UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

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

	FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

OR

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

	FOR THE TRANSITION PERIOD FROM TO

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

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

FOR THE TRANSITION PERIOD FROM____________ TO___________

333-45235

COMMISSION FILE NUMBER

[GRAPHIC OMITTED]

PERRY JUDD’S HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

DELAWARE		51-0365965
(State or other jurisdiction of		(IRS Employer Identification Number)
incorporation or organization)
575 WEST MADISON STREET, WATERLOO, WISCONSIN		53594
(Address of principal executive offices)		(Zip Code)
920-478-3551
(Registrant’s telephone number, including area code)

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 in the past 90 days. YES ý No o

575 WEST MADISON STREET, WATERLOO, WISCONSIN		53594
(Address of principal executive offices)		(Zip Code)

As of November 1, 2001 there were 901,317 shares of Registrant’s Common Stock outstanding, par value $.001 per share. There is no established public trading market for the Registrant’s Common Stock.920-478-3551

(Registrant’s telephone number, including area code)

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 in the past 90 days. YES ý No o

As of May 1, 2002, there were 901,317 shares of Registrant’s Common Stock outstanding, par value $.001 per share. There is no established public trading market for the Registrant’s Common Stock.

PERRY JUDD’S HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~MARCH 3031, ~~2001~~2002

INDEX

PART I.	FINANCIAL INFORMATION
	ITEM I.			Financial Statements
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000
		Condensed Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001
		Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2001 and September 30, 2000
		Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2002 and March 31, 2001
		Condensed Consolidated Statements of Minority Interests, Preferred Stock and Stockholders’ Equity for the Nine Months ended September 30, 2001
		Condensed Consolidated Statements of Minority Interests, Preferred Stock and Stockholders’ Equity for the Three Months ended March 31, 2002
		Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2001 and September 30, 2000
		Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2002 and March 31, 2001
		Notes to Condensed Consolidated Financial Statements as of September 30, 2001
		Notes to Condensed Consolidated Financial Statements
	ITEM 2.			Management’s Discussion and Analysis of Financial Condition
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
			and Results of Operations
	Item 3.	Quantitative and Qualitative Disclosure About Market Risk
	ITEM 3.			Quantitative and Qualitative Disclosure About Market Risk
PART II.	OTHER INFORMATION
PART II.	OTHER INFORMATION
	Item 6.	Exhibits and Reports on Form 8-K
	ITEM 6.			Exhibits and Reports on Form 8-K

PERRY JUDD’S HOLDINGS, INC.

ITEM I. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

~~SEPTEMBER 30~~MARCH 31, ~~2001~~2002 AND DECEMBER 31, ~~2000~~2001

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE ~~AND~~ ~~SHARE~~ DATA)

	September 30,			December 31,
	March 31,			December 31,
ASSETS	2001			2000
	2002			2001
	(Unaudited)			(Note)
CURRENT ASSETS:
ASSETS:
Cash and cash equivalents	$	2,424		$	4,924
Current Assets:
Accounts receivable - net of allowance for doubtful accounts of $1,546 and $1,239, respectively	56,076			63,123
Cash and cash equivalents	$	2,872		$	4,123
Inventories	18,584			19,374
Accounts receivable - net of allowance for doubtful accounts of $1,476 and $1,236, respectively	43,464			59,353
Prepaid expenses	1,883			1,645
Inventories	14,558			14,624
Deferred income taxes	1,271			1,145
Prepaid expenses	1,594			1,801
Total current assets	80,238			90,211
Deferred income taxes	1,050			1,079
Property, plant and equipment, at cost	152,741			141,195
Total current assets	63,538			80,980
Less accumulated depreciation and amortization	48,785			39,667
Property, plant and equipment, at cost	152,929			148,694
Property, plant and equipment - net	103,956			101,528
Less accumulated depreciation and amortization	49,905			51,219
Goodwill - net	29,668			30,380
Property, plant and equipment - net	103,024			97,475
Other assets - net	5,018			6,150
Goodwill - net	29,431			29,431
TOTAL ASSETS	$	218,880		$	228,269
Other assets - net	4,235			4,640
TOTAL ASSETS	$	200,228		$	212,526
LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	4132,~~381~~495		$	5036,~~456~~794
Current maturities of long-term debt	8,330			6,018
Current portion of long-term debt	—			7,800
Total current liabilities	4932,~~711~~495			5644,~~474~~594
Long-term debt (less current portion)	~~118~~115,~~300~~000			~~122~~115,~~800~~000
Deferred income taxes	1516,~~773~~904			1517,~~816~~014
Other noncurrent obligations	9,~~591~~401			9,~~846~~428
Total liabilities	~~193~~173,~~375~~800			~~204~~186,~~936~~036
MINORITY INTERESTS:
Series A redeemable preferred stock, 43,941 shares outstanding with a stated redemption value of $100 per share, aggregate liquidation value of $4,394	3,~~428~~549			3,~~254~~488
STOCKHOLDERS’ EQUITY:
Preferred stock (Series A) - par value $0.001 per share, 775,000 shares authorized, 166,100 and 148,731 shares issued and outstanding, respectively	16,610			14,873
Preferred stock (Series A) - par value $0.001 per share, 775,000 shares authorized, 178,791 and 172,328 shares issued and outstanding, respectively	17,879			17,233
Common stock - par value $0.001 per share, 1,000,000 shares authorized, 901,317 shares issued and outstanding, respectively	1			1
Common stock - par value $0.001 per share, 1,000,000 shares authorized, 901,317 shares issued and outstanding	1			1
Additional paid-in capital	22,~~240~~356			22,~~148~~279
Accumulated deficit	(1617,~~774~~357		)	(16,~~943~~511		)
Total stockholders’ equity	22,~~077~~879			2023,~~079~~002
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	~~218~~200,~~880~~228		$	~~228~~212,~~269~~526

Note: Derived from audited financial statements. See notes to condensed consolidated financial statements.

PERRY JUDD’S HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

THREE ~~AND~~ ~~NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2001~~2002 AND ~~SEPTEMBER~~MARCH 3031, ~~2000~~2001

(DOLLARS IN THOUSANDS)

	THREE MONTHS ENDED						NINE MONTHS ENDED
	THREE MONTHS ENDED MARCH 31,
	SEPTEMBER 30,						SEPTEMBER 30,
	2002			2001
	2001			2000			2001			2000
NET SALES	$	66,659		$	80,260
NET SALES	$	86,975		$	93,620		$	243,345		$	252,999
OPERATING EXPENSES:
OPERATING EXPENSES:
Costs of production and distribution	51,302			64,414
Costs of production and distribution	68,436			75,045			192,906			203,582
Selling, general and administrative	7,661			7,971
Selling, general and administrative	7,816			8,533			23,643			25,291
Depreciation	4,440			3,664
Depreciation	3,622			3,373			10,890			10,121
Amortization	76			313
Amortization of intangibles	312			318			938			1,126
Gain on disposals of equipment	(190		)	(60		)
Gain on disposals of equipment	(58		)	(48		)	(439		)	(151		)
	63,289			76,302
	80,128			87,221			227,938			239,969
INCOME FROM OPERATIONS	3,370			3,958
INCOME FROM OPERATIONS	6,847			6,399			15,407			13,030
OTHER (INCOME) EXPENSES:
OTHER (INCOME) EXPENSES:
Interest expense	3,124			3,365
Interest expense	3,281			3,472			9,922			10,405
Interest income	(40		)	(54		)
Interest income	(15		)	(147		)	(107		)	(500		)
Amortization of deferred financing costs	328			300
Amortization of deferred financing costs	300			300			900			900
Other expenses	104			107
Other financial expenses	106			92			325			286
	3,516			3,718
	3,672			3,717			11,040			11,091
INCOME (LOSS) BEFORE INCOME TAXES	(146		)	240
INCOME BEFORE INCOME TAXES	3,175			2,682			4,367			1,939
PROVISION (BENEFIT) FOR INCOME TAXES	(53		)	212
PROVISION FOR INCOME TAXES	1,351			1,442			2,066			1,170
INCOME (LOSS) BEFORE DIVIDENDS AND ACCRETION ON REDEEMABLE PREFERRED STOCK	(93		)	28
INCOME BEFORE DIVIDENDS AND ACCRETION ON REDEEMABLE PREFERRED STOCK	1,824			1,240			2,301			769
DIVIDENDS AND ACCRETION ON REDEEMABLE PREFERRED STOCK	107			142
DIVIDENDS AND ACCRETION ON REDEEMABLE PREFERRED STOCK	123			2,549			395			3,095
NET LOSS	$	(200	)	$	(114	)
NET INCOME (LOSS)	$	1,701		$	(1,309	)	$	1,906		$	(2,326	)

See notes to condensed consolidated financial statements.

PERRY JUDD’S HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF MINORITY INTERESTS, PREFERRED STOCK

AND STOCKHOLDERS’ EQUITY (UNAUDITED)

~~NINE~~ THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2001~~2002

(DOLLARS IN THOUSANDS)

							Common Stock
	Minority Interests			Preferred Stock			Common Stock and Additional Paid-in Capital
							and Additional
	Shares	Carrying Value		Shares	Carrying Value		Shares	Carrying Value			Accumulated Deficit
	Minority Interests			Preferred Stock			Paid-in Capital
December 31, 2001	43,941	$	3,488	172,328	$	17,233	901,317	$	22,280		$	(16,511	)
		Carrying			Carrying			Carrying		Accumulated
Net loss	—	—-		—	—-		—	—-			(200		)
	Shares	Value		Shares	Value		Shares	Value			Deficit
Stock dividends	—	—-		6,463	646		—	—-			(646		)
December 31, 2000	43,941	$	3,254	148,731	$	14,873	901,317	$	22,149		$	(16,943	)
Accretion on Series A redeemable preferred stock	—	61		—	—-		—	—-			—
Net income	--	--		--	--		--	--			1,906
Provision for noncash compensation related to common stock options	—	—		—	—		—	77			—
Stock dividends	--	--		17,369	1,737		--	--			(1,737		)
March 31, 2002	43,941	$	3,549	178,791	$	17,879	901,317	$	22,357		$	(17,357	)
Accretion on Series A redeemable preferred stock	--	174		--	--		--	--			--
Provision for non-cash compensation related to common stock options	--	--		--	--		--	92			--
September 30, 2001	43,941	$	3,428	166,100	$	16,610	901,317	$	22,241		$	(16,774	)

See notes to condensed consolidated financial statements.

PERRY JUDD’S HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

~~NINE~~ THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2001~~2002 AND ~~SEPTEMBER~~MARCH 3031, ~~2000~~2001

(DOLLARS IN THOUSANDS)

	NINE MONTHS ENDED
	THREE MONTHS ENDED MARCH 31,
	SEPTEMBER 30,
	2002			2001
	2001			2000
OPERATING ACTIVITIES:
Net income (loss)	$	1,906		$	(2,326	)
Net loss	$	(200	)	$	(114	)
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	124,~~728~~844			124,~~148~~277
Accretion on redeemable preferred stock	~~174~~61			~~1,001~~57
Compensation related to common stock options	9277			--13
Deferred income tax provision	(169		)	108
Deferred income taxes	(81		)	117
Gain on disposals of equipment	(~~439~~190		)	(~~151~~60		)
Changes in assets and liabilities:
Receivables	715,~~047~~889			1112,~~024~~039
Inventories	~~790~~66			(1,~~005~~258		)
Accounts payable and accrued expenses	(94,~~075~~299		)	(712,~~551~~065		)
Other assets and liabilities - net	~~(312~~240		)	(1607		)
Net cash provided by operating activities	1216,~~742~~407			132,~~247~~399
INVESTING ACTIVITIES:
INVESTING ACTIVITIES -
Proceeds from disposal of equipment	637			29
Expenditures for property, plant and equipment - net	(9,858		)	(2,583		)
Additions to property, plant and equipment - net	(13,691		)	(6,995		)
FINANCING ACTIVITIES -
Net cash used in investing activities	(13,054		)	(6,966		)
Repayment of term debt	(7,800		)	(1,518		)
FINANCING ACTIVITIES:
NET DECREASE IN CASH AND CASH EQUIVALENTS	(1,251		)	(1,702		)
Increase in revolving debt	2,330			4,983
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	4,123			4,924
Debt repayments	(4,518		)	(4,565		)
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,872		$	3,222
Redemption of Redeemable Series B and D Preferred Stock	--			(7,341		)
Net cash used in financing activities	(2,188		)	(6,923		)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(2,500		)	(642		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	4,924			3,932
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,424		$	3,290
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	~~6,791~~142		$	~~7,101~~158
Cash paid for income taxes	~~193~~54			~~818~~823
NON-CASH TRANSACTIONS:
Stock dividends on preferred stock	$	~~1,737~~646		$	~~1,499~~558
Stock dividends on redeemable preferred stock	--			81

See notes to condensed consolidated financial statements.

PERRY JUDD’S HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2001

(DOLLARS IN THOUSANDS)

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial ~~financial~~ statements have been prepared by Perry Judd’s Holdings, Inc. (collectively with its subsidiaries, the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission and reflect normal and recurring ~~recurring~~ adjustments, which are, in the opinion of the Company, considered necessary to present fairly the consolidated financial position of the Company as of ~~September~~March 31, 302002 and December 31, 2001 and its related results of operations and cash ~~flows~~ flows for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2001~~2002 and ~~September~~March 3031, ~~2000~~ 2001. As permitted by these regulations, these condensed consolidated financial statements do not include all information required by accounting principles generally accepted in the United States to be included in an annual set of financial statements; however, the Company believes that the disclosures are adequate to make the information presented not misleading. The Company’s condensed consolidated balance sheet as of December 31, ~~2000~~2001 was derived from the Company’s latest audited consolidated financial statements. It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the latest audited consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K.

2. INVENTORIES

Inventories are summarized as follows (in thousands):

	September 30,		December 31,
	March 31,		December 31,
	2001		2000
	2002		2001
Raw materials	$	8,977	$	9,544
Raw Materials	$	5,960	$	6,803
Work-in-process	64,~~006~~933		64,~~238~~161
Production supplies and maintenance parts	3,~~601~~665		3,~~592~~660
Total	$	1814,~~584~~558	$	1914,~~374~~624

3. ~~RECLASSIFICATIONS~~GOODWILL AND OTHER INTANGIBLE ASSETS

InThe ~~May~~Company ~~2000,~~adopted ~~the~~Statement ~~Emerging~~of ~~Issues~~Financial ~~Task~~Accounting ~~Force~~Standards (~~“EITF”~~SFAS) ~~reached a consensus on Issue~~ No. ~~00-10~~142, “~~Accounting~~Goodwill ~~for~~and ~~Shipping~~Other Intangible Assets”, effective ~~and~~January ~~Handling~~1, ~~Fees~~2002. ~~and~~Under ~~Costs~~SFAS No.” ~~EITF~~142, ~~00-10~~goodwill ~~provides~~and ~~guidance~~certain onother ~~the financial~~intangible ~~reporting~~assets ofare ~~shipping~~no ~~and~~longer ~~handling~~amortized ~~fees~~but ~~and~~are ~~costs~~reviewed infor ~~the~~impairment. ~~consolidated~~In connection ~~statements~~with the adoption of ~~operations~~SFAS No. ~~During~~142, the ~~year~~Company ~~ended~~has ~~December~~completed ~~31, 2000,~~ the ~~Company~~transitional ~~adopted~~goodwill ~~EITF~~impairment ~~00-10 and~~test, aswhich arequires ~~result,~~the ~~amounts~~Company ~~billed~~ to acompare ~~customer~~its infair ~~a sale~~value ~~transaction related~~ to ~~shipping~~the ~~costs~~carrying ~~are~~value ~~reported~~of asits net ~~sales~~assets ~~and~~as ~~the~~of ~~related costs~~January ~~incurred~~1, ~~for~~2002. ~~shipping~~Based ~~are~~on ~~reported as costs of production and~~this ~~distribution.~~analysis, ~~The~~the Company ~~previously~~has ~~reported~~concluded ~~shipping~~that ~~costs~~no asimpairment aexisted ~~reduction~~at the time of ~~net~~adoption, ~~sales.~~and, ~~Prior~~accordingly, ~~year~~the ~~condensed~~Company ~~consolidated~~has ~~financial~~not ~~statements~~recognized ~~have~~any ~~been~~transitional ~~reclassified~~impairment ~~to conform to the new requirements~~loss.

4As required by SFAS No. ~~RETIREMENT~~ ~~PLAN~~142, ~~TERMINATION~~the results of operations for periods prior to its adoption have not been restated. Had SFAS No. 142 been adopted at January 1, 2001, the pro forma income before income taxes and net income for the three month period ended March 31, 2001 would have been approximately $477,000 and $123,000, respectively.

Effective December 31, 1997, benefits payable under a defined benefit pension plan existing at the time of the Company’s December 16, 1997 acquisition of Judd’s Incorporated were frozen. On December 14, 2000, the Company’s Board of Directors approved a resolution to terminate the plan. In June 2001, the Company received a favorable advance termination letter from the Internal Revenue Service and has substantially completed the termination of the plan through lump sum payments and the purchase of annuity contracts. During the nine months ended September 30, 2001, the Company recorded a gain on the termination of the pension plan of approximately $1,233,000. Additional net excess plan assets could revert to the Company by December 31, 2001.7

5ITEM 2. ~~NEW~~ ~~ACCOUNTING~~MANAGEMENT’S ~~PRONOUNCEMENTS~~DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~In June 2001, the Financial Accounting~~Results ~~Standards Board (FASB) issued Statement~~ of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 is effective for the Company beginning January 1, 2002, and applies to goodwill and other intangible assets recognized in the Company’s consolidated balance sheet at that date, regardless of when those assets were initially recognized. The Company is continuing to assess the impact of SFAS No. 142 on its consolidated financial statements.Operations

~~ITEM~~Three Months 2ended March 31, 2002 versus Three Months ended March 31, 2001

~~MANAGEMENT'S~~Net sales decreased $13.6 million or 16.9% to $66.7 ~~DISCUSSION~~million ~~AND~~for ~~ANALYSIS~~the OFthree ~~FINANCIAL~~months ~~CONDITION~~ended March 31, 2002 from $80.3 million for the three months ended March 31, 2001. The net decrease resulted primarily from reduced production orders during the three months ended March 31, 2002 compared to the three months ended March 31, 2001.

~~AND~~Costs ~~RESULTS~~of OFproduction ~~OPERATIONS~~and distribution decreased $13.1 million or 20.3% to $51.3 million for the three months ended March 31, 2002 from $64.4 million for the three months ended March 31, 2001, principally related to lower production levels. Costs of production and distribution as a percent of net sales were 76.9% for the three months ended March 31, 2002 as compared to 80.2% experienced in the three months ended March 31, 2001 principally related to certain cost containment initiatives implemented during the first quarter of 2002. Paper costs were 20.0% of net sales for the three months ended March 31, 2002 and 24.6% for the three months ended March 31, 2001.

~~Results~~Selling, general and administrative expenses decreased $0.3 million or 3.8% to $7.7 million for the three months ended March 31, 2002 compared to $8.0 million for the three months ended March 31, 2001 principally related to certain cost containment initiatives implemented during the first quarter of ~~operations~~2002. As a percent of net sales, selling, general and administrative expenses increased to 11.5% in the 2002 period compared to 9.9% in the 2001 period due primarily to the decrease in net sales mentioned above.

~~Nine~~Depreciation expense increased $0.7 million or 18.9% ~~Months~~to $4.4 million for the three months ended ~~September~~March 3031, ~~2001~~2002 ~~versus~~from ~~Nine~~$3.7 ~~Months~~million for the three months ended ~~September~~March 3031, ~~2000~~2001 as a result of assets placed in service within the past twelve months.

~~Net sales~~Income from operations decreased $90.76 million or 315.80% to $~~243.~~3.4 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2001~~2002 from $~~253~~4.0 million for the ~~nine~~three months ended ~~September~~ 30March 31, ~~2000. The~~2001, ~~decrease resulted~~due ~~primarily~~to ~~from~~ the ~~sale~~factors ofdiscussed ~~Judd’s Online on October 19, 2000 whose net sales of $4.2 million are included~~ in the ~~2000 results and from lower volume of~~ ~~production~~preceding ~~units from new and existing customers~~paragraphs.

~~Costs of~~Interest ~~production~~expense ~~and distribution~~ decreased $100.73 million or 58.38% to ~~$192.9~~ $3.1 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2001~~2002 from $~~203~~3.64 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2000,~~2001 ~~principally~~ due to ~~the~~lower ~~sale~~average ofamounts ~~Judd’s~~outstanding ~~Online,~~on ~~lower~~the ~~operating~~Company’s ~~expenses~~term ~~resulting~~loan ~~from~~facility ~~lower~~during ~~production levels and~~ the ~~termination~~ offirst aquarter ~~defined benefit pension plan. Costs~~ of ~~production~~2002 ~~as a percent~~compared ~~of net sales were 79.3% for the nine months ended September 30, 2001 as compared~~ to ~~80.5% experienced in~~ the ~~nine~~first ~~months~~quarter ~~ended September 30, 2000. Paper costs were 23.9%~~ of ~~net sales for the nine months ended September 30,~~ 2001 ~~versus 23~~.~~3% for the nine months ended September 30, 2000.~~

Selling, general and administrative expenses decreased $1.7 million or 6.7% to $23.6 million for the nine months ended September 30, 2001 compared to $25.3 million for the nine months ended September 30, 2000, principally related to the sale of Judd’s Online. Selling, general and administrative expenses decreased as a percent of net sales to 9.7% in the 2001 period compared to 10.0% in the 2000 period.8

Depreciation expense increased $0.8 million or 7.9% to $10.9 million for the nine months ended September 30, 2001 from $10.1 million for the nine months ended September 30, 2000 as a result of new assets placed in service within the past twelve months.

Income from operations increased $2.4 million or 18.5% to $15.4 million for the nine months ended September 30, 2001 from $13.0 million for the nine months ended September 30, 2000, due to the factors discussed in the preceding paragraphs.

Interest expense decreased $0.5 million or 4.8% to $9.9 million for the nine months ended September 30, 2001 from $10.4 million for the nine months ended September 30, 2000 due to reduced debt levels and lower borrowing rates.

Three Months ended September 30, 2001 versus Three Months ended September 30, 2000.

Net sales decreased $6.6 million or 7.1% to $87.0 million for the three months ended September 30, 2001 from $93.6 million for the three months ended September 30, 2000. The decrease resulted from substantially lower volume of production units from new and existing customers.

Costs of production and distribution decreased $6.6 million or 8.8% to $68.4 million for the three months ended September 30, 2001 from $75.0 million for the three months ended September 30, 2000, principally from the overall decreased volume of production and the termination of a defined benefit pension plan. Costs of production as a percent of net sales were 78.6% for the three months ended September 30, 2001 as compared to 80.1% experienced in the three months ended September 30, 2000. Paper costs were 23.2% of net sales for the three months ended September 30, 2001 versus 24.1% for the three months ended September 30, 2000.

Selling, general and administrative expenses decreased $0.7 million or 8.2% to $7.8 million for the three months ended September 30, 2001 compared to $8.5 million for the three months ended September 30, 2000, principally related to the sale of Judd’s Online. Selling, general and administrative expenses decreased as a percent of net sales to 9.0% in the 2001 period compared to 9.1% in the 2000 period.

Depreciation expense increased $0.2 million or 5.9% to $3.6 million for the three months ended September 30, 2001 from $3.4 million for the three months ended September 30, 2000 as a result of new assets placed in service within the past twelve months.

Income from operations increased $0.4 million or 6.3% to $6.8 million for the three months ended September 30, 2001 from $6.4 million for the three months ended September 30, 2000, due to the factors discussed in the preceding paragraphs.

Interest expense decreased $0.2 million or 5.7% to $3.3 million for the three months ended September 30, 2001 from $3.5 million for the three months ended September 30, 2000 as a result of reduced debt levels and lower borrowing rates during the period.

Liquidity and Capital Resources

Historically, the Company has funded its capital and operating requirements with a combination of cash flow from operations, borrowings and external operating leases. Earnings before interest, income taxes, depreciation, amortization, noncash ~~non-cash~~ compensation related to common stock options and gains and losses on disposition of assets (“EBITDA”) was $267.67 million for the ~~nine~~three months ended March ~~September 30~~31, ~~2001~~2002 and $237.8 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2000~~2001.

Working capital was $3031.50 million and $3336.74 million at March ~~September 30~~31, ~~2001~~2002 and December 31, ~~2000~~2001, respectively.

Since the inception of operations on April 28, 1995, the Company has funded the majority of its needs for production equipment through operating leases and borrowings under its Amended and Restated Credit Agreement, (the “Credit Agreement”), which expires on December 15, 2002. The Credit Agreement is comprised of a $45 million revolving credit facility based upon a borrowing base of eligible accounts receivable and inventory amounts and a term loan facility ~~with an outstanding balance of $9~~.~~3 million~~ Borrowings atunder ~~September~~the ~~30, 2001. The~~ Credit Agreement ~~provides for monthly reductions in its term loan facility and~~bear ~~borrowings bear~~ interest at rates that fluctuate with the prime rate and the Eurodollar ~~Eurodollar~~ rate. As of ~~September~~March 3031, ~~2001~~ 2002, the Company had ~~$2.3~~no ~~million~~borrowings ~~outstanding~~ under ~~its~~the ~~revolving~~Credit ~~credit facility~~Agreement.

~~During~~Concentrations of credit risk with respect to accounts ~~the~~receivable ~~nine~~are ~~months~~limited ~~ended~~due ~~September~~to ~~30,~~the ~~2001,~~Company’s ~~approximately~~diverse ~~$9.3~~operations ~~million~~and ~~was~~large ~~expended~~customer onbase. As ~~capital~~of ~~projects~~March ~~that~~31, ~~will~~2002, the beCompany ~~converted~~had tono ~~operating~~significant ~~leases~~concentrations inof ~~the near~~credit ~~future~~risk.

Concentrations of credit risk with respect to accounts receivable are limited due to the Company’s diverse operations and large customer base. As of September 30, 2001, the Company had no significant concentrations of credit risk.

The Company believes that its liquidity, capital resources and cash flows are sufficient to fund planned capital expenditures, working capital requirements and interest and principal payments for the foreseeable future.

Seasonality

Results of operations for this interim period are not necessarily indicative of results for the full year. The Company’s operations are seasonal. Historically, approximately two-thirds of its income from operations has been generated in the second half of the fiscal year, primarily due to the higher number of magazine pages, new product launches and back-to-school and holiday catalog promotions.

~~ITEM 3.~~Critical ~~Quantitative and~~Accounting ~~Qualitative Disclosures About Market Risk~~Policies

~~The~~A ~~information~~summary ~~called~~of ~~for~~the ~~under~~Company’s significant accounting ~~this~~policies ~~item~~are isincluded ~~contained~~ in ~~Notes~~Note 21 ~~and 4~~ of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2000~~2001. ~~The~~Management ~~Company~~believes ~~has~~that ~~not~~the ~~experienced~~consistent ~~any~~application ~~material~~of ~~changes~~these policies inenables ~~its~~the Company to provide readers of the financial statements ~~market~~with ~~risk~~useful ~~exposures~~and ~~since~~reliable ~~December~~information ~~31,~~about ~~2000~~the Company’s operating results and financial condition.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

The Company generally does not enter into any material futures, forwards, swaps, options or other derivative financial instruments for trading or other purposes. The primary exposure to market risk relates to fluctuations in interest rates and the effects those changes may have on operating results due to long-term financing arrangements. The Company manages its exposure to this market risk by monitoring interest rates and possible alternative means of financing. Operating results may be affected by changes in short-term interest rates under the revolving credit and term loan facilities, pursuant to which borrowings bear interest at a variable rate. See Notes 4, 7 and 11 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

The quarterly report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking ~~These~~ statements ~~relate~~generally tocan ~~expectations~~be ~~concerning~~identified ~~matters~~by ~~that~~the ~~are not historical~~use ~~facts.~~of ~~Words~~forward-looking terminology such as “~~projects~~may,” “~~believes~~will,” “~~anticipates~~expect,” “~~will~~intend,” “estimate,” “~~plans~~anticipate,” “~~expects~~believe,” or “~~intends~~continue,” ~~and~~or ~~similar~~the ~~words~~negative ~~and~~thereof ~~expressions~~or variations ~~are~~thereon ~~intended~~or similar terminology. toSuch ~~identify~~ forward-looking statements. ~~Although~~are webased ~~believe~~upon information currently available in which the Company’s management shares its knowledge and judgment about factors that ~~such~~they believe may materially affect the Company’s performance. The Company makes forward-looking statements ~~are~~in ~~reasonable,~~good wefaith ~~cannot~~and ~~assure~~believes ~~that~~them to have a reasonable basis. However, such ~~expectations~~statements are speculative, ~~will~~speak ~~prove~~only as of the date made and are subject to becertain ~~correct~~risks, uncertainties and assumptions. Should ~~Important~~one ~~language~~or ~~regarding~~more ~~factors~~of these ~~which~~risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could vary materially from those anticipated, estimated or expected. Factors that might cause actual results to differ materially from ~~such~~those ~~expectations~~in ~~are~~such ~~disclosed~~forward-looking statements include, but are not limited to statements in this Report, ~~our~~and in our Annual Report on Form 10-K for the year -ended December 31, ~~2000~~ 2001 filed with the Securities and Exchange Commission on March 3029, ~~2001, and other reports filed with the Securities and Exchange Commission~~2002. ~~All forward-looking statements attributable to the Company are expressly qualified in their entirety by such language.~~ The Company does not undertake any obligation to update any forward-looking statements.

~~PERRY JUDD’S HOLDINGS, INC.~~9

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibits required in accordance with Item 601 of Regulation S-K are incorporated by reference herein as filed with registrant’s Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2000~~2001, filed with the Securities and Exchange Commission on March 3029, ~~2001~~2002.

(b) Reports on Form 8-K

~~The following~~There ~~report~~were no reports on Form 8-K ~~was~~ filed during the quarterly period ended ~~September~~ 30March 31, ~~2001:~~2002.

~~On August 27, 2001, the Company filed a Report on Form 8-K that reported information under “Item 4. Changes in Registrant’s Certifying Accountants.”~~10

PERRY JUDD’S HOLDINGS, INC.

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.

		PERRY JUDD’S HOLDINGS, INC.
Date:	~~November~~May 1, ~~2001~~2002	/s/ Verne F. Schmidt
		Verne F. Schmidt
		Senior Vice President and
		Chief Financial Officer

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