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Visant Corporation Announces 2013 Full Year And Fourth Quarter Results

March 5, 2014

ARMONK, N.Y., March 5, 2014 /PRNewswire/ — VISANT CORPORATION today announced results for its fiscal year ended December 28, 2013, including consolidated net sales of $1,127.7 million, compared to $1,155.3 million for its fiscal year ended December 29, 2012, a decrease of approximately 2.4%. Visant reported consolidated net income of $1.1 million for the fiscal year ended December 28, 2013, compared to a consolidated net loss of $58.6 million for the fiscal year ended December 29, 2012. The 2013 fiscal year results include an $8.2 million non-cash charge associated with the write-off of a tradename no longer in use in the Marketing and Publishing Services segment and the 2012 fiscal year results included a $64.2 million non-cash impairment charge associated with the write-down of goodwill in the Marketing and Publishing Services and Scholastic segments. Visant’s consolidated Adjusted EBITDA (defined in the accompanying summary of financial data) was $284.8 million for the 2013 fiscal year, a decrease of $13.3 million, compared to consolidated Adjusted EBITDA of $298.1 million for the 2012 fiscal year.

For the fourth fiscal quarter of 2013, consolidated net sales were $226.7 million, an increase of approximately 0.8%, compared to consolidated net sales of $225.0 million for the fourth fiscal quarter of 2012. In addition, the Company reported a consolidated net loss of $13.7 million for the fourth quarter of 2013 compared to a consolidated net loss of $85.6 million for the fourth quarter of 2012. The net loss in 2013 includes the $8.2 million write-off of a tradename no longer in use in the Marketing and Publishing Services segment and the net loss in 2012 was primarily attributable to the $64.2 million non-cash impairment charge recorded in 2012 associated with the write-down of goodwill in the Marketing and Publishing Services and Scholastic segments. Consolidated Adjusted EBITDA was $33.3 million for the fourth quarter of 2013 compared to consolidated Adjusted EBITDA of $35.9 million for the fourth quarter of 2012.

Fiscal Year 2013

Net sales for the Scholastic segment for the fiscal year ended December 28, 2013 decreased by $13.9 million, or 3.1%, to $431.9 million compared to $445.8 million for the fiscal year ended December 29, 2012. This decrease was primarily attributable to lower volume in our high school jewelry and announcement products. Partially offsetting the decrease was the shift of approximately $4.0 million of jewelry sales to the 2013 fiscal year from the fall of 2012 due to the timing of orders.

Net sales for the Memory Book segment were $331.3 million for the fiscal year ended December 28, 2013, a decrease of 4.3%, compared to $346.1 million for the fiscal year ended December 29, 2012. This decrease was primarily attributable to 3.6% lower yearbook volume.

Net sales for the Marketing and Publishing Services segment increased to $365.0 million for the fiscal year ended December 28, 2013 compared to $364.3 million for the fiscal year ended December 29, 2012. This increase included sales attributable to the Company’s acquisition of SAS Carestia (“Carestia”), a leader in fragrance sampling in Europe, which closed on July 1, 2013. Excluding the impact attributable to the acquisition of Carestia, net sales declined $9.5 million compared to the fiscal year ended December 29, 2012, primarily due to lower sampling volume in North America, partially offset by higher revenues from our Latin American sampling operations and our direct mail operations.

The Scholastic segment reported Adjusted EBITDA of $74.6 million for the fiscal year ended December 28, 2013, an increase of $2.1 million, compared to $72.5 million for the fiscal year ended December 29, 2012. This increase was primarily due to lower overall costs, including lower selling expenses, material costs and pension expense, partially offset by lower sales volume in high school jewelry and announcement products.

Our Memory Book segment reported Adjusted EBITDA of $140.1 million for the fiscal year ended December 28, 2013, a decrease of $3.6 million, compared to $143.7 million for the fiscal year ended December 29, 2012. This decrease was primarily due to lower yearbook volume partially offset by lower overall costs as a result of cost saving initiatives and lower pension expense.

The Marketing and Publishing Services segment reported Adjusted EBITDA of $70.1 million for the fiscal year ended December 28, 2013, a decrease of $11.8 million, compared to $81.9 million for the prior year comparative period. This decrease was primarily due to lower volume and unfavorable sales mix in our sampling business.

Fourth Fiscal Quarter 2013

Net sales for the Scholastic segment were $114.7 million for the fourth fiscal quarter of 2013 compared to $120.7 million for the fourth fiscal quarter of 2012. This decrease was primarily attributable to lower volume of high school jewelry products.

Net sales for the Memory Book segment were $14.8 million for the fourth fiscal quarter of 2013 compared to $16.5 million for the fourth fiscal quarter of 2012. This decrease was primarily attributable to lower volume.

Net sales for the Marketing and Publishing Services segment for the fourth fiscal quarter of 2013 increased $9.3 million to $97.4 million from $88.1 million for the fourth fiscal quarter of 2012. This increase included sales attributable to the Company’s acquisition of Carestia. Excluding the impact attributable to the acquisition of Carestia, the increase in net sales was $3.6 million compared to the fourth fiscal quarter of 2012, primarily due to higher sampling volume.

Adjusted EBITDA for the Scholastic segment decreased $2.4 million to $18.8 million for the fourth fiscal quarter of 2013, compared to a $21.2 million for the fourth fiscal quarter of 2012, primarily due to lower sales volume.

Adjusted EBITDA for the Memory Book segment for the fourth fiscal quarter of 2013 was a loss of $3.2 million compared to a loss of $3.6 million for the fourth fiscal quarter of 2012. This slight improvement in Adjusted EBITDA was primarily attributable to the impact of cost saving initiatives and lower pension expense.

The Marketing and Publishing Services segment reported Adjusted EBITDA of $17.7 million for the fourth fiscal quarter of 2013 compared to $18.4 million for the fourth fiscal quarter of 2012. This decrease was primarily due to unfavorable sales mix in our sampling operations.

Consolidated Indebtedness

As of December 28, 2013, Visant’s consolidated debt, comprised of the outstanding indebtedness under its senior secured credit facilities and its 10.00% senior notes due 2017, was $1,884.8 million, including $7.7 million of capital lease and equipment financing obligations and exclusive of original issue discount of $11.9 million related to the term loan under the senior secured credit facilities. Visant’s cash position as of December 28, 2013 totaled $96.0 million.

The Company had accrued approximately $14.6 million of interest under its senior notes and senior secured credit facilities as of December 28, 2013. This amount was paid following the end of the fourth fiscal quarter.

Visant has provided a reconciliation of net income to Adjusted EBITDA and EBITDA to Adjusted EBITDA in the accompanying summary of financial data.

Supplemental data has also been provided for Visant’s three segments: Scholastic, Memory Book and Marketing and Publishing Services.

CONFERENCE CALL

The Company’s regular quarterly conference call concerning the 2013 full year and fourth quarter results will be webcast live today at 10:00 a.m. Eastern Time on the Investor Information section of Visant’s website at www.visant.net.

ABOUT OUR COMPANY

Visant is a leading marketing and publishing services enterprise servicing the school affinity, direct marketing, fragrance, cosmetic and personal care sampling and packaging, and educational and trade publishing segments.

The Company has three reportable segments:

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.

Marketing and Publishing Services – provides services in conjunction with the development, marketing, sale and production of multi-sensory and interactive advertising sampling systems and packaging, primarily for the fragrance, cosmetic 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.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains forward-looking statements including, without limitation, statements concerning our operations, our economic performance and financial condition. Forward-looking statements are not historical facts, but rather 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 “Risk Factors” in our Annual Report on Form 10-K for the year ended December 29, 2012 and as will be identified under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 28, 2013.

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; competition from other companies; our inability to consummate acquisitions and dispositions on acceptable terms or capture anticipated synergies; global market and economic conditions; levels of customers’ advertising and marketing spending, including as may be impacted by economic factors and general market conditions; fluctuations in raw material prices; our reliance on a limited number of suppliers; the seasonality of our businesses; developments in technology and related changes in consumer behavior; the loss of significant customers or customer relationships; Jostens’ reliance on independent sales representatives; our reliance on numerous complex information systems and associated security risks; the amount of capital expenditures required at our businesses; risks associated with doing business outside the United States; 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, including tax legislation; the application of privacy laws and other related obligations and liabilities for our business; the textbook adoption cycle and levels of government funding for education spending; control by our stockholders; changes in market value of the securities held in our pension plans; and our dependence on members of senior management.

We caution you not to place undue reliance on these forward-looking statements, and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date they are made, are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements 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.

The information presented in this release contains financial measures other than in accordance with generally accepted accounting principles and should not be considered in isolation from or as a substitute for the company’s historical consolidated financial statements. The company presents this information because management uses it to monitor and evaluate the company’s ongoing operating results and trends, and the covenants in its debt agreements are tied to these measures. The company believes this information provides investors with an understanding of the company’s operating performance over comparative periods.

                                                                             VISANT CORPORATION AND SUBSIDIARIES

                                                                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                    Three months ended                                                 Twelve months ended
                                    ------------------                                                 -------------------

                                       December 28,                         December 29,                                     December 28,             December 29,

    In thousands                                           2013                                  2012                                           2013                     2012
    ------------                                           ----                                  ----                                           ----                     ----

     Net sales                                         $226,680                              $224,985                                     $1,127,703               $1,155,342

     Cost of products
      sold                                              118,228                               115,372                                        543,401                  549,490

       Gross profit                                     108,452                               109,613                                        584,302                  605,852

     Selling and
      administrative
      expenses                                           96,012                               105,802                                        405,962                  426,376

     (Gain) loss on
      disposal of fixed
      assets                                               (793)                                  686                                           (835)                  (1,629)

     Special charges (1)                                  9,080                                65,275                                         20,561                   75,905

       Operating income
        (loss)                                            4,153                               (62,150)                                       158,614                  105,200

     Gain on repurchase
      and redemption of
      debt                                                    -                                  (947)                                             -                     (947)

     Interest expense,
      net                                                38,907                                40,552                                        155,268                  158,924

       (Loss) income
        before income
        taxes                                           (34,754)                             (101,755)                                         3,346                  (52,777)

     (Benefit from)
      provision for
      income taxes                                      (21,098)                              (16,130)                                         2,265                    5,823

     Net (loss) income                                 $(13,656)                             $(85,625)                                        $1,081                 $(58,600)
     =================                                 ========                              ========                                         ======                 ========

    Adjusted EBITDA (2)                                 $33,304                               $35,934                                       $284,832                 $298,081

    Adjusted EBITDA Reconciliation:

    In thousands
    ------------

     Net (loss) income                                 $(13,656)                             $(85,625)                                        $1,081                 $(58,600)

     Interest expense,
      net                                                38,907                                40,552                                        155,268                  158,924

     (Benefit from)
      provision for
      income taxes                                      (21,098)                              (16,130)                                         2,265                    5,823

     Depreciation and
      amortization
      expense                                            17,689                                27,693                                         89,523                  104,533

       EBITDA                                            21,842                               (33,510)                                       248,137                  210,680

     Special charges (1)                                  9,080                                65,275                                         20,561                   75,905

     (Gain) loss on
      disposal of fixed
      assets                                               (793)                                  686                                           (835)                  (1,629)

     Gain on repurchase
      and redemption of
      debt                                                    -                                  (947)                                             -                     (947)

     Stock-based
      compensation (3)                                      850                                   700                                          1,512                    1,093

     Non-recurring
      employment-
      related expenses
      (4)                                                   102                                     -                                          6,953                        -

     Other (5)                                            2,223                                 3,730                                          8,504                   12,979

       Adjusted EBITDA (2)                              $33,304                               $35,934                                       $284,832                 $298,081
       ==================                               =======                               =======                                       ========                 ========



    (1)     Special charges for the
            fourth fiscal quarter ended
            December 28, 2013 included
            non-cash charges of $8.2
            million related to the
            write-off of a tradename no
            longer in use in our
            Marketing and Publishing
            Services segment and $0.1
            million of asset impairment
            charges associated with
            facility consolidations in
            the Scholastic segment.
            Also included in special
            charges for the three months
            ended December 28, 2013 were
            $0.6 million and $0.2
            million of severance and
            related benefit costs
            associated with reductions
            in force in the Scholastic
            and Memory Book segments,
            respectively.

            Special charges for the
            fiscal year ended December
            28, 2013 included: (a) $8.6
            million of costs in the
            Marketing and Publishing
            Services segment consisting
            of a non-cash charge of
            $8.2 million related to the
            write-off of a tradename no
            longer in use, and $0.4
            million of severance and
            related benefit costs
            associated with reductions
            in force; (b) $2.6 million
            of costs in the Scholastic
            segment consisting of $2.5
            million of severance and
            related benefit costs
            associated with reductions
            in force and a non-cash
            charge of $0.1 million
            related to asset impairment
            charges associated with
            facility consolidations; and
            (c) $1.7 million of costs in
            the Memory Book segment
            consisting of $1.0 million
            of severance and related
            benefit costs associated
            with reductions in force and
            a non-cash charge of $0.7
            million related to asset
            impairment charges
            associated with the
            consolidation of our Topeka,
            Kansas facility.  Also
            included in special charges
            for the twelve months ended
            December 28, 2013 was $7.7
            million related to the
            mutual termination of a
            multi-year marketing and
            sponsorship arrangement
            entered into by Jostens in
            2007.

            Special charges for the
            fourth fiscal quarter ended
            December 29, 2012 included
            an aggregate $64.2 million
            non-cash impairment charge
            associated with the write-
            down of goodwill in the
            amount of $55.3 million in
            our Marketing and Publishing
            Services segment and $8.9
            million in our Scholastic
            segment.  The Scholastic
            segment also reported $0.4
            million of severance and
            related benefit costs
            associated with reductions
            in force.  Special charges
            in the Memory Book segment
            included $0.5 million of
            costs consisting of
            severance and related
            benefit costs associated
            with the consolidation of
            our Topeka, Kansas facility.

            Special charges for the
            fiscal year ended December
            29, 2012 included: (a) $58.0
            million of costs in the
            Marketing and Publishing
            Services segment consisting
            of a $55.3 million non-cash
            impairment charge associated
            with the write-down of
            goodwill, $2.1 million of
            severance and related
            benefit costs and $0.5
            million of non-cash asset
            related impairment charges
            associated with facility
            consolidations; (b) $10.1
            million of costs in the
            Scholastic segment including
            an $8.9 million non-cash
            impairment charge associated
            with the write-down of
            goodwill and $1.2 million of
            severance and related
            benefit costs associated
            with reductions in force;
            and (c) $7.8 million of
            costs in the Memory Book
            segment including $6.5
            million of severance and
            related benefit costs
            associated with reductions
            in force and approximately
            $1.3 million of non-cash
            asset impairment charges
            associated with the
            consolidation of our Topeka,
            Kansas facility.

    (2)     Adjusted EBITDA is defined as
            net income plus net interest
            expense, income taxes,
            depreciation and
            amortization, excluding
            certain non-recurring
            items.  Adjusted EBITDA
            excludes certain items that
            are also excluded for
            purposes of calculating
            required covenant ratios and
            compliance under the
            indenture governing our
            outstanding 10.00% senior
            notes and our senior secured
            credit facilities.  As such,
            Adjusted EBITDA is a
            material component of these
            covenants.  Non-compliance
            with the financial ratio
            maintenance covenants
            contained in our senior
            secured credit facilities
            could result in the
            requirement to immediately
            repay all amounts
            outstanding under such
            facilities, while non-
            compliance with the debt
            incurrence ratio contained
            in the indenture governing
            the senior notes would
            prohibit Visant and its
            restricted subsidiaries from
            being able to incur
            additional indebtedness
            other than pursuant to
            specified exceptions.
            Adjusted EBITDA is not a
            presentation made in
            accordance with generally
            accepted accounting
            principles in the United
            States of America (GAAP), is
            not a measure of financial
            condition or profitability
            and should not be considered
            as an alternative to (a) net
            income (loss) determined in
            accordance with GAAP or (b)
            operating cash flows
            determined in accordance
            with GAAP.  Additionally,
            Adjusted EBITDA is not
            intended to be a measure of
            free cash flow for
            management's discretionary
            use, as it does not consider
            certain cash requirements
            such as interest payments,
            tax payments and debt
            service requirements.
            Because not all companies
            use identical calculations,
            this presentation of
            Adjusted EBITDA may not be
            comparable to other
            similarly titled measures of
            other companies.

    (3)     Reflects amounts included in
            selling and administrative
            expenses in connection with
            the recognition by Visant
            Corporation of stock-based
            compensation expense.

    (4)     Reflects amounts included in
            selling and administrative
            expenses for non-recurring
            employment expenses related
            to certain executive
            transitions.

    (5)     Other charges for the quarter
            ended December 28, 2013
            included $1.0 million of
            management fees, $0.9
            million of acquisition-
            related costs and $0.3
            million of other costs that
            are non-recurring in
            nature.

            Other charges for the fiscal
            year ended December 28, 2013
            included $3.8 million of
            management fees, $1.6
            million of acquisition-
            related costs, $1.0 million
            of costs related to the
            relocation of certain
            manufacturing equipment and
            the consolidation of certain
            facilities in the Memory
            Book segment, $0.3 million
            of non-recurring
            professional fees and $1.8
            million of other costs that
            are non-recurring in
            nature.

            Other charges for the quarter
            ended December 29, 2012
            included $1.9 million and
            $0.4 million of costs
            related to the relocation of
            certain manufacturing
            equipment and consolidation
            of certain facilities in the
            Memory Book and Marketing
            and Publishing Services
            segments, respectively. Also
            included were $0.9 million
            of management fees, $0.1
            million of non-recurring
            professional fees and $0.4
            million of other costs that
            were non-recurring in
            nature.

            Other charges for the fiscal
            year ended December 29, 2012
            included $3.7 million and
            $2.4 million of costs
            related to the relocation of
            certain manufacturing
            equipment and consolidation
            of certain facilities in the
            Memory Book and Marketing
            and Publishing Services
            segments, respectively. In
            addition, in the Scholastic
            segment, there were $0.6
            million of non-cash costs
            associated with the donation
            to the local industrial
            development authority of the
            former Unadilla, Georgia
            facility. Also included were
            $3.7 million of management
            fees, $0.9 million of non-
            recurring professional fees
            and $1.6 million of other
            costs that were non-
            recurring in nature.

                                      VISANT CORPORATION AND SUBSIDIARIES

                                         SUPPLEMENTAL DATA (UNAUDITED)

                    Three months ended
                    ------------------

                       December 28,                    December 29,

    In
     thousands                          2013                            2012  $ Change  % Change
                                                                              --------  --------

    Net
     sales

      Scholastic                    $114,701                        $120,712   $(6,011)        (5.0%)

      Memory
       Book                           14,756                          16,501    (1,745)       (10.6%)

       Marketing
       and
       Publishing
       Services                       97,361                          88,105     9,256          10.5%

      Inter-
       segment
       eliminations                     (138)                           (333)      195            NM

                                    $226,680                        $224,985    $1,695           0.8%
                                    ========                        ========    ======

     Adjusted
     EBITDA

      Scholastic                     $18,845                         $21,162   $(2,317)       (10.9%)

      Memory
       Book                           (3,228)                         (3,579)      351           9.8%

       Marketing
       and
       Publishing
       Services                       17,687                          18,351      (664)        (3.6%)

                                     $33,304                         $35,934   $(2,630)        (7.3%)
                                     =======                         =======   =======

     Adjusted
     EBITDA
     margin                             14.7%                           16.0%

    NM =
     not
     meaningful

                    Twelve months ended
                    -------------------

                       December 28,                    December 29,

    In
     thousands                          2013                            2012  $ Change  % Change
                                                                              --------  --------

    Net
     sales

      Scholastic                    $431,895                        $445,790  $(13,895)        (3.1%)

      Memory
       Book                          331,339                         346,070   (14,731)        (4.3%)

       Marketing
       and
       Publishing
       Services                      365,011                         364,297       714           0.2%

      Inter-
       segment
       eliminations                     (542)                           (815)      273            NM

                                  $1,127,703                      $1,155,342  $(27,639)        (2.4%)
                                  ==========                      ==========  ========

     Adjusted
     EBITDA

      Scholastic                     $74,636                         $72,461    $2,175           3.0%

      Memory
       Book                          140,103                         143,727    (3,624)        (2.5%)

       Marketing
       and
       Publishing
       Services                       70,093                          81,893   (11,800)       (14.4%)

                                    $284,832                        $298,081  $(13,249)        (4.4%)
                                    ========                        ========  ========

     Adjusted
     EBITDA
     margin                             25.3%                           25.8%

    NM =
     not
     meaningful

SOURCE Visant Corporation


Source: PR Newswire



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