolidated Statements of Operations for the three and six months ended June 28, 2003 and June 29, 2002 |  | 1   
|                                |  |                                                                                                                   
|                                |  | Condensed Consolidated Balance Sheets as of June 28, 2003, June 29, 2002 and December 28, 2002                     |  | 2   
|                                |  |                                                                                                                   
|                                |  | Condensed Consolidated Statements of Cash Flows for the six months ended June 28, 2003 and June 29, 2002           |  | 3   
|                                |  |                                                                                                                   
|                                |  | Notes to Condensed Consolidated Financial Statements                                                               |  | 4   
|                                |  |                                                                                                                   
|Item 2.                         |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                              |  | 10  
|                                |  |                                                                                                                   
|Item 3.                         |  | Quantitative and Qualitative Disclosures about Market Risk                                                         |  | 15  
|                                |  |                                                                                                                   
|Item 4.                         |  | Controls and Procedures                                                                                            |  | 15  
|                               
|Part II    Other Information   
|                                |  |                                                                                                                   
|Item 1.                         |  | Legal Proceedings                                                                                                  |  | 17  
|                                |  |                                                                                                                   
|Item 6.                         |  | Exhibits and Reports on Form 8-K                                                                                   |  | 17  
|                                | 
|Signatures                      |  | 18                                                                                                                



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##### Table of Contents

PART I FINANCIAL INFORMATION



|ITEM 1. |  | FINANCIAL STATEMENTS
|------- |  | --------------------



JOSTENS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



|                                                             |  | Three months ended |         |   | Six months ended |  
|------------------------------------------------------------ |  | ------------------ | ------- | - | ---------------- | -
|In thousands, except per share data                          |  | June 28,2003       |         |   | June 29,2002     |  
|Net sales                                                    |  | $                  | 374,936 |   |                  | $
|Cost of products sold                                        |  |                    | 161,005 |   |                  |  
|                                                             |  |                    |         |   |                  |  
|Gross profit                                                 |  |                    | 213,931 |   |                  |  
|Selling and administrative expenses                          |  |                    | 108,589 |   |                  |  
|                                                             |  |                    |         |   |                  |  
|Operating income                                             |  |                    | 105,342 |   |                  |  
|Net interest expense                                         |  |                    | 13,535  |   |                  |  
|                                                             |  |                    |         |   |                  |  
|Income from continuing operations before income taxes        |  |                    | 91,807  |   |                  |  
|Provision for income taxes                                   |  |                    | 38,100  |   |                  |  
|                                                             |  |                    |         |   |                  |  
|Income from continuing operations                            |  |                    | 53,707  |   |                  |  
|Discontinued operations, net of tax                          |  |                    |        |   |                  |  
|                                                             |  |                    |         |   |                  |  
|Net income                                                   |  |                    | 53,707  |   |                  |  
|Dividends and accretion on redeemable preferred shares       |  |                    | (3,320  | ) |                  |  
|                                                             |  |                    |         |   |                  |  
|Net income available to common shareholders                  |  | $                  | 50,387  |   |                  | $
|                                                             |  |                    |         |   |                  |  
|                                                             |  |                    |         |  
|Basic net income per common share                            |  | $                  | 5.63    |   |                  | $
|                                                             |  |                    |         |  
|Diluted net income per common share                          |  | $                  | 5.12    |   |                  | $
|                                                             |  |                    |         |  
|Weighted average common shares outstanding                   |  |                    | 8,956   |   |                  |  
|Dilutive effect of warrants and stock options                |  |                    | 883     |   |                  |  
|                                                             |  |                    |         |   |                  |  
|Weighted average common shares outstanding assuming dilution |  |                    | 9,839   |   |                  |  
|                                                             |  |                    |         |   |                  |  



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



1



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##### Table of Contents

JOSTENS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)



|In thousands, except per share data                                                                                                                                                                                                       |  | June 28,2003 |          |   | June 29,2002 |   |          | December 28,2002 | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ------------ | - | -------- | ---------------- | 
|ASSETS                                                                                                                                                                                                                                    |  |              |          |   |              |   |          |                  | 
|Current assets                                                                                                                                                                                                                            |  |              |          |   |              |   |          |                  | 
|Cash and cash equivalents                                                                                                                                                                                                                 |  | $            | 22,940   |   |              | $ | 59,148   |                  | 
|Accounts receivable, net (Note 5)                                                                                                                                                                                                         |  |              | 87,860   |   |              |   | 80,418   |                  | 
|Inventories, net (Note 5)                                                                                                                                                                                                                 |  |              | 45,528   |   |              |   | 47,167   |                  | 
|Salespersons overdrafts, net of allowance of $8,629, $6,595 and $8,034                                                                                                                                                                    |  |              | 17,701   |   |              |   | 14,913   |                  | 
|Other current assets, including deferred tax assets of $13,718, $19,964 and $13,631                                                                                                                                                       |  |              | 19,116   |   |              |   | 25,153   |                  | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 
|Total current assets                                                                                                                                                                                                                      |  |              | 193,145  |   |              |   | 226,799  |                  | 
|Noncurrent assets                                                                                                                                                                                                                         |  |              |          |   |              |   |          |                  | 
|Goodwill and other intangibles, net                                                                                                                                                                                                       |  |              | 19,656   |   |              |   | 14,763   |                  | 
|Deferred financing costs, net                                                                                                                                                                                                             |  |              | 20,699   |   |              |   | 25,194   |                  | 
|Other                                                                                                                                                                                                                                     |  |              | 36,690   |   |              |   | 34,520   |                  | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 
|Total other assets                                                                                                                                                                                                                        |  |              | 77,045   |   |              |   | 74,477   |                  | 
|                                                                                                                                                                                                                                          |  |              |         
|Property and equipment                                                                                                                                                                                                                    |  |              | 277,452  |   |              |   | 274,431  |                  | 
|Less accumulated depreciation                                                                                                                                                                                                             |  |              | (216,757 | ) |              |   | (209,562 | )                | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 
|Property and equipment, net                                                                                                                                                                                                               |  |              | 60,695   |   |              |   | 64,869   |                  | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 
|                                                                                                                                                                                                                                          |  | $            | 330,885  |   |              | $ | 366,145  |                  | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                                                                                                                                                     |  |              |          |   |              |   |          |                  | 
|Current liabilities                                                                                                                                                                                                                       |  |              |          |   |              |   |          |                  | 
|Short-term borrowings                                                                                                                                                                                                                     |  | $            | 8,880    |   |              | $ |         |                  | 
|Accrued employee compensation and related taxes                                                                                                                                                                                           |  |              | 23,389   |   |              |   | 26,519   |                  | 
|Commissions payable                                                                                                                                                                                                                       |  |              | 42,453   |   |              |   | 41,996   |                  | 
|Customer deposits                                                                                                                                                                                                                         |  |              | 58,583   |   |              |   | 59,662   |                  | 
|Income taxes payable                                                                                                                                                                                                                      |  |              | 37,241   |   |              |   | 48,556   |                  | 
|Current portion of long-term debt                                                                                                                                                                                                         |  |              | 18,411   |   |              |   | 22,049   |                  | 
|Other accrued liabilities                                                                                                                                                                                                                 |  |              | 36,333   |   |              |   | 35,552   |                  | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 
|Total current liabilities                                                                                                                                                                                                                 |  |              | 225,290  |   |              |   | 234,334  |                  | 
|Noncurrent liabilities                                                                                                                                                                                                                    |  |              |          |   |              |   |          |                  | 
|Long-term debtless current maturities, net of unamortized original issue discount of $15,679, $17,547 and
$16,343                                                                                                                        |  |              | 554,463  |   |              |   | 610,547  |                  | 
|Other noncurrent liabilities, including deferred tax liabilities of $10,533, $4,077 and $9,668                                                                                                                                            |  |              | 16,895   |   |              |   | 15,342   |                  | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 
|Total liabilities                                                                                                                                                                                                                         |  |              | 796,648  |   |              |   | 860,223  |                  | 
|Commitments and contingencies                                                                                                                                                                                                             |  |              |          |   |              |   |          |                  | 
|Redeemable preferred shares $.01 par value, liquidation preference: $90,358; authorized: 308 shares; issued and
outstanding: June 28, 200390; June 29, 200279; December 28, 200284                                                     |  |              | 77,316   |   |              |   | 64,710   |                  | 
|Preferred shares $.01 par value, authorized: 4,000 shares; issued and outstanding in the form of redeemable preferred shares
listed above: June 28, 200390; June 29, 200279: December 28, 200284; undesignated: 3,910 at June 28, 2003 |  |              |         |   |              |   |         |                  | 
|Shareholders deficit                                                                                                                                                                                                                     |  |              |          |   |              |   |          |                  | 
|Common shares (Note 9)                                                                                                                                                                                                                    |  |              | 1,003    |   |              |   | 1,003    |                  | 
|Additional paid-in-capitalwarrants                                                                                                                                                                                                       |  |              | 20,964   |   |              |   | 24,733   |                  | 
|Officer notes receivable                                                                                                                                                                                                                  |  |              | (1,670   | ) |              |   | (1,578   | )                | 
|Accumulated deficit                                                                                                                                                                                                                       |  |              | (553,421 | ) |              |   | (572,845 | )                | 
|Accumulated other comprehensive loss                                                                                                                                                                                                      |  |              | (9,955   | ) |              |   | (10,101  | )                | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 
|Total shareholders deficit                                                                                                                                                                                                               |  |              | (543,079 | ) |              |   | (558,788 | )                | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 
|                                                                                                                                                                                                                                          |  | $            | 330,885  |   |              | $ | 366,145  |                  | 
|                                                                                                                                                                                                                                          |  |              |          |   |              |   |          |                  | 



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



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##### Table of Contents

JOSTENS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



|                                                                                  |  | Six months ended |        
|--------------------------------------------------------------------------------- |  | ---------------- | -------
|In thousands                                                                      |  | June 28,2003     |        
|Operating activities                                                              |  |                  |        
|Net income                                                                        |  | $                | 45,109 
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                  |        
|Depreciation                                                                      |  |                  | 10,941 
|Amortization of debt discount and deferred financing costs                        |  |                  | 2,664  
|Other amortization                                                                |  |                  | 1,687  
|Other                                                                             |  |                  | 95     
|Changes in assets and liabilities:                                                |  |                  |        
|Accounts receivable                                                               |  |                  | (28,649
|Inventories                                                                       |  |                  | 24,387 
|Salespersons overdrafts                                                           |  |                  | 8,834  
|Accounts payable                                                                  |  |                  | (3,338 
|Accrued employee compensation and related taxes                                   |  |                  | (8,137 
|Commissions payable                                                               |  |                  | 26,411 
|Customer deposits                                                                 |  |                  | (76,132
|Income taxes payable                                                              |  |                  | 29,933 
|Interest payable                                                                  |  |                  | (1,310 
|Net liabilities of discontinued operations                                        |  |                  | (640   
|Other                                                                             |  |                  | 298    
|                                                                                  |  |                  |        
|Net cash provided by operating activities                                         |  |                  | 32,153 
|                                                                                  |  |                  |        
|Investing activities                                                              |  |                  |        
|Acquisition of business, net of cash acquired                                     |  |                  | (5,008 
|Purchases of property and equipment                                               |  |                  | (5,369 
|Other investing activities, net                                                   |  |                  | (407   
|                                                                                  |  |                  |        
|Net cash used for investing activities                                            |  |                  | (10,784
|                                                                                  |  |                  |        
|Financing activities                                                              |  |                  |        
|Net short-term borrowings (repayments)                                            |  |                  | (1,420 
|Principal payments on long-term debt                                              |  |                  | (8,218 
|Other financing activities, net                                                   |  |                  |       
|                                                                                  |  |                  |        
|Net cash used for financing activities                                            |  |                  | (9,638 
|                                                                                  |  |                  |        
|Effect of exchange rate changes on cash and cash equivalents                      |  |                  | 271    
|                                                                                  |  |                  |        
|Change in cash and cash equivalents                                               |  |                  | 12,002 
|Cash and cash equivalents, beginning of period                                    |  |                  | 10,938 
|                                                                                  |  |                  |        
|Cash and cash equivalents, end of period                                          |  | $                | 22,940 
|                                                                                  |  |                  |        



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



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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)

Jostens, Inc. and Subsidiaries



1. Basis of Presentation



We prepared our accompanying unaudited condensed consolidated financial statements following
the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain notes or other financial information normally required by accounting principles generally accepted in the United States
of America have been condensed or omitted. Therefore, we suggest that these financial statements be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the fiscal year ended December 28,
2002 (2002 Form 10-K). The Condensed Consolidated Balance Sheet as of December 28, 2002 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by generally
accepted accounting principles for complete financial information.



Revenues,
expenses, cash flows, assets and liabilities can and do vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year.



In our opinion, the accompanying unaudited condensed consolidated financial statements
include all adjustments (consisting of normal recurring items) considered necessary to present fairly, when read in conjunction with the 2002 Form 10-K, our financial position, results of operations and cash flows for the periods presented. Certain
balances have been reclassified to conform to the 2003 presentation.



2.
Earnings Per Common Share



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



Options to purchase 42,250 shares of common stock were outstanding at June 29, 2002, but were excluded from the computation of common share equivalents for the six-month
period ended June 29, 2002 because they were antidilutive.



3. Stock-Based
Compensation



We apply the intrinsic method prescribed by Accounting
Principles Board Opinion (APB) 25, Accounting for Stock Issued to Employees,and related interpretations in accounting for stock options granted to employees and non-employee directors. Accordingly, no compensation cost has been
reflected in net income for these plans since all options are granted at or above fair value. The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of Statement of
Financial Accounting Standards (SFAS) 123, Accounting for Stock-Based Compensation.



|                                                                                                                                   |  | Three months ended |        |   | Six months ended |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | ---------------- | -
|In thousands, except per share data                                                                                                |  | June 28, 2003      |        |   | June 29, 2002    |  
|Net income available to common shareholders                                                                                        |  |                    |        |   |                  |  
|As reported                                                                                                                        |  | $                  | 50,387 |   |                  | $
|Deduct total stock-based employee compensation expense determined under fair value-based method for all awards, net of tax
effects |  |                    | (157   | ) |                  |  
|                                                                                                                                   |  |                    |        |   |                  |  
|Proforma net income available to common shareholders                                                                               |  | $                  | 50,230 |   |                  | $
|                                                                                                                                   |  |                    |        |   |                  |  
|Net income per share                                                                                                               |  |                    |        |   |                  |  
|Basicas reported                                                                                                                  |  | $                  | 5.63   |   |                  | $
|Basicpro forma                                                                                                                    |  | $                  | 5.61   |   |                  | $
|                                                                                                                                   |  |                    |        |  
|Dilutedas reported                                                                                                                |  | $                  | 5.12   |   |                  | $
|Dilutedproforma                                                                                                                   |  | $                  | 5.11   |   |                  | $



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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)

Jostens, Inc. and Subsidiaries



4. Comprehensive Income



Comprehensive income and its components, net of tax, are as follows:



|                                                     |  | Three months ended |        | Six months ended
|---------------------------------------------------- |  | ------------------ | ------ | ----------------
|In thousands                                         |  | June 28, 2003      |        |                 
|Net income                                           |  | $                  | 53,707 |                 
|Change in cumulative translation adjustment          |  |                    | (175   | )               
|Change in fair value of interest rate swap agreement |  |                    | 601    |                 
|Change in fair value of foreign currency hedge       |  |                    |       |                 
|                                                     |  |                    |        |                 
|Comprehensive income                                 |  | $                  | 54,133 |                 
|                                                     |  |                    |        |                 



The following amounts were included in
accumulated other comprehensive loss (AOCL) as of June 28, 2003:



|In thousands                 |  | Foreign currency translation |        |   | Minimum pension liability |   |        | Fair value of interest rate swap |  |   | Accumulated other comprehensive loss |  
|---------------------------- |  | ---------------------------- | ------ | - | ------------------------- | - | ------ | -------------------------------- |  | - | ------------------------------------ | -
|Balance at December 28, 2002 |  | $                            | (6,166 | ) |                           | $ | (3,329 | )                                |  | $ | (1,322                               | )
|Current period change        |  |                              | (327   | ) |                           |   |       |                                  |  |   | 1,189                                |  
|                             |  |                              |        |   |                           |   |        |                                  |  |   |                                      |  
|Balance at June 28, 2003     |  | $                            | (6,493 | ) |                           | $ | (3,329 | )                                |  | $ | (133                                 | )
|                             |  |                              |        |   |                           |   |        |                                  |  |   |                                      |  



5. Accounts Receivable and
Inventories



Net accounts receivable were comprised of the following:



|In thousands                    |  | June 28, 2003 |         |   | June 29, 2002 |   |         | December 28, 2002 | 
|------------------------------- |  | ------------- | ------- | - | ------------- | - | ------- | ----------------- | 
|Trade receivables               |  | $             | 100,014 |   |               | $ | 94,351  |                   | 
|Allowance for doubtful accounts |  |               | (2,569  | ) |               |   | (3,789  | )                 | 
|Allowance for sales returns     |  |               | (9,585  | ) |               |   | (10,144 | )                 | 
|                                |  |               |         |   |               |   |         |                   | 
|Total accounts receivable, net  |  | $             | 87,860  |   |               | $ | 80,418  |                   | 
|                                |  |               |         |   |               |   |         |                   | 



Net inventories were comprised of the
following:



|In thousands              |  | June 28, 2003 |        |   | June 29, 2002 |   |        | December 28, 2002 | 
|------------------------- |  | ------------- | ------ | - | ------------- | - | ------ | ----------------- | 
|Raw material and supplies |  | $             | 12,657 |   |               | $ | 12,172 |                   | 
|Work-in-process           |  |               | 22,753 |   |               |   | 24,228 |                   | 
|Finished goods            |  |               | 12,116 |   |               |   | 13,107 |                   | 
|Reserve for obsolescence  |  |               | (1,998 | ) |               |   | (2,340 | )                 | 
|                          |  |               |        |   |               |   |        |                   | 
|Total inventories, net    |  | $             | 45,528 |   |               | $ | 47,167 |                   | 
|                          |  |               |        |   |               |   |        |                   | 



6. Goodwill and Other Intangible
Assets



The changes in the net carrying amount of goodwill for the first
six months of fiscal 2003 were as follows:



|In thousands                        |  |  
|----------------------------------- |  | -
|Balance at December 28, 2002        |  | $
|Goodwill acquired during the period |  |  
|Currency translation                |  |  
|                                    |  |  
|Balance at June 28, 2003            |  | $
|                                    |  |  



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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)

Jostens, Inc. and Subsidiaries



The components of other amortizable intangible assets were as follows:



|                       |  | June 28, 2003         |       |                          | December 28, 2002 |     
|---------------------- |  | --------------------- | ----- | ------------------------ | ----------------- | ----
|In thousands           |  | Gross Carrying Amount |       | Accumulated Amortization |                   |     
|Customer relationships |  | $                     | 4,146 |                          | $                 | (601
|Other                  |  |                       | 24    |                          |                   | (8  
|                       |  |                       |       |                          |                   |     
|                       |  | $                     | 4,170 |                          | $                 | (609
|                       |  |                       |       |                          |                   |     



There were no amortizable intangible
assets as of June 29, 2002. Amortization expense for intangible assets during the first six months of 2003 was $0.6 million. Estimated annual amortization expense for fiscal 2003 and succeeding fiscal years based on intangible assets at June 28,
2003 is expected to be $1.0 million in 2003, $0.8 million in 2004, 2005, and 2006, and $0.7 million in 2007.



In January 2003, we acquired the assets of a photography business for $5.0 million in cash. The acquisition was recorded using the purchase method of accounting. The purchase price allocation was $0.4 million to net
tangible assets, $3.2 million to amortizable intangible assets and $1.4 million to goodwill. The operating results of this acquisition are included in our consolidated financial statements from the date of the acquisition. Pro forma results of
operations have not been presented since the effect of this acquisition on our financial position and results of operations is not material.



7. Financing Arrangements



Long-term debt consists of the following:



|In thousands                                                                                                                                                                                                                                                      |  | June 28, 2003 |         | June 29, 2002 |   | December 28, 2002
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ------------- | - | -----------------
|Borrowings under senior secured credit facility:                                                                                                                                                                                                                  |  |               |         |               |   |                  
|Term Loan A, variable rate, 3.36 percent at June 28, 2003, 4.11 percent at June 29, 2002 and 3.65 percent at December 28, 2002,
with semi-annual principal and interest payments through May 2006                                                                 |  | $             | 51,359  |               | $ | 94,852           
|Term Loan B, variable rate, 5.36 percent at June 29, 2002                                                                                                                                                                                                         |  |               |        |               |   | 330,291          
|Term Loan C, variable rate, 3.86 percent at June 28, 2003 and 4.15 percent at December 28, 2002, with semi-annual principal and
interest payments through December 2009                                                                                           |  |               | 319,694 |               |   |                 
|Senior subordinated notes, 12.75 percent fixed rate, net of discounts of $15,679 at June 28, 2003, $17,547 at June 29, 2002 and
$16,343 at December 28, 2002, with semi-annual interest payments of $13.9 million, principal due and payable at maturityMay 2010 |  |               | 201,821 |               |   | 207,453          
|                                                                                                                                                                                                                                                                  |  |               |         |               |   |                  
|                                                                                                                                                                                                                                                                  |  |               | 572,874 |               |   | 632,596          
|Less current portion                                                                                                                                                                                                                                              |  |               | 18,411  |               |   | 22,049           
|                                                                                                                                                                                                                                                                  |  |               |         |               |   |                  
|                                                                                                                                                                                                                                                                  |  | $             | 554,463 |               | $ | 610,547          
|                                                                                                                                                                                                                                                                  |  |               |         |               |   |                  



We have a $150.0 million revolving
credit facility that expires on May 31, 2006. As of June 28, 2003, there was $8.9 million outstanding in the form of short-term borrowings at our Canadian subsidiary at a weighted average interest rate of 7.25% and an additional $9.9 million
outstanding in the form of letters of credit, leaving $131.2 million available under this facility.



The senior secured credit facility and the senior subordinated notes contain certain cross-default provisions whereby a violation of a covenant under one debt obligation would, consequently, violate covenants under
the other debt obligation. As of June 28, 2003, we were in compliance with all covenants.



6



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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)

Jostens, Inc. and Subsidiaries



As of June 28, 2003, June 29, 2002 and December 28, 2002, the fair value of our debt, excluding the senior subordinated notes, approximated its carrying value. The fair
value of the senior subordinated notes as of June 28, 2003, June 29, 2002 and December 28, 2002 was $256.7 million, $252.0 million and $242.2 million, respectively, based on the quoted market price.



8. Commitments



We are subject to market risk associated with changes in the price of gold. To mitigate our commodity price risk, we enter into gold forward
contracts to purchase gold based upon the estimated ounces needed to satisfy projected customer requirements. Our purchase commitment at June 28, 2003 was $8.1 million with delivery dates occurring throughout 2003. These forward purchase contracts
are considered normal purchases and therefore not subject to the requirements of SFAS 133, Accounting for Derivative Instruments and Hedging Activities.The fair market value of our open gold forward contracts as of June 28, 2003
was $8.7 million and was calculated by valuing each contract at quoted futures prices.



9. Shareholders Deficit



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



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



|                                    |  |          |        |                  |        | Issued and Outstanding Shares
|----------------------------------- |  | -------- | ------ | ---------------- | ------ | -----------------------------
|In thousands, except par value data |  | ParValue |        | AuthorizedShares |        | June 28,2003                 
|Class A                             |  | $        | .331/3 |                  | 4,200  |                              
|Class B                             |  | $        | .01    |                  | 5,300  |                              
|Class C                             |  | $        | .01    |                  | 2,500  |                              
|Class D                             |  | $        | .01    |                  | 20     |                              
|Class E                             |  | $        | .01    |                  | 1,900  |                              
|Undesignated                        |  | $        | .01    |                  | 12,020 |                              
|                                    |  |          |        |                  |        |                              
|                                    |  |          |        |                  | 25,940 |                              
|                                    |  |          |        |                  |        |                              



10. Discontinued Operations



In conjunction with exiting our Recognition business on December 3, 2001,
we recorded a $27.4 million pre-tax loss on disposal in 2001 for the discontinued operations. The pre-tax loss on disposal consisted of a non-cash charge of $11.1 million to write off certain net assets of the Recognition business plus a $16.3
million charge for accrued costs related to exiting the Recognition business. Components of the accrued disposal costs included in other accrued liabilities in our Condensed Consolidated Balance Sheet are as follows:



|                                                        |  | Initialcharge |        | Prioraccrual |      | Net adjustmentsin 2002 |  |      | Utilization |   |  | Balance June 28, 2003
|------------------------------------------------------- |  | ------------- | ------ | ------------ | ---- | ---------------------- |  | ---- | ----------- | - |  | ---------------------
|In thousands                                            |  |               |        |              | 2002 |                        |  | 2003 |             |  
|Employee separation benefits and other related costs    |  | $             | 6,164  |              | $    |                       |  | $    | (523        | ) |  | $                    
|Phase-out costs of exiting the Recognition business     |  |               | 4,255  |              |      |                       |  |      | (1,365      | ) |  |                      
|Salesperson transition benefits                         |  |               | 2,855  |              |      | 1,236                  |  |      | (191        | ) |  |                      
|Other costs related to exiting the Recognition business |  |               | 3,018  |              |      | 1,434                  |  |      | (228        | ) |  |                      
|                                                        |  |               |        |              |      |                        |  |      |             |   |  |                      
|                                                        |  | $             | 16,292 |              | $    | 2,670                  |  | $    | (2,307      | ) |  | $                    
|                                                        |  |               |        |              |      |                        |  |      |             |   |  |                      



7



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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)

Jostens, Inc. and Subsidiaries



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



11. New Accounting Standards



SFAS 149  Amendment of Statement 133 on
Derivative Instruments and Hedging Activities

In April 2003, the Financial Accounting Standards Board (FASB) issued SFAS 149, which amends and
clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS 133. In general, SFAS 149
is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. We do not expect that the adoption of SFAS 149 will have a material impact on our financial position or results of
operations.



SFAS 150  Accounting
for Certain Financial Instruments with Characteristics of both Liabilities and Equity

In May 2003, the FASB issued SFAS 150, which establishes
standards for how certain financial instruments with characteristics of both liabilities and equity are classified and requires that a financial instrument that is within its scope be classified as a liability (or as an asset in some circumstances).
SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective for existing issuances at the beginning of the first interim period beginning after June 15, 2003. We are adopting SFAS 150 as it
becomes effective. We expect to reclassify the redeemable preferred securities ($77.3 million at June 28, 2003), from the mezzanine section of our Condensed Consolidated Balance Sheet to the liabilities section.



12. Subsequent Events



On July 29, 2003, Ring Acquisition Corp. (MergerCo), a newly-formed company indirectly controlled by DLJ Merchant Banking
Partners III, L.P. and certain of its affiliated funds (collectively, the DLJMB Funds), each of which is affiliated with CSFB Private Equity, merged with and into Jostens, Inc., pursuant to an Agreement and Plan of Merger, dated as of
June 17, 2003 (the Merger Agreement), among MergerCo, Jostens Holding Corp. (formerly known as Ring Holding Corp.) and Jostens, Inc. (the merger). Jostens, Inc. was the surviving corporation in the merger and, at the
effective time of the merger, became an indirect wholly owned subsidiary of Ring Holding Corp.



Pursuant to the Merger Agreement, (i) each issued and outstanding share of common stock, together with all shares represented by exercisable stock options and warrants, was converted into the right to receive $48.25
in cash less the applicable per share exercise price of such stock option or warrant and (ii) each share of our 14% redeemable, payment-in-kind, preferred stock will remain outstanding unless tendered by the holders thereof pursuant to the change of
control offer described below.



Prior to the merger, Investcorp International,
Inc., its co-investors and MidOcean Partners collectively beneficially owned approximately 88% of our common stock. Upon consummation of the merger (the closing), the DLJMB Funds became beneficial owners of approximately 99% of our
post-merger common stock.



In connection with the merger, we refinanced our
existing senior secured credit facility through the establishment of new senior secured credit facilities (the credit facilities). The credit facilities consist of: (i) a $475.0 million term loan which was fully funded at the time of the
closing; (ii) a $150.0 million revolving credit facility of which approximately $11.0 million was drawn at the closing to refinance our Canadian subsidiarys then-existing borrowings; and (iii) an incremental $50.0 million change of control
term loan, the proceeds of which may be used solely to fund certain change of control payments due to holders of our 12.75% senior subordinated notes due 2010 (the notes) who elect to tender their notes pursuant to the notes change of
control offer that we commenced on July 30, 2003 (the Notes Offer). In addition, we may use the revolving credit facility from time to time after the closing to finance general corporate needs and for working capital purposes. We may
also borrow up to $270.0 million of bridge term loans solely for the purpose of financing certain change of control payments due to holders of the notes and to holders of the preferred stock who elect to tender their preferred stock pursuant to the
preferred stock change of control offer that we commenced on July 30, 2003 (the Preferred Stock Offer). We were required to commence the Notes Offer and the Preferred Stock Offer pursuant to the terms of the indenture relating to the
notes and the certificate of designations relating to the preferred stock, respectively, upon a change of control of Jostens, Inc.



8



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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)

Jostens, Inc. and Subsidiaries



Commitments for any amounts not borrowed in respect of the $50.0 million change of control term loan and the $270.0 million bridge term loan will be terminated following
the consummation of the Notes Offer and the Preferred Stock Offer and will not be available for our future use. Substantially all of the assets of our operations were used to secure the credit facilities.



The term loans bear a variable interest rate based upon either the London Interbank Offered
Rate (LIBOR) or an alternative base rate, which is based upon the greater of the federal funds effective rate plus 0.5% or the prime rate, plus a fixed margin. Future mandatory principal payment obligations under the term loans are due
semi-annually beginning on July 2, 2004 at an amount equal to 2.5% of the term loans. Thereafter, semi-annual principal payments gradually increase to an amount equal to 7.5% of the term loans through July 2009, with two final principal payments due
in December 2009 and July 2010, each equal to 25.0% of the term loans.



Under
the $150.0 million revolving credit facility, we may borrow funds and elect to pay interest under either LIBOR or the alternative base rate plus applicable margins. The revolving credit facility contains a sub-facility that allows our
Canadian subsidiary to borrow funds not to exceed $20.0 million of the total $150.0 million facility. We have guaranteed the revolving credit facility of our Canadian subsidiary upon the occurrence of any event of default under any credit document.
The revolving credit facility expires on July 29, 2008.



The credit facilities
require that we meet certain financial covenants, ratios and tests, including a maximum leverage ratio, a maximum senior leverage ratio and a minimum interest coverage ratio. In addition, we are required to pay certain fees in connection with the
credit facilities, including letter of credit fees, agency fees and commitment fees on the average daily unused portion of the revolving credit facility.



At June 28, 2003, we have $2.8 million of prepaid management fees paid to Investcorp International, Inc. and $14.2 million of deferred financing charges related to our
senior secured credit facility, both included in the noncurrent assets section of our Condensed Consolidated Balance Sheet. We anticipate that these assets will be expensed upon consummation of the merger.



After giving effect to the merger, the Board of Directors of Jostens, Inc. consisted of the
following seven directors, all of whom were duly appointed by the DLJMB Funds: Carl Blowers, Vice Chairman  Operations and Technology, Jostens, Inc.; Robert Buhrmaster, Chairman of the Board and Chief Executive Officer, Jostens, Inc.; David
Burgstahler, Principal, DLJ Merchant Banking Partners III, L.P.; Thomas R. Nides, Chief Administrative Officer, Credit Suisse First Boston; James Quella, Managing Director and Operating Partner, DLJ Merchant Banking Partners III, L.P.; Lawrence
M.v.D. Schloss, Global Head of Private Equity, Credit Suisse First Boston; and David Wittels, Managing Director, DLJ Merchant Banking Partners III, L.P.



9



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##### Table of Contents

|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
|------- |  | --------------------------------------------------------------------------

|OPERATIONS |  | 
|---------- |  | 



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



Any change in the following factors may adversely affect our financial results:



| |  |  | our ability to satisfy our debt obligations, including related covenants;
| | - |  | -------------------------------------------------------------------------



| |  |  | the seasonality of our sales and operating income;
| | - |  | --------------------------------------------------



| |  |  | our relationship with our independent sales representatives and employees;
| | - |  | --------------------------------------------------------------------------



| |  |  | the fluctuating prices of raw materials, primarily gold;
| | - |  | --------------------------------------------------------



| |  |  | our dependence on a key supplier for our synthetic and semiprecious stones;
| | - |  | ---------------------------------------------------------------------------



| |  |  | fashion and demographic trends;
| | - |  | -------------------------------



| |  |  | the competitive environment;
| | - |  | ----------------------------



| |  |  | general economic, business and market trends and events;
| | - |  | --------------------------------------------------------



| |  |  | litigation cases, if decided against us; and
| | - |  | --------------------------------------------



| |  |  | a trend of greater environmental awareness and increasingly stringent regulations, which may impose substantial costs upon us.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



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



In the text below, financial statement amounts have been rounded and the percentage changes are based on the financial statements.



10



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##### Table of Contents

RESULTS OF OPERATIONS



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



|                                                      |  | Three months ended |         |   |              |   |         |          |  |   | Six months ended |   |  |              |    |  |              |        
|----------------------------------------------------- |  | ------------------ | ------- | - | ------------ | - | ------- | -------- |  | - | ---------------- | - |  | ------------ | -- |  | ------------ | -------
|Dollars in thousands                                  |  | June 28,2003       |         |   | June 29,2002 |   |         | $ Change |  |   | % Change         |   |  | June 28,2003 |    |  | June 29,2002 |        
|Net sales                                             |  | $                  | 374,936 |   |              | $ | 353,720 |          |  | $ | 21,216           |   |  | 6.0          | %  |  | $            | 496,460
|% of net sales                                        |  |                    | 100.0   | % |              |   | 100.0   | %        |  |   |                  |   |  |              |    |  |              | 100.0  
|Cost of products sold                                 |  |                    | 161,005 |   |              |   | 151,446 |          |  |   | 9,559            |   |  | 6.3          | %  |  |              | 211,750
|% of net sales                                        |  |                    | 42.9    | % |              |   | 42.8    | %        |  |   |                  |   |  |              |    |  |              | 42.7   
|                                                      |  |                    |         |   |              |   |         |          |  |   |                  |   |  |              |    |  |              |        
|Gross profit                                          |  |                    | 213,931 |   |              |   | 202,274 |          |  |   | 11,657           |   |  | 5.8          | %  |  |              | 284,710
|% of net sales                                        |  |                    | 57.1    | % |              |   | 57.2    | %        |  |   |                  |   |  |              |    |  |              | 57.3   
|Selling and administrative expenses                   |  |                    | 108,589 |   |              |   | 100,480 |          |  |   | 8,109            |   |  | 8.1          | %  |  |              | 180,047
|% of net sales                                        |  |                    | 29.0    | % |              |   | 28.4    | %        |  |   |                  |   |  |              |    |  |              | 36.3   
|Operating income                                      |  |                    | 105,342 |   |              |   | 101,794 |          |  |   | 3,548            |   |  | 3.5          | %  |  |              | 104,663
|% of net sales                                        |  |                    | 28.1    | % |              |   | 28.8    | %        |  |   |                  |   |  |              |    |  |              | 21.1   
|Net interest expense                                  |  |                    | 13,535  |   |              |   | 17,016  |          |  |   | (3,481           | ) |  | (20.5        | %) |  |              | 27,475 
|% of net sales                                        |  |                    | 3.6     | % |              |   | 4.8     | %        |  |   |                  |   |  |              |    |  |              | 5.5    
|                                                      |  |                    |         |   |              |   |         |          |  |   |                  |   |  |              |    |  |              |        
|Income from continuing operations before income taxes |  |                    | 91,807  |   |              |   | 84,778  |          |  |   | 7,029            |   |  | 8.3          | %  |  |              | 77,188 
|% of net sales                                        |  |                    | 24.5    | % |              |   | 24.0    | %        |  |   |                  |   |  |              |    |  |              | 15.5   
|Provision for income taxes                            |  |                    | 38,100  |   |              |   | 35,184  |          |  |   | 2,916            |   |  | 8.3          | %  |  |              | 32,079 
|% of net sales                                        |  |                    | 10.2    | % |              |   | 9.9     | %        |  |   |                  |   |  |              |    |  |              | 6.5    
|                                                      |  |                    |         |   |              |   |         |          |  |   |                  |   |  |              |    |  |              |        
|Income from continuing operations                     |  |                    | 53,707  |   |              |   | 49,594  |          |  |   | 4,113            |   |  | 8.3          | %  |  |              | 45,109 
|% of net sales                                        |  |                    | 14.3    | % |              |   | 14.0    | %        |  |   |                  |   |  |              |    |  |              | 9.1    
|Discontinued operations, net of tax                   |  |                    |        |   |              |   | 940     |          |  |   | (940             | ) |  | NM           |    |  |              |       
|% of net sales                                        |  |                    | 0.0     | % |              |   | 0.3     | %        |  |   |                  |   |  |              |    |  |              | 0.0    
|                                                      |  |                    |         |   |              |   |         |          |  |   |                  |   |  |              |    |  |              |        
|Net income                                            |  | $                  | 53,707  |   |              | $ | 50,534  |          |  | $ | 3,173            |   |  | 6.3          | %  |  | $            | 45,109 
|                                                      |  |                    |         |   |              |   |         |          |  |   |                  |   |  |              |    |  |              |        
|% of net sales                                        |  |                    | 14.3    | % |              |   | 14.3    | %        |  |   |                  |   |  |              |    |  |              | 9.1    



NM = percentage not meaningful



Three Months Ended June 28, 2003 Compared to the Three Months Ended June
29, 2002



Net Sales



Net sales increased $21.2 million, or 6.0%, to $374.9 million for the
three months ended June 28, 2003 from $353.7 million for the same period last year. The increase in net sales resulted from price increases yielding an aggregate effect of approximately 2.1% and volume/mix increases averaging approximately 3.9%. The
fluctuation attributable to price increases is net of the effect of a shift in jewelry product mix toward non-precious metals with lower price points.



The increase in volume/mix was partially due to the timing of deliveries for graduation products compared to last year as a result of difficulties encountered in the
implementation of a new enterprise resource planning (ERP) system. The outcome was a shift of some sales volume for the spring season from the first quarter to the second quarter in 2003, however, despite this delay, we still met all of our customer
deadlines. Additional factors contributing to the increase in volume/mix include:



| |  |  | net account growth across most of our product lines;
| | - |  | ----------------------------------------------------



| |  |  | an increase in the number of individual orders for graduation products and higher average purchases per school;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | higher average order size in printing due to an increase in the number of color pages per yearbook;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | volume associated with our acquisition of a photography business; and
| | - |  | ---------------------------------------------------------------------



| |  |  | a favorable foreign exchange variance for our Canadian operations.
| | - |  | ------------------------------------------------------------------



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##### Table of Contents

Gross Profit



Gross profit increased $11.7 million, or 5.8%, to $213.9 million for the three months ended
June 28, 2003 from $202.3 million for the same prior year period. As a percentage of net sales, gross profit margin remained relatively flat at 57.1% for the current three-month period, but was affected by several offsetting factors. Gross profit
results were postively impacted by general price increases across all product lines and a favorable sales mix of our printing products resulting from increased higher margin yearbook volume relative to lower margin commercial printing volume. Gross
profit results were negatively impacted by additional production costs incurred to address the difficulties encountered with the ERP system implementation, increased gold prices compared to last year and a shift in jewelry product mix toward less
profitable non-precious metals.



Selling
and Administrative Expenses



Selling and administrative expenses
increased $8.1 million, or 8.1%, to $108.6 million for the three months ended June 28, 2003 from $100.5 million for the same prior year period. As a percentage of net sales, selling and administrative expenses increased 60 basis points to 29.0% for
the current three-month period from 28.4% for the same period last year. The $8.1 million increase is primarily due to the following:



| |  |  | higher commission expense as a result of increased sales;
| | - |  | ---------------------------------------------------------



| |  |  | strategic investment in our customer service and support functions; and
| | - |  | -----------------------------------------------------------------------



| |  |  | higher spending on information systems and customer service support to address the difficulties encountered with the ERP system implementation.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



Net Interest Expense



Net interest expense decreased $3.5 million to $13.5 million for the three months ended June
28, 2003 as compared to $17.0 million for the three months ended June 29, 2002. The decrease was due to a lower average outstanding debt balance and lower average interest rates.



Provision for Income Taxes



Our effective tax rate was 41.5% for the three months ended June 28, 2003 and June 29, 2002.



Net Income



Net income increased $3.2 million, or 6.3%, to $53.7 million for the three months ended June
28, 2003 from $50.5 million for the same prior year period. In summary, our results for the three-month period were impacted primarily by a combination of increased sales yielding a consistent gross profit margin and lower net interest expense,
which were partially offset by higher spending on selling and administrative expenses.



Six Months Ended June 28, 2003 Compared to the Six Months Ended June 29, 2002



Net Sales



Net sales increased $21.4 million, or 4.5%, to $496.5 million for the six months ended June 28, 2003 from $475.0 million for the same period last year. The increase in
net sales resulted from price increases yielding an aggregate effect of approximately 1.9% and volume/mix increases averaging approximately 2.6%. The fluctuation attributable to price increases is net of the effect of a shift in jewelry product mix
toward non-precious metals with lower price points. Specific factors contributing to the increase in volume/mix include:



| |  |  | net account growth across most of our product lines;
| | - |  | ----------------------------------------------------



| |  |  | an increase in the number of individual orders for graduation products and higher average purchases per school;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | higher average order size in printing due to an increase in the number of color pages per yearbook;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | volume associated with our acquisition of a photography business; and
| | - |  | ---------------------------------------------------------------------



| |  |  | a favorable foreign exchange variance for our Canadian operations.
| | - |  | ------------------------------------------------------------------



These increases were partially offset by lower commercial printing volume and slightly lower same school buy rates for high school class rings compared to
last year.



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##### Table of Contents

Gross Profit



Gross profit increased $8.8 million, or 3.2%, to $284.7 million for the six months ended June 28, 2003 from $275.9 million for the same prior year period. As a percentage
of net sales, gross profit margin decreased 80 basis points to 57.3% for the current six-month period from 58.1% for the same period last year. The decrease in gross profit margin is primarily due to additional production costs and production
inefficiencies incurred to address the difficulties encountered with the ERP system implementation, which we estimate range between $3.0 and $4.0 million. Furthermore, gross profit results were negatively impacted by increased gold prices compared
to last year and a shift in jewelry product mix toward less profitable non-precious metals. Gross profit results were postively impacted by general price increases across all product lines and a favorable sales mix of our printing products resulting
from increased higher margin yearbook volume relative to lower margin commercial printing volume.



Selling and Administrative Expenses



Selling and administrative expenses increased $12.6 million, or 7.5%, to $180.0 million for the six months ended June 28, 2003 from $167.5 million for the same prior year period. As a percentage of net sales, selling and administrative
expenses increased 100 basis points to 36.3% for the current six-month period from 35.3% for the same period last year. The $12.6 million increase is primarily due to the following:



| |  |  | higher commission expense as a result of increased sales;
| | - |  | ---------------------------------------------------------



| |  |  | strategic investment in our customer service and support functions;
| | - |  | -------------------------------------------------------------------



| |  |  | higher spending on information systems and customer service support to address the difficulties encountered with the ERP system implementation, which we estimate to range between
$2.0 and $3.0 million; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher information systems expense due to severance costs and a reduction in capitalized software development costs compared to last year.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



Net Interest Expense



Net interest expense decreased $7.2 million to $27.5 million for the six months ended June
28, 2003 as compared to $34.7 million for the six months ended June 29, 2002. The decrease was due to a lower average outstanding debt balance and lower average interest rates.



Provision for Income Taxes



Our effective tax rate was 41.6% for the six months ended June 28, 2003 compared to 41.5% for the same period last year.



Net Income



Net income increased $1.1 million, or 2.4%, to $45.1 million for the six months ended June 28, 2003 from $44.0 million for the same prior
year period. In summary, our results for the six-month period were impacted primarily by a combination of increased sales, albeit yielding a slightly reduced gross profit margin, and lower net interest expense, which were partially offset by higher
spending on selling and administrative expenses.



LIQUIDITY AND CAPITAL
RESOURCES



Our primary cash needs are for debt service obligations,
capital expenditures, working capital and general corporate purposes. As of June 28, 2003, we had cash and cash equivalents of $22.9 million.



Operating Activities



Operating activities generated cash of $32.2 million during the six months ended June 28, 2003 compared to $40.1 million for the same prior year period. The decline in
operating cash flow was primarily impacted by a greater reduction in customer deposit liabilities in the current year due to the higher level of customer deposits collected in fiscal 2002 for the 2003 school year compared to similar prior year
activity.



Investing Activities



In January 2003, we acquired the assets of a photography business for $5.0 million in cash.
The operating results of this acquisition are included in our consolidated financial statements from the date of acquisition. Pro forma results



13



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##### Table of Contents

of operations have not been presented since the effect of this acquisition on our financial position and results of
operations is not material. Capital expenditures for the six months ended June 28, 2003 were $5.4 million compared to $8.5 million for the same period last year. The decrease is due to the timing of spending on several items compared to last year
including information systems, expansion of our color printing capacity and replacement projects.



Financing Activities



As of June
28, 2003, there was $8.9 million outstanding on our revolving credit facility in the form of short-term borrowings at our Canadian subsidiary at a weighted average interest rate of 7.25% and an additional $9.9 million outstanding in the form of
letters of credit, leaving $131.2 million available under this facility.



Recent Transactions



On July 29, 2003, Ring Acquisition
Corp. (MergerCo), a newly-formed company indirectly controlled by DLJ Merchant Banking Partners III, L.P. and certain of its affiliated funds (collectively, the DLJMB Funds), each of which is affiliated with CSFB Private
Equity, merged with and into Jostens, Inc., pursuant to an Agreement and Plan of Merger, dated as of June 17, 2003 (the Merger Agreement), among MergerCo, Jostens Holding Corp. (formerly known as Ring Holding Corp.) and Jostens, Inc.
(the merger). Jostens, Inc. was the surviving corporation in the merger and, at the effective time of the merger, became an indirect wholly owned subsidiary of Ring Holding Corp.



Pursuant to the Merger Agreement, (i) each issued and outstanding share of common stock,
together with all shares represented by exercisable stock options and warrants, was converted into the right to receive $48.25 in cash less the applicable per share exercise price of such stock option or warrant and (ii) each share of our 14%
redeemable, payment-in-kind, preferred stock will remain outstanding unless tendered by the holders thereof pursuant to the change of control offer described below.



Prior to the merger, Investcorp International, Inc., its co-investors and MidOcean Partners collectively beneficially owned approximately
88% of our common stock. Upon consummation of the merger (the closing), the DLJMB Funds became beneficial owners of approximately 99% of our post-merger common stock.



In connection with the merger, we refinanced our existing senior secured credit facility through the establishment of new senior secured
credit facilities (the credit facilities). The credit facilities consist of: (i) a $475.0 million term loan which was fully funded at the time of the closing; (ii) a $150.0 million revolving credit facility of which approximately $11.0
million was drawn at the closing to refinance our Canadian subsidiarys then-existing borrowings; and (iii) an incremental $50.0 million change of control term loan, the proceeds of which may be used solely to fund certain change of control
payments due to holders of our 12.75% senior subordinated notes due 2010 (the notes) who elect to tender their notes pursuant to the notes change of control offer that we commenced on July 30, 2003 (the Notes Offer). In
addition, we may use the revolving credit facility from time to time after the closing to finance general corporate needs and for working capital purposes. We may also borrow up to $270.0 million of bridge term loans solely for the purpose of
financing certain change of control payments due to holders of the notes and to holders of the preferred stock who elect to tender their preferred stock pursuant to the preferred stock change of control offer that we commenced on July 30, 2003 (the
Preferred Stock Offer). We were required to commence the Notes Offer and the Preferred Stock Offer pursuant to the terms of the indenture relating to the notes and the certificate of designations relating to the preferred stock,
respectively, upon a change of control of Jostens, Inc. Commitments for any amounts not borrowed in respect of the $50.0 million change of control term loan and the $270.0 million bridge term loan will be terminated following the consummation of the
Notes Offer and the Preferred Stock Offer and will not be available for our future use. Substantially all of the assets of our operations were used to secure the credit facilities.



The term loans bear a variable interest rate based upon either the London Interbank Offered Rate (LIBOR) or an alternative base
rate, which is based upon the greater of the federal funds effective rate plus 0.5% or the prime rate, plus a fixed margin. Future mandatory principal payment obligations under the term loans are due semi-annually beginning on July 2, 2004 at
an amount equal to 2.5% of the term loans. Thereafter, semi-annual principal payments gradually increase to an amount equal to 7.5% of the term loans through July 2009, with two final principal payments due in December 2009 and July 2010, each equal
to 25.0% of the term loans.



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Under the $150.0 million revolving credit facility, we may borrow funds and elect to pay interest under either LIBOR or
the alternative base rate plus applicable margins. The revolving credit facility contains a sub-facility that allows our Canadian subsidiary to borrow funds not to exceed $20.0 million of the total $150.0 million facility. We have
guaranteed the revolving credit facility of our Canadian subsidiary upon the occurrence of any event of default under any credit document. The revolving credit facility expires on July 29, 2008.



The credit facilities require that we meet certain financial covenants, ratios and tests,
including a maximum leverage ratio, a maximum senior leverage ratio and a minimum interest coverage ratio. In addition, we are required to pay certain fees in connection with the credit facilities, including letter of credit fees, agency fees and
commitment fees on the average daily unused portion of the revolving credit facility.



At June 28, 2003, we have $2.8 million of prepaid management fees paid to Investcorp International, Inc. and $14.2 million of deferred financing charges related to our senior secured credit facility, both included in the noncurrent assets
section of our Condensed Consolidated Balance Sheet. We anticipate that these assets will be expensed upon consummation of the merger.



After giving effect to the merger, the Board of Directors of Jostens, Inc. consisted of the following seven directors, all of whom were duly appointed by the DLJMB Funds:
Carl Blowers, Vice ChairmanOperations and Technology, Jostens, Inc.; Robert Buhrmaster, Chairman of the Board and Chief Executive Officer, Jostens, Inc.; David Burgstahler, Principal, DLJ Merchant Banking Partners III, L.P.; Thomas R. Nides,
Chief Administrative Officer, Credit Suisse First Boston; James Quella, Managing Director and Operating Partner, DLJ Merchant Banking Partners III, L.P.; Lawrence M.v.D. Schloss, Global Head of Private Equity, Credit Suisse First Boston; and David
Wittels, Managing Director, DLJ Merchant Banking Partners III, L.P.



NEW
ACCOUNTING STANDARDS



SFAS 149Amendment of Statement 133 on
Derivative Instruments and Hedging Activities



In April 2003, the
Financial Accounting Standards Board (FASB) issued SFAS 149, which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities under SFAS 133. In general, SFAS 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. We do not expect that the adoption of
SFAS 149 will have a material impact on our financial position or results of operations.



SFAS 150Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity



In May 2003, the FASB issued SFAS 150, which establishes standards for how certain financial instruments with characteristics of both liabilities and equity are
classified and requires that a financial instrument that is within its scope be classified as a liability (or as an asset in some circumstances). SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and
otherwise is effective for existing issuances at the beginning of the first interim period beginning after June 15, 2003. We are adopting SFAS 150 as it becomes effective. We expect to reclassify the redeemable preferred securities ($77.3 million at
June 28, 2003), from the mezzanine section of our Condensed Consolidated Balance Sheet to the liabilities section.



|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- |  | ----------------------------------------------------------



There have been no material changes in our exposures to market risk during the quarter ended June 28, 2003. For additional information, refer to Item 7A of our 2002 Form
10-K.



|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------



As of the end of the period covered by this report, management, under the supervision of our Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the design and operation of our disclosure controls and procedures that are designed to ensure that information that is required to be disclosed in our quarterly report is recorded, processed and summarized within time periods
specified in the Securities and Exchange Commissions rules and regulations and that such information is accumulated and communicated to our management, including our



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Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective, in all material respects, in timely alerting them to material information
relating to Jostens required to be included in our periodic reports filed under the Securities Exchange Act of 1934, as amended.



There have been no significant changes in our internal controls or in other factors subsequent to the date of the evaluation that has materially affected, or is
reasonably likely to materially affect, these controls.



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PART II OTHER INFORMATION



|ITEM 1. |  | LEGAL PROCEEDINGS
|------- |  | -----------------



Jostens is currently prosecuting its appeal of the orders of the U.S. District Court in Orange County, California related to the Epicenter Recognition, Inc. (Epicenter) matter to the U.S. Court of Appeals for the
Ninth Circuit based upon substantive and procedural grounds. Additional information regarding the Epicenter matter is set forth in Item 7, Managements Discussion and Analysis of Financial Conditions and Results of Operations, and in Item 8,
Note 8 of the Notes to Consolidated Financial Statements of our 2002 Form 10-K.



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



|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K
|------- |  | --------------------------------



|(a) |  | Exhibits
|--- |  | --------



|     | 
|---- | 
|2.1  | 
|     | 
|12   | 
|     | 
|31.1 | 
|     | 
|31.2 | 



|(b) |  | Reports on Form 8-K during the quarter ended June 28, 2003
|--- |  | ----------------------------------------------------------



A Form 8-K was filed on April 16, 2003, announcing that we had engaged investment banking advisors to assist in connection with a possible sale or
recapitalization of Jostens, Inc.



A Form 8-K was filed on May
8, 2003, furnishing our press release reporting results for the three months ended March 29, 2003.



A Form 8-K was filed on June 17, 2003, announcing the execution of a definitive merger agreement under which DLJ Merchant Banking Partners III, L.P., an
affiliate of CSFB Private Equity, would acquire Jostens, Inc. from Investcorp International, Inc.



A Form 8-K was filed on June 30, 2003, (a) reporting certain terms of a definitive merger agreement under which DLJ Merchant Banking Partners III, L.P.,
an affiliate of CSFB Private Equity, would acquire Jostens, Inc. and (b) filing as an exhibit, the Agreement and Plan of Merger, dated June 17, 2003.



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SIGNATURES



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



|                      |  | JOSTENS, INC.                                                         
|--------------------- |  | ----------------------------------------------------------------------
|                      | 
|Date: August 11, 2003 |  | /s/    ROBERT C.
BUHRMASTER                                           
|                      |  | Robert C. Buhrmaster Chairman of the Board and Chief Executive Officer
|                      | 
|Date: August 11, 2003 |  | /s/    JOHN A.
FEENAN                                                 
|                      |  | John A. Feenan Sr. Vice President and Chief Financial Officer         



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