10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended January 3, 2004

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-5064

Jostens, Inc.

(Exact name of Registrant as specified in its charter)

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

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

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in PART III of this Form 10-K or any amendment to this Form 10-K. Yes o     No x

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

The aggregate market value of voting and non-voting stock held by nonaffiliates of the Registrant on June 28, 2003:  Not applicable.

Number of shares of Common Stock outstanding as of March 31, 2004:  1,000.

Documents incorporated by reference:  None

Jostens, Inc. and Subsidiaries
Annual Report on Form 10-K
For the Year Ended January 3, 2004

PART I
		Page
ITEM 1.	Business	1
ITEM 2.	Properties	5
ITEM 3.	Legal Proceedings	5
ITEM 4.	Submission of Matters to a Vote of Security Holders	5
PART II
ITEM 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	5
ITEM 6.	Selected Financial Data	6
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk	24
ITEM 8.	Financial Statements and Supplementary Data	25
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	60
ITEM 9A.	Controls and Procedures	60
PART III
ITEM 10.	Directors and Executive Officers of the Registrant	61
ITEM 11.	Executive Compensation	64
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management	67
ITEM 13.	Certain Relationships and Related Transactions	68
ITEM 14.	Principal Accountants Fees and Services	70
PART IV
ITEM 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	71
	Signatures	74
Financial Statement Schedules		75
Exhibits		77

Unless otherwise indicated, all references to “Jostens,” “we,” “our,” “us” or the “Company” refer to Jostens, Inc. and its subsidiaries.

PART I

ITEM 1.   BUSINESS

General

We are a leading provider of school-related affinity products and services in three major product categories: yearbooks, class rings and graduation products, which includes diplomas, graduation regalia, such as caps and gowns, accessories and fine paper announcements. We also are a leading provider of school photography products and services in Canada and have a small but growing presence in the United States. We have a 107-year history of providing quality products, which has enabled us to develop long-standing relationships with school administrators throughout the country.

Merger

On June 17, 2003, we entered into a merger agreement with Jostens Holding Corp. (formerly known as Ring Holding Corp.) and Ring Acquisition Corp., an entity organized for the sole purpose of effecting a merger on behalf of DLJ Merchant Banking Partners III, L.P. and certain of its affiliated funds (collectively, the “DLJMB Funds”). On July 29, 2003, Ring Acquisition Corp. merged with and into Jostens, Inc., with Jostens, Inc. becoming the surviving company and an indirect subsidiary of Jostens Holding Corp. (the “merger”). As a result of the merger, the DLJMB Funds and certain co-investors beneficially own 99% of our outstanding voting securities and certain members of our senior management and directors own the remaining 1%.

In connection with the merger, we received $417.9 million of proceeds from a capital contribution by Jostens IH Corp. (“JIHC”), which was established for purposes of the merger. We used the proceeds from the capital contribution, along with incremental borrowings under our new senior secured credit facility, to repurchase all previously outstanding common stock and warrants. We paid $471.0 million to holders of common stock and warrants representing a cash payment of $48.25 per share.

As a result of the merger, in accordance with Statement of Financial Accounting Standards (SFAS) 141, “Business Combinations”, we have reflected a pre-merger period from December 29, 2002 to July 29, 2003 and a post-merger period from July 30, 2003 to January 3, 2004 in our consolidated financial statements for fiscal 2003. Our consolidated financial statements for the pre-merger period from December 29, 2002 through July 29, 2003, were prepared using our historical basis of accounting. As a result of the transaction on July 29, 2003, we applied purchase accounting. Although a new basis of accounting began on July 29, 2003, we have presented results for the fiscal year ended January 3, 2004 on a combined basis in the following discussion as we believe this presentation facilitates the comparison of our results with the corresponding periods for fiscal years 2002 and 2001.

For further information on the merger and the related accounting treatment see ITEM 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Principal Products

Although we market our products primarily through independent sales representatives, we also market certain of our products through a direct employee-based sales organization. We offer our products predominantly to North American high school and college students. Approximately 94% of our combined 2003 net sales and 95% of both our 2002 and 2001 net sales were in the U.S. market. Additional information is set forth below in ITEM 8, Note 15 of the Notes to Consolidated Financial Statements.

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Yearbooks:We manufacture and sell yearbooks to students in U.S. high schools, middle schools, colleges and universities. We earn the majority of our revenues from high school accounts, although a small commercial printing business is also included in this product line. Our independent sales representatives and technical support employees based in our five printing facilities assist students and faculty advisers with the planning, editing and layout of yearbooks. With a new class of students each year and periodic faculty advisor turnover, our independent sales representatives and customer service employees are the main point of continuity for the yearbook production process on a year-to-year basis. Yearbooks contributed 41%, 42% and 41% of our net sales in the combined 2003 periods, 2002 and 2001, respectively.

Class Rings:   We design, manufacture and sell class rings to students in U.S. high schools, colleges and universities. Most schools have only one school-designated supplier who sells the school’s official class ring to students. Class rings are sold within the high schools, through college bookstores, other campus stores, retail jewelry stores and the Internet. We sell a significant portion of our class rings within schools, where our independent sales representatives, along with the support of customer service employees, coordinate ring design, promotion and ordering with the students. Our proprietary ring dies and tooling and our manufacturing expertise enable us to offer highly customized class rings. We also design, manufacture and sell championship rings for professional sports and commemorative rings for a variety of specialty markets. Rings contributed 26%, 27% and 28% of our net sales in the combined 2003 periods, 2002 and 2001, respectively.

Graduation Products:We manufacture and sell graduation products to students and administrators in U.S. high schools, colleges and universities. We sell caps, gowns, diplomas and announcements, as well as graduation-related accessories, to students and administrators through the same independent sales representatives who sell class rings. We have a proven track record of providing timely delivery of a wide array of high quality graduation products. In recent years, our line of graduation products has been expanded to include such products as diploma plaques and personalization options for our regalia line. We maintain product-specific tooling as well as a library of school logos and mascots that can be used repeatedly for specific school accounts over time. Graduation products contributed 25%, 24% and 24% of our net sales in the combined 2003 periods, 2002 and 2001, respectively.

Photography:We process and sell photography products and services to students in Canada and the United States. Through our network of sales representatives and independent dealers, we provide class and individual school pictures of high school, middle and elementary school students. We also provide high school senior portraits and photography for proms and other special events. In recent years, we have introduced a number of new digital photography products. In addition to our products designed for student purchasers, we provide photography products to school administrators, including office records photos, school composites, pictorial directories and identification cards. Photography contributed 8%, 7% and 7% of our net sales in the combined 2003 periods, 2002 and 2001, respectively.

Competition

We are one of four national competitors in the sale of yearbooks, class rings and/or graduation products along with Herff Jones, Inc., American Achievement Corporation and Walsworth Publishing Company. We believe that we are the largest of the national competitors in yearbooks, class rings and graduation products based on the number of schools served. Herff Jones, Inc. and American Achievement Corporation are the only other national manufacturers that sell each of these three product lines.

Yearbooks:In the sale of yearbooks, we compete primarily with Herff Jones, Inc., American Achievement Corporation (which markets under the Taylor Publishing brand), Walsworth Publishing Company and Lifetouch, Inc. Each competes on the basis of service, on-time delivery, print quality, price

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and product offerings. Customization and personalization combined with technical assistance and customer service capabilities are important factors in yearbook production.

Class Rings:   Our competition in class rings consists primarily of two national firms, Herff Jones, Inc. and American Achievement Corporation (which markets the Balfour and ArtCarved brands). Herff Jones, Inc. distributes its products within schools, while American Achievement Corporation distributes its products through multiple distribution channels including schools, independent and chain jewelers and mass merchandisers. We distribute our products primarily within schools. Class rings sold through independent and chain jewelers and mass merchandisers are generally lower priced rings than class rings sold within schools. Customer service is particularly important in the sale of class rings because of the high degree of customization and the emphasis on timely delivery.

Graduation Products:In the sale of graduation products, we compete primarily with Herff Jones, Inc. and American Achievement Corporation as well as numerous local and regional competitors who offer products similar to ours. Each competes on the basis of service, on-time delivery, product quality, price and product offerings with particular importance given to establishing a proven track record of timely delivery of quality products.

Photography:Our sales of school photography products and services are divided between Canada and the United States. In Canada, we compete with a variety of regional and local photographers. In the United States, our primary competitors are Lifetouch Inc. and Herff Jones, Inc. as well as regional and local photographers. Each competes on the basis of quality, price, on-time delivery and product offerings.

Seasonality

We experience seasonality concurrent with the North American school year, with nearly one half of full-year sales and approximately three fourths of full-year operating income typically occurring in the second quarter.

Raw Materials

The principal raw materials that we purchase are gold and other precious metals, paper products, and precious, semiprecious and synthetic stones. The cost of gold and precious, semiprecious and synthetic stones is affected by market volatility. To manage the risk associated with gold price changes, we enter into gold forward contracts based upon the estimated ounces needed to satisfy projected customer demand.

We purchase substantially all precious, semiprecious and synthetic stones from a single supplier located in Germany whom we believe is also a supplier to our major class ring competitors in the United States. We believe that the loss of this supplier could adversely affect our business during the time period in which alternate sources would adapt their production capabilities to meet increased demand.

Matters pertaining to our market risks are set forth below in ITEM 7A, Quantitative and Qualitative Disclosures about Market Risk.

Backlog

Because of the nature of our business, all orders are generally filled within a few months from the time of placement. However, we typically obtain contracts in the second quarter of one year for student yearbooks to be delivered in the second and third quarters of the subsequent year. Often the total revenue pertaining to a yearbook order is not established at the time of the order because the content of the book is not final. Subject to the foregoing qualifications, we estimate the backlog of orders, primarily related to student yearbooks, was approximately $340.6 million, $324.0 million and $308.0 million as of the end of 2003, 2002 and 2001, respectively. We expect most of the 2003 backlog to be confirmed and filled in 2004.

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Environmental

Matters pertaining to the environment are set forth below in ITEM 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Employees

Given the seasonality of our business, we utilize a high percentage of cyclical employees to maximize efficiency and manage our costs. The total number of employees fluctuates throughout the year, with the number typically being highest in March and lowest in August.

We have two union organizations within our workforce. The Topeka Printing operation located in Kansas (which is a “right to work” state) has the Graphic Communication International Union Local 49C affiliated with the AFL/CIO. The Owatonna Jewelry Warranty and Refinery operation located in Minnesota (which is not a “right to work” state) has the International Association of Machinists and Aerospace Workers Union Local 1416 affiliated with the AFL/CIO.

As of the end of February 2004, we had approximately 6,300 employees, of which approximately 230 were members of the two aforementioned unions.

Intellectual Property

We have licenses, patents, trademarks and copyrights that, in the aggregate, are an important part of our business. However, we do not regard our business as being materially dependent upon any single license, patent, trademark or copyright. We have patent and trademark registration applications pending and will pursue other filings and registrations as appropriate to establish and preserve our intellectual property rights.

International Operations

Our foreign sales are derived primarily from operations in Canada. Local taxation, import duties, fluctuation in currency exchange rates and restrictions on exportation of currencies are among risks attendant to foreign operations, but these risks are not considered significant with respect to our business. Our margins on foreign sales are comparable to our margins on domestic sales.

Availability of Reports

We make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practical after such material is electronically filed with or furnished to the Securities and Exchange Commission. Such reports can be obtained by contacting us at www.jostens.com or at Jostens, Inc., 5501 American Boulevard West, Minneapolis, Minnesota 55437. Our main phone number is (952) 830-3300.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this report may contain “forward-looking statements.” Forward-looking statements give our current expectations or forecasts of future events and generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project,” or “continue,” or the negative thereof or similar words. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. We base these forward-looking statements on assumptions that we believe are reasonable; however, these assumptions may prove incorrect and may be affected by known or unknown risks or uncertainties. As a result, actual results may vary materially from those set forth in our forward-looking statements. Investors are cautioned not to place undue reliance on any forward-looking statements.

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These risks and uncertainties include the following: our ability to satisfy our debt obligations, including related covenants; the seasonality of our sales and operating income; our relationship with our independent sales representatives; the fluctuating prices of raw materials, primarily gold; our dependence on a key supplier for our precious, semiprecious and synthetic stones; our dependence on numerous complex information systems for operational and financial information; fashion, consumer preferences and demographic trends; the competitive environment; general economic conditions; litigation cases, if decided against us, that could adversely affect our financial results; and environmental regulations that could impose substantial costs upon us adversely affecting our financial results.

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

ITEM 2.   PROPERTIES

Our principal executive offices are owned and are located in Minneapolis, Minnesota. Our manufacturing facilities are located in Minnesota, Kansas, North Carolina, South Carolina, Tennessee, California, Pennsylvania, Texas, Massachusetts and Winnipeg, Manitoba. We own approximately 96%, or 1,219,000 square feet, of our total manufacturing space and lease the balance. We also lease 158,000 square feet of warehouse facilities. All owned domestic properties represent collateral under our senior secured credit facility.

We also maintain sales and administrative office space, primarily for our photography product line, in forty locations in nineteen states and three Canadian provinces. With the exception of one location, all of this space is leased.

In management’s opinion, all buildings, machinery and equipment are suitable for their purposes and are maintained on a basis consistent with sound operations. The extent of utilization of individual facilities varies significantly due to the seasonal nature of the business. We believe that we have sufficient space for our current operations and for foreseeable expansion in the next few years.

ITEM 3.   LEGAL PROCEEDINGS

Matters pertaining to legal proceedings are set forth below in ITEM 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and ITEM 8, Note 10 of the Notes to Consolidated Financial Statements.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Currently, there is no established public trading market for our closely held common stock. Our ability to pay dividends is limited by the terms of our senior secured credit facility and the senior subordinated notes.

At March 20, 2004, there was one shareholder of record for our common stock.

Recent Sales of Unregistered Securities

We have not issued nor sold securities within the past three years pursuant to offerings that were not registered under the Securities Act of 1933, as amended (the “Securities Act”).

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ITEM 6.   SELECTED FINANCIAL DATA

The table below sets forth our selected consolidated historical data. The selected historical financial information for the pre-merger period from December 29, 2002 through July 29, 2003 (seven months), the post-merger period from July 30, 2003 through January 3, 2004 (five months) and each of the four fiscal years in the period ended December 28, 2002 was derived from our audited historical consolidated financial statements.

	Post-Merger			Pre-Merger
	Five Months			Seven Months
	2003			2003				2002			2001			2000			1999
	In millions, except common share data
Statement of Operations Data(1):
Net sales	$	284.2			$	504.1		$	756.0		$	736.6		$	724.6		$	701.5
Cost of products sold	162.7				218.6			316.0			311.2			305.1			305.0
Gross profit	121.5				285.5			440.0			425.3			419.5			396.5
Selling and administrative expenses	143.8				196.4			306.4			300.9			301.7			293.6
Loss on redemption of debt(2)	0.5				13.9			1.8			—			—			—
Transaction costs(3)	0.2				31.0			—			—			46.4			—
Special charges	—				—			—			2.5			0.2			20.2
Operating (loss) income	(23.1		)		44.2			131.8			121.9			71.2			82.7
Interest expense, net	28.3				32.4			67.3			76.8			58.9			7.0
Equity losses and write-down of investment	—				—			—			—			6.7			—
(Loss) income from continuing operations before income taxes	(51.4		)		11.8			64.5			45.1			5.5			75.7
(Benefit from) provision for income taxes	(18.0		)		8.7			36.2			18.6			16.0			31.7
(Loss) income from continuing operations	(33.4		)		3.1			28.3			26.5			(10.5		)	44.0
Gain (loss) on discontinued operations, net of tax	—				—			1.6			(22.4		)	(2.3		)	(0.8		)
Cumulative effect of accounting change, net of tax	—				4.6			—			—			(5.9		)	—
Net (loss) income	(33.4		)		7.6			29.9			4.1			(18.7		)	43.2
Dividends and accretion on redeemable preferred shares	—				(6.5		)	(11.7		)	(10.2		)	(5.8		)	—
Net (loss) income available to common shareholders	(33.4		)		1.1			18.2			(6.1		)	(24.5		)	43.2
Common Share Data(4):
Basic EPS—(loss) income from continuing operations	$	(33,402.00	)		$	(0.39	)	$	1.85		$	1.82		$	(0.92	)	$	1.29
Basic EPS—net (loss) income	(33,402.00		)		0.12			2.03			(0.68		)	(1.38		)	1.27
Diluted EPS—(loss) income from continuing operations	(33,402.00		)		(0.39		)	1.66			1.65			(0.92		)	1.29
Diluted EPS—net (loss) income	(33,402.00		)		0.12			1.83			(0.61		)	(1.38		)	1.27
Cash dividends declared per share	—				—			—			—			0.22			0.88
Common shares outstanding at period end (in thousands)	1				8,956			8,959			8,980			8,993			33,324
Balance Sheet Data (at end of period):
Current assets	$	189.4						$	187.1		$	232.6		$	236.1		$	286.3
Working capital, as defined(5)	(76.8		)					(56.0		)	(62.6		)	(20.0		)	8.3
Property and equipment, net	105.6							65.4			68.2			79.3			84.6
Total assets	1,720.4							327.5			374.6			388.3			408.2
Short-term borrowings	13.0							9.0			—			—			117.6
Long-term debt, including current maturities	685.4							580.4			647.0			684.8			3.6
Redeemable preferred stock(6)	135.3							70.8			59.0			48.8			—
Shareholders’ equity (deficit)	384.5							(582.5		)	(599.1		)	(586.3		)	36.5
Statement of Cash Flows:
Net cash provided by (used for) operating activities	$	71.8			$	(6.8	)	$	55.5		$	71.6		$	35.5		$	125.2
Net cash used for investing activiites	(28.0		)		(11.9		)	(22.8		)	(15.8		)	(18.2		)	(37.2		)
Net cash (used for) provided by financing activities	(30.0		)		12.9			(64.8		)	(39.3		)	(29.3		)	(52.1		)
Other Financial Data(1):
Depreciation and amortization	$	34.5			$	14.6		$	26.9		$	28.6		$	26.8		$	22.7
Capital expenditures	17.0				6.1			22.8			22.2			21.2			26.8
Adjusted EBITDA(7)	50.4				103.6			160.9			153.0			144.6			125.6
Adjusted EBITDA margin(8)	17.7		%		20.6		%	21.3		%	20.8		%	20.0		%	17.9		%

(1)Certain Statement of Operations Data and Other Financial Data have been reclassified for all periods presented to reflect the results of discontinued operations consisting of the exit of our Recognition business as set forth below in ITEM 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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(2)For the post-merger period in 2003, loss on redemption of debt represents a loss of $0.5 million in connection with our repurchase of $8.5 million principal amount of senior subordinated notes. For the pre-merger period in 2003, loss on redemption of debt represents a loss of $13.9 million consisting of the write-off of unamortized deferred financing costs in connection with refinancing the old senior secured credit facility. For 2002, loss on redemption of debt represents a loss of $1.8 million in connection with our repurchase of $7.5 million principal amount of senior subordinated notes.

(3)For the post-merger and pre-merger periods in 2003, transaction costs represent $0.2 million and $31.0 million, respectively, of transaction expenses incurred in connection with the 2003 merger. For 2000, transaction costs represent $46.4 million of transaction expenses incurred in connection with the merger and recapitalization during such period.

(4)Earnings per share calculations include the effect of dividends and accretion on redeemable preferred shares.

(5)Working capital represents current assets (excluding cash and cash equivalents) less current liabilities (excluding short-term borrowings, book overdrafts and current maturities of long-term debt, as applicable).

(6)Liquidation preference of our redeemable preferred stock as of the end of 2003, 2002, 2001 and 2000 was $99.1 million, $86.3 million, $75.2 million and $65.6 million, respectively, including accrued dividends.

(7)EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted for the impact of purchase accounting, loss on the redemption of debt, transaction costs, the cumulative effect of accounting changes, (gain) loss on discontinued operations and certain other items as described below. We believe EBITDA and Adjusted EBITDA provide meaningful additional information that enables management to monitor and evaluate our ongoing operating results and trends and provide investors an understanding of operating performance over comparative periods. Adjusted EBITDA is also one component of measurement used in our compensation plans. EBITDA and Adjusted EBITDA are not measures of performance under generally accepted accounting principles in the United States (GAAP) and should not be considered in isolation or as a substitute for net income, cash flows from operations, or other income and cash flow statement data prepared in accordance with GAAP or as measures of profitability or liquidity. Moreover, EBITDA and Adjusted EBITDA are not standardized measures and may be calculated in a number of ways. Accordingly, the EBITDA and Adjusted EBITDA information provided might not be comparable to other similarly titled measures provided by other companies. Adjusted EBITDA is calculated as follows:

Reconciliation of EBITDA and Adjusted EBITDA

	Post-Merger				Pre-Merger
	Five Months				Seven Months
	2003				2003				2002			2001		2000			1999
	In millions
Net (loss) income		$	(33.4	)		$	7.6		$	29.9		$	4.1	$	(18.7	)	$	43.2
Interest expense, net		28.3				32.4			67.3			76.8		58.9			7.0
(Benefit from) provision for income taxes		(18.0		)		8.7			36.2			18.6		16.0			31.7
Depreciation and amortization expense		34.5				14.6			26.9			28.6		26.8			22.7
EBITDA		11.4				63.3			160.3			128.1		83.0			104.6
Impact of purchase accounting(a)		37.7				—			—			—		—			—
Loss on redemption of debt		0.5				13.9			1.8			—		—			—
Transaction costs		0.2				31.0			—			—		46.4			—
Cumulative effect of accounting change(b)		—				(4.6		)	—			—		5.9			—
(Gain) loss on discontinued operations(c)		—				—			(1.6		)	22.4		2.3			0.8
Other(d)		0.6				—			0.4			2.5		7.0			20.2
Adjusted EBITDA		$	50.4			$	103.6		$	160.9		$	153.0	$	144.6		$	125.6

(a)As a result of purchase accounting, we wrote up our inventory by $37.7 million. This adjustment reflects the elimination of the excess purchase price allocated to inventory sold during the period.

(b)In the third quarter of fiscal 2003, we adopted SFAS 150 that resulted in the recognition of a cumulative effect of a change in accounting principle, which increased net income by $4.6 million in connection with the revaluation of our redeemable preferred stock. In 2000, we adopted SAB 101 that resulted in the recognition of a cumulative effect of a change in accounting principle, which reduced net income by $5.9 million, net of tax.

(c)In 2001, we exited our Recognition business. In connection with the exit, we incurred a $27.4 million charge ($16.8 million, net of tax), which reduced net income. As a result of this action, we made corresponding after-tax

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reclassifications for discontinued operations of $5.6 million in 2001, $2.3 million in 2000 and $0.8 million in 1999. In 2002, we reversed $2.7 million of the charge ($1.6 million, net of tax), which increased net income during the period.

(d)Represents non-recurring costs consisting of (i) for the post-merger period of 2003, primarily financial advisory fees of $0.5 million; (ii) for 2002, financing costs of $0.4 million in connection with our Canadian credit facility; (iii) for 2001, primarily severance costs of $2.1 million in connection with our termination of three senior executives; (iv) for 2000, primarily equity losses and write-downs of $6.7 million in connection with two equity investments; and (v) for 1999, a restructuring charge of $20.2 million ($13.3 million, net of tax) in connection with a reorganization.

(8)Adjusted EBITDA margin represents the ratio of Adjusted EBITDA to net sales.

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

During 2003, we faced some unusual challenges. We spent a considerable part of the year on activities aimed at marketing and selling the Company to DLJ Merchant Banking Partners III, L.P; we refinanced our bank debt; and we raised additional public debt at the new holding company level. Although we experienced sales growth, particularly in our graduation products and photography lines, this sales growth did not translate into earnings growth.

During our busy spring season, we encountered serious difficulties in connection with the installation of an enterprise-wide resource planning (“ERP”) system in our graduation products line. Our efforts to rectify these difficulties and to continue to provide timely delivery of our products required us to divert manufacturing, customer service and information systems support resources. Although these efforts minimized the impact to our customers, the associated costs negatively affected our margins. Our results were also affected by rising costs, particularly associated with employee health care costs and the price of gold; foreign currency exchange rate fluctuation against the euro in connection with our precious, semiprecious and synthetic stone purchases; and the effect of stock market performance and low interest rates on accounting for our defined benefit pension plans.

Despite these challenges, we generated $65.0 million of cash from operating activities. Although our debt level increased in connection with the merger, we intend to continue our focus on increasing our cash flow in order to pay down debt. We made payments totaling approximately $41.7 million in 2003, $68.3 million in 2002 and $38.9 million in 2001 on the face value of our debt.

MERGER

On June 17, 2003, we entered into a merger agreement with Jostens Holding Corp. (formerly known as Ring Holding Corp.) and Ring Acquisition Corp., an entity organized for the sole purpose of effecting a merger on behalf of DLJ Merchant Banking Partners III, L.P. and certain of its affiliated funds (collectively, the “DLJMB Funds”). On July 29, 2003, Ring Acquisition Corp. merged with and into Jostens, Inc., with Jostens, Inc. becoming the surviving company and an indirect subsidiary of Jostens Holding Corp. (the “merger”). As a result of the merger, the DLJMB Funds and certain co-investors beneficially own 99% of the outstanding voting securities of Jostens Holding Corp. and certain members of our senior management and directors own the remaining 1%.

In connection with the merger, we received $417.9 million of proceeds from a capital contribution by Jostens IH Corp. (“JIHC”), which was established for purposes of the merger. We used the proceeds from the capital contribution, along with incremental borrowings under our new senior secured credit facility, to repurchase all previously outstanding common stock and warrants. We paid $471.0 million to holders of common stock and warrants representing a cash payment of $48.25 per share. In addition, we paid

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approximately $41.2 million of fees and expenses associated with the merger including $12.6 million of compensation expense representing the excess of the fair market value over the exercise price of outstanding stock options, $12.6 million of capitalized merger costs and $16.0 million of expensed costs consisting primarily of investment banking, legal and accounting fees. We also recognized $2.6 million of transaction costs as a result of writing off certain prepaid management fees having no future value.

Also in connection with the merger, we refinanced our senior secured credit facility through the establishment of a new senior secured credit facility. We received $475.0 million in borrowings under the new credit facility and repaid $371.1 million of outstanding indebtedness under the old credit facility. In addition, we incurred transaction fees and related costs of $20.2 million associated with the new credit facility, which have been capitalized and are being amortized as interest expense over the life of the facility. We also wrote off the unamortized balance of $13.9 million relating to deferred financing costs associated with the old credit facility.

Merger Accounting

Beginning on July 29, 2003, Jostens, Inc. and JIHC, a subsidiary of Jostens Holding Corp., accounted for the merger as a purchase in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) 141, “Business Combinations”, which requires a valuation for the assets and liabilities of JIHC and its subsidiaries based upon the fair values as of the date of the merger. As allowed under SEC Staff Accounting Bulletin No. 54, “Push Down Basis of Accounting Required in Certain Limited Circumstances”, we have reflected all applicable purchase accounting adjustments recorded by JIHC in our consolidated financial statements for all SEC filings covering periods subsequent to the merger (“purchase accounting”). Purchase accounting requires us to establish a new basis for our assets and liabilities based on the amount paid for ownership at July 29, 2003. Accordingly, JIHC’s ownership basis is reflected in our consolidated financial statements beginning upon completion of the merger. In order to apply purchase accounting, JIHC’s purchase price of $471.0 million was allocated to the assets and liabilities based on their relative fair values and $417.9 million was reflected in shareholders’ equity of Jostens, Inc. as the value of JIHC’s ownership upon completion of the merger. Immediately prior to the merger, shareholders’ equity of Jostens, Inc. was a deficit of approximately $578.7 million. As of January 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	727,633
Other assets	18,622
Current liabilities	(199,776		)
Long-term debt	(594,494		)
Redeemable preferred stock	(126,511		)
Deferred income taxes	(253,577		)
Other liabilities	(28,521		)
	$	471,044

We have estimated the fair value of our assets and liabilities, including intangible assets and property and equipment, as of the merger date, utilizing information available at the time that our consolidated financial statements were prepared. These estimates are subject to refinement until all pertinent information has been obtained. We also recognized the funding status of our pension and postretirement benefit plans as of July 29, 2003 and updated the calculation of our post-merger pension expense.

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As a result of the merger, in accordance with SFAS 141, we have reflected a pre-merger period from December 29, 2002 to July 29, 2003 (seven months) and a post-merger period from July 30, 2003 to January 3, 2004 (five months) in our consolidated financial statements for fiscal 2003.

During the post-merger period in 2003, we recognized the following items in our consolidated statement of operations: (a) $37.7 million of excess purchase price allocated to inventory as cost of products sold; (b) $19.8 million of additional amortization expense of intangible assets including $2.2 million in cost of products sold and $17.6 million in selling and administrative expenses; (c) $3.1 million of higher depreciation expense including $3.4 million in cost of products sold offset by a $0.3 million adjustment in selling and administrative expenses; and (d) $1.9 million of lower interest expense from the amortization of a premium allocated to long-term debt, all as compared to our historical basis of accounting prior to the merger.

RESULTS OF OPERATIONS

Our consolidated financial statements for the pre-merger period from December 29, 2002 through July 29, 2003, were prepared using our historical basis of accounting. As a result of the transaction on July 29, 2003, we applied purchase accounting as discussed above under “Merger Accounting.”  Although a new basis of accounting began on July 29, 2003, we have presented results for the fiscal year ended January 3, 2004 on a combined basis as we believe this presentation facilitates the comparison of our results with the corresponding periods for fiscal years 2002 and 2001. In addition, we have adjusted our combined operating results for the period ended January 3, 2004 to exclude the impact of purchase accounting as we believe this further enhances comparability to the corresponding periods in 2002 and 2001. The adjusted combined operating results may not reflect the actual results we would have achieved absent the adjustments and may not be predictive of future results of operations. Our adjusted combined operating results for 2003 were derived as follows:

	Five Months Post-Merger				Seven Months Pre-Merger			Combined			Adjustments				Adjusted Combined
	In thousands
Net sales		$	284,171			$	504,058	$	788,229			$	—		$	788,229
Cost of products sold		162,656				218,594		381,250				43,329		(1)	337,921
Gross profit		121,515				285,464		406,979				(43,329		)	450,308
Selling and administrative expenses		143,845				196,430		340,275				17,323		(2)	322,952
Loss on redemption of debt		503				13,878		14,381				(1,119		)(3)	15,500
Transaction costs		226				30,960		31,186				—			31,186
Operating (loss) income		(23,059		)		44,196		21,137				(59,533		)	80,670
Interest expense, net		28,298				32,446		60,744				(1,909		)(4)	62,653
(Loss) income from continuing operations before income taxes		(51,357		)		11,750		(39,607		)		(57,624		)	18,017
(Benefit from) provision for income taxes		(17,955		)		8,695		(9,260		)		(22,889		)(5)	13,629
(Loss) income from continuing operations		(33,402		)		3,055		(30,347		)		(34,735		)	4,388
Cumulative effect of accounting change		—				4,585		4,585				—			4,585
Net (loss) income		$	(33,402	)		$	7,640	$	(25,762	)		$	(34,735	)	$	8,973

(1)Reflects the elimination of $37.7 million of excess purchase price allocated to inventory sold during the period, $2.2 million of amortization expense for excess purchase price allocated to an intangible

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asset for order backlog and $3.4 million of depreciation expense for excess purchase price allocated to property and equipment.

(2)Reflects $17.6 million of amortization expense for excess purchase price allocated to various intangible assets offset by $0.3 million to adjust depreciation expense for excess purchase price allocated to property and equipment including a change in depreciable lives.

(3)Reflects $1.1 million of accelerated amortized interest reduction for excess purchase price allocated to a premium in connection with the partial redemption of the senior subordinated notes.

(4)Reflects $1.9 million of amortized interest reduction for excess purchase price allocated to a premium on the senior subordinated notes.

(5)Reflects benefit from income taxes on the aforementioned items.

The following table sets forth selected information derived from our adjusted combined operating results for the period ended January 3, 2004 and our consolidated statements of operations for fiscal years 2002 and 2001, expressed as a percentage of net sales. In the text below, amounts and percentages have been rounded and are based on the financial statement amounts.

	Percentage of net sales							Percentage change
	Combined 2003			2002		2001		Combined 2003 vs. 2002			2002 vs. 2001
Net sales		100.0	%	100.0	%	100.0	%		4.3	%		2.6	%
Cost of products sold		42.9	%	41.8	%	42.3	%		7.0	%		1.5	%
Gross profit		57.1	%	58.2	%	57.7	%		2.3	%		3.5	%
Selling and administrative expenses		41.0	%	40.5	%	40.9	%		5.4	%		1.8	%
Loss on redemption of debt		2.0	%	0.2	%	—			NM			NM
Transaction costs		4.0	%	—		—			NM			—
Special charges		—		—		0.3	%		—			NM
Operating income		10.2	%	17.4	%	16.5	%		(38.8	)%		8.1	%
Interest expense, net		7.9	%	8.9	%	10.4	%		(6.9	)%		(12.3	)%
Income from continuing operations before income taxes		2.3	%	8.5	%	6.1	%		(72.1	)%		42.9	%
Provision for income taxes		1.7	%	4.8	%	2.5	%		(62.4	)%		95.0	%
Income from continuing operations		0.6	%	3.7	%	3.6	%		(84.5	)%		6.5	%
Gain (loss) on discontinued operations, net of tax		—		0.2	%	(3.0	)%		NM			NM
Cumulative effect of accounting change		0.6	%	—		—			NM			—
Net income		1.1	%	4.0	%	0.6	%		(70.0	)%		629.4	%
Dividends and accretion on redeemable preferred shares		(0.8	)%	(1.6	)%	(1.4	)%		44.5	%		(15.1	)%
Net income (loss) available to common shareholders		0.3	%	2.4	%	(0.8	)%		(86.5	)%		397.6	%

NM=percentage not meaningful

Year Ended January 3, 2004 Compared to the Year Ended December 28, 2002

Net Sales

Net sales increased $32.2 million, or 4.3%, to $788.2 million for 2003 from $756.0 million for 2002. Of this 4.3% increase, approximately 2.2% resulted from price increases across all product lines, approximately 1.3% resulted from volume/mix increases and approximately 0.8% was due to the

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strengthening of the Canadian dollar against the U.S. dollar. The fluctuation attributable to price increases includes the effect of a slight recovery in jewelry product mix toward more precious metals with higher price points. Primary factors contributing to the increase in volume from 2002 to 2003 include:

·net account growth across most of our product lines;

·an increase in the number of individual orders for graduation products and higher average purchases per student;

·volume associated with our acquisition of a photography business early in the year;

·an increase in the number of color pages per yearbook; and

·incremental jewelry volume from an emerging market.

These increases were partially offset by a modest decline in net accounts for yearbooks compounded by a slight shift in mix of orders to smaller yearbooks; slightly lower same school buy rates for high school class rings; and lower commercial printing volume.

Gross Profit

Excluding the impact of purchase accounting, gross profit increased $10.3 million, or 2.3%, to $450.3 million for 2003 from $440.0 million for 2002. As a percentage of net sales, however, gross profit margin decreased 1.1 percentage points to 57.1% for 2003 from 58.2% for 2002.

The decrease in gross profit margin is primarily due to additional production costs and production inefficiencies incurred in connection with the installation of an ERP system in our graduation products line. The decline in gross profit margin is due, to a lesser extent, to an increase in the price of gold, higher pension and employee benefit costs, the effect of sales growth on lower margin products and an unfavorable currency fluctuation against the euro associated with our purchases of precious, semiprecious and synthetic stones. Gross profit results were favorably impacted by the general price increases and incremental volume discussed above combined with the strengthening of the Canadian dollar against the U.S. dollar.

Selling and Administrative Expenses

Excluding the impact of purchase accounting, selling and administrative expenses increased $16.5 million, or 5.4%, to $323.0 million for 2003 from $306.4 million for 2002. As a percentage of net sales, selling and administrative expenses increased 0.5 percentage points to 41.0% for 2003 from 40.5% for 2002. The $16.5 million increase is primarily due to the following:

·higher commission expense as a result of increased sales;

·incremental spending on information systems, customer service support and selling activities to address the difficulties encountered with the installation of the ERP system;

·higher pension and employee benefit costs;

·additional investment in customer service and support; and

·incremental spending on a combination of severance costs, a legal settlement and acquisition related expenses.

These increases were partially offset by lower general and administrative expense compared to last year.

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Loss on Redemption of Debt

As a result of refinancing our senior secured credit facility, we recognized a loss of $13.9 million consisting of unamortized deferred financing costs. In addition, during the post-merger period of 2003, we redeemed $8.5 million principal amount of our senior subordinated notes. As a result, we recognized a loss of $0.5 million consisting of $0.8 million of premium paid on redemption of the notes and a net $0.3 million credit to write-off unamortized premium, original issuance discount and deferred financing costs.

Transaction Costs

During the post-merger and pre-merger periods, we incurred $0.2 million and $31.0 million, respectively, of transaction expenses in connection with the merger, consisting of investment banking fees, legal and accounting fees, compensation expense related to stock option payments and a charge to write off prepaid management fees.

Net Interest Expense

Excluding the impact of purchase accounting, net interest expense decreased $4.7 million, or 6.9%, to $62.7 million for 2003 as compared to $67.3 million for 2002. The decrease was due to a lower average outstanding debt balance during the pre-merger period of 2003 compared to last year and lower average interest rates offset by $6.4 million of additional interest expense as a result of the reclassification of dividends on our redeemable preferred stock in connection with the change in accounting principle as further described in ITEM 8, Note 8 of the Notes to Consolidated Financial Statements.

(Benefit from) Provision for Income Taxes

Excluding the impact of purchase accounting, our effective tax rate was 75.6% for 2003 compared to 56.2% for 2002. The increase reflects the impact of nondeductible transaction related costs and nondeductible interest expense associated with the reclassification of dividends on our redeemable preferred stock in connection with the change in accounting principle discussed below. Our effective rate of tax benefit for the post-merger period of 2003 is 35%. The rate of benefit is less than our historical effective income tax rate due primarily to the unfavorable impact of nondeductible interest expense attributable to the change in accounting principle compounded by our loss position. Excluding the impact of purchase accounting, we anticipate a 2004 effective tax rate between 45% and 50%.

Cumulative Effect of Accounting Change

We recognized a cumulative effect of a change in accounting principle upon adoption of SFAS 150 on June 29, 2003, the beginning of our third quarter. We assessed the value of our redeemable preferred stock at the present value of the settlement obligation using the rate implicit at inception of the obligation, resulting in an adjustment of $4.6 million. We did not provide any tax provision in connection with the adoption of SFAS 150 because the payment of the related preferred dividend and discount amortization are not tax deductible.

Net Income

Excluding the impact of purchase accounting, and as a result of the foregoing discussion, net income decreased $20.9 million, or 70.0%, to $9.0 million for 2003 from $29.9 million for 2002.

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Year Ended December 28, 2002 Compared to the Year Ended December 29, 2001

Net Sales

Net sales increased $19.4 million, or 2.6%, to $756.0 million for 2002 from $736.6 million for 2001. Of this 2.6% increase, approximately 2.2% resulted from price increases across all product lines and approximately 0.4% resulted from volume/mix increases. The fluctuation attributable to price increases is net of the effect of a shift in jewelry product mix toward non-precious metals with lower price points. Primary factors contributing to the increase in volume from 2001 to 2002 include net account growth across most of our product lines; an increase in the number of pages per yearbook including more color pages; and photography territory additions and new product development. These increases were partially offset by the loss of a large college customer in the jewelry and graduation product lines; lower same school buy rates for high school class rings; lower average purchases per student for graduation products; and lower commercial printing volume.

Gross Profit

Gross profit increased $14.7 million, or 3.5%, to $440.0 million for 2002 from $425.3 million for 2001. As a percentage of net sales, gross profit margin increased 0.5 percentage points to 58.2% in 2002 from 57.7% in 2001. Gross profit was favorably impacted by general price increases across all product lines; continued improvement in plant efficiencies including the implementation of lean manufacturing principles; and sales mix of our printing products resulting in increased higher margin yearbook volume and decreased lower margin commercial printing volume. These profit improvements were partially offset by an increase in the price of gold compared to 2001; higher employee benefit costs; and a general shift in consumer spending toward lower-priced products with lower profit margins in some of our product lines.

Selling and Administrative Expenses

Selling and administrative expenses increased $5.5 million, or 1.8%, to $306.4 million for 2002 from $300.9 million for 2001. As a percentage of net sales, selling and administrative expenses decreased 0.4 percentage points to 40.5% for 2002 compared to 40.9% for 2001. The $5.5 million increase is primarily due to higher spending on information systems related to the upgrade of our transaction processing system and early costs associated with the installation of an ERP system in our graduation products line; as well as higher commissions and general and administrative expenses, both as a result of increased sales. These increases were partially offset by reduced spending for outside legal counsel in connection with the resolution of a specific legal matter pending in 2001.

Loss on Redemption of Debt

During 2002, we redeemed $7.5 million principal amount of our senior subordinated notes. As a result, we recognized a loss of $1.8 million in 2002 consisting of $1.0 million of premium paid on redemption of the notes and $0.8 million to write-off unamortized original issuance discount and deferred financing costs.

Net Interest Expense

Net interest expense decreased $9.4 million, or 12.3%, to $67.3 million for 2002 as compared to $76.8 million for 2001. The decrease was due to a lower average outstanding debt balance and a lower average interest rate, partially as a result of refinancing a portion of our senior secured credit facility, but primarily due to declining interest rates in 2002.

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Provision for Income Taxes

Our effective tax rate for continuing operations was 56.2% for 2002 compared to 41.2% for 2001. The increase was due primarily to the effect of additional federal and state income taxes attributable to earnings repatriated from our Canadian subsidiary.

Income from Continuing Operations

Income from continuing operations increased $1.7 million, or 6.5%, to $28.3 million for 2002 from $26.5 million for 2001 primarily as a result of increased net sales, improved gross profit margin and lower net interest expense.

DISCONTINUED OPERATIONS

In December 2001, our Board of Directors approved a plan to exit our former Recognition business in order to focus our resources on our core school-related affinity products business. The results of the Recognition business are reflected as discontinued operations in our consolidated statement of operations for all periods presented.

Revenue and loss from discontinued operations were as follows:

	2002			2001
	In thousands
Revenue from external customers	$	—		$	55,913
Pre-tax loss from operations of discontinued operations before measurement date	—			(9,036		)
Pre-tax gain (loss) on disposal	2,708			(27,449		)
Income tax (expense) benefit	(1,071		)	14,045
Gain (loss) on discontinued operations	$	1,637		$	(22,440	)

During 2001, the results of discontinued operations encompassed the period through the December 3, 2001 measurement date. The $27.4 million pre-tax loss on disposal of the discontinued business consisted of a non-cash charge of $11.1 million to write off certain net assets of the Recognition business plus a $16.3 million charge for accrued costs related to exiting the Recognition business.

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During 2002, we reversed $2.3 million of the accrued charges based on our revised estimates for employee separation costs and phase-out costs. Of the total adjustment, $0.5 million resulted from modifying our anticipated workforce reduction from 150 to 130 full-time positions and $1.8 million resulted from lower information systems, customer service and internal support costs and lower receivable write-offs than originally anticipated. In addition, we reversed $0.4 million in other liabilities for a total pre-tax gain on discontinued operations of $2.7 million ($1.6 million net of tax). Components of the accrued disposal costs, which are included in “current liabilities of discontinued operations” in our consolidated balance sheet, are as follows:

									Utilization											Balance
	Initial charge		Prior accrual		Net adjustments				Prior periods			Pre-Merger 2003				Post-Merger 2003				end of 2003
	In thousands
Employee separation benefits and other related costs	$	6,164	$	—		$	(523	)	$	(5,109	)		$	(156	)		$	—		$	376
Phase-out costs of exiting the Recognition business	4,255		—			(1,365		)	(2,591		)		(72		)		(7		)	220
Salesperson transition benefits	2,855		1,236			(191		)	(767		)		(688		)		(252		)	2,193
Other costs related to exiting the Recognition business	3,018		1,434			(228		)	(4,224		)		—				—			—
	$	16,292	$	2,670		$	(2,307	)	$	(12,691	)		$	(916	)		$	(259	)	$	2,789

Our obligation for separation benefits continues through 2004 over the benefit period as specified under our severance plan, and transition benefits will continue to be paid through the period of our statutory obligations.

LIQUIDITY AND CAPITAL RESOURCES

Contractual Obligations

The following table shows due dates and amounts of our contractual obligations:

	Total		2004		2005		2006		2007		2008		Thereafter
	In thousands
Long-term debt excluding premium	$	662,690	$	—	$	29,849	$	41,789	$	47,758	$	59,698	$	483,596
Revolving credit facility(1)	13,013		—		—		—		—		13,013		—
Operating leases	5,518		3,472		1,443		516		81		6		—
Gold forward contracts	7,462		7,462		—		—		—		—		—
Redeemable preferred stock(2)	272,630		—		—		—		—		—		272,630
Total contractual cash obligations	$	961,313	$	10,934	$	31,292	$	42,305	$	47,839	$	72,717	$	756,226

(1)Also outstanding is $12.8 million in the form of letters of credit.

(2)Includes payment-in-kind dividends compounded quarterly through maturity in May 2011.

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Operating Activities

Operating activities generated cash of $65.0 million in the combined 2003 periods compared with $55.5 million in 2002 and $71.6 million in 2001. The increase in 2003 was primarily due to improvements in working capital, mostly related to income tax payments and the timing of customer deposits received compared to 2002. This increase was partially offset by $28.5 million of transaction related expenses paid in connection with the merger.

During 2002, we agreed to certain adjustments proposed by the Internal Revenue Service in connection with its audit of our federal income tax returns filed for years 1996 through 1998. As a result of the audit, we agreed to pay additional federal taxes of $11.3 million. Combined with additional state taxes and interest charges, the liability related to these adjustments was approximately $17.0 million and had previously been accrued. During 2003, we filed an appeal with the Internal Revenue Service concerning a further proposed adjustment of approximately $8.0 million. While the appeal process may take up to two years to complete, we believe the outcome of this matter will not have a material impact on our results of operations.

Investing Activities

Capital expenditures in the combined 2003 periods, 2002 and 2001 were $23.2 million, $22.8 million and $22.7 million, respectively. The majority of our spending in each period was for technology, expansion of our color printing capacity and proprietary dies and tooling.

In January 2003, we acquired the net assets of a photography business for $5.0 million in cash and in September 2003, we acquired the net assets of a printing business for $10.9 million in cash. The operating results of these two acquisitions are included in our consolidated financial statements from the date of acquisition. Proforma results of operations have not been presented since the effect on our financial position and results of operations is not material.

Financing Activities

Net cash used for financing activities in the combined 2003 periods, 2002 and 2001 was $17.1 million, $64.8 million and $39.3 million, respectively. As a result of the merger, we received a $417.9 million capital contribution by JIHC. We used the proceeds from the capital contribution, along with incremental borrowings under our new senior secured credit facility, to repurchase all common stock and warrants outstanding immediately prior to the merger. We paid $471.0 million to holders of common stock and warrants representing $48.25 per share. In addition, we incurred $12.6 million of capitalized merger costs.

Also in connection with the merger, we received $475.0 million of borrowings under our new credit facility and repaid $371.1 million of outstanding indebtedness under the old credit facility. In addition, we incurred transaction fees and related costs of $20.2 million associated with the new credit facility, which have been capitalized and are being amortized as interest expense over the life of the facility.

During 2003, we continued our focus on increasing our cash flow. During the combined 2003 period, 2002 and 2001, we made scheduled principal payments of $8.2 million, $20.9 million and $14.9 million, respectively, and voluntarily prepaid an additional $25.0 million, $40.0 million and $24.0 million, respectively, of principal on our senior secured credit facility. Also during 2003, we redeemed $8.5 million principal amount of our senior subordinated notes for total consideration paid of $9.3 million.

We may, from time to time purchase outstanding debt securities for cash in private transactions subject to compliance with our debt and redeemable preferred stock commitments.

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Borrowing Arrangements

Future mandatory principal payment obligations under the term loan are due semi-annually beginning on July 2, 2005 at an amount equal to 2.63% of the current outstanding balance of the term loan. Thereafter, semi-annual principal payments gradually increase through July 2009 to an amount equal to 7.89% of the current outstanding balance of the term loan, with two final principal payments due in December 2009 and July 2010, each equal to 26.32% of the current outstanding balance of the term loan. The $209.0 million in notes come due May 2010. In addition, mandatory interest obligations on the notes are $13.3 million semi-annually through May 2010.

We experience seasonality that corresponds to the North American school year. To manage the seasonal nature of our cash flow, we have a $150.0 million revolving credit facility that expires on July 29, 2008. At the end of 2003, there was $13.0 million outstanding in the form of short-term borrowings at our Canadian subsidiary and an additional $12.8 million outstanding in the form of letters of credit, leaving $124.2 million available under this facility. We also have a precious metals consignment arrangement with a major financial institution whereby we have the ability to obtain up to $30.0 million in consigned inventory. At the end of 2003, we had $6.0 million available under this facility.

The senior subordinated notes are not collateralized and are subordinate in right of payment to the senior secured credit facility, which is collateralized by substantially all the assets of our operations. The senior secured credit facility requires that we meet certain financial covenants, ratios and tests, including a maximum senior leverage ratio, a maximum leverage ratio and a minimum interest coverage ratio. The senior secured credit facility and the senior subordinated notes contain certain cross-default and cross-acceleration provisions whereby default under or acceleration of one debt obligation would, consequently, cause a default or acceleration under the other debt obligation. At the end of 2003, we were in compliance with all covenants.

The redeemable payment-in-kind preferred shares had an initial liquidation preference of $60.0 million and are entitled to receive dividends at 14.0% per annum, compounded quarterly, and are payable either in cash or in additional shares of the same series of preferred stock. We plan to pay dividends in additional shares of preferred stock for the foreseeable future. The redeemable preferred shares are subject to mandatory redemption by Jostens in May 2011. The aggregate liquidation preference outstanding as of the end of 2003 and 2002 was $99.1 million and $86.3 million, respectively, including accrued dividends.

Our ability to make scheduled principal payments on existing indebtedness and preferred stock or to refinance our indebtedness, will depend on our future financial and operating performance, which to a certain extent is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on the current anticipated level of operations, we believe that cash flows from operations and available cash, together with available borrowings under the senior secured credit facility will be adequate to meet our anticipated future requirements for working capital, budgeted capital expenditures and scheduled payments of principal and interest on our indebtedness for the next twelve months. However, there can be no assurance that our business will generate sufficient cash flows from operations or that future borrowings will be available under the senior secured credit facility in an amount sufficient to enable us to service our indebtedness and the preferred stock obligation. In addition, our indirect parent, Jostens Holding Corp., is dependent upon us to generate sufficient cash to service its debt obligations.

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COMMITMENTS AND CONTINGENCIES

Environmental

Our operations are subject to a wide variety of federal, state, local and foreign laws and regulations governing emissions to air, discharges to waters, the generation, handling, storage, transportation, treatment and disposal of hazardous substances and other materials, and employee health and safety matters. Also, as an owner and operator of real property or a generator of hazardous substances, we may be subject to environmental cleanup liability, regardless of fault, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act. As part of our environmental management program, we are currently involved in various environmental remediation activities. As sites are identified and assessed in this program, we determine potential environmental liabilities. Factors considered in assessing liability include, but are not limited to: whether we have been designated as a potentially responsible party, the number of other potentially responsible parties designated at the site, the stage of the proceedings and available environmental technology.

In 1996, we assessed the likelihood as probable that a loss had been incurred at one of our sites based on findings included in remediation reports and from discussions with legal counsel. Although we no longer own the site, we continue to manage the remediation project, which began in 2000. As of the end of 2003, we had made payments totaling $7.3 million for remediation at this site and our consolidated balance sheet included $0.9 million in “other accrued liabilities” related to this site. During 2001, we received reimbursement from our insurance carrier in the amount of $2.7 million, net of legal costs. While we may have an additional right of contribution or reimbursement under insurance policies, amounts recoverable from other entities with respect to a particular site are not considered until recoveries are deemed probable. We have not established a receivable for potential recoveries as of January 3. 2004. We believe the effect on our consolidated results of operations, cash flows and financial position, if any, for the disposition of this matter will not be material.

Litigation

A federal antitrust action was served on us on October 23, 1998. The complainant, Epicenter Recognition, Inc. (Epicenter), alleged that we attempted to monopolize the market of high school graduation products in the state of California. Epicenter is a successor to a corporation formed by four of our former independent sales representatives. The plaintiff claimed damages of approximately $3.0 million to $10.0 million under various theories and differing sized relevant markets. Epicenter waived its right to a jury, so the case was tried before a judge in U.S. District Court in Orange County, California. On June 18, 2002, the Court found, among other things, that while our use of rebates, contributions and value-added programs are legitimate business practices widely practiced in the industry and do not violate antitrust laws, our use of multi-year Total Service Program contracts violated Section 2 of the Sherman Act because these agreements could “exclude competition by making it difficult for a new vendor to compete against Jostens.”

On July 12, 2002, the Court entered an initial order providing, among other things, that Epicenter be awarded damages of $1.00, trebled pursuant to Section 15 of the Clayton Act, and that in the state of California, Jostens was enjoined for a period of ten years from utilizing any contract, including those for Total Service Programs, for a period which extends for more than one year (the “Initial Order”). The Initial Order also provided for payment to Epicenter of reasonable attorneys fees and costs. We made a motion to set aside the Initial Order. On August 23, 2002, the Court entered its ruling on the motion, and granted, in part, our motion for relief from judgment, changing the Initial Order and enjoining us for only five years, and allowing us to enter into multi-year agreements in the following specific circumstances: (1) when a school requests a multi-year agreement, in writing and on its own accord, or (2) in response to a competitor’s offer to enter into a multi-year agreement. On August 23, 2002, the Court entered an

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additional order granting Epicenter’s motion for attorneys’ fees in the amount of $1.6 million plus $0.1 million in out-of-pocket expenses for a total award of $1.7 million. On September 12, 2002, we filed a Notice of Appeal to the Ninth Circuit of the United States Court of Appeals. Payment of attorneys’ fees and costs were stayed pending appeal. In November 2002, we issued a letter of credit in the amount of $2.0 million to secure the judgment on attorneys’ fees and costs. Our brief on appeal was filed with the Court on February 13, 2003. Oral argument was scheduled by the Court and heard by a three-judge panel on October 7, 2003. On November 20, 2003, the Ninth Circuit panel completely reversed the decision of the lower court, holding that we had not violated antitrust laws because we did not possess a monopoly in the relevant market and that the lower court had erred when it founded an injunction under the California unfair competition law. The Ninth Circuit panel also reversed the grant of damages, costs, attorneys’ fees and the injunction. On January 6, 2004, the Ninth Circuit panel denied a Petition for Rehearing and for Rehearing En Banc that had been filed by Epicenter on December 4, 2003. In response to the appellate court’s reversal of the Initial Order, the trial court on March 19, 2004, entered a revised judgment for Jostens and against Epicenter on all claims. The case is now closed.

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

OFF-BALANCE SHEET ARRANGEMENTS

Precious Metals Consignment Arrangement

We have a precious metals consignment arrangement with a major financial institution whereby we have the ability to obtain up to $30.0 million in consigned inventory. Under the terms of the consignment arrangement, we do not own the consigned inventory until it is shipped in the form of a product to our customer. Accordingly, we do not include the value of consigned inventory nor the corresponding liability in our financial statements. The value of consigned inventory as of the end of 2003 and 2002 was $24.1 million and $17.4 million, respectively.

Other than our precious metals consignment arrangement and general operating leases, we have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

CRITICAL ACCOUNTING POLICIES

Our accounting policies are more fully described in ITEM 8, Note 1 of the Notes to Consolidated Financial Statements. As disclosed in Note 1, the preparation of financial statements in conformity with generally accepted accounting principles in the United States (GAAP) requires management to make estimates and assumptions about future events that affect the amounts reported in our financial statements and accompanying notes. Actual results could differ significantly from those estimates. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.

Goodwill and Indefinite-Lived Intangible Assets

Effective December 30, 2001, we adopted SFAS 142, “Goodwill and Other Intangible Assets”. Under SFAS 142, we are required to test goodwill and intangible assets with indefinite lives for impairment annually, or more frequently if impairment indicators occur. The impairment test requires management to make judgments in connection with identifying reporting units, assigning assets and liabilities to reporting

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units, assigning goodwill and indefinite-lived intangible assets to reporting units, and determining the fair value of each reporting unit. Significant judgments required to estimate the fair value of reporting units include projecting future cash flows, determining appropriate discount rates and other assumptions. The projections are based on management’s best estimate given recent financial performance, market trends, strategic plans and other available information. Changes in these estimates and assumptions could materially affect the determination of fair value and/or impairment for each reporting unit.

We believe that we had no unrecorded impairment as of the end of 2003 and 2002; however, unforeseen future events could adversely affect the reported value of goodwill and indefinite-lived intangible assets, which totaled $1.0 billion at January 3, 2004.

Pension and Other Postretirement Benefits

We sponsor several defined-benefit pension plans that cover nearly all employees. We also provide certain medical and life insurance benefits for eligible retirees. Several statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liability related to the plans. Key factors include assumptions about the expected rates of return on plan assets, discount rates and health care cost trend rates, as determined by management, within certain guidelines. We also consider market conditions, including changes in investment returns and interest rates, in making these assumptions.

We used an expected long-term rate of return on plan assets of 9.5% in the combined 2003 periods compared with 10.0% in 2002 to determine net periodic benefit cost for the respective periods. The expected long-term rate of return on plan assets was determined based on the building block method, which consists of aggregating the expected rates of return for each component of the plans’ asset mix. Plan assets are comprised primarily of a diversified blend of equity and fixed income investments. We also considered our historic 10-year and 15-year compounded annual returns of 11.9% and 12.1%, respectively, combined with current market conditions to estimate the rate of return. The expected rate of return on plan assets is a long-term assumption and generally does not change annually.

We used a discount rate of 6.75% in the combined 2003 periods compared with 7.25% in 2002 to determine net periodic benefit cost for the respective periods. The discount rate reflects the market rate for high-quality fixed income debt instruments on our annual measurement date (September 30) and is subject to change each year.

Holding all other assumptions constant, a reduction of 25 basis points in the discount rate would have increased our pension and other postretirement benefit expense $0.7 million in the combined 2003 periods. Likewise, a reduction of 50 basis points in the expected long-term return assumption would have increased our pension expense $1.0 million in the combined 2003 periods. While we believe that the assumptions used are appropriate, differences in actual experience or changes in the assumptions could materially affect our financial position or results of operations.

Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items such as capital assets for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from taxable income of the appropriate character within the carryback or carryforward period and to the extent we believe that recovery is not likely, we must establish a valuation allowance. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation

21

allowance recorded against our deferred tax assets. We have estimated a tax valuation allowance related to capital loss and foreign tax credit carryforwards because we believe the tax benefits are not likely to be fully realized.

NEW ACCOUNTING STANDARDS

SFAS 143—Accounting for Asset Retirement Obligations

In the first quarter of fiscal 2003, we adopted SFAS 143, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Adoption of this Statement had no impact on our financial statements.

SFAS 146—Accounting for Costs Associated with Exit or Disposal Activities

In the first quarter of fiscal 2003, we adopted SFAS 146, which requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred and be measured at fair value. Adoption of this Statement had no impact on our financial statements.

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

As of June 29, 2003, we adopted SFAS 150, which establishes guidance for how certain financial instruments with characteristics of both liabilities and equity are classified and requires that a financial instrument that is within its scope be classified as a liability (or as an asset in some circumstances). We determined that the characteristics of our redeemable preferred stock were such that the securities should be classified as a liability and we recognized a $4.6 million cumulative effect of a change in accounting principle upon adoption. Restatement of prior periods was not permitted. We assessed the value of our redeemable preferred stock at the present value of the settlement obligation using the rate implicit at inception of the obligation, thus recognizing a discount of $19.7 million. The redeemable preferred stock was reclassified to the liabilities section of our consolidated balance sheet and the preferred dividend and related discount amortization were subsequently recorded as interest expense in our results of operations rather than as a reduction to retained earnings. We did not provide any tax benefit in connection with the cumulative effect adjustment because payment of the related preferred dividend and the discount amortization are not tax deductible.

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Unaudited proforma amounts assuming the change in accounting principle had been in effect since the beginning of 2001 are as follows:

	Post-Merger			Pre-Merger
	Five Months 2003			Seven Months 2003				2002			2001
	In thousands, except per share data
Net (loss) income available to common shareholder(s)
As reported	$	(33,402	)		$	1,115		$	18,159		$	(6,102	)
Dividends and accretion on redeemable preferred shares previously reported	—				6,525			11,747			10,202
Reverse cumulative effect of accounting change	—				(4,585		)	—			—
Proforma interest expense	—				(5,528		)	(10,395		)	(8,788		)
Proforma net (loss) income available to common shareholder(s)	$	(33,402	)		$	(2,473	)	$	19,511		$	(4,688	)
Net (loss) income per share
Basic—as reported	$	(33,402.00	)		$	0.12		$	2.03		$	(0.68	)
Basic—proforma	$	(33,402.00	)		$	(0.28	)	$	2.18		$	(0.52	)
Diluted—as reported	$	(33,402.00	)		$	0.12		$	1.83		$	(0.61	)
Diluted—proforma	$	(33,402.00	)		$	(0.28	)	$	1.97		$	(0.47	)

SFAS 132 (Revised)—Employers’ Disclosures about Pensions and Other Postretirement Benefits

As of January 3, 2004, we adopted the provisions of SFAS 132 (Revised), which amends the disclosure requirements of SFAS 132 to require more complete information in both annual and interim financial statements about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and postretirement benefit plans. A discussion of our accounting policy and the required disclosures under the revised provisions of SFAS 132 are included in Note 12. Adoption of this Statement had no impact on our financial statements.

FSP 106-1—Accounting and Disclosure Requirements Related to the Medicare Prescription Drug Improvement and Modernization Act of 2003

On December 8, 2003, President Bush signed into law a bill that expands Medicare, primarily adding a prescription drug benefit for Medicare-eligible retirees starting in 2006. Under this bill, postretirement plans with prescription drug benefits that are at least “actuarially equivalent” to the Medicare Part D benefit will be eligible for a 28% subsidy. In response to this bill, on January 12, 2004, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) 106-1. FSP 106-1 addresses how to incorporate this subsidy into the calculation of the accumulated periodic benefit obligation (APBO) and net periodic postretirement benefit costs, and also allows plan sponsors to defer recognizing the effects of the bill in the accounting for its postretirement plan under SFAS 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, until further authoritative guidance on the accounting for the federal subsidy is issued. As the measurement date for our postretirement benefit plan is September 30, 2003, the APBO and the net periodic postretirement benefit cost in the financial statements and accompanying notes do not reflect the effects of the bill on the plan. In addition, specific authoritative guidance on the accounting for the federal subsidy is pending, and when issued, could require a change to previously reported information. We have deferred adoption of this standard, as is allowed under FSP 106-1, until further guidance is issued.

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ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are subject to market risk associated with changes in interest rates, foreign currency exchange rates and commodity prices. To reduce any one of these risks, we may at times use financial instruments. All hedging transactions are authorized and executed under clearly defined company policies and procedures, which prohibit the use of financial instruments for trading purposes.

Interest Rate Risk

We are subject to market risk associated with changes in the London Interbank Offered Rate (LIBOR) in connection with our senior secured credit facility. We periodically prepare a sensitivity analysis to estimate our exposure to market risk on our floating rate debt. If short-term interest rates or the LIBOR averaged 10% more or less in the pre-merger period of 2003, the post-merger period of 2003 and in 2002, our interest expense would have changed by $1.0 million, $1.0 million and $2.4 million, respectively.

Foreign Currency Exchange Rate Risk

From time to time, we may enter into foreign currency contracts to hedge purchases of inventory denominated in foreign currency. The purpose of these hedging activities is to protect us from the risk that inventory purchases denominated in foreign currencies will be adversely affected by changes in foreign currency rates. Our principal currency exposures relate to the Canadian dollar and the euro. We consider our market risk in such activities to be immaterial. Our foreign operations are primarily in Canada, and substantially all transactions are denominated in the local currency.

Commodity Price Risk

We are subject to market risk associated with changes in the price of gold. To mitigate our commodity price risk, we may enter into forward contracts to purchase gold based upon the estimated ounces needed to satisfy projected customer demand. We periodically prepare a sensitivity analysis to estimate our exposure to market risk on our open gold forward purchase contracts. We consider our market risk associated with these contracts as of the end of 2003 and 2002 to be immaterial. Market risk was estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in fair value and giving effect to the increase in fair value over our aggregate forward contract commitment.

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ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Auditors

To the Shareholder and Board of Directors
Jostens, Inc.
Minneapolis, Minnesota

We have audited the accompanying consolidated balance sheet of Jostens, Inc. and subsidiaries as of January 3, 2004 (post-merger), and the related consolidated statements of operations, changes in shareholders’ equity (deficit) and cash flows for the period from July 30, 2003 to January 3, 2004 (post-merger, five months) and the period from December 29, 2002 to July 29, 2003 (pre-merger, seven months). These financial statements are the responsibility of Jostens, Inc.’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Jostens, Inc. and subsidiaries as of January 3, 2004, and the results of their operations and their cash flows for the period from July 30, 2003 to January 3, 2004 and the period from December 29, 2002 to July 29, 2003, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 1 to the consolidated financial statements, Jostens, Inc. adopted Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” effective June 29, 2003 and changed its method of accounting for redeemable preferred stock.

Minneapolis, Minnesota
February 12, 2004

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Report of Independent Auditors

To the Shareholder and Board of Directors of Jostens, Inc.:

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of changes in shareholders’ equity (deficit) and of cash flows present fairly, in all material respects, the consolidated financial position of Jostens, Inc. and its subsidiaries at December 28, 2002, and the consolidated results of their operations and their cash flows for each of the two fiscal years in the period ended December 28, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of Jostens, Inc.’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 6 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” on December 30, 2001.

PricewaterhouseCoopers LLP

Minneapolis, Minnesota

February 12, 2004

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JOSTENS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	Post-Merger			Pre-Merger
	Five Months 2003			Seven Months 2003				2002			2001
	In thousands, except per share data
Net sales	$	284,171			$	504,058		$	755,984		$	736,560
Cost of products sold	162,656				218,594			315,961			311,212
Gross profit	121,515				285,464			440,023			425,348
Selling and administrative expenses	143,845				196,430			306,449			300,927
Loss on redemption of debt	503				13,878			1,765			—
Transaction costs	226				30,960			—			—
Special charges	—				—			—			2,540
Operating (loss) income	(23,059		)		44,196			131,809			121,881
Interest income	323				82			1,109			2,269
Interest expense	28,621				32,528			68,435			79,035
(Loss) income from continuing operations before income taxes	(51,357		)		11,750			64,483			45,115
(Benefit from) provision for income taxes	(17,955		)		8,695			36,214			18,575
(Loss) income from continuing operations	(33,402		)		3,055			28,269			26,540
Discontinued operations:
Loss from operations (net of income tax benefit of $3,422)	—				—			—			(5,614		)
Gain (loss) on disposal (net of income tax expense of $1,071 and income tax benefit of $10,623)	—				—			1,637			(16,826		)
Gain (loss) on discontinued operations	—				—			1,637			(22,440		)
Cumulative effect of accounting change	—				4,585			—			—
Net (loss) income	(33,402		)		7,640			29,906			4,100
Dividends and accretion on redeemable preferred shares	—				(6,525		)	(11,747		)	(10,202		)
Net (loss) income available to common shareholder(s)	$	(33,402	)		$	1,115		$	18,159		$	(6,102	)
Basic net (loss) income per common share:
(Loss) income from continuing operations	$	(33,402.00	)		$	(0.39	)	$	1.85		$	1.82
Gain (loss) on discontinued operations	—				—			0.18			(2.50		)
Cumulative effect of accounting change	—				0.51			—			—
	$	(33,402.00	)		$	0.12		$	2.03		$	(0.68	)
Diluted net (loss) income per common share:
(Loss) income from continuing operations	$	(33,402.00	)		$	(0.39	)	$	1.66		$	1.65
Gain (loss) on discontinued operations	—				—			0.17			(2.26		)
Cumulative effect of accounting change	—				0.51			—			—
	$	(33,402.00	)		$	0.12		$	1.83		$	(0.61	)
Weighted average common shares outstanding	1				8,956			8,959			8,980
Dilutive effect of warrants and stock options	—				—			941			957
Weighted average common shares outstanding assuming dilution	1				8,956			9,900			9,937

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

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JOSTENS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 3, 2004 and December 28, 2002

	Post-Merger				Pre-Merger
	2003				2002
	In thousands,  except share amounts
ASSETS
Cash and cash equivalents		$	19,371			$	10,938
Accounts receivable, net		57,018				59,027
Inventories, net		72,523				69,348
Deferred income taxes		—				13,631
Salespersons overdrafts, net of allowance of $10,953 and $8,034, respectively		30,062				25,585
Prepaid expenses and other current assets		10,446				8,614
Total current assets		189,420				187,143
Property and equipment, net		105,593				65,448
Goodwill		746,025				14,450
Intangibles, net		644,654				479
Deferred financing costs, net		23,809				22,665
Pension assets, net		—				21,122
Other assets		10,857				16,214
		$	1,720,358			$	327,521
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Short-term borrowings		$	13,013			$	8,960
Accounts payable		17,009				13,893
Accrued employee compensation and related taxes		28,124				31,354
Commissions payable		16,736				15,694
Customer deposits		149,809				133,840
Income taxes payable		8,840				7,316
Interest payable		4,910				10,789
Current portion of long-term debt		—				17,094
Deferred income taxes		4,283				—
Other accrued liabilities		14,065				14,968
Current liabilities of discontinued operations		3,100				4,323
Total current liabilities		259,889				258,231
Long-term debt - less current maturities		685,407				563,334
Redeemable preferred stock (liquidation preference: $99,052)		135,272				—
Deferred income taxes		231,890				9,668
Pension liabilities, net		18,695				—
Other noncurrent liabilities		4,664				7,978
Total liabilities		1,335,817				839,211
Commitments and contingencies
Redeemable preferred stock (liquidation preference: $86,318)		—				70,790
Common stock $.01 par value; authorized: 2,000,000 shares; issued and outstanding: 1,000 shares at January 3, 2004		—				—
Common stock		—				1,003
Additional paid-in-capital		417,934				20,964
Officer notes receivable		—				(1,625		)
Accumulated deficit		(33,402		)		(592,005		)
Accumulated other comprehensive income (loss)		9				(10,817		)
Total shareholders’ equity (deficit)		384,541				(582,480		)
		$	1,720,358			$	327,521

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

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JOSTENS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Post-Merger				Pre-Merger
	Five Months				Seven Months
	2003				2003				2002			2001
	In thousands
Net (loss) income		$	(33,402	)		$	7,640		$	29,906		$	4,100
Adjustments to reconcile net (loss) income to net cash provided by (used for) operating activities:
Depreciation		13,900				12,649			24,645			25,910
Amortization of debt discount, premium and deferred financing costs		1,611				3,112			7,422			6,960
Other amortization		20,621				1,939			2,252			2,708
Depreciation and amortization of discontinued operations		—				—			—			1,202
Accrued interest on redeemable preferred stock		5,598				842			—			—
Deferred income taxes		(19,577		)		(1,500		)	11,805			(2,237		)
Loss on redemption of debt		503				13,878			1,765			—
Cumulative effect of accounting change, net of tax		—				(4,585		)	—			—
Other		180				2,765			(959		)	3,038
Changes in assets and liabilities:
Accounts receivable		(1,888		)		4,576			(2,789		)	8,706
Inventories		21,102				14,293			1,166			20,716
Salespersons overdrafts		(4,840		)		1,645			2,452			(810		)
Prepaid expenses and other current assets		(4,724		)		3,405			(891		)	2,423
Pension liabilities/assets		(1,478		)		(750		)	(5,983		)	(6,875		)
Accounts payable		8,794				(5,969		)	(4,828		)	(5,709		)
Accrued employee compensation and related taxes		6,487				(9,998		)	3,962			(3,434		)
Commissions payable		(24,953		)		25,632			(2,945		)	(1,256		)
Customer deposits		90,845				(76,069		)	7,440			17,552
Income taxes payable		(6,773		)		8,288			(9,624		)	1,785
Interest payable		871				(6,750		)	222			471
Net liabilities of discontinued operations		(326		)		(897		)	(5,159		)	6,982
Other		(767		)		(939		)	(4,387		)	(10,585		)
Net cash provided by (used for) operating activities		71,784				(6,793		)	55,472			71,647
Acquisition of businesses, net of cash acquired		(10,936		)		(5,008		)	—			—
Purchases of property and equipment		(17,041		)		(6,129		)	(22,843		)	(22,205		)
Purchases of property and equipment related to discontinued operations		—				—			—			(496		)
Proceeds from sale of property and equipment		7				90			1,256			4,204
Proceeds from sale of business		—				—			—			2,500
Other investing activities, net		(18		)		(828		)	(1,225		)	168
Net cash used for investing activities		(27,988		)		(11,875		)	(22,812		)	(15,829		)
Net short-term borrowings		620				1,500			8,960			—
Repurchase of common stock and warrants		—				(471,044		)	(2,851		)	(396		)
Principal payments on long-term debt		(25,000		)		(379,270		)	(60,855		)	(38,874		)
Redemption of senior subordinated notes payable		(9,325		)		—			(8,456		)	—
Proceeds from issuance of long-term debt		3,705				475,000			—			—
Proceeds from issuance of common stock		—				417,934			—			—
Debt financing costs		—				(20,212		)	(1,620		)	—
Merger costs		—				(12,608		)	—			—
Other financing activities, net		—				1,625			—			—
Net cash (used for) provided by financing activities		(30,000		)		12,925			(64,822		)	(39,270		)
Effect of exchange rate changes on cash and cash equivalents		144				236			—			—
Increase (decrease) in cash and cash equivalents		13,940				(5,507		)	(32,162		)	16,548
Cash and cash equivalents, beginning of period		5,431				10,938			43,100			26,552
Cash and cash equivalents, end of period		$	19,371			$	5,431		$	10,938		$	43,100
Supplemental information:
Income taxes paid		$	8,398			$	1,895		$	31,492		$	5,004
Interest paid		$	23,703			$	32,162		$	61,542		$	71,604

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

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JOSTENS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

	Common shares					Additional paid-in- capital			Additional paid-in-		Officer notes				Accumulated			Accumulated other compre- hensive income
Pre-Merger	Number		Amount			warrants			capital		receivable				deficit			(loss)				Total
	In thousands
Balance—December 30, 2000	8,993		$	1,015		$	24,733		$	—		$	(1,775	)	$	(604,102	)		$	(6,191	)	$	(586,320	)
Net income															4,100							4,100
Change in cumulative translation adjustment																			(1,502		)	(1,502		)
Transition adjustment relating to the adoption of SFAS 133, net of $1,194 tax																			(1,821		)	(1,821		)
Change in fair value of interest rate swap agreement, net of $1,021 tax																			(1,566		)	(1,566		)
Adjustment in minimum pension liability, net of $931 tax																			(1,423		)	(1,423		)
Comprehensive loss																						(2,212		)
Preferred stock dividends															(9,670		)					(9,670		)
Preferred stock accretion															(532		)					(532		)
Repurchase of common stock	(28	)	(9		)							368			(755		)					(396		)
Balance—December 29, 2001	8,965		$	1,006		$	24,733		$	—		$	(1,407	)	$	(610,959	)		$	(12,503	)	$	(599,130	)
Net income															29,906							29,906
Change in cumulative translation adjustment																			579			579
Change in fair value of interest rate swap agreement, net of $1,351 tax																			2,065			2,065
Adjustment in minimum pension liability, net of $627 tax																			(958		)	(958		)
Comprehensive income																						31,592
Preferred stock dividends															(11,097		)					(11,097		)
Preferred stock accretion															(650		)					(650		)
Repurchase of common stock	(9	)	(3		)							126			(268		)					(145		)
Reacquisition of warrants to purchase common shares						(3,769		)							1,063							(2,706		)
Interest accrued on officer notes receivable												(344		)								(344		)
Balance—December 28, 2002	8,956		$	1,003		$	20,964		$	—		$	(1,625	)	$	(592,005	)		$	(10,817	)	$	(582,480	)
Net income															7,640							7,640
Change in cumulative translation adjustment																			(278		)	(278		)
Change in fair value of interest rate swap agreement,																						—
net of $846 tax																			1,293			1,293
Comprehensive income																						8,655
Preferred stock dividends															(6,148		)					(6,148		)
Preferred stock accretion															(377		)					(377		)
Payment on officer notes receivable												1,625										1,625
Repurchase of common stock and warrants	(8,956	)	(1,003		)	(20,964		)							(449,077		)					(471,044		)
Issuance of common stock	1		—						417,934													417,934
Effect of purchase accounting															1,039,967				9,802			1,049,769
Balance—July 29, 2003	1		$	—		$	—		$	417,934		$	—		$	—			$	—		$	417,934
Post-Merger
Balance July 29, 2003	1		$	—		$	—		$	417,934		$	—		$	—			$	—		$	417,934
Net loss															(33,402		)					(33,402		)
Change in cumulative translation adjustment																			9			9
Comprehensive loss																						(33,393		)
Balance—January 3, 2004	1		$	—		$	—		$	417,934		$	—		$	(33,402	)		$	9		$	384,541

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

30

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Summary of Significant Accounting Policies

Basis of Presentation

Our consolidated financial statements for the pre-merger period from December 29, 2002 through July 29, 2003 were prepared using our historical basis of accounting. As a result of the merger transaction as discussed in Note 2, we applied purchase accounting and a new basis of accounting began on July 29, 2003. We have reflected a pre-merger period from December 29, 2002 to July 29, 2003 (seven months) and a post-merger period from July 30, 2003 to January 3, 2004 (five months) in our consolidated financial statements for fiscal 2003.

Principles of Consolidation

The consolidated financial statements include the accounts of Jostens, Inc. and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Reclassifications

Certain reclassifications of previously reported amounts have been made to conform to the current year presentation and to conform with recent accounting pronouncements and guidance. The reclassifications had no impact on net earnings as previously reported.

Fiscal Year

We utilize a fifty-two, fifty-three week fiscal year ending on the Saturday nearest December 31. The post-merger period in 2003 and fiscal years 2002 and 2001 ended on January 3, 2004, December 28, 2002 and December 29, 2001, respectively. The combined pre-merger and post-merger periods in 2003 consisted of fifty-three weeks while fiscal years 2002 and 2001 each consisted of fifty-two weeks.

Use of Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

We consider all investments with an original maturity of three months or less on their acquisition date to be cash equivalents.

Allowance for Doubtful Accounts

We make estimates of potentially uncollectible customer accounts receivable. We believe that our credit risk for these receivables is limited because of our large number of customers and the relatively small account balances for most of our customers. We evaluate the adequacy of the allowance on a periodic basis. The evaluation includes historical loss experience, length of time receivables are past due, adverse situations that may affect a customer’s ability to repay and prevailing economic conditions. We make adjustments to the allowance balance if the evaluation of allowance requirements differs from the

31

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

actual aggregate reserve. This evaluation is inherently subjective and estimates may be revised as more information becomes available.

Allowance for Sales Returns

We make estimates of potential future product returns related to current period product revenue. We evaluate the adequacy of the allowance on a periodic basis. This evaluation includes historical returns experience, changes in customer demand and acceptance of our products and prevailing economic conditions. We make adjustments to the allowance if the evaluation of allowance requirements differs from the actual aggregate reserve. This evaluation is inherently subjective and estimates may be revised as more information becomes available.

Allowance for Salespersons Overdrafts

We make estimates of potentially uncollectible receivables arising from sales representative draws paid in excess of earned commissions. For veteran sales representatives, these estimates are based on historical commissions earned and length of service. For newer sales representatives, receivables arising from draws paid in excess of earned commissions are fully reserved. We evaluate the adequacy of the allowance on a periodic basis. The evaluation includes historical loss experience, length of time receivables are past due, adverse situations that may affect a sales representative’s ability to repay and prevailing economic conditions. We make adjustments to the allowance balance if the evaluation of allowance requirements differs from the actual aggregate reserve. This evaluation is inherently subjective and estimates may be revised as more information becomes available.

Inventories

Inventories are stated at the lower of cost or market value. Cost is determined by using standard costing, which approximates the first-in, first-out (FIFO) method for all inventories except gold and certain other precious metals, which are determined using the last-in, first-out (LIFO) method. Cost includes direct materials, direct labor and applicable overhead. LIFO inventories were $0.1 million at the end of 2003 and 2002 and approximated replacement cost. Obsolescence reserves are provided as necessary in order to approximate inventories at market value.

Property and Equipment

Property and equipment are stated at historical cost for the pre-merger period through July 29, 2003, at which time we adjusted property and equipment to fair value in accordance with purchase accounting. Maintenance and repairs are charged to operations as incurred. Major renewals and betterments are capitalized. Depreciation is determined for financial reporting purposes by using the straight-line method over the following estimated useful lives:

	Years
Buildings	15 to 40
Machinery and equipment	3 to 10
Capitalized software	2 to 5

32

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Capitalization of Internal-Use Software

We capitalize costs of software developed or obtained for internal use once the preliminary project stage has concluded, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project and (3) interest costs incurred, when material, while developing internal-use software. Capitalization of costs ceases when the project is substantially complete and ready for its intended use.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets are originally recorded at their fair values at date of acquisition. Goodwill and indefinite-lived intangibles are no longer amortized, but are tested annually for impairment, or more frequently if impairment indicators occur, as further described in ITEM 7 “Critical Accounting Policies”. Prior to fiscal 2002, goodwill and intangibles were amortized over their estimated useful lives, not to exceed a period of forty years. Definite-lived intangibles are amortized over their estimated useful lives and are evaluated for impairment annually, or more frequently if impairment indicators are present, using a process similar to that used to test other long-lived assets for impairment.

Impairment of Long-Lived Assets

We evaluate our long-lived assets, including intangible assets with finite lives, in compliance with Statement of Financial Accounting Standards (SFAS) 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. An impairment loss is recognized whenever events or changes in circumstances indicate the carrying amount of an asset is not recoverable. In applying SFAS 144, assets are grouped and evaluated at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. We consider historical performance and future estimated results in our evaluation of impairment. If the carrying amount of the asset exceeds expected undiscounted future cash flows, we measure the amount of impairment by comparing the carrying amount of the asset to its fair value, generally measured by discounting expected future cash flows at the rate we utilize to evaluate potential investments.

Customer Deposits

Amounts received from customers in the form of cash down payments to purchase goods are recorded as a liability until the goods are delivered.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax expense represents the taxes payable for the year

33

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and the change in deferred taxes during the year. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Revenue Recognition and Warranty Costs

We recognize revenue when the earnings process is complete, evidenced by an agreement between Jostens and the customer, delivery and acceptance has occurred, collectibility is probable and pricing is fixed and determinable. Provisions for warranty costs related to our jewelry products, sales returns and uncollectible amounts are recorded based on historical information and current trends.

Shipping and Handling

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

Foreign Currency Translation

Assets and liabilities denominated in foreign currency are translated at the current exchange rate as of the balance sheet date, and income statement amounts are translated at the average monthly exchange rate. Translation adjustments resulting from fluctuations in exchange rates are recorded in other comprehensive income (loss).

Supplier Concentration

We purchase substantially all precious, semiprecious and synthetic stones from a single supplier located in Germany, whom we believe is also a supplier to our major class ring competitors in the United States.

Derivative Financial Instruments

We account for all derivatives in accordance with SFAS 133, “Accounting for Derivatives and Hedging Activities”, as amended. SFAS 133 requires that we recognize all derivatives on the balance sheet at fair value and establish criteria for designation and effectiveness of hedging relationships. Effective December 31, 2000, the beginning of fiscal year 2001, we adopted SFAS 133 and recognized a $1.8 million, net-of-tax cumulative effect adjustment in other comprehensives income (loss). Changes in the fair value of derivatives are recorded in earnings or other comprehensive income (loss), based on whether the instrument is designated as part of a hedge transaction and, if so, the type of hedge transaction. Gains or losses on derivative instruments reported in other comprehensive income (loss) are reclassified into earnings in the period in which earnings are affected by the underlying hedged item. The ineffective portion of a derivative’s change in fair value is recognized in earnings in the current period.

(Loss) Earnings Per Common Share

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

34

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

There were no common share equivalents outstanding subsequent to the merger on July 29, 2003 as discussed in Note 2. For the pre-merger period in 2003, approximately 0.9 million shares of common share equivalents were excluded in the computation of net (loss) earnings per share since they were antidilutive due to the net loss incurred in the period. For 2002, options to purchase 44,750 shares of common stock were outstanding, but were excluded from the computation of common share equivalents because they were antidilutive.

Stock-Based Compensation

We apply the intrinsic value method prescribed by Accounting Principles Board Opinion (APB) 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for stock options granted to employees and non-employee directors. Accordingly, no compensation cost has been reflected in net income for these plans since all options are granted at or above fair value. The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of SFAS 123, “Accounting for Stock-Based Compensation”. There were no stock options outstanding subsequent to the merger on July 29, 2003, as discussed in Note 2.

	Pre-Merger
	Seven Months
	2003				2002			2001
	In thousands, except per-share data
Net income (loss) available to common shareholders
As reported		$	1,115		$	18,159		$	(6,102	)
Add stock-based employee compensation expense included in reported net income available to common shareholders, net of tax effects		7,608			—			—
Deduct total stock-based employee compensation expense determined under fair value based method for all awards, net of tax effects		(2,185		)	(483		)	(375		)
Proforma net income (loss) available to common shareholders		$	6,539		$	17,676		$	(6,477	)
Net income (loss) per share
Basic—as reported		$	0.12		$	2.03		$	(0.68	)
Basic—proforma		$	0.73		$	1.97		$	(0.72	)
Diluted—as reported		$	0.12		$	1.83		$	(0.61	)
Diluted—proforma		$	0.66		$	1.79		$	(0.65	)

New Accounting Standards

SFAS 143—Accounting for Asset Retirement Obligations

In the first quarter of fiscal 2003, we adopted SFAS 143, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Adoption of this Statement had no impact on our financial statements.

35

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SFAS 146—Accounting for Costs Associated with Exit or Disposal Activities

In the first quarter of fiscal 2003, we adopted SFAS 146, which requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred and be measured at fair value. Adoption of this Statement had no impact on our financial statements.

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

As of June 29, 2003, we adopted SFAS 150, which establishes guidance for how certain financial instruments with characteristics of both liabilities and equity are classified and requires that a financial instrument that is within its scope be classified as a liability (or as an asset in some circumstances). We determined that the characteristics of our redeemable preferred stock were such that the securities should be classified as a liability and we recognized a $4.6 million cumulative effect of a change in accounting principle upon adoption. Restatement of prior periods was not permitted. We assessed the value of our redeemable preferred stock at the present value of the settlement obligation using the rate implicit at inception of the obligation, thus recognizing a discount of $19.7 million. The redeemable preferred stock was reclassified to the liabilities section of our consolidated balance sheet and the preferred dividend and related discount amortization were subsequently recorded as interest expense in our results of operations rather than as a reduction to retained earnings. We did not provide any tax benefit in connection with the cumulative effect adjustment because payment of the related preferred dividend and the discount amortization are not tax deductible.

Unaudited proforma amounts assuming the change in accounting principle had been in effect since the beginning of 2001 are as follows:

	Post-Merger			Pre-Merger
	Five Months			Seven Months
	2003			2003				2002			2001
	In thousands, except per share data
Net (loss) income available to common shareholder(s)
As reported	$	(33,402	)		$	1,115		$	18,159		$	(6,102	)
Dividends and accretion on redeemable preferred shares previously reported	—				6,525			11,747			10,202
Reverse cumulative effect of accounting change	—				(4,585		)	—			—
Proforma interest expense	—				(5,528		)	(10,395		)	(8,788		)
Proforma net (loss) income available to common shareholder(s)	$	(33,402	)		$	(2,473	)	$	19,511		$	(4,688	)
Net (loss) income per share
Basic—as reported	$	(33,402.00	)		$	0.12		$	2.03		$	(0.68	)
Basic—proforma	$	(33,402.00	)		$	(0.28	)	$	2.18		$	(0.52	)
Diluted—as reported	$	(33,402.00	)		$	0.12		$	1.83		$	(0.61	)
Diluted—proforma	$	(33,402.00	)		$	(0.28	)	$	1.97		$	(0.47	)

36

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SFAS 132 (Revised)—Employers’ Disclosures about Pensions and Other Postretirement Benefits

As of January 3, 2004, we adopted the provisions of SFAS 132 (Revised), which amends the disclosure requirements of SFAS 132 to require more complete information in both annual and interim financial statements about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and postretirement benefit plans. A discussion of our accounting policy and the required disclosures under the revised provisions of SFAS 132 are included in Note 12. Adoption of this Statement had no impact on our financial statements.

FSP 106-1—Accounting and Disclosure Requirements Related to the Medicare Prescription Drug Improvement and Modernization Act of 2003

On December 8, 2003, President Bush signed into law a bill that expands Medicare, primarily adding a prescription drug benefit for Medicare-eligible retirees starting in 2006. Under this bill, postretirement plans with prescription drug benefits that are at least “actuarially equivalent” to the Medicare Part D benefit will be eligible for a 28% subsidy. In response to this bill, on January 12, 2004, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) 106-1. FSP 106-1 addresses how to incorporate this subsidy into the calculation of the accumulated periodic benefit obligation (APBO) and net periodic postretirement benefit costs, and also allows plan sponsors to defer recognizing the effects of the bill in the accounting for its postretirement plan under SFAS 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, until further authoritative guidance on the accounting for the federal subsidy is issued. As the measurement date for our postretirement benefit plan is September 30, 2003, the APBO and the net periodic postretirement benefit cost in the financial statements and accompanying notes do not reflect the effects of the bill on the plan. In addition, specific authoritative guidance on the accounting for the federal subsidy is pending, and when issued, could require a change to previously reported information. We have deferred adoption of this standard, as is allowed under FSP 106-1, until further guidance is issued.

2.   Merger

On June 17, 2003, we entered into a merger agreement with Jostens Holding Corp. (formerly known as Ring Holding Corp.) and Ring Acquisition Corp., an entity organized for the sole purpose of effecting a merger on behalf of DLJ Merchant Banking Partners III, L.P. and certain of its affiliated funds (collectively, the “DLJMB Funds. On July 29, 2003, Ring Acquisition Corp. merged with and into Jostens, Inc., with Jostens, Inc. becoming the surviving company and an indirect subsidiary of Jostens Holding Corp. (the “merger”). As a result of the merger, the DLJMB Funds and certain co-investors beneficially own 99% of the outstanding voting securities of Jostens Holding Corp. and certain members of our senior management and directors own the remaining 1%.

In connection with the merger, we received $417.9 million of proceeds from a capital contribution by Jostens IH Corp. (“JIHC”), which was established for purposes of the merger. We used the proceeds from the capital contribution, along with incremental borrowings under our new senior secured credit facility, to repurchase all previously outstanding common stock and warrants. We paid $471.0 million to holders of common stock and warrants representing a cash payment of $48.25 per share. In addition, we paid approximately $41.2 million of fees and expenses associated with the merger including $12.6 million of compensation expense representing the excess of the fair market value over the exercise price of

37

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

outstanding stock options, $12.6 million of capitalized merger costs and $16.0 million of expensed costs consisting primarily of investment banking, legal and accounting fees. We also recognized $2.6 million of transaction costs as a result of writing off certain prepaid management fees having no future value.

Also in connection with the merger, we refinanced our senior secured credit facility through the establishment of a new senior secured credit facility. We received $475.0 million in borrowings under the new credit facility and repaid $371.1 million of outstanding indebtedness under the old credit facility. In addition, we incurred transaction fees and related costs of $20.2 million associated with the new credit facility, which have been capitalized and are being amortized as interest expense over the life of the facility. We also wrote off the unamortized balance of $13.9 million relating to deferred financing costs associated with the old credit facility.

Merger Accounting

Beginning on July 29, 2003, Jostens, Inc. and JIHC, a subsidiary of Jostens Holding Corp., accounted for the merger as a purchase in accordance with the provisions of SFAS 141, “Business Combinations”, which requires a valuation for the assets and liabilities of JIHC and its subsidiaries based upon the fair values as of the date of the merger. As allowed under SEC Staff Accounting Bulletin No. 54, “Push Down Basis of Accounting Required in Certain Limited Circumstances”, we have reflected all applicable purchase accounting adjustments recorded by JIHC in our consolidated financial statements for all SEC filings covering periods subsequent to the merger (“purchase accounting”). Purchase accounting requires us to establish a new basis for our assets and liabilities based on the amount paid for ownership at July 29, 2003. Accordingly, JIHC’s ownership basis is reflected in our consolidated financial statements beginning upon completion of the merger. In order to apply purchase accounting, JIHC’s purchase price of $471.0 million was allocated to the assets and liabilities based on their relative fair values and $417.9 million was reflected in shareholders’ equity of Jostens, Inc. as the value of JIHC’s ownership upon completion of the merger. Immediately prior to the merger, shareholders’ equity of Jostens, Inc. was a deficit of approximately $578.7 million. As of January 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		727,633
Other assets		18,622
Current liabilities		(199,776		)
Long-term debt		(594,494		)
Redeemable preferred stock		(126,511		)
Deferred income taxes		(253,577		)
Other liabilities		(28,521		)
		$	471,044

We have estimated the fair value of our assets and liabilities, including intangible assets and property and equipment, as of the merger date, utilizing information available at the time that our consolidated financial statements were prepared. These estimates are subject to refinement until all pertinent

38

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

information has been obtained. We also recognized the funding status of our pension and postretirement benefit plans as of July 29, 2003 and updated the calculation of our post-merger pension expense.

As a result of the merger, in accordance with SFAS 141, we have reflected a pre-merger period from December 29, 2002 to July 29, 2003 (seven months) and a post-merger period from July 30, 2003 to January 3, 2004 (five months) in our consolidated financial statements for fiscal 2003.

3.   Accumulated Comprehensive Income (Loss)

The following amounts were included in accumulated other comprehensive income (loss) as of the dates indicated:

								Fair value				Accumulated
	Foreign				Minimum			of interest				other
	currency				pension			rate swap				comprehensive
Pre-Merger	translation				liability			agreement				income (loss)
	In thousands
Balance at December 30, 2000		$	(5,243	)	$	(948	)		$	—			$	(6,191	)
Transition adjustment relating to adoption of SFAS 133		—			—				(1,821		)		(1,821		)
Current period change		(1,502		)	(1,423		)		(1,566		)		(4,491		)
Balance at December 29, 2001		(6,745		)	(2,371		)		(3,387		)		(12,503		)
Current period change		579			(958		)		2,065				1,686
Balance at December 28, 2002		(6,166		)	(3,329		)		(1,322		)		(10,817		)
Pre-merger period change		(278		)	—				1,293				1,015
Effect of purchase accounting		6,444			3,329				29				9,802
Balance at July 29, 2003		$	—		$	—			$	—			$	—
Post-Merger
Balance at July 29, 2003		$	—		$	—			$	—			$	—
Post-merger period change		9			—				—				9
Balance at January 3, 2004		$	9		$	—			$	—			$	9

4.   Accounts Receivable and Inventories

Net accounts receivable were comprised of the following:

	Post-Merger				Pre-Merger
	2003				2002
	In thousands
Trade receivables		$	64,993			$	67,181
Allowance for doubtful accounts		(2,184		)		(2,557		)
Allowance for sales returns		(5,791		)		(5,597		)
Accounts receivable, net		$	57,018			$	59,027

39

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net inventories were comprised of the following:

	Post-Merger				Pre-Merger
	2003				2002
	In thousands
Raw materials and supplies		$	11,416			$	10,810
Work-in-process		28,084				27,347
Finished goods		34,713				32,850
Reserve for obsolescence		(1,690		)		(1,659		)
Inventories, net		$	72,523			$	69,348

Precious Metals Consignment Arrangement

We have a precious metals consignment arrangement with a major financial institution whereby we have the ability to obtain up to $30.0 million in consigned inventory. We expensed consignment fees related to this facility of $0.2 million in the post-merger period of 2003, $0.2 million in the pre-merger period of 2003 and $0.3 million and $0.5 million in 2002 and 2001, respectively. Under the terms of the consignment arrangement, we do not own the consigned inventory until it is shipped in the form of a product to our customer. Accordingly, we do not include the value of consigned inventory nor the corresponding liability in our financial statements. The value of consigned inventory as of the end of 2003 and 2002 was $24.1 million and $17.4 million, respectively.

5.   Property and Equipment

As of the end of 2003 and 2002, net property and equipment consisted of:

	Post-Merger			Pre-Merger
	2003			2002
	In thousands
Land		$	12,617	$	2,795
Buildings		26,925		36,332
Machinery and equipment		66,554		201,421
Capitalized software		13,410		40,242
Total property and equipment		119,506		280,790
Less accumulated depreciation and amortization		13,913		215,342
Property and equipment, net		$	105,593	$	65,448

Property and equipment are stated at historical cost for the pre-merger period through July 29, 2003, at which time we adjusted property and equipment to fair value in accordance with purchase accounting. Depreciation expense was $13.9 million for the post-merger period in 2003 and $12.6 million for the pre-merger period in 2003. Depreciation expense for 2002 and 2001 was $24.6 million and $25.9 million, respectively. The amount in 2001 relates to continuing operations. Amortization related to capitalized software is included in depreciation expense and totaled $2.6 million for the post-merger period in 2003, $3.8 million for the pre-merger period in 2003 and $6.9 million and $6.6 million in 2002 and 2001, respectively.

40

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.   Goodwill and Other Intangible Assets

On December 30, 2001, the beginning of fiscal year 2002, we adopted SFAS 142 “Goodwill and Other Intangible Assets”, which provides that goodwill and other indefinite-lived intangible assets are no longer amortized but are reviewed for impairment annually, or more frequently if impairment indicators occur. Separable intangible assets that are deemed to have a definite life continue to be amortized over their useful lives. Had the provisions of SFAS 142 been in effect during fiscal year 2001, net loss available to common shareholders would have decreased by $1.0 million or $.09 per diluted share and income from continuing operations would have increased by $0.5 million or $.05 per diluted share.

Goodwill

The changes in the net carrying amount of goodwill were as follows:

	Post-Merger			Pre-Merger
	Five Months			Seven Months
	2003			2003			2002
	In thousands
Balance at beginning of period		$	679,231		$	14,450	$	13,759
Goodwill acquired during the period		10,954			664,668		678
Purchase price adjustments		55,768			—		—
Currency translation		72			113		13
Balance at end of period		$	746,025		$	679,231	$	14,450

Other Intangible Assets

Information regarding our other intangible assets as of the end of 2003 and 2002 is as follows:

	Post-Merger
	2003
		Gross
	Estimated	Carrying		Accumulated
	Useful Life	Amount		Amortization				Net
	In thousands
School relationships	10 years	$	330,000		$	(14,540	)	$	315,460
Order backlog	1.5 years	48,700			(2,190		)	46,510
Internally developed software	2 to 5 years	12,200			(1,447		)	10,753
Patented/unpatented technology	3 years	11,000			(1,612		)	9,388
Customer relationships	4 to 8 years	8,666			(1,135		)	7,531
Other	3 years	24			(12		)	12
		410,590			(20,936		)	389,654
Trademarks	Indefinite	255,000			—			255,000
		$	665,590		$	(20,936	)	$	644,654

41

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Pre-Merger
	2002
			Gross
	Estimated		Carrying			Accumulated
	Useful Life		Amount			Amortization				Net
	In thousands
Customer relationships		5 years		$510			$(51		)	$459
Other		3 years		24			(4		)	20
				$	534		$	(55	)	$	479

Amortization expense was $20.3 million for the post-merger period in 2003 and $0.6 million for the pre-merger period in 2003. Amortization expense for 2002 and 2001 was $0.1 million and $0.5 million, respectively. Estimated amortization expense for each of the five succeeding fiscal years based on intangible assets as of January 3, 2004 is as follows:

	In thousands
2004		$	87,901
2005		41,051
2006		38,769
2007		35,470
2008		34,473
		$	237,664

The increase in goodwill and other intangible assets is predominantly attributable to the effect of purchase accounting in connection with the merger as discussed in Note 2. In addition, we acquired the net assets of a photography business in January 2003 for $5.0 million in cash. The purchase price allocation was $0.4 million to net tangible assets, $3.2 million to amortizable intangible assets and $1.4 million to goodwill. We also acquired the net assets of a printing business in September 2003 for $10.9 million in cash. The purchase price allocation was $0.7 million to net tangible assets, $4.5 million to amortizable intangible assets and $5.7 million to goodwill.

Acquisitions are accounted for as purchases and, accordingly, have been included in our consolidated results of operations since the acquisition date. Purchase price allocations are subject to refinement until all pertinent information regarding the acquisition is obtained. Proforma results of operations have not been presented since the effect of these acquisitions on our financial position and results of operations is not material.

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JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.   Long-term Debt

As of the end of 2003 and 2002, long-term debt consists of the following:

	Post-Merger			Pre-Merger
	2003			2002
	In thousands
Borrowings under senior secured credit facility:
Term Loan, variable rate, 3.72 percent at January 3, 2004,with semi-annual principal and interest payments throughJuly 2010		$	453,705	$	—
Term Loan A, variable rate, 3.65 percent at December 28, 2002, paid in full July 2003		—		58,602
Term Loan C, variable rate, 4.15 percent at December 28, 2002, paid in full July 2003		—		320,669
Senior subordinated notes, 12.75 percent fixed rate, including premiumof $22,717 at January 3, 2004, net of discount of $16,343 at December 28, 2002, with semi-annual interest payments of $13.3 million, principal due and payable at maturity—May 2010		231,702		201,157
		685,407		580,428
Less current portion		—		17,094
		$	685,407	$	563,334

Maturities of long-term debt, excluding $22.7 million of premium on our senior subordinated notes, as of the end of 2003 are as follows:

	In thousands
2004		$	—
2005		29,849
2006		41,789
2007		47,758
2008		59,698
Thereafter		483,596
		$	662,690

Senior Secured Credit Facility

In connection with the merger, we refinanced our senior secured credit facility through the establishment of a new senior secured credit facility, which consists of: (i) a $475.0 million term loan; (ii) a $150.0 million revolving credit facility; and (iii) $3.7 million drawn under an incremental $50.0 million change of control term loan, which was subsequently consolidated into the term loan. The proceeds of the change of control term loan were used solely to fund certain change of control payments due to holders of our 12.75% senior subordinated notes due May 2010 (the “notes”) who elected to tender their notes pursuant to the notes change of control offer that we commenced on July 30, 2003 (the “Notes Offer”). Commitment for the amounts not borrowed in respect of the $50.0 million change of control term loan terminated following the consummation of the Notes Offer and is not available for our future use. Substantially all of the assets of our operations were used to secure the new senior secured credit facility.

43

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The term loan bears a variable interest rate based upon either the London Interbank Offered Rate (LIBOR) or an “alternative base rate”, which is based upon the greater of the federal funds effective rate plus 0.5% or the prime rate, plus a fixed margin. Future mandatory principal payment obligations under the term loan are due semi-annually beginning on July 2, 2005 at an amount equal to 2.63% of the current outstanding balance of the term loan. Thereafter, semi-annual principal payments gradually increase through July 2009 to an amount equal to 7.89% of the current outstanding balance of the term loan, with two final principal payments due in December 2009 and July 2010, each equal to 26.32% of the current outstanding balance of the term loan. In the post-merger period of 2003 and during 2002 and 2001, we voluntarily paid down $25.0 million, $40.0 million and $24.0 million, respectively, of our term loans. Deferred financing fees related to these voluntary prepayments, which are included in interest expense, totaled $0.6 million in the post-merger period of 2003 and $1.2 million and $0.8 million in 2002 and 2001, respectively.

Under the $150.0 million revolving credit facility, we may borrow funds and elect to pay interest under either LIBOR or the “alternative base rate” plus applicable margins. The revolving credit facility contains a sub-facility that allows our Canadian subsidiary to borrow funds not to exceed $20.0 million of the total $150.0 million facility. The revolving credit facility expires on July 29, 2008. At the end of 2003, there was $13.0 million outstanding in the form of short-term borrowings at our Canadian subsidiary at a weighted average interest rate of 6.25% and an additional $12.8 million outstanding in the form of letters of credit, leaving $124.2 million available under this facility.

The senior secured credit facility requires that we meet certain financial covenants, ratios and tests, including a maximum senior everage ratio, a maximum leverage ratio and a minimum interest coverage ratio. In addition, we are required to pay certain fees in connection with the senior secured credit facility, including letter of credit fees, agency fees and commitment fees. The senior secured credit facility and the notes contain certain cross-default and cross-acceleration provisions whereby default under or acceleration of one debt obligation would, consequently, cause a default or acceleration under the other debt obligation. At the end of 2003, we were in compliance with all covenants.

Senior Subordinated Notes

The notes are not collateralized and are subordinate in right of payment to the senior secured credit facility. The notes were issued with detachable warrants valued at $10.7 million. During 2002, we repurchased 79,015 warrants to purchase 149,272 actual equivalent shares of common stock for $2.7 million. In connection with the merger, all warrants that were outstanding immediately prior to the merger were cancelled and extinguished for $48.25 per equivalent common share, resulting in an aggregate payment of $13.3 million.

The notes were issued with an original issuance discount of $19.9 million. In accordance with purchase accounting, we recorded the notes at fair value based on the quoted market price as of the merger date, giving rise to a premium in the amount of $24.4 million and eliminating the unamortized discount of $15.5 million. The resulting premium is being amortized to interest expense through May 2010 and represents a $1.1 million reduction to interest expense during the post-merger period in 2003. The discount was also being amortized to interest expense and during the pre-merger period of 2003, 2002 and 2001, the amount of interest expense related to the amortization of discount on the notes was $0.8 million, $1.2 million and $1.1 million, respectively.

44

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the post-merger period of 2003, we purchased $3.5 million principal amount of the notes pursuant to the Notes Offer and voluntarily redeemed an additional $5.0 million principal amount of the notes. As a result of these transactions, we recognized a loss of $0.5 million consisting of $0.8 million of premium paid on redemption of the notes and a net $0.3 million credit to write-off unamortized premium, original issuance discount and deferred financing costs.

During 2002, we voluntarily redeemed $7.5 million principal amount of the notes and recognized a loss of $1.8 million consisting of $1.0 million of premium paid on redemption of the notes and $0.8 million to write-off unamortized original issuance discount and deferred financing costs.

As of the end of 2003 and 2002, the fair value of our debt, excluding the notes, approximated its carrying value and is estimated based on quoted market prices for comparable instruments. The fair value of the notes as of the end of 2003 and 2002 was $239.8 million and $242.2 million, respectively, and was estimated based on the quoted market price.

8.   Redeemable Preferred Stock

In May 2000, we issued redeemable, payment-in-kind, preferred shares, having an initial liquidation preference of $60.0 million. The redeemable preferred shares are entitled to receive dividends at 14.0% per annum, compounded quarterly and payable either in cash or in additional shares of the same series of preferred stock. The redeemable preferred shares are subject to mandatory redemption by Jostens in May 2011 for a total amount of $272.6 million.

We ascribed $14.0 million of the initial liquidation preference value to detachable warrants to purchase 531,325 shares of our Class E common stock at an exercise price of $0.01 per share. In addition, $3.0 million of issuance costs were netted against the initial liquidation preference value and reflected as a reduction to the carrying amount of the preferred stock. Prior to our adoption of SFAS 150 on June 29, 2003, the carrying value of the preferred stock was being accreted to full liquidation preference value, plus unpaid preferred stock dividends, over the eleven-year period through charges to retained earnings. Upon adoption of SFAS 150, we assessed the value of our redeemable preferred stock at the present value of the settlement obligation using the rate implicit at inception of the obligation, thus recognizing a discount of $19.7 million and a $4.6 million cumulative effect of a change in accounting principle. The redeemable preferred stock was reclassified to the liabilities section of our consolidated balance sheet and the preferred dividend and related discount amortization were subsequently recorded as interest expense in our results of operations rather than as a reduction to retained earnings.

In connection with the merger, all warrants that were outstanding immediately prior to the merger were cancelled and extinguished for $48.25 per equivalent common share, resulting in an aggregate payment of $25.6 million. In accordance with purchase accounting, we recorded the redeemable preferred stock at fair value as of the merger date based on a third party appraisal, giving rise to a premium in the amount of $36.5 million and eliminating the unamortized discount of $19.6 million previously established with the adoption of SFAS 150. The resulting premium is being amortized to interest expense through 2011 and represents a $0.3 million reduction to interest expense during the post-merger period in 2003. During the pre-merger period of 2003, $0.1 million of discount was amortized to interest expense.

The aggregate liquidation preference outstanding of our redeemable preferred stock as of the end of 2003 and 2002 was $99.1 million and $86.3 million, respectively, including accrued dividends. We have

45

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4,000,000 shares of preferred stock, $.01 par value, authorized. We had 96,793 and 84,350 shares outstanding in the form of redeemable preferred stock as of the end of 2003 and 2002, respectively.

9.   Derivative Financial Instruments and Hedging Activities

Our involvement with derivative financial instruments is limited principally to managing well-defined interest rate and foreign currency exchange risks. Forward foreign currency exchange contracts may be used to hedge the impact of currency fluctuations primarily on inventory purchases denominated in euros.

We used an interest rate swap agreement to modify risk from interest rate risk fluctuations associated with a specific portion of our underlying debt. The interest rate swap was designated as a cash flow hedge and was reflected at fair value in our consolidated balance sheets. Differences paid or received under the swap contract were recognized over the life of the contract as adjustments to interest expense. As the critical terms of the interest rate swap and the hedged debt matched, there was an assumption of no ineffectiveness for this hedge. At the end of 2002, the notional amount outstanding was $70.0 million and the fair value of the interest rate swap was a liability of $2.2 million ($1.3 million net of tax). The contract matured in August of 2003 and was not renewed.

10.   Commitments and Contingencies

Leases

We lease buildings, equipment and vehicles under operating leases. Future minimum rental commitments under noncancellable operating leases are $3.5 million, $1.4 million, $0.5 million and $0.1 million in 2004, 2005, 2006 and 2007, respectively. Rent expense was $1.7 million for the post-merger period and $2.4 million for the pre-merger period in 2003. Rent expense for 2002 and 2001 was $4.0 million and $3.5 million, respectively.

Forward Purchase Contracts

We are subject to market risk associated with changes in the price of gold. To mitigate our commodity price risk, we enter into forward contracts to purchase gold based upon the estimated ounces needed to satisfy projected customer demand. Our purchase commitment at the end of 2003 was $7.5 million with delivery dates occurring throughout 2004. These forward purchase contracts are considered normal purchases and therefore not subject to the requirements of SFAS 133. The fair market value of our open gold forward contracts at the end of 2003 was $8.3 million and was calculated by valuing each contract at quoted futures prices.

Gains or losses on forward contracts used to purchase inventory for which we have firm purchase commitments qualify as accounting hedges and are therefore deferred and recognized in income when the inventory is sold. Counter parties expose us to loss in the event of nonperformance as measured by the unrealized gains on the contracts. Exposure on our open gold forward contracts at the end of 2003 was $0.8 million.

Environmental

Our operations are subject to a wide variety of federal, state, local and foreign laws and regulations governing emissions to air, discharges to waters, the generation, handling, storage, transportation, treatment and disposal of hazardous substances and other materials, and employee health and safety

46

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

matters. Also, as an owner and operator of real property or a generator of hazardous substances, we may be subject to environmental cleanup liability, regardless of fault, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act. As part of our environmental management program, we are currently involved in various environmental remediation activities. As sites are identified and assessed in this program, we determine potential environmental liabilities. Factors considered in assessing liability include, but are not limited to: whether we have been designated as a potentially responsible party, the number of other potentially responsible parties designated at the site, the stage of the proceedings and available environmental technology.

In 1996, we assessed the likelihood as probable that a loss had been incurred at one of our sites based on findings included in remediation reports and from discussions with legal counsel. Although we no longer own the site, we continue to manage the remediation project, which began in 2000. As of the end of 2003, we had made payments totaling $7.3 million for remediation at this site and our consolidated balance sheet included $0.9 million in “other accrued liabilities” related to this site. During 2001, we received reimbursement from our insurance carrier in the amount of $2.7 million, net of legal costs. While we may have an additional right of contribution or reimbursement under insurance policies, amounts recoverable from other entities with respect to a particular site are not considered until recoveries are deemed probable. We have not established a receivable for potential recoveries as of January 3. 2004. We believe the effect on our consolidated results of operations, cash flows and financial position, if any, for the disposition of this matter will not be material.

Litigation

A federal antitrust action was served on us on October 23, 1998. The complainant, Epicenter Recognition, Inc. (Epicenter), alleged that we attempted to monopolize the market of high school graduation products in the state of California. Epicenter is a successor to a corporation formed by four of our former independent sales representatives. The plaintiff claimed damages of approximately $3.0 million to $10.0 million under various theories and differing sized relevant markets. Epicenter waived its right to a jury, so the case was tried before a judge in U.S. District Court in Orange County, California. On June 18, 2002, the Court found, among other things, that while our use of rebates, contributions and value-added programs are legitimate business practices widely practiced in the industry and do not violate antitrust laws, our use of multi-year Total Service Program contracts violated Section 2 of the Sherman Act because these agreements could “exclude competition by making it difficult for a new vendor to compete against Jostens.”

On July 12, 2002, the Court entered an initial order providing, among other things, that Epicenter be awarded damages of $1.00, trebled pursuant to Section 15 of the Clayton Act, and that in the state of California, Jostens was enjoined for a period of ten years from utilizing any contract, including those for Total Service Programs, for a period which extends for more than one year (the “Initial Order”). The Initial Order also provided for payment to Epicenter of reasonable attorneys fees and costs. We made a motion to set aside the Initial Order. On August 23, 2002, the Court entered its ruling on the motion, and granted, in part, our motion for relief from judgment, changing the Initial Order and enjoining us for only five years, and allowing us to enter into multi-year agreements in the following specific circumstances: (1) when a school requests a multi-year agreement, in writing and on its own accord, or (2) in response to a competitor’s offer to enter into a multi-year agreement. On August 23, 2002, the Court entered an additional order granting Epicenter’s motion for attorneys’ fees in the amount of $1.6 million plus $0.1 million in out-of-pocket expenses for a total award of $1.7 million. On September 12, 2002, we filed a

47

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Notice of Appeal to the Ninth Circuit of the United States Court of Appeals. Payment of attorneys’ fees and costs were stayed pending appeal. In November 2002, we issued a letter of credit in the amount of $2.0 million to secure the judgment on attorneys’ fees and costs. Our brief on appeal was filed with the Court on February 13, 2003. Oral argument was scheduled by the Court and heard by a three-judge panel on October 7, 2003. On November 20, 2003, the Ninth Circuit panel completely reversed the decision of the lower court, holding that we had not violated antitrust laws because we did not possess a monopoly in the relevant market and that the lower court had erred when it founded an injunction under the California unfair competition law. The Ninth Circuit panel also reversed the grant of damages, costs, attorneys’ fees and the injunction. On January 6, 2004, the Ninth Circuit panel denied a Petition for Rehearing and for Rehearing En Banc that had been filed by Epicenter on December 4, 2003. In response to the appellate court’s reversal of the Initial Order, the trial court on March 19, 2004, entered a revised judgment for Jostens and against Epicenter on all claims. The case is now closed.

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

11.   Income Taxes

The following table summarizes the differences between income taxes computed at the federal statutory rate and income taxes from continuing operations for financial reporting purposes:

	Post-Merger				Pre-Merger
	Five Months 2003				Seven Months 2003				2002			2001
	In thousands
Federal statutory income tax rate		35		%		35		%	35		%	35		%
Federal (benefit) tax at statutory rate		$	(17,975	)		$	4,113		$	22,569		$	15,790
State (benefit) tax, net of federal tax benefit		(2,420		)		873			2,394			1,655
Foreign tax credits used (generated), net		2,033				—			(16,240		)	—
Foreign earnings repatriation, net		933				—			9,278			—
Nondeductible interest expense		1,959				295			—			—
Nondeductible transaction costs		—				3,095			—			—
Capital loss resulting from IRS audit		—				—			(10,573		)	—
(Decrease) increase in deferred tax valuation allowance		(2,383		)		—			26,813			—
Other differences, net		(102		)		319			1,973			1,130
(Benefit from) provision for income taxes from continuing operations		$	(17,955	)		$	8,695		$	36,214		$	18,575

48

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The U.S. and foreign components of income from continuing operations before income taxes and the (benefit from) provision for income taxes attributable to earnings from continuing operations were as follows:

	Post-Merger				Pre-Merger
	Five Months 2003				Seven Months 2003				2002		2001
	In thousands
Domestic		$	(55,969	)		$	10,648		$	57,436	$	38,172
Foreign		4,612				1,102			7,047		6,943
(Loss) Income from continuing operations before income taxes		$	(51,357	)		$	11,750		$	64,483	$	45,115
Federal		$	8			$	7,977		$	20,029	$	8,144
State		(320		)		1,609			2,289		1,592
Foreign		1,934				609			3,162		3,300
Total current income taxes		1,622				10,195			25,480		13,036
Deferred		(19,577		)		(1,500		)	10,734		5,539
(Benefit from) provision for income taxes from continuing operations		$	(17,955	)		$	8,695		$	36,214	$	18,575

49

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A net deferred tax asset represents management’s best estimate of the tax benefits that will more likely than not be realized in future years at each reporting date. Significant components of the deferred income tax liabilities and assets as of the end of 2003 and 2002 consisted of:

	Post-Merger			Pre-Merger
	2003			2002
	In thousands
Tax depreciation in excess of book	$	(7,043	)	$	(4,471	)
Capitalized software development costs	(2,324		)	(3,947		)
Tax on unremitted non-U.S. earnings	(904		)	(768		)
Pension benefits	(21,976		)	(17,129		)
Basis difference on property and equipment	(15,506		)	—
Basis difference on intangible assets	(251,978		)	—
Other	(611		)	(532		)
Deferred tax liabilities	(300,342		)	(26,847		)
Reserves for accounts receivable and salespersons overdrafts	6,542			5,828
Reserves for employee benefits	16,867			15,424
Other reserves not recognized for tax purposes	3,341			3,326
Foreign tax credit carryforwards	14,392			16,425
Capital loss carryforwards	12,884			13,234
Basis difference on pension liabilities	17,488			—
Basis difference on long-term debt	14,691			—
Other	5,240			6,232
Deferred tax assets	91,445			60,469
Valuation allowance	(27,276		)	(29,659		)
Deferred tax assets, net	64,169			30,810
Net deferred tax (liability) asset	$	(236,173	)	$	3,963

As a result of the merger, Jostens, Inc. became an indirect subsidiary of Jostens Holding Corp. effective July 29, 2003. Jostens Holding Corp. will file a consolidated federal income tax return beginning in 2004.

We recognized $258.2 million of net deferred tax liabilities in connection with the merger. This amount represents the tax effect for temporary differences between the carrying amount of assets and liabilities resulting from the purchase price allocation and the related tax bases. At the end of 2003, the net deferred tax liability related to temporary differences arising from our merger accounting was $235.3 million.

During 2002, we agreed to certain adjustments proposed by the Internal Revenue Service (IRS) in connection with its audit of our federal income tax returns filed for years 1996 through 1998. As a result of the audit, we agreed to pay additional federal taxes of $11.3 million. Combined with additional state taxes and interest charges, the liability related to these adjustments, which had previously been accrued, was approximately $17.0 million. During 2003, we filed an appeal with the IRS concerning a further proposed adjustment of approximately $8.0 million. While the appeal process may take up to two years to complete, we believe the outcome of this matter will not have a material impact on our results of operations.

50

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In connection with the aforementioned audit, the IRS recharacterized as a capital loss approximately $27.0 million of notes that were written off in 1998. The notes were received in connection with the 1995 sale of a subsidiary. Since capital losses may only be used to offset future capital gains, we have provided a valuation allowance for the entire related deferred tax asset because the tax benefit related to our capital losses may not be realized. At the end of 2003, we have capital loss carryforwards totaling approximately $32.6 million of which $27.0 million expire in 2004, $4.0 million expire in 2006 and $1.6 million expire in 2007.

During 2003 and 2002, we repatriated $3.0 million and $32.1 million, respectively, of earnings from our Canadian subsidiary. We were unable to fully utilize all foreign tax credits generated in connection with the distributions. During 2003, we reduced our deferred tax asset balance and related valuation allowance by $2.4 million to reflect foreign tax credit carryforwards as reported on our 2002 income tax return. At the end of 2003, we have foreign tax credit carryforwards totaling $14.4 million of which approximately $13.5 million expire in 2007 and $0.9 million expire in 2008. We have provided a valuation allowance for the entire related deferred tax asset because the tax benefit related to the foreign tax credits may not be realized. During 2003 and 2002, we provided deferred income taxes of $0.1 million and $0.8 million on approximately $0.5 million and $4.0 million, respectively, of unremitted Canadian earnings that are no longer considered permanently invested.

12.   Benefit Plans

Pension and Other Postretirement Benefits

We have noncontributory defined-benefit pension plans that cover nearly all employees. The benefits provided under the plans are based on years of service, age eligibility and employee compensation. We have funded the benefits for our qualified pension plans through pension trusts, the objective being to accumulate sufficient funds to provide for future benefits. In addition to our qualified pension plans, we have unfunded, non-qualified pension plans covering certain employees, which provide for benefits in addition to those provided by the qualified plans. We also provide certain medical and life insurance benefits for eligible retirees, including their spouses and dependents. Generally, the postretirement benefits require contributions from retirees.

51

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables present the benefit obligations, plan assets and funded status of the plans for our qualified and non-qualified plans in aggregate and for our postretirement benefits at the respective period end based on a measurement date of September 30:

	Pension benefits											Postretirement benefits
	Post-Merger				Pre-Merger							Post-Merger				Pre-Merger
	Five Months 2003				Seven Months 2003				2002			Five Months 2003				Seven Months 2003				2002
	In thousands
Change in benefit obligation
Benefit obligation beginning of period		$	201,857			$	185,388		$	165,676			$	6,309			$	8,942		$	6,392
Service cost		983				4,846			4,944				6				65			89
Interest cost		2,109				10,176			11,705				60				388			438
Plan amendments		—				—			477				—				—			(129		)
Actuarial loss (gain)		5,792				8,935			11,282				313				(2,170		)	2,997
Benefits paid		(1,488		)		(7,488		)	(8,696		)		(135		)		(916		)	(845		)
Benefit obligation end of period		$	209,253			$	201,857		$	185,388			$	6,553			$	6,309		$	8,942
Change in plan assets
Fair value of plan assets beginning of period		$	189,923			$	165,929		$	189,823			$	—			$	—		$	—
Actual return (loss) on plan assets		4,428				29,975			(17,011		)		—				—			—
Company contributions		294				1,507			1,813				135				916			845
Benefits paid		(1,488		)		(7,488		)	(8,696		)		(135		)		(916		)	(845		)
Fair value of plan assets end of period		$	193,157			$	189,923		$	165,929			$	—			$	—		$	—
Funded status
Funded status end of period(1)		$	8,733						$	4,668			$	—						$	—
Unfunded status end of period(2)		(24,829		)					(24,127		)		(6,553		)					(8,943		)
Net unfunded status end of period		(16,096		)					(19,459		)		(6,553		)					(8,943		)
Unrecognized cost:
Net actuarial loss		4,314							47,449				312							5,709
Transition amount		—							(830		)		—							—
Prior service cost		—							3,319				—							(157		)
Net amount recognized		$	(11,782	)					$	30,479			$	(6,241	)					$	(3,391	)
Amounts recognized in the consolidated
balance sheets consist of:
Prepaid benefit cost		$	12,579						$	47,239			$	—						$	—
Accrued benefit cost		(24,361		)					(22,549		)		(6,241		)					(3,391		)
Intangible asset		—							341				—							—
Accumulated conprehensive income—pre-tax		—							5,448				—							—
Net amount recognized		$	(11,782	)					$	30,479			$	(6,241	)					$	(3,391	)

(1)Relates to all qualified pension plans

(2)Relates to all non-qualified pension and postretirement benefit plans

52

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During 2003, interest rates had not returned to the levels of prior years, which required us to change the discount rate assumption from 6.75% to 6.00% for the pension and postretirement plans. This increased the year-end benefit obligations and accounts for the majority of the amounts shown as 2003 actuarial loss.

In accordance with purchase accounting, we recognized the funding status of our pension and postretirement benefit plans as of July 29, 2003. At the end of 2003, the unrecognized net actuarial loss for pension benefits was $4.3 million.

The accumulated benefit obligation (ABO) for all defined benefit pension plans was $197.1 million and $174.1 million at the end of 2003 and 2002, respectively. The ABO differs from the benefit obligation shown in the table in that it includes no assumption about future compensation levels.

Non-qualified pension plans, included in the tables above, with obligations in excess of plan assets were as follows:

	Post-Merger			Pre-Merger
	2003			2002
	In thousands
Projected benefit obligation		$	24,829		$	24,127
Accumulated benefit obligation		23,578			22,549
Fair value of plan assets		—			—

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for one qualified plan with obligations in excess of plan assets at the end of 2002 were $88.1 million, $78.4 million and $87.3 million, respectively.

Net periodic benefit expense (income) of the pension and other postretirement benefit plans included the following components:

	Pension benefits
	Post-Merger				Pre-Merger
	Five Months 2003				Seven Months 2003				2002			2001
	In thousands
Service cost		$	983			$	4,846		$	4,944		$	4,690
Interest cost		2,109				10,176			11,705			10,900
Expected return on plan assets		(2,950		)		(16,973		)	(21,569		)	(19,838		)
Amortization of prior year service cost		—				1,548			1,837			1,868
Amortization of transition amount		—				(461		)	(714		)	(875		)
Amortization of net actuarial loss (gain)		—				439			(1,626		)	(2,518		)
Net periodic benefit expense (income)		$	142			$	(425	)	$	(5,423	)	$	(5,773	)

53

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Postretirement benefits
	Post-Merger			Pre-Merger
	Five Months 2003			Seven Months 2003				2002			2001
	In thousands
Service cost		$	6		$	65		$	89		$	66
Interest cost		60			388			438			372
Amortization of prior year service cost		—			(16		)	(7		)	(7		)
Amortization of net actuarial loss		—			232			186			—
Net periodic benefit expense		$	66		$	669		$	706		$	431

Assumptions

Weighted-average assumptions used to determine end of year benefit obligations are as follows:

	Pension benefits						Postretirement benefits
	2003			2002			2003			2002
Discount rate		6.00	%		6.75	%		6.00	%		6.75
Rate of compensation increase		6.30	%		6.30	%		—			—

Weighted-average assumptions used to determine net periodic benefit cost for the year are as follows:

	Pension benefits					Postretirement benefits
	2003			2002		2003			2002
Discount rate		6.75	%	7.25	%		6.75	%		7.25	%
Expected long-term rate of return on plan assets		9.50	%	10.00	%		—			—
Rate of compensation increase		6.30	%	6.30	%		—			—

Assumed health care cost trend rates are as follows:

	Postretirement benefits
	2003			2002
Health care cost trend rate assumed for next year		9.00	%		10.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		2007			2007

We employ a building block approach in determining the long-term rate of return for plan assets. Historical markets are studied and long-term historical relationships between equities and fixed income are preserved congruent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio return is established via a building block approach and proper consideration of diversification and rebalancing. Peer data and historical returns are reviewed to check for reasonability and appropriateness.

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JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. For 2003, a one percentage point change in the assumed health care cost trend rates would have the following effects:

	1% Increase			1% Decrease
	In thousands
Effect on total of service and interest cost components		$	32		$	29
Effect on postretirement benefit obligation		$	374		$	341

Plan Assets

Our weighted-average asset allocations for our pension plans as of the measurement date of 2003 and 2002, by asset category, are as follows:

Asset Category	2003		2002		Target
Equity securities	78.0	%	63.4	%	80.0	%
Debt securities	21.2	%	35.7	%	20.0	%
Real estate	—		—		—
Other	0.8	%	0.9	%	—
	100.0	%	100.0	%	100.0	%

We employ a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks as well as growth, value, and small and large capitalizations. Derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews.

Contributions

Our projected contributions include $1.8 million to our non-qualified pension plans and $0.8 million to our postretirement benefit plans in 2004. The actual amount of contributions is dependent upon the actual return on plan assets.

401(k) Plans

We have 401(k) savings plans, which cover substantially all salaried and hourly employees who have met the plans’ eligibility requirements. We provide a matching contribution on amounts contributed by employees, limited to a specific amount of compensation that varies among the plans. Our contribution was $1.6 million for the post-merger period in 2003, $2.7 million for the pre-merger period in 2003 and $4.4 million and $4.3 million in 2002 and 2001, respectively, which represents 50% of eligible employee contributions.

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JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.   Shareholder’s Deficit

Prior to the merger on July 29, 2003, our common stock consisted of Class A through Class E common stock as well as undesignated common stock. Holders of Class A common stock were entitled to one vote per share, whereas holders of Class D common stock were entitled to 306.55 votes per share. Holders of Class B common stock, Class C common stock and Class E common stock had no voting rights.

The par value and number of authorized, issued and outstanding shares as of the end of 2002 for each class of common stock is set forth below:

	Par value		Authorized shares		Issued and outstanding shares
	In thousands, except par value
Class A	$	.331¤3		4,200		2,825
Class B	$	.01		5,300		5,300
Class C	$	.01		2,500		811
Class D	$	.01		20		20
Class E	$	.01		1,900		—
Undesignated	$	.01		12,020		—
				25,940		8,956

14.   Stock Plans

Stock Options

In connection with the merger, all options to purchase our common stock that were outstanding immediately prior to the merger were cancelled and extinguished in consideration for an amount equal to the difference between the per- share merger consideration and the exercise price, resulting in an aggregate payment of $12.6 million included in “transaction costs” in the pre-merger period of 2003.

We did not grant any stock options in 2003. The weighted average fair value of options granted in 2002 and 2001 was $8.03 and $7.66 per option, respectively. We estimated the fair values using the Black-Scholes option-pricing model, modified for dividends and using the following assumptions:

	2002		2001
Risk-free rate	2.7	%	4.8	%
Dividend yield	—		—
Volatility factor of the expected market price of Jostens’ common stock	20	%	20	%
Expected life of the award (years)	7.0		7.0

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JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes stock option activity:

	Shares			Weighted- average exercise price
	Shares in thousands
Outstanding at December 30, 2000		531			$	25.25
Granted		73			25.25
Cancelled		(52	)		25.25
Outstanding at December 29, 2001		552			25.25
Granted		45			28.50
Cancelled		(41	)		25.29
Outstanding at December 28, 2002		556			25.51
Cancelled		(2	)		25.25
Settled for cash in the merger		(554	)		25.51
Outstanding at July 29, 2003		—			$	—

At the end of 2002, the weighted average remaining contractual life of the options was approximately 4.7 years and 111,570 options were exercisable.

Stock Loan Programs

In connection with the merger, the remaining stock loans issued in May 2000 to certain members of senior management to purchase shares of common stock were repaid together with accumulated interest. At the end of 2002, the outstanding balance of these loans was $1.6 million including accumulated interest and was classified as a reduction in shareholders’ equity (deficit) in our consolidated balance sheet.

15.   Business Segments

We manage our business on the basis of one reportable segment: the development, manufacturing and distribution of school-related affinity products.

Revenues are reported in the geographic area where the final sales to customers are made, rather than where the transaction originates. No single customer accounted for more than 10% of revenue in the post-merger and pre-merger periods of 2003 or in fiscal years 2002 or 2001.

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JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables present net sales by class of similar products and certain geographic information:

	Post-Merger		Pre-Merger
	Five Months		Seven Months
	2003		2003			2002		2001
	In thousands
Net sales by classes of similar products:
Yearbooks	$	94,429		$	229,041	$	318,451	$	299,856
Class rings	113,010			90,785		204,148		204,243
Graduation products	31,528			163,535		179,713		181,885
Photography	45,204			20,697		53,672		50,576
Consolidated	$	284,171		$	504,058	$	755,984	$	736,560
Net sales by geographic area:
United States	$	256,758		$	484,460	$	716,110	$	697,484
Other, primarily Canada	27,413			19,598		39,874		39,076
Consolidated	$	284,171		$	504,058	$	755,984	$	736,560
Net property and equipment and intangible assets by geographic area:
United States	$	1,490,666				$	77,217	$	78,394
Other, primarily Canada	5,606					3,160		3,556
Consolidated	$	1,496,272				$	80,377	$	81,950

16.   Discontinued Operations

In December 2001, our Board of Directors approved a plan to exit our former Recognition business in order to focus our resources on our core school-related affinity products business. Prior to the end of 2001 and in connection with our exit, we sold certain assets of the Recognition business to a supplier who manufactures awards and trophies. We received cash proceeds in the amount of $2.5 million and non-cash proceeds of $0.8 million in the form of a promissory note that was paid in 2002. The results of the Recognition business are reflected as discontinued operations in our consolidated statement of operations for all periods presented.

Revenue and loss from discontinued operations were as follows:

	2002			2001
	In thousands
Revenue from external customers	$	—		$	55,913
Pre-tax loss from operations of discontinued operations before measurement date	—			(9,036		)
Pre-tax gain (loss) on disposal	2,708			(27,449		)
Income tax (expense) benefit	(1,071		)	14,045
Gain (loss) on discontinued operations	$	1,637		$	(22,440	)

During 2001, the results of discontinued operations encompassed the period through the December 3, 2001 measurement date. The $27.4 million pre-tax loss on disposal of the discontinued business consisted

58

JOSTENS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

of a non-cash charge of $11.1 million to write off certain net assets of the Recognition business plus a $16.3 million charge for accrued costs related to exiting the Recognition business.

During 2002, we reversed $2.3 million of the accrued charges based on our revised estimates for employee separation costs and phase-out costs. Of the total adjustment, $0.5 million resulted from modifying our anticipated workforce reduction from 150 to 130 full-time positions and $1.8 million resulted from lower information systems, customer service and internal support costs and lower receivable write-offs than originally anticipated. In addition, we reversed $0.4 million in other liabilities for a total pre-tax gain on discontinued operations of $2.7 million ($1.6 million net of tax). Components of the accrued disposal costs, which are included in “current liabilities of discontinued operations” in our consolidated balance sheet, are as follows:

									Utilization											Balance
	Initial charge		Prior accrual		Net adjustments				Prior periods			Pre-Merger 2003				Post-Merger 2003				end of 2003
	In thousands
Employee separation benefits and other related costs	$	6,164	$	—		$	(523	)	$	(5,109	)		$	(156	)		$	—		$	376
Phase-out costs of exiting the Recognition business	4,255		—			(1,365		)	(2,591		)		(72		)		(7		)	220
Salesperson transition benefits	2,855		1,236			(191		)	(767		)		(688		)		(252		)	2,193
Other costs related to exiting the Recognition business	3,018		1,434			(228		)	(4,224		)		—				—			—
	$	16,292	$	2,670		$	(2,307	)	$	(12,691	)		$	(916	)		$	(259	)	$	2,789

Our obligation for separation benefits continues through 2004 over the benefit period as specified under our severance plan, and transition benefits will continue to be paid through the period of our statutory obligations.

17.   Special Charges

During 2001, we recorded special charges totaling $2.5 million. We incurred costs of $2.1 million for severance and related separation benefits in connection with the departure of a senior executive and two other management personnel. In addition, we elected to terminate our joint venture operations in Mexico City, Mexico and took a charge of $0.4 million, primarily to write off the net investment. We utilized $2.3 million of the aggregate special charge in 2001, less than $0.1 million in 2002 and the remaining balance in the post-merger period of 2003.

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ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

In October 2003, we engaged Ernst & Young LLP (“E&Y”) as our new independent accountants, and dismissed PricewaterhouseCoopers LLP (“PwC”), which had previously served as our independent accountants. The Board of Directors participated in and approved the decision to change independent accountants.

The reports of PwC on the consolidated financial statements as of and for the fiscal years ended December 28, 2002 and December 29, 2001 contained no adverse opinion or disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope or accounting principles. In connection with its audits as of and for the aforementioned periods, there have been no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused them to make reference to the subject matter in connection with their reports on the consolidated financial statements for such years, other than those described in the next paragraph.

On March 1, 2001, PwC communicated to the Audit Committee disagreements with management concerning the application of accounting principles to our consolidated financial statements. These disagreements related to (i) the methods of accounting for, and recording of, losses related to an investment in another entity and (ii) the application of Staff Accounting Bulletin (SAB) 101 to certain product sales. These disagreements were satisfactorily resolved.

During the fiscal years ended December 28, 2002 and December 29, 2001, and through October 13, 2003, the date that we engaged E&Y, there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K other than those described in the next paragraph.

On March 1, 2001, PwC communicated to the Audit Committee and to management a significant deficiency in our internal control systems, attributable primarily to our process for establishing the initial accounting methodology used for our investments in other entities as well as our process for our on-going analysis of the accounting for such investments, including accounting for our share of any losses generated by these entities. This deficiency was corrected.

The Audit Committee has discussed the exceptions indicated above with PwC and we have authorized PwC to respond fully to any inquiries from E&Y concerning these matters.

We provided PwC with a copy of the disclosures in the preceding paragraphs. A letter from PwC to the Securities and Exchange Commission dated October 15, 2003 stating its agreement with these statements was attached to a Form 8-K, which we filed on October 20, 2003 to disclose our change in certifying accountants.

During the fiscal years ended December 28, 2002 and December 29, 2001, and through October 13, 2003, we did not consult E&Y with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, or any other matters or reportable events as set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

ITEM 9A.CONTROLS AND PROCEDURES

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

60

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

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

PART III

ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Executive officers and directors of Jostens as of February 29, 2004 are as follows:

Name	Age	Title
Robert C. Buhrmaster	56	Chairman of the Board and Chief Executive Officer
Michael L. Bailey	48	President
John L. Larsen	46	Senior Vice President of Operations
David A. Tayeh	37	Senior Vice President and Chief Financial Officer
Andrew W. Black	41	Vice President and Chief Information Officer
Steven A. Tighe	52	Vice President—Human Resources
Paula R. Johnson	56	Vice President, General Counsel and Corporate Secretary
Marjorie J. Brown	49	Vice President and Treasurer
Timothy M. Wolfe	43	Vice President of Sales
Timothy M. Larson	30	Vice President of Marketing
Carl H. Blowers	64	Director
David F. Burgstahler	35	Director
John W. Castro	55	Director
Thomas R. Nides	43	Director
James A. Quella	54	Director
Marc L. Reisch	48	Director
Lawrence M. Schloss	49	Director
David M. Wittels	39	Director

Robert C. Buhrmasterjoined Jostens in December 1992 as Executive Vice President and Chief Staff Officer. He was named President and Chief Operating Officer in June 1993; was named Chief Executive Officer in March 1994; and was named Chairman in February 1998. Prior to joining Jostens, Mr. Buhrmaster worked for Corning, Inc. for 18 years, most recently as Senior Vice President. He is also a director of The Toro Company.

Michael L. Baileyjoined Jostens in 1978. He has held a variety of leadership positions, including director of marketing, planning manager for manpower and sales, national product sales director, division manager for printing and publishing, printing operations manager and Senior Vice President—Jostens School Solutions. He was appointed to his current position in February 2003.

John L. Larsenjoined Jostens in January 1998 as Director of Corporate Development. He was named to his current position in September 2003. From June 1994 to December 1997, Mr. Larsen was a director in the Corporate Finance group with Arthur Andersen LLP in Minneapolis.

David A. Tayehjoined Jostens in November 2003 in his current position. Mr. Tayeh was an executive of Investcorp S.A. or one or more of its wholly owned subsidiaries from February 1999 to November 2003.

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Prior to joining Investcorp, Mr. Tayeh was a Vice President in investment banking at Donaldson, Lufkin & Jenrette.

Andrew W. Blackjoined Jostens in September 2000 in his current position. Prior to joining Jostens, Mr. Black spent six years with Target Corporation where his most recent position was Information Systems Director.

Steven A. Tighejoined Jostens in September 2000 in his current position. From January to September 2000, Mr. Tighe was Vice President of Human Resources at RealNetworks. From June 1997 to January 2000, Mr. Tighe was Senior Vice President of Human Resources, Communications & Corporate Services at Fortis Health.

Paula R. Johnsonjoined Jostens in September 2001 in her current position. Prior to joining Jostens, Ms. Johnson spent 20 years with Honeywell Inc. in a variety of positions of increasing responsibility. Ms. Johnson was named a Vice President of Honeywell in 1994, and most recently was Vice President and Associate General Counsel—Home Building Control.

Marjorie J. Brownjoined Jostens in January 1998. She served as Business Controller until December 2000 when she became Division Vice President/Controller. She was appointed to her current position in September 2003.

Timothy M. Wolfejoined Jostens in October 1995. He served as Manager-Division Sales from October 1995 to March 2000. From March 2000 to September 2003, Mr. Wolfe served as Division Vice President—Sales. He was appointed to his current position in October 2003.

Timothy M. Larsonjoined Jostens in July 1996. He has held a variety of marketing positions including Director of Marketing, Vice President of E-Commerce, and Division Vice President—Marketing. He was appointed to his current position in October 2003.

Carl H. Blowershas been one of our directors since January 2003. Mr. Blowers joined Jostens in May 1996 as an independent consultant serving as Division Vice President—Manufacturing & Engineering and was hired as an employee in 1997. He was appointed to Senior Vice President—Manufacturing in February 1998, appointed as Vice Chairman for Operations and Technology in February 2003 and retired from Jostens in September 2003.

David F. Burgstahlerhas been one of our directors since June 2003. Mr. Burgstahler is a Director of Credit Suisse First Boston LLC (“CSFB”) and Principal of DLJ Merchant Banking. Mr. Burgstahler joined CSFB in 2000 when it merged with DLJ, where he was a Vice President of DLJ Merchant Banking from 1999 to 2001 and an associate from 1995 to 1999. Mr. Burgstahler also serves as a director of Focus Technologies, Inc., Von Hoffmann Corporation and WRC Media, Inc.

John W. Castrohas been one of our directors since November 2003. Mr. Castro has been the President and Chief Executive Officer of Merrill Corporation since 1984 and a member of the Board of Directors since 1981. Mr. Castro also serves as a director of Minnesota Life Insurance Company.

Thomas R. Nideshas been one of our directors since July 2003. Mr. Nides currently serves as Chief Administrative Officer of CSFB and he is a member of the Executive Board and Operating Committee. Mr. Nides joined CSFB in August 2001 from Fannie Mae, a large non-bank financial services company where he was a Senior Vice President. Mr. Nides took a leave of absence to become campaign manager for Vice Presidential nominee Senator Joseph Lieberman. Prior to Fannie Mae, Mr. Nides was employed as a principal with Morgan Stanley.

James A. Quellahas been one of our directors since July 2003. Mr. Quella joined the Private Equity Group of CSFB in July 2000 as a Managing Director and Senior Operating Partner. Immediately prior to joining CSFB, he was a Managing Director of GH Venture Partners. From 1990 to 1999, Mr. Quella

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worked at Mercer Management Consulting, where he served as a senior consultant and became Vice Chairman in 1997. Mr. Quella was also a director of Mercer Consulting Group. Mr. Quella currently serves as a director of Advanstar, Inc., Advanstar Communications, Inc., DeCrane Aircraft Holdings, Inc., DeCrane Holdings, Co., Merrill Corporation and Von Hoffman Press, Inc. In March 2004, Mr. Quella resigned as one of our directors. We have no immediate plans to replace him.

Marc L. Reischhas been one of our directors since November 2003. Mr. Reisch is a Senior Advisor to Kohlberg Kravis Roberts & Co. and was appointed Chairman of the Board of Yellow Pages Group Co. in December 2002. Prior to his current position, Mr. Reisch was Chairman and Chief Executive Officer of Quebecor World North America between August 1999 and September 2002. Prior to holding that position, he held the position of President of World Color Press, Inc. since November 1998 and Group President since 1996. Mr. Reisch also serves on the board of directors of FIND/SVP, Inc.

Lawrence M. Schlosshas been one of our directors since July 2003. Mr. Schloss has been the Global Head of Private Equity for CSFB since CSFB’s merger with DLJ in the Fall of 2000. Prior to that time and since 1985, upon the formation of DLJ’s Merchant Banking Group, Mr. Schloss was Managing Director of DLJ. Mr. Schloss became the head of the Merchant Banking Group in 1995 and the chairman in 1998, in which capacity he served until DLJ’s merger with CSFB. Mr. Schloss also serves as Chairman of the Board of Directors of Merrill Corporation. In March 2004, Mr. Schloss resigned as one of our directors. We have no immediate plans to replace him.

David M. Wittelshas been one of our directors since June 2003. Mr. Wittels, a Managing Director at CSFB, joined DLJ in 1986, where he served in various capacities with DLJ Merchant Banking, and joined CSFB following the merger between CSFB and DLJ in 2000. Mr. Wittels serves on the board of directors of Advanstar, Inc., Advanstar Communications Inc., AKI Holding Corp., AKI Inc., Mueller Holdings (N.A.) Inc., and Ziff Davis Holdings Inc.

Audit Committee

The Audit Committee of our Board of Directors is comprised of Messrs. Reisch, Burgstahler and Wittels. The Board of Directors has determined that Mr. Reisch qualifies as an audit committee financial expert. Our Board of Directors has further determined that Mr. Reisch qualifies as an independent director as that term is used in Schedule 14A of the Securities Exchange Act of 1934, as amended.

Code of Ethics

We have a general code of ethics, which has been in effect for many years, that applies to all of our employees, including the Chief Executive Officer and Chief Financial Officer, as well as our independent sales representatives and vendors. It was updated in 2003. We regularly review our code of ethics and amend it as necessary to be in compliance with current law. You may obtain a copy of our code of ethics free of charge by writing to us at the address set forth on the cover page of this annual report on Form 10-K.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Officers and directors of Jostens are not subject to Section 16(a) reporting requirements.

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ITEM 11.EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the cash and non-cash compensation for 2003, 2002 and 2001 awarded to or earned by the Chief Executive Officer, four other most highly compensated executive officers and one former executive officer of Jostens.

						Long-term Compensation
		Annual Compensation				Awards		Payouts
Name and principal position	Year	Salary		Bonus(1)		Securities underlying options		LTIP payouts(2)		All other compensation(3)
Robert C. Buhrmaster,	2003	$	650,942	$	270,270		—	$	—		$	6,671,480
Chairman of the Board	2002	611,711		381,542			—	—			—
and Chief Executive Officer	2001	593,654		264,040			—	—			—
Michael L. Bailey,	2003	$	327,859	$	109,800		—	$	—		$	1,831,640
President	2002	283,346		159,787			—	—			64,628
	2001	277,633		100,828			—	—			—
David A. Tayeh,	2003	$	31,848	$	443,342		—	$	—		$	—
Senior Vice President	2002	—		—			—	—			—
and Chief Financial Officer(4)	2001	—		—			—	—			—
Steven A. Tighe,	2003	$	219,122	$	58,670		—	$	—		$	346,112
Vice President—Human Resources	2002	209,002		86,192			5,000	60,000			60,942
	2001	204,039		53,559			6,000	—			31,994
Andrew W. Black,	2003	$	219,109	$	56,202		—	$	—		$	350,026
Vice President	2002	209,002		86,044			5,000	120,000			45,292
and Chief Information Officer	2001	204,039		53,559			6,000	—			—
Carl H. Blowers	2003	$	258,558	$	81,156		—	$	—		$	1,111,925
Vice Chairman—Operations	2002	345,998		191,636			—	—			—
and Technology(5)	2001	332,448		126,031			—	—			—

(1)Amounts in 2003 include payments under the Management Incentive bonus program as follows: Mr. Buhrmaster: $270,270; Mr. Bailey: $101,170; Mr. Tayeh: $142,500; Mr. Tighe: $52,902; Mr. Black: $50,420; and Mr. Blowers: $73,365. Amount in 2003 for Mr. Tayeh also includes a signing bonus of $300,000. Amounts in 2002 include payments under the Management Incentive bonus program as follows: Mr. Buhrmaster: $381,542; Mr. Bailey: $145,223; Mr. Tighe: $75,449; Mr. Black: $75,301 and Mr. Blowers: $173,852. Amounts in 2001 include payments under the Management Incentive bonus program as follows: Mr. Buhrmaster: $264,040; Mr. Bailey: $92,777; Mr. Tighe: $47,642; Mr. Black: $47,642 and Mr. Blowers: $116,390.

(2)Amounts in 2002 include payments upon termination of a long-term incentive plan.

(3)Amounts in 2003 include cancellation of stock options in connection with the merger for consideration of $48.25 per share as follows: Mr. Buhrmaster: $6,671,480; Mr. Bailey: $1,779,066; Mr. Tighe: $298,808; Mr. Black: $298,808; and Mr. Blowers: $1,111,925. Amounts in 2003 also include miscellaneous perquisites including use of the corporate jet as follows: Mr. Bailey: $28,780; Mr. Tighe: $21,752 and Mr. Black: $28,006; and automobile reimbursement as follows: Mr. Tighe: $13,073; and Mr. Black: $13,075. Amounts in 2002 include miscellaneous perquisites including use of the corporate jet as follows: Mr. Bailey $41,737; Mr. Tighe: $37,274 and Mr. Black: $24,070. In 2002, Mr. Black also

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received $13,075 for automobile reimbursement. In 2001, Mr. Tighe received miscellaneous perquisites, including $12,608 for automobile reimbursement.

(4)Mr. Tayeh joined Jostens in his current position in November 2003.

(5)Mr. Blowers resigned as an officer of Jostens in September 2003.

Report of the Compensation Committee

We have a Compensation Committee consisting of Messrs. Buhrmaster, Castro and Wittels. This committee is responsible for making recommendations to the Board of Directors concerning executive compensation. The Compensation Committee takes into consideration a number of factors in setting compensation, including the overall performance of the company, individual achievements made by each officer and comparable wages in the industry.

Option Grants in the Last Fiscal Year

The Management Stock Incentive Plan established in May 2000, was terminated in July 2003. No options were granted under this plan during 2003. In connection with the merger, all options to purchase Jostens’ common stock that were outstanding immediately prior to the merger were cancelled and extinguished in consideration for an amount equal to the difference between the per share merger consideration and the exercise price.

The Board of Directors of Jostens Holding Corp. has approved the 2003 Stock Incentive Plan. The plan allows for a total of 298,023 options for shares of Jostens Holding Corp. Class B Non-Voting Stock to be granted at the current market value. No options were granted under this plan during 2003.

Compensation Committee Interlocks and Insider Participation

Of the three members of our Compensation Committee, only Mr. Buhrmaster served as an officer of Jostens during 2003.

Management Employment Arrangements

Management Bonus Arrangements

We maintain a Management Shareholder Bonus Plan providing for an annual bonus to be paid to the named executive officers based upon achievements of specific operating targets. Mr. Buhrmaster is entitled to a standard bonus as determined by the Compensation Committee. No bonus shall be paid to Mr. Buhrmaster if Jostens fails to achieve specified performance levels. Messrs. Bailey, Tayeh, Tighe and Black are entitled to a standard bonus as determined by the Chief Executive Officer and approved by the Board of Directors. Similarly, no bonus shall be paid to them if Jostens fails to achieve specified minimum performance levels.

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Executive Severance Pay Plan

In 1999, we implemented the Jostens’ Executive Severance Pay Plan, which was amended effective February 2003 and entitled the Jostens, Inc. Executive Severance Pay Plan—2003 Revision (the “Plan”). The primary purpose of the Plan is to provide severance benefits for our Chief Executive Officer and other members of management or highly compensated employees that are selected by our Chief Executive Officer, whose employment is terminated pursuant to a qualifying termination (as defined in the Plan). The amount of severance benefits received by a particular employee is based upon the employee’s position in Jostens. The range of severance benefits is from nine months to thirty months of salary and would be paid in a lump sum upon termination. Plan participants are also eligible to receive their annual incentive award on a pro-rated basis provided that the participant’s termination date is after the fourth month of our fiscal year end. In addition, participants are eligible to receive reimbursement for COBRA premiums and continuation of their perquisites.

Retirement Plans

We maintain a non-contributory pension plan, Pension Plan D (“Plan D”), which provides benefits for substantially all salaried employees. Retirement income benefits are based upon a participant’s highest average annual cash compensation (base salary plus annual bonus, if any) during any five consecutive calendar years, years of credited service (to a maximum of 35 years) and the Social Security-covered compensation table in effect at termination.

We also maintain an unfunded supplemental retirement plan that gives additional credit under Plan D for years of service as a Jostens sales representative to those salespersons who were hired as employees of Jostens prior to October 1, 1991. In addition, benefits specified in Plan D may exceed the level of benefits that may be paid from a tax-qualified plan under the Internal Revenue Code of 1986, as amended. The benefits up to IRS limits are paid from Plan D and benefits in excess, to the extent they could have been earned in Plan D, are paid from the unfunded supplemental plan.

The executive officers participate in pension plans maintained by us for certain employees. The following table shows estimated annual retirement benefits payable for life at age 65 for various levels of compensation and service under these plans. The table does not take into account transition rule provisions of the plan for employees who were participants on June 30, 1988.

Averagefinal	Years of service at retirement(1)
compensation	15		20		25		30		35
$   200,000	$	37,900	$	50,500	$	63,100	$	75,700	$	88,300
250,000	49,100		65,500		81,900		98,200		114,600
300,000	60,400		80,500		100,600		120,700		140,800
400,000	82,900		110,500		138,100		165,700		193,300
500,000	105,400		140,500		175,600		210,700		245,800
600,000	127,900		170,500		213,100		255,700		298,300
700,000	150,400		200,500		250,600		300,700		350,800
800,000	172,900		230,500		288,100		345,700		403,300
900,000	195,400		260,500		325,600		390,700		455,800
1,000,000	217,900		290,500		363,100		435,700		508,300
1,100,000	240,400		320,500		400,600		480,700		560,800
1,200,000	262,900		350,500		438,100		525,700		613,300
1,250,000	274,100		365,500		456,900		548,200		639,600

(1)The following individuals named in the Summary Compensation Table have the respective number of years of service under Plan D: Mr. Buhrmaster, 11.1 years; Mr. Bailey, 25.5 years including sales service of 6.5 years; Mr. Tayeh, 0.2 years; Mr. Tighe, 3.3 years and Mr. Black, 3.3 years.

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We also maintain a non-contributory supplemental pension plan for corporate vice presidents. Under the plan, vice presidents who retire after age 55 with at least seven full calendar years of service as a corporate vice president are eligible for a benefit equal to 1% of final base salary for each full calendar year of service, up to a maximum of 30%. Only service after age 30 is recognized in the plan. The calculation of benefits is frozen at the levels reached at age 60. In connection with the merger, vesting in this plan was accelerated for Messrs. Bailey, Tighe and Black. At their current levels of compensation, and if they retire at age 60, the estimated total annual pension amounts from this plan for Messrs. Buhrmaster, Bailey, Tighe and Black would be $95,875, $59,272, $24,117 and $48,117, respectively. If Mr. Tayeh continues in his current position at his current level of compensation and retires at age 60, the estimated total annual pension amounts from this plan would be $69,113.

Directors Fees

Three non-employee directors, Messrs. Blowers, Reisch and Castro, receive annual directors fees of $75,000, $50,000 and $25,000, respectively. We do not pay any remuneration to our other directors for serving as directors.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

We are authorized to issue shares of one class of common stock, with a par value of $.01 per share. All of the outstanding shares of Jostens, Inc. are owned by Jostens IH Corp.

Our indirect parent company, Jostens Holding Corp., is authorized to issue two classes of common stock, consisting of Class A Voting Common Stock and Class B Non-Voting Common Stock, each with a par value of $0.01 per share. The following table sets forth certain information regarding the beneficial ownership of Jostens Holding Corp. Class A Voting Common Stock and Class B Non-Voting Common Stock:

	Common stock beneficially owned		Percentage of class outstanding
Class A Voting Common Stock
DLJ Merchant Banking Partners III, L.P.		416,305		82.5	%
Robert C. Buhmaster		3,125		0.6	%
Carl H. Blowers		781		0.2	%
Michael L. Bailey		678		0.1	%
All directors and executive officers as a group		4,584		0.9	%
Class B Non-Voting Common Stock
DLJ Merchant Banking Partners III, L.P.		2,248,052		82.5	%
Robert C. Buhmaster		16,875		0.6	%
Carl H. Blowers		4,219		0.2	%
Michael L. Bailey		3,665		0.1	%
All directors and executive officers as a group		24,759		0.9	%

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ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Stockholders’ Agreement

On July 29, 2003, Jostens Holding Corp., the DLJMB Funds and members of management who own stock of Jostens Holding Corp. entered into a stockholders’ agreement that sets forth certain rights and restrictions relating to the ownership of Jostens Holding Corp. common stock, and agreements among those parties as to the governance of Jostens Holding Corp. and, indirectly, of Jostens, Inc.

The agreement contains provisions which, among other things and subject to certain exceptions: (i) restrict the ability of the management stockholders to transfer their respective ownership interests; (ii) grant pro rata tag-along rights to management stockholders for the DLJMB Funds sales above 10% of the DLJMB Funds’ initial ownership; (iii) grant certain drag-along rights to the DLJMB Funds to require the management stockholders to sell their shares, pro rata, alongside the DLJMB Funds, if the DLJMB Funds sell more than 50% of the number of shares of Jostens Holding Corp.’s common stock held by the DLJMB Funds as of the date of the agreement; and (iv) grant to management stockholders certain preemptive rights and piggyback registration rights.

Jostens Holding Corp. or its designee has the right to repurchase all shares owned by any management stockholder upon the termination of such management stockholder’s employment with Jostens Holding Corp. Additionally, the DLJMB Funds were granted demand registration rights. This agreement was negotiated on an arm’s length basis.

Stock Purchase and Stockholders’ Agreement

On September 3, 2003, Jostens Holding Corp., JIHC, the DLJMB Funds and certain of its co-investors entered into a stock purchase and stockholders’ agreement pursuant to which the DLJMB Funds sold to such co-investors shares of: (i) Jostens Holding Corp. Class A Voting Common Stock, (ii) Jostens Holding Corp. Class B Non-Voting Common Stock and (iii) JIHC’s 8% Senior Redeemable Preferred Stock, which has since been repurchased.

The stock purchase and stockholders’ agreement contains provision which, among other things and subject to certain exceptions: (i) restrict the ability of the co-investors to transfer their respective ownership interest; (ii) grant pro rata tag-along rights to co-investors for the DLJMB Funds sales above 10% of the DLJMB Funds’ initial ownership; (iii) grant certain drag-along rights to the DLJMB Funds to require the co-investors to sell their shares, pro rata, alongside the DLJMB Funds, if the DLJMB Funds sell more than 50% of the number of shares of Jostens Holding Corp.’s or JIHC’s stock held by the DLJMB Funds as of the date of the agreement, and (iv) grant the co-investors certain preemptive rights and piggyback registration rights.

Advisory Agreements

On July 28, 2003, Ring Acquisition Corp. (“Mergerco”), which merged with and into Jostens on July 29, 2003, entered into a letter agreement with DLJ Merchant Banking III, Inc. (“DLJ”), an affiliate of the DLJMB Funds, in which Mergerco agreed to pay DLJ a fee of $9.0 million, subject to the consummation of the merger, for services provided by DLJ to Mergerco, including assisting Mergerco in its financial and structural analyses, due diligence investigations and negotiation of the merger and related debt financing.

On July 28, 2003, Mergerco entered into a letter agreement with CSFB in which Mergerco agreed to pay CSFB a fee of $1.0 million, payable upon consummation of the merger, for financial advisory services provided by CSFB to Mergerco, including evaluating Mergerco’s capital structure, analyzing financing strategies and developing an overall financing package, including a potential restructuring of its long-term debt and possible strategic alternatives.

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Lease Agreements

We have entered into an aircraft lease agreement with Jostens Holding Corp., our indirect parent, pursuant to which we shall pay Jostens Holding Corp. an aggregate of $449,400 per year, plus the cost of operation, for use of a Citation CJ2 aircraft owned by Jostens Holding Corp. We have also entered into a time-sharing agreement with each of DLJ Merchant Banking III, Inc. and Mr. Buhrmaster, pursuant to which they will respectively, from time to time sublease the Citation CJ2 from us at a rate equal to twice our cost of fuel plus incidentals.

KA Rentals, an entity wholly owned by Mr. Buhrmaster, our Chief Executive Officer, has agreed to make the aircraft that it owns available to us for lease when our principal aircraft is not available. We paid KA Rentals an aggregate of $82,843 during 2003 for use of the aircraft under this lease arrangement. We believe that the lease arrangement with KA Rentals is on terms at least as favorable to us as could have been obtained from an unaffiliated third party.

Financial Monitoring Agreements

As of July 29, 2003, we entered into a financial advisory agreement with CSFB, which we terminated on March 24, 2004. Pursuant to this agreement, CSFB had been retained to act as financial advisor for a five-year period, unless terminated earlier. Under this agreement, CSFB, among other things, was to assist us in (i) analyzing our operations and historical performance; (ii) analyzing future prospects; and (iii) preparing a strategic plan for the company. For its services, CSFB was entitled to receive an annual financial advisory retainer of $0.5 million, payable in installments at the beginning of each calendar quarter. As contemplated by the agreement, we agreed to indemnify CSFB against specified losses or liability arising out of, or in connection with, advice and services rendered under the agreement.

As of July 29, 2003, we entered into a financial advisory agreement with DLJ, which was further amended as of March 24, 2004. Pursuant to this agreement, DLJ has been retained to act as financial advisor for a five-year period, unless terminated earlier. Under this agreement, DLJ, among other things, shall provide us with certain monitoring services. For its services, DLJ is entitled to receive an annual financial advisory retainer of $1.0 million, payable in installments, at the beginning of each calendar quarter. DLJ shall further receive an annual credit to be used solely to offset amounts payable by DLJ to us pursuant to the time-sharing agreement in an amount of up to $0.5 million. As contemplated by the agreement, we have agreed to indemnify DLJ against specified losses or liability arising out of, or in connection with, advice and services rendered under the agreement.

Other

An affiliate of CSFB is the administrative agent under the new senior secured credit facility for which it has received and will receive in the future certain customary fees and expenses.

Pursuant to an agreement with Jostens Holdings Corp., Messrs. Buhrmaster, Bailey and Blowers exchanged shares in Jostens, Inc. for shares of Jostens Holding Corp.

In connection with the merger, the remaining stock loans issued in May 2000 to certain members of senior management to purchase shares of common stock were repaid together with accumulated interest.

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ITEM 14.   PRINCIPAL ACCOUNTANTS FEES AND SERVICES

Audit Fees

Ernst & Young LLP (“E&Y”) has been engaged as our independent accountant since October 13, 2003. The aggregate fees billed to us by E&Y during 2003 were $259,725. Prior to October 13, 2003, PricewaterhouseCoopers LLP (“PwC”) was engaged as our independent accountant. The aggregate fees billed to us by PwC during 2003 and 2002 were $32,000 and $229,730, respectively. Such fees represent audits of our annual consolidated financial statements and reviews of our quarterly consolidated financial statements.

Audit-Related Fees

The aggregate fees billed to us by E&Y for audit-related services during 2003 were $925, related primarily to accounting and financial reporting consultation. The aggregate fees billed to us by PwC for audit-related services during 2003 and 2002 were $968,838 and $56,261, respectively, related primarily to audits of pension and other employee benefit plan financial statements and professional advisory fees in connection with the merger.

Tax Fees

The aggregate fees billed to us by E&Y for tax services rendered during 2003 and 2002 were $1,090,933 and $997,595, respectively, related primarily to tax compliance, including the preparation of and assistance with federal, state and local income tax returns, sales and use tax filings, foreign and other tax compliance. The aggregate fees billed to us by PwC for tax services rendered during 2003 and 2002 were $76,410 and $338,142, respectively, related primarily to domestic and foreign tax planning and other consulting services.

All Other Fees

The aggregate fees billed to us by E&Y for all other services rendered during 2003 and 2002 were $2,000 and $7,925, respectively. The aggregate fees billed to us by PwC for all other services rendered during 2003 and 2002 were $20,200 and $26,000, respectively. These fees were for other professional research and consultation services.

Audit Committee

The Audit Committee makes recommendations concerning the engagement of independent public accountants, reviews with the independent public accountants the scope and results of the audit engagement, approves professional services provided by the independent accountants, reviews the independence of the independent public accountants, considers the range of audit and non-audit fees and reviews the adequacy of our internal accounting controls.

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PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)	List of documents filed as part of this report:
	(1)	Financial Statements
		Report of Independent Auditors
		Consolidated Statements of Operations for the period from July 30, 2003 to January 3, 2004 (post-merger, five months), the period from December 29, 2002 to July 29, 2003 (pre-merger, seven months) and the fiscal years ended December 28, 2002 and December 29, 2001
		Consolidated Balance Sheets as of January 3, 2004 and December 28, 2002
		Consolidated Statements of Cash Flows for the period from July 30, 2003 to January 3, 2004 (post-merger, five months), the period from December 29, 2002 to July 29, 2003 (pre-merger, seven months) and the fiscal years ended December 28, 2002 and December 29, 2001
		Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the period from July 30, 2003 to January 3, 2004 (post-merger, five months), the period from December 29, 2002 to July 29, 2003 (pre-merger, seven months) and the fiscal years ended December 28, 2002 and December 29, 2001
		Notes to Consolidated Financial Statements
	(2)	Financial Statement Schedules
		Report of Independent Auditors
		Schedule II Valuation and Qualifying Accounts
		All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
	(3)	Exhibits
		2.1	Agreement and Plan of Merger by and among Ring Holding Corp., Ring Acquisition Corp. and Jostens, Inc., dated as of June 17, 2003, incorporated by reference to Jostens’ Report on Form 8-K filed June 30, 2003.
		3.1	Form of Amended and Restated Articles of Incorporation of Jostens, Inc., incorporated by reference to Exhibit 3.1 contained in Jostens’ Report on Form 10-Q for the quarterly period ended September 27, 2003.
		3.2	Certificate of Designation, effective May 10, 2000, of the Powers, Preferences and Rights of the 14% Senior Redeemable Payment-In-Kind Preferred Stock, and Qualifications, Limitations and Restrictions Thereof, incorporated by reference to Exhibit 4.3 contained in Jostens’ Report on Form 8-K filed May 25, 2000.
		3.3	Bylaws of Jostens, Inc. incorporated by reference to Exhibit 3.2 contained in Jostens’ Report on Form 10-Q for the quarterly period ended July 3, 1999.
		4.1	Indenture, dated as of May 10, 2000, including therein the form of Note, between Jostens, Inc. and The Bank of New York, as Trustee, providing for 12.75% Senior Subordinated Notes due 2010, incorporated by reference to Exhibit 4.1 contained in Jostens’ Report on Form 8-K filed May 25, 2000.

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10.1	Credit Agreement, dated as of July 29, 2003 by and among Ring Acquisition Corp. and Jostens Canada Ltd. as borrowers, Jostens IH Corp. as guarantor, the Lenders party thereto, Credit Suisse First Boston Toronto Branch as Canadian Administrative Agent, and Credit Suisse First Boston as Administrative Agent, incorporated by reference to Exhibit 10.1 contained in Jostens Report on Form 10-Q for the quarterly period ended September 27, 2003.
10.2	Stockholders’ Agreement, dated as of July 29, 2003, among Jostens Holding Corp. and the stockholders party thereto incorporated by reference to Exhibit 10.2 contained in Jostens Report on Form 10-Q for the quarterly period ended September 27, 2003.
10.3	Purchase Agreement, dated May 10, 2000, for 14% Senior Redeemable Payment-In-Kind Preferred Stock with Warrants to Purchase Shares of Class E Common Stock, between Jostens, Inc. and DB Capital Investors, L.P., incorporated by reference to Exhibit 4.6 contained in Jostens’ Report on Form 8-K filed May 25, 2000.
10.4	Jostens Holding Corp. 2003 Stock Incentive Plan, effective October 30, 2003.*
10.5	Management Shareholder Bonus Plan established by Credit Agreement incorporated by reference to Exhibit 10.26 contained in Jostens’ registration statement on Form S-4 filed April 7, 2000.*
10.6	Jostens, Inc. Executive Change in Control Severance Pay Plan, effective January 1, 1999, incorporated by reference to Exhibit 10.8 contained in Jostens’ Annual Report on From 10-K for 1998.*
10.7	Jostens, Inc. Executive Change in Control Severance Pay Plan First Declaration of Amendment, effective August 1, 1999, incorporated by reference to Exhibit 10.10 contained in Jostens’ Report on Form 10-Q for the quarterly period ended October 2, 1999.*
10.8	Form of Contract entered into with respect to Executive Supplemental Retirement Plan incorporated by reference to Jostens’ registration statement on Form 8 dated May 2, 1991.*
10.9	Jostens, Inc. Executive Severance Pay Plan—2003 Revision, effective February 26, 2003.*
10.10	Aircraft Lease Agreement between Jostens Holding Corp. and Jostens, Inc., effective March 15, 2004.
10.11	Time-Sharing Agreement between Jostens, Inc. and DLJ Merchant Banking III, Inc., effective March 15, 2004.
10.12	Time-Sharing Agreement between Jostens, Inc. and Robert C. Buhrmaster, effective March 15, 2004.
10.13	Financial Advisory Agreement, as amended, between Jostens, Inc. and DLJ Merchant Banking III, Inc. dated as of March 24, 2004.
12	Computation of Ratio of Earnings to Fixed Charges
21	List of Jostens’ subsidiaries
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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		31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(b)	Reports on Form 8-K
		A Form 8-K was filed on October 20, 2003 reporting a change in our certifying accountant.
		A Form 8-K was filed on November 13, 2003, furnishing our press release reporting results for the three and nine months ended September 27, 2003.
		A Form 8-K was filed on November 21, 2003 announcing the commencement of a private placement of senior discount notes due 2013 of Jostens Holding Corp.

*Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K pursuant to Item 15(c) of this annual report

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SIGNATURES

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

	Jostens, Inc.
Date: March 31, 2004	By  /s/  Robert C. Buhrmaster
	Robert C. Buhrmaster
	Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on March 31, 2004 on behalf of the registrant in the capacities indicated.

	Signature		Title
/s/  Robert C. Buhrmaster		Chairman of the Board and Chief Executive Officer
Robert C. Buhrmaster		(Principal Executive Officer)
/s/  David A. Tayeh		Senior Vice President and Chief Financial Officer
David A. Tayeh		(Principal Financial and Accounting Officer)
/s/  Carl H. Blowers		Director
Carl H. Blowers
/s/  David F. Burgstahler		Director
David F. Burgstahler
/s/  John W. Castro		Director
John W. Castro
/s/  Thomas R. Nides		Director
Thomas R. Nides
/s/  Marc L. Reisch		Director
Marc L. Reisch
/s/  David M. Wittels		Director
David M. Wittels

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FINANCIAL STATEMENT SCHEDULES

Report of Independent Auditors on Financial Statement Schedule

To the Shareholder and Board of Directors
Jostens, Inc.
Minneapolis, Minnesota

We have audited the consolidated financial statements of Jostens Inc. as of January 3, 2004, and for the period from July 30, 2003 to January 3, 2004 (post-merger) and the period from December 29, 2002 to July 29, 2003 (pre-merger), and have issued our report thereon dated February 12, 2004 (included elsewhere in this Form 10-K). Our audit also included the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audit.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

Minneapolis, Minnesota
February 12, 2004

Report of Independent Auditors on Financial Statement Schedule

To the Shareholder and Board of Directors of Jostens, Inc.:

Our audits of the consolidated financial statements as of December 28, 2002, and for each of the two fiscal years in the period ended December 28, 2002, referred to in our report dated February 12, 2003 appearing in the Annual Report on Form 10-K for the fiscal year ended January 3, 2004 also included an audit as of December 28, 2002 and December 29, 2001 and for each of the two fiscal years in the period ended December 28, 2002, of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly in all material respects, the information set forth therein as of December 28, 2002 and December 29, 2001, and for each of the two fiscal years in the period ended December 28, 2002, when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP
Minneapolis, Minnesota
February 12, 2003

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Schedule II—Valuation and Qualifying Accounts

Jostens, Inc. and subsidiaries

	Balance			Charged to			Charged to								Balance
	beginning			costs and			other								end of
	of period			expenses			accounts				Deductions				period
	In thousands
Reserves and allowances deducted from asset accounts
Allowances for uncollectible accounts
July 30, 2003 through January 3, 2004		$	2,569		$	14		$	—			$	399	(2)	$	2,184
December 29, 2002 through July 29, 2003		2,557			491			—				479		(2)	2,569
Year ended December 28, 2002		3,657			869			—				1,969		(2)	2,557
Year ended December 29, 2001		4,361			1,677			(295		)(1)		2,086		(2)	3,657
Allowances for sales returns
July 30, 2003 through January 3, 2004		9,585			7,950			—				11,744		(3)	5,791
December 29, 2002 through July 29, 2003		5,597			13,276			—				9,288		(3)	9,585
Year ended December 28, 2002		5,727			18,337			—				18,467		(3)	5,597
Year ended December 29, 2001		6,360			17,832			(110		)(1)		18,355		(3)	5,727
Salesperson overdraft reserves
July 30, 2003 through January 3, 2004		8,629			2,204			—				(120		)(2)	10,953
December 29, 2002 through July 29, 2003		8,034			1,285			—				690		(2)	8,629
Year ended December 28, 2002		6,897			3,603			—				2,466		(2)	8,034
Year ended December 29, 2001		5,568			3,046			(549		)(1)		1,168		(2)	6,897

(1)Effects of reclassifying Jostens Recognition business as discontinued operations.

(2)Uncollectible accounts written off, net of recoveries.

(3)Returns processed against reserve.

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EX-10.4

Exhibit 10.4

JOSTENS HOLDING CORP.

2003 STOCK INCENTIVE PLAN

EFFECTIVE AS OF OCTOBER 30, 2003

Table of Contents

1.	Purposes
2.	Number of Shares Subject to the Plan
3.	Administration of the Plan
4.	Eligibility
5.	Options
	A.	Option Price and Payment
	B.	Terms of Options and Limitations on the Right of Exercise
	C.	Termination of Employment or Service
	D.	Exercise of Options
	E.	Non-Transferability of Options
	F.	Transfer Restrictions and Repurchase Rights
6.	Stock Awards
7.	Adjustment of Shares; Effect of Certain Transactions
8.	Right to Terminate Employment or Service
9.	Compliance with Legal Requirements
10.	Issuance of Stock Certificates; Legends; Payment of Expenses
11.	Withholding Taxes
12.	Listing of Shares and Related Matters
13.	Amendment of the Plan
14.	Termination or Suspension of the Plan
15.	Governing Law
16.	Partial Invalidity
17.	Effective Date

JOSTENS HOLDING CORP.

2003 STOCK INCENTIVE PLAN

1.Purposes

Jostens Holding Corp., a Delaware corporation (the “Company”), desires to afford certain employees, directors and other persons providing services for the Company or any parent corporation or subsidiary corporation of the Company now existing or hereafter formed or acquired who are responsible for the continued growth of the Company an opportunity to acquire a proprietary interest in the Company, and thereby create in such persons an increased interest in and a greater concern for the welfare of the Company and its subsidiaries.

The Company, by means of this 2003 Stock Incentive Plan (the “Plan”), seeks to retain for itself and any parent corporation or subsidiary corporation of the Company the services of persons now holding key positions and also to secure and retain the services of persons capable of filling such positions.

The stock options (“Options”) and stock awards (“Awards”) offered pursuant to the Plan are a matter of separate inducement and are not in lieu of any salary or other compensation for the services of any key employee, non-employee director or consultant.

The Options granted under the Plan are intended to be either incentive stock options (“Incentive Options”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or options that do not meet the requirements for Incentive Options (“Non-Qualified Options”).  The Company makes no warranty, however, as to the qualification of any Option as an Incentive Option.

2.Number of Shares Subject to the Plan

Options and Awards granted under the Plan shall be exercisable for shares of Class B Common Stock, $0.01 par value per share (the “Class B Common Stock” and together with the Company’s Class A Common Stock, par value $0.01 per share, the “Common Stock”).  Subject to Section 7 hereof, the total number of shares of Class B Common Stock of the Company authorized for issuance upon the exercise of Options or in connection with Awards granted under the Plan to employees of the Company or any parent corporation or subsidiary corporation of the Company shall not exceed, in the aggregate, 288,023 shares of the Class B Common Stock (the “Employee Shares”) and the total number of shares of Class B Common Stock of the Company authorized for issuance upon the exercise of Options or in connection with Awards granted under the Plan to directors and other persons providing services for the Company or any parent corporation or subsidiary corporation of the Company shall not exceed, in the aggregate, 10,000 shares of the Class B Common Stock (the “Non-Employee Shares” and, together

with the Employee Shares, the “Shares”); provided, that the maximum number of Shares that may be purchased or acquired upon the exercise of Options or in connection with Awards granted under the Plan to any one person shall not exceed, in the aggregate, 70,400 Shares.

Shares available for issuance under the Plan may be either authorized but unissued Shares, Shares of issued stock held in the Company’s treasury, or both, at the discretion of the Company.  If and to the extent that Options or Awards expire or are cancelled or otherwise terminated under the Plan, the Shares covered by the unexercised portion of such Options or Awards may again be subject to an Option or Award under the Plan.

Except as provided in Sections 14 and 17 hereof, the Company may, from time to time during the period beginning on October 30, 2003 (the “Effective Date”), the date of approval of the Plan by the Company’s Board of Directors (the “Board”), and ending on July 29, 2013 (the “Termination Date”), grant to certain employees, directors and other persons providing services for the Company or any parent corporation or subsidiary corporation of the Company now existing or hereafter formed or acquired Incentive Options, Non-Qualified Options, and/or Awards under the terms hereinafter set forth.

As used in the Plan, the term “parent corporation” and “subsidiary corporation” shall mean a corporation within the definitions of such terms contained in Sections 424(e) and 424(f) of the Code, respectively.

3.Administration of the Plan

The Board shall administer the Plan, provided that the Board may, from time to time, designate from among its members a compensation committee, which may also be any other committee of the Board (the “Committee”), to administer the Plan.  Whenever the Company shall have any class of equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Committee shall be composed solely of two or more members who are “Non-Employee Directors” within the meaning of Rule 16b-3, as amended (“Rule 16b-3”) promulgated under the Exchange Act and “Outside Directors” within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Code, and shall meet such other conditions as required by Rule 16b-3 or other applicable rules under Section 16(b) of the Exchange Act.  A majority of the members of the Committee shall constitute a quorum and the act of a majority of the members of the Committee shall be the act of the Committee.  If the Board administers the Plan, then any reference herein, or in any agreement granting Options or Awards pursuant to the Plan, to the Committee shall, unless the context otherwise requires, include references to the Board, as appropriate.

Subject to the express provisions of the Plan, the Committee shall have the authority, in its sole discretion, to determine the employees, directors and service providers to the Company or any parent corporation or subsidiary corporation to whom

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Options or Awards shall be granted (the “Optionholders”), the time when such persons shall be granted Options or Awards, the number of Shares which shall be subject to each Option or Award, the purchase price of each Share which shall be subject to each Option or Award, the period(s) during which such Options shall be exercisable (whether in whole or part), and the other terms and provisions thereof (which need not be identical).  In determining the persons to whom Options or Awards shall be granted and the number of Shares for which Options or Awards are to be granted to each person, the Committee shall give due consideration to, among other things, the length of service, performance and the responsibilities and duties of such person.

Subject to the express provisions of the Plan, the Committee also shall have the authority to construe the Plan and the Options and Awards granted hereunder, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the Options and Awards (which need not be identical) and to make all other determinations necessary or advisable for administering the Plan.

The Committee may establish performance standards for determining the periods during which Options or Awards shall be granted or exercisable, including without limitation, standards based on the earnings of the Company and its subsidiaries for various fiscal periods.  The Committee shall define such performance criteria and, from time to time, the Committee in its sole discretion and in administering the Plan may make such adjustments to such performance criteria for any fiscal period so that extraordinary or unusual charges or credits, changes to capital expenditure plans, acquisitions, mergers, consolidations, and other corporate transactions and other elements of or factors influencing the calculations of earnings or any other performance standard do not distort or affect the operation of the Plan in an a manner inconsistent with the achievement of its purpose.

Any determination of the Committee on the matters referred to in this Section 3 shall be conclusive.

The Committee may delegate to one or more of its members, or to one or more agents, such administrative duties as it may deem advisable, and the Committee, or any person to whom it has delegated duties as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan.  The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such counsel, consultant or agent.  Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company or such subsidiary corporation or parent corporation of the Company whose employees have benefited from the Plan, as determined by the Committee.  No member or former member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Awards or Options granted hereunder.

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4.Eligibility

Options or Awards may be granted only to key employees, non-employee directors and consultants providing services to the Company or any parent corporation or subsidiary corporation of the Company now existing or hereafter formed or acquired; provided, however that Incentive Options may only be granted to key employees of the Company or any parent corporation or subsidiary corporation of the Company now existing or hereafter formed or acquired.  The Plan does not create a right in any person to participate in, or be granted Options or Awards under, the Plan.

5.Options

A.Option Price and Payment

The price for each Share purchasable under any Option granted hereunder shall be determined by the Committee; provided, however, that in the case of an Incentive Option, the purchase price for each Share shall not be less than one hundred percent (100%) of the Fair Market Value (as defined below) per Share at the date the Option is granted; and provided further, that in the case of an Incentive Option granted to a key employee who, at the time such Option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any subsidiary corporation or parent corporation, the purchase price for each Share shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share at the date the Option is granted.  In determining the stock ownership of a key employee for any purpose under the Plan, the rules of Section 424(d) of the Code shall be applied, and the Committee may rely on representations of fact made to it by the key employee and believed by it to be true.

For purposes of the Plan, the “Fair Market Value” of the Shares with respect to any date of determination, means:

(i)$87.12 per Share as of the date hereof;

(ii)if the Shares are listed or admitted to trading on a national securities exchange in the United States or reported through The Nasdaq Stock Market (“Nasdaq”) then the closing sale price on such exchange or Nasdaq on such date or, if no trading occurred or quotations were available on such date, then the closest preceding date on which such Shares were traded or quoted; or

(iii)if not so listed or reported but a regular, active public market for the Shares exists (as determined in the sole discretion of the Committee, whose discretion shall be conclusive and binding), then the average of the closing bid and ask quotations per Share in the over-the-counter market for such Shares in the United States on such date or, if no such quotations are available on such date, then on the closest date preceding such date.  For purposes of the foregoing, a market in which trading is sporadic and the ask quotations generally exceed the bid quotations by more than fifteen percent (15%) shall not be deemed to be a “regular, active public market.”

4

If the Board determines that a regular, active public market does not exist for the Shares, the Board shall determine the Fair Market Value of the Shares in its good faith judgment based on the total number of shares of Common Stock then outstanding, taking into account all outstanding options, warrants, rights or other securities exercisable or exchangeable for, or convertible into, shares of Common Stock.  The Board shall make its determination of Fair Market Value from time to time not less than annually (the “Valuation”) and such determination shall remain in effect until the Board makes the next Valuation (provided that, at any relevant date of determination, the Valuation approximates the Fair Market Value at that date and, if it does not, the Board shall make a new determination of Fair Market Value which shall apply retroactively at such date of determination).  Notwithstanding the foregoing, if an investment banker or appraiser appointed by the Company makes a determination of Fair Market Value subsequent to a Valuation, such subsequent determination shall supersede the Valuation then in effect and shall establish the Fair Market Value until the next Valuation.

For purposes of this Plan, the determination of the Board of the Fair Market Value shall be conclusive.

Upon the exercise of an Option granted hereunder, the Company shall cause the purchased Shares to be issued only when it shall have received the full purchase price therefor in cash; provided, however, that in lieu of cash, the holder of an Option may, if the terms of such Option so provide and to the extent permitted by applicable law, exercise an Option (a) in whole or in part, by delivering to the Company shares of Class B Common Stock (in proper form for transfer and accompanied by all requisite stock transfer tax stamps or cash in lieu thereof) owned by such holder having a Fair Market Value equal to the cash exercise price applicable to that portion of the Option being exercised, the Fair Market Value of the shares of Class B Common Stock so delivered to be determined as of the date immediately preceding the date of exercise, or as otherwise may be required to comply with or conform to the requirements of any applicable law or regulations, or (b) by delivering to the Company such other form of payment as the Committee shall permit in its sole discretion at the time of grant of the Option; provided that any such shares of Class B Common Stock to be delivered by the holder of an Option shall have been owned by such holder for at least six (6) months.

B.Terms of Options and Limitations on the Right of Exercise

Any Option granted hereunder shall be exercisable at such times, in such amounts and during such period or periods as the Committee shall determine at the date of the grant of such Option; provided, however, that an Incentive Option shall not be exercisable after the expiration of ten (10) years from the date such Option is granted; and provided further, that in the case of an Incentive Option granted to a key employee who, at the time such Incentive Option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any subsidiary corporation or parent corporation of the Company, such Incentive Option shall not be exercisable after the expiration of five (5) years from the date such Incentive Option is granted.

5

The Committee shall have the right to accelerate, in whole or in part, from time to time, conditionally or unconditionally, rights to exercise any Option granted hereunder.

To the extent that an Option granted hereunder is not exercised within the period of exercisability specified therein, it shall expire as to the then unexercised part.

Except as otherwise provided under the Code, to the extent that the aggregate Fair Market Value of stock for which Incentive Options (under all stock option plans of the Company and of any parent corporation or subsidiary corporation of the Company) are exercisable for the first time by a key employee during any calendar year exceeds one hundred thousand dollars ($100,000), such Options shall be treated as Non-Qualified Options.  For purposes of this limitation, (a) the Fair Market Value of stock is determined as of the time the Option is granted and (b) Options will be taken into account in the order in which they were granted.

In no event shall an Option granted hereunder be exercised for a fraction of a Share.

A person entitled to receive Shares upon the exercise of an Option granted hereunder shall not have the rights of a stockholder with respect to such Shares until the date of issuance of a stock certificate to him or her for such Shares; provided, however, that until such stock certificate is issued, any holder of an Option using previously acquired shares of Common Stock in payment of the exercise price shall continue to have the rights of a stockholder with respect to such previously acquired shares of Common Stock.

C.Termination of Employment or Service

Upon termination of employment of any employee or termination of service of any non-employee director or of any consultant with the Company and all subsidiary corporations and parent corporations of the Company, any Option previously granted to such person, unless otherwise specified by the Committee in the agreement granting such Option or otherwise, to the extent not theretofore exercised, shall terminate and become null and void; provided, however, that:

(i)if any Optionholder shall die while in the employ or service of such corporation or during either the ninety (90) day or thirty (30) day period, whichever is applicable, specified in clauses (ii) and (iii) below, any Option granted hereunder, unless otherwise specified by the Committee in the letter granting such Option, shall be exercisable for any or all of such number of Shares that such Optionholder is entitled to purchase at the time of death, by the legal representative of such Optionholder or by such person who acquired such Option by bequest or inheritance or by reason of the death of such Optionholder, at any time up to and including ninety (90) days after the date of death;

(ii)if the employment or service of any Optionholder shall terminate by reason of such Optionholder’s Disability (as defined below), any Option granted

6

hereunder, unless otherwise specified by the Committee in the letter granting such Option, shall be exercisable for any or all of such number of Shares that such Optionholder is entitled to purchase at the effective date of termination of employment or service by reason of Disability, at any time up to and including ninety (90) days after the effective date of such termination of employment or service;

(iii)(x) in the case of an employee, if the employment of such employee shall terminate (i) by reason of the employee’s retirement (at such age or upon such conditions as shall be specified by the Committee in the letter granting such Option) or (ii) by the Company or a subsidiary corporation or parent corporation of the Company other than for Cause, and (y) in the case of a non-employee director or consultant, if the service of such director or consultant shall terminate (i) by reason of the non-employee director’s voluntary retirement from service as a director, (ii) due to failure on the part of the Company or a subsidiary corporation or parent corporation of the Company to retain or nominate for re-election such director who is otherwise eligible, unless due to an act of (a) fraud or intentional misrepresentation or (b) embezzlement, misappropriation or conversion of assets or opportunities of the Company or any subsidiary corporation or parent corporation of the Company, or (iii) by the Company or a subsidiary corporation or parent corporation of the Company other than for Cause, any Option granted hereunder, unless otherwise specified by the Committee in the letter granting such Option, shall be exercisable for any or all of such number of Shares that such Optionholder is entitled to exercise at the effective date of termination of employment or service, at any time up to and including thirty (30) days after the effective date of such termination of employment or service; and

(iv)if the employment or service of any Optionholder shall terminate by any reason other than that provided for in clauses (i), (ii) or (iii) above, any Option granted hereunder, unless otherwise specified by the Committee in the letter granting such Option shall, to the extent not theretofore exercised, become null and void.

None of the events described in clauses (i), (ii) or (iii) above shall extend the period of exercisability of the Option beyond the expiration date thereof.

If an Option granted hereunder shall be exercised by the legal representative of a deceased Optionholder or by a person who acquired an Option granted hereunder by bequest or inheritance or by reason of the death of any current or former employee, non-employee director or consultant, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or equivalent proof of the right of such legal representative or other person to exercise such Option.

For purposes of the Plan, the term “for Cause” shall mean (a) with respect to an employee who is a party to a written employment agreement with the Company or a subsidiary corporation or parent corporation of the Company, which agreement contains a definition of “for cause” or “cause” (or words of like import) for purposes of termination of employment or services thereunder by the Company or such subsidiary corporation or parent corporation of the Company, “for cause” or “cause” as defined therein; or (b) in all other cases, as determined by the Committee or the Board in its sole discretion, (i) the

7

intentional or willful commission or failure due to bad faith by an Optionholder of an act that causes or may cause substantial damage or significant injury to the Company or a subsidiary corporation or parent corporation of the Company; (ii) the commission by an Optionholder of an act of fraud or willful dishonesty in the performance of such Optionholder’s duties on behalf of the Company or a subsidiary corporation or parent corporation of the Company; (iii) conviction of an Optionholder for commission of a felony or a plea of guilty or nolo contendere to a felony; (iv) the breach by an Optionholder of any non-competition, non-solicitation or confidentiality provision or agreement entered into with the Company or a subsidiary corporation or parent corporation of the Company; (v) the Optionholder’s being repeatedly under the influence of illegal drugs and alcohol while performing his duties to the Company or a subsidiary corporation or parent corporation of the Company, or (vi) the continuing willful failure of an Optionholder to perform the duties of such Optionholder to the Company or a subsidiary corporation or parent corporation of the Company that has not been cured within fifteen (15) days after written notice thereof has been given to the Optionholder by the Committee or its designee.

For purposes of the Plan, the term “Disability” means (i) with respect to an Optionholder who is a party to a written employment agreement with the Company, which agreement contains a definition for “disability” or “permanent disability” (or words of like import) for purposes of termination of employment thereunder by the Company, “disability” or “permanent disability” in the most recent agreements, or (ii) in all other cases, means, as determined by the Committee or the Board in its sole discretion, such Optionholder’s inability to perform substantially his or her duties and responsibilities to the Company or any subsidiary corporation or parent corporation any reason of physical or mental illness, injury, infirmity or condition for a continuous period of six (6) months or one or more periods aggregating twelve (12) months in any two-year period.

For purposes of the Plan, an employment relationship shall be deemed to exist between an individual and a corporation if, at the time of determination, the individual is an “employee” of such corporation for purposes of Section 422(a) of the Code.  An employment relationship shall be deemed to continue while an individual is on a bona fide leave of absence if the period of such leave does not exceed ninety (90) days or, if longer, if such individual’s right to reemployment is guaranteed by statute or contract.

A termination of employment shall not be deemed to occur by reason of (i) the transfer of an employee from employment by the Company to employment by a subsidiary corporation or a parent corporation of the Company or (ii) the transfer of an employee from employment by a subsidiary corporation or a parent corporation of the Company to employment by the Company or by another subsidiary corporation or parent corporation of the Company.

8

D.Exercise of Options

Subject to the limitations on exercise referred to in Sections 5.B and 5.C hereof, Options granted under the Plan shall be exercised by the Optionholder as to all or part of the Shares covered thereby by giving written notice of exercise to the Corporate Secretary of the Company at the principal business office of the Company, specifying the number of Shares to be purchased (including the class of such Shares), and specifying a business day not more than ten (10) days from the date such notice is given for the payment of the purchase price against delivery of the Shares being purchased.  Subject to the terms of Sections 9, 10 and 11 hereof, the Company shall cause certificates for the Shares so purchased to be delivered at the principal business office of the Company, against payment of the full purchase price, on the date specified in the notice of exercise.

E.Non-Transferability of Options

An Option granted hereunder shall not be transferable, whether by operation of law or otherwise, other than, in the case of Non-Qualified Options, to (a) any spouse, lineal descendant, sibling, parent, heir, executor, administrator, testamentary trustee, legatee or beneficiary of such Optionholder or (B) a trust that is for the exclusive benefit of such Optionholder or the person set forth under clause (a) above (each a “Permitted Transferee”), and any Option granted hereunder shall be exercisable, during the lifetime of the holder, only by such holder.  Except to the extent provided above, Options may not be assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar proceeding.  Any attempted assignment, transfer, pledge, hypothecation or other disposition of an Option granted hereunder contrary to the provisions hereof, and the levy of any attachment or similar proceeding upon such Option, shall be null and void and without effect.

F.Transfer Restrictions and Repurchase Rights

It shall be a condition to the grant of any Option hereunder that the Optionholder agrees to become bound by certain transfer restrictions and repurchase rights set forth in the agreement granting such Option, which provisions may be amended or modified from time to time as more fully specified by the Committee in connection with the grant of the Option.

6.Stock Awards

The Committee may, in its discretion, grant Awards (which may include mandatory payment of bonus incentive compensation in stock) consisting of Class B Common Stock issued or transferred to participants with or without other payments therefor.  Awards may be subject to such terms and conditions as the Committee determines appropriate, including, without limitation, restrictions on the sale or other disposition of such Shares, and the right of the Company to reacquire such Shares for no consideration upon termination of the participant’s employment or service within specified periods.  The Committee may require the participant to deliver a duly signed

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stock power, endorsed in blank, relating to the Class B Common Stock covered by such an Award.  The Committee may also require that the stock certificates evidencing such Shares be held in custody or bear restrictive legends until the restrictions thereon shall have lapsed.  The Award shall specify whether the participant shall have, with respect to the Shares subject to an Award, all of the rights of a holder of Class B Common Stock, including the right to receive dividends and to vote the Shares.  It shall be a condition to the grant of any Award hereunder that the participant agree to become bound by certain transfer restrictions and repurchase rights set forth in the agreement granting such Award, which provisions may be amended or modified from time to time as more fully specified by the Committee in connection with the grant of the Award.

7.Adjustment of Shares; Effect of Certain Transactions

If by reason of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization, recapitalization or liquidation the Board shall authorize the issuance or assumption of a stock option in a transaction to which Section 424(a) of the Code applies, then, notwithstanding any other provision of this Plan, the Board may grant an option upon such terms and conditions as it may deem appropriate for the purpose of assumption of old option, or substitution of a new option for the old option, in conformity with the provisions of said Section 424(a) of the Code and the Treasury Regulations thereunder.

Notwithstanding any other provision contained herein, in the event of any change in the Shares subject to the Plan or to any Option or other right to acquire Shares granted under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or other like change in the capital structure of the Company), an adjustment shall be made to each outstanding Option or other right to acquire Shares under the Plan such that each such Option or right shall thereafter be exercisable for such securities, cash and/or other property as would have been received in respect of the Shares subject to such Option or right had such Option or right been exercised in full immediately prior to such change, and such an adjustment shall be made successively each time any such change shall occur.  The term “Shares” after any such change shall refer to the securities, cash and/or property then receivable upon exercise of an Option or other right to acquire Shares under the Plan.  In addition, in the event of any such change, the Committee shall make any further adjustment to the maximum number of Shares which may be acquired under the Plan pursuant to the exercise of Options or other right to acquire Shares, the maximum number of Shares for which Options or Awards may be granted to any one participant and the number of Shares and exercise price per Share subject to outstanding Options or other right to acquire Shares under the Plan as shall be equitable to prevent dilution or enlargement of rights under such Options or rights, and the determination of the Committee as to these matters shall be conclusive and binding on the Optionholder; provided, however, that (a) each such adjustment with respect to an Incentive Option shall comply with the rules of Section 424(a) of the Code (or any successor provision) and (b) in no event shall any adjustment be made which would render any Incentive Option granted hereunder other than an “incentive stock option” as defined in Section 422 of the Code.

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Except as specifically provided in the agreement granting the Option or Award, in the event of a Change in Control (as defined below), and in anticipation thereof if required by the circumstances, the Board, in its sole discretion may also (i) accelerate the exercisability, prior to the effective date of such change in control, of additional percentages of all outstanding Options granted under this Plan (and redesignate as Non-Qualified Options any Options or portions thereof that were originally designated as Incentive Options but that no longer so qualify under Section 422 of the Code), (ii) arrange, if there is a surviving or acquiring corporation, subject to the consummation of a change in control, to have that corporation or an affiliate of that corporation grant to employees and other optionholders replacement options with substantially similar or, if not adverse to the optionholders, different provisions with respect to exercisability (upon which grant the Options granted under this Plan shall immediately terminate and be of no further force or effect) which, however, in the case of Incentive Options, satisfy, in the determination of the Board, the requirements of Section 424(a) of the Code, (iii) cancel all outstanding Options in exchange for consideration in cash or in kind in an amount equal to the value of the Shares, as determined by the Board in good faith, the optionholder would have received had the Option been exercised (to the extent then exercisable or to a greater extent, including in full, as the Board may determine) less the option price therefor (upon which cancellation such Options shall immediately terminate and be of no further force or effect), (iv) cancel all outstanding options to the extent then exercisable for no consideration, (v) permit the purchaser of the Company’s stock or assets to deliver to the optionholders the same kind of consideration that is delivered to the stockholders of the Company in cancellation of such Options in an amount equal to the value of the Shares as determined by the Board in good faith, the optionholder would have received had the Option been exercised (to the extent then exercisable or to a greater extent, including in full, as the Board may determine), less the option price therefor, or (vi) take any combination (or none) of the foregoing actions.

For purposes of the Plan, a “Change in Control” shall occur if (a) any person or other entity (other than any of the Company’s subsidiaries), including any person as defined in Section 13(d)(3) of the Exchange Act, other than (1) (A) DLJ Merchant Banking Partners III, L.P., DLJ Offshore Partners III-1, C.V., DLJ Offshore Partners III-2, C.V., DLJ Offshore Partners III, C.V., DLJMB Partners III GmbH & Co. KG, Millennium Partners II, L.P. and MBP III Plan Investors, L.P. (the “DLJMB Funds”), (B) any shareholder, member or general or limited partner of any DLJMB Fund (a “DLJMB Partner”), and any corporation, partnership, limited liability company, or other entity that is an Affiliate (as defined below) of any DLJMB Partner (collectively, “DLJMB Affiliates”), (C) any managing director, general partner, director, limited partner, officer or employee of any DLJMB Fund or any DLJMB Affiliate, or any spouse, lineal descendant, sibling, parent, heir, executor, administrator, testamentary trustee, legatee or beneficiary of any of the foregoing persons described in this clause (C) (collectively, “DLJMB Associates”), or (D) any trust the beneficiaries of which, or any corporation, limited liability company or partnership the stockholders, members or general or limited partners of which, include only such DLJMB Funds, DLJMB Affiliates, DLJMB Associates, their spouses or other lineal descendants, or (2) any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) of which any DLJMB Fund is part, becomes the beneficial owner, as defined in Rule 13d-3 of the

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Exchange Act, directly or indirectly, in a single transaction or a series of related transactions, by way of merger, consolidation or other business combination, securities of the Company representing more than fifty-one percent (51%) of the total combined voting power of all classes of capital stock of the Company (or its successor) normally entitled to vote for the election of directors of the Company or (b) the sale of all or substantially all of the property or assets of the Company to any unaffiliated person or entity other than one of the Company’s subsidiaries is consummated.  For purposes of this Plan, an “Affiliate” means, with respect to any person, any other person directly or indirectly controlling, controlled by or under common control with such person; provided that no securityholder of the Company or any parent corporation or subsidiary corporation of the Company shall be deemed an Affiliate of any person solely by reason of an investment in the Company or any parent corporation or subsidiary corporation of the Company.  For the purposes of this Plan, the term “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities, by contract or otherwise.

8.Right to Terminate Employment or Service

The Plan shall not impose any obligation on the Company or on any subsidiary corporation or parent corporation thereof to continue the employment or service of any Optionholder and it shall not impose any obligation on the part of any Optionholder to remain in the employ or service of the Company or any subsidiary corporation or parent corporation thereof.

9.Compliance with Legal Requirements

The Committee may refuse to issue or transfer any Shares or other consideration under an Option if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by an Optionholder in connection therewith shall be promptly refunded to the relevant Optionholder.  Without limiting the generality of the foregoing, no Option granted hereunder shall be construed as an offer to sell securities of the Company, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the federal and state securities laws and any other laws to which such offer, if made, would be subject.

10.Issuance of Stock Certificates; Legends; Payment of Expenses

Upon any exercise of an Option or acquisition of Shares granted hereunder and payment of the purchase price therefor, a certificate or certificates representing the Shares shall be issued by the Company in the name of the person exercising the Option and shall be delivered to or upon the order of such person.

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The Company may endorse such legend or legends upon the certificates for Shares issued pursuant to the Plan and may issue such “stop transfer” instructions to its transfer agent in respect of such Shares as the Committee, in its sole discretion, determines to be necessary or appropriate to (a) prevent a violation of, or to comply with the procedures for an exemption from, the registration requirements of the Securities Act, (b) implement the provisions of the Plan and any agreement between the Company and the Optionholder with respect to such Shares or (c) permit the Company to determine the occurrence of a disqualifying disposition, as described in Section 421(b) of the Code, of Shares transferred upon exercise of an Incentive Option granted under the Plan.

The Company shall pay all issue or transfer taxes with respect to the issuance or transfer of Shares, as well as all fees and expenses necessarily incurred by the Company in connection with such issuance or transfer, except fees and expenses which may be necessitated by the filing or amending of a registration statement under the Securities Act, which fees and expenses shall be borne by the recipient of the Shares unless such registration statement has been filed by the Company for its own corporate purposes (and the Company so states).

All Shares issued as provided herein shall be fully paid and nonassessable to the extent permitted by law.

11.Withholding Taxes

All payments or distributions of Options or Awards made pursuant to the Plan shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax withholding requirements.  If the Company proposes or is required to distribute Class B Common Stock pursuant to the Plan, it may require the recipient to remit to it or to the corporation that employs such recipient an amount sufficient to satisfy such tax withholding requirements prior to the delivery of any certificates for such Class B Common Stock.  In lieu thereof, the Company or the employing corporation shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the recipient as the Committee shall prescribe.  The Committee may, in its discretion and subject to such rules as it may adopt (including any as may be required to satisfy applicable tax and/or non-tax regulatory requirements), permit an optionee or award or right holder to pay all or a portion of the federal, state and local withholding taxes arising in connection with any Option or Award consisting of shares of Class B Common Stock by electing to have the Company withhold shares of Class B Common Stock having a Fair Market Value equal to the amount of tax to be withheld, such tax calculated at rates required by statute or regulation; provided that any such shares withheld shall have been owned by the optionee or award or right holder for at least six (6) months.

12.Listing of Shares and Related Matters

If at any time the Committee shall determine that the listing, registration or qualification of the Shares subject to an Option or other right to acquire Shares on any securities exchange or under any applicable law, or the consent or approval of any

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governmental regulatory authority, is necessary or desirable as a condition of, or in connection with, the granting of an Option or Award, or the issuance of Shares thereunder, such Option or Award may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

13.Amendment of the Plan

The Board may, from time to time, amend the Plan, provided that no amendment shall be made, without the approval of the stockholders of the Company, that will (a) increase the total number of Shares issuable under the Plan or the maximum number of Shares for which Options and Awards may be granted to any one Optionholder (other than an increase resulting from an adjustment provided for in Section 7 hereof), (b) reduce the exercise price of any Incentive Option granted hereunder or (c) modify the provisions of the Plan relating to eligibility.  The Committee shall be authorized to amend the Plan and the Options granted thereunder to permit the Incentive Options granted thereunder to qualify as “incentive stock options” within the meaning of Section 422 of the Code and the Treasury Regulations promulgated thereunder.  The rights and obligations under any Option or Award granted before amendment of the Plan or any unexercised portion of such Option or Award shall not be adversely affected by amendment of the Plan or the Option or Award without the consent of the holder of such Option or Award.

14.Termination or Suspension of the Plan

The Board may at any time suspend or terminate the Plan.  The Plan, unless sooner terminated under Section 17 or by action of the Board, shall terminate at the close of business on the Termination Date.  Options or Awards may not be granted while the Plan is suspended or after it is terminated.  Rights and obligations under any Option or Award granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except upon the consent of the person to whom the Option or other right was granted.  The power of the Committee to construe and administer any Options or Awards under Section 3 that are granted prior to the termination or suspension of the Plan shall continue after such termination or during such suspension.

15.Governing Law

The Plan, the Options and Awards granted hereunder and all related matters shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware from time to time obtaining.

16.Partial Invalidity

The invalidity or illegality of any provision herein shall not be deemed to affect the validity of any other provision.

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17.Effective Date

The Plan shall become effective at 5:00 P.M., New York City time, on the Effective Date; provided, however, that if the Plan is not approved by a vote of the stockholders of the Company at an annual meeting or any special meeting, or by unanimous written consent of the stockholders, within (12) months after the Effective Date, the Plan and any Options and Awards granted thereunder shall terminate.

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EX-10.9

Exhibit 10.9

JOSTENS, INC.

EXECUTIVE SEVERANCE PAY PLAN

(2003 REVISION)

As Adopted Effective February 26, 2003

JOSTENS, INC.

EXECUTIVE SEVERANCE PAY PLAN (2003 REVISION)

TABLE OF CONTENTS

ARTICLE 1 INTRODUCTION.
1.1.	Plan Name.
1.2.	Plan Type.
1.3.	Plan Purpose.
1.4.	Plan Background.
ARTICLE 2 CONSTRUCTION, INTERPRETATIONS AND DEFINITIONS.
2.1.	Governing Law.
2.2.	Headings.
2.3.	Number and Gender.
2.4.	Officers.
2.5.	Definitions.
ARTICLE 3 ELIGIBILITY FOR BENEFITS.
3.1.	Eligibility Requirements.
3.2.	Other Special Benefits.
ARTICLE 4 BENEFITS.
4.1.	Compensation and Benefits Through Termination Date.
4.2.	Cash Payment.
4.3.	COBRA Premiums.
4.4.	Continuation of Perquisites.
4.5.	Limitation on Benefits.
ARTICLE 5 SOURCE OF PAYMENTS; NATURE OF INTEREST.
5.1.	Establishment of Trust.
5.2.	Source of Payments.
5.3.	Status of Plan.
5.4.	Non-assignability of Benefits.
ARTICLE 6 ADMINISTRATION.
6.1.	Administrator.
6.2.	Plan Rules.
6.3.	Administrator’s Discretion.
6.4.	Specialist’s Assistance.
6.5.	Indemnification.
6.6.	Benefit Claim Procedure.
6.7.	Disputes.
ARTICLE 7 MISCELLANEOUS.
7.1.	Amendment and Termination.
7.2.	Withholding and Offsets.
7.3.	Other Benefits.

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7.4.	No Employment Rights Created.
7.5.	Successors.
7.6.	Nature of Company Action.
7.7.	Delegation by Chief Executive Officer.
7.8.	Waiver.
7.9.	Effect of Plan Benefits on Other Severance Plans.
7.10.	Related Plans.
7.11.	Survival.

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JOSTENS, INC.

EXECUTIVE SEVERANCE PAY PLAN (2003 REVISION)

ARTICLE 1.

INTRODUCTION

1.1.Plan Name.

The name of the Plan is the “Jostens, Inc. Executive Severance Pay Plan (2003 Revision).”

1.2.Plan Type.

The Plan is an unfunded plan maintained by the Company primarily for the purpose of providing benefits for a select group of management or highly compensated employees.  The Plan is also intended to be unfunded for tax purposes.  The Plan will be construed in a manner that gives effect to such intent.

1.3.Plan Purpose.

The purpose of the Plan is to provide severance benefits to Eligible Employees who experience a Qualifying Termination.

1.4.Plan Background.

The Plan is an amendment and restatement of the Jostens, Inc. Executive Severance Pay Plan as originally adopted effective July 1, 1999.

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ARTICLE 2.

CONSTRUCTION, INTERPRETATIONS AND DEFINITIONS

2.1.Governing Law.

To the extent that state law is not preempted by provisions of ERISA or any other laws of the United States, all questions pertaining to the construction, validity, effect and enforcement of this Plan will be determined in accordance with the internal, substantive laws of the State of Minnesota, without regard to the conflict of laws principles of the State of Minnesota or of any other jurisdiction.

2.2.Headings.

The headings of articles and sections are included solely for convenience.  If there is a conflict between a heading and the text of the Plan, the text will control.

2.3.Number and Gender.

Whenever appropriate, the singular number may be read as the plural, the plural may be read as the singular and a reference to one gender may be read as a reference to the other.

2.4.Officers.

Any reference in this Plan to a particular officer of the Company also refers to the functional equivalent of such officer if the title or responsibilities of that office change.

2.5.Definitions.

The definitions set forth in this Section 2.5 apply in construing the Plan unless the context otherwise indicates.

Administrator.  The “Administrator” of the Plan is the Compensation Committee of the Board or the person to whom administrative responsibilities are delegated pursuant to Section 6.1, as the context requires.

Affiliate.An “Affiliate” is:

(a)any corporation at least a majority of whose outstanding securities ordinarily having the right to vote at elections of directors is owned directly or indirectly by the Company; or

(b)any other form of business entity in which the Company, by virtue of a direct or indirect ownership interest, has the right to elect a majority of the members of such entity’s governing body.

Base Pay.  The “Base Pay” of an Eligible Employee is his or her monthly base salary from the Company at the rate in effect immediately before his or her Termination Date.  Base Pay includes only regular cash salary and is determined before any reduction or deduction of any kind.

Board.  The “Board” is the board of directors of the Company.  When the Plan provides for an action to be taken by the Board, the action may be taken by any committee or individual authorized to take such action pursuant to a proper delegation by the board of directors of the Company.

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Code.  The “Code” is the Internal Revenue Code of 1986, as amended, any successor provisions thereto, any regulations promulgated thereunder, and any other binding pronouncements of any agency of the federal government that has jurisdiction with respect thereto.

Company.  The “Company” is Jostens, Inc., and any Successor.

Continuation Period.  The “Continuation Period” with respect to an Eligible Employee who has experienced a Qualifying Termination is the period that begins on the Eligible Employee’s Termination Date and ends on the last day of the

(a)thirtieth month that begins after the Eligible Employee’s Termination Date if, immediately prior to the Termination Date, the Eligible Employee was the Chief Executive Officer of the Company, or

(b)eighteenth month that begins after the Eligible Employee’s Termination Date if, immediately prior to the Termination Date, the Eligible Employee was a member of the Company’s Executive Team as selected by the Board, or

(c)twelfth month that begins after the Eligible Employee’s Termination Date if, immediately prior to the Termination Date, the Eligible Employee was the Company’s Treasurer, or

(d)ninth month that begins after the Eligible Employee’s Termination Date in the case of any other Eligible Employee.

Effective Date.  The “Effective Date” of this restated Plan is January    , 2003.

Eligible Employee.

(a)An “Eligible Employee” is an individual who, immediately prior to his or her Termination Date, is (i) employed by the Company as either (1) the chief executive officer of the Company elected by the Board, (2) a member of the Executive Team, (3) the Treasurer of the Company, or (4) a management or highly compensated employee, as determined by the Company’s Chief Executive Officer, selected as an Eligible Employee by the Company’s Chief Executive Officer and (ii) not a party to a separate written agreement with the Company which provides for severance benefits, unless the agreement expressly provides that such severance benefits are in addition to the benefits provided pursuant to the Plan.  An individual will become an Eligible Employee pursuant to clause (i)(4) only if he or she receives a written notice signed by the Company’s Chief Executive Officer indicating that the individual has been selected as an Eligible Employee for purposes of the Plan, effective as of the date specified in the written notice.

(b)In the case of an individual who is selected as an Eligible Employee pursuant to Subsection (a)(i)(4), the Company’s Chief Executive Officer may at any time prior to the individual’s Termination Date, but not thereafter, determine that the individual is no longer an Eligible Employee, in which case the individual will not have any rights arising under or in connection with the Plan on and after the date of the Chief Executive Officer’s determination or, if later, the effective date of the determination.

(c)For purposes of those provisions of the Plan relating to the period after his or her Termination Date, an Eligible Employee who has a Qualifying Termination will continue

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to be an Eligible Employee until he or she ceases to be entitled to benefits under the Plan in connection with the Qualifying Termination.

ERISA.  “ERISA” is the Employee Retirement Income Security Act of 1974, as amended.  Any reference to a specific provision of ERISA includes a reference to such provision as it may be amended from time to time and to any successor provision.

Executive Team.  The “Executive Team” is the group of officers of the Company who are elected by the Board and designated to report directly to the Chief Executive Officer of the Company.

Other Arrangement. An “Other Arrangement” is an employee benefit plan or other plan, policy or practice of the Company or any other agreement between the Eligible Employee and the Company, other than the Plan.

Plan. The “Plan” is the Jostens, Inc. Executive Severance Pay Plan (2003 Revision), as amended from time to time.

Qualifying Termination.

(a)Subject to Subsection (b), a “Qualifying Termination” with respect to an Eligible Employee is a complete termination of his or her employment relationship with the Company and all Affiliates on or after the Effective Date:

(i)by the Company for any reason other than the Eligible Employee’s poor or unsatisfactory job performance or misconduct;

(ii)by the Eligible Employee due to:

(1)a material reduction in the Eligible Employee’s title(s), status, position(s), authority, duties or responsibilities as an executive of the Company other than such a reduction caused by an insubstantial and inadvertent action that is remedied by the Company promptly after the Chief Executive Officer of the Company (or the Chair of the Compensation Committee of the Board if the Eligible Employee in question is the Chief Executive Officer of the Company) becomes aware of the reduction;

(2)a reduction by the Company in the Eligible Employee’s Base Pay, or an adverse change in the form or timing of the payment thereof; or

(3)the Company’s requiring the Eligible Employee to be based more than 30 miles from where his or her office is located immediately prior to the change, except for required travel on the Company’s business; or

(4)the failure of the Company to obtain from any Successor the assent to this Plan contemplated by Section 7.5.

(b)An Eligible Employee will not be considered to have experienced a Qualifying Termination if:

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(i)the Eligible Employee dies, resigns, retires or otherwise voluntarily terminates employment under any circumstance not described in Subsection (a)(ii);

(ii)the Eligible Employee accepts another position with the Company;

(iii)in connection with the sale, transfer or other disposition by the Company of some or all of its assets, the Eligible Employee becomes an employee of the acquirer or an entity that controls, is controlled by or is under common control with the acquirer; or

(iv)in connection with the sale, transfer or other disposition by the Company of some or all of its interest in an Affiliate pursuant to which the entity ceases to be an Affiliate, the Eligible Employee becomes an employee of the former Affiliate or an entity that controls, is controlled by or is under common control with the former Affiliate or any successor to the former Affiliate.

(c)An Eligible Employee’s continued employment does not constitute consent to, or waiver of any rights arising in connection with, any circumstance in Subsection (a)(ii).

Release.  A “Release” is a written instrument, in form prescribed by the Company and signed by the Eligible Employee, under which the Eligible Employee releases the Company, each Affiliate and their respective predecessors and successors, and the directors, officers, employees and agents of each of them, from any and all claims the Eligible Employee may have against any of them by reason of his or her employment or the termination of such employment.  The Release will waive all claims the Eligible Employee may have under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974, and such other statutes and rules of law as the Company may deem advisable.

Successor.  A “Successor” is any entity that succeeds to, or has the practical ability to control (either immediately or solely with the passage of time), the Company’s business directly, by merger, consolidation or other form of business combination, or indirectly, by purchase of the Company’s outstanding securities ordinarily having the right to vote at the election of directors, all or substantially all of its assets or otherwise.

Termination Date.  The “Termination Date” of an Eligible Employee is his or her last day of employment in connection with a Qualifying Termination, without regard to any payments or benefits provided pursuant to the Plan.

Trust. The “Trust” is the trust or trusts, if any, established by the Company pursuant to Section 5.1.

Trustee.The “Trustee” is the one or more banks or trust companies that at the relevant time has or have been appointed by the Company to act as Trustee of the Trust.

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ARTICLE 3.

ELIGIBILITY FOR BENEFITS

3.1.Eligibility Requirements.

An Eligible Employee is entitled to the benefits provided in Article 4 upon his or her Qualifying Termination only if he or she signs and delivers to the Company a Release and does not rescind the Release within any applicable rescission period.  The Company may, on a case-by-case basis, elect not to require a Release.  Any such election by the Company with respect to a particular Eligible Employee applies only to that Eligible Employee and does not in any way limit the Company’s right to require any other Eligible Employee to provide the Release.

3.2.Other Special Benefits.

The Company may (a) provide severance benefits to any Eligible Employee who is not otherwise entitled to such benefits and (b) provide severance benefits in excess of the amount provided by the Plan to any Eligible Employee who is entitled to benefits under the Plan.  In either case, the amount and type of such benefits must be set forth in a written instrument signed on behalf of the Company by its Chief Executive Officer (or the Chair of the Compensation Committee of the Board if the Eligible Employee in question is the Company’s Chief Executive Officer) but will be deemed to be provided pursuant to the Plan.  Any special benefit provided to an Eligible Employee pursuant to this Section 3.2 applies only to that Eligible Employee and does not in any way obligate the Company to provide any special benefit to any other Eligible Employee.

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ARTICLE 4.

BENEFITS

4.1.Compensation and Benefits Through Termination Date.

An Eligible Employee who has a Qualifying Termination will continue to receive his or her compensation, continue to be eligible for perquisites for which he or she is otherwise eligible and continue to participate in Company benefit plans, programs and arrangements in accordance with their terms through his or her Termination Date.  As of the Termination Date, the Eligible Employee will cease to earn any additional compensation, cease to be eligible for perquisites and cease to participate in Company benefit plans, programs and arrangements except as otherwise provided by the terms of such plans, programs and arrangements with respect to former employees.

4.2.Cash Payment.

(a)Subject to Sections 4.5 and 7.3(b), an Eligible Employee who has a Qualifying Termination and who satisfies the eligibility requirements described in Section 3.1 will receive a cash payment in an amount equal to the sum of

(i)the Eligible Employee’s monthly Base Pay multiplied by

(1)30 if, immediately prior to his or her Termination Date, the Eligible Employee was the Chief Executive Officer of the Company, or

(2)18 if, immediately prior to his or her Termination Date, the Eligible Employee was a member of the Company’s Executive Team, or

(3)12 if, immediately prior to his or her Termination Date, the Eligible Employee was the Company’s Treasurer, or

(4)9 in the case of any other Eligible Employee; plus

(ii)if, and only if, the Eligible Employee’s Termination Date is after the end of the fourth month of the Company’s fiscal year that includes the Termination Date, the annual incentive award, if any, that the Eligible Employee would have earned for the Company’s fiscal year that includes the Termination Date had he or she remained employed through the last day of the fiscal year, based on his or her base salary at the annual rate in effect immediately prior to his or her Termination Date, multiplied by a fraction, the numerator of which is the number of calendar months that have commenced during the fiscal year on or before the Termination Date and the denominator of which is 12.  The payment pursuant to this clause is in lieu of any cash bonus payment to which the Eligible Employee may otherwise be entitled under the management incentive plan or any other annual bonus plan maintained by the Company or an Affiliate for the period that includes the Termination Date;

(b)The amount determined under Subsection (a)(i) will be paid in periodic payments made on the same basis as the Eligible Employee’s Base Pay and the amount determined pursuant to Subsection (a)(ii) will be paid on the date on which the annual incentive award would have been paid had the Eligible Employee remained an Eligible Employee,

7

subject to the Company’s retained right to at any time cause any remaining payments to be paid in a single lump sum payment; provided, that in no case will payments be made before the end of any rescission period arising under applicable law or Plan rule in connection with the Eligible Employee’s Release.  As a condition to making a lump sum payment to an Eligible Employee, the Company may require the Eligible Employee to enter into a written agreement, in form specified by the Company, pursuant to which the Eligible Employee is required to repay to the Company any portion of the payment that he or she was not entitled to receive or is not entitled to retain.

(c)The cash payments pursuant to Subsection (a) are allocable to the Release and the covenants in Section 4.5(d) as follows:

(i)30% of the cash payments is allocable to the Release; and

(ii)70% of the cash payments is allocable to the covenants in Section 4.5(d).

4.3.COBRA Premiums.

(a)Subject to Sections 4.5 and 7.3(b), if an Eligible Employee has a Qualifying Termination and satisfies the eligibility requirements described in Section 3.1, then, through the end of the Eligible Employee’s Continuation Period or, if earlier, through the last day of the Eligible Employee’s continuation coverage pursuant to Code Section 4980B and Part 6 of Subtitle B of Title I of ERISA or in the case of group life insurance, comparable provisions of applicable state law (“COBRA”), the Company will reimburse the Eligible Employee for a portion of his or her COBRA premiums under the Company’s group medical, dental, vision and life plans.  The amount of the reimbursement pursuant to this section for any period is an amount which, prior to any income or other taxes applicable to the reimbursement, equals the amount by which the COBRA premium for the period exceeds the premium paid for the period for the coverage in question by similarly situated active employees of the Company.  In order to receive reimbursements pursuant to this section, an Eligible Employee must comply with any reimbursement policies and procedures specified by the Company.

(b)To the extent an Eligible Employee incurs a tax liability (including federal, state and local taxes and any interest and penalties with respect thereto) in connection with a benefit provided pursuant to Subsection (a) which he or she would not have incurred had he or she been an active employee of the Company participating in the Company’s benefit plans, the Company will make a payment to the Eligible Employee in an amount equal to such tax liability plus an additional amount sufficient to permit the Eligible Employee to retain a net amount after all taxes (including penalties and interest) equal to the initial tax liability in connection with the benefit.  For purposes of applying the foregoing, an Eligible Employee’s tax rate will be deemed to be the highest statutory marginal state and federal tax rate (on a combined basis) then in effect.  The payment pursuant to this subsection will be made within ten business days after the Eligible Employee’s remittal of a written request therefor accompanied by a statement indicating the basis for an amount of the liability.

4.4.Continuation of Perquisites.

Subject to Sections 4.5 and 7.3(b), if an Eligible Employee has a Qualifying Termination and satisfies the eligibility requirements described in Section 3.1, then, through the end of the Eligible

8

Employee’s Continuation Period, the Company will provide the Eligible Employee with the same perquisites he or she was entitled to receive immediately prior to his or her Termination Date, subject to any reductions applicable to similarly situated active employees of the Company.

4.5.Limitation on Benefits.

(a)If, during an Eligible Employee’s Continuation Period, the Eligible Employee again becomes an employee of the Company or any Affiliate, the Eligible Employee will not be entitled to any further benefits pursuant to the Plan.  If the Eligible Employee subsequently has another Qualifying Termination and is eligible to receive benefits pursuant to the Plan in connection with the Qualifying Termination, the amount of the benefit will be reduced by the amount or value of any benefits he or she received pursuant to the Plan in connection with any previous Qualifying Termination.  The Administrator will determine how the reduction will be made.

(b)If, during an Eligible Employee’s Continuation Period, the Eligible Employee performs any services for which he or she receives, directly or indirectly, remuneration as an employee, consultant, sole proprietor, partner, member, owner or otherwise, other than the services provided as an employee of the Company or an Affiliate, then: (i) the amount of his or her cash payment pursuant to Section 4.2(a)(i) for any period will be reduced by the rate of his or her base salary or the equivalent of base salary, as determined by the Administrator, for the period; (ii) the Eligible Employee will continue to be entitled to receive the amount, if any, described in Section 4.2(a)(ii) and (iii) reimbursements pursuant to Section 4.3 and perquisites pursuant to Section 4.4 will immediately cease.  The Eligible Employee must promptly notify the Administrator of any such subsequent services, the rate of his or her base salary or remuneration and any changes in the rate of his or her base salary or remuneration.

(c)If the Company notifies the Administrator that an Eligible Employee who has had a Qualifying Termination and would otherwise be entitled to receive benefits in connection with the Qualifying Termination is either competing with the Company or disclosing confidential information -

(i)The Administrator will temporarily suspend any payments pursuant to Section 4.2 allocable to the covenants in this section pursuant to Section 4.2(c)(ii) and all reimbursements pursuant to Section 4.3 and perquisites pursuant to Section 4.4 to which the Eligible Employee would otherwise be entitled pursuant to the Plan.  The Administrator will promptly inform the Eligible Employee of the suspension and provide the Eligible Employee with a reasonable opportunity to establish to the Administrator’s reasonable satisfaction that he or she is not competing with the Company or disclosing confidential information.  The Administrator may, but is not required to, seek additional information from the Company, the Eligible Employee or any other person.  Within a reasonable period of time after the Administrator receives a response from the Eligible Employee, the Administrator will make a final determination as to whether the Participant is competing with the Company or disclosing confidential information based on the information then available to the Administrator and will communicate the final determination to the Eligible Employee and the Company.

(ii)If the Administrator’s final determination is that the Eligible Employee is not competing with the Company or disclosing confidential information, the

9

Administrator will lift the suspension on benefits and the Company will promptly provide any benefit that would have been provided during the suspension period but for the suspension, with no adjustment for lost interest or earnings.  Thereafter, any remaining benefits will be provided as if the suspension had not occurred.

(iii)If the Administrator’s final determination is that the Eligible Employee is competing with the Company or disclosing confidential information, then the Eligible Employee is not entitled to any further payments pursuant to Section 4.2 allocable to the covenants in this section pursuant to Section 4.2(c)(ii) or any further reimbursements pursuant to Section 4.3 or perquisites pursuant to Section 4.4 or to retain any prior payments pursuant to Section 4.2 allocable to the covenants in this section pursuant to Section 4.2(c)(ii) or reimbursements previously provided pursuant to Section 4.3 or perquisites (or the value of perquisites) previously provided pursuant to Section 4.4.

(iv)For purposes of applying this Subsection (c) -

(1)An Eligible Employee will be deemed to be competing with the Company if the Administrator determines that the Eligible Employee, directly or indirectly, alone or as a partner, officer, director, shareholder, sole proprietor, employee or consultant of any other firm or entity (A) has engaged, is engaging or intends to engage in any commercial activity in competition with any part of the business of the Company or any Affiliate as conducted at the time in question or (B) has solicited or interfered, is soliciting or interfering or intends to solicit or interfere with the relationship of the Company or any Affiliate with any customers, suppliers, employees or sales representatives of the Company or any Affiliate.  For purposes of applying the foregoing, “shareholder” does not include beneficial ownership of less than one percent of the combined voting power of all issued and outstanding voting securities of a publicly held corporation the stock of which is traded on a major stock exchange or quoted on NASDAQ.

(2)An Eligible Employee will be deemed to be disclosing confidential information if the Administrator determines that the Eligible Employee has disclosed, is disclosing or intends to disclose any confidential information.  Confidential information means any information relating to the business or affairs of the Company or any Affiliate, including but not limited to information relating to financial statements, customer identities, potential customers, employees, sales representatives, suppliers, servicing methods, equipment, programs, strategies and information, analyses, profit margins or other proprietary information used by the Company or Affiliate; provided, however, that confidential information does not include any information which is in the public domain or becomes known in the industry through no wrongful act on the part of an Eligible Employee.

(d)If an Eligible Employee’s Release is at any time determined to be partially or wholly unenforceable or ineffective in any respect for any reason, then the Eligible Employee is not entitled to any further payments pursuant to Section 4.2 allocable to the Release

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pursuant to Section 4.2(c)(i) or any further reimbursements pursuant to Section 4.3 or perquisites pursuant to Section 4.4 or to retain any prior payments pursuant to Section 4.2 allocable to the Release pursuant to Section 4.2(c)(i) or reimbursements previously provided pursuant to Section 4.3 or perquisites (or the value of perquisites) previously provided pursuant to Section 4.4.

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ARTICLE 5.

SOURCE OF PAYMENTS; NATURE OF INTEREST

5.1.Establishment of Trust.

The Company may establish a Trust.  The Trust must (a) be a grantor trust with respect to which the Company is treated as grantor for purposes of Code Section 677, (b) not cause the Plan to be funded for purposes of Title I of ERISA and (c) provide that Trust assets will, upon the insolvency of the Company, be used to satisfy claims of the Company’s general creditors.  The Company may from time to time transfer to the Trust cash, marketable securities or other property acceptable to the Trustee.

5.2.Source of Payments.

The Trustee will make payments from the Trust in satisfaction of the Company’s obligations under the Plan in accordance with the terms of the Trust.  The Company is responsible for paying any benefits that are not paid from the Trust.

5.3.Status of Plan.

Nothing contained in the Plan or Trust is to be construed as providing for assets to be held for the benefit of any Eligible Employee, the Eligible Employee’s only interest under the Plan being the right to receive the benefits as provided in the Plan.  The Trust is established only for the convenience of the Company and no Eligible Employee has any interest in the assets of the Trust.  To the extent an Eligible Employee acquires a right to receive benefits under the Plan, such right is no greater than the right of any unsecured general creditor of the Company.

5.4.Non-assignability of Benefits.

The benefits payable under the Plan and the right to receive future benefits under the Plan may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered or subjected to any charge or legal process.

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ARTICLE 6.

ADMINISTRATION

6.1.Administrator.

Except as otherwise expressly provided in the Plan, the general administration of the Plan and the duty to carry out its provisions is vested in the Compensation Committee of the Board.  The Compensation Committee of the Board may delegate such duty or any portion thereof to any person and may from time to time revoke such authority and delegate it to another person.  Any such delegation to any employee or officer of the Company will automatically terminate when he or she ceases to be an employee or officer.  No person may act as the Administrator in connection with any decision that directly affects his or her own benefit under the Plan.

6.2.Plan Rules.

The Administrator has the discretionary power and authority to make such rules as the Administrator determines to be consistent with the terms, and necessary or advisable in connection with the administration, of the Plan and to modify or rescind any such rules.  A rule includes any rule, policy, procedure or practice adopted by the Administrator.

6.3.Administrator’s Discretion.

The Administrator has the discretionary power and authority to make all determinations necessary for administration of the Plan, except those determinations that the Plan requires others to make, and to construe, interpret, apply and enforce the provisions of the Plan and Plan rules whenever necessary to carry out its intent and purpose and to facilitate its administration, including, without limitation, the discretionary power and authority to remedy ambiguities, inconsistencies, omissions and erroneous benefit calculations.  In the exercise of its discretionary power and authority, the Administrator will treat all persons determined by the Administrator to be similarly situated in a uniform manner.  All acts and decisions of the Administrator made in good faith are binding on all interested persons.

6.4.Specialist’s Assistance.

The Administrator may retain such actuarial, accounting, legal, clerical and other services as may reasonably be required in the administration of the Plan, and may pay reasonable compensation for such services.  All costs of administering the Plan will be paid by the Company.

6.5.Indemnification.

The Company will indemnify and hold harmless, to the extent permitted by law, each director, officer and employee of the Company against any and all liabilities, losses, costs and expenses (including legal fees) of every kind and nature that may be imposed on, incurred by or asserted against such person at any time by reason of such person’s services in connection with the Plan, but only if such person did not act dishonestly or in bad faith or in willful violation of the law or regulation under which such liability, loss, cost or expense arises.  The Company has the right, but not the obligation, to select counsel and control the defense and settlement of any action for which a person may be entitled to indemnification under this provision.

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6.6.Benefit Claim Procedure.

(a)Any claim by an individual of entitlement to benefits under the Plan in connection with a particular termination of employment must be filed in writing with the Administrator not later than 60 days after the individual’s termination of employment.  Any objection by an Eligible Employee to any benefit or action under the Plan must be filed in writing with the Administrator not later than 60 days after the Eligible Employee first receives the objectionable benefit or first knows or should have known of the objectionable action.

(b)The Administrator, not later than 90 days after receipt of such claim, will render a written decision to the claimant on the claim.  If the claim is denied, in whole or in part, such decision will include the reason or reasons for the denial; a reference to the Plan provisions on which the denial is based; a description of any additional material or information, if any, necessary for the claimant to perfect his or her claim; an explanation as to why such information or material is necessary; and an explanation of the Plan’s claim procedure.

(c)The claimant may file with the Administrator, not later than 60 days after receiving the Administrator’s written decision, a written notice of request for review of the Administrator’s decision, and the claimant or his or her representative may thereafter review relevant Plan documents which relate to the claim and may submit written comments to the Administrator.

(d)Not later than 60 days after receipt of such review request, the Administrator will render a written decision on the claim, which decision will include the specific reasons for the decision, including a reference to the Plan’s specific provisions where appropriate.

(e)The foregoing 90 and 60-day periods during which the Administrator must respond to the claimant may be extended by up to an additional 90 or 60 days, respectively, if special circumstances beyond the Administrator’s control so require and notice of such extension is given to the claimant prior to the expiration of such initial 90 or 60-day period, as the case may be.

(f)An individual must exhaust the procedure described in this section before making any claim of entitlement to benefits pursuant to the Plan in an arbitration pursuant to Section 6.7.  If an individual is barred from pursuing a claim pursuant to this section by reason of the lapse of time or otherwise, he or she is not entitled to commence an arbitration pursuant to Section 6.7 and he or she no longer has any rights to pursue the claim in any proceeding.

6.7.Disputes.

Any controversy or claim arising out of or relating to a claim for benefits payable pursuant to the Plan will be settled exclusively by arbitration in accordance with the Employee Benefit Plan Claims Arbitration Rules of the American Arbitration Association, incorporated by reference herein.  The decision of the arbitrator will be final and binding and judgment on the award may be entered in any court having jurisdiction.  The arbitration must be commenced within 180 days after the date of the Administrator’s final determination pursuant to Section 6.6(d).

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ARTICLE 7.

MISCELLANEOUS

7.1.Amendment and Termination.

(a)The Company reserves the right to amend or terminate the Plan at any time.  To be effective an amendment must be stated in a written instrument approved in advance or ratified by the Board and executed in the name of the Company by two officers.  Notwithstanding the foregoing, a Successor may not terminate the Plan or amend the Plan to significantly reduce the benefits payable under the Plan within the two year period beginning on the date it became a Successor.

(b)An instrument amending or terminating the Plan is binding on all interested persons as of the later of the date on which the instrument is adopted and the date on which the instrument is effective.

(c)No person has any right to benefits under the Plan until he or she incurs a Qualifying Termination as an Eligible Employee and is otherwise entitled to benefits pursuant to Section 3.1.  An Eligible Employee’s right to benefits under the Plan, if any, will be determined solely under the provisions of the Plan in effect on his or her Termination Date and such terms may be changed or the Plan may be terminated at any time and to any extent before then.

(d)The Company may, at any time, prospectively change the form of the Release or any other instrument or agreement used in connection with the Plan and no such change is a Plan amendment.

7.2.Withholding and Offsets.

The Company and the Trustee retain the right to withhold from any compensation or benefit payment pursuant to the Plan any and all income, employment, excise and other tax as the Company or Trustee determines, in its sole discretion, is necessary or advisable in connection with any benefits earned or paid pursuant to the Plan and the Company may offset against amounts otherwise then distributable to any person under the Plan any amounts then owing to the Company or any Affiliate by such persons.

7.3.Other Benefits.

(a)No amounts paid pursuant to the Plan constitute salary or compensation for the purpose of computing benefits under any other benefit plan, practice, policy or procedure of the Company unless otherwise expressly provided thereunder.

(b)If an Eligible Employee is entitled to benefits under the Jostens, Inc. Executive Change in Control Severance Pay Plan in connection with his or her termination of employment, the Eligible Employee is not entitled to receive any benefits under this Plan in connection with such termination of employment.

7.4.No Employment Rights Created.

Neither the establishment of or participation in the Plan gives any employee a right to continued employment or limits the right of the Company to discharge, transfer, demote or modify the terms and

15

conditions of employment or otherwise deal with any employee without regard to the effect such action might have on him or her with respect to the Plan.

7.5.Successors.

Except as otherwise expressly provided in the Plan, all obligations of the Company under the Plan are binding on any Successor to the Company whether the existence of such Successor is the result of a direct or indirect purchase, merger, consolidation or otherwise of all or substantially all of the business and/or assets of the Company.  The Company will require any Successor to expressly assume and agree to perform the obligations of this Plan in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

7.6.Nature of Company Action.

The decisions of the Company or any officer of the Company on the Company’s behalf pursuant to the Plan (other than those decisions which the Plan requires to be made by the Administrator when the Company is acting in that capacity) will be made in the Company’s own interest and the Company is not required to consider the interest of an Eligible Employee, it being intended that any such decision will be made by the Company in its settlor capacity rather than in a fiduciary capacity.

7.7.Delegation by Chief Executive Officer.

When the Plan provides for an action to be taken by the Company’s Chief Executive Officer, the action may be taken by any individual authorized to take such action pursuant to a written delegation signed in advance of the action by the Company’s Chief Executive Officer.  The Company’s Chief Executive Officer may revoke any such delegation at any time and any such delegation to an employee or officer of the Company will automatically terminate when he or she ceases to be an employee or officer.  In no event may an individual to whom a delegation has been made pursuant to this section take any action that directly affects his or her own benefit under the Plan.

7.8.Waiver.

No waiver by the Company of any breach of any obligation of an Eligible Employee arising under or in connection with the Plan or of any condition or requirement which may be imposed on an Eligible Employee under or in connection with the Plan constitutes a waiver of similar or dissimilar obligations, conditions or requirements at the same time or at any prior or subsequent time with respect to the Eligible Employee or any other Eligible Employee.

7.9.Effect of Plan Benefits on Other Severance Plans.

An Eligible Employee who receives any payment under the terms of this Plan will not be eligible to receive benefits under any other severance pay plan sponsored or maintained by the Company.

7.10.Related Plans.

To the extent that any provision of any Other Arrangement limits, qualifies or is inconsistent with any provision of this Plan, then for purposes of this Plan, while such Other Arrangement remains in force, the provision of this Plan will control and such provision of such Other Arrangement will be deemed to have been superseded, and to be of no force or effect, as if such Other Arrangement had been formally amended to the extent necessary to accomplish such purpose.  Nothing in this Plan prevents or limits an Eligible Employee’s continuing or future participation in any Other Arrangement, and nothing in this Plan

16

limits or otherwise affects the rights Eligible Employees may have under any Other Arrangement.  Amounts which are vested benefits or which Eligible Employees are otherwise entitled to receive under any Other Arrangement at or subsequent to the Date of Termination will be payable in accordance with such Other Arrangement.

7.11.Survival.

The respective obligations of, and benefits afforded to, the Company and the Eligible Employees which by their express terms or clear intent survive termination of an Eligible Employee’s employment with the Company or termination of this Plan, as the case may be, will remain in full force and effect according to their terms notwithstanding the termination of an Eligible Employee’s employment with the Company or termination of this Plan, as the case may be.

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JOSTENS, INC.

EXECUTIVE SEVERANCE PAY PLAN

Declaration of Amendment

Pursuant to the retained power of amendment contained in Section 7.1 of the “Jostens, Inc. Executive Severance Pay Plan,” the undersigned hereby amends the Plan by way of restatement in the manner set forth in the instrument entitled “Jostens, Inc. Executive Severance Pay Plan – 2003 Revision” attached hereto.

The foregoing amendment is effective as of February 26, 2003.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized officers this 22^nd day of April 2003.

		JOSTENS, INC.
Attest:	/s/  Paula R. Johnson	By:	/s/  Steven A. Tighe
	Paula R. Johnson		Steven A. Tighe
	Secretary		Vice-President – Human Resouces
		and
Attest:	/s/  Paula R. Johnson	By:	/s/  Robert C. Buhrmaster
	Paula R. Johnson		Robert C. Buhrmaster
	Secretary		Chairman of the Board and Chief Executive Officer

EX-10.10

Exhibit 10.10

AIRCRAFT LEASE AGREEMENT

This Aircraft Lease Agreement (“Lease”) is made and entered into as of March 15, 2004, by and between JOSTENS HOLDING CORP., a Delaware corporation (“Lessor”), with its principal place of business at 5501 American Boulevard West, Minneapolis, Minnesota 55437, and JOSTENS, INC., a Minnesota corporation (“Lessee”), with its principal place of business at 5501 American Boulevard West, Minneapolis, Minnesota 55437.

W I T N E S S E T H

WHEREAS, Lessor has purchased a certain Citation CJ2 aircraft, manufacturer’s serial number 111, current registration number N219FL, including two (2) Williams/Rolls Royce FJ44-2C aircraft engines, bearing manufacturer’s serial numbers 126090 and 126091 installed thereon (collectively the “Aircraft”);

WHEREAS, Lessee desires to Lease the Aircraft from Lessor on the terms and subject to the conditions set forth herein; and

WHEREAS, Lessor and Lessee desire that all flight operations conducted by Lessee under this Lease be conducted pursuant to Part 91 of the Federal Aviation Regulations and that this Lease not be construed as giving rise to air taxi operations under Part 135 of the Federal Aviation Regulations.

NOW, THEREFORE, the parties hereto agree as follows:

1.Lease of Aircraft.  Pursuant to the terms and conditions of this Lease, Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the Aircraft for the term of this Lease.

2.Fees.  In consideration for Lessor’s lease of the Aircraft to Lessee, Lessee shall pay to Lessor aircraft lease fees as set forth on the Lease Supplement attached hereto (the “Aircraft Lease Fees”) in such amounts and at such times as are set forth therein.

3.Term.  This Lease shall commence on the date hereof and shall continue in effect for a period of one year, and shall automatically renew on an annual basis unless either party shall give notice to the other that it desires to terminate or unless terminated earlier in accordance with the terms hereof.

4.Costs of Operation.  All costs of operating the Aircraft, including, without limitation, costs of aviation fuel, oil and additives for the Aircraft, shall be for the account of, and paid by, Lessee.

5.Repair and Maintenance; Logbooks and Records.

(a)Lessee hereby represents and warrants to Lessor that the Aircraft shall be maintained in good flying condition in conformity with all applicable federal and state laws, rules and regulations.  All routine Aircraft inspections, maintenance and services shall be for the account of, and paid by, Lessor.

(b)Lessee shall maintain all logs, manuals, inspection data, modification and overhaul records required to be maintained with respect to the Aircraft (collectively, “Logbooks”).

6.Inspection Right.  Lessor or its designee shall have the right to inspect the Aircraft at any reasonable time upon reasonable advance notice.  At the time of such inspection, Lessee shall make available to Lessor or its designee the Logbooks.

7.Disclaimer of Warranty.  NOTWITHSTANDING ANYTHING IN THIS LEASE TO THE CONTRARY, LESSOR EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY AS TO AIRWORTHINESS, DESIGN, VALUE, CONDITION, SUITABILITY, ABSENCE OF ANY LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, ABSENCE OF OBLIGATION BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH WARRANTY OR WARRANTIES.  LESSOR SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, WHETHER ARISING IN CONTRACT OR TORT OUT OF ANY NEGLIGENCE OR STRICT LIABILITY OF LESSOR OR OTHERWISE, FOR (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR ANY PART THEREOF OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT.  IN NO EVENT SHALL LESSOR BE LIABLE TO LESSEE HEREUNDER FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT OR PUNITIVE DAMAGES, WHETHER ARISING IN CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE), INDEMNITY OR OTHERWISE.

8.Insurance.  Lessor shall purchase and maintain insurance policies covering full hull damage for the Aircraft, and passenger and public liability with such coverage as Lessor deems satisfactory.  Lessor shall furnish Lessee and Sublessees (if any) with evidence of such insurance naming Lessee as an insured.  Lessee shall operate the Aircraft in strict compliance with the terms, conditions and limitations of, and in the geographical areas allowed by, such insurance policies.

9.Other Expenses.  Lessee agrees to provide its own flight following, dispatch, communications and weather briefing in connection with Lessee’s lease of the Aircraft.  All other costs and expenses in connection with Lessee’s operation of the Aircraft, including but not limited to, commissary expenses, landing fees, parking fees, hangar fees and annual registration fees or taxes, shall be paid by Lessee.

10.Pilots.  All pilots shall be type-rated in the Aircraft and meet the minimum requirements imposed or recommended by the manufacturer of the Aircraft, the Federal Aviation

Administration or the Aircraft’s insurer, as such requirements or recommendations may change from time to time.

11.Payments.  All payments due to Lessor under this Lease shall be paid to Lessor in immediately available funds on the date payable hereunder by wire transfer to an account specified by Lessor in a notice given to Lessee in accordance with the provisions hereof, except that if Lessor shall consent thereto or shall fail to specify an account to which wire transfer of funds shall be made, Lessee may make payment by check drawn payable to Lessor and sent to Lessor’s address, or at such other address or to such other person as the Lessor may from time to time direct by notice in writing to Lessee.

12.Default.  Each of the following events shall constitute an “Event of Default” hereunder (whatever the reason for such event and whether it shall be voluntary or involuntary, or come about or be effected by operation of law, or be pursuant to or in compliance with any judgment, decree or order of any administrative or governmental body):

(a)Lessee shall fail to make any payment of any Aircraft Lease Fees within forty five (45) days after the same shall become due and such failure shall continue for thirty (30) days after Lessee’s receipt of written notice thereof given by Lessor;

(b)Lessee shall breach any covenant, condition or agreement set forth in this Lease;

(c)Lessee shall or shall attempt to remove, sell, transfer, encumber, part with possession of, or assign the Aircraft or any part thereof, except as permitted by Section 17 hereof;

(d)Lessee shall use or permit the Aircraft to be used for any criminal or unlawful purpose, or the Aircraft shall be subject to seizure or confiscation for alleged criminal or unlawful purposes;

(e)Lessee shall be insolvent, be generally not paying its debts as they become due, make an assignment for the benefit of creditors or consent to the appointment of any custodian, receiver, trustee or other officer with similar powers, or any proceeding shall be commenced by or against Lessee under any bankruptcy, reorganization, insolvency, receivership, liquidation or dissolution law of any jurisdiction; or

(f)Any representation or warranty made by Lessee in this Lease is or shall become incorrect in any material respect.

13.Remedies.

(a)Upon the occurrence and continuance of any Event of Default, Lessor may exercise any or all of the following remedies as Lessor in its sole discretion shall elect:

(i)by notice in writing (except that written notice shall not be required for events of insolvency or bankruptcy) terminate this Lease, whereupon all rights of Lessee to the use of the Aircraft shall cease and terminate; and/or

(ii)proceed by appropriate court action, either at law or in equity, to enforce performance by Lessee of the applicable covenants, conditions and agreements set forth in this Lease or to recover damages for the breach thereof; and/or

(iii)collect from Lessee all reasonable costs, charges and expenses, including reasonable legal fees and disbursements, incurred by Lessor by reason of an occurrence of an Event of Default, as additional Aircraft Lease Fees.

(b)The remedies set forth in subparagraph (a) above are cumulative, and any or all thereof may be exercised in lieu of or in addition to each other or any remedies at law, in equity or under statute.  Lessor also may exercise any available remedies at law, in equity or under statute in lieu of the remedies set forth in subparagraph (a).

(c)The waiver of any Event of Default shall not operate or be construed as a waiver of any other or subsequent Event of Default.

14.Return of the Aircraft.  Upon termination of the Lease, aircraft shall be returned to a location in Minnesota or as otherwise designated by Lessor in the 48 continental states.

15.Indemnification.  Lessee agrees to indemnify Lessor against any and all losses, liabilities (including tax liabilities), damages and expenses (collectively, “Losses”) arising out of or in any manner connected with Lessee’s possession and operation of the Aircraft during the term of this Lease, including, without limitation, Losses arising by reason of claims for injury to or death of persons and loss of or damage to property to the extent not compensable under any insurance policy.

16.Compliance with Regulations and Other Requirements.  The parties agree to comply with the requirements of all laws, rules and regulations applicable to the operation, maintenance and lease of the Aircraft.  Lessee shall operate the Aircraft in accordance with (i) the Aircraft manufacturer’s operating and maintenance instructions, a copy of which previously have been provided to Lessee, (ii) the requirements, if any, of Lessor’s insurance provider, and (iii) all applicable terms and conditions of this Lease.

17.Representations and Warranties of Lessee.  Lessee represents and warrants to Lessor as follows:

(a)Lessee is duly organized, validly existing and in good standing under the laws of the State of Minnesota and authorized to do business in Minnesota.  Lessee has full power and authority to enter into and perform its obligations under this Lease.

(b)This Lease has been duly and validly authorized, executed and delivered on behalf of Lessee and is a valid and binding agreement of Lessee, enforceable in accordance with its terms.

(c)The execution and delivery of this Lease, the incurrence and performance of the obligations set forth herein and the lease of the Aircraft contemplated herein will not violate or constitute a default under, or a breach of (i) any term or provision of the

certificate of incorporation, by-laws or other organizational documents of Lessee, (ii) any agreement or instrument by which Lessee is bound, or (iii) any order, rule, law or regulation applicable to Lessee of any court, governmental body, administrative agency or panel having jurisdiction over Lessee.

18.Assignment or Subleasing.  Lessee may not assign this Lease without the express prior written consent of Lessor, and any assignment without such consent shall be void.  Notwithstanding the foregoing, Lessee may sublet or timeshare the Aircraft to one or more parties pursuant to documentation reasonably acceptable to Lessor, so long as Lessee shall not be released from any of its obligations hereunder and the arrangement does not otherwise violate the terms of this Lease.

19.Operational Controlof the Aircraft.  Lessee shall have possession, command and operational control of the Aircraft during such times as the Aircraft is leased to Lessee, and Lessee shall have sole authority over initiating, conducting or terminating any flights scheduled pursuant to this Lease.

20.Termination.  Upon termination of this Lease pursuant to the terms hereof, neither party shall have any further liability to the other hereunder other than for any payments due to Lessor under this Lease that have accrued through the date of termination, and indemnification obligations under Section 14.

21.Entire Lease; Modification; Governing Law.  This Lease constitutes the entire agreement between the parties hereto with respect to the lease of the Aircraft and supersedes all prior agreements.  No agreement other than this Lease shall be binding on the parties hereto unless in writing and signed by the party against whom enforcement is sought.  This Lease may be amended or modified only by a written instrument executed by each party hereto.  This Lease shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to or application of principles of conflicts of laws.

22.Ownership. The Aircraft is, and shall at all times be and remain, the sole and exclusive property of Lessor, and Lessee shall have no right, title or interest therein or thereto except as expressly set forth in this Lease.

23.Part 91 Operations.  The parties intend that all flight operations to be conducted by Lessee under this Lease shall be conducted in accordance with Part 91 of the Federal Aviation Regulations, and that nothing herein shall be construed as giving rise to an air taxi operation or as otherwise requiring that such flight operations be conducted under Part 135 of said Regulations.

24.Truth in Leasing.  THE AIRCRAFT, AS EQUIPMENT, BECAME SUBJECT TO THE MAINTENANCE REQUIREMENTS OF PART 91 OF THE FEDERAL AVIATION REGULATIONS (“FARS”) UPON THE REGISTRATION OF THE AIRCRAFT WITH THE FEDERAL AVIATION ADMINISTRATION.  PRIOR TO EXECUTING THIS LEASE, LESSOR REVIEWED THE AIRCRAFT’S MAINTENANCE AND OPERATING LOGS AND FOUND THAT THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER PART 91, AS APPLICABLE, OF THE FARS DURING THE LAST 12 MONTHS.  LESSOR

CERTIFIES THAT THE AIRCRAFT PRESENTLY COMPLIES WITH THE APPLICABLE MAINTENANCE AND INSPECTION REQUIREMENTS OF PART 91 OF THE FARS.  LESSOR CERTIFIES THAT THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS FOR OPERATIONS TO BE CONDUCTED UNDER THIS LEASE.  UPON EXECUTION OF THIS LEASE, AND DURING THE TERM HEREOF, LESSEE, WHOSE NAME AND ADDRESS ARE JOSTENS, INC., 5501 AMERICAN BOULEVARD WEST, MINNEAPOLIS, MINNESOTA 55437, ACTING BY AND THROUGH DAVID TAYEH (SIGNATURE:  s/s David A. Tayeh), WHO EXECUTES THIS SECTION SOLELY IN HIS CAPACITY AS CHIEF FINANCIAL OFFICER OF LESSEE, CERTIFIES THAT LESSEE SHALL BE RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THIS LEASE.  LESSEE FURTHER CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FARS.  THE PARTIES HERETO ACKNOWLEDGE THAT AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FARS MAY BE OBTAINED FROM THE NEAREST FEDERAL AVIATION ADMINISTRATION FLIGHT STANDARD DISTRICT OFFICE, GENERAL AVIATION DISTRICT OFFICE OR AIR CARRIER DISTRICT OFFICE.

I, THE UNDERSIGNED, s/s Greg Mans, THE CHIEF PILOT OF JOSTENS, INC., THE LESSEE NAMED IN THE FOREGOING AIRCRAFT LEASE AGREEMENT, CERTIFY THAT I AM RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT AND THAT I UNDERSTAND MY RESPONSIBILITIES FOR COMPLIANCE WITH THE APPLICABLE FEDERAL AVIATION REGULATIONS.

IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year first above written.

JOSTENS HOLDING CORP.
By:	/s/  David A. Tayeh
	David A. Tayeh
	Senior Vice President and Chief Financial Officer
JOSTENS, INC.
By:	/s/  Marjorie J. Brown
	Marjorie J. Brown
	Vice President and Treasurer

LEASE SUPPLEMENT

TO AIRCRAFT LEASE AGREEMENT

BETWEEN JOSTENS HOLDING CORP. (“LESSOR”)

AND JOSTENS, INC. (“LESSEE”)

DATED AS OF MARCH 15, 2004

A.Definitions

All capitalized terms used herein and not expressly defined herein shall have the same respective meanings as are set forth in the Aircraft Lease Agreement to which this Lease Schedule is attached.

B.Aircraft Lease Fees

1.Pursuant to Section 2 of the Lease, Lessee shall pay Lessor during the term of the Lease a monthly Aircraft Lease Fee in the amount of $35,000.00, plus any and all applicable sales, use and other tax thereon, as well as any property taxes associated with the housing of the Aircraft at its hangar location in St. Paul, Minnesota.

2.Aircraft Lease Fees shall be due and payable on the 1^st business day of each month except that if the Lease should commence on or after such date, the Aircraft Lease Fee payable to Lessor for that month shall be prorated based on a 30-day month.

EX-10.11

Exhibit 10.11

TIME-SHARING AGREEMENT
(N219FL)

This Time-Sharing Agreement (the “Agreement’) is made effective as of March 15, 2004 (the “Effective Date”), by and between JOSTENS, INC., a Minnesota corporation (“Sublessor”) and DLJ MERCHANT BANKING III, INC., a Delaware limited partnership (“Sublessee”).

RECITALS

WHEREAS, Sublessor is the lessee of that certain aircraft identified as a Citation Jet CJ2, bearing serial number 111and FAA registration number N219FL, including two (2) Williams/Rolls Royce FJ44-2C aircraft engines, bearing manufacturer’s serial numbers 126090 and 126091 installed thereon, together with the auxiliary power unit, avionics, equipment, components, accessories, instruments and other items installed in or attached to the airframe, all spare parts, any replacement part(s) or engine(s) which may be installed on the aircraft from time to time, and all logs, manuals and other records relating to such aircraft (collectively, the “Aircraft”); and

WHEREAS, Sublessor employs a fully qualified flight crew to operate the Aircraft; and

WHEREAS, Sublessee desires to lease the Aircraft and flight crew from Sublessor on a time-sharing basis, as defined in Section 91.501(c)(1)of the Federal Aviation Regulations (“FARs”).

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and conditions herein set forth, Sublessor and Sublessee agree as follows:

1.Lease of Aircraft.  Sublessor agrees to lease the Aircraft to Sublessee pursuant to the provisions of FAR 91.501(c)(1) and to provide a fully qualified flight crew for all operations for the period commencing on the Effective Date of this Agreement and terminating on March 15, 2009, or sooner pursuant to Section 18.  Nothing contained in this Agreement shall be deemed to prohibit Sublessor, in its discretion, from substituting for the Aircraft any different aircraft of any type or model.

2.Sublessee’s Payment Obligations. Sublessee shall pay Sublessor for each flight conducted under this Agreement an amount equal to the sum of each category of expense set forth below, provided however, such amount shall in no event exceed the sum of the following expenses authorized by FAR Section 91.501(d):

(a)Fuel, oil, lubricants, and other additives;

(b)Travel expenses of the crew, including food, lodging and ground transportation;

(c)Hangar and tie down costs away from the Aircraft’s base of operation;

(d)Insurance obtained for the specific flight;

(e)Landing fees, airport taxes and similar assessments;

(f)Customs, foreign permit, and similar fees directly related to the flight;

(g)In-flight food and beverages;

(h)Passenger ground transportation;

(i)Flight planning and weather contract services; and

(j)An additional charge equal to 100% of the expenses listed in subparagraph (a) of this Section 2.

3.Invoicing for Flights.  Sublessor shall pay all expenses related to the operation of the Aircraft when incurred and will provide, or contract with third parties to provide, a monthly invoice to Sublessee setting forth the expenses of each specific flight through the last day of the month in which any flight or flights for the account of Sublessee occur, which expenses shall not exceed the amount permitted under FAR Section 91.501(d). Sublessee shall pay Sublessor for the total amount set forth on each such invoice within thirty (30) days of receipt of such invoice. Should Sublessor receive from Sublessee any amounts under this Agreement not otherwise allowed under the applicable FAR provisions, Sublessor shall refund such amounts to Sublessee or apply such amounts to the account of Sublessee promptly after discovering such unauthorized payments.

4.Taxes.  The parties acknowledge that, with the exception of 2.(g) and (h), the payments specified in Section 2 from Sublessee to Sublessor are subject to the federal excise tax imposed under Section 4261 of the Internal Revenue Code of 1986, as amended (the “Commercial Transportation Tax”). Sublessee shall pay to Sublessor (for remittance to the appropriate governmental agency) all Commercial Transportation Tax applicable to flights of the Aircraft conducted hereunder.

5.Request for Flights by Sublessee.  Sublessee shall provide Sublessor with requests for flight time and proposed flight schedules as far in advance of any given flight as is reasonably possible and in any event at least forty-eight (48) hours in advance of any requested departure time. Requests for flight time shall be in a form, whether written or oral, mutually convenient to, and agreed upon by the parties. In addition to the proposed schedules and flight times, Sublessee shall provide at least the following information for each proposed flight at least twenty-four (24) hours in advance of the scheduled departure as required by Sublessor or Sublessor’s flight crew:

(a)proposed departure point;

(b)destination;

(c)date and time of flight;

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(d)number of anticipated passengers;

(e)nature and extent of luggage and/or cargo to be carried;

(f)date and time of return flight, if any; and

(g)any other information concerning the proposed flight that may be pertinent or required by Sublessor or Sublessor’s flight crew.

6.Scheduling Flights.  Sublessor shall have final authority over the scheduling of the Aircraft; provided, however, that Sublessor shall use reasonable efforts to accommodate Sublessee’s needs and to avoid conflicts in scheduling.  Sublessee acknowledges that maintenance and inspection of the Aircraft shall take precedence over scheduling of the Aircraft.

7.Maintenance of Aircraft.  Sublessor shall be solely responsible for securing maintenance, preventive maintenance and all required or otherwise necessary inspections of the Aircraft and shall take such requirements into account in scheduling the Aircraft. No period of maintenance, preventive maintenance or inspection shall be delayed or postponed for the purpose of scheduling the Aircraft, unless such maintenance or inspection can be safely conducted at a later time in compliance with all applicable laws and regulations, and within the discretion of the pilot-in-command. The pilot-in-command shall have final and complete authority to cancel or terminate any flight for any reason or condition which in his or her judgment would compromise the safety of the flight.

8.Operational Control.  “Operational control” as defined in the FARs and for the purposes of this Agreement, with respect to a flight, means the exercise of authority over initiating, conducting, or terminating a flight. Sublessor shall have operational control of the Aircraft, which shall include, without limitation, providing the flight crew, selecting the pilot-in-command and all other physical and technical operations of the Aircraft.

9.Flight Crew.  Sublessor shall employ, or contract with others to employ, pay for and provide to Sublessee, a qualified flight crew for each flight undertaken under this Agreement.

10.Safety of Flights.  In accordance with applicable FARs, the qualified flight crew provided by Sublessor shall exercise all of its duties and responsibilities in regard to the safety of each flight conducted hereunder. Sublessee specifically agrees that the flight crew, in its sole and absolute discretion, may terminate any flight, refuse to commence any flight, or take other action which in the judgment of the pilot-in-command is necessitated by considerations of safety. No such action of the pilot-in-command shall create any liability for loss, injury, damage or delay to Sublessee or any other person. The parties further agree that Sublessor shall not be liable for delay or failure to furnish the Aircraft and crew pursuant to this Agreement when such failure is caused by government regulation or authority, mechanical difficulty, war, civil commotion, strikes or labor disputes, weather conditions, acts of God or other reasons beyond Sublessor’s reasonable control.

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11.Title.  Sublessee acknowledges that Sublessor has leased the Aircraft from Jostens Holding Corp. (“Lessor”), which is also the owner of the Aircraft (“Owner”).

12.Hull and Liability Insurance.  Lessor shall arrange for and maintain at all times during the term of this Agreement at its expense (a) aircraft liability insurance for the Aircraft in the form and substance and with such insurers as is customary for large corporate aircraft of the type similar to the Aircraft, but in any event with limits of not less than $100,000,000.00 single limit and shall cause Sublessee to be named as an additional insured thereunder and (b) aircraft hull insurance for the Aircraft in an amount to be determined by Lessor.  A certificate of insurance (and, upon request, a copy of the insurance policy(ies)) shall be furnished to Sublessee after the execution of this Agreement and prior to flights being conducted under this Agreement. In addition, Lessor shall provide Sublessee with advance written notice prior to amending or terminating any insurance on the Aircraft and shall provide Sublessee with a certificate of insurance promptly after entering into any amended or newly issued insurance policy.

13.Additional Insurance.  Sublessor shall provide such additional insurance coverage as Sublessee may reasonably request or require; provided, however, that the cost of such additional insurance, if any, shall be borne by Sublessee as set forth in Section 2(d) hereof.

14.Representations of Sublessor.  Sublessor represents and warrants that:

(a)It has the right, power and authority to enter into and perform its obligations under this Agreement, and the execution and delivery of this Agreement by Sublessor have been duly authorized by all necessary action on the part of Sublessor. This Agreement constitutes a legal, valid and binding obligation of Sublessor, enforceable in accordance with its terms.

(b)It is a corporation duly organized, existing and in good standing under the laws of the State of Minnesota and has all necessary power and authority under applicable law and its organizational documents to own or lease its properties and to carry on its business as presently conducted.

(c)It is a “citizen of the “United States” as defined in Section 40102(a)(15) of Title 49, United States Code.

15.Representations of Sublessee.  Sublessee represents and warrants that:

(a)It will use the Aircraft for and on account of its own business only in strict accordance with the provisions of this Agreement and will neither sell seats to passengers nor sell space for cargo or otherwise use the Aircraft for the purpose of providing transportation of passengers or cargo in air commerce for compensation or hire.

(b)It shall refrain from incurring any mechanics or other lien in connection with inspection, preventive maintenance, maintenance or storage of the Aircraft or otherwise, whether permissible or impermissible under this Agreement, and that it shall refrain from attempting to convey, mortgage, assign, lease or any way

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alienate the Aircraft or from creating any kind of lien or security interest involving the Aircraft, or do anything or take any action that might mature through notice or the passage of time into such a lien.

(c)During the term of this Agreement, it will abide by and conform to all such laws, governmental and airport orders, rules and regulations, as shall from time to time be in effect relating in any way to the operation and use of the Aircraft by a time-sharing Sublessee, including, without limitation, Part 91 of the FARs.

16.Aircraft Base.  For purposes of this Agreement, the permanent base of operation of the Aircraft shall be Holman Field in Saint Paul, Minnesota.

17.Limitation of Liability; Indemnification.  Sublessor agrees to indemnify and hold harmless Sublessee and its respective officers, directors, partners, employees, shareholders, and affiliates (“Indemnified Parties”) from and against any and all claims, proceedings, losses, liabilities, suits, judgments, costs, expenses, penalties or fines, including reasonable attorney’s fees (each a “Claim”) that may at any time be suffered or incurred as a result of or connected with Sublessor’s subleasing, maintenance, operation or use of the Aircraft, but, excluding any Claim which results from the gross negligence or willful misconduct an Indemnified Party.  As to Claims arising upon or prior to the end of the term of this Agreement, the indemnities contained in this Section 17 shall continue in full force and effect, notwithstanding the expiration or other termination of this Agreement.

EACH PARTY AGREES THAT (A) THE PROCEEDS OF INSURANCE TO WHICH IT IS ENTITLED, (B) ITS RIGHTS TO INDEMNIFICATION FROM THE OTHER PARTY UNDER THIS SECTION, AND (C) ITS RIGHT TO DIRECT DAMAGES ARISING IN CONTRACT FROM A MATERIAL BREACH OF THE OTHER PARTY’S OBLIGATIONS UNDER THIS AGREEMENT ARE THE SOLE REMEDIES FOR ANY DAMAGE, LOSS, OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER OR CONTEMPLATED HEREBY. EXCEPT AS SET FORTH IN THIS SECTION 17, EACH PARTY WAIVES ANY RIGHT TO RECOVER ANY DAMAGE, LOSS, OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER OR CONTEMPLATED HEREBY. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR OR HAVE ANY DUTY FOR INDEMNIFICATION OR CONTRIBUTION TO THE OTHER PARTY FOR ANY CLAIMED INDIRECT, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR ANY DAMAGES CONSISTING OF DAMAGES FOR LOSS OF USE OR DEPRECIATION OF VALUE OF THE AIRCRAFT, LOSS OF PROFITS OR INSURANCE DEDUCTIBLE.

The provisions of this Section 17 shall survive the termination or expiration of this Agreement.

18.Termination.  Either party may terminate this Agreement upon five (5) business days’ prior written notice to the other party.

19.Notices.  All notices and other communications under this Agreement shall be in writing (except as permitted in Section 5) and shall be given (and shall be deemed to have been duly given upon receipt or refusal to accept receipt) by personal delivery, the next

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business day if given by facsimile (with a simultaneous confirmation copy sent by first class mail properly addressed and postage prepaid) or by a reputable overnight courier service, addressed as follows:

If to Sublessor:Jostens, Inc.
Attn:  Chief Financial Officer
5501 Norman Center Drive
Minnesota, MN  55437
Facsimile:  (952) 830-3293

With a copy to:General Counsel

If to Sublessee:DLJ Merchant Banking III, Inc.

Eleven Madison Avenue, 16^th Floor

New York, NY  10010

Facsimile:  (646) 935-7193

or to such other person or address as either party shall from time to time designate by writing to the other party.

20.Successors and Assigns.  Neither this Agreement nor any party’s interest herein shall be assignable without the other party’s written consent thereto. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their heirs, representatives, successors and permitted assigns.

21.Governing Law and Consent to Jurisdiction.  This Agreement is entered into under and is to be construed in accordance with the laws of the State of Minnesota.  The parties hereby consent and agree to submit to the exclusive jurisdiction and venue of any state or federal court in the State of Minnesota in any proceedings hereunder, and each hereby waives any objection to any such proceedings based on improper venue or forum nonconveniens or similar principles.  The parties hereto hereby further consent and agree to the exercise of such personal jurisdiction over them by such courts with respect to any such proceedings, waive any objection to the assertion or exercise of such jurisdiction and consent to process being served in any such proceedings in the manner provided for the giving of notices hereunder.

22.Recitals.  The Recitals preceding this Agreement are hereby incorporated by reference in their entirety and made a part hereof.

23.Further Acts.  Sublessor and Sublessee shall each from time to time perform such other and further acts and execute such other and further instruments as may be required by law or which may be reasonably necessary to carry out the intents and purposes of this Agreement.

24.Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement, binding on all the parties notwithstanding that all the parties are not signatories to the same counterpart.

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25.TRUTH IN LEASING STATEMENT.

THE AIRCRAFT, AS EQUIPMENT, BECAME SUBJECT TO THE MAINTENANCE REQUIREMENTS OF PART 91 OF THE FEDERAL AVIATION REGULATION (“FARS”) UPON THE REGISTRATION OF THE AIRCRAFT WITH THE FEDERAL AVIATION ADMINISTRATION.  PRIOR TO EXECUTING THIS AGREEMENT, SUBLESSOR REVIEWED THE AIRCRAFT’S MAINTENANCE AND OPERATING LOGS AND FOUND THAT THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS, AS APPLICABLE, DURING THE LAST 12 MONTHS.  SUBLESSOR CERTIFIES, AND SUBLESSEE ACKNOWLEDGES THAT THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS FOR OPERATIONS TO BE CONDUCTED UNDER THIS LEASE. UPON EXECUTION OF THIS LEASE, AND DURING THE TERM HEREOF, SUBLESSOR, WHOSE NAME AND ADDRESS ARE JOSTENS, INC., 5501 NORMAN CENTER DRIVE, MINNEAPOLIS, MINNESOTA, 55437, ACTING BY AND THROUGH DAVID TAYEH (SIGNATURE:  s/s David A. Tayeh), WHO EXECUTES THIS SECTION SOLELY IN HIS CAPACITY AS CHIEF FINANCIAL OFFICER OF SUBLESSOR, CERTIFIES THAT SUBLESSOR AND NOT SUBLESSEE SHALL BE RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THIS AGREEMENT. SUBLESSOR FURTHER CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FARS. THE PARTIES HERETO ACKNOWLEDGE THAT AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FARS MAY BE OBTAINED FROM THE NEAREST FEDERAL AVIATION ADMINISTRATION FLIGHT STANDARD DISTRICT OFFICE, GENERAL AVIATION DISTRICT OFFICE OR AIR CARRIER DISTRICT OFFICE.  THE “INSTRUCTIONS FOR COMPLIANCE WITH TRUTH IN LEASING REQUIREMENTS” ATTACHED HERETO ARE INCORPORATED HEREIN BY REFERENCE.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement.

JOSTENS, INC.
By:	/s/  Marjorie J. Brown	March 11, 2004  4:00 p.m.
	Name: Marjorie J. Brown	Date and Time of Execution
	Title: Vice President and Treasurer
DLJ MERCHANT BANKING III, INC.
By:	/s/  Michael Isikow
	Name: Michael Isikow	March 11, 2003  4:00 p.m.
	Title:  Principal	Date and Time of Execution

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INSTRUCTIONS FOR COMPLIANCE WITH “TRUTH IN LEASING”

REQUIREMENTS

1.Mail a copy of the lease to the following address via certified mail, return receipt requested, immediately upon execution of the lease (14 C.F.R. 91.23 requires that the copy be sent within twenty-four hours after it is signed):

Federal Aviation Administration

Aircraft Registration Branch

ATTN: Technical Section

P. O. Box 25724

Oklahoma City, Oklahoma 73125

2.Telephone the nearest Flight Standards District Office at least forty-eight hours prior to the first flight under this lease.

3.Carry a copy of the lease in the aircraft at all times.

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EX-10.12

Exhibit 10.12

TIME-SHARING AGREEMENT
(N219FL)

This Time-Sharing Agreement (the “Agreement’) is made effective as of March 15, 2004 (the “Effective Date”), by and between JOSTENS, INC., a Minnesota corporation (“Sublessor”) and ROBERT C. BURHMASTER (“Sublessee”).

RECITALS

WHEREAS, Sublessor is the lessee of that certain aircraft identified as a Citation Jet CJ2, bearing serial number 111and FAA registration number N219FL, including two (2) Williams/Rolls Royce FJ44-2C aircraft engines, bearing manufacturer’s serial numbers 126090 and 126091 installed thereon, together with the auxiliary power unit, avionics, equipment, components, accessories, instruments and other items installed in or attached to the airframe, all spare parts, any replacement part(s) or engine(s) which may be installed on the aircraft from time to time, and all logs, manuals and other records relating to such aircraft (collectively, the “Aircraft”); and

WHEREAS, Sublessor employs a fully qualified flight crew to operate the Aircraft; and

WHEREAS, Sublessee desires to lease the Aircraft and flight crew from Sublessor on a time-sharing basis, as defined in Section 91.501(c)(1)of the Federal Aviation Regulations (“FARs”).

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and conditions herein set forth, Sublessor and Sublessee agree as follows:

1.Lease of Aircraft.  Sublessor agrees to lease the Aircraft to Sublessee pursuant to the provisions of FAR 91.501(c)(1) and to provide a fully qualified flight crew for all operations for the period commencing on the Effective Date of this Agreement and terminating on March 15, 2009 or sooner pursuant to Section 18.  Nothing contained in this Agreement shall be deemed to prohibit Sublessor, in its discretion, from substituting for the Aircraft any different aircraft of any type or model.

2.Sublessee’s Payment Obligations. Sublessee shall pay Sublessor for each flight conducted under this Agreement an amount equal to the sum of each category of expense set forth below, provided however, such amount shall in no event exceed the sum of the following expenses authorized by FAR Section 91.501(d):

(a)Fuel, oil, lubricants, and other additives;

(b)Travel expenses of the crew, including food, lodging and ground transportation;

(c)Hangar and tie down costs away from the Aircraft’s base of operation;

(d)Insurance obtained for the specific flight;

(e)Landing fees, airport taxes and similar assessments;

(f)Customs, foreign permit, and similar fees directly related to the flight;

(g)In-flight food and beverages;

(h)Passenger ground transportation;

(i)Flight planning and weather contract services; and

(j)An additional charge equal to 100% of the expenses listed in subparagraph (a) of this Section 2.

3.Invoicing for Flights.  Sublessor shall pay all expenses related to the operation of the Aircraft when incurred and will provide, or contract with third parties to provide, a monthly invoice to Sublessee setting forth the expenses of each specific flight through the last day of the month in which any flight or flights for the account of Sublessee occur, which expenses shall not exceed the amount permitted under FAR Section 91.501(d). Sublessee shall pay Sublessor for the total amount set forth on each such invoice within thirty (30) days of receipt of such invoice. Should Sublessor receive from Sublessee any amounts under this Agreement not otherwise allowed under the applicable FAR provisions, Sublessor shall refund such amounts to Sublessee or apply such amounts to the account of Sublessee promptly after discovering such unauthorized payments.

4.Taxes.  The parties acknowledge that, with the exception of 2.(g) and (h), the payments specified in Section 2 from Sublessee to Sublessor are subject to the federal excise tax imposed under Section 4261 of the Internal Revenue Code of 1986, as amended (the “Commercial Transportation Tax”). Sublessee shall pay to Sublessor (for remittance to the appropriate governmental agency) all Commercial Transportation Tax applicable to flights of the Aircraft conducted hereunder.

5.Request for Flights by Sublessee.  Sublessee shall provide Sublessor with requests for flight time and proposed flight schedules as far in advance of any given flight as is reasonably possible and in any event at least forty-eight (48) hours in advance of any requested departure time. Requests for flight time shall be in a form, whether written or oral, mutually convenient to, and agreed upon by the parties. In addition to the proposed schedules and flight times, Sublessee shall provide at least the following information for each proposed flight at least twenty-four (24) hours in advance of the scheduled departure as required by Sublessor or Sublessor’s flight crew:

(a)proposed departure point;

(b)destination;

(c)date and time of flight;

2

(d)number of anticipated passengers;

(e)nature and extent of luggage and/or cargo to be carried;

(f)date and time of return flight, if any; and

(g)any other information concerning the proposed flight that may be pertinent or required by Sublessor or Sublessor’s flight crew.

6.Scheduling Flights.  Sublessor shall have final authority over the scheduling of the Aircraft; provided, however, that Sublessor shall use reasonable efforts to accommodate Sublessee’s needs and to avoid conflicts in scheduling.  Sublessee acknowledges that maintenance and inspection of the Aircraft shall take precedence over scheduling of the Aircraft.

7.Maintenance of Aircraft.  Sublessor shall be solely responsible for securing maintenance, preventive maintenance and all required or otherwise necessary inspections of the Aircraft and shall take such requirements into account in scheduling the Aircraft. No period of maintenance, preventive maintenance or inspection shall be delayed or postponed for the purpose of scheduling the Aircraft, unless such maintenance or inspection can be safely conducted at a later time in compliance with all applicable laws and regulations, and within the discretion of the pilot-in-command. The pilot-in-command shall have final and complete authority to cancel or terminate any flight for any reason or condition which in his or her judgment would compromise the safety of the flight.

8.Operational Control.  “Operational control” as defined in the FARs and for the purposes of this Agreement, with respect to a flight, means the exercise of authority over initiating, conducting, or terminating a flight. Sublessor shall have operational control of the Aircraft, which shall include, without limitation, providing the flight crew, selecting the pilot-in-command and all other physical and technical operations of the Aircraft.

9.Flight Crew.  Sublessor shall employ, or contract with others to employ, pay for and provide to Sublessee, a qualified flight crew for each flight undertaken under this Agreement.

10.Safety of Flights.  In accordance with applicable FARs, the qualified flight crew provided by Sublessor shall exercise all of its duties and responsibilities in regard to the safety of each flight conducted hereunder. Sublessee specifically agrees that the flight crew, in its sole and absolute discretion, may terminate any flight, refuse to commence any flight, or take other action which in the judgment of the pilot-in-command is necessitated by considerations of safety. No such action of the pilot-in-command shall create any liability for loss, injury, damage or delay to Sublessee or any other person. The parties further agree that Sublessor shall not be liable for delay or failure to furnish the Aircraft and crew pursuant to this Agreement when such failure is caused by government regulation or authority, mechanical difficulty, war, civil commotion, strikes or labor disputes, weather conditions, acts of God or other reasons beyond Sublessor’s reasonable control.

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11.Title.  Sublessee acknowledges that Sublessor has leased the Aircraft from Jostens Holdings, Inc. (“Lessor”) which is also the owner of the Aircraft (“Owner”).

12.Hull and Liability Insurance.  Lessor shall arrange for and maintain at all times during the term of this Agreement at its expense (a) aircraft liability insurance for the Aircraft in the form and substance and with such insurers as is customary for large corporate aircraft of the type similar to the Aircraft, but in any event with limits of not less than $100,000,000.00 single limit and shall cause Sublessee to be named as an additional insured thereunder and (b) aircraft hull insurance for the Aircraft in an amount to be determined by Lessor.  A certificate of insurance (and, upon request, a copy of the insurance policy(ies)) shall be furnished to Sublessee after the execution of this Agreement and prior to flights being conducted under this Agreement. In addition, Lessor shall provide Sublessee with advance written notice prior to amending or terminating any insurance on the Aircraft and shall provide Sublessee with a certificate of insurance promptly after entering into any amended or newly issued insurance policy.

13.Additional Insurance.  Sublessor shall provide such additional insurance coverage as Sublessee may reasonably request or require; provided, however, that the cost of such additional insurance, if any, shall be borne by Sublessee as set forth in Section 2(d) hereof.

14.Representations of Sublessor.  Sublessor represents and warrants that:

(a)It has the right, power and authority to enter into and perform its obligations under this Agreement, and the execution and delivery of this Agreement by Sublessor have been duly authorized by all necessary action on the part of Sublessor. This Agreement constitutes a legal, valid and binding obligation of Sublessor, enforceable in accordance with its terms.

(b)It is a corporation duly organized, existing and in good standing under the laws of the State of Minnesota and has all necessary power and authority under applicable law and its organizational documents to own or lease its properties and to carry on its business as presently conducted.

(c)It is a “citizen of the “United States” as defined in Section 40102(a)(15) of Title 49, United States Code.

15.Representations of Sublessee.  Sublessee represents and warrants that:

(a)It will use the Aircraft for and on account of its own business only in strict accordance with the provisions of this Agreement and will neither sell seats to passengers nor sell space for cargo or otherwise use the Aircraft for the purpose of providing transportation of passengers or cargo in air commerce for compensation or hire.

(b)It shall refrain from incurring any mechanics or other lien in connection with inspection, preventive maintenance, maintenance or storage of the Aircraft or otherwise, whether permissible or impermissible under this Agreement, and that it shall refrain from attempting to convey, mortgage, assign, lease or any way

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alienate the Aircraft or from creating any kind of lien or security interest involving the Aircraft, or do anything or take any action that might mature through notice or the passage of time into such a lien.

(c)During the term of this Agreement, it will abide by and conform to all such laws, governmental and airport orders, rules and regulations, as shall from time to time be in effect relating in any way to the operation and use of the Aircraft by a time-sharing Sublessee, including, without limitation, Part 91 of the FARs.

16.Aircraft Base.  For purposes of this Agreement, the permanent base of operation of the Aircraft shall be Holman Field in Saint Paul, Minnesota.

17.Limitation of Liability; Indemnification.  Each party to this Agreement agrees to indemnify and hold harmless the other party and its respective officers, directors, partners, employees, shareholders, and affiliates from any claim, damage, loss, or expense, including reasonable attorney’s fees, resulting from the bodily injury or property damage caused by an occurrence and arising out of the leasing, maintenance, or use of the Aircraft which results from the gross negligence or willful misconduct of such party; provided however that neither party shall be liable for any such loss to the extent such loss: (a) is covered by the insurance policies described in Sections 12 and 13; (b) is covered by such policies but the amount of such loss exceeds the policy limits; or (c) consists of expense incurred in connection with any loss covered, in whole or in part, by such policies but such expenses are not payable under such policies.

EACH PARTY AGREES THAT (A) THE PROCEEDS OF INSURANCE TO WHICH IT IS ENTITLED, (B) ITS RIGHTS TO INDEMNIFICATION FROM THE OTHER PARTY UNDER THIS SECTION, AND (C) ITS RIGHT TO DIRECT DAMAGES ARISING IN CONTRACT FROM A MATERIAL BREACH OF THE OTHER PARTY’S OBLIGATIONS UNDER THIS AGREEMENT ARE THE SOLE REMEDIES FOR ANY DAMAGE, LOSS, OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER OR CONTEMPLATED HEREBY. EXCEPT AS SET FORTH IN THIS SECTION 17, EACH PARTY WAIVES ANY RIGHT TO RECOVER ANY DAMAGE, LOSS, OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER OR CONTEMPLATED HEREBY. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR OR HAVE ANY DUTY FOR INDEMNIFICATION OR CONTRIBUTION TO THE OTHER PARTY FOR ANY CLAIMED INDIRECT, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR ANY DAMAGES CONSISTING OF DAMAGES FOR LOSS OF USE OR DEPRECIATION OF VALUE OF THE AIRCRAFT, LOSS OF PROFITS OR INSURANCE DEDUCTIBLE.

The provisions of this Section 17 shall survive the termination or expiration of this Agreement.

18.Termination.  Either party may terminate this Agreement upon five (5) business days’ prior written notice to the other party.

19.Notices.  All notices and other communications under this Agreement shall be in writing (except as permitted in Section 5) and shall be given (and shall be deemed to

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have been duly given upon receipt or refusal to accept receipt) by personal delivery, the next business day if given by facsimile (with a simultaneous confirmation copy sent by first class mail properly addressed and postage prepaid) or by a reputable overnight courier service, addressed as follows:

If to Sublessor:Jostens, Inc.
Attn:  Chief Financial Officer
5501 Norman Center Drive
Minnesota, MN  55437
(952) 830-3293

With a copy to:General Counsel

If to Sublessee:Robert C. Burhmaster

4808 Rolling Green Parkway

Edina, MN  55436

or to such other person or address as either party shall from time to time designate by writing to the other party.

20.Successors and Assigns.  Neither this Agreement nor any party’s interest herein shall be assignable without the other party’s written consent thereto. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their heirs, representatives, successors and permitted assigns.

21.Governing Law and Consent to Jurisdiction.  This Agreement is entered into under and is to be construed in accordance with the laws of the State of Minnesota.  The parties hereby consent and agree to submit to the exclusive jurisdiction and venue of any state or federal court in the State of Minnesota in any proceedings hereunder, and each hereby waives any objection to any such proceedings based on improper venue or forum nonconveniens or similar principles.  The parties hereto hereby further consent and agree to the exercise of such personal jurisdiction over them by such courts with respect to any such proceedings, waive any objection to the assertion or exercise of such jurisdiction and consent to process being served in any such proceedings in the manner provided for the giving of notices hereunder.

22.Recitals.  The Recitals preceding this Agreement are hereby incorporated by reference in their entirety and made a part hereof.

23.Further Acts.  Sublessor and Sublessee shall each from time to time perform such other and further acts and execute such other and further instruments as may be required by law or which may be reasonably necessary to carry out the intents and purposes of this Agreement.

24.Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement, binding on all the parties notwithstanding that all the parties are not signatories to the same counterpart.

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25.TRUTH IN LEASING STATEMENT.

THE AIRCRAFT, AS EQUIPMENT, BECAME SUBJECT TO THE MAINTENANCE REQUIREMENTS OF PART 91 OF THE FEDERAL AVIATION REGULATION (“FARS”) UPON THE REGISTRATION OF THE AIRCRAFT WITH THE FEDERAL AVIATION ADMINISTRATION.  PRIOR TO EXECUTING THIS AGREEMENT, SUBLESSOR REVIEWED THE AIRCRAFT’S MAINTENANCE AND OPERATING LOGS AND FOUND THAT THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS, AS APPLICABLE, DURING THE LAST 12 MONTHS.  SUBLESSOR CERTIFIES, AND SUBLESSEE ACKNOWLEDGES THAT THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS FOR OPERATIONS TO BE CONDUCTED UNDER THIS LEASE. UPON EXECUTION OF THIS LEASE, AND DURING THE TERM HEREOF, SUBLESSOR, WHOSE NAME AND ADDRESS ARE JOSTENS, INC., 5501 NORMAN CENTER DRIVE, MINNEAPOLIS, MINNESOTA, 55437, ACTING BY AND THROUGH DAVID TAYEH (SIGNATURE: s/s David A. Tayeh), WHO EXECUTES THIS SECTION SOLELY IN HIS CAPACITY AS CHIEF FINANCIAL OFFICER OF SUBLESSOR, CERTIFIES THAT SUBLESSOR AND NOT SUBLESSEE SHALL BE RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THIS AGREEMENT. SUBLESSOR FURTHER CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FARS. THE PARTIES HERETO ACKNOWLEDGE THAT AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FARS MAY BE OBTAINED FROM THE NEAREST FEDERAL AVIATION ADMINISTRATION FLIGHT STANDARD DISTRICT OFFICE, GENERAL AVIATION DISTRICT OFFICE OR AIR CARRIER DISTRICT OFFICE.  THE “INSTRUCTIONS FOR COMPLIANCE WITH TRUTH IN LEASING REQUIREMENTS” ATTACHED HERETO ARE INCORPORATED HEREIN BY REFERENCE.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement.

JOSTENS, INC.
By:	/s/  Marjorie J. Brown	March 11, 2004  4:00 p.m.
	Name: Marjorie J. Brown	Date and Time of Execution
	Title: Vice President and Treasurer
ROBERT C. BURHMASTER
By:	/s/ Robert C. Buhrmaster	March 11, 2004  4:00 p.m.
		Date and Time of Execution

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INSTRUCTIONS FOR COMPLIANCE WITH “TRUTH IN LEASING”

REQUIREMENTS

1.Mail a copy of the lease to the following address via certified mail, return receipt requested, immediately upon execution of the lease (14 C.F.R. 91.23 requires that the copy be sent within twenty-four hours after it is signed):

Federal Aviation Administration

Aircraft Registration Branch

ATTN: Technical Section

P. O. Box 25724

Oklahoma City, Oklahoma 73125

2.Telephone the nearest Flight Standards District Office at least forty-eight hours prior to the first flight under this lease.

3.Carry a copy of the lease in the aircraft at all times.

9

EX-10.13

Exhibit 10.13

DLJ Merchant Banking III, Inc.

Eleven Madison Avenue

New York, NY  10010

March 24, 2004

PRIVATE AND CONFIDENTIAL

Jostens, Inc.

5501 American Boulevard
Minneapolis, Minnesota 55437

Attention:  Robert Buhrmaster

Ladies and Gentlemen:

This letter agreement (as amended from time to time, this “Agreement”), by and among Jostens, Inc. (the “Company”), and DLJ Merchant Banking III, Inc. (“DLJMB”; and the Company and DLJMB are collectively referred to as the “Parties”), amends and restates in its entirety that certain letter agreement dated as of July 29, 2003 between the Parties, pursuant to which the Company engaged DLJMB to undertake certain monitoring services (the “Services”) on the Company’s behalf.

As compensation for the Services, the Company agrees:

(i) to pay DLJMB an annual financial advisory retainer of $1,000,000, payable in equal quarterly installments on the first business day of each calendar quarter beginning on the date hereof (for a pro rated amount in respect of the period from the date hereof through March 31, 2004) and continuing through the date of termination or expiration of this Agreement (if payable upon termination of this Agreement, such final installment to be paid on the effective date of such termination and prorated for any final period consisting of less than ninety (90) days);

(ii) to provide DLJMB with a credit beginning on the date hereof and continuing through the date of termination or expiration of this Agreement in an annual amount equal to $500,000 (the “Credit”), which Credit shall be applied solely to offset DLJMB’s payment obligations under that certain Time-Sharing Agreement, dated as of March 15, 2004, by and among the Parties, and which unused portion of such Credit shall expire on December 31 of each year and shall not be carried forward; and

(iii) to pay and reimburse DLJMB for the reasonable out-of-pocket costs and expenses, reasonably incurred by DLJMB or its affiliates in connection with (x) the Services and (y) any services provided at the request of the Company by DLJMB or members of the Company’s Board of Directors designated by DLJMB, and including, without limitation, attendance at meetings of the Company’s Board of Directors, and the other rights and obligations arising out of the ownership of shares of capital stock of the Company by DLJMB and its affiliates, including,

without limitation, in each case, (A) fees and disbursements of any independent professionals and organizations, including independent accountants, outside legal counsel or consultants, (B) costs of any outside services or independent contractors such as financial printers, couriers, business publications, on-line financial services or similar services, (C) transportation, per diem costs, word processing expenses or any similar expense not associated with its ordinary operations, and (D) expenses incurred in complying with legal requirements resulting from the ownership of shares in the Company by its affiliates (collectively, the “Out-of-Pocket Expenses”).

As DLJMB has acted and will be acting on your behalf, it is our practice to receive indemnification and the Company agrees to the indemnification and other obligations set forth in Annex A attached hereto, which Annex A is incorporated herein by reference and an integral part hereof.

The Company acknowledges and agrees that DLJMB has been retained hereunder solely to provide the Services set forth in this Agreement.  In such capacity, DLJMB shall act as an independent contractor, and any duties of DLJMB arising out of its engagement hereunder shall be owed solely to the Company.  Subject to applicable law, nothing in this Agreement shall in any way preclude us or our affiliates or their respective partners (both general and limited), officers, directors, employees, agents or representatives from engaging in any business activities or from performing services for our or their own account or for the account of others, including for companies that may be in competition with the business conducted by the Company.

The Company shall make available to DLJMB all available financial and other information concerning its business and operations which DLJMB reasonably requests and will provide DLJMB with access to the Company’s officers, directors, employees, independent accountants and legal counsel.  In performing its Services, DLJMB shall be entitled to rely without investigation upon all information that is available from public sources as well as all other information supplied to it by or on behalf of the Company or its advisors and, except as otherwise specifically agreed to in a writing signed by both parties, shall not in any respect be responsible for the accuracy or completeness of, or have any obligation to verify, the same or to conduct any appraisal of assets.

No advice rendered by DLJMB, whether formal or informal, may be disclosed, in whole or in part, or summarized, excerpted from or otherwise referred to without DLJMB’s prior written consent.  To the extent consistent with legal requirements, all information given to one party of this Agreement (such party the “Recipient Party”) by the other party (the “Providing Party”), including, without limitation, this Agreement, unless publicly available or otherwise available to the Recipient Party without restriction or breach of any confidentiality agreement, will be held by the Recipient Party in confidence and will not, without the Providing Party’s prior approval, be disclosed to anyone other than the Recipient’s agents and advisors who require such information to perform services for the Providing Party as contemplated by this Agreement (and who agree to use such information only in connection with such services) or used by such person for any purpose other than those contemplated by this Agreement.  Each party

2

hereto shall be responsible for violations of its respective agents and advisors of the obligations set forth herein.

This Agreement shall be assignable by DLJMB in its sole discretion and shall be binding on successors and assigns.  This Agreement shall be terminable (i) by DLJMB at any time upon thirty (30) days’ prior written notice to the Company and (ii) by the Company at any time following the date that DLJMB (together with any investment funds or accounts managed or arranged by it) directly or indirectly owns less than 10% of its initial common equity investment in the Company; provided, however, that the Company may not terminate this Agreement prior to July 29, 2008.  Upon any termination of this Agreement, DLJMB will be entitled to prompt reimbursement of all Out-of-Pocket Expenses.  The indemnity and other provisions contained in Annex A will also remain operative and in full force and effect regardless of any termination of this Agreement.

This Agreement including Annex A attached hereto, incorporates the entire understanding of the parties and supersedes all previous agreements with respect to the subject matter hereof and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.  This Agreement shall be binding upon and inure to the benefit of the Company, DLJMB, each Indemnified Person (as defined in Annex A attached hereto) and their respective successors and assigns.

The prevailing party in any suit, action or proceeding arising out of or relating to this Agreement shall be entitled to recover from the non-prevailing party all of the attorney fees and other expenses the prevailing party may incur in such suit, action or proceeding and in any subsequent suit to enforce a judgment.

If any term, provision, covenant or restriction contained in this Agreement, including Annex A attached hereto, is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

This Agreement may be executed by one or more parties to this Agreement or any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

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After reviewing this letter, please confirm that the foregoing is in accordance with your understanding by signing and returning to me the duplicate of this Agreement attached hereto, whereupon it shall be our binding Agreement.

Very truly yours,
DLJ MERCHANT BANKING III, INC.
By:	/s/ David Wittels
	Name: David Wittels
	Title:  Managing Director

ACCEPTED AND AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE

JOSTENS, INC.
By:	/s/ Robert C. Buhrmaster
	Name:  Robert C. Buhrmaster
	Title:  Chairman of the Board and CEO

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ANNEX A

This Annex A is a part of and is incorporated into that certain letter agreement (together, the “Agreement”) dated March 24, 2004 by and between Jostens, Inc. (the “Company”) and DLJ Merchant Banking III, Inc. (“DLJMB”).

The Company will indemnify and hold harmless DLJMB and its affiliates, and the respective directors, officers, agents and employees of DLJMB and its affiliates (other than the Company)  (DLJMB and each such entity or person, an “Indemnified Person”), from and against any losses, claims, damages, judgments, assessments, costs and other liabilities  (collectively “Liabilities”), and will reimburse each Indemnified Person for all fees and expenses (including the reasonable fees and expenses of counsel) (collectively, “Expenses”) as they are incurred in investigating, preparing,  pursuing or defending any claim, action, proceeding or investigation, whether or not in connection with pending or  threatened litigation and whether or not any Indemnified Person  is a party (collectively, “Actions”), arising out of or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement, the transactions contemplated hereby or any Indemnified Person’s actions or inactions in connection with any such advice, services or transactions; provided that the Company will not be responsible for any Liabilities or Expenses of any Indemnified Person that are determined by a judgment of a court of competent jurisdiction which is no longer subject to appeal or further review to have resulted solely from such Indemnified Person’s gross negligence or willful misconduct in connection with any of the advice, actions, inactions or services referred to above.  The Company also agrees to reimburse each Indemnified Person for all Expenses as they are incurred in connection with enforcing such Indemnified Person’s rights under this Agreement (including, without limitation, its rights under this Annex A).

Upon receipt by an Indemnified Person of actual notice of an Action against such Indemnified Person with respect to which indemnity may be sought under this Agreement, such Indemnified Person shall promptly notify the Company in writing; provided that failure so to notify the Company shall not relieve the Company from any liability which the Company may have on account of this indemnity or otherwise, except to the extent the Company shall have been materially prejudiced by such failure.  The Company shall, if requested by DLJMB, assume the defense of any such Action including the employment of counsel reasonably satisfactory to DLJMB.  Any Indemnified Person shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person, unless:  (i) the Company has failed promptly to assume the defense and employ counsel or (ii) the named parties to any such Action (including any impleaded parties) include such Indemnified Person and the Company, and such Indemnified Person shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the Company; provided that the Company shall not in such event be responsible hereunder for the fees and expenses of more than one firm of separate counsel in connection with any Action in the same jurisdiction, in addition to any local counsel.  The Company shall not be liable for any settlement of any Action effected without its written consent.  In addition, the Company will not, without prior written

consent of DLJMB, settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened Action in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Person is a party thereto) unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Person from all Liabilities arising out of such Action.

In the event the foregoing indemnity is unavailable to an Indemnified Person other than in accordance with this Agreement, the Company shall contribute to the Liabilities and Expenses paid or payable by such Indemnified Person in such proportion as is appropriate to reflect (i) the relative benefits to the Company and its shareholders, on the one hand, and to DLJMB, on the other hand, of the matters contemplated by this Agreement or (ii) if the allocation provided by the immediately preceding clause is not permitted by the applicable law, not only such relative benefits but also the relative fault of the Company, on the one hand, and DLJMB, on the other hand, in connection with the matters as to which such Liabilities or Expenses relate, as well as any other relevant equitable considerations; provided that in no event shall the Company contribute less than the amount necessary to ensure that all Indemnified Persons, in the aggregate, are not liable for any Liabilities and Expenses in excess of the amount of fees actually received by DLJMB pursuant to the Agreement.  For purposes of this paragraph, the relative benefits to the Company and its shareholders, on the one hand, and to DLJMB, on the other hand, of the matters contemplated by the Agreement shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid or received or contemplated to be received by the Company or the Company’s shareholders, as the case may be, in the transaction or transactions that are within the scope of the Agreement, whether or not any such transaction is consummated, bears to (b) the fees paid or to be paid to DLJMB under the Agreement.

The Company also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement, the transactions contemplated hereby or any Indemnified Person’s actions or inactions in connection with any such advice, services or transactions except for Liabilities (and related Expenses) of the Company that are determined by a judgment of a court of competent jurisdiction which is no longer subject to appeal or further review to have resulted solely from such Indemnified Person’s gross negligence or willful misconduct in connection with any such advice, actions, inactions or services.

The Company’s obligations hereunder shall be in addition to any rights that any Indemnified Person may have at common law or otherwise. The Company acknowledges that in connection with the services provided under the Agreement, DLJMB has acted and will be acting as an independent contractor and not in any other capacity with duties owing solely to the Company.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, applicable to contracts made and to be performed therein and, in connection therewith, the parties hereto consent to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New

6

York County or the United States District Court for the Southern District of New York and the respective appellate courts thereof.  Notwithstanding the foregoing, solely for the purpose of enforcing the Company’s obligations hereunder, the Company consents to personal jurisdiction, service and venue in any court proceeding in which any claim subject to this Agreement is brought by or against any Indemnified Person.  DLJMB HEREBY AGREES, AND THE COMPANY HEREBY AGREES ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS SECURITY HOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE ENGAGEMENT, DLJMB’S PERFORMANCE THEREOF OR THIS AGREEMENT.

The reimbursement, indemnity and contribution obligations of the Company set forth herein shall apply to any modification of this Agreement and shall remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services under or in connection with, this Agreement.

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EX-12

EXHIBIT 12

JOSTENS, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)

	Post-Merger				Pre-Merger
	Five Months				Seven Months
	2003				2003			2002		2001		2000		1999
	Dollars in thousands
Earnings
(Loss) income from continuing operations before income taxes		$	(51,357	)		$	11,750	$	64,483	$	45,115	$	5,532	$	75,704
Interest expense (excluding capitalized interest)		28,621				32,528		68,435		79,035		60,252		7,486
Portion of rent expense under long-term operating leases representative of an interest factor		576				3,219		1,312		1,164		1,121		1,483
Total (loss) earnings		$	(22,160	)		$	47,497	$	134,230	$	125,314	$	66,905	$	84,673
Fixed charges
Interest expense (including capitalized interest)		$	28,621			$	32,528	$	68,435	$	79,035	$	60,252	$	7,887
Portion of rent expense under long-term operating leases representative of an interest factor		576				3,219		1,312		1,164		1,121		1,483
Total fixed charges		$	29,197			$	35,747	$	69,747	$	80,199	$	61,373	$	9,370
Ratio of earnings to fixed charges		—		(1)		1.3		1.9		1.6		1.1		9.0

(1)For the post-merger period in 2003, earnings did not cover fixed charges by $51.4 million.

77

EX-21

EXHIBIT 21

Jostens, Inc. subsidiaries as of March 31, 2004

Name of Company	Jurisdiction of Incorporation
Jostens Canada Ltd.	Canada
Jostens Can Investments B.V.	The Netherlands
Jostens International Holding B.V.	The Netherlands
C.V. Jostens Global Trading	The Netherlands
JC Trading, Inc.	Puerto Rico
Conceptos Jostens,	Mexico
JostFer, S.A. de C.V.	Mexico
Reconocimientos E Incentivos, S.A. de C.V.	Mexico

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EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Robert C. Buhrmaster, certify that:

1.I have reviewed this annual report on Form 10-K of Jostens, Inc.;

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

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

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

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

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

c)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a)all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2004	/s/ Robert C. Buhrmaster
	Robert C. Buhrmaster
	Chairman of the Board and Chief Executive Officer

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EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, David A. Tayeh, certify that:

1.I have reviewed this annual report on Form 10-K of Jostens, Inc.;

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

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

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

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

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

c)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

c)all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

d)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2004	/s/ David A. Tayeh
	David A. Tayeh
	Sr. Vice President and Chief Financial Officer

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