##### Table of Contents




UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549








FORM 10-Q








xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934





For the Quarterly Period Ended September 28, 2002





OR





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


SECURITIES EXCHANGE ACT OF 1934








Commission
file number 1-5064








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 [    ]








On November 8, 2002 there
were 8,955,741 shares of the Registrants common stock outstanding.







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##### Table of Contents




Jostens, Inc. and Subsidiaries








Part I    Financial InformationPageItem 1.

Financial Statements (Unaudited)Condensed Consolidated Statements of Operations for the three and nine months endedSeptember 28, 2002 and September 29, 2001

3Condensed Consolidated Balance Sheets as of September 28, 2002, September 29, 2001and December 29, 2001

4Condensed Consolidated Statements of Cash Flows for the nine months endedSeptember 28, 2002 and September 29, 2001

5Notes to Condensed Consolidated Financial Statements

6Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

12Item 3.

Quantitative and Qualitative Disclosures about Market Risk

18Item 4.

Controls and Procedures

18Part II    Other InformationItem 1.

Legal Proceedings

19Item 6.

Exhibits and Reports on Form 8-K

19Signatures



20




2




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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


Nine months endedIn thousands, except per-share data

September 28, 2002


September 29, 2001


September 28, 2002


September 29, 2001Net sales

$
96,869


$
99,548


$
571,912


$
554,352Cost of products sold


49,486



53,818



248,639



245,382Gross profit


47,383



45,730



323,273



308,970Selling and administrative expenses


59,334



58,298



226,825



220,846Loss on redemption of senior subordinated notes payable


1,765







1,765



Special charges














2,138Operating income (loss)


(13,716
)


(12,568
)


94,683



85,986Net interest expense


16,124



17,520



50,830



58,442Income (loss) from continuing operations before income taxes


(29,840
)


(30,088
)


43,853



27,544Provision for (benefit from) income taxes


(12,359
)


(12,577
)


18,225



11,162Income (loss) from continuing operations


(17,481
)


(17,511
)


25,628



16,382Gain (loss) on discontinued operations, net of tax






(1,859
)


940



(5,540
)Net income (loss)


(17,481
)


(19,370
)


26,568



10,842Dividends and accretion on redeemable preferred shares


(2,987
)


(2,594
)


(8,653
)


(7,516
)Net income (loss) available to common shareholders

$
(20,468
)

$
(21,964
)

$
17,915


$
3,326Basic net income (loss) per common shareIncome (loss) from continuing operations

$
(2.29
)

$
(2.24
)

$
1.90


$
0.99Gain (loss) on discontinued operations






(0.21
)


0.10



(0.62
)$
(2.29
)

$
(2.45
)

$
2.00


$
0.37Diluted net income (loss) per common shareIncome (loss) from continuing operations

$
(2.29
)

$
(2.24
)

$
1.65


$
0.86Gain (loss) on discontinued operations






(0.21
)


0.09



(0.54
)$
(2.29
)

$
(2.45
)

$
1.74


$
0.32Weighted average common shares outstanding


8,956



8,972



8,960



8,985Dilutive effect of warrants and stock options










1,348



1,334Weighted average common shares outstanding assuming dilution


8,956



8,972



10,308



10,319





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




3




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##### Table of Contents

JOSTENS, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS





(Unaudited)In thousands, except per-share data

September 28, 2002


September 29, 2001


December 29, 2001ASSETSCurrent assetsCash and cash equivalents

$
19,964


$
16,944


$
43,100Accounts receivable, net of allowance of $3,759, $3,442 and $3,657


51,869



65,451



56,238Inventories, net of reserve of $1,890, $2,891 and $2,089


59,532



65,262



70,514Deferred income taxes


19,964



17,995



19,964Salespersons overdrafts, net of allowance of $7,189, $5,557 and $6,897


31,921



33,618



28,037Prepaid expenses and other current assets


3,899



5,205



7,723Current assets of discontinued operations










7,029Total current assets


187,149



204,475



232,605Other assetsIntangibles, net


14,863



16,763



14,260Deferred financing costs, net


24,407



29,254



27,476Other


35,541



31,642



32,075Total other assets


74,811



77,659



73,811Property and equipment


279,933



289,912



267,255Less accumulated depreciation


(212,664
)


(216,184
)


(199,064
)Property and equipment, net


67,269



73,728



68,191$
329,229


$
355,862


$
374,607LIABILITIES AND SHAREHOLDERS' DEFICITCurrent liabilitiesBank overdrafts

$
6,362


$
6,025


$
Short-term borrowings


50,200



42,900



Accounts payable


11,873



12,247



18,721Accrued employee compensation and related taxes


27,060



24,164



27,392Commissions payable


10,119



13,011



18,639Customer deposits


39,691



41,963



126,400Income taxes payable


24,457



23,050



16,940Interest payable


16,791



16,122



10,567Current portion of long-term debt


22,120



20,879



20,966Other accrued liabilities


11,702



13,465



16,913Current liabilities of discontinued operations


5,593







16,511Total current liabilities


225,968



213,826



273,049Long-term debtless current maturities, net of unamortized original issue discount of $16,659, $18,428 and
$18,143


603,573



655,702



626,017Other noncurrent liabilities including deferred tax liabilities of $4,354, $4,369 and $3,472


14,342



18,736



15,628Total liabilities


843,883



888,264



914,694Commitments and contingenciesRedeemable preferred shares $.01 par value (liquidation preference: $81,497; authorized: 308 shares; issued and
outstanding: September 28, 200281; September 29, 200171; December 29, 200174


67,696



56,357



59,043Preferred shares $.01 par value (authorized: 4,000 shares; issued and outstanding in the form of redeemable preferred
shares listed above: September 28, 200281; September 29, 200171: December 29, 200174; undesignated: 3,919)










Shareholders' deficitCommon shares (note 8)


1,003



1,006



1,006Additional paid-in-capitalwarrants


21,679



24,733



24,733Officer notes receivable


(1,601
)


(1,407
)


(1,407
)Accumulated deficit


(592,435
)


(601,530
)


(610,959
)Accumulated other comprehensive loss


(10,996
)


(11,561
)


(12,503
)Total shareholders' deficit


(582,350
)


(588,759
)


(599,130
)$
329,229


$
355,862


$
374,607





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







4




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##### Table of Contents

JOSTENS, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)





Nine months endedIn thousands

September 28, 2002


September 29, 2001Operating activitiesNet income

$
26,568


$
10,842Adjustments to reconcile net income to net cash provided by operating activities:Depreciation


17,322



19,630Amortization of debt discount and deferred financing costs


5,128



4,897Other amortization


1,648



2,453Loss on redemption of senior subordinated notes payable


1,765



Other non-cash operating activities


(323
)


(2,327
)Changes in assets and liabilities:Inventories


10,982



25,968Salespersons overdrafts


(3,884
)


(6,391
)Prepaid expenses and other current assets


3,993



2,949Net pension assets


(4,916
)


(5,484
)Accounts payable


(6,848
)


(12,183
)Accrued employee compensation and related taxes


(332
)


(6,662
)Commissions payable


(8,520
)


(6,884
)Customer deposits


(86,709
)


(66,885
)Income taxes payable


7,517



7,895Interest payable


6,224



6,026Other


(5,180
)


(11,631
)Net cash used for operating activities


(35,565
)


(37,787
)Investing activitiesPurchases of property and equipment


(16,793
)


(15,550
)Other investing activities, net


96



4,180Net cash used for investing activities


(16,697
)


(11,370
)Financing activitiesNet increase in bank overdrafts


6,362



6,025Net short-term borrowings


50,200



42,900Reacquisition of warrants to purchase common stock


(2,177
)


Principal payments on long-term debt


(15,274
)


(8,991
)Redemption of senior subordinated notes payable


(8,456
)


Other financing activities, net


(1,529
)


(385
)Net cash provided by financing activities


29,126



39,549Change in cash and cash equivalents


(23,136
)


(9,608
)Cash and cash equivalents, beginning of period


43,100



26,552Cash and cash equivalents, end of period

$
19,964


$
16,944





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







5




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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 (SEC) for interim reporting. As permitted under those rules, certain footnotes
or other financial information normally required by accounting principles generally accepted in the United States of America can be 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 29, 2001 (2001 Form 10-K). The condensed consolidated balance sheet data as of December 29, 2001 were derived from audited
financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States of America.





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 2001 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 2002 presentation.





|2. |  | Earnings Per Common Share
|-- |  | -------------------------




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





For the quarters ended September 28, 2002 and September 29, 2001, approximately 1.3 million shares of common stock equivalents were excluded in the computation
of net earnings per share since they were antidilutive due to the net loss incurred in each period. For the nine-month period ended September 28, 2002, options to purchase 42,250 shares of common stock were outstanding, but were excluded from the
computation of common share equivalents because they were antidilutive.





Diluted earnings per share for the nine-month period ended
September 29, 2001 has been adjusted to reflect a change in the calculation of common stock equivalents.





|3. |  | Comprehensive Income (Loss)
|-- |  | ---------------------------




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





Three months ended


Nine months endedIn thousands

September 28, 2002


September 29, 2001


September 28, 2002


September 29, 2001Net income (loss)

$
(17,481
)

$
(19,370
)

$
26,568


$
10,842Change in cumulative translation adjustment


(1,259
)


(1,166
)


(10
)


(1,488
)Transition adjustment relating to adoption of SFAS 133














(1,821
)Change in fair value of interest rate swap agreement


424



(1,129
)


1,348



(2,061
)Change in fair value of foreign currency hedge


(60
)






169



(895
)


(2,295
)


1,507



(5,370
)Comprehensive income (loss)

$
(18,376
)

$
(21,665
)

$
28,075


$
5,472




6




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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)


Jostens, Inc. and subsidiaries








The following amounts
were included in accumulated other comprehensive loss as of September 28, 2002:





In thousands

Foreign currency translation


Minimum pension liability


Fair value
of interest rate swap


Fair value of
foreign currency hedge

Accumulated other comprehensive lossBalance at December 29, 2001

$
(6,745
)

$
(2,371
)

$
(3,387
)

$


$
(12,503
)Current period change


(10
)






1,348



169


1,507Balance at September 28, 2002

$
(6,755
)

$
(2,371
)

$
(2,039
)

$
169

$
(10,996
)





|4. |  | Derivatives and Hedging Activities
|-- |  | ----------------------------------




We use a floating-to-fixed cash flow interest rate swap to modify risk from interest rate fluctuations in our underlying debt. Our senior secured credit facility bears a variable interest rate predominantly linked to LIBOR.
The interest rate provided by the swap agreement is fixed at 7.0% as opposed to LIBOR. Notional amounts outstanding as of September 28, 2002, September 29, 2001 and December 29, 2001 were $95.0 million, $120.8 million and $100.0 million,
respectively. Substantially all aspects of the swap agreement expire June 30, 2003. We expect that pre-tax costs totaling $3.3 million, which are recorded in accumulated other comprehensive loss (AOCL) at September 28, 2002, and
represent the difference in fair value between the fixed rate of the swap agreement and the variable rate of the term note, will be recognized within the next twelve months as part of interest expense. The fair value of the interest rate swap is
based on current settlement values and as of September 28, 2002, September 29, 2001 and December 29, 2001 was a non-cash liability of $3.3 million ($2.0 million net of tax), $6.4 million ($3.9 million net of tax) and $5.6 million
($3.4 million net of tax), respectively, and is recorded in other noncurrent liabilities in our Condensed Consolidated Balance Sheet. Based on the critical terms of the interest rate swap and the hedged debt, there is no
ineffectiveness for this hedge.





The purpose of our foreign currency hedging activities is to protect us from the risk that purchases
denominated in foreign currency will be adversely affected by changes in foreign currency rates. We enter into forward exchange contracts to hedge forecasted cash flows denominated in foreign currencies (principally euro). The effective portion of
the changes in fair value for these contracts, which have been designated as cash flow hedges, is reported in AOCL and reclassified into earnings in the same financial statement line item and in the same period or periods during which the hedged
transaction affects earnings. Any ineffective portion of the change in fair value of these instruments is immediately recognized in earnings. The amount of contracts outstanding at September 28, 2002 was $1.8 million. There were no forward
exchange contracts outstanding at September 29, 2001 and December 29, 2001. These contracts will mature over the remainder of the current fiscal year, the period in which all amounts included in AOCL will be reclassified into earnings.





|5. |  | Inventories
|-- |  | -----------




Inventories, net are comprised of the following:





In thousands

September 28, 2002

September 29, 2001

December 29, 2001Raw material and supplies

$
13,109

$
14,753

$
10,302Work-in-process


19,107


19,495


28,447Finished goods


27,316


31,014


31,765Total inventories, net

$
59,532

$
65,262

$
70,514





Net inventories as of September 29, 2001 included $7.0 million related to discontinued
operations.







7




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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)


Jostens, Inc. and subsidiaries








|6. |  | Goodwill and Other Intangible Assets
|-- |  | ------------------------------------




On December 30, 2001, the beginning of our fiscal year, we adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. SFAS 142 addresses the accounting and
financial reporting for acquired goodwill and other intangible assets. Under the new statement, goodwill and intangible assets with indefinite lives are no longer amortized, but are subject to impairment testing on at least an annual basis. Other
than goodwill, we have no intangible assets with indefinite useful lives. Adoption of this statement resulted in no goodwill impairment losses and had no impact on our financial position as of December 30, 2001. Had SFAS 142 been effective at the
beginning of 2001, the non-amortization provisions would have increased net income (loss) by $0.3 million (or $.03 per share) and $0.8 million (or $.08 per share) for the three and nine months ended September 29, 2001 and would have increased income
(loss) from continuing operations by $0.1 million (or $.01 per share) and $0.4 million (or $.04 per share) for the same periods. As of September 28, 2002, the net carrying amount of goodwill was $14.4 million and intangible pension assets
totaled $0.5 million.





|7. |  | Borrowings
|-- |  | ----------




Long-term debt consists of the following:





In thousands

September 28, 2002

September 29, 2001

December 29, 2001Borrowings under senior secured credit facility:Term loan A, variable rate, 4.06 percent at September 28, 2002, 5.09 percent at September 29, 2001 and 4.63 percent at
December 29, 2001, with semi-annual principal and interest payments through May 2006

$
94,852

$
128,957

$
108,187Term loan B, variable rate, 6.09 percent at September 29, 2001 and 5.38 percent at December 29, 2001





341,052


331,939Term loan C, variable rate, 4.56 percent at September 28, 2002, with semi-annual principal and interest payments through
December 2009


330,000





Senior subordinated notes, 12.75 percent fixed rate, net of discounts of $16,659 at September 28, 2002, $18,428 at
September 29, 2001 and $18,143 at December 29, 2001, with semi-annual interest payments of $14,334, principal due and payable at maturityMay 2010


200,841


206,572


206,857625,693


676,581


646,983Less current portion


22,120


20,879


20,966$
603,573

$
655,702

$
626,017





On July 31, 2002, we amended and restated our senior secured credit facility to provide
for the replacement of Term Loan B with a new Term Loan C in the amount of $330.0 million. Term Loan C is payable in semi-annual installments of $1.0 million through June 30, 2008 followed by semi-annual installments of $106.0 million through
December 31, 2009. The initial interest margin on Term Loan C is 75 basis points less than Term Loan B resulting in an estimated $2.5 million reduction of annual interest expense on a pre-tax basis. Capitalized loan fees related to Term Loan B will
continue to be amortized over the life of Term Loan C. Fees of $1.3 million related directly to the amendment have been capitalized and will also be amortized over the life of Term Loan C.





During the quarter ended September 28, 2002, we voluntarily redeemed $7.5 million principal amount of our 12.75% senior subordinated notes due May 2010. As a result of redeeming the senior
subordinated notes, we recognized a loss of $1.8 million consisting of a $0.8 million write-off of unamortized original issuance discount and deferred financing costs and a $1.0 million premium paid on redemption of the notes.





We have a $150.0 million revolving credit facility that expires on May 31, 2006. We may borrow funds and elect to pay interest under the
alternative base rate or eurodollar interest rate provisions as defined in the agreement. The eurodollar rate is based upon the London Interbank Offered Rate (LIBOR) and the




8




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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)


Jostens, Inc. and subsidiaries








alternative base rate
is based upon the prime rate. As of September 28, 2002, there was $50.2 million outstanding in the form of short-term borrowings and an additional $7.8 million outstanding in the form of letters of credit leaving $92.0 million available under this
facility.





|8. |  | Shareholders Deficit
|-- |  | ---------------------




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





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





Issued and Outstanding SharesIn thousands, except par value data

Par Value

Authorized Shares

September 28, 2002

September 29, 2001

December 29, 2001Class A

$.33 1/3

4,200

2,825

2,834

2,834Class B

$.01

5,300

5,300

5,300

5,300Class C

$.01

2,500

811

811

811Class D

$.01

20

20

20

20Class E

$.01

1,900





Undesignated

$.01

12,020





25,940

8,956

8,965

8,965





During the quarter ended September 28, 2002, we reacquired 64,015 warrants to purchase
120,934 actual equivalent shares of common stock for total consideration paid of $2.2 million. The detachable warrants were issued with our 12.75% senior subordinated notes due May 2010 at an aggregate price of $3.1 million. The difference of $0.9
million between the issue and reacquisition price of the warrants has been included as a component of shareholders deficit as of September 28, 2002.





|9. |  | 2001 Special Charges
|-- |  | --------------------




Accrued special charges of $0.2 million, $0.3 million and $0.2 million at September 28, 2002, September 29, 2001 and December 29, 2001, respectively, are included in other current liabilities in our Condensed
Consolidated Balance Sheets. In the second quarter of 2001, we entered into a separation agreement with a senior executive. The total cost of $2.1 million for severance and related termination benefits was expensed in 2001 and included costs for the
senior executive and two other management personnel. We utilized $1.9 million of the special charge in 2001. The remaining liability of approximately $0.2 million will continue to be paid out over the next nine months as specified under the
separation agreement.





|10. |  | Discontinued Operations
|--- |  | -----------------------




Discontinued operations represents the results of our Recognition business, which we exited on December 3, 2001.




9




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##### Table of Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)


Jostens, Inc. and subsidiaries








Revenue and loss from
discontinued operations for the three and nine-month periods ended September 29, 2001 were as follows:





Three months ended


Nine months endedIn thousands

September 29, 2001


September 29, 2001Revenue from external customers

$
14,042


$
46,982Pre-tax loss from operations of discontinued operations before measurement date

$
(3,023
)

$
(9,008
)Income tax benefit


1,164



3,468Net loss from discontinued operations

$
(1,859
)

$
(5,540
)





In conjunction with exiting the Recognition business, we recorded a $27.4 million pre-tax
loss on disposal for the discontinued segment in the fourth quarter of 2001. 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.





In the second quarter of 2002, we reversed $1.4 million of these charges
based on our revised estimates for employee separation costs and phase-out costs. Of the total adjustment, $0.5 million resulted from modifying our anticipated workforce reduction from 150 to 130 full-time positions and $0.9 million resulted from
lower information systems, customer service and internal support costs than originally anticipated. In addition, we reversed $0.2 million in other liabilities for a total pre-tax gain on discontinued operations of $1.6 million ($0.9 million, net of
tax). Components of the accrued disposal costs are as follows:





UtilizationIn thousands

Initial charge

Prior accrual

Net adjustments in 2002


Nine months ended September 28, 2002


Balance September 28, 2002Employee separation benefits and other related costs

$
6,164

$


$
(550
)

$
(4,992
)

$
622Phase-out costs of exiting the Recognition business


4,255





(874
)


(2,711
)


670Salesperson transition benefits


2,855


1,236






(761
)


3,330Other costs related to exiting the Recognition business


3,018


1,434






(3,477
)


975$
16,292

$
2,670

$
(1,424
)

$
(11,941
)

$
5,597





With the exception of certain separation benefits and certain transition benefits, we
anticipate the remaining payments will occur in 2002. Separation benefits will continue to be paid out over the benefit period as specified under our severance plan and transition benefits will continue to be paid through 2004.





Assets and liabilities of the discontinued business included in our Condensed Consolidated Balance Sheets were as follows:





In thousands

September 28, 2002

September 29, 2001

December 29, 2001AssetsAccounts receivable

$


$
12,176

$
Inventories





6,969


Salespersons overdrafts





2,421


Current assets of discontinued operations








7,029Intangibles





2,432


Property and equipment, net





1,829


Other





547


$


$
26,374

$
7,029LiabilitiesAccounts payable

$


$
1,838

$
Accrued employee compensation and related taxes





1,530


Commissions payable





2,623


Other





2,405


Current liabilities of discontinued operations


5,593





16,511$
5,593

$
8,396

$
16,511




10




---

##### Table of Contents




Notes to Condensed Consolidated Financial Statements (Unaudited)


Jostens, Inc. and subsidiaries








|11. |  | New Accounting Standards
|--- |  | ------------------------




SFAS 143Accounting for Asset Retirement Obligations


In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS 143, which
establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. It also provides accounting guidance for legal obligations associated with the retirement of tangible
long-lived assets. SFAS 143 is effective for fiscal years beginning after June 15, 2002, with early adoption permitted. We expect that the provisions of SFAS 143 will not have a material impact, if any, on our consolidated results of operations,
cash flows and financial position.





SFAS 145Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No.
13, and Technical Corrections


In April 2002, the FASB issued SFAS 145, which rescinds SFAS 4, Reporting Gains and Losses from Extinguishments of Debt, SFAS
44, Accounting for Intangible Assets of Motor Carriers and SFAS 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements and amends SFAS 13, Accounting for Leases. As a result of rescinding SFAS 4 and
SFAS 64, the criteria in APB 30, Reporting the Results of Operations  Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, will be used to
classify gains and losses from extinguishments of debt. SFAS 145 also amends SFAS 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback
transactions. During 2002, we adopted the provisions of SFAS 145. Accordingly, the $1.8 million loss on redemption of our 12.75% senior subordinated notes due May 2010 has been classified as an operating expense as it does not meet the criteria
in APB 30 to be classified as an extraordinary loss.







11




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





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





| | · |  | 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;
| | - |  | -------------------------------




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




| | · |  | litigation cases, if decided against us, may adversely affect our financial results; and
| | - |  | ----------------------------------------------------------------------------------------




| | · |  | environmental regulations that could impose substantial costs upon us may adversely affect our financial results.
| | - |  | -----------------------------------------------------------------------------------------------------------------




The foregoing factors are not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that would impact our business.





Except to the extent required by law, we undertake no obligation to publicly update or revise any forward-looking statements.




12




---

##### 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








Nine months endedDollars in thousands

September 28, 2002


September 29, 2001


$ Change


% Change


September 28, 2002


September 29, 2001


$ Change


% ChangeNet sales

$
96,869


$
99,548


$
(2,679
)

(2.7
%)

$
571,912


$
554,352


$
17,560


3.2
%% of net sales


100.0
%


100.0
%









100.0
%


100.0
%Cost of products sold


49,486



53,818



(4,332
)

(8.0
%)


248,639



245,382



3,257


1.3
%% of net sales


51.1
%


54.1
%









43.5
%


44.3
%Gross profit


47,383



45,730



1,653


3.6
%


323,273



308,970



14,303


4.6
%% of net sales


48.9
%


45.9
%









56.5
%


55.7
%Selling and administrative expenses


59,334



58,298



1,036


1.8
%


226,825



220,846



5,979


2.7
%% of net sales


61.3
%


58.6
%









39.7
%


39.8
%Loss on redemption of senior subordinated notes payable


1,765







1,765


NM



1,765







1,765


NMSpecial charges













0.0
%






2,138



(2,138
)

NMOperating income (loss)


(13,716
)


(12,568
)


(1,148
)

(9.1
%)


94,683



85,986



8,697


10.1
%% of net sales


-14.2
%


-12.6
%









16.6
%


15.5
%Net interest expense


16,124



17,520



(1,396
)

(8.0
%)


50,830



58,442



(7,612
)

(13.0
%)% of net sales


16.6
%


17.6
%









8.9
%


10.5
%Income (loss) from continuing operations before income taxes


(29,840
)


(30,088
)


248


0.8
%


43,853



27,544



16,309


59.2
%% of net sales


-30.8
%


-30.2
%









7.7
%


5.0
%Provision for (benefit from) income taxes


(12,359
)


(12,577
)


218


1.7
%


18,225



11,162



7,063


63.3
%% of net sales


-12.8
%


-12.6
%









3.2
%


2.0
%Income (loss) from continuing operations


(17,481
)


(17,511
)


30


0.2
%


25,628



16,382



9,246


56.4
%% of net sales


-18.0
%


-17.6
%









4.5
%


3.0
%Gain (loss) on discontinued operations, net of tax






(1,859
)


1,859


NM



940



(5,540
)


6,480


NM% of net sales


0.0
%


-1.9
%









0.2
%


-1.0
%Net income (loss)

$
(17,481
)

$
(19,370
)

$
1,889


9.8
%

$
26,568


$
10,842


$
15,726


145.0
%% of net sales


-18.0
%


-19.5
%









4.6
%


2.0
%


---

Percentages in this table may reflect rounding adjustments.


NM = percentage not meaningful





We experience seasonality that
corresponds to the North American school year. As a result, our third quarter normally reflects modest sales, which contribute to exaggerated fluctuations in operating activities.





Three Months Ended September 28, 2002 Compared to the Three Months Ended September 29, 2001





Net Sales


Net sales decreased $2.6 million, or 2.7%, to $96.9 million for the three months ended September 28, 2002 from $99.5 million for the
same period last year. The decrease in net sales resulted from declines in volume/mix of approximately 6.1% offset by price increases averaging approximately 3.4%. The decrease in net sales was primarily due to:





| | · |  | decreased volume in the high school jewelry market due to timing of delivery dates compared to last year;
| | - |  | ---------------------------------------------------------------------------------------------------------




| | · |  | decreased volume in the college jewelry and graduation product lines as a result of the loss of a large customer; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------




| | · |  | decreased volume in graduation announcements due to lower dollars spent per student.
| | - |  | ------------------------------------------------------------------------------------



13




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##### Table of Contents




These decreases were partially offset by price increases primarily in our printing and jewelry product
lines and increased volume in our photography line primarily due to earlier shipments compared to last year when all major air carriers were grounded at the end of September 2001 creating processing and shipping delays at our plant in Canada .





Gross Margin


Gross profit increased $1.7 million,
or 3.6%, to $47.4 million for the three months ended September 28, 2002 from $45.7 million for the same prior year period. As a percentage of sales, gross margin increased 3.0 percentage points to 48.9% for the current three-month period from 45.9%
for the same period last year. The increase in gross margin can be attributed to:





| | · |  | price increases primarily in the printing and jewelry product lines;
| | - |  | --------------------------------------------------------------------




| | · |  | continued improvement in company-wide plant efficiencies, particularly in printing production; and
| | - |  | --------------------------------------------------------------------------------------------------




| | · |  | efficiencies resulting from increased volume for the quarter in our photography line primarily due to earlier shipments compared to last year.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------




These increases were partially offset by decreased volume in the high school jewelry market mostly due to timing of delivery dates
compared to last year.





Selling and Administrative Expenses


Selling and administrative expenses increased $1.0 million, or 1.8%, to $59.3 million for the three months ended September 28, 2002 from $58.3 million for the same prior year period. As a percentage of sales, selling and
administrative expenses increased 2.7 percentage points to 61.3% for the current three-month period from 58.6% for the same period last year. The $1.0 million increase is primarily due to higher spending on information systems related to the
upgrade of our transaction processing system and application development in one of our product lines.





Loss on Redemption of Senior
Subordinated Notes Payable


During the quarter ended September 29, 2002, we voluntarily redeemed $7.5 million principal amount of our 12.75% senior subordinated notes
due May 2010. As a result of redeeming the senior subordinated notes, we recognized a loss of $1.8 million consisting of a $0.8 million write-off of unamortized original issuance discount and deferred financing costs and a $1.0 million premium paid
on redemption of the notes.





Net Interest Expense


Net interest expense decreased $1.4 million to $16.1 million for the three months ended September 28, 2002 as compared to $17.5 million for the three months ended September 29, 2001. The decrease was due to a lower average
outstanding balance and a lower average interest rate.





Provision for Income Taxes


Our effective tax rate for continuing operations was 41.5% for the three months ended September 28, 2002 compared to 41.8% for the same period last year.





Loss From Continuing Operations


Loss from continuing operations remained
consistent at $17.5 million for the three months ended September 28, 2002 compared to the same prior year period. In summary, the results of continuing operations were impacted by decreased net sales and slightly higher spending offset by improved
gross profit and lower net interest expense.





Discontinued Operations


Loss from discontinued operations was $1.9 million for the three months ended September 29, 2001. This represents the results of our Recognition business, which we exited in December 2001.




14




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##### Table of Contents

Nine Months Ended September 28, 2002 Compared to the Nine Months Ended September 29, 2001





Net Sales


Net sales increased $17.5 million, or 3.2%, to $571.9 million
for the nine months ended September 28, 2002 from $554.4 million for the same period last year. The increase in net sales resulted from price increases averaging approximately 2.8% and slight volume/mix increases. The increase in net sales was
primarily due to:





| | · |  | price increases in the printing, jewelry and graduation product lines;
| | - |  | ----------------------------------------------------------------------




| | · |  | increased volume as a result of net account growth across all product lines; and
| | - |  | --------------------------------------------------------------------------------




| | · |  | increased volume for yearbook printing due to an increase in the number of pages published per yearbook including an increase in the number of color pages.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------




These increases were partially offset by the following:





| | · |  | decreased volume in the college jewelry and graduation product lines as a result of the loss of a large customer;
| | - |  | -----------------------------------------------------------------------------------------------------------------




| | · |  | volume decreases in high school jewelry due to a slight decline in the number of ring units sold per school;
| | - |  | ------------------------------------------------------------------------------------------------------------




| | · |  | volume decreases in graduation announcements due to lower dollars spent per student; and
| | - |  | ----------------------------------------------------------------------------------------




| | · |  | decreased volume in commercial printing.
| | - |  | ----------------------------------------




Gross Margin


Gross profit increased $14.3 million, or 4.6%, to $323.3 million for the nine months ended September 28, 2002 from $309.0 million for
the same prior year period. As a percentage of sales, gross margin increased 0.8 percentage points to 56.5% for the current nine-month period from 55.7% for the same period last year. The increase in gross margin can be attributed to:





| | · |  | price increases in the printing, jewelry and graduation product lines;
| | - |  | ----------------------------------------------------------------------




| | · |  | continued improvement in company-wide plant efficiencies; and
| | - |  | -------------------------------------------------------------




| | · |  | a favorable sales mix of our printing products resulting in increased higher margin yearbook volume and decreased lower margin commercial printing volume.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------




Selling and Administrative Expenses


Selling and administrative expenses increased $6.0 million, or 2.7%, to $226.8 million for the nine months ended September 28, 2002 from $220.8 million for the same prior year period. As a percentage of sales, selling and
administrative expenses remained relatively flat at 39.7% for the current nine-month period compared to 39.8% for the same period last year. The $6.0 million increase is primarily due to:





| | · |  | higher commissions and general and administrative expenses, both as a result of increased sales and
| | - |  | ---------------------------------------------------------------------------------------------------




| | · |  | higher spending on information systems related to the upgrade of our transaction processing system and application development in one of our product lines.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------




Loss on Redemption of Senior Subordinated Notes Payable


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





Net Interest
Expense


Net interest expense decreased $7.6 million to $50.8 million for the nine months ended September 28, 2002 as compared to $58.4 million for the nine months
ended September 29, 2001. Similar to the quarter activity, the decrease was due to a lower average outstanding balance and a lower average interest rate.




15




---

##### Table of Contents




Provision for Income Taxes


Our effective tax rate for continuing operations was 41.5% for the nine months ended September 28, 2002 compared to 40.5% for the same period last year.





Income From Continuing Operations


Income from continuing operations increased $9.2 million, or 56.4% to $25.6
million for the nine months ended September 28, 2002 from $16.4 million for the same prior year period as a result of increased net sales, relatively flat spending and lower net interest expense.





Discontinued Operations


Loss from discontinued operations was $5.5 million for the nine months ended
September 29, 2001 and represents the results of our Recognition business, which we exited in December 2001. Income from discontinued operations of $0.9 million for the nine months ended September 28, 2002 represents the after-tax effect of a $1.6
million reversal of accrued disposal costs, which was recorded in the second quarter of 2002.





In conjunction with exiting the
Recognition business, we recorded a $27.4 million pre-tax loss on disposal for the discontinued segment in the fourth quarter of 2001. 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.





In the second
quarter of 2002, we reversed $1.4 million of these charges based on our revised estimates for employee separation costs and phase-out costs. Of the total adjustment, $0.5 million resulted from modifying our anticipated workforce reduction from 150
to 130 full-time positions and $0.9 million resulted from lower information systems, customer service and internal support costs than originally anticipated. In addition, we reversed $0.2 million in other liabilities for a total pre-tax gain on
discontinued operations of $1.6 million ($0.9 million, net of tax). Components of the accrued disposal costs are as follows:





UtilizationIn thousands

Initial charge

Prior accrual

Net adjustments in 2002


Nine months ended September 28, 2002


Balance September 28, 2002Employee separation benefits and other related costs

$
6,164

$


$
(550
)

$
(4,992
)

$
622Phase-out costs of exiting the Recognition business


4,255





(874
)


(2,711
)


670Salesperson transition benefits


2,855


1,236






(761
)


3,330Other costs related to exiting the Recognition business


3,018


1,434






(3,477
)


975$
16,292

$
2,670

$
(1,424
)

$
(11,941
)

$
5,597





With the exception of certain separation benefits and certain transition benefits, we
anticipate the remaining payments will occur in 2002. Separation benefits will continue to be paid out over the benefit period as specified under our severance plan and transition benefits will continue to be paid through 2004.





LIQUIDITY AND CAPITAL RESOURCES





Our primary cash needs are for debt service obligations, capital expenditures, working capital and general corporate purposes. As of September 28, 2002, we had cash and cash equivalents of $20.0 million. Our free cash flow for the
nine months ended September 29, 2002 was negative $52.3 million compared to negative $49.2 million for the same period last year. Free cash flow excludes the effects of cash flow from financing activities. During our third quarter, we typically
spend a considerable amount of time on non-revenue generating activities in preparation for the upcoming school year. As a result, our third quarter normally reflects modest sales and significant cash usage.





Operating Activities


Operating activities used cash of $35.6 million
during the nine months ended September 28, 2002 compared to $37.8 million for the same prior year period. The $2.2 million decreased use of funds is primarily due to the results of our continuing operations which generated a $9.2 million improvement
in earnings offset by a




16




---

##### Table of Contents

$7.1 million decrease in operating cash flow related to changes in working capital and certain non-current assets and liabilities of which the
most significant fluctuation is due to the timing of customer deposits on yearbooks. In addition operating activities were impacted by the $1.8 million loss on redemption of the senior subordinated notes offset by a $1.7 million decrease in
depreciation and amortization related to continuing operations.





During October 2002, we agreed to certain adjustments proposed by the
Internal Revenue Service in connection with its audit of our federal income tax returns filed for years 1996 through 1998. As a result of the audit, we agreed to pay additional federal taxes of $11.3 million. Combined with additional state taxes and
interest charges, our estimated liability related to these adjustments is approximately $18.6 million. This amount had previously been accrued and is included in income taxes payable in our Condensed Consolidated Balance Sheet as of
September 28, 2002. We expect to pay the total amount owed pertaining to these adjustments prior to the end of 2002. In addition, we intend to file an appeal with the Internal Revenue Service concerning a further $8.0 million proposed adjustment.
The appeal process may take from twelve to twenty-four months to complete and we believe that we are adequately reserved to cover the remaining issue.





Investing Activities


Capital expenditures for the nine months ended September 28, 2002 were $16.8 million compared to $15.6 million for the same
period last year. The increase can be attributed to expenditures incurred in connection with the expansion of our color printing capacity and the upgrade of our transaction processing system including application development in one of our major
product lines.





Financing Activities


Net cash
provided by financing activities consists primarily of short-term borrowings on our revolving credit facility offset by principal payments on our long-term debt. During the nine months ended September 28, 2002, we made scheduled principal payments
of $10.3 million, voluntarily prepaid an additional $5.0 million of principal on our senior secured credit facility and voluntarily redeemed $7.5 million principal amount of our 12.75% senior subordinated notes due May 2010 for $8.5
million and other non-cash costs.





We have a $150.0 million revolving credit facility that expires on May 31, 2006. As of September 28,
2002, there was $50.2 million outstanding in the form of short-term borrowings and an additional $7.8 million outstanding in the form of letters of credit leaving $92.0 million available under this facility. Seasonal short-term borrowings are
normally paid in full by the end of the fiscal year.





On July 31, 2002 we amended and restated our senior secured credit facility to
provide for the replacement of Term Loan B with a new Term Loan C in the amount of $330.0 million. Term Loan C is payable in semi-annual installments of $1.0 million through June 30, 2008 followed by semi-annual installments of $106.0 million
through December 31, 2009. The initial interest margin on Term Loan C is 75 basis points less than Term Loan B resulting in an estimated $2.5 million reduction of annual interest expense on a pre-tax basis. Capitalized loan fees related to Term Loan
B will continue to be amortized over the life of Term Loan C. Fees of $1.3 million related directly to the amendment have been capitalized and will also be amortized over the life of Term Loan C.





During the quarter ended September 28, 2002, we reacquired 64,015 warrants to purchase 120,934 equivalent shares of common stock for total consideration paid of $2.2 million. The detachable
warrants were issued with our 12.75% senior subordinated notes due May 2010. We may, from time to time, purchase outstanding debt and equity securities for cash in private transactions, in the market or otherwise, subject to compliance with our debt
and preferred stock commitments.





NEW ACCOUNTING STANDARDS





SFAS 143Accounting for Asset Retirement Obligations


In June 2001, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, which establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. It also provides
accounting guidance for legal obligations associated with the retirement of tangible long-lived assets. SFAS 143 is effective for fiscal years beginning after June 15, 2002, with early adoption permitted. We expect that the provisions of




17




---

##### Table of Contents

SFAS 143 will not have a material impact, if any, on our consolidated results of operations, cash flows and financial position.





SFAS 145Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections


In April 2002, the FASB issued SFAS 145, which rescinds SFAS 4, Reporting Gains and Losses from Extinguishments of Debt, SFAS 44, Accounting for
Intangible Assets of Motor Carriers and SFAS 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements and amends SFAS 13, Accounting for Leases. As a result of rescinding SFAS 4 and SFAS 64, the criteria in
APB 30, Reporting the Results of Operations  Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, will be used to classify gains and losses
from extinguishments of debt. SFAS 145 also amends SFAS 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. During 2002,
we adopted the provisions of SFAS 145. Accordingly, the $1.8 million loss on redemption of our 12.75% senior subordinated notes due May 2010 has been classified as an operating expense as it does not meet the criteria in APB 30 to be classified
as an extraordinary loss.





ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Commodity
Price Risk


We are subject to market risk associated with changes in the price of gold. To mitigate our commodity price risk, we enter into gold forward contracts based
upon the estimated ounces needed to satisfy projected customer requirements. We periodically prepare a sensitivity analysis to estimate our exposure to market risk on our open gold forward purchase contracts. The fair market value of our open gold
forward contracts as of September 28, 2002 was $28.1 million and was calculated by valuing each contract at quoted futures prices. The market risk associated with these contracts was $2.8 million and was estimated as the potential loss in fair value
resulting from a hypothetical 10% adverse change in such prices.





There have been no material changes in our other exposures to market
risk during the nine months ended September 28, 2002. For additional information, refer to Item 7A of our 2001 Form 10-K.





ITEM 4.    CONTROLS AND PROCEDURES





Based on an evaluation of our disclosure controls and
procedures conducted within 90 days of the date of filing this report on


Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of 1934) are effective.





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




18




---

##### Table of Contents




PART II    OTHER INFORMATION





ITEM 1.    LEGAL PROCEEDINGS





A federal antitrust action was served on Jostens on October
23, 1998. The complainant, Epicenter Recognition, Inc. (Epicenter), alleges that Jostens has attempted to monopolize the market of high school graduation products in the state of California. Epicenter is a successor to a corporation
formed by four of our former sales representatives. The plaintiff claimed damages of approximately $3.0 million to $10.0 million under various theories and differing sized relevant markets. Epicenter waived its right to a jury, so the case was
tried before a judge in U.S. District Court in Orange County, California. On June 18, 2002, the Court found, among other things, that while Jostens use of rebates, contributions and value-added programs are legitimate business practices widely
practiced in the industry and not violative of antitrust laws, our use of multi-year Total Service Program contracts violated Section 2 of the Sherman Act because these agreements could exclude competition by making it difficult for a new
vendor to compete against Jostens. On July 12, 2002, the Court entered an initial order providing, among other things, that Epicenter be awarded damages of $1.00, trebled pursuant to Section 15 of the Clayton Act, and that in the state of
California, Jostens was enjoined for a period of ten years from utilizing any contract, including those for Total Service Programs, for a period which extends for more than one year (the Initial Order). The Initial Order also provided
for payment to Epicenter of reasonable attorneys fees and costs. Jostens made a motion to set aside the Initial Order. On August 23, 2002, the Court entered its ruling on the motion, and granted, in part, Jostens motion for relief from
judgment, changing the Initial Order and enjoining Jostens for only five years, and allowing Jostens to enter into multi-year agreements in the following specific circumstances: (1) when a school requests a multi-year agreement, in writing and on
its own accord, or (2) in response to a competitors offer to enter into a multi-year agreement. On August 23, 2002, the Court entered an additional order granting Epicenters motion for attorneys fees in the amount of $1.6 million
plus $0.1 million in out-of-pocket expenses for a total award of $1.7 million. On September 12, 2002, Jostens filed a Notice of Appeal to the Ninth Circuit of the United States Court of Appeals. Payment of attorneys fees and costs are stayed pending
appeal. During November 2002, Jostens issued a letter of credit in the amount of $2.0 million to secure the judgment on attorneys fees and costs. Jostens continues to vigorously appeal this matter and is optimistic about the result based upon
substantive and procedural grounds.





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 will not be material.





ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K





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




| | 12 |  | Computation of Ratio of Earnings to Fixed Charges
| | -- |  | -------------------------------------------------




|(b) |  | Reports on Form 8-K
|--- |  | -------------------




A Form 8-K dated July 31, 2002 and filed on August 8, 2002 announcing an amendment of the senior secured credit facility.




19




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##### Table of Contents




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:    November 8, 2002

/s/    Robert C. BuhrmasterRobert C. Buhrmaster Chairman,
President and Chief Executive Officer








Date:    November 8, 2002

/s/    John A. FeenanJohn A. Feenan Sr. Vice
President and Chief Financial Officer




20




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##### Table of Contents

CERTIFICATIONS





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





|1. |  | I have reviewed this quarterly report on Form 10-Q of Jostens, Inc.;
|-- |  | --------------------------------------------------------------------




|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during this period in which the quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------




|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------




|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







Date:  November 8, 2002

/s/    Robert C. BuhrmasterRobert C. Buhrmaster Chairman,
President and Chief Executive Officer


|
|






21




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##### Table of Contents




CERTIFICATIONS





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





|1. |  | I have reviewed this quarterly report on Form 10-Q of Jostens, Inc.;
|-- |  | --------------------------------------------------------------------




|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during this period in which the quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------




|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------




|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







Date:  November 8, 2002

/s/    John A. FeenanJohn A. Feenan Sr. Vice
President and Chief Financial Officer




22