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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 2, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-5064
Jostens, Inc.
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(Exact name of Registrant as specified in its charter)
Minnesota 41-0343440
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
5501 Norman Center Drive, Minneapolis, Minnesota 55437
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (612-830-3300)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
On November 1, 1999, there were 33,365,027 shares of the Registrant's common
stock outstanding.
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Jostens, Inc.
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Part I. Financial Information Page
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Item 1. Financial Statements
Condensed Consolidated Statements of Operations for the Three and Nine months ended October
2, 1999 and October 3, 1998 3
Condensed Consolidated Balance Sheets as of October 2, 1999, October 3, 1998 and January 2, 4
1999
Condensed Consolidated Statements of Cash Flows for the Nine months ended October 2, 1999
and October 3, 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
Item 3 Quantitative and Qualitative Disclosures about Market Risk 12
Part II. Other Information
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Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
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2
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Condensed Consolidated Statements of Operations
Jostens, Inc. and Subsidiaries
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Three months ended Nine months ended
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(unaudited) (unaudited)
October 2 October 3 October 2 October 3
In thousands, except per-share data 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Net sales $ 122,643 $ 127,009 $ 592,162 $ 594,165
Cost of products sold 69,659 70,470 278,902 281,702
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Gross margin 52,984 56,539 313,260 312,463
Selling and administrative expenses 62,626 66,659 241,262 238,927
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Operating income (loss) (9,642) (10,120) 71,998 73,536
Net interest expense 1,980 1,943 4,478 4,565
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Income (loss) before income taxes (11,622) (12,063) 67,520 68,971
Income taxes (4,708) (4,885) 27,345 28,021
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Net income (loss) $ (6,914) $ (7,178) $ 40,175 $ 40,950
============================================================================================
Earnings (loss) per common share
Basic $ (0.21) $ (0.20) $ 1.17 $ 1.11
Diluted $ (0.21) $ (0.20) $ 1.17 $ 1.10
============================================================================================
Weighted average common shares outstanding
Basic 33,711 36,213 34,228 36,970
Diluted 33,711 36,213 34,344 37,159
============================================================================================
Cash dividends declared per common share $ 0.22 $ 0.22 $ 0.66 $ 0.66
============================================================================================
See notes to condensed consolidated financial statements
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3
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<TABLE>
<CAPTION>
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Condensed Consolidated Balance Sheets
Jostens, Inc. and Subsidiaries
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(unaudited)
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October 2 October 3 January 2
In thousands, except per-share data 1999 1998 1999
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<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Short-term investments $ 11,603 $ 3,746 $ 2,595
Accounts receivable, net of allowance of $6,243, $7,971 and $7,308, respectively 110,762 107,269 106,347
Inventories 75,678 84,919 90,494
Deferred income taxes 14,682 15,543 14,682
Other receivables, net of allowance of $5,835, $6,623 and $7,061, respectively 29,359 19,711 20,689
Prepaid expenses and other current assets 6,882 3,990 5,737
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Total current assets 248,966 235,178 240,544
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OTHER ASSETS
Intangibles, net 27,076 28,903 28,165
Notes receivable, net -- 12,925 --
Noncurrent deferred income taxes -- 7,743 --
Other 15,503 13,970 8,811
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Total other assets 42,579 63,541 36,976
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Property and equipment 273,454 257,261 256,165
Less accumulated depreciation (184,525) (172,956) (167,518)
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Property and equipment, net 88,929 84,305 88,647
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$ 380,474 $ 383,024 $ 366,167
======================================================================================================================
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Notes payable $ 181,997 $ 178,326 $ 93,922
Accounts payable 21,691 19,457 23,682
Employee compensation 23,587 19,037 27,560
Commissions payable 20,239 12,981 22,131
Customer deposits 34,022 28,727 92,092
Income taxes 18,537 12,765 4,713
Other accrued liabilities 19,219 22,049 23,679
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Total current liabilities 319,292 293,342 287,779
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Other noncurrent liabilities 18,209 15,072 19,836
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Total liabilities 337,501 308,414 307,615
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' INVESTMENT
Preferred shares, $1.00 par value: authorized 4,000 shares, none issued -- -- --
Common shares, $.33 1/3 par value: authorized 100,000 shares, issued
October 2, 1999 - 33,528; October 3, 1998 - 35,397; January 2, 1999 - 35,071 11,176 11,799 11,690
Retained earnings 39,072 69,379 54,627
Accumulated other comprehensive loss (7,275) (6,568) (7,765)
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Total shareholders' investment 42,973 74,610 58,552
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$ 380,474 $ 383,024 $ 366,167
======================================================================================================================
See notes to condensed consolidated financial statements
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4
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<CAPTION>
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Condensed Consolidated Statements of Cash Flows
Jostens, Inc. and Subsidiaries
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Nine months ended
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(unaudited)
October 2 October 3
In thousands 1999 1998
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 40,175 $ 40,950
Depreciation 17,331 16,338
Amortization 1,698 1,719
Changes in assets and liabilities:
Accounts receivable (4,415) 1,428
Inventories 14,816 7,143
Other receivables (8,670) 5,784
Prepaid expenses and other current assets (1,145) 689
Accounts payable (448) (2,843)
Employee compensation (3,973) (409)
Commissions payable (1,892) (6,241)
Customer deposits (58,070) (69,932)
Income taxes 13,824 1,667
Other (4,884) 1,831
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Net cash provided by (used for) operating activities 4,347 (1,876)
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INVESTING ACTIVITIES
Purchases of property and equipment (19,358) (27,844)
Equity investment (7,493) --
Other 1,224 101
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Net cash used for investing activities (25,627) (27,743)
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FINANCING ACTIVITIES
Short-term borrowings 86,532 120,099
Dividends paid (22,664) (24,582)
Proceeds from exercise of stock options 2,463 1,649
Repurchases of common stock (36,043) (69,869)
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Net cash provided by financing activities 30,288 27,297
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CHANGE IN SHORT-TERM INVESTMENTS 9,008 (2,322)
SHORT-TERM INVESTMENTS, BEGINNING OF PERIOD 2,595 6,068
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SHORT-TERM INVESTMENTS, END OF PERIOD $ 11,603 $ 3,746
=====================================================================================
See notes to condensed consolidated financial statements
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5
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Jostens, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(unaudited)
(1) BASIS OF PRESENTATION
The accompanying interim financial statements are unaudited but, in the
opinion of management, reflect all adjustments necessary for a fair
presentation of financial position, results of operations and cash flows
for the periods presented. These adjustments consist of normal, recurring
items. Because of the seasonal nature of our business, the results of
operations for any interim period are not necessarily indicative of results
for the full year. The condensed consolidated financial statements and
notes are presented as permitted by the requirements for Form 10-Q and do
not contain certain information included in our annual consolidated
financial statements and notes. This Form 10-Q should be read in
conjunction with our consolidated financial statements and notes included
in our 1998 Annual Report to Shareholders.
Certain balances have been reclassified to conform to the October 2, 1999
presentation.
(2) EARNINGS PER COMMON SHARE
Basic earnings per share are computed by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per
share are computed by dividing net income by the average number of common
shares outstanding, including the dilutive effects of options, restricted
stock and contingently issuable shares. Unless otherwise noted, references
are to diluted earnings per share. The following table sets forth the
computation of basic and diluted earnings per share for the three month and
nine month periods:
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Three months ended Nine months ended
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October 2 October 3 October 2 October 3
In thousands, except per-share data 1999 1998 1999 1998
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EARNINGS PER SHARE - BASIC
Net income (loss) $ (6,914) $ (7,178) $ 40,175 $ 40,950
Weighted average common shares outstanding - basic 33,711 36,213 34,228 36,970
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Net income (loss) per share - basic $ (0.21) $ (0.20) $ 1.17 $ 1.11
==================================================================================================
EARNINGS PER SHARE - DILUTED
Net income (loss) $ (6,914) $ (7,178) $ 40,175 $ 40,950
Weighted average common shares outstanding - basic 33,711 36,213 34,228 36,970
Dilutive effect of stock options and awards -- -- 116 189
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Weighted average common shares outstanding - diluted 33,711 36,213 34,344 37,159
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Net income (loss) per share - diluted $ (0.21) $ (0.20) $ 1.17 $ 1.10
==================================================================================================
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6
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(3) SUPPLEMENTAL BALANCE SHEET INFORMATION
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October 2 October 3 January 2
In thousands 1999 1998 1999
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INVENTORIES
Finished goods $32,060 $33,012 $38,141
Work-in-process 20,380 19,802 29,735
Raw materials and supplies 23,238 32,105 22,618
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Total inventories $75,678 $84,919 $90,494
=============================================================
(4) COMPREHENSIVE INCOME
Comprehensive income and its components, net of tax, are as follows:
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Three months ended Nine months ended
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October 2 October 3 October 2 October 3
In thousands 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Net income (loss) $ (6,914) $ (7,178) $ 40,175 $ 40,950
Change in cumulative translation adjustment (278) (873) 490 (1,430)
- -----------------------------------------------------------------------------------------------------
Comprehensive income (loss) $ (7,192) $ (8,051) $ 40,665 $ 39,520
=====================================================================================================
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(5) BUSINESS SEGMENTS
Financial information by reportable business segment is included in the
following summary:
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Three months ended Nine months ended
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October 2 October 3 October 2 October 3
In thousands 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
NET SALES FROM EXTERNAL CUSTOMERS
School Products $ 100,446 $ 103,930 $ 509,369 $ 506,588
Recognition 21,339 21,826 74,875 77,271
Other 858 1,253 7,918 10,306
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CONSOLIDATED $ 122,643 $ 127,009 $ 592,162 $ 594,165
================================================================================================
OPERATING INCOME (LOSS)
School Products $ 2,396 $ (1,196) $ 103,338 $ 93,101
Recognition (994) 1,500 1,168 7,125
Other (11,044) (10,424) (32,508) (26,690)
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Consolidated (9,642) (10,120) 71,998 73,536
Net interest expense (1,980) (1,943) (4,478) (4,565)
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INCOME (LOSS) BEFORE INCOME TAXES $ (11,622) $ (12,063) $ 67,520 $ 68,971
================================================================================================
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7
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Management's Discussion and Analysis of Financial Condition and Results of
Operations
We occasionally may make statements regarding our business and markets, such as
projections of future performance, statements of management's plans and
objectives, forecasts of market trends and other matters. To the extent such
statements are not historical fact, they may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Statements containing the words or phrases "will likely result," "are
expected to," "expects," "will continue," "anticipates," "believes,"
"estimates," "projected," or similar expressions are intended to identify
forward-looking statements. Forward-looking statements may appear in this
document or other documents, reports, press releases and written or oral
presentations made by our officers to shareholders, analysts, news organizations
or others. All forward-looking statements speak only as of the date on which the
statements are made. Actual results could be affected by one or more factors,
which could cause the results to differ materially. Therefore, all
forward-looking statements are qualified in their entirety by such factors,
including the factors listed below. Such factors may be more fully discussed
periodically in our subsequent filings with the Securities and Exchange
Commission (SEC).
Any change in the following factors may impact the achievement of results in
forward-looking statements: our access to students and consumers in schools; the
seasonality of our business; our ability to ship backlog; our relationship with
our sales force; fashion and demographic trends; the general economy, especially
during peak buying seasons for our products and services; our ability to respond
to customer change orders and delivery schedules; our ability to maintain our
customer base; competitive pricing and program changes; our ability to
successfully execute new programs; interest rates; the price of gold; our
ability to continue improving operating efficiencies; and the impact of year
2000 compliance on our computer-based systems and our external relationships.
The foregoing factors are not exhaustive, and new factors may emerge or changes
to the foregoing factors may occur that would impact our business.
RESULTS OF OPERATIONS
The following table sets forth selected information from our Condensed
Consolidated Statements of Operations, expressed as a percentage of net sales.
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Three months ended Nine months ended
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(unaudited) Percent (unaudited) Percent
October 2 October 3 increase October 2 October 3 increase
1999 1998 (decrease) 1999 1998 (decrease)
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<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% (3.4%) 100.0% 100.0% (0.3%)
Cost of products sold 56.8% 55.5% (1.2%) 47.1% 47.4% (1.0%)
- -----------------------------------------------------------------------------------------------------------------------------
Gross margin 43.2% 44.5% (6.3%) 52.9% 52.6% 0.3%
Selling and administrative expenses 51.1% 52.5% (6.1%) 40.7% 40.2% 1.0%
- -----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) (7.9%) (8.0%) (4.7%) 12.2% 12.4% (2.1%)
Net interest expense 1.6% 1.5% 1.9% 0.8% 0.8% (1.9%)
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Income (loss) before income taxes (9.5%) (9.5%) (3.7%) 11.4% 11.6% (2.1%)
Income taxes (3.8%) (3.8%) (3.6%) 4.6% 4.7% (2.4%)
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Net income (loss) (5.7%) (5.7%) (3.7%) 6.8% 6.9% (1.9%)
=============================================================================================================================
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8
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Net sales
Net sales for the three and nine months ended October 2, 1999 were $122.6
million and $592.2 million, compared with $127.0 million and $594.2 million for
the comparable periods in 1998. The following is an explanation of changes in
net sales by business segment.
School Products segment sales for the three and nine months ended October 2,
1999 were $100.4 million and $509.4 million, compared with $103.9 million and
$506.6 million for the comparable periods in 1998. The third quarter decline of
3.4 percent was primarily due to a shift in North American Photography revenue
from the third to the fourth quarter. The year-to-date sales increase of 0.6
percent over the prior year period was driven by price increases for all school
product lines as well as higher sales of add-on features in the Printing &
Publishing product lines. These increases were offset by a decline in commercial
printing volume, a shift in North American Photography revenue from the third to
the fourth quarter, and a loss of about $9 million in Jewelry and Graduation
Products sales volume due to a sales group leaving in mid-1998.
Recognition segment sales for the three and nine months ended October 2, 1999
were $21.3 million and $74.9 million, compared with $21.8 million and $77.3
million for the comparable periods in 1998. The 2.2 percent third quarter
decrease and 3.1 percent year-to-date decrease were primarily due to lower sales
volume caused by problems encountered with systems implementation. We anticipate
full year 1999 sales for Recognition to be lower than 1998 levels.
The Other segment is comprised primarily of unallocated corporate expenses, the
direct marketing program to college alumni, international sales, and expenses
associated with new product development. Sales for the three and nine months
ended October 2, 1999 were $0.9 million and $7.9 million, compared with $1.3
million and $10.3 million for the comparable periods in 1998. The $2.4 million
year-to-date decrease over the prior year period was due to lower sales volume
resulting from fewer mailings in our direct marketing program to college alumni.
We anticipate full year 1999 sales for the direct marketing program to college
alumni to be below 1998 levels.
Gross Margin
Gross margins for the three and nine months ended October 2, 1999 were $53.0
million and $313.3 million or 43.2 percent and 52.9 percent, compared with $56.5
million and $312.5 million or 44.5 percent and 52.6 percent for the comparable
periods in 1998. The 6.3 percent decrease in the third quarter was primarily due
to a shift in North American Photography revenue from the third to the fourth
quarter and higher costs in Recognition associated with problems encountered
with systems implementation. The 0.3 percent increase on a year-to-date basis is
the result of manufacturing efficiencies and increased pricing in School
Products as well as sales of higher margin add-on features in the Printing and
Publishing product lines. These were partially offset by a shift in North
American Photography revenue from the third to the fourth quarter and higher
costs in Recognition associated with problems encountered with systems
implementation.
Selling and Administrative Expenses
Selling and administrative expenses for the three and nine months ended October
2, 1999 were $62.6 million and $241.3 million, compared with $66.7 million and
$238.9 million for the comparable periods in 1998. The 6.1 percent decrease in
the third quarter was due to a reduction in compensation expense, lower selling
and commission expenses resulting from a change in product mix, and a decrease
in legal expense due to the lawsuit with Taylor Publishing in 1998. The 1.0
percent increase for the nine month period is the result of higher costs related
to investments in information systems for year 2000 readiness and higher costs
associated with market development activities.
9
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Operating Income (Loss)
Operating income (loss) for the three and nine months ended October 2, 1999 was
$(9.6) million and $72.0 million, compared with $(10.1) million and $73.5
million for the comparable periods in 1998. The following is an explanation of
changes in operating income by business segment.
Operating income (loss) for the School Products segment for the three and nine
months ended October 2, 1999 was $2.4 million and $103.3 million, compared with
$(1.2) million and $93.1 million for the comparable periods in 1998. The
year-over-year increases were the result of improved manufacturing efficiencies
for all school product lines and sales of higher margin add-on features in the
Printing & Publishing product lines. In addition, there was a decline in selling
and commission expenses resulting from a change in product mix, and a decrease
in legal expense due to the lawsuit with Taylor Publishing in 1998.
Operating income (loss) for the Recognition segment for the three and nine
months ended October 2, 1999 was $(1.0) million and $1.2 million, compared with
$1.5 million and $7.1 million for the comparable periods in 1998. The
year-over-year decreases were the result of lower sales volume and higher costs
associated with problems encountered with systems implementation. We anticipate
full year 1999 operating income for Recognition to be lower than 1998 levels.
Operating losses for the Other segment for the three and nine months ended
October 2, 1999 were $11.0 million and $32.5 million, compared with $10.4
million and $26.7 million for the comparable periods in 1998. The $0.6 million
third quarter increase and $5.8 million year-to-date increase were primarily the
result of higher costs related to investments in information systems for year
2000 readiness and higher costs associated with market development activities.
We anticipate full year 1999 operating loss to be more than 1998.
Net Interest Expense
Net interest expense for the three and nine months ended October 2, 1999 was
$2.0 million and $4.5 million, compared with $1.9 million and $4.6 million for
comparable periods in 1998. The year-over-year changes reflected lower average
interest rates on higher average short-term borrowings in 1999 versus 1998.
Income Taxes
Income taxes have been accrued at an overall effective rate of 40.5 percent for
the three and nine months ended October 2, 1999, compared with 40.5 percent and
40.6 percent for the comparable periods last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated from operating activities and short-term borrowings were our
principal sources of funds during the nine months ended October 2, 1999 and was
used primarily to repurchase common stock, pay dividends, and fund capital
expenditures and equity investments.
Operating activities generated cash of $4.3 million in the first nine months of
1999, compared to the same period in 1998 where operating activities used cash
of $1.9 million. The increase of $6.2 million was due to a variety of favorable
factors, including a change in the timing of customer deposit collections, a
decrease in inventory resulting from our decision to expand our consigned gold
inventory program in the fourth quarter of 1998, and the timing of income tax
payments. This was offset by an increase in accounts receivable and other
receivables due to customer invoicing issues in Recognition related to the
implementation of new information systems.
Capital expenditures for the first nine months of 1999 were $19.4 million
compared with $27.8 million for the same period in 1998. Of the $8.4 million
decrease, $5.3 million reflected more investments for information systems in
1998 and $3.1 million was due to increased spending for manufacturing equipment
in 1998.
During the third quarter of 1999, we filed a debt shelf registration statement
with the Securities and Exchange Commission for a $200 million medium term note
program to be used for general corporate purposes. As of October 2, 1999, there
were no notes issued or outstanding.
10
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In the first nine months of 1999, we invested $5 million to take a minority
ownership position in the FamilyEducation Network, a privately held company,
which creates web sites for schools to link school districts with students and
their families. In the third quarter of 1999, we invested $2.5 million to take a
minority position in Project ACHIEVE, Inc., a privately-held provider of
web-based data management tools that enable teachers and school administrators
to efficiently manage information and administrative tasks.
In December 1998, the Board of Directors authorized the repurchase of up to $100
million in shares of our common stock. For the nine months ended October 2,
1999, we repurchased 1.7 million shares at a cost of $36 million, including
547,500 shares at a cost of $11 million in the third quarter.
YEAR 2000
We have examined our critical systems and equipment and have undertaken
remediation and replacement initiatives to ensure accurate processing and
accounting for "00". We have conducted additional validation testing of our
critical systems and equipment using year 2000 simulations. Based on this
validation testing, we believe that our systems are ready to correctly process
year 2000 date data and to conduct business as usual through the century change.
Contingency planning is in place to address any unanticipated disruptions that
may arise.
The total program cost is estimated to be $51 million when completed. Actual
spending on the project since inception has been $49.1 million, of which $36.0
million has been capitalized. In the nine months ended October 2, 1999, we spent
$12.9 million, including $8.7 million in capital spending. The program cost
includes internally allocated expenses such as salaries, benefits and contractor
costs.
We have divided the year 2000 program into eight planks covering the following
areas: 1) mainframe infrastructure; 2) central legacy applications; 3) shared
technical infrastructure; 4) distributed systems and manufacturing technology by
product line; 5) distributed systems and manufacturing technology by plant; 6)
external agents; 7) legal and audit; and 8) conversions to new software systems.
Each plank is separated into three categories based on the potential impact on
our operations: mission critical, high impact and low impact.
Mission critical items (computer hardware, software, embedded equipment,
machinery and devices, and to external suppliers of products and services) are
those where loss or interruption of functionality, support or delivery would
have a catastrophic impact on customers, operations or earnings. High impact
items are those where loss or interruption of functionality, support or delivery
would have a serious impact on internal productivity with minor impact to
customers. Low impact items are those where loss or interruption of
functionality, support or delivery would have a nominal impact on internal
productivity with no impact to customers.
We have completed all mission critical activities and will continue some
monitoring and testing throughout 1999. Activities on all high impact and low
impact categories are substantially completed. The few remaining activities will
be completed before the year 2000 transition or are not expected to materially
impact day to day operations. As of November 15, 1999 the high impact activities
were 99% complete and low impact activities were 98% complete.
We have substantially completed a comprehensive analysis of and contingency
planning process for operational problems and costs (including the loss of
revenues) that could most likely result from a potential failure by us or
certain third parties to achieve year 2000 compliance on a timely basis. In
planning for the worst case scenarios, we believe the information technology
systems and manufacturing systems will be ready for the year 2000, but we may
experience isolated incidents of noncompliance. We plan to allocate resources to
be ready to take action if these events occur. Because the company's year 2000
compliance is dependent upon key third parties also being year 2000 compliant on
a timely basis, there can be no guarantee that the company's efforts will
prevent a material adverse impact on its results of operations, financial
condition or cash flows.
11
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Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in our market risk during the nine months
ended October 2, 1999. For additional information, refer to page 20 of our 1998
Annual Report to Shareholders.
Part II. Other Information
Item 1. Legal Proceedings
In January 1999, a federal judge in Texas overturned a jury's $25.3
million verdict against Jostens in an antitrust lawsuit. The judge,
acting on Jostens' post-trial motions, set aside the jury's verdict and
dismissed all claims against Jostens in the case. Yearbook competitor
Taylor Publishing, a unit of Insilco Holding Corp. and the plaintiff in
the case, has appealed the decision and is seeking to have the jury
verdict reinstated. Briefs have been filed and oral arguments have been
tentatively scheduled for December 8, 1999. No costs were accrued
related to the lawsuit, because management determined a loss associated
with Taylor Publishing is not currently "probable and estimable".
There are no other material pending or threatened legal, governmental,
administrative or other proceedings to which the company or any
subsidiary as a defendant or plaintiff is subject.
12
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Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
3.1 Restated Articles of Incorporation of Jostens, Inc.
3.2 By-laws (incorporated by reference to Exhibit 3.2 contained
in the Quarterly Report on Form 10-Q for the period ended
July 3, 1999)
4.1 Rights Agreement, dated July 23, 1998, between Jostens, Inc.
and Norwest Bank Minnesota, N.A. (incorporated by reference
to the company's Form 8-A filed on August 5, 1998)
4.2 Form of Indenture, dated 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
Registration Statement on Form S-3, File No. 33-40233)
4.3 Form of Indenture, dated August 30, 1999, between Jostens,
Inc. and Norwest Bank Minnesota, N.A., as Trustee
(incorporated by reference to Exhibit 4.1 contained in the
company's Form 8-K filed August 30, 1999)
4.4 Officers' Certificate and Company Order, dated August 30,
1999 pursuant to sections 201, 301 and 303 of the Indenture
dated August 30, 1999 (incorporated by reference to Exhibit
4.2 contained in the company's Form 8-K filed August 30,
1999)
4.5 Specimens of the Global Fixed Rate Note, Global Floating
Rate Note, Global Original Issue Discount Zero Coupon Note,
and Global Original Issue Discount Fixed Rate Note
(incorporated by reference to Exhibit 4.3 contained in the
company's Form 8-K filed August 30, 1999)
10.10 Jostens, Inc. Executive Change in Control Severance Pay
Plan First Declaration of Amendment, effective August 1,
1999
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
(b) Reports on Form 8-K:
Form 8-K dated August 30, 1999, was filed under Item 5,
announcing a Distribution Agreement between the company and
Credit Suisse First Boston Corporation, Banc One Capital
Markets Inc. and J.P. Morgan Securities Inc. for the public
offering of its Medium-Term Notes, Series A.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JOSTENS, INC.
Registrant
Date: November 16, 1999
By /s/ Robert C. Buhrmaster
---------------------------
Robert C. Buhrmaster
Chairman of the Board, President and Chief
Executive Officer
Date: November 16, 1999
By /s/ William N. Priesmeyer
---------------------------
William N. Priesmeyer
Senior Vice President and Chief Financial
Officer
14
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
3.1 Restated Articles of Incorporation of Jostens, Inc.
10.10 Jostens, Inc. Executive Change in Control Severance Pay Plan First
Declaration of Amendment, effective August 1, 1999
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
<PAGE>
EXHIBIT 3.1
RESTATED
ARTICLES OF INCORPORATION
JOSTENS, INC.
Restated as of October 28, 1999, as supplemented by the
Certificate of Designations, Preferences and Rights of
Series A Junior Participating Preferred Stock, attached
hereto and incorporated herein.
ARTICLE I
---------
The name of the Corporation shall be Jostens, Inc.
ARTICLE II
----------
The purposes of this Corporation shall be as follows:
(1) To manufacture, buy and sell at wholesale and retail, and otherwise dispose
of and deal in, all kinds of jewelry, diamonds, watches, watch findings and
materials, jewelers' supplies of all sorts and kinds, machinery, tools,
medals, trophies, stationery, printed matter of all kinds, sporting goods
and all other kinds of merchandise or parts thereof;
(2) To refine, market and distribute crude oil, or petroleum and all of its
products; to locate, purchase, lease or otherwise acquire, and to sell,
mortgage or otherwise dispose of lands containing or believed to contain
petroleum, oil or natural gas, or any of them, and to drill or prospect for
or produce the same; to purchase, lease or otherwise acquire, and to sell,
mortgage or otherwise dispose of developed or producing oil and gas
properties or the products of such oil or gas properties; to purchase,
produce, refine, sell and distribute petroleum and all of the products and
by-products thereof, to buy, sell or otherwise dispose of, and manufacture
all kinds of illuminating, burning and heating oils, and gasoline, naphtha,
lubricants, greases, waxes and all other products and by-products of
petroleum; to act as broker or agent for others in all of said acts, to
build, construct, equip, maintain, own, control, lease or otherwise
acquire, and to operate all necessary tanks, tank cars, pipes and
pipelines, compressors, separating plants, refineries, buildings and
warehouses, and the necessary fixtures and equipment thereunto obtaining
and other and all means of refining, storing, saving, conveying,
transporting, exporting, or marketing petroleum, oil and gas, or the crude
or refined products of either; and to do any and all other acts and things
necessary as a broker or agent in the marketing or sale of petroleum
products, property, or its allied lines;
<PAGE>
(3) To manufacture, have manufactured under license or otherwise, use, buy,
sell and in all respects deal in and with chemicals and chemical compounds
and chemical products of every kind and nature, including, without limiting
the generality of the foregoing, alcohol, gasoline and rubber, whether
synthetically produced or otherwise, alcohol, gasoline, and rubber
products, wood products, plastics and products thereof, of every kind and
nature whatsoever, and all forms of ersatz or substitute materials and
products;
(4) To purchase or otherwise acquire, apply for, register, hold, use, sell or-
in-any manner dispose of and to grant licenses or other rights in and in
any manner deal in patents, inventions, improvements, processes, formulas,
trademarks, trade names, rights and licenses secured under letters patent,
copyrights or otherwise;
(5) To acquire, hold, pledge, hypothecate, sell or otherwise dispose of the
shares, bonds, securities and other evidences of indebtedness of any person
or of any domestic or foreign corporation;
(6) To purchase, lease or otherwise acquire, hold, sell, exchange, transfer,
repair, maintain, improve, mortgage, pledge or otherwise hypothecate, and
in any other manner deal in and deal with real property, mixed and personal
property wherever situated; and
(7) In general, to have and exercise all of the powers conferred by the laws of
the State of Minnesota upon business corporations, it being expressly
provided that the foregoing-enumeration of specific purposes and powers
shall not be held to limit or restrict in any manner such general powers,
and that the foregoing enumeration of purposes and powers shall be in no
way limited or restricted by reference to or inference from the terms of
any other clause or paragraph hereof.
ARTICLE III
-----------
The period of duration of this Corporation shall be perpetual.
ARTICLE IV
----------
The location and post office address of the registered office of this
Corporation in Minnesota is 5501 Norman Center Drive, Bloomington, Minnesota
55437.
ARTICLE V
---------
The total authorized number of shares of this Corporation is 104,000,000
divided into 4,000,000 Preferred Shares of par value $1.00 each and 100,000,000
Common Shares of the par value of $.33-1/3 each.
2
<PAGE>
The relative rights, voting power, preferences and restrictions granted to
or imposed upon the shares of each class of the Corporation are as follows:
A. PRIORITY OF PREFERRED SHARES. The Preferred Shares are senior to the
Common Shares with respect to dividends and with respect to the
distributive amounts to which the holders of the Preferred Shares are
entitled upon liquidation, dissolution or winding up of the Corporation.
B. ISSUANCE OF PREFERRED SHARES IN SERIES. The Preferred Shares may be
issued from time to time in one or more series, each of which series shall
have such designation and such relative rights, voting power, preferences
and restrictions as are hereinafter provided and, to the extent hereinafter
permitted, as are determined and stated by the Board of Directors in the
resolution or resolutions authorizing the creation of shares of such
series.
All Preferred Shares shall be of equal rank and shall be identical, except
in respect of the particulars that may be determined by the Board of
Directors as hereinafter provided, and each share of each series shall be
identical in all respects with the other shares of such series, except as
to the dates from which dividends thereon shall be cumulative. Preferred
Shares shall be issued only as fully paid and nonassessable shares.
Authority is hereby expressly granted to the Board of Directors, subject to
the provisions of this Article V, to authorize the issuance of Preferred
Shares in one or more series, and to determine and state, by the resolution
or resolutions authorizing the creation of each series:
(1) The designation of the series and the number of shares which
shall constitute such series, which number may be altered from
time to time by like action of the Board of Directors in respect
of shares then unissued;
(2) The annual rate of dividends payable on the shares of such
series;
(3) The price or prices per share at which the shares of such series
shall be redeemable;
(4) The amount payable on shares of such series in the event of any
dissolution, liquidation or winding up of the affairs of the
Corporation;
3
<PAGE>
(5) Whether or not the shares of such series shall be entitled to the
benefit of a sinking fund to be applied to the redemption of such
series and, if so entitled, the amount of such fund and the
manner of its application;
(6) Whether or not the shares of such series shall be convertible
into shares of any other class or classes or any other series of
the same class of the Corporation and, if made so convertible,
the conversion price or prices and the manner of making such
conversion;
(7) Whether or not the shares of the series shall have voting rights,
in addition to the voting rights provided by law, and, if so, the
terms of such voting rights; and
(8) Any other powers, preferences and relative participating,
optional or other special rights, and the qualifications,
limitations or restrictions thereof, of the shares of such
series, as the Board of Directors may deem advisable and as shall
not be inconsistent with applicable law and the provisions of
this Article V.
C. DIVIDENDS. Before any dividends on Common Shares shall be paid or declared
and set apart for payment (other than dividends payable in Common Shares of the
Corporation), the holders of the Preferred Shares of each series shall be
entitled to receive, out of any funds legally available for such purpose, cash
dividends at the annual rate for such series theretofore fixed by the Board of
Directors as hereinbefore provided, and no more, payable quarterly on such dates
as may be fixed in the resolution or resolutions adopted by the Board of
Directors authorizing the creation of such series. Such dividends shall be
cumulative in the case of shares of each particular series:
(1) If issued prior to the record date for the first dividend on shares of
such series, then from and including the date fixed for such purpose
by the Board of Directors in the resolution or resolutions creating
such series;
(2) If issued during the period commencing immediately after the record
date for a dividend on shares of such series and terminating at the
close of the payment date for such dividend, then from and including
such last mentioned dividend payment date;
(3) Otherwise from and including the quarterly dividend payment date next
preceding the date of issue on such shares.
4
<PAGE>
No dividend shall be paid or declared and set apart for payment upon any
Preferred Shares of any series for any quarterly dividend period unless at the
same time a like proportionate dividend for the same or comparable quarterly
period, ratable in proportion to the annual dividend rates fixed therefore,
shall be paid or declared and set apart for payment upon All Preferred Shares of
all series then issued and outstanding.
In no event shall any dividend be paid or declared, nor shall any distribution
be made, on the Common Shares of the Corporation, nor shall any Common Shares be
purchased, redeemed or otherwise acquired by the Corporation for value, nor
shall any moneys be paid to or set aside or made available for a purchase fund
or sinking fund for the purchase or redemption of any Common Shares of the
Corporation, unless all dividends on the Preferred Shares of all series for all
past quarterly dividend periods and for the then current quarterly dividend
period shall have been paid or declared and a sum sufficient for the payment
thereof set apart for payment, and unless all accrued sinking fund obligations,
if any, of the Corporation shall have been satisfied in respect of each series
for which a sinking fund has been provided for in the resolution or resolutions
authorizing the creation of such series.
In no event shall any Preferred Shares be purchased, redeemed or other-wise
acquired by the Corporation for value, nor shall any moneys be paid or set aside
as a sinking fund for the benefit of any series of Preferred Shares unless all
dividends on the Preferred Shares of all series for all past quarterly dividend
periods and for the then current quarterly dividend period shall have been paid
or declared and a sum sufficient for the payment thereof set apart for payment,
except in the event all of the Preferred Shares shall be called for redemption.
Subject to the provisions of this Article V and not otherwise, dividends may be
declared by the Board of Directors and paid from time to time, out of any funds
legally available therefore, upon the then outstanding Common Shares of the
Corporation, and the holders of the Preferred Shares shall not be entitled to
participate in any such dividends.
D. REDEMPTION OF PREFERRED SHARES. The Preferred Shares of any and all series
may be redeemed as a whole at any time or in part from time to time (unless the
resolution or resolutions authorizing the creation of a series shall specify the
first date upon which shares of such series may be redeemed, in which event
shares of such series shall not be redeemable until such date) at the option of
the Corporation by resolution of the Board of Directors at the applicable
redemption price for the shares of such series as determined by the Board of
Directors in the resolution or resolutions authorizing the creation of such
series, together with an amount equal to accrued and unpaid dividends thereon to
the redemption date. If less than all the outstanding
5
<PAGE>
Preferred Shares of any series are to be redeemed, the redemption may be made
either by lot or pro rata in such manner as the Board of Directors may
prescribe.
Notice of every redemption of Preferred Shares shall be mailed, addressed to the
holders of record of the shares to be redeemed at their respective addresses as
they appear on the stock books of the Corporation, not less than thirty (30) and
not more than sixty (60) days prior to the date fixed for redemption.
If notice of redemption shall have been duly given as aforesaid, and if, on or
before the redemption date specified in the notice, all funds necessary for the
redemption shall have been deposited in trust with a bank or trust company in
good standing and doing business at any place within the United States of
America, having capital, surplus and undivided profits aggregating at least
$1,000,000, and designated in the notice of redemption, for the pro rata benefit
of the holders of the shares so called for redemption, so as to be and continue
to be available therefore, then, from and after the date of such deposit,
notwithstanding that any certificate for Preferred Shares so called for
redemption shall not have been surrendered for cancellation, the shares
represented thereby shall no longer be deemed outstanding, the dividends thereon
shall cease to accumulate from and after the date fixed for redemption, and all
rights with respect to the Preferred Shares so called for redemption shall
forthwith on the date of such deposit cease and terminate, except only the right
of the holders thereof to receive the redemption price of the shares so
redeemed, including accrued dividends to the redemption date, but without
interest, and, in the case of such deposit, any conversion rights not
theretofore expired, shall cease and terminate. Any funds deposited by the
Corporation pursuant to this paragraph and unclaimed at the end of six years
after the date fixed for redemption shall be repaid to the Corporation upon its
request expressed in a resolution of its Board of Directors, after which
repayment the holders of the shares so called for redemption shall look only to
the Corporation for the payment thereof.
E. DISSOLUTION, LIQUIDATION AND WINDING UP. In the event of any dissolution,
liquidation or winding up of the affairs of the Corporation, before any
distribution or payment shall be made to the holders of Common Shares of the
Corporation, the holders of the shares of each series of Preferred Shares shall
be entitled to be paid in full the respective amounts fixed by the Board of
Directors in the resolution or resolutions authorizing the issue of such series,
(which amounts may vary depending upon whether the dissolution, liquidation or
winding up is voluntary or involuntary), together in either event with a sum, in
the case of each share, equal to the accrued and unpaid dividends thereon to the
date fixed for such distribution or payment. If such distribution or payment
shall have been made to the holders of the Preferred Shares, or moneys made
available for such payments in full, the remaining assets and funds of the
Corporation shall be distributed among the holders of the Common Shares of the
Corporation, to the exclusion of the holders of Preferred Shares
6
<PAGE>
of any and all series, ratably according to the number of Common Shares held by
them respectively. If the assets available are not sufficient to pay in full the
amounts so payable to the holders of all outstanding Preferred Shares, the
holders of all series of such shares shall share ratably in any distribution of
assets in proportion to the full amounts to which they would otherwise be
respectively entitled. The consolidation or merger of the Corporation into or
with any other corporation or corporations shall not be deemed a liquidation,
dissolution or winding up of the affairs of the Corporation within the meaning
of any of the provisions of this paragraph.
F. VOTING RIGHTS. Each holder of record of Preferred Shares shall be entitled
to as many votes as are provided for by the resolution or resolutions
authorizing the creation of one or more series of Preferred Shares for each such
share held by him. Each holder of record of Common Shares shall be entitled to
one vote for each such share held by him. Except as otherwise required by law or
by the Articles of Incorporation of the Corporation or by the resolution or
resolutions authorizing the creation of one or more series of Preferred Shares,
the vote of the holders of all or any portion of any class or series of shares,
as a class or series, shall not be required, but instead voting shall be without
distinction between classes or series. Voting for the election of directors
shall not be cumulative.
G. SPECIAL VOTING RIGHTS OF HOLDERS OF PREFERRED SHARES. The holders of
Preferred Shares shall have the following special voting rights:
(1) So long as any Preferred Shares of any series are outstanding, the
Corporation shall not without the consent of the holders of at least
two thirds of the total number of Preferred Shares of all series then
outstanding amend the Articles of Incorporation so as to create or
authorize any class of shares ranking prior to the Preferred Shares or
other-wise to affect adversely any of the preferences or other rights
of the holders of the Preferred Shares (except as specifically
provided in subparagraph (2) below; provided, however, that if any
such amendment would affect adversely the holders of one or more, but
not all, of the series of the Preferred Shares at the time
outstanding, consent only of the holders of at least two-thirds of the
total number of shares of each series so adversely affected shall be
required.
(2) So long as any Preferred Shares of any series are outstanding, the
Corporation shall not without the consent of the holders of at least a
majority of the total number of Preferred Shares of all series then
outstanding amend the Articles of Incorporation so as to increase the
authorized number of Preferred Shares or to create any shares of a
class on a parity with the Preferred Shares with respect to dividends
or with
7
<PAGE>
respect to the distributive amounts to which the holders thereof are
entitled upon liquidation, dissolution or winding up of the
Corporation.
(3) If and whenever all or any part of each of six full quarterly dividend
installments on the Preferred Shares of any series outstanding,
whether or not consecutive, shall be in default and if and whenever
the Corporation has defaulted in whole or in part for two years,
whether or not consecutive, with respect to its sinking fund
obligations for any series of Preferred Shares, the number of members
of the Board of Directors shall be increased by two and the holders of
Preferred Shares of all series at the time outstanding, voting
separately as a class, shall at any annual meeting of the shareholders
or any special meeting of the shareholders called as herein provided
occurring during such period, elect such two additional directors and
such voting power shall continue until all arrears in payment of
quarterly dividends on the Preferred Shares of all series shall have
been paid and the dividends thereon for the current quarter shall have
been declared and paid or set apart and all accrued sinking fund
obligations of the Corporation with respect to the Preferred Shares of
all series shall have been fulfilled, and thereupon the holders of the
Preferred Shares shall be divested of such additional voting rights
and the terms of such two additional directors shall terminate, but
subject always to the same provisions for the vesting of such voting
rights in case of any such future default or defaults. At any meeting
at which the holders of Preferred Shares shall have such special
voting power to elect two directors, the holders of Preferred Shares
shall not be entitled to vote for the election of any other directors.
At any time when such voting rights shall be so vested in the holders
of the Preferred Shares, the proper officers o f the Corporation shall
upon the written request of the record holders of at least 5% of the
Preferred Shares of all series then outstanding, addressed to the
secretary of the Corporation, call a special meeting of the holders of
the Preferred Shares of all series for the purpose of electing such
additional two directors, such meeting to be held at the earliest
practicable date thereafter at the place designated for the holding of
annual meetings of shareholders of the Corporation and at least ten
days' written notice shall be given of such meeting. At any annual or
special meeting at which the holders of the Preferred Shares shall be
entitled to elect additional directors, the holders of a majority of
the then outstanding Preferred Shares of all series shall be
sufficient to constitute a quorum, whether present in person or by
proxy, and the vote of the holders of a majority of the Preferred
Shares present or represented at. any such meeting, at which there
shall be such quorum, shall be sufficient to elect two additional
members of the Board of Directors. Such voting by the holders of
Preferred Shares shall not be
8
<PAGE>
cumulative. Any vacancy in the office of a director elected by the
holders of Preferred Shares shall be filled only by the holders of
Preferred Shares.
H. RIGHTS OF HOLDERS OF COMMON SHARES. Subject to all provisions of this
Article V, the holders of the Common Shares shall be entitled to receive
dividends when and as declared by the Board of Directors out of any funds
legally available for such purpose. In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary or any
distribution of any of its assets to any of its shareholders, other than by
dividends from funds legally available therefore, and other than payments made
upon redemption or purchase of shares of the Corporation, after payment in full
of the amounts which the holders of the Preferred Shares are entitled to receive
in such event, the remaining assets of the Corporation shall be distributed
ratably to the holders of the Common Shares.
ARTICLE VI
----------
The business and affairs of the Corporation shall be managed by or under
the direction of a Board of Directors consisting of not less than five nor more
than fifteen directors, the exact number of directors to be determined from time
to time by resolution adopted by affirmative vote of a majority of the entire
Board of Directors. The directors shall be divided into three classes,
designated Class 1, Class II and Class III. Each class shall consist, as nearly
as may be possible, of one-third of the total number of directors constituting
the entire Board of Directors.
At the annual meeting of shareholders held in 1984, Class I directors shall
be elected for a one-year term, Class 11 directors for a two-year term and Class
III directors for a three-year term. At each succeeding annual meeting of
shareholders beginning in 1985, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but in no case
will a decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the year in
which his ten-n expires and until his successor shall be elected and shall
qualify, subject, however, to prior death, resignation, disqualification or
removal from office. The shareholders shall have the right to remove any one or
all of the directors only for cause. Any vacancy on the Board of Directors that
results from a newly created directorship may be filled by the affirmative vote
of a majority of the Board of Directors then in office, and any other vacancy
occurring in the Board of Directors may be filled by a majority of the directors
then in office, although less than a quorum,
9
<PAGE>
or by a sole remaining director. Any director elected to fill a vacancy not
resulting from an increase in the number of directors shall have the same
remaining term as that of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred issued by the Corporation shall have the right,
voting separately by class or series, to elect directors at an annual or special
meeting of shareholders the election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms of these
Articles of Incorporation applicable thereto, and such directors so elected
shall not be divided into classes pursuant to this Article VI unless expressly
provided by such terms.
No person (other than a person nominated by or on behalf of the Board of
Directors) shall be eligible for election as a director at any annual or special
meeting of shareholders unless a written request that his or her name be placed
in nomination is received from a shareholder of record by the Secretary of the
Corporation not less than 30 days prior to the date fixed for the meeting,
together with the written consent of such person to serve as a director.
ARTICLE VII
-----------
The shareholders of this Corporation shall have no preemptive right to
subscribe to any issue of shares of this Corporation now or hereafter made.
ARTICLE VIII
------------
The Board of Directors of this Corporation shall have authority to accept
or reject subscriptions for shares made after incorporation, and may grant
rights to convert any securities of this Corporation into shares of any class or
classes or grant options to purchase or subscribe for shares of any class or
classes.
ARTICLE IX
----------
The Board of Directors shall have authority to make and alter the Bylaws of
this Corporation subject to the power of the shareholders to change or repeal
such Bylaws.
10
<PAGE>
ARTICLE X
---------
The holders of a majority of the outstanding shares of this Corporation
shall have power to authorize the sale, lease, exchange or other disposal of all
or substantially all of the properties and assets of this Corporation, including
its goodwill, to amend the Articles of Incorporation of this Corporation, and to
adopt or reject an agreement of consolidation or merger.
ARTICLE XI
----------
No director shall be personally liable to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except as otherwise required by Minnesota law. Any repeal or modification of
this Article by shareholders of this Corporation shall not adversely affect any
right or protection of a director existing at the time of such repeal or
modification.
11
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
JOSTENS, INC.
(Pursuant to Section 302A.401 of the
Minnesota Business Corporation Act)
The undersigned, Brian K. Beutner, Secretary of Jostens, Inc., a
corporation organized and existing under the business corporation act of the
State of Minnesota (hereinafter called the "Corporation"), hereby certifies
that:
(i) the following resolutions establishing a series of junior
participating preferred stock pursuant to Chapter 302A of the Minnesota Statutes
were adopted by the Board of Directors of the Corporation on July 23, 1998.
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the Articles of Incorporation,
the Board of Directors hereby creates a series of Preferred Stock, par value
$1.00 per share (the "Preferred stock"), the Series A Junior Participating
Preferred Stock, and hereby states the designation and number of shares, and
fixes the relative rights, preferences, and limitations thereof as follows:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 1,000,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the
<PAGE>
holders of Common Stock (the "Common Stock") of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (i) $1 or (ii)
subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause
(ii) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$1 per share on the Series A Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series
2
<PAGE>
A Preferred Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
-------------
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the shareholders
of the Corporation. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock and any other capital stock of
the Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of shareholders of the
Corporation.
(C) The holders of Preferred Shares shall have the following
special voting rights:
(i) So long as any Preferred Shares are outstanding, the Corporation
shall not without the consent of the holders of at least two-thirds of
the total number of Preferred Shares of all series then outstanding
amend the Articles of Incorporation so as to create or authorize any
class of shares ranking prior to the Preferred Shares or otherwise to
affect adversely any of the preferences or other rights of the holders
of the preferred Shares (except as specifically provided in
subparagraph (ii) below; provided, however, that if any such amendment
would affect adversely the holders of one or more, but not all, of the
series of the Preferred Shares at the time outstanding, consent only
of the holders of at least two-thirds of the total number of shares of
each series so adversely affected shall be required.
3
<PAGE>
(ii) So long as any Preferred Shares are outstanding, the
Corporation shall not without the consent of the holders of at least a
majority of the total number of Preferred Shares of all series then
outstanding amend the Articles of Incorporation so as to increase the
authorized number of Preferred Shares or to create any shares of a class on
a parity with the Preferred Shares with respect to dividends or with
respect to the distributive amounts to which the holders thereof are
entitled upon liquidation, dissolution or winding up of the Corporation.
(iii) If and whenever all or any part of each of six full
quarterly dividend installments on the Preferred Shares of any series
outstanding, whether or not consecutive, shall be in default and if and
whenever the Corporation has defaulted in whole or in part for two years,
whether or not consecutive, with respect to its sinking fund obligations
for any series of Preferred Shares, the number of members of the Board of
Directors shall be increased by two and the holders of Preferred Shares of
all series at the time outstanding, voting separately as a class, shall at
any annual meeting of the shareholders or any special meeting of the
shareholders called as herein provided occurring during such period, elect
such two additional directors and such voting power shall continue until
all arrears in payment of quarterly dividends on the Preferred Shares of
all series shall have been paid and the dividends thereon for the current
quarter shall have been declared and paid or set apart and all accrued
sinking fund obligations of the Corporation with respect to the Preferred
Shares of all series shall have been fulfilled, and thereupon the holders
of the Preferred Shares shall be divested of such additional voting rights
and the terms of such two additional directors shall terminate, but subject
always to the same provisions for the vesting of such voting rights in case
of any such future default or defaults. At any meeting at which the holders
of Preferred Shares shall have such special voting power to elect two
directors, the holders of Preferred Shares shall not be entitled to vote
for the election of any other directors. At any time when such voting
rights shall be so vested in the holders of the Preferred Shares, the
proper officers of the Corporation shall upon the written request of the
record holders of at least 5% of the Preferred Shares of all series then
outstanding, addressed to the secretary of the Corporation, call a special
meeting of the holders of the Preferred Shares of all series for the
purpose of electing such additional two directors, such meeting to be held
at the earliest practicable date thereafter at the place designated for the
holding of annual meetings of shareholders of the Corporation and at least
ten days' written notice shall be given of such meeting. At any annual or
special meeting at which the holders of the Preferred Shares shall be
entitled to elect additional directors, the holders of a majority of the
then outstanding Preferred Shares of all series shall be sufficient to
constitute a quorum, whether present in person or by proxy, and the vote of
the holders of a majority of the Preferred Shares present or represented at
any such meeting at which there shall be such quorum, shall be sufficient
to elect two additional members of the Board of Directors. Such voting by
the holders of Preferred Shares shall not be cumulative.
4
<PAGE>
Any vacancy in the office of a director elected by the holders of Preferred
Shares shall be filled only by the holders of Preferred Shares.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms-as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
5
<PAGE>
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein.
Section 6. Liquidation. Dissolution or Winding. Upon any liquidation,
-----------------------------------
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time after the Record Date declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger. etc. In case the Corporation shall
--------------------------
enter into any consolidation, merger, combination, statutory share exchange or
other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
6
<PAGE>
Section 8. No Redemption. The shares of Series A Preferred Stock shall not
-------------
be redeemable until August 20, 2008.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect
----
to the payment of dividends and the distribution of assets, junior to all series
of any other class of the Corporation's preferred stock hereafter issued that
specifically provide that they shall rank senior to the Series A Preferred
Stock.
Section 10. Amendment. If any shares of the Series A Preferred Stock are
---------
outstanding, the Articles of Incorporation of the Corporation shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least a
majority of the outstanding shares of Series A Preferred Stock, voting together
as a single class.
(ii) That this resolution has been adopted in accordance with the
requirements of, and pursuant to, Chapter 302A of the Minnesota Statutes and
shall be effective as of when filed with the Secretary of State.
IN WITNESS WHEREOF, executed on behalf of the Corporation by its Secretary
this 23/rd/ day of July, 1998.
JOSTENS, INC.
/s/ Brian K. Beutner
-----------------------------
Brian K. Beutner
Secretary
7
<PAGE>
EXHIBIT 10.10
JOSTENS, INC.
EXECUTIVE CHANGE IN CONTROL
SEVERANCE PAY PLAN
First Declaration of Amendment
------------------------------
Pursuant to the retained power of amendment contained in Section 5.2 of the
Jostens, Inc. Executive Change in Control Severance Pay Plan, the undersigned
hereby amends the Plan in the manner described below.
1. Section 4.2(b) of the Plan is amended to read as follows:
(b) The Company will make a lump sum cash payment to an Eligible
Participant in an amount equal to the amount by which the
actuarially equivalent lump sum value of his or her hypothetical
pension benefit under the Company Pension Plans exceeds the
actuarially equivalent lump sum value of the benefit which he or
she is actually entitled to receive under the Company Pension
Plans. For purposes of applying the foregoing sentence:
(i) Company Pension Plan means each qualified or nonqualified
defined benefit pension plan, arrangement or agreement
maintained by the Company and covering the Eligible
Participant, or to which the Company and the Eligible
Participant are parties, as in effect immediately prior to
the Eligible Participant's Date of Termination (without
regard to any changes to such plans, arrangements or
agreements that constitute Good Reason);
(ii) Hypothetical pension benefit under the Company Pension Plans
means the benefit to which an Eligible Participant would be
entitled under the Company Pension Plans if he or she had
completed a number of additional years of service for all
purposes under each Company Pension Plan (including, but not
limited to, application of the benefit formula, application
of the benefit accrual method, application of the vesting
schedule, entitlement to benefits, rights and features and
application of the requirements for eligibility to
participate) equal to the greater of (1) the amount by which
ten exceeds the number of years of service actually taken
into account for the purpose in question under the Company
Pension Plan and (2) the number of years of service credit
that the Eligible Participant would have received pursuant
to the Company Pension Plan had he or she remained employed
through the end of his or her Continuation Period in the
same position and on the same schedule as in effect
immediately prior to his or her Termination Date (without
regard to any change that constitutes Good Reason);
<PAGE>
(iii) If the Eligible Participant has an Executive Supplemental
Retirement Agreement with the Company, the provisions of
this subsection will be applied after and in addition to
any adjustments to his or her benefit under the Executive
Supplemental Retirement Agreement made as a result of the
Change in Control or the termination of his or her
employment on or after the date of the Change in Control;
(iv) Benefits will be determined based on the Eligible
Participant's actual compensation as defined under the
applicable Company Pension Plan and the limitations in
effect under Code Sections 401(a)(17), 415 and other
applicable Code sections for the appropriate period that
includes the Date of Termination;
(v) The Eligible Participant will be deemed to commence his or
her benefit under each Company Pension Plan as of his or
her normal retirement date under the Company Pension Plan
(of if later as of the first day of the month first
following the Participant's Date of Termination) in the
normal form of payment under the Company Pension Plan; and
(vi) Actuarial equivalence will be determined based on the
assumptions used as of the date of the payment pursuant to
this section to determine the value of a lump sum payment
of $5000 or less under the Jostens Pension Plan D (or any
successor plan) or if that plan has been terminated
without the establishment of a successor plan, based on
the assumptions used to determine the value of lump sum
payments of $5000 or less in connection with the
termination.
2. Section 4.3 of the Plan is amended to read as follows:
4.3. Continuation of Certain Welfare Benefits
----------------------------------------
(a) Through the end of an Eligible Participant's Continuation Period
or, if earlier, through the last day of the first month after the
Eligible Participant's Date of Termination during which the
Eligible Participant commences full-time employment, the Company
will provide, or arrange to provide, medical, dental, vision and
life insurance benefits (excluding premium conversion or flexible
spending accounts under any cafeteria plan) to each Eligible
Participant (and his or her family members and dependents who
were eligible to be covered at any time during the 90-day period
ending on the date of a Change in Control for the period after
the Change in Control in which such family members and dependents
would otherwise continue to be covered under the terms of the
applicable Benefit Plan in effect immediately prior to the Change
in Control) under the same terms and at the same cost to the
Eligible Participant and his or her family
2
<PAGE>
members and dependents as similarly situated executives who
continue to be employed by the Company (without regard to any
reduction in such benefits that constitutes Good Reason).
(b) For purposes of determining whether an Eligible Participant is
eligible for retiree health benefits under any Benefit Plan, the
Eligible Participant will be credited with a number of additional
years of service and a number of additional years of age equal to
the greater of (i) the amount by which ten exceeds the number of
years of service actually taken into account in determining his
or her eligibility for retiree health benefits and (ii) the
number of years of service credit that the Eligible Participant
would have received pursuant to the Benefit Plan had he or she
remained employed through the end of his or her Continuation
Period in the same position and on the same schedule as in effect
immediately prior to his or her Termination Date (without regard
to any change that constitutes Good Reason). If the Eligible
Participant satisfies the applicable age and service requirements
for retiree health benefits because of this subsection, he or she
will become eligible for such benefits commencing as of his or
her attainment of age 55 or, if later, as of his or her
Termination Date. The Company may arrange to provide retiree
health benefits through a separate plan or arrangement which is,
in all respects, at least as favorable to the Eligible
Participant and his or her family members and dependents as the
Company's retiree Plan in which he or she would otherwise be
eligible to participate.
(c) To the extent an Eligible Participant incurs a tax liability
(including federal, state and local taxes and any interest and
penalties with respect thereto) in connection with a benefit
provided pursuant to Subsection (a) or (b) which he or she would
not have incurred had he or she been an active employee of the
Company participating in the Company's Benefit Plan or had he or
she actually satisfied the eligibility requirements for retiree
health benefits, as the case may be, the Company will make a
payment to the Eligible Participant in an amount equal to such
tax liability plus an additional amount sufficient to permit the
Eligible Participant to retain a net amount after all taxes
(including penalties and interest) equal the initial tax
liability in connection with the benefit. For purposes of
applying the foregoing, an Eligible Participant's tax rate will
be deemed to be the highest statutory marginal state and federal
tax rate (on a combined basis) then in effect. The payment
pursuant to this subsection will be made within ten days after
the Eligible Participant's remittal of a written request therefor
accompanied by a statement indicating the basis for and amount of
the liability.
3
<PAGE>
3. Section 4.5 of the Plan is amended to read as follows:
4.5. Excess Parachute Payments.
-------------------------
Following a Change in Control, the Company will cause its independent
auditors promptly to review, at the Company's sole expense, the
applicability of Code Section 4999 to any payment or distribution of
any type by the Company to an Eligible Participant or for his or her
benefit, whether paid or payable or distributed or distributable
pursuant to the terms of this Plan, any other Benefit Plan or
otherwise (the "Total Payments"). If the auditor determines that the
Total Payments result in an excise tax imposed by Code Section 4999 or
any comparable state or local law or any interest or penalties with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are collectively referred to as the "Excise
Tax"), the Company will make an additional cash payment (a "Gross-Up
Payment") to the Participant within 10 days after such determination
equal to an amount such that after payment by the Participant of all
taxes (including any interest or penalties imposed with respect to
such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Participant would retain an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Total Payments. For
purposes of the foregoing determination, the Participant's tax rate
will be deemed to be the highest statutory marginal state and federal
tax rate (on a combined basis) then in effect. If no determination by
the Company's auditors is made prior to the time the Participant is
required to file a tax return reflecting the Total Payments, the
Participant will be entitled to receive from the Company a Gross-Up
Payment calculated on the basis of the Excise Tax the Participant
reported in such tax return, within 10 days after the later of the
date on which the Participant files such tax return or the date on
which the Participant provides a copy thereof to the Company. In all
events, if any tax authority determines that a greater Excise Tax
should be imposed upon the Total Payments than is determined by the
Company's independent auditors or reflected in the Participant's tax
return pursuant to this Section 4.5, the Participant will be entitled
to receive from the Company the full Gross-Up Payment calculated on
the basis of the amount of Excise Tax determined to be payable by such
tax authority within 10 days after the Participant notifies the
Company of such determination. If any Other Arrangement specifically
provides that benefits thereunder will be reduced or limited so that
such benefits or the Total Payments will not result in the imposition
of an excise tax pursuant to Code Section 4999, the reduction or
limitation will apply, to the extent provided in the Other
Arrangement, solely to the benefits provided pursuant to the Other
Arrangement as if the benefits under the Other Arrangement constituted
the entire Total Payments, and such reduction or limitation will not
otherwise reduce or limit the actual Total Payments.
The foregoing amendments are effective as of August 1, 1999.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by
its duly authorized officers this 18th day of October, 1999.
JOSTENS, INC.
By /s/ Robert C. Buhrmaster
------------------------------
Chief Executive Officer
And /s/ William J. George
-----------------------------
Secretary
5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
- ------------------------------------------------------------------------------------------------------------------------------------
Jostens, Inc, and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
Exhibit 12
(unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Nine months ended] Years ended [Six months ended] Years ended
- ------------------------------------------------------------------------------------------------------------------------------------
October 2 January 2 January 3 December 28 June 30 June 30 June 30
Dollars in thousands 1999 1999 1999 1996 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings
Income from continuing
operations before income
taxes $ 67,520 $ 83,520 $ 93,383 $ 26 $ 87,479 $ 93,893 $ 48,494
Interest expense
(excluding capitalized
interest) 4,663 7,014 6,854 4,324 9,296 5,350 6,701
Portion of rent expense under
long-term operating leases
reprensentative of an interest
factor 1,087 1,233 2,133 1,070 2,103 2,100 2,000
Amoritization of debt expense 71 12 12 6 107 102 102
- ------------------------------------------------------------------------------------------------------------------------------------
Total Earnings $ 73,341 $ 91,779 $ 102,382 $ 5,426 $ 98,985 $ 101,445 $ 57,297
====================================================================================================================================
Fixed charges
Interest expense
(including capitalized
interest) 5,064 7,717 6,854 4,324 9,296 5,350 6,701
Portion of rent expense under
long-term operating leases
representative of an interest
factor 1,087 1,233 2,133 1,070 2,103 2,100 2,000
Amoritization of debt expense 71 12 12 6 107 102 102
- ------------------------------------------------------------------------------------------------------------------------------------
Total fixed charges $ 6,222 $ 8,962 $ 8,999 $ 5,400 $ 11,506 $ 7,552 $ 8,803
====================================================================================================================================
Ratio of earnings to
fixed charges 11.8 10.2 11.4 1.0 8.6 13.4 6.5
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOSTENS,
INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTH
PERIOD ENDED OCTOBER 2, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-START> JUL-04-1999
<PERIOD-END> OCT-02-1999
<CASH> 0
<SECURITIES> 11,603
<RECEIVABLES> 117,005
<ALLOWANCES> (6,243)
<INVENTORY> 75,678
<CURRENT-ASSETS> 248,966
<PP&E> 273,454
<DEPRECIATION> (184,525)
<TOTAL-ASSETS> 30,474
<CURRENT-LIABILITIES> 319,292
<BONDS> 3,600
0
0
<COMMON> 11,176
<OTHER-SE> 31,797
<TOTAL-LIABILITY-AND-EQUITY> 380,474
<SALES> 592,162
<TOTAL-REVENUES> 592,162
<CGS> 278,902
<TOTAL-COSTS> 278,902
<OTHER-EXPENSES> 241,262
<LOSS-PROVISION> 1,306
<INTEREST-EXPENSE> 4,478
<INCOME-PRETAX> 67,520
<INCOME-TAX> 27,345
<INCOME-CONTINUING> 40,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,175
<EPS-BASIC> 1.17
<EPS-DILUTED> 1.17
</TABLE>
