<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the fiscal year ended June 30, 1995.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ____________________
Commission File No. 1-5064
JOSTENS, INC.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Minnesota 41-0343440
------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5501 Norman Center Drive, Minneapolis, Minnesota 55437
-------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(612) 830-3300
-----------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
--------------------- -----------------------------------------
Common Shares, $.33 1/3 par value New York Stock Exchange, Inc.
Common Share Purchase Rights New York Stock Exchange, Inc.
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
requirements for the past 90 days. Yes X No
--- ---
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.
The aggregate market value of voting stock held by nonaffiliates of the
Registrant on September 6, 1995, was $1,050,875,896. The number of shares
outstanding of Registrant's only class of common stock on September 6, 1995, was
45,571,855.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Document Form 10-K
------------------------------------------- --------------------------
Annual Report to Shareholders for Parts II and IV
The Year Ended June 30, 1995.
Proxy Statement for Annual Meeting of Parts I and III
Shareholders to be held October 26, 1995
<PAGE>
PART I
Item 1. BUSINESS
(a) The Company is a Minnesota corporation, incorporated in 1906. The Company
provides products and services that help people celebrate achievement,
reward performance, recognize service and commemorate experiences
throughout their lives. Products and services include: yearbooks, class
rings, graduation products, student photography packages, customized
business performance and service awards, sports awards and customized
affinity products.
In August 1995, Jostens offered to repurchase up to 6.1 million of its
common shares through a Modified Dutch Auction tender offer. Under the
offer, which expired September 1, 1995, shareholders had the option to
tender shares at a price range of $21.50 to $24.50 per share. The Company
purchased just over 7 million shares of its common stock for $24 per share,
the maximum allowed under the terms of the tender offer. The repurchase
was funded from the Company's cash and short-term investment balance, as
well as short-term borrowings.
In June 1995, Jostens sold its Jostens Learning Corp. (JLC) curriculum
software subsidiary to a group led by Bain Capital, Inc. for $50 million in
cash, a $36 million note maturing in eight years and a separate $4 million
note convertible into 19 percent of the equity of Jostens Learning, subject
to dilution in certain events. The transaction gain of $11.1 million ($5.8
million after tax) was deferred in accordance with the Securities and
Exchange Commission Staff Accounting Bulletin No. 81, Gain Recognition on
the Sale of a Business or Operating Assets to a Highly Leveraged Entity.
The gain will be deferred until cash flows from the operating activities of
JLC are sufficient to fund debt service, dividend or any other covenant
requirements.
In the fourth quarter of fiscal 1994, the Company recorded an $8.5 million
restructuring charge ($5.1 million after tax, or 12 cents per share)
related to continuing operations, covering headcount reductions in the
general and administrative functions. As a result of a study of corporate
overhead costs in 1994, the Company eliminated approximately 125 positions
to achieve the desired management organization. Jostens also recorded a
restructuring charge of $60.9 million ($40.2 million after tax, or 88 cents
per share) related to JLC, which has been reclassified as part of
discontinued operations. The restructuring charge relating to JLC included
$39.1 million to focus its product development, $7.3 million to exit both
direct and indirect investments in three ancillary lines of business, $4.1
million to exit the hardware sales and service business, and $10.4 million
for work-force reductions.
In the third quarter of fiscal 1994, the U.S. Photography business closed
leased facilities in Clinton, Mississippi, and Lake Forest, California, and
transferred production in fiscal 1995 to owned facilities in Webster, New
York; Jackson, Mississippi and Winnipeg, Manitoba.
<PAGE>
In January 1994, Jostens sold its Sportswear business to a subsidiary of
Fruit of the Loom for $46.7 million in cash. Jostens recognized an $18.5
million gain ($11 million after tax) on the sale, primarily because the
Sportswear business had been written down by $15 million to its estimated
net realizable value in the fiscal 1993 restructuring.
In the fourth quarter of fiscal 1993, the Company recorded a $40.2 million
($25.3 million after tax, or 56 cents per share) restructuring charge
related to continuing operations. The charge included $26.7 million for
restructuring the Photography business, of which $7.9 million related to
goodwill write-offs ($5.6 million relating to the Portrait World
acquisition in 1989 and $2.3 million in various smaller Photography
intangibles), $12.8 million related to plant shutdowns and $6 million
related primarily to write-offs of abandoned receivables from independent
sales representatives and dealers. The remaining $13.5 million of
restructuring charges included $4.8 million primarily for headcount
reductions and relocation expenses, and $8.7 million primarily for sales
force restructuring and policy changes, including write-offs of abandoned
receivables from terminated independent sales representatives. The
accounts receivable balances, which would have ordinarily been collectible
in the absence of the changes in the sales force, were abandoned as part of
the territory consolidations and sales force terminations resulting from
the sales force restructuring. The Company also recorded in 1993 a
restructuring charge of $10.4 million ($8.3 million after tax, or 18 cents
per share) related to JLC, which has been reclassified as part of
discontinued operations. The restructuring charge included $5 million for
the write-off of certain software development costs, as well as $5.4
million for work-force reductions. Prior to reclassification, the 1993
restructuring also included $15 million to write down the carrying value of
the Sportswear business to its net realizable value. The $15 million
related to the sale of Sportswear in 1994 was reclassified as part of a
discontinued operation.
There have been no material changes during fiscal 1995 in the mode in which
the Company has conducted its business.
(b) The Company's operations are classified into two business segments: school-
based recognition products and services (School Products) and longevity and
performance recognition products and services for businesses (Recognition).
Business segment financial information is in the financial statement
footnote "Business Segment Information" on pages 34 and 35 of the 1995
Annual Report to Shareholders.
(c) The Company's two business segments sell their products in elementary
schools, high schools, colleges and businesses in the 50 United States and
some foreign countries through a sales force of over 1,200 independent
representatives. In fiscal 1995, the Company had a discontinued operation
(JLC), which produced educational software for students in kindergarten
through grade 12. In fiscal 1994, the Company had a discontinued operation
(Sportswear), which manufactured and marketed decorated sportswear to
retail outlets and schools.
<PAGE>
SCHOOL PRODUCTS SEGMENT
-----------------------
School Products recognizes individual and group achievement and affiliation
primarily in the academic market. School Products comprises five businesses:
Printing & Publishing, Jewelry, Graduation Products, U.S. Photography and
Jostens Canada. The School Products segment sales of $565 million in 1995
included these five lines of business and $8.5 million in other sales.
Printing & Publishing: Jostens manufactures and sells student-created yearbooks
in elementary schools, junior high schools, high schools and colleges.
Independent sales representatives work closely with each school's yearbook staff
(both students and a faculty adviser), assisting with the planning, editing,
layout and printing scheduling until the book is completed. Jostens sales
representatives work with the faculty advisers to renew yearbook contracts each
year. This business also provides commercial printing of annual reports,
brochures, and promotional books and materials. Printing and Publishing
contributed 36% of sales volume of this segment in fiscal 1995 and approximately
35% in 1994 and 1993.
Jewelry: Jostens manufactures and sells rings representing a graduating class
primarily to high school and college students. This product contributed
approximately 27% of the sales volume of this segment in fiscal 1995, 1994 and
1993. Most schools have only one supplier to its students each year. Rings may
be sold through bookstores, other campus stores, retail jewelry stores as well
as within the school through temporary order-taking booths. Jostens, through its
independent sales representatives, manages the entire process of interacting
with the student through ring design, promotion, ordering and presentation to
relieve school officials of any administrative burden connected with students
purchasing this symbol of achievement.
Graduation Products: Jostens manufactures and sells graduation announcements,
diplomas and caps and gowns to students and administrators in high schools and
colleges. This product group contributed approximately 24%, 23% and 22% of sales
to this segment in fiscal years 1995, 1994 and 1993, respectively. Jostens
independent sales representatives make calls on schools and sales are taken
through temporary order-taking booths.
Photography: Jostens U.S. provides student pictures and senior portraits to
elementary and high school students through its sales force and dealer network,
which arrange the sittings/shootings at individual schools or in their own
studios. This business contributed approximately 4% of sales to this segment in
fiscal 1995 and approximately 5% in fiscal 1994 and 1993. Jostens processes the
photos at its plants in the U.S. and Canada.
Jostens Canada: Jostens is the leader in school photography, yearbooks and
class rings in Canada. This product group contributed approximately 7% of sales
to this segment in fiscal 1995, 8% in fiscal 1994 and 9% in fiscal 1993.
MARKETS: School Products serves elementary schools, middle schools, high
schools, colleges, alumni associations and other organizations in the United
States and Canada through approximately 1,100 independent sales representatives.
Jostens also maintains an international sales force covering about 50 countries
servicing primarily American schools and military installations.
<PAGE>
PRODUCTS: School products include elementary through college yearbooks,
commercial printing, desktop publishing curriculum kits, class rings, graduation
caps and gowns, graduation announcements and accessories, diplomas, individual
and group school pictures, group photographs for youth camps and organizations,
and senior graduation portraits.
SALES FORCE: The School Products segment markets its products primarily through
independent sales representatives. Approximately 425 persons are dedicated to
selling class rings and graduation products, 325 to yearbooks and 350 to
photography.
SEASONALITY: This product segment experiences a strong Seasonality concurrent
with the school year with 40-50% of full-year sales occurring in the fourth
quarter. The business generally requires short-term financing during the course
of the fiscal year. In 1995, the Company's strong cash position eliminated the
need for short-term borrowing. Jostens will again require seasonal financing in
1996 due to the share repurchase.
COMPETITION: The business of the School Products segment is highly competitive,
primarily in the pricing, product development and marketing areas.
In the class ring business, the Company has two primary national competitors:
Town & Country (Balfour) and Herff Jones, both with distribution methods similar
to the Company's. The class ring business is also served through retail jewelry
stores, dominated by two companies: Commitment Jewelry Company with two lines
(ArtCarved and R. Johns), and Town & Country with one line (Gold Lance).
In the Graduation Products business, several national and numerous local and
regional competitors offer products similar to those of the Company.
Printing & Publishing competition is primarily made up of two national firms
(Herff Jones and Taylor Publishing) and two smaller regional firms (Walsworth
Publishing and Delmar Corporation). All compete on price, print quality, product
offerings and service. Technological offerings in the way of computer based
curricula are becoming a more significant market advantage.
In the Photography area, the Company competes with Olan Mills in the U.S.,
Lifetouch, and a variety of regional and locally owned and operated
photographers that process product in small batches in both Canada and the U.S.
The Company's strategy for competing with these companies is based on its
service and quality. On the basis of available information, the Company believes
that it has the largest U.S. market share in the following product areas: class
rings, yearbooks, diplomas, graduation announcements and caps and gowns, and the
largest market share of photography business in Canada.
<PAGE>
RECOGNITION SEGMENT
-------------------
The Recognition segment helps companies promote and recognize achievement in
people's careers. It designs, communicates and administers programs to help
customers improve performance and employee service. Jostens provides products
and services that reflect achievements in service, sales, quality, productivity,
attendance, safety and retirements. It also produces awards for championship
team accomplishments and affinity products for associations.
This business manufactures and markets a wide variety of products sold primarily
to corporations and businesses in the United States and Canada. The products
manufactured by Recognition include customized and personalized jewelry, rings,
watches and engraved certificates. In addition, this business also remarkets
items manufactured by others for incorporation into programs sold to Recognition
customers. These products include items supplied by Lenox, Hartmann, Waterman,
Kirk Stieff and Oneida.
MARKETS: Recognition serves customers from small and mid-size companies to
global corporations, professional and amateur sports teams and special interest
associations.
PRODUCTS: Recognition offers a wide assortment of products and services tailored
to the needs of the organization it is serving. For global companies, Jostens
customizes programs to meet specific customer needs.
Standardized programs, such as New Generation and Reflections, provide small and
mid-size companies the same product and service features without complex
customization. Recognition enjoys exclusive product and personalization
distributor arrangements with such companies as Lenox/TM/ china and Hartmann/TM/
luggage for the service award marketplace.
SALES FORCE: Recognition sells its products through approximately 100
independent sales representatives who develop programs incorporating Recognition
products.
COMPETITION: The Recognition business competes primarily with O.C. Tanner and
the Robbins Company on a national basis as well as several regional recognition
companies. Recognition focuses on service and product offerings in competing
with these companies.
<PAGE>
JOSTENS, INC. -- INFORMATION REGARDING ALL BUSINESSES
-----------------------------------------------------
BACKORDERS: Because of the nature of the Company's business, generally all
orders are filled within a few months from the time of placement. However, the
School Products Segment obtains student yearbook contracts in one fiscal year
for a significant portion of the yearbooks to be delivered in the next fiscal
year. Often the prices of the yearbooks are not established at the time of the
order because the content of the books may not have been finalized. Subject to
the foregoing qualifications, the Company estimates that as of June 30, 1995,
the backlog of orders related to continuing operations was approximately $231
million compared with $211 million a year earlier, primarily related to student
yearbooks. The Company expects most of the backlog orders to be confirmed and
filled within the current fiscal year.
ENVIRONMENTAL: The Company does not believe that compliance with federal, state,
and local provisions protecting the environment will have a material affect upon
its capital expenditures, earnings, or competitive position.
RAW MATERIALS: All of the raw materials used by the Company are available from
several sources. Gold is an important raw material and accounted for
approximately 10%, 9%, and 9%, respectively, of the Company's cost of products
sold in the fiscal years ended June 30, 1995, 1994 and 1993.
INTELLECTUAL PROPERTY: The Company has no patents, licenses, franchises or
concessions that are material to the Company as a whole, but does have a number
of proprietary trade secrets, trademarks and copyrights that it considers
important. In addition, licenses are an important part of certain aspects of the
Company's businesses; however, the loss of any license would not have a material
affect on the Company's operations.
SIGNIFICANT CUSTOMERS: No material part of any business of the Company depends
upon a single customer or very few customers.
FEDERAL GOVERNMENT CONTRACTS: No material portion of the Company's business is
subject to renegotiation of profits or the termination of contracts or
subcontracts at the election of the United States Government.
EMPLOYEES: At June 30, 1995, the total number of employees of the Company was
approximately 5,600 (not including independent sales representatives). Because
of seasonal fluctuations and the nature of the business, the number of employees
tends to vary.
(d) The Company's foreign sales are derived primarily from operations in Canada
and the United Kingdom. The accounts and operations of the Company's
foreign businesses are not material. 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 material with respect to the Company's business. The
profit margin on foreign sales is approximately the same as the profit
margin on domestic sales.
<PAGE>
Item 2. PROPERTIES
----------
The principal plants, which are owned by the Company unless otherwise
noted, are as follows:
<TABLE>
<CAPTION>
Approximate
Area in
Location Principal Products Square Feet
-------- ------------------ -----------
<S> <C> <C>
Attleboro, Massachusetts Class Rings 52,000
Denton, Texas Class Rings 57,000
Laurens, South Carolina Caps and Gowns 98,000
Simpsonville, South Carolina * Caps and Gowns 30,000
Porterville, California Graduation Products 92,000
Red Wing, Minnesota Graduation Products 132,000
Shelbyville, Tennessee Graduation Products 87,000
Burnsville, Minnesota * Scholastic Support 44,000
Edina, Minnesota * Scholastic Support 22,000
Owatonna, Minnesota ** Scholastic Support 154,000
Owatonna, Minnesota * Scholastic Support 24,000
Memphis, Tennessee Recognition Awards 67,000
Princeton, Illinois Recognition Awards 65,000
Sherbrooke, Quebec Recognition Awards 15,000
Clarksville, Tennessee *** Yearbooks 105,000
State College, Pennsylvania Yearbooks 66,000
Topeka, Kansas Yearbooks 236,000
Visalia, California Yearbooks 96,000
Winston-Salem, North Carolina *** Yearbooks/Commercial Printing 132,000
Anaheim, California * Photography Retail Office 12,000
Clinton, Mississippi * Photography Products 163,000
Jackson, Mississippi **** Photography Products 78,000
Pleasanton, California * Photography Retail Office 6,000
Webster, New York Photography Products 60,000
Webster, New York * Photography Products 10,000
Montreal, Quebec * Photography Products 7,000
Toronto, Ontario * Sales and General Offices 2,000
Winnipeg, Manitoba Photography and Yearbooks 69,000
Winnipeg, Manitoba * Class Rings 11,000
Lindon, Utah * Wicat General Offices 20,000
Surrey, England * Wicat General Offices 7,425
</TABLE>
Executive offices are located in a general offices building owned by the
Company, which has approximately 116,000 square feet and is located in a
Minneapolis, MN suburb. A portion of this facility has been financed through
the issuance of revenue bonds.
<PAGE>
Item 2. PROPERTIES (continued)
----------
* Represents leased properties with the following expiration dates. The
Company expects to renew those leases expiring in fiscal 1996.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Clinton 1997 (Still under lease, but plant closed)
Edina 1997 Burnsville 1997
Anaheim 1996 Owatonna 2001
Webster 1997 Pleasanton 1996
Montreal Toronto 2000
Plant 1996 Lindon 1998
Sales Office 1997 Surrey 2009
Winnipeg Simpsonville Month to Month
Ring Plant 1996
Extention of
Photo Plant 1996
General
Offices 1997
</TABLE>
** Several locations.
*** Clarksville is leased under the terms of Industrial Revenue Bond issues
maturing in fiscal 1996 (see Long-Term Debt and Other Borrowings note in
the Company's annual report to shareholders for the year ended June 30,
1995). This lease obligation has been capitalized and reported as current
maturities on long-term debt in the financial statements.
**** Jackson plant closed and building for sale
Item 3. LEGAL PROCEEDINGS
-----------------
No material legal proceedings involving the Company or any
subsidiary as a defendant are pending or threatened.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
<PAGE>
Item 4A. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The information under the caption "Election of Directors" contained
on pages 2 through 6 of the Company's Proxy Statement for the
Annual Meeting of Shareholders to be held on October 26, 1995, as
filed with the Securities and Exchange Commission is hereby
incorporated herein by reference. Executive officers of the
Registrant are as follows:
<TABLE>
<CAPTION>
Years of
Service With
Name the Company Age Title and Business Experience
---- ------------ --- -----------------------------
<S> <C> <C> <C>
Robert C. Buhrmaster 3 48 President and Chief Executive Officer
Mr. Buhrmaster joined the Company in December
1992 as Executive Vice President and Chief
Staff Officer. He was named President and
Chief Operating Officer in June 1993 and was
named to his current position in March 1994.
Prior to joining Jostens, Mr. Buhrmaster had
been with Corning, Inc. for 18 years serving
in various capacities, most recently as Senior
Vice President of Strategy and Business
Development.
Charles W. Schmid 2 52 Executive Vice President and General
Manager - Scholastic and Recognition
Mr. Schmid joined the Company in April 1994
as Senior Vice President and Chief Marketing
Officer. He was appointed to his current
position in August 1995. Prior to joining the
Company he was President and Chief Operating
Officer for Carlson Companies, Inc. From 1979
through 1991, Mr. Schmid served in various
executive capacities for Philip Morris
Companies, Inc., most recently as Senior Vice
President of Marketing for its Miller Brewing
Company.
Orville E. Fisher Jr. 20 51 Senior Vice President, General Counsel and
Secretary
Mr. Fisher joined the Company in 1975 as
General Counsel, was named Vice President,
General Counsel and Assistant Secretary in
1977. He assumed his present position in
1988.
John L. Jones 4 58 Senior Vice President - Human Resources
Mr. Jones joined the Company in January, 1992.
Prior to joining Jostens, he was Director of
Human Resources, Americas Operations of Xerox
Corporation, and had held various human
resource positions with Xerox since 1971.
</TABLE>
<PAGE>
Item 4A. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
--------------------------------------------------
<TABLE>
<CAPTION>
Years of
Service With
Name the Company Age Title and Business Experience
---- ------------ --- -----------------------------
<S> <C> <C> <C>
Trudy A. Rautio 2 42 Senior Vice President and Chief Financial
Officer
Ms. Rautio joined the Company in June 1993 as
Vice President-Finance and Administration of
the School Products Group. She was appointed to
Corporate Vice President and Controller in
August 1993, and Senior Vice President
President, Finance International and Strategic
Brand Development and earlier as Vice
President, Finance for Green Giant
G. Nichols Simonds 2 56 Senior Vice President and Chief Information
Officer
Mr. Simonds joined the Company in September
1993 as Vice President and Chief Information
Officer. He was appointed to his current
position in August 1995. Prior to joining the
Company he was Vice President, Information
Systems for Honeywell, Inc. From 1987 through
1990, Mr. Simonds was Director of Management
Information Systems at Chrysler Corporation.
Jack Thornton 17 42 Senior Vice President and General Manager -
Printing & Publishing / Photography / Jostens
Canada
Mr. Thornton has held several management
positions with Jostens since starting as a
personnel manager in 1978. He was promoted to
Operations Manager of the Printing and
Publishing Division in 1989 and Vice President
of Operations-School Products Group one year
later. He was named a Vice President for
Jostens in February 1991. He was appointed a
Senior Vice President of the School Products
Group in October 1992. He was appointed
General Manager of the Printing & Publishing
business in April 1993. He assumed his current
position in August 1995.
</TABLE>
<PAGE>
Item 4A. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
--------------------------------------------------
<TABLE>
<CAPTION>
Years of
Service With
Name the Company Age Title and Business Experience
---- ------------ --- -----------------------------
<S> <C> <C> <C>
Greg S. Lea 2 43 Vice President and General Manager -
Colleges and Universities
Mr. Lea joined the Company in November 1993 as
Vice President - Total Quality Management. He
was named to his current position in June
1995. Prior to joining the Company, Mr. Lea
spent 19 years with International Business
Machines Corp. in various financial,
operations and quality positions, most
recently as Director of Market Driven Quality
for IBM's AS/400 Division.
Guy M. Marsala 1 44 Vice President and General Manager -
Scholastic
Mr. Marsala joined the Company in March 1995.
Prior to joining the Company he worked for ten
years for Pepsico, Inc. in various positions,
most recently as general manager for Southern
California.
Lee U. McGrath 1 39 Vice President and Treasurer
Mr. McGrath joined the Company in May 1995.
Prior to joining the Company he worked for six
years for H.B. Fuller Company in various
positions, most recently as assistant
treasurer.
</TABLE>
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
------------------------
The information under the captions "Unaudited Quarterly Financial
Data", contained on pages 37 and 38 and "Shareholder Inquiries" and
"Stock Exchange Listing" contained on page 41 in the Company's annual
report to shareholders for the year ended June 30, 1995, is
incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
-----------------------
The information under the caption "Five-Year Financial Summary"
contained on page 39 in the Company's annual report to shareholders
for the year ended June 30, 1995, is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
------------------------------------
The information under the caption "Management's Discussion and
Analysis" contained on pages 14 through 19 of the Company's annual
report to shareholders for the year ended June 30, 1995, is
incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The consolidated balance sheets of Jostens, Inc. as of June 30, 1995
and 1994, and the related statements of consolidated operations,
changes in shareholder's investment and cash flows for each of the
years in the three-year period ended June 30, 1995, together with the
related notes and the report of Ernst & Young LLP, independent
auditors, all contained on pages 20 through 36 of the Company's annual
report to shareholders for the year ended June 30, 1995, is
incorporated herein by reference.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
----------------------------------------------------
None.
<PAGE>
PART III
Item 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
----------------------------------------
In addition to certain information as to executive officers of the
Company included in Part I of this Form 10-K, the information
contained on pages 2 through 6 of the Company's Proxy Statement for
the Annual Meeting of Shareholders to be held October 26, 1995, with
respect to directors and executive officers of the Company, is
incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
----------------------
The information under the caption "Executive Compensation" contained
on pages 8 through 13 of the Company's Proxy Statement for the Annual
Meeting of Shareholders to be held on October 26, 1995, as filed with
the Securities and Exchange Commission is incorporated herein by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The information under the caption "Shares Held by Directors and
Officers" on pages 6 through 7 of the Company's Proxy Statement for
the Annual Meeting of Shareholders to be held October 26, 1995, is
incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
None.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
--------------------------------------------------------------
(a) 1. Financial Statements: The following financial statements of the
Company appearing on the indicated pages of the Annual Report to
Shareholders for the year ended June 30, 1995, are incorporated
herein by reference.
Pages in
Annual Report
-------------
Consolidated Balance Sheets -
June 30, 1995 and 1994 22 and 23
Statements of Consolidated Operations
for the Years Ended June 30,
1995, 1994, and 1993 21
Statements of Consolidated Changes
in Shareholders' Investment
for the Years Ended June 30,
1995, 1994, and 1993 25
Statements of Consolidated Cash
Flows for the Years Ended June 30,
1995, 1994, and 1993 24
Notes to Consolidated Financial
Statements 26 through 36
2. Financial Statement Schedule
Page in
10-K
-------
Schedule II - Valuation and
Qualifying Accounts S-1
Separate parent Company financial statements have been omitted
since the parent is primarily an operating Company and all
subsidiaries included in the consolidated financial statements are
wholly owned. All other schedules for which provision is made in
the applicable accounting regulations of the Securities and
Exchange Commission have been omitted as not required or not
applicable or the information required to be shown thereon is
included in the financial statements and related notes.
<PAGE>
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
--------------------------------------------------------------
(continued)
3. Executive Agreements
The following agreement is an exhibit to this Annual Report on Form
10-K:
Executive Supplemental Retirement Agreement with John L. Jones.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the
fourth quarter of the year ended June 30, 1995.
(c) Exhibits
3.a. Articles of Incorporation and Bylaws (Incorporated by
reference to Exhibit 3(a), contained in the Annual Report on
Form 10-K for the year ended June 30, 1993).
4.a. Rights Agreement dated August 9, 1988 between the Company
and Norwest Bank Minnesota, N.A. (incorporated by reference
to the Company's Form 8-A dated August 17, 1988, File No.
1-5064).
b. Form of Indenture, dated as of May 1, 1991, between Jostens,
Inc. and Norwest Bank Minnesota, N.A., as Trustee
(incorporated by reference to Exhibit 4.1 contained in the
Company's Form S-3, File No. 33-40233).
10.a. Company's 1984 Stock Option Plan (incorporated by reference
to the Company's Registration Statement on Form S-8, File
No. 2-95076).
b. Company's 1987 Stock Option Plan (incorporated by reference
to the Company's Registration Statement on Form S-8, File
No. 33-19308).
c. Company's 1992 Stock Incentive Plan (incorporated by
reference to Exhibit 10(d) contained in the Annual Report on
Form 10-K for the year ended June 30, 1992).
<PAGE>
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
--------------------------------------------------------------
(continued)
d. The Company's 1981 Performance Award Plan (incorporated by
reference to the Company's Form 8 dated May 2, 1991).
e. Form of Contract entered into with respect to Executive
Supplemental Retirement Plan (incorporated by reference to
the Company's Form 8 dated May 2, 1991).
f. Written description of the Company's Retired Director
Consulting Plan (incorporated by reference to the Company's
Form 8 dated May 2, 1991).
g. Form of Performance Share Agreement entered into with
respect to the Special Equity Performance Plan (filed
herewith).
h. Executive Supplemental Retirement Agreement with John L.
Jones (filed herewith).
i. Directors Deferred Compensation Plan (filed herewith).
11. Computation of earnings per share.
13. Annual Report to Shareholders for the year ended June 30,
1995.
21. List of Company's subsidiaries.
23. Consent of Independent Auditors.
27. Financial Data Schedule.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: September 22, 1995
By /s/ Robert C. Buhrmaster
----------------------------------------------------
Robert C. Buhrmaster
President 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 behalf of the registrants in
the capacities and on the dates indicated.
/s/ Robert C. Buhrmaster September 22, 1995
----------------------------------------------------
Robert C. Buhrmaster (Principal Executive Officer)
President and Chief Executive Officer and Director
/s/ Trudy A. Rautio September 22, 1995
----------------------------------------------------
Trudy A. Rautio (Principal Financial and Accounting
Officer)
Senior Vice President and Chief Financial Officer
/s/ Robert P. Jensen September 22, 1995
----------------------------------------------------
Robert P. Jensen
Chairman of the Board and Director
/s/ Lilyan H. Affinito September 22, 1995
----------------------------------------------------
Lilyan H. Affinito
Director
/s/ William A. Andres September 22, 1995
----------------------------------------------------
William A. Andres
Director
/s/ Mannie L. Jackson September 22, 1995
----------------------------------------------------
Mannie L. Jackson
Director
/s/ John W. Stodder September 22, 1995
----------------------------------------------------
John W. Stodder
Director
<PAGE>
JOSTENS INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
-------------------------------------------------------------------------------------------------------------------
Additions
-------------------------
Charged to
Balance at Charged to Other Balance at
Beginning Costs and Accounts - Deductions - End of
Description of Period Expenses Describe Describe Period
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserves and allowances deducted from asset accounts:
-------------------------------------------------------------------------------------------------------------------
Allowances for uncollectible accounts:
Year ended June 30, 1995 $13,749 $ 3,552 $ - $ 8,252 (1) $ 9,049
Year ended June 30, 1994 $ 6,869 $10,576 (8) $ - $ 3,696 (2) $13,749
Year ended June 30, 1993 $ 5,681 $ 2,871 $ - $ 1,683 (2) $ 6,869
-------------------------------------------------------------------------------------------------------------------
Allowances for sales returns:
Year ended June 30, 1995 $ 6,719 $12,763 $ - $11,973 (3) $ 7,509
Year ended June 30, 1994 $ 8,733 $10,843 $ - $12,857 (3) $ 6,719
Year ended June 30, 1993 $ 7,813 $13,209 $ - $12,289 (3) $ 8,733
-------------------------------------------------------------------------------------------------------------------
SFAS No. 109 valuation allowances:
Year ended June 30, 1995 $ 3,642 $ - $ - $ 1,525 (4) $ 2,117
Year ended June 30, 1994 $ 3,547 $ 95 $ - $ - $ 3,642
Year ended June 30, 1993 $ 3,547 $ - $ - $ - $ 3,547
-------------------------------------------------------------------------------------------------------------------
Overdraft reserves:
Year ended June 30, 1995 $ 7,796 $ 1,943 $ - $ 3,582 (2) $ 6,157
Year ended June 30, 1994 $ 3,243 $ 4,553 (8) $ - $ - $ 7,796
Year ended June 30, 1993 $ 1,787 $ 1,456 $ - $ - $ 3,243
-------------------------------------------------------------------------------------------------------------------
Reserves and allowances added to liability accounts:
-------------------------------------------------------------------------------------------------------------------
Restructuring charges:
Year ended June 30, 1995 $39,821 $ - $ - $31,185 (5) $ 8,636
Year ended June 30, 1994 $38,203 $28,668 $ - $27,050 (6) $39,821
Year ended June 30, 1993 $ - $40,292 $ - $ 2,089 (7) $38,203
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Note (1) - Uncollectible accounts written off - net of recoveries ($5,796) plus
disposition of Jostens Learning ($2,456).
Note (2) - Uncollectible amounts written off - net of recoveries.
Note (3) - Returns processed against reserve.
Note (4) - Reduced for utilization of Jostens Learning NOL.
Note (5) - Payments ($21,090), Noncash items ($3,523), and disposition of
Jostens Learning ($6,572).
Note (6) - Payments ($12,050) and disposition of Sportswear business ($15,000).
Note (7) - Amounts paid.
Note (8) - Include change in estimate.
S-1
<PAGE>
EXHIBIT 10.g. Form of Performance Share Agreement entered into with Respect to
the Special Equity Performance Plan
JOSTENS, INC.
1992 STOCK INCENTIVE PLAN
PERFORMANCE SHARE AGREEMENT
THIS AGREEMENT is entered into and effective as of this ____ day of
_________, 1995 (the "Date of Grant"), by and between Jostens, Inc. (the
"Company") ______________ and (the "Grantee").
A. The Company has adopted the Jostens, Inc. 1992 Stock Incentive Plan
(the "Plan") authorizing the Board of Directors of the Company, or a committee
as provided for in the Plan (the Board or such a committee to be referred to as
the "Committee"), to grant performance share awards to certain employees and
non-employee consultants and independent contractors or agents of the Company
and its Subsidiaries (as defined in the Plan).
B. The Company desires to give the Grantee a proprietary interest in the
Company and an added incentive to advance the interests of the Company by
granting to the Grantee performance shares of common stock of the Company
pursuant to the Plan.
Accordingly, the parties agree as follows:
ARTICLE 1. GRANT OF AWARD.
---------------
The Company hereby grants to the Grantee as a matter of separate inducement
and agreement in connection with the Grantee's services to the Company, and not
in lieu of any salary or other compensation for services, a performance share
award (the "Award") consisting of __________ shares (the "Award Shares") of
the Company's common stock, par value $.33-1/3 per share (the "Common Stock"),
according to the terms and subject to the restrictions and conditions
hereinafter set forth and as set forth in the Plan. Upon the achievement of the
performance criteria set forth in Section 2.1 below, the Award Shares shall be
converted to Restricted Stock Awards. Reference to the Award Shares in this
Agreement shall be deemed to include the Dividend Proceeds (as defined in
Section 3.2 of this Agreement) with respect to Award Shares which have been
converted to Restricted Stock Awards in accordance with Article 2 of this
Agreement.
ARTICLE 2. GRANT RESTRICTION.
-----------------
2.1. Restriction and Forfeiture. The Grantee's right to receive
Restricted Stock Awards (each grant individually and all grants pursuant to this
Section 2. collectively shall be referred to as an "RSA") shall be subject to
the following:
<PAGE>
(a) (i) Grant. Effective June 30, 1995, an RSA shall be granted based
on the Company's fiscal year ending June 30, 1995 EBIT as reported (as
defined in Schedule A attached hereto and made a part hereof) as indicated
in the following table:
EBIT Number of Award Shares
---- ----------------------
For EBIT amounts between the points listed above, the number of Award
Shares which shall be converted to an RSA shall be determined pro rata
between the corresponding Number of Award Shares listed above.
(ii) Forfeiture. To the extent that the number of Award Shares which are
converted to an RSA pursuant to Section 2.1 (a)(i) is less than ___________
such number of Award Shares that is less than ___________ shall be
forfeited effective June 30, 1995. The Grantee's right to retain the
restricted stock subject to the RSA granted pursuant to this Section 2.1(a)
shall be subject to the Grantee remaining in the continuous employ or
service of the Company or any Subsidiary through June 30, 1997 and other
terms and conditions set forth in the agreement granting the RSA.
(b) (i) Grant. Effective June 30, 1996, an RSA shall be granted
based on the Company's fiscal year ending June 30, 1996 EBIT as reported
(as defined in Schedule A attached hereto and made a part hereof) as
indicated in the following table:
EBIT Number of Award Shares
---- ----------------------
For EBIT amounts between the points listed above, the number of Award
Shares which shall be converted to an RSA shall be determined pro rata
between the corresponding Number of Award Shares listed above.
(ii) Forfeiture. To the extent that the number of Award Shares which are
converted to an RSA pursuant to Section 2.1 (b)(i) is less than __________
such number of Award Shares that is less than ___________ shall be
forfeited effective June 30, 1996. The Grantee's right to retain the
restricted stock subject to the RSA granted pursuant to this Section 2.1(b)
shall be subject to the Grantee remaining in the continuous employ or
service of the Company or any Subsidiary through June 30, 1998 and other
terms and conditions set forth in the agreement granting the RSA.
<PAGE>
(c) (i) Grant. Effective June 30, 1997, an RSA shall be granted based
on the Company's fiscal year ending June 30, 1997 EBIT as reported (as
defined in Schedule A attached hereto and made a part hereof) as indicated
in the following table:
EBIT Number of Award Shares
---- ----------------------
For EBIT amounts between the points listed above, the number of Award
Shares which shall be converted to an RSA shall be determined pro rata
between the corresponding Number of Award Shares listed above. In no event
will the number of Award Shares which are converted to an RSA pursuant to
this Section 2.1(c) exceed _________ less the number of Award Shares which
previously have been converted to an RSA pursuant to Sections 2.1 (a)(i) or
(b)(i) above (to the extent the number of such Award Shares converted to an
RSA exceed _________). The Grantee's right to retain the restricted stock
subject to the RSA granted pursuant to this Section 2.1(c) shall be subject
to the Grantee remaining in the continuous employ or service of the Company
or any Subsidiary through June 30, 1999 and other terms and conditions set
forth in the agreement granting the RSA.
(ii) Forfeiture. Any Award Shares which have not been forfeited pursuant
to Sections 2.1(a)(ii) and (b)(ii) or converted to a RSA pursuant to
Sections 2.1 (a)(i), (b)(i) or (c)(i) shall be forfeited effective June
30, 1997.
2.2 Termination of Employment or Other Service. Except as otherwise
provided in Section 2.3 below, in the event that the Grantee's employment or
other service with the Company and all Subsidiaries is terminated for any
reason, all rights of the Grantee under this Agreement shall immediately
terminate without notice of any kind, and this Award shall be terminated and the
Award Shares for which an RSA has not been granted shall be forfeited. The
disposition of Award Shares for which an RSA has been granted shall be
determined by the agreement granting such RSA.
2.3 Change in Control.
-----------------
(a) For purposes of this Section 2.3, the term "Change in
Control" shall have the meaning set forth in Section 13.1 of the Plan.
(b) If any events constituting a Change in Control of the
Company shall occur, then all restrictions applicable to Award Shares which
have not been forfeited pursuant to Sections 2.1(a)(ii), (b)(ii) or (c)(ii)
or converted to a RSA pursuant to Sections 2.1 (a)(i), (b)(i) or (c)(i)
shall immediately lapse and terminate, whether or not the Grantee remains
in the employ or service of the Company or any Subsidiary.
<PAGE>
(c) Notwithstanding anything in this Section 2.3 to the contrary,
if, with respect to the Grantee, acceleration of the vesting of this Award
(which acceleration could be deemed a "payment" within the meaning of
Section 280G(b)(2) of the Code), together with any other payments which the
Grantee has the right to receive from the Company or any corporation which
is a member of an "affiliated group" (as defined in Section 1504(a) of the
Code without regard to Section 1504(b) of the Code) of which the Company is
a member, would constitute a "parachute payment" (as defined in Section
280G(b)(2) of the Code), the payments to the Grantee as set forth herein
shall be reduced to the largest amount as will result in no portion of such
payments being subject to the excise tax imposed by Section 4999 of the
Code.
ARTICLE 3. ISSUANCE OF AWARD SHARES.
------------------------
3.1 No Privileges of a Shareholder; Transferability. The Grantee shall
not be recorded on the books of the Company as the owner of any Award Shares
until such time as an RSA has been granted pursuant to Section 2.1 above. At
such time the Company shall issue one or more duly issued and executed stock
certificates evidencing the same. Such stock certificates shall be held by the
Company and delivered to the Grantee only as the service period restrictions
contained in the RSA lapse. The Award Shares shall not be assignable or
transferable by the Grantee, either voluntarily or involuntarily, and shall not
be subjected to any lien, directly or indirectly, by operation of law or
otherwise. Any attempt to transfer, assign or encumber the Award Shares other
than in accordance with this Agreement and the Plan shall be null and void and
shall void the Award.
3.2 Dividends and Other Distributions. The Grantee shall have no right
to receive dividends or distributions with respect to Award Shares, including
stock dividends or dividends in kind, dividends or distributions paid in cash,
the proceeds of any stock split or the proceeds resulting from any changes or
exchanges described in Article 4 of this Agreement (all of which shall
collectively be referred to as "Dividend Proceeds").
ARTICLE 4. ADJUSTMENTS.
-----------
In the event of any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split, combination of
shares, rights offering or divestiture (including a spin-off) or any other
change in the corporate structure or shares of the Company, the Committee (or,
if the Company is not the surviving corporation in any such transaction, the
board of directors of the surviving corporation), in order to prevent dilution
or enlargement of the rights of the Grantee, shall make appropriate adjustment
(which determination shall be conclusive) as to the number and kind of
securities subject to this Award.
<PAGE>
ARTICLE 5. LIMITATION OF LIABILITY.
-----------------------
Nothing in this Agreement shall be construed to (a) limit in any way the
right of the Company to terminate the employment or service of the Grantee at
any time, or (b) be evidence of any agreement or understanding, express or
implied, that the Company will retain the Grantee in any particular position at
any particular rate of compensation or for any particular period of time.
ARTICLE 6. WITHHOLDING TAXES.
-----------------
The Company is entitled to (a) withhold and deduct from future wages of the
Grantee all legally required amounts necessary to satisfy any federal, state or
local withholding tax requirements attributable to the receipt of the Award, the
receipt of dividends or distributions on Award Shares, or the lapse or
termination of the service period restrictions applicable to an RSA granted
pursuant to Section 2.1 above, or (b) require the Grantee to promptly remit the
amount of such withholding to the Company. In the event that the Company is
unable to withhold such amounts, for whatever reason, the Grantee hereby agrees
to pay to the Company an amount equal to the amount the Company would otherwise
be required to withhold under federal, state or local law.
ARTICLE 7. SUBJECT TO PLAN.
---------------
The Award and the Award Shares granted pursuant to this Agreement have been
granted under, and are subject to the terms of, the Plan. Terms of the Plan are
incorporated by reference herein in their entirety, and the Grantee, by
execution hereof, acknowledges having received a copy of the Plan. The
provisions of this Agreement shall be interpreted as to be consistent with the
Plan, and any ambiguities herein shall be interpreted by reference to the Plan.
In the event that any provision hereof is inconsistent with the terms of the
Plan, the terms of the Plan shall prevail.
ARTICLE 8. MISCELLANEOUS.
-------------
8.1 Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.
8.2 Governing Law. This Agreement and all rights and obligations
hereunder shall be construed in accordance with the Plan and governed by the
laws of the State of Minnesota.
<PAGE>
8.3 Entire Agreement. This Agreement and the Plan set forth the entire
agreement and understanding of the parties hereto with respect to the grant and
exercise of this Award and the administration of the Plan and supersede all
prior agreements, arrangements, plans and understandings relating to the grant
and vesting of this Award and the administration of the Plan.
8.4 Amendment and Waiver. Other than as provided in the Plan, this
Agreement may be amended, waived, modified or canceled only by a written
instrument executed by the parties hereto or, in the case of a waiver, by the
party waiving compliance.
The parties hereto have executed this Agreement effective the day and year
first above written.
JOSTENS, INC.
By _______________________
Its Vice President and Treasurer
----------------------------
GRANTEE
[By execution hereof, the
Grantee acknowledges having
received a copy of the Plan.]
<PAGE>
SCHEDULE A
The Company's Earnings Before Interest and Taxes ("EBIT") is defined as Net
Income as publicly reported in the Consolidated Financial Statements for the
applicable Fiscal Year, adjusted to eliminate the effects of the following
items:
Charges or credits for income taxes
Charges or credits for net interest expense (income)
Charges for discontinued operations
Charges for cumulative effects of change in accounting principles
Charges for extraordinary items
Charges for any other extraordinary or unusual items separately identified
and quantified in the MD&A section of the Annual Report of Form 10-K or in
the footnotes to the Financial Statements
The Compensation Committee of the Company's Board of Directors may use "negative
discretion" to reduce the effect of eliminating extraordinary charges in the
EBIT calculation for which the Committee believes management should bear
responsibility.
<PAGE>
EXHIBIT 10.h. EXECUTIVE SUPPLEMENTAL RETIREMENT AGREEMENT WITH
JOHN L. JONES
JOSTENS, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AGREEMENT, made this 15th day of November, 1992, between Jostens, Inc., a
Minnesota corporation (hereinafter "Jostens"), and JOHN L. JONES (hereinafter
"Employee").
WITNESSETH THAT:
WHEREAS, the Employee is currently employed by and is an officer of
Jostens; and
WHEREAS, Employer desires to encourage the Employee to continue his or her
employment with Jostens;
NOW, THEREFORE, it is agreed as follows:
1. Definitions. For all purposes of this Agreement, except as otherwise
expressly provided, or unless the context otherwise requires, the terms defined
in this section have the meanings assigned to them and include the plural as
well as the singular. Certain terms defining the parties hereto are defined in
the first paragraph of this instrument.
A. "Employer" means Jostens, Inc. plus all of its direct or indirect
subsidiaries in which it directly or indirectly owns at least an
80% ownership interest.
B. "Officer" means a corporate officer position of at least Vice
President or above, held with Jostens, excluding any such
positions that may have been held with any of Jostens'
subsidiaries.
C. "Supplemental Retirement Benefit" means the benefit to be paid as
described in and pursuant to the calculations set out in Section
2 herein.
D. "Special Retirement Benefit" means the benefit to be paid as
described in and pursuant to Section 11 herein.
E. "Full-time Employee" means the Employee has actively worked for
the Employer for at least 1,000 hours each year and/or any period
of time the Employee is by special agreement receiving continued
salary payments after full-time active employment has been
discontinued.
F. "Time of Service" means the number of years spent by the Employee
in the full-time employ of the Employer as defined in Section lE.
above plus credit (if applicable) which has been allowed by
Employer for time spent with any company prior to
<PAGE>
its acquisition by Employer or for time spent as a full-time
sales representative of Employer. For purposes of determining
time of service, no credit will be allowed for time of service
incurred prior to Employee's attainment of the age of thirty
(30).
G. "Base Salary" means base monthly salary only, exclusive of any
other compensation paid such as but not limited to, bonuses,
performance awards, vehicle allowances and financial services for
the last full year when the Employee was in the full-time and
active employment of the Employer.
H. "Beneficiary" means only those heirs provided for by law or
provided for in accordance with the Employee's Last Will and
Testament.
I. "Named Beneficiary" means the beneficiary or beneficiaries
specifically named and identified on the Employee's group life
insurance policies with the Employer.
J. "Deferred Vested Retirement Benefit" means that benefit
specifically defined in Section 6B. herein.
K. "Total Disability" means that disability as determined under
Jostens' Long-Term Disability Insurance Program.
2. Supplemental Retirement Benefit. If the Employee remains and
continues as a full-time Employee of the Employer until he attains the age of
sixty (60) years and has five (5) years in time of service with the Employer,
then commencing with the first day of the second calendar month immediately
following the termination of the Employee's employment with Employer, Jostens
will pay a supplemental retirement benefit, in equal monthly installments, to
the Employee during his remaining lifetime. Said payments shall be made to the
Employee only if living on each payment date. The supplemental retirement
benefits to be paid hereunder shall be equal to one percent (1%) of the
annualized base salary rate that the Employee was receiving during the
Employee's last full active year of employment with Employer, multiplied by the
time of service with the Employer, not to exceed thirty (30) years. The results
of this calculation shall be divided by 12 to arrive at the monthly benefit
payment.
3. Survivor Benefit. If the Employee has retired but is deceased on any
payment date, payments equal to fifty percent (50%) of said supplemental
retirement benefit shall be paid to the Employee's spouse, if any. Payments to
the Employee's spouse shall cease the month following the month when the
Employee, if living, would have attained age 80.
<PAGE>
For purposes of the survivor benefit to be paid under this Section 3,
the only person eligible for this benefit shall be the then living current
spouse of the Employee. No survivor benefit payments to be paid under this
Section 3 shall be paid to any other heirs or beneficiaries of the Employee or
those of his spouse upon their respective deaths.
4. Pre-retirement Death Benefit. If the Employee is terminated as a
result of total disability or remains and continues in the full-time employ of
the Employer, but dies at any time before he qualifies to receive, earns or is
paid any supplemental retirement benefits under this plan, then regardless of
his age at death, a pre-retirement death benefit shall be paid to the
Employee's named beneficiary. Said pre-retirement death benefit shall be paid
in a single lump sum amount and shall be equal to twice the annualized base
salary of the Employee.
If the Employee's employment shall have terminated, and if he shall
have earned a deferred vested retirement benefit, and if the Employee's death
occurs before the payment of any of the deferred vested retirement benefits
begin, then regardless of his age at death, a special pre-retirement death
benefit payment will be paid to the Employee's beneficiary, in a single lump sum
amount equal to twice the annualized base salary of the Employee at the time of
termination of his employment.
5. Disability. If the Employee's employment terminates by reason of
total disability, he shall continue to accrue time of service under the deferred
vested retirement benefit plan until he attains the age of 55. In the event the
Employee has not achieved 5 years in time of service prior to age 55, he shall
continue to accrue time of service up to a total of 5 years.
Notwithstanding the benefit calculations set out for the deferred
vested retirement benefit herein, the amount of the monthly benefit payable to
the disabled Employee at age 55 (or later if required to achieve 5 years in time
of service) pursuant to this Section 5 shall be based on the Employee's
annualized base salary rate at the time of commencement of disability
multiplied by the time of service years granted pursuant to the above accrual
provisions.
6. Termination of Employment.
A. If the Employee's employment is terminated for any reason, other
than by death or as a result of total disability before the
completion of 5 years of service with the Employer, which period
shall include any time the Employee receives any salary
continuation payments from the Employer, then no benefits
whatsoever shall be due Employee under the terms of this
Agreement.
<PAGE>
B. If the Employee following termination of employment is entitled
to a deferred vested retirement benefit, Jostens may, at its
sole option, calculate the present value of such benefit using
appropriate actuarial tables and applying an appropriate
discount based on the prime rate in use by the First National
Bank of Minneapolis, Minneapolis, Minnesota, or any successor
organization, at the time of the Employee's termination. In such
event, Jostens shall pay said present value in one lump sum to
the terminated Employee in lieu of all other benefits otherwise
due or payable under this Agreement.
7. Continuation of Employment. If the Employee, with the consent of the
Employer, shall continue in the employ of the Employer after attaining the age
of sixty (60) years, any supplemental retirement benefits otherwise payable
hereunder shall be deferred to the time of actual retirement. In such event,
there shall be no credit for time of service and no increases in any benefits
hereunder on account of services performed after the age of 60 years.
8. Suicide. If within one year from the execution date of this
Agreement, the Employee dies as a result of suicide, then no benefits or
payments whatsoever shall be due or owing to the Employee's beneficiaries under
the terms of this Agreement.
9. Life Insurance Contract. Jostens has the right to elect to purchase
a life insurance contract or contracts on the life of the Employee, for the
purpose of providing Jostens with cash funds to meet and discharge the payments
to be made by it under this Agreement. In such event, Jostens shall at all
times be the sole and absolute owner of any such life insurance contract or
contracts and the sole beneficiary thereof, and shall have the full and
unrestricted right to use or exercise all values, privileges and options
available thereunder as it may desire, without the knowledge or consent of any
other person or persons. It is expressly understood and agreed that
notwithstanding any of the terms, provisions or conditions of this Agreement,
neither the Employee nor his beneficiary, his estate, or any other person,
persons, or their executors or administrators shall have any right, title or
interest whatsoever in or to any such life insurance contract or contracts.
10. Discharge for Cause. Notwithstanding any other provisions of this
Agreement to the contrary, in the event the Employee's employment is terminated
for cause, he shall forfeit all amounts otherwise due or payable to him or her
hereunder. For purposes of this Agreement, "terminated for cause" shall mean a
termination from the employment of the Employer, because of a dishonest act as
determined by the Employer which has or may result in significant injury to the
Employer, its business reputation or financial structure.
<PAGE>
11. Special Retirement Benefit. If the Employee satisfies the service
requirements contained in Section 2, he shall also be entitled to a Special
Retirement Benefit as described below in this paragraph.
In addition to any other benefit payable under this plan, Employee
shall, upon termination of his employment with the Company after completing five
or more years of continuous service but prior to his attaining age 65, be
entitled to a monthly Special Retirement Benefit under this plan that is equal
to the monthly Early Retirement Benefit he has then accrued under the provisions
of Jostens Pension Plan "D". Such benefit shall commence as of the first day of
the second month following the date on which his employment terminates and shall
cease as of the last monthly benefit payment preceding the earlier of (i) the
date of his death and/or (ii) the month in which he is first entitled to
commence benefits under such Plan "D". The amount of such benefit shall,
however, be reduced in the manner provided in Plan "D" for the actuarial
reduction of benefits commencing prior to the Employee's Normal Retirement Age.
However, if the benefits the Employee receives at his Normal
Retirement Age under Pension Plan "D" are greater than those received under the
monthly Special Retirement Benefit provided under this Section 11, the
difference shall be offset each month first against any Executive Supplemental
Pension Plan benefits he may have a right to receive, and if none or they are
exhausted or are not available for such offset, then offset monthly against any
Executive Supplemental Retirement Benefits he is eligible to receive under
Section 2 of this Agreement.
Subject to the above conditions, all payments to Employee under this
Special Retirement Benefit section shall be governed by the provisions of
Pension Plan "D".
12. Noncompete. In consideration for the benefits to be paid to the
Employee hereunder, the Employee agrees that from the date of his termination of
employment with the Employer and during the entire term he is receiving any
payments under this Agreement he will refrain from performing services of any
kind, as an employee or otherwise, whether directly or indirectly, to or for the
benefit of any person, firm or corporation whose business the Board of Directors
of Employer shall in good faith determine to be competitive with any of the
businesses that the Employer was involved in at the time of the Employee's
retirement. Notice of such determination shall be mailed to the Employee at his
last known mailing address; in the event that the Employee fails to discontinue
such activities, all amounts then remaining unpaid under this Agreement shall be
automatically forfeited, and the Employee agrees that the Employer shall have no
past or future liability to him or to any other person hereunder.
13. Change of Control. In the event that Jostens, Inc. is acquired by,
or substantially all of its assets are sold to, another company or legal entity,
the Employee shall for purposes
<PAGE>
of calculating any benefits of any kind provided for under this Agreement, be
immediately credited with a minimum of at least five (5) years in time of
service and shall become 100% vested in the supplemental retirement benefit.
14. Employment at Will. The Employee hereby acknowledges that he is an
Employee at will and that nothing contained herein constitutes any obligation or
commitment by the Employer to continue the Employee in the Employer's
employment.
15. Release. As a condition to qualifying for any of the benefit
payments provided for hereunder, the Employee at the termination of his
employment and prior to receiving any payments under this Agreement, agrees to
execute a general release agreement releasing the Employer from any and all
claims or actions of any kind he may have against it arising out of the
Employee's employment with the Employer.
16. Additional Considerations.
A. Neither the Employee, his beneficiary, nor any other person
claiming through or under him shall have any right to commute,
encumber, or dispose of the right to receive payments hereunder,
all of which payments and the right thereto are expressly
declared to be nonassignable. In the event of any attempted
assignment or other disposition, all benefits hereunder are
forfeited and Jostens shall have no further liability to
Employee hereunder. This paragraph shall not, however, restrict
a beneficiary's exercise of a power of appointment conferred
upon such beneficiary by the Employee's beneficiary designation.
B. This Agreement shall be binding upon and inure to the benefit of
any successor of Jostens, including, but not limited to, any
person, firm, corporation or other business entity which at any
time, whether by merger, purchase, or otherwise acquires all or
substantially all of the assets or business of Jostens, and upon
the Employee, his designated beneficiary, and personal
representative.
C. Jostens shall make all determinations as to the rights to
benefits under this Agreement. Any decision by Jostens denying
a claim by the Employee or his beneficiary for benefits under
this Agreement shall be stated in writing and delivered or
mailed to the Employee or such beneficiary. Such decision shall
set forth the specific reasons for the denial, written to the
best of Jostens' ability in a manner that may be understood
without legal or actuarial counsel. In addition, Jostens shall
afford a reasonable
<PAGE>
opportunity to the Employee or such beneficiary for a full and
fair review of the decision denying such claim.
D. This Agreement may not be amended, altered or modified, except
by a written instrument signed by the parties hereto, or their
respective successors or assigns, and may not be otherwise
terminated except as provided herein.
E. This Agreement, and the rights of the parties hereunder, shall
be governed by and construed in accordance with the laws of the
State of Minnesota.
IN WITNESS WHEREOF, the parties have executed this Agreement at
Minneapolis, Minnesota, in duplicate, on the date first above written.
JOSTENS, INC.
/s/ H. William Lurton
------------------------------
H. William Lurton
Chief Executive Officer
/s/ John L. Jones
------------------------------
John L. Jones
Senior Vice President-Human
Resources
<PAGE>
FORM
EXECUTIVE SUPPLEMENTAL RETIREMENT BENEFIT SUMMARY
I. BENEFIT
. One percent (1%) of base salary rate (excluding bonus) for each year
of service
. Maximum of 5%
. Salary increases after age 60 are not considered
. Benefit is payable for life
. Time of service includes credit for period continued salary payments
are made after full-time active service has been discontinued
II. ELIGIBILITY
. Minimum of 5 years service
III. DEATH BENEFIT
(a) Pre-Retirement death -
Lump sum two times salary (equivalent to one times salary life
insurance benefit)
Payable to the beneficiary listed on the Group Term Life Insurance
Beneficiary Form on file in the Human Resources Department.
(b) Post-Retirement Survivor Benefit
Fifty percent (50%) of annual benefit payable to surviving spouse
until date when employee would have attained age 80.
IV. VESTING
(a) Death Benefit
When eligible for coverage
(b) Retirement and survivor benefit
Five years of service
<PAGE>
EXHIBIT 10.i. Directors Deferred Compensation Plan
JOSTENS, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
SECTION 1. DEFINITIONS.
The following words and terms shall have the indicated meanings wherever they
appear in the Plan:
1.1. "Board of Directors", "Directors" or "Director" shall mean, respectively,
the Board of Directors, the Directors or a Director of the Company.
1.2. "Committee" shall mean the Compensation Committee of the Board of
Directors.
1.3. "Company" shall mean Jostens, Inc.
1.4. "Compensation" shall mean compensation otherwise payable to a Participant
in cash for services as an "independent" (i.e., non-employee) Director,
including, without limitation, retainer fees for service on the Board and Board
committees and fees for attendance at regular or special meetings of the Board
and Board committees, but does not include travel expense allowances or other
expense reimbursement.
1.5. "Deferred Cash Account," "Deferred Shares Account" or "Account" shall mean
the separate account established under the Plan for each Participant, as
described in Sections 4.2 or 4.3 hereof.
1.6. "Market Price" shall mean the closing sale price for Shares on a specified
date or, if Shares were not then traded, on the most recent prior date when
Shares were traded, all as is quoted in The Wall Street Journal reports of New
York Stock Exchange - Composite Transactions.
1.7. "Notice Form" shall mean the form attached hereto and marked as Exhibit A
or any other document which incorporates information substantially similar to
Exhibit A.
1.8. "Participant" shall mean each Director who participates in the Plan in
accordance with its terms and conditions.
1.9. "Plan" shall mean the Jostens, Inc. Directors' Deferred Compensation Plan
as set forth herein, or as it may be amended from time to time by the Board of
Directors.
1.10. "Secretary" shall mean the Secretary of the Company who shall have
responsibility for those functions assigned under the Plan.
<PAGE>
1.11. "Shares" shall mean shares of common stock of the Company, $.33-1/3 par
value, or such other class or kind of shares or other securities as may be
applicable pursuant to Section 4.3(c) hereof.
SECTION 2. PARTICIPATION.
2.1. Each Director is eligible to participate in the Plan so long as such
Director is "independent" (i.e., is not an employee of the Company or any of its
subsidiaries or affiliates).
2.2. (a) A Director may elect to receive Compensation currently in the form of
cash or Shares or to defer Compensation into a Deferred Cash Account or a
Deferred Shares Account pursuant to the Plan by giving a properly
completed Notice Form to the Secretary. The effective date for his or her
election shall be the first day of the calendar quarter that follows by at
least six months the Secretary's receipt of the Notice Form; provided,
however, that (i) in conjunction with the adoption of the Plan, a Director
may make such an election pursuant to the Plan effective as of January 1,
1995 by giving a properly completed Notice Form to the Secretary on or
before December 31, 1994, and (ii) upon becoming a Director during a
calendar quarter, the Director may make such an election pursuant to the
Plan as of the effective date of his or her election or appointment as a
Director by giving a properly completed Notice Form to the Secretary
within ten (10) days after such date. Such election shall remain in
effect until the termination of the Participant's services as a Director,
or he or she provides a subsequent properly completed Notice Form to the
Secretary requesting the termination or the modification of such election.
(b) Except as provided in Section 2.2(e) hereof, a Participant may modify
his or her election pursuant to the Plan effective as of the first day of
a calendar quarter that follows by at least six months the Secretary's
receipt of a properly completed Notice Form.
(c) A Participant may terminate his or her election effective as of the
first day of the calendar quarter that follows by at least six months the
Secretary's receipt of a properly completed Notice Form.
(d) A Participant may designate a beneficiary and may thereafter change
his or her beneficiary at any time by providing a properly completed
Notice Form to the Secretary. To be effective, a beneficiary designation
must have been received by the Secretary prior to the Participant's death.
(e) The Notice Form containing an initial deferral election must specify
the method of distribution of amounts payable pursuant to the Plan in
accordance with Section 5 hereof, and such election regarding the method
of distribution
<PAGE>
shall apply to all Compensation deferred under the Plan and earnings
thereon.
(f) Each Participant in the Plan shall have a one-time opportunity to
elect to transfer to such Participant's Deferred Shares Account all or a
portion of the existing deferred compensation balances attributable to
such Participant under the Company's Deferred Compensation Plan for Non-
Employee Directors, as amended effective October 30, 1985 (the "Prior
Plan") as well as amounts deferred under the Prior Plan but not yet
credited to the Participant's account thereunder. Such transfers will be
effective on January 1, 1995 and, if made with respect to less than all of
such existing balance, must be made in 25% increments. Notice of such
election must be in writing and must be received by the Secretary on or
before December 31, 1994.
(g) To the extent that a Participant does not elect to have amounts
deferred under the Prior Plan transferred to the Participant's Deferred
Shares Account under the Plan as provided in Section 2.2(f) above, such
deferred amounts under the Prior Plan shall, as of January 1, 1995, be
transferred automatically to such Participant's Deferred Cash Account
under the Plan. To the extent that the method and time of distribution of
amounts deferred under the Prior Plan differ from the method and time of
distribution of amounts deferred under the Plan, a subaccount shall be
established on behalf of such Participant under the Deferred Cash Account,
and such subaccount balance shall be distributed at the time and in
accordance with the method described in the Prior Plan as in effect as of
December 31, 1994. Following December 31, 1994, no further amounts may be
deferred pursuant to the Prior Plan, which shall terminate as of such
date.
(h) An election pursuant to the Plan shall be irrevocable as of the latest
date by which it must be made to be effective.
2.3. To the extent that a Participant does not elect either to defer
Compensation in accordance with Section 4 hereof or to receive Compensation
currently in the form of Shares in accordance with Section 3 hereof, such
Participant will be deemed to have elected to receive such Compensation
currently in the form of cash on the first day following the end of each
calendar quarter to which such Compensation relates.
SECTION 3. CURRENT ELECTION.
3.1. A Participant may elect on a properly completed Notice Form that all (but
not less than all) of such Participant's Compensation be paid currently in the
form of cash or Shares. The Participant's Notice Form must specify the portions
of such Compensation to be paid in cash and Shares (provided that
<PAGE>
allocations between cash and Shares may only be made in increments of 25%).
3.2. In connection with such an election, Compensation that would otherwise be
paid to a Participant in cash at the end of a calendar quarter shall instead be
deposited as of the first day after the end of such calendar quarter into an
account established on behalf of such Participant in the Company's dividend
reinvestment plan. Following such deposit, Shares shall be purchased on behalf
of such Participant, and dividends with respect to such Shares reinvested,
pursuant to and in accordance with the terms of such dividend reinvestment plan.
Any excess cash amounts following the purchase of Shares shall be held, carried
over or distributed in accordance with the terms of such dividend reinvestment
plan.
SECTION 4. DEFERRAL ELECTION.
4.1. A Participant may elect on a properly completed Notice Form that all (but
not less than all) of such Participant's Compensation be deferred until the
termination of his or her services as a Director. The Participant's Notice Form
must specify the portions of the deferred amount to be credited to the
Participant's Deferred Cash Account and Deferred Shares Account (provided that
allocations between the Deferred Cash Account and the Deferred Shares Account
may only be made in increments of 25%).
4.2. (a) A Deferred Cash Account shall be established for each Participant who
has elected such an Account to which there shall be credited the amount of
Compensation that he or she elects to defer under such option. Each such
credit shall be made to the Account as of the first day after the end of
the calendar quarter for which such Compensation would have otherwise been
payable to the Participant in cash.
(b) Deferred Compensation credited to a Participant's Deferred Cash
Account is assumed to earn interest for each calendar quarter at a rate
equal to one percent (1%) plus the rate shown for U.S. Treasury Notes with
an original maturity of not less than seven (7) years and with a remaining
maturity closest to seven (7) years, in the "representative mid-afternoon
over-the-counter quotations supplied by the Federal Reserve Bank of New
York City, based on transactions of $1 million or more," as reported in
The Wall Street Journal. The rate to be paid during each calendar quarter
shall be fixed for such calendar quarter as of the first business day of
such calendar quarter. The interest to be credited to the Deferred Cash
Account shall be credited as of the end of each calendar quarter in
arrears. Notwithstanding the foregoing, the Committee may at any time or
from time to time change or otherwise modify the basis or the method of
calculating and crediting such interest, provided that such change or
modification may effect amounts credited to the Deferred Cash Account
pursuant to elections prior to the effective
<PAGE>
date of such change or modification only if the Committee determines in
good faith at the time of such change or modification that it is
reasonably likely, on a long-term basis, that such change or modification
will not result in materially lower earnings.
4.3. (a) A Deferred Shares Account shall be established for each Participant
who has elected such an Account to which there shall be credited, as of
the first day after the end of the calendar quarter for which Compensation
would have otherwise been payable to the Participant in cash, the number
of full Shares that could have been purchased at the Market Price of
Shares on such date with (i) the total amount of the Compensation which he
or she elected to defer during the preceding calendar quarter under such
option, (ii) any excess amounts carried over from a previous calendar
quarter as described in the following sentence, and (iii) the amount of
dividend equivalents paid with respect to such Account during such
preceding calendar quarter as provided in Section 4.3(b) hereof. If such
total amount is not evenly divisible by such Market Price, the excess
shall be carried over and credited on the first day of the next following
calendar quarter.
(b) As of each dividend payment date with respect to Shares occurring
after Shares are initially credited to a Participant's Deferred Shares
Account and until distribution in full of Shares with respect to such
Deferred Shares Account has been completed pursuant to Section 5 hereof,
there shall be paid with respect to such Deferred Shares Account an amount
equal to the dividends that would then have been payable to the
Participant if the number of Shares credited to the Deferred Shares
Account on the record date for such dividend payment had then been
registered in his or her name. Dividend equivalents paid with respect to
such Account shall be held until the first day of the following calendar
quarter, at which time such amounts will be credited to the Deferred
Shares Account in the manner described in Section 4.3(a) hereof.
(c) In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering or
any other change in the corporate structure or Shares of the Company, the
Committee shall make such adjustment, if any, as it may deem appropriate
in the number and kinds of Shares credited to the Deferred Shares Account.
4.4. As soon as practicable after the end of each calendar year, each
Participant will receive a statement of the balance in his or her Account or
Accounts as of the end of each such calendar year.
<PAGE>
SECTION 5. PAYMENT OF DEFERRED COMPENSATION.
5.1. Upon the termination of a Participant's services as a Director, the cash
credited to his or her Deferred Cash Account and the Shares credited to his or
her Deferred Shares Account shall be distributed, as the case may be, (a) in
accordance with the method elected by the Participant on his or her Notice Form
in conjunction with his or her initial deferral election pursuant to the Plan,
as provided in Section 5.2 hereof, or (b) in accordance with the method provided
by the Prior Plan, as provided in Section 2.2(g) hereof.
5.2. Subject to Section 2.2 hereof and this Section 5, a Participant may elect
any of the following methods of distribution of the balance or balances in his
or her Account or Accounts. The distribution shall be made or shall commence,
as the case may be, on the first day of the calendar quarter that first follows
the date of termination of his or her services as a Director, with respect to
distributions pursuant to Section 5.2(a) below, and six months after the first
day of the calendar quarter that first follows the date of termination of his or
her services as a Director, with respect to distributions pursuant to Section
5.2(b) below.
(a) As to a Deferred Cash Account,
(i) a lump sum payment in cash equal to the sum of (A) the balance in
the Participant's Deferred Cash Account as of the last day of the
calendar quarter immediately preceding the date of payment, (B) the
deferred amounts credited to the Participant's Deferred Cash Account
pursuant to Section 4.2 hereof since the last day of the calendar
quarter immediately preceding the date of the payment, and (C)
interest on the average daily balance of the Participant's Deferred
Cash Account for the period beginning on the first day of the
calendar quarter during which the payment occurs and ending on the
day prior to the date of payment at the rate in effect for the
calendar quarter pursuant to Section 4.2 hereof; or
(ii) cash payments in quarterly installments for a period not to
exceed ten (10) years, with the amount of the payment each year
determined by dividing the balance in the Participant's Deferred Cash
Account as of the last day of the calendar quarter immediately
preceding the payment date by the total number of remaining payments
(including the current payment), provided that the amount of the
final installment payment shall be determined as provided in
paragraph (i) above.
(b) As to a Deferred Shares Account,
(i) a single distribution of (A) the number of Shares that have been
credited to the Participant's Deferred
<PAGE>
Shares Account as of such date, (B) the number of full Shares that
could have been purchased at the Market Price of Shares as of such
date with the total amount of deferred Compensation, excess carryover
amounts and dividend equivalent amounts that have accumulated since
the most recent date for crediting such Compensation to such
Participant's Deferred Shares Account, determined in the same manner
as provided in Section 4.3 hereof, and (C) cash to the extent that
the amount described in clause (B) above is not evenly divisible by
such Market Price; or
(ii) distributions in annual installments, for a period not to exceed
ten (10) years, of the total number of Shares distributable, with the
amount of the distribution each year determined by dividing the
number of Shares credited to the Participant's Deferred Shares
Account as of the distribution date by the total number of remaining
distributions (including the current distribution), provided that the
amount of the final installment distribution will be determined as
provided in paragraph (i) above.
5.3. Notwithstanding any other provisions of this Plan, if the Committee
determines, after consideration of a Participant's application, that he or she
has a financial need of such a substantial nature that a contemporaneous payment
of Compensation deferred under this Plan is warranted, the Committee may in its
sole and absolute discretion direct that all or a portion of the balance of the
Participant's Deferred Cash Account be paid to the Participant. Payments from
the Deferred Cash Account shall be made in cash, and the Committee shall
determine the timing of such payments or distributions. A Participant who is
also a member of the Committee shall in no way take part in any decision
pertaining to a request for payment made by him or her under this Section 5.3.
5.4. In the event of a Participant's death before the balance in his or her
Account or Accounts is fully paid or distributed out, payment or distribution of
such balance shall be made to the beneficiary or beneficiaries designated by the
Participant or, if the Participant has made no such designation or no
beneficiary survives, to the Participant's estate. In either case, such payment
or distribution shall be made as soon as practical in a lump sum in the manner
provided in Section 5.2(a)(i) and Section 5.2(b)(ii) hereof, as the case may be.
5.5. Until such time as Shares are distributed to a Participant pursuant to the
terms of the Plan, such Participant shall have no rights as a shareholder with
respect to any Shares credited to such Participant's Deferred Shares Account.
5.6. Notwithstanding any other provision of the Plan to the contrary, the
Company shall not be required to issue or distribute any Shares under this Plan,
and a Participant may not sell, assign, transfer or otherwise dispose of Shares
issued or
<PAGE>
distributed pursuant to the Plan, unless (a) there is in effect with respect to
such Shares a registration statement under the Securities Act of 1933 and any
applicable state securities laws or an exemption from such registration under
the Securities Act of 1933 and applicable state securities laws, and (b) there
has been obtained any other consent, approval or permit from any other
regulatory body which the Committee deems necessary or advisable. The Company
may condition such issuance, distribution, sale or transfer upon the receipt of
any representations or agreements from the parties involved, and the placement
of any legends on certificates representing Shares, as may be deemed necessary
or advisable by the Company in order to comply with such securities laws or
other restrictions.
SECTION 6. CHANGE OF CONTROL.
6.1. In the event of a Change of Control, the method and time of payment of
compensation previously deferred shall be modified as follows:
(a) As to the Deferred Cash Account, a Participant shall be entitled to
receive, as of the effective date of such Change of Control, a lump sum
cash payment determined as provided in Section 5.2(a)(i) hereof, and the
Committee shall have no discretion or authority to alter or delay the
amount or form of payment of the Deferred Cash Account.
(b) As to the Deferred Shares Account, a Participant shall be entitled to
receive, as of the effective date of such Change of Control, a lump sum
cash payment in lieu of Shares. The amount of such lump sum cash payment
shall be equal to the sum of (i) the amount calculated by multiplying the
number of Shares that would otherwise have been distributed to the
Participant as provided in Section 5.2(b)(i) hereof by the greater of (A)
the highest price per Share paid for the purchase of Shares in connection
with the Change of Control, or (B) the highest Market Price per Share paid
during the 30-day period immediately preceding the Change of Control, and
(iii) the amount of cash that would have been distributed as provided in
clause (C) of Section 5.2(b)(i) hereof. The Committee shall have no
discretion or authority to alter or delay the amount or form of payment of
the Deferred Shares Account.
6.2. In the event of a Change of Control of the Company, the Company shall pay
all of the legal fees and expenses reasonably incurred by a Participant or such
Participant's beneficiary (or by any legal defense trust created by the Company)
to enforce his or her rights under the Plan, as in effect immediately before
such Change of Control. The Company shall pay such fees and expenses promptly
after bills therefor are submitted from time to time by attorneys representing
the claimant. However, the Company will not be obligated to pay such fees and
expenses after it proves in a court of law that the claim is not well grounded
in fact and warranted by existing law or a good faith argument for the
extension, modification or reversal of existing law and
<PAGE>
will be entitled to full reimbursement of any amounts previously paid pursuant
to this Section 6.2. In any such proceeding, the burden of proof shall be on the
Company. Notwithstanding anything else contained in the Plan, the rights of
Participants and their beneficiaries under this paragraph shall survive
amendment of this paragraph, as well as termination of the Plan, after a Change
of Control, regardless of whether such rights arise before or after the date of
amendment or termination.
6.3. For purposes of this Section 6, a "Change of Control" of the Company shall
mean (a) the sale, lease, exchange or other transfer of substantially all of the
assets of the Company (in one transaction or in a series of related
transactions) to, or the merger or consolidation of the Company with, a
corporation that is not controlled by the Company, or (b) a change of control of
the Company of a nature that would be required to be reported pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"),
whether or not the Company is then subject to such reporting requirement,
including, without limitation, such time as (a) any person becomes after the
effective date of the Plan the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 25% or more of the combined
voting power of the Company's outstanding securities ordinarily having he right
to vote at elections of directors, or (b) individuals who constitute the Board
on the effective date of the Plan cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the effective date of the Plan whose election, or nomination for election by
the Company's shareholders was approved by a vote of at least a majority of the
directors comprising the Board on the effective date of the Plan shall be, for
purposes of this clause (b), considered as though such person were a member of
the Board on the effective date of the Plan.
SECTION 7. AMENDMENT.
7.1. The Company reserves the right to amend the Plan at any time to any extent
that it may deem advisable. 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 an appropriate officer. An amendment adopted in
accordance with this Section 7.1 shall be binding on all interested parties as
of the effective date stated in the amendment, provided that no amendment shall
have any retroactive affect so as to deprive any Participant, or the beneficiary
of a deceased Participant, of any benefit to which he or she is entitled under
the terms of the Plan in effect immediately prior to the effective date of the
amendment.
7.2. The provisions of the Plan in effect at the termination of a Participant's
service as a Director shall, except as otherwise expressly provided by a
subsequent amendment, continue to apply to such Participant.
<PAGE>
SECTION 8. GENERAL.
8.1. The right of any Participant, beneficiary or estate to receive payment or
distribution of any unpaid balance in any Account of the Participant shall be an
unsecured claim against the general assets of the Company.
8.2. During a Participant's lifetime, any payment under the Plan shall be made
only to him or her. No sum or other interest under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt by a Participant or any beneficiary under
the Plan to do so shall be void. No interest under the Plan shall in any manner
be liable for or subject to the debts, contracts, liabilities, engagements or
torts of a Participant or beneficiary entitled thereto.
8.3. Except as otherwise provided herein, the Plan shall be administered by the
Committee which shall have the authority, subject to the express provisions of
the Plan, to adopt, amend and rescind rules and regulations relating to the
Plan, and to interpret, construe and implement the provisions of the Plan.
8.4. Neither the establishment of or participation in the Plan gives any
Participant the right to continue to serve as a Director of the Company or
limits in any way the right of the Company to terminate the service of a
Participant.
8.5. The Company retains the right to withhold from any compensation, deferral
and/or benefit payment or distribution pursuant to the Plan any and all income,
employment, excise and other tax as the Company deems necessary, and the Company
may offset against amounts payable to a Participant under the Plan any amounts
then owing to the Company by such Participant.
8.6. The validity, construction, interpretation, administration and effect of
the Plan and any rules, regulations and actions relating to the Plan shall be
governed by and construed exclusively in accordance with the laws of the State
of Minnesota, regardless of any conflicts of laws provisions.
<PAGE>
JOSTENS INC. AND SUBSIDIARIES
EXHIBIT 11 -- COMPUTATION OF EARNINGS PER SHARE
(In Thousands, Except Per Share Data)
Year Ended June 30,
------------------------------
1995 1994 1993
------- -------- --------
Net Income (Loss) $50,368 $(16,169) $(12,672)
Primary:
Average shares outstanding 45,492 45,455 45,328
Net effect of dilutive stock options --
based on the treasury stock method
using average market price 97 N/A N/A
------- -------- --------
45,589 45,455 45,328
Per Share Amount:
Net Income (Loss) $ 1.10 $ (0.36) $ (0.28)
======= ======== ========
Per Share Amount as reported
based on average shares outstanding:
Net Income (Loss) $ 1.11 $ (0.36) $ (0.28)
======= ======== ========
Fully diluted:
Average shares outstanding 45,492 45,455 45,328
Net effect of dilutive stock options --
based on the treasury stock method
using the year-end market price
if higher than average price 198 N/A N/A
------- -------- --------
45,690 45,455 45,328
Per Share Amount:
Net Income (Loss) $ 1.10 $ (0.36) $ (0.28)
======= ======== ========
Per Share Amount as reported
based on average shares outstanding:
Net Income (Loss) $ 1.11 $ (0.36) $ (0.28)
======= ======== ========
<PAGE>
Exhibit 13. Annual Report to Shareholders for the year ended June 30, 1995
Jostens
Annual Report 1995
<PAGE>
With a period of restructuring behind it, Jostens is planning for the future.
A new, broader mission and business opportunities in several areas help provide
a sense of renewal and rejuvenation.
Jostens provides products and services that help people celebrate achievement,
reward performance, recognize service and commemorate experiences.
We provide these achievement and affiliation products in partnership with
the diverse organizations people belong to throughout their lives. As a partner,
we are committed to delivering value and quality that exceed the needs of the
people and the organizations we serve.
Jostens is a team of employees and independent business partners. Our aim is
to be the world leader in providing achievement and affiliation products and to
constantly deliver exceptional performance.
<PAGE>
Financial Highlights
(Dollars in millions, except per-share data) Years ended June 30
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1995 1994
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Statement of operations
Net sales $ 665.1 $ 649.9
Income from continuing operations 55.9 28.0
Net income (loss) 50.4 (16.2)
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Balance sheet data
Working capital $ 206.3 $ 172.7
Current ratio 2.1 1.8
Total assets 548.0 569.8
Long-term debt 53.9 54.3
Shareholders' investment 270.6 256.6
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Common share data
Earnings per share from continuing operations $ 1.23 $ .61
Earnings (loss) per share 1.11 (.36)
Cash dividends .88 .88
Stock price high 21 5/8 20 7/8
low 15 3/4 15 1/8
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Return on Investment '91 '92 '93 '94 '95
[in %]
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19.6 16.9 -3.7 -5.7 19.1
Return on Sales '91 '92 '93 '94 '95
Continuing Operations [in $]
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7.1 7.1 1.3 4.3 8.4
Earnings per Share '91 '92 '93 '94 '95
Continuing Operations [in $]
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1.01 1.00 .19 .61 1.23
Letter to Shareholders 2
4 Refining the Focus
Jostens at a Glance 12
Management's Discussion & Analysis 14
Financial Statements 21
Notes to Financial Statements 26
Five-Year Financial Summary 39
<PAGE>
To Our Fellow Shareholders
--------------------------
From Robert C. Buhrmaster, President and Chief Executive Officer [right]
and Robert P. Jensen, Chairman of the Board [below]
[Photo of Robert C. Buhrmaster appears here]
[Photo of Robert P. Jensen appears here]
Two years of effort to return our company to acceptable financial
performance began paying off for shareholders in fiscal 1995. We met our
primary objective for the year, which was to restore net income and earnings
per share to historical levels.
At the same time, we began preparing for the future. We completed the return
to our traditional businesses and continued to make the systems and
infrastructure investments necessary to support future growth.
In 1994 we embarked on a program to repair the foundation of our company. We
essentially completed those repairs in 1995 and began shifting from a "fix-it"
mode to a "build-it" mode. Some of our major accomplishments:
. We completed the sale of the Jostens Learning curriculum software unit.
Removing Jostens Learning from our portfolio was the last major step in
refocusing on our traditional business of recognizing achievement and
affiliation in schools and businesses.
. We realized about $11 million in cost savings from the first full year
of reengineering our business processes and streamlining the organization
through restructuring.
. We returned the Photography business to profitability through the
completion of a restructuring and plant consolidation program.
Business Update The School Products businesses delivered a second straight
year of earnings improvement following restructuring efforts.
Printing & Publishing, Jewelry and Graduation Products -- our three largest
businesses -- generated record profits in 1995. Record sales levels were reached
by Printing & Publishing and Graduation Products.
Sales in Photography declined as planned, as we cut unprofitable volume, while
Jostens Canada remained steadily profitable.
Although the Recognition segment slipped from 1994's record sales and
earnings, we are well along with a review of that business, an approach we've
taken with the rest of our businesses in the last two years. Recognition is an
essentially solid business that will benefit from a tighter focus on its
opportunities and strategies.
Shareholder Value The overall success of our efforts in 1995 led to tangible
value for shareholders. Our ongoing businesses generated earnings of $55.9
million, or $1.23 per share, compared with $28 million, or 61 cents per share,
in 1994. Return on investment from continuing operations was 21.2 percent, up
more than 11 percentage points from 1994. We also maintained an 88-cent
dividend, which yielded about 4 percent based on the year-end price of Jostens
stock. That compares with a dividend yield of about 2.6 percent for companies in
the S&P 500. The market recognized this improvement in performance by moving the
company's stock from $15.75 in July 1994 to $21.625 in June 1995, a 37 percent
increase. Combined with the dividend, our total return to shareholders exceeded
40 percent in fiscal 1995.
2
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Share Repurchase In early fiscal 1996 we took a further step to deliver
value to shareholders by repurchasing 6.1 million shares of Jostens stock.
We chose to conduct this share repurchase program for two primary reasons:
. It is a fast and efficient way to return to shareholders cash generated
from the sale of businesses no longer related to our strategic direction; and
. It reflects our confidence in Jostens as a good investment.
We are unable to predict the impact of the repurchase on 1996 earnings.
However, had 6.1 million shares been retired as of the start of fiscal 1995,
earnings per share from continuing operations in 1995 would have been in the
range of $1.30.
The Next Objective With the divestiture of Jostens Learning and the share
repurchase program, we are closing the chapter on a period of fixing and
restructuring our ongoing businesses and of shedding businesses that don't fit
with our strategy going forward.
The foundation of Jostens is now formed by a solid cadre of healthy,
profitable businesses -- Printing & Publishing, Jewelry, Graduation Products,
Recognition, Photography and Jostens Canada.
Our ability to make that statement is a credit to the people of Jostens --
from employees to independent sales agents to the senior leadership team -- all
of whom successfully met many challenges in the last few years. Only through a
team effort could we make the changes necessary to put our company back on the
right track.
Now that we have begun delivering on our most pressing objective -- to
restore earnings to acceptable levels -- we are starting to address the next
objective: Generating sustainable, profitable sales growth. Our focus will be
twofold. First, reengineering and systems implementation will continue to help
improve our cost structure. Second, we will pursue a portfolio of sound
opportunities to generate new sales.
One of the keys to unlocking our opportunities involves taking a broader
view of what Jostens does and who our customers are.
On the inside front cover of this report is a new mission statement, which
reflects our belief that Jostens is an expert at helping people recognize
achievement and affiliation. The key to the mission is the phrase "throughout
their lives." Rather than focus on providing recognition symbols solely to
people in high school, college and business, we see opportunities to broaden
our scope to include people at other levels of education and through the
various groups and organizations people associate with from childhood through
adult life.
As you will read in the following pages, the course we're following involves
taking prudent steps that build on what we do best.
And so our company, having successfully made its way through a challenging
few years, is moving into the future with a renewed vigor and focus. Since the
current management team was put in place, we have taken things one step at a
time.
We'll continue that one-step-at-a-time approach in fiscal 1996, with an
emphasis on generating sustained, long-term benefits for shareholders.
/s/ Robert C. Buhrmaster
-------------------------------------
Robert C. Buhrmaster
President and Chief Executive Officer
/s/ Robert P. Jensen
-------------------------------------
Robert P. Jensen
Chairman of the Board
August 31, 1995
3
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Refining the Focus
------------------
Jostens businesses share a common mission -- providing products that recognize
achievement and affiliation throughout life.
Through 1994 and 1995, Jostens underwent a period of intense transition and
change. Led by new management, the company embarked on a program to fix and
restructure its traditional businesses. It began investing in new systems and
reengineering unique and complex work processes.
At the same time, a new picture of opportunity emerged in the traditional
businesses, and as a result Jostens divested business lines unrelated to school
and business recognition products.
Today, Jostens is a collection of related businesses that are stronger and
more focused on a common mission and on generating increases in earnings and
sales.
In its traditional businesses, which serve customers in school and
business, Jostens will continue to expand with new products, programs and
services.
Beyond those traditional markets, Jostens sees an opportunity to provide
products and services to people through the various groups and organizations
they associate with throughout their lives.
The company's prospects fall into three primary areas -- involving market
segments, technology and new markets -- which are outlined on the following
pages. The shift from "fix-it" to "build-it" takes time, but the work has
begun, and it reflects the ability of a stronger Jostens to build a clear path
for the future.
Fundamental Strengths
---------------------
The company's prospects are underscored by some key trends and strengths:
Independent Sales Force Jostens customers receive personal, customized
service from a network of about 1,000 independent sales agents. The sales force
was a key factor in the company's 1995 success, and will be relied on as a
partner for the future.
Expanding Market Today, most of Jostens' customers are in high school. In
this important market segment, U.S. enrollments are expected to increase about
21 percent through 2006, affording Jostens a natural opportunity. The elementary
school, junior high and college market segments also expect enrollment growth.
In the U.S., where two-thirds of the companies offer employee service
recognition programs, the overall labor force is expected to climb by about 20
percent in the next decade.
Financial Condition The company is financially strong. With good cash flow
and a low debt-to-total-capitalization ratio, Jostens can make the investments
necessary to remain strong, pursue growth opportunities and generate
shareholder value.
Value-Added Programs Jostens delivers value beyond its products and
services. Jostens Renaissance is a program that joins students, parents,
administrators, teachers and the business community in recognizing and
rewarding academic achievement. Jostens also helps students develop marketable
skills through the Yeartech(R) desktop publishing system. Used by school
yearbook staffs, Yeartech can provide the basis for credit-bearing courses in
desktop publishing, a skill sought by many employers.
Industry Leadership For 98 years, Jostens has crafted products that
recognize achievement and affiliation. From yearbooks to class rings,
graduation products to school photos and other fine jewelry, Jostens is a
market leader in serving customers in schools and businesses. The Jostens name
is a symbol of quality products, backed by nearly a century of experience
creating memories from life's milestones.
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5
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Focusing on Market Segments and Product Extensions
--------------------------------------------------
Products tailored to the needs of specific market segments enable Jostens to
build from its strong foundation.
Jostens' strongest presence is in the high school market, served through a
network of independent sales agents. During their high school years, about one
of every two U.S. students purchases at least one Jostens product.
However, not all high schools served by Jostens carry all major product
lines -- yearbooks, class rings, graduation products and photography. The
company is pursuing ways to extend more product lines into more schools, as
well as to increase the percentage of students in each school who purchase
Jostens products.
Efforts are underway. In fiscal 1995, Jostens piloted a simplified pricing
program for high school class rings. The successful test contributed to a
significant year-to-year ring unit increase, and led to lower ring prices for
the average high school customer. The new pricing program is being introduced
nationwide in 1996.
In Graduation Products, the company held the line on prices in 1995, which
contributed to higher student buy rates and an increase in dollars per order.
Printing & Publishing successfully gained market share in high school
yearbooks by using market research to target and win accounts from competitors.
The business continued the trend with new account wins in the selling season
leading into fiscal 1996.
But Jostens' strength doesn't come from products alone. Through its
Renaissance program, Jostens provides its school accounts with proven,
value-added methods to involve the community in promoting and recognizing
academic achievement. More than 5,000 schools nationwide have adopted principles
of Jostens Renaissance.
While the company continues to develop the high school market, it is also
building strategies and programs to attract customers in different areas of
education as well as in business.
Colleges and Universities Established as a stand-alone market unit,
Colleges and Universities is working on ways to improve student buy rates and
expand the number of schools covered by Jostens.
Market research and pilots conducted in 1995 suggest opportunities to
increase business in this segment. One program that has demonstrated early
success is Senior Salutes -- one-stop resource fairs where students can find the
information they need for graduation, from cap and gown fitting to hotel
availability for the family, from alumni association information to credit card
applications. With Senior Salutes, Jostens partners with the university's
administration to generate enthusiasm and make it easy for busy students to
take care of important details so that graduation day is a smooth celebration.
Junior High/Middle School Jostens has also established a presence in the
junior high segment with a yearbook product that in 1995 reached into more than
3,000 schools.
Working from that experience and from market research conducted in 1995,
Jostens plans to expand its junior high product line in 1996.
Business Recognition From corner store to global conglomerate, most U.S.
companies offer employee service recognition programs. Jostens, currently the
second-largest service award provider, sees opportunities to expand by
tailoring products and services to meet the specific needs of small, midsize
and large companies. In addition, Jostens also offers performance recognition
products, achievement symbols awarded for meeting business objectives. In 1996,
the company expects to create and implement strategies for both the service and
performance recognition markets.
6
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7
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Utilizing Technologies
Investments in technology are designed to provide
Jostens' customers with better service, more products and great value.
The tool of technology is an important one in helping Jostens shape its
future. New systems based on proven technology are being tested and installed
to, over time, help improve manufacturing efficiency and provide better service
and information to customers. The company is also exploring potential new
products based on advancing technology.
In manufacturing, the Printing & Publishing and Photography businesses are
beginning to utilize digital scanning technology to improve costs, cycle times
and customer value. In fiscal 1995, the Printing & Publishing business tested
the use of scanners to digitize school yearbook photos, rather than prepare them
for the press through traditional methods. Experience with an initial scanning
unit installed in 1995 in the Topeka plant is leading to the installation of
scanners in the company's four other printing facilities -- an expansion plan
that emphasizes standardized processes and training.
Looking to the future, digital technology will enable Jostens to efficiently
receive and handle yearbooks as more and more customers, who now prepare pages
on the Jostens Yeartech desktop publishing system, take the next step and
electronically transmit yearbook pages directly to printing plants.
In Photography, scanners are being introduced to digitize rolls of film
rather than process them through traditional chemical methods.
More importantly, the emergence of digital imaging technology is forging a
link between the Printing & Publishing and Photography businesses. In 1995, the
two units tested a coordinated yearbook-photo approach to attract new business
in selected cities -- an effort that increased photography volume in the test
areas. Further tests between the businesses are planned.
Technology is also being put to work helping Jostens' sales representatives
deliver better customer service. A program to put sales representatives
"on-line" was piloted to a group in the yearbook business in 1995, with
encouraging results. The ability to provide customers with real-time status
reports on their yearbook pages enables more effective deadline management,
allows plants to more accurately plan production and helps forestall problems
caused by a lack of information.
Over time, sales force automation will provide a direct line of information
to reps throughout the enterprise, providing information to better understand
and meet customer needs.
In 1996, automation will continue to be introduced to sales reps in the
yearbook and other businesses.
Fiscal 1995 was also a developmental year for new product concepts based on
digital imaging. Products such as electronic student databases and digital
student identification cards were tested in more than two dozen Canadian
schools last year. Based on input from that test, the products are being
refined for further testing in 1996.
In these and other ways, technology forms a strategic plank in the company's
foundation for the future.
8
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9
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Exploring new Markets
Prudent steps into new areas will help open doors
of opportunity for Jostens in the future.
As a provider of ways to recognize achievement and affinity throughout
people's lives, the company is beginning to explore new markets and channels as
avenues of future growth.
Affinity The concept of achievement and affinity isn't limited to school or
business; people reach important milestones and affiliate with various groups
and organizations at different times of their lives -- from youth athletic clubs
to senior citizen community groups.
To reach those potential customers, Jostens is taking steps in developing
the affinity market. The company has already gained some experience in this
area through its direct-mail business. For example, two Star Trek(R) affinity
rings have been successfully marketed in the last few years to fans of the
popular television and movie series. Other successful direct-mail programs have
identified areas of particular potential for affinity products -- experience
that provides a foundation for further research and planning to reach customers
through the organizations they're involved with.
Retail A significant number of class rings are sold at retail by mass
merchandisers, jewelry chains and local jewelers, and Jostens plans to play a
larger role in the retail market.
Although it will continue to emphasize its in-school presence and the higher
level of service and selection that in-school customers receive, the company
believes it is important to participate in the retail market.
Jostens has established a presence in the retail market through a separately
branded product line, Studio One(R). Studio One rings are professionally but
simply designed, with far fewer customizing options than Jostens' in-school
rings.
With Studio One, the company has entered two areas of the retail market,
building relationships with jewelry chains and mass merchandisers.
International Jostens believes that remaining competitive will require a
broader international presence, and it is beginning to explore business
opportunities in other countries.
Today, Jostens is strong in Canada and conducts business in a number of
local schools in the United Kingdom, Puerto Rico and Mexico. The company also
serves U.S. military installations and American schools abroad. Wherever
possible, the company intends to build on that presence.
In 1995, Jostens conducted initial research into the market potential of
several countries, with some encouraging signs.
Through 1996, Jostens will prudently pursue the opportunities that make
sense, with an eye toward long-term development of a solid international
business presence.
10
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11
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Jostens at a Glance
A look at Jostens
by Segments and Businesses.
[GRAPHIC APPEARS HERE]
School Products Segment
-----------------------
The businesses in this segment provide products and services primarily to
students and schools. Customers are served through a network of about 900
independent sales representatives and associates in the United States and
Canada, as well as in international locations serving American schools and
military installations. In fiscal 1995, School Products sales were $565 million
(including $556.5 million from five major lines of business and $8.5 million in
other sales), compared with $546.2 million in 1994. Operating profit improved
to a record $107.1 million, from $73.5 million in 1994.
Printing and Publishing Products: Yearbooks, memory books and desktop
publishing kits for students in high school, college, junior high and elementary
school throughout the United States. The business also provides commercial
printing services.
Sales: $203.1 million in 1995, a record for the business and a 6 percent
increase from $191.7 million in 1994.
Business Developments: Gained market share in both high school and junior high
yearbook segments; successfully tested an automation system to provide sales
reps with real-time updates for each yearbook account; introduced digital
scanning modules to two of five printing facilities.
Jewelry Products: Class rings and athletic rings to students in junior
high, high school and college.
Sales: $154.5 million in 1995, up 3.6 percent from $149.1 million in 1994.
Business Developments: Class ring unit volume increased significantly in
both the high school and college markets; Jostens won the class ring accounts
of all four U.S. military academies for the first time this decade.
12
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[GRAPHICS APPEAR HERE]
Graduation Products Products: Announcements and related products, caps,
gowns, diplomas and accessories for high school and college students.
Sales: A record $133 million in 1995, up 6.4 percent from $125 million in
1994.
Business Developments: New marketing initiatives led to an increase in the
percentage of students purchasing products in 1995; average sales per customer
increased from year-earlier levels.
Photography Products: Class and individual school pictures to students in
elementary, junior high and high school; high school senior portrait
photography; and photography for proms and other special events.
Sales: $24.2 million in 1995, a planned reduction from $27.7 million in
1994.
Business Developments: Successfully completed a restructuring program to
return the business to profitability; consolidated the number of photo
processing facilities from five to two; began pilot project with Printing &
Publishing to earn new accounts.
Jostens Canada Products: Yearbooks, class rings, graduation products and
school photography to schools throughout Canada.
Sales: $41.7 million in 1995, compared with $42.3 million in 1994. The
decline resulted primarily from the effects of translating the unit's results
from Canadian dollars to U.S. dollars.
Business Developments: Following successful testing in 1994, introduced the
new Expressions(TM) class-ring line, resulting in higher buy rates; absorbed
additional U.S. photo processing volume through the Photography plant
consolidation program; signed 10 percent of its high school account base to
multiyear, multiproduct agreements.
Recognition Segment
-------------------
The Recognition segment is a single-business unit that provides awards
recognizing employee service longevity and performance achievement in companies
of all sizes. Customers are served through about 100 independent sales
representatives. Sales in Recognition were $100.1 million in 1995, down from a
record $103.7 million in 1994. Operating profit was $4.7 million, compared with
$9.5 million in 1994, a record year.
Business Developments: A study of the Recognition business and its markets
is expected to bring a clearer focus on the strengths and market opportunities
for this business; 1995 account wins included Thrifty Payless.
13
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Management's Discussion and Analysis
Introduction
------------
This discussion summarizes significant factors that affected the
consolidated operating results, financial condition and liquidity of Jostens
Inc. in the three years ended June 30, 1995. Material in this section reflects
the June 1995 sale of the company's Jostens Learning Corp. (JLC) subsidiary,
the anticipated sale of the Wicat Systems business and the January 1994 sale of
the Sportswear business, all of which are treated as discontinued operations in
the financial statements presented in this report.
Results of Operations
---------------------
Overall Jostens' sales from continuing operations increased 2 percent in
fiscal 1995, to $665.1 million from $649.9 million in fiscal 1994. Sales in
1994 increased 2 percent from $634.8 million in 1993. The 1995 sales increase
was driven by gains in the company's three largest business lines -- Printing &
Publishing, Jewelry and Graduation Products. Prices for the company's products
increased 1 percent from 1994 to 1995 and 3 percent from 1993 to 1994,
reflecting a continued effort to minimize price increases. Gross margins in
1995 were 52 percent, up from 51.7 percent in 1994 and 51.1 percent in fiscal
1993. The margin improvement resulted from manufacturing efficiencies and cycle-
time gains in the School Products segment. Selling and administrative expenses
decreased to $251.4 million from $274.1 million in 1994 and $259.4 million in
1993. As a percentage of sales, these expenses were 37.8 percent in 1995, 42.2
percent in 1994 and 40.9 percent in 1993. The 1995 decrease was primarily due to
cost improvements realized through the company's reengineering efforts. The
increase from 1993 to 1994 was primarily due to changes in accounting estimates
of $7.7 million for receivables and $6 million for overdrafts recorded in 1994.
The company's strong cash position at June 30, 1994, eliminated the need for
short-term borrowing to meet operational needs. The result was a decrease in
interest expense of $1.4 million from 1994 and $2.3 million from 1993. In
addition, interest income increased $2.9 million and $2.6 million over 1994 and
1993, respectively, because the company maintained higher cash balances and
benefited from higher short-term interest rates in 1995.
Net income for 1995 was $50.4 million, compared with losses of $16.2 million
in 1994 and $12.7 million in 1993. Included in the 1994 and 1993 income from
continuing operations were after-tax restructuring charges of $5.1 million and
$25.3 million, respectively. Included in the 1993 net loss was an after-tax
charge of $4.2 million associated with the early adoption of Statement of
Financial Accounting Standards (SFAS) No. 106 for postretirement benefits. In
addition, net income in 1995 included an after-tax charge of $.6 million
associated with the adoption of SFAS No. 112, Employers' Accounting for
Postemployment Benefits, and a net after-tax loss on discontinued operations of
$4.9 million, compared with net after-tax losses of $44.1 million and $17
million in 1994 and 1993, respectively.
Earnings per share were $1.11 in 1995, compared with losses per share of 36
cents in 1994 and 28 cents in 1993. Earnings per share from continuing
operations prior to the change in accounting principle, discontinued operations
and restructuring charges were $1.23 in 1995, compared with 73 cents in 1994
and 75 cents in 1993.
The earnings improvement in 1995 reflected the success of efforts to refocus
on core businesses, streamline operations and position the company for future
growth, all of which were objectives of restructuring programs initiated in
1993 and 1994.
14
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School Products Segment Sales in this segment increased 3 percent to $565
million in fiscal 1995, compared with $546.2 million in 1994 and $540.7 million
in 1993. Record sales were recorded in the Printing & Publishing ($203.1
million) and Graduation Products ($133 million) businesses, while Jewelry sales
($154.5 million) were just shy of a record.
Growth in Printing & Publishing stemmed from successful market research and
programs targeted to win new accounts, primarily in high school yearbooks. In
Graduation Products, the percentage of students per school who purchased
products (buy rates) improved, and the average dollar amount of products
purchased by each student increased. In Jewelry, new marketing and pricing
initiatives led to increased sales of high school and college class rings.
Photography sales declined to $24.2 million from $27.7 million in 1994 and
$30.6 million in 1993. The planned reduction was part of the 1993 restructuring
program that included eliminating under-performing dealers and unprofitable
accounts, as well as consolidating processing operations from five plants into
two.
Jostens Canada sales declined slightly to $41.7 million from $42.3 million in
1994. Canadian dollar sales volume was essentially flat with 1994 levels, with
currency exchange rate fluctuations accounting for most of the decline. The
business remained steady despite organizational changes and increases in photo
processing volume, resulting from the plant consolidation program in the
Photography business.
The School Products segment generated stronger operating profit in 1995
through a combination of sales growth and cost improvements. Operating
profit was $107.1 million, up 45.7 percent from $73.5 million in 1994, which
included changes in estimates of $16.4 million related to inventory, accounts
receivable and overdraft reserves. Fiscal 1994 operating profit increased 84
percent from 1993, which included restructuring costs of $36.5 million. The cost
improvements in Printing & Publishing resulted from reduced cycle times in
preparing page proofs for customers. This business has also successfully tested
page and photo scanning capability, which is expected to help reduce costs. Both
the Jewelry and Graduation Products facilities have improved the production
cycle times for their products, enabling them to better meet customer needs,
reduce costs and provide additional plant capacity.
Recognition Segment Sales declined 3 percent to $100.1 million from record
1994 levels due primarily to smaller orders per account. Fiscal 1994 sales
increased 10 percent from 1993.
Operating profit was $4.7 million in 1995, compared with a record $9.5
million in 1994 and $8.6 million in 1993. The 1995 decrease in operating
profit resulted from some erosion in product mix and margins, as well as
charges to establish an environmental reserve ($.6 million) and to abandon a
unique computer information system ($1.1 million). The company is currently
performing a review of this business and is focusing on improving internal
efficiency and more closely evaluating market opportunities.
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Financial Position
------------------
Net working capital at June 30, 1995, was $206.3 million, reflecting a
current ratio of 2.1 to 1. Cash and short-term investments were $173.5 million,
up from $107.8 million at year-end 1994. The increase resulted from cash
received from the sale of JLC and from the company's continued emphasis on cash
management.
Accounts receivable decreased to $124.4 million from $149.2 million in 1994.
The decrease was due to the sale of JLC ($39.6 million), offset in part by an
increase in receivables as a result of a strong fourth quarter in the School
Products segment.
Inventories decreased to $71.4 million in 1995 from $82.6 million in 1994.
The decrease resulted from an inventory reduction effort in School Products, as
well as from the sale of JLC, which had an inventory balance of $7.6 million at
June 30, 1994.
Intangibles decreased to $30.9 million in 1995 from $47.7 million in 1994,
primarily because of the JLC sale ($13.5 million), as well as a decrease in
intangible assets related to additional minimum pension liability requirements
of $2.7 million and amortization of $1.5 million.
Prepaid expenses, other assets, software development costs, accounts payable
and deferred revenue all decreased from their 1994 balances. Reductions in all
categories were primarily due to the sale of JLC.
Salaries, wages and commissions payable were $52.5 million in 1995, compared
with $68.4 million in 1994. The decrease was due to the JLC sale ($14.8
million) as well as to payments related to restructuring reserves.
Income taxes payable increased to $35.4 million from $14.7 million in 1994,
due to higher earnings.
Accrued pension costs decreased to $12.6 million from $19.3 million in 1994
due to a higher than expected return on pension plan assets and an increase in
the discount rate to reflect current prevailing interest rates.
Generally, the company's cash requirements have been met with internally
generated funds and through short-term borrowings. Because most of the
company's sales volume occurs in the second and fourth quarters of each year,
Jostens usually requires interim financing of inventories and receivables.
Average short-term borrowing was $28.6 million in 1994 and $42.6 million in
1993, with highs of $87 million in 1994 and $83.3 million in 1993. In 1995, the
company's strong cash position eliminated the need for short-term borrowing.
Because of the company's plan to return cash to shareholders through a share
repurchase tender offer in early fiscal 1996, Jostens will again require
seasonal financing in 1996. Those needs will be covered by utilizing short-term
financing comparable with past years.
Shareholders' investment increased 5 percent to $270.6 million from $256.6
million in 1994. The increase was primarily attributable to net income of $50.4
million, partially offset by dividends paid. Book value at June 30, 1995, was
$5.95 per share, compared with $5.64 a year earlier. Long-term debt, as a
percentage of total capitalization, was 16.6 percent on June 30, 1995.
Capital Expenditures and Product Development
--------------------------------------------
The company invested $19.1 million in capital expenditures in 1995, compared
with $15.2 million in 1994. The largest investments were made in the School
Products segment, with $8.5 million spent to update manufacturing equipment and
processes with current technology. Corporate, Recognition and JLC expended $6.7
million, $1.4 million and $2.5 million, respectively. About $20 million in
capital projects are planned for 1996, including upgrading presses and other
yearbook printing equipment, improving photo processing and field camera
equipment, and enhancing certain management information and communication
systems. The projects are expected to be funded internally.
16
<PAGE>
Dividends
---------
The company paid $40 million in cash dividends to shareholders in fiscal
1995. The annual dividend was 88 cents per share in 1995, 1994 and 1993.
Restructurings
--------------
Fiscal 1994 The company recorded an $8.5 million restructuring charge ($5.1
million after tax, or 12 cents per share) related to continuing operations in
the fourth quarter of 1994, covering headcount reductions in the general and
administrative functions. As a result of a study of corporate overhead costs in
1994, the company eliminated approximately 125 positions to achieve the desired
management organization. The 1994 restructuring accrual decreased by $7 million
in fiscal 1995 to $.9 million at June 30, 1995, due to payments of $6.2 million
and noncash items of $.8 million.
Fiscal 1993 The company recorded a $40.2 million ($25.3 million after tax,
or 56 cents per share) restructuring charge related to continuing operations in
the fourth quarter of 1993. The charge included $26.7 million for restructuring
the Photography business, of which $7.9 million related to goodwill write-offs
($5.6 million relating to the Portrait World acquisition in 1989 and $2.3
million in various smaller Photography intangibles), $12.8 million related to
plant shutdowns and $6 million related primarily to write-offs of abandoned
receivables from independent sales representatives and dealers. The remaining
$13.5 million of restructuring charges included $4.8 million primarily for
headcount reductions and relocation expenses, and $8.7 million primarily for
sales force restructuring and policy changes, including write-offs of abandoned
receivables from terminated independent sales representatives. The accounts
receivable balances, which would have ordinarily been collectible in the
absence of the changes in the sales force, were abandoned as part of the
territory consolidations and sales force terminations resulting from the sales
force restructuring. The 1993 restructuring accrual decreased by $6.4 million in
1995 to $4.6 million at June 30, 1995, due to payments of $4.9 million and
noncash items of $1.5 million.
The 1994 and 1993 restructuring accruals are expected to be reduced by $1.1
million of noncash items in 1996. The future cash outlay is estimated to be
$2.9 million in 1996 and $1.5 million in 1997 and beyond. The company estimates
that the 1994 and 1993 restructurings have reduced annual operating costs by $7
million to $12 million. See Discontinued Operations for further discussion of
restructuring items related to discontinued operations.
Environmental
-------------
As part of its continuing environmental management program, Jostens is
involved in various environmental improvement activities. As sites are
identified and assessed in this program, the company determines potential
environmental liability. Factors considered in assessing this liability
include, among others, the following: whether the company has 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. When the potential liability amounts are probable and
reasonably estimable, Jostens accrues the best estimate available. For specific
sites where only a range of liability is probable and reasonably estimable and
no amount in the range is a better estimate than another, the company has
accrued the low end of that range. While Jostens may have a right of
contribution or reimbursement under insurance policies, amounts that may be
recoverable from other entities by the company with respect to a
particular site are not considered until recoveries are deemed to be probable.
No assets for potential recoveries have been established as of June 30, 1995.
17
<PAGE>
Jostens also assesses reasonably possible environmental liability beyond
that which has been accrued. This liability is not probable, but is more likely
than remote. As of June 30, 1995, the company identified four sites requiring
further investigation. The potential liability cannot be fully assessed, since
the sites are in the early stages of investigation. In addition, two other
sites nearing completion did not require any accruals as of June 30, 1995. The
amount of environmental liability identified that is reasonably possible is in
the range of $.6 million to $4.6 million. As of June 30, 1995, the company has
not been designated as a potentially responsible party at any
site. The amount accrued during fiscal 1995 with respect to potential
liability is $.6 million and is recorded as part of "other accrued
liabilities." The company does not expect to incur liabilities at
the higher end of the range, based on the limited information currently
available.
Discontinued Operations
-----------------------
The statements of consolidated operations presented have been reclassified
to reflect the company's JLC business (including the Wicat Systems
computer-based aviation training division, which Jostens retains but intends to
sell in fiscal 1996) as discontinued operations along with the company's
previously discontinued Sportswear business.
In June 1995, Jostens sold its JLC curriculum software subsidiary to a group
led by Bain Capital, Inc. for $50 million in cash; a $36 million unsecured,
subordinated note maturing in eight years with a stated interest rate of 11
percent; and a separate $4 million note with a stated interest rate of 8.3
percent convertible into 19 percent of the equity of Jostens Learning, subject
to dilution in certain events. The notes were recorded at fair value, using an
estimated 20 percent discount rate on the $36 million note, resulting in a
discount of $9.9 million. The transaction gain of $11.1 million ($5.8 million
after tax) was deferred in accordance with Securities and Exchange Commission
Staff Accounting Bulletin No. 81, Gain Recognition on the Sale of a Business or
Operating Assets to a Highly Leveraged Entity. The gain will be deferred until
cash flows from the operating activities of JLC are sufficient to fund debt
service, dividend or any other covenant requirements. As part of the
transaction, Jostens also agreed to pay $13 million over two years to fund
certain JLC existing liabilities.
18
<PAGE>
In 1994, Jostens also recorded a restructuring charge of $60.9 million ($40.2
million after tax, or 88 cents per share) related to JLC, which has been
reclassified as part of discontinued operations. The restructuring charge
relating to JLC included $39.1 million to focus its product development, $7.3
million to exit both direct and indirect investments in three ancillary lines of
business, $4.1 million to exit the hardware sales and service business, and
$10.4 million for work-force reductions. The company also recorded in 1993 a
restructuring charge of $10.4 million ($8.3 million after tax, or 18 cents per
share) related to JLC, which has been reclassified as part of discontinued
operations. The restructuring charge included $5 million for the write-off of
certain software development costs, as well as $5.4 million for work-force
reductions. Jostens Learning retained all remaining accruals related to the
restructurings after the sale except for $3.1 million related to the Wicat
Systems business.
In January 1994, Jostens sold its Sportswear business to a subsidiary of
Fruit of the Loom for $46.7 million in cash. Jostens recognized an $18.5
million gain ($11 million after tax) on the sale, primarily because the
Sportswear business had been written down by $15 million to its estimated net
realizable value in the fiscal 1993 restructuring.
Changes in Accounting Estimates
-------------------------------
As a result of certain changes in business conditions, the company conducted
a review that concluded at the end of the third quarter of fiscal 1994. That
review led the company to increase reserves for inventories, receivables and
overdrafts from independent sales representatives to reflect amounts estimated
not to be recoverable, based upon current facts and circumstances. The revised
estimates reduced pretax income for 1994 by $16.9 million ($10.1 million after
tax, or 22 cents per share).
Share Repurchase
----------------
In August 1995, Jostens offered to repurchase up to 6.1 million of its
common shares through a Modified Dutch Auction tender offer. Under the offer,
which is expected to close in early September, shareholders have the option to
tender shares at a price range of $21.50 to $24.50 per share. The repurchase
will be funded from the company's cash and short-term investment balance, as
well as short-term borrowings.
19
<PAGE>
Report of Management
--------------------
The management of Jostens is responsible for the integrity and objectivity
of the financial information presented in this report. The financial statements
have been prepared in accordance with generally accepted accounting principles
and include certain amounts based on management's best estimates and judgment.
Management is also responsible for establishing and maintaining the
company's accounting systems and related internal controls, which are designed
to provide reasonable assurance that assets are safeguarded and transactions
are properly recorded. These systems and controls are reviewed by the internal
auditors. In addition, the company's code of conduct states that its affairs
are to be conducted under the highest ethical standards.
The independent auditors provide an independent review of the financial
statements and the fairness of the information presented therein. The Audit
Committee of the Board of Directors, comprised solely of outside directors,
meets regularly with management, the company's internal auditors and its
independent auditors to review audit activities, internal controls and other
accounting, reporting and financial matters. Both the independent auditors and
internal auditors have unrestricted access to the Audit Committee.
/s/ TRUDY A. RAUTIO
---------------
Trudy A. Rautio, Senior Vice President and
Chief Financial Officer
/s/ ROBERT C. BUHRMASTER
--------------------
Robert C. Buhrmaster, President and
Chief Executive Officer
Minneapolis, Minnesota,
August 4, 1995
Report of Independent Auditors
------------------------------
To the Stockholders of Jostens Inc.: We have audited the accompanying
consolidated balance sheets of Jostens Inc. and subsidiaries as of June 30,
1995 and 1994, and the related consolidated statements of operations, changes
in shareholders' investment and cash flows for each of the three years in the
period ended June 30, 1995. These financial statements are the responsibility
of the company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Jostens Inc.
and subsidiaries at June 30, 1995 and 1994, and the consolidated results of
their operations and cash flows for each of the three years in the period ended
June 30, 1995, in conformity with generally accepted accounting principles.
As discussed in the notes to the financial statements, the company changed
its method of accounting for postemployment benefits in 1995 and postretirement
benefits other than pensions in 1993.
/s/ ERNST & YOUNG LLP
-----------------
Ernst & Young LLP
Minneapolis, Minnesota
August 4, 1995
20
<PAGE>
STATEMENTS OF CONSOLIDATED OPERATIONS
-------------------------------------
JOSTENS INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA) YEARS ENDED JUNE 30
-------------------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $665,099 $649,869 $634,797
Cost of products sold 319,065 313,755 310,417
-------------------------------------------------------------------------------
346,034 336,114 324,380
Selling and administrative expenses 251,416 274,140 259,423
Restructuring charges -- 8,500 40,153
-------------------------------------------------------------------------------
Operating income 94,618 53,474 24,804
Interest income 4,727 1,823 2,094
Interest expense (5,452) (6,803) (7,746)
-------------------------------------------------------------------------------
Income from continuing operations before income
taxes 93,893 48,494 19,152
Income taxes 38,027 20,540 10,655
-------------------------------------------------------------------------------
Income from continuing operations 55,866 27,954 8,497
Discontinued operations:
Loss from operations, net of tax (4,864) (55,110) (17,019)
Gain on sale, net of tax -- 10,987 --
Cumulative effect of changes in accounting
principle, net of tax (634) -- (4,150)
-------------------------------------------------------------------------------
Net income (loss) $ 50,368 $(16,169) $(12,672)
===============================================================================
Earnings (loss) per common share
Continuing operations $ 1.23 $ .61 $ .19
Loss from discontinued operations (0.11) (1.21) (.38)
Gain on sale of discontinued operations -- .24 --
Cumulative effect of changes in accounting
principle (.01) -- (.09)
-------------------------------------------------------------------------------
Net income (loss) $ 1.11 $ (.36) $ (.28)
================================================================================
</TABLE>
See notes to consolidated financial statements
21
<PAGE>
CONSOLIDATED BALANCE SHEETS
---------------------------
JOSTENS INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER-SHARE DATA) JUNE 30
-------------------------------------------------------------------------------
1995 1994
-------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash and short-term investments $173,469 $107,827
Accounts receivable, net of allowance of $9,049 and
$13,749, respectively 124,392 149,206
Inventories Finished products 17,079 28,026
Work-in-process 26,928 23,879
Materials and supplies 27,387 30,733
-------------------------------------------------------------------------------
71,394 82,638
Deferred income taxes 17,845 39,985
Prepaid expenses 2,869 6,123
Other receivables 12,399 10,338
-------------------------------------------------------------------------------
Total current assets 402,368 396,117
-------------------------------------------------------------------------------
Other assets
Intangibles 30,915 47,737
Software development costs -- 29,356
Note receivable, net of $9,900 discount and $11,131
deferred gain 18,969 --
Noncurrent deferred income taxes 15,590 --
Other 12,301 20,850
-------------------------------------------------------------------------------
Total other assets 77,775 97,943
-------------------------------------------------------------------------------
Property and equipment
Land 5,260 5,277
Buildings 38,253 38,131
Machinery and equipment 141,043 164,233
-------------------------------------------------------------------------------
184,556 207,641
Accumulated depreciation (116,731) (131,870)
-------------------------------------------------------------------------------
Total property and equipment 67,825 75,771
-------------------------------------------------------------------------------
$547,968 $569,831
===============================================================================
</TABLE>
22 See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
June 30
-----------------------------------------------------------------
1995 1994
-----------------------------------------------------------------
<S> <C> <C>
Liabilities and shareholders' investment
Current liabilities
Accounts payable $ 17,624 $ 33,192
Salaries, wages and commissions 52,544 68,394
Customer deposits 36,367 36,080
Other accrued liabilities 43,820 48,749
Dividends payable 10,005 10,001
Deferred revenue -- 11,820
Income taxes 35,372 14,663
Current maturities on long-term debt 355 495
-----------------------------------------------------------------
Total current liabilities 196,087 223,394
Long-term debt -- less current maturities 53,899 54,267
Deferred income taxes -- 5,943
Accrued pension costs 12,578 19,291
Other noncurrent liabilities 14,791 10,355
Commitments and contingencies -- --
Shareholders' investment
Preferred shares, $1.00 par value:
authorized 4,000 shares, none issued -- --
Common shares, $.33 1/3 par value:
authorized 100,000 shares
Issued 1995 -- 45,482; 1994 -- 45,482 15,160 15,160
Capital surplus 154,410 152,996
Retained earnings 105,213 92,855
Foreign currency translation adjustment (4,170) (4,430)
-----------------------------------------------------------------
Total shareholders' investment 270,613 256,581
-----------------------------------------------------------------
$547,968 $569,831
=================================================================
</TABLE>
23
<PAGE>
Statements of Consolidated Cash Flows
Jostens Inc. and Subsidiaries
<TABLE>
<CAPTION>
(Dollars in thousands) Years ended June 30
----------------------------------------------------------------------------------
1995 1994 1993
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income (loss) $ 50,368 $(16,169) $(12,672)
Depreciation and amortization 28,339 38,927 34,896
Noncash restructuring charges -- 27,333 10,624
Deferred income taxes 607 (21,254) (14,427)
Gain on sale of discontinued operations -- (10,987) --
Changes in assets and liabilities, net of
effects from sale of discontinued operations:
Accounts receivable (1,303) 37,000 15,470
Inventories 2,436 26,333 (13,325)
Prepaid expenses 434 4,577 (3,562)
Accounts payable (11,009) (19,396) 5,596
Other 11,070 58,747 41,796
----------------------------------------------------------------------------------
80,942 125,111 64,396
----------------------------------------------------------------------------------
Investing activities
Capital expenditures (19,142) (15,202) (20,900)
Software development costs (9,560) (19,437) (27,515)
Other 4,074 (144) (1,824)
Net proceeds from sale of discontinued operations 49,471 43,808 --
----------------------------------------------------------------------------------
24,843 9,025 (50,239)
----------------------------------------------------------------------------------
Financing activities
Cash dividends (40,000) (39,999) (40,798)
Exercise of stock options 225 702 5,721
Reduction in long-term notes (368) (576) (24,126)
----------------------------------------------------------------------------------
(40,143) (39,873) (59,203)
----------------------------------------------------------------------------------
Change in cash and short-term investments 65,642 94,263 (45,046)
Cash and short-term investments, beginning of year 107,827 13,564 58,610
----------------------------------------------------------------------------------
Cash and short-term investments, end of year $173,469 $107,827 $ 13,564
==================================================================================
</TABLE>
See notes to consolidated financial statements
24
<PAGE>
Statements of Consolidated Changes in Shareholders' Investment
Jostens Inc. and Subsidiaries
<TABLE>
<CAPTION>
Common Shares Cumulative
------------------ Capital Retained Translation
(In thousands, except per-share data) Number Amount Surplus Earnings Adjustment
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance -- June 30, 1992 45,033 $15,010 $146,070 $204,483 $ (838)
Stock options exercised -- net 194 65 3,217
Transactions of pooled company 198 67 2,372
Net loss (12,672)
Cash dividends of $.88 per share (40,798)
Tax benefit of stock options 653
Change in cumulative translation adjustment (1,911)
---------------------------------------------------------------------------------------------------------
Balance -- June 30, 1993 45,425 15,142 152,312 151,013 (2,749)
Stock options and restricted stock -- net 57 18 684
Net loss (16,169)
Cash dividends of $.88 per share (39,999)
Change in cumulative translation adjustment (1,681)
Adjustment in minimum pension liability (1,990)
---------------------------------------------------------------------------------------------------------
Balance -- June 30, 1994 45,482 15,160 152,996 92,855 (4,430)
Stock options and restricted stock -- net 1,414
Net income 50,368
Cash dividends of $.88 per share (40,000)
Change in cumulative translation adjustment 260
Adjustment in minimum pension liability 1,990
---------------------------------------------------------------------------------------------------------
Balance -- June 30, 1995 45,482 $15,160 $154,410 $105,213 $(4,170)
=========================================================================================================
</TABLE>
See notes to consolidated financial statements 25
<PAGE>
Notes to Consolidated Financial Statements
Jostens Inc. and Subsidiaries
Summary of Significant Accounting Policies
------------------------------------------
Principles of Consolidation The consolidated financial statements include
the accounts of the company and its subsidiaries. All material intercompany
accounts and transactions have been eliminated.
Cash, Short-term Investments and Cash Flows For purposes of reporting cash
flows, cash and short-term investments include cash on hand, time deposits and
commercial paper. SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities, was adopted in fiscal 1995. The implementation of this
statement did not have a material impact on the results of operations.
Short-term investments have an original maturity of three months or less and
are considered cash equivalents. All investments in debt securities have an
original maturity of three months or less and are considered to be held to
maturity. The short-term securities are carried at amortized cost, which
approximates fair value, and totaled $161.1 million and $99.2 million at June
30, 1995 and 1994, respectively. Total cash payments for income taxes and
interest, respectively, were $15.1 million and $4.2 million in 1995, $8.9
million and $5.9 million in 1994, and $24.2 million and $7.5 million
in 1993.
Inventories Gold and certain other inventories aggregating $2.6 million at
June 30, 1995, and $4.1 million at June 30, 1994, are stated at the lower of
last-in, first-out (LIFO) cost or market, and are $14.8 million and $13.8
million lower in the respective years than such inventories determined under
the lower of first-in, first-out (FIFO) cost or market. All other inventories
are stated at the lower of FIFO cost or market.
Inventory Obsolescence The company's policy is to employ a systematic
methodology that includes quarterly evaluations of inventory, based upon
business trends, to specifically identify obsolete, slow-moving and nonsalable
inventory. Inventory reserves are evaluated quarterly to ensure they
continually reflect the current business environment and trends.
Intangibles Intangibles primarily represent the excess of the purchase price
over the fair value of the net tangible assets of acquired businesses and are
amortized over various periods of up to 40 years. Accumulated amortization at
June 30, 1995 and 1994, was $14.5 million and $23.2 million, respectively. The
carrying value of intangible assets is assessed annually and/or when factors
indicating an impairment are present. The company employs an undiscounted cash
flow method of assessment for these assets. The intangible balance also includes
the intangible asset related to additional minimum pension liability of $2.7
million and $5.5 million at June 30, 1995 and 1994, respectively.
Depreciation Property and equipment are carried at cost. Depreciation on
buildings, machinery and equipment is provided principally on the straight-line
method for financial reporting purposes over their estimated useful lives:
buildings, 15 to 40 years; machinery and equipment, three to 10 years.
Depreciation expense charged to continuing operations was $13.6 million, $13.3
million and $14.6 million in 1995, 1994 and 1993, respectively. The carrying
value of property and equipment is assessed annually and/or when factors
indicating an impairment is present.
26
<PAGE>
Income Taxes The company records income taxes in accordance with SFAS No.
109, Accounting for Income Taxes. This statement requires the use of the asset
and liability method of accounting for income taxes. Deferred taxes are
recognized for the estimated taxes ultimately payable or recoverable based on
enacted tax law. Changes in enacted tax rates are reflected in the tax
provision as they occur.
Sales Returns and Warranty Costs Provisions for sales returns and warranty
costs are recorded at the time of sale based on historical information adjusted
for current trends.
Foreign Currency The company enters into foreign currency forward contracts
to hedge purchases of inventory in foreign currency. The purpose of these
hedging activities is to protect the company from the risk that inventory
purchases denominated in foreign currency will be adversely affected by changes
in foreign currency rates. All contracts the company had at June 30, 1995,
mature within one year and are held for purposes other than trading. The amount
of contracts outstanding at June 30, 1995 and 1994, were $.1 million and $3.2
million, respectively. The company is exposed to credit loss in the event of
nonperformance by counterparties on foreign exchange forward contracts. Jostens
does not anticipate nonperformance by any of these counterparties. The amount
of this credit exposure is generally limited to unrealized gains on the
contracts. At June 30, 1995 and 1994, there were no material unrealized gains
or losses on outstanding foreign currency forward contracts.
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 a
separate component of equity. Realized and unrealized gains and losses on
foreign currency forward contracts used to purchase inventory with no firm
purchase commitments are recognized currently in net income because they do not
qualify as hedges for accounting purposes. Realized and unrealized gains and
losses on forward contracts used to purchase inventory for which the company
has firm purchase commitments qualify as accounting hedges and therefore are
deferred and recognized in income when the inventory is sold.
Earnings Per Common Share Earnings per share have been computed by dividing
net income by the average number of common shares outstanding. The impact of
any additional shares issuable upon the exercise of dilutive stock options is
not material.
Postemployment Benefits In the first quarter of fiscal 1995, the company
adopted SFAS No. 112, Employers' Accounting for Postemployment Benefits.
Adopting this statement resulted in a $1.1 million ($.6 million after tax)
charge to operations.
Reclassification Certain 1994 and 1993 balances have been reclassified to
conform to the fiscal 1995 presentation.
27
<PAGE>
Discontinued Operations
-----------------------
The statements of consolidated operations presented have been reclassified
to reflect the company's JLC business (including the Wicat Systems
computer-based aviation training division, which Jostens retains but intends to
sell in fiscal 1996) as discontinued operations along with the company's
previously discontinued Sportswear business.
In June 1995, Jostens sold its JLC curriculum software subsidiary to a
group led by Bain Capital, Inc. for $50 million in cash; a $36 million
unsecured, subordinated note maturing in eight years with a stated interest
rate of 11 percent; and a separate $4 million note with a stated interest rate
of 8.3 percent convertible into 19 percent of the equity of Jostens Learning,
subject to dilution in certain events. The notes were recorded at fair value,
using an estimated 20 percent discount rate on the $36 million note, resulting
in a discount of $9.9 million. The transaction gain of $11.1 million ($5.8
million after tax) was deferred in accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 81, Gain Recognition on the Sale of a
Business or Operating Assets to a Highly Leveraged Entity. The gain will be
deferred until cash flows from the operating activities of JLC are sufficient
to fund debt service, dividend or any other covenant requirements. As part of
the transaction Jostens also agreed to pay $13 million over two years to fund
certain JLC existing liabilities.
In 1994, the company also recorded a restructuring charge of $60.9 million
($40.2 million after tax, or 88 cents per share) related to JLC, which has been
reclassified as part of discontinued operations. The restructuring charge
relating to JLC included $39.1 million to focus its product development, $7.3
million to exit both direct and indirect investments in three ancillary lines of
business, $4.1 million to exit the hardware sales and service business, and
$10.4 million for work-force reduction. The company also recorded in 1993 a
restructuring charge of $10.4 million ($8.3 million after tax, or 18 cents per
share) related to JLC, which has been reclassified as part of discontinued
operations. The restructuring charge included $5 million for the write-off of
certain software development costs, as well as $5.4 million for headcount
reductions. Jostens Learning retained all remaining accruals related to the
restructurings after the sale except for $3.1 million related to the Wicat
Systems business.
Significant accounting policies relevant to discontinued operations included
those related to capitalization of software development costs and software
revenue recognition. JLC capitalized software development costs when the project
reached technological feasibility and ceased capitalization when the product was
ready for release. Research and development costs related to software
development that had not reached technological feasibility were expensed as
incurred. Software development costs were amortized on the straight-line method
over a maximum of five years or the expected life of the product, whichever was
less. JLC recognized revenue for hardware and software upon shipment of the
product, provided that no significant vendor or postcontract obligations
remained outstanding and collection of the resulting receivable was deemed
probable. Revenue generated from service contracts and postcontract customer
support on software was recognized ratably over the period of the contract. The
revenue recognition for instruction and user training was part of the service
contract recognized ratably over the life of the contract. For insignificant
vendor and postcontract obligations remaining at the time of shipment, the
company's policy was to accrue all such obligations. Deferred revenue comprised
payments received in advance of revenue recognized on contracts.
In January 1994, Jostens sold its Sportswear business to a subsidiary of Fruit
of the Loom for $46.7 million in cash. Jostens recognized an $18.5 million gain
($11 million after tax) on the sale, primarily because the Sportswear business
had been written down by $15 million to its estimated net realizable value in
the fiscal 1993 restructuring.
28
<PAGE>
Revenue and income data related to discontinued operations are as follows:
JLC/Wicat Systems 1995 1994 1993
--------------------------------------------------------
Revenue $108.6 $177.5 $201.6
Restructuring charges -- 60.9 10.4
Income tax benefit 2.5 28.0 6.0
Loss from operations $ 4.9 $ 54.3 $ 9.0
Sportswear 1995 1994 1993
--------------------------------------------------------
Revenue $ -- $ 52.1 $ 82.8
Restructuring charges -- -- 15.0
Income tax benefit -- .5 4.9
Loss from operations -- .8 8.0
Gain on sale, net of tax $ -- $ 11.0 $ --
Long-Term Debt and Other Borrowings
-----------------------------------
Long-term debt consisted of the following:
June 30
-----------------
(Dollars in thousands) 1995 1994
--------------------------------------------------------
Medium-term notes, due in
August 1996, plus interest
at 8.02% $50,000 $50,000
6.75% revenue bonds,
covering general offices,
due in January 2004 3,600 3,600
Other 654 1,162
--------------------------------------------------------
54,254 54,762
Less current maturities 355 495
--------------------------------------------------------
$53,899 $54,267
========================================================
Annual maturities on long-term debt are $50 million in fiscal 1997, zero in
1998, zero in 1999, zero in 2000 and $3.9 million thereafter. The fair value of
long-term debt at June 30, 1995 and 1994, approximated the carrying value.
During fiscal 1995, Jostens had unsecured lines of credit with four banks
totaling $60 million, under which the company could either borrow on a short-
term basis or use the bank's credit to support the issuance of short-term
commercial paper. In addition, the company had unsecured demand facilities with
two banks totaling $55 million. Such credit arrangements are renegotiated
periodically based on the anticipated seasonal needs for short-term financing.
In compensation for its credit arrangements, the company incurred certain
commitment fees, which were not significant. The company had no short-term
borrowings outstanding at June 30, 1995 or 1994.
Income Taxes
------------
Income from continuing operations before taxes, discontinued operations and
changes in accounting principle was as follows:
(Dollars in thousands) 1995 1994 1993
--------------------------------------------------------
Domestic $87,009 $42,095 $10,534
Foreign 6,884 6,399 8,618
--------------------------------------------------------
$93,893 $48,494 $19,152
========================================================
The components of the provision for income taxes attributable to earnings
from continuing operations were as follows:
(Dollars in thousands) 1995 1994 1993
--------------------------------------------------------
Federal $23,272 $18,710 $17,490
State 5,198 3,883 2,775
Foreign 3,518 2,603 3,688
--------------------------------------------------------
31,988 25,196 23,953
Deferred 6,039 (4,656) (13,298)
--------------------------------------------------------
$38,027 $20,540 $10,655
========================================================
29
<PAGE>
The following summarizes the differences between income taxes computed at
the U.S. statutory rate and income tax expense from continuing operations for
financial reporting purposes:
(Dollars in thousands) 1995 1994 1993
-------------------------------------------------
Tax at U.S.
statutory rate $32,862 $16,973 $ 6,512
State income taxes,
net of federal income
tax benefit 3,682 2,455 1,637
Nondeductible
restructuring charges -- -- 1,354
All other, net 1,483 1,112 1,152
-------------------------------------------------
$38,027 $20,540 $10,655
=================================================
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. Significant components of
the deferred income tax liabilities and assets as of June 30, 1995 and 1994,
were as follows:
(Dollars in thousands) 1995 1994
---------------------------------------------------
Deferred tax liabilities
Capitalized software
development costs $ -- $ 11,596
Tax over book depreciation 4,119 3,869
Other, net 5,869 5,549
---------------------------------------------------
Net deferred tax liabilities 9,988 21,014
Deferred tax assets
Restructuring charges 3,694 18,689
Net operating loss and tax
credit carryforwards of
acquired companies 6,412 10,356
Allowance for doubtful accounts 4,657 7,063
Sales representatives'
overdraft reserve 2,389 3,657
Sales returns and allowances 2,929 3,401
Postretirement benefits 3,200 2,933
Pension plans 5,403 4,994
Deferred gain on sale of
Jostens Learning 5,330 --
Discount on note receivable 3,950 --
Reserves for discontinued
operations 2,156 --
Other, net 5,420 7,605
---------------------------------------------------
45,540 58,698
Valuation allowance (2,117) (3,642)
---------------------------------------------------
Net deferred tax assets 43,423 55,056
---------------------------------------------------
Net deferred tax (asset) $(33,435) $(34,042)
---------------------------------------------------
At June 30, 1995, the company had net operating loss carryforwards from
business acquisitions of $15.1 million for federal income tax purposes that
expire in the years 1998 through 2004. The company also had investment tax
credit and research and experimentation tax credit carryforwards of $1.1
million that expire in the years 1998 through 2004. The decrease in the
valuation allowance from June 30, 1994, to June 30, 1995, was due to
utilization of net operating loss carryforwards and tax credit carryforwards
related to the sale of JLC. This benefit was deferred and will be recognized in
income when the deferred gain on the sale is recognized.
30
<PAGE>
Benefit Plans
The company's noncontributory pension plans cover substantially all
employees. The defined benefits provided under the plans are based on years of
service and/or compensation levels. Annually, the company funds the actuarially
determined costs of these plans, including the amortization of prior service
costs over 30 years. Service cost represents the present value of the increase
in future benefits resulting from the current year's service. The projected
benefit obligation is the present value of benefits, assuming future
compensation levels, for services rendered to date. During fiscal 1995, the
company reduced by $6 million the minimum pension liability as required by the
SFAS No. 87, Employers' Accounting for Pensions. The adjustment, which had no
effect on 1995 income, was offset by a reduction of $2.7 million in intangible
assets recorded in the previous year and an increase in shareholders'
investment of $2 million after tax.
<TABLE>
<CAPTION>
The components of pension cost and the funded status were as follows:
(Dollars in thousands) 1995 1994 1993
--------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 3,366 $ 3,254 $ 3,209
Interest on projected
benefit obligation 7,447 6,925 6,083
Return on assets --
actual loss (gain) (7,556) 326 (6,164)
deferred (262) (6,978) 93
Amortization 243 (359) (527)
--------------------------------------------------------------------------
Pension cost $ 3,238 $ 3,168 $ 2,694
==========================================================================
June 30, 1995
--------------------------------
Plans whose Plans whose
assets exceed accrued benefits
accrued benefits exceed assets
-----------------------------------------------------------------------
Vested benefit obligation $ 64,047 $ 24,661
Accumulated benefit
obligation 67,818 25,869
Projected benefit obligation 75,285 27,425
Fair value of plan assets 81,635 9,777
Plan assets in excess of
(less than) projected
benefit obligation $ 6,350 $ (17,648)
Unrecognized net (gain) loss (5,460) 1,339
Unrecognized prior service cost 9,486 3,348
Unrecognized net (asset)
at transition (6,796) (513)
Adjustment required to
recognize minimum liability -- (2,684)
-----------------------------------------------------------------------
Net pension asset (liability) in
consolidated balance sheets $ 3,580 $ (16,158)
=======================================================================
June 30, 1994
--------------------------------
Plans whose Plans whose
assets exceed accrued benefits
accrued benefits exceed assets
-----------------------------------------------------------------------
Vested benefit obligation $ 34,743 $ 52,664
Accumulated benefit
obligation 37,795 54,467
Projected benefit obligation 45,736 55,839
Fair value of plan assets 49,304 36,069
Plan assets in excess of
(less than) projected
benefit obligation $ 3,568 $ (19,770)
Unrecognized net (gain) loss (6,951) 7,075
Unrecognized prior service cost 8,094 5,680
Unrecognized net (asset)
at transition (5,679) (2,523)
Adjustment required to
recognize minimum liability -- (8,785)
-----------------------------------------------------------------------
Net pension (liability) in
consolidated balance sheets $ (968) $ (18,323)
=======================================================================
</TABLE>
31
<PAGE>
Plan assets consist primarily of corporate equity, including $4.2 million
of the company's common stock, as well as corporate and U.S. government debt,
and real estate.
The assumptions used in determining the components of pension cost and the
funded status were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
-----------------------------------------------------------------------
Weighted average
discount rates 8.00% 7.50% 8.00%
Rates of increase in
compensation 5.00% 5.00% 6.00%
Expected rate of return
on assets 8.75% 8.00% 8.00%
</TABLE>
In conjunction with the 1994 divestiture of Sportswear, accrued benefits
under the applicable defined-benefit pension plans were frozen and active
participants became fully vested. The plans' trustee will continue to maintain
and invest plan assets and will administer benefit payments. In accordance with
SFAS No. 88, Employers' Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans, a curtailment loss of $.7 million was included in the
gain on the sale of Sportswear.
The company's retirement savings plan, which covers substantially all
nonunion employees, provides for a matching contribution by the company on
amounts, limited to 6 percent of compensation, contributed by employees. The
company's contribution for the years ended June 30, 1995, 1994 and 1993, was
$2.4 million, $2.4 million and $1.8 million, respectively, representing 50
percent of eligible employee contributions in 1995, 50 percent in 1994 and 33.3
percent in 1993.
Postretirement Benefits other than Pensions
-------------------------------------------
Jostens provides medical insurance benefits for substantially all retirees.
Employees who retired prior to June 30, 1993, pay medical contributions at an
amount either frozen at retirement or at a fixed percentage of the plan costs
prior to age 65. Employees retiring after that date receive only a fixed dollar
contribution toward coverage prior to age 65. The fixed dollar contribution is
based on vested service at retirement and is not projected to increase in the
future. In fiscal 1993, Jostens adopted SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions. This statement requires the accrual
of postretirement benefit costs during the years an employee provides services.
The unfunded obligation of $6.7 million ($4.2 million after tax) was charged
against earnings, effective as of the beginning of the year.
The components of the postretirement costs and the benefit obligation
reported in the consolidated balance sheets under SFAS No. 106 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(Dollars in thousands) 1995 1994
------------------------------------------------------------
Service cost of benefits earned $ 75 $ 77
Interest cost of benefit obligation 463 466
Amortization of net (gain)
from earlier periods (471) --
Amortization of unrecognized
prior service cost (7) (7)
------------------------------------------------------------
Postretirement benefit cost $ 60 $ 536
============================================================
(Dollars in thousands) 1995 1994
------------------------------------------------------------
Retirees $ 5,009 $ 5,594
Fully eligible active participants 82 97
Other active participants 959 1,140
------------------------------------------------------------
6,050 6,831
Unrecognized prior service cost 84 92
Unrecognized net gain 884 503
------------------------------------------------------------
Accumulated postretirement
benefit obligations $ 7,018 $ 7,426
============================================================
</TABLE>
32
<PAGE>
The assumptions used in determining the benefit obligation in 1995 included
a medical plan cost trend rate of 13.4 percent, declining to 7.9 percent in the
year 2000, and a weighted average discount rate of 8 percent. Fiscal 1994
assumptions included a medical plan cost trend rate of 14.5 percent, declining
to 7.9 percent in the year 2000, and a weighted average discount rate of 7.5
percent. A one-percentage-point increase in the assumed health care cost trend
rates for each future year increases the accumulated postretirement benefit
obligation for health care benefits by approximately $.4 million with minimal
impact on interest cost and no impact on service cost, since benefits for future
retirees are defined-dollar benefits unrelated to health care benefits.
Commitments and Contingencies
-----------------------------
The company's noncancelable minimum rental commitments for facilities and
equipment are $4.7 million in fiscal 1996, $3.3 million in 1997, $1 million in
1998, $.6 million in 1999, $.5 million in 2000 and $2.5 million thereafter.
Operating lease rental expenses were $6.3 million in 1995, $6 million in 1994
and $6.2 million in 1993. Jostens has forward contracts of $27.7 million for
commitments to purchase 70,557 ounces of gold that mature at various times in
1996 with prices ranging from $385 to $407 per ounce. Jostens is a party to
litigation arising in the normal course of business. Management regularly
analyzes current information and, as necessary, provides accruals for probable
liabilities on the eventual disposition of these matters. Management believes
that the effect on the company's results of operations and financial position,
if any, for the disposition of these matters will not be material.
Jostens also assesses reasonably possible environmental liability beyond
that which has been accrued. This liability is not probable, but is more likely
than remote. As of June 30, 1995, the company identified four sites requiring
further investigation. The potential liability cannot be fully assessed, since
the sites are in the early stages of investigation. In addition, two other
sites nearing completion did not require any accruals as of June 30, 1995. The
amount of environmental liability identified that is reasonably possible is in
the range of $.6 million to $4.6 million. As of June 30, 1995, the company has
not been designated as a potentially responsible party at any site. The amount
accrued during 1995 with respect to potential liability is $.6 million and is
recorded as part of the "other accrued liabilities." The company does not
expect to incur liabilities at the higher end of the range, based on the
limited information currently available.
Stock Options and Restricted Stock
----------------------------------
Under stock option plans, Jostens has granted options to key employees to
purchase common shares of the company at 100 percent of the market price on the
dates the options are granted. The following summarizes the changes in stock
options outstanding:
<TABLE>
<CAPTION>
Options Outstanding
-------------------------------------
<S> <C> <C> <C>
(In thousands) 1995 1994 1993
--------------------------------------------------------------------------
Beginning of year 2,400 2,446 2,181
Granted 1,106 463 521
Exercised (28) (26) (200)
Canceled (223) (483) (56)
--------------------------------------------------------------------------
End of year 3,255 2,400 2,446
==========================================================================
</TABLE>
33
<PAGE>
The options exercised during fiscal 1995 ranged in price from $1.21 to
$17.88 per share. At June 30, 1995, the exercise price on outstanding options
ranged from $1.21 to $34.19 per share, and 1.6 million options were exercisable
under stock option plans. Approximately .7 million and 1.1 million common shares
were reserved for future grants under the stock option plans at June 30, 1995
and 1994, respectively.
Jostens maintains a stock incentive plan, which provides for the grant of
restricted stock awards and performance share units. Shares of restricted stock
issued under the plan are subject to transfer restrictions based on the
continuous employment of the employee, other than retirement, and/or
performance criteria. Participants have voting, liquidation and other rights
with respect to shares of common stock issued to the participant as a
restricted stock award. Restricted stock awards based solely on continuous
employment of the employee granted as of June 30, 1995, totaled 8,500 shares.
Holders of these restricted stock awards receive dividends paid on the common
stock. During fiscal 1995, certain members of the Jostens senior management
team were granted performance share units as part of Jostens' long-term
management incentive plan. Performance share units are tied directly to
attaining specific financial performance targets. If all or a portion of
performance units are awarded, the units are converted into a restricted stock
award, which is subject to transfer and vesting restrictions based upon
continuous employment of the recipient. Performance share units granted as of
June 30, 1995, totaled 171,573. Effective June 30, 1995, a total of 56,182
restricted shares were awarded as a result of achieving fiscal 1995 performance
share unit targets, resulting in $1.2 million in expense.
Shareholder Rights Plan
-----------------------
In August 1988, the Board of Directors declared a distribution to shareholders
of one common share purchase right for each outstanding common share. Each right
entitles the holder to purchase one common share at an exercise price of $60.
The rights become exercisable if a person acquires 20 percent or more, or
announces a tender offer for 25 percent or more, of the company's common shares.
If a person acquires at least 25 percent of the company's outstanding shares,
each right will entitle the holder to purchase the company's common shares
having a market value of twice the exercise price of the right. If the company
is acquired in a merger or other business combination, each right will entitle
the holder to purchase common stock of the acquiring company at a similar 50
percent discount. The rights, which expire in August 1998, may be redeemed by
the company at a price of 1 cent per right at any time prior to the 30th day
after a person has acquired at least 20 percent of the company's outstanding
shares.
Business Segment Information
----------------------------
The company's operations are classified into two business segments:
school-based recognition products and services (School Products) and longevity
and performance recognition products and services for businesses (Recognition).
The School Products segment manufactures and sells products and services
including yearbooks, class rings, graduation products and student photography
packages, as well as customized products for university alumni.
34
<PAGE>
Operations within the Recognition segment include the manufacture and sale
of customized sales, service and business achievement awards.
Operating income from continuing operations by business segment is defined
as sales less operating costs and expenses. Income and expense not allocated to
business segments include investment income, interest expense and corporate
administrative costs.
Identifiable assets are assets used exclusively in the operations of each
business segment and are reflected after eliminating intercompany balances.
Corporate assets principally comprise cash, short-term investments, deferred
income tax assets, notes receivable and certain property and equipment.
Financial information by reportable business segment is included in the
following summary:
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994 1993
------------------------------------------------------------
<S> <C> <C> <C>
Net Sales
School Products $565,033 $546,191 $540,691
Recognition 100,066 103,678 94,106
------------------------------------------------------------
Consolidated $665,099 $649,869 $634,797
============================================================
Income from
continuing operations
School Products $107,071 $ 73,463 $ 40,042
Recognition 4,727 9,489 8,582
Corporate items
and eliminations (17,180) (29,478) (23,820)
------------------------------------------------------------
Consolidated 94,618 53,474 24,804
Net interest expense (725) (4,980) (5,652)
Income from continuing
operations before
income taxes $ 93,893 $ 48,494 $ 19,152
============================================================
(Dollars in thousands) 1995 1994 1993
------------------------------------------------------------
Identifiable Assets
School Products $236,424 $225,249 $260,927
Recognition 45,177 47,315 48,068
Discontinued
operations 6,165 119,999 246,792
Corporate items and
eliminations 260,202 177,268 57,663
------------------------------------------------------------
Consolidated $547,968 $569,831 $613,450
============================================================
Depreciation and
amortization
School Products $ 10,951 $ 11,700 $ 12,634
Recognition 2,111 1,775 2,267
Discontinued
operations 13,179 24,013 18,780
Corporate items 2,098 1,439 1,215
------------------------------------------------------------
Consolidated $ 28,339 $ 38,927 $ 34,896
============================================================
Capital Expenditures
School Products $ 8,540 $ 6,252 $ 9,769
Recognition 1,369 1,054 1,550
Discontinued
operations 2,559 3,994 8,589
Corporate items 6,674 3,902 992
------------------------------------------------------------
Consolidated $ 19,142 $ 15,202 $ 20,900
============================================================
</TABLE>
Corporate recorded restructuring charges of $8.5 million in 1994 and $3.7
million in 1993. School Products recorded restructuring charges of $36.5
million in 1993. Income from continuing operations for School Products in 1994
included $16.4 million of provisions for revised estimates of inventories,
receivables and overdrafts. Income from continuing operations for Recognition
in 1994 included $.5 million for revised inventory estimates.
35
<PAGE>
Restructurings
--------------
Fiscal 1994 The company recorded an $8.5 million restructuring charge ($5.1
million after tax, or 12 cents per share) related to continuing operations in
the fourth quarter of 1994, covering headcount reductions in the general and
administrative functions. As a result of a study of corporate overhead costs in
1994, the company eliminated approximately 125 positions to achieve the desired
management organization. The 1994 restructuring accrual decreased by $7 million
in fiscal 1995 to $.9 million at June 30, 1995, due to payments of $6.2 million
and noncash items of $.8 million.
Fiscal 1993 The company recorded a $40.2 million ($25.3 million after tax,
or 56 cents per share) restructuring charge related to continuing operations in
the fourth quarter of 1993. The charge included $26.7 million for restructuring
the Photography business, of which $7.9 million related to goodwill write-offs
($5.6 million relating to the Portrait World acquisition in 1989 and $2.3
million in various smaller Photography intangibles), $12.8 million related to
plant shutdowns and $6 million related primarily to write-offs of abandoned
receivables from independent sales representatives and dealers. The remaining
$13.5 million of restructuring charges included $4.8 million primarily for
headcount reductions and relocation expenses, and $8.7 million primarily for
sales force restructuring and policy changes, including write-offs of abandoned
receivables from terminated independent sales representatives. The accounts
receivable balances, which would have ordinarily been collectible in the absence
of the changes in the sales force, were abandoned as part of the territory
consolidations and sales force terminations resulting from the sales force
restructuring. The 1993 restructuring accrual decreased by $6.4 million in
fiscal 1995 to $4.6 million at June 30, 1995, due to payments of $4.9 million
and noncash items of $1.5 million.
Changes in Accounting Estimates
-------------------------------
As a result of certain changes in business conditions, the company conducted
a review that concluded at the end of the third quarter of fiscal 1994. That
review led the company to increase reserves for inventories, receivables and
overdrafts from independent sales representatives to reflect amounts estimated
not to be recoverable, based upon current facts and circumstances. The revised
estimates reduced pretax income for 1994 by $16.9 million ($10.1 million after
tax, or 22 cents per share).
Subsequent Event
----------------
In August 1995, Jostens offered to repurchase up to 6.1 million of its common
shares through a Modified Dutch Auction tender offer. Under the offer, which is
expected to close in early September, shareholders have the option to tender
shares at a price range of $21.50 to $24.50 per share. The repurchase will be
funded from the company's cash and short-term investment balance, as well as
short-term borrowings.
36
<PAGE>
Unaudited Quarterly Financial Data
----------------------------------
Jostens Inc. and Subsidiaries
<TABLE>
<CAPTION>
Fiscal 1995 Income Earnings Per Share
from ------------------ Stock Price Dividends
(Dollars in thousands, Net Gross Continuing Net Continuing Net ---------------- Per
except per-share data) Sales Margin Operations Income Operations Income High Low Share
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First
Previously reported $131,557 $ 65,461 $ 1,950 $ 1,316 $ .04 $ .03
Discontinued operations (33,534) (12,326) 1,639 -- .04 --
----------------------------------------------------------------------------------------------------------------------
$ 98,023 $ 53,135 $ 3,589 $ 1,316 $ .08 $ .03 $18 3/4 $15 3/4 $.22
----------------------------------------------------------------------------------------------------------------------
Second
Previously reported $189,890 $ 96,353 $11,707 $11,707 $ .26 $ .26
Discontinued operations (32,267) (11,463) 660 -- .01 --
----------------------------------------------------------------------------------------------------------------------
$157,623 $ 84,890 $12,367 $11,707 $ .27 $ .26 $19 3/8 $16 7/8 $.22
----------------------------------------------------------------------------------------------------------------------
Third
Previously reported $163,120 $ 81,715 $ 8,511 $ 8,511 $ .18 $ .18
Discontinued operations (24,082) (9,411) 926 -- .03 --
----------------------------------------------------------------------------------------------------------------------
$139,038 $ 72,304 $ 9,437 $ 8,511 $ .21 $ .18 $21 1/4 $17 3/4 $.22
----------------------------------------------------------------------------------------------------------------------
Fourth $270,415 $135,705 $30,473 $28,834 $ .67 $ .64 $21 5/8 $18 7/8 $.22
----------------------------------------------------------------------------------------------------------------------
Total year $665,099 $346,034 $55,866 $50,368 $1.23 $1.11 $21 5/8 $15 3/4 $.88
======================================================================================================================
</TABLE>
The quarterly financial data above includes the effects of reclassifying
Jostens Learning and Wicat Systems as discontinued operations.
37
<PAGE>
Unaudited Quarterly Financial Data
----------------------------------
Jostens Inc. and Subsidiaries
<TABLE>
Earnings (Loss)
Fiscal 1994 Per Share
----------- Income ----------------
(Loss) from Net Net Stock Price Dividends
(Dollars in thousands, Net Gross Continuing Income Continuing Income ------------- Per
except per-share data) Sales Margin Operations (Loss) Operations (Loss) High Low Share
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First
Previously reported $148,738 $ 69,431 $ 1,451 $ 2,478 $ .03 $ .05
Discontinued operations (46,787) (14,611) 458 -- .01 --
-------------------------------------------------------------------------------------------------------------------
$101,951 $ 54,820 $ 1,909 $ 2,478 $ .04 $ .05 $20 7/8 $18 $.22
-------------------------------------------------------------------------------------------------------------------
Second
Previously reported $197,968 $ 96,600 $ 5,709 $ 3,872 $ .13 $ .09
Discontinued operations (36,346) (8,851) 5,020 -- .11 --
-------------------------------------------------------------------------------------------------------------------
$161,622 $ 87,749 $ 10,729 $ 3,872 $ .24 $ .09 $20 5/8 $17 1/2 $.22
-------------------------------------------------------------------------------------------------------------------
Third
Previously reported $158,726 $ 75,761 $ (9,247) $ 1,740 $(.20) $ .04
Discontinued operations (32,189) (8,391) 4,126 -- .09 --
-------------------------------------------------------------------------------------------------------------------
$126,537 $ 67,370 $ (5,121) $ 1,740 $(.11) $ .04 $20 $16 5/8 $.22
-------------------------------------------------------------------------------------------------------------------
Fourth
Previously reported $321,906 $159,064 $(24,259) $(24,259) $(.54) $(.54)
Discontinued operations (62,147) (32,889) 44,696 -- .98 --
-------------------------------------------------------------------------------------------------------------------
$259,759 $126,175 $ 20,437 $(24,259) $ .44 $(.54) $17 1/2 $15 1/8 $.22
-------------------------------------------------------------------------------------------------------------------
Total year $649,869 $336,114 $ 27,954 $(16,169) $ .61 $(.36) $20 7/8 $15 1/8 $.88
===================================================================================================================
</TABLE>
The quarterly financial data above includes the effects of reclassifying
Jostens Learning and Wicat Systems as discontinued operations. Sportswear was
previously reclassified as a discontinued operation and included a
third-quarter gain of $18.5 million ($11 million after tax). In the third
quarter of fiscal 1994, $16.9 million was recorded for provisions related to
revised estimates of reserves for inventories, receivables and overdrafts.
Restructuring charges totaling $8.5 million from continuing operations and $60.9
million from discontinued operations were recorded in the fourth quarter of
1994.
38
<PAGE>
Five-Year Financial Summary
Jostens Inc. and Subsidiaries
<TABLE>
<CAPTION>
(Dollars in millions, except per-share data)
-------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of operations
Net Sales $665.1 $649.9 $634.8 $639.2 $632.1
Cost of products sold 319.1 313.8 310.4 314.0 311.3
Net interest expense .7 5.0 5.7 8.7 10.2
Income taxes 38.0 20.5 10.7 29.8 27.5
Income -- continuing operations 55.9 28.0 8.5 45.2 45.0
Return on sales -- continuing operations 8.4% 4.3% 1.3% 7.1% 7.1%
Net income (loss) 50.4 (16.2) (12.7) 59.2 61.6
Return on investment 19.1% (5.7%) (3.7%) 16.9% 19.6%
-------------------------------------------------------------------------------------
Balance sheet data
Current assets $402.4 $396.1 $401.6 $436.3 $389.4
Working capital 206.3 172.7 185.3 232.2 167.7
Current ratio 2.1 1.8 1.9 2.2 1.8
Property and equipment 184.6 207.6 218.9 207.4 192.3
Total assets 548.0 569.8 613.5 643.3 596.4
Long-term debt 53.9 54.3 54.8 55.5 31.9
Shareholders' investment 270.6 256.6 315.7 364.7 333.6
-------------------------------------------------------------------------------------
Common share data
EPS -- continuing operations $ 1.23 $ .61 $ .19 $ 1.00 $ 1.01
EPS -- net income (loss) 1.11 (.36) (.28) 1.32 1.38
Cash dividends .88 .88 .88 .84 .80
Book value 5.95 5.64 6.95 8.10 7.46
Common shares (in millions) 45.5 45.5 45.4 45.0 44.7
Stock price high 21 5/8 20 7/8 31 1/4 37 3/8 38 5/8
Stock price low 15 3/4 15 1/8 16 1/2 24 1/8 23 1/2
-------------------------------------------------------------------------------------
</TABLE>
The financial information above reflects Jostens Learning, Wicat Systems and
Sportswear as discontinued operations. Restructuring charges totaling $8.5
million and $40.2 million were recorded in continuing operations and $60.9
million and $25.4 million in discontinued operations in the fourth quarters of
1994 and 1993, respectively. In 1994, $16.9 million was recorded for provisions
related to revised estimates of reserves for inventories, receivables and
overdrafts. Fiscal 1993 net income reflects the cumulative effect of adopting
SFAS No. 106 of $6.7 million ($4.2 million after tax, or 9 cents per share).
39
<PAGE>
Board of Directors
------------------
Lilyan H. Affinito Former Vice Chairman of the Board, Maxxam Group Inc.;
Director, Caterpillar Inc., Chrysler Corp., New York Telephone Co. and New
England Telephone and Telegraph Co., Tambrands Inc., Lillian Vernon Corp.,
Kmart Corp. (Member, Audit Committee, Compensation Committee and Executive
Committee)
William A. Andres Retired Chairman of the Board and Chief Executive
Officer, Dayton Hudson Corp.; Director, International Multifoods, Scott Paper
Co., Lowe's Companies Inc., Hannaford Bros. Co., The St. Paul Companies.
(Member, Audit Committee, Compensation Committee and Executive Committee)
Robert C. Buhrmaster President and Chief Executive Officer, Jostens Inc.;
Director, Marietta Corp. (Member, Executive Committee)
Mannie L. Jackson Majority Owner, Chairman of the Board and Chief Executive
Officer, Harlem Globetrotters International; Former Senior Vice
President-Corporate Marketing and Administration, Honeywell Inc.; Director,
Ashland Oil Corp., Stanley Products, Martech Controls-South Africa. (Member,
Audit Committee and Executive Committee)
Robert P. Jensen Chairman of the Board, Jostens Inc.; Private Investor;
Former Chairman and Chief Executive Officer, GK Technologies Inc., Tiger
International Inc., EF Hutton LBO Inc. (Member, Audit Committee and Executive
Committee)
John W. Stodder Vice Chairman of the Board and Audit Committee Chairman,
Jostens Inc.; Independent Corporate Finance Consultant; Director, Tally
Industries Inc., Stevens International Inc., TransLeasing International Inc.
(Member, Audit Committee, Compensation Committee and Executive Committee)
Corporate Management
--------------------
Robert C. Buhrmaster, 48, President and Chief Executive Officer, an employee
since 1992.
Charles W. Schmid, 52, Executive Vice President and General
Manager-Scholastic and Recognition, an employee since 1994.
Orville E. Fisher Jr., 51, Senior Vice President, General Counsel and
Secretary, an employee since 1975.
John L. Jones, 58, Senior Vice President-Human Resources, an employee since
1992.
Trudy A. Rautio, 42, Senior Vice President and Chief Financial Officer, an
employee since 1993.
G. Nichols Simonds, 56, Senior Vice President and Chief Information Officer,
an employee since 1993.
Jack Thornton, 42, Senior Vice President and General Manager-Printing &
Publishing/Photography/Jostens Canada, an employee since 1978.
Greg S. Lea, 43, Vice President and General Manager-Colleges and Universities,
an employee since 1993.
Guy M. Marsala, 44, Vice President and General Manager-Scholastic, an
employee since 1995.
Lee U. McGrath, 39, Vice President and Treasurer, an employee since 1995.
40
<PAGE>
Shareholder Information
-----------------------
Annual Meeting of Shareholders The annual meeting of Jostens shareholders
will be held at 10 a.m. Thursday, October 26, 1995, in the Jostens auditorium,
5501 Norman Center Drive, Minneapolis, Minnesota. All shareholders are invited
to attend.
Shareholder Inquiries Requests for information about Jostens, including
annual and quarterly reports, Form 10-K reports and other company financial
communications, may be directed to: Investor Relations, Jostens Inc., 5501
Norman Center Drive, Minneapolis, Minnesota 55437-1088. Telephone: (612)
830-3398.
Dividend Reinvestment Jostens' automatic dividend reinvestment service is a
convenient way for shareholders to increase their investment in the company.
Approximately 40 percent of Jostens' registered shareholders use this service,
which applies quarterly dividends and optional cash deposits to the purchase of
additional Jostens shares. Shareholders interested in this service can obtain a
brochure by writing the Jostens investor relations department.
Transfer Agent and Registrar Shareholders with questions about
stockholdings, dividend checks, transfer requirements and address changes
should contact: Norwest Bank Minnesota, N.A., 161 North Concord Exchange, P.O.
Box 738, South St. Paul, Minnesota 55075-0738. Telephone: (612) 450-4064
Stock Exchange Listing Jostens common stock is traded on the New York Stock
Exchange (symbol: JOS). There were approximately 9,400 shareholders of record
as of June 30, 1995.
Annual Report of Corporate Responsibility The Jostens Annual Report of
Corporate Responsibility is available by writing: The Jostens Foundation, 5501
Norman Center Drive, Minneapolis, Minnesota 55437-1088.
Facilities
----------
United States Porterville and Visalia, California; Princeton, Illinois;
Topeka, Kansas; Attleboro, Massachusetts; Burnsville, Edina, Minneapolis,
Owatonna and Red Wing, Minnesota; Webster, New York; Winston-Salem, North
Carolina; State College, Pennsylvania; Laurens, South Carolina; Clarksville,
Memphis and Shelbyville, Tennessee; Denton, Texas; Lindon, Utah.
Canada Winnipeg, Manitoba; Toronto, Ontario; Montreal and Sherbrooke,
Quebec.
United Kingdom Surrey, England.
[Recycled Logo] This report was printed by the Jostens commercial printing
facility in Winston-Salem, North Carolina, on recycled (and recyclable) paper,
50% total recovered fiber, minimum 10% post-consumer fiber.
Star Trek(R) is a trademark of Paramount Pictures Corporation.
<PAGE>
For more information
about products and services from
JOSTENS
please contact us. Our address is
5501 Norman Center Drive, Minneapolis, MN 55437,
or you may reach us by calling (612) 830-3300.
<PAGE>
JOSTENS, INC. AND SUBSIDIARIES
EXHIBIT 21--SUBSIDIARIES OF THE REGISTRANT
State or Other
Name Jurisdiction of Organization
---- --------------------------------
American Yearbook Company, Inc. Kansas
Hunter Publishing Company North Carolina
Jostens Canada, Ltd. Manitoba, Canada
Josten Engraving Company Minnesota
Josten's/Massachusetts, Inc. Massachusetts
Jostens Photography, Inc. California
Jostens Publishing Group, Inc. Minnesota
S. C. Cap and Gown, Inc. South Carolina
The Jostens Foundation, Inc. Minnesota
Wayneco Enterprises, Incorporated Pennsylvania
Wicat Systems, Inc. Delaware
<PAGE>
EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Jostens, Inc. of our report dated August 4, 1995, included in the 1995 Annual
Report to Shareholders of Jostens, Inc.
Our audits also included the financial statement schedule of Jostens, Inc.
listed in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
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.
We also consent to the incorporation by reference in Registration Statement
Number 33-40233 and Registration Statement Number 33-37076 on Form S-3;
Registration Statement Number 33-49968 on Form S-4; Post-effective Amendment
Number 1 to Registration Statement Numbers 2-95076, 33-19308 and 33-58414 on
Form S-8 of Jostens, Inc. and in the related Prospectuses of our report dated
August 4, 1995, with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the preceding
paragraph with respect to the financial statement schedule included in this
Annual Report (Form 10-K) of Jostens, Inc.
/s/ ERNST & YOUNG LLP
----------------------
ERNST & YOUNG LLP
Minneapolis, Minnesota
September 22, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Jostens Inc. consolidated financial statements and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 12,373
<SECURITIES> 161,096
<RECEIVABLES> 133,441
<ALLOWANCES> (9,049)
<INVENTORY> 71,394
<CURRENT-ASSETS> 402,368
<PP&E> 184,556
<DEPRECIATION> (116,731)
<TOTAL-ASSETS> 547,968
<CURRENT-LIABILITIES> 196,087
<BONDS> 53,899
<COMMON> 15,160
0
0
<OTHER-SE> 255,453
<TOTAL-LIABILITY-AND-EQUITY> 547,968
<SALES> 665,099
<TOTAL-REVENUES> 665,099
<CGS> 319,065
<TOTAL-COSTS> 319,065
<OTHER-EXPENSES> 251,416
<LOSS-PROVISION> 3,552
<INTEREST-EXPENSE> 5,452
<INCOME-PRETAX> 93,893
<INCOME-TAX> 38,027
<INCOME-CONTINUING> 55,866
<DISCONTINUED> (4,864)
<EXTRAORDINARY> 0
<CHANGES> (634)
<NET-INCOME> 50,368
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11
</TABLE>
