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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2004

OR

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

For the transition period from _________________ to _____________________ .


Commission File Number 0-24383


WORKFLOW MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)

Delaware 06-1507104
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization.) Identification No.)

240 Royal Palm Way
Palm Beach, FL 33480
(Address of principal executive offices) (Zip Code)

(561) 659-6551
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last
report)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
--- ---

As of March 12, 2004, there were 13,460,151 shares of common stock
outstanding.








WORKFLOW MANAGEMENT, INC.
INDEX




Page No.
PART I - FINANCIAL INFORMATION --------

Item 1. Financial Statements


Consolidated Balance Sheet..............................................................................3
January 31, 2004 (unaudited) and April 30, 2003

Consolidated Statement of Operations (unaudited)........................................................4
For the three and nine months ended January 31, 2004 and January 31, 2003

Consolidated Statement of Cash Flows (unaudited)........................................................5
For the nine months ended January 31, 2004 and January 31, 2003

Notes to Consolidated Financial Statements (unaudited)..................................................6


Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................................................16

Item 3. Quantitative and Qualitative Disclosure About Market Risk..............................................28

Item 4. Controls and Procedures................................................................................28


PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.......................................................................29

Signatures........................................................................................................30








2






PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WORKFLOW MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
January 31, April 30,
ASSETS 2004 2003
- ------ -------------- ---------------
(Unaudited)
Current assets:

Cash and cash equivalents $ 4,042 $ 4,992
Accounts receivable, less allowance for doubtful
accounts of $8,746 and $3,455, respectively 83,665 89,585
Inventories 42,191 49,182
Assets of businesses held for sale 8,219
Short-term deferred income taxes 7,757 7,738
Prepaid expenses and other current assets 11,259 7,219
------------ ------------
Total current assets 148,914 166,935

Property and equipment, net 35,344 38,072
Goodwill 115,368 109,515
Other intangible assets, net 1,281 1,307
Long-term deferred income taxes 9,236 7,568
Other assets 4,607 5,844
------------ ------------
Total assets $ 314,750 $ 329,241
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Short-term debt $ 151,808 $ 674
Accounts payable 37,477 35,332
Accrued compensation 12,470 13,266
Accrued additional purchase consideration 6,196 7,677
Accrued restructuring costs 1,629 2,448
Liabilities of businesses held for sale 3,219
Short-term swap liability 1,438 4,263
Other accrued liabilities 19,391 19,435
------------ ------------
Total current liabilities 230,409 86,314

Long-term credit facility 165,065
Other long-term debt 1,353 834
Deferred income taxes 5,552 5,405
Other long-term liabilities 8,549 3,757
------------ ------------
Total liabilities 245,863 261,375
------------ ------------

Stockholders' equity:
Preferred stock, $.001 par value, 1,000,000 shares authorized, none
outstanding Common stock, $.001 par value, 150,000,000 shares authorized,
13,414,125 and 13,359,164 shares, respectively, issued and outstanding 13 13
Additional paid-in capital 53,554 53,191
Notes receivable from officers (40) (53)
Accumulated other comprehensive income (loss) 70 (699)
Retained earnings 15,290 15,414
------------ ------------
Total stockholders' equity 68,887 67,866
------------ ------------
Total liabilities and stockholders' equity $ 314,750 $ 329,241
============ ============


See accompanying notes to consolidated financial statements.




3





WORKFLOW MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended Nine Months Ended
----------------------------- ---------------------------
January 31, January 31, January 31, January 31,
2004 2003 2004 2003
------------ ------------ ------------ -----------

Revenues $ 153,765 $ 160,860 $ 444,863 $ 470,183
Cost of revenues 110,523 118,917 322,000 341,412
------------ ------------ ------------ -----------
Gross profit 43,242 41,943 122,863 128,771

Selling, general and administrative expenses 39,533 36,066 106,764 107,315
Restructuring costs 23 1,021 244
Abandoned software costs 2,105 2,105
Uncollectible notes receivable 681 681
Severance and other employment costs (gains) 3,845 (2,239) 3,845
----------- ------------ ------------ -----------
Operating income (loss) 3,709 (777) 17,317 14,581

Interest expense 4,774 5,566 13,528 15,569
Interest income (36) (79) (103) (341)
(Income) loss on ineffective interest rate hedge (27) 300 96 5,750
Financing fees and other bank related costs 3,286 661 4,096
Abandoned debt offering (gains) costs (124) 1,755
Other expense 45 5 21 15
------------ ------------ ------------ -----------

(Loss) income from continuing operations
before (benefit) provision for income taxes (1,047) (9,731) 3,114 (12,263)
(Benefit) provision for income taxes (400) (3,609) 1,979 (4,180)
------------- ------------ ------------ -----------

(Loss) income from continuing operations (647) (6,122) 1,135 (8,083)
------------- ------------ ------------ -----------

Discontinued operations:
Loss from discontinued operations (17,059) (2,171) (16,924)
Benefit from income taxes (5,832) (912) (5,776)
------------ ------------ ------------ -----------
Loss from discontinued operations (11,227) (1,259) (11,148)

Net loss $ (647) $ (17,349) $ (124) $ (19,231)
=========== ============ ============ ===========

Net loss per share:
Basic:
(Loss) income from continuing operations $ (0.05) $ (0.46) $ 0.09 $ (0.61)
Loss from discontinued operations (0.85) (0.09) (0.85)
------------ ------------ ------------ -----------
Net loss $ (0.05) $ (1.31) $ (0.00) $ (1.46)
============ ============ ============ ===========
Diluted:
(Loss) income from continuing operations $ (0.05) $ (0.46) $ 0.09 $ (0.61)
Loss from discontinued operations (0.85) (0.09) (0.85)
------------ ------------ ------------ -----------
Net loss $ (0.05) $ (1.31) $ (0.00) $ (1.46)
============ ============ ============ ===========

Weighted average common shares outstanding:
Basic 13,422 13,240 13,396 13,196
Diluted 13,422 13,240 13,396 13,196

See accompanying notes to consolidated financial statements.



4






WORKFLOW MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended January 31,
-----------------------------
2004 2003
----------- -----------
Cash flows from operating activities:

Net loss $ (124) $ (19,231)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 6,860 7,328
Restructuring costs, net of cash paid (776) (72)
Amortization of deferred financing costs 2,004 954
Deferred income taxes (15,233)
Loss on ineffective swap 96 5,750
Loss on write-down of assets 661 3,366
Loss on abandoned debt offering 1,755
Loss on uncollectible notes 681
Loss from discontinued operations 2,171 16,924
Change in assets and liabilities held for sale, net 651 (1,625)
Changes in assets and liabilities:
Accounts receivable 7,749 9,551
Inventories 8,146 (57)
Prepaid expenses and other assets (2,889) 1,401
Accounts payable 1,584 (148)
Accrued liabilities (3,728) (2,939)
----------- -----------
Net cash provided by operating activities 22,405 8,405
----------- -----------

Cash flows from investing activities:
Cash paid in acquisitions (47) (1,072)
Cash paid for additional purchase consideration (6,475) (7,458)
Cash proceeds from the sale of discontinued operations 5,000
Additions to property and equipment (3,000) (4,609)
Cash collection of notes receivable 4,543
Other 116 (12)
----------- -----------
Net cash used in investing activities (4,406) (8,608)
----------- -----------

Cash flows from financing activities:
Proceeds from credit facility borrowings 78,014 107,775
Payments of credit facility borrowings (91,956) (98,782)
Payments of other debt (387) (345)
Payment of abandoned debt offering costs (1,755)
Payment on cash settlement of interest rate swap (2,921) (2,459)
Payments of deferred financing costs (1,947) (3,733)
Other 232 217
----------- ------------
Net cash (used in) provided by financing activities (18,965) 918
----------- -----------
Effect of exchange rates on cash and cash equivalents 16 77
---------- -----------
Net (decrease) increase in cash and cash equivalents (950) 792
Cash and cash equivalents at beginning of period 4,992 5,262
----------- -----------
Cash and cash equivalents at end of period $ 4,042 $ 6,054
=========== ===========

Supplemental disclosures of cash flow information:
Interest paid $ 9,819 $ 16,451
Income taxes paid $ 3,584 $ 5,546
Non-cash transactions:

o During the nine months ended January 31, 2004 and January 31, 2003, the
Company accrued $5,565 and $5,943 for additional purchase consideration for
earn-outs, respectively.

o During the nine months ended January 31, 2004, the Company recorded
additional paid-in capital of $2 relating to the tax benefit of stock
options exercised.

See accompanying notes to consolidated financial statements.



5



WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)


NOTE 1 - NATURE OF BUSINESS

Workflow Management, Inc. (the "Company" or "Workflow Management") is
one of the largest distributors of printed business products in North America
and is also a leading provider of end-to-end business management outsourcing
solutions, which include vendor-neutral custom print sourcing, consulting and
integrated storage and distribution services, that allow its customers to
control all of their print-related costs. The Company produces and distributes a
full range of printed business products and provides related management services
to approximately 31,000 customers in North America ranging in size from small
businesses to Fortune 100 companies. Workflow Management provides customers with
an integrated set of services and information tools that reduce the costs of
procuring, storing, distributing and using printed business products and
produces custom business documents, envelopes, direct mail and commercial
printing. The Company employs approximately 2,700 persons and has 87 facilities
located throughout North America.


NOTE 2 - LIQUIDITY

Under the terms of the Company's bank credit facility ("Credit
Facility"), a $50,000 term loan is due May 1, 2004 and another term loan and the
asset based revolving facility under the Credit Facility are both due August 1,
2004. After considering and pursuing strategic and refinancing alternatives to
repay its Credit Facility obligations by their respective due dates, the Company
entered into an Agreement and Plan of Merger on January 30, 2004 ("Merger
Agreement") with WF Holdings, Inc. ("WF Holdings"), an entity formed and
controlled by Perseus, L.L.C. and The Renaissance Group, LLC, pursuant to which
WF Holdings would acquire the Company for $4.87 per share in cash. The Company
will hold a special stockholder meeting to vote on the transaction on March 30,
2004. Upon closing of the transaction, WF Holdings would cause the Company to
pay and satisfy all of the Company's obligations under the Credit Facility.

In connection with the Merger Agreement, the Company also negotiated an
amendment and waiver ("Amendment and Waiver") to the Credit Facility. The
Amendment and Waiver provides the Company with limited interest rate reductions
and fee deferrals, which are designed to allow the Company to more easily
satisfy certain closing conditions contained in the Merger Agreement. The
Amendment and Waiver also waives the Company's failure to comply with various
financial covenant defaults under the Credit Facility as of January 31, 2004.
These defaults occurred as a result of the Company increasing its allowance for
bad debt expense by $5,024 related to accounts receivable owed by one of the
Company's largest customers, KB Toys, Inc. ("KB Toys"), who filed for bankruptcy
on January 14, 2004.

Under the terms of the Amendment and Waiver, the covenant default waiver and
other bank concessions expire if the Merger Agreement is terminated for any
reason. As a result, if the Company's stockholders do not approve the proposed
transaction and the Merger Agreement is terminated, all deferred fees and
interest will become immediately due and the Company will be in default under
the Credit Facility. Any such default will likely have a material adverse effect
on the Company's business, relationships with key suppliers and customers,
financial condition and results of operations and the Company's lenders upon
such default will have the right to exercise all remedies available to them
under the Credit Facility, including foreclosure on the Company's assets.



6



WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)


NOTE 3 - BASIS OF PRESENTATION

The accompanying consolidated financial statements and related notes to
consolidated financial statements include the accounts of Workflow Management
and all of its wholly-owned subsidiaries. All significant intracompany accounts
and transactions have been eliminated.

The preparation of financial statements in conformity with generally
accepted accounting principles 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 and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Significant
estimates include allowance for doubtful accounts and inventory reserves,
impairment of property and equipment, impairment of goodwill and realization of
deferred tax assets.

In the opinion of management, the information contained herein reflects
all adjustments necessary to make the results of operations for the interim
periods a fair presentation of such operations. All such adjustments are of a
normal recurring nature. Operating results for interim periods are not
necessarily indicative of results that may be expected for the year as a whole.
The consolidated financial statements included in this Form 10-Q should be read
in conjunction with the Company's audited consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended April 30, 2003.

As used in the Notes to Consolidated Financial Statements, "Fiscal
2003", "Fiscal 2002", "Fiscal 2001" and "Fiscal 1999" refer to the Company's
fiscal years ended April 30, 2003, 2002 and 2001 and April 24, 1999,
respectively.


NOTE 4 - INVENTORIES



Inventories consist of the following:
January 31, April 30,
2004 2003
------------- -------------


Raw materials..................................................................... $ 9,513 $ 11,438
Work-in-process................................................................... 5,943 6,294
Finished goods.................................................................... 26,735 31,450
------------- -------------
Total inventories $ 42,191 $ 49,182
============= =============




7




WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)




NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:
January 31, April 30,
2004 2003


Buildings............................................................................. $ $ 351
Furniture and fixtures................................................................ 28,230 26,000
Computer equipment and software....................................................... 25,379 22,972
Warehouse equipment................................................................... 33,657 33,309
Equipment under capital leases........................................................ 1,224 1,224
Leasehold improvements................................................................ 12,517 11,936
----------- -----------
101,007 95,792
Less: Accumulated depreciation........................................................ (65,663) (57,720)
----------- -----------
Net property and equipment............................................................ $ 35,344 $ 38,072
=========== ===========


Depreciation expense for the three months ended January 31, 2004 and 2003
was $2,241 and $2,395, respectively, and for the nine months ended January 31,
2004 and 2003 was $6,810 and $7,254, respectively.



8




WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

NOTE 6 - DEBT

Revolving Credit Facility

On August 1, 2003, the Company amended and restructured its Credit
Facility with its senior lenders. Under the terms of the Credit Facility, Term
Loan B matures on May 1, 2004 while the asset based facility ("Revolver") and
Term Loan A both mature on August 1, 2004. For a discussion of the Amendment and
Waiver to the Credit Facility, which the Company entered into with its lenders
in connection with the Merger Agreement with WF Holdings, see Note 2 -
Liquidity.

The Credit Facility contains a number of affirmative covenants. These covenants
include, but are not limited to, the requirement that the Company meet certain
leverage ratio, interest coverage ratio, fixed charge ratio and minimum EBITDA
thresholds on an ongoing basis. The Revolver contains advance rates of 85% of
the Company's eligible accounts receivable, 60% of the Company's eligible
inventories (until February 1, 2004 at which time it reduces to 50%) and $10,000
against the Company's fixed assets. Under the Credit Facility, the Company's
senior lenders hold warrants for 2,400 shares which would represent
approximately 15.2% of the Company's outstanding common stock if the warrants
were exercised. On December 31, 2003, warrants to acquire 400 shares became
exercisable at an exercise price of $5.32 per share. Under the terms of the
warrants (after giving effect to the Amendment and Waiver), commencing no later
than April 30, 2004, additional 400 share warrant tranches become exercisable on
a monthly basis in the event there remains outstanding indebtedness under the
Credit Facility on the date the tranche becomes exercisable. Each 400 share
warrant tranche would have an exercise price equal to the fair market value of
the Company's common stock on the date the tranche becomes exercisable.

The outstanding balances on the Credit Facility at January 31, 2004 were as
follows:



Maximum Amount Applicable
Availability Outstanding Interest Rate
------------ ----------- -------------

Revolver $ 98,231 $ 85,000 LIBOR + 5%
Term Loan A 16,165 16,165 LIBOR + 8%
Term Loan B 50,000 50,000 11%, 12%, 13% & 14% for each
calendar quarter of 2003
------------- ------------
$ 164,396 $ 151,165
============= ==============


At January 31, 2004, the Company had $151,165 outstanding on the Credit
Facility and, in addition, $3,369 in outstanding letters of credit. The
Company's availability under the Credit Facility at January 31, 2004 was $9,862
after inclusion of letters of credit.


9




WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

Letters of Credit

The Company has outstanding letters of credit of approximately $3,369
related to performance and payment guarantees. Based upon the Company's
experience with these arrangements, the Company does not believe that any
obligations that may arise will be significant.

Interest Rate Swap

The Company does not hold or issue derivative financial instruments for
trading purposes. On May 3, 2001, the Company entered into an interest rate swap
agreement (the "Swap") with various lending institutions at no initial cost to
the Company with an effective date of August 1, 2001 and an expiration date of
March 10, 2004. The Company exchanged its variable interest rate on $100,000 in
credit facility debt for a fixed LIBOR of approximately 5.10% plus the Company's
interest rate spread under its prior credit facility. The Swap was entered into
to manage interest rate risk on the variable rate borrowings under the Company's
revolving credit portion of its debt. This interest rate swap has the effect of
locking in, for a specified period, the base interest rate the Company will pay
on the $100,000 notional principal amount established in the Swap. As a result,
while this hedging arrangement is structured to reduce the Company's exposure to
increases in interest rates, it also limits the benefit the Company might
otherwise have received from any decreases in interest rates.

The Company accounted for the Swap under the guidelines of SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." Effective
May 1, 2001, the Company implemented SFAS No. 133 as amended. This standard
requires companies to record all derivative instruments as assets or liabilities
on the balance sheet, measured at fair value. The recognition of gains or losses
resulting from changes in the values of those derivative instruments is based on
the use of each derivative instrument and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in fair
value or cash flows. Under the guidelines of SFAS No. 133, the Company
originally classified the Swap as a cash flow hedge. However, on October 16,
2002, the Company's prior credit facility was amended so that borrowings under
the credit facility bore a non-LIBOR based fixed interest rate. Thus, under SFAS
No. 133 as amended, the Swap underlying this debt became ineffective and could
no longer be designated as a cash flow hedge of variable rate debt. This
ineffective Swap is cash settled quarterly dependent upon the movement of
3-month LIBOR rates. In measuring the fair value of the Swap at January 31,
2004, the Company recorded a short-term liability of $1,438. During the nine
months ended January 31, 2004, the Company paid $2,921 representing quarterly
cash settlement payments. The Company recorded a net loss of $96 on the
ineffective interest rate hedge for the nine months ended January 31, 2004.



10




WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)


NOTE 7 - STOCKHOLDERS' EQUITY



Changes in stockholders' equity during the nine months ended January 31, 2004
were as follows:


Stockholders' equity balance at April 30, 2003 $ 67,866
Issuance of common stock in conjunction with:
Exercise of stock options, including tax benefits 21
Employee stock purchase program 167
Fees paid to outside members of the Company's Board of Directors 33
Change in balance of notes receivable from directors and officers 13
Value of contingent common stock warrants 142
Comprehensive income 645
-------------
Stockholders' equity balance at January 31, 2004 $ 68,887
=============



Comprehensive (Loss) Income



The components of comprehensive (loss) income are as follows:

Three Months Ended Nine Months Ended
------------------------------- -------------------------------
January 31, January 31, January 31, January 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------

Net loss $ (647) $ (17,349) $ (124) $ (19,231)
Other comprehensive (loss) income:
Unfunded benefit plan obligation, net of tax (2,935)
Changes in fair market value of financial
instruments designated as hedges of
interest rate exposure, net of taxes (394)
Write-off of fair market value of ineffective
interest rate hedge, net of tax 2,520
Foreign currency translation adjustment (464) 965 3,704 971
-------------- ------------- ------------- -------------
Comprehensive (loss) income $ (1,111) $ (16,384) $ 645 $ (16,134)
============= ============= ============= =============



Notes Receivable from Officers

During Fiscal 2001 and Fiscal 1999, the Company extended unsecured
loans to certain members of management and the Board of Directors (the "Director
and Officer Notes") for the purchase, in the open market, of the Company's
common stock by those individuals. The Director and Officer Notes were full
recourse, interest bearing promissory notes with principal and interest payable
during Fiscal 2003. At January 31, 2004, $40 (net of a $270 reserve established
for uncollectible notes) remains outstanding on the Director and Officer notes.



11




WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)


NOTE 8 - EARNINGS PER SHARE ("EPS")

Basic EPS excludes dilution and is computed by dividing income
available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. The following information presents the
Company's computations of basic and diluted EPS for the periods presented in the
consolidated statement of operations:



Three Months Ended Nine Months Ended
January 31, January 31, January 31, January 31,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Earnings per share:


Net (loss) income from continuing operations $ (647) $ (6,122) $ 1,135 $ (8,083)
Net loss from discontinued operations (11,227) (1,259) (11,148)
------------ ----------- ----------- -------------
Net loss $ (647) $ (17,349) $ (124) $ (19,231)
=========== =========== =========== =============

Weighted average number of
Common shares outstanding 13,422 13,240 13,396 13,196
Potentially dilutive shares*
------------ ------------ ------------ -------------
Total 13,422 13,240 13,396 13,196
============ ============ ============ =============

Basic income (loss) earnings per share:
Net (loss) income from continuing operations $ (0.05) $ (0.46) $ 0.09 $ (0.61)
Net (loss) from discontinued operations (0.85) (0.09) (0.85)
------------ ------------- ------------ ------------
Net loss $ (0.05) $ (1.31) $ (0.00) $ (1.46)
============ ============= ============ ============

Diluted (loss) income earnings per share:
Net (loss) income from continuing operations $ (0.05) $ (0.46) $ 0.09 $ (0.61)
Net loss from discontinued operations (0.85) (0.09) (0.85)
------------ ------------ ------------ -----------
Net loss $ (0.05) $ (1.31) $ (0.00) $ (1.46)
============ ============ ============ ===========



* The Company had additional employee stock options and warrants outstanding
during the periods presented that were not included in the computation of
diluted earnings per share because they were anti-dilutive. Options and warrants
to purchase 2,780 and 4,269 shares of common stock were anti-dilutive and
outstanding during the three and nine months ended January 31, 2004 and 2003,
respectively.




12




WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)


NOTE 9 - BUSINESS COMBINATIONS

During the nine months ended January 31, 2004 and Fiscal 2003, the
Company did not complete any business combinations.

During Fiscal 2002 and Fiscal 2001, the Company made two and eight
acquisitions, respectively, accounted for under the purchase method (the
"Purchased Companies"). These acquisitions were made in order to expand the
Company's presence in the marketplace in which it serves. The results of these
acquisitions have been included in the Company's results from their respective
dates of acquisition. Initial cash consideration and subsequent acquisition
costs paid associated with the acquisition of the Purchased Companies totaled
$6,522, $8,537, $17,494 and $29,989 during the nine months ended January 31,
2004, Fiscal 2003, Fiscal 2002 and Fiscal 2001, respectively. The total assets
acquired and earn-outs paid in connection with the Purchased Companies during
the nine months ended January 31, 2004, Fiscal 2003, Fiscal 2002 and Fiscal
2001, were $6,522, $8,537, $18,078 and $39,431, respectively, including
intangible assets of $6,522, $8,537, $16,464 and $20,282, respectively.

The majority of the Purchased Companies have earn-out provisions that
could result in additional purchase consideration payable in subsequent periods,
ranging from three to five years, dependent upon the future earnings of these
acquired companies. During the nine months ended January 31, 2004, Fiscal 2003,
Fiscal 2002 and Fiscal 2001, $6,475, $7,659, $9,451 and $6,614, respectively, of
additional purchase consideration was paid by the Company in connection with
earn-out provisions and another $6,196 has been accrued for these earn-out
provisions at January 31, 2004. The additional consideration, whether paid or
accrued, has been reflected in the accompanying balance sheet as goodwill at
January 31, 2004. In addition to the accrued additional purchase consideration
as of January 31, 2004, the Company estimates that approximately $786 and $1,461
will be paid under contractual earn-out provisions during the fiscal years
ending April 30, 2005 and 2006. As these contingent amounts have not yet been
earned, under accounting rules, they have not been reflected in the accompanying
balance sheet at January 31, 2004.


NOTE 10 - RESTRUCTURING COSTS

The Company historically has grown significantly through acquisitions.
However, the Company began to implement a new strategic business plan in Fiscal
2003. Under its new strategic plan, the Company has focused on (i) integrating
its existing core operations to improve profitability and (ii) divesting
non-core operations to pay down debt. The Company did not consummate any
acquisitions during the nine months ended January 31, 2004 or in Fiscal 2003 and
does not anticipate pursuing or consummating acquisitions in the near future.

During the nine months ended January 31, 2004, the Company recorded a
restructuring charge of $1,021 in connection with its consolidation of envelope
printing facilities in the New York area. The costs mainly were comprised of
future rental payments for a facility the Company vacated in May 2003.

During the nine months ended January 31, 2003, the Company reversed
into income a $1,242 restructuring charge taken in the three months ended April
30, 2001 that was no longer required since the Company settled the underlying
contract dispute and expensed $1,486 in strategic restructuring costs associated
with the exploration of other financial, restructuring and strategic
alternatives.



13




WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

Under the restructuring plan implemented during Fiscal 2003, the
Company terminated and provided severance benefits to 37 employees. However,
certain severed employees have delayed severance payments. The majority of the
workforce reductions were within the production area and administration.

The following table sets forth the Company's accrued restructuring
costs for the nine months ended January 31, 2004.



Facility Severance Other Asset
Closure and and Writedowns
Consolidation Terminations and Costs Total
------------- ------------ -------------- ------------

Balance at April 30, 2003......................................$ 206 $ 1,845 $ 397 $ 2,448
Additions............................................... 1,021 1,021
Utilizations............................................ (912) (928) (1,840)
---------------- ------------- -------------- ------------

Balance at January 31, 2004....................................$ 315 $ 917 $ 397 $ 1,629
=============== ============= ============== ============



NOTE 11 - GOODWILL AND OTHER INTANGIBLE ASSETS


Goodwill consists of the following:




Balance at April 30, 2003 ...................................................... $ 109,515
Additions................................................................ 5,891
Disposals................................................................ (38)
-------------
Balance at January 31, 2004..................................................... $ 115,368
=============




Intangible assets subject to amortization consist of the following:
January 31, April 30,
2004 2003
----------------------------

Customer lists.................................................................. $ 1,327 $ 1,302
Non-compete agreements.......................................................... 398 398
Other ......................................................................... 664 664
------------- -------------
2,389 2,364
Less: Accumulated amortization............................................... (1,108) (1,057)
------------- -------------
Net intangible assets.................................................... $ 1,281 $ 1,307
============= =============



NOTE 12 - INCOME TAXES

During the nine months ended January 31, 2004, the Company's effective
income tax rate was greater than the statutory rate due to treating earnings of
our Canadian subsidiary as taxable income in the U.S. without the ability to use
offsetting foreign tax credits. This treatment resulted from the pledge of the
Company's Canadian subsidiary's assets as part of its January 2003 debt
restructing. For the nine months ended January 31, 2004 and 2003, the Company's
overall effective rate was 63.5% and 34.1%, respectively.

14




WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)


NOTE 13 - SEGMENT REPORTING

The Company transacts business in the United States, Canada and Puerto
Rico. The Company does not allocate corporate overhead by segment in assessing
performance. Corporate expenses and overhead included within the operating
income of the Company's United States operations totaled $1,609 and $8,076 for
the three months ended January 31, 2004 and 2003, respectively, and $2,154 and
$11,850 for the nine months ended January 31, 2004 and 2003, respectively.


The following table sets forth information as to the Company's
operations in its different geographic segments:



Three Months Ended Nine Months Ended
---------------------------- ----------------------------
January 31, January 31, January 31, January 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Revenues:

United States............................... $ 112,070 $ 125,465 $ 321,508 $ 363,079
Canada...................................... 39,068 32,989 115,568 99,773
Puerto Rico................................. 2,627 2,406 7,787 7,331
------------- ------------- ------------- -------------
Total..................................... $ 153,765 $ 160,860 $ 444,863 $ 470,183
============= ============= ============= =============

Three Months Ended Nine Months Ended
---------------------------- ----------------------------
January 31, January 31, January 31, January 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Operating Income:
United States............................... $ (346) $ (3,777) $ 6,367 $ 5,521
Canada...................................... 3,929 2,967 10,534 8,901
Puerto Rico................................. 126 33 416 159
------------- ------------- ------------- -------------
Total..................................... $ 3,709 $ (777) $ 17,317 $ 14,581
============= ============= ============= =============




Identifiable assets (at quarter-end):
January 31, April 30,
2004 2003
------------- -------------


United States....................................................................$ 246,643 $ 260,719
Canada........................................................................... 65,006 65,297
Puerto Rico...................................................................... 3,101 3,225
------------- -------------
Total..........................................................................$ 314,750 $ 329,241
============= =============




15



WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

NOTE 14 - SALE OF DISCONTINUED OPERATIONS

Effective July 31, 2003, the Company completed the divestiture of
certain non-core print manufacturing operations. The assets and liabilities of
the divested businesses, which had been excluded from the Company's historical
operating results and classified as discontinued operations at April 30, 2003
pursuant to SFAS No. 144, were sold to a financial buyer for $5,000 in gross
proceeds. After payment of expenses, the transaction generated net cash proceeds
of approximately $4,900. The Company used these net proceeds to make certain
earn-out payments that were due in May 2003 under purchase agreements for prior
acquisitions and to reduce outstanding indebtedness with its senior lenders.
With the divestiture, the Company exited the print manufacturing of various
types of specialty packaging, folding boxes and vinyl, flexographic and
silkscreen labels and signs.

Summarized below are the results of discontinued operations for the nine months
ended January 31, 2004 and 2003:



Nine Months Ended January 31,
---------------------------------
2004 2003
-------------- --------------

Revenue $ 5,677 $ 18,606
Loss from discontinued operations (1,259) (11,148)


The major classes of assets and liabilities sold included in the consolidated
balance sheet at April 30, 2003 under the captions "Assets of Businesses Held
for Sale" and "Liabilities of Businesses Held for Sale" are as follows:


April 30,
Assets Held for Sale: 2003
------------

Accounts receivable, net $ 3,880
Inventories 3,662
Prepaid expenses and other current assets 61
Property, plant and equipment, net 616
------------
$ 8,219

April 30,
Liabilities Held for Sale: 2003
------------

Accounts payable $ 838
Accrued compensation 903
Accrued additional purchase consideration 970
Other accrued liabilities 508
------------
$ 3,219


Note 15 - COMMITMENTS AND CONTINGENCIES

The Company is, from time to time, a party to litigation arising in the normal
course of its business. Management believes that none of this litigation will
have a material adverse effect on the financial position, results of operations
or cash flows of the Company.



16




Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

This Quarterly Report on Form 10-Q contains forward-looking statements
that involve risks and uncertainties. When used in this Report, the words
"anticipate," "believe," "estimate," "intend," "may," "will," "expect" and
similar expressions as they relate to Workflow Management, Inc. (the "Company,"
"Workflow Management," "we," "us," and "our") or its management are intended to
identify such forward-looking statements. The Company's actual results,
performance or achievements could differ materially from the results expressed
in, or implied by, these forward-looking statements, which are made only as of
the date hereof.


Introduction

We are one of the largest distributors of printed business products in
North America and we are also a leading provider of end-to-end business
management outsourcing solutions, which include vendor-neutral custom print
sourcing, consulting and integrated storage and distribution services, that
allow our customers to control all of their print-related costs. We produce and
distribute a full range of printed business products and provide related
management services to approximately 31,000 customers in North America ranging
in size from small businesses to Fortune 100 companies. We provide customers
with an integrated set of services and information tools that reduce the costs
of procuring, storing, distributing and using printed business products and
produce custom business documents, envelopes, direct mail and commercial
printing. We employ approximately 2,700 persons and have 87 facilities
throughout North America.

As used in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, "Fiscal 2004", "Fiscal 2003" and "Fiscal
2002" refer to our fiscal years ending April 30, 2004 and ended April 30, 2003
and 2002, respectively.

The following discussion should be read in conjunction with the
consolidated historical financial statements, including the related notes
thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, as well as
our audited consolidated financial statements, and notes thereto, included in
our Annual Report on Form 10-K for the fiscal year ended April 30, 2003.

As previously announced and disclosed, after considering and pursuing
strategic and refinancing alternatives to address our bank credit facility
obligations, we entered into an Agreement and Plan of Merger on January 30, 2004
("Merger Agreement") with WF Holdings, Inc. ("WF Holdings"), an entity formed
and controlled by Perseus, L.L.C. and The Renaissance Group, LLC, pursuant to
which WF Holdings would acquire the Company for $4.87 per share in cash. We will
hold a special stockholder meeting to vote on the transaction on March 30, 2004.





17



Consolidated Results of Operations

Three Months Ended January 31, 2004 Compared to Three Months Ended
January 31, 2003

Revenues. Consolidated revenues decreased 4.4%, from $160.9 million for
the three months ended January 31, 2003, to $153.8 million for the three months
ended January 31, 2004. The decrease in consolidated revenues was primarily
within our distribution, envelope printing and direct mail project management
operations as we continue to experience strong competition and the impact of our
customers re-evaluating their purchasing programs for direct mail advertising,
commercial printing and other related products due to general economic
conditions. We also continue to evaluate customer relationships and renegotiate
or eliminate unprofitable accounts.

International revenues increased 17.8%, from $35.4 million, or 22.0% of
consolidated revenues, for the three months ended January 31, 2003, to $41.7
million, or 27.1% of consolidated revenues, for the three months ended January
31, 2004. The increase in international revenues was due to the relative
strengthening of the Canadian dollar. In local currency, Canadian dollar
revenues decreased 1.1% for the three months ended January 31, 2004 versus the
three months ended January 31, 2003. The decline in revenues in Canadian dollars
is primarily due to a general softness in the Canadian economy. International
revenues consist exclusively of revenues generated in Canada and Puerto Rico.

Gross Profit. Gross profit increased 3.1%, from $41.9 million, or 26.1%
of revenues, for the three months ended January 31, 2003, to $43.2 million, or
28.1% of revenues, for the three months ended January 31, 2004. The increase in
gross profit both as a percentage of revenues and in dollars was primarily due
to the write-off of $1.1 million of obsolete inventory during the three months
ended January 31, 2003 and the continuing efforts of eliminating unprofitable
accounts.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 9.6%, from $36.1 million, or 22.4% of
revenues, for the three months ended January 31, 2003, to $39.5 million, or
25.7% of revenues, for the three months ended January 31, 2004. The increase in
selling, general and administrative expenses both as a percentage of revenues
and in dollars was primarily due to an increase in our allowance for bad debt of
$5.0 million related to accounts receivable owed by a significant customer who
filed for bankruptcy in January 2004.

Restructuring Costs. During the three months ended January 31, 2003, we
expensed $23,000 in strategic restructuring costs associated with the continued
exploration of other financial, restructuring and strategic alternatives.

Abandoned Software Costs. During the three months ended January 31,
2003, we expensed $2.1 million in previously capitalized costs relating to
software that has had its value impaired due to the implementation of our
business plan and long-term strategic objectives.

Uncollectible Notes Receivable. During the three months ended January
31, 2003, we expensed as uncollectible $681,000 of notes receivable.

Severance and Other Employment Costs. During the three months ended
January 31, 2003, we expensed $3.8 million in severance and other employment
costs relating to the termination of certain executive officers as we
implemented our strategic restructuring plan. In addition, we incurred certain
employee retention expenses and executive recruiting costs.

Interest Expense, net. Interest expense, net of interest income,
decreased 13.7%, from $5.5 million for the three months ended January 31, 2003,
to $4.7 million for the three months ended January 31, 2004. This decrease in
net interest expense during the three months ended January 31, 2004 was due to a
decrease in our interest rates under our restructured credit facility and a
decrease in the level of debt outstanding during the period. See "Note 2 and
Note 6 to the Company's Consolidated Financial Statements" of this Form 10-Q and
"Liquidity and Capital Resources" below.

(Income) Loss on Ineffective Interest Rate Hedge. On October 16, 2002,
our credit facility was amended so that borrowings under the credit facility
bore a non-LIBOR based fixed interest rate. Thus, under SFAS No. 133 as amended
the Swap became ineffective and could no longer be designated as a cash flow
hedge of variable rate debt. During the three months ended January 31, 2004 and
the three months ended January 31, 2003, we recorded income of $27,000 and
expense of $300,000, respectively, for the subsequent change in the value of the
Swap as a component of income.


18


Financing Fees and Other Banking Related Costs. On January 15, 2003, we
restructured our senior secured credit facility with our lenders (the "Credit
Facility"). During the three months ended January 31, 2003, we expensed $2.1
million in connection with consultants and other professional fees incurred in
the negotiation and consummation of the restructured Credit Facility.
Additionally, we wrote-off $1.2 million of deferred costs related to our prior
credit facility.

Abandoned Debt Offering Costs. During the three months ended January
31, 2003 we recorded a gain of $124,000 for the reimbursement of costs which
were previously expensed for transaction costs paid in connection with a
proposed private placement of senior secured notes (the "Offering"). Due to
unfavorable market conditions at the timing of the Offering, we decided not to
actively pursue the placement of the senior secured notes. The transaction costs
incurred in connection with the Offering were expensed during Fiscal 2003.

Other Expense. Other expense increased $40,000 from $5,000 for the
three months ended January 31, 2003, to $45,000 for the three months ended
January 31, 2004. Other expense primarily represents the net of gains and/or
losses on sales of equipment and miscellaneous other income and expense items.

Income Taxes. The benefit for income taxes from continuing operations
decreased $3.2 million from a $3.6 million tax benefit for the three months
ended January 31, 2003, to a $0.4 million tax benefit for the three months ended
January 31, 2004, reflecting effective income tax benefit rates of 37.1% and
38.2%, respectively. During the three months ended January 31, 2004, the
effective income tax rate was greater than the statutory rate due to treating
earnings of our Canadian subsidiary as taxable income in the U.S. without the
ability to use offsetting foreign tax credits. This treatment resulted from the
pledge of our Canadian subsidiary's assets as part of our January 2003 debt
restructuring. During both periods, the effective income tax rates reflect the
recording of tax provisions at the federal statutory rate of 35.0%, plus
appropriate state and local taxes.

Discontinued Operations. During Fiscal 2003, we committed to a plan to
dispose of certain non-core businesses. We completed the sale of these non-core
businesses effective July 31, 2003 under our long-term business plan and
strategic objectives. The net loss from discontinued operations during the three
months ended January 31, 2003 was $11.2 million, which includes a write-down of
assets of $11.0 million and a loss from operations of $0.2 million.

Nine Months Ended January 31, 2004 Compared to Nine Months Ended January
31, 2003

Revenues. Consolidated revenues decreased 5.4%, from $470.2 million for
the nine months ended January 31, 2003, to $444.9 million for the nine months
ended January 31, 2004. The decrease in consolidated revenues was primarily
within our distribution, envelope printing and direct mail project management
operations as we continue to experience strong competition and the impact of our
customers re-evaluating their purchasing programs for direct mail advertising,
commercial printing and other related products due to general economic
conditions. We also continue to evaluate customer relationships and renegotiate
or eliminate unprofitable accounts. In addition, revenues for the nine months
ended January 31, 2003 benefited from bi-annual political mailings. We also
believe that our inability to make certain earn-out payments due to financial
covenants with our lenders adversely impacted the morale and productivity of
some of our most important employees which in turn also negatively impacted
revenues during the nine months ended January 31, 2004.

International revenues increased 15.2%, from $107.1 million, or 22.8%
of consolidated revenues, for the nine months ended January 31, 2003, to $123.4
million, or 27.7% of consolidated revenues, for the nine months ended January
31, 2004. The increase in international revenues was due to the relative
strengthening of the Canadian dollar. In local currency, Canadian dollar
revenues increased only 0.2% for the nine months ended January 31, 2004 versus
the nine months ended January 31, 2003 due to a general softness in the Canadian
economy. International revenues consist exclusively of revenues generated in
Canada and Puerto Rico.


19


Gross Profit. Gross profit decreased 4.6%, from $128.8 million, or
27.4% of revenues, for the nine months ended January 31, 2003, to $122.9
million, or 27.6% of revenues, for the nine months ended January 31, 2004. The
increase in gross profit as a percentage of revenue was due to the write-off of
$1.1 million of obsolete inventory during the nine months ended January 31,
2003.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased 0.5%, from $107.3 million, or 22.8% of
revenues, for the nine months ended January 31, 2003, to $106.8 million, or
24.0% of revenues, for the nine months ended January 31, 2004. The increase in
selling, general and administrative expenses as a percentage of revenues is
primarily due to $5.0 million in accounts receivable owed by a significant
customer who filed bankruptcy in January 2004 that we reserved against as a bad
debt.

Restructuring Costs. During the nine months ended January 31, 2004, the
Company incurred $1.0 million in restructuring costs for the consolidation of
certain envelope manufacturing facilities in the New York area. The costs are
mainly comprised of future rental payments for the vacated facility. During the
nine months ended January 31, 2003, net restructuring costs totaled $244,000 as
we reversed into income a $1.2 million restructuring charge taken in the three
months ended April 30, 2001 that was no longer required since we settled the
underlying contract dispute and we expensed $1.4 million in strategic
restructuring costs associated with the exploration of other financial,
restructuring and strategic alternatives.

Abandoned Software Costs. During the nine months ended January 31,
2003, we expensed $2.1 million in previously capitalized costs relating to
software that has had its value impaired due to the implementation of our
business plan and long-term strategic objectives.

Uncollectible Notes Receivable. During the nine months ended January
31, 2003, we expensed as uncollectible $0.7 million of notes receivable.

Severance and Other Employment Costs. During the nine months ended
January 31, 2004, Thomas B. D'Agostino, Sr., the Chairman of the Board of
Directors, resigned from the Board and as Chairman, and released us from any
obligation to pay severance or other amounts under his employment agreement with
us. As a result, during the nine months ended January 31, 2004, we reversed into
income approximately $2.2 million which had previously been recorded as an
obligation to Mr. D'Agostino.

Interest Expense, net. Interest expense, net of interest income,
decreased 11.8%, from $15.2 million for the nine months ended January 31, 2003,
to $13.4 million for the nine months ended January 31, 2004. This decrease in
net interest expense during the nine months ended January 31, 2004 was due to a
decrease in our interest rates under our Credit Facility and a decrease in the
level of debt outstanding during the period. See "Note 2 and Note 6 to the
Company's Consolidated Financial Statements" of this Form 10-Q and "Liquidity
and Capital Resources" below.

(Income) Loss on Ineffective Interest Rate Hedge. On July 16, 2002, our
former credit facility was amended so that borrowings under the credit facility
bore a non-LIBOR based fixed interest rate. Thus, under SFAS No. 133 as amended,
the Swap has become ineffective and can no longer be designated as a cash flow
hedge of variable rate debt. As such, during the nine months ended January 31,
2003, we wrote off $4.3 million for the fair market value of the ineffective
hedge and recorded $1.5 million for the subsequent changes in the value of the
Swap as a component of income. During the nine months ended January 31, 2004, we
paid $2.9 million representing cash settlement payments on the Swap and have
$1.4 million accrued at January 31, 2004.

Financing Fees and Other Banking Related Costs. Due to amendments to
our Credit Facility during Fiscal 2003 and 2004, during the nine months ended
January 31, 2004 and 2003, we expensed $0.7 million and $4.1 million,
respectively, in connection with consultants and other professional fees
incurred in the negotiation and consummation of our Credit Facility and the
write-off of a certain portion of pre-amendment deferred costs relating to our
Credit Facility.


20


Abandoned Debt Offering (Gains) Costs. During the nine months ended
January 31, 2003, we incurred $1.8 million in transaction costs paid in
connection with the Offering. Due to unfavorable market conditions at the timing
of the Offering, we decided not to actively pursue the placement of the senior
secured notes. The transaction costs incurred in connection with the Offering
were expensed during Fiscal 2003.

Other Expense. Other expense increased $6,000 from $15,000 during the
nine months ended January 31, 2003 to $21,000 during the nine months ended
January 31, 2004. Other expense primarily represents the net of gains and/or
losses on sales of equipment and miscellaneous other income and expense items.

Income Taxes. Provision (benefit) for income taxes increased 125.4%
from a $4.2 million tax benefit for the nine months ended January 31, 2003, to a
tax provision of $2.0 million for the nine months ended January 31, 2004,
reflecting effective income benefit and tax rates of 34.1% and 63.5%
respectively. During the nine months ended January 31, 2003, the effective
income tax rate was lower due to the tax benefit associated with the
restructuring costs, abandoned software costs, uncollectible notes receivable,
severance, and other employment costs, loss on ineffective interest rate hedge
and financing fees and other banking related costs. During the nine months ended
January 31, 2004, the effective income tax rate was greater than the statutory
rate due to treating earnings of our Canadian subsidiary as taxable income in
the U.S. without the ability to use offsetting foreign tax credits. This
treatment resulted from the pledge of our Canadian subsidiary's assets as part
of our January 2003 debt restructuring. At January 31, 2004, we have both
short-term and long-term deferred tax assets totaling $17.0 million. We evaluate
recoverability of deferred tax assets based on estimated future taxable income.
To the extent that recovery is deemed not likely, a valuation allowance is
recorded. We believe that as of January 31, 2004 realization of its deferred tax
assets is more likely than not, and thus no valuation allowance is recorded.
During both periods, the effective income tax rates reflect the recording of tax
provisions at the federal statutory rate of 35.0%, plus appropriate state and
local taxes.

Discontinued Operations. During Fiscal 2003, we committed to a plan to
dispose of certain non-core businesses. We completed the sale of these non-core
businesses effective July 31, 2003 under our long-term business plan and
strategic objectives. The net loss from discontinued operations during the nine
months ended January 31, 2004 of $1.3 million includes a write-down in assets of
$1.0 million and a loss from operations of $0.3 million compared to a write-down
in assets of $10.9 million and a loss from operations of $0.2 during the nine
months ended January 31, 2003.

Liquidity and Capital Resources

At January 31, 2004, we had a working capital deficit of $81.5 million,
which includes $151.2 million in debt under our existing credit facility, which
has been classified as short-term debt. Our capitalization, defined as the sum
of long-term debt and stockholders' equity, was approximately $70.2 million at
January 31, 2004.

We use a centralized approach to cash management and the financing of
our operations. As a result, minimal amounts of cash and cash equivalents are
typically on hand as any excess cash would be used to pay down our Credit
Facility. Cash at January 31, 2004, primarily represented customer collections
and in-transit cash sweeps from our subsidiaries at the end of the quarter and
cash in Canada that has not been repatriated.

Our anticipated capital expenditures budget for the next twelve months
is approximately $7.0 million. We anticipate that these capital expenditures
primarily will be equipment purchases, leasehold improvements and related costs
we expect to incur in connection with the integration of certain operations.

During the nine months ended January 31, 2004, net cash provided by
operating activities was $22.4 million. Net cash used in investing activities
was $4.4 million, which was mainly comprised of $6.5 million used for additional
purchase consideration and $3.0 million used for capital expenditures, which was
partially offset by $5.0 million in proceeds from the sale of discontinued
operations. Net cash used by financing activities was $19.0 million, which was
mainly comprised of $13.9 million in net pay-downs on our Credit Facility, $2.9
million in settlement payments for the interest rate swap, $2.0 million in
payments of deferred financing costs and $0.4 million in payments of other
long-term debt.

During the nine months ended January 31, 2003, net cash provided by
operating activities was $8.4 million. Net cash used in investing activities was
$8.6 million, including $8.5 million used for acquisitions and additional
purchase consideration and $4.6 million used for capital expenditures, which
were partially offset by $4.5 million received from the collection of notes
receivable. Net cash provided by financing activities was $0.9 million, which
was mainly comprised of $9.0 million in net borrowings on our prior credit
facility and the Credit Facility, which was partially offset by $2.5 million for
the cash settlement of the interest rate hedge, $3.7 million in payments of
deferred financing costs, $1.8 million in the payment of abandoned debt offering
costs and $0.3 million in payments of other long-term debt.


21


We have significant operations in Canada. Net sales from our Canadian
operations accounted for approximately 26.0% of our total revenues for the nine
months ended January 31, 2004. As a result, we are subject to certain risks
inherent in conducting business internationally, including fluctuations in
currency exchange rates. Changes in exchange rates may have a significant effect
on our business, financial condition and results of operations.

The following table illustrates the impact that the strengthening of
the Canadian dollar had on our results of operations during the three months and
nine months ended January 31, 2004 and 2003:




Three Months Ended Nine Months Ended
---------------------------- ----------------------------
January 31, January 31, January 31, January 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------

Canadian dollars (local currency):


Revenues.................................. $ 51.0 $ 51.5 $ 155.8 $ 155.4
Operating income.......................... 5.1 4.6 14.2 13.9

Average exchange rate..................... 0.77 0.64 0.74 0.64

U.S. dollars:

Revenues.................................. 39.1 33.0 115.6 99.8
Operating income.......................... 3.9 3.0 10.5 8.9



Effective August 1, 2003 we amended and restructured our Credit
Facility with our senior lenders. At April 30, 2003, we had exceeded certain
debt covenants with our lenders that limited capital expenditures and the
incurrence of restructuring costs. As part of the amended Credit Facility, our
senior lenders waived these defaults. As amended, the Credit Facility also
modified the calculation of EBITDA for credit facility covenant purposes to
exclude the impact of goodwill impairment and the results of discontinued
operations and amended certain financial covenants for future periods in a
manner consistent with our current business plan and forecasts.

Under the terms of the Credit Facility, a $50.0 million term loan is
due May 1, 2004 and another term loan and the asset based revolving facility
under the Credit Facility are both due August 1, 2004. After considering and
pursuing strategic and refinancing alternatives to repay our Credit Facility
obligations by their respective due dates, we entered into an Agreement and Plan
of Merger on January 30, 2004 ("Merger Agreement") with WF Holdings, Inc.
("WF Holdings"), an entity formed and controlled by Perseus, L.L.C. and The
Renaissance Group, LLC, pursuant to which WF Holdings would acquire us for $4.87
per share in cash. We will hold a special stockholder meeting to vote on the
transaction on March 30, 2004. Upon closing of the transaction, WF Holdings
would cause us to pay and satisfy all of our obligations under the Credit
Facility.


22


In connection with the Merger Agreement, we also negotiated an
amendment and waiver ("Amendment and Waiver") to the Credit Facility. The
Amendment and Waiver provides us with limited interest rate reductions and fee
deferrals, which are designed to allow us to more easily satisfy certain closing
conditions contained in the Merger Agreement. The Amendment and Waiver also
waives our failure to comply with various financial covenant defaults under the
Credit Facility as of January 31, 2004. These defaults occured as a result of
increasing our allowance for bad debt expense by $5.0 million related to
accounts receivable owed by one of our largest customers, KB Toys, Inc. ("KB
Toys"), who filed for bankruptcy on January 14, 2004.

Under the terms of the Amendment and Waiver, the covenant default waiver
and other bank concessions expire if the Merger Agreement is terminated for any
reason. As a result, if our stockholders do not approve the proposed transaction
and the Merger Agreement is terminated, all deferred fees and interest will
become immediately due and we will be in default under the Credit Facility. Any
such default will likely have a material adverse effect on our business,
relationships with key suppliers and customers, financial condition and results
of operations and our lenders upon such default will have the right to exercise
all remedies available to them under the Credit Facility, including foreclosure
on our assets.

The tranches of debt under the Credit Facility consist of: (i) an
approximately $100.0 million in availability asset-based revolving credit
facility (the "Revolver") which provides access to working capital advanced on a
borrowing base formula; (ii) an approximately $13.0 million senior term loan
(the "Term Loan A"); and (iii) a $50.0 million senior term loan (the "Term Loan
B"). The Revolver and Term Loan A mature on August 1, 2004. Term Loan B matures
on May 1, 2004. The Revolver contains advance rates of 85% of our eligible
accounts receivable, 50% of our eligible inventories and $10.0 million against
our fixed assets. Under the Credit Facility, we have granted our senior lenders
warrants to acquire up to 2.4 million shares of our common stock. On December
31, 2003, warrants to acquire 400,000 shares became exercisable at an exercise
price of $5.32 per share. Under the terms of the warrants (after giving effect
to the Amendment and Waiver), commencing no later than April 30, 2004,
additional 400,000 share warrant tranches become exercisable on a monthly basis
in the event there remains outstanding indebtedness under the Credit Facility on
the date the tranche becomes exercisable. Each 400,000 share warrant tranche
would have an exercise price equal to the fair market value of the Company's
common stock on the date the tranche becomes exercisable.


The outstanding balances (in millions) on the Credit Facility at March
12, 2004 were as follows:



Maximum Amount Applicable
Availability Outstanding Interest Rate
------------ ------------ -------------

Revolver $ 99.4 $ 89.0 LIBOR + 5%
Term Loan A 13.0 13.0 LIBOR + 8%
Term Loan B 50.0 50.0 11%, 12%, 13% & 14% for each
calendar quarter of 2003 and 14%
thereafter
------------- -------------
$ 162.4 $ 152.0
============= =============


At March 12, 2004, we had $152.0 million outstanding on the Credit
Facility and, in addition, $3.4 million in outstanding letters of credit. Our
availability under the Credit Facility at March 12, 2004 was $7.0 million after
inclusion of letters of credit.

The Credit Facility contains a number of affirmative covenants related
to our business with which we must comply. These covenants include, but are not
limited to, the requirements that (i) we meet certain liquidity tests before
making any earn-out payments as a result of our prior acquisitions and (ii) we
meet certain leverage ratio, interest coverage ratio, fixed charge ratio, and
minimum EBITDA thresholds on an ongoing basis. There can be no assurance that we
will be able to satisfy all or any of these covenants. Any failure to satisfy
these covenants (or any other covenants) would constitute a default under the
Credit Facility. Any such default likely would have a material adverse effect on
our business, financial condition and results of operations.


23


In May 2001, we entered into an interest rate swap agreement to manage
interest rate risk on the variable rate borrowings under our then existing
credit facility. As of January 31, 2004, the swap was recorded at $1.4 million,
which represents the amount which we would have paid to settle the swap at that
date. The swap expired on March 10, 2004.

We historically have grown significantly through acquisitions. However,
we began to implement a new strategic business plan in Fiscal 2003. Under our
new strategic plan, we have focused on (i) integrating our existing core
operations to improve profitability, (ii) divesting non-core operations to pay
down debt and (iii) greater focus on profitable accounts even at the expense of
lower overall revenue. We did not consummate any acquisitions in Fiscal 2003 or
during the nine months ended January 31, 2004 and we do not anticipate pursuing
or consummating acquisitions in the near future.


Fluctuations in Quarterly Results of Operations

Our envelope and commercial print businesses are subject to seasonal
influences resulting from the lower demand for consumable printed business
products during the summer months which coincides with our fiscal quarter ending
in July. Quarterly results also may be materially affected by variations in the
prices by us for the products we sell, the mix of products sold and general
economic conditions. Therefore, results for any quarter are not necessarily
indicative of results that may be achieved for any subsequent fiscal quarter or
full fiscal year.

Inflation

We do not believe that inflation has had a material impact on our
results of operations during the nine months ended January 31, 2004 and 2003.


Critical Accounting Policies and Judgments

Use of Estimates. In preparing our financial statements in conformity
with generally accepted accounting principles, we are required 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 and the reported amounts of revenues and expenses during the
reporting period. We evaluate our estimates and judgments on an ongoing basis,
including those related to allowance for doubtful accounts, inventory reserves,
impairment of property and equipment, impairment of goodwill and intangible
assets and realization of deferred tax assets. We base our estimates and
judgments on historical experience and on various other factors that we believe
to be reasonable under the circumstances. Actual results may differ from these
estimates.

Revenue Recognition. We recognize revenue for the majority of our
products upon shipment to the customer, upon the transfer of title and at the
time risk of loss passes to the buyer. Under agreements with certain customers,
we may store custom forms for future delivery. In these situations, we typically
receive a warehousing fee for the services we provide. In these cases, delivery
and billing schedules are agreed upon with the customer and revenue is
recognized when manufacturing is complete, title transfers to the customer, the
order is invoiced and there is reasonable assurance as to collectibility. Since
the majority of products are customized, product returns are not significant. We
recognize revenues for warehousing customers' inventory as storage services are
provided. We do not charge separate fees for on-line access and ordering of
inventory as these services are offered to customers as a convenience. Delivery
costs billed to customers are recognized in revenues.

Allowance for Doubtful Accounts. We maintain an allowance for doubtful
accounts, which is reviewed at least quarterly for estimated losses resulting
from the inability of our customers to make required payments. Additional
allowances may be necessary in the future if the ability of our customers to pay
deteriorates.


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Inventory Reserves. We maintain a reserve for slow moving or obsolete
inventory, which is reviewed at least quarterly, based upon usage and inventory
age to determine its adequacy. Physical inventories are taken throughout each
fiscal year.

Impairment of Property and Equipment. Property and equipment are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. An estimate of
undiscounted future cash flows produced by the asset, or the appropriate
grouping of assets, is compared with the carrying value to determine whether an
impairment exists, pursuant to the provisions of Statement of Financial
Accounting Standards No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets" beginning in fiscal year 2003.

Impairment of Goodwill and Intangible Assets. During Fiscal 2002,
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets", was issued. We adopted this new standard and as a
result, we ceased to amortize goodwill effective May 1, 2001. In lieu of
amortization we performed an initial impairment review of our goodwill and
indefinite-lived intangible assets as of the implementation date, following
which we concluded that there was no impairment at May 1, 2001. An impairment is
recorded when the fair value of a reporting unit is less than the carrying value
of the reporting unit's net assets. Fair value of a reporting unit is derived
from a combination of discounted future cash flow and comparison to comparable
publicly traded companies. We are required to perform an annual impairment
review upon the completion of each fiscal year. The results of these annual
impairment reviews are highly dependent on management's projection of future
results for our reporting units and there can be no assurance that at the time
such reviews are completed a material impairment charge will not be recorded. An
impairment test was performed at April 30, 2003 at which time an $18.0 million
charge was recorded as a component of operating income.

Realization of Deferred Tax Assets. A valuation allowance is recorded
to reduce deferred tax assets when it is more likely than not that a tax benefit
will not be realized. The primary factors we consider are our historical
results, earnings potential determined through use of internal projections and
the nature of income that can be used to realize the deferred tax asset. Based
on our consideration of these factors, we believe it is more likely than not all
of our deferred tax assets will be realized. If future results of operations are
less than expected future assessments may result in a determination that some or
all of the net deferred tax assets are not realizable.

New Accounting Pronouncements

Employers' Disclosures about Pensions and Other Postretirement Benefits. In
December 2003, the FASB issued SFAS No. 132 (revised 2003), "Employers'
Disclosures about Pensions and Other Postretirement Benefits," to improve
financial statement disclosures for defined benefit plans. This standard
requires that companies provide additional disclosures about their plan assets,
benefit obligations, cash flows, benefit costs and other relevant information.
In addition to extended annual disclosures, we will be required to report the
various elements of pensions and other postretirement benefit costs on a
quarterly basis. SFAS No. 132 (revised 2003) is effective for fiscal years
ending after December 15, 2003, and for quarters beginning after December 15,
2003.

Extinguishment of Debt and Accounting for Leases. In April 2002, the FASB
issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections," that supercedes previous
guidance for the reporting of gains and losses from extinguishment of debt and
accounting for leases, among other things.

SFAS No. 145 requires that only gains and losses from the
extinguishment of debt that meet the requirements for classification as
"Extraordinary Items," as prescribed in APB No. 30, should be disclosed as such
in the financial statements. Previous guidance required all gains and losses
from the extinguishment of debt to be classified as "Extraordinary Items." This
portion of SFAS No. 145 is effective for fiscal years beginning after May 15,
2002, with restatement of prior periods required. Implementation of this portion
of the standard will result in the reclassification of certain losses on
extinguishment of debt previously treated as extraordinary items by Workflow.

In addition, SFAS No. 145 amends SFAS No. 13, "Accounting for Leases,"
as it relates to accounting by a lessee for certain lease modifications. Under
SFAS No. 13, if a capital lease is modified in such a way that the change gives
rise to a new agreement classified as an operating lease, the assets and
obligation are removed, a gain or loss is recognized and the new lease is
accounted for as an operating lease. Under SFAS No. 145, capital leases that are
modified so the resulting lease agreement is classified as an operating lease
are to be accounted for under he sale-leaseback provisions of SFAS No. 98,
"Accounting or Leases." These provisions of SFAS No. 145 are effective for
transactions occurring after May 15, 2002.


25


SFAS No. 145 will be applied as required. Adoption of SFAS No. 145 is
not expected to have a material impact on the Company's results of operations,
financial position or cash flows.

Accounting for Exit and Disposal Activities. In June 2002, the FASB
issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" which addresses the recognition, measurement, and reporting of costs
associated with exit and disposal activities, including restructuring
activities. This statement requires that liabilities for costs associated with
an exit or disposal activity not be recognized until the liability is incurred
and the fair value can be estimated, except for certain one-time termination
benefits. SFAS No. 146 nullifies Emerging Issues Task Force (EITF) 94-3 which
permitted recognition of a liability for such costs at the date of a company's
commitment to an exit plan. The provisions of SFAS No. 146 are effective, and we
have adopted its provisions, for exit and disposal activities initiated after
December 31, 2002. The provisions of EITF 94-3 will continue to apply for
liabilities previously recorded.


Accounting for Consideration Received from a Vendor. In January 2003,
the Emerging Issues Task Force issued EITF 02-16, "Accounting by a Customer
(Including a Reseller) for Certain Consideration Received from a Vendor, " which
states that cash consideration received from a vendor is presumed to be a
reduction of the prices of the vendor's products or services and should,
therefore, be characterized as a reduction of cost of goods sold when recognized
in the statement of operations. That presumption is overcome when the
consideration is either a reimbursement of specific, incremental, identifiable
costs incurred to the sell the vendor's products, or a payment for assets or
services delivered to the vendor. EITF 02-16 is effective, and we have adopted
it provisions, for arrangements entered into after December 31, 2002.

Guarantor's Accounting for Guarantees. In December 2002, the FASB
issued Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others, " which provides for additional disclosures to be made by a guarantor in
its interim and annual financial statements about its obligations and requires,
under certain circumstances, a guarantor to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. We have adopted the disclosure requirements for Fiscal
2003 and do not expect the recognition and measurement provisions of
Interpretation No. 45 to have an effect on our consolidated financial
statements.


Factors Affecting the Company's Business

After considering and pursuing various strategic and refinancing alternatives to
address our credit facility obligations that mature on May 1, 2004 and August 1,
2004, we have entered into a merger agreement with WF Holdings. At the closing
of this transaction, WF Holdings would cause us to satisfy and pay all of our
credit facility obligations. However, if the merger agreement terminates for any
reason, we will be in default under our credit facility. Any such default will
likely have a material adverse effect on our business, relationships with key
suppliers and customers, financial condition and results of operations and our
lenders upon such default will have the right to foreclose on our assets.

As discussed above, a $50.0 million term loan under our Credit Facility
matures on May 1, 2004 and a second term loan and the asset based revolving
portion of the Credit Facility are due August 1, 2004. After considering
strategic and refinancing alternatives, we entered into the Merger Agreement
with WF Holdings. If this transaction closes, WF Holdings will cause us to pay
or satisfy all of our Credit Facility obligations. In connection with the Merger
Agreement, we also entered into the Amendment and Waiver with our lenders.

As also discussed above, the covenant default waiver and other bank
concessions in the Amendment and Waiver expire if the Merger Agreement is
terminated for any reason. As a result, if our stockholders do not approve the
transaction and the Merger Agreement is terminated, all deferred fees and
interest will become immediately due, we will be in default under the Credit
Facility and our lenders will have the right to exercise all remedies available
to them under the Credit Facility, including foreclosure on our assets. We do
not believe that our lenders will agree to further amendments to, or waivers
under, our Credit Facility.


26


The obligation of WF Holdings to close the transaction under the Merger
Agreement is subject to various closing conditions. There can be no assurance
that these closing conditions will be satisfied. If the closing conditions are
not satisfied (or waived by WF Holdings), the transaction will not close, the
Merger Agreement will be terminated and we will be in default under our Credit
Facility.

The Merger Agreement contains a number of conditions on the obligation
of WF Holdings to close the transaction. The conditions include approval of the
transaction by our stockholders, a limitation on our aggregate "net debt" (as
defined in the Merger Agreement) at closing, the ability of WF Holdings to
obtain necessary financing to complete the transaction and other customary
closing conditions. There can be no assurance that these closing conditions will
be satisfied. If one or more closing conditions under the Merger Agreement are
not satisfied (or waived by WF Holdings), the Merger Agreement will terminate
and, under the terms of the Amendment and Waiver, we automatically will be in
default under our Credit Facility. We do not believe that our lenders will agree
to further amendments to, or waivers under, our Credit Facility.


Under the terms of our amended credit facility, we have granted our lenders
warrants to acquire up to 2.4 million shares of our common stock. These warrants
could have a dilutive effect on our existing stockholders.

Under the terms of our Credit Facility, we have granted our senior
lenders warrants to acquire up to 2.4 million shares of our common stock, which
would represent approximately 15.2% of our outstanding common stock if the
warrants were exercised. On December 31, 2003, warrants to acquire 400,000
shares became exercisable at an exercise price of $5.32 per share. Under the
terms of the warrants (after giving effect to the Amendment and Waiver),
commencing no later than April 30, 2004, additional 400,000 share warrant
tranches become exercisable on a monthly basis in the event there remains
outstanding indebtedness under the Credit Facility on the date the tranche
becomes exercisable. Each 400,000 share warrant tranche would have an exercise
price equal to the fair market value of our common stock on the date
the tranche becomes exercisable.

In order to remain in compliance with our credit facility, in 2003 we breached
our obligations to pay earn-outs under numerous purchase agreements for prior
acquisitions. These breaches have had, and may continue to have, an adverse
impact on our business.

The terms of most of our purchase agreements for prior acquisitions
require us to pay earn-outs to the former owners of the acquired businesses. In
many cases, the earn-out recipients are employed by us and are critical to
maintaining good relationships with some of our best customers. Under the terms
of an amendment to our Credit Facility that we entered into with our senior
lenders in January 2003, we were required to defer or otherwise not pay at least
$4.0 million of earn-outs due in May 2003.

Recipients of approximately $1.0 million of earn-out payments
voluntarily agreed to accept subordinated notes due in 2005 in lieu of receiving
a cash earn-out payment in May. However, many earn-out recipients were not
willing to accept these notes. As a result, to remain in compliance with our
credit facility, we were required to breach our earn-out obligations, or in one
case deliver a short-term promissory note, with respect to individuals entitled
to approximately $3.0 million in earn-out payments. Under the terms of the
amendment to the Credit Facility that we entered into with our lenders on August
1, 2003, we were allowed to make these earn-out payments that were previously
required to be deferred. However, we believe that the earn-out breaches have had
an adverse effect on the morale and productivity of some of our most important
employees and this adverse effect may impact our operations on a long-term
basis.


27


Our credit facility subjects us to a number of financial covenants. If our
financial results in future periods are not what we anticipate, we likely will
breach one or more of these covenants. Any such breaches could have a material
adverse impact on our business and financial condition.

The terms of our Credit Facility require us to comply with certain
financial covenants, including minimum liquidity and minimum EBITDA covenants.
As of January 31, 2004, we breached various financial covenants under the Credit
Facility as a result of increasing our bad debt expense by $5.0 million related
to accounts receivable owed by KB Toys, one of our largest customers. The terms
of the Amendment and Waiver, which we entered into in connection with the Merger
Agreement, waived these defaults on a short-term basis. In the event that our
financial results in future periods are not what we anticipate, then we likely
will breach one or more of these covenants. In the event of any such breaches,
our lenders would have the right to declare our Credit Facility in default and
foreclose on our assets unless we obtain waivers for the breaches. We do not
believe that our lenders will provide waivers in the event we breach any
covenants in future periods.


For additional risk factors, refer to our Annual Report on Form 10-K for the
fiscal year ended April 30, 2003.



28



Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our financial instruments include cash, accounts receivable, accounts
payable, long-term debt and an interest rate swap. Market risks relating to the
Company's operations result primarily from changes in interest rates. Our
borrowings under our Credit Facility are primarily dependent upon LIBOR rates.
The estimated fair value of long-term debt approximates its carrying value at
January 31, 2004.

We do not hold or issue derivative financial instruments for trading
purposes. On May 3, 2001, we entered into an interest rate swap agreement (the
"Swap") with various lending institutions at no cost to us. We exchanged our
variable interest rate on $100.0 million in credit facility debt for a fixed
3-month LIBOR of approximately 5.10% plus our interest rate spread under our
credit facility. The Swap was entered into to manage interest rate risk on the
variable rate borrowings under our revolving credit portion of our debt. The
Swap's effective date was August 1, 2001 and terminated on March 10, 2004.

Item 4. Controls and Procedures

(a) Within the 90-day period prior to the date of this report, the
Company carried out an evaluation, under the supervision and with
the participation of the Company's management, including the
Company's interim Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Rule
13a-15(e) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Based upon the evaluation, the interim Chief
Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective in
timely alerting them to material information relating to the
Company (including its consolidated subsidiaries) required to be
included in the Company's Exchange Act filings.

(b) There have been no significant changes in the Company's internal
controls or in other factors which could significantly affect its
internal controls subsequent to the date the Company carried out
its evaluation.


29


PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

**31.1 Section 302 Certification - Interim Chief Executive Officer
**31.2 Section 302 Certification - Chief Financial Officer
**32.1 Section 906 Certification - Interim Chief Executive Officer
**32.2 Section 906 Certification - Chief Financial Officer

** Filed herewith.

(b) Reports on Form 8-K: none


30




SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

WORKFLOW MANAGEMENT, INC.



March 16, 2004 By: /s/ Gerald F. Mahoney
- ------------------------------ ----------------------
Date Gerald F. Mahoney
Interim President and Chief
Executive Officer (Principal
Executive Officer)


March 16, 2004 By: /s/ Michael L. Schmickle
- ------------------------------- --------------------------------
Date Michael L. Schmickle
Executive Vice President, Chief
Financial Officer, Secretary and
Treasurer (Principal Financial
Officer and Principal Accounting
Officer)



31