**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

# **Washington, D.C.20549**

# ** **

## **FORM 10-Q**

## ** **

ý  **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THESECURITIES EXCHANGE ACT OF 1934**

 

**For the Quarterly Period EndedApril 3, 2004**

 

**OR**

 

**o****  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934**

### ** **

**Commissionfile 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  American Boulevard West  Minneapolis, Minnesota**     |   | **55437**                               |
| (Address of principal executive offices)                      |   | (Zip code)                              |
|                                                          |   |                                    |
| **Registrant’s telephone number: **(952) 830-3300   |

 

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports) and (2) has been subject to such filingrequirement for the past 90 days.  Yes ý    No o

 

Indicate by check markwhether the Registrant is an accelerated filer (as defined in Rule 12b-2 of theAct).  Yes o    No ý

 

Number of shares of theRegistrant’s Common Stock outstanding as of May 14, 2004:  1,000.

 

 

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**Jostens,Inc. and Subsidiaries**

** **
| **Part  I Financial Information** |                                                                                                                    |
|-----------------------------------|-------------------------------------------------------------------------------------------------------------------------|
|                              |                                                                                                                    |   |
| Item 1.                           | Financial Statements (Unaudited)                                                                                        |   |
|                              |                                                                                                                    |   |
|                              | Condensed  Consolidated Statements of Operations for the three months ended  April 3, 2004 and March 29, 2003 |   |
|                              |                                                                                                                    |   |
|                              | Condensed Consolidated Balance Sheets  as of April 3, 2004, January 3, 2004 and March 29, 2003                     |   |
|                              |                                                                                                                    |   |
|                              | Condensed Consolidated Statements of Cash  Flows for the three months ended April 3, 2004 and March 29, 2003  |   |
|                              |                                                                                                                    |   |
|                              | Notes to Condensed Consolidated Financial  Statements                                                                   |   |
|                              |                                                                                                                    |   |
| Item 2.                           | Management’s Discussion and Analysis of  Financial Condition and Results of Operations                             |   |
|                              |                                                                                                                    |   |
| Item 3.                           | Quantitative and Qualitative Disclosures about  Market Risk                                                             |   |
|                              |                                                                                                                    |   |
| Item 4.                           | Controls and Procedures                                                                                                 |   |
|                              |                                                                                                                    |   |
| **Part  II Other Information**    |                                                                                                                    |
|                              |                                                                                                                    |   |
| Item 1.                           | Legal  Proceedings                                                                                                      |   |
|                              |                                                                                                                    |   |
| Item  6.                          | Exhibits  and Reports on Form 8-K                                                                                       |   |
|                              |                                                                                                                    |   |
| Signatures                        |                                                                                                                    |   |

 

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##### **PART I**FINANCIAL INFORMATION

##### ** **

###### **ITEM 1**.  FINANCIAL STATEMENTS

 

**JOSTENS,INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**

 
|                                                   |   | **Three  months ended**             |        |
|--------------------------------------------------------|--------|-------------------------------------|-------------|
| **In thousands**                                       |   | **Post-Merger  April 3, 2004** |        | **Pre-Merger  March 29, 2003** |   |
| **Net sales**                                          |   | **$**                               | **143,085** | ** ** | **$** | **121,524** | ** ** |
| Cost  of products sold                                 |   | 60,780                              |        | 50,745 |   |
| Gross  profit                                          |   | 82,305                              |        | 70,779 |   |
| Selling  and administrative expenses                   |   | 88,225                              |        | 71,458 |   |
| **Operating loss**                                     |   | **(5,920**                          | **)**       | **(679** | **)** |
| Loss  on redemption of debt                            |   | 420                                 |        | — |   |
| Net  interest expense                                  |   | 15,829                              |        | 13,940 |   |
| Loss  before income taxes                              |   | (22,169                             | )           | (14,619 | ) |
| Benefit  from income taxes                             |   | (2,217                              | )           | (6,021 | ) |
| **Net loss**                                           |   | **(19,952**                         | **)**       | **(8,598** | **)** |
| Dividends  and accretion on redeemable preferred stock |   | —                              |        | (3,205 | ) |
| **Net loss available to common shareholder(s)**        |   | **$**                               | **(19,952** | **)** | **$** | **(11,803** | **)** |

 

*Theaccompanying notes are an integral part of the unaudited condensed consolidatedfinancial statements.*

 

1

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**JOSTENS,INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)**

 
|                                                                                                                                             |   | **Post-Merger**         |          | **Pre-Merger**            |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------------|---------------------------|------------|
| **In thousands, except share  amounts**                                                                                                          |   | **April 3,  2004** |          | **January 3,  2004** |       | **March 29,  2003** |   |
| **ASSETS**                                                                                                                                       |   |                    |          |                      |       |   |   |
| Cash  and cash equivalents                                                                                                                       |   | $                       | 27,312        |                      | $          | 19,371 |   | $ | 20,868 |   |
| Accounts  receivable, net                                                                                                                        |   | 48,470                  |          | 57,018                    |       | 46,193 |   |
| Inventories,  net                                                                                                                                |   | 111,880                 |          | 72,523                    |       | 108,484 |   |
| Salespersons  overdrafts, net of allowance of $11,144, $10,953 and $8,567                                                                        |   | 32,916                  |          | 30,062                    |       | 31,110 |   |
| Prepaid  expenses and other current assets                                                                                                       |   | 11,780                  |          | 10,446                    |       | 25,133 |   |
| **Total current assets**                                                                                                                         |   | **232,358**             | ** **    | **189,420**               | ** ** | **231,788** | ** ** |
|                                                                                                                                             |   |                    |          |                      |       |   |   |
| Property  and equipment                                                                                                                          |   | 121,506                 |          | 119,506                   |       | 279,718 |   |
| Less  accumulated depreciation                                                                                                                   |   | (20,495                 | )             | (13,913                   | )          | (215,783 | ) |
| Property  and equipment, net                                                                                                                     |   | 101,011                 | ** **    | 105,593                   | ** ** | 63,935 |   |
| Goodwill                                                                                                                                         |   | 726,040                 |          | 746,025                   |       | 19,286 |   |
| Intangibles,  net                                                                                                                                |   | 633,216                 |          | 644,654                   |       | 689 |   |
| Other  assets                                                                                                                                    |   | 33,318                  |          | 34,666                    |       | 58,897 |   |
|                                                                                                                                             |   | **$**                   | **1,725,943** |                      | **$**      | **1,720,358** | ** ** | **$** | **374,595** | ** ** |
|                                                                                                                                             |   |                    |          |                      |       |   |   |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY (DEFICIT)**                                                                                         |   |                    |          |                      |       |   |   |
| Short-term  borrowings                                                                                                                           |   | $                       | 9,163         |                      | $          | 13,013 |   | $ | 9,520 |   |
| Commissions  payable                                                                                                                             |   | 25,151                  |          | 16,736                    |       | 21,531 |   |
| Customer  deposits                                                                                                                               |   | 193,036                 |          | 149,809                   |       | 189,863 |   |
| Income  taxes payable                                                                                                                            |   | 10,982                  |          | 8,840                     |       | — |   |
| Interest  payable                                                                                                                                |   | 11,298                  |          | 4,910                     |       | 16,579 |   |
| Current  portion of long-term debt                                                                                                               |   | —                  |          | —                    |       | 17,094 |   |
| Other  accrued liabilities, including deferred tax liabilities of $3,852, $4,283 and  $0                                                         |   | 62,720                  |          | 66,581                    |       | 59,140 |   |
| **Total current liabilities**                                                                                                                    |   | **312,350**             | ** **    | **259,889**               | ** ** | **313,727** | ** ** |
|                                                                                                                                             |   |                    |          |                      |       |   |   |
| Long-term  debt - less current maturities                                                                                                        |   | 679,244                 |          | 685,407                   |       | 563,666 |   |
| Redeemable  preferred securities (liquidation preference: $102,519 and $99,052)                                                                  |   | 118,913                 |          | 135,272                   |       | — |   |
| Deferred  income taxes                                                                                                                           |   | 227,793                 |          | 231,890                   |       | 10,053 |   |
| Other  noncurrent liabilities                                                                                                                    |   | 23,130                  |          | 23,359                    |       | 7,023 |   |
| **Total liabilities**                                                                                                                            |   | **1,361,430**           | ** **    | **1,335,817**             | ** ** | **894,469** | ** ** |
|                                                                                                                                             |   |                    |          |                      |       |   |   |
| Commitments  and contingencies                                                                                                                   |   |                    |          |                      |       |   |   |
|                                                                                                                                             |   |                    |          |                      |       |   |   |
| Redeemable  preferred stock (liquidation preference: $87,302)                                                                                    |   | —                  |          | —                    |       | 73,995 |   |
|                                                                                                                                             |   |                    |          |                      |       |   |   |
| Common  stock $.01 par value; authorized: 2,000,000 shares; issued and outstanding:  1,000 shares at April 3, 2004 and January 3, 2004 |   | —                  |          | —                    |       | — |   |
| Common  stock                                                                                                                                    |   | —                  |          | —                    |       | 1,003 |   |
| Additional  paid-in-capital                                                                                                                      |   | 417,934                 |          | 417,934                   |       | 20,964 |   |
| Officer  notes receivable                                                                                                                        |   | —                  |          | —                    |       | (1,647 | ) |
| Accumulated  deficit                                                                                                                             |   | (53,354                 | )             | (33,402                   | )          | (603,808 | ) |
| Accumulated  other comprehensive loss                                                                                                            |   | (67                     | )             | 9                         |       | (10,381 | ) |
| **Total shareholders’ equity (deficit)**                                                                                                    |   | **364,513**             | ** **    | **384,541**               | ** ** | **(593,869** | **)** |
|                                                                                                                                             |   | **$**                   | **1,725,943** |                      | **$**      | **1,720,358** | ** ** | **$** | **374,595** | ** ** |

 

*Theaccompanying notes are an integral part of the unaudited condensed consolidatedfinancial statements.*

 

2

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**JOSTENS,INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**

 
|                                                                            |   | **Three  Months Ended**             |       |
|---------------------------------------------------------------------------------|--------|-------------------------------------|------------|
| **In thousands**                                                                |   | **Post-Merger  April 3, 2004** |       | **Pre-Merger  March 29, 2003** |   |
| Net loss                                                                        |   | $                                   | (19,952    | ) | $ | (8,598 | ) |
| Adjustments to reconcile net loss to net cash  provided by operating activities |   |                                |       |   |   |
| Depreciation                                                                    |   | 6,980                               |       | 5,513 |   |
| Amortization of intangible assets                                               |   | 11,438                              |       | 140 |   |
| Amortization of debt discount, premium and deferred  financing costs            |   | 558                                 |       | 1,316 |   |
| Other amortization                                                              |   | 212                                 |       | 552 |   |
| Accrued interest on redeemable preferred stock                                  |   | 3,642                               |       | — |   |
| Deferred income taxes                                                           |   | (4,528                              | )          | — |   |
| Other                                                                           |   | 436                                 |       | 118 |   |
| Changes in assets and liabilities:                                              |   |                                |       |   |   |
| Accounts receivable                                                             |   | 8,531                               |       | 12,843 |   |
| Inventories                                                                     |   | (39,337                             | )          | (39,032 | ) |
| Salespersons overdrafts                                                         |   | (2,847                              | )          | (5,525 | ) |
| Prepaid expenses and other current assets                                       |   | (1,631                              | )          | (2,888 | ) |
| Accrued employee compensation and related taxes                                 |   | (3,920                              | )          | (7,483 | ) |
| Commissions payable                                                             |   | 8,418                               |       | 5,837 |   |
| Customer deposits                                                               |   | 43,189                              |       | 55,948 |   |
| Income taxes payable                                                            |   | 2,136                               |       | (7,404 | ) |
| Interest payable                                                                |   | 6,388                               |       | 5,790 |   |
| Other                                                                           |   | 357                                 |       | 1,458 |   |
| **Net cash provided by operating  activities**                                  |   | **20,070**                          | ** ** | **18,585** | ** ** |
| Acquisition of businesses, net of cash acquired                                 |   | —                              |       | (4,951 | ) |
| Purchases of property and equipment                                             |   | (2,488                              | )          | (3,541 | ) |
| Other investing activities, net                                                 |   | (14                                 | )          | (163 | ) |
| **Net cash used for investing  activities**                                     |   | **(2,502**                          | **)**      | **(8,655** | **)** |
| Net short-term borrowings                                                       |   | (3,840                              | )          | — |   |
| Redemption of senior subordinated notes payable                                 |   | (5,800                              | )          | — |   |
| **Net cash used for financing  activities**                                     |   | **(9,640**                          | **)**      | **—** | ** ** |
| Effect of exchange rate changes on cash and cash  equivalents                   |   | 13                                  |       | — |   |
| Increase in cash and cash equivalents                                           |   | 7,941                               |       | 9,930 |   |
| Cash and cash equivalents, beginning of period                                  |   | 19,371                              |       | 10,938 |   |
| **Cash and cash equivalents, end of  period**                                   |   | **$**                               | **27,312** | ** ** | **$** | **20,868** | ** ** |

 

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

 

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**Notes****toCondensed Consolidated Financial Statements (Unaudited)**

***Jostens, Inc. and Subsidiaries***

 

**1.****     SignificantAccounting Policies**

 

***Basis of Presentation***

The accompanyingunaudited condensed consolidated financial statements have been prepared inaccordance with accounting principles generally accepted in the United Statesfor interim financial information and with the instructions to Form 10-Q andRule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotesrequired by accounting principles generally accepted in the United States forcomplete financial statements.  In theopinion of management, all adjustments (consisting of normal recurringadjustments) considered necessary for a fair presentation have been included.  Operating results for the interim periodspresented are not necessarily indicative of the results that may be expectedfor the full year.  For furtherinformation, refer to the consolidated financial statements and footnotesincluded in our Form 10-K for the fiscal year ended January 3, 2004.

 

The preparation of ourfinancial statements in conformity with accounting principles generallyaccepted in the United States requires us to make estimates and assumptionsthat affect the amounts reported in the financial statements and accompanyingnotes.  Actual results could differ fromthose estimates.

 

Our condensedconsolidated financial statements as of and for the period ended March 29,2003, were prepared using our historical basis of accounting.  As a result of the 2003 merger transactionas discussed in Note 2, we applied purchase accounting and a new basis ofaccounting began on July 29, 2003. The three months ended March 29, 2003 are a pre-merger period andthe three months ended April 3, 2004 are a post-merger period.

 

Certain amounts in ourprior period financial statements and notes have been reclassified to conformto the current period presentation.

 

***Stock-BasedCompensation***

We apply the intrinsic method prescribed by Accounting Principles BoardOpinion (APB) 25, *“Accounting for StockIssued to Employees,”*and related interpretations in accounting forstock options granted to employees and non-employee directors.  Accordingly, no compensation cost has beenreflected in net income for these plans since all options are granted at orabove fair value of the underlying stock on the date of grant.  The following table illustrates the effecton net income and earnings per share if we had applied the fair valuerecognition provisions of SFAS 123, *“Accountingfor Stock-Based Compensation”. *During2004, options to purchase common shares of our indirect parent, Jostens HoldingCorp. were granted to employees and directors for services rendered on behalfof Jostens, Inc.  Accordingly, thecompensation cost related to these options is reflected in the post-mergeramounts presented below.

 
|                                                                                                                                 |   | **Three  Months Ended**             |    |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|
| **In thousands**                                                                                                                     |   | **Post-Merger  April 3, 2004** |    | **Pre-Merger  March 29, 2003** |   |
| **Net loss available to common shareholder(s)**                                                                                      |   |                                |    |   |   |
| As  reported                                                                                                                         |   | $                                   | (19,952 | ) | $ | (11,803 | ) |
| Deduct  total stock-based employee compensation expense determined under fair  value-based method for all awards, net of tax effects |   | (152                                | )       | (116 | ) |
| Pro  forma net loss available to common shareholder(s)                                                                               |   | $                                   | (20,104 | ) | $ | (11,919 | ) |

 

**2.****     2003Merger**

 

On July 29, 2003, wewere acquired by DLJ Merchant Banking Partners III, L.P. and certain of itsaffiliated funds through a merger in which Jostens, Inc. became the survivingcompany and an indirect subsidiary of Jostens Holding Corp.  We paid $471.0 million to holders of ourcommon stock and warrants representing a cash payment of $48.25

 

4

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per share.  We accounted for the merger using thepurchase method of accounting.  Theaggregate purchase price of $471.0 million, excluding certain capitalizedtransaction costs, was allocated to the tangible and intangible assets acquiredand liabilities assumed, based upon their relative fair values as of the dateof the merger.  As of April 3,2004, our preliminary allocation of the purchase price is as follows:

 
| **In thousands**            |   |     |        |
|-----------------------------|--------|----------|-------------|
| Current  assets             |   | $        | 165,280     |   |
| Property  and equipment     |   | 101,989  |        |
| Intangible  assets          |   | 660,399  |        |
| Goodwill                    |   | 707,633  |        |
| Other  assets               |   | 18,622   |        |
| Current  liabilities        |   | (199,776 | )           |
| Long-term  debt             |   | (594,494 | )           |
| Redeemable  preferred stock |   | (106,511 | )           |
| Deferred  income taxes      |   | (253,577 | )           |
| Other  liabilities          |   | (28,521  | )           |
|                        |   | **$**    | **471,044** |   |

 

We have estimated thefair value of our assets and liabilities as of the merger date utilizinginformation available at the time that our condensed consolidated financialstatements were prepared.  Theseestimates are subject to refinement until all pertinent information has beenobtained.  During the quarter ended April 3, 2004, we refined our estimate ofthe fair value of our redeemable preferred stock as of the merger date from$130.0 million to $110.0 million, thus recording a purchase price adjustment of$20.0 million through goodwill.

 

**3.****     New Accounting Standards**

 

***FSP 106-1 – Accounting and DisclosureRequirements Related to the Medicare Prescription Drug Improvement andModernization Act of 2003***

In January 2004, theFinancial Accounting Standards Board (FASB) issued FASB Staff Position (FSP)106-1 with an effective date for fiscal years ending after December 7,2003.  FSP 106-1 relates to the MedicarePrescription Drug, Improvement and Modernization Act of 2003 (the “Act”) signedinto law on December 8, 2003.  TheAct introduced a prescription drug benefit under Medicare, as well as a federalsubsidy to sponsors of retiree health care benefit plans that provide a benefitthat is at least actuarially equivalent to Medicare.  As permitted by FSP 106-1, we made a one-time election to deferaccounting for the effect of the Act until specific authoritative guidance isissued.  Therefore, in accordance withFSP 106-1, the net periodic postretirement benefit cost included in ourfinancial statements and accompanying notes does not reflect the effects of theAct on our plans.  Specificauthoritative guidance on the accounting for the federal subsidy is pending andthat guidance, when issued, could require us to change previously reportedinformation.  We do not expect theadoption of FSP 106-1, when finalized, to have a material impact on ourfinancial statements.

 

**4.****     IncomeTaxes**

 

Consistent with theprovisions of APB 18, *“Interim FinancialReporting”,* we have provided an income tax benefit based on our bestestimate of the consolidated effective tax rate applicable for the entireyear.  Based on those estimates, weprovided an income tax benefit at a consolidated effective rate of 10% for thethree months ended April 3, 2004 compared to 41% in the comparable prioryear period.  We review our tax rateestimates on a quarterly basis and make revisions as necessary.

 

Our consolidatedeffective rate of tax benefit is less than the federal statutory rate of taxprimarily due to the effect of nondeductible interest expense associated withour redeemable preferred stock. Furthermore, the rate of tax benefit

 

5

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recorded for purchaseaccounting adjustments is based on the change in deferred tax liabilitybalances attributable to net taxable temporary differences recorded inconnection with the purchase price allocation of the prior year mergertransaction.

 

**5.****     ComprehensiveLoss**

 

Comprehensive loss and its components, net of taxare presented below:

 
|                                                  |   | **Three  Months Ended**             |    |
|-------------------------------------------------------|--------|-------------------------------------|---------|
| **In thousands**                                      |   | **Post-Merger  April 3, 2004** |    | **Pre-Merger  March 29, 2003** |   |
| Net  loss                                             |   | $                                   | (19,952 | ) | $ | (8,598 | ) |
| Change  in cumulative translation adjustment          |   | (76                                 | )       | (152 | ) |
| Change  in fair value of interest rate swap agreement |   | —                              |    | 588 |   |
| Comprehensive  loss                                   |   | $                                   | (20,028 | ) | $ | (8,162 | ) |

 

**6.****     AccountsReceivable and Inventories**

 

Net accounts receivablewere comprised of the following:

 
|                             |   | **Post-Merger**         |   | **Pre-Merger**            |   |
|----------------------------------|--------|-------------------------|--------|---------------------------|--------|
| **In thousands**                 |   | **April 3,  2004** |   | **January 3,  2004** |   | **March 29,  2003** |   |
| Trade  receivables               |   | $                       | 59,836 |                      | $      | 64,993 |   | $ | 56,496 |   |
| Allowance  for doubtful accounts |   | (2,526                  | )      | (2,184                    | )      | (2,718 | ) |
| Allowance  for sales returns     |   | (8,840                  | )      | (5,791                    | )      | (7,585 | ) |
| Total  accounts receivable, net  |   | $                       | 48,470 |                      | $      | 57,018 |   | $ | 46,193 |   |

 

Net inventorieswere comprised of the following:

 
|                       |   | **Post-Merger**         |    | **Pre-Merger**            |   |
|----------------------------|--------|-------------------------|---------|---------------------------|--------|
| **In thousands**           |   | **April 3,  2004** |    | **January 3,  2004** |   | **March 29,  2003** |   |
| Raw  material and supplies |   | $                       | 13,288  |                      | $      | 11,416 |   | $ | 13,031 |   |
| Work-in-process            |   | 59,556                  |    | 28,084                    |   | 60,018 |   |
| Finished  goods            |   | 41,959                  |    | 34,713                    |   | 37,877 |   |
| Reserve  for obsolescence  |   | (2,923                  | )       | (1,690                    | )      | (2,442 | ) |
| Total  inventories, net    |   | $                       | 111,880 |                      | $      | 72,523 |   | $ | 108,484 |   |

 

 

**7.****     Goodwilland Other Intangible Assets**

 

The increase in goodwill and other intangible assetsas of April 3, 2004 compared to the period ended March 29, 2003 ispredominantly attributable to the effect of purchase accounting in connectionwith the July 29, 2003 merger.

 

6

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The changes in the net carrying amount of goodwillwere as follows:

 
|                                 |   | **Post-Merger**         |        | **Pre-Merger**           |   |
|--------------------------------------|--------|-------------------------|-------------|--------------------------|--------|
| **In thousands**                     |   | **April 3,  2004** |        | **March 29,  2003** |   |
| Balance  at beginning of period      |   | $                       | 746,025     |                     | $      | 14,450 |   |
| Goodwill  acquired during the period |   | 15                      |        | 4,781                    |   |
| Purchase  price adjustments          |   | (20,000                 | )           | —                   |   |
| Currency  translation                |   | —                  |        | 55                       |   |
| Balance at end of period             |   | **$**                   | **726,040** | ** **               | **$**  | **19,286** | ** ** |

 

The following table presents the gross carryingamount and accumulated amortization for each major class of other intangibleassets as of the dates indicated:

 
|                            |   | **Post-Merger  April 3, 2004** |   |
|---------------------------------|--------|-------------------------------------|--------|
| **In thousands**                |   | **Estimated  Useful Life**          |   | **Gross  Carrying  Amount** |   | **Accumulated  Amortization** |   | **Net** |   |
| School  relationships           |   | 10 years                            |   | $ | 330,000 |   | $ | (22,759 | ) | $ | 307,241 |   |
| Order  backlog                  |   | 1.5 years                           |   | 48,700 |   | (3,280 | ) | 45,420 |   |
| Internally  developed software  |   | 2 to 5 years                        |   | 12,200 |   | (2,315 | ) | 9,885 |   |
| Patented/unpatented  technology |   | 3 years                             |   | 11,000 |   | (2,523 | ) | 8,477 |   |
| Customer  relationships         |   | 4 to 8 years                        |   | 8,666 |   | (1,483 | ) | 7,183 |   |
| Other                           |   | 3 years                             |   | 24 |   | (14 | ) | 10 |   |
|                            |   |                                |   | 410,590 |   | (32,374 | ) | 378,216 |   |
| Trademarks                      |   | Indefinite                          |   | 255,000 |   | — |   | 255,000 |   |
|                            |   |                                |   | **$** | **665,590** |   | **$** | **(32,374** | **)** | **$** | **633,216** | ** ** |

 
|                    |   | **Pre-Merger  March 29, 2003** |   |
|-------------------------|--------|-------------------------------------|--------|
| **In thousands**        |   | **Estimated  Useful Life**          |   | **Gross  Carrying  Amount** |   | **Accumulated  Amortization** |   | **Net** |   |
| Customer  relationships |   | 4 to 5 years                        |   | 860 |   | (189 | ) | 671 |   |
| Other                   |   | 3 years                             |   | 24 |   | (6 | ) | 18 |   |
|                    |   |                                |   | **$** | **884** |   | **$** | **(195** | **)** | **$** | **689** | ** ** |
|                         |        |                                     |        |  |  |  |  |  |  |  |  |  |

 

Amortization expense related to other intangibleassets was $11.4 million and $0.1 million for the quarters ended April 3,2004 and March 29, 2003, respectively.

 

7

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**8.****     Long-termDebt**

 

Long-termdebt consists of the following:

 
|                                                                                                                                                                                                                                                                                                      |   | **Post-Merger**         |        | **Pre-Merger**              |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-------------|-----------------------------|--------|
| **In thousands**                                                                                                                                                                                                                                                                                          |   | **April 3,  2004** |        | **January 3,****2004** |   | **March 29,  2003** |   |
| Borrowings  under senior secured credit facility:                                                                                                                                                                                                                                                         |   |                    |        |                        |   |   |   |
| Term  Loan, variable rate, 3.67 percent at April 3, 2004, with semi-annual  principal and interest payments through July 2010                                                                                                                                                                   |   | $                       | 453,705     |                        | $      | 453,705 |   | $ | — |   |
| Term  Loan A, variable rate, 3.54 percent at March 29, 2003, paid in full  July 2003                                                                                                                                                                                                            |   | —                  |        | —                      |   | 58,602 |   |
| Term  Loan C, variable rate, 4.04 percent at March 29, 2003, paid in full  July 2003                                                                                                                                                                                                            |   | —                  |        | —                      |   | 320,669 |   |
| Senior  subordinated notes, 12.75 percent fixed rate, including premium of $21,554 at  April 3, 2004 and $22,717 at January 3, 2004, net of discount of  $16,011 at March 29, 2003, with semi-annual interest payments of $13.3  million, principal due and payable at maturity - May 2010 |   | 225,539                 |        | 231,702                     |   | 201,489 |   |
|                                                                                                                                                                                                                                                                                                      |   | 679,244                 |        | 685,407                     |   | 580,760 |   |
| Less  current portion                                                                                                                                                                                                                                                                                     |   | —                  |        | —                      |   | 17,094 |   |
|                                                                                                                                                                                                                                                                                                      |   | **$**                   | **679,244** |                        | **$**  | **685,407** | ** ** | **$** | **563,666** | ** ** |

 

During the quarter ended April 3, 2004, wevoluntarily redeemed $5.0 million principal amount of our senior subordinatednotes and recognized a loss of $0.4 million, including the impact of purchaseaccounting, consisting of $0.8 million of premium paid on redemption of thenotes and a net $0.4 million credit resulting from the write-off of relatedunamortized premium, original issuance discount and deferred financing costs.

 

As of April 3, 2004,there was $9.2 million outstanding in the form of short-term borrowings at ourCanadian subsidiary, at a weighted average interest rate of 5.75% and anadditional $10.8 million outstanding in the form of letters of credit, leaving$130.0 million available under our revolving credit facility.

 

The senior secured creditfacility and the senior subordinated notes contain certain cross-defaultprovisions whereby a violation of a covenant under one debt obligation would,consequently, violate covenants under the other debt obligation.  As of April 3, 2004, we were incompliance with all covenants.

 

As of April 3, 2004,January 3, 2004 and March 29, 2003, the fair value of our debt,excluding the senior subordinated notes, approximated its carrying value.  The fair value of the senior subordinatednotes as of April 3, 2004, January 3, 2004 and March 29, 2003was $230.5 million, $239.8 million and $242.3 million, respectively, based onthe quoted market price.

 

**9.****     RedeemablePreferred Stock**

 

On June 29, 2003, weadopted SFAS 150, *“Accounting for CertainFinancial Instruments with Characteristics of both Liabilities and Equity”.*  In accordance with SFAS 150, we reclassifiedour redeemable preferred stock to the liabilities section of our condensedconsolidated balance sheet and began reporting the preferred dividend asinterest expense in our results of operations rather than as a reduction toretained earnings.  We also recognized$4.6 million cumulative effect of a change in accounting principle.  We did not provide any tax benefit inconnection with the cumulative effect adjustment because payment of the relatedpreferred dividend and the discount amortization are not tax deductible.  Pro forma amounts assuming the change inaccounting principle had been in effect since the beginning of 2003 are asfollows:

 

8

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|                                                                        |   | **Three  Months Ended**             |    |
|-----------------------------------------------------------------------------|--------|-------------------------------------|---------|
| **In thousands**                                                            |   | **Post-Merger  April 3, 2004** |    | **Pre-Merger  March 29, 2003** |   |
| **Net loss available to common shareholder(s)**                             |   |                                |    |   |   |
| As  reported                                                                |   | $                                   | (19,952 | ) | $ | (11,803 | ) |
| Dividends  and accretion on redeemable preferred shares previously reported |   | —                              |    | 3,205 |   |
| Pro  forma interest expense                                                 |   | —                              |    | (2,600 | ) |
| Pro  forma net loss available to common shareholder(s)                      |   | $                                   | (19,952 | ) | $ | (11,198 | ) |

 

During the quarter endedApril 3, 2004, we refined our estimate of the fair value of the redeemablepreferred stock as of the merger date from $130.0 million to $110.0million.  Liquidation preference of our redeemable preferred stock as ofApril 3, 2004, January 3, 2004 and March 29, 2003 was $102.5million, $99.1 million and $89.3 million, respectively, including accrueddividends.  We have 4,000,000 shares ofpreferred stock, $.01 par value, authorized. We had 100,181, 96,793 and 87,302 shares outstanding in the form ofredeemable preferred stock as of April 3, 2004, January 3, 2004 andMarch 29, 2003, respectively.

 

**10.****  Pensionand Other Postretirement Benefit Plans**

 

Net periodic benefit cost for our pension and other postretirementbenefit plans for the three months ended April 3, 2004 and March 29,2003 consists of the following:

 
|                                       |   | **Pension  benefits**               |    | **Postretirement  benefits**        |   |
|--------------------------------------------|--------|-------------------------------------|---------|-------------------------------------|--------|
| **In thousands**                           |   | **Post-Merger  April 3, 2004** |    | **Pre-Merger  March 29, 2003** |   | **Post-Merger  April 3, 2004** |   | **Pre-Merger  March 29, 2003** |   |
| Service  cost                              |   | $                                   | 1,618   |                                | $      | 1,454 |   | $ | 10 |   | $ | 20 |   |
| Interest  cost                             |   | 3,068                               |    | 3,053                               |   | 93 |   | 116 |   |
| Expected  return on plan assets            |   | (4,497                              | )       | (5,092                              | )      | — |   | — |   |
| Amortization  of prior year service cost   |   | —                              |    | 464                                 |   | — |   | (5 | ) |
| Amortization  of transition amount         |   | —                              |    | (138                                | )      | — |   | — |   |
| Amortization  of net actuarial loss (gain) |   | —                              |    | 132                                 |   | — |   | 70 |   |
| Net periodic benefit expense (income)      |   | **$**                               | **189** | ** **                          | **$**  | **(127** | **)** | **$** | **103** | ** ** | **$** | **201** | ** ** |

 

**11.****  Commitments**

 

Weare subject to market risk associated with changes in the price of gold.  To mitigate our commodity price risk, weenter into forward contracts to purchase gold based upon the estimated ouncesneeded to satisfy projected customer demand. Our purchase commitment at April 3, 2004 was $10.5 million withdelivery dates occurring throughout 2004. These forward purchase contracts are considered normal purchases andtherefore not subject to the requirements of SFAS 133, *“Accounting for Derivative Instruments and HedgingActivities”. *The fair marketvalue of our open gold forward contracts as of April 3, 2004 was $11.0million and was calculated by valuing each contract at quoted futures prices.

 

**12.****  DiscontinuedOperations**

 

In conjunction withexiting our Recognition business in December 2001, we recorded a $27.4million pre-tax loss on disposal for discontinued operations.  The pre-tax loss on disposal consisted of anon-cash charge of $11.1 million to write off certain net assets of theRecognition business plus a $16.3 million charge for accrued costs related toexiting the Recognition business. Components of the accrued exit costs are as follows:

 

9

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|                                                     |   | **Initial** |       | **Prior**   |   | **Net**         |       | **Utilization** |       | **Balance** |   |
|----------------------------------------------------------|--------|-------------|------------|-------------|--------|-----------------|------------|-----------------|------------|-------------|--------|
| **In thousands**                                         |   | **charge**  |       | **accrual** |   | **adjustments** |       | **Prior**       |       | **2004**    |   | **April 3,  2004** |   |
| Employee  separation benefits and other related costs    |   | $           | 6,164      |        | $      | —          |       | $               | (442       | )           | $      | (5,265 | ) | $ | (7 | ) | $ | 450 |   |
| Phase-out  costs of exiting the Recognition business     |   | 4,255       |       | —      |   | (1,203          | )          | (2,670          | )          | 20          |   | 402 |   |
| Salesperson  transition benefits                         |   | 2,855       |       | 1,236       |   | (191            | )          | (1,707          | )          | (211        | )      | 1,982 |   |
| Other  costs related to exiting the Recognition business |   | 3,018       |       | 1,434       |   | (228            | )          | (4,224          | )          | —      |   | — |   |
|                                                     |   | **$**       | **16,292** |        | **$**  | **2,670**       | ** ** | **$**           | **(2,064** | **)**       | **$**  | **(13,866** | **)** | **$** | **(198** | **)** | **$** | **2,834** | ** ** |

 

Our obligation forseparation benefits continues through 2004 over the benefit period as specifiedunder our severance plan, and transition benefits will continue to be paidthrough the period of our contractual obligation.

 

10

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**ITEM 2**.   MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

** **

**GENERAL**

 

Jostens, Inc. and its subsidiaries (“we,” “our,” “us,” or “the Company”)is a leading provider of school-related affinity products and services in threemajor product categories:  yearbooks,class rings and graduation products, which includes diplomas, graduationregalia, such as caps and gowns, accessories and fine paper announcements.  We also are a leading provider of schoolphotography products and services in Canada and have a small but growingpresence in the United States.

 

On July 29, 2003, we were acquired by DLJ Merchant Banking PartnersIII, L.P. and certain of its affiliated funds through a merger in whichJostens, Inc. became the surviving company and an indirect subsidiary ofJostens Holding Corp.  We paid $471.0million to holders of our common stock and warrants representing a cash paymentof $48.25 per share.  We accounted forthe merger using the purchase method of accounting.  The aggregate purchase price of $471.0 million, excluding certaincapitalized transaction costs, was allocated to the tangible and intangibleassets acquired and liabilities assumed, based upon their relative fair valuesas of the date of the merger.  As aresult of the merger, the three months ended March 29, 2003 are apre-merger period and the three months ended April 3, 2004 are a post-mergerperiod.

 

**RESULTS OF OPERATIONS**

 

Ourcondensed consolidated financial statements for the three-month pre-mergerperiod ended March 29, 2003, were prepared using our historical basis ofaccounting.  Although a new basis ofaccounting began on July 29, 2003, we have adjusted our operating resultsfor the three-month post-merger period ended April 3, 2004 to exclude theimpact of purchase accounting. The adjusted operating results may not reflectthe actual results we would have achieved absent the adjustments and may not bepredictive of future results of operations. We present this information because we use it to monitor and evaluateour ongoing operating results and trends, and believe it provides investors anunderstanding of our operating performance over comparative periods.

 

**Three Months Ended April 3, 2004 Compared to the ThreeMonths Ended March 29, 2003**

 

The following table setsforth selected information from our condensed consolidated statements ofoperations expressed as a percentage of net sales.  In the text below, amounts and percentages have been rounded andare based on the financial statement amounts.

 

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| **Dollars in thousands**                   |   | **Post-Merger  Three Months  Ended  April 3, 2004** |    | **Adjusted  Three Months  Ended  April 3, 2004** |   | **Pre-Merger  Three Months  Ended  March 29, 2003** |   | **$ Change** |     | **% Change** |     |
|--------------------------------------------|--------|----------------------------------------------------------|---------|-------------------------------------------------------|--------|----------------------------------------------------------|--------|--------------|----------|--------------|----------|
| Net  sales                                 |   | $                                                        | 143,085 |                                                  | $      | 143,085                                                  |   | $            | 121,524  |         | $        | 21,561 |   | 17.7 | % |
| *% of net sales*                           |   | *100.0*                                                  | *%*     | *100.0*                                               | *%*    | *100.0*                                                  | %      |         |     |         |     |
| Cost  of products sold                     |   | 60,780                                                   |    | 57,811                                                | (1)    | 50,745                                                   |   | 7,066        |     | 13.9         | %        |
| *% of net sales*                           |   | *42.5*                                                   | *%*     | *40.4*                                                | *%*    | *41.8*                                                   | %      |         |     |         |     |
| Gross  profit                              |   | 82,305                                                   |    | 85,274                                                |   | 70,779                                                   |   | 14,495       |     | 20.5         | %        |
| *% of net sales*                           |   | *57.5*                                                   | *%*     | *59.6*                                                | *%*    | *58.2*                                                   | %      |         |     |         |     |
| Selling  and administrative expenses       |   | 88,225                                                   |    | 77,857                                                | (2)    | 71,458                                                   |   | 6,399        |     | 9.0          | %        |
| *% of net sales*                           |   | *61.7*                                                   | *%*     | *54.4*                                                | *%*    | *58.8*                                                   | %      |         |     |         |     |
| Operating  (loss) income                   |   | (5,920                                                   | )       | 7,417                                                 |   | (679                                                     | )      | 8,096        |     | 1192.3       | %        |
| *% of net sales*                           |   | *-4.1*                                                   | *%*     | *5.2*                                                 | *%*    | *-0.6*                                                   | %      |         |     |         |     |
| Loss  on redemption of debt                |   | 420                                                      |    | 1,276                                                 | (3)    | —                                                   |   | 1,276        |     | NM           |     |
| *% of net sales*                           |   | *0.3*                                                    | *%*     | *0.9*                                                 | *%*    | *0.0*                                                    | %      |         |     |         |     |
| Net  interest expense                      |   | 15,829                                                   |    | 16,686                                                | (4)    | 13,940                                                   |   | 2,746        |     | 19.7         | %        |
| *% of net sales*                           |   | *11.1*                                                   | *%*     | *11.7*                                                | *%*    | *11.5*                                                   | %      |         |     |         |     |
| Loss  before income taxes                  |   | (22,169                                                  | )       | (10,545                                               | )      | (14,619                                                  | )      | 4,074        |     | 27.9         | %        |
| *% of net sales*                           |   | *-15.5*                                                  | *%*     | *-7.4*                                                | *%*    | *-12.0*                                                  | %      |         |     |         |     |
| (Benefit  from) provision for income taxes |   | (2,217                                                   | )       | 2,311                                                 | (5)    | (6,021                                                   | )      | 8,332        |     | 138.4        | %        |
| *% of net sales*                           |   | *-1.5*                                                   | *%*     | *1.6*                                                 | *%*    | *-5.0*                                                   | %      |         |     |         |     |
| Net  Loss                                  |   | $                                                        | (19,952 | )                                                     | $      | (12,856                                                  | )      | $            | (8,598   | )            | $        | (4,258 | ) | (49.5 | )% |
| *% of net sales*                           |   | *-13.9*                                                  | *%*     | *-9.0*                                                | *%*    | *-7.1*                                                   | *%*    |         | * * |         | * * |

 

NM =percentage not meaningful

 

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(1)     Adjusted to reverse $1.1million of amortization expense for excess purchase price allocated to anintangible asset for order backlog and $1.9 million of depreciation expense forexcess purchase price allocated to property and equipment.

 

(2)     Adjusted to reverse $10.0million of amortization expense for excess purchase price allocated to variousintangible assets and $0.4 million of depreciation expense for excess purchaseprice allocated to property and equipment.

 

(3)     In connection with thepartial redemption of the senior subordinated notes, adjusted to reverse $0.9million of accelerated amortization for excess purchase price allocated to apremium on the notes

 

(4)     Adjusted to reverse $0.9million of amortization for excess purchase price allocated to a premium on thesenior subordinated notes.

 

(5)     Reflects $4.5 million ofincome tax benefit on the adjusted items above.

 

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***Net Sales***

Net sales increased $21.6million, or 17.7%, to $143.1 million for the three months ended April 3,2004 from $121.5 million for the same period last year.  The majority of the increase is due tohigher sales volume, driven primarily by the timing of deliveries between thefirst and second quarters compared to last year.  Net sales also increased as a result of improved jewelry metal mixand modest price increases.  Specificfactors contributing to the increase in volume include:

 

•      thereturn of graduation product deliveries to more typical patterns before thedelivery issues we experienced last year in connection with the implementationof an ERP system in this product line;

•      increasedorders for graduation regalia products attributable to net account growth, anincrease in unit sales per school and an increase in sales of accessory items;

•      timingof deliveries of high school class rings compared to last year; and

•      increasedjewelry orders associated with collegiate class rings, high school andcollegiate championship rings and an emerging specialty market.

 

These increases wereoffset by lower commercial printing volume and continued lower same school buyrates for high school class rings.

 

***Gross Profit***

Gross profit increased$14.5 million, or 20.5%, to $85.3 million for the three months endedApril 3, 2004 from $70.8 million for the same prior year period.  As a percentage of net sales, gross profitmargin increased 1.4 percentage points to 59.6% for the current three-monthperiod from 58.2% for the same period last year.

 

The increase in grossprofit margin is primarily attributable to the impact of the shift in salesvolume for higher margin graduation products between the first and secondquarters as discussed above.  In theprior year, our efforts to rectify the difficulties we encountered inconnection with the implementation of the ERP system and to continue to providetimely delivery of our products required us to incur additional productioncosts, as well as certain selling and administrative expenses.  Although these efforts minimized the impactto our customers, the associated costs negatively affected our margins.  We believe we have resolved most of themanufacturing challenges connected with the systems implementation.  The increase in gross profit margin in thecurrent period is also due to the general price increases and incremental salesvolume discussed above offset by higher costs for precious raw materialscompared to last year.

 

***Selling and Administrative Expenses***

Selling andadministrative expenses increased $6.4 million, or 9.0%, to $77.9 million forthe three months ended April 3, 2004 from $71.5 million for the same prioryear period.  As a percentage of netsales, selling and administrative expenses decreased 4.4 percentage points to54.4% for the current three-month period from 58.8% for the same period lastyear.

 

The $6.4 million increaseis primarily due to higher commission expense as a result of increased salesand additional investment in customer service and support.

 

These increases wereoffset by the following:

 

•      eliminationof prior year non-recurring costs associated with the difficulties encountered withthe ERP system implementation;

•      theimpact of prior year non-recurring costs for severance, a legal settlement andacquisition related items; and

•      lowerinformation systems expense due to the timing of costs associated withmaintenance contracts and the elimination of depreciation expense related tofully amortized software.

 

***Operating Income/(Loss)***

Operating income increased $8.1 million to $7.4million for the three months ended April 3, 2004 from a loss of $0.7million for the same prior year period primarily driven by the higher salesvolume achieved.

 

13

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***Loss on Redemption of Debt***

During the quarter ended April 3, 2004, wevoluntarily redeemed $5.0 million principal amount of our senior subordinatednotes and recognized a loss of $0.4 million, including the impact of purchaseaccounting, consisting of $0.8 million of premium paid on redemption of thenotes and a net $0.4 million credit resulting from the write-off of relatedunamortized premium, original issuance discount and deferred financing costs.

 

***Net Interest Expense***

Net interest expenseincreased $2.7 million, or 19.7%, to $16.7 million for the three months endedApril 3, 2004 as compared to $13.9 million for the same prior yearperiod.  The increase was primarily dueto reclassification of $3.6 million of dividends on our redeemable preferredstock in connection with the prior year change in accounting principle.

 

***(Benefit From) Provision for Income Taxes***

The effective rate of taxpresented for results of operations excluding the impact of purchase accountingis not a meaningful rate because it is a component of our consolidatedeffective rate for the entire year that is affected by the seasonality of ourquarterly results.  We anticipate thatthe effective rate of tax for the entire fiscal year, excluding the impact ofpurchase accounting, will be between 45% and 50%.

 

Consistent with theprovisions of APB 18, *“Interim FinancialReporting”,* we have provided an income tax benefit based on our bestestimate of the consolidated effective tax rate applicable for the entireyear.  Based on those estimates, weprovided an income tax benefit at a consolidated effective rate of 10% for thethree months ended April 3, 2004, including the impact of purchaseaccounting, compared to 41% in the comparable prior year period.  We review our tax rate estimates on aquarterly basis and make revisions as necessary.

 

Our consolidatedeffective rate of tax benefit is less than the federal statutory rate of taxprimarily due to the effect of nondeductible interest expense associated withour redeemable preferred stock. Furthermore, the rate of tax benefit recorded for purchase accountingadjustments is based on the change in deferred tax liability balances attributableto net taxable temporary differences recorded in connection with the purchaseprice allocation of the prior year merger transaction.

 

***Net Loss***

As a result of theaforementioned items, net loss increased $4.3 million, or 49.5%, to $12.9million for the three months ended April 3, 2004 from $8.6 million for thesame prior year period.

 

**LIQUIDITY AND CAPITAL RESOURCES**

 

Net cash provided byoperating activities for the three months ended April 3, 2004 was $20.1million compared to $18.6 million for the same prior year period.

 

Our principal sources ofliquidity are cash flows from operating activities and borrowings under oursenior secured credit facility, which includes $130.0 million available underour revolving credit facility as of April 3, 2004.  Our cash is primarily used for debt serviceobligations, capital expenditures and to fund working capitalrequirements.  We believe that cashgenerated from operations and available cash, together with available borrowingsunder the senior secured credit facility, will be adequate to meet ouranticipated requirements for working capital, planned capital expenditures andscheduled payments of principal and interest on our indebtedness for the nexttwelve months.

 

**CAUTIONARY NOTE REGARDINGFORWARD-LOOKING STATEMENTS**

 

Our disclosure andanalysis in this report may contain “forward-looking statements.”  Forward-looking statements give our currentexpectations or forecasts of future events. Forward-looking statements generally can be identified by the use offorward-looking terminology such as “may,” “will,” “expect,” “intend,”“estimate,” “anticipate,” “believe,” “project,” or “continue,” or the negativethereof or similar words.  From time totime, we also may provide oral or written forward-looking statements in othermaterials we release to the public.  Webase these forward-looking statements on assumptions that we believe arereasonable; however, these assumptions may prove incorrect

 

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and may be affected by knownor unknown risks or uncertainties.  As aresult, actual results may vary materially from those set forth in ourforward-looking statements.  Investorsare cautioned not to place undue reliance on any forward-looking statements.

 

These risks and uncertaintiesinclude the following: our ability to satisfy our debt obligations, includingrelated covenants; the seasonality of our sales and operating income; ourrelationship with our independent sales representatives and employees; thefluctuating prices of raw materials, primarily gold; our dependence on a keysupplier for our precious, semiprecious and synthetic stones; our dependence onnumerous complex information systems for operational and financial information;fashion, consumer preferences and demographic trends; the competitiveenvironment; general economic conditions; litigation cases, if decided againstus, that could adversely affect our financial results; and environmentalregulations that could impose substantial costs upon us adversely affecting ourfinancial results.

 

The foregoing factors arenot exhaustive, and new factors may emerge or changes to the foregoing factorsmay occur that could impact our business. Except to the extent required by law, we undertake no obligation topublicly update or revise any forward-looking statements.

 

#### **ITEM 3**.           QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK

#### ** **

There have been nomaterial changes in our exposures to market risk during the quarter endedApril 3, 2004.  For additionalinformation, refer to Item 7A of our 2003 Form 10-K.

 

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

#### ** **

As of the end of theperiod covered by this report, management, under the supervision of our ChiefExecutive Officer and Chief Financial Officer, evaluated the effectiveness ofthe design and operation of our disclosure controls and procedures that aredesigned to ensure that information that is required to be disclosed in ourquarterly report is recorded, processed and summarized within time periodsspecified in the Securities and Exchange Commission’s rules and regulations andthat such information is accumulated and communicated to our management,including our Chief Executive Officer and Chief Financial Officer, asappropriate to allow timely decisions regarding required disclosures.  Based upon that evaluation, our ChiefExecutive Officer and Chief Financial Officer concluded that these disclosurecontrols and procedures are effective, in all material respects, in timelyalerting them to material information relating to Jostens, Inc. required to beincluded in our periodic reports filed under the Securities Exchange Act of1934, as amended.

 

There have been nosignificant changes in our internal controls or in other factors subsequent tothe date of the evaluation that has materially affected, or is reasonablylikely to materially affect, these controls.

 

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**PART II****OTHER INFORMATION**

 

#### **ITEM1.**           LEGAL PROCEEDINGS

#### ** **

We are a party tolitigation 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 thesematters.  We believe the effect on ourconsolidated results of operations, cash flows and financial position, if any,for the disposition of these matters will not be material.

 

#### **ITEM6.**           EXHIBITS AND REPORTS ON FORM 8-K

#### ** **

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

 

12            Computation of Ratioof Earnings to Fixed Charges

 

31.1         Certification of ChiefExecutive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of2002

 

31.2         Certification of ChiefFinancial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of2002

 

**(b)****          **Reportson Form 8-K during the quarter ended April 3, 2004

 

AForm 8-K was filed on February 24, 2004, furnishing our press release reportingresults for the quarter and fiscal year ended January 3, 2004.

 

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**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 

 
|                     | **  JOSTENS,  INC.**                        |   |
|--------------------------|-------------------------------------------------------|--------|
|                     |                                                  |   |
|                     |                                                  |   |
| Date:  May 14, 2004 | /s/   Robert  C. Buhrmaster            |   |
|                     | Robert C.  Buhrmaster                                 |   |
|                     | *Chairman  of the Board  and Chief Executive Officer* |   |
|                     |                                                  |   |
|                     |                                                  |   |
| Date:  May 14, 2004 | /s/   David  A. Tayeh                  |   |
|                     | David A. Tayeh                                        |   |
|                     | *Sr.  Vice President  and Chief Financial Officer*    |   |

 

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