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

FORM 10-K

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

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For the fiscal year ended April 25, 1998
Commission file number 0-24383

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

DELAWARE 06-1507104

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

240 ROYAL PALM WAY, PALM BEACH, FLORIDA 33480
(Address of principal executive offices) (Zip Code)

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

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Securities registered pursuant to Section 12(b) of the Exchange Act:

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED

None None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:
Common Stock

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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 [ ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X]

The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant as of July 15, 1998: $104,750,056.

The number of shares of common stock of the registrant outstanding as of
July 15, 1998: 14,625,268.

PART I

THE FOLLOWING DISCUSSION IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION, INCLUDING "RISK FACTORS" IN ITEM 1 AND THE CONSOLIDATED FINANCIAL
STATEMENTS OF WORKFLOW MANAGEMENT, INC. (THE "COMPANY" OR "WORKFLOW
MANAGEMENT") APPEARING ELSEWHERE IN THIS FORM 10-K. THIS FORM 10-K CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. WHEN USED
HEREIN, THE WORDS "ANTICIPATE,""BELIEVE,""ESTIMATE,""EXPECT,""PLAN" AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN "ITEM 1. BUSINESS -- RISK FACTORS,""ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND THOSE DISCUSSED ELSEWHERE IN THIS FORM 10-K.

UNLESS THE CONTEXT REQUIRES OTHERWISE, ALL REFERENCES TO THE COMPANY (OR
WORKFLOW MANAGEMENT) INCLUDE SFI OF DELAWARE, LLC ("SFI DELAWARE"), SFI OF
PUERTO RICO, INC. ("SFI PUERTO RICO") (SFI DELAWARE AND SFI PUERTO RICO
COLLECTIVELY "SFI"), HANO DOCUMENT PRINTERS, INC. ("HANO"), UNITED ENVELOPE,
LLC ("UE"), REX ENVELOPE CO., INC. ("REX"), HUXLEY ENVELOPE CORP. ("HUXLEY"),
POCONO ENVELOPE CORP. ("POCONO") (UE, REX, HUXLEY AND POCONO COLLECTIVELY
"UNITED"), ASTRID OFFSET CORP. ("ASTRID") AND BUSINESSES OF 1186202 ONTARIO
LIMITED ("1186202 ONTARIO"), OF WHICH 3303471 CANADA LIMITED ("3303471 CANADA")
IS A DIRECT SUBSIDIARY AND DATA BUSINESS FORMS LIMITED ("DBF") (DBF, 1186202
ONTARIO AND 3303471 CANADA COLLECTIVELY THE "DBF GROUP") IS AN INDIRECT
SUBSIDIARY, WHOLLY-OWNED DIRECT OR INDIRECT SUBSIDIARIES OF THE COMPANY, AS
WELL AS ALL PREDECESSORS THEREOF.

ITEM 1. BUSINESS

SPIN-OFF FROM U.S. OFFICE PRODUCTS

Workflow Management is a Delaware corporation formed by U.S. Office
Products Company, also a Delaware corporation ("U.S. Office Products") in
connection with U.S. Office Products' strategic restructuring plan ("Strategic
Restructuring Plan"). As part of its Strategic Restructuring Plan, U.S. Office
Products (i) transferred to the Company substantially all the assets and
liabilities of U.S. Office Products' Print Management Division and (ii)
distributed to holders of U.S. Office Products common stock ("U.S. Office
Products Common Stock") 14,625,268 shares (the "Distribution" or "Workflow
Distribution") of the Company's Common Stock, par value $.001 per share (the
"Common Stock" or "Company Common Stock"). Holders of U.S. Office Products
Common Stock were not required to pay any consideration for the shares of
Company Common Stock they received in the Workflow Distribution. The Workflow
Distribution occurred on June 9, 1998 ("Distribution Date").

As part of its Strategic Restructuring Plan, U.S. Office Products also
distributed to the holders of U.S. Office Products Common Stock shares of
common stock (the "Related Distributions") (the Workflow Distribution and
Related Distributions collectively the "Distributions") of three additional
companies, Aztec Technology Partners, Inc., Navigant International, Inc. and
School Specialty, Inc. (collectively the "other Spin-Off Companies"). Effective
upon consummation of the Workflow Distribution and the Related Distributions,
the Company entered into the following principal agreements with U.S. Office
Products and the other Spin-Off Companies. See "Risk Factors -- Potential
Conflicts of Interest in the Distributions" below.

o a Distribution Agreement ("Distribution Agreement"), pursuant to which
(i) the equity interests of the U.S. Office Products subsidiaries engaged
in the print management business were transferred to the Company, (ii)
liabilities were allocated among the Company, U.S. Office Products and the
other Spin-Off Companies and (iii) the Company, U.S. Office Products and
the other Spin-Off Companies agreed to indemnify one another for
liabilities allocated to them under the Distribution Agreement and a share
of certain other liabilities. See "Risk Factors -- Risks Related to
Allocation for Certain Liabilities" below.

o a Tax Allocation Agreement ("Tax Allocation Agreement"), pursuant to
which (i) the Company is responsible for its share of U.S. Office Products'
consolidated income tax liability for the years it was included in U.S.
Office Products' consolidated federal income tax returns, (ii) the Company,
U.S. Office Products and the other Spin-Off Companies share certain state,
local and foreign taxes, and (iii) the Company has (a) indemnified U.S.
Office Products for certain taxes if they are assessed against U.S. Office
Products as a result of the Workflow Distribution or the Related
Distributions and (b) jointly and severally indemnified U.S. Office
Products for certain taxes resulting from certain acts taken by the Company
or any of the other Spin-Off Companies. The joint and several liabilities
of the Company and the other Spin-Off Companies have been allocated
pursuant to a separate agreement (the "Tax Indemnification Agreement"). As
a consequence, the Company is primarily liable for taxes resulting from
acts taken by the

Company and liable (subject to rights of indemnification under the Tax
Indemnification Agreement) for taxes resulting from acts taken by the other
Spin-Off Companies. See "Risk Factors -- Potential Liability for Taxes
Related to the Distributions" below.

o an Employee Benefits Agreement ("Employee Benefits Agreement"),
pursuant to which the assets, liabilities and responsibilities with respect
to employee benefit plans and programs and certain related matters were
allocated among the Company, U.S. Office Products and the other Spin-Off
Companies.

Workflow Management was incorporated in the state of Delaware on February
13, 1998. U.S. Office Products acquired SFI Corp. ("SFI Corp."), a predecessor
to SFI, and a related company, Hano, on January 24, 1997. On April 25, 1997,
U.S. Office Products acquired United Envelope Co., Inc. ("United Co."), a
predecessor to UE, as well as Rex, Huxley and Pocono. On April 26, 1997, U.S.
Office Products acquired DBF, and on February 26, 1998, U.S. Office Products
acquired Astrid. As part of the Strategic Restructuring Plan, SFI Corp. and
United Co. were converted into the limited liability companies SFI Delaware and
UE, respectively, whose sole members and equity owners are the Company, the
shares of Rex, Huxley, Pocono and Astrid were transferred to UE, the shares of
SFI Puerto Rico were transferred to SFI Delaware, and the shares of Hano and
the DBF Group were transferred to the Company. The principal executive offices
of the Company are located at 240 Royal Palm Way, Palm Beach, Florida 33480.
Workflow Management's telephone number is (561) 659-6551.

COMPANY OVERVIEW

Workflow Management is an integrated graphic arts company providing
documents, envelopes and commercial printing to more than 22,000 businesses in
the United States and Canada. The Company also offers various print and
facilities management services, which allow customers to realize cost savings
by outsourcing non-core operations, as well as graphic design services and
workflow analysis. Drawing on its position in the industry and its experience
in completing acquisitions, the Company seeks to become a consolidator in the
highly fragmented graphic arts industry. In the last ten years the Company's
senior management team completed the acquisition of 16 smaller distributors for
Standard Forms, Inc., the predecessor to SFI. Since the acquisition of SFI and
Hano by the Print Management Division of U.S. Office Products in January 1997,
that same management team has continued its acquisition strategy by buying
seven additional companies. As a result, the enterprise has grown from SFI's
revenues and operating income of $115.1 million and $6.7 million, respectively,
for the year ended December 31, 1996, to the Company's revenues and operating
income of $353.4 million and $16.6 million, respectively, for the fiscal year
ended April 25, 1998. The Company currently has over 2,100 employees and has 17
manufacturing facilities in seven states and five Canadian Provinces, 26
distribution centers, eight print-on-demand centers and 59 sales offices.
Workflow Management intends to continue to pursue its aggressive acquisition
strategy to extend its geographic scope and market penetration, and to increase
sales to existing customers by cross-selling documents, envelopes and
commercial printing.

Workflow Management offers a full range of printed products which are
either manufactured by the Company or procured from one of the Company's more
than 3,500 vendors. The Company's product line includes: (i) documents, such as
custom invoices, purchase orders, checks and labels; (ii) envelopes, including
specialty envelopes for uses such as credit card solicitations, annual reports,
direct mail and airline tickets; and (iii) commercial printing, such as product
and corporate brochures, personalized direct mail literature, catalogs,
directories and digital imaging. The Company's manufacturing base, combined
with its extensive vendor network and distribution capability, gives the
Company broad flexibility to meet customers' demand for printed products. For
the year ended April 25, 1998, approximately 53.6% of the Company's revenues
were derived from products purchased by the Company for distribution, and 46.4%
were derived from products manufactured by the Company.

Many of the Company's customers are attempting to reduce their overhead
and direct costs by focusing on core competencies and by outsourcing non-core
operations to specialists. The Company provides customers with print management
services that are designed to control the costs of procuring, storing and using
graphic arts in their business operations. As an outsourcing specialist for
print management services, Workflow Management enables its customers to reduce
costs and improve control by soliciting competitive bids, establishing more
efficient inventory levels and order quantities, and consolidating
requisitions, production and deliveries. The Company also performs design and
procurement services for its customers. In order to meet growing demand,
Workflow Management plans to continue to expand its product lines and services,
and to promote its print and facilities management services, which allow
customers to outsource the management of printed products.

The Company believes that its proprietary technology and systems are
central to its ability to capitalize effectively on industry outsourcing trends
and provide it with a competitive advantage. The Company has developed its
GetSmart and Informa transaction and information systems to support these
services and the Company's sales of printed products. The GetSmart system
provides transaction, reporting and control capabilities to the Company and its
customers in the United States. The Informa system supports requisition,
distribution and imaging services with a control database and a variety of
customer interfaces for its customers in Canada, including the Imagenet
Document Manager that provides access via the world wide web. In addition,
using the GetSmart and the Informa systems, the Company believes it has the
flexibility to integrate future acquisitions and increase its customer base
rapidly and seamlessly. In addition, with its technology platform, Workflow
Management believes that it is able to position itself as a premier technology
deployer, thus increasing the Company's attractiveness to potential acquisition
targets. The Company has granted a license to U.S. Office Products for the
Company's Imagenet technology effective on the Distribution Date. See "Item 13.
Certain Relationships and Related Transactions."

The document, envelope and commercial printing industries that comprise
the graphic arts businesses are highly fragmented, and the Company believes
consolidation opportunities exist within these industries. The Company believes
that (i) the market for documents was approximately $12.7 billion in 1996, up
from $11.1 billion in 1993; (ii) while the United States market for envelopes
decreased from $3.0 billion in 1989 to $2.6 billion in 1992, the market has
since increased to approximately $3.0 billion in 1996; and (iii) the general
commercial segment of the United States printing industry shipped more than
$88.0 billion of products in 1996, an increase of 8% over 1995. Furthermore,
management believes there are approximately 200 envelope manufacturers in the
U.S., and that the commercial printing industry is composed of approximately
25,000 printing plants, 70% of which have fewer than 10 employees.

The principal subsidiaries of the Company are as follows:

o SFI is a national distributor of documents and other printed consumables
used by businesses in the United States and Puerto Rico. SFI also provides
print management services that are designed to control its customers'
costs of procuring, storing and using graphic arts. SFI developed its
proprietary GetSmart information system as the platform for delivering
these services and executing sales. SFI has 380 employees, 167 of which
are in sales. SFI has 25 sales offices and nine distribution warehouses
located in eight states and Puerto Rico.

o United is a regional manufacturer and distributor of envelopes, primarily
custom and specialty envelopes for applications such as credit card
solicitations, annual reports, direct mail and airline tickets. United
manufactures its products in four plants located in New York, New Jersey
and Pennsylvania. United also has several digital pre-press systems for
converting text and graphics to film and plates prior to printing,
enabling United to offer design services to its customers. United has 411
employees, of which 16 are in sales and 287 are in manufacturing.

o DBF is a Canadian manufacturer, printer and distributor of documents and
other printed products, such as labels, direct mail, business
communications, security products, bar coding and thermal labeling. DBF
also offers its customers document and print facility management services
through its proprietary Informa and Imagenet systems. These systems allow
DBF's customers to control printing processes at DBF's eight Imagenet
print centers which are located in six cities across Canada. In addition,
DBF has 11 plants with approximately 1,200 employees, of which 737 are
engaged in manufacturing or printing.

o Hano is a manufacturer and printer of documents. Hano has three plants
located in Georgia, Illinois and Massachusetts. Hano has 179 employees.
Approximately 21% of Hano's products are sold to SFI.

BUSINESS STRATEGY

The Company's objective is to become a leading single source provider of
printed products and related services to businesses of all sizes. To attain its
goals, Workflow Management plans to grow both externally, through strategic
acquisitions, and internally, through product development, cross-selling the
full suite of the Company's products and services to its subsidiaries, which
had previously limited product offerings, and cross-utilization of the
Company's proprietary computer systems. In addition, the Company intends to
develop additional systems to establish a position as a technologically
sophisticated provider of printed products and related management services.

Workflow Management intends to capitalize on consolidation opportunities
in three segments of the North American graphic arts industry: U.S. printed
products, U.S. envelopes and Canadian printed products. Through acquisitions,
the Company plans to expand its presence into new geographic regions and
increase penetration in regions where it currently

has operations. In the U.S. printed products market, the acquisition strategy
will focus on the large population of independent distributors. In the U.S.
envelope market, Workflow Management will seek to acquire high value-added
producers of specialty envelope and direct mail concerns. In the Canadian
printed products market, the Company plans to leverage its document sales force
and customer base with selective acquisitions of commercial print
manufacturers.

Workflow Management intends to grow internally through product
development, cross-marketing and cross-utilization of its proprietary GetSmart,
Informa and Imagenet computer systems. A substantial majority of the Company's
net sales are derived from custom documents, envelopes, and commercial
printing. The Company believes that its analysis, design work and print
management services enable the Company to better understand customers'
requirements, and fosters close business relationships between the Company and
its customers. Workflow Management believes that its knowledge of customer
requirements and these relationships enable the Company to identify new product
lines and services in response to emerging customer opportunities and provide
cross-marketing opportunities for the Company's various product lines and
services. The Company also believes that it will be able to increase sales by
implementing its GetSmart, Informa and Imagenet systems on a Company-wide
basis.

PRODUCT LINES

DOCUMENTS. Workflow Management offers a complete line of custom and stock
documents, such as invoices, purchase orders, money orders, bank drafts and
labels. These documents may be fan-folded, roll-fed, snap-apart or cut-sheet,
and manufactured to specification with respect to content, size, plies, paper
and inks. More than 85% of the Company's revenues from sales of documents are
from sales of custom products.

ENVELOPES. Workflow Management offers a complete line of conventional and
specialty envelopes for applications such as billing, credit card
solicitations, annual reports, proxy solicitations, direct mail and airline
tickets. These envelopes may be of varying sizes and specialized materials,
with constructions including wallet flap, flat mailer, safety fold, peel and
seal, clasp, button and string, window, expansion and continuous. The Company
can customize dimensions, materials, construction and graphics to customers'
specific requirements.

COMMERCIAL PRINTING. The Company's commercial printing line includes
products such as corporate brochures, personalized direct mail, catalogs,
directories and promotional products. These products are designed and
manufactured to customers' requirements. Workflow Management provides a variety
of custom services, including art direction, digital and conventional design,
layout, illustration, photography and production.

The following table sets forth the amount of the Company's revenue (in
thousands) derived from each of its three largest product lines for the periods
indicated:

FISCAL YEAR FISCAL YEAR
YEAR ENDED ENDED ENDED
DECEMBER 31, 1995 APRIL 26, 1997 APRIL 25, 1998
------------------- ---------------- ---------------

Documents ................... $178,806 $186,787 $176,448
Envelopes ................... 101,642 97,256 101,830
Commercial Printing ......... 24,850 37,426 49,440

PRINT MANAGEMENT

Workflow Management supports its product offering with a selection of
value-added services. For many businesses, the costs of managing, storing and
using printed products exceed their purchase price. The Company seeks to
control these costs and improve efficiency throughout the workflow by providing
systems analysis, design, and facilities and inventory management services.
Workflow Management delivers its print management services through GetSmart and
Informa, its proprietary computerized transaction and information systems. The
Company does not charge a separate fee for its management services, but instead
tailors its product pricing to reflect the services provided.

GETSMART SYSTEM. The Company offers the GetSmart system in the United
States. GetSmart provides transaction, reporting and control capabilities to
the Company and its customers. SFI introduced GetSmart in 1986, and it
re-engineered the system in 1993 to incorporate advances in hardware and
software technologies. The system's transaction database now includes more than
200,000 SKUs, 12,000 active customers and 3,500 active vendors. Customers can
access GetSmart

either off-line, through the Company's sales and customer support personnel, or
on-line, through wide area network, dial-up, leased-line, and Internet
connections. This array of delivery options makes GetSmart available to
customers of every size and complexity, and to customers at every level of
computer sophistication. The discussion below summarizes these support
functions. The Company is continually refining and enhancing the GetSmart
system.

A customer can initiate a distribution from inventory by issuing a
requisition through GetSmart. GetSmart then allocates the merchandise to the
cost center and routes the release to the appropriate distribution facility.
Customers can specify their minimum inventory requirements or can rely on
GetSmart's ongoing analysis of usage patterns and lead times. GetSmart notifies
the Company's sales representative when a re-order point is reached, and the
representative negotiates a new purchase order with the customer. The purchase
order is entered into the system and GetSmart tracks the order to the product's
receipt at the Company's distribution center. At this point the storage,
shipment, usage and re-order cycle begins again. Throughout the cycle, the
system supports inventory transfers and write-offs, returns of items
requisitioned in error, and purchases that are shipped directly to customers by
the Company's vendors. GetSmart produces invoices when merchandise is received
at the Company's distribution centers, or when it is shipped to customers, and
tracks invoices through to remittance. All transactions can be consummated in a
number of electronic formats required by customers' data processing operations.
GetSmart also offers electronic catalogs of 375,000 promotional products and
30,000 office products. The catalogs provide product images and descriptions,
as well as powerful search engines enabling customers to locate the products
best suited to their requirements.

GetSmart can generate more than 100 real-time and periodic reports to
customers. These reports detail, summarize, and analyze purchases, inventory
levels, utilization rates, and billing by cost center, product, and product
line to meet each customer's specific needs. Reports can be viewed on-screen in
real time, printed at the customer's premises, printed remotely and delivered
to a customer, or transmitted electronically for further processing by a
customer's internal management information system. The Company maintains five
years of historical data on-line for comparative reports and analyses. In
addition, GetSmart's Base Line Pricing Report routinely analyzes changes in
prices charged to managed accounts, an analysis the Company believes is unique
in the industry.

GetSmart also provides customers with a system of management controls for
certain services. Customers may control cost center access with passwords,
allocate inventories to cost centers, limit the transacting and reporting
authority of each cost center by product or product line, constrain purchases
and requisitions to amounts budgeted for each cost center, and suspend
transactions until they are reviewed and approved. The Company can customize
GetSmart to create optimal programs for its customers.

INFORMA SYSTEM. Workflow Management offers the Informa system in Canada.
Informa supports requisition, distribution, and digital imaging services with a
central transaction database and a variety of customer interfaces. In addition
to sophisticated print-on-demand capabilities, Informa provides much of the
functionality of the GetSmart system: inventory inquiries and releases; order
tracking; usage analysis and forecasting; detailed reporting for cost centers
and products; and procurement-card and X.12 EDI billing. Customer interfaces
include terminal access, a graphical user interface client, e-mail, world wide
web browser, touch-tone, and automated voice recognition. Informa is accessed
through leased lines, dial-up service, Internet and wide area networks.

Informa's Electronic Job Ticket ("EJT") interface is a specialized e-mail
enabling customers to requisition documents and other products from the
Company's distribution centers, and to route attached documents to the
Company's network of Imagenet print-on-demand facilities. EJT's print on demand
feature supports a broad range of custom specifications, including quantities;
fixed and variable imaging; page orientation; paper size, weight, grade, and
color; drilling and binding; and cover page. EJT also provides fields for the
customer's budget code, billing information, and distribution instructions. EJT
originates jobs ranging from single impressions, to thousands of copies
delivered to a single location, to thousands of documents mailed to tens of
thousands of recipients.

IMAGENET DOCUMENT MANAGER. The Company intends to deploy Imagenet for use
in the United States. Workflow Management has also licensed Imagenet to U.S.
Office Products effective on the Distribution Date. See "Item 13. Certain
Relationships and Related Transactions."

Workflow Management provides customers with world wide web-access to
Informa through Imagenet. This application provides a browser interface to
Informa's transaction and reporting features for managing and distributing
inventories held for customers. The application also offers a full-featured
document librarian, with image storage, retrieval, viewing, downloading,
archiving, and version control. In addition, Imagenet provides estimation and
requisition for digital print-on-demand orders. Production images for these
orders can be uploaded to the world wide web or retrieved from the
application's document library.

OPERATIONS

SALES. Workflow Management sells its products directly to end-users, as
well as to distributors and brokers who re-sell to end-users. The Company
employs more than 380 sales representatives and 189 customer service personnel
in 59 sales offices throughout the United States, Puerto Rico and Canada. Sales
representatives are compensated through salaries and commissions. Commissioned
sales representatives are compensated based on either product sales or gross
margins. In addition to the Company's line of documents, commercial printing,
envelopes and related products, the sales force offers value-added services
including workflow analysis, design, document management and print-on-demand.
The Company's sales force is supported by its GetSmart and Informa transaction
and information systems.

PURCHASING. Workflow Management purchases raw materials such as paper
stock, ink, stock envelopes, adhesives, plates, film, chemicals and cartons
from a variety of manufacturers and resellers. These materials are purchased
job-by-job or under contracts with terms of up to two years. Longer-term supply
contracts generally specify services to be provided and may guarantee product
availability, but typically reserve to vendors the right to adjust prices as
required by market conditions. The largest suppliers of paper stock to the
Company are Rollsource, Appleton, Mead, Avenor and Domtar. Workflow Management
also purchases finished goods for resale to customers. These finished goods
include the Company's full line of documents, envelopes and commercial
printing. Workflow Management has more than 3,500 suppliers of finished goods,
including, among the largest, Ward Kraft Forms, United Computer Supplies,
Gilman Sky, Transkrit and United Stationers, Inc.

MANUFACTURING. Workflow Management manufactures documents and envelopes.
Documents produced by the Company include continuous and snap-apart forms, roll
forms, cut sheets and label/form combinations, and checks and other security
documents. Workflow Management operates 13 document plants in Canada, and four
in the U.S. These plants employ more than 1,150 manufacturing personnel and
utilize over 250 presses and other machines. The Company also manufactures a
broad line of conventional and specialty envelopes in four plants located in
New York, New Jersey and Pennsylvania. The envelope plants currently operate
more than 80 manufacturing and printing machines. Workflow Management operates
a network of eight Imagenet print-on-demand facilities in Canada, providing
digital imaging and litho quick printing. The Company also operates several
conventional and digital pre-press systems for converting text and graphics to
film and plates prior to printing. Among these pre-press capabilities are
several state-of-the-art digital systems which enhance overall production
efficiency and provide high-process capabilities to customers.

DISTRIBUTION. Products manufactured by Workflow Management are either
shipped directly to customers or held in inventory and shipped as requisitioned
by customers. Finished goods purchased by the Company from manufacturers and
wholesalers are either shipped directly to customers by vendors, or shipped to,
stored in, and shipped from one of the Company's distribution centers. Workflow
Management owns or leases nine distribution centers in the United States and 17
in Canada, and rents additional warehouse space as necessary. More than 130
distribution personnel are employed by Workflow Management. Products are
transported from the Company's suppliers and to its customers by short-haul,
regional, contract and custom carriers, as well as by air and ground courier
services.

CUSTOMERS

Workflow Management has more than 22,000 customers ranging in size from
small office/home office businesses to Fortune 500 companies in industries such
as healthcare, insurance, energy, advertising, travel and financial services.
Significant customers of the Company include: Bank of Montreal; Aetna, Inc.;
Citibank N.A.; Chase Manhattan Corp.; Group Health Incorporated; Health
Insurance Plan of Greater New York, Inc.; Heilig-Meyers Company; Merrill Lynch
& Co., Inc.; Banco Popular, Inc.; Shell Canada and Salomon Smith Barney
Holdings, Inc.

The Company's five largest customers accounted for 11.4% of the Company's
net sales for the year ended April 25, 1998. The Company's single largest
customer accounted for 4.4% of net sales for the year ended April 25, 1998.

COMPETITION

Workflow Management competes for retail sales of documents and envelopes
against other independent distributors and against manufacturers' direct sales
organizations. In commercial printing, the Company also competes with
manufacturers' direct sales organizations, independent brokers, advertising
agencies and design firms. The principal competitive factors in the graphic
arts industry are price, quality, selection, services, production capacity,
delivery and customer support.

Standard Register Company and Wallace Computer Services, Inc., and the largest
competitors in the U.S. envelope industry, such as Mail-Well, Westvaco and
Tension Envelope Company. The largest competitors for commercial printing
include direct sales organizations of Graphic Industries, Inc., R. R. Donnelley
& Sons, Quebecor, Inc. and World Color Press, Inc. Most of these competitors
have substantially greater financial resources than the Company.

EMPLOYEES

Workflow Management currently has more than 2,100 full- and part-time
employees, including over 575 in sales and sales support and more than 1,150 in
manufacturing. Approximately 31% of the Company's employees in the United
States and approximately 8% of the Company's employees in Canada are
represented by labor unions. There can be no assurance that work stoppages or
strikes will not occur. The Company considers its employee relations to be
good.

INTELLECTUAL PROPERTY

Workflow Management has more than 40 registered trademarks in the U.S. and
Canada, including Get Smart, Informa and Imagenet. The Company believes that
its trademarks and other proprietary rights are material to the operations of
its business. Workflow Management regards its GetSmart, Informa and Imagenet
software as proprietary, and relies on a combination of copyright and trademark
laws, trade secrets, confidentiality agreements and contractual provisions to
protect its rights. Workflow Management is not aware that any of its software,
trademarks or other proprietary rights are being infringed by third parties, or
that they infringe proprietary rights of third parties.

ENVIRONMENTAL REGULATIONS

The Company's operations and real property are subject to United States
and Canadian federal, state, provincial and local environmental laws and
regulations, including those governing the use, storage, treatment,
transportation and disposal of solid and hazardous materials, the emission or
discharge of such materials into the environment, and the remediation of
contamination associated with such disposal or emissions (the "Environmental
Laws"). Certain of these laws and regulations may impose joint and several
liability on lessees and owners or operators of facilities for the costs of
investigation or remediation of contaminated properties, regardless of fault or
the legality of the original disposal.

The past and present business operations of the Company that are subject
to the Environmental Laws include the use, storage, handling and contracting
for recycling or disposal of hazardous and nonhazardous materials such as
washes, inks, alcohol-based products, fountain solution, photographic fixer and
developer solutions, machine and hydraulic oils, and solvents. Workflow
Management generates both hazardous and non-hazardous waste.

Limited environmental investigations have been conducted at certain of the
Company's properties. Based on these investigations and all other available
information, management believes that the Company's current operations are in
substantial compliance with the Environmental Laws. The Company is not aware of
any liability under the Environmental Laws that the Company believes would have
a material adverse effect on the Company's business, financial condition or
results of operations. No assurance can be given, however, that all potential
environmental liabilities have been identified or that future uses, conditions
or legal requirements (including, without limitation, those that may result
from future acts or omissions or changes in applicable Environmental Laws) will
not require material expenditures to maintain compliance or resolve potential
liabilities.

RISK FACTORS

POTENTIAL VOLATILITY OF STOCK PRICE AND OTHER RISKS ASSOCIATED WITH SHARES
ELIGIBLE FOR IMMEDIATE SALE. As a result of the Workflow Distribution,
stockholders of U.S. Office Products acquired 14,625,268 shares of Company
Common Stock that are freely tradable without restrictions or further
registration under the Securities Act of 1933 ("Securities Act"), except that
any shares held by "affiliates" of Workflow Management within the meaning of
the Securities Act will be subject to the resale limitations of Rule 144
promulgated under the Securities Act. Because the Workflow Distribution was
made to existing stockholders of U.S. Office Products who did not make an
affirmative decision to invest in the Company Common Stock and who may not, for
whatever reason, have had an interest in holding Company Common Stock, the
Company believes that a significant number of shares of Common Stock were sold
immediately after the Workflow Distribution that would not have been sold
absent the ability of shareholders to sell such shares without restriction. The
Company believes that such sales have adversely affected the market price for
Company Common Stock.

In addition, the Company has outstanding immediately exercisable options
to acquire shares of Company Common Stock. The Company has registered the
shares of Company Common Stock reserved for issuance pursuant to its 1998

Stock Incentive Plan under the Securities Act. In view of the large number of
shares freely-tradable and available for immediate sale, the market for the
Company Common Stock could be highly volatile and the trading price of the
Company Common Stock could be adversely affected. See "Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters."

ABSENCE OF HISTORY AS A STAND-ALONE COMPANY. The Company is the result of
the consolidation by U.S. Office Products of nine separate companies engaged in
the graphic arts industry. The operations of Workflow Management as a stand-
alone, consolidated entity may place significant demands on the Company's
management, operational and technical resources. Prior to the Workflow
Distribution, certain general and administrative functions relating to the
Company's business (such as legal and accounting) were handled by U.S. Office
Products. The Company's future performance will depend on its ability to
function as a stand-alone entity, to finance and manage expanding operations,
and to adapt its information systems to changes in its business. In addition,
Workflow Management will not be able to rely on the purchasing power of U.S.
Office Products and, therefore, may not be able to obtain the same volume
discounts for products and services that are available to U.S. Office Products.
As a result, the Company's expenses may be higher than when it was a part of
U.S. Office Products, and the Company may experience disruptions it would not
encounter as a part of U.S. Office Products. Furthermore, the financial
information included herein may not necessarily reflect the results of
operations and financial condition of Workflow Management had it been a
separate, stand-alone entity during the periods presented, or may not be
indicative of future results of operations and financial condition of the
Company.

DEPENDENCE UPON ACQUISITIONS FOR FUTURE GROWTH. One of the Company's
strategies is to increase its revenues and the markets it serves through the
acquisition of additional graphic arts businesses. There can be no assurance
that suitable candidates for acquisitions can be identified or, if suitable
candidates are identified, that acquisitions can be completed on acceptable
terms, if at all. Prior to the Workflow Distribution, the Company's
acquisitions were completed with substantial business, legal and accounting
assistance from U.S. Office Products and the acquisitions were primarily paid
for with U.S. Office Products Common Stock. The pace of the Company's
acquisition program may be adversely affected by the absence of U.S. Office
Products' support for the acquisitions. In addition, Workflow Management
intends to use Company Common Stock to pay for certain of its acquisitions. If
the owners of potential acquisition candidates are not willing to receive
shares of Company Common Stock in exchange for their businesses, or if
management elects not to consummate acquisitions with Common Stock because
market prices for the Common Stock would require issuances of shares at a level
considered by management to be too dilutive to existing shareholders, the
Company's acquisition program could be adversely affected. Moreover, the
consolidation of the North American graphic arts industry has reduced the
number of larger companies available for sale, which could lead to higher
prices being paid for the acquisition of the remaining domestic, independent
companies. In addition, Workflow Management is subject to limitations on the
number of shares it can issue without jeopardizing the tax-free treatment of
the Workflow Distribution. Limitations on the Company's ability to issue shares
could also adversely affect the Company's acquisition strategy. See "Possible
Limitations on Issuances of Common Stock," "Material Amount of Goodwill,"
"Inability to Use Pooling-of-Interests Accounting" and "Tax Matters" below.

RISKS RELATED TO INTEGRATION OF ACQUISITIONS. Integration of acquired
companies may involve a number of special risks that could have a material
adverse effect on the Company's operations and financial performance, including
adverse short-term effects on its reported operating results (including those
adverse short-term effects caused by severance payments to employees of
acquired companies, restructuring charges associated with the acquisitions and
other expenses associated with a change of control, as well as non-recurring
acquisition costs including accounting and legal fees, investment banking fees,
recognition of transaction-related obligations and various other
acquisition-related costs); diversion of management's attention; difficulties
with retention, hiring and training of key personnel; risks associated with
unanticipated problems or legal liabilities; and amortization of acquired
intangible assets. Furthermore, although Workflow Management conducts due
diligence and generally requires representations, warranties and
indemnifications from the former owners of acquired companies, there can be no
assurance that such owners will have accurately represented the financial and
operating conditions of their companies. If an acquired company's financial or
operating results were misrepresented, the acquisition could have a material
adverse effect on the results of operations and financial condition of Workflow
Management.

RISKS RELATED TO ACQUISITION FINANCING; ADDITIONAL DILUTION. Workflow
Management currently intends to finance its future acquisitions by using shares
of Company Common Stock, cash, borrowed funds or a combination thereof. If the
Company Common Stock does not maintain a sufficient market value, if the price
of Company Common Stock is highly volatile, or if potential acquisition
candidates are otherwise unwilling to accept Company Common Stock as part of
the consideration for the sale of their businesses, Workflow Management may be
required to use more of its cash resources or more borrowed funds in order to
initiate and maintain its acquisition program. If Workflow Management does not
have

sufficient cash resources, its growth could be limited unless it is able to
obtain additional capital through debt or equity offerings. However, the use of
equity offerings will also be subject to certain limitations on the number of
shares that Workflow Management can issue without jeopardizing the tax-free
treatment of the Workflow Distribution. See "Possible Limitation on Issuances
of Common Stock" and "Tax Matters" below. Prior to the Workflow Distribution,
Workflow Management was not responsible for obtaining external sources of
funding. There can be no assurance that Workflow Management, as a stand-alone
company, will be able to obtain such financing if and when it is needed or that
any such financing will be available on terms it deems acceptable.

The Company will have 150,000,000 authorized shares of Company Common
Stock, a portion of which could be available (subject to the rules and
regulations of federal and state securities laws, limitations under U.S.
federal income tax laws and the rules of the Nasdaq Stock Market) to finance
acquisitions without obtaining stockholder approval for such issuances.
Existing stockholders may suffer dilution if Workflow Management uses Company
Common Stock as consideration for future acquisitions. Moreover, the issuance
of additional shares of Company Common Stock may have a negative impact on
earnings per share and may negatively impact the market price of the Company
Common Stock.

MATERIAL AMOUNT OF GOODWILL. Approximately $14.0 million, or 9.6% of the
Company's total assets as of April 25, 1998, represents intangible assets, the
significant majority of which is goodwill. Goodwill represents the excess of
cost over the fair market value of net assets acquired in business combinations
accounted for under the purchase method. The Company amortizes goodwill on a
straight line method over a period of 40 years with the amount amortized in a
particular period constituting a non-cash expense that reduces the Company's
net income. The Company will be required to periodically evaluate the
recoverability of goodwill by reviewing the anticipated undiscounted future
cash flows from the operations of the acquired companies and comparing such
cash flows to the carrying value of the associated goodwill. If goodwill
becomes impaired, Workflow Management would be required to write down the
carrying value of the goodwill and incur a related charge to its income. A
reduction in net income resulting from the amortization or write down of
goodwill could have a material and adverse impact upon the market price of the
Company Common Stock.

INABILITY TO USE POOLING-OF-INTERESTS ACCOUNTING. Generally accepted
accounting principles require that an entity be autonomous for a period of two
years before it is eligible to complete business combinations under the
pooling-of-interests method. As a result of the Company being a wholly-owned
subsidiary of U.S. Office Products prior to the Workflow Distribution, the
Company will be unable to satisfy this criteria for a period of two years
following the Workflow Distribution. Therefore, the Company will be precluded
from completing business combinations under the pooling-of-interests method for
a period of two years and any business combinations completed by the Company
during such period will be accounted for under the purchase method resulting in
the recording of goodwill. The amortization of the goodwill will reduce net
income reported by the Company below that which would have been reported if the
pooling-of-interests method had been used by the Company. See "Material Amount
of Goodwill" above.

POTENTIAL CONFLICTS OF INTEREST IN THE DISTRIBUTIONS. The Company, U.S.
Office Products and the other Spin-Off Companies have entered into the
Distribution Agreement, the Tax Allocation Agreement and the Employee Benefits
Agreement, and the Company and the other Spin-Off Companies have entered into
the Tax Indemnification Agreement. These agreements provide, among other
things, for U.S. Office Products and the Company to indemnify each other from
tax and other liabilities relating to their respective businesses prior to and
following the Workflow Distribution.

Certain indemnification obligations of the Company and the other Spin-Off
Companies to U.S. Office Products are joint and several. Therefore, if one of
the other Spin-Off Companies fails to satisfy its indemnification obligations
to U.S. Office Products when such a loss occurs, the Company may be required to
reimburse U.S. Office Products for all or a portion of the losses that
otherwise would have been allocated to such other Spin-Off Company. In
addition, the agreements allocate certain liabilities (including general
corporate and securities liabilities of U.S. Office Products not specifically
related to the specific business to be conducted by the Company, the other
Spin-Off Companies or U.S. Office Products) among the Company, U.S. Office
Products and the other Spin-Off Companies. Adverse developments involving U.S.
Office Products or one of the other Spin-Off Companies, or material disputes
with U.S. Office Products following the Distributions, could have a material
adverse effect on the Company.

The terms of the agreements that govern the relationship among the
Company, U.S. Office Products and the other Spin-Off Companies were established
by U.S. Office Products in consultation with the Company and the other Spin-Off
Companies prior to the Distributions and while the Company and the other
Spin-Off Companies were wholly-owned subsidiaries of U.S. Office Products. The
terms of these agreements, including the allocation of general corporate and
securities liabilities among U.S. Office Products, the Company and the other
Spin-Off Companies, may not be the same as

they would have been if the agreements were the result of arm's-length
negotiations. Accordingly, there can be no assurance that the terms and
conditions of these agreements are not more or less favorable to the Company
than those that might have been obtained from unaffiliated third parties.

As of June 10, 1998, Jonathan J. Ledecky, former Chairman of the U.S.
Office Products Board of Directors and a director of the Company, received
options for shares of the Company and the other Spin-Off Companies exercisable
for 7.5% of the common stock of the Company and the other Spin-Off Companies.
As a result, Mr. Ledecky has interests in the Distributions that differ in
certain respects from, and may conflict with, the interests of other
stockholders of Workflow Management. See "Item 11. Executive Compensation."

TAX MATTERS. In connection with the Workflow Distribution, Wilmer, Cutler
& Pickering, legal counsel to U.S. Office Products, delivered an opinion to the
Company (the "Tax Opinion") stating that for U.S. federal income tax purposes
the Workflow Distribution qualified as a tax-free spin-off under Section 355 of
the Internal Revenue Code of 1986, as amended (the "Code"), and was not taxable
under Section 355(e) of the Code. The Tax Opinion is based on certain
assumptions and the accuracy as of the time of the Distributions of factual
representations made by U.S. Office Products, the Company, and the other
Spin-Off Companies and certain other information, data, documentation and other
materials as Wilmer, Cutler & Pickering deemed necessary.

The Tax Opinion represents Wilmer, Cutler & Pickering's best judgment of
how a court would rule. However, the opinion is not binding upon either the
Internal Revenue Service (the "IRS") or any court. A ruling was not sought from
the IRS with respect to the U.S. federal income tax consequences of the
Workflow Distribution. Accordingly, the IRS and/or a court could reach a
conclusion that differs from the conclusions in the Tax Opinion.

If the Workflow Distribution fails to qualify under Section 355 as a
tax-free spin-off, each holder of U.S. Office Products Common Stock on the
record date of the Distribution will be treated as having received a taxable
corporate distribution in an amount equal to the fair market value (on the
Distribution Date) of the Company Common Stock distributed to such holder of
U.S. Office Products Common Stock including fractional shares. In addition,
U.S. Office Products will recognize gain equal to the difference between the
fair market value of the Company Common Stock (on the Distribution Date) and
U.S. Office Products' adjusted tax basis in the Company Common Stock (on the
Distribution Date). If U.S. Office Products were to recognize gain on the
Workflow Distribution, such gain would likely be substantial.

If the Workflow Distribution is taxable under Section 355(e), but
otherwise satisfies the requirements for a tax-free spin-off, U.S. Office
Products will recognize gain equal to the difference between the fair market
value of the Company Common Stock (on the Distribution Date) and U.S. Office
Products' adjusted tax basis in the Company Common Stock (on the Distribution
Date). However, no gain or loss will be recognized by holders of U.S. Office
Products Common Stock (except with respect to cash received in lieu of
fractional shares). If U.S. Office Products were to recognize gain on the
Workflow Distribution, such gain would likely be substantial.

POTENTIAL LIABILITY FOR TAXES RELATED TO THE DISTRIBUTIONS. In connection
with the Distributions, the Company entered into the Tax Allocation Agreement,
which provides that the Company and the other Spin-Off Companies will jointly
and severally indemnify U.S. Office Products for any losses associated with
taxes related to the Distributions ("Distribution Taxes") if an action or
omission (an "Adverse Tax Act") of the Company or the other Spin-Off Companies
materially contributes to a final determination that any or all of the
Distributions are taxable. Workflow Management has also entered into the Tax
Indemnification Agreement with the other Spin-Off Companies under which the
company that is responsible for the Adverse Tax Act will indemnify the other
companies for any liability to indemnify U.S. Office Products under the Tax
Allocation Agreement. As a consequence, Workflow Management will be liable for
any Distribution Taxes resulting from any Adverse Tax Act by Workflow
Management and liable (subject to indemnification by the other Spin-Off
Companies) for any Distribution Taxes resulting from an Adverse Tax Act by the
other Spin-Off Companies. If there is a final determination that any or all of
the Distributions are taxable and it is determined that there has not been an
Adverse Tax Act by either U.S. Office Products, the Company or the other
Spin-Off Companies, U.S. Office Products, the Company and the other Spin-Off
Companies will be liable for their pro rata portion of the Distribution Taxes
based on the value of each company's common stock after the Distributions. As a
result, the Company could become liable for a pro rata portion of any
Distribution Taxes with respect not only to the Workflow Distribution, but also
any of the other Distributions.

POSSIBLE LIMITATIONS ON ISSUANCES OF COMMON STOCK. Section 355(e) of the
Code, which was added in 1997, generally provides that a company that
distributes shares of a subsidiary in a spin-off that is otherwise tax-free
will incur U.S. federal income tax liability if 50% or more, by vote or value,
of the capital stock of either the company making the distribution or the
spun-off subsidiary is acquired by one or more persons acting pursuant to a
plan or series of related transactions that include the spin-off. Stock
acquired by certain related persons is aggregated in determining whether the
50%

test is met. There is a presumption that any acquisition occurring two years
before or after the spin-off is pursuant to a plan that includes the spin-off.
However, the presumption may be rebutted by establishing that the spin-off and
such acquisition are not part of a plan or series of related transactions. This
limitation could adversely affect the pace of Workflow Management's
acquisitions and its ability to issue Company Common Stock for other purposes,
including equity offerings.

RISKS RELATED TO ALLOCATION FOR CERTAIN LIABILITIES. Under the
Distribution Agreement, Workflow Management is and became liable for (i) any
liabilities arising out of or in connection with the business conducted by it
or its subsidiaries, (ii) its liabilities under the Employee Benefits
Agreement, Tax Allocation Agreement and related agreements, (iii) $45.6 million
of U.S. Office Products' debt that was allocated to the Company, (iv)
liabilities under the securities laws relating to sections of the Information
Statement/Prospectus distributed to U.S. Office Products' shareholders in
connection with the spin-off, as well as other securities law liabilities
related to Workflow Management's business, that arise from information supplied
to U.S. Office Products (or that should have been supplied, but was not) by
Workflow Management, (v) U.S. Office Products' liabilities for earn-outs from
acquisitions in respect of Workflow Management and its subsidiaries, (vi)
Workflow Management's costs and expenses related to a planned public offering
that did not occur and its bank credit facility, and (vii) $1.0 million of the
transaction costs (including legal, accounting, investment banking and
financial advisory) and other fees incurred by U.S. Office Products in
connection with its Strategic Restructuring Plan. Each of the other Spin-Off
Companies is similarly obligated to U.S. Office Products. Workflow Management
and the other Spin-Off Companies have also agreed to bear a pro rata portion of
(i) U.S. Office Products' liabilities under the securities laws (other than
claims relating solely to a specific spin-off company or relating specifically
to the continuing businesses of U.S. Office Products) and (ii) U.S. Office
Products' general corporate liabilities (other than debt, except for that
specifically allocated to the Company and the other Spin-Off Companies)
incurred prior to the Distributions (I.E., liabilities not related to the
conduct of a particular distributed or retained subsidiary's business) (the
"Shared Liabilities"). If the Company or one of the other Spin-Off Companies
defaults on an obligation owed to U.S. Office Products, the non-defaulting
spin-off companies will be obligated on a pro rata basis to pay such obligation
("Default Liability"). As a result of the Shared Liabilities and Default
Liability, Workflow Management could be obligated to U.S. Office Products in
respect of obligations and liabilities not related to its business or
operations and over which neither it nor its management has or has had any
control or responsibility. The aggregate of the Shared Liabilities and Default
Liability for which any spin-off company may be liable, however, is limited to
$1.75 million.

EMERGING ALTERNATIVE TECHNOLOGIES. Electronic forms and electronic data
interchange technologies have recently been introduced. There can be no
assurance that such emerging technologies will not have a material adverse
effect on the Company or on the document industry. Over the last several years,
the document industry has undergone a transition as a result of the increased
usage of desk top publishing and laser printer technology, which has led to a
decreased demand for certain document products. The continuation of such
technological changes, or the development of other trends that decrease demand
for documents, could have a material adverse effect on the Company's business,
financial condition or results of operations.

ATTRACTION AND RETENTION OF PERSONNEL. The Company's senior management
team does not have experience operating a public company. The Company's
operations depend on the continued efforts of Thomas B. D'Agostino, its Chief
Executive Officer, its other executive officers and the senior management of
certain of its subsidiaries. Furthermore, the Company's operations will likely
depend on the senior management of certain of the companies that may be
acquired in the future. If any of these people becomes unable to continue in
his or her present role, or if the Company is unable to attract and retain
other skilled employees, its business could be adversely affected. The Company
does not have key man life insurance covering any of its executive officers or
other members of senior management of its subsidiaries.

In addition, Jonathan J. Ledecky is serving as a director and an employee
of Workflow Management and is providing services to Workflow Management
pursuant to an employment agreement between Mr. Ledecky and the Company. U.S.
Office Products has assigned to Workflow Management certain rights of, and
obligations under, U.S. Office Products' services agreement with Mr. Ledecky
dated January 13, 1998, as amended and restated as of June 8, 1998. See "Item
11. Executive Compensation." Mr. Ledecky is also serving as a director and
employee of each of the other Spin-Off Companies, and is the director or an
officer of other public companies. Mr. Ledecky may be unable to devote
substantial time to the activities of Workflow Management.

DEPENDENCE ON INTELLECTUAL PROPERTY RIGHTS; RISKS OF INFRINGEMENT. The
Company's success and ability to compete depends in part upon its proprietary
technology, trademarks and copyrights. Workflow Management regards the software
underlying its GetSmart, Imagenet and Informa systems as proprietary, and
relies primarily on trade secrets, copyright and trademark law to protect these
proprietary rights. The Company has registered some of its trademarks, and has
no patents issued nor applications pending. Existing trade secrets and
copyright laws afford the Company only limited protection.

Unauthorized parties may attempt to copy aspects of the Company's software or
to obtain and use information that Workflow Management regards as proprietary.
Policing unauthorized use of the Company's software is difficult. Workflow
Management generally enters into confidentiality and assignment agreements with
its employees and generally controls access to and distribution of its
software, documentation and other proprietary information. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use the Company's services or technology without authorization, or to
develop similar services or technology independently. Workflow Management is
not aware that any of its software, trademarks or other proprietary rights
infringe the proprietary rights of third parties. However, there can be no
assurance that third parties will not assert infringement claims against
Workflow Management in the future. Any such claims, with or without merit, can
be time consuming and expensive to defend and may require the Company to enter
into royalty or licensing agreements or cease the alleged infringing
activities.

EFFECTS OF CHANGES IN DEMAND FOR DOCUMENTS; CYCLICALITY. Historically, the
Company's operating results have depended heavily on sales of documents. For
the fiscal years ended April 25, 1998 and April 26, 1997, sales of documents
accounted for approximately 50% and 57%, respectively, of the Company's net
sales. Workflow Management anticipates that document sales will continue to
account for a significant percentage of the Company's sales for the foreseeable
future. An important element of the Company's business strategy is to continue
its growth in document sales by continuing to acquire other document companies,
hiring experienced sales representatives, attracting new customers and
increasing sales to existing customers. The overall document industry has not
grown in the last few years, although demand for certain products, such as
laser forms, pressure-sensitive labels, form/label combinations and single-part
cut-sheet mailers has increased. Accordingly, for Workflow Management to
continue its growth in document sales, it must increase its market share and
respond to changes in demand in the overall document industry. No assurance can
be given that Workflow Management will be successful in increasing its market
share or responding to shifts in demand. The failure by the Company to do so
could have a material adverse effect on its business, financial condition or
results of operations.

In addition, the document industry historically has been affected by
general economic and industry cycles that have materially and adversely
affected distributors and manufacturers of documents. No assurance can be given
as to the effect of a continuation of, or change in, such business cycles on
the Company's business, financial condition or results of operations. The delay
or inability of Workflow Management to respond to changing economic cycles
could have a material adverse effect on the Company's business, financial
condition or results of operations. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations."

RISKS ASSOCIATED WITH CANADIAN OPERATIONS. Workflow Management has
significant operations in Canada. Net sales from the Company's Canadian
operations accounted for approximately 36% of the Company's total net sales in
the fiscal year ended April 25, 1998. As a result, Workflow Management is
subject to certain risks inherent in conducting business internationally,
including fluctuations in currency exchange rates. Workflow Management is also
subject to risks associated with the imposition of protective legislation and
regulations, including those resulting from trade or foreign policy. In
addition, because of the Company's Canadian operations, significant revenues
and expenses are denominated in Canadian dollars. Changes in exchange rates may
have a significant effect on the Company's business, financial condition and
results of operations. Workflow Management does not currently engage in
currency hedging transactions.

UNITED STATES POSTAL RATES; ALTERNATIVE DELIVERY MEDIA. The Company's
operating results depend, to a significant extent, on sales of envelopes. Sales
of envelopes accounted for approximately 29% of the Company's net sales for the
fiscal year ended April 25, 1998. Because the great majority of envelopes used
in the United States are sent through the mail, postal rates are a significant
factor affecting the growth of envelope usage. Historically, increases in
postal rates, relative to changes in the cost of alternative delivery means
and/or advertising media, have resulted in temporary reductions in the growth
rate of mail sent. For example, third class postal rates increased
approximately 50% and 14% in 1991 and 1995, respectively, contributing to a
substantial leveling off in the growth rate of third class mail sent during the
periods following such increases. If postal rates increase, mail volume could
decline, which could reduce revenue from the Company's sale of envelopes and
reduce the Company's earnings and cash flow.

In addition, alternative delivery media may affect the demand for
envelopes. As the current trend towards usage of the Internet and other
electronic media by consumers for such purposes as paying utility and credit
card bills grows, Workflow Management expects the demand for envelopes for such
purposes to decline. Although management believes that overall demand for
envelopes, particularly the custom and specialty envelopes Workflow Management
focuses on, will continue to grow at rates comparable to recent historical
levels, competition from alternative media may reduce demand for envelopes, and
the Company's revenues from the sale of envelopes may decrease, which could
reduce the Company's earnings and cash flow.

IMPACT OF FLUCTUATIONS IN PAPER PRICES. Paper prices represent a
substantial portion of the cost of producing documents, envelopes and
commercial printing distributed and manufactured by the Company. Accordingly,
prevailing paper prices can have a significant impact on the Company's sales.
The timing of increases or decreases in paper prices and any subsequent change
in prices charged to the Company's customers could have a material adverse
effect on the Company's revenues and gross margins. Although Workflow
Management has generally been able to pass increases in paper costs on to its
customers, for competitive or other reasons, the Company cannot offer any
assurance that it will be able to pass all or a portion of any future paper
price or other cost increases on to its customers. If Workflow Management were
unable to pass on these costs, profit margins would decrease, which could
reduce earnings and cash flow. Moreover, an increase in the Company's prices
for the products it distributes, resulting from a pass-through of increased
paper costs, could reduce the volume of units sold by the Company and decrease
the Company's revenues.

Due to the significance of paper to most of the Company's products,
Workflow Management is dependent upon the availability of paper. During periods
of tight paper supply, many paper producers allocate shipments of paper based
on the historical purchase levels of customers. There can be no assurance that
the Company's document and envelope businesses would not be materially
adversely affected if either Workflow Management or its vendors experienced
difficulty in obtaining adequate quantities of paper in the future. See "Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations."

UNIONIZED WORKFORCE. Approximately 31% of the Company's employees in the
United States and approximately 8% of the Company's employees in Canada are
covered by collective bargaining agreements. There can be no assurance that
strikes or work stoppages will not occur in the future. Strikes or work
stoppages and the resultant adverse impact on the Company's relationship with
its customers could have a material adverse effect on the Company's business,
financial condition or results of operations. In addition, the Company's
acquisition strategy could be adversely affected because of its union status
for a variety of reasons, including without limitation, incompatibility with a
target's existing unions and reluctance of non-union targets to become
affiliated with a union based company.

COST AND RISKS OF LOSS RELATING TO ENVIRONMENTAL REGULATION. The Company's
operations and real property are subject to the Environmental Laws. Workflow
Management utilizes certain hazardous materials, such as washes, inks,
alcohol-based products, fountain solution, photographic fixer and developer
solutions, machine and hydraulic oils and solvents. While management believes
that the Company's current operations are in substantial compliance with
Environmental Laws, there can be no assurance that all potential environmental
liabilities have been identified, or that future uses, conditions or legal
requirements (including without limitation those that may result from future
acts or omissions or changes in applicable Environmental Laws) will not
materially adversely affect the Company's business or operations in the future.
See " -- Environmental Regulations" above.

COMPETITION. Workflow Management competes for retail sales of documents
and envelopes against other independent distributors and against manufacturers'
direct sales organizations. In commercial printing, the Company also competes
with manufacturers' direct sales organizations, independent brokers,
advertising agencies and design firms. The principal competitive factors in the
graphic arts industry are price, quality, selection, services, production
capacity, delivery and customer support.

Although Workflow Management often competes with smaller businesses, it
also competes against the largest competitors in the North American documents
industry, such as Moore Corporation Ltd., Reynolds & Reynolds Company, Standard
Register Company and Wallace Computer Services, Inc., and the largest
competitors in the U.S. envelope industry, such as Mail-Well, Westvaco and
Tension Envelope Company. The largest competitors for commercial printing
include direct sales organizations of Graphic Industries, Inc., R. R. Donnelley
& Sons, Quebecor, Inc. and World Color Press, Inc. Most of these competitors
have substantially greater financial resources than the Company. See " --
Competition" above.

INABILITY TO ASSIGN CONTRACTS. In connection with the Workflow
Distribution, certain operating companies (the "Predecessor Companies")
reorganized into new business entities (the "Successor Companies"). The
Predecessor Companies entered into numerous contracts, including leases,
employment and services contracts that require the consents of the other
parties to assignment of such contracts to the Successor Companies. To date,
the Company has not obtained all of such consents. Failure to obtain any or all
of such consents could result in loss of benefits under leases or employment
contracts, or loss of revenues or the acceleration of obligations thereunder or
under other contracts. There can be no assurance that all of the parties to
contracts with Predecessor Companies will consent to the assignment of these
contracts to the Successor Companies. Inability to assign all of these
contracts may have a material adverse effect on the Successor Companies and
Workflow Management as a whole.

NO DIVIDENDS. Workflow Management does not expect to pay cash dividends on
Company Common Stock in the foreseeable future. See "Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters."

ABSENCE OF PUBLIC MARKET. Prior to the Workflow Distribution, there was no
public market for the Company Common Stock. The trading price of the Company
Common Stock could be subject to wide fluctuations in response to variations in
the Company's quarterly operating results, changes in earnings estimates by
analysts, conditions in the Company's businesses, general market or economic
conditions or other factors. In addition, in recent years the stock market has
experienced extreme price and volume fluctuations. These fluctuations have had
a substantial effect on the market prices for many companies, often unrelated
to the operating performance of the specific companies. Such market
fluctuations could have a material adverse effect on the market price of the
Company Common Stock.

CONSIDERATION FOR OPERATING COMPANIES EXCEEDS ASSET VALUE. To date, the
purchase prices of the Company's acquisitions have not been established by
independent appraisals, but generally have been determined through arm's-length
negotiations between the Company's management and representatives of such
companies. The consideration paid for each such company has been based
primarily on the value of such company as a going concern and not on the value
of the acquired assets. Valuations of these companies determined solely by
appraisals of the acquired assets would have been less than the consideration
paid for the companies. No assurance can be given that the future performance
of such companies will be commensurate with the consideration paid. Workflow
Management does not expect to value future acquisitions on the basis of asset
appraisals. Therefore, this risk will apply to future acquisitions as well.

RISK OF LOSS FROM POSSIBLE FAILURE TO ACHIEVE YEAR 2000 COMPLIANCE.
Several of the Company's operating companies are using billing or other
software that is not Year 2000 compliant. The Company has not quantified the
costs of addressing its Year 2000 issues, but it believes that the necessary
adaptations of these systems can be completed in the next 18 months, and that
the costs of achieving compliance will not be material. If the Company is
unable to make the necessary adaptations on a timely basis, or if the costs are
greater than expected, the consequences of untimely resolution or the costs of
complying could have an adverse impact on the Company's business or operations.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations."

ITEM 2. PROPERTIES

The following table sets forth certain information about the Company's
executive offices and manufacturing and printing facilities.

APPROXIMATE LEASE
FUNCTION AND LOCATION SQUARE FOOTAGE TITLE EXPIRATION
- -------------------------------- ---------------- -------- ---------------

EXECUTIVE OFFICE:
Palm Beach, Florida 5,300 Leased 2003
MANUFACTURING AND PRINTING:
Conyers, Georgia 71,300 Leased 2006
Mt. Olive, Illinois 82,000 Leased 2004
Springfield, Massachusetts 65,000 Leased 2004
Lyndhurst, New Jersey 16,000 Leased 2000
New York, New York 160,000 Leased 2002
New York, New York 53,000 Leased 2005
New York, New York 60,000 Leased 2002
Norfolk, Virginia 26,400 Owned
Mt. Pocono, Pennsylvania 140,000 Owned
Calgary, Alberta 48,000 Leased 1999
Calgary, Alberta 30,000 Leased 1999
Edmonton, Alberta 81,000 Leased 2006
Victoria, British Columbia 14,000 Leased 1999
Winnipeg, Manitoba 12,500 Leased 2002
Brampton, Ontario 174,500 Leased 1999
Brampton, Ontario 44,200 Leased 2000
London, Ontario 17,500 Leased month-to-month
Mississauga, Ontario 60,000 Leased 2004
Mississauga, Ontario 7,200 Leased month-to-month
Toronto, Ontario 10,000 Leased 2000
Regina, Saskatchewan 28,000 Leased 2006
Dorval, Quebec 42,000 Owned
Granby, Quebec 100,000 Owned
Pointe Claire, Quebec 30,000 Leased 1998

In addition to those facilities identified above, Workflow Management
leases other offices, warehouses and distribution centers across the United
States and Canada.

Workflow Management believes that its properties are adequate to support
its operations for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

Workflow Management is involved in various lawsuits arising in the
ordinary course of business. Workflow Management believes that the outcome of
these matters will not have a material adverse effect on the Company's
business, financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

a. By unanimous written consent in lieu of a special meeting of the sole
shareholder of the Company, dated February 1998, an amendment to the
Company's Certificate of Incorporation was adopted changing the legal name
of the Company from "Workflow Graphics, Inc." to "Workflow Management,
Inc." At the time of the consent, U.S. Office Products was the sole
shareholder of the Company.

b. By unanimous written consent in lieu of special meeting of the sole
shareholder of the Company, effective April 15, 1998, the Company adopted
Plans of Merger with SFI Corp. and United Co. These mergers were
consummated in contemplation of the Company's spin-off from U.S. Office
Products. See "Item 1. Business -- Spin-off from U.S. Office Products." At
the time of the consent, U.S. Office Products was the sole shareholder of
the Company.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

A. On June 10, 1998, the shares of the Company's Common Stock began
trading on the Nasdaq National Market ("Nasdaq") under the symbol "WORK." Prior
to June 10, 1998, there was no public market for the Common Stock.

The Company does not anticipate declaring and paying cash dividends on the
Common Stock in the foreseeable future. The decision whether to apply any
legally available funds to the payment of dividends on the Common Stock will be
made by the Company's Board of Directors from time to time in the exercise of
its business judgment, taking into account the Company's financial condition,
results of operations, existing and proposed commitments for use of the
Company's funds and other relevant factors. In addition, the Company's credit
agreement with its principal lender expressly prohibits the payment of any cash
dividends on the Common Stock. Any payment of cash dividends would therefore
require the lender's consent.

On July 15, 1998, the Company had approximately 3,950 shareholders of
record.

B. Effective February 13, 1998, the Company issued 1,000 shares of Common
Stock to U.S. Office Products in a private placement for aggregate cash
consideration of $1,000. The issuance of the shares was exempt from the
registration requirements of the Securities Act of 1933 ("Securities Act")
pursuant to Section 4(2) thereof and Regulation D, Rules 504, 505 and 506
promulgated thereunder. The shares were issued to capitalize the Company as a
subsidiary of U.S. Office Products in contemplation of the Company's spin-off
from U.S. Office Products.

C. In connection with the Company's spin-off from U.S. Office Products,
the Company filed a Registration Statement (Commission File No. 333-46535) on
Form S-1 that registered under the Securities Act the 14,625,268 shares of
Common Stock distributed to U.S. Office Products' shareholders. Shareholders of
U.S. Office Products were not required to pay any consideration for the shares
of Common Stock received in the spin-off and the Company therefore did not
receive any proceeds in connection with the share distribution. The Company
also filed a Registration Statement on Form S-1 under the Securities Act
(Commission File No. 333-47505) in connection with a planned initial public
offering of Common Stock. The Company elected not to proceed with the offering
and, therefore, did not receive any proceeds in connection with the shares
registered under this Registration Statement.

ITEM 6. SELECTED FINANCIAL DATA

The historical Statement of Income Data for the year ended December 31,
1995, the four months ended April 30, 1996 and the fiscal years ended April 26,
1997 and April 25, 1998 and the Balance Sheet Data at April 26, 1997 and April
25, 1998 have been derived from Workflow Management's consolidated financial
statements that have been audited and are included elsewhere in this Annual
Report on Form 10-K. The historical Statement of Income Data for the years
ended December 31, 1993 and 1994 and the Balance Sheet Data at December 31,
1993, 1994 and 1995 and April 30, 1996 have been derived from unaudited
consolidated financial statements which are not included elsewhere in this
Annual Report.

The Selected Financial Data provided herein should be read in conjunction
with the Company's historical financial statements, including the notes
thereto, and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."

SELECTED FINANCIAL DATA (1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR ENDED
--------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 (2)
---------------- ---------------- ----------------

STATEMENT OF OPERATIONS DATA:
Revenues ......................................... $ 121,463 $ 154,193 $ 309,426
Cost of revenues ................................. 88,255 114,885 234,959
--------- --------- ---------
Gross profit .................................... 33,208 39,308 74,467
Selling, general and administrative expenses ..... 27,683 32,020 62,012
Restructuring costs ..............................
Strategic restructuring costs ....................
Non-recurring acquisition costs ..................
--------- --------- ---------
Operating income ................................ 5,525 7,288 12,455
Other (income) expense:
Interest expense ................................ 1,328 2,048 5,370
Interest income ................................. (116)
Other ........................................... 511 186 62
--------- --------- ---------
Income before provision for (benefit from)
income taxes and extraordinary items ............ 3,802 5,054 7,023
Provision for (benefit from)
income taxes (3) ................................ 260 379 (33)
--------- --------- ---------
Income before extraordinary items ................ 3,542 4,675 7,056
Extraordinary items -- losses on early
terminations of credit facilities, net of
income taxes (4) ................................ 700
--------- --------- ---------

Net income ....................................... $ 3,542 $ 4,675 $ 6,356
========= ========= =========
Per share amounts:
Basic:
Income before extraordinary items ............. $ 0.60 $ 0.77 $ 0.90
Extraordinary items ........................... 0.09
--------- --------- ---------
Net income .................................... $ 0.60 $ 0.77 $ 0.81
========= ========= =========
Diluted:
Income before extraordinary items ............. $ 0.60 $ 0.77 $ 0.88
Extraordinary items ........................... 0.09
-------- --------- ---------
Net income .................................... $ 0.60 $ 0.77 $ 0.79
========= ========= =========
Weighted average shares outstanding:
Basic ........................................... 5,901 6,075 7,875
Diluted ......................................... 5,901 6,094 8,003

DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995
--------- --------- ---------
BALANCE SHEET DATA:
Working capital .................................. $ 7,264 $ 8,583 $ 20,127
Total assets ..................................... 48,374 51,357 120,630
Short-term debt payable to U.S. Office
Products ........................................
Long-term debt, less current portion ............. 9,632 7,355 28,812
Long-term debt payable to U.S. Office
Products ........................................
Stockholder's equity ............................. 11,675 12,889 24,719

FOUR MONTHS
ENDED FISCAL YEAR ENDED
------------ --------------------------
APRIL 30, APRIL 26, APRIL 25,
1996 1997 1998
------------ ------------- ------------

STATEMENT OF OPERATIONS DATA:
Revenues ......................................... $ 114,099 $ 327,381 $ 353,351
Cost of revenues ................................. 82,998 236,340 260,299
--------- --------- ---------
Gross profit .................................... 31,101 91,041 93,052
Selling, general and administrative expenses ..... 22,485 70,949 73,801
Restructuring costs .............................. 872
Strategic restructuring costs .................... 1,750
Non-recurring acquisition costs .................. 5,006
----- --------- --------
Operating income ................................ 8,616 15,086 16,629
Other (income) expense:
Interest expense ................................ 1,676 4,561 2,210
Interest income ................................. (18) (25) (274)
Other ........................................... (151) 632 (258)
--------- --------- ---------
Income before provision for (benefit from)
income taxes and extraordinary items ............ 7,109 9,918 14,951
Provision for (benefit from)
income taxes (3) ................................ 1,351 3,690 6,743
--------- --------- ---------
Income before extraordinary items ................ 5,758 6,228 8,208
Extraordinary items -- losses on early
terminations of credit facilities, net of
income taxes (4) ................................ 798
---------
Net income ....................................... $ 5,758 $ 5,430 $ 8,208
========= ========= =========
Per share amounts:
Basic:
Income before extraordinary items ............. $ 0.56 $ 0.52 $ 0.51
Extraordinary items ........................... 0.07
--------- --------- ---------
Net income .................................... $ 0.56 $ 0.45 $ 0.51
========= ========= =========
Diluted:
Income before extraordinary items ............. $ 0.55 $ 0.51 $ 0.50
Extraordinary items ........................... 0.07
--------- --------- ---------
Net income .................................... $ 0.55 $ 0.44 $ 0.50
========= ========= =========
Weighted average shares outstanding:
Basic ........................................... 10,333 12,003 15,941
Diluted ......................................... 10,547 12,235 16,257

APRIL 30, APRIL 26, APRIL 25,
1996 1997 1998
--------- --------- ---------
BALANCE SHEET DATA:
Working capital .................................. $ 23,378 $ 16,910 $ 33,625
Total assets ..................................... 117,949 125,108 146,678
Short-term debt payable to U.S. Office
Products ........................................ 23,622 13,536
Long-term debt, less current portion ............. 28,108 6,034 7,065
Long-term debt payable to U.S. Office
Products ........................................ 561 19,221
Stockholder's equity ............................. 29,120 47,780 59,491

(1) The historical financial information of the Pooled Companies (as defined in
Item 7. below) has been combined on a historical cost basis in accordance
with generally accepted accounting principles ("GAAP") to present this
financial data as if the Pooled Companies had always been members of the
same operating group. The financial information of the Purchased Companies
(as defined in Item 7. below) is included from the dates of their
respective acquisitions. See Note 4 of the Company's Notes to Consolidated
Financial Statements for a description of the number and accounting
treatment of the acquisitions by the Company.

(2) The results for the year ended December 31, 1995 include the results of
DBF, one of the Pooled Companies, from its date of incorporation on
February 8, 1995.

(3) Certain Pooled Companies were organized as subchapter S corporations prior
to the closing of their acquisitions by the Company and, as a result, the
federal tax on their income was the responsibility of their individual
stockholders. Accordingly, the specific Pooled Companies provided no
federal income tax expense prior to their acquisitions by the Company.

(4) Extraordinary items represent the losses associated with the early
terminations of credit facilities at one Pooled Company, net of the
related income tax benefits.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW. Workflow Management is an integrated graphic arts company
providing documents, envelopes and commercial printing to more than 22,000
businesses in the United States and Canada. The Company's subsidiaries
comprised the Print Management Division of U.S. Office Products, which acquired
such companies on the following dates: SFI and a related company, Hano, on
January 24, 1997; United on April 25, 1997; DBF on April 26, 1997; FMI
Graphics, Inc. ("FMI") on July 17, 1997, which was subsequently merged into
SFI; and Astrid on February 26, 1998. As part of the Company's spin-off from
U.S. Office Products, these companies became direct or indirect wholly-owned
subsidiaries of Workflow Management. See "Item 1. Business - Spin-off from U.S.
Office Products."

Workflow Management's consolidated financial statements give retroactive
effect to the seven business combinations accounted for under the
pooling-of-interests method during the period from January 1997 through April
1997 (the "Pooled Companies") and include the results of the three companies
acquired in business combinations accounted for under the purchase method, each
from its acquisition date (the "Purchased Companies"). Prior to their
respective dates of acquisition by U.S. Office Products, the Pooled Companies
reported results for years ended on December 31. Upon acquisition by U.S.
Office Products and effective for the fiscal year ended April 26, 1997 ("Fiscal
1997"), the Pooled Companies changed their year-ends from December 31 to
conform with U.S. Office Products' fiscal year, which ends on the last Saturday
of April. The following discussion should be read in conjunction with Workflow
Management's consolidated financial statements and related notes thereto
appearing elsewhere in this Form 10-K.

In accordance with GAAP, the Company will be unable to utilize the
pooling-of-interests method to account for acquisitions for a period of two
years following the Workflow Distribution. During this period, the Company will
not reflect any non-recurring acquisition costs in its results of operations,
as all costs incurred of this nature would be related to acquisitions accounted
for under the purchase method and, therefore, would be capitalized as a portion
of the purchase consideration.

RESULTS OF OPERATIONS.

The following table sets forth various items as a percentage of revenues
for the fiscal years ended April 25, 1998 and April 26, 1997 and the year ended
December 31, 1995:

FISCAL YEAR ENDED YEAR ENDED
------------------------- -------------
APRIL 25, APRIL 26, DECEMBER 31,
1998 1997 1995
----------- ----------- -------------

Revenues .................................................................... 100.0% 100.0% 100.0%
Cost of revenues ............................................................ 73.7 72.2 75.9
----- ----- -----
Gross profit ............................................................... 26.3 27.8 24.1
Selling, general and administrative expenses ................................ 20.9 21.7 20.1
Restructuring costs ......................................................... 0.2
Strategic restructuring costs ............................................... 0.5
Non-recurring acquisition costs ............................................. 1.5
----- ----- -----
Operating income ........................................................... 4.7 4.6 4.0
Interest expense, net ....................................................... 0.6 1.4 1.7
Other (income) .............................................................. ( 0.1) 0.2
----- ----- -----
Income before provision for income taxes and extraordinary items ............ 4.2 3.0 2.3
Provision for income taxes .................................................. 1.9 1.1
----- ----- -----
Income before extraordinary items ........................................... 2.3 1.9 2.3
Extraordinary items -- losses on early terminations of credit facilities,
net of income taxes ........................................................ 0.2 0.2
----- ----- -----
Net income .................................................................. 2.3% 1.7% 2.1%
===== ===== =====

CONSOLIDATED RESULTS OF OPERATIONS.

FISCAL YEAR ENDED APRIL 25, 1998 COMPARED TO FISCAL YEAR ENDED APRIL 26,
1997

Consolidated revenues increased 7.9%, from $327.4 million for Fiscal 1997
to $353.4 million for the year ended April 25, 1998 ("Fiscal 1998"). This
increase was primarily due to sales to a large new account, passing on
increased product costs to customers, increased sales to existing customers and
the purchase acquisitions of FMI and Astrid during Fiscal 1998.

Gross profit increased 2.2%, from $91.0 million, or 27.8% of revenues, for
Fiscal 1997 to $93.1 million, or 26.3% of revenues, for Fiscal 1998. This
decrease in gross profit as a percentage of revenues was primarily due to
inefficiencies related to the start-up period of a large new account.

Selling, general and administrative expenses increased 4.0%, from $70.9
million, or 21.7% of revenues, for Fiscal 1997 to $73.8 million, or 20.9% of
revenues, for Fiscal 1998. This decrease in selling, general and administrative
expenses as a percentage of revenues was primarily due to an increase in
revenues combined with a decrease in executive compensation at the subsidiary
level.

The Company incurred restructuring costs of $872,000 during Fiscal 1998.
These costs represent the external costs and liabilities to close redundant
Company facilities, severance costs related to the Company's employees and
other costs associated with the Company's restructuring plans. The Company
expects to incur similar costs in the future as the Company continues to review
its operations.

The Company also incurred expenses of approximately $1.8 million during
Fiscal 1998 associated with the U.S. Office Products Strategic Restructuring
Plan. As a result of the Workflow Distribution, U.S. Office Products allocated
$1.0 million to the Company for its share of the transaction costs (including
legal, accounting, investment banking and financial advisory) and other fees
incurred by U.S. Office Products in connection with the Strategic Restructuring
Plan. In addition to the allocation by U.S. Office Products, the Company itself
incurred an additional $750,000 in transaction costs during Fiscal 1998
relating to the Strategic Restructuring Plan for legal, accounting and
financial advisory services and various other fees.

The Company incurred non-recurring acquisition costs of $5.0 million for
Fiscal 1997 in conjunction with business combinations accounted for under the
pooling-of-interests method. These non-recurring acquisition costs included
accounting, legal and investment banking fees, real estate and environmental
assessments and appraisals and various regulatory fees. GAAP requires the
Company to expense all acquisition costs (both those paid by the Company and
those paid by the sellers of the acquired companies) related to business
combinations accounted for under the pooling-of-interests methods of
accounting.

Interest expense, net of interest income, decreased 57.3%, from $4.5
million for Fiscal 1997 to $1.9 million for Fiscal 1998. The decrease was due
primarily to the fact that a portion of the debt outstanding during Fiscal 1997
was repaid by U.S. Office Products upon acquisition of the Pooled Companies and
was replaced with intercompany debt bearing interest at U.S. Office Products'
lower cost of borrowing rate.

Other expense decreased $890,000 from other expense of $632,000 for Fiscal
1997, to other income of $258,000 for Fiscal 1998. The decrease is primarily
the result of costs incurred at one of the Pooled Companies, during Fiscal
1997, relating to a contemplated initial public offering that was aborted as a
result of that company's acquisition by U.S. Office Products.

Provision for income taxes increased from $3.7 million for Fiscal 1997 to
$6.7 million for Fiscal 1998, reflecting effective income tax rates of 37.2%
and 45.1%, respectively. The lower effective tax rate for Fiscal 1997, compared
to the federal statutory rate of 35.0% plus state taxes, is the result of
certain of the companies included in the results not being subject to federal
income taxes on a corporate level as they had elected to be treated as
subchapter S corporations. The higher effective tax rate for Fiscal 1998,
compared to the federal statutory rate of 35.0% plus state taxes, is a result
of nondeductibl e goodwill amortization and nondeductible costs associated with
the Strategic Restructuring Plan.

FISCAL YEAR ENDED APRIL 26, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Consolidated revenues increased 5.8%, from $309.4 million in 1995, to
$327.4 million in Fiscal 1997. This increase was primarily due to sales to a
large new account, passing on increased product costs to customers and
increased sales to existing customers.

Gross profit increased 22.3%, from $74.5 million, or 24.1% of revenues, in
1995 to $91.0 million, or 27.8% of revenues, in Fiscal 1997. The increase in
gross profit as a percentage of revenues was due primarily to cost reductions
resulting from an increased utilization of Company owned manufacturing
facilities and to increased rebates and purchase discounts from vendors.

Selling, general and administrative expenses increased 14.4%, from $62.0
million, or 20.1% of revenues, in 1995 to $70.9 million, or 21.7% of revenues,
in Fiscal 1997. The increase in selling, general and administrative expenses as
a percentage of revenues was due primarily to an increase in fixed costs as a
result of expansions to Company facilities for anticipated future growth.

The Company incurred non-recurring acquisition costs of $5.0 million for
the fiscal year ended April 26, 1997 in conjunction with business combinations
accounted for under the pooling-of-interests method.

Interest expense, net of interest income, decreased 15.5%, from $5.4
million in 1995 to $4.5 million in Fiscal 1997. The decrease was due primarily
to the fact that a portion of the debt outstanding during 1995 was repaid by
U.S. Office Products upon acquisition of the Pooled Companies and U.S. Office
Products did not charge the Company interest on the long-term portion of the
payable balance.

Other expense increased $570,000, from $62,000 in 1995, to $632,000 in
Fiscal 1997. Fiscal 1997 other expense consists primarily of costs incurred at
one of the Pooled Companies, prior to its acquisition, relating to a
contemplated initial public offering that was aborted as a result of that
company's acquisition by U.S. Office Products.

Provision for income taxes increased from a benefit of $33,000 in 1995 to
an expense of $3.7 million in Fiscal 1997, reflecting effective income tax
rates of -0.5% and 37.2%, respectively. The benefit from income taxes in 1995,
compared to the federal statutory rate of 35.0% plus state taxes, is the result
of certain of the companies included in the results not being subject to
federal income taxes on a corporate level as they had elected to be treated as
subchapter S corporations. In Fiscal 1997, this effect was partially offset by
non-deductible non-recurring acquisition costs.

During Fiscal 1997, the Company incurred an extraordinary item totaling
$798,000, which represented the expenses, net of the expected income tax
benefit, associated with the early termination of the credit facility at one of
the Pooled Companies during Fiscal 1997.

LIQUIDITY AND CAPITAL RESOURCES.

At April 25, 1998, the Company had cash of $234,000 and working capital of
$33.6 million. The Company's capitalization, defined as the sum of long-term
debt, long-term payable to U.S. Office Products and stockholder's equity, at
April 25, 1998 was approximately $85.8 million.

During Fiscal 1998, net cash provided by operating activities was $4.5
million. Net cash used in investing activities was $18.0 million, including
$12.8 million of net cash paid in acquisitions, $4.4 million of capital
expenditures and the payment of non-recurring acquisition costs of $906,000.
Net cash provided by financing activities totaled $11.5 million, consisting
primarily of $8.6 million in advances from U.S. Office Products and a $2.5
million capital contribution by U.S. Office Products.

During Fiscal 1997, net cash provided by operating activities was $19.7
million. Net cash used in investing activities was $14.1 million, including
$4.1 million of cash paid for non-recurring acquisition costs and $9.5 million
of capital expenditures. Net cash used in financing activities totaled $4.7
million, consisting primarily of the repayment of debt of $17.2 million and the
payment of dividends at Pooled Companies of $6.1 million, partially offset by
the $20.1 million capital contribution by U.S. Office Products.

During the year ended December 31, 1995, net cash provided by operating
activities was $11.1 million. Net cash used in investing activities was $42.4
million, including $37.9 million of net cash paid in acquisitions and $5.9
million of capital expenditures. Net cash provided by financing activities
totaled $31.4 million, consisting primarily of an increase in debt of $35.8
million and the payment of dividends at Pooled Companies of $3.9 million.

Workflow Management has significant operations in Canada. Net sales and
income before provision for income taxes from the Company's Canadian operations
accounted for approximately 36.2% and 34.8% of the Company's total net sales
and income before provision for income taxes, respectively, in Fiscal 1998. As
a result, Workflow Management is 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 the
Company's business, financial condition and results of operations. The Company
is currently reviewing certain hedge transaction options to mitigate the effect
of currency fluctuations.

Workflow Management's anticipated capital expenditures budget for the next
twelve months is approximately $10.0 million for new equipment and maintenance.

As a result of the provisions of Section 355 of the Code, the Company may
be subject to constraints on its ability to issue additional shares of Company
Common Stock in certain transactions for two years following the date of the
Workflow Distribution. In particular, if 50% or more, by vote or value, of the
capital stock of Workflow Management is acquired by one or more persons acting
pursuant to a plan or series of transactions that includes the Workflow
Distribution, Workflow Management will suffer significant tax liability.
Workflow Management will evaluate any significant future issuance of capital
stock to avoid the imposition of such tax liability. See "Item 1. Business -
Risk Factors."

The Distribution Agreement with U.S. Office Products called for an
allocation of $45.6 million of debt by U.S. Office Products resulting in the
forgiveness of $2.5 million and $20.1 million of debt during Fiscal 1998 and
Fiscal 1997, respectively, which is reflected in the Company's financial
statements as a contribution of capital by U.S. Office Products. The Company
has entered into a secured $150.0 million revolving credit facility
underwritten and agented by Bankers Trust Company. The credit facility matures
approximately five years from the Distribution Date and is secured by
substantially all assets of the Company. The credit facility is subject to
terms and conditions typical of a credit facility of such type and size,
including certain financial covenants. Interest rate options are available to
the Company conditioned on certain leverage tests. The maximum rate of interest
will be the prime rate from time to time in effect. Workflow Management expects
that the credit facility is adequate to fund working capital and capital
expenditure needs. The credit facility will also be available to fund the cash
portion of future acquisitions, subject to the maintenance of bank covenants.
The Company has repaid the $45.6 million of debt owed to U.S. Office Products
with funds available under the credit facility.

The Company anticipates that its current cash on hand, cash flow from
operations and additional financing available under the bank line of credit
will be sufficient to meet the Company's liquidity requirements for its
operations for the next 12 months. However, the Company intends to pursue
acquisitions, which are expected to be funded through cash, stock or a
combination thereof. There can be no assurance that additional sources of
financing will not be required during the next 12 months or thereafter.

FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS. Workflow Management's
envelope business is subject to seasonal influences from holiday mailings. As
Workflow Management continues to complete acquisitions, it may become subject

to other seasonal influences if the businesses it acquires are seasonal.
Quarterly results also may be materially affected by the timing of
acquisitions, the timing and magnitude of costs related to such acquisitions,
variations in the prices paid by the Company for the products it sells, the mix
of products sold and general economic conditions. Moreover, the operating
margins of companies acquired may differ substantially from those of Workflow
Management, which could contribute to further fluctuation in its quarterly
operating results. Therefore, results for any quarter are not necessarily
indicative of the results that Workflow Management may achieve for any
subsequent fiscal quarter or for a full fiscal year.

The following tables set forth certain unaudited quarterly financial data
for Fiscal 1998 and Fiscal 1997 (in thousands, except for per share amounts).
The information has been derived from unaudited consolidated financial
statements that in the opinion of management reflect adjustments, consisting
only of normal recurring accruals, necessary for a fair presentation of such
quarterly information.

FISCAL 1998 QUARTERS
--------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
------------- ------------ ------------ ------------ -------------

Revenues ...................... $ 82,163 $ 88,884 $ 86,730 $ 95,574 $ 353,351
Gross profit .................. 21,895 23,314 22,086 25,757 93,052
Operating income .............. 4,975 4,842 4,395 2,417 16,629
Net income .................... 2,703 2,582 2,265 658 8,208
Net income per share: .........
Basic ........................ 0.19 0.18 0.13 0.04 0.51
Diluted ...................... 0.19 0.17 0.13 0.04 0.50

FISCAL 1997 QUARTERS
--------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
------------- ------------- ----------- ----------- --------------

Revenues ................... $ 78,071 $ 80,227 $ 81,453 $ 87,630 $ 327,381
Gross profit ............... 21,717 22,518 22,647 24,159 91,041
Operating income ........... 4,650 6,085 1,510 2,841 15,086
Net income (loss) .......... 2,974 3,181 (658) (67) 5,430
Net income (loss) per share:
Basic ..................... 0.27 0.28 (0.06) (0.00) 0.45
Diluted ................... 0.27 0.27 (0.05) (0.00) 0.44

INFLATION. The Company does not believe that inflation had a material
impact on its results of operations during 1995 or the fiscal years ended April
26, 1997 and April 25, 1998.

NEW ACCOUNTING PRONOUNCEMENTS - REPORTING COMPREHENSIVE INCOME. In June
1997, FASB issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes standards for the reporting and display of comprehensive income and
its components (revenues, expenses, gains and losses) in a full set of general
purpose financial statements. SFAS No. 130 requires that all items required to
be recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed with the same prominence
as other financial statements. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997. Reclassification of financial statements for
earlier periods provided for comparative purposes is required. Workflow
Management intends to adopt SFAS No. 130 in the fiscal year ending April 24,
1999.

YEAR 2000 ISSUE. Many existing computer programs were designed and
developed without considering the impact of the upcoming change in the century
and consequently use only two digits to identify a year in the date field. If
not corrected, many computer applications could fail or create erroneous
results by or at the year 2000 (the "Year 2000 Issue"). The Company has
reviewed the potential impact of the Year 2000 Issue on its business,
operations and financial condition and has concluded that it will not be
material.

During the period immediately following the Strategic Restructuring Plan
of U.S. Office Products, the Company had to postpone its Year 2000 compliance
project because of the inability to allocate adequate personnel. The Company
intends to have its proprietary software systems and related services (known as
GetSmart and Informa) Year 2000 ready by the end of calendar year 1998. With
respect to the third party vendors components, the Company will use its best
efforts to replace third-party software, hardware, and computer systems that
are currently not Year 2000 ready by December 31, 1999.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

PAGE
-----

FINANCIAL STATEMENTS:
Reports of Independent Accountants ............................................... F-1

Consolidated Balance Sheet at April 25, 1998 and April 26, 1997 .................. F-5

Consolidated Statement of Income for the fiscal years ended April 25, 1998 and
April 26, 1997, the four months ended April 30, 1996 and the year
ended December 31, 1995 ......................................................... F-6

Consolidated Statement of Stockholder's Equity for the fiscal years ended April
25, 1998 and April 26, 1997, the four months ended April 30, 1996 and the
year ended December 31, 1995 .................................................... F-7

Consolidated Statement of Cash Flows for the fiscal years ended April 25, 1998 and
April 26, 1997, the four months ended April 30, 1996 and the year ended December
31, 1995.......................................................................... F-8

Notes to Consolidated Financial Statements ....................................... F-10

FINANCIAL STATEMENT SCHEDULE:
For the year ended December 31, 1995, the four months ended April 30, 1996, and
the fiscal years ended April 26, 1997 and April 25, 1998
II -- Valuation and Qualifying Accounts

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS
OF WORKFLOW MANAGEMENT, INC.:

In our opinion, based upon our audits and the reports of other auditors,
the consolidated financial statements listed in the accompanying index present
fairly, in all material respects, the financial position of Workflow
Management, Inc. (the "Company") and its subsidiaries at April 25, 1998 and
April 26, 1997, and the results of their operations and their cash flows for
each of the two fiscal years in the period ended April 25, 1998, the four
months ended April 30, 1996, and the year ended December 31, 1995, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Hano Document
Printers, Inc. ("Hano"), United Envelope Co., Inc. and its affiliate, Rex
Envelope Co. Inc. ("United") and Huxley Envelope Corporation ("Huxley"),
wholly-owned subsidiaries, which statements reflect total revenues for the year
ended December 31, 1995 of $31,299,000, $81,917,000 and $18,868,000,
respectively. Those statements were audited by other auditors whose reports
thereon have been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for Hano, United and Huxley, is based solely
on the reports of the other auditors. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits and the reports of
other auditors provide a reasonable basis for the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP

Minneapolis, Minnesota
June 23, 1998

F-1

INDEPENDENT AUDITORS' REPORT

THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF HANO DOCUMENT PRINTERS, INC.:

We have audited the balance sheet of Hano Document Printers, Inc. as of
December 31, 1995 and the related statements of income, stockholders' equity
and cash flows for the year then ended, which are not included herein. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Hano Document Printers,
Inc. as of December 31, 1995 and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

KPMG PEAT MARWICK LLP

Norfolk, Virginia
August 28, 1996

F-2

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF
UNITED ENVELOPE CO., INC.

We have audited the combined balance sheets of United Envelope Co., Inc.
and its affiliate, Rex Envelope Co., Inc., as at December 31, 1995, and the
related combined statement of income and retained earnings and cash flows for
the year then ended (not presented separately herein). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of
United Envelope Co., Inc. and its affiliate as at December 31, 1995, and the
results of their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles.

HERTZ, HERSON & COMPANY, LLP

New York, New York
March 6, 1996

F-3

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF
HUXLEY ENVELOPE CORPORATION

We have audited the balance sheet of Huxley Envelope Corporation as at
December 31, 1995, and the related statements of income and accumulated deficit
and cash flows for the year then ended (not presented separately herein). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Huxley Envelope Corporation
as at December 31, 1995, and the results of its operations and its cash flows
for the year then ended, in conformity with generally accepted accounting
principles.

HERTZ, HERSON & COMPANY LLP

New York, New York
March 4, 1996

F-4

WORKFLOW MANAGEMENT, INC.

CONSOLIDATED BALANCE SHEET

(IN THOUSANDS)

APRIL 25, APRIL 26,
1998 1997
------------- ------------

ASSETS
Current assets:
Cash and cash equivalents ..................................................... $ 234 $ 2,168
Accounts receivable, less allowance for doubtful accounts of $2,859 and $1,831,
respectively ................................................................ 56,328 50,917
Inventories ................................................................... 32,655 26,990
Prepaid expenses and other current assets ..................................... 1,978 3,402
--------- ---------
Total current assets ........................................................ 91,195 83,477
Property and equipment, net .................................................... 33,210 33,119
Notes receivable from employees ................................................ 3,703 3,461
Intangible assets, net ......................................................... 14,014 913
Other assets ................................................................... 4,556 4,138
--------- ---------
Total assets ................................................................ $ 146,678 $ 125,108
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Short-term debt ............................................................... $ 5,855 $ 3,681
Short-term payable to U.S. Office Products .................................... 13,536 23,622
Accounts payable .............................................................. 25,370 27,031
Accrued compensation .......................................................... 4,916 4,173
Other accrued liabilities ..................................................... 7,893 8,060
--------- ---------
Total current liabilities ................................................... 57,570 66,567
Long-term debt ................................................................. 7,065 6,034
Long-term payable to U.S. Office Products ...................................... 19,221 561
Deferred income taxes .......................................................... 3,314 4,045
Other long-term liabilities .................................................... 17 121
--------- ---------
Total liabilities ........................................................... 87,187 77,328
--------- ---------
Commitments and contingencies
Stockholder's equity:
Divisional equity ............................................................. 50,270 45,614
Cumulative translation adjustment ............................................. (1,056) 97
Retained earnings ............................................................. 10,277 2,069
--------- ---------
Total stockholder's equity .................................................. 59,491 47,780
--------- ---------
Total liabilities and stockholder's equity .................................. $ 146,678 $ 125,108
========= =========

See accompanying notes to consolidated financial statements.

F-5

WORKFLOW MANAGEMENT, INC.

CONSOLIDATED STATEMENT OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

FOR THE FISCAL YEAR ENDED FOR THE FOUR FOR THE
----------------------------- MONTHS ENDED YEAR ENDED
APRIL 25, APRIL 26, APRIL 30, DECEMBER 31,
1998 1997 1996 1995
------------- ------------- -------------- -------------

Revenues .................................................... $ 353,351 $ 327,381 $ 114,099 $ 309,426
Cost of revenues ............................................ 260,299 236,340 82,998 234,959
--------- --------- --------- ---------
Gross profit ............................................... 93,052 91,041 31,101 74,467
Selling, general and administrative expenses ................ 73,801 70,949 22,485 62,012
Restructuring costs ......................................... 872
Strategic restructuring costs ............................... 1,750
Non-recurring acquisition costs ............................. 5,006
--------- --------- ---------- ---------
Operating income ........................................... 16,629 15,086 8,616 12,455
Other (income) expense:
Interest expense ........................................... 2,210 4,561 1,676 5,370
Interest income ............................................ (274) (25) (18)
Other ...................................................... (258) 632 (151) 62
--------- --------- --------- ---------
Income before provision for income taxes and extraordinary
items ...................................................... 14,951 9,918 7,109 7,023
Provision for (benefit from) income taxes ................... 6,743 3,690 1,351 (33)
--------- --------- --------- ---------
Income before extraordinary items ........................... 8,208 6,228 5,758 7,056
Extraordinary items -- losses on early terminations of credit
facilities, net of income taxes ............................ 798 700
--------- ---------
Net income .................................................. $ 8,208 $ 5,430 $ 5,758 $ 6,356
========= ========= ========= =========
Per share amounts:
Basic:
Income from before extraordinary items ................... $ 0.51 $ 0.52 $ 0.56 $ 0.90
Extraordinary items ...................................... 0.07 0.09
--------- ---------
Net income ............................................... $ 0.51 $ 0.45 $ 0.56 $ 0.81
========= ========= ========= =========
Diluted:
Income from before extraordinary items ................... $ 0.50 $ 0.51 $ 0.55 $ 0.88
Extraordinary items ...................................... 0.07 0.09
--------- --------- --------- ---------
Net income ............................................... $ 0.50 $ 0.44 $ 0.55 $ 0.79
========= ========= ========= =========

See accompanying notes to consolidated financial statements.

F-6

WORKFLOW MANAGEMENT, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

(IN THOUSANDS)

CUMULATIVE TOTAL
DIVISIONAL TRANSLATION RETAINED STOCKHOLDER'S
EQUITY ADJUSTMENT EARNINGS EQUITY
------------ ------------- ------------ --------------

Balance at December 31, 1994 ................................... $ 4,239 $ $ 8,650 $ 12,889
Transactions of Pooled Companies:
Issuance of Pooled Company common stock in
conjunction with acquisition ............................... 7,451 7,451
Capital contributions ....................................... 100 100
Cash dividends .............................................. (2,465) (2,465)
Cumulative translation adjustment ............................. 388 388
Net income .................................................... 6,356 6,356
------ --------- ---------- --------
Balance at December 31, 1995 ................................... 11,790 388 12,541 24,719
Cash dividends at Pooled Companies ............................ (1,321) (1,321)
Cumulative translation adjustment ............................. (36) (36)
Net income .................................................... 5,758 5,758
------ -------- ---------- --------
Balance at April 30, 1996 ...................................... 11,790 352 16,978 29,120
Transactions of Pooled Companies:
Retirement of common stock .................................. (477) (477)
Cash dividends .............................................. (6,102) (6,102)
Undistributed earnings of subchapter S corporations ......... 14,237 (14,237)
Cumulative translation adjustment ............................. (255) (255)
Capital contribution by U.S. Office Products .................. 20,064 20,064
Net Income .................................................... 5,430 5,430
------ ------- ---------- --------
Balance at April 26, 1997 ...................................... 45,614 97 2,069 47,780
Issuance of U.S. Office Products Company common stock
in conjunction with acquisition ............................. 2,112 2,112
Cumulative translation adjustment ............................. (1,153) (1,153)
Capital contribution by U.S. Office Products .................. 2,544 2,544
Net income .................................................... 8,208 8,208
-------- ---------- ---------- --------
Balance at April 25, 1998 ...................................... $ 50,270 $ (1,056) $ 10,277 $ 59,491
======== ========= ========== ========

See accompanying notes to consolidated financial statements.

F-7

WORKFLOW MANAGEMENT, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN THOUSANDS)

FOR THE FISCAL YEAR
ENDED FOR THE FOUR FOR THE
----------------------- MONTHS ENDED YEAR ENDED
APRIL 25, APRIL 26, APRIL 30, DECEMBER 31,
1998 1997 1996 1995
----------- ----------- -------------- -------------

Cash flows from operating activities:
Net income ..................................................... $ 8,208 $ 5,430 $ 5,758 $ 6,356
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense ........................ 6,722 6,469 3,583 5,890
Restructuring costs .......................................... 872
Strategic restructuring costs ................................ 1,750
Non-recurring acquisition costs .............................. 5,006
Deferred income taxes ........................................ (17) (660)
Extraordinary losses ......................................... 798 700
Other ........................................................ 122
Cash paid for restructuring costs ............................ (405)
Changes in current assets and liabilities (net of assets
acquired and liabilities assumed in business combinations
accounted for under the purchase method):
Accounts receivable ......................................... (3,701) 25 3,098 (7,039)
Inventory ................................................... (5,561) (3,175) 302 1,884
Prepaid expenses and other current assets ................... 725 249 (354) (284)
Accounts payable ............................................ (2,738) 4,643 (339) 1,541
Accrued liabilities ......................................... (1,349) 894 (930) 1,942
--------- --------- -------- ---------
Net cash provided by operating activities .................. 4,506 19,679 11,118 11,112
--------- --------- -------- ---------
Cash flows from investing activities:
Cash paid in acquisitions, net of cash received ................ (12,756) (37,859)
Payments of non-recurring acquisition costs .................... (906) (4,100)
Additions to property and equipment ............................ (4,442) (9,450) (4,505) (5,944)
Cash received on the sale of property and equipment ............ 141 2,199 82 269
Other .......................................................... (2,739) 1,147
--------- --------- -------- ---------
Net cash used in investing activities ........................ (17,963) (14,090) (4,423) (42,387)
--------- --------- -------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt ....................... 1,771 1,178 82 65,218
Payments of long-term debt ..................................... (3,638) (23,135) (4,710)
Proceeds from (payments of) short-term debt, net ............... 2,263 (19,414) (5,844) (24,684)
Payments to terminate credit facilities ........................ (974) (579)
Payments of dividends at Pooled Companies ...................... (6,141) (1,321) (3,909)
Retirement of common stock ..................................... (477)
Capital contributed by stockholders of Pooled Company .......... 100
Advances from U.S. Office Products ............................. 8,574 24,183
Capital contributed by U.S. Office Products .................... 2,544 20,064
--------- --------- -------- ---------
Net cash provided by (used in) financing activities .......... 11,514 (4,716) (7,083) 31,436
--------- --------- -------- ---------
Effect of exchange rates on cash and cash equivalents ........... 9 (29) 388
--------- --------- -------- ---------
Net increase (decrease) in cash and cash equivalents: ........... (1,934) 844 (388) 549
Cash and cash equivalents at beginning of period ................ 2,168 1,324 1,712 1,163
--------- --------- -------- ---------
Cash and cash equivalents at end of period ...................... $ 234 $ 2,168 $ 1,324 $ 1,712
========= ========= ======== =========
Supplemental disclosures of cash flow information:
Interest paid .................................................. $ 1,359 $ 2,063 $ 794 $ 2,703
Income taxes paid .............................................. $ 8,633 $ 3,390 $ 674 $ 560

F-8

WORKFLOW MANAGEMENT, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN THOUSANDS)

The Company issued common stock and cash in connection with certain
business combinations accounted for under the purchase method during Fiscal
1998 and the year ended December 31, 1995. The fair values of the assets and
liabilities of the acquired companies at the dates of the acquisitions are
presented as follows:

FOR THE FISCAL FOR THE
YEAR ENDED YEAR ENDED
APRIL 25, DECEMBER 31,
1998 1995
---------------- -------------

Accounts receivable ....................................... $ 2,257 $ 19,106
Inventories ............................................... 465 17,436
Prepaid expenses and other current assets ................. 105 578
Property and equipment .................................... 2,748 21,466
Intangible assets ......................................... 13,269
Other assets .............................................. (9) 4,499
Accounts payable .......................................... (464) (9,651)
Accrued liabilities ....................................... (572) (3,700)
Long-term debt ............................................ (2,817)
Other long-term liabilities and minority interest ......... (114) (4,424)
--------- --------
Net assets acquired ................................... $ 14,868 $ 45,310
========= ========
The acquisitions were funded as follows:
Common stock .............................................. $ 2,112 $ 7,451
Cash paid, net of cash received ........................... 12,756 37,859
--------- --------
Total ................................................. $ 14,868 $ 45,310
========= ========
Noncash transactions:

During the year ended December 31, 1995 and the four months ended April
30, 1996, the Company forgave receivables from an employee of $509 and $382,
respectively.

See accompanying notes to consolidated financial statements.

F-9

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS)

NOTE 1 -- BACKGROUND

Workflow Management, Inc. (the "Company") is a Delaware corporation which
was formed by U.S. Office Products Company ("U.S. Office Products") in
connection with U.S. Office Products' strategic restructuring plan ("Strategic
Restructuring Plan"). As part of its Strategic Restructuring Plan, U.S. Office
Products spun-off its Print Management Division as an independent publicly
owned company, which was comprised of certain wholly-owned subsidiaries of U.S.
Office Products. This spin-off transaction was effected through the
distribution of shares of the Company to U.S. Office Products shareholders
effective on June 9, 1998 (the "Distribution"). U.S. Office Products and the
Company entered into a number of agreements to facilitate the Distribution and
the transition of the Company to an independent business enterprise.

The Print Management Division was created by U.S. Office Products in
January 1997 and completed seven business combinations accounted for under the
pooling-of-interests method during the period from January 1997 to April 1997
(the "Pooled Companies"). As a result of these business combinations being
accounted for under the pooling-of-interests method, the results of the Company
prior to the completion of such business combinations represent the combined
results of the Pooled Companies operating as separate autonomous entities.

NOTE 2 -- BASIS OF PRESENTATION

The consolidated financial statements reflect the assets, liabilities,
divisional equity, revenues and expenses that were directly related to the
Company as it was operated within U.S. Office Products. In cases involving
assets and liabilities not specifically identifiable to any particular business
of U.S. Office Products, only those assets and liabilities transferred to the
Company prior to the Distribution were included in the Company's separate
consolidated balance sheet. With the exception of interest expense, the
Company's statement of income includes all of the related costs of doing
business including an allocation of certain general corporate expenses of U.S.
Office Products which were not directly related to these businesses including
certain corporate executives' salaries, accounting and legal fees, departmental
costs for accounting, finance, legal, purchasing, marketing, human resources as
well as other general overhead costs. These allocations were based on a variety
of factors, dependent upon the nature of the costs being allocated, including
revenues, number and size of acquisitions and number of employees. Management
believes these allocations were made on a reasonable basis.

U.S. Office Products uses a centralized approach to cash management and
the financing of its operations. As a result, minimal amounts of cash and cash
equivalents and an agreed upon amount of debt were allocated to the Company at
the time of the Distribution. The consolidated statement of income includes an
allocation of interest expense on all debt allocated to the Company. See Note 7
for further discussion of interest expense.

NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

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.

DEFINITION OF FISCAL YEAR

As used in these consolidated financial statements and related notes to
consolidated financial statements, "Fiscal 1998", "Fiscal 1997"and "1995" refer
to the Company's fiscal years ended April 25, 1998 and April 26, 1997 and the
year ended December 31, 1995, respectively.

CHANGE IN FISCAL YEAR

Prior to their respective dates of acquisition by U.S. Office Products,
the Pooled Companies reported results on years ending on December 31. Upon
acquisition by U.S. Office Products and effective for Fiscal 1997, the Pooled
Companies

F-10

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued

changed their year-ends from December 31 to conform to U.S. Office Products'
fiscal year, which ends on the last Saturday in April. A four month fiscal
transition period from January 1, 1996 through April 30, 1996 has been
presented for the Company to conform its fiscal year-end.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions
and accounts are eliminated in consolidation.

CASH AND CASH EQUIVALENTS

The Company considers temporary cash investments with original maturities
of three months or less from the date of purchase to be cash equivalents.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
Receivables arising from sales to customers are not collateralized and, as a
result, management continually monitors the financial condition of its
customers to reduce the risk of loss.

INVENTORIES

Inventories are stated at the lower of cost or market with cost determined
on a first-in, first-out (FIFO) basis and consist primarily of products held
for sale.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Additions and improvements are
capitalized. Maintenance and repairs are expensed as incurred. Depreciation of
property and equipment is calculated using the straight-line method over the
estimated useful lives of the respective assets. The estimated useful lives
range from 25 to 40 years for buildings and its components and 3 to 15 years
for furniture, fixtures and equipment. Property and equipment leased under
capital leases is being amortized over the lesser of its useful life or its
lease terms.

NOTES RECEIVABLE FROM EMPLOYEES

The Company has outstanding promissory notes receivable due from two
employees which earn interest at a rate of approximately 7% per annum. The
promissory notes receivable are due in two equal installments with the first
payment, including accrued interest, due on June 30, 1998 and the final
payment, including all outstanding principal and remaining interest, due on
June 30, 1999. The Company has agreed to defer payment of the first
installments due on June 30, 1998 to August 31, 1998 provided the outstanding
balances under the notes are prepaid in full on such date.

INTANGIBLE ASSETS

Intangible assets consist primarily of goodwill, which represents the
excess of cost over the fair value of assets acquired in business combinations
accounted for under the purchase method, and non-compete agreements.
Substantially all goodwill is amortized on a straight line basis over an
estimated useful life of 40 years. Management periodically evaluates the
recoverability of goodwill, which would be adjusted for a permanent decline in
value, if any, by comparing anticipated undiscounted future cash flows from
operations to net book value. Intangible assets associated with non-compete
agreements are being amortized using the straight-line method over the
estimated useful lives of the agreements which are generally one to five years.
Other intangibles primarily consist of customer lists which are amortized over
the estimated useful lives of the agreements which are generally one to five
years.

TRANSLATION OF FOREIGN CURRENCIES

Balance sheet accounts of foreign subsidiaries are translated using the
year-end exchange rate, and statement of income accounts are translated using
the average exchange rate for the year. Translation adjustments are recorded as
a separate component of stockholder's equity.

F-11

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments including cash
and cash equivalents, accounts receivable and accounts payable approximate fair
value.

INCOME TAXES

As a division of U.S. Office Products, the Company did not file separate
federal income tax returns but rather were included in the federal income tax
returns filed by U.S. Office Products and its subsidiaries from the respective
dates that the entities within the Company were acquired by U.S. Office
Products. For purposes of the consolidated financial statements, the Company's
allocated share of U.S. Office Products' income tax provision was based on the
"separate return" method. Certain companies acquired in pooling-of-interests
transactions elected to be taxed as subchapter S corporations, and accordingly,
no federal income taxes were recorded by those companies for periods prior to
their acquisition by U.S. Office Products.

TAXES ON UNDISTRIBUTED EARNINGS

No provision is made for U.S. income taxes on earnings of the Company's
Canadian subsidiary company which the Company controls but does not include in
the consolidated federal income tax return since it is management's practice
and intent to permanently reinvest the earnings of this subsidiary.

REVENUE RECOGNITION

Revenue is recognized upon the delivery of products or upon the completion
of services provided to customers as no additional obligations to the customers
exist. Returns of the Company's product are considered immaterial.

COST OF REVENUES

Vendor rebates are recognized on an accrual basis in the period earned and
are recorded as a reduction to cost of revenues. Delivery and occupancy costs
are included in cost of revenues.

ADVERTISING COSTS

The Company expenses advertising costs when the advertisement occurs.
Advertising costs are included in the consolidated statement of income as a
component of selling, general and administrative expenses. Advertising expense
for Fiscal 1998, Fiscal 1997 and the year ended December 31, 1995 was $899,
$1,410 and $551, respectively.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are charged to operations in the year
incurred. Research and development costs are included in the consolidated
statement of income as a component of selling, general and administrative
expenses.

INTERNALLY DEVELOPED SOFTWARE

Internal costs related to internally developed software such as internal
salaries and supplies are expensed as incurred as a component of selling,
general and administrative expenses. External costs related to internally
developed software such as outside programmers and consultants are capitalized
and expensed over the expected useful life of the software, normally three to
five years.

RESTRUCTURING COSTS

The Company records the costs of consolidating existing Company facilities
into acquired operations, including the external costs and liabilities to close
redundant Company facilities and severance and relocation costs related to the
Company's employees in accordance with EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs incurred in Restructuring)."

F-12

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued

STRATEGIC RESTRUCTURING COSTS

Strategic restructuring costs represent the Company's portion of the costs
incurred as a result of U.S. Office Products' recently completed comprehensive
restructuring.

NON-RECURRING ACQUISITION COSTS

Non-recurring acquisition costs represent acquisition costs incurred by
the Company in business combinations accounted for under the
pooling-of-interests method. These costs include accounting, legal, and
investment banking fees, real estate and environmental assessments and
appraisals and various regulatory fees. Generally accepted accounting
principles require the Company to expense all acquisition costs (both those
paid by the Company and those paid by the sellers of the acquired companies)
related to business combinations accounted for under the pooling-of-interests
method.

NET INCOME PER SHARE

Net income per share is calculated in accordance with the Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share," which
establishes standards for computing and presenting earnings per share ("EPS").
SFAS No. 128 requires dual presentation of basic and diluted EPS on the face of
the income statement. Basic EPS excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average number of
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 difference between the
weighted-average number of common shares used for the calculation of basic EPS
and the weighted-average number of shares of common shares used for the diluted
EPS is comprised of the dilutive effect of outstanding common stock options.
However, a portion of the Company's employee stock options outstanding during
the periods presented were not included in the computation of diluted EPS as
they were anti-dilutive.

NEW ACCOUNTING PRONOUNCEMENT

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of general-purpose financial statements. SFAS No. 130 requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. SFAS No. 130
is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. The Company intends to adopt SFAS No. 130 in
the fiscal year ended in April, 1999 ("Fiscal 1999").

DISTRIBUTION RATIO

At the date of Distribution, U.S. Office Products distributed to its
shareholders one share of common stock of the Company for every 7.5 shares of
U.S. Office Products common stock held by each respective shareholder. The
share data reflected in the accompanying financial statements represents the
historical share data for U.S. Office Products for the period or as of the date
indicated, and retroactively adjusted to give effect to the one for 7.5
distribution ratio.

F-13

WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 4 -- BUSINESS COMBINATIONS

POOLING-OF-INTERESTS METHOD

In Fiscal 1997, the Company issued 1,449,135 shares of U.S. Office
Products common stock to acquire the Pooled Companies. The Pooled Companies and
the number of shares issued are as follows:

NUMBER OF SHARES ISSUED
------------------------

SFI Corp. ............................. 386,275
Hano Document Printers, Inc. .......... 97,525
United Envelope Co., Inc.* ............ 381,818
Data Business Forms Limited ........... 583,517
-------
Total shares issued ................. 1,449,135
=========

- ---------
* Includes shares issued for the acquisitions of United Envelope Co., Inc., Rex
Envelope Co., Inc., Huxley Envelope Corp. and Pocono Envelope Corp. which
were simultaneously acquired in the aggregate.

The Company's consolidated financial statements give retroactive effect to
the acquisitions of the Pooled Companies for all periods presented. Prior to
being acquired by U.S. Office Products, the Pooled Companies all reported on
years ending on December 31. Upon completion of the acquisitions of the Pooled
Companies, their year-ends were changed to U.S. Office Products' year-end of
the last Saturday in April.

The following presents the separate results, in each of the periods
presented, of the Company (excluding the results of Pooled Companies prior to
the dates on which they were acquired), and the Pooled Companies up to the
dates on which they were acquired:

WORKFLOW
MANAGEMENT, POOLED
INC. COMPANIES COMBINED
------------- ----------- ------------

For the fiscal year ended April 25, 1998
Revenues .............................. $ 353,351 $ $ 353,351
Net income ............................ $ 8,208 $ $ 8,208
For the fiscal year ended April 26, 1997
Revenues .............................. $ 29,373 $ 298,008 $ 327,381
Net income (loss) ..................... $ (61) $ 5,491 $ 5,430
For the four months ended April 30, 1996
Revenues .............................. $ $ 114,099 $ 114,099
Net income ............................ $ $ 5,758 $ 5,758
For the year ended December 31, 1995 ....
Revenues .............................. $ $ 309,426 $ 309,426
Net income ............................ $ $ 6,356 $ 6,356

PURCHASE METHOD

During Fiscal 1998, the Company made two acquisitions accounted for under
the purchase method for an aggregate purchase price of $14,868, consisting of
16,009 shares of common stock with a market value of $2,112 and cash of
$12,756. The total assets related to these acquisitions were $18,835, including
intangible assets of $13,269. The results of these acquisitions have been
included in the Company's results from their respective dates of acquisition.

In 1995, one of the Pooled Companies made an acquisition accounted for
under the purchase method for an aggregate purchase price of $45,310,
consisting of $37,859 of cash and common stock with a market value of $7,451.
The total assets related to this acquisition were $63,085. No goodwill was
generated in the acquisition. The results of this acquisition have been
included in the Company's results from its date of acquisition.

The following presents the unaudited pro forma results of operations of
the Company for Fiscal 1998 and Fiscal 1997 and includes the Company's
consolidated financial statements and the results of the purchase acquisitions
completed in

F-14

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 4 -- BUSINESS COMBINATIONS -- Continued

Fiscal 1998 and Fiscal 1997 as if they had been made at the beginning of Fiscal
1997. The results presented below include certain pro forma adjustments to
reflect the amortization of intangible assets, adjustments in executive
compensation of $84 and $1,058 for Fiscal 1998 and Fiscal 1997, respectively,
and the inclusion of a federal income tax provision on all earnings:

FISCAL YEAR FISCAL YEAR
ENDED ENDED
APRIL 25, 1998 APRIL 26, 1997
---------------- ---------------

Revenues ................ $ 359,908 $ 342,335
Net income .............. 9,736 7,529
Net income per share:
Basic ................... $ 0.61 $ 0.63
Diluted ................. $ 0.60 $ 0.61

The unaudited pro forma results of operations are prepared for comparative
purposes only and do not necessarily reflect the results that would have
occurred had the acquisitions occurred at the beginning of Fiscal 1998 or the
results which may occur in the future.

NOTE 5 -- PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

APRIL 25, APRIL 26,
1998 1997
----------- ------------

Land ................................... $ 1,013 $ 1,022
Buildings .............................. 4,755 4,705
Furniture and fixtures ................. 47,363 42,394
Warehouse equipment .................... 1,107 1,013
Equipment under capital leases ......... 1,021 916
Leasehold improvements ................. 3,365 2,933
--------- ---------
58,624 52,983
Less: Accumulated depreciation ......... (25,414) (19,864)
--------- ---------
Net property and equipment . .......... $ 33,210 $ 33,119
========= =========

Depreciation expense for Fiscal 1998, Fiscal 1997, the four months ended
April 30, 1996 and the year ended 1995 was $6,413, $5,778, $3,174 and $4,720,
respectively.

NOTE 6 -- INTANGIBLE ASSETS

Intangible assets consist of the following:

APRIL 25, APRIL 26,
1998 1997
----------- ----------

Goodwill ............................... $ 13,857 $ 496
Non-compete agreements ................. 322 322
Other .................................. 506 507
-------- ------
14,685 1,325
Less: Accumulated amortization ......... (671) (412)
-------- ------
Net intangible assets ...... .......... $ 14,014 $ 913
======== ======

Amortization expense for Fiscal 1998, Fiscal 1997, the four months ended
April 30, 1996 and the year ended 1995 was $309, $204, $44 and $74,
respectively.

F-15

WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 7 -- CREDIT FACILITIES

SHORT-TERM DEBT

Short-term debt consists of the following:

APRIL 25, APRIL 26,
1998 1997
----------- ----------

Current maturities of long-term debt ......... $ 5,251 $ 3,681
Other ........................................ 604
-------
Total short-term debt ...................... $ 5,855 $ 3,681
======= =======

LONG-TERM DEBT

Long-term debt consists of the following:

APRIL 25, APRIL 26,
1998 1997
----------- ----------

Notes payable, secured by certain assets of the Company,
interest rates ranging from 5.0% to 9.0% ............. $ 12,011 $ 9,283
Capital lease obligations .............................. 305 432
-------- --------
12,316 9,715
Less: Current maturities of long-term debt ............. (5,251) (3,681)
-------- --------
Total long-term debt ................................ . $ 7,065 $ 6,034
======== ========

MATURITIES OF LONG-TERM DEBT

Maturities on long-term debt, including capital lease obligations, are as
follows:

1999 ......................................... $ 5,251
2000 ......................................... 2,265
2001 ......................................... 1,372
2002 ......................................... 1,191
2003 ......................................... 1,093
Thereafter ................................... 1,144
--------
Total maturities of long-term debt ......... $ 12,316
========

PAYABLE TO U.S. OFFICE PRODUCTS

The short-term payable to U.S. Office Products was incurred by the Company
primarily as a result of U.S. Office Products repaying short-term debt
outstanding at the businesses acquired by U.S. Office Products at or soon after
the respective dates of acquisition and through the centralized cash management
system, which involves daily advances or sweeps of cash to keep the cash
balance at or near zero on a daily basis.

The long-term payable to U.S. Office Products primarily represents
payments made by U.S. Office Products on behalf of the Company and a reasonable
allocation by U.S. Office Products of certain general corporate expenses.
Interest has been allocated to the Company based upon the Company's average
outstanding payable balance with U.S. Office Products at U.S. Office Products
average interest rate during such period. U.S. Office Products allocated $1,319
of interest expense to the Company during Fiscal 1998. There was no significant
amount of intercompany debt outstanding during prior periods and, therefore, no
interest expense was allocated to the Company by U.S. Office Products during
such periods.

At the date of Distribution on June 9, 1998 (the "Distribution Date"),
U.S. Office Products allocated $30,000 of debt plus the amount of any
additional debt incurred after January 12, 1998 in connection with the
acquisition of entities that

F-16

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 7 -- CREDIT FACILITIES -- Continued

became subsidiaries of the Company. The allocation included debt outstanding
with third parties and the balance represented intercompany debt payable to
U.S. Office Products. The debt payable to U.S. Office Products was repaid upon
the completion of the Distribution with funds available under the Company's
credit facility, which is further described below.

The Company entered into a secured $150.0 million revolving credit
facility underwritten and agented by Bankers Trust Company. The credit facility
matures approximately five years from the Distribution Date and is secured by
substantially all assets of the Company. The credit facility is subject to
terms and conditions typical of a credit facility of such type and size,
including certain financial covenants. Interest rate options are available to
the Company conditioned on certain leverage tests. The maximum rate of interest
will be the prime rate from time to time in effect. Workflow Management expects
that the credit facility is adequate to fund working capital and capital
expenditure needs. Workflow Management expects that a portion of the credit
facility will also be available to fund the cash portion of future
acquisitions, subject to the maintenance of bank covenants.

NOTE 8 -- INCOME TAXES

Domestic and foreign income before provision for income taxes and
extraordinary items consist of the following:

FOR THE FISCAL YEAR ENDED FOR THE FOUR FOR THE
------------------------- MONTHS ENDED YEAR ENDED
APRIL 25, APRIL 26, APRIL 30, DECEMBER 31,
1998 1997 1996 1995
----------- ----------- -------------- -------------

Domestic ............. $ 9,754 $ 4,006 $ 4,599 $ 5,582
Foreign .............. 5,197 5,912 2,510 1,441
-------- ------- ------- -------
Total ................ $ 14,951 $ 9,918 $ 7,109 $ 7,023
======== ======= ======= =======

The provision for income taxes consists of:

Income taxes currently payable:
Federal ..................... $ 3,066 $ 196 $ $
State ....................... 1,419 628 460 376
Foreign ..................... 2,275 3,526 891 (409)
------- ------- ------- ------
6,760 4,350 1,351 (33)
Deferred income tax expense
(benefit) ..................... (17) (660)
------- ------- ------- ------
Total provision for income
taxes ..................... $ 6,743 $ 3,690 $ 1,351 $ (33)
======= ======= ======= ======

F-17

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 8 -- INCOME TAXES -- Continued

Deferred taxes are comprised of the following:

APRIL 25, APRIL 26,
1998 1997
------------- -------------

Current deferred tax assets:
Inventory ......................................... $ 112 $ 145
Allowance for doubtful accounts ................... 546 497
Accrued liabilities ............................... 710 168
--------- ---------
Total current deferred tax assets ................ 1,368 810
--------- ---------
Long-term deferred tax liabilities: .................
Property and equipment ............................ (3,701) (1,238)
Intangible assets ................................. 144 36
Other ............................................. (1,125) (3,653)
--------- ---------
Total long-term deferred tax liabilities ......... (4,682) (4,855)
--------- ---------
Net deferred tax liability ....................... $ (3,314) $ (4,045)
========= =========

The Company's effective income tax rate varied from the U.S. federal
statutory tax rate as follows:

U.S. federal statutory rate ................................... 35.0% 35.0% 35.0% 35.0%
State income taxes, net of federal income tax benefit ......... 6.4 6.8 6.5 5.4
Subchapter S corporation income not subject to corporate level
taxation ..................................................... (24.6) (22.6) (27.7)
Foreign earnings not subject to U.S. taxes .................... (13.2) (21.4) (12.4) (7.3)
Nondeductible goodwill amortization ........................... 0.7
Nondeductible acquisition costs/restructuring costs ........... 2.3 11.8
Foreign taxes ................................................. 15.2 25.6 12.5
Other ......................................................... (1.3) 4.0 (5.9)
----- ----- ----- -----
Effective income tax rate ..................................... 45.1% 37.2% 19.0% (0.5)%
===== ===== ===== =====

Certain Pooled Companies were organized as subchapter S corporations prior
to the closing of their acquisitions by the Company and, as a result, the
federal tax on their income was the responsibility of their individual
stockholders. Accordingly, the specific Pooled Companies provided no federal
income tax expense prior to these acquisitions by the Company.

NOTE 9 -- LEASE COMMITMENTS

The Company leases various types of warehouse and office facilities and
equipment, furniture and fixtures under noncancelable lease agreements which
expire at various dates. Future minimum lease payments under noncancelable
capital and operating leases are as follows:

F-18

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 9 -- LEASE COMMITMENTS -- Continued

CAPITAL OPERATING
LEASES LEASES
--------- ----------

1999 ................................................... $ 188 $ 3,406
2000 ................................................... 82 3,411
2001 ................................................... 42 2,589
2002 ................................................... 20 2,045
2003 ................................................... 1,106
Thereafter ............................................. 1,550
--------
Total minimum lease payments .......................... 332 $ 14,107
========
Less: Amounts representing interest .................... (27)
-----
Present value of net minimum lease payments ......... $ 305
=====

Rent expense for all operating leases for Fiscal 1998, Fiscal 1997, the
four months ended April 30, 1996 and the year ended 1995 was $8,406, $4,928,
$1,844 and $6,137, respectively.

NOTE 10 -- COMMITMENTS AND CONTINGENCIES

LITIGATION

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.

POSTEMPLOYMENT BENEFITS

The Company has entered into employment agreements with several employees
that would result in payments to these employees upon a change of control or
certain other events. No amounts have been accrued at April 25, 1998 or April
26, 1997 related to these agreements, as no change of control has occurred.

DISTRIBUTION

On the Distribution Date, the Company entered into a secured revolving
credit facility. The terms of the credit facility contain customary covenants
including financial covenants. The Company used a portion of the proceeds from
the credit facility to repay certain amounts payable to U.S. Office Products.

On June 9, 1998, the Company, U.S. Office Products and the three other
companies spun-off from U.S. Office Products as part of the Strategic
Restructuring Plan (collectively the "other Spin-Off Companies") entered into a
Distribution Agreement, a Tax Allocation Agreement, and an Employee Benefits
Agreement, and the Company and the other Spin-Off Companies entered into a Tax
Indemnification Agreement. These agreements provide, among other things, for
U.S. Office Products and the Company to indemnify each other from tax and other
liabilities relating to their respective businesses prior to and following the
Distribution. Certain of the obligations of the Company and the other Spin-Off
Companies to indemnify U.S. Office Products are joint and several. Therefore,
if one of the other Spin-Off Companies fails to satisfy its indemnification
obligations to U.S. Office Products when such a loss occurs, the Company may be
required to reimburse U.S. Office Products for all or a portion of the losses
that otherwise would have been allocated to other Spin-Off Companies. In
addition, the agreements allocate liabilities, including general corporate and
securities liabilities of U.S. Office Products not specifically related to the
Company's business, between U.S. Office Products, the Company, and the other
Spin-Off Companies.

NOTE 11 -- EMPLOYEE BENEFIT PLANS

Effective January 24, 1997, the Company implemented the U.S. Office
Products 401(k) Retirement Plan. Effective on the Distribution, the Company
adopted its own 401(k) Retirement Plan (the "401(k) Plan") which allows
employee

F-19

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 11 -- EMPLOYEE BENEFIT PLANS -- Continued

contributions in accordance with Section 401(k) of the Internal Revenue Code.
The Company may match a portion of employee contributions and all full-time
employees are eligible to participate in the 401(k) Plan after six months of
service.

Certain subsidiaries of the Company have, or had prior to implementation
of the 401(k) Plan, qualified defined contribution benefit plans, which allow
for voluntary pre-tax contributions by the employees. The subsidiaries paid all
general and administrative expenses of the plans and in some cases made
matching contributions on behalf of the employees. For Fiscal 1998, Fiscal
1997, the four months ended April 30, 1996 and the year ended December 31,
1995, the subsidiaries incurred expenses totaling $136, $481, $179 and $602,
respectively, related to these plans.

NOTE 12 -- STOCKHOLDER'S EQUITY

EARNINGS PER SHARE

In February 1997, the FASB issued SFAS no. 128, "Earnings Per Share." SFAS
No. 128 establishes standards for computing and presenting earnings per share
("EPS"). SFAS No. 128 requires dual presentation of basic and diluted EPS on
the face of the consolidated statement of income. 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 Company has adopted SFAS No. 128 during Fiscal 1998 and has restated all
prior period EPS data. The following information presents the Company's
computations of basic and diluted EPS for the periods presented in the
consolidated statement of income.

NET INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- --------------- ----------

Fiscal 1998:
Basic EPS ................................ $ 8,208 15,941 $ 0.51
=======
Effect of dilutive employee stock options 316
------
Diluted EPS .............................. $ 8,208 16,257 $ 0.50
======= ====== =======
Fiscal 1997:
Basic EPS ................................ $ 5,430 12,003 $ 0.45
=======
Effect of dilutive employee stock options 232
------
Diluted EPS .............................. $ 5,430 12,235 $ 0.44
======= ====== =======
Four Months ended December 31, 1996:
Basic EPS ................................ $ 5,758 10,333 $ 0.56
=======
Effect of dilutive employee stock options 214
------
Diluted EPS .............................. $ 5,758 10,547 $ 0.55
======= ====== =======
Year ended December 31,1995:
Basic EPS ................................ $ 6,356 7,875 $ 0.81
=======
Effect of dilutive employee stock options 128
------
Diluted EPS .............................. $ 6,356 8,003 $ 0.79
======= ====== =======

CAPITAL CONTRIBUTION BY U.S. OFFICE PRODUCTS

During the fiscal years ended April 25, 1998 and April 26, 1997, U.S.
Office Products contributed $2,544 and $20,064 of capital to the Company,
respectively. The contribution reflects the forgiveness of intercompany debt by
U.S. Office Products, as it was agreed that the Company would be allocated only
$30,000 of debt plus the amount of any additional debt incurred after January
12, 1998 in connection with the acquisition of entities that will become
subsidiaries of the Company.

F-20

WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

EMPLOYEE STOCK PLANS

Prior to the Distribution, certain employees of the Company participated
in the U.S. Office Products 1994 Long-Term Incentive Plan ("USOP Plan")
covering employees of U.S. Office Products. U.S. Office Products, as the sole
stockholder of the Company prior to the Distribution, approved the provisions
of the Company's 1998 Stock Incentive Plan (the "Plan") that permit issuance of
up to 600,000 shares of "incentive stock options" as that term is defined in
the Internal Revenue Code. The Company's Board of Directors adopted the Plan
prior to the Distribution. Upon the Distribution, the Company replaced the
options to purchase shares of common stock of U.S. Office Products held by
employees with options to purchase shares of common stock of the Company.

In order to keep the option holders in the same economic position
immediately before and after the Distribution, the number of U.S. Office
Products' options held by Company personnel was multiplied by 1.556 and the
exercise price of those options was divided by 1.556 for purposes of the
replacement options. The vesting provisions and option period of the original
grants were not changed. All option data reflected below has been retroactively
restated to reflect the effects of the Distribution.

The Company accounts for options issued in accordance with APB Opinion No.
25. Accordingly, because the exercise prices of the options have equaled the
market price on the date of grant, no compensation expense has been recognized
for the options granted. Had compensation cost for the Company's stock options
been recognized based upon the fair value of the stock options on the grant
date under the methodology prescribed by SFAS 123, the Company's net income and
net income per share would have been impacted as indicated in the following
table.

The pro forma results shown below reflect the impact of options granted in
Fiscal 1998 and Fiscal 1997.

FOR THE FISCAL YEAR ENDED
----------------------------------
APRIL 25, 1998 APRIL 26, 1997
---------------- ---------------

Net Income: ...........
As reported ............... $ 8,208 $ 5,430
Pro forma ................. 6,903 5,184

Net Income Per Share:
As reported:
Basic ..................... $ 0.51 $ 0.45
Diluted ................... $ 0.50 $ 0.44
Pro forma:
Basic ..................... $ 0.43 $ 0.43
Diluted ................... $ 0.42 $ 0.42

The fair value of options granted (which is amortized to expense over the option
vesting period in determining the pro forma impact) is estimated on the date of
grant using the Black-Sholes option pricing model with the following weighted
average assumptions for the fiscal years ended April 25, 1998 and April 26, 1997
respectively:

Expected life of option 7 years 7 years
Risk free interest rate 6.36% 6.66%
Expected volatility of the U.S. Office Products Stock 44.1% 44.0%

The weighted-average fair value of options granted was $6.37 and $3.99 for
Fiscal 1998 and Fiscal 1997, respectively.

F-21

WORKFLOW MANAGEMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 12 -- STOCKHOLDER'S EQUITY -- Continued

The summary of option transactions follows:

WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
EXERCISE OPTIONS EXERCISE
OPTIONS PRICE EXERCISABLE PRICE
------------ ----------- ------------- ----------

Balance at April 30, 1996 ......... --
Granted .......................... 649,093 $ 7.15

Balance at April 30, 1996 ......... 649,093 7.15 291,153 $ 6.86
Granted .......................... 1,225,375 11.78
Exercised ........................ (114,106) 7.04
Canceled ......................... (66,539) 10.42
--------- -------

Balance at April 25, 1998 ......... 1,693,823 $ 10.38 172,768 $ 7.01
========= =======

The following table summarizes information about stock options outstanding
at April 25, 1998:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------- ----------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
RANGE OF CONTRACTUAL EXERCISE EXERCISE
EXERCISE PRICES OPTIONS LIFE PRICE OPTIONS PRICE
- ----------------- ------------ ------------- ------------- --------- ----------

$ 6.81 - $ 6.88 485,831 8.76 $6.87 169,851 $6.85
$ 9.75 - $11.68 564,200 9.06 10.05 -- --
$13.07 - $16.29 643,792 9.26 13.32 2,917 16.29

-------
$ 6.81 - $16.29 1,693,823 9.05 $ 10.38 172,768 $ 7.01
========= =======

Non-qualified options granted to employees are generally exercisable
beginning one year from the date of grant in cumulative yearly amounts of 25%
of the shares under option and generally expire ten years from the date of
grant.

Mr. Ledecky received a stock option for Company Common Stock from the
Company as of June 10, 1998. The Board intends the option to be compensation
for Mr. Ledecky's services as a director of the Company, and certain services
as an employee of the Company. The option covers up to 7.5% of the outstanding
Company Common Stock determined as of the date of the Distribution, with no
anti-dilution provisions in the event of issuance of additional shares of
Common Stock (other than with respect to stock splits or reverse stock splits).
The option has a per share exercise price equal to the closing sale price of
the Company Common Stock on Nasdaq on the first day of post-Distribution
trading, June 10, 1998 (the date of grant), which was $9 per share.

As of June 10, 1998, the Company granted an option for 7.5% of the
outstanding Company Common Stock determined as of the Distribution Date to Mr.
D'Agostino, approximately 6% to certain executive officers and 15,000 shares to
each non-employee director. The options were granted under the Plan and have a
per share exercise price equal to the closing sale price of the Company Common
Stock on Nasdaq on the first day of post-Distribution trading, June 10, 1998
(the date of grant), which was $9 per share. Total options available for grant
under the Plan are up to 30.0% of the outstanding shares of the Company's
common stock immediately following the Distribution, which equals 4,387,580
shares, including the options granted to Mr. Ledecky, Mr. D'Agostino, executive
officers and non-employee directors described above.

F-22

WORKFLOW MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 13 -- SEGMENT REPORTING

GEOGRAPHIC SEGMENTS

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

UNITED
STATES CANADA TOTAL
------------ ------------ ------------

For the fiscal year ended April 25, 1998
Revenues .............................. $ 225,435 $ 127,916 $ 353,351
Operating income ...................... 10,609 6,020 16,629
Identifiable assets at year-end ....... 97,999 48,679 146,678
For the fiscal year ended April 26, 1997
Revenues .............................. $ 205,910 $ 121,471 $ 327,381
Operating income ...................... 7,010 8,076 15,086
Identifiable assets at year-end ....... 72,854 52,254 125,108
For the four months ended April 30, 1996
Revenues .............................. $ 73,047 $ 41,052 $ 114,099
Operating income ...................... 3,435 5,181 8,616
Identifiable assets at period end ..... 66,255 51,694 117,949
For the year ended December 31, 1995
Revenues .............................. $ 196,922 $ 112,504 $ 309,426
Operating income ...................... 7,859 4,596 12,455
Identifiable assets at year-end ....... 64,301 56,329 120,630

NOTE 14 -- QUARTERLY FINANCIAL DATA (UNAUDITED)

The following presents certain unaudited quarterly financial data for
Fiscal 1998 and Fiscal 1997:

FISCAL 1998 QUARTERS
----------------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
------------- ------------- ------------- ------------- --------------

Revenues ............. $ 82,163 $ 88,884 $ 86,730 $ 95,574 $ 353,351
Gross profit ......... 21,895 23,314 22,086 25,757 93,052
Operating income ..... 4,975 4,842 4,395 2,417 16,629
Net income ........... 2,703 2,582 2,265 658 8,208
Net income per share:
Basic .................... 0.19 0.18 0.13 0.04 0.51
Diluted .................. 0.19 0.17 0.13 0.04 0.50

FISCAL 1997 QUARTERS
--------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
------------- ------------- ----------- ----------- --------------

F-23

SCHEDULE II

WORKFLOW MANAGEMENT, INC.

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1995, THE 4 MONTHS ENDED APRIL 30, 1996, AND
THE FISCAL YEARS ENDED APRIL 27, 1997, AND APRIL 25, 1998

BALANCE AT CHARGED TO
BEGINNING COSTS AND
DESCRIPTION DATE OF PERIOD EXPENSES
- ---------------------------- ------------------- ------------ ------------

Allowance for doubtful
accounts .................. December 31, 1994 $ 574,000 $ 883,000
December 31, 1995 1,606,000 387,000
April 30, 1996 1,993,000 1,394,000
April 27, 1997 1,831,000 1,200,000
Accumulated amortization
of intangibles ............ December 31, 1994 $ 129,000 $ 74,000
December 31, 1995 188,000 44,000
April 30, 1996 208,000 204,000
April 27, 1997 412,000 309,000

CHARGED TO BALANCE
OTHER AT END OF
DESCRIPTION ACCOUNTS DEDUCTIONS DATE PERIOD
- ---------------------------- ------------------- ----------------------- ------------------- -------------

Allowance for doubtful
accounts .................. $ 646,000 (b) $ (497,000) (a) December 31, 1995 $1,606,000
April 30, 1996 1,993,000
(1,556,000) (a) April 27, 1997 1,831,000
5,000 (b) (177,000) (a) April 25, 1998 2,859,000
Accumulated amortization
of intangibles ............ $ (15,000) (c) December 31, 1995 $ 188,000
(24,000) (c) April 30, 1996 208,000
April 27, 1997 412,000
(50,000) (c) April 25, 1998 671,000

- ---------
(a) Represents write-offs of uncollectible accounts receivable

(b) Allowance for doubtful accounts acquired in purchase acquisitions

F-24

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not Applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors, executive officers and key employees of the Company are as
follows:

NAME AGE POSITION
- -------------------------------------------- ----- -------------------------------------------

OFFICERS AND DIRECTORS OF THE COMPANY:
Thomas B. D'Agostino 56 Chairman of the Board, President, Chief
Executive Officer and Director
Steven R. Gibson 38 Vice President and Chief Financial Officer
Claudia S. Amlie 29 Vice President and General Counsel
Thomas A. Brown, Sr.(1)(2) 55 Director
Gus J. James, II(1) 59 Director
Jonathan J. Ledecky 40 Director
Timothy L. Tabor 44 Director
F. Craig Wilson(2) 48 Director

KEY EMPLOYEES OF SUBSIDIARIES:
John Conway 55 President of Data Business Forms
Limited
Thomas B. D'Agostino, Jr.* 31 President of SFI of Delaware, LLC
Robert M. Fishbein 55 Co-Chairman and Co-President of United
Envelope, LLC
Richard M. Schlanger 53 Co-Chairman and Co-President of United
Envelope, LLC
Andre Beaudet 55 President of Hano Document Printers, Inc.

- ---------
* Thomas B. D'Agostino, Jr. is the son of Thomas B. D'Agostino.

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

The Board of Directors intends to increase its size from six to seven
members and to appoint the seventh director to serve on the Compensation
Committee.

THOMAS B. D'AGOSTINO is Chairman of the Board, President and Chief
Executive Officer of the Company. Mr. D'Agostino was President of SFI and its
predecessor company, Forms & Peripherals, Inc., from 1972 until 1998, and was
appointed President of U.S. Office Products Print Management Division in
January 1997 when U.S. Office Products acquired SFI and Hano.

STEVEN R. GIBSON is Vice President and Chief Financial Officer of the
Company, the position to which he was appointed in April 1998. From February
1997 until April 1998, Mr. Gibson was President of Cortez Financial Services,
Inc., an investment banking company. From May 1985 to February 1997, he was
employed in various positions at NationsBank Corporation, ultimately serving as
Senior Vice President.

CLAUDIA S. AMLIE was appointed Vice President and General Counsel of the
Company in May 1998. From July 1997 until April 1998, she served as an
associate attorney at the law firm of Edwards & Angell in Palm Beach, Florida.
Ms. Amlie worked as an associate attorney at Foley & Lardner in West Palm
Beach, Florida from June 1996 to July 1997, and Stearns, Weaver, Miller,
Weissler, Alhadeff & Sitterson in Miami, Florida from August 1994 to May 1996.
Ms. Amlie graduated from law school in 1994.

THOMAS A. BROWN, SR. has served as the Vice
President-Purchasing/Sourcing/Logistics of Pfizer, Inc., a large pharmaceutical
company, since May 1996. From June 1991 until May 1996, Mr. Brown was Vice
President-Procurement of Aetna, Inc., a national insurance company.

GUS J. JAMES, II is the President, a director and shareholder of the law
firm of Kaufman & Canoles in Norfolk, Virginia. Mr. James has practiced law
with Kaufman & Canoles since 1967. See "Item 13. Certain Relationships and
Related Transactions."

JONATHAN J. LEDECKY is a director and an employee of the Company and each
of the other Spin-Off Companies. He founded Consolidation Capital Corporation
in February 1997 and will serve as its Chairman and Chief Executive Officer.
Mr. Ledecky founded U.S. Office Products in October 1994 and served as its
Chairman of the Board until the Distribution Date and served as its Chief
Executive Officer until November 5, 1997. Mr. Ledecky has also served as the
Non-Executive Chairman of the Board of USA Floral Products, Inc. since April
1997 and as a director of UniCapital Corporation since October 1997. Mr.
Ledecky is also a director of MicroStrategy Incorporated. Mr. Ledecky served
from 1989 to 1991 as the President of The Legacy Fund, Inc., and from 1991 to
September 1994 as President and Chief Executive Officer of Legacy Dealer
Capital Fund, Inc., a wholly-owned subsidiary of Steelcase Inc. Prior to his
tenure at The Legacy Fund, Inc., Mr. Ledecky was a partner at Adler and Company
and a Senior Vice President at Allied Capital Corporation, an investment
management company.

TIMOTHY L. TABOR served as Executive Vice President of U.S. Office
Products Print Management Division and Executive Vice President and Chief
Operating Officer of SFI and Hano from May 1997 until the Distribution Date.
From 1996 until 1997, he served as an executive officer of SFI and Hano. From
1993 to 1995, Mr. Tabor managed his own investments. From 1987 to 1993, Mr.
Tabor held various positions with Tudor Investment Corp., serving as Director
of Technology from 1987 to 1990, Director of the Securities Department from
1990 until 1992 and as a proprietary trader in 1993.

F. CRAIG WILSON has served as Chief Executive Officer and Chairman of the
Board of Cortez III Service Corporation ("Cortez III") since March 1997. Cortez
III provides logistics and technical services to various governmental agencies.
Mr. Wilson also serves as President of EC III, Inc., a joint venture of Cortez
III, and EG&G Inc. From 1993 to 1997, Mr.Wilson was Chief Operating Officer of
Cortez III.

JOHN CONWAY has served as President of DBF since 1992. From 1987 to 1992,
Mr. Conway was Vice President and General Manager of Data East.

THOMAS B. D'AGOSTINO, JR. was appointed President of SFI in 1998. He
previously served as Vice President of Sales of SFI from 1997 until 1998. From
1995 to 1997, he served as President of Hano. From 1993 to 1995, Mr.
D'Agostino, Jr. held several other positions with Hano, including Vice
President of Sales and Marketing and General Manager.

ROBERT M. FISHBEIN is Co-Chairman of United. He has also served as
Co-President of United since 1994. From 1982 to 1994, Mr. Fishbein held the
position of Executive Vice President of United.

RICHARD M. SCHLANGER is also Co-Chairman of United. He has also served as
Co-President of United since 1994. From 1982 to 1994, Mr. Schlanger held the
position of Executive Vice President of United.

ANDRE BEAUDET is President of both Hano and Multiple Pakfold, Inc., the
distributor arm of DBF. Mr. Beaudet joined DBF in 1992 when it acquired Southam
Paragon, where he had been employed since 1965. From 1986 to 1997, Mr. Beaudet
held a variety of positions at Southam Paragon, including President and Vice
President.

Directors are elected for a one-year term and hold office until their
successors have been elected and qualified or until such director's earlier
resignation or removal.

COMMITTEES OF THE BOARD

The Board of Directors has an Audit Committee. The Audit Committee is
charged with reviewing Workflow Management's annual audit and meeting with the
Company's independent accountants to review the Company's internal controls and
financial management practices. Messrs. Brown and James are members of the
Audit Committee.

The Board of Directors has a Compensation Committee. The Compensation
Committee is charged with determining the compensation of Workflow Management's
executive officers and administering the Company's 1998 Stock Incentive Plan.
Mr. Wilson and Mr. Brown are members of the Compensation Committee. See "Item
11. Executive Compensation -- 1998 Stock Incentive Plan."

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, officers and persons who beneficially own more than 10% of a
registered class of equity securities of the Company to file initial reports of
ownership (Form 3) and reports of changes in beneficial ownership (Form 4 and
5) with the Securities and Exchange Commission ("SEC") and Nasdaq. Such persons
are also required under the rules and regulations promulgated by the SEC to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the Company, the
Company believes that all reporting requirements under Section 16(a) have been
met in a timely manner by its directors, officers and greater than 10%
beneficial owners.

ITEM 11. EXECUTIVE COMPENSATION

LEDECKY SERVICES AGREEMENT

Jonathan J. Ledecky entered into a Services Agreement with U.S. Office
Products on January 13, 1998, as amended and restated as of June 8, 1998
("Ledecky Services Agreement"), which became effective on the Distribution
Date. The Company has also entered into an employment agreement with Mr.
Ledecky, effective as of June 10, 1998, that implements assigned portions of
the Ledecky Services Agreement. Under the employment agreement, Mr. Ledecky
reports to the Board of Directors and senior management of the Company. In such
capacity, Mr. Ledecky will provide high-level acquisition negotiation services
and strategic business advice. The Company can require Mr. Ledecky's
performance of such services, consistent with his other contractual obligations
to Consolidation Capital Corporation, U.S. Office Products and the other
Spin-Off Companies. As an employee, Mr. Ledecky is subject to the generally
applicable personnel policies of the Company and is eligible for the Company's
benefit plans in accordance with their terms. The Company will pay Mr. Ledecky
an annual salary of $48,000 for up to two years. The Company may terminate Mr.
Ledecky's employment with "cause."

The Ledecky Services Agreement provides for non-competition and
non-solicitation restrictions that will continue until the later of June 10,
2000 or the date one year after Mr. Ledecky leaves Workflow Management's
employ. These provisions generally restrict Mr. Ledecky from, among other
things, investing in or working for or on behalf of any business selling any
products or services in direct competition with the Company, U.S. Office
Products or the other Spin-Off Companies (collectively, the"U.S. Office
Products Companies"), within 100 miles of any location where the relevant U.S.
Office Products Company regularly maintains an office with employees. (For this
purpose, "products or services" are those that U.S. Office Products offered on
January 13, 1998.) Notwithstanding this prohibition, Mr. Ledecky may serve in a
policy making role (but not engage in direct personal competition) with respect
to the following businesses: (i) certain businesses that are potentially
competitive with Aztec Technology Partners, Inc., one of the other Spin-Off
Companies, if those businesses (A) relate to computer installation and
servicing, (B) information technology, or (C) telecommunications, and if, when
acquired, the businesses met certain revenue limits and had their principal
place of business in the same metropolitan area as that of the acquiring
electrical contracting and services business; (ii) businesses selling,
supplying, or distributing janitorial or sanitary products or services; (iii)
businesses managing or servicing office equipment (other than computers); (iv)
businesses providing internet access services; (v) UniCapital Corporation's
current businesses (which include equipment leasing); or (vi) U.S. marketing
services. The Ledecky Services Agreement prohibits Mr. Ledecky from trying to
hire away managerial employees of the U.S. Office Products Companies or from
calling upon customers of the U.S. Office Products Companies to solicit or sell
products or services in direct competition with the U.S. Office Products
Companies. Mr. Ledecky also may not hire away for Consolidation Capital
Corporation any person then or in the preceding one year employed by the U.S.
Office Products Companies. U.S. Office Products has assigned to Workflow
Management the ability to enforce the non-competition provisions described
above as to its own business, which constitute part of Mr. Ledecky's employment
agreement with the Company.

Mr. Ledecky has received a stock option for Company Common Stock from
Workflow Management as of June 10, 1998. The option is intended to compensate
Mr. Ledecky for his services to Workflow Management as an employee. The option
was granted under the Company's 1998 Stock Incentive Plan. The option covers
7.5% of the outstanding Company Common Stock determined as of the Distribution
Date, which equals 1,096,895 shares of Common Stock. The per share exercise
price of the option is $9.00, which is equal to the closing price of Company
Common Stock as reported on Nasdaq on June 10, 1998. The estimated value of
this option depends on its exercise price and the trading volatility of the
Company Common Stock. Based on an exercise price of $9.00 per share and an
assumed trading volatility index of the Company Common Stock of 40%, the
estimated value of the option is approximately $2.0 million, net of taxes at an
assumed 40% rate.

Mr. Ledecky's option was fully vested when granted but is not exercisable
until June 10, 1999. Mr. Ledecky's option from the Company is exercisable
immediately if Mr. Ledecky dies before the option expires, or if Workflow
Management accelerates the exercise schedule of options for substantially all
management option holders (in this latter case, Mr. Ledecky's option will
become exercisable on the same accelerated schedule as the other Workflow
Management option holders). All unexercised portions of the option expire ten
years after its date of grant or, if applicable, as of the date Mr. Ledecky
violates his non-competition agreement with the Company.

DIRECTOR COMPENSATION

Non-employee directors receive cash compensation in the amount of $10,000
per year. In addition, non-employee directors received formula stock options
under the 1998 Stock Incentive Plan of 15,000 shares as of June 10, 1998. These
options become exercisable one year from the date of grant. The exercise price
is $9.00 per share, the closing sale price of the Company Common Stock as
reported on Nasdaq on June 10, 1998. Non-employee directors are also eligible
to receive formula stock options for additional shares at each annual meeting
at which such director is reelected to the Company's Board of Directors. The
exercise price of these options will be the fair market value of the Common
Stock on the date of grant.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Board of Directors of Workflow Management has ever been
an officer of the Company or any of its subsidiaries, except that Mr.
D'Agostino is the Chairman, President and Chief Executive Officer of the
Company and was the President of U.S. Office Products Print Management Division
and a member of the Board of Directors of SFI prior to the Distribution Date.
In addition, Mr. Tabor was the Executive Vice President of U.S. Office Products
Print Management Division and the Executive Vice President and Chief Operating
Officer of SFI and Hano prior to the Distribution Date. Mr. Tabor resigned as
an officer of the Print Management Division of U.S. Office Products, SFI and
Hano on the Distribution Date. In addition, Mr. Ledecky was the Chief Executive
Officer of U.S. Office Products until November 5, 1997 and was Chairman of U.S.
Office Products until the Distribution Date. None of Messrs. D'Agostino, Tabor
or Ledecky serve on the Company's Compensation Committee.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to the
compensation paid by the Company for services rendered during the year ended
April 25, 1998 to the Chief Executive Officer and to the other officers of the
Company whose combined compensation exceeded $100,000 during this period
(collectively the "Named Officers").

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG TERM
------------------------ COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS (#) COMPENSATION
- -------------------------------------------------------- ----------- ---------- -------------- ---------------

Thomas B. D'Agostino
Chairman of the Board, President, Chief
Executive Officer and Director of the Company ......... $400,000 $ -0- 45,000 $ 9,968(1)
Michael B. Feldman
Former Vice President and Chief Financial
Officer of the Company (2) ............................ $133,750 $25,000 37,500 $ 6,319(3)
Timothy L. Tabor (4)
Former Executive Vice President
U.S. Office Products Print Management Division
and Director of the Company ........................... $260,000 $25,000 15,000 $ 5,041(5)

- ---------
(1) Includes $6,805 of insurance premiums and $3,163 of 401(k) plan
contributions paid by the Company on Mr. D'Agostino's behalf.

(2) Steven R. Gibson assumed the position of Vice President and Chief
Financial Officer on April 8, 1998.

(3) Includes $3,403 of insurance premiums and $2,916 of 401(k) plan
contributions paid by the Company on Mr. Feldman's behalf.

(4) Mr. Tabor resigned as an officer of the Print Management Division of U.S.
Office Products, SFI and Hano on the Distribution Date.

(5) Includes $5,041 of insurance premiums paid by the Company on Mr. Tabor's
behalf.

EMPLOYMENT CONTRACTS AND RELATED MATTERS

The Company has entered into an employment agreement with Thomas B.
D'Agostino, the Company's Chairman, President and Chief Executive Officer. The
employment agreement provides for a four-year term. Pursuant to this agreement,
Mr. D'Agostino is entitled to receive minimum annual compensation of $400,000,
incentive bonuses and certain perquisites and benefits. Under the agreement,
Mr. D'Agostino is eligible to receive up to 100% of his base salary in bonus
compensation, payable in cash or stock based awards, as determined by the
Compensation Committee based on specified performance criteria. In the event
that Mr. D'Agostino's employment is terminated without cause, Mr. D'Agostino's
employment agreement provides that he is entitled to receive his base salary
and benefits for the longer of (i) six months from the date of termination or
(ii) the remaining time under the term of the employment agreement. The
employment agreement also contains a non-competition covenant which prohibits
Mr. D'Agostino from engaging in certain activities during the term of the
employment agreement and for the longer of (i) a period of one year thereafter
or (ii) as long as Mr. D'Agostino continues to receive severance payments from
the Company.

The Company also has entered into employment agreements with Steven R.
Gibson, Vice President and Chief Financial Officer, Claudia S. Amlie, Vice
President and General Counsel, and certain other employees (collectively, the
"Executive Employment Agreements") on the following general terms. The
Executive Employment Agreements (i) provide for an initial term of two years;
(ii) contain non-competition covenants which prohibit the employees from
engaging in certain activities during the term of the Executive Employment
Agreements and for the longer of (x) a period of one year thereafter or (y) as
long as the employees receive severance payments from the Company; and (iii)
provide for severance payments upon termination without cause for the longer of
(x) three months from the date of termination or (y) the remaining term under
the Executive Employment Agreement. Under the Executive Employment Agreements,
employees are eligible to receive up to 50% of their base salary in bonus
compensation, payable in cash or stock based awards, as determined by the
Compensation Committee based on specified performance criteria. Mr. Gibson's
base salary under his Executive Employment Agreement is $175,000 annually and
Ms. Amlie's base salary under her Executive Employment Agreement is $110,000
annually.

REPLACEMENT OF OUTSTANDING U.S. OFFICE PRODUCTS OPTIONS

Substantially all vested and unvested options to acquire shares of U.S.
Office Products Common Stock ("U.S. Office Products Options") that were held by
Workflow Management employees on the Distribution Date have been replaced with

options to acquire shares of Company Common Stock ("Workflow Options"). As of
the Distribution Date, 805,457 U.S. Office Products Options were held by
employees of Workflow Management. The following formulae were used to adjust
the number and exercise price of U.S. Office Products Options for purposes of
determining the number and exercise price of Workflow Options. The formulae did
not affect when the options vest or when employees can exercise the options.
The EXERCISE PRICE of U.S. Office Products Options was adjusted by
applying the following formula:

EXERCISE PRICE (NEW) = EXERCISE PRICE (OLD) x $ 9.00 (CLOSING PRICE OF
COMPANY COMMON STOCK ON JUNE 10, 1998)
- ------------------------------------------------------------------------------
$14.00 (TRADING PRICE OF U.S. OFFICE PRODUCTS COMMON
STOCK PRE-WORKFLOW DISTRIBUTION)

The NUMBER of U.S. Office Products Options was adjusted by applying the
following formula:

OPTION SHARES (NEW) = OPTION SHARES (OLD) x $14.00 (TRADING PRICE OF U.S.
OFFICE PRODUCTS COMMON STOCK PRE-WORKFLOW
DISTRIBUTION)

- ------------------------------------------------------------------------------

$ 9.00 (CLOSING PRICE OF COMPANY COMMON STOCK ON
JUNE 10, 1998)

For all optionees, the "Trading Price of U.S. Office Products Common Stock
Pre-Workflow Distribution" of $14.00 was the average closing price of U.S.
Office Products Common Stock for the number of business days falling between
the expiration of the tender offer completed by U.S. Office Products as part of
its Strategic Restructuring Plan and the completion of the Distributions. The
foregoing formula adjustments are intended to preserve for the former holders
of U.S. Office Products Options the intrinsic value per option, measured as the
difference between the market value of one share of U.S. Office Products Common
Stock at the time of the Workflow Distribution and the exercise price of such
option. The intrinsic value of the adjusted Workflow Options is no greater than
the intrinsic value of the U.S. Office Products Options immediately before the
Workflow Distribution, and the ratio of exercise price to market price is not
less than the ratio immediately before the Workflow Distributions.

1998 STOCK INCENTIVE PLAN

The Company has adopted the 1998 Stock Incentive Plan (the "Plan"). The
purpose of the Plan is to promote the long-term growth and profitability of the
Company by providing employees with incentives to improve stockholder value and
contribute to the growth and financial success of the Company, and by enabling
the Company to attract, retain and reward highly motivated and qualified
employees. The maximum number of shares of Company Common Stock that may be
issued with respect to awards granted under the Plan is 4,387,580, which equals
30% of the outstanding Company Common Stock following the Workflow
Distribution. The maximum number of shares that may be issued with respect to
awards granted under the Plan to an individual in a calendar year may not
exceed 1,500,000 shares. The Plan is administered by the Compensation Committee
of the Board of Directors. All employees of the Company and its subsidiaries,
as well as non-employee directors of the Company, are eligible to receive
awards under the Plan. The Plan authorizes the Compensation Committee to make
awards of stock options, restricted stock, stock appreciation rights and other
stock-based awards. The Compensation Committee will determine the prices,
vesting schedules, expiration dates and other material conditions under which
such awards may be exercised.

As of June 10, 1998, Mr. Ledecky received a stock option for Company
Common Stock from Workflow Management pursuant to the Plan. The option is
intended to compensate Mr. Ledecky for his services to Workflow Management as
an employee. The option covers 1,096,895 shares of Common Stock, which is equal
to 7.5% of the outstanding Company Common Stock determined as of the
Distribution Date. The per share exercise price of the option is $9.00, which
is equal to the closing price of the Company Common Stock on June 10, 1998 as
reported on Nasdaq.

Mr. Ledecky's option was fully vested when granted but is not be
exercisable until June 10, 1999. Mr. Ledecky's option from the Company will be
exercisable immediately if Mr. Ledecky dies before the option expires or, if
and to the extent that, Workflow Management accelerates the exercise schedule
of options for substantially all Workflow Management option holders. All
unexercised portions of the option expire ten years after its date of grant or,
if applicable, as of the date Mr. Ledecky violates his non-competition
agreement with Workflow Management. See " -- Ledecky Services Agreement" above.

As of June 10, 1998, Thomas B. D'Agostino also received an option
(the"D'Agostino Option") pursuant to the Plan for 1,096,895 shares of Common
Stock, which is equal to 7.5% of the outstanding Company Common Stock as of the
Distribution Date. The D'Agostino Option is on the same terms as Mr. Ledecky's
option, including an exercise price equal to $9.00 per share. The estimated
value of the D'Agostino Option depends on its exercise price and the trading
volatility of Company Common Stock. Based on an exercise price of $9.00 per
share and an assumed trading volatility index of the Company Common Stock of
40%, the estimated value of the D'Agostino Option is approximately $2.0
million, net of taxes at an assumed 40% rate.

In addition to Mr. Ledecky and Mr. D'Agostino, certain executive officers
and key employees of the Company received option grants for a total of 905,000
shares of Company Common Stock, including option grants to Steven R. Gibson and
Claudia S. Amlie exercisable for 175,000 and 50,000 shares of Company Common
Stock, respectively, at an exercise price of $9.00 per share. Mr. Gibson's and
Ms. Amlie's options vest in equal installments over a three year period
following the date of grant.

OPTIONS GRANTED IN FISCAL YEAR 1998

The following table sets forth certain information regarding options to
acquire U.S. Office Products Common Stock granted to the Named Officers during
the year ended April 25, 1998. All options were granted by U.S. Office Products
as options to acquire U.S. Office Products Common Stock and have been replaced
with options to acquire Company Common Stock in connection with the Workflow
Distribution. See "Replacement of Outstanding U.S. Office Products Options"
above for a discussion of the formulae used to convert the number and exercise
price of the options listed below.

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE
OPTIONS GRANTED IN EXERCISE EXPIRATION APPRECIATION FOR
NAME GRANTED(1) FISCAL YEAR(2) PRICE DATE OPTION TERM(3)
- ---------------------- ------------ ---------------- ---------- ------------ ---------------------------
5% 10%
----------- -------------

Thomas B. D'Agostino 45,000 5.9% $ 15.17 4/28/07 $429,315 $1,087,968
Timothy L. Tabor 15,000 2.0% $ 15.17 4/28/07 $143,105 $ 362,656
Michael B. Feldman 15,000 2.0% $ 15.17 4/28/07 $143,105 $ 362,656
22,500 2.9% $ 21.13 9/17/07 $298,992 $ 757,705

- ---------
(1) The options granted are non-qualified stock options, which are exercisable
at the market price on the date of grant.

(2) Total options granted means all options granted to employees of Workflow
Management.

(3) The dollar amounts under these columns are the results of calculations at
assumed annual rates of stock appreciation of 5% and 10%. These assumed
rates of growth were selected by the SEC for illustration purposes only.
They are not intended to forecast possible future appreciation, if any, of
stock prices. No gain to the optionees is possible without an increase in
stock prices, which will benefit all stockholders.

AGGREGATE OPTION EXERCISES IN FISCAL YEAR ENDED APRIL 25, 1998 AND FISCAL
YEAR-END 1998 OPTION VALUES

The following table sets forth certain information regarding option
exercises and unexercised options held by the Named Officers at April 25, 1998.
As described above, all options were granted by U.S. Office Products as options
to acquire U.S. Office Products Common Stock and have been replaced with
options to acquire shares of Company Common Stock in connection with the
Workflow Distribution. See "Replacement of Outstanding U.S. Office Products
Options" above.

AGGREGATE OPTION EXERCISES IN FISCAL YEAR END APRIL 25, 1998 AND FISCAL
YEAR-END OPTION VALUES

VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS HELD AT AT FISCAL YEAR END
ON EXERCISE (#) REALIZED ($) APRIL 25, 1998 ($)(3)(4)
----------------- -------------- ------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ------------- --------------- ------------- --------------

Thomas B. D'Agostino -- -- -- 45,000(1) -- $ 76,725
Timothy L. Tabor 48,522 486,601 -- 15,000(1) -- $ 25,575
Michael B. Feldman -- -- 36,391 37,500(2) $224,714 $ 25,575

- ---------
(1) 25% of these options became exercisable on April 28, 1998.

(2) 3,750 of these options became exercisable on April 28, 1998.

(3) Options were "in-the-money" at fiscal year end if the closing market price
of U.S. Office Products Common Stock exceeded the exercise price of the
options.

(4) The value of unexercised options at fiscal year end represents the
difference between the exercise price of such options and $16.875, the
closing market price of U.S. Office Products Common Stock on April 24,
1998.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the number and percentage of outstanding
shares of Company Common Stock beneficially owned as of July 15, 1998 by (i)
each director and Named Officer, and (ii) all directors and executive officers
as a group. All persons listed below have sole voting and investment power with
respect to their shares of Company Common Stock unless otherwise indicated.
Unless otherwise indicated, directors and executive officers receive their mail
at 240 Royal Palm Way, Palm Beach, Florida 33480. Effective on the Distribution
Date, the Company believes that FMR Corp. and Massachusetts Financial Services
each owned beneficially more than 5% of the Company's Common Stock. To date, no
filings have been made by these entities with the Securities and Exchange
Commission to indicate whether they continue to own beneficially more than 5%
of the Company's Common Stock.

NUMBER OF SHARES OF PERCENT OF SHARES OF
WORKFLOW MANAGEMENT WORKFLOW MANAGEMENT
--------------------- ---------------------
NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
- -------------------------------------------------------------- --------------------- ---------------------

OFFICERS AND DIRECTORS
Thomas B. D'Agostino 63,475(1) *
Thomas A. Brown, Sr. 0 0%
Jonathan J. Ledecky 248,433(2) 1.7
Gus J. James, II 1,000 *
One Commercial Place
Norfolk, VA 23514
Timothy L. Tabor 4,478(3) *
276 Park Avenue South,
New York, NY 10010
F. Craig Wilson 0 0
4841 Tramway Ridge Drive N.E.
Albuquerque, NM 87111
Michael B. Feldman 35,732(4) *
3701 E. Virginia Beach Blvd.,
Norfolk, VA 23502
All current executive officers and directors as a group 318,386 2.2
(eight persons)

- ---------
* Less than 1%.

(1) Includes 13,434 shares which may be acquired upon exercise of options
exercisable within 60 days. Excludes Mr. D'Agostino's option for 1,096,895
shares of Company Common Stock granted under the 1998 Stock Incentive
Plan, which is not exercisable until June 10, 1999. See "Item 11.
Executive Compensation."

(2) Excludes Mr. Ledecky's option for 1,096,895 shares of Company Common Stock
granted under the Company's 1998 Stock Incentive Plan, which is not
exercisable until June 10, 1999. See "Item 11. Executive Compensation."

(3) Includes 4,478 shares which may be acquired upon exercise of options
exercisable within 60 days. Because Mr. Tabor is no longer an employee of
the Company, these option expire if not exercised by August 28, 1998,
which is the 90th day after his resignation as an employee.

(4) Includes 35,732 shares which may be acquired upon exercise of options
exercisable within 60 days.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has from time to time retained the law firm of Kaufman &
Canoles in connection with certain legal representations. Gus J. James, II, a
Director of the Company, is the President, a director and a shareholder of
Kaufman & Canoles.

SFI Delaware expects to enter into a lease with an entity controlled by
relatives of Mr. D'Agostino and certain employees of SFI Delaware for office
space in Norfolk, Virginia. The terms of any such lease have not yet been
finalized. The Company anticipates that lease payments will be based on the
market value of the office space and will be comparable to rents that would be
charged to parties not affiliated with Mr. D'Agostino. The Company believes
that the terms of this transaction are as favorable as could be negotiated with
third parties.

Workflow Management has granted a license of the Imagenet technology to
U.S. Office Products effective on the Distribution Date. Workflow Management
has retained ownership of Imagenet, but U.S. Office Products has received a
perpetual, non-exclusive, non-transferable license to use the technology and
the source code to develop derivative applications; provided, however, that for
30 months U.S. Office Products is prohibited from using the Imagenet technology
or any derivative application to offer its customers the kind of print and
forms services that Workflow Management offers its customers, including
print-on-demand and print management. U.S. Office Products has agreed to refer
customers seeking such services to the Company during the restricted period.
The license fee payable with respect to the license will be a one time fee of
$5,000. The Company believes that the terms of the license are commercially
reasonable as between the Company and U.S. Office Products.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

a. Financial Statements and Schedules:

1. Financial Statements (See Item 8. hereof.)

2. Financial Statement Schedules (See Item 8. hereof.)

b. Reports on 8-K during quarter ended April 25, 1998: None

c. Exhibits

The exhibits listed on the accompanying Exhibit Index are filed or
incorporated by reference as part of this Form 10-K and such Exhibit Index is
incorporated herein by reference.

SIGNATURES

In accordance with Section 13 of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned, in
the City of Palm Beach, State of Florida, on July 24, 1998.

WORKFLOW MANAGEMENT, INC.

By: /s/ THOMAS B. D'AGOSTINO*
------------------------------------
THOMAS B. D'AGOSTINO
PRESIDENT, CHAIRMAN, CHIEF EXECUTIVE OFFICER

In accordance with the Securities Exchange Act of 1934, this Report has
been signed by the following persons in the capacities and on the dates stated.

SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------------------ --------------

/s/ THOMAS B. D'AGOSTINO Chairman of the Board, Chief July 24, 1998
---------------------------------- Executive Officer, President, Director
THOMAS B. D'AGOSTINO (Principal Executive Officer)
Vice President, Chief Financial Officer,
/s/ STEVEN R. GIBSON July 24, 1998
---------------------------------- Treasurer, Secretary (Principal
STEVEN R. GIBSON Financial Officer and Principal
Accounting Officer)

/s/ THOMAS A. BROWN, SR. Director July 24, 1998
----------------------------------
THOMAS A. BROWN, SR.

/s/ GUS J. JAMES, II Director July 24, 1998
----------------------------------
GUS J. JAMES, II

/s/ JONATHAN J. LEDECKY Director July 24, 1998
----------------------------------
JONATHAN J. LEDECKY

/s/ TIMOTHY L. TABOR Director July 24, 1998
----------------------------------
TIMOTHY L. TABOR

/s/ F. CRAIG WILSON Director July 24, 1998
----------------------------------
F. CRAIG WILSON

EXHIBIT INDEX

3.1 Certificate of Incorporation of the Company. (Incorporated by reference to the *
Registrant's Form S-1, Commission File No. 333-46535, as amended, previously filed
with the Commission).
3.2 Certificate of Amendment of the Company's Certificate of Incorporation. (Incorporated *
by reference to the Registrant's Form S-1, Commission File No. 333-46535, as
amended, previously filed with the Commission).
3.3 Bylaws of the Company. (Incorporated by reference to the Registrant's Form S-1, *
Commission File No. 333-46535, as amended, previously filed with the Commission).
4.1 Form of certificate representing shares of Common Stock (Incorporated by reference to
the Registrant's Form S-1, Commission File No. 333-46535, as amended, previously
filed with the Commission).
10.1 Form of Distribution Agreement among U.S. Office Products Company, Workflow *
Management, Inc., Aztec Technology Partners, Inc., Navigant International, Inc. and
School Specialty, Inc. (Incorporated by reference to the Registrant's Form S-1,
Commission File No. 333-46535, as amended, previously filed with the Commission).
10.2 Form of Tax Allocation Agreement among U.S. Office Products Company, Workflow *
Management, Inc., Aztec Technology Partners, Inc., Navigant International, Inc. and
School Specialty, Inc. (Incorporated by reference to the Registrant's Form S-1,
Commission File No. 333-46535, as amended, previously filed with the Commission).
10.3 Form of Tax Indemnification Agreement among Workflow Management, Inc., Aztec *
Technology Partners, Inc., Navigant International, Inc. and School Specialty, Inc.
(Incorporated by reference to the Registrant's Form S-1, Commission File
No. 333-46535, as amended, previously filed with the Commission).
10.4 Form of Employee Benefits Agreement among Workflow Management, Inc., Aztec *
Technology Partners, Inc., Navigant International, Inc. and School Specialty, Inc.
(Incorporated by reference to the Registrant's Form S-1, Commission File
No. 333-46535, as amended, previously filed with the Commission).
10.5 Agreement dated as of January 24, 1997 between SFI Corp. and Thomas B. D'Agostino. *
(Incorporated by reference to the Registrant's Form S-1, Commission File
No. 333-46535, as amended, previously filed with the Commission).
10.6 Agreement dated as of January 24, 1997 between Hano Document Printers, Inc. and *
Timothy L. Tabor. (Incorporated by reference to the Registrant's Form S-1, Commission
File No. 333-46535, as amended, previously filed with the Commission).
10.7 Services Agreement dated as of January 13, 1998 between U.S. Office Products *
Company and Jonathan J. Ledecky. (Incorporated by reference to the Registrant's Form
S-1, Commission File No. 333-46535, as amended, previously filed with the
Commission).
10.8 Form of Credit Agreement between Workflow Management, Inc., certain other *
borrowers and Bankers Trust Company, as Agent (Incorporated by reference to the
Registrant's Form S-1, Commission File No. 333-46535, as amended, previously filed
with the Commission).
10.9 Form of 1998 Stock Incentive Plan. (Incorporated by reference to the Registrant's Form *
S-1, Commission File No. 333-46535, as amended, previously filed with the
Commission).
10.10 Form of Executive Employment Agreement. (Incorporated by reference to the *
Registrant's Form S-1, Commission File No. 333-46535, as amended, previously filed
with the Commission).
10.11 Form of Employment Agreement between Workflow Management, Inc. and Jonathan J. *
Ledecky. (Incorporated by reference to the Registrant's Form S-1, Commission File
No. 333-46535, as amended, previously filed with the Commission).
10.12 Employment Agreement between Workflow Management, Inc. and Steven R. Gibson. *
(Incorporated by reference to the Registrant's Form S-1, Commission File
No. 333-46535, as amended, previously filed with the Commission).
10.13 Employment Agreement between Workflow Management, Inc. and Claudia S. Amlie. *
(Incorporated by reference to the Registrant's Form S-1, Commission File
No. 333-46535, as amended, previously filed with the Commission).

10.14 Amendment to Services Agreement dated as of June 8, 1998 between U.S. Office *
Products Company and Jonathan J. Ledecky. (Incorporated by reference to the
Registrant's Form S-1, Commission File No. 333-46535, as amended, previously filed
with the Commission).
10.15 Form of Software Source Code License Agreement between Workflow Management, *
Inc. and U.S. Office Products Company for Imagenet technology. (Incorporated by
reference to the Registrant's Form S-1, Commission File No. 333-46535, as amended,
previously filed with the Commission).
**10.16 Employment Agreement dated June 11, 1998, between Workflow Management, Inc. and
Thomas B. D'Agostino.
**10.17 Stock Option Award Agreement dated June 10, 1998, between Workflow
Management, Inc. and Jonathan J. Ledecky.
**10.18 Stock Option Award Agreement dated June 10, 1998, between Workflow
Management, Inc. and Thomas B. D'Agostino.
21 Subsidiaries of the Registrant. (Incorporated by reference to the Registrant's Form S-1, *
Commission File No. 333-46535, as amended, previously filed with the Commission).
**23.1 Consent of PricewaterhouseCoopers LLP
**23.2 Consent of Hertz, Herson & Company, LLP
**23.3 Consent of KPMG Peat Marwick LLP
**27 Financial Data Schedule

- ---------
* (Not filed herewith. In accordance with Rule 12(b)-32 of the General Rules
and Regulations under the Securities Exchange Act of 1934, the exhibit is
incorporated by reference).

** Filed herewith.