form10q_1q09.htm

10-Q 1 form10q_1q09.htm FORM 10-Q Q1 FY09 form10q_1q09.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

FOR THE QUARTERLY PERIOD ENDED November 29, 2008

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

COMMISSION FILE NUMBERS 333-137067, 333-121479, 333-84294

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

(Exact name of registrant as specified in its charter)


DELAWARE		20-4833998
DELAWARE		20-1854833
DELAWARE		13-4126506
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification Number)
organization)

7211 CIRCLE S ROAD

AUSTIN, TEXAS 78745

(Address of principal executive offices) (Zip Code)

Registrants’ Telephone Number, Including Area Code (512) 444-0571

Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes o No þ.

Indicate by check mark whether the registrant 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. (Check one):

Large accelerated filer o Accelerated filer o

Non-accelerated filer þ(do not check if smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ.

Number of shares outstanding of American Achievement Group Holding Corp. as of December 31, 2008: 505,460 shares of common stock.

Number of shares outstanding of AAC Group Holding Corp. as of December 31, 2008: 100 shares of common stock.

Number of shares of American Achievement Corporation outstanding as of December 31, 2008: 100 shares of common stock.

This Form 10-Q is a combined quarterly report being filed separately by three registrants: American Achievement Group Holding Corp., AAC Group Holding Corp., and American Achievement Corporation. Unless the context indicates otherwise, any reference in this report to “Parent Holdings” refers to American Achievement Group Holding Corp., “Intermediate Holdings” refers to AAC Group Holding Corp., and “AAC” refers to American Achievement Corporation, the indirect wholly-owned operating subsidiary of Intermediate Holdings. The “Company”, “we”, “us”, and “our” refer to American Achievement Group Holding Corp., and AAC Group Holding Corp. together with American Achievement Corporation.

FOR THE QUARTERLY PERIOD ENDED NOVEMBER 29, 2008

INDEX

	PAGE
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements and Notes
Condensed Consolidated Balance Sheets (unaudited) — As of November 29, 2008 and August 30, 2008	3
Condensed Consolidated Statements of Operations (unaudited) — For the Three Months Ended November 29, 2008 and the Three Months Ended November 24, 2007	6
Condensed Consolidated Statements of Cash Flows (unaudited) — For the Three Months Ended November 29, 2008 and the Three Months Ended November 24, 2007	9
Notes to Condensed Consolidated Financial Statements (unaudited)	12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	28
Item 4. Controls and Procedures	28

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	29
Item 6. Exhibits	30

SIGNATURES	31
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

Explanatory Note

This combined Form 10-Q is separately filed by American Achievement Group Holding Corp., AAC Group Holding Corp., and American Achievement Corporation. Each Registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such Registrant. Each Registrant hereto is not filing any information that does not relate to such Registrant, and therefore makes no representation as to any such information.

Unless the context indicates otherwise, any reference in this report to “Parent Holdings” refers to American Achievement Group Holding Corp., “Intermediate Holdings” refers to AAC Group Holding Corp., and “AAC” refers to American Achievement Corporation, the indirect wholly-owned operating subsidiary of Intermediate Holdings. The “Company”, “we”, “us”, and “our” refer to American Achievement Group Holding Corp., and AAC Group Holding Corp. together with American Achievement Corporation.

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

Condensed Consolidated Balance Sheets

(unaudited)

	Parent Holdings
	November 29, 2008			August 30, 2008
	(Dollars in thousands)
ASSETS
Cash and cash equivalents	$	14,970		$	9,757
Accounts receivable, net of allowances		35,156			36,920
Inventories		29,956			27,411
Deferred tax assets		24,504			11,752
Prepaid expenses and other current assets, net		21,593			17,062
Total current assets		126,179			102,902

Property, plant and equipment, net		66,825			68,477
Goodwill		171,073			171,073
Other intangible assets, net		94,888			97,000
Deferred tax assets		-			973
Other assets, net		18,223			18,692
Total assets	$	477,188		$	459,117

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Book overdraft	$	119		$	61
Accounts payable		8,734			10,900
Customer deposits		28,748			8,102
Accrued expenses		24,364			22,018
Deferred revenue		6,909			2,750
Accrued interest		5,077			5,722
Current portion of long-term debt		469			2,908
Total current liabilities		74,420			52,461

Long-term debt, net of current portion		562,068			556,135
Deferred tax liabilities		5,945			-
Mandatory redeemable preferred stock		7,500			7,500
Other long-term liabilities		9,840			9,201
Total liabilities		659,773			625,297

Commitments and contingencies (Note 8)

Stockholders’ deficit:
Common stock		5			5
Distributions in excess of paid-in capital		(123,880	)		(123,880	)
Accumulated deficit		(61,345	)		(45,014	)
Accumulated other comprehensive income		2,635			2,709
Total stockholders’ deficit		(182,585	)		(166,180	)

Total liabilities and stockholders’ deficit	$	477,188		$	459,117

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

AAC GROUP HOLDING CORP.

Condensed Consolidated Balance Sheets

(unaudited)

	Intermediate Holdings
	November 29, 2008			August 30, 2008
	(Dollars in thousands)
ASSETS
Cash and cash equivalents	$	14,959		$	9,746
Accounts receivable, net of allowances		35,156			36,920
Inventories		29,956			27,411
Deferred tax assets		16,130			12,196
Prepaid expenses and other current assets, net		24,812			19,395
Total current assets		121,013			105,668

Property, plant and equipment, net		66,825			68,477
Goodwill		171,073			171,073
Other intangible assets, net		94,888			97,000
Other assets, net		12,465			12,555
Total assets	$	466,264		$	454,773

LIABILITIES AND STOCKHOLDER'S EQUITY
Book overdraft	$	119		$	61
Accounts payable		8,734			10,900
Customer deposits		28,748			8,102
Accrued expenses		17,732			16,863
Deferred revenue		6,909			2,750
Accrued interest		5,077			5,722
Current portion of long-term debt		469			2,908
Total current liabilities		67,788			47,306

Long-term debt, net of current portion		350,531			352,998
Deferred tax liabilities		21,166			21,595
Other long-term liabilities		2,564			2,703
Total liabilities		442,049			424,602

Commitments and contingencies (Note 8)

Stockholder's equity:
Common stock		-			-
Additional paid-in capital		24,309			24,309
Accumulated earnings (deficit)		(2,729	)		3,153
Accumulated other comprehensive income		2,635			2,709
Total stockholder's equity		24,215			30,171

Total liabilities and stockholder's equity	$	466,264		$	454,773

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

AMERICAN ACHIEVEMENT CORPORATION

Condensed Consolidated Balance Sheets

(unaudited)

	AAC
	November 29, 2008		August 30, 2008
	(Dollars in thousands)
ASSETS
Cash and cash equivalents	$	14,948	$	9,735
Accounts receivable, net of allowances		35,156		36,920
Inventories		29,956		27,411
Deferred tax assets		17,539		14,920
Prepaid expenses and other current assets, net		24,256		18,839
Total current assets		121,855		107,825

Property, plant and equipment, net		66,825		68,477
Goodwill		171,073		171,073
Other intangible assets, net		94,888		97,000
Other assets, net		10,760		10,739
Total assets	$	465,401	$	455,114

LIABILITIES AND STOCKHOLDER'S EQUITY
Book overdraft	$	119	$	61
Accounts payable		8,734		10,900
Customer deposits		28,748		8,102
Accrued expenses		17,721		16,852
Deferred revenue		6,909		2,750
Accrued interest		2,831		5,722
Current portion of long-term debt		469		2,908
Total current liabilities		65,531		47,295

Long-term debt, net of current portion		219,031		222,577
Deferred tax liabilities		39,535		39,580
Other long-term liabilities		2,536		2,675
Total liabilities		326,633		312,127

Commitments and contingencies (Note 8)

Stockholder's equity:
Common stock		-		-
Additional paid-in capital		109,211		109,211
Accumulated earnings		26,922		31,067
Accumulated other comprehensive income		2,635		2,709
Total stockholder's equity		138,768		142,987

Total liabilities and stockholder's equity	$	465,401	$	455,114

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

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

Condensed Consolidated Statements of Operations

(unaudited)

	Parent Holdings
	For the three months ended
	November 29, 2008			November 24, 2007
	(Dollars in thousands)

Net sales	$	49,213		$	51,940
Cost of sales		25,051			25,317
Gross profit		24,162			26,623
Selling, general and administrative expenses		28,852			29,346
Operating loss		(4,690	)		(2,723	)
Interest expense, net		17,430			15,631
Loss from continuing operations before income taxes		(22,120	)		(18,354	)
Benefit for income taxes		(5,789	)		(4,555	)
Loss from continuing operations		(16,331	)		(13,799	)
Discontinued operations:
Loss from discontinued operations before income taxes		-			(7,090	)
Benefit for income taxes		-			(2,772	)
Loss from discontinued operations		-			(4,318	)
Net loss	$	(16,331	)	$	(18,117	)

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

AAC GROUP HOLDING CORP.

Condensed Consolidated Statements of Operations

(unaudited)

	Intermediate Holdings
	For the three months ended
	November 29, 2008			November 24, 2007
	(Dollars in thousands)

Net sales	$	49,213		$	51,940
Cost of sales		25,051			25,317
Gross profit		24,162			26,623
Selling, general and administrative expenses		26,489			29,346
Operating loss		(2,327	)		(2,723	)
Interest expense, net		7,873			8,171
Loss from continuing operations before income taxes		(10,200	)		(10,894	)
Benefit for income taxes		(4,318	)		(4,592	)
Loss from continuing operations		(5,882	)		(6,302	)
Discontinued operations:
Loss from discontinued operations before income taxes		-			(7,090	)
Benefit for income taxes		-			(2,772	)
Loss from discontinued operations		-			(4,318	)
Net loss	$	(5,882	)	$	(10,620	)

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

AMERICAN ACHIEVEMENT CORPORATION

Condensed Consolidated Statements of Operations

(unaudited)

	AAC
	For the three months ended
	November 29, 2008			November 24, 2007
	(Dollars in thousands)

Net sales	$	49,213		$	51,940
Cost of sales		25,051			25,317
Gross profit		24,162			26,623
Selling, general and administrative expenses		26,489			29,346
Operating loss		(2,327	)		(2,723	)
Interest expense, net		4,437			5,105
Loss from continuing operations before income taxes		(6,764	)		(7,828	)
Benefit for income taxes		(2,619	)		(3,090	)
Loss from continuing operations		(4,145	)		(4,738	)
Discontinued operations:
Loss from discontinued operations before income taxes		-			(7,090	)
Benefit for income taxes		-			(2,772	)
Loss from discontinued operations		-			(4,318	)
Net loss	$	(4,145	)	$	(9,056	)

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

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Parent Holdings
	For the three months ended
	November 29, 2008			November 24, 2007
	(Dollars in thousands)
Cash flows from operating activities:
Net loss	$	(16,331	)	$	(18,117	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Other charges		-			5,542
Depreciation and amortization		5,966			5,276
Deferred income taxes		(5,789	)		(7,328	)
Amortization of deferred financing fees		872			873
Accretion of interest on 10.25% senior discount notes		1,079			2,962
Accretion of Senior PIK Notes		8,400			6,388
Gain on sale of property, plant and equipment		-			(21	)
Allowance for doubtful accounts		(90	)		326
Changes in assets and liabilities:
Accounts receivable		1,854			1,729
Inventories		(1,940	)		3,150
Prepaid expenses and other current assets, net		(4,531	)		(2,652	)
Other assets, net		(1,009	)		1,666
Customer deposits		20,646			13,276
Deferred revenue		4,159			5,017
Accounts payable, accrued expenses, accrued interest and other long-term liabilities		(602	)		(2,647	)
Net cash provided by operating activities		12,684			15,440
Cash flows from investing activities:
Purchases of property, plant and equipment		(1,544	)		(3,116	)
Proceeds from sales of property, plant and equipment		-			52
Net cash used in investing activities		(1,544	)		(3,064	)
Cash flows from financing activities:
Payments on revolving credit facility		(6,000	)		(12,950	)
Proceeds from credit facility revolver		6,000			14,100
Payments on term loan		(5,985	)		(225	)
Change in book overdraft		58			(4,524	)
Net cash used in financing activities		(5,927	)		(3,599	)
Net increase in cash and cash equivalents		5,213			8,777
Cash and cash equivalents, beginning of period		9,757			1,454
Cash and cash equivalents, end of period	$	14,970		$	10,231

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	6,968		$	8,099
Income taxes	$	192		$	465
Supplemental non-cash investing and financing activities disclosure:
Additions to property, plant and equipment included in accounts payable	$	752		$	84

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

AAC GROUP HOLDING CORP.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Intermediate Holdings
	For the three months ended
	November 29, 2008			November 24, 2007
	(Dollars in thousands)
Cash flows from operating activities:
Net loss	$	(5,882	)	$	(10,620	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Other charges		-			5,542
Depreciation and amortization		5,966			5,276
Deferred income taxes		(4,318	)		(7,365	)
Amortization of deferred financing fees		493			494
Accretion of interest on 10.25% senior discount notes		1,079			2,962
Gain on sale of property, plant and equipment		-			(21	)
Allowance for doubtful accounts		(90	)		326
Changes in assets and liabilities:
Accounts receivable		1,854			1,729
Inventories		(1,940	)		3,150
Prepaid expenses and other current assets, net		(5,417	)		(2,652	)
Other assets, net		(1,009	)		1,666
Customer deposits		20,646			13,276
Deferred revenue		4,159			5,017
Accounts payable, accrued expenses, accrued interest and other long-term liabilities		(2,857	)		(3,344	)
Net cash provided by operating activities		12,684			15,436
Cash flows from investing activities:
Purchases of property, plant and equipment		(1,544	)		(3,116	)
Proceeds from sales of property, plant and equipment		-			52
Net cash used in investing activities		(1,544	)		(3,064	)
Cash flows from financing activities:
Payments on revolving credit facility		(6,000	)		(12,950	)
Proceeds from credit facility revolver		6,000			14,100
Payments on term loan		(5,985	)		(225	)
Change in book overdraft		58			(4,524	)
Net cash used in financing activities		(5,927	)		(3,599	)
Net increase in cash and cash equivalents		5,213			8,773
Cash and cash equivalents, beginning of period		9,746			1,168
Cash and cash equivalents, end of period	$	14,959		$	9,941

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	6,968		$	8,099
Income taxes	$	192		$	465

Supplemental non-cash investing and financing activities disclosure:
Additions to property, plant and equipment included in accounts payable	$	752		$	84

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

AMERICAN ACHIEVEMENT CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

	AAC
	For the three months ended
	November 29, 2008			November 24, 2007
	(Dollars in thousands)
Cash flows from operating activities:
Net loss	$	(4,145	)	$	(9,056	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Other charges		-			5,542
Depreciation and amortization		5,966			5,276
Deferred income taxes		(2,619	)		(5,863	)
Amortization of deferred financing fees		382			383
Gain on sale of property, plant and equipment		-			(21	)
Allowance for doubtful accounts		(90	)		326
Changes in assets and liabilities:
Accounts receivable		1,854			1,729
Inventories		(1,940	)		3,150
Prepaid expenses and other current assets, net		(5,417	)		(2,652	)
Other assets, net		(1,009	)		1,666
Customer deposits		20,646			13,276
Deferred revenue		4,159			5,017
Accounts payable, accrued expenses, accrued interest and other long-term liabilities		(5,103	)		(3,344	)
Net cash provided by operating activities		12,684			15,429
Cash flows from investing activities:
Purchases of property, plant and equipment		(1,544	)		(3,116	)
Proceeds from sales of property, plant and equipment		-			52
Net cash used in investing activities		(1,544	)		(3,064	)
Cash flows from financing activities:
Payments on revolving credit facility		(6,000	)		(12,950	)
Proceeds from credit facility revolver		6,000			14,100
Payments on term loan		(5,985	)		(225	)
Change in book overdraft		58			(4,524	)
Net cash used in financing activities		(5,927	)		(3,599	)
Net increase in cash and cash equivalents		5,213			8,766
Cash and cash equivalents, beginning of period		9,735			620
Cash and cash equivalents, end of period	$	14,948		$	9,386

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	6,968		$	8,099
Income taxes	$	192		$	465
Supplemental non-cash investing and financing activities disclosure:
Additions to property, plant and equipment included in accounts payable	$	752		$	84

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

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(unaudited)

1. Summary of Organization and Significant Accounting Policies

Registrants

The consolidated financial statements of American Achievement Group Holding Corp. (“Parent Holdings”) include the accounts of its wholly-owned subsidiary, AAC Group Holding Corp. (“Intermediate Holdings”) and its indirect wholly-owned subsidiary, American Achievement Corporation (“AAC”), all of which are separate public reporting companies. The consolidated financial statements of Intermediate Holdings include the accounts of its indirect wholly-owned subsidiary, AAC. Parent Holdings, Intermediate Holdings, and AAC are treated as entities under common control. Parent Holdings, Intermediate Holdings and AAC together with their consolidated subsidiaries are referred to as the “Company.” Unless separately stated, the notes herein relate to Parent Holdings, Intermediate Holdings and AAC.

Description of Business

The Company is a manufacturer and supplier of class rings, yearbooks and other graduation-related scholastic products for the high school and college markets and of recognition products, such as letter jackets, and affinity jewelry designed to commemorate significant events, achievements and affiliations. The Company markets its products and services primarily in the United States and operates in four reporting segments; class rings, yearbooks, graduation products and other. The Company’s corporate office is located in Austin, Texas and its manufacturing facilities are located in Austin, Dallas, El Paso and Waco, Texas, Louisville, Kentucky, Manhattan, Kansas, and Juarez, Mexico.

As described in Note 4, during the first quarter of fiscal year 2008, the Company decided to shut down its achievement publications segment. This segment sold achievement publications in the specialty directory publishing industry nationwide.

Consolidation

The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Parent Holdings conducts all of its business through Intermediate Holdings and AAC and its subsidiaries. The consolidated financial statements of Parent Holdings include the accounts of its direct wholly-owned subsidiary, Intermediate Holdings and its indirect wholly-owned subsidiary, AAC. Parent Holdings’ consolidated financial statements are substantially identical to Intermediate Holdings’ consolidated financial statements, with the exception of the series A preferred stock, senior PIK notes, costs related to the Transaction (see Note 2), additional interest expense related to its series A preferred stock and senior PIK notes, amortization of deferred financing costs, interest income on its cash balances and the related income taxes.

Intermediate Holdings conducts all of its business indirectly through AAC and its subsidiaries. The consolidated financial statements of Intermediate Holdings include the accounts of its indirect wholly-owned subsidiary, AAC. Intermediate Holdings’ consolidated financial statements are substantially identical to AAC’s consolidated financial statements, with the exception of the 10.25% senior discount notes, additional interest expense related to the 10.25% senior discount notes, amortization of deferred financing costs, interest income on its cash balances and the related income taxes.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Operating results for the three months ended November 29, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending August 29, 2009. The interim condensed consolidated financial statements and accompanying notes included herein should be read in conjunction with the consolidated financial statements for the year ended August 30, 2008 included in the Company’s Report on Form 10-K (File No. 333-84294, 333-121479 and 333-137067) filed on November 25, 2008.

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(unaudited)

Unless separately stated, the notes herein relate to Parent Holdings, Intermediate Holdings and AAC.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS 157 are effective for the Company beginning with its fiscal year 2009. The adoption of the standard did not have a material impact on the Company’s financial position and results of operations.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — An Amendment of FASB Statements No. 87, 88, 106 and 132 (R)” (“SFAS 158”). SFAS 158 requires an employer to recognize the funded status of defined benefit postretirement plan as an asset or liability in the balance sheet and to recognize changes in that funded status in the year in which changes occur through comprehensive income. Additionally, SFAS 158 requires an employer to measure the funded status of each of its plans as of the date of its year-end statement of financial position. The Company adopted the recognition and disclosure provisions of SFAS 158 in fiscal 2007. The measurement date provisions of SFAS 158 will be effective for the Company beginning with its fiscal year 2009 and the Company will use a measurement date as of the end of its fiscal year for its defined benefit postretirement plans in fiscal 2009.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for the Company for fiscal years beginning with its fiscal year 2009. The standard did not have an impact on the Company’s financial position and results of operations, as the Company did not elect to measure any financial assets or liabilities at fair value.

2. Stock Purchase Agreement

Pursuant to a Stock Purchase Agreement dated May 15, 2008 among Herff Jones Inc. (the “Buyer”), Parent Holdings and the holders of all of Parent Holdings’ equity securities (the “Equity Holders”), the Equity Holders agreed to sell all of the equity in Parent Holdings to the Buyer (the “Transaction”). On December 5, 2008, Parent Holdings and the Buyer, together with the Equity Holders, announced that such parties have entered into a Settlement Agreement pursuant to which they have mutually agreed to terminate the Stock Purchase Agreement (see Note 13).

During the first quarter of 2009, Parent Holdings recorded costs related to the Transaction of $2.4 million in selling, general and administrative expenses. As of November 29, 2008, Parent Holdings had accrued expenses related to the Transaction of $6.6 million.

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(unaudited)

3. Comprehensive Loss

The following amounts were included in determining comprehensive loss for the three months ended November 29, 2008 and November 24, 2007.

	For the three months ended
	November 29, 2008				November 24, 2007
Parent Holdings
Net loss		$	(16,331	)		$	(18,117	)
Amortization of net actuarial gain and prior service costs - pension and postretirement plans, net of tax			(74	)			(73	)
Total comprehensive loss		$	(16,405	)		$	(18,190	)

	For the three months ended
	November 29, 2008				November 24, 2007
Intermediate Holdings
Net loss		$	(5,882	)		$	(10,620	)
Amortization of net actuarial gain and prior service costs - pension and postretirement plans, net of tax			(74	)			(73	)
Total comprehensive loss		$	(5,956	)		$	(10,693	)

	For the three months ended
	November 29, 2008				November 24, 2007
AAC
Net loss		$	(4,145	)		$	(9,056	)
Amortization of net actuarial gain and prior service costs - pension and postretirement plans, net of tax			(74	)			(73	)
Total comprehensive loss		$	(4,219	)		$	(9,129	)

4. Discontinued Operations

On October 26, 2007, the Company announced a planned shutdown of the achievement publications segment. Operations of this segment have ceased and have been eliminated from the ongoing operations of the Company as a result of the shutdown. All activities in connection with the shutdown were completed prior to May 31, 2008, and the Company has not had any significant continuing involvement in this segment since then.

The results of operations of the achievement publications business are reported as discontinued operations in the condensed consolidated income statements for the period ended November 24, 2007. Prior to the shutdown, the achievement publications business was included as the Company’s achievement publications reporting segment. Net sales and loss from discontinued operations for the three months ended November 24, 2007 are as follows:

	For the three months ended
	November 24, 2007
Discontinued operations:
Net sales	$	1,758

Operating loss	$	(7,090	)
Benefit for income taxes		(2,772	)
Loss from discontinued operations	$	(4,318	)

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(unaudited)

The Company recognized charges of $5.5 million during the three months ended November 24, 2007 primarily related to the write-off of the remaining carrying value of tangible and intangible assets upon shutdown of the achievement publications segment. These charges are included in the loss from discontinued operations in the condensed consolidated statements of operations and in other charges in the condensed consolidated statements of cash flows. Also included in loss from discontinued operations for the period ended November 24, 2007, are $0.7 million of costs incurred for contract termination and employee termination costs related to the shutdown. All such costs have been paid as of November 29, 2008.

5. Inventories

	November 29, 2008			August 30, 2008

Raw materials	$	14,016		$	15,840
Work in process		8,090			5,431
Finished goods		8,319			6,540
Less—Reserves		(469	)		(400	)
	$	29,956		$	27,411

The Company’s cost of sales includes depreciation of $2,268 and $2,042 for the three months ended November 29, 2008 and November 24, 2007, respectively.

6. Goodwill and Other Intangible Assets

Goodwill

	November 29, 2008		August 30, 2008
Class Rings	$	67,092	$	67,092
Yearbooks		65,241		65,241
Graduation Products		23,781		23,781
Other		14,959		14,959
Total	$	171,073	$	171,073

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(unaudited)

Other Intangible Assets

	November 29, 2008
	Estimated	Gross			Accumulated				Net
	Useful Life	Asset			Amortization				Asset
Trademarks	Indefinite		$	36,826		$	-			$	36,826
Patents	14 to 17 years			7,317			(2,070	)			5,247
Customer lists and distribution contracts	3 to 12 years			98,340			(45,525	)			52,815

Total			$	142,483		$	(47,595	)		$	94,888

	August 30, 2008
	Estimated	Gross			Accumulated				Net
	Useful Life	Asset			Amortization				Asset
Trademarks	Indefinite		$	36,826		$	-			$	36,826
Patents	14 to 17 years			7,317			(1,960	)			5,357
Customer lists and distribution contracts	3 to 12 years			97,740			(42,923	)			54,817

Total			$	141,883		$	(44,883	)		$	97,000

Total amortization on other intangible assets was $2,712 and $2,562 for the three months ended November 29, 2008 and November 24, 2007, respectively, which is recorded as selling, general and administrative expenses. Estimated annual amortization expense is as follows:

Year	Amount
2009	$	10,849
2010		10,249
2011		10,249
2012		9,816
2013		9,220

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(unaudited)

7. Long-term Debt

	November 29, 2008				August 30, 2008
Parent Holdings
Senior PIK Notes due October 1, 2012 (including $61,537 and $53,137 PIK interest, respectively)		$	211,537			$	203,137
10.25% Senior discount notes due October 1, 2012 (net of unamortized discount of $0 and $1,079, respectively)			131,500				130,421
8.25% Senior subordinated notes due April 1, 2012			150,000				150,000
Senior secured credit facility:
Revolving credit facility due 2010			-				-
Term loan due 2011			69,500				75,485
Total			562,537				559,043
Less current portion of long-term debt			(469	)			(2,908	)
Total long-term debt		$	562,068			$	556,135

	November 29, 2008				August 30, 2008
Intermediate Holdings
10.25% Senior discount notes due October 1, 2012 (net of unamortized discount of $0 and $1,079, respectively)		$	131,500			$	130,421
8.25% Senior subordinated notes due April 1, 2012			150,000				150,000
Senior secured credit facility:
Revolving credit facility due 2010			-				-
Term loan due 2011			69,500				75,485
Total			351,000				355,906
Less current portion of long-term debt			(469	)			(2,908	)
Total long-term debt		$	350,531			$	352,998

	November 29, 2008				August 30, 2008
AAC
8.25% Senior subordinated notes due April 1, 2012		$	150,000			$	150,000
Senior secured credit facility:
Revolving credit facility due 2010			-				-
Term loan due 2011			69,500				75,485
Total			219,500				225,485
Less current portion of long-term debt			(469	)			(2,908	)
Total long-term debt		$	219,031			$	222,577

The amendments to the indentures governing the senior PIK notes, the 10.25% senior discount notes, and the 8.25% senior subordinated notes that were included in the various supplemental indentures entered into in connection with the Transaction have become substantially ineffective as a result of the termination of the Transaction. However, with respect to notes held by holders of senior PIK notes that did not consent to such amendments, substantially all of the restrictive and reporting covenants under the indenture governing the senior PIK notes have been removed by the supplemental indenture entered into in connection with the Transaction. Such notes represent a de minimus portion of the total outstanding balance of the senior PIK notes. All such covenants remain in full force and effect for all other senior PIK notes.

Because the Compay's consolidated group leverage ratio, as defined in the corresponding agreement, was greater than 5.0 to 1.0 on August 30, 2008, the rate at which interest accrues on the senior PIK notes was increased an additional 2.00% per annum, to a rate of 16.75%, commencing on, and including August 30, 2008.

During the three months ended November 29, 2008 and November 24, 2007, the Company paid down $6.0 million and $0.2 million of the term loan of the Amended Senior Credit Facility, of which $2.5 million and $0.2 million were mandatory payments.

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(unaudited)

Availability under the revolving credit facility is restricted to a total revolving commitment of $40.0 million as defined in the credit agreement governing the Amended Senior Credit Facility. Availability under the revolving credit facility as of November 29, 2008 was approximately $38.3 million with $1.7 million in letters of credit outstanding.

Interest income, included in the interest expense, net, for the three months ended November 29, 2008 was $115 for Parent Holdings, Intermediate Holdings and AAC. Interest income, included in the interest expense, net, for the three months ended November 24, 2007 was $123, $119 and $112 for Parent Holdings, Intermediate Holdings and AAC, respectively.

8. Commitments and Contingencies

Pending Litigation

The Company currently is not a party to any pending legal proceedings other than ordinary routine litigation incidental to its business. In management’s opinion, adverse decisions on these ordinary legal proceedings, individually or in the aggregate, would not have a materially adverse impact on the Company’s results of operations, financial condition or cash flows.

9. Income Taxes

As part of the process of preparing consolidated financial statements, the Company assesses the likelihood that its deferred income tax assets will be recovered through future taxable income. To the extent that recovery is not likely, a valuation allowance is established. Based on this assessment, the Company has not recorded a valuation allowance as of November 29, 2008 or August 30, 2008. In the event that actual results differ from these estimates or adjustments are made to these estimates in future periods, a valuation allowance may need to be established.

10. Postretirement Pension and Medical Benefits

Commemorative Brands, Inc. (“CBI”) provides certain healthcare and life insurance benefits for former employees of L.G. Balfour Company, Inc. (“CBI Plan”). Certain hourly employees of Taylor are covered by a defined benefit pension plan (“TPC Plan”) established by Taylor. The benefits under the CBI Plan and TPC Plan are based primarily on the employees’ years of service and compensation near retirement. The CBI Plan was frozen to new entrants effective January 1991. Effective September 2003, the TPC Plan is open for enrollment only for certain hourly employees of Taylor. The funding policies for these plans are consistent with the funding requirements of federal laws and regulations.

For fiscal 2008, the measurement date for the CBI Plan was August 30, 2008, and the measurement date for the TPC Plan was June 30, 2008. The Company will use a measurement date as of the end of its fiscal year for both plans in fiscal 2009.

The net periodic postretirement benefit income includes the following components:

	For the three months ended								For the three months ended
	November 29, 2008								November 24, 2007
					CBI post-								CBI post-
	Taylor pension				retirement				Taylor pension				retirement
Service costs, benefits attributed to service during the period		$	18			$	-			$	22			$	-
Interest cost			219				23				229				27
Expected return on assets			(264	)			-				(292	)			-
Amortization of unrecognized net gain			(6	)			(76	)			(9	)			(77	)
Amortization of unrecognized net prior service costs			-				(37	)			-				(37	)
Net periodic postretirement benefit income		$	(33	)		$	(90	)		$	(50	)		$	(87	)

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(unaudited)

Amounts recognized in accumulated other comprehensive income consist of:

	November 29, 2008						November 24, 2007
	Taylor pension			CBI post-retirement			Taylor pension			CBI post-retirement
Net actuarial gain	$	(1,721	)	$	(1,881	)	$	(2,020	)	$	(2,182	)
Prior service cost		-			(669	)		-			(818	)
	$	(1,721	)	$	(2,550	)	$	(2,020	)	$	(3,000	)

The estimated net gain for the TPC Plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost in fiscal year 2009 is $25. The estimated net gain and estimated prior service credit for the CBI Plan that will be amortized from accumulated other comprehensive income into net periodic postretirement benefit cost in fiscal year 2009 are $302 and $149, respectively.

11. Related-Party Transactions

On March 25, 2004, AAC entered into a management agreement with an affiliate of Fenway Partners pursuant to which AAC, among other things, agreed to pay such affiliate an annual fee equal to the greater of $3.0 million or 5% of the previous fiscal year’s EBITDA (as defined in the agreement). Amounts paid by the Company under the management agreement totaled $750 for the three months ended November 29, 2008 and for the three months ended November 24, 2007.

As of November 29, 2008 and August 30, 2008, the Company had prepaid management fees of approximately $148 and $244, respectively.

12. Business Segments

The Company’s operating segments, on campus class rings and retail class rings, have been aggregated into one reporting segment, class rings, in accordance with paragraph 26.a. of SFAS 131. The other segment consists primarily of jewelry commemorating family events such as the birth of a child, military and fan affinity jewelry and related products, professional sports championship rings, commercial printing and recognition products such as letter jackets.

As discussed in Note 4, the achievement publications business was shut down during the first quarter of fiscal year 2008. This business historically was included as an additional reporting segment. As all of the results of operations of the achievement publications business are included in discontinued operations, they are not presented in the tables below.

During the first quarter of fiscal year 2009, Parent Holdings incurred certain costs related to the Transaction, which are not allocated to the operating segments. Total unallocated costs included in Parent Holdings operating income but not included in total segment operating income were $2,363 for the three months ended November 29, 2008. Assets not allocated to the operating segments represent affiliate receivables from Parent Holdings related to payments funded by Intermediate Holdings and AAC for costs related to the Transaction and are presented in the tables below.


	Class					Graduation
	Rings		Yearbooks			Products			Other			Total
Three Months Ended November 29, 2008
Net sales	$	30,624	$	8,376		$	3,310		$	6,903		$	49,213
Segment operating income (loss)		3,201		(3,720	)		(1,120	)		(688	)		(2,327	)

Three Months Ended November 24, 2007
Net sales	$	32,661	$	9,620		$	3,464		$	6,195		$	51,940
Segment operating income (loss)		2,760		(3,307	)		(1,740	)		(436	)		(2,723	)

	Parent Holdings
	Class				Graduation				Assets not
	Rings		Yearbooks		Products		Other		Allocated		Total
As of November 29, 2008
Goodwill	$	67,092	$	65,241	$	23,781	$	14,959	$	-	$	171,073
Segment assets		207,202		160,771		59,925		49,290		-		477,188

As of August 30, 2008
Goodwill	$	67,092	$	65,241	$	23,781	$	14,959	$	-	$	171,073
Segment assets		192,538		165,123		56,199		45,257		-		459,117

	Intermediate Holdings
	Class				Graduation				Assets not
	Rings		Yearbooks		Products		Other		Allocated		Total
As of November 29, 2008
Goodwill	$	67,092	$	65,241	$	23,781	$	14,959	$	-	$	171,073
Segment assets		201,277		155,681		58,192		47,895		3,219		466,264

As of August 30, 2008
Goodwill	$	67,092	$	65,241	$	23,781	$	14,959	$	-	$	171,073
Segment assets		189,633		162,727		55,377		44,703		2,333		454,773

	AAC
	Class				Graduation				Assets not
	Rings		Yearbooks		Products		Other		Allocated		Total
As of November 29, 2008
Goodwill	$	67,092	$	65,241	$	23,781	$	14,959	$	-	$	171,073
Segment assets		201,130		155,650		58,205		47,753		2,663		465,401

As of August 30, 2008
Goodwill	$	67,092	$	65,241	$	23,781	$	14,959	$	-	$	171,073
Segment assets		189,939		163,139		55,541		44,718		1,777		455,114

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(unaudited)

13. Subsequent Events

On December 5, 2008, Parent Holdings and the Buyer, together with the Equity Holders, announced that such parties have entered into a Settlement Agreement pursuant to which they have mutually agreed to terminate the Transaction because they had not received the required regulatory approvals necessary to complete the Transaction.

Parent Holdings received proceeds in connection with the termination of the Transaction that, after considering transaction related costs incurred by the Company, amounted to net proceeds of approximately $25.0 million. A portion of the costs incurred by the Company related to the Transaction were incurred during fiscal 2008 and during the first quarter of fiscal 2009, and these costs were included in the operating results of the respective periods.

On January 6, 2009, CBI entered into an amendment to the Stock Purchase Agreement (“SPA”) related to the acquisition of Powers Embroidery Inc. in fiscal 2007. The amended agreement provides for $250 of additional purchase price instead of the provision in the SPA that provided for up to $1.5 million additional purchase price payment that was contingent upon the acquired business achieving certain financial goals through August 2010. The $250 of additional purchase price is to be paid over three years beginning January 2009.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our condensed consolidated financial condition and results of operations should be read in conjunction with the information contained in our condensed consolidated financial statements and accompanying notes included elsewhere in this report. The condensed consolidated financial statements and the notes thereto have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations (see Note 1 in our condensed consolidated financial statements). The following discussion includes forward looking statements that involve certain risks and uncertainties. See “Disclosure Regarding Forward Looking Statements.”

General

We are one of the leading manufacturers and suppliers of class rings, yearbooks, graduation products, and recognition products and affinity jewelry in the United States. We market and sell yearbooks to the college, high school, junior high school and elementary markets. We primarily sell our class rings and graduation products, which include fine paper products and graduation accessories, in the high school, college and junior high school markets. We also sell jewelry commemorating family events such as the birth of a child, military and fan affinity jewelry and related products, professional sports championship rings, commercial printing and recognition products such as letter jackets.

As fully described under the “Significant Developments” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, during the first quarter of fiscal year 2008, the Company decided to shut down the operations of its achievement publications segment, which produced, marketed and sold publications that recognize the achievements of top students at the high school and college levels, as well as the nation’s most inspiring teachers. All shutdown activities were substantially complete prior to November 24, 2007 and were fully complete by May 31, 2008.

Our ability to meet our debt service and other obligations depends in significant part on how successful we are in maintaining our core businesses and further implementing our business strategy. Our business plan envisions several long-term growth initiatives, including the development of new products. The components of our strategy are subject to significant business, economic and competitive uncertainties and contingencies.

Numerous raw materials are used in the manufacture of our products. Gold and other metals, precious, semi-precious and synthetic stones, paper products and ink comprise the bulk of the raw materials we utilize in the largest segments of our business. Prices of these materials, especially gold, continually fluctuate. We purchase a majority of our gold from a single supplier. We may consign a portion of our gold and pay for gold as our products are shipped to customers. We also purchase the majority of our precious, semi-precious and synthetic stones from a single supplier in Germany. We generally are able to pass on price increases in gold and stones to our customers as such increases are realized by us, however, this may not always be the case.

We face competition for most of our principal products. While the class ring, graduation products and yearbook markets were once highly concentrated and consisted primarily of a few large national manufacturers (of which we were one) advances in technology and the emergence of international manufacturing have significantly lowered the costs of entry. Major domestic mass merchant and jewelry chain retailers now effectively compete in the class ring business and the traditional yearbook and graduation products businesses now face considerable competition from regional and local printers and internet-based purveyors of yearbook and alternative web-based virtual products. Competition from alternative sales channels is robust in virtually all market categories.

We experience seasonal fluctuations in our net sales tied primarily to the school year. We recorded 50% of our fiscal year 2008 net sales in our third quarter. Class ring sales are highest during October through December and early spring, with many orders made for delivery to students before the winter holiday season. Graduation product sales are predominantly made during February through April prior to the April through June graduation season. Yearbook sales are highest during the months of April through June, as yearbooks are typically shipped prior to each school’s summer break. Our recognition and affinity product line sales are seasonal. The recognition and affinity product line sales are highest during the winter holiday season and in the period leading up to Mother’s Day. We have experienced operating losses during our first and fourth fiscal quarters, which includes the beginning of the school year and the summer months when school is not in session, thus reducing related shipment of products. In addition, our working capital requirements tend to exceed our operating cash flows from May through September.

We also have exposure to market risk relating to changes in interest rates on our variable rate debt. Our senior secured credit facility (revolver and term loan) and existing gold consignment agreement are variable rate arrangements.

Historically, the class rings, yearbooks and graduation products markets have been impacted by demographic changes. The U.S. Department of Education projects that the number of high school and college graduates will increase by an average of 6% and 16% nationally, respectively, over the time period from 2004 to 2017. Additionally, the U.S. Census Bureau projects that the total U.S. population will increase by 6% over the time period from 2007 to 2015. Both the increased population and the increased number of high school and college graduates should expand the market for our products.

Company Background

Our business was founded when the operations of ArtCarved, which were previously owned by CJC Holdings, Inc., and the operations of Balfour, which were previously owned by L.G. Balfour Company, Inc., were combined through various asset purchase agreements in December 1996. AAC was formed in June 2000 to serve as a holding company for these operations as well as any future acquisitions. In June 2000, we acquired the Taylor Senior Holding Company, the parent company of Taylor Publishing Company (“Taylor”), whose primary business is designing and printing student yearbooks. In July 2002, AAC acquired all the outstanding stock and warrants of Milestone Marketing, a marketer of class rings and other graduation products to the college market. In January 2004, AAC acquired C-B Graduation Announcements, a marketer of graduation products to the college market. In April 2007, Commemorative Brands, Inc. (“CBI”), a wholly-owned subsidiary of AAC, acquired all of the outstanding stock of BFJ Holdings, Inc. and its wholly owned subsidiary, Powers Embroidery, Inc. (“Powers”). Powers is a producer of quality letter jackets, chenille patches and other school spirit embroidery merchandise and is located in Waco, Texas.

Basis of Presentation

We present financial information relating to Parent Holdings, Intermediate Holdings and AAC and its subsidiaries in this discussion and analysis. Parent Holdings owns 100% of the shares of common stock of Intermediate Holdings. Intermediate Holdings owns 100% of the shares of common stock of AAC Holding Corp., which is the holder of 100% of the shares of common stock of AAC.

Other than the series A preferred stock, debt obligations, cash, costs related to the Transaction, additional interest expense related to the series A preferred stock and debt obligations, amortization of deferred financing costs, interest income on cash balances, and the related income taxes, all other assets, liabilities, income, expenses and cash flows presented for all periods represent those of Parent Holdings and Intermediate Holdings’ wholly-owned indirect subsidiary AAC and the direct and indirect subsidiaries of AAC. Intermediate Holdings’ only direct subsidiary is AAC Holding Corp., whose sole asset is the stock of AAC. AAC, Intermediate Holdings and Parent Holdings are treated as entities under common control.

The Company uses a 52/53-week fiscal year ending on the last Saturday of August.

Significant Developments

Stock Purchase Agreement. Pursuant to a Stock Purchase Agreement dated May 15, 2008 among Herff Jones Inc. (the “Buyer”), Parent Holdings and the holders of all of Parent Holding’s equity securities (the “Equity Holders”), the Equity Holders agreed to sell all of the equity in Parent Holdings to the Buyer (the “Transaction”). On December 5, 2008, Parent Holdings and the Buyer, together with the Equity Holders, announced that such parties have entered into a Settlement Agreement pursuant to which they have mutually agreed to terminate the Transaction because they had not received the required regulatory approvals necessary to complete the Transaction.

During the three months ended November 29, 2008, Parent Holdings incurred $2.4 million in costs related to the Transaction. These costs are included in selling, general and administrative expenses in Parent Holdings’ consolidated statement of operations.

Discontinued Operations. In the first quarter of fiscal 2008, we recorded charges of approximately $5.5 million primarily related to the write-off of the remaining carrying value of tangible and intangible assets of the achievement publications segment and incurred approximately $0.7 million related to contract termination and employee severance costs as a consequence of the decision in October 2007 to shutdown the achievement publications business. These charges are included in loss from discontinued operations for the three months ended November 24, 2007 in the accompanying condensed consolidated statements of operations.

The results of operations of the achievement publications business are reported as discontinued operations in the condensed consolidated income statements for all periods presented.

Results of Operations

Three Months Ended November 29, 2008 Compared to Three Months Ended November 24, 2007

The following tables set forth selected information for Parent Holdings, Intermediate Holdings, and AAC from our condensed consolidated statements of operations expressed on an actual basis and as a percentage of net sales (dollars in thousands):

	Parent Holdings
	For the Three			% of				For the Three			% of
(in thousands)	Months Ended			Net				Months Ended			Net
	November 29, 2008			Sales				November 24, 2007			Sales
Net sales	$	49,213			100.0		%	$	51,940			100.0		%
Cost of sales		25,051			50.9		%		25,317			48.7		%
Gross profit		24,162			49.1		%		26,623			51.3		%
Selling, general & administrative expenses		28,852			58.6		%		29,346			56.5		%
Operating loss		(4,690	)		(9.5	)	%		(2,723	)		(5.2	)	%
Interest expense, net		17,430			35.4		%		15,631			30.1		%
Loss from continuing operations before income taxes		(22,120	)		(44.9	)	%		(18,354	)		(35.3	)	%
Benefit for income taxes		(5,789	)		(11.8	)	%		(4,555	)		(8.7	)	%
Loss from continuing operations		(16,331	)		(33.2	)	%		(13,799	)		(26.6	)	%
Discontinued operations:
Loss from discontinued operations before income taxes		-			-		%		(7,090	)		(13.7	)	%
Benefit for income taxes		-			-		%		(2,772	)		(5.4	)	%
Loss from discontinued operations		-			-		%		(4,318	)		(8.3	)	%
Net loss	$	(16,331	)		(33.2	)	%	$	(18,117	)		(34.9	)	%

	Intermediate Holdings
	For the Three			% of				For the Three			% of
(in thousands)	Months Ended			Net				Months Ended			Net
	November 29, 2008			Sales				November 24, 2007			Sales
Net sales	$	49,213			100.0		%	$	51,940			100.0		%
Cost of sales		25,051			50.9		%		25,317			48.7		%
Gross profit		24,162			49.1		%		26,623			51.3		%
Selling, general & administrative expenses		26,489			53.8		%		29,346			56.5		%
Operating loss		(2,327	)		(4.7	)	%		(2,723	)		(5.2	)	%
Interest expense, net		7,873			16.0		%		8,171			15.7		%
Loss from continuing operations before income taxes		(10,200	)		(20.7	)	%		(10,894	)		(21.0	)	%
Benefit for income taxes		(4,318	)		(8.8	)	%		(4,592	)		(8.8	)	%
Loss from continuing operations		(5,882	)		(12.0	)	%		(6,302	)		(12.2	)	%
Discontinued operations:
Loss from discontinued operations before income taxes		-			-		%		(7,090	)		(13.7	)	%
Benefit for income taxes		-			-		%		(2,772	)		(5.4	)	%
Loss from discontinued operations		-			-		%		(4,318	)		(8.3	)	%
Net loss	$	(5,882	)		(12.0	)	%	$	(10,620	)		(20.5	)	%

	AAC
	For the Three			% of				For the Three			% of
(in thousands)	Months Ended			Net				Months Ended			Net
	November 29, 2008			Sales				November 24, 2007			Sales
Net sales	$	49,213			100.0		%	$	51,940			100.0		%
Cost of sales		25,051			50.9		%		25,317			48.7		%
Gross profit		24,162			49.1		%		26,623			51.3		%
Selling, general & administrative expenses		26,489			53.8		%		29,346			56.5		%
Operating loss		(2,327	)		(4.7	)	%		(2,723	)		(5.2	)	%
Interest expense, net		4,437			9.0		%		5,105			9.8		%
Loss from continuing operations before income taxes		(6,764	)		(13.7	)	%		(7,828	)		(15.1	)	%
Benefit for income taxes		(2,619	)		(5.3	)	%		(3,090	)		6.0		%
Loss from continuing operations		(4,145	)		(8.4	)	%		(4,738	)		(9.1	)	%
Discontinued operations:					-							-
Loss from discontinued operations before income taxes		-			-		%		(7,090	)		(13.7	)	%
Benefit for income taxes		-			-		%		(2,772	)		5.4		%
Loss from discontinued operations		-			-		%		(4,318	)		(8.3	)	%
Net loss	$	(4,145	)		(8.4	)	%	$	(9,056	)		(17.4	)	%

Net Sales. Net sales consist of product sales and are net of product returns and promotional discounts. Net sales decreased $2.7 million, or 5%, to $49.2 million for the three months ended November 29, 2008 from $51.9 million for the three months ended November 24, 2007. The following details the changes in net sales during such periods by business segment.

Class Rings. Net sales decreased $2.1 million to $30.6 million for the three months ended November 29, 2008 from $32.7 million for the three months ended November 24, 2007. The decrease in net sales in class ring sales was primarily a result of lower sales volumes due to softness in the economy and a change in product mix caused by increases in gold prices, partially offset by an increase in average selling price of college class rings.

Yearbooks. Net sales decreased $1.2 million to $8.4 million for the three months ended November 29, 2008 from $9.6 million for the three months ended November 24, 2007. The decrease in net sales was primarily the result timing of shipments between the fourth quarter of 2008 and the first quarter of 2009 and a result of softness in the economy. This decrease was partially offset by an increase in the average contract value from the first quarter of fiscal 2008.

Graduation Products. Net sales decreased $0.2 million to $3.3 million for the three months ended November 29, 2008 from $3.5 million for the three months ended November 24, 2007. The decrease in net sales was the result of lower sales volume.

Other. Net sales increased $0.7 million to $6.9 million for the three months ended November 29, 2008 from $6.2 million for the three months ended November 24, 2007. The increase in net sales was primarily related to an increase in professional championship rings, partially offset by a decline in sales of personalized family jewelry due to softness in the economy.

Gross Profit. Gross margin represents gross profit as a percentage of net sales. Gross margin was 49.1% for the three months ended November 29, 2008, a 2.2 percentage point decrease from 51.3% for the three months ended November 24, 2007. Overall, gross profit decreased $2.5 million. The decrease in gross profit was primarily a result of the sales declines.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for Intermediate Holdings and AAC decreased $2.8 million, or 10%, to $26.5 million for the three months ended November 29, 2008 from $29.3 million for the three months ended November 24, 2007. Included in selling, general and administrative expenses are two sub-categories: selling and marketing expenses and general and administrative expenses.

Selling and marketing expenses for Intermediate Holdings and AAC decreased $2.3 million to $16.7 million or 34% of net sales, for the three months ended November 29, 2008 from $19.0 million or 37% of net sales, for the three months ended November 24, 2007 due to decreased marketing expenditures and lower commissions.

General and administrative expenses for Intermediate Holdings and AAC for the three months ended November 29, 2008 were $9.8 million, or 20% of net sales, as compared to $10.3 million, or 20% of net sales, for the three months ended November 24, 2007. The decrease in general and administrative expenses was primarily the result of decreases in professional fees and consulting fees.

Selling, general and administrative expenses at Parent Holdings decreased $0.4 million to $28.9 million the three months ended November 29, 2008 due to the reasons discussed above, partially offset by $2.4 million of costs incurred related to the Transaction.

Operating Loss. As a result of the foregoing, operating loss for Intermediate Holdings and AAC was $2.3 million, or 5% of net sales, for the three months ended November 29, 2008 as compared with operating loss of $2.7 million, or 5% of net sales, for the three months ended November 24, 2007. Operating loss for Parent Holdings was $4.7 million, or 10% of net sales, for the three months ended November 29, 2008 as compared with operating loss of $2.7 million, or 5% of net sales, for the three months ended November 24, 2007.

The class rings segment reported operating income of $3.2 million for the three months ended November 29, 2008 as compared with operating income of $2.8 million for the three months ended November 24, 2007. The yearbooks segment reported operating loss of $3.7 million for the three months ended November 29, 2008 as compared with operating loss of $3.3 million for the three months ended November 24, 2007. The graduation products segment reported operating loss of $1.1 million for the three months ended November 29, 2008 as compared with operating loss of $1.7 million for the three months ended November 24, 2007. The other segment reported an operating loss of $0.7 million for the three months ended November 29, 2008 as compared with operating loss of $0.4 million for the three months ended November 24, 2007.

Interest Expense, Net. For Parent Holdings, net interest expense was $17.4 million for the three months ended November 29, 2008 and $15.6 million for the three months ended November 24, 2007. The average debt outstanding of Parent Holdings for the three months ended November 29, 2008 and the three months ended November 24, 2007 was $573 million and $556 million, respectively. The weighted average interest rate on debt outstanding of Parent Holdings for the three months ended November 29, 2008 and the three months ended November 24, 2007 was 12.2% and 10.7%, respectively. The increase in interest expense is a result of a 2.00% per annum increase in the interest rate for our senior PIK notes effective beginning August 30, 2008.

For Intermediate Holdings, net interest expense was $7.9 million for the three months ended November 29, 2008 and $8.2 million for the three months ended November 24, 2007. The average debt outstanding of Intermediate Holdings for the three months ended November 29, 2008 and the three months ended November 24, 2007 was $359 million and $369 million, respectively. The weighted average interest rate on debt outstanding of Intermediate Holdings for the three months ended November 29, 2008 and the three months ended November 24, 2007 was 8.9% and 8.7%, respectively.

For AAC, net interest expense was $4.4 million for the three months ended November 29, 2008 and $5.1 million for the three months ended November 24, 2007. The average debt outstanding of AAC for the three months ended November 29, 2008 and the three months ended November 24, 2007 was $228 million and $250 million, respectively. The weighted average interest rate on debt outstanding of AAC for the three months ended November 29, 2008 and the three months ended November 24, 2007 was 8.0%.

Benefit for Income Taxes. For the three months ended November 29, 2008, and November 24, 2007, Parent Holdings recorded an income tax benefit of $5.8 million and $4.6 million, respectively, which represents an effective tax rate of 26% and 25%, respectively. The effective tax rates vary from the statutory federal rate due to the impact of state income taxes and the non-deductibility of a portion of interest on high-yield debt. Parent Holdings’ effective rates for the three months ended November 29, 2008 and November 24, 2007 represent an estimate of the annual federal and state income tax rate.

For the three months ended November 29, 2008 and November 24, 2007, Intermediate Holdings recorded an income tax benefit of $4.3 million and $4.6 million, respectively, which represents an effective tax rate of 42% for both periods. The effective tax rates vary from the statutory federal rate due to the impact of state income taxes and the non-deductibility of a portion of interest on high-yield debt. Intermediate Holdings’ effective rates for the three months ended November 29, 2008 and November 24, 2007 represent an estimate of the annual federal and state income tax rate.

For the three months ended November 29, 2008 and November 24, 2007, AAC recorded an income tax benefit of $2.6 million and $3.1 million, respectively, which represents an effective tax rate of 39% for both periods. The effective tax rates vary from the statutory federal rate due to the impact of state income taxes. AAC’s effective rates for the three months ended November 29, 2008 and November 24, 2007 represent an estimate of the annual federal and state income tax rate.

Loss from Discontinued Operations. As described in “Significant Developments”, the results of operations of the achievement publications business are reported as discontinued operations. Loss from discontinued operations before income taxes during the three months ended November 24, 2007 includes charges of $5.5 million primarily related to the write-off of the remaining carrying value of tangible and intangible assets of the achievement publications segment and charges of approximately $0.7 million related to contract termination and employee severance costs.

Liquidity and Capital Resources

Operating Activities. Operating activities provided $12.7 million of cash for the three months ended November 29, 2008 compared to cash provided of $15.4 million for the three months ended November 24, 2007. The $2.7 million decrease in cash provided by operating activities was mainly attributable to higher working capital in first quarter 2009.

Investing Activities. Capital expenditures for the three months ended November 29, 2008 were $1.5 million compared to capital expenditures of $3.1 million for the three months ended November 24, 2007. Our projected capital expenditures for the entire fiscal year 2009 are expected to be approximately $7.3 million.

Financing Activities. During the three months ended November 29, 2008, cash was used to pay down $6.0 million of the term loan, of which $2.5 million were mandatory payments.

During the three months ended November 24, 2007, cash was used to pay down $0.2 million of the term loan, which were mandatory payments. In addition, net revolver borrowings were $1.2 million.

Capital Resources. We have a significant amount of indebtedness. On November 29, 2008, Parent Holdings had total indebtedness of $570.0 million, of which $211.5 million was senior PIK notes, $131.5 million was 10.25% senior discount notes, $150.0 million was 8.25% senior subordinated notes, $69.5 million was indebtedness under the existing senior secured credit facility and $7.5 million was our mandatory redeemable series A preferred stock. We also have up to $40.0 million in available revolving loan borrowings under our senior secured credit facility. We are currently in compliance with financial covenants in all of the agreements governing our outstanding indebtedness.

Because our consolidated group leverage ratio, as defined in the corresponding agreement, was greater than 5.0 to 1.0 on August 30, 2008, the rate at which interest accrues on the senior PIK notes was increased an additional 2.00% per annum, to a rate of 16.75%, commencing on, and including August 30, 2008.

Interest accrued on the 10.25% senior discount notes in the form of an increase in the accreted value of the notes through October 1, 2008. Thereafter, cash interest on the 10.25% senior discount notes will accrue and be payable semiannually in arrears on April 1 and October 1 of each year, commencing April 1, 2009 at a rate of 10.25% per annum.

We expect that cash generated from operating activities and availability under the senior secured credit facility will be our principal sources of liquidity. Due to the current unfavorable economic environment, we expect continued softness in sales for the rest of this year and into next year. We expect our productivity initiatives and cost containment measures to partially offset the impact of lower sales on our operating income. Based on our current and planned level of operations, we believe our cash flow from operations, available cash on hand and available borrowings under the senior secured credit facility will be adequate to meet our liquidity needs for at least the next twelve months.

Off Balance-Sheet Obligations

Gold Consignment Agreement. On March 25, 2004, we signed the First Amended and Restated Letter Agreement for Fee Consignment and Purchase of Gold with The Bank of Nova Scotia. Under this agreement, we have an ability to have on consignment gold with aggregate value less than or equal to the lowest of: (i) the dollar value of 27,000 troy ounces of gold, (ii) $14.2 million or (iii) a borrowing base, calculated based on a percentage of the gold held at our facilities and other approved locations, as specified by the agreement. Under the terms of this arrangement, we do not own the consigned gold nor do we have risk of loss related to price variance on such inventory until we pay The Bank of Nova Scotia for quantities purchased. Accordingly, we do not reflect the value of consigned gold in our inventory, nor do we reflect the corresponding liability for financial statement purposes. As of November 29, 2008 and August 30, 2008, we held no consigned gold.

The agreement can be terminated by either us or The Bank of Nova Scotia with 60 days prior written notice to the other party.

Letters of Credit. As of November 29, 2008 and August 30, 2008, we had commitments for $1.7 million and $2.1 million on letters of credit outstanding, respectively.

Seasonality

The seasonal nature of our various businesses tends to be tempered by our broad product mix. Class ring sales are highest during October through December and early spring, with many orders made for delivery to students before the winter holiday season. Graduation product sales are predominantly made during February through April prior to the April through June graduation season. Yearbook sales are highest during the months of April through June, as yearbooks are typically shipped prior to each school’s summer break. Our recognition and affinity product line sales are also seasonal, with highest sales during the winter holiday season and in the period leading up to Mother’s Day.

As a result of the foregoing, we have historically experienced operating losses during our first and fourth fiscal quarters, which includes the beginning of the school year and the summer months when school is not in session, thus reducing related shipment of products. In addition, our working capital requirements tend to exceed our operating cash flows from May through September.

Recent Accounting Pronouncements

In September 2006, the FASB issued Statement on Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS 157 are effective for us beginning with our fiscal year 2009. The adoption of the standard did not have a material impact on our financial position and results of operations.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — An Amendment of FASB Statements No. 87, 88, 106 and 132 (R)” (“SFAS 158”). SFAS 158 requires an employer to recognize the funded status of defined benefit postretirement plan as an asset or liability in the balance sheet and to recognize changes in that funded status in the year in which changes occur through comprehensive income. Additionally, SFAS 158 requires an employer to measure the funded status of each of its plans as of the date of its year-end statement of financial position. We adopted the recognition and disclosure provisions of SFAS 158 in fiscal 2007. The measurement date provisions of SFAS 158 will be effective for us beginning with our fiscal year 2009 and we will use a measurement date as of the end of our fiscal year for our defined benefit postretirement plans in fiscal 2009.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for us beginning with our fiscal year 2009. The standard did not have an impact on our financial position and results of operations, as we did not elect to measure any financial assets or liabilities at fair value.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. We have exposure to market risk relating to changes in interest rates on our variable rate debt. Our policy is to manage interest rate exposure through the use of a combination of fixed and floating rate debt instruments. Our senior secured credit facility (revolver and term loan) and existing gold consignment agreement are variable rate arrangements. Each quarter point change in interest rates on our senior secured credit facility, which bears interest at variable rates, would result in a $0.3 million change in annual interest expense, assuming the entire revolving loan was drawn.

Currency Exchange Rate Risk. We purchase the majority of our precious, semi-precious and synthetic stones from a single supplier in Germany. We believe that all of our major competitors purchase their semi-precious stones from this same supplier. Each ten percent change in the Euro exchange rate would result in a $0.5 million annual change in cost of goods sold, assuming stone purchase levels approximate the levels of fiscal 2008.

Gold. We purchase a majority of our gold from a single supplier. We may consign a portion of our gold and pay for consigned gold as our related products are shipped to customers. Each ten percent change in the price of gold would result in a $3.6 million annual change in cost of goods sold, assuming gold purchase levels approximate the levels in fiscal 2008.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. The evaluation was conducted based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

This report contains “forward looking statements.” All statements other than statements of historical facts included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward looking statements. Forward looking statements give our current expectations and projections relating to the financial condition, results of operations, plans, objectives, future performance and business of our company. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

These forward looking statements are based on our expectations and beliefs concerning future events affecting us. They are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Although we believe that the expectations reflected in our forward looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties.

Although management believes that the expectations reflected in such forward looking statements are based upon reasonable assumptions, the Company can give no assurance that these expectations will be achieved. Any change in or adverse development, including the following factors, may impact the achievement of results in or accuracy of forward-looking statements: the price of gold

and precious, semiprecious and synthetic stones; the Company’s access to students and consumers in schools; the seasonality of the Company’s business; regulatory and accounting rules; the Company’s relationship with its independent sales representatives; fashion

and demographic trends; general economic, business, and market trends and events, especially during peak buying seasons for the Company’s products; the Company’s ability to respond to customer change orders and delivery schedules; development and operating

costs; competitive pricing changes; successful completion of management initiatives designed to achieve operating efficiencies; the

Company’s cash flows; and the Company’s ability to draw down funds under its current bank financings and to enter into new bank financings. The foregoing factors are not exhaustive. New factors may emerge or changes may occur that impact the Company’s operations and businesses. Forward-looking statements herein are expressly qualified on the foregoing or such other factors as may be applicable.

You should consider the risks described in the Company’s Form 10-K filed with the Securities and Exchange Commission on November 25, 2008 as you review this quarterly report.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the normal course of business, we may be a party to lawsuits and administrative proceedings before various courts and government agencies. These lawsuits and proceedings may involve personal injury, contractual issues and other matters. We cannot predict the ultimate outcome of any pending or threatened litigation or of actual claims or possible claims.

We currently are not a party to any pending legal proceedings other than ordinary routine litigation incidental to our business. In management’s opinion, adverse decisions on these ordinary legal proceedings, individually or in the aggregate, would not have a materially adverse impact on our results of operations, financial condition or cash flows.

ITEM 6. EXHIBITS

(a) Exhibits


EXHIBIT
NUMBER		DESIGNATION
31.1		CEO Certification Accompanying Period Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		CFO Certification Accompanying Period Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		CEO Certification Accompanying Period Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		CFO Certification Accompanying Period Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

AMERICAN ACHIEVEMENT GROUP HOLDING CORP.

AAC GROUP HOLDING CORP.

AMERICAN ACHIEVEMENT CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

Date: January 13, 2009


		AMERICAN ACHIEVEMENT GROUP HOLDING CORP.
		AAC GROUP HOLDING CORP.
		AMERICAN ACHIEVEMENT CORPORATION

		By:		/s/ DONALD J. PERCENTI
				Donald J. Percenti
				CHIEF EXECUTIVE OFFICER
				(principal executive officer)


		By:		/s/ KRIS G. RADHAKRISHNAN
				Kris G. Radhakrishnan
				CHIEF FINANCIAL OFFICER
				(principal financial officer)