body_10q-3q2008.htm

This Form 10-Q is a combined quarterly report being filed separately by three registrants: American Achievement Group Holding Corp., AAC Group Holding Corp., and American Achievement Corporation. Unless the context indicates otherwise, any reference in this report to “Parent Holdings” refers to American Achievement Group Holding Corp., “Intermediate Holdings” refers to AAC Group Holding Corp., and “AAC” refers to American Achievement Corporation, the indirect wholly-owned operating subsidiary of Intermediate Holdings. The “Company”, “we”, “us”, and “our” refer to American Achievement Group Holding Corp. and AAC Group Holding Corp. together with American Achievement Corporation.

This combined Form 10-Q is separately filed by American Achievement Group Holding Corp., AAC Group Holding Corp., and American Achievement Corporation. Each Registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such Registrant. Each Registrant hereto is not filing any information that does not relate to such Registrant, and therefore makes no representation as to any such information.

Unless the context indicates otherwise, any reference in this report to “Parent Holdings” refers to American Achievement Group Holding Corp., “Intermediate Holdings” refers to AAC Group Holding Corp., and “AAC” refers to American Achievement Corporation, the indirect wholly-owned operating subsidiary of Intermediate Holdings. The “Company”, “we”, “us”, and “our” refer to American Achievement Group Holding Corp., and AAC Group Holding Corp. together with American Achievement Corporation.

	Parent Holdings
	May 31, 2008			August 25, 2007
	(in thousands)
ASSETS
Cash and cash equivalents	$	13,891		$	1,454
Accounts receivable, net of allowance for doubtful accounts of $2,611 and $1,875, respectively		75,306			43,039
Inventories		20,803			31,158
Deferred tax assets		3,731			3,731
Prepaid expenses and other current assets, net		14,455			18,317
Total current assets		128,186			97,699

Property, plant and equipment, net		70,668			70,653
Goodwill		171,073			173,277
Other intangible assets, net		99,786			107,855
Other assets, net		20,056			26,582

Total assets	$	489,769		$	476,066

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Book overdraft	$	1,663		$	5,082
Accounts payable		8,990			10,590
Customer deposits		25,410			11,771
Accrued expenses		35,154			20,361
Deferred revenue		496			4,460
Accrued interest		2,391			5,550
Current portion of long-term debt		841			900
Total current liabilities		74,945			58,714

Long-term debt, net of current portion		548,206			537,680
Mandatory redeemable preferred stock		7,500			7,500
Deferred tax liabilities		4,481			9,736
Other long-term liabilities		8,703			6,619
Total liabilities		643,835			620,249

Commitments and contingencies

Stockholders’ deficit:
Common stock		5			5
Additional paid-in capital		(123,880	)		(124,045	)
Accumulated deficit		(33,122	)		(23,297	)
Accumulated other comprehensive income		2,931			3,154
Total stockholders’ deficit		(154,066	)		(144,183	)

Total liabilities and stockholders’ deficit	$	489,769		$	476,066

	Intermediate Holdings
	May 31, 2008		August 25, 2007
	(in thousands)
ASSETS
Cash and cash equivalents	$	13,596	$	1,168
Accounts receivable, net of allowance for doubtful accounts of $2,611 and $1,875, respectively		75,306		43,039
Inventories		20,803		31,158
Deferred tax assets		3,731		3,731
Prepaid expenses and other current assets, net		14,455		18,317
Total current assets		127,891		97,413

Property, plant and equipment, net		70,668		70,653
Goodwill		171,073		173,277
Other intangible assets, net		99,786		107,855
Other assets, net		13,541		18,931

Total assets	$	482,959	$	468,129

LIABILITIES AND STOCKHOLDERS’ EQUITY
Book overdraft	$	1,663	$	5,082
Accounts payable		8,990		10,590
Customer deposits		25,410		11,771
Accrued expenses		33,503		20,299
Deferred revenue		496		4,460
Accrued interest		2,391		5,550
Current portion of long-term debt		841		900
Total current liabilities		73,294		58,652

Long-term debt, net of current portion		352,064		361,836
Deferred tax liabilities		24,617		19,731
Other long-term liabilities		2,935		3,034
Total liabilities		452,910		443,253

Commitments and contingencies

Stockholders’ equity:
Common stock		-		-
Additional paid-in capital		24,309		24,144
Accumulated earnings (deficit)		2,809		(2,422	)
Accumulated other comprehensive income		2,931		3,154
Total stockholders’ equity		30,049		24,876

Total liabilities and stockholders’ equity	$	482,959	$	468,129

	AAC
	May 31, 2008		August 25, 2007
	(in thousands)
ASSETS
Cash and cash equivalents	$	13,032	$	620
Accounts receivable, net of allowance for doubtful accounts of $2,611 and $1,875, respectively		75,306		43,039
Inventories		20,803		31,158
Deferred tax assets		3,731		3,731
Prepaid expenses and other current assets, net		14,455		18,317
Total current assets		127,327		96,865

Property, plant and equipment, net		70,668		70,653
Goodwill		171,073		173,277
Other intangible assets, net		99,786		107,855
Other assets, net		11,613		16,669

Total assets	$	480,467	$	465,319

LIABILITIES AND STOCKHOLDERS’ EQUITY
Book overdraft	$	1,663	$	5,082
Accounts payable		8,990		10,590
Customer deposits		25,410		11,771
Accrued expenses		33,488		20,284
Deferred revenue		496		4,460
Accrued interest		2,391		5,550
Current portion of long-term debt		841		900
Total current liabilities		73,279		58,637

Long-term debt, net of current portion		224,841		243,982
Deferred tax liabilities		37,883		30,639
Other long-term liabilities		2,907		3,006
Total liabilities		338,910		336,264

Commitments and contingencies

Stockholders’ equity:
Common stock		-		-
Additional paid-in capital		109,211		109,046
Accumulated earnings		29,415		16,855
Accumulated other comprehensive income		2,931		3,154
Total stockholders’ equity		141,557		129,055

Total liabilities and stockholders’ equity	$	480,467	$	465,319

	Parent Holdings
	For the three months ended						For the nine months ended
	May 31, 2008			May 26, 2007			May 31, 2008			May 26, 2007
	(in thousands)
Net sales	$	157,142		$	143,822		$	269,710		$	252,967
Cost of sales		62,432			56,994			114,614			105,645
Gross profit		94,710			86,828			155,096			147,322
Selling, general and administrative expenses		51,683			46,117			112,773			104,331
Operating income		43,027			40,711			42,323			42,991
Interest expense, net		16,972			15,611			48,598			44,585
Income (loss) before income taxes		26,055			25,100			(6,275	)		(1,594	)
Provision (benefit) for income taxes		7,377			9,448			(835	)		-
Income (loss) from continuing operations		18,678			15,652			(5,440	)		(1,594	)
Discontinued Operations:
Loss from discontinued segment		(72	)		(797	)		(7,200	)		(2,491	)
Benefit for income taxes		(28	)		(312	)		(2,815	)		(974	)
Loss from discontinued operations		(44	)		(485	)		(4,385	)		(1,517	)
Net income (loss)	$	18,634		$	15,167		$	(9,825	)	$	(3,111	)

	Intermediate Holdings
	For the three months ended						For the nine months ended
	May 31, 2008			May 26, 2007			May 31, 2008			May 26, 2007
	(in thousands)
Net sales	$	157,142		$	143,822		$	269,710		$	252,967
Cost of sales		62,432			56,994			114,614			105,645
Gross profit		94,710			86,828			155,096			147,322
Selling, general and administrative expenses		50,094			46,117			111,184			104,331
Operating income		44,616			40,711			43,912			42,991
Interest expense, net		8,469			8,558			24,990			25,573
Income before income taxes		36,147			32,153			18,922			17,418
Provision for income taxes		16,846			13,363			9,306			7,251
Income from continuing operations		19,301			18,790			9,616			10,167
Discontinued Operations:
Loss from discontinued segment		(72	)		(797	)		(7,200	)		(2,491	)
Benefit for income taxes		(28	)		(312	)		(2,815	)		(974	)
Loss from discontinued operations		(44	)		(485	)		(4,385	)		(1,517	)
Net income	$	19,257		$	18,305		$	5,231		$	8,650

	AAC
	For the three months ended						For the nine months ended
	May 31, 2008			May 26, 2007			May 31, 2008			May 26, 2007
	(in thousands)
Net sales	$	157,142		$	143,822		$	269,710		$	252,967
Cost of sales		62,432			56,994			114,614			105,645
Gross profit		94,710			86,828			155,096			147,322
Selling, general and administrative expenses		50,094			46,117			111,184			104,331
Operating income		44,616			40,711			43,912			42,991
Interest expense, net		5,022			5,622			15,303			16,952
Income before income taxes		39,594			35,089			28,609			26,039
Provision for income taxes		16,012			13,846			11,664			10,273
Income from continuing operations		23,582			21,243			16,945			15,766
Discontinued Operations:
Loss from discontinued segment		(72	)		(797	)		(7,200	)		(2,491	)
Benefit for income taxes		(28	)		(312	)		(2,815	)		(974	)
Loss from discontinued operations		(44	)		(485	)		(4,385	)		(1,517	)
Net Income	$	23,538		$	20,758		$	12,560		$	14,249

	Parent Holdings
	For the nine months ended
	May 31, 2008			May 26, 2007
	(in thousands)
Cash flows from operating activities:
Net loss	$	(9,825	)	$	(3,111	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Write-offs related to discontinued segment		5,542			-
Gains on sales of property, plant and equipment		(12	)		-
Depreciation and amortization		18,393			18,311
Deferred income taxes		(5,108	)		(2,406	)
Amortization of deferred financing fees		2,617			2,620
Accretion of interest on 10.25% senior discount notes		9,369			8,304
Accretion of Senior PIK notes		20,298			15,927
Allowance for doubtful accounts		736			851
Changes in assets and liabilities:
Accounts receivable		(33,003	)		(33,446	)
Inventories		10,539			7,780
Prepaid expenses and other current assets, net		2,750			(6,717	)
Other assets, net		2,198			852
Customer deposits		13,639			22,694
Deferred revenue		(3,964	)		(1,937	)
Accounts payable, accrued expenses, and other long-term liabilities		11,863			10,529
Net cash provided by operating activities		46,032			40,251

Cash flows from investing activities:
Purchases of property, plant and equipment		(11,037	)		(7,928	)
Proceeds from sales of property, plant, and equipment		61			-
Business acquisitions, net of cash acquired		-			(5,954	)
Net cash used in investing activities		(10,976	)		(13,882	)

Cash flows from financing activities:
Payments on revolving credit facility		(21,905	)		(25,150	)
Proceeds from revolving credit facility		14,100			15,850
Payments on term loan		(11,395	)		(12,190	)
Deferred financing fees		-			(179	)
Change in book overdraft		(3,419	)		(889	)
Net cash used in financing activities		(22,619	)		(22,558	)

Net increase in cash and cash equivalents		12,437			3,811
Cash and cash equivalents, beginning of period		1,454			3,404

Cash and cash equivalents, end of period	$	13,891		$	7,215

Supplemental disclosures of cash flow information:
Cash paid for interest	$	17,475		$	18,992
Cash paid for income taxes		914			501

	Intermediate Holdings
	For the nine months ended
	May 31, 2008			May 26, 2007
	(in thousands)
Cash flows from operating activities:
Net income	$	5,231		$	8,650
Adjustments to reconcile net loss to net cash provided by operating activities:
Write-offs related to discontinued segment		5,542			-
Gains on sales of property, plant and equipment		(12	)		-
Depreciation and amortization		18,393			18,311
Deferred income taxes		5,033			4,845
Amortization of deferred financing fees		1,481			1,483
Accretion of interest on 10.25% senior discount notes		9,369			8,304
Allowance for doubtful accounts		736			851
Changes in assets and liabilities:
Accounts receivable		(33,003	)		(33,446	)
Inventories		10,539			7,780
Prepaid expenses and other current assets, net		2,750			(6,717	)
Other assets, net		2,198			852
Customer deposits		13,639			22,694
Deferred revenue		(3,964	)		(1,937	)
Accounts payable, accrued expenses, and other long-term liabilities		8,091			8,635
Net cash provided by operating activities		46,023			40,305

Cash flows from investing activities:
Purchases of property, plant and equipment		(11,037	)		(7,928	)
Proceeds from sales of property, plant and equipment		61			-
Business acquisitions, net of cash acquired		-			(5,954	)
Net cash used in investing activities		(10,976	)		(13,882	)

Cash flows from financing activities:
Payments on revolving credit facility		(21,905	)		(25,150	)
Proceeds from revolving credit facility		14,100			15,850
Payments on term loan		(11,395	)		(12,190	)
Deferred financing fees		-			(16	)
Change in book overdraft		(3,419	)		(889	)
Net cash used in financing activities		(22,619	)		(22,395	)

Net increase in cash and cash equivalents		12,428			4,028
Cash and cash equivalents, beginning of period		1,168			2,904

Cash and cash equivalents, end of period	$	13,596		$	6,932

Supplemental disclosures of cash flow information:
Cash paid for interest	$	17,475		$	18,992
Cash paid for income taxes		914			501

	AAC
	For the nine months ended
	May 31, 2008			May 26, 2007
	(in thousands)
Cash flows from operating activities:
Net income	$	12,560		$	14,249
Adjustments to reconcile net loss to net cash provided by operating activities:
Write-offs related to discontinued segment		5,542			-
Gains on sales of property, plant and equipment		(12	)		-
Depreciation and amortization		18,393			18,311
Deferred income taxes		7,391			7,867
Amortization of deferred financing fees		1,147			1,148
Allowance for doubtful accounts		736			851
Changes in assets and liabilities:
Accounts receivable		(33,003	)		(33,446	)
Inventories		10,539			7,780
Prepaid expenses and other current assets, net		2,750			(6,717	)
Other assets, net		2,198			852
Customer deposits		13,639			22,694
Deferred revenue		(3,964	)		(1,937	)
Accounts payable, accrued expenses, and other long-term liabilities		8,091			8,635
Net cash provided by operating activities		46,007			40,287

Cash flows from investing activities:
Purchases of property, plant and equipment		(11,037	)		(7,928	)
Proceeds from sales of property, plant and equipment		61			-
Business acquisitions, net of cash acquired		-			(5,954	)
Net cash used in investing activities		(10,976	)		(13,882	)

Cash flows from financing activities:
Payments on revolving credit facility		(21,905	)		(25,150	)
Proceeds from revolving credit facility		14,100			15,850
Payments on term loan		(11,395	)		(12,190	)
Deferred financing fees		-			(16	)
Change in book overdraft		(3,419	)		(889	)
Net cash used in financing activities		(22,619	)		(22,395	)

Net increase in cash and cash equivalents		12,412			4,010
Cash and cash equivalents, beginning of period		620			2,381

Cash and cash equivalents, end of period	$	13,032		$	6,391

Supplemental disclosures of cash flow information:
Cash paid for interest	$	17,475		$	18,992
Cash paid for income taxes		914			501

The consolidated financial statements of American Achievement Group Holding Corp. (“Parent Holdings”) include the accounts of its wholly-owned subsidiary, AAC Group Holding Corp. (“Intermediate Holdings”) and its indirect wholly-owned subsidiary, American Achievement Corporation (“AAC”), all of which are separate public reporting companies. The consolidated financial statements of Intermediate Holdings include the accounts of its indirect wholly-owned subsidiary, AAC. Parent Holdings, Intermediate Holdings, and AAC are treated as entities under common control. Parent Holdings, Intermediate Holdings and AAC together with their consolidated subsidiaries are referred to as the “Company.” Unless separately stated, the notes herein relate to Parent Holdings, Intermediate Holdings and AAC.

The Company is a manufacturer and supplier of class rings, yearbooks and other graduation-related scholastic products for the high school and college markets and of recognition products, such as letter jackets, and affinity jewelry designed to commemorate significant events, achievements and affiliations. The Company markets its products and services primarily in the United States and operates in four reporting segments; class rings, yearbooks, graduation products and other. The Company’s corporate office is located in Austin, Texas and its manufacturing facilities are located in Austin, Dallas, El Paso and Waco, Texas; Louisville, Kentucky; Manhattan, Kansas; and Juarez, Mexico.

Parent Holdings conducts all of its business through Intermediate Holdings and AAC and its subsidiaries. The consolidated financial statements of Parent Holdings include the accounts of its direct wholly-owned subsidiary, Intermediate Holdings and its indirect wholly-owned subsidiary, AAC. Parent Holdings’ consolidated financial statements are substantially identical to Intermediate Holdings’ consolidated financial statements, with the exception of costs related to the Transaction (see Note 2), the series A preferred stock, senior PIK notes, additional interest expense related to its series A preferred stock and senior PIK notes, amortization of deferred financing costs and the related income taxes.

Intermediate Holdings conducts all of its business indirectly through AAC and its subsidiaries. The consolidated financial statements of Intermediate Holdings include the accounts of its indirect wholly-owned subsidiary, AAC. Intermediate Holdings’ consolidated financial statements are substantially identical to AAC’s consolidated financial statements, with the exception of the 10.25% senior discount notes, additional interest expense related to the 10.25% senior discount notes, amortization of deferred financing costs and the related income taxes.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Operating results for the three and nine months ended May 31, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending August 30, 2008. The interim condensed consolidated financial statements and accompanying notes included herein should be read in conjunction with the consolidated financial statements for the year ended August 25, 2007 included in the Company’s Report on Form 10-K (File No. 333-84294, 333-121479 and 333-137067) filed on December 7, 2007.

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

Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year’s presentation. Deferred financing costs in the amount of $16,028, $8,377, and $6,115 have been reclassified from other intangible assets, net to other assets, net as of August 25, 2007 for Parent Holdings, Intermediate Holdings, and AAC, respectively.

In September 2006, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS 157 are effective for the Company beginning with its fiscal year 2009. The Company has not yet evaluated the impact this standard will have on its financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — An Amendment of FASB Statements No. 87, 88, 106 and 132 (R)” (“SFAS 158”). SFAS 158 requires an employer to recognize the funded status of defined benefit postretirement plan as an asset or liability in the balance sheet and to recognize changes in that funded status in the year in which changes occur through comprehensive income. Additionally, SFAS 158 requires an employer to measure the funded status of each of its plans as of the date of its year-end statement of financial position. The Company adopted the recognition and disclosure provisions of SFAS 158 in fiscal year 2007. The measurement date provisions of SFAS 158 will be effective for the Company beginning with its fiscal year 2009. The Company has not yet evaluated the impact that the measurement date provisions of this standard will have on its financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 will be effective for the Company beginning with its fiscal year 2009. The Company has not yet evaluated the impact of SFAS 159 on its financial statements.

Pursuant to a Stock Purchase Agreement dated May 15, 2008 among Herff Jones Inc. (the “Buyer”), Parent Holdings and the holders of all of Parent Holdings’ equity securities (the “Equity Holders”), the Equity Holders have agreed to sell all of the equity in Parent Holdings to the Buyer (the “Transaction”). The Transaction is subject to regulatory approvals and customary closing conditions.

In connection with the Transaction, the Company entered into arrangements with holders of a majority in principal amount of the senior PIK notes to launch a consent solicitation with respect to proposed amendments to the indenture governing the senior PIK notes. Subsequent to May 31, 2008, the Company entered into supplemental indentures incorporating proposed amendments to the indentures governing the 10.25% senior discount notes and the 8.25% senior subordinated notes and launched a consent solicitation with respect to proposed amendments to the indenture governing the senior PIK notes (see Notes 7 and 13).

	For the three months ended					For the nine months ended
	May 31, 2008			May 26, 2007		May 31, 2008			May 26, 2007
Parent Holdings
Net income (loss)	$	18,634		$	15,167	$	(9,825	)	$	(3,111	)
Amortization of net actuarial gain and prior service costs - pension and postretirement plans, net of tax of $51 and $148 for the three and nine months ended May 31, 2008, respectively		(73	)		-		(223	)		-
Total comprehensive income (loss)	$	18,561		$	15,167	$	(10,048	)	$	(3,111	)

	For the three months ended					For the nine months ended
	May 31, 2008			May 26, 2007		May 31, 2008			May 26, 2007
Intermediate Holdings
Net income	$	19,257		$	18,305	$	5,231		$	8,650
Amortization of net actuarial gain and prior service costs - pension and postretirement plans, net of tax of $51 and $148 for the three and nine months ended May 31, 2008, respectively		(73	)		-		(223	)		-
Total comprehensive income	$	19,184		$	18,305	$	5,008		$	8,650

	For the three months ended					For the nine months ended
	May 31, 2008			May 26, 2007		May 31, 2008			May 26, 2007
AAC
Net income	$	23,538		$	20,758	$	12,560		$	14,249
Amortization of net actuarial gain and prior service costs - pension and postretirement plans, net of tax of $51 and $148 for the three and nine months ended May 31, 2008, respectively		(73	)		-		(223	)		-
Total comprehensive income	$	23,465		$	20,758	$	12,337		$	14,249

On October 26, 2007, the Company announced a planned shutdown of the achievement publications segment. Operations of this segment have ceased and have been eliminated from the ongoing operations of the Company as a result of the shutdown. All activities in connection with the shutdown have been completed, and the Company will not have any significant continuing involvement in this segment going forward.

The results of operations of the achievement publications business are reported as discontinued operations in the condensed consolidated statements of operations for all periods presented. Prior to the shutdown, the achievement publications business was included as the Company’s achievement publications reporting segment. Certain shared costs that were previously allocated to the achievement publications segment were reallocated to the remaining continuing segments. Net sales and loss from discontinued operations for the three and nine months ended May 31, 2008 and May 26, 2007 are as follows:

The Company recognized charges of $5.5 million during the first quarter of 2008, primarily related to the write-off of the remaining carrying value of tangible and intangible assets upon shutdown of the achievement publications segment. These charges are included in the loss from discontinued operations in the condensed consolidated statements of operations and in write-offs related to the discontinued segment in the condensed consolidated statements of cash flows.

	Estimated	Gross			Accumulated				Net
	Useful Life	Asset			Amortization				Asset
At May 31, 2008
Trademarks	Indefinite		$	36,826		$	-			$	36,826
Patents	14 to 17 years			7,317			(1,849	)			5,468
Customer lists and distribution contracts	3 to 12 years			97,740			(40,248	)			57,492
Total			$	141,883		$	(42,097	)		$	99,786

At August 25, 2007
Trademarks	Indefinite		$	37,433		$	-			$	37,433
Patents	14 to 17 years			7,317			(1,516	)			5,801
Customer lists and distribution contracts	3 to 12 years			102,968			(38,347	)			64,621
Total			$	147,718		$	(39,863	)		$	107,855

Total amortization on other intangible assets was $3,153 and $8,407 for the three and nine months ended May 31, 2008, respectively, and was $2,693 and $8,625 for the three and nine months ended May 26, 2007, respectively, which is recorded as selling, general and administrative expenses. Estimated annual amortization expense is $11,195 for 2008, $10,249 for the years 2009 through 2011 and $9,816 for the year 2012.

	May 31, 2008			August 25, 2007
Parent Holdings
Senior PIK notes due October 1, 2012 (including $46,142 and $25,844 PIK interest, respectively)	$	196,142		$	175,844
10.25% Senior discount notes due October 1, 2012 (net of unamortized discount of $4,277 and $13,646, respectively)		127,223			117,854
8.25% Senior subordinated notes due April 1, 2012		150,000			150,000
Senior secured credit facility:
Revolving credit facility due 2010		-			7,805
Term loan due 2011		75,682			87,077
Total		549,047			538,580
Less current portion of long-term debt		(841	)		(900	)
Total long-term debt	$	548,206		$	537,680

	May 31, 2008			August 25, 2007
Intermediate Holdings
10.25% Senior discount notes due October 1, 2012 (net of unamortized discount of $4,277 and $13,646, respectively)	$	127,223		$	117,854
8.25% Senior subordinated notes due April 1, 2012		150,000			150,000
Senior secured credit facility:
Revolving credit facility due 2010		-			7,805
Term loan due 2011		75,682			87,077
Total		352,905			362,736
Less current portion of long-term debt		(841	)		(900	)
Total long-term debt	$	352,064		$	361,836

In connection with the Transaction, Parent Holdings has entered into arrangements with holders of a majority in principal amount of the senior PIK notes to launch a consent solicitation to provide all holders with the opportunity to consent to the following amendments to the indenture governing the senior PIK notes: (i) an amendment requiring Parent Holdings, upon consummation of the Transaction, to redeem at a price of 101% the senior PIK notes held by any holder that timely consents to the proposed amendments and (ii) an amendment, effective promptly following the completion of the consent solicitation, to remove substantially all of the restrictive and reporting covenants under the indenture for the senior PIK notes. The covenant removal would remain effective for non-consenting notes even if the Transaction has not closed. A majority of the holders have already consented to these proposed amendments, providing sufficient consents to approve such amendments.

Subsequent to May 31, 2008, Intermediate Holdings and AAC entered into supplemental indentures incorporating proposed amendments to the indentures governing the 10.25% senior discount notes and the 8.25% senior subordinated notes, respectively, and Parent Holdings launched a consent solicitation with respect to proposed amendments to the indenture governing the senior PIK notes (see Note 13).

Under the Company’s gold consignment financing arrangement, the Company has the ability to have on consignment the lowest of the dollar value of 27,000 troy ounces of gold, $14.2 million or a borrowing base, determined based upon a percentage of gold located at the Company’s facilities and other approved locations, as specified by the agreement. Under the terms of the consignment arrangement, the Company does not own the consigned gold nor does it have risk of loss related to price variation on such inventory until the Company pays the supplier for quantities purchased. Accordingly, the Company does not include the value of consigned gold in its inventory or the corresponding liability for financial statement purposes. As of May 31, 2008, the Company held consigned gold valued at $4.9 million, while at August 25, 2007, the Company held no gold on consignment. The gold consignment agreement does not have a stated period and it can be terminated by either party upon 60 days written notice.

During the third quarter of fiscal 2008, management revised its estimated future cash flows for the San Angelo, Texas operating lease, which is no longer in use by the Company. The revision was based on a change in timing and amount of the estimated sublease rentals that can reasonably be obtained in the current market. The cumulative effect of this change resulted in a reduction of expense of $222, which was recorded in cost of sales. The consolidated balance sheets as of May 31, 2008 and August 25, 2007 reflect a current liability of $578 and $593 and a long-term liability of $158 and $368, included in accrued liabilities and other long-term liabilities, respectively.

As part of the process of preparing consolidated financial statements, we must assess the likelihood that our deferred income tax assets will be recovered through future taxable income. To the extent we believe that recovery is not likely, a valuation allowance must be established. Significant management judgment is required in determining any valuation allowance recorded against net deferred income tax assets. Based on our estimates of taxable income in each jurisdiction in which we operate and the period over which deferred income tax assets will be recoverable, we have not recorded a valuation allowance as of May 31, 2008 or August 25, 2007. In the event that actual results differ from these estimates or we make adjustments to these estimates in future periods, we may need to establish a valuation allowance. All tax years after 2003 are open to examination.

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (“FIN 48”), which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, FIN 48 provides guidance on derecognition, classification, accounting in interim periods and disclosure requirements for uncertain tax positions. The accounting provisions of FIN 48 are effective for the Company beginning with its fiscal year 2008. As a result of the adoption of FIN 48 on August 26, 2007 and as of May 31, 2008, no material adjustments to the Company’s financial statements were required.

Commemorative Brands, Inc. (“CBI”) provides certain healthcare and life insurance benefits for former employees of L.G. Balfour Company, Inc. (“CBI Plan”). Certain hourly employees of Taylor Publishing Company are covered under its defined benefit pension plan (“TPC Plan”). The benefits under the CBI Plan and TPC Plan are based primarily on the employees’ years of service and compensation near retirement. The funding policies for these plans are consistent with the funding requirements of federal laws and regulations.

In September 2006, the FASB issued SFAS 158, which requires an employer to recognize the funded status of defined benefit postretirement plan as an asset or liability in the balance sheet and to recognize changes in that funded status in the year in which changes occur through comprehensive income. Additionally, SFAS 158 requires an employer to measure the funded status of each of its plans as of the date of its year-end statement of financial position. The Company adopted the recognition and disclosure provisions of SFAS 158 in fiscal year 2007. The measurement date provisions of SFAS 158 will be effective for the Company beginning with its fiscal year 2009.

	For the three months ended								For the three months ended
	May 31, 2008								May 26, 2007
	TPC Plan				CBI Plan				TPC Plan				CBI Plan
Service costs, benefits attributed to service during the period		$	21			$	-			$	20			$	-
Interest cost			229				27				225				27
Expected return on assets			(292	)			-				(247	)			-
Amortization of unrecognized net gain			(9	)			(77	)			-				(88	)
Amortization of unrecognized net prior service costs			-				(38	)			-				(37	)
Net periodic postretirement benefit income		$	(51	)		$	(88	)		$	(2	)		$	(98	)


	For the nine months ended								For the nine months ended
	May 31, 2008								May 26, 2007
	TPC Plan				CBI Plan				TPC Plan				CBI Plan
Service costs, benefits attributed to service during the period		$	65			$	-			$	60			$	-
Interest cost			686				81				675				81
Expected return on assets			(876	)			-				(741	)			-
Amortization of unrecognized net gain			(27	)			(232	)			-				(264	)
Amortization of unrecognized net prior service costs			-				(112	)			-				(111	)
Net periodic postretirement benefit income		$	(152	)		$	(263	)		$	(6	)		$	(294	)

	For the three months ended May 31, 2008							For the three months ended May 26, 2007
		TPC Plan			CBI Plan				TPC Plan		CBI Plan
Net gain		$	(9	)	$	(77	)			n/a		n/a
Prior service cost			-			(38	)			n/a		n/a
		$	(9	)	$	(115	)

	For the nine months ended May 31, 2008							For the nine months ended May 26, 2007
		TPC Plan			CBI Plan				TPC Plan		CBI Plan
Net gain		$	(27	)	$	(232	)			n/a		n/a
Prior service cost			-			(112	)			n/a		n/a
		$	(27	)	$	(344	)

The estimated net gain for the TPC Plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost during fiscal year 2008 is $36. The estimated net gain and estimated prior service credit for the CBI Plan that will be amortized from accumulated other income into net periodic postretirement benefit cost during fiscal year 2008 are $310 and $149, respectively.

On March 25, 2004, AAC entered into a management agreement with an affiliate of Fenway Partners pursuant to which AAC, among other things, agreed to pay such affiliate an annual fee equal to the greater of $3.0 million or 5% of the previous fiscal year’s EBITDA (as defined in the agreement). Amounts paid by the Company under the management agreement totaled $850 and $2,549 for the three and nine months ended May 31, 2008, respectively and $916 and $2,748 for the three and nine months ended May 26, 2007, respectively.

12. Business Segments

The Company’s operating segments, on campus class rings and retail class rings, have been aggregated into one reporting segment, class rings, in accordance with paragraph 26.a. of SFAS 131. The other segment consists primarily of jewelry commemorating family events such as the birth of a child, military and fan affinity jewelry and related products, professional sports championship rings, commercial printing and recognition products such as letter jackets.

As discussed in Note 4, the achievement publications business was shut down during the first quarter of fiscal year 2008. This business historically was included as an additional reporting segment. As all of the results of operations of the achievement publications business are included in discontinued operations, they are not presented in the tables below. Assets of the achievement publications segment were $83 and $7,610 as of May 31, 2008 and August 25, 2007, respectively. Certain shared assets and costs that were previously allocated to the achievement publications segment were reallocated to the remaining continuing segments.


	Class				Graduation
	Rings		Yearbooks		Products		Other			Total
Three Months Ended May 31, 2008
Net sales	$	40,339	$	80,675	$	25,645	$	10,483		$	157,142
Segment operating income		4,812		33,874		5,961		(31	)	$	44,616

Three Months Ended May 26, 2007
Net sales	$	40,409	$	68,202	$	25,029	$	10,182		$	143,822
Segment operating income		7,266		25,206		6,826		1,413		$	40,711

Nine Months Ended May 31, 2008
Net sales	$	105,855	$	92,630	$	44,587	$	26,638		$	269,710
Segment operating income		11,351		25,081		8,014		(534	)	$	43,912

Nine Months Ended May 26, 2007
Net sales	$	104,778	$	81,407	$	43,066	$	23,716		$	252,967
Segment operating income		15,759		17,336		7,809		2,087		$	42,991

In the case of each supplemental indenture, the applicable amendments consist of (1) a requirement that upon consummation of the Transaction the applicable company shall redeem all of its outstanding notes which have delivered a valid consent to the applicable amendments at a redemption price in cash equal to 102.8125% and 102.3125% of the aggregate principal amount of the 10.25% senior discount notes and the 8.25% senior subordinated notes, respectively, plus accrued and unpaid interest, and (2) the removal of substantially all of the restrictive and reporting covenants under the applicable indenture, as well as certain events of default and related provisions, including without limitation, the covenant that would otherwise require the applicable company to make an offer to purchase the applicable notes upon consummation of the Transaction as currently provided in the applicable indenture. The amendments will only be effective upon the consummation of the Transaction. All holders of the notes who delivered consents to these amendments on or prior to July 15, 2008 are eligible to receive a consent fee equal to $5 for each $1,000 principal amount of notes held.

The following discussion of our condensed consolidated financial condition and results of operations should be read in conjunction with the information contained in our condensed consolidated financial statements and accompanying notes included elsewhere in this report. The condensed consolidated financial statements and the notes thereto have been prepared in accordance with U.S. Generally Accepted Accounting Principals. The following discussion includes forward looking statements that involve certain risks and uncertainties. See “Disclosure Regarding Forward Looking Statements.”

We are one of the leading manufacturers and suppliers of class rings, yearbooks, graduation products, and recognition products and affinity jewelry in the United States. We market and sell yearbooks to the college, high school, junior high school and elementary markets. We primarily sell our class rings and graduation products, which include fine paper products and graduation accessories, in the high school, college and junior high school markets. We also sell jewelry commemorating family events such as the birth of a child, military and fan affinity jewelry and related products, professional sports championship rings, commercial printing and recognition products such as letter jackets.

As fully described under the “Significant Developments” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, on October 26, 2007, the Company decided to shut down the operations of its achievement publications segment, which produced, marketed and sold publications that recognize the achievements of top students at the high school and college levels, as well as the nation’s most inspiring teachers. All shutdown activities were complete as of May 31, 2008.

Our ability to meet our debt service and other obligations depends in significant part on how successful we are in maintaining our core businesses and further implementing our business strategy. Our business plan envisions several long-term growth initiatives, including the development of new products. The components of our strategy are subject to significant business, economic and competitive uncertainties and contingencies.

Numerous raw materials are used in the manufacture of our products. Gold and other metals, precious, semiprecious and synthetic stones, paper products and ink comprise the bulk of the raw materials we utilize in the largest segments of our business. Prices of these materials, especially gold, continually fluctuate. We purchase a majority of our gold from a single supplier, through our existing gold consignment agreement. We may consign a portion of our gold and pay for gold as our products are shipped to customers. We also purchase the majority of our semi-precious and synthetic stones from a single supplier in Germany. The prices for these stone purchases are denominated in Euros. We generally are able to pass on price increases in gold and stones to our customers as such increases are realized by us, however, this may not always be the case.

We face competition for most of our principal products. While the class ring, graduation products and yearbook markets were once highly concentrated and consisted primarily of a few national manufacturers (of which we were one) advances in technology and the emergence of international manufacturing have significantly lowered the costs of entry. Major domestic mass merchant and jewelry chain retailers now effectively compete in the class ring business and the traditional yearbook and graduation products businesses now face considerable competition from regional and local printers and internet-based purveyors of yearbook and alternative web-based virtual products. Competition from alternative sales channels is robust in virtually all market categories.

We experience seasonal fluctuations in our net sales tied primarily to the school year. We recorded 46% of our fiscal year 2007 net sales in our third quarter. Class ring sales are highest during October through December and early spring, with many orders made for delivery to students before the winter holiday season. Graduation product sales are predominantly made during February through April prior to the April through June graduation season. Yearbook sales are highest during the months of April through June, as yearbooks are typically shipped prior to each school’s summer break. Our recognition and affinity product line sales are seasonal. The recognition and affinity product line sales are highest during the winter holiday season and in the period leading up to Mother’s Day. We have experienced operating losses during our first and fourth fiscal quarters, which includes the beginning of the school year and the summer months when school is not in session, thus reducing related shipment of products. In addition, our working capital requirements tend to exceed our operating cash flows from May through September.

Historically, growth in the class rings, yearbooks and graduation products market has been driven primarily by demographics. The U.S. Department of Education projects that the number of high school and college graduates will increase by an average of 6% and 22% nationally, respectively, over the time period from 2003 to 2016. Additionally, the U.S. Census Bureau projects that the total U.S. population will increase by 6% over the time period from 2007 to 2015. Both the increased population, and the increased number of high school and college graduates should expand the market for our products.

Our business was founded when the operations of ArtCarved, which were previously owned by CJC Holdings, Inc., and the operations of Balfour, which were previously owned by L.G. Balfour Company, Inc., were combined through various asset purchase agreements in December 1996. AAC (formerly known as CBI Holding Corp) was formed in June 2000 to serve as a holding company for these operations as well as any future acquisitions. In June 2000, we acquired the Taylor Senior Holding Company, the parent company of Taylor Publishing Company (“Taylor”), whose primary business is designing and printing student yearbooks. In July 2002, AAC acquired all the outstanding stock and warrants of Milestone Marketing, a marketer of class rings and other graduation products to the college market. In January 2004, AAC acquired C-B Graduation Announcements, a marketer of graduation products to the college market. In April 2007, Commemorative Brands, Inc. (“CBI”), a wholly-owned subsidiary of AAC, acquired all of the outstanding stock of BFJ Holdings, Inc. and its wholly owned subsidiary, Powers Embroidery, Inc. (“Powers”), which companies were immediately merged into and became an operating division of CBI. Powers is a producer of quality letter jackets, chenille patches and other school spirit embroidery merchandise and is located in Waco, Texas.

Other than costs related to the Transaction (defined below), the series A preferred stock, debt obligations, related deferred debt issuance costs, associated accrued liabilities and related interest expense, net of taxes, all other assets, liabilities, income, expenses and cash flows presented for all periods represent those of Parent Holdings and Intermediate Holdings’ wholly-owned indirect subsidiary AAC and the direct and indirect subsidiaries of AAC. Intermediate Holdings’ only direct subsidiary is AAC Holding Corp., whose sole asset is the stock of AAC. AAC, Intermediate Holdings and Parent Holdings are treated as entities under common control.

Stock Purchase Agreement. Pursuant to a Stock Purchase Agreement dated May 15, 2008 among Herff Jones Inc. (the “Buyer”), Parent Holdings and the holders of all of Parent Holdings’ equity securities (the “Equity Holders”), the Equity Holders have agreed to sell all of the equity in Parent Holdings to the Buyer (the “Transaction”). The Transaction is subject to regulatory approvals and customary closing conditions.

In connection with the Transaction, Parent Holdings has entered into arrangements with a holders of a majority in principal amount of the senior PIK notes to launch a consent solicitation to provide all holders with the opportunity to consent to the following amendments to the indenture governing the senior PIK notes: (i) an amendment requiring Parent Holdings, upon consummation of the Transaction, to redeem at a price of 101% the senior PIK notes held by any holder that timely consents to the proposed amendments and (ii) an amendment, effective promptly following the completion of the consent solicitation, to remove substantially all of the restrictive and reporting covenants under the indenture for the senior PIK notes. The covenant removal would remain effective for non-consenting notes even if the Transaction has not closed. A majority of the holders have already consented to these proposed amendments, providing sufficient consents to approve such amendments. On July 11, 2008, Parent Holdings launched the consent solicitation with respect to these proposed amendments to the indenture governing the senior PIK notes.

Discontinued Operations. In the first quarter of fiscal 2008, we recorded charges of approximately $5.5 million primarily related to the write-off of the remaining carrying value of tangible and intangible assets of the achievement publications segment and incurred approximately $0.7 million related to contract termination and employee severance costs as a consequence of the decision in October 2007 to shutdown the achievement publications business. These charges are included in loss from discontinued operations for the nine months ended May 31, 2008 in the accompanying condensed consolidated statements of operations.

	Parent Holdings
	For the Three		% of			For the Three		% of
(in thousands)	Months Ended		Net			Months Ended		Net
	May 31, 2008		Sales			May 26, 2007		Sales
Net sales	$	157,142		100.0	%	$	143,822		100.0	%
Cost of sales		62,432		39.7	%		56,994		39.6	%
Gross profit		94,710		60.3	%		86,828		60.4	%
Selling, general and administrative expenses		51,683		32.9	%		46,117		32.1	%
Operating income		43,027		27.4	%		40,711		28.3	%
Interest expense, net		16,972		10.8	%		15,611		10.8	%
Income before income taxes		26,055		16.6	%		25,100		17.5	%
Provision for income taxes		7,377		4.7	%		9,448		6.6	%
Income from continuing operations		18,678		11.9	%		15,652		10.9	%
Discontinued operations:
Loss from discontinued segment		(72)		-	%		(797)		(0.6)	%
Benefit for income taxes		(28)		-	%		(312)		(0.2)	%
Loss from discontinued operations		(44)		-	%		(485)		(0.4)	%
Net income	$	18,634		11.9	%	$	15,167		10.5	%

	Intermediate Holdings
	For the Three		% of			For the Three		% of
(in thousands)	Months Ended		Net			Months Ended		Net
	May 31, 2008		Sales			May 26, 2007		Sales
Net sales	$	157,142		100.0	%	$	143,822		100.0	%
Cost of sales		62,432		39.7	%		56,994		39.6	%
Gross profit		94,710		60.3	%		86,828		60.4	%
Selling, general and administrative expenses		50,094		31.9	%		46,117		32.1	%
Operating income		44,616		28.4	%		40,711		28.3	%
Interest expense, net		8,469		5.4	%		8,558		5.9	%
Income before income taxes		36,147		23.0	%		32,153		22.4	%
Provision for income taxes		16,846		10.7	%		13,363		9.3	%
Income from continuing operations		19,301		12.3	%		18,790		13.1	%
Discontinued operations:
Loss from discontinued segment		(72)		-	%		(797)		(0.6)	%
Benefit for income taxes		(28)		-	%		(312)		(0.2)	%
Loss from discontinued operations		(44)		-	%		(485)		(0.4)	%
Net income	$	19,257		12.3	%	$	18,305		12.7	%

	AAC
	For the Three		% of			For the Three		% of
(in thousands)	Months Ended		Net			Months Ended		Net
	May 31, 2008		Sales			May 26, 2007		Sales
Net sales	$	157,142		100.0	%	$	143,822		100.0	%
Cost of sales		62,432		39.7	%		56,994		39.6	%
Gross profit		94,710		60.3	%		86,828		60.4	%
Selling, general and administrative expenses		50,094		31.9	%		46,117		32.1	%
Operating income		44,616		28.4	%		40,711		28.3	%
Interest expense, net		5,022		3.2	%		5,622		3.9	%
Income before income taxes		39,594		25.2	%		35,089		24.4	%
Provision for income taxes		16,012		10.2	%		13,846		9.6	%
Income from continuing operations		23,582		15.0	%		21,243		14.8	%
Discontinued operations:
Loss from discontinued segment		(72)		-	%		(797)		(0.6)	%
Benefit for income taxes		(28)		-	%		(312)		(0.2)	%
Loss from discontinued operations		(44)		-	%		(485)		(0.4)	%
Net income	$	23,538		15.0	%	$	20,758		14.4	%

The company uses a 52/53 week fiscal year. Fiscal year 2008 will consist of 53 weeks, whereas fiscal year 2007 consisted of 52 weeks. The additional week is included in the third quarter of fiscal year 2008; therefore the three month period ended May 31, 2008 consisted of fourteen weeks as compared to the three month period ended May 26, 2007, which consisted of thirteen weeks. As a result, the current reporting period reflects an extra week of net sales, expenses and operating income as compared to the same period of last year.

Net Sales. Net sales consist of product sales and are net of product returns and promotional discounts. Net sales increased $13.3 million, or 9.2%, to $157.1 million for the three months ended May 31, 2008 from $143.8 million for the three months ended May 26, 2007. The following details the changes in net sales during such periods by business segment.

Yearbooks. Net sales increased $12.5 million to $80.7 million for the three months ended May 31, 2008 from $68.2 million for the three months ended May 26, 2007. The increase in net sales was primarily the result of higher shipments in the third quarter of 2008 compared to 2007 resulting from timing of yearbook shipments between the third and fourth quarters of 2008.

Graduation Products. Net sales increased $0.6 million to $25.6 million for the three months ended May 31, 2008 from $25.0 million for the three months ended May 26, 2007. The increase is primarily due to an increase in high school graduation products and diplomas, partially offset by a decrease due to higher shipments in the third quarter of 2007 resulting from timing between the second and third quarters of 2007.

Other. Net sales increased $0.3 million to $10.5 million for the three months ended May 31, 2008 from $10.2 million for the three months ended May 26, 2007. The increase in net sales was primarily related to the acquisition of Powers in April 2007, an increase in the sale of commercial and fine books and an increase in military affinity rings, partially offset by a decrease in sales of other recognition and affinity rings and licensing revenue.

Gross Profit. Gross margin represents gross profit as a percentage of net sales. Gross margin was 60.3% for the three months ended May 31, 2008, a 0.1 percentage point decrease from 60.4% for the three months ended May 26, 2007. Overall, gross profit increased $7.9 million. The increase in gross profit was a result of an increase in yearbook sales, higher sales of commercial and fine books, and the Powers acquisition, partially offset by lower sales in retail class rings and recognition and affinity rings, the unfavorable exchange impact on Euro denominated stone purchases and an increase in labor and other manufacturing costs in the jewelry plant mainly related to productivity projects.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for Intermediate Holdings and AAC increased $4.0 million, or 8.7%, to $50.1 million for the three months ended May 31, 2008 from $46.1 million for the three months ended May 26, 2007. Included in selling, general and administrative expenses are two sub-categories: selling and marketing expenses and general and administrative expenses.

General and administrative expenses for the three months ended May 31, 2008 were $12.1 million, or 7.7% of net sales as compared to $10.0 million, or 7.0% of net sales for the three months ended May 26, 2007. The increase in general and administrative expenses of $2.1 million was primarily the result of the acquisition of Powers in April 2007, increases of employee headcount, increases in other administrative expenses and increases in consulting and other professional fees.

For Parent Holdings, selling, general and administrative expenses for the three months ended May 31, 2008 also include $1.6 million of costs incurred in connection with the Transaction.

Operating Income. As a result of the foregoing, operating income for Intermediate Holdings and AAC was $44.6 million ($43.0 million for Parent Holdings as a result of costs related to the Transaction), or 28.4% of net sales for the three months ended May 31, 2008 as compared with operating income of $40.7 million, or 28.3% of net sales, for the three months ended May 26, 2007. The class rings segment reported operating income of $4.8 million for the three months ended May 31, 2008 as compared with operating income of $7.3 million for the three months ended May 26, 2007. The yearbooks segment reported operating income of $33.9 million for the three months ended May 31, 2008 as compared with operating income of $25.2 million for the three months ended May 26, 2007. The graduation products segment reported operating income of $6.0 million for the three months ended May 31, 2008 as compared with operating income of $6.8 million for the three months ended May 26, 2007. The other segment reported an operating loss of $0.1 million for the three months ended May 31, 2008 as compared with operating income of $1.4 million for the three months ended May 26, 2007.

Interest Expense, Net. For Parent Holdings, net interest expense was $17.0 million for the three months ended May 31, 2008 and $15.6 million for the three months ended May 26, 2007. The average debt outstanding of Parent Holdings for the three months ended May 31, 2008 and the three months ended May 26, 2007 was $549 million and $533 million, respectively. The weighted average interest rate on debt outstanding of Parent Holdings for the three months ended May 31, 2008 and the three months ended May 26, 2007 was 10.7% and 10.9%, respectively.

For Intermediate Holdings, net interest expense was $8.5 million for the three months ended May 31, 2008 and $8.6 million for the three months ended May 26, 2007. The average debt outstanding of Intermediate Holdings for the three months ended May 31, 2008 and the three months ended May 26, 2007 was $349 million and $359 million, respectively. The weighted average interest rate on debt outstanding of Intermediate Holdings for the three months ended May 31, 2008 and the three months ended May 26, 2007 was 8.4% and 9.0%, respectively.

For AAC, net interest expense was $5.0 million for the three months ended May 31, 2008 and $5.6 million for the three months ended May 26, 2007. The average debt outstanding of AAC for the three months ended May 31, 2008 and the three months ended May 26, 2007 was $227 million and $245 million, respectively. The weighted average interest rate on debt outstanding of AAC for the three months ended May 31, 2008 and the three months ended May 26, 2007 was 7.5% and 8.5%, respectively.

Provision for Income Taxes. For the three months ended May 31, 2008 and the three months ended May 26, 2007, Parent Holdings recorded an income tax provision of $7.4 million and $9.4 million, respectively, which represents an effective tax rate of 28% and 38%, respectively. The effective tax rates vary from the statutory federal rate due to the impact of state income taxes and the non-deductibility of a portion of interest on high-yield debt.

For the three months ended May 31, 2008 and the three months ended May 26, 2007, Intermediate Holdings recorded an income tax provision of $16.8 million and $13.4 million, respectively, which represents an effective tax rate of 47% and 42%, respectively. The effective tax rates vary from the statutory federal rate due to the impact of state income taxes and the non-deductibility of a portion of interest on high-yield debt.

	Parent Holdings
	For the Nine		% of			For the Nine		% of
(in thousands)	Months Ended		Net			Months Ended		Net
	May 31, 2008		Sales			May 26, 2007		Sales
Net sales	$	269,710		100.0	%	$	252,967		100.0	%
Cost of sales		114,614		42.5	%		105,645		41.8	%
Gross profit		155,096		57.5	%		147,322		58.2	%
Selling, general and administrative expenses		112,773		41.8	%		104,331		41.2	%
Operating income		42,323		15.7	%		42,991		17.0	%
Interest expense, net		48,598		18.0	%		44,585		17.6	%
Loss before income taxes		(6,275)		(2.3)	%		(1,594)		(0.6)	%
Benefit for income taxes		(835)		(0.3)	%		-		-	%
Loss from continuing operations		(5,440)		(2.0)	%		(1,594)		(0.6)	%
Discontinued operations:
Loss from discontinued segment		(7,200)		(2.6)	%		(2,491)		(1.0)	%
Benefit for income taxes		(2,815)		(1.0)	%		(974)		(0.4)	%
Loss from discontinued operations		(4,385)		(1.6)	%		(1,517)		(0.6)	%
Net loss	$	(9,825)		(3.6)	%	$	(3,111)		(1.2)	%

	Intermediate Holdings
	For the Nine		% of			For the Nine		% of
(in thousands)	Months Ended		Net			Months Ended		Net
	May 31, 2008		Sales			May 26, 2007		Sales
Net sales	$	269,710		100.0	%	$	252,967		100.0	%
Cost of sales		114,614		42.5	%		105,645		41.8	%
Gross profit		155,096		57.5	%		147,322		58.2	%
Selling, general and administrative expenses		111,184		41.2	%		104,331		41.2	%
Operating income		43,912		16.3	%		42,991		17.0	%
Interest expense, net		24,990		9.3	%		25,573		10.1	%
Income before income taxes		18,922		7.0	%		17,418		6.9	%
Provision for income taxes		9,306		3.5	%		7,251		2.9	%
Income from continuing operations		9,616		3.5	%		10,167		4.0	%
Discontinued operations:
Loss from discontinued segment		(7,200)		(2.6)	%		(2,491)		(1.0)	%
Benefit for income taxes		(2,815)		(1.0)	%		(974)		(0.4)	%
Loss from discontinued operations		(4,385)		(1.6)	%		(1,517)		(0.6)	%
Net income	$	5,231		1.9	%	$	8,650		3.4	%

	AAC
	For the Nine		% of			For the Nine		% of
(in thousands)	Months Ended		Net			Months Ended		Net
	May 31, 2008		Sales			May 26, 2007		Sales
Net sales	$	269,710		100.0	%	$	252,967		100.0	%
Cost of sales		114,614		42.5	%		105,645		41.8	%
Gross profit		155,096		57.5	%		147,322		58.2	%
Selling, general and administrative expenses		111,184		41.2	%		104,331		41.2	%
Operating income		43,912		16.3	%		42,991		17.0	%
Interest expense, net		15,303		5.7	%		16,952		6.7	%
Income before income taxes		28,609		10.6	%		26,039		10.3	%
Provision for income taxes		11,664		4.3	%		10,273		4.1	%
Income from continuing operations		16,945		6.3	%		15,766		6.2	%
Discontinued operations:
Loss from discontinued segment		(7,200)		(2.6)	%		(2,491)		(1.0)	%
Benefit for income taxes		(2,815)		(1.0)	%		(974)		(0.4)	%
Loss from discontinued operations		(4,385)		(1.6)	%		(1,517)		(0.6)	%
Net income	$	12,560		4.7	%	$	14,249		5.6	%

The company uses a 52/53 week fiscal year. Fiscal year 2008 will consist of 53 weeks, whereas fiscal year 2007 consisted of 52 weeks. The additional week is included in the third quarter of fiscal year 2008; therefore the nine month period ended May 31, 2008 consisted of forty weeks as compared to the nine month period ended May 26, 2007, which consisted of thirty-nine weeks. As a result, the current reporting period reflects an extra week of net sales, expenses and operating income as compared to the same period of last year.

Net Sales. Net sales consist of product sales and are net of product returns and promotional discounts. Net sales increased $16.7 million, or 6.6%, to $269.7 million for the nine months ended May 31, 2008 from $253.0 million for the nine months ended May 26, 2007. The following details the changes in net sales during such periods by business segment.

Class Rings. Net sales increased $1.1 million to $105.9 million for the nine months ended May 31, 2008 from $104.8 million for the nine months ended May 26, 2007. The increase in net sales was primarily due to higher average sales price of on-campus class rings during the nine months ended May 31, 2008 partially offset by lower retail unit sales as compared to the nine months ended May 26, 2007 due to softness in the retail market.

Yearbooks. Net sales increased $11.2 million to $92.6 million for the nine months ended May 31, 2008 from $81.4 million for the nine months ended May 26, 2007. The increase in net sales was primarily the result of higher shipments in the third quarter of 2008 compared to 2007 resulting from timing of yearbook shipments between the third and fourth quarters of 2008.

Graduation Products. Net sales increased $1.5 million to $44.6 million for the nine months ended May 31, 2008 from $43.1 million for the nine months ended May 26, 2007. The increase in net sales is primarily due to an increase in high school graduation products and diplomas.

Gross Profit. Gross margin represents gross profit as a percentage of net sales. Gross margin was 57.5% for the nine months ended May 31, 2008, a 0.7 percentage point decrease from 58.2% for the nine months ended May 26, 2007. Overall, gross profit increased $7.8 million. The increase in gross profit was a result of the increase in sales of yearbooks, on-campus class rings, graduation products, the Powers acquisition, and commercial books. The increase was partially offset by a decline in retail class rings and other recognition and affinity ring sales, as well as unfavorable exchange impact on Euro denominated stone purchases and higher consulting expenses, labor expenses, and other manufacturing costs in the jewelry plant mainly related to productivity projects.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for Intermediate Holdings and AAC increased $6.9 million, or 6.6%, to $111.2 million for the nine months ended May 31, 2008 from $104.3 million for the nine months ended May 26, 2007. Included in selling, general and administrative expenses are two sub-categories: selling and marketing expenses and general and administrative expenses.

Selling and marketing expenses increased $2.9 million to $78.6 million or 29.1% of net sales for the nine months ended May 31, 2008 from $75.7 million or 29.9% of net sales for the nine months ended May 26, 2007 due to increased commission expenses directly related to net sales increases of yearbooks, graduation products, on-campus class rings and military rings, increased advertising and promotion costs in class rings and recognition and affinity jewelry, increased marketing research and development expenditures, and as a result of the acquisition of Powers in April 2007.

General and administrative expenses for the nine months ended May 31, 2008 were $32.6 million, or 12.1% of net sales as compared to $28.6 million, or 11.3% of net sales for the nine months ended May 26, 2007. The increase in general and administrative expenses was primarily the result of the acquisition of Powers in April 2007, increased employee headcount, increases in other administrative expenses and increases in consulting and other professional fees.

Operating Income. As a result of the foregoing, operating income for Intermediate Holdings and AAC was $43.9 million ($42.3 million for Parent Holdings as a result of costs related to the Transaction), or 16.3% of net sales, for the nine months ended May 31, 2008 as compared with operating income of $43.0 million, or 17.0% of net sales, for the nine months ended May 26, 2007. The class rings segment reported operating income of $11.4 million for the nine months ended May 31, 2008 as compared with operating income of $15.8 million for the nine months ended May 26, 2007. The yearbooks segment reported operating income of $25.0 million for the nine months ended May 31, 2008 as compared with operating income of $17.3 million for the nine months ended May 26, 2007. The graduation products segment reported operating income of $8.0 million for the nine months ended May 31, 2008 as compared with operating income of $7.8 million for the nine months ended May 26, 2007. The other segment reported an operating loss of $0.5 million for the nine months ended May 31, 2008 as compared with operating income of $2.1 million for the nine months ended May 26, 2007.

Interest Expense, Net. For Parent Holdings, net interest expense was $48.6 million for the nine months ended May 31, 2008 and $44.6 million for the nine months ended May 26, 2007. The average debt outstanding of Parent Holdings for the nine months ended May 31, 2008 and the nine months ended May 26, 2007 was $555 million and $539 million, respectively. The weighted average interest rate on debt outstanding of Parent Holdings for the nine months ended May 31, 2008 and the nine months ended May 26, 2007 was 10.7% and 10.6%, respectively.

For Intermediate Holdings, net interest expense was $25.0 million for the nine months ended May 31, 2008 and $25.6 million for the nine months ended May 26, 2007. The average debt outstanding of Intermediate Holdings for the nine months ended May 31, 2008 and the nine months ended May 26, 2007 was $361 million and $369 million, respectively. The weighted average interest rate on debt outstanding of Intermediate Holdings for the nine months ended May 31, 2008 and the nine months ended May 26, 2007 was 8.5% and 8.7%, respectively.

For AAC, net interest expense was $15.3 million for the nine months ended May 31, 2008 and $17.0 million for the nine months ended May 26, 2007. The average debt outstanding of AAC for the nine months ended May 31, 2008 and the nine months ended May 26, 2007 was $239 million and $258 million, respectively. The weighted average interest rate on debt outstanding of AAC for the nine months ended May 31, 2008 and the nine months ended May 26, 2007 was 7.6% and 8.1%, respectively.

Provision (Benefit) for Income Taxes. For the nine months ended May 31, 2008 and the nine months ended May 26, 2007, Parent Holdings recorded an income tax benefit of $0.8 million and $0.0 million, respectively, which represents an effective tax rate of 13% and 0%, respectively. The effective tax rates vary from the statutory federal rate due to the impact of state income taxes and the non-deductibility of a portion of interest on high-yield debt.

For the nine months ended May 31, 2008 and the nine months ended May 26, 2007, Intermediate Holdings recorded an income tax provision of $9.3 million and $7.3 million, respectively, which represents an effective tax rate of 49% and 42%, respectively. The effective tax rates vary from the statutory federal rate due to the impact of state income taxes and the non-deductibility of a portion of interest on high-yield debt.

Loss from Discontinued Operations. As described in “Significant Developments,” the results of operations of the achievement publications business are reported as discontinued operations. Loss from discontinued operations before income taxes during the nine months ended May 31, 2008 was $7.2 million and includes charges of $5.5 million primarily related to the write-off of the remaining carrying value of tangible and intangible assets of the achievement publications segment and charges of approximately $0.7 million related to contract termination and employee severance costs. Loss from discontinued operations before income taxes during the nine months ended May 26, 2007 was $2.5 million.

Operating Activities. Operating activities provided $46.0 million of cash for the nine months ended May 31, 2008 compared to cash provided of $40.3 million for the nine months ended May 26, 2007. The $5.7 million increase in cash provided by operating activities was mainly attributable to lower working capital requirements and lower cash usage as a result of the achievement publications segment shutdown.

Capital Resources. We have a significant amount of indebtedness. On May 31, 2008, Parent Holdings had total indebtedness of $556.5 million, of which $196.1 million was senior PIK notes, $127.2 million was 10.25% senior discount notes, $150.0 million was 8.25% senior subordinated notes, $75.7 million was indebtedness under the existing senior secured credit facility and $7.5 million was our mandatory redeemable series A preferred stock. We also have up to $38.2 million in available revolving loan borrowings under our senior secured credit facility. We are currently in compliance with financial covenants in all of the agreements governing our outstanding indebtedness.

We expect that cash generated from operating activities and availability under the senior secured credit facility will be our principal sources of liquidity. Based on our current level of operations and anticipated cost savings and operational improvements, we believe our cash flow from operations, available cash and available borrowings under the senior secured credit facility will be adequate to meet our liquidity needs for at least the next twelve months.

Gold Consignment Agreement. Under an agreement with a supplier, we have an ability to have on consignment gold with aggregate value less than or equal to the lowest of: (i) the dollar value of 27,000 troy ounces of gold, (ii) $14.2 million or (iii) a borrowing base, calculated based on a percentage of the gold held at our facilities and other approved locations, as specified by the agreement. Under the terms of this arrangement, we do not own the consigned gold nor do we have risk of loss related to price variance on such inventory until we pay for quantities purchased. Accordingly, we do not reflect the value of consigned gold in our inventory, nor do we reflect the corresponding liability for financial statement purposes. As of May 31, 2008, we held consigned gold valued at $4.9 million, while at August 25, 2007, we held no gold on consignment.

The seasonal nature of our various businesses tends to be tempered by our broad product mix. Class ring sales are highest during October through December and early spring, with many orders made for delivery to students before the winter holiday season. Graduation product sales are predominantly made during February through April prior to the April through June graduation season. Yearbook sales are highest during the months of April through June, as yearbooks are typically shipped prior to each school’s summer break. Our recognition and affinity product line sales are also seasonal. The recognition and affinity product line sales are highest during the winter holiday season and in the period leading up to Mother’s Day.

In September 2006, the FASB issued Statement on Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS 157 are effective for us beginning with our fiscal year 2009. We have not yet evaluated the impact this standard will have on our financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — An Amendment of FASB Statements No. 87, 88, 106 and 132 (R)” (“SFAS 158”). SFAS 158 requires an employer to recognize the funded status of defined benefit postretirement plan as an asset or liability in the balance sheet and to recognize changes in that funded status in the year in which changes occur through comprehensive income. Additionally, SFAS 158 requires an employer to measure the funded status of each of its plans as of the date of its year-end statement of financial position. We adopted the recognition and disclosure provisions of SFAS 158 in our fiscal year 2007. The measurement date provisions of SFAS 158 will be effective for us beginning with our fiscal year 2009. We have not yet evaluated the impact that the measurement date provisions of this standard will have on our financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for us beginning with our fiscal year 2009. We have not yet evaluated the impact of SFAS 159 on our financial statements.

Interest Rate Risk. We have exposure to market risk relating to changes in interest rates on our variable rate debt. Our policy is to manage interest rate exposure through the use of a combination of fixed and floating rate debt instruments. Our senior secured credit facility (revolver and term loan) and existing gold consignment agreement are variable rate arrangements. Each quarter point change in interest rates on our senior secured credit facility, which bears interest at variable rates, would result in a $0.3 million change in annual interest expense, assuming the entire revolving loan was drawn.

Exchange Rate Risk. We purchase the majority of our semi-precious and synthetic stones from a single supplier in Germany. We believe that all of our major competitors purchase their semi-precious stones from this same supplier. Each ten percent change in the Euro exchange rate would result in a $0.5 million annual change in cost of goods sold, assuming stone purchase levels approximate the levels of fiscal 2007.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the quarter. The evaluation was conducted based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective in enabling us to record, process, summarize and report information required to be included in the Company’s periodic SEC filings within the required time period, and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

This report contains “forward looking statements.” All statements other than statements of historical facts included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward looking statements. Forward looking statements give our current expectations and projections relating to the financial condition, results of operations, plans, objectives, future performance and business of our company. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

These forward looking statements are based on our expectations and beliefs concerning future events affecting us. They are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Although we believe that the expectations reflected in our forward looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties.

Although management believes that the expectations reflected in such forward looking statements are based upon reasonable assumptions, the Company can give no assurance that these expectations will be achieved. Any change in or adverse development, including the following factors, may impact the achievement of results in or accuracy of forward-looking statements: the price of gold and precious, semiprecious and synthetic stones; the Company’s access to students and consumers in schools; the seasonality of the Company’s business; regulatory and accounting rules; the Company’s relationship with its independent sales representatives; fashion and demographic trends; general economic, business, and market trends and events, especially during peak buying seasons for the Company’s products; the Company’s ability to respond to customer change orders and delivery schedules; development and operating costs; competitive pricing changes; successful completion of management initiatives designed to achieve operating efficiencies; the Company’s cash flows; and the Company’s ability to draw down funds under its current bank financings and to enter into new bank financings. The foregoing factors are not exhaustive. New factors may emerge or changes may occur that impact the Company’s operations and businesses. Forward-looking statements herein are expressly qualified on the foregoing or such other factors as may be applicable.

There is no assurance that the conditions to the completion of the Transaction will be satisfied or waived, that the necessary approvals will be obtained, or that we will be able to successfully consummate the Transaction as provided for under the Stock Purchase Agreement, if at all. In the event that the Transaction is not completed, we may be subject to several risks including the following: we may not realize any or all of the potential benefits of the Transaction, including any synergies that could result from combining the resources of the Company and the Buyer; we will remain liable for significant transaction costs, including legal, accounting, financial advisory and other costs relating to the Transaction even if it is not consummated; management’s attention from our day to day business may be diverted; and uncertainties with regards to the Transaction may adversely affect our relationships with our employees, vendors and customers.

Our business partners and customers may delay, defer or cancel purchases pending the consummation of the Transaction. The Transaction may also adversely affect our ability to attract and retain key personnel. Activities relating to the Transaction and related uncertainties could divert the attention of our management and employees from our day-to-day business, which could cause disruptions among our relationships with business partners and customers, and cause our employees to seek alternative employment, all of which could detract from our ability to generate revenue and control costs. In addition, the Stock Purchase Agreement imposes affirmative and negative restrictions on the operations of our business. Without the consent of the Buyer, we may be restricted from making certain acquisitions and taking other specified actions until the Transaction closes or is terminated. These restrictions may prevent us from pursuing otherwise attractive business opportunities and making other changes to our business prior to completion of the Transaction or its termination.


EXHIBIT
NUMBER		DESIGNATION
31.1		CEO Certification Accompanying Period Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		CFO Certification Accompanying Period Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		CEO Certification Accompanying Period Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		CFO Certification Accompanying Period Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


DELAWARE		20-4833998
DELAWARE		20-1854833
DELAWARE		13-4126506
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification Number)
organization)

	PAGE
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements and Notes
Unaudited Condensed Consolidated Balance Sheets — As of May 31, 2008 and August 25, 2007		3
Unaudited Condensed Consolidated Statements of Operations — For the Three and Nine Months Ended May 31, 2008 and May 26, 2007		6
Unaudited Condensed Consolidated Statement of Cash Flows – For the Nine Months Ended May 31, 2008 and May 26, 2007		9
Notes to Condensed Consolidated Financial Statements (unaudited)		12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		31
Item 4. Controls and Procedures		32

PART II. OTHER INFORMATION
Item 1. Legal Proceedings		33
Item 1A. Risk Factors		33
Item 6. Exhibits		33
SIGNATURES		34
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

	Contract Termination Costs			Employee Termination Costs			Total

Balance, August 25, 2007	$	-		$	-		$	-
Accrued costs		491			246			737
Payments made		(190	)		(98	)		(288	)
Balance, November 24, 2007		301			148			449

Payments made		(301	)		(45	)		(346	)
Balance, February 23, 2008		-			103			103

Payments made		-			(48	)		(48	)
Balance, May 31, 2008	$	-		$	55		$	55

	May 31, 2008			August 25, 2007
Raw materials	$	8,747		$	19,357
Work in process		6,702			4,853
Finished goods		6,105			7,941
Less — reserves		(751	)		(993	)
	$	20,803		$	31,158

	May 31, 2008		August 25, 2007
Class Rings	$	67,092	$	67,092
Yearbooks		65,241		65,241
Graduation Products		23,781		23,781
Achievement Publications		-		2,193
Other		14,959		14,970
Total	$	171,073	$	173,277


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


		AMERICAN ACHIEVEMENT GROUP HOLDING CORP.
		AAC GROUP HOLDING CORP.
		AMERICAN ACHIEVEMENT CORPORATION

		By:		/s/ DONALD J. PERCENTI
				Donald J. Percenti
				CHIEF EXECUTIVE OFFICER
				(principal executive officer)


		By:		/s/ KRIS G. RADHAKRISHNAN
				Kris G. Radhakrishnan
				CHIEF FINANCIAL OFFICER
				(principal financial officer)