UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended October 2, 2010

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

For the transition period from to


Commission File Number	Registrant, State of Incorporation, Address of Principal Executive Offices and Telephone Number	I.R.S. Employer Identification No.
333-112055	VISANT HOLDING CORP.		90-0207875
	(Incorporated in Delaware)
	357 Main Street
	Armonk, New York 10504
	Telephone: (914) 595-8200

333-120386	VISANT CORPORATION		90-0207604
	(Incorporated in Delaware)
	357 Main Street
	Armonk, New York 10504
	Telephone: (914) 595-8200

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

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that each registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether either of the registrants is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether either of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November 9, 2010, there were 5,967,265 shares of Class A Common Stock, par value $.01 per share, and one share of Class C Common Stock, par value $.01 per share, of Visant Holding Corp. outstanding and 1,000 shares of common stock, par value $.01 per share, of Visant Corporation outstanding (all of which are beneficially owned by Visant Holding Corp.).

Visant Corporation meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction (H)(2) to Form 10-Q.

Each registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months.

FILING FORMAT

This Quarterly Report on Form 10-Q is a combined report being filed separately by two registrants: Visant Holding Corp. (“Holdings”) and Visant Corporation, a wholly owned subsidiary of Holdings (“Visant”). Unless the context indicates otherwise, any reference in this report to the “Company”, “we”, “our”, “us” or “Holdings” refers to Visant Holding Corp., together with Visant Corporation and its consolidated subsidiaries.

Note: In connection with the refinancing consummated by Visant, prior to the end of our fiscal third quarter 2010, on September 22, 2010, Holdings’ outstanding 10.25% Senior Discount Notes due 2013 (the “Senior Discount Notes”) and 8.75% Senior Notes due 2013 (the “Senior Notes”) and Visant’s outstanding 7.625% Senior Subordinated Notes due 2012 (the “Senior Subordinated Notes” and together with the Senior Discount Notes and the Senior Notes, the “Old Notes”) were either purchased for cash pursuant to tender offers made in respect of the Old Notes or satisfied and discharged by Holdings and Visant by delivering to the applicable trustee, for the respective series of Old Notes in trust, amounts sufficient to pay the redemption price, plus accrued and unpaid interest up to, but not including, the date of redemption pursuant to notices of redemption given by Holdings or Visant, as applicable, with respect to the respective series of Old Notes. Accordingly, Holdings and Visant have no further reporting obligations pursuant to the indentures governing the Old Notes. In connection with the refinancing, Visant sold in a private placement to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act, $750.0 million aggregate principal amount of 10.00% Senior Notes due 2017 (the “New Senior Notes”). Visant has agreed to file an exchange offer registration statement to exchange the New Senior Notes and related guarantees for a new issue of substantially identical notes and guarantees registered under the Securities Act and, accordingly, anticipates continuing to file annual reports on Form 10-K and quarterly reports on Form 10-Q pursuant to its reporting obligations under the indenture governing the New Senior Notes. Holdings’ information in this report is being provided voluntarily for informational purposes. Holdings does not currently have nor will it have an ongoing reporting obligation, and Holdings will no longer be reflected as a registrant on current or periodic filings under the Exchange Act after the filing of the Form 10-K for fiscal year 2010. Further information regarding the presentation of Holdings’ financial condition and results of operations is provided elsewhere in this report under Management’s Discussion and Analysis of Financial Condition and Results of Operations.

TABLE OF CONTENTS


	PART I – FINANCIAL INFORMATION
			Page
ITEM 1.	Financial Statements (Unaudited)

	Visant Holding Corp. and subsidiaries:

		Condensed Consolidated Statements of Operations for the three and nine months ended October 2, 2010 and October 3, 2009		1

		Condensed Consolidated Balance Sheets as of October 2, 2010 and January 2, 2010		2

		Condensed Consolidated Statements of Cash Flows for the nine months ended October 2, 2010 and October 3, 2009		3

	Visant Corporation and subsidiaries:

		Condensed Consolidated Statements of Operations for the three and nine months ended October 2, 2010 and October 3, 2009		4

		Condensed Consolidated Balance Sheets as of October 2, 2010 and January 2, 2010		5

		Condensed Consolidated Statements of Cash Flows for the nine months ended October 2, 2010 and October 3, 2009		6

	Notes to Condensed Consolidated Financial Statements			7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			35

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk			52

ITEM 4.	Controls and Procedures			52

ITEM 4T.	Controls and Procedures			52

	PART II – OTHER INFORMATION

ITEM 1.	Legal Proceedings			52

ITEM 1A.	Risk Factors			52

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds			62

ITEM 3.	Defaults Upon Senior Securities			62

ITEM 4.	Reserved			62

ITEM 5.	Other Information			62

ITEM 6.	Exhibits			62

Signatures

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

VISANT HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three months ended						Nine months ended
	October 2,			October 3,			October 2,		October 3,
*In thousands*	2010			2009			2010		2009
Net sales	$	224,287		$	235,901		$	989,389	$	1,000,273
Cost of products sold		120,585			128,071			451,104		462,342

Gross profit		103,702			107,830			538,285		537,931
Selling and administrative expenses		92,368			92,959			347,353		338,644
(Gain) loss on disposal of fixed assets		(303	)		(223	)		203		(453	)
Special charges		995			2,395			3,383		14,816

Operating income		10,642			12,699			187,346		184,924
Interest expense, net		31,444			27,894			87,699		85,543
Loss on repurchase and redemption of debt		37,680			—			37,680		—

(Loss) income before income taxes		(58,482	)		(15,195	)		61,967		99,381
(Benefit from) provision for income taxes		(13,503	)		(7,105	)		31,169		37,523

Net (loss) income	$	(44,979	)	$	(8,090	)	$	30,798	$	61,858

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

VISANT HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	October 2,			January 2,
*In thousands, except share amounts*	2010			2010
ASSETS
Cash and cash equivalents	$	11,282		$	113,330
Accounts receivable, net		125,573			113,274
Inventories		90,184			102,749
Salespersons overdrafts, net of allowance of $9,482 and $8,737, respectively		30,536			28,518
Income taxes receivable		2,561			2,645
Prepaid expenses and other current assets		13,133			18,242
Deferred income taxes		28,337			14,521

Total current assets		301,606			393,279

Property, plant and equipment		469,515			441,985
Less accumulated depreciation		(255,379	)		(231,153	)

Property, plant and equipment, net		214,136			210,832
Goodwill		1,008,428			1,004,317
Intangibles, net		517,201			550,630
Deferred financing costs, net		50,775			20,053
Deferred income taxes		2,605			—
Other assets		16,525			13,732
Prepaid pension costs		4,855			4,855

Total assets	$	2,116,131		$	2,197,698


LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ (DEFICIT) EQUITY
Short-term borrowings	$	92,500		$	196
Accounts payable		53,038			48,017
Accrued employee compensation and related taxes		32,301			42,555
Commissions payable		8,058			21,956
Customer deposits		53,944			183,975
Income taxes payable		349			628
Current portion of long-term debt and capital leases		16,208			1,862
Interest payable		5,099			15,122
Other accrued liabilities		28,118			29,476

Total current liabilities		289,615			343,787

Long-term debt and capital leases - less current maturities		1,975,418			1,421,631
Deferred income taxes		178,062			150,352
Pension liabilities, net		52,026			55,755
Other noncurrent liabilities		49,402			40,870

Total liabilities		2,544,523			2,012,395

Mezzanine equity		8,564			9,147
Common stock:
Class A $.01 par value; authorized 7,000,000 shares; issued and outstanding: 5,967,265 and 5,964,690 shares at October 2, 2010 and January 2, 2010
Class B $.01 par value; non-voting; authorized 2,724,759 shares; issued and outstanding: none at October 2, 2010 and January 2, 2010
Class C $.01 par value; authorized 1 share; issued and outstanding: 1 share at October 2, 2010 and January 2, 2010		60			60
Additional paid-in-capital		9,545			173,568
Accumulated (deficit) earnings		(413,701	)		33,813
Treasury stock		(5,129	)		(4,138	)
Accumulated other comprehensive loss		(27,731	)		(27,147	)

Total stockholders’ (deficit) equity		(436,956	)		176,156

Total liabilities, mezzanine equity and stockholders’ (deficit) equity	$	2,116,131		$	2,197,698

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

VISANT HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine months ended
	October 2,			October 3,
*In thousands*	2010			2009
Net income	$	30,798		$	61,858
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		33,904			32,035
Amortization of intangible assets		43,008			43,414
Amortization of debt discount, premium and deferred financing costs		5,609			6,024
Other amortization		391			460
Deferred income taxes		12,429			(13,858	)
Loss on repurchase and redemption of debt		14,778			—
Loss (gain) on disposal of fixed assets		203			(453	)
Stock-based compensation		10,045			575
Excess tax benefit from share-based arrangements		(53	)		(2,909	)
Loss on asset impairments		198			6,036
Changes in assets and liabilities:
Accounts receivable		(10,421	)		13,385
Inventories		14,061			15,667
Salespersons overdrafts		(1,999	)		(814	)
Prepaid expenses and other current assets		4,034			13,451
Accounts payable and accrued expenses		(10,621	)		2,651
Customer deposits		(130,246	)		(129,161	)
Commissions payable		(13,952	)		(15,278	)
Income taxes payable/receivable		11,602			40,414
Interest payable		(10,023	)		4,949
Other		(8,520	)		(13,509	)

Net cash (used in) provided by operating activities		(4,775	)		64,937

Purchases of property, plant and equipment		(43,163	)		(37,047	)
Proceeds from sale of property and equipment		659			3,042
Acquisition of business, net of cash acquired		(9,906	)		(869	)
Additions to intangibles		(741	)		(553	)
Other investing activities, net		8			(1	)

Net cash used in investing activities		(53,143	)		(35,428	)

Short-term borrowings		308,700			5,296
Short-term repayments		(216,200	)		(137,000	)
Repurchase of common stock and payments for stock-based awards		(1,017	)		(5,796	)
Principal payments on long-term debt and capital lease obligations		(1,416,280	)		—
Proceeds from issuance of long-term debt and capital leases		1,983,234			—
Proceeds from issuance of common stock		30			—
Excess tax benefit from share-based arrangements		53			2,909
Distribution to stockholders		(654,741	)		—
Debt financing costs		(47,585	)		(2,619	)

Net cash used in financing activities		(43,806	)		(137,210	)

Effect of exchange rate changes on cash and cash equivalents		(324	)		(441	)

Decrease in cash and cash equivalents		(102,048	)		(108,142	)
Cash and cash equivalents, beginning of period		113,330			118,273

Cash and cash equivalents, end of period	$	11,282		$	10,131

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

VISANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three months ended						Nine months ended
	October 2,			October 3,			October 2,		October 3,
*In thousands*	2010			2009			2010		2009
Net sales	$	224,287		$	235,901		$	989,389	$	1,000,273
Cost of products sold		120,585			128,071			451,104		462,342

Gross profit		103,702			107,830			538,285		537,931
Selling and administrative expenses		98,374			92,717			347,313		337,771
(Gain) loss on disposal of fixed assets		(303	)		(223	)		203		(453	)
Special charges		995			2,395			3,383		14,816

Operating income		4,636			12,941			187,386		185,797
Interest expense, net		18,372			13,419			45,675		41,975
Loss on repurchase and redemption of debt		9,693			—			9,693		—

(Loss) income before income taxes		(23,429	)		(478	)		132,018		143,822
(Benefit from) provision for income taxes		(1,861	)		(1,306	)		55,951		54,420

Net (loss) income	$	(21,568	)	$	828		$	76,067	$	89,402

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

VISANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	October 2,			January 2,
*In thousands, except share amounts*	2010			2010
ASSETS
Cash and cash equivalents	$	9,514		$	113,093
Accounts receivable, net		125,573			113,274
Inventories		90,184			102,749
Salespersons overdrafts, net of allowance of $9,482 and $8,737, respectively		30,536			28,518
Prepaid expenses and other current assets		13,098			18,242
Deferred income taxes		17,856			14,521

Total current assets		286,761			390,397

Property, plant and equipment		469,515			441,985
Less accumulated depreciation		(255,379	)		(231,153	)

Property, plant and equipment, net		214,136			210,832
Goodwill		1,008,428			1,004,317
Intangibles, net		517,201			550,630
Deferred financing costs, net		50,775			12,484
Deferred income taxes		2,605			—
Other assets		16,525			13,732
Prepaid pension costs		4,855			4,855

Total assets	$	2,101,286		$	2,187,247


LIABILITIES AND STOCKHOLDER’S (DEFICIT) EQUITY
Short-term borrowings	$	92,500		$	196
Accounts payable		53,037			48,017
Accrued employee compensation and related taxes		32,301			42,555
Commissions payable		8,058			21,956
Customer deposits		53,944			183,975
Income taxes payable		46,276			1,643
Current portion of long-term debt and capital leases		16,208			1,862
Interest payable		5,099			10,458
Other accrued liabilities		27,156			29,471

Total current liabilities		334,579			340,133

Long-term debt and capital leases - less current maturities		1,975,418			824,431
Deferred income taxes		179,054			188,035
Pension liabilities, net		52,026			55,755
Other noncurrent liabilities		48,585			39,091

Total liabilities		2,589,662			1,447,445

Mezzanine equity		30			—
Preferred stock $.01 par value; authorized 300,000 shares; none issued and outstanding at October 2, 2010 and January 2, 2010		—			—
Common stock $.01 par value; authorized 1,000 shares; 1,000 shares issued and outstanding at October 2, 2010 and January 2, 2010		—			—
Additional paid-in-capital		40			570,180
Accumulated (deficit) earnings		(460,715	)		196,769
Accumulated other comprehensive loss		(27,731	)		(27,147	)

Total stockholder’s (deficit) equity		(488,406	)		739,802

Total liabilities and stockholder’s (deficit) equity	$	2,101,286		$	2,187,247

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

VISANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine months ended
	October 2,			October 3,
*In thousands*	2010			2009
Net income	$	76,067		$	89,402
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		33,904			32,035
Amortization of intangible assets		43,008			43,414
Amortization of debt discount, premium and deferred financing costs		4,211			4,574
Other amortization		391			460
Deferred income taxes		(13,772	)		(13,431	)
Loss on repurchase and redemption of debt		8,607			—
Loss (gain) on disposal of fixed assets		203			(453	)
Stock-based compensation		10,045			—
Loss on asset impairments		198			6,036
Changes in assets and liabilities:
Accounts receivable		(10,421	)		13,385
Inventories		14,061			15,667
Salespersons overdrafts		(1,999	)		(814	)
Prepaid expenses and other current assets		4,069			13,451
Accounts payable and accrued expenses		(10,622	)		2,650
Customer deposits		(130,246	)		(129,161	)
Commissions payable		(13,952	)		(15,278	)
Income taxes payable		44,665			39,087
Interest payable		(5,359	)		(9,185	)
Other		(8,508	)		(13,485	)

Net cash provided by operating activities		44,550			78,354

Purchases of property, plant and equipment		(43,163	)		(37,047	)
Proceeds from sale of property and equipment		659			3,042
Acquisition of business, net of cash acquired		(9,906	)		(869	)
Additions to intangibles		(741	)		(553	)
Other investing activities, net		8			(1	)

Net cash used in investing activities		(53,143	)		(35,428	)

Short-term borrowings		308,700			5,296
Short-term repayments		(216,200	)		(137,000	)
Principal payments on long-term debt and capital lease obligations		(819,080	)		—
Proceeds from issuance of long-term debt and capital leases		1,983,234			—
Distribution to stockholder		(1,303,731	)		(15,981	)
Debt financing costs		(47,585	)		(2,619	)

Net cash used in financing activities		(94,662	)		(150,304	)

Effect of exchange rate changes on cash and cash equivalents		(324	)		(441	)

Decrease in cash and cash equivalents		(103,579	)		(107,819	)
Cash and cash equivalents, beginning of period		113,093			117,601

Cash and cash equivalents, end of period	$	9,514		$	9,782

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

VISANT HOLDING CORP.

VISANT CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.	Overview and Basis of Presentation

Overview

The Company is a marketing and publishing services enterprise servicing the school affinity, direct marketing, fragrance and cosmetics sampling, and educational and trade publishing segments. The Company sells products and services to end customers through several different sales channels including independent sales representatives and dedicated sales forces. Our sales and results of operations are impacted by a number of factors, including general economic conditions, seasonality, cost of raw materials, school population trends, the availability of school funding, product and service offerings and quality and price.

Basis of Presentation

The unaudited condensed consolidated financial statements included herein are:

•

Visant Holding Corp. and its wholly-owned subsidiaries (“Holdings”) which includes Visant Corporation (“Visant”); and

•

Visant and its wholly-owned subsidiaries.

There are no significant differences between the results of operations and financial condition of Visant Corporation and those of Visant Holding Corp., other than on a historical basis for stock compensation expense, interest expense and the related income tax effect of certain indebtedness of Holdings.

All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements of Holdings and Visant, and their respective subsidiaries, are presented pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) in accordance with disclosure requirements for the quarterly report on Form 10-Q. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and footnotes included in Holdings’ and Visant’s Annual Report on Form 10-K for the fiscal year ended January 2, 2010.

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

2.	Significant Accounting Policies

Revenue Recognition

The Company recognizes revenue when the earnings process is complete, evidenced by an agreement between the Company and the customer, delivery and acceptance has occurred, collectibility is probable and pricing is fixed or determinable. Revenue is recognized (1) when products are shipped (if shipped free on board “FOB” shipping point), (2) when products are delivered (if shipped FOB destination) or (3) as services are performed as determined by contractual agreement, but in all cases only when risk of loss has transferred to the customer and the Company has no further performance obligations.

Cost of Products Sold

Cost of products sold primarily includes the cost of paper, precious metals and other raw materials, direct and indirect labor and related benefit costs, depreciation of production assets and shipping and handling costs.

Shipping and Handling

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

Selling and Administrative Expenses

Selling and administrative expenses are expensed as incurred. These costs primarily include salaries and related benefits of sales and administrative personnel, sales commissions, amortization of intangibles and professional fees such as audit and consulting fees.

Advertising

The Company expenses advertising costs as incurred. Selling and administrative expenses included advertising expense of $2.8 million and $1.7 million for the quarters ended October 2, 2010 and October 3, 2009, respectively. Advertising expense totaled $6.1 million for the nine months ended October 2, 2010 and $4.5 million for the nine months ended October 3, 2009.

Warranty Costs

Provisions for warranty costs related to Jostens’ scholastic products, particularly class rings due to their lifetime warranty, are recorded based on historical information and current trends in manufacturing costs. The provision related to the lifetime warranty is based on the number of rings manufactured in the prior school year. The total net warranty costs on rings were $0.8 million and $0.7 million for the three-month periods ended October 2, 2010 and October 3, 2009, respectively. For the nine months ended October 2, 2010 and October 3, 2009, the total net warranty costs were $3.6 million and $3.4 million, respectively. Warranty repair costs for rings manufactured in the current school year are expensed as incurred. Accrued warranty costs included in the condensed consolidated balance sheets were approximately $0.6 million as of each of October 2, 2010 and January 2, 2010.

Stock-based Compensation

The Company recognizes compensation expense related to all equity awards granted, including awards modified, repurchased or cancelled based on the fair values of the awards at the grant date. The Company recognized total stock-based compensation expense of approximately $4.1 million and $0.2 million for the three-month periods ended October 2, 2010 and October 3, 2009, respectively, which was included in selling and administrative expenses. Stock-based compensation expense totaled $10.0 million and $0.6 million for the nine-month periods ended October 2, 2010 and October 3, 2009, respectively. Refer to Note 15, Stock-based Compensation, for further details.

Mezzanine Equity

Certain management stockholder agreements contain a purchase feature pursuant to which, in the event the holder’s employment terminates as a result of the death or permanent disability (as defined in the agreement) of the holder, the holder (or his/her estate, in the case of death) has the option to require Holdings to purchase the common shares or vested options from the holder (estate) and settle the amounts in cash. Equity instruments are considered temporary equity and have been classified as mezzanine equity in the balance sheet as of October 2, 2010 and January 2, 2010, respectively.

Recently Adopted Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance which expands the required disclosures about fair value measurements. This guidance requires (1) separate disclosure of the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements along with the reasons for such transfers, (2) information about purchases, sales, issuances and settlements to be presented separately in the reconciliation for Level 3 fair value measurements, (3) fair value measurement disclosures for each class of assets and liabilities and (4) disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for fair value measurements that fall in either Level 2 or Level 3. This guidance is effective for the first reporting period beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is effective for fiscal years beginning after December 15, 2010. The Company’s adoption of this guidance did not have a material impact on its condensed consolidated financial statements.

In February 2010, the FASB issued guidance related to events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance amends existing standards to address potential conflicts with SEC guidance and refines the scope of the reissuance disclosure requirements to include revised financial statements only. Under this guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated. The Company’s adoption of this guidance did not have a material impact on its condensed consolidated financial statements.

3.	The Transactions

On October 4, 2004, an affiliate of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and affiliates of DLJ Merchant Banking Partners III, L.P. (“DLJMBP III”) completed a series of transactions which created a marketing and publishing services enterprise, servicing the school affinity, direct marketing, fragrance and cosmetics sampling, and educational and trade publishing segments (the “Transactions”) through the combination of Jostens, Inc. (“Jostens”), Von Hoffmann Holdings, Inc. and its subsidiaries (“Von Hoffmann”) and AKI, Inc. and its subsidiaries (“Arcade”).

Prior to the Transactions, Von Hoffmann and Arcade were each controlled by affiliates of DLJ Merchant Banking Partners II, L.P. (“DLJMBP II”), and DLJMBP III owned approximately 82.5% of Holdings’ outstanding equity, with the remainder held by other co-investors and certain members of management. Upon consummation of the Transactions, an affiliate of KKR invested $256.1 million and was issued equity interests representing approximately 49.6% of the voting interest and 45.0% of the economic interest of Holdings, DLJMBP III and certain of its affiliates held equity interests representing approximately 41.0% of Holdings’ voting interest and 45.0% of Holdings’ economic interest, with the remainder held by other co-investors and certain members of management. As of October 2, 2010, an affiliate of KKR and DLJMBP III and certain of its affiliates (the “Sponsors”) held approximately 49.1% and 41.1%, respectively, of Holdings’ voting interest, while each held approximately 44.6% of Holdings’ economic interest. As of October 2, 2010, the other co-investors held approximately 8.4% of the voting interest and 9.1% of the economic interest of Holdings, and members of management held approximately 1.4% of the voting interest and approximately 1.7% of the economic interest of Holdings.

4.	Restructuring Activity and Other Special Charges

During the three months ended October 2, 2010, the Company recorded $0.9 million of restructuring costs and $0.1 million of other special charges. The Scholastic segments incurred $0.4 million of severance and related benefits for headcount reductions associated with the closure of the Unadilla, Georgia facility and $0.1 million of other facility closure costs. The Marketing and Publishing Services segments incurred $0.1 million of severance and related benefits for headcount reductions associated with reductions in force and $0.4 million of costs associated with the exit of certain leased office space. The associated employee headcount reductions related to the above actions were two and 84 in the Marketing and Publishing Services and Scholastic segments, respectively.

For the nine-month period ended October 2, 2010, the Company recorded $3.2 million of restructuring costs and $0.2 million of other special charges. Restructuring costs for the nine months ended October 2, 2010 included $1.6 million and $0.5 million related to cost reduction initiatives in our Scholastic and Memory Book segments, respectively, and $1.3 million of cost reduction initiatives and facility consolidation costs in the Marketing and Publishing Services segment. Included in these costs were approximately $0.2 million in the aggregate of non-cash asset impairment charges in the Scholastic and Marketing and Publishing Services segments. The associated employee headcount reductions were 142, 13 and 23 in the Scholastic, Memory Book and Marketing and Publishing Services segments, respectively.

During the three months ended October 3, 2009, the Company recorded $0.8 million of restructuring costs and $1.6 million of other special charges. The Memory Book segment incurred $0.1 million of severance and related benefits associated with the closure of the Winston-Salem, North Carolina facility. The Scholastic segment incurred $0.2 million of severance and related benefits associated with the closure of the Marysville, Ohio chenille letter manufacturing facility. The Marketing and Publishing Services segment incurred $0.2 million of restructuring costs for severance and related benefits associated with the closure of the Baltimore, Maryland facility, $0.1 million of other shutdown related costs and $0.2 million of other severance and related benefits. Other special charges for the three months ended October 3, 2009 included $1.6

million of non-cash facility related asset impairment charges in the Memory Book segment associated with the closure of the Winston-Salem, North Carolina facility. The associated employee headcount reductions related to the above actions were 17 in the Marketing and Publishing Services segment.

For the nine-month period ended October 3, 2009, the Company recorded $8.8 million of restructuring costs and $6.0 million of other special charges. Restructuring charges included $0.9 million of cost reduction initiatives and severance and related benefits in the Scholastic segment and $4.2 million of severance and related benefits for associated headcount reductions in connection with the closure of the Winston Salem, North Carolina facility and certain other reductions in force in the Memory Book segment. Additionally, the Marketing and Publishing Services segment incurred $2.0 million of severance and related benefits for associated headcount reductions in connection with the closure of its Baltimore, Maryland facility, $0.3 million of restructuring costs associated with the closure of the Pennsauken, New Jersey facilities, $0.3 million of other shutdown related costs and $1.1 million of other severance and related benefits associated with cost reduction initiatives. Other special charges included $0.5 million of non-cash asset impairment charges in the Scholastic segment related to the closure of Jostens’ Attleboro, Massachusetts facility and $4.1 million of non-cash asset impairment charges in the Memory Book segment related to the closure of the Winston-Salem, North Carolina facility. Additionally, the Marketing and Publishing Services segment reported $1.4 million of non-cash costs related to asset impairment charges. The associated employee headcount reductions related to the above actions were 17, 231 and 156 in the Scholastic, Memory Book and Marketing and Publishing Services segments, respectively.

Restructuring accruals of $2.0 million and $3.2 million as of October 2, 2010 and January 2, 2010, respectively, are included in other accrued liabilities in the condensed consolidated balance sheets. The accruals include amounts provided for severance and related benefits related to headcount reductions in the Scholastic, Memory Book and Marketing and Publishing Services segments.

On a cumulative basis through October 2, 2010, the Company incurred $19.2 million of employee severance and related benefit costs associated with the 2010, 2009 and 2008 cost savings initiatives, which affected 1,044 employees. The Company has paid $17.2 million in cash related to these cost savings initiatives.

Changes in the restructuring accruals during the first nine months of 2010 were as follows:


*In thousands*	2010 Initiatives			2009 Initiatives			2008 Initiatives			Total
Balance at January 2, 2010	$	—		$	3,103		$	62		$	3,165
Restructuring charges		2,830			355			—			3,185
Severance and related benefits paid		(1,536	)		(2,735	)		(62	)		(4,333	)

Balance at October 2, 2010	$	1,294		$	723		$	—		$	2,017

The Company expects the majority of the remaining severance and related benefits associated with the 2010 and 2009 initiatives to be paid by the end of 2011.

5.	Acquisitions

2010 Acquisitions

On February 1, 2010, the Company purchased all of the outstanding common stock of Rock Creek Athletics, Inc. (“Rock Creek”) for a total purchase price of $5.4 million, including $4.7 million paid in cash at closing and subsequent working capital adjustment, and $0.7 million related to a contingent consideration arrangement subject to Rock Creek achieving a certain revenue target through December 2010 to be paid in March 2011. Rock Creek is a producer of varsity jackets and is complementary to the Company’s awards and team jackets business. The results of the acquired Rock Creek operations are reported as part of the Scholastic segment from the date of acquisition. None of the goodwill or intangible assets will be amortized for tax purposes.

On April 21, 2010, the Company announced it had acquired, through a wholly owned subsidiary of Jostens, approximately 96 percent of the issued and outstanding common shares of Intergold Ltd. (“Intergold”) in connection with a cash offer to acquire all of the issued and outstanding common shares of Intergold. The Company subsequently exercised its

right to acquire the remaining common shares pursuant to the compulsory acquisition provisions of the Business Corporations Act (Alberta). The total purchase price of $5.9 million included $4.4 million paid in cash at closing and $1.5 million of assumed debt. Intergold designs, manufactures and sells precious and non-precious metal custom recognition and fashion jewelry, including for the scholastic and champion sports segments. The results of the acquired Intergold operations are reported as part of the Scholastic segment from the date of acquisition. None of the goodwill or intangible assets will be amortized for tax purposes.

On July 13, 2010, the Company acquired certain assets of Daden Group, Inc. (a producer of varsity jackets under the DeLong brand) (the “Daden Assets”). The total purchase price of $0.8 million was paid in cash at closing, inclusive of $0.2 million from an earn-out provision, subject to a working capital adjustment. The results of the acquired operations are reported as part of the Scholastic segment from the date of acquisition. The estimated fair value of the identifiable intangible assets, which relate solely to customer relationships, is $0.3 million and will be amortized over a two-year period. There was no goodwill recognized as a result of this acquisition.

The aggregate cost of the acquisitions was allocated to the tangible and intangible assets acquired and liabilities assumed based upon their relative fair values as of the date of the acquisition.

The allocation of the purchase price for the Rock Creek, Intergold and Daden acquisitions was as follows:


*In thousands*	October 2, 2010
Current assets	$	3,242
Property, plant and equipment		1,104
Intangible assets		5,920
Goodwill		4,088
Long-term assets		2,486
Current liabilities		(2,772	)
Long-term liabilities		(1,884	)

	$	12,184

In connection with the purchase accounting related to the acquisitions of Rock Creek, Intergold and the Daden Assets, the intangible assets and goodwill approximated $10.0 million and consisted of:


*In thousands*	October 2, 2010
Customer relationships	$	5,437
Trademarks (definite lived)		483
Goodwill		4,088

	$	10,008

Customer relationships for the Rock Creek, Intergold, and Daden Assets acquisitions are being amortized on a straight line basis over a three-, ten- and two-year period, respectively. Trademarks related to the Intergold acquisition are being amortized on a straight line basis over a 20 year period.

2009 Acquisition

On July 22, 2009, the Company acquired certain assets of Rennoc Corporation (“Rennoc”), a privately-held company located in Vineland, New Jersey. The purchase price of the assets acquired was approximately $2.3 million. Rennoc was a producer of letter jackets and sports apparel. The results of the acquired Rennoc operations are reported as part of the Scholastic segment from the date of acquisition. The estimated fair value of the identifiable intangible assets, which related solely to customer relationships, is $0.7 million and will be amortized over a two-year period. There was no goodwill recognized as a result of this acquisition.

These acquisitions, both individually and in the aggregate, are not considered material to the Company’s results of operations, financial position or cash flows.

6.	Other Comprehensive (Loss) Income

The following amounts were included in determining comprehensive (loss) income for Holdings as of the dates indicated:


	Three months ended						Nine months ended
*In thousands*	October 2, 2010			October 3, 2009			October 2, 2010			October 3, 2009
Net (loss) income	$	(44,979	)	$	(8,090	)	$	30,798		$	61,858
Change in cumulative translation adjustment		744			205			(145	)		966
Pension and other postretirement benefit plans, net of tax		(147	)		(151	)		(439	)		(453	)

Comprehensive (loss) income	$	(44,382	)	$	(8,036	)	$	30,214		$	62,371

The following amounts were included in determining comprehensive (loss) income for Visant as of the dates indicated:


	Three months ended						Nine months ended
*In thousands*	October 2, 2010			October 3, 2009			October 2, 2010			October 3, 2009
Net (loss) income	$	(21,568	)	$	828		$	76,067		$	89,402
Change in cumulative translation adjustment		744			205			(145	)		966
Pension and other postretirement benefit plans, net of tax		(147	)		(151	)		(439	)		(453	)

Comprehensive (loss) income	$	(20,971	)	$	882		$	75,483		$	89,915

7.	Accounts Receivable and Inventories

Net accounts receivable were comprised of the following:


*In thousands*	October 2, 2010			January 2, 2010
Trade receivables	$	135,578		$	125,870
Allowance for doubtful accounts		(5,209	)		(5,085	)
Allowance for sales returns		(4,796	)		(7,511	)

Accounts receivable, net	$	125,573		$	113,274

Inventories were comprised of the following:


*In thousands*	October 2, 2010		January 2, 2010
Raw materials and supplies	$	39,704	$	36,091
Work-in-process		24,641		35,456
Finished goods		25,839		31,202

Inventories	$	90,184	$	102,749

Precious Metals Consignment Arrangement

The Company has a precious metals consignment arrangement with a major financial institution whereby it currently has the ability to obtain up to the lesser of a certain specified quantity of precious metals and $45.0 million in dollar value in consigned inventory. As required by the terms of this agreement, the Company does not take title to consigned inventory until payment. Accordingly, the Company does not include the value of consigned inventory or the corresponding liability in its financial statements. The value of consigned inventory at October 2, 2010 and January 2, 2010 was $31.8 million and $27.7 million, respectively. The agreement does not have a stated term, and it can be terminated by either party upon 60 days written notice. Additionally, the Company expensed consignment fees related to the facility of $0.3 million and $0.1 million for the three-month periods ended October 2, 2010 and October 3, 2009 respectively. The consignment fees expensed for the nine-months ended October 2, 2010 and October 3, 2009 were $0.7 and $0.4 million, respectively. The obligations under the consignment agreement are guaranteed by Visant.

8.	Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the Company’s own credit risk.

The Fair Value Measurements and Disclosures authoritative guidance expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

•

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

•

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

The Company does not have financial assets or financial liabilities that are currently measured and reported on the balance sheet on a fair value basis except as noted in Note 11, Derivative Financial Instruments and Hedging Activities.

In addition to financial assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record non-financial assets and liabilities at fair value on a nonrecurring basis. During the nine months ended October 2, 2010, assets that were recorded at fair value on a nonrecurring basis were as a result of impairment charges. Long-lived assets were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. For the nine-month period ended October 2, 2010, long-lived assets with a carrying amount of $0.2 million exceeded the expected cash flows and were written down to their fair value of $0, resulting in an impairment charge of $0.2 million. The following table provides information by level for non-financial assets and liabilities that were measured at fair value during 2010 on a nonrecurring basis.

Fair Value

Fair Value Measurements Using

Quoted Prices in Active
Market for Identical Assets
Level 1

Significant Other
Observable Input
Level 2

Significant
Unobservable
Inputs
Level 3

Total
Loss

In thousands

October 2,
2010

Long-lived assets

—

198

In addition to the methods and assumptions the Company uses to record the fair value of financial and non-financial instruments as discussed above, the Company used the following methods and assumptions to estimate the fair value of its financial instruments, which are not recorded at fair value on the balance sheet as of October 2, 2010. As of October 2, 2010, the fair value of the term loan B facility under Visant’s senior secured credit facilities was estimated based on quoted market prices for comparable instruments. The fair value of the term loan B facility, with a principal amount of $1,250.0 million, approximated $1,258.3 million. As of October 2, 2010, the fair value of the Visant 10.00% senior notes due 2017 (the “New Senior Notes”) was estimated based on quoted market prices. The fair value of the New Senior Notes, with a principal amount of $750.0 million, approximated $774.4 million.

As of January 2, 2010, the fair value of each of Holdings’ then outstanding senior discount notes and senior notes and Visant’s then outstanding senior subordinated notes was based on respective quoted market prices and the fair value of the then outstanding term loan C facility was estimated based on quoted market prices for comparable instruments. The fair value of such Holdings’ senior discount notes, with a principal amount of $247.2 million at maturity, approximated $255.5 million at January 2, 2010. The fair value of such Holdings’ senior notes, with a principal amount of $350.0 million, approximated $361.4 million at January 2, 2010. The fair value of such Visant senior subordinated notes, with a principal amount of $500.0 million, approximated $503.1 million at January 2, 2010. The fair value of such term loan C facility, with a principal amount of $316.5 million, approximated $310.2 million at January 2, 2010. Refer to Note 10, Debt, for additional disclosure in relation to the debt instruments and the refinancing of our debt in September 2010.

9.	Goodwill and Other Intangible Assets

The change in the carrying amount of goodwill is as follows:


*In thousands*	Scholastic			Memory Book		Marketing and Publishing Services		Total
Balance at January 2, 2010	$	305,806		$	391,553	$	306,958	$	1,004,317
Goodwill additions during the period		4,088			—		—		4,088
Reduction in goodwill		—			—		—		—
Currency translation		(14	)		37		—		23

Balance at October 2, 2010	$	309,880		$	391,590	$	306,958	$	1,008,428

Additions to goodwill during the nine months ended October 2, 2010 relate to the Rock Creek and Intergold acquisitions.

Information regarding other intangible assets is as follows:


			October 2, 2010							January 2, 2010
*In thousands*	Estimated useful life		Gross carrying amount		Accumulated amortization			Net		Gross carrying amount		Accumulated amortization			Net
School relationships		10 years	$	330,000	$	(237,069	)	$	92,931	$	330,000	$	(212,414	)	$	117,586
Internally developed software		2 to 5 years		9,800		(9,800	)		—		9,800		(9,800	)		—
Patented/unpatented technology		3 years		20,289		(18,351	)		1,938		20,211		(17,692	)		2,519
Customer relationships		4 to 40 years		161,340		(36,237	)		125,103		162,789		(33,808	)		128,981
Trademarks (definite lived)		20 years		480		(10	)		470		—		—			—
Restrictive covenants		3 to 10 years		66,458		(38,179	)		28,279		81,009		(47,945	)		33,064

				588,367		(339,646	)		248,721		603,809		(321,659	)		282,150
Trademarks		Indefinite		268,480		—			268,480		268,480		—			268,480

			$	856,847	$	(339,646	)	$	517,201	$	872,289	$	(321,659	)	$	550,630

Amortization expense related to other intangible assets was $14.2 million and $14.6 million for the three months ended October 2, 2010 and October 3, 2009, respectively. For the nine months ended October 2, 2010 and October 3, 2009, amortization expense related to other intangible assets was $43.0 million and $43.4 million, respectively. During the nine-month period ended October 2, 2010, approximately $25.7 million of fully amortized customer relationships and restrictive covenants were written off.

Based on intangible assets in service as of October 2, 2010, estimated amortization expense for the remainder of fiscal 2010 and each of the five succeeding fiscal years is $14.1 million, $54.5 million, $51.5 million, $33.4 million, $12.8 million and $12.0 million, respectively.

10.

Debt

Debt consists of the following:


*In thousands*	October 2, 2010		January 2, 2010
Holdings:
Senior discount notes, 10.25% fixed rate, with semi-annual interest payments of $12.7 million, paid in full September 2010	$	—	$	247,200
Senior notes, 8.75% fixed rate, with semi-annual interest payments of $15.3 million, paid in full September 2010		—		350,000
Visant:
Borrowings under senior secured credit facility:
Term Loan C, variable rate, 2.23% at January 2, 2010 with semi-annual interest payments, paid in full September 2010		—		316,500
Senior subordinated notes, 7.625% fixed rate, with semi-annual interest payments of $19.1 million, paid in full September 2010		—		500,000
Borrowings under senior secured credit facilities, net of original issue discount of $24.9 million:
Term Loan B, variable rate, 7.00% at October 2, 2010 with amortization of principal and interest payments due quarterly, principal due and payable at maturity- December 2016		1,225,120		—
Senior notes, 10.00% fixed rate, with semi-annual interest payments of $37.5 million in April and October, principal due and payable at maturity- October 2017		750,000		—

		1,975,120		1,413,700
Borrowings under senior secured revolving credit facilities		92,500		—
Borrowings related to equipment financing arrangements		7,651		1,069
Capital lease obligations		8,855		8,920

Total Debt	$	2,084,126	$	1,423,689

The 2010 Refinancing; Debt Before the 2010 Refinancing

In connection with the Transactions, Visant entered into senior secured credit facilities in an aggregate amount of $1,270 million, originally consisting of $150.0 million of a term loan A facility, an $870.0 million term loan B facility and $250.0 million of revolving credit facilities (the “Old Credit Facilities”), and issued $500.0 million aggregate principal amount of 7.625% senior subordinated notes due 2012 (the “Senior Subordinated Notes”). Also in connection with the Transactions, Jostens, Von Hoffmann and Arcade repaid their existing indebtedness having an aggregate face value of $1,392.6 million, including the redemption value of certain remaining redeemable preferred stock. All outstanding obligations under the term loan A facility were repaid by the end of fiscal 2005. In 2007, we prepaid $400.0 million of scheduled payments under the term loan C facility with the proceeds generated from the sale of the Von Hoffmann businesses. With these pre-payments, the outstanding balance under the term loan C facility was reduced to $316.5 million. On May 28, 2009, we entered into an amendment which resulted in a reduction of the revolving credit commitments from an aggregate of $250.0 million to an aggregate of $100.0 million. The Old Credit Facilities were replaced by the New Credit Facilities described below.

On December 2, 2003, Holdings issued $247.2 million in principal amount at maturity of 10.25% senior discount notes due 2013 (the “Senior Discount Notes”) for gross proceeds of $150.0 million. At the end of the first quarter of 2006, Holdings issued $350.0 million of 8.75% senior notes due 2013 (the “Senior Notes” and together with the Senior Subordinated Notes and the Senior Discount Notes, the “Old Notes”), with settlement on April 4, 2006.

In connection with the refinancing consummated by Visant, prior to the end of our fiscal third quarter 2010, on September 22, 2010 (the “2010 Refinancing”), Visant sold in a private placement to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act, $750.0 million aggregate principal amount of 10.00% Senior Notes due 2017 (the “New Senior Notes”) and entered into a $1,250.0 million term loan B facility maturing in 2016 (the “New Term Loan Facility”), and a $175.0 million revolving credit facility expiring in 2015 (the “New Revolving Credit Facility, and together with the New Term Loan Facility, the “New Credit Facilities”). A portion of the proceeds from the New Term Loan Facility and the offering of the New Senior Notes were used by Visant to (1) repay in full the Old Credit Facilities, or (2) repurchase directly or through Holdings the outstanding Senior Discount Notes, Senior Notes and Senior Subordinated Notes pursuant to tender offers made in respect of the Old Notes or by satisfaction and discharge of the Old Notes directly or through Holdings by delivering to the applicable trustee, for the respective series of Old Notes in trust, amounts sufficient to pay the redemption price, plus accrued and unpaid interest up to, but not including, the date of redemption pursuant to notices of redemption given by Holdings or Visant, as applicable, with respect to the respective series of Old Notes.

Debt After the 2010 Refinancing

The New Credit Facilities are among Visant, as borrower, Jostens Canada Ltd. (“Jostens Canada”), as Canadian borrower, Visant Secondary Holdings Corp. (“Visant Secondary”), as guarantor, the lenders from time to time parties thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent, and Credit Suisse AG, Toronto Branch, as Canadian administrative agent, for the New Term Loan Facility in an aggregate amount of $1,250.0 million, the New Revolving Credit Facility consisting of a $165.0 million U.S. revolving credit facility available to Visant and its subsidiaries and a $10.0 million Canadian revolving credit facility available to Jostens Canada. The borrowing capacity under the New Revolving Credit Facility can also be used for the issuance of up to $35.0 million of letters of credit (inclusive of a Canadian letter of credit facility). The New Credit Facilities allow Visant, subject to certain conditions, to incur additional term loans under the New Term Loan Credit Facility, or under a new term facility, in either case in an aggregate principal amount of up to $300.0 million, which additional term loans will have the same security and guarantees as the New Term Loan Credit Facility. Amounts borrowed under the New Term Loan Credit Facility that are repaid or prepaid may not be reborrowed.

Visant’s obligations under the New Credit Facilities are unconditionally and irrevocably guaranteed jointly and severally by Visant Secondary and all of Visant’s material current and future wholly-owned domestic subsidiaries. The obligations of Jostens Canada under the New Credit Facilities are unconditionally and irrevocably guaranteed jointly and severally by Visant Secondary, Visant, Visant’s material current and future domestic wholly-owned subsidiaries and by any future Canadian subsidiaries of Visant. Visant’s obligations under the New Credit Facilities, and the guarantees of those obligations (as well as cash management obligations and any interest hedging or other swap agreements, in each case with lenders or affiliates of lenders), are secured by substantially all of Visant’s assets and substantially all of the assets of Visant Secondary and Visant’s material current and future domestic subsidiaries, including but not limited to:

•

all of Visant’s capital stock and the capital stock of each of Visant’s existing and future direct and indirect subsidiaries, except that with respect to foreign subsidiaries such lien and pledge is limited to 65% of the capital stock of “first-tier” foreign subsidiaries (and excludes the stock of all other foreign subsidiaries); and

•

substantially all of Visant’s material existing and future domestic subsidiaries’ tangible and intangible assets (subject to an exception for up to $125.0 million of assets).

The obligations of Jostens Canada under the New Credit Facilities, and the guarantees of those obligations, are secured by the collateral referred to in the prior paragraph and substantially all of the tangible and intangible assets of Jostens Canada and any future Canadian subsidiaries of Visant.

The New Credit Facilities require that Visant not exceed a maximum total leverage ratio, that it meet a minimum interest coverage ratio and that it abide by a maximum capital expenditure limitation. In addition, the New Credit Facilities contain certain restrictive covenants which, among other things, limit Visant’s and its subsidiaries’ ability to incur additional indebtedness and liens, pay dividends, prepay subordinated and senior unsecured debt, make investments, merge or consolidate, change the business, amend the terms of its subordinated and senior unsecured debt, engage in certain dispositions of assets, enter into sale and leaseback transactions, engage in certain transactions with affiliates and engage in certain other activities customarily restricted in such agreements. It also contains certain customary events of default, subject to applicable grace periods, as appropriate.

The dividend restrictions under the New Credit Facilities apply only to Visant and Visant Secondary, and essentially prohibit all dividends other than (1) dividends used by Holdings to repurchase shares under management and employee compensation plans, (2) other dividends so long as the amount thereof does not exceed $50.0 million plus an additional amount based on Visant’s excess cash flow (subject to a senior secured leverage-based incurrence test) and the amount of any capital contributions received by Visant after the effective date of the New Credit Facilities and (3) pursuant to other customary exceptions, including redemptions of stock made with other, substantially similar stock or with proceeds of concurrent issuances of substantially similar stock.

The borrowings under the New Credit Facilities bear a variable interest rate based upon either LIBOR or an alternative base rate (“ABR”) based upon the greatest of (1) the federal funds effective rate plus 0.5%, (2) the prime rate and (3) LIBOR plus 1.00%. The interest rate per year on the New Term Loan Credit Facility is ABR or LIBOR plus the applicable spread. The New Term Loan Credit Facility amortizes on a quarterly basis commencing in December 2010 and matures in December 2016 with amortization prior to the maturity date to be at 1.0% of the initial principal amount per year. In addition, transaction fees and related costs of $35.2 million associated with the New Credit Facilities are capitalized and amortized as interest expense over the life of the New Credit Facilities.

The interest rate per year on the New Revolving Credit Facility is LIBOR plus 5.25% or ABR plus 4.25% (or, in the case of Canadian dollar denominated loans, the bankers’ acceptance discount rate plus 5.25% or the Canadian prime rate plus 4.25% (subject to a floor of the one-month Canadian Dealer Offered Rate plus 1.0%), in each case, with step-downs based on the total leverage ratio.

To the extent that the interest rates on our borrowings under the New Credit Facilities are determined by reference to LIBOR, the LIBOR component of such interest rates is subject to a LIBOR floor of 1.75%.

The New Term Loan Credit Facility is subject to a 1% prepayment premium in the event of certain repricing events within one year of the effective date of the New Credit Facilities.

Visant pays a commitment fee to the lenders under the New Revolving Credit Facility in respect of unutilized commitments thereunder, such commitment fee being subject to a decrease should Visant’s leverage ratio decrease below a certain designated level. Visant also pays customary letter of credit fees under the New Revolving Credit Facility.

On September 22, 2010, in connection with the private placement of the New Senior Notes, Visant and the U.S. Subsidiary Guarantors (as defined below) entered into an Indenture among Visant, the U.S. Subsidiary Guarantors and U.S. Bank National Association, as trustee (the “Indenture”). The New Senior Notes are guaranteed on a senior unsecured basis by each of Visant’s existing and future domestic wholly-owned subsidiaries (“U.S. Subsidiary Guarantors”). Interest on the notes accrues at the rate of 10.00% per annum and is payable semi-annually in arrears on April 1 and October 1 commencing on April 1, 2011, to holders of record on the immediately preceding March 15 and September 15.

The New Senior Notes are senior unsecured obligations of Visant and the U.S. Subsidiary Guarantors and rank (i) equally in right of payment with any existing and future senior unsecured indebtedness of Visant and the U.S. Subsidiary Guarantors; (ii) senior to all of Visant’s and the U.S. Subsidiary Guarantors’ existing and any of Visant’s and the U.S. Subsidiary Guarantors’ future subordinated indebtedness; (iii) effectively junior to all of Visant’s existing and future secured obligations and the existing and future secured obligations of the U.S. Subsidiary Guarantors, including indebtedness under the New Credit Facilities, to the extent of the value of the assets securing such obligations; and (iv) structurally subordinated to all liabilities of Visant’s existing and future subsidiaries that do not guarantee the New Senior Notes.

The New Senior Notes are redeemable, in whole or in part, at any time: (i) on or after October 1, 2013, at a redemption price equal to 107.50% of the principal amount thereof; (ii) on or after October 1, 2014, at a redemption price equal to 105.00% of the principal amount thereof; (iii) on or after October 1, 2015, at a redemption price equal to 102.50% of the principal amount thereof; and (iv) on or after October 1, 2016 and thereafter, at a redemption price equal to 100.00% of the principal amount thereof, plus, in each case, accrued and unpaid interest and additional interest, if any. In addition, Visant may redeem up to 35% of the aggregate of the principal amount of the New Senior Notes at any time on or prior to October 1, 2013 with the net cash proceeds from certain equity offerings at a price equal to 110.00% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. Visant may also redeem some or all of the notes before October 1, 2013 at a redemption price equal to 100% of the principal amount thereof plus a “make-whole” premium, together with accrued and unpaid interest and additional interest, if any. Upon the occurrence of certain change of control events, Visant must offer to purchase the New Senior Notes at 101% of their principal amount, plus accrued and unpaid interest and additional interest, if any. In addition, transaction fees and related costs of $15.8 million associated with the New Senior Notes are capitalized and amortized as interest expense over the life of the New Senior Notes.

The Indenture contains restrictive covenants that limit among other things, the ability of Visant and its restricted subsidiaries to (i) incur additional indebtedness or issue certain preferred stock, (ii) pay dividends on or make other distributions or repurchase capital stock or make other restricted payments, (iii) make investments, (iv) limit dividends or other payments by restricted subsidiaries to Visant or other restricted subsidiaries, (v) create liens on pari passu or subordinated indebtedness without securing the notes, (vi) sell certain assets or merge with or into other companies or otherwise dispose of all or substantially all of Visant’s assets, (vii) enter into certain transactions with affiliates and (viii) designate Visant’s subsidiaries as unrestricted subsidiaries. The Indenture also contains customary events of default, including the failure to make timely payments on the New Senior Notes or other material indebtedness, the failure to satisfy certain covenants and specified events of bankruptcy and insolvency.

In connection with the consummation of the offering of the New Senior Notes, Visant and the U.S. Subsidiary Guarantors also entered into an exchange and registration rights agreement (the “Registration Rights Agreement”) among Visant, the U.S. Subsidiary Guarantors and the representatives for the initial purchasers named therein, relating to, among other things, the exchange offer for the New Senior Notes and the related guarantees. Pursuant to the Registration Rights Agreement, Visant and the U.S. Subsidiary Guarantors have agreed to use all commercially reasonable efforts to register with the Securities and Exchange Commission notes and guarantees having substantially identical terms as the New Senior Notes (except for provisions relating to the transfer restrictions and payment of additional interest, which would otherwise apply in certain circumstances relating to Registration Defaults, as defined and described below) and the related guarantees as part of an offer to exchange such registered notes for the New Senior Notes (the “Exchange Offer”). Visant and the U.S. Subsidiary Guarantors are expected to cause the Exchange Offer to be completed or, if required under special circumstances, to have a shelf registration statement declared effective, within 240 days after the original issue date of the New Senior Notes. If this obligation is not satisfied (a “Registration Default”), the annual interest rate on the New Senior Notes will increase by $0.05 per week per $1,000 principal amount of the New Senior Notes for the first 90-day period during which a Registration Default continues, and by an additional $0.05 per week per $1,000 principal amount of the New Senior Notes with respect to each subsequent 90-day period, up to a maximum amount of additional interest for all Registration Defaults of $0.20 per week per $1,000 principal amount of the New Senior Notes. If the Registration Default is corrected, the applicable interest rate on such New Senior Notes will revert to the original level.

As of October 2, 2010, there were $92.5 million of short-term borrowings outstanding and $13.3 million in the form of outstanding letters of credit leaving $69.2 million available for borrowing under the New Revolving Credit Facility. The Company is obligated to pay commitment fees of 0.75% on the unused portion of the New Revolving Credit Facility, with step-down to 0.50% if the total leverage ratio is below 5.00 to 1.00.

As of October 2, 2010, the Company was in compliance with all covenants under its material debt obligations.

11.

Derivative Financial Instruments and Hedging Activities

The Company’s involvement with derivative financial instruments is limited principally to managing well-defined interest rate and foreign currency exchange risks. Forward foreign currency exchange contracts may be used to hedge the impact of currency fluctuations primarily on inventory purchases denominated in Euros. The Company has entered into foreign currency forward contracts for certain forecasted transactions denominated in Euros in order to manage the volatility associated with these transactions and limit the Company’s exposure to currency fluctuations between the contract date and ultimate settlement. The foreign currency forward contracts were not designated as hedges, and accordingly, the fair value gains or losses from these foreign currency derivatives are recognized currently in the Condensed Consolidated Statements of Operations. The aggregate notional value of the forward contracts at October 2, 2010 was $1.9 million. The fair value of foreign currency forward contracts was determined to be Level 2 under the fair value hierarchy and is valued using market exchange rates. The Company did not enter into any such transactions during the fiscal year ended January 2, 2010.

At October 2, 2010, the total fair value of the Company’s forward contracts and the accounts in the Condensed Consolidated Balance Sheets in which the fair value amounts are included are shown below:

In thousands

Fair Value of Derivative Instruments Not
Designated as Hedging Instruments

Classification in the Consolidated
Consolidated Balance Sheets

October 2, 2010

January 2, 2010

Foreign currency forward contracts

Prepaid expenses and other current assets

231

—

The pre-tax gains related to derivatives not designated as hedges recognized in the Condensed Consolidated Statements of Operations for the three and nine months ended October 2, 2010 and October 3, 2009 are shown below:


*In thousands*
*Gain on Derivatives Not* *Designated as Hedges*	*Classification in Condensed Consolidated* *Statement Of Operations*	Three months ended
*Gain on Derivatives Not* *Designated as Hedges*		October 2, 2010		October 3, 2009
Foreign currency forward contracts	Selling, General and Administrative Expenses	$	151	$	—

*In thousands*
*Gain on Derivatives Not* *Designated as Hedges*	*Classification in Condensed Consolidated* *Statement Of Operations*	Nine months ended
*Gain on Derivatives Not* *Designated as Hedges*		October 2, 2010		October 3, 2009
Foreign currency forward contracts	Selling, General and Administrative Expenses	$	231	$	—

12.

Commitments and Contingencies

Forward Purchase Contracts

The Company is subject to market risk associated with changes in the price of precious metals. To mitigate the commodity price risk, the Company may from time to time enter into forward contracts to purchase gold, platinum and silver based upon the estimated ounces needed to satisfy projected customer demand. As of October 2, 2010, the Company had purchase commitments totaling $11.9 million with delivery dates occurring through 2011. The forward purchase contracts are considered normal purchases and therefore are not subject to the requirements of derivative accounting.

Environmental

Our operations are subject to a variety of federal, state, local and foreign laws and regulations governing emissions to air, discharge to water, the generation, handling, storage, transportation, treatment and disposal of hazardous substances and other materials, and employee health and safety matters, and from time to time the Company may be involved in remedial and compliance efforts.

Legal Proceedings

In communications with U.S. Customs and Border Protection (“U.S. Customs”), we learned of an alleged inaccuracy of the tariff classification for certain of Jostens’ imports from Mexico. Jostens promptly filed with U.S. Customs a voluntary disclosure to limit its monetary exposure. The effect of these tariff classification errors was that back duties and fees (or “loss of revenue”) may be owed on certain imports. Additionally, U.S. Customs may impose interest and penalties on the loss of revenue, if any was determined. A review of Jostens’ import practices revealed that, during the relevant period, the subject merchandise qualified for duty-free tariff treatment under the North American Free Trade Agreement (“NAFTA”), in which case there should be no loss of revenue or interest payment owed to U.S. Customs. U.S. Customs’ allegations indicated that Jostens committed a technical oversight in the classification used by Jostens in claiming the preferential tariff treatment. Through its prior disclosure to U.S. Customs, Jostens addressed this technical oversight and asserted that the merchandise did in fact qualify for duty-free tariff treatment under NAFTA and that there is no associated loss of revenue. In a series of communications received from U.S. Customs during the period of December 2006 through May 2007, Jostens learned that U.S. Customs was disputing the validity of Jostens’ prior disclosure and asserting a loss of revenue in the amount of $2.9 million for duties owed on entries made in 2002 and 2003. In a separate penalty notice, U.S. Customs calculated a monetary penalty in the amount of approximately $5.8 million (two times the alleged loss of revenue). Jostens filed various petitions with U.S. Customs disputing U.S. Customs’ claims and advancing arguments to support that no loss of revenue or penalty should be issued against us, or in the alternative, that any penalty based on a purely technical violation should be reduced to a nominal fixed amount reflective of the nature of the violation. In response to Jostens’ petitions, U.S. Customs withdrew its penalty notice but restated its loss of revenue demand in order to close out Jostens’ prior disclosure. In response to this demand, Jostens filed a supplement to its prior disclosure presenting arguments for U.S. Customs’ consideration supporting its determination that the subject imports at the time of entry were entitled to duty-free status and extended an offer in compromise for U.S. Customs’ consideration to resolve the matter. In order to obtain the benefits of the orderly continuation and conclusion of administrative proceedings, Jostens agreed to waivers of the statute of limitations with respect to the entries made in 2002 and 2003 that otherwise would have expired. Based on recent settlement discussions with U.S. Customs, we tendered an offer in compromise, including the remission of funds to Customs to satisfy the settlement, in final resolution of this matter and certain other proceedings with U.S. Customs. The offer in compromise has been accepted by U.S. Customs Headquarters and the matter is closed.

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

13.

Income Taxes

The Company has recorded an income tax provision for the nine months ended October 2, 2010 based on its best estimate of the consolidated effective tax rate applicable for the entire year. The estimated full-year consolidated effective tax rates for 2010 are 49.7% and 42.1% for Holdings and Visant, respectively, before consideration of the effects of $0.4 million of net tax and interest accruals considered a current period tax expense. The Company’s effective tax rate increased

significantly as a result of the 2010 Refinancing and is described in Note 10, Debt. Redemption of Holdings’ Senior Discount Notes resulted in $97.2 million of tax deferred original issue discount becoming currently deductible. Along with the impact of certain other refinancing expenses in connection with the 2010 Refinancing, Holdings is expected to report a consolidated federal taxable loss for 2010 and, accordingly, will not be eligible for the favorable domestic manufacturing deduction. The tax rate increase was also caused by unfavorable state income tax effects resulting from the distribution of profits and losses among the Company’s subsidiaries.

The net current period tax expense includes a $0.6 million net tax benefit to reflect the decision by the Canada Revenue Agency (“CRA”) during 2010 to withdraw its transfer price assessment for the taxable periods 1996 and 1997. The net current period tax expense also includes $0.7 million of net tax and interest expense accruals for unrecognized tax benefits and $0.3 million of other net income tax adjustments considered a current period tax expense. The combined effect of the annual estimated consolidated tax rates and the net current period tax adjustments resulted in effective tax rates of 50.3% and 42.4% for Holdings and Visant, respectively, for the nine-month period ended October 2, 2010.

For the comparable nine-month period ended October 3, 2009, the effective rates of income tax expense for Holdings and Visant were 37.8% for both companies. The increase in effective income tax rates from 2009 to 2010 was due to the loss of the deduction for domestic manufacturing as a result of the redemption of the Senior Discount Notes as part of the 2010 Refinancing in September 2010 and due to state income tax effects resulting from the distribution of profits and losses among the Company’s subsidiaries.

In May 2009 and February 2010, President Obama’s administration proposed significant changes to U.S. tax laws for U.S. corporations doing business outside the United States, including a proposal to defer certain tax deductions allocable to non-U.S. earnings until those earnings are repatriated. It is unclear whether the proposed tax changes will be enacted or, if enacted, what the ultimate scope of the changes will be. If enacted as currently proposed, the Company does not believe the changes will have a material adverse tax effect on its results because the Company’s repatriation practice is to distribute substantially all of its non-U.S. earnings on an annual basis.

During the nine–month period ended October 2, 2010, the Company provided net tax and interest accruals for unrecognized tax benefits of $0.7 million consisting of $0.9 million of current income tax expense and $0.2 million of deferred income tax benefit. At October 2, 2010, the Company’s unrecognized tax benefit liability totaled $21.0 million, including interest and penalty accruals of $3.3 million. Substantially all of this liability was included in non-current liabilities except for $0.3 million which was included in income taxes payable. At January 2, 2010, the Company’s unrecognized tax benefit liability totaled $20.3 million, including interest and penalty accruals of $2.7 million.

The Company’s income tax filings for 2005 to 2009 are subject to examination in the U.S. federal tax jurisdiction. During 2009, the Company agreed to certain audit adjustments in connection with the Internal Revenue Service (“IRS”) examination of the Company’s tax filings for 2005 and 2006. The settlement resulted in only minor adjustments. The IRS also proposed certain transfer price adjustments for which the Company disagreed in order to preserve its right to seek relief from double taxation with the applicable U.S. and French tax authorities. The Company is also subject to examination in state and certain foreign tax jurisdictions for the 2004 to 2009 periods, none of which was individually material. During the nine months ended October 2, 2010, the Company was notified that the CRA had withdrawn its original transfer price assessment for years 1996 and 1997 and would refund approximately $0.6 million of tax and interest previously paid by the Company. As a result of the CRA’s decision, the Company is no longer pursuing efforts to seek relief from double taxation. The Company’s Canadian income tax filings for 2007 and 2008 are currently under examination by the CRA. Though subject to uncertainty, the Company believes it has made appropriate provisions for all outstanding issues for all open years and in all applicable jurisdictions. Due to the potential for resolution of the Company’s current federal examination and the expiration of the related statute of limitations, it is reasonably possible that the Company’s gross unrecognized tax benefit liability could change within the next twelve months by a range of zero to $9.1 million.

14.

Benefit Plans

Pension and Other Postretirement Benefit Plans

Net periodic benefit income for pension and other postretirement benefit plans is presented below:


	Pension benefits						Postretirement benefits
	Three months ended						Three months ended
*In thousands*	October 2, 2010			October 3, 2009			October 2, 2010			October 3, 2009
Service cost	$	1,249		$	1,212		$	2		$	2
Interest cost		4,364			4,324			26			31
Expected return on plan assets		(6,368	)		(6,471	)		—			—
Amortization of prior service cost		(186	)		(186	)		(69	)		(69	)
Amortization of net actuarial loss		9			—			5			6

Net periodic benefit income	$	(932	)	$	(1,121	)	$	(36	)	$	(30	)


	Pension benefits						Postretirement benefits
	Nine months ended						Nine months ended
*In thousands*	October 2, 2010			October 3, 2009			October 2, 2010			October 3, 2009
Service cost	$	3,747		$	3,636		$	6		$	6
Interest cost		13,092			12,972			78			93
Expected return on plan assets		(19,104	)		(19,413	)		—			—
Amortization of prior service cost		(558	)		(558	)		(207	)		(207	)
Amortization of net actuarial loss		27			—			15			18

Net periodic benefit income	$	(2,796	)	$	(3,363	)	$	(108	)	$	(90	)

As of January 2, 2010, the Company did not expect to have an obligation to contribute to its qualified pension plans in 2010 due to the funded status of the plans. This expectation had not changed as of October 2, 2010, but the Company continues to monitor its obligation in light of market conditions. For the nine months ended October 2, 2010, the Company did not make any contributions to its qualified pension plans and contributed $1.7 million and $0.2 million to its non-qualified pension plans and postretirement welfare plans, respectively. The contributions to the non-qualified pension and the postretirement welfare plans were consistent with the amounts anticipated as of January 2, 2010.

15.

Stock-based Compensation

2003 Stock Incentive Plan

The 2003 Stock Incentive Plan (the “2003 Plan”) was approved by Holdings’ Board of Directors and was effective as of October 30, 2003. The 2003 Plan permits Holdings to grant key employees and certain other persons stock options and stock awards and provides for a total of 288,023 shares of common stock for issuance of options and awards to employees of Holdings and a total of 10,000 shares of common stock for issuance of options and awards to directors and other persons providing services to Holdings. As of October 2, 2010, there were 288,010 shares available for grant under the 2003 Plan. The maximum grant to any one person shall not exceed in the aggregate 70,400 shares. We do not currently intend to make any additional grants under the 2003 Plan. Option grants consist of “time options”, which vest and become exercisable in annual installments over the first five years following the date of grant, and/or “performance options”, which vest and become exercisable over the first five years following the date of grant at varying levels based on the achievement of certain EBITDA targets, and in any event by the eighth anniversary of the date of grant. The performance vesting includes certain carryforward provisions if targets are not achieved in a particular fiscal year and performance in a subsequent fiscal year satisfies cumulative performance targets, subject to certain conditions. Upon the occurrence of a “change in control” (as defined in the 2003 Plan), the unvested portion of any time option will immediately become vested and exercisable, and the vesting and exercisability of the unvested portion of any performance option may accelerate depending on the timing of the

change of control and return DLJMBP III’s equity investment in Holdings, all as provided under the 2003 Plan. A “change in control” under the 2003 Plan is defined as: (i) any person or other entity (other than any of Holdings’ subsidiaries), including any “person” as defined in Section 13(d)(3) of the Exchange Act, other than certain of the DLJMBP funds or affiliated parties thereof, becoming the beneficial owner, directly or indirectly, in a single transaction or a series of related transactions, by way of merger, consolidation or other business combination, of securities of Holdings representing more than 51% of the total combined voting power of all classes of capital stock of Holdings (or its successor) normally entitled to vote for the election of directors of Holdings or (ii) the sale of all or substantially all of the property or assets of Holdings to any unaffiliated person or entity other than one of Holdings’ subsidiaries is consummated. The Transactions did not constitute a change of control under the 2003 Plan. Options issued under the 2003 Plan expire on the tenth anniversary of the grant date. The shares underlying the options are subject to certain transfer and other restrictions set forth in a management stockholders agreement dated July 29, 2003, by and among Holdings and certain holders of the capital stock of Holdings. Participants under the 2003 Plan also agree to certain restrictive covenants with respect to confidential information learned in their employment and certain non-competition obligations in connection with their receipt of options. All outstanding options to purchase Holdings common stock continued following the closing of the Transactions.

2004 Stock Option Plan

In connection with the closing of the Transactions, we established the 2004 Stock Option Plan, which permits Holdings to grant key employees and certain other persons of Holdings and its subsidiaries various equity-based awards, including stock options and restricted stock. The plan, currently known as the Third Amended and Restated 2004 Stock Option Plan for Key Employees of Visant Holding Corp. and Subsidiaries (the “2004 Plan”), provides for the issuance of a total of 510,230 shares of Holdings Class A Common Stock. As of October 2, 2010, there were 116,036 shares available for grant under the 2004 Plan. Shares related to grants that are forfeited, terminated, cancelled or expire unexercised become available for new grants. Under his employment agreement, Mr. Marc L. Reisch, the Chairman of our Board of Directors and our Chief Executive Officer and President, received awards of stock options and restricted stock under the 2004 Plan. Additional members of management have also received grants under the 2004 Plan. Option grants consist of “time options”, which fully vested and became exercisable in annual installments through 2009 (for those options granted in 2004 and 2005), and/or “performance options”, which vest and become exercisable following the date of grant based upon the achievement of certain EBITDA and other performance targets, and in any event by the eighth anniversary of the date of grant. The performance vesting includes certain carryforward provisions if targets are not achieved in a particular fiscal year and performance in a subsequent fiscal year satisfies cumulative performance targets. Upon the occurrence of a “change in control” (as defined under the 2004 Plan), the unvested portion of any time option will immediately become vested and exercisable, and the vesting and exercisability of the unvested portion of any performance option may accelerate if certain EBITDA or other performance measures have been satisfied. A “change in control” under the 2004 Plan is defined as: (i) the sale (in one or a series of transactions) of all or substantially all of the assets of Holdings to an unaffiliated person; (ii) a sale (in one transaction or a series of transactions) resulting in more than 50% of the voting stock of Holdings being held by an unaffiliated person; (iii) a merger, consolidation, recapitalization or reorganization of Holdings with or into an unaffiliated person; in the case of each of clauses (i) through (iii) above, if and only if any such event results in the inability of the Sponsors, or any member or members of the Sponsors, to designate or elect a majority of Holdings’ Board of Directors (or the board of directors of the resulting entity or its parent company). The option exercise period is determined at the time of grant of the option but may not extend beyond the end of the calendar year that is ten calendar years after the date the option is granted. All stock options, restricted shares and any common stock received upon the exercise of such equity awards or with respect to which restrictions lapse are governed by a management stockholder’s agreement and a sale participation agreement. As of October 2, 2010, there were 283,606 options vested under the 2004 Plan and 2,000 options unvested and subject to future vesting.

On March 1, 2010 and September 22, 2010, stockholders/optionholders received extraordinary cash distributions in respect of their shares or options issued under the 2003 Plan or the 2004 Plan. See below under Common Stock for additional information regarding the extraordinary cash distributions.

2008 LTIP

During 2008, Holdings implemented long-term phantom share incentive arrangements with certain key employees (the “2008 LTIP”). Under these arrangements, the employee was granted a target award based on a specified number of phantom share units, which provided for vesting on the basis of performance or time (and continued employment).

No participants in the 2008 LTIP, other than Jostens participants, vested in or received payments with respect to any award under the 2008 LTIP. At the beginning of the fourth quarter of 2010, total payments of approximately $4.6 million were made to Jostens participants in respect of their vested awards under the 2008 LTIP.

2010 LTIP

During the first fiscal quarter of 2010, Holdings implemented long-term phantom share incentive arrangements with respect to certain key employees (the “2010 LTIP”). Under these arrangements, the applicable executive was granted a target award, based on a specified number of phantom share units, half of which vests on the basis of performance (and continued employment) and the other half of which vests on the basis of time (and continued employment), regardless of whether the respective performance target(s) are met. Except under certain conditions described below, if the respective performance or service target is not achieved, or the executive resigns or suffers a termination of employment by Holdings prior to the applicable date other than following a change in control, the applicable award is forfeited without payment. Each award also contains covenants with respect to confidentiality, noncompetition and nonsolicitation to which the executive is bound during his or her employment and for two years following termination of employment. The following summarizes the key terms of the various forms of 2010 LTIP awards.

Jostens. The awards granted to executives of our Jostens subsidiary are based on a two-year incentive period, and the performance award vests if Jostens achieves a trailing twelve months’ EBITDA target measured as of the last day of fiscal year 2011, subject to the applicable executive’s continued employment through such measurement date. The time award vests based solely on the basis of the applicable executive’s continued employment through the last day of fiscal year 2011.

In the case of the executive’s termination by Holdings without cause due to the elimination of the executive’s position as a result of a restructuring or due to the executive’s permanent disability or death, in each case occurring after fiscal year 2010 and prior to any change in control, 100% of the executive’s time award will vest and all other unvested awards will be forfeited without payment therefor. In the case of the executive’s termination by Holdings without cause or by the executive for good reason or due to the executive’s permanent disability or death within two years following a change in control and prior to the last day of fiscal year 2011, 100% of the executive’s time award will vest and (i) 50% of the executive’s performance award will vest if such termination occurs on or before the last day of fiscal year 2010, or (ii) 100% of the executive’s performance award will vest if such termination occurs after the last day of fiscal year 2010 but prior to the last day of fiscal year 2011.

Visant and Other Subsidiaries. The awards granted to executives of Visant and its subsidiaries (other than Jostens) are based on an 18-month incentive period and performance awards vest based on achievement of a trailing twelve months’ EBITDA target measured as of the last day of the second fiscal quarter of 2011 and, in the case of a certain subset of Holdings’ subsidiaries, a portion of the performance awards vest based on the achievement of certain other performance targets as of such measurement date, in any event subject to the executive’s continued employment through the applicable measurement date, provided that if the respective performance target is achieved as of the last day of fiscal year 2010 or the last day of the first fiscal quarter of 2011, the performance award applicable to such performance target will vest and become due and payable as of such earlier date. The time award vests solely on the basis of the executive’s continued employment through the last day of the second fiscal quarter of 2011.

In the case of an executive’s termination by Holdings without cause or by the executive for good reason or due to the executive’s permanent disability or death within two years following a change in control and prior to the last day of the second fiscal quarter of 2011, 100% of the executive’s time award will vest. If such a termination were to occur prior to September 30, 2010, 50% of the executive’s performance award will become vested (regardless of whether the respective performance target(s) are met), but if the termination occurs after September 30, 2010, the executive will have the opportunity to become vested in either 50% or 100% of the performance award provided that an applicable portion of the respective EBITDA performance target has been achieved (measured as of the last day of the fiscal month ended closest to the date of the employee’s termination). If a minimum applicable portion of the EBITDA performance target is not achieved, the unvested performance award will be forfeited without payment therefor.

Subject to the applicable vesting conditions, the awards are settled in cash in an amount equal to the fair market value of one share of Class A Common Stock as of the vesting date (provided that following a change in control, the per share value of Class A Common Stock shall not be less than the price per share paid in respect of such common stock in the change in control) multiplied by the number of phantom share units in which the executive’s awards have vested, payable in a lump sum as soon as practicable following the vesting event, and in any event not later than March 14th of the calendar year following the calendar year in which such vesting event occurred.

Common Stock

There is no established public market for the Holdings Class A Common Stock. The fair market value of the Class A Common Stock is established pursuant to the terms of the 2004 Plan and determined by a third party valuation, and the methodology to determine the fair market value under our equity incentive plans does not give effect to any premium for control or discount for minority interests or restrictions on transfers. Fair value includes any premium for control or discount for minority interests or restrictions on transfers. The Company used a discounted cash flow analysis and selected public company analysis to determine the enterprise value and share price for Holdings Class A Common Stock.

On February 26, 2010, the Board of Directors of Holdings declared an extraordinary cash distribution in the aggregate amount of $137.7 million (inclusive of the dividend equivalent payment to holders of vested stock options), or $22.00 per share (the “ February 2010 Distribution”) on Holdings’ outstanding common stock. The February 2010 Distribution was paid on March 1, 2010 to stockholders of record on February 26, 2010. The February 2010 Distribution was funded from cash on hand.

On September 20, 2010, the Board of Directors of Holdings declared an extraordinary cash distribution in the aggregate amount of $517.0 million (inclusive of the distribution to holders of vested stock options) of $82.55 per share (the “September 2010 Distribution” and together with the February 2010 Distribution, the “Distributions”) on Holdings’ outstanding common stock. The September Distribution was paid on September 22, 2010 to stockholders of record on September 20, 2010 and was funded from the net proceeds of the 2010 Refinancing.

In connection with the Distributions, Holdings made cash payments to holders of vested stock options for the Common Stock granted pursuant to Holdings’ equity incentive plans. The cash payments on the vested stock options equaled (x) the product of (i) the number of shares of Holdings Class A Common Stock subject to such options outstanding on the applicable record date multiplied by (ii) the per share amount of the distribution, minus (y) any applicable withholding taxes. Holdings reduced the per share exercise price as permitted under the applicable equity incentive plans of any unvested options outstanding as of the applicable record date by the per share distribution amounts paid. The 2003 Plan and 2004 Plan and/or underlying stock option agreements contain provisions that provide for anti-dilutive protection in the case of certain extraordinary corporate transactions, such as the Distributions, and the incremental compensation cost, defined as the difference in the fair value of the award immediately before and after the Distributions, was calculated as zero. As a result of the above Distributions, no incremental compensation cost was recognized.

For the three months ended October 2, 2010 and October 3, 2009, the Company recognized total stock-based compensation expense of approximately $4.1 million and $0.2 million, respectively, which is included in selling, general and administrative expenses. Stock-based compensation expense totaled $10.0 million and $0.6 million for the nine-month periods ended October 2, 2010 and October 3, 2009, respectively.

During the three months ended and nine months ended October 2, 2010, Holdings issued, subject to vesting, a total of 7,000 restricted shares of Holdings’ Class A Common Stock to one officer of the Company under the 2004 Plan. For the nine months ended October 3, 2009, there were no issuances of restricted shares.

As of October 2, 2010, $1.3 million of total unrecognized stock-based compensation expense related to restricted shares is expected to be recognized over a weighted-average period of 3.0 years.

In each of the nine-month periods ended October 2, 2010 and October 3, 2009, there were no issuances of stock options.

Stock Options

The following table summarizes stock option activity for Holdings:


*Options in thousands*	Options			Weighted - average exercise price
Outstanding at January 2, 2010		299		$	47.64
Exercised		(1	)	$	39.07
Granted		—		$	—
Forfeited/Expired		(2	)	$	130.45
Cancelled		(1	)	$	169.15

Outstanding at October 2, 2010		295		$	46.64

Vested or expected to vest at October 2, 2010		295		$	46.64

Exercisable at October 2, 2010		293		$	45.32

The exercise prices for options that were unvested as of the applicable record date have been adjusted to reflect the Distributions.

The weighted average remaining contractual life of outstanding options at October 2, 2010 was approximately 4.5 years. As of October 2, 2010, $0.1 million of total unrecognized stock-based compensation expense related to stock options is expected to be recognized over a weighted-average period of 1.9 years.

LTIPs

The following table summarizes 2008 LTIP and 2010 LTIP award activity for Holdings:


*Units in thousands*	2008 LTIP			2010 LTIP
Outstanding at January 2, 2010		40			—
Granted		—			112
Forfeited		—			—
Cancelled		(22	)		—

Outstanding at October 2, 2010		18			112

Vested or expected to vest at October 2, 2010		18			79

As of October 2, 2010, $10.1 million of aggregate total unrecognized stock-based compensation expense related to the 2010 LTIP is expected to be recognized over a weighted-average period of 0.9 years.

No participants in the 2008 LTIP, other than Jostens participants, vested in or will receive payments with respect to any award under the 2008 LTIP.

16.

Business Segments

Our three reportable segments consist of:

•

Scholastic — provides services in conjunction with the marketing, sale and production of class rings and an array of graduation products and other scholastic affinity products to students and administrators primarily in high schools, colleges and other post-secondary institutions;

•

Memory Book — provides services in conjunction with the publication, marketing, sale and production of school yearbooks, memory books and related products that help people tell their stories and chronicle important events; and

•

Marketing and Publishing Services — provides services in conjunction with the development, marketing, sale and production of multi-sensory and interactive advertising sampling systems, primarily for the fragrance, cosmetics and personal care segments, and provides innovative products and related services to the direct marketing sector. The group also produces book components primarily for the educational and trade publishing segments.

The following table presents information on Holdings by business segment:


	Three months ended
*In thousands*	October 2, 2010			October 3, 2009			$ Change			% Change
*Net sales*
Scholastic	$	42,544		$	43,232		$	(688	)		(1.6	%)
Memory Book		74,663			77,690			(3,027	)		(3.9	%)
Marketing and Publishing Services		107,080			114,979			(7,899	)		(6.9	%)

	$	224,287		$	235,901		$	(11,614	)		(4.9	%)

*Operating (loss) income*
Scholastic	$	(21,223	)	$	(17,033	)	$	(4,190	)		(24.6	%)
Memory Book		14,361			11,691			2,670			22.8	%
Marketing and Publishing Services		17,504			18,041			(537	)		(3.0	%)

	$	10,642		$	12,699		$	(2,057	)		(16.2	%)

*Depreciation and Amortization*
Scholastic	$	7,633		$	6,943		$	690			9.9	%
Memory Book		9,614			9,687			(73	)		(0.8	%)
Marketing and Publishing Services		8,400			8,524			(124	)		(1.5	%)

	$	25,647		$	25,154		$	493			2.0	%


	Nine months ended
*In thousands*	October 2, 2010			October 3, 2009			$ Change			% Change
*Net sales*
Scholastic	$	331,949		$	324,986		$	6,963			2.1	%
Memory Book		358,351			369,470			(11,119	)		(3.0	%)
Marketing and Publishing Services		299,108			306,090			(6,982	)		(2.3	%)
Inter-segment eliminations		(19	)		(273	)		254			NM

	$	989,389		$	1,000,273		$	(10,884	)		(1.1	%)

*Operating income*
Scholastic	$	12,031		$	28,919		$	(16,888	)		(58.4	%)
Memory Book		130,194			119,523			10,671			8.9	%
Marketing and Publishing Services		45,121			36,482			8,639			23.7	%

	$	187,346		$	184,924		$	2,422			1.3	%

*Depreciation and Amortization*
Scholastic	$	22,984		$	21,114		$	1,870			8.9	%
Memory Book		29,077			29,276			(199	)		(0.7	%)
Marketing and Publishing Services		25,242			25,519			(277	)		(1.1	%)

	$	77,303		$	75,909		$	1,394			1.8	%

NM = Not meaningful

17.

Related Party Transactions

Management Services Agreement

In connection with the Transactions, Holdings entered into a management services agreement with the Sponsors pursuant to which the Sponsors provide certain structuring, consulting and management advisory services. Under the management services agreement, during the term the Sponsors receive an annual advisory fee of $3.0 million, that is payable quarterly and which increases by 3% per year. Holdings incurred $0.9 million and $0.8 million of advisory fees from the Sponsors for each of the three months ended October 2, 2010 and October 3, 2009, respectively. Holdings incurred $2.6 million and $2.5 million of advisory fees from the Sponsors for each of the nine months ended October 2, 2010 and October 3, 2009, respectively. The management services agreement also provides that Holdings will indemnify the Sponsors and their affiliates, directors, officers and representatives for losses relating to the services contemplated by the management services agreement and the engagement of the Sponsors pursuant to, and the performance by the Sponsors of the services contemplated by, the management services agreement.

Other

KKR Capstone is a team of operational professionals who work exclusively with KKR’s investment professionals and portfolio company management teams to enhance and strengthen operations in KKR’s portfolio companies. We have retained KKR Capstone from time to time to provide certain of our businesses with consulting services primarily to help identify and implement operational improvements and other strategic efforts within our businesses. There were no services rendered or payments made for the three and nine month periods ended October 2, 2010 and October 3, 2009. An affiliate of KKR Capstone has an ownership interest in Holdings.

An affiliate of Credit Suisse Securities (USA) LLC acted as an agent and was a lender under the Old Credit Facilities and received a portion of the proceeds from the 2010 Refinancing. Affiliates of Credit Suisse Securities (USA) LLC and KKR Capital Markets LLC act as lenders and/or as agents under the New Credit Facilities and were initial purchasers of the New Senior Notes, for which they received and will receive customary fees and expenses. Each of Credit Suisse Securities (USA) LLC and KKR Capital Markets LLC is an affiliate of one of our Sponsors.

The Company is party to an agreement with CoreTrust Purchasing Group (“CoreTrust”), a group purchasing organization, pursuant to which it may avail itself of the terms and conditions of the CoreTrust purchasing organization. In addition to other vendors the Company purchases from under the CoreTrust group purchasing program, beginning in 2010 the Company avails itself of a prescription drug benefit program and related services through the CoreTrust program. An affiliate of KKR is party to an agreement with CoreTrust which permits certain KKR affiliates, including Visant, the benefit of utilizing the CoreTrust group purchasing program. CoreTrust receives payment of fees for administrative and other services provided by CoreTrust from certain vendors based on the products and services purchased by the Company and other parties and CoreTrust shares a portion of such fees with the KKR affiliate.

The Company participates in providing, with an affiliate of First Data Corporation (“First Data”), integrated marketing programs to third parties from time to time. The terms of the arrangement between the Company and First Data have been negotiated on an arm’s length basis. First Data is also owned and controlled by affiliates of KKR, and Tagar C. Olson, a member of the Company’s board of directors, is a director of First Data. Based on the applicable guidance, the Company records its portion of the profits from such “collaborative arrangement” as revenue. The Company is not permitted, in accordance with the applicable accounting guidance, to present the sales, cost of sales or marketing expenses related to the sales transactions with third parties because First Data is the “principal participant” in the “collaborative arrangement.” For the three and nine months ended October 2, 2010, the amount of revenue that the Company recognized from this arrangement was not material to its financial statements. The Company did not recognize any revenue from this arrangement for the year ended January 2, 2010.

18.

Condensed Consolidating Guarantor Information

As discussed in Note 10, Debt, Visant’s obligations under the New Credit Facilities and the New Senior Notes are guaranteed by certain of its wholly-owned subsidiaries (the “Guarantors”) on a full, unconditional and joint and several basis. The following tables present condensed consolidating financial information for Visant, as issuer, and its guarantor and non-guarantor subsidiaries.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

Three months ended October 2, 2010


*In thousands*	Visant			Guarantors			Non- Guarantors		Eliminations			Total
Net sales	$	—		$	232,115		$	17,263	$	(25,091	)	$	224,287
Cost of products sold		—			135,199			10,499		(25,113	)		120,585

Gross profit		—			96,916			6,764		22			103,702
Selling and administrative expenses		2,899			91,356			4,119		—			98,374
Gain on sale of assets		—			(303	)		—		—			(303	)
Special charges		—			995			—		—			995

Operating (loss) income		(2,899	)		4,868			2,645		22			4,636
Loss on repurchase and redemption of debt		9,693			—			—		—			9,693

(Loss) income before interest and taxes		(12,592	)		4,868			2,645		22			(5,057	)
Net interest expense		17,514			13,102			29		(12,273	)		18,372

(Loss) income before income taxes		(30,106	)		(8,234	)		2,616		12,295			(23,429	)
Provision for (benefit from) income taxes		1,904			(4,605	)		832		8			(1,861	)

(Loss) income from operations		(32,010	)		(3,629	)		1,784		12,287			(21,568	)
Equity (earnings) in subsidiary, net of tax		(10,442	)		(1,784	)		—		12,226			—

Net (loss) income	$	(21,568	)	$	(1,845	)	$	1,784	$	61		$	(21,568	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

Three months ended October 3, 2009


*In thousands*	Visant			Guarantors			Non- Guarantors		Eliminations			Total
Net sales	$	—		$	225,852		$	16,464	$	(6,415	)	$	235,901
Cost of products sold		—			124,445			10,216		(6,590	)		128,071

Gross profit		—			101,407			6,248		175			107,830
Selling and administrative expenses		(153	)		88,987			3,883		—			92,717
Gain on sale of assets		—			(223	)		—		—			(223	)
Special charges		(1	)		2,374			22		—			2,395

Operating income		154			10,269			2,343		175			12,941
Net interest expense		16,665			10,535			18		(13,799	)		13,419

(Loss) income before income taxes		(16,511	)		(266	)		2,325		13,974			(478	)
(Benefit from) provision for income taxes		(835	)		(1,306	)		767		68			(1,306	)

(Loss) income from operations		(15,676	)		1,040			1,558		13,906			828
Equity (earnings) loss in subsidiary, net of tax		(16,504	)		(1,558	)		—		18,062			—

Net income	$	828		$	2,598		$	1,558	$	(4,156	)	$	828

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

Nine months ended October 2, 2010


*In thousands*	Visant			Guarantors			Non- Guarantors			Eliminations			Total
Net sales	$	—		$	992,651		$	46,491		$	(49,753	)	$	989,389
Cost of products sold		—			472,472			28,321			(49,689	)		451,104

Gross profit		—			520,179			18,170			(64	)		538,285
Selling and administrative expenses		2,692			332,467			12,154			—			347,313
Loss on sale of assets		—			203			—			—			203
Special charges		—			3,383			—			—			3,383

Operating (loss) income		(2,692	)		184,126			6,016			(64	)		187,386
Loss on repurchase and redemption of debt		9,693			—			—			—			9,693

(Loss) income before interest and taxes		(12,385	)		184,126			6,016			(64	)		177,693
Net interest expense		43,283			37,703			(9	)		(35,302	)		45,675

(Loss) income before income taxes		(55,668	)		146,423			6,025			35,238			132,018
Provision for income taxes		1,733			53,047			1,196			(25	)		55,951

(Loss) income from operations		(57,401	)		93,376			4,829			35,263			76,067
Equity (earnings) in subsidiary, net of tax		(133,468	)		(4,829	)		—			138,297			—

Net income	$	76,067		$	98,205		$	4,829		$	(103,034	)	$	76,067

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

Nine months ended October 3, 2009


*In thousands*	Visant			Guarantors			Non- Guarantors		Eliminations			Total
Net sales	$	—		$	976,222		$	41,010	$	(16,959	)	$	1,000,273
Cost of products sold		—			453,750			25,384		(16,792	)		462,342

Gross profit		—			522,472			15,626		(167	)		537,931
Selling and administrative expenses		(398	)		327,883			10,286		—			337,771
Gain on sale of assets		—			(453	)		—		—			(453	)
Special charges		(1	)		14,795			22		—			14,816

Operating income		399			180,247			5,318		(167	)		185,797
Net interest expense		50,045			31,686			146		(39,902	)		41,975

(Loss) income before income taxes		(49,646	)		148,561			5,172		39,735			143,822
(Benefit from) provision for income taxes		(1,387	)		54,355			1,517		(65	)		54,420

(Loss) income from operations		(48,259	)		94,206			3,655		39,800			89,402
Equity (earnings) loss in subsidiary, net of tax		(137,661	)		(3,655	)		—		141,316			—

Net income	$	89,402		$	97,861		$	3,655	$	(101,516	)	$	89,402

CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)

October 2, 2010


*In thousands*	Visant			Guarantors		Non- Guarantors		Eliminations			Total
ASSETS
Cash and cash equivalents	$	3,572		$	2,106	$	3,836	$	—		$	9,514
Accounts receivable, net		1,000			112,822		11,751		—			125,573
Inventories		—			86,364		4,006		(186	)		90,184
Salespersons overdrafts, net		—			29,509		1,027		—			30,536
Prepaid expenses and other current assets		677			11,697		724		—			13,098
Intercompany receivable		13,819			11,876		—		(25,695	)		—
Deferred income taxes		2,647			15,145		64		—			17,856

Total current assets		21,715			269,519		21,408		(25,881	)		286,761
Property, plant and equipment, net		369			213,015		752		—			214,136
Goodwill		—			983,905		24,523		—			1,008,428
Intangibles, net		—			506,675		10,526		—			517,201
Deferred financing costs, net		50,775			—		—		—			50,775
Deferred income taxes		—			—		2,605		—			2,605
Intercompany receivable		1,120,154			431,805		47,127		(1,599,086	)		—
Other assets		1,272			15,168		85		—			16,525
Investment in subsidiaries		850,362			89,145		—		(939,507	)		—
Prepaid pension costs		—			4,855		—		—			4,855

	$	2,044,647		$	2,514,087	$	107,026	$	(2,564,474	)	$	2,101,286

LIABILITIES AND STOCKHOLDER’S (DEFICIT) EQUITY
Short-term borrowings	$	92,500		$	—	$	—	$	—		$	92,500
Accounts payable		7,369			41,399		4,268		1			53,037
Accrued employee compensation		7,176			23,250		1,875		—			32,301
Customer deposits		—			49,948		3,996		—			53,944
Commissions payable		—			7,193		865		—			8,058
Income taxes payable		(11,905	)		56,050		2,203		(72	)		46,276
Interest payable		5,060			31		8		—			5,099
Current portion of long-term debt and capital leases		12,512			3,689		7		—			16,208
Intercompany payable		3,798			18,938		2,960		(25,696	)		—
Other accrued liabilities		8,192			18,325		639		—			27,156

Total current liabilities		124,702			218,823		16,821		(25,767	)		334,579
Long-term debt and capital leases, less current maturities		1,962,637			12,773		8		—			1,975,418
Intercompany payable		431,805			1,167,395		—		(1,599,200	)		—
Deferred income taxes		(9,929	)		188,983		—		—			179,054
Pension liabilities, net		(747	)		52,773		—		—			52,026
Other noncurrent liabilities		24,555			22,978		1,052		—			48,585

Total liabilities		2,533,023			1,663,725		17,881		(1,624,967	)		2,589,662
Mezzanine equity		30			—		—		—			30
Stockholder’s (deficit) equity		(488,406	)		850,362		89,145		(939,507	)		(488,406	)

	$	2,044,647		$	2,514,087	$	107,026	$	(2,564,474	)	$	2,101,286

CONDENSED CONSOLIDATING BALANCE SHEET

January 2, 2010


*In thousands*	Visant			Guarantors		Non- Guarantors			Eliminations			Total
ASSETS
Cash and cash equivalents	$	98,340		$	3,825	$	10,928		$	—		$	113,093
Accounts receivable, net		1,611			105,819		5,844			—			113,274
Inventories		—			100,879		1,992			(122	)		102,749
Salespersons overdrafts, net		—			27,551		967			—			28,518
Prepaid expenses and other current assets		1,914			16,025		303			—			18,242
Intercompany receivable		647			12,207		—			(12,854	)		—
Deferred income taxes		(440	)		14,908		53			—			14,521

Total current assets		102,072			281,214		20,087			(12,976	)		390,397
Property, plant and equipment, net		499			210,278		55			—			210,832
Goodwill		—			982,212		22,105			—			1,004,317
Intangibles, net		—			541,366		9,264			—			550,630
Deferred financing costs, net		12,484			—		—			—			12,484
Intercompany receivable		1,053,724			375,902		48,497			(1,478,123	)		—
Other assets		1,496			12,158		78			—			13,732
Investment in subsidiaries		752,596			84,461		—			(837,057	)		—
Prepaid pension costs		—			4,855		—			—			4,855

	$	1,922,871		$	2,492,446	$	100,086		$	(2,328,156	)	$	2,187,247

LIABILITIES AND STOCKHOLDER’S EQUITY
Short-term borrowings	$	—		$	196	$	—		$	—		$	196
Accounts payable		2,410			43,027		2,580			—			48,017
Accrued employee compensation and related taxes		8,351			32,183		2,021			—			42,555
Customer deposits		—			175,633		8,342			—			183,975
Commissions payable		—			21,204		752			—			21,956
Income taxes (receivable) payable		(1,211	)		1,271		1,630			(47	)		1,643
Interest payable		10,292			166		—			—			10,458
Current portion of long-term debt and capital leases		6			1,849		7			—			1,862
Intercompany payable (receivable)		4,983			7,965		(93	)		(12,855	)		—
Other accrued liabilities		152			28,748		571			—			29,471

Total current liabilities		24,983			312,242		15,810			(12,902	)		340,133
Long-term debt and capital leases - less current maturities		816,510			7,908		13			—			824,431
Intercompany payable		328,785			1,149,412		—			(1,478,197	)		—
Deferred income taxes		(10,048	)		198,281		(198	)		—			188,035
Pension liabilities, net		675			55,080		—			—			55,755
Other noncurrent liabilities		22,164			16,927		—			—			39,091

Total liabilities		1,183,069			1,739,850		15,625			(1,491,099	)		1,447,445
Stockholder’s equity		739,802			752,596		84,461			(837,057	)		739,802

	$	1,922,871		$	2,492,446	$	100,086		$	(2,328,156	)	$	2,187,247

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)

Nine months ended October 2, 2010


*In thousands*	Visant			Guarantors			Non- Guarantors			Eliminations			Total
Net income	$	76,067		$	98,205		$	4,829		$	(103,034	)		76,067
Other cash used in operating activities		(98,013	)		(25,511	)		(11,028	)		103,035			(31,517	)

Net cash (used in) provided by operating activities		(21,946	)		72,694			(6,199	)		1			44,550
Purchases of property, plant and equipment		—			(43,163	)		—			—			(43,163	)
Additions to intangibles		—			(741	)		—			—			(741	)
Proceeds from sale of property and equipment		—			659			—			—			659
Acquisition of business, net of cash acquired		—			(9,906	)		—			—			(9,906	)
Other investing activities, net		—			8			—			—			8

Net cash used in investing activities		—			(53,143	)		—			—			(53,143	)
Short-term borrowings		308,700			—			—			—			308,700
Short-term repayments		(216,200	)		—			—			—			(216,200	)
Principal payments on long-term debt		(816,508	)		(2,003	)		(569	)		—			(819,080	)
Proceeds from issuance of long-term debt		1,975,000			8,234			—			—			1,983,234
Intercompany payable (receivable)		27,502			(27,501	)		—			(1	)		—
Distribution to shareholder		(1,303,731	)		—			—			—			(1,303,731	)
Debt financing costs		(47,585	)		—			—			—			(47,585	)

Net cash used in financing activities		(72,822	)		(21,270	)		(569	)		(1	)		(94,662	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(324	)		—			(324	)

Decrease in cash and cash equivalents		(94,768	)		(1,719	)		(7,092	)		—			(103,579	)
Cash and cash equivalents, beginning of period		98,340			3,825			10,928			—			113,093

Cash and cash equivalents, end of period	$	3,572		$	2,106		$	3,836		$	—		$	9,514


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED) Nine months ended October 3, 2009

*In thousands*	Visant			Guarantors			Non- Guarantors			Eliminations			Total
Net income	$	89,402		$	97,861		$	3,655		$	(101,516	)		89,402
Other cash (used in) provided by operating activities		(125,707	)		18,386			(8,599	)		104,872			(11,048	)

Net cash (used in) provided by operating activities		(36,305	)		116,247			(4,944	)		3,356			78,354
Purchases of property, plant and equipment		—			(37,045	)		(2	)		—			(37,047	)
Additions to intangibles		—			(553	)		—			—			(553	)
Proceeds from sale of property and equipment		—			3,042			—			—			3,042
Acquisition of business, net of cash acquired		1,432			(2,301	)		—			—			(869	)
Other investing activities, net		—			(1	)		—			—			(1	)

Net cash provided by (used in) investing activities		1,432			(36,858	)		(2	)		—			(35,428	)
Short-term repayments		(132,500	)		796			—			—			(131,704	)
Intercompany payable (receivable)		88,008			(84,652	)		—			(3,356	)		—
Distribution to stockholder		(15,981	)		—			—			—			(15,981	)
Debt financing costs		(2,532	)		(44	)		(43	)		—			(2,619	)

Net cash used in financing activities		(63,005	)		(83,900	)		(43	)		(3,356	)		(150,304	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(441	)		—			(441	)

Decrease in cash and cash equivalents		(97,878	)		(4,511	)		(5,430	)		—			(107,819	)
Cash and cash equivalents, beginning of period		102,517			6,499			8,585			—			117,601

Cash and cash equivalents, end of period	$	4,639		$	1,988		$	3,155		$	—		$	9,782

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements including, without limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial condition. These forward-looking statements are not historical facts, but only predictions and generally can be identified by use of statements that include such words as “may”, “might”, “will”, “should”, “estimate”, “project”, “plan”, “anticipate”, “expect”, “intend”, “outlook”, “believe” and other similar expressions that are intended to identify forward-looking statements and information. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those identified under, Part II, Item 1A. Risk Factors, and elsewhere in this report.

The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from historical results or those anticipated or predicted by these forward-looking statements:

•

our substantial indebtedness and our ability to service the indebtedness;

•

our inability to implement our business strategy in a timely and effective manner;

•

global market and economic conditions;

•

levels of customers’ advertising and marketing spending, including as may be impacted by economic factors and general market conditions;

•

competition from other companies;

•

fluctuations in raw material prices;

•

our reliance on a limited number of suppliers;

•

the seasonality of our businesses;

•

the loss of significant customers or customer relationships;

•

Jostens’ reliance on independent sales representatives;

•

our reliance on numerous complex information systems;

•

the amount of capital expenditures required at our businesses;

•

developments in technology and related changes in consumer behavior;

•

the reliance of our businesses on limited production facilities;

•

actions taken by the U.S. postal service and changes in postal standards and their effect on our marketing services business, including as such changes may impact competition for our sampling systems;

•

labor disturbances;

•

environmental obligations and liabilities;

•

adverse outcome of pending or threatened litigation;

•

the enforcement of intellectual property rights;

•

the impact of changes in applicable law and regulations;

•

the textbook adoption cycle and levels of government funding for education spending; and

•

control by our stockholders.

We caution you that the foregoing list of important factors is not exclusive. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly or revise any of them in light of new information, future events or otherwise, except as required by law. Comparisons of results for current and prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

Except where otherwise indicated, management’s discussion and analysis of our financial condition and results of operations is provided with respect to Visant, which has materially the same financial condition and results of operations as its indirect parent, Holdings. Historical financial information in all of our previous filings with the SEC (which information contained therein is not incorporated by reference into this Quarterly Report on Form 10-Q, except where specifically presented herein or incorporated by reference herein) was provided with respect to Holdings, which has historically had the same financial condition and results of operations as Visant in all material respects, except for stock-based compensation expense (relating to employees of Visant and its subsidiaries because equity and phantom equity awards granted to such employees are based on Holdings equity) and interest expense related to indebtedness of Holdings and the income tax effects thereof. In view of our prior debt service obligations under Holdings’ senior discount notes and senior notes, which have historically been funded by the operations of Visant and its subsidiaries, we have included certain information pertaining to such debt service obligations for all periods prior to September 22, 2010 in the discussion of Visant’s liquidity and capital resources. The amounts disclosed as to net sales, gross profit and special charges and described in this Item 2 are the same for both Visant and Holdings.

GENERAL

We are a leading marketing and publishing services enterprise servicing the school affinity, direct marketing, fragrance and cosmetics sampling, and educational and trade publishing segments. On October 4, 2004, an affiliate of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and affiliates of DLJ Merchant Banking Partners III, L.P. (“DLJMBP III”) completed a series of transactions which created a marketing and publishing services enterprise, servicing the school affinity, direct marketing, fragrance and cosmetics sampling, and educational and trade publishing segments (the “Transactions”) through the combination of Jostens, Inc. (“Jostens”), Von Hoffmann Holdings, Inc. and its subsidiaries (“Von Hoffmann”) and AKI, Inc. and its subsidiaries (“Arcade”). Visant was formed to create a platform of businesses with leading positions in attractive end market segments and to establish a highly experienced management team that could leverage a shared services infrastructure and capitalize on margin and growth opportunities. Since 2004, we have developed a unified marketing and publishing services organization with a leading and differentiated approach in each of our segments. Our management team has created and integrated central services and management functions and has reshaped the business to focus on the most attractive and highest growth market opportunities. We sell our products and services to end customers through several different sales channels including independent sales representatives and dedicated sales forces. Our sales and results of operations are impacted by a number of factors, including general economic conditions, seasonality, cost of raw materials, school population trends, product quality, service and price. Holdings (formerly known as Jostens Holding Corp.) and Visant (formerly known as Jostens IH Corp.) were each originally incorporated in Delaware in 2003.

Our business has expanded through recently completed acquisitions, which complement our awards and team jackets business and the jewelry business in our Scholastic segment. These acquisitions include the acquisition of certain assets of Rennoc Corporation (“Rennoc”) (a producer of varsity jackets) in July 2009 and the acquisition of the capital stock of Rock Creek Athletics, Inc. (“Rock Creek”) (a producer of varsity jackets) in February 2010. On April 21, 2010, we announced that we had acquired approximately 96% of the issued and outstanding shares of the common shares of Intergold Ltd. (“Intergold”) (a custom jewelry manufacturer) in connection with a cash offer to acquire all of the issued and outstanding common shares to complement the jewelry business in our Scholastic segment. We subsequently exercised our right to

acquire the remaining common shares. On July 13, 2010, we acquired certain assets of Daden Group, Inc. (a producer of varsity jackets under the DeLong brand). We also previously acquired Phoenix Color (a leading book component manufacturer) in 2008 as part of our Marketing and Publishing Services segment.

Our three reportable segments as of October 2, 2010 consisted of:

•

We experience seasonal fluctuations in our net sales and cash flow from operations, tied primarily to the North American school year. Jostens generates a significant portion of its annual net sales in the second quarter. Deliveries of caps, gowns and diplomas for spring graduation ceremonies and spring deliveries of school yearbooks are the key drivers of our seasonality in net sales. Our cash flow from operations is concentrated in the fourth quarter, primarily driven by the receipt of customer deposits in our Scholastic and Memory Book segments. The net sales of sampling and other direct mail and commercial printed products have also historically reflected seasonal variations, and we expect these businesses to continue to generate significant sales during our third and fourth quarters. These seasonal variations in net sales are based on the timing of customers’ advertising campaigns, which have traditionally been concentrated prior to the Christmas and spring holiday seasons. Net sales of textbook components are impacted seasonally by state and local schoolbook purchasing schedules, which commence in the spring and peak in the summer months preceding the start of the school year. The seasonality of each of our businesses requires us to allocate our resources to manage our capital and manufacturing capacity, which often operates at full or near full capacity during peak seasonal demands.

Our net sales include sales to certain customers for whom we purchase paper. The price of paper, a primary material across most of our products and services, is volatile over time and may cause swings in net sales and cost of sales. We generally are able to pass on increases in the cost of paper to our customers across most of our product lines at the time we are impacted by such increases.

The price of gold and other precious metals increased dramatically during 2009 and 2010, and we anticipate continued volatility in the price of gold for the foreseeable future driven by numerous factors, such as changes in supply and demand and investor sentiment. These higher metal prices have impacted, and could further impact, our jewelry sales metal mix. While historically the purchase of class rings has been relatively resistant to economic conditions, we saw a shift in jewelry metal mix from gold to lesser priced metals during 2009, which we believe was attributable in part to economic factors and the impact of significantly higher precious metal costs on our jewelry prices. We have continued to experience this dynamic in 2010 and anticipate it will continue to occur through the remainder of 2010, given the significant increase in the price of gold and the remaining strained consumer spending environment.

The continued uncertainty in market conditions and excess capacity that exists in the print and related services industry, as well as the variety of other advertising media with which we compete, have amplified competitive and pricing pressures, which we anticipate will continue for the foreseeable future. In addition, we have continued to see the impact of restrictions on school budgets affect spending at the state and local levels resulting in reduced spending for our Memory Book, Scholastic and elementary/high school publishing services products and services.

We seek to distinguish ourselves based on our capabilities, innovative service offerings to our customers, quality and organizational and financial strength. We continue to expand and improve our product and service offerings, including to address changes in technology, consumer behavior and user preferences.

We continue to implement efforts to reduce costs and drive operating efficiencies, including through the restructuring and integration of our operations and the rationalization of sales, administrative and support functions. We expect to initiate additional efforts focused on cost reduction and containment to address uncertain and continuously challenging marketplace conditions as well as competitive and pricing pressures demanding innovation and a lower cost structure.

For additional financial and other information about our operating segments, see Note 16, Business Segments, to our condensed consolidated financial statements included elsewhere herein.

Company Background

On October 4, 2004, we completed the Transactions, which created a marketing and publishing services enterprise through the consolidation of Jostens, Von Hoffmann and Arcade.

Prior to the Transactions, Von Hoffmann and Arcade were each controlled by affiliates of DLJMBP II, and DLJMBP III owned approximately 82.5% of our outstanding equity, with the remainder held by other co-investors and certain members of management. Upon consummation of the Transactions, an affiliate of KKR invested $256.1 million and was issued equity interests representing approximately 49.6% of our voting interest and 45.0% of Holdings’ economic interest, affiliates of DLJMBP III held equity interests representing approximately 41.0% of Holdings’ voting interest and 45.0% of Holdings’ economic interest, with the remainder held by other co-investors and certain members of management. Approximately $175.6 million of the proceeds were distributed to certain stockholders, and certain treasury stock held by Von Hoffmann was redeemed. As of November 9, 2010, affiliates of KKR and DLJMBP III held approximately 49.1% and 41.1%, respectively, of Holdings’ voting interest, while each continued to hold approximately 44.6% of Holdings’ economic interest. As of November 9, 2010, the other co-investors held approximately 8.4% of the voting interest and 9.1% of the economic interest of Holdings, and members of management held approximately 1.4% of the voting interest and approximately 1.7% of the economic interest of Holdings.

The Transactions were accounted for as a combination of interests under common control.

CRITICAL ACCOUNTING POLICIES

The preparation of interim financial statements involves the use of certain estimates that differ from those used in the preparation of annual financial statements, the most significant of which relate to income taxes. For purposes of preparing our interim financial statements, we utilize an estimated annual effective tax rate based on estimates of the components that impact the tax rate. Those components are re-evaluated each interim period, and, if changes in our estimates are significant, we modify our estimate of the annual effective tax rate and make any required adjustments in the interim period.

There have been no material changes to our critical accounting policies and estimates as described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 2, 2010.

Recently Adopted Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance which expanded the required disclosures about fair value measurements. This guidance requires (1) separate disclosure of the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements along with the reasons for such transfers, (2) information about purchases, sales, issuances and settlements to be presented separately in the reconciliation for Level 3 fair value measurements, (3) fair value measurement disclosures for each class of assets and liabilities and (4) disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for fair value measurements that fall in either Level 2 or Level 3. This guidance is effective for the first reporting period beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlement on a gross basis, which is effective for fiscal years beginning after December 15, 2010. The Company’s adoption of this guidance did not have a material impact on its financial statements.

RESULTS OF OPERATIONS

Three Months Ended October 2, 2010 Compared to the Three Months Ended October 3, 2009

The following table sets forth selected information derived from our condensed consolidated statements of operations for the three-month periods ended October 2, 2010 and October 3, 2009.

Visant Corporation


	Three months ended
*In thousands*	October 2, 2010			October 3, 2009			$ Change			% Change
Net sales	$	224,287		$	235,901		$	(11,614	)		(4.9	%)
Cost of products sold		120,585			128,071			(7,486	)		(5.8	%)

Gross profit		103,702			107,830			(4,128	)		(3.8	%)
% of net sales		*46.2*	%		*45.7*	%

Selling and administrative expenses		98,374			92,717			5,657			6.1	%
% of net sales		*43.9*	%		*39.3*	%

Gain on disposal of fixed assets		(303	)		(223	)		(80	)		NM
Special charges		995			2,395			(1,400	)		NM

Operating income		4,636			12,941			(8,305	)		(64.2	%)
% of net sales		*2.1*	%		*5.5*	%

Interest expense, net		18,372			13,419			4,953			36.9	%
Loss on repurchase and redemption of debt		9,693			—			9,693			NM

Loss before income taxes		(23,429	)		(478	)		(22,951	)
Benefit from income taxes		(1,861	)		(1,306	)		(555	)		(42.5	%)

Net (loss) income	$	(21,568	)	$	828		$	(22,396	)		NM

NM = Not meaningful

Visant Holding Corp.


	Three months ended
*In thousands*	October 2, 2010			October 3, 2009			$ Change			% Change
Net sales	$	224,287		$	235,901		$	(11,614	)		(4.9	%)
Cost of products sold		120,585			128,071			(7,486	)		(5.8	%)

Gross profit		103,702			107,830			(4,128	)		(3.8	%)
% of net sales		*46.2*	%		*45.7*	%

Selling and administrative expenses		92,368			92,959			(591	)		(0.6	%)
% of net sales		*41.2*	%		*39.4*	%

Gain on disposal of fixed assets		(303	)		(223	)		(80	)		NM
Special charges		995			2,395			(1,400	)		NM

Operating income		10,642			12,699			(2,057	)		(16.2	%)
% of net sales		*4.7*	%		*5.4*	%

Interest expense, net		31,444			27,894			3,550			12.7	%
Loss on repurchase and redemption of debt		37,680			—			37,680			NM

Loss before income taxes		(58,482	)		(15,195	)		(43,287	)
Benefit from income taxes		(13,503	)		(7,105	)		(6,398	)		(90.0	%)

Net loss	$	(44,979	)	$	(8,090	)	$	(36,889	)		NM

NM = Not meaningful

Our business is managed on the basis of three reportable segments: Scholastic, Memory Book and Marketing and Publishing Services. The following table sets forth selected segment information derived from our condensed consolidated statements of operations for the three-month periods ended October 2, 2010 and October 3, 2009. For additional financial information about our operating segments, see Note 16, Business Segments, to the condensed consolidated financial statements.

Visant Corporation


	Three months ended
*In thousands*	October 2, 2010			October 3, 2009			$ Change			% Change
Net sales
Scholastic	$	42,544		$	43,232		$	(688	)		(1.6	%)
Memory Book		74,663			77,690			(3,027	)		(3.9	%)
Marketing and Publishing Services		107,080			114,979			(7,899	)		(6.9	%)

Net sales	$	224,287		$	235,901		$	(11,614	)		(4.9	%)


Operating (loss) income
Scholastic	$	(23,508	)	$	(16,987	)	$	(6,521	)		(38.4	%)
Memory Book		12,139			11,774			365			3.1	%
Marketing and Publishing Services		16,005			18,154			(2,149	)		(11.8	%)

Operating income	$	4,636		$	12,941		$	(8,305	)		(64.2	%)


Depreciation and amortization
Scholastic	$	7,633		$	6,943		$	690			9.9	%
Memory Book		9,614			9,687			(73	)		(0.8	%)
Marketing and Publishing Services		8,400			8,524			(124	)		(1.5	%)

Depreciation and amortization	$	25,647		$	25,154		$	493			2.0	%

Visant Holding Corp.


	Three months ended
*In thousands*	October 2, 2010			October 3, 2009			$ Change			% Change
Net sales
Scholastic	$	42,544		$	43,232		$	(688	)		(1.6	%)
Memory Book		74,663			77,690			(3,027	)		(3.9	%)
Marketing and Publishing Services		107,080			114,979			(7,899	)		(6.9	%)

Net sales	$	224,287		$	235,901		$	(11,614	)		(4.9	%)


Operating (loss) income
Scholastic	$	(21,223	)	$	(17,033	)	$	(4,190	)		(24.6	%)
Memory Book		14,361			11,691			2,670			22.8	%
Marketing and Publishing Services		17,504			18,041			(537	)		(3.0	%)

Operating income	$	10,642		$	12,699		$	(2,057	)		(16.2	%)


Depreciation and amortization
Scholastic	$	7,633		$	6,943		$	690			9.9	%
Memory Book		9,614			9,687			(73	)		(0.8	%)
Marketing and Publishing Services		8,400			8,524			(124	)		(1.5	%)

Depreciation and amortization	$	25,647		$	25,154		$	493			2.0	%

Net Sales. Consolidated net sales decreased $11.6 million, or 4.9%, to $224.3 million for the three months ended October 2, 2010 compared to $235.9 million for the third fiscal quarter of 2009. Included in consolidated net sales for the third fiscal quarter of 2010 were approximately $3.3 million of incremental sales from acquisitions. Excluding the impact of these acquisitions, consolidated net sales decreased $14.9 million for the three months ended October 2, 2010 compared to the prior year comparable period, a decline of 6.3%.

Net sales of the Scholastic segment decreased $0.7 million, or 1.6%, to $42.5 million for the third fiscal quarter of 2010 from $43.2 million for the third fiscal quarter of 2009. The decrease was primarily attributable to lower volume in our jewelry products offset in part by the incremental impact from acquisitions completed during 2009 and 2010.

Net sales of the Memory Book segment decreased $3.0 million, or 3.9%, to $74.7 million for the third fiscal quarter of 2010 compared to $77.7 million for the third fiscal quarter of 2009, primarily due to lower volume of memory books.

Net sales of the Marketing and Publishing Services segment decreased $7.9 million, or 6.9%, to $107.1 million for the third fiscal quarter of 2010 from $115.0 million for the third fiscal quarter of 2009. This decrease was primarily attributable to lower volume in our publishing services operations offset in part by higher volume in our direct marketing operations.

Gross Profit. Consolidated gross profit decreased $4.1 million, or 3.8%, to $103.7 million for the three months ended October 2, 2010 from $107.8 million for the three-month period ended October 3, 2009. As a percentage of net sales, gross profit margin increased to 46.2% for the three months ended October 2, 2010 from 45.7% for the comparative period in 2009. This increase in gross profit margin was due to the impact of operational cost reductions.

Selling and Administrative Expenses. Visant’s selling and administrative expenses increased $5.7 million, or 6.1%, to $98.4 million for the three months ended October 2, 2010 from $92.7 million for the corresponding period in 2009. This increase included stock-based compensation expense. Excluding the impact of stock-based compensation expense, selling and administrative expenses decreased $4.3 million to $88.4 million primarily attributable to lower overall commissions in our Memory Book segment and savings resulting from cost reduction initiatives offset somewhat by $1.4 million of incremental costs incurred related to investments in new growth initiatives in our Jostens business and $1.3 million of incremental costs from acquisitions.

Holdings’ selling and administrative expenses decreased $0.5 million, less than 1%, to $92.4 million for the three months ended October 2, 2010 from $92.9 million for the corresponding period in 2009. This decrease was primarily attributable to lower overall commissions in our Memory Book segment and savings resulting from cost reduction initiatives offset somewhat by incremental stock-based compensation expense, $1.4 million of incremental costs incurred related to investments in new growth initiatives in our Jostens business and $1.3 million of incremental costs from acquisitions.

Special Charges. During the three months ended October 2, 2010, the Company recorded $0.9 million of restructuring costs and $0.1 million of other special charges. The Scholastic segment incurred $0.4 million of severance and related benefits for headcount reductions associated with the closure of the Unadilla, Georgia facility and $0.1 million of other facility closure costs. The Marketing and Publishing Services segment incurred $0.1 million of severance and related benefits for headcount reductions associated with reductions in force and $0.4 million of costs associated with the exit of certain leased office space. The associated employee headcount reductions related to the above actions were two and 84 in the Marketing and Publishing Services and Scholastic segments, respectively.

During the three months ended October 3, 2009, the Company recorded $0.8 million of restructuring costs and $1.6 million of other special charges. The Scholastic segment incurred $0.2 million of severance and related benefits associated with the closure of the Marysville, Ohio chenille letter manufacturing facility. The Marketing and Publishing Services segment incurred $0.2 million of restructuring costs for severance and related benefits associated with the closure of the Baltimore, Maryland facility, $0.1 million of other shutdown related costs and $0.2 million of other severance and related benefits. The Memory Book segment incurred $0.1 million of severance and related benefits associated with the closure of the Winston-Salem, North Carolina facility. Other special charges for the three months ended October 3, 2009 represented $1.6 million of non-cash facility related asset impairment charges in the Memory Book segment associated with the closure of the Winston-Salem, North Carolina facility. The associated employee headcount reductions related to the above actions were 17 in the Marketing and Publishing Services segment.

Operating Income. As a result of the foregoing, Visant’s consolidated operating income decreased $8.3 million to $4.6 million for the three months ended October 2, 2010 compared to $12.9 million for the comparable period in 2009. As a percentage of net sales, operating income decreased to 2.1% for the third fiscal quarter of 2010 from 5.4% for the same period in 2009.

Holdings’ consolidated operating income decreased $2.1 million to $10.6 million for the three months ended October 2, 2010 compared to $12.7 million for the comparable period in 2009. As a percentage of net sales, operating income decreased less than one percent to 4.7% for the third fiscal quarter of 2010 from 5.4% for the same period in 2009.

Net Interest Expense. Net interest expense was comprised of the following:


	Three months ended
*In thousands*	October 2, 2010			October 3, 2009			$ Change			% Change
Holdings:
Interest expense	$	12,640		$	13,992		$	(1,352	)		(9.7	%)
Amortization of debt discount, premium and deferred financing costs		432			483			(51	)		(10.6	%)

Holdings interest expense, net		13,072			14,475			(1,403	)		(9.7	%)

Visant:
Interest expense		16,826			12,125			4,701			38.8	%
Amortization of debt discount, premium and deferred financing costs		1,562			1,310			252			19.2	%
Interest income		(16	)		(16	)		—			NM

Visant interest expense, net		18,372			13,419			4,953			36.9	%

Interest expense, net	$	31,444		$	27,894		$	3,550			12.7	%

NM = Not meaningful

Net interest expense increased $3.5 million, or 12.7%, to $31.4 million for the three months ended October 2, 2010 compared to $27.9 million for the comparative 2009 period primarily due to higher average borrowings and incremental interest charges related to the 2010 Refinancing as described below.

Loss on Repurchase and Redemption of Debt. In connection with the refinancing transactions consummated by Visant in September 2010 (the “2010 Refinancing”), Visant, directly or through Holdings, repurchased Holdings’ outstanding 10.25% Senior Discount Notes due 2013 (the “Senior Discount Notes”) and 8.75% Senior Notes due 2013 (the “Senior Notes”) and Visant’s outstanding 7.625% Senior Subordinated Notes due 2012 (the “Senior Subordinated Notes” and together with the Senior Discount Notes and the Senior Notes, the “Old Notes”) pursuant to cash tender offers or satisfied and discharged the Old Notes, directly or through Holdings, by delivering to the applicable trustee amounts sufficient to pay the redemption price, plus accrued and unpaid interest up to, but not including, the date of redemption pursuant to notices given by Holdings or Visant, as applicable, with respect to the respective series of Old Notes. In connection with these transactions, we recognized losses in the aggregate of $37.7 million. These losses included $9.7 million of premium paid over the redemption price under the tender offers, $12.9 million of consent payments paid to holders of the Old Notes who tendered by the early tender date under the tender offers, $0.2 million of redemption premium payments and an aggregate of $14.9 million of non-cash unamortized deferred financing costs.

Income Taxes. On a consolidated basis, Holdings recorded an income tax provision for the three months ended October 2, 2010 based on its best estimate of the consolidated effective tax rate applicable for the entire year plus tax adjustments considered a current period tax expense or benefit. The effective tax rates for the three months ended October 2, 2010 were 23.1% and 7.9% for Holdings and Visant, respectively. For the comparable three-month period ended October 3, 2009, the effective tax rates were 46.8% and 273.2% for Holdings and Visant, respectively. The effective rates of tax benefit for the 2009 and 2010 three-month periods reflect changes made to each of Holdings’ and Visant’s estimated annual effective tax rate for the entire year and the effect of tax adjustments considered a current period expense or benefit.

Net Loss. As a result, Visant’s net loss increased $22.4 million to $21.6 million for the three months ended October 2, 2010 compared to net income of $0.8 million for the three months ended October 3, 2009. Holdings’ net loss increased $36.9 million to $45.0 million for the three months ended October 2, 2010 compared to a net loss of $8.1 million for the three months ended October 3, 2009.

Nine Months Ended October 2, 2010 Compared to the Nine Months Ended October 3, 2009

The following table sets forth selected information derived from our condensed consolidated statements of operations for the nine-month periods ended October 2, 2010 and October 3, 2009.

Visant Corporation


	Nine months ended
*In thousands*	October 2, 2010			October 3, 2009			$ Change			% Change
Net sales	$	989,389		$	1,000,273		$	(10,884	)		(1.1	%)
Cost of products sold		451,104			462,342			(11,238	)		(2.4	%)

Gross profit		538,285			537,931			354			0.1	%
% of net sales		*54.4*	%		*53.8*	%

Selling and administrative expenses		347,313			337,771			9,542			2.8	%
% of net sales		*35.1*	%		*33.8*	%

Loss (gain) on disposal of fixed assets		203			(453	)		656			NM
Special charges		3,383			14,816			(11,433	)		NM

Operating income		187,386			185,797			1,589			0.9	%
% of net sales		*18.9*	%		*18.6*	%

Interest expense, net		45,675			41,975			3,700			8.8	%
Loss on repurchase and redemption of debt		9,693			—			9,693			NM

Income before income taxes		132,018			143,822			(11,804	)		(8.2	%)
Provision for income taxes		55,951			54,420			1,531			2.8	%

Net income	$	76,067		$	89,402		$	(13,335	)		(14.9	%)

NM = Not meaningful

Visant Holding Corp.


	Nine months ended
*In thousands*	October 2, 2010		October 3, 2009		$ Change			% Change
Net sales	$	989,389	$	1,000,273	$	(10,884	)		(1.1	%)
Cost of products sold		451,104		462,342		(11,238	)		(2.4	%)

Gross profit		538,285

VISANT HOLDING CORP 10-Q