10-K

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the Fiscal Year Ended December 31, 2006

Or

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

For the Period From                to              .

Commission File Number:  333-110441

THE SHERIDAN GROUP, INC.

(Exact name of Registrant as specified in its charter)

Maryland	52-1659314
(State or other jurisdiction of	(I.R.S. employer identification number)
incorporation or organization)

11311 McCormick Road, Suite 260
Hunt Valley, Maryland  21031-1437
(Address of principal executive offices and zip code)

(410) 785-7277
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the Registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes o  No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes x  No o

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 periods as the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o  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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Check one:  Large accelerated filer o  Accelerated filer o   Non-accelerated filer x

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

None of the Registrant’s common stock is held by non-affiliates of the Registrant.

There was 1 share of the Registrant’s Common Stock outstanding as of March 29, 2007.

THE SHERIDAN GROUP, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2006

INDEX

	Pages
ITEM 1. BUSINESS	3
ITEM 1A. RISK FACTORS	6
ITEM 1B. UNRESOLVED STAFF COMMENTS	11
ITEM 2. PROPERTIES	11
ITEM 3. LEGAL PROCEEDINGS	12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	12
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	12
ITEM 6. SELECTED FINANCIAL DATA	13
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	48
ITEM 9A. CONTROLS AND PROCEDURES	48
ITEM 9B. OTHER INFORMATION	48
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	48
ITEM 11. EXECUTIVE COMPENSATION	52
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	63
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	66
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	67
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	68

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes “forward-looking statements.” Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. They may contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “predict,” “project,” “should,” “will,” “would” or words or phrases of similar meaning. They may relate to, among other things:

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·our liquidity and capital resources;

·competitive pressures and trends in the printing industry;

·prevailing interest rates;

·legal proceedings and regulatory matters;

·general economic conditions;

·statements with respect to the Buyout Transactions and the Dingley Transactions (each as defined in this Annual Report on Form 10-K);

·predictions of net sales, expenses or other financial items;

·future operations, financial condition and prospects; and

·our plans, objectives, strategies and expectations for the future.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the forward-looking statements, might cause us to modify our plans or objectives, may affect our ability to pay timely amounts due under our notes and/or may affect the value of our notes. These risks and uncertainties may include, but are not limited to, those discussed in Part I, Item 1A, “Risk Factors.” New risk factors can emerge from time to time. It is not possible for us to predict all of these risks, nor can we assess the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in forward-looking statements. Given these risks and uncertainties, we urge you to read this Annual Report on Form 10-K completely with the understanding that actual future results may be materially different from what we plan or expect. We caution you that any forward-looking statement reflects only our belief at the time the statement is made. We will not update these forward-looking statements even if our situation changes in the future.

PART I

ITEM 1.   BUSINESS

Overview

We are a leading specialty printer offering a full range of printing and value-added support services for the journal, catalog, magazine, book and article reprint markets. We believe that we enjoy strong and longstanding relationships with our customers, which include publishers, catalog merchants, associations and university presses.  We provide a wide range of printing services and value-added support services, such as electronic publishing support, digital proofing, preflight checking, offshore key stroking and copy editing, online peer review systems, manuscript tracking systems, subscriber database maintenance, mail sortation and distribution, customer audits and training classes, and back issue fulfillment.  We utilize a decentralized management structure, which provides our customers with access to the resources of a large company, while maintaining the high level of service and flexibility of a smaller company. We operate in three business segments:  short-run journals, specialty catalogs and other publications.  For the year ended December 31, 2006, we generated net sales of $337.5 million, operating income of $5.5 million and net loss of $8.3 million.  As used in this Annual Report on Form 10-K, the terms “we,” “us,” “our” and other similar terms refer to the consolidated businesses of The Sheridan Group, Inc. and all of its subsidiaries.

History

We trace our roots back to The Sheridan Press, the predecessor of which was founded in 1915. We entered the short-run journal market in 1980, targeting the printing of scientific, technical, medical and scholarly journals for publishers. The Sheridan Group, Inc. was formed in 1988 to complete the acquisition of Braun-Brumfield, Inc., a short-run book printer located in Michigan. In 1994, we entered the specialty magazine market with the acquisition of United Litho, Inc., a printer of specialty magazines serving the Washington, D.C. metro area. In conjunction with our recapitalization in 1998, we acquired Dartmouth Printing Company, a specialty magazine printer in New Hampshire, and Capital City Press, a journal printer in Vermont. In 1999, we acquired BookCrafters, Inc., a short-run book printer in Chelsea, Michigan and consolidated it with Braun-Brumfield to form Sheridan Books, Inc. In 2004, we acquired The Dingley Press (the “Dingley Acquisition”), a specialty catalog printer in Maine. During the first quarter of 2006, we shutdown the operations of Capital City Press and consolidated the production of short-run journals at The Sheridan Press. Currently, we are comprised of six specialty printing companies operating in the domestic scientific, technical, medical and scholarly journal, specialty catalog, short-run book, specialty magazine and article reprints markets: The Sheridan Press in Pennsylvania; Sheridan Books in Michigan;

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Dartmouth Printing Company in New Hampshire; Dartmouth Journal Services in Vermont; United Litho in Virginia; and The Dingley Press in Maine.

Printing Services

Our printing services include transferring content onto printing plates in pre-press, printing the content on press, binding the printed pages into the finished product and distributing the finished product to either the customer or the ultimate end user.  Pre-press processes, which include digital and conventional techniques, as well as computer-to-plate technology, are critical front-end elements of our printing services which ready the content for printing on our presses.  Sheet-fed and web presses are used, depending on run length, to produce the printed product.  We also offer ultra-short-run printing services for article reprints, books and journals.  We utilize three types of binding techniques for the printed product:  perfect binding, saddle stitching and case binding.   The product is then labeled and packaged prior to mailing.   Journals, magazines and books are typically mailed to the publisher or directly to consumers. Roughly half of our journals, the majority of our magazines and all of our books are shipped in cases to the customer. The remaining journals and magazines are mailed directly to the subscriber. Catalogs are drop-shipped to various locations throughout the U.S. and placed into the mail stream close to the recipient.

Value-Added Support Services

In addition to providing printing services to our customers, we offer a full range of value-added support services.  While sales of these services constitute a relatively small percentage of total revenues, they are critical to meeting the customer’s needs.  These services are highly customized for each customer’s specifications and logistics requirements.  With fully digital pre-press capabilities and computer-to-plate technology, we have greatly increased the efficiency with which we provide these services. Examples of the value-added support services we provide are electronic publishing support, digital proofing, preflight checking, offshore key stroking and copy editing, online peer review systems, manuscript tracking systems, subscriber database maintenance, mail sortation and distribution, customer audits and training classes, and back issue fulfillment.

Printing Segments

As a leading publications printer, we offer a broad range of products and services, including the printing of scientific, technical, medical and scholarly journals, specialty catalogs, short-run books, specialty magazines, article reprints, and an extensive array of value-added support services.  Our products are sold to a diverse set of customers, including publishers, catalog merchants, university presses and associations.   Our printing operations are classified into three reportable segments.  The following table presents the percentage of net sales contributed by each segment during the past three fiscal years.

Net sales %	2006		2005		2004
Short-run journals	27		29		34
Specialty catalogs	29		32		22
Other publications	45		41		46
Intersegment eliminations	(1	)	(2	)	(2	)
Total	100		100		100

Short-Run Journals

The journal market includes journals for the scientific, technical, medical and scholarly communities. We compete in both the short-run and medium-run portions of the journal market.  We define short-run journals as journals produced on sheet-fed and digital presses with typical production runs of less than 5,000 copies. Publishers, associations and university presses comprise the customers in this portion of the journals market.  In 2006, we printed over 2,200 journal titles.

Our journals are primarily black and white with a small amount of color for photographs, diagrams and advertisements.  They are printed on schedules that range from weekly to annually in run lengths that average 1,800 copies and range from 50 to 10,000 copies. Journal printing typically results in a high level of repeat business due to the periodic nature and complexity of these publications. The vast majority of journals are perfect bound, with the remainder saddle-stitched.  Our journal customers rely on our consistency and on-time reliability to meet the demands of their own customers.

The short-run journals segment also includes article reprints, which are produced on sheet-fed and digital presses, and originally developed as an ancillary product from the base journal business.  Article reprints are produced for customers who require reprints of an individual article from a journal or magazine for marketing or other purposes. Historically, we have primarily reprinted journal and magazine articles for which we were the original printer. We have expanded our business by winning

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article reprint business on publications for which we were not the original printer.  We are a full-service reprint printer, producing black and white as well as color reprints for publishers, university presses and associations.

Specialty Catalogs

We entered the specialty catalog segment in 2004 with our purchase of The Dingley Press.  We characterize specialty catalogs as catalogs distributed by specialty catalog merchant companies, which are often smaller entrepreneurial firms with high service requirements. We produce catalogs with run lengths between 300,000 and 10,000,000 copies, most of which are printed in four-color and are bound using the saddle stitching technique. Multiple versions of each catalog are distributed during the year requiring high levels of customer service and extensive distribution services.  In 2006, we printed over 130 catalog titles.

Other Publications

The other publications segment provides products and services for specialty magazines, short-run books and medium-run journals to publishers, university presses and associations.

Specialty Magazines

We characterize specialty magazines as magazines having production runs of less than 100,000 copies. Our customers in this market are publishers and associations. Specialty magazines also have a high level of repeat business due to the periodic nature of the publications. This is largely a regional market defined by proximity to the customer. In 2006, we printed over 400 magazine titles.

We produce short-run magazines with average run lengths of 25,000 copies.  The majority of these magazines are printed in four-color.  The magazines are bound using the saddle-stitching and perfect binding techniques. The magazines are produced in frequencies that range from weekly to annually. These magazines are produced on web presses.  Although specialty magazine customers do not require composition services, they do demand high levels of customer service focused on distribution and mailing services, where managing the customer’s subscriber database is critical to customer satisfaction.

Short-Run Books

Short-run books, which we characterize as books having production runs of less than 5,000 copies, are printed for publishers, associations and university presses. Sales to this market include both the initial printing of titles and subsequent reprints.  In 2006, we printed more than 10,200 book titles.

We produce books in run lengths that average 2,000 copies and range from 100 to 10,000 copies.  The majority of these books are black and white.  Books are produced on both sheet-fed and web presses.  About 50% of our books have soft covers (perfect bound) and about 50% have hard covers (case bound).

Medium-Run Journals

We consider medium-run journals to be journals with production runs between 5,000 and 100,000 copies.  Medium-run journals are typically produced on web presses due to economies of scale versus sheet-fed presses.  Similar to the short-run journal market, customers include publishers, associations and university presses, and there is a high level of repeat business due to the periodic nature and complexity of these publications.  Our consistency and on-time reliability are key attributes that our customers expect and demand.

Competition

The printing industry in the United States is fragmented and highly competitive in most product categories and geographic regions. We compete in subsegments of the overall printing market.  Competition is largely based on price, quality, range of services offered, distribution capabilities, ability to service the specialized needs of customers, availability of printing time on appropriate equipment and use of state-of-the-art technology.  Competitive price pressure continues to be strong in the product segments in which we compete.

Customers

We benefit from a highly diversified customer base. The majority of our business comes from publishers, followed by catalog merchants, associations and university presses.  The average length of our relationship with our top 50 customers is approximately 15 years. In 2006, High Response Holdings, Inc. accounted for about 12.0% of our net sales, which are included in the specialty catalogs segment. In 2006, Elsevier accounted for about 10.3% of our net sales, which are included in both the short-run journals and other publications segments.

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Sales and Marketing

We have developed a knowledgeable and experienced sales management team, which has successfully cultivated and maintained strong relationships with customers across the U.S. Our products are sold through internal direct sales professionals and a dedicated network of sales representatives. Across all of our companies, external representatives augment an internal sales staff, providing our customers with multiple touch points. Our sales representatives are paid a commission based on sales volume growth targets in a structure that minimizes the fixed costs we incur to support our sales force.

We traditionally market through industry trade shows and industry association conferences. In addition, in our article reprint business, we have strategic relationships with three marketing firms that specialize in obtaining reprint orders from customers, companies and individuals that were featured in a recent publication produced by us or other printers.  These marketing firms identify opportunities for these potential clients to utilize the identified publication reprints as marketing tools.

Raw Materials

The principal raw material used in our business is paper, which represents a significant portion of our cost of materials. Due to the significance of paper in our business, we are dependent upon the availability of paper. In periods of high demand, certain paper grades have been in short supply, including grades we use in our business. In addition, during periods of tight supply, many paper producers allocate shipments of paper based upon historical purchase levels of customers. Historically, however, we generally have not experienced significant difficulty in obtaining adequate quantities of paper. We do not have any long-term paper supply agreements. We also use a variety of other raw materials including ink, film, offset plates, chemicals and solvents, glue, wire and subcontracted components. In general, we have not experienced any significant difficulty in obtaining these raw materials.

Technology and Operations

Our capital investments have been focused on productivity improvement, more efficient material usage and incremental capacity.  Additionally, our investments in technology have been critical in helping achieve improved workflow and reduced cycle times.

Employees

We have about 1,900 employees as of December 31, 2006. We focus heavily on fostering enthusiastic and positive cultures at each of our locations, evidenced by the fact that we have been recognized with numerous “Best Workplace in America” awards presented by Printing Industries of America. In addition, we closely monitor our employees’ level of job satisfaction with comprehensive surveys on a regular basis. Management believes our compensation and benefits packages are competitive within the industry and local markets.

Regulatory Matters

We are subject to a broad range of federal, state and local laws and regulations relating to the pollution and protection of the environment, health and safety and labor. Based on currently available information, we do not anticipate any material adverse effect on our operations, financial condition or competitive position as a result of our efforts to comply with environmental, health and safety or labor requirements, and we do not anticipate needing to make any material capital expenditures to comply with such requirements.

ITEM 1A.   RISK FACTORS

Risk Factors

Substantial Leverage—Our substantial indebtedness could adversely affect our financial health and prevent us from meeting our obligations under our indebtedness.

We have a significant amount of indebtedness.  On December 31, 2006, we had total indebtedness of approximately $164.9 million.

Our substantial indebtedness could have important consequences.  For example, it could:

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·make it more difficult for us to meet our payment and other obligations under our indebtedness;

·require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

·increase our vulnerability to general adverse economic and industry conditions;

·limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

·place us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged; and

·limit our ability to borrow additional funds or raise additional financing.

In addition, agreements governing our indebtedness contain financial and other restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interests.  Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt.

Technological Change—The evolution of technology may decrease the demand for our products and services.

The technology we use in our operations is rapidly evolving. We could experience delays or difficulties in responding to changing technology, in addressing the increasingly sophisticated needs of our customers or in keeping pace with emerging industry standards. In addition, the cost required to respond to and integrate changing technologies may be greater than we anticipate. If we do not respond adequately to the need to integrate changing technologies in a timely manner, or if the investment required to so respond is greater than anticipated, our business, financial condition, results of operations, cash flow and ability to make payments on the notes may be adversely affected. We remain largely dependent on the distribution of scientific, technical, medical and other scholarly information in printed form. Usage of the Internet and other electronic media continues to grow. We cannot assure you that the acceleration of the trend toward such electronic media will not decrease the demand for our products which could result in lower profits and reduced cash flows.

Changes in technology could also result in digital printing methods becoming more cost effective for printing short-run publications. If the use of digital printing were expanded in this manner, it could allow smaller printers to compete against us in our specialized market, which could cause a decrease in the demand for our services or could force us to lower our prices to remain competitive. Such a decrease in demand or price could result in decreased profitability and have a material adverse effect on our business, financial condition and results of operations.

Competition—The printing industry is competitive and rapidly evolving and competition may adversely affect our business.

The printing industry is extremely competitive. We compete with numerous companies, some of which have greater financial resources than we do. Two of our direct competitors have recently been acquired by larger printing companies, which could enable them to reduce operating costs and expand services – thus enhancing their competitiveness. We compete on the basis of ongoing customer service, quality of finished products, range of services offered, distribution capabilities, use of state of the art technology and price. We cannot assure you that we will be able to compete successfully with respect to any of these factors. In certain circumstances, due primarily to factors such as freight rates and customer preference for local services, printers with better access to certain regions of the country may have a competitive advantage in such regions. Our failure to compete successfully could cause us to lose existing business or opportunities to generate new business and could result in decreased profitability, adversely affecting our business.

Consolidation—Industry consolidation of customers and increased competition for those customers may result in increased expenses and reduced revenue and market position.

The continuing consolidation of publishing companies has shrunk the pool of available customers. Large publishing companies often have preferred provider arrangements with specific printing companies. As smaller publishing companies are consolidated into the larger companies, the smaller publishing companies are often required to use the printing company with which the acquiring company has established an arrangement. If our customers were to merge or consolidate with publishing companies utilizing other printing companies, we could lose our customers to competing printing companies. If we were to lose a significant portion of our current base of customers to competing printing companies, our business, financial condition, results of operations and cash flow could be materially adversely affected.

Customer Concentration—The increase in business from a top customer may make our net sales and profitability more sensitive to the loss of such a customer’s business.

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We have two customers that accounted for approximately 22.0% of our net sales in 2006. In 2007, these two customers are projected to account for similar percentages of our net sales. The loss of either of these customers would cause our net sales and profitability to decline. We cannot assure you that net sales to these and our other large customers will not continue to increase as a percentage of our total net sales or that these customers will continue to use our printing services. The loss of any such customer could adversely affect us.

Cost and Availability of Paper and Other Raw Materials—Increases in prices of paper and other raw materials and postal rates could cause disruptions in our services to customers.

The principal raw material used in our business is paper, which represents a significant portion of our cost of materials. Although we believe that we have been successful in negotiating favorable price relationships with our paper vendors, prices in the overall paper market are beyond our control. Historically, we have generally been able to pass increases in the cost of paper on to our customers. If we are unable to continue to pass any price increases on to our customers, future paper price increases could adversely affect our margins and profits.

Due to the significance of paper in our business, we are dependent upon the availability of paper. In periods of high demand, certain paper grades have been in short supply, including grades we use in our business. In addition, during periods of tight supply, many paper producers allocate shipments of paper based upon historical purchase levels of customers. Although we generally have not experienced significant difficulty in obtaining adequate quantities of paper, unforeseen developments in the overall paper markets could result in a decrease in the supply of paper and could cause either or both of our revenues or profits to decline.

We use a variety of other raw materials including ink, film, offset plates, chemicals and solvents, glue, wire and subcontracted components. In general, we have not experienced any significant difficulty in obtaining these raw materials. We cannot assure you, however, that a shortage of any of these raw materials will not occur in the future or will not potentially adversely affect the financial results of our business.

Our journals and magazines are often mailed, either by us or our customers, to subscribers. As a result, an increase in postal rates may cause our customers to decrease the size and number of their publications. Although we generally have not experienced significant decreases in mailings in the past due to postal rate increases, we cannot assure you that such a decrease will not occur in the future or will not potentially adversely affect the financial results of our business.

We require energy products, primarily natural gas and electricity, in our operating facilities.  We also depend on gasoline and diesel fuel for our delivery vehicles and the vehicles of the carriers we utilize to deliver our products.  Possible disruption of supplies or an increase in the prices of energy products could adversely affect the financial results of our business.

Key Employees—Our ability to attract, train and retain executives and other qualified employees is crucial to results of operations and future growth.

We rely to a significant extent on our executive officers and other key management personnel. There can be no assurance that we will be able to continue to retain our executive officers and key management personnel or attract additional qualified management in the future. In addition, the success of any acquisition by us may depend, in part, on our ability to retain management personnel of the acquired companies. There can be no assurance that we will be able to retain such management personnel.

In addition, to provide high-quality printed products in a timely fashion we must maintain an adequate staff of skilled technicians, including pre-press personnel, pressmen, bindery operators and fulfillment personnel. Accordingly, our ability to maintain and increase our productivity and profitability will depend, in part, on our ability to employ, train and retain the skilled technicians necessary to meet our commitments. From time-to-time:

·the industry experiences shortages of qualified technicians, and we may not be able to maintain an adequate skilled labor force necessary to operate efficiently;

·our labor expenses may increase as a result of shortages of skilled technicians; or

·we may have to curtail our planned internal growth as a result of labor shortages.

If any of these events were to occur, it could adversely affect our business.

Business Interruption—Our printing facilities may suffer business interruptions which could increase our operating costs, decrease our sales or cause us to lose customers.

The reliability of our printing facilities is critical to the success of our business. Our facilities might be damaged or

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interrupted by fire, flood, power loss, telecommunications failure, break-ins, earthquakes, terrorist attacks, war or similar events. Equipment malfunctions, computer viruses, physical or electronic break-ins and similar disruptions might cause interruptions and delays in our printing services and could significantly diminish our reputation and brand name and prevent us from providing services. Although we believe we have taken adequate steps to address these risks, damage to, or unreliability of, our printing facilities could have a material adverse effect on our business, financial condition, results of operations and cash flow.

Research Funding—Decreases in the types and amount of research funding could decrease the demand for our journal printing services.

In our journal business, we provide printing services primarily to scientific, technical, medical and other scholarly journals. The supply of research papers published in these journals is related to the amount of research funding provided by the federal government and private companies. In the future, the federal government or private companies could decrease the type and amount of funding that they provide for scientific, technical, medical and other scholarly research. A significant decrease in research funding might decrease the number or length of journals that we print for our customers, which would decrease our cash flow.

Environmental Matters—Our printing and other facilities are subject to environmental laws and regulations, which may subject us to liability or require us to incur costs.

We use various materials in our operations which contain substances considered hazardous or toxic under environmental laws. In addition, our operations are subject to federal, state and local environmental laws and regulations relating to, among other things, air emissions, waste generation, handling, management and disposal, waste water treatment and discharge and remediation of soil and groundwater contamination. Permits are required for the operation of certain of our businesses, and these permits are subject to renewal, modification and, in some circumstances, revocation. Our operations also generate wastes which are disposed of off-site. Under certain environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act, as amended (“CERCLA,” commonly referred to as “Superfund”) and similar state laws and regulations, we may be liable for costs and damages relating to soil and groundwater contamination at these off-site disposal locations, or at our own facilities. In the past, such matters have not had a material impact on our business or operations. We are not currently aware of any environmental matters that are likely to have a material adverse effect on our business, financial condition, results of operations and cash flow. However, we cannot assure you that such matters will not have such an impact on us. Furthermore, future changes to environmental laws and regulations may give rise to additional costs or liabilities that could have a material adverse impact on us.

Health and Safety Requirements—We could be adversely affected by health and safety requirements.

We are subject to requirements of federal, state and local occupational health and safety laws and regulations. These requirements are complex, constantly changing and have tended to become more stringent over time. It is possible that these requirements may change or liabilities may arise in the future in a manner that could have a material adverse effect on our business, financial condition, results of operations and cash flow. We cannot assure you that we have been or will be at all times in complete compliance with all those requirements or that we will not incur material costs or liabilities in connection with those requirements in the future.

Intellectual Property—We may not protect our technology effectively, which would allow competitors to duplicate our products and services, or our products and services may infringe on claims of intellectual property rights of third parties.

Our success and ability to compete depend, in part, upon our technology. Among our significant assets are our proprietary information and intellectual property rights. We rely on a combination of copyright, trademark and patent laws, trade secrets, confidentiality procedures and contractual provisions to protect these assets. Unauthorized use and misuse of our intellectual property could have a material adverse effect on our business, financial condition and results of operations, and there can be no assurance that our legal remedies would adequately compensate us for the damages caused by unauthorized use. In addition, licenses for a number of software products have been granted to us. Some of these licenses, individually and in the aggregate, are material to our business. Although we believe that the risk that we will lose any material license is remote, any loss could have a material adverse effect on our business, financial condition, results of operations and cash flow.

We do not believe that any of our products, services or activities infringe upon the intellectual property rights of third parties in any material respect. There can be no assurance, however, that third parties will not claim infringement by us with respect to current or future products, services or activities. Any infringement claim, with or without merit, could result in substantial costs and diversion of management and financial resources, and a successful claim could effectively block our ability to use or license products and services or cost us money.

Additional Capital—We may need additional capital in the future and it may not be available on acceptable terms.

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We may require more capital in the future to:

·fund our operations;

·finance investments in equipment and infrastructure needed to maintain and expand our network;

·enhance and expand the range of services we offer; and

·respond to competitive pressures and potential strategic opportunities, such as investments, acquisitions and international expansion.

We cannot assure you that additional financing will be available on terms favorable to us, or at all. The terms of available financing may place limits on our financial and operating flexibility. If adequate funds are not available on acceptable terms, we may be forced to reduce our operations or delay, limit or abandon expansion opportunities. Moreover, even if we are able to continue our operations, the failure to obtain additional financing could reduce our competitiveness as our competitors may provide better maintained networks or offer an expanded range of services.

Consummation of Future Acquisitions—We may not be able to acquire other companies on satisfactory terms or at all.

Our business strategy includes pursuing acquisitions. Nonetheless, we cannot assure you that we will identify suitable acquisitions or that such acquisitions can be made at an acceptable price. If we acquire additional businesses, those businesses may require substantial capital. Although we will be able to borrow under our working capital facility under certain circumstances to fund acquisitions, we cannot assure you that such borrowings will be available in sufficient amounts or that other financing will be available in amounts and on terms that we deem acceptable. In addition, future acquisitions could result in us incurring debt and contingent liabilities. We cannot assure you that we will be successful in consummating future acquisitions on favorable terms or at all.

Integration of Acquired Businesses—The integration of acquired businesses may result in substantial costs, delays and other problems.

Our future performance will depend heavily on our ability to integrate the businesses that we may acquire. To integrate newly acquired businesses we must integrate manufacturing facilities and extend our financial and management controls and operating, administrative and information systems in a timely manner and on satisfactory terms and conditions. This may be more difficult with respect to significant acquisitions. We may not be able to successfully integrate acquired businesses or realize projected cost savings and synergies in connection with those acquisitions on the timetable contemplated or at all.

Furthermore, the costs of businesses that we may acquire could significantly impact our short-term operating results. These costs could include:

·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.

The integration of newly acquired businesses will require the expenditure of substantial managerial, operating, financial and other resources and may also lead to a diversion of management’s attention from our ongoing business concerns.

Finally, although we conduct and intend to conduct what we believe to be a prudent level of investigation regarding the businesses we purchase, in light of the circumstances of each transaction, an unavoidable level of risk remains regarding the actual condition of these businesses. Until we actually assume operating control of such business assets and their operations, we may not be able to ascertain the actual value or understand the potential liabilities of the acquired entities and their operations. Once we acquire a business, we are faced with risks, including:

·the possibility that we have acquired substantial undisclosed liabilities;

·the risks of entering markets in which we have limited or no prior experience;

·the potential loss of key employees or customers as a result of changes in management; and

·the possibility that we may be unable to recruit additional managers with the necessary skills to supplement the management of the acquired businesses.

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We may not be successful in overcoming these risks.

Principal Stockholders—Our principal stockholders could exercise their influence over us.

As a result of their stock ownership of TSG Holdings Corp., our parent, Bruckmann, Rosser, Sherrill & Co., L.L.C. (“BRS”), Jefferies Capital Partners (“JCP”) and their respective affiliates together beneficially own about 84.8% of TSG Holdings Corp.’s outstanding capital stock. By virtue of their stock ownership and the terms of the securities holders agreement, these entities have significant influence over our management and will be able to determine the outcome of all matters required to be submitted to the stockholders for approval, including the election of our directors and the approval of mergers, consolidations and the sale of all or substantially all of our assets. The interests of BRS and JCP as equity owners of TSG Holdings Corp. may differ from the interests of our noteholders and the lenders under our working capital facility, and, as such, BRS and JCP may take actions which may not be in the interest of such noteholders and lenders. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of our equity owners might conflict with the interests of our noteholders and the lenders under our working capital facility. In addition, our equity owners may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to our noteholders and the lenders under our working capital facility.

Effectiveness of our internal controls — Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

We are evaluating our internal controls over financial reporting in order to allow management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and rules and regulations of the SEC thereunder, which we refer to as “Section 404”.  We are in the process of documenting and testing our internal control procedures in order to satisfy the requirements of Section 404, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accountants addressing these assessments. During the course of our testing, we may identify deficiencies which we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. We will be required to comply with the requirements of Section 404 for our fiscal year ending December 31, 2007. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions of the impact of the same on our operations. Our independent registered public accounting firm will be required to certify as to the effectiveness of our internal control over financial reporting for our fiscal year ending December 31, 2008. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the effectiveness of our internal control over financial reporting and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. In addition, we expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we may incur as a result of these requirements or the timing of such costs.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

ITEM 2.   PROPERTIES

We operate a network of 16 manufacturing, warehousing and office facilities located throughout the East Coast and Midwest that occupy, in total, about 1,215,500 square feet. We maintain approximately 958,000 square feet of production space consisting of manufacturing and publication services. We own about 77% of the square footage we use.  The following table provides an overview of our manufacturing, warehousing and office facilities.

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Location		Function(s)		Ownership Structure				Total Size (Sq. Feet)
Hunt Valley, MD		Corporate Headquarters		Leased				6,366
Orford, NH		Publication Services (Other publications)		Leased				6,895
Hanover, PA		Manufacturing (Short-run journals)		Owned		(1)		159,250
Chelsea, MI	Manufacturing (Other publications)		Owned		(1)		160,569
Hanover, NH	Manufacturing (Other publications)		Owned		(1)		147,830
Ashburn, VA	Manufacturing (Other publications)		Owned		(1)		70,159
Lisbon, ME	Manufacturing (Specialty catalogs)		Owned		(1)		276,787
Ann Arbor, MI	Manufacturing and Distribution (Other publications)		Owned				124,726
Hanover, PA	Warehousing (Short-run journals)		Leased				50,000
Williamstown, VT	Warehousing (Short-run journals)		Leased				27,120
Orford, NH	Warehousing (Other publications)		Leased				4,330
Waterbury, VT	Publication Services (Other publications)		Leased				11,700
Sterling, VA	Warehousing (Other publications)		Leased				6,304
Lewiston, ME	Warehousing (Specialty catalogs)		Leased				55,858
Lewiston, ME	Warehousing (Specialty catalogs)		Leased				97,606
Auburn, ME	Warehousing (Specialty catalogs)		Leased				10,000
			Total				1,215,500

(1)     Subject to liens in favor of the holders of our outstanding senior secured notes and the lenders under our working capital facility.

Some of our office and warehouse leases are on yearly renewals, with the lease of our corporate headquarters expiring in December 2011, subject to a renewal option.  We believe that our office, manufacturing and warehousing facilities are adequate for our immediate needs and that additional or substitute space is available at a reasonable cost if needed to accommodate future growth and expansion.  In addition to the properties listed above, we occasionally lease space for single offices for our sales representatives.

In 2006, our Sheridan Books subsidiary completed a 25,290 square foot expansion of its existing facility in Chelsea, MI to provide additional manufacturing capacity. We are continuing our efforts to sell the Ann Arbor, Michigan book facility. We may consolidate this facility with our Chelsea, Michigan operation, pending a firm offer from a third party at an acceptable price.

In 2006, we sold the former Capital City Press production facility in Berlin, Vermont as a result of the consolidation of the short-run journals business in early 2006.

In 2006, our Dingley Press subsidiary expanded its existing facility by 10,340 square feet to provide additional manufacturing capacity.

ITEM 3.   LEGAL PROCEEDINGS

We currently are involved in various litigation proceedings as a defendant and are from time totime involved in routine litigation. In the opinion of our management, these matters are not expected to have a material adverse effect on our business, financial condition or results of operations.

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

There were no matters submitted to a vote of security holders during the fourth quarter ended December 31, 2006.

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

We are wholly-owned by TSG Holdings Corp, a privately owned corporation. There is no public trading market for our equity securities or for those of TSG Holdings Corp. As of March 28, 2007, there were 32 holders of TSG Holdings Corp. common stock.

Our working capital facility contains customary restrictions on our ability and the ability of certain of our

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subsidiaries to declare or pay any dividends or repurchase stock. The indenture governing our 10¼% Senior Secured Notes due 2011 also contains customary terms restricting our ability and the ability of certain of our subsidiaries to declare or payany dividends or repurchase stock. For further information related to the payment of dividends, see the discussion contained in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”  Information with respect to shares of common stock that may be issued under our equity compensation plans is set forth in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

ITEM 6.   SELECTED FINANCIAL DATA

	Successor Basis									Predecessor Basis (1)
	Year ended			Year ended		Year ended		August 21, 2003		January 1, 2003		Year ended
	December 31,			December 31,		December 31,		to December 31,		to August 20,		December 31,
(Dollars in thousands)	2006			2005		2004		2003		2003		2002
Statement of Income Data:
Net sales	$	337,540		$	347,959	$	287,513	$	81,193	$	131,904	$	208,837
Gross profit	65,376			64,456		60,782		18,745		31,839		48,997
Selling and administrative expenses	40,339			39,594		37,404		12,704		23,619		32,244
Operating income	5,489			21,897		21,456		5,415		8,108		17,133
Net (loss) income	(8,343		)	1,180		2,330		760		1,169		6,624
Balance Sheet Data (at end of period):
Cash and cash equivalents	$	7,800		$	7,962	$	4,975	$	9,918			$	48
Property, plant and equipment, net	129,666			119,220		115,253		57,277				45,664
Total assets	291,567			300,721		299,139		202,488				99,955
Total debt and capital leases	164,915			164,904		164,894		103,641				66,003
Mandatorily redeemable preferred stock	—			—		—		—				18,192
Total stockholders’ equity (deficit)	46,688			54,996		54,065		47,760				(7,923		)
Other Financial Data:
Depreciation and amortization	$	18,991		$	17,072	$	14,593	$	4,168	$	4,874	$	8,442
Capital expenditures	26,296			21,282		21,827		2,915		5,213		4,870

(1)Periods prior to August 20, 2003 represent the predecessor company prior to the consummation of the Buyout Transactions (discussed below under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), and our historical consolidated financial data for such periods do not give effect to the Buyout Transactions.

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

The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, our historical consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The discussions in this section contain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed below. See “Special Note Regarding Forward-Looking Statements” and Part I, Item 1A, “Risk Factors” for a discussion of some of the risks that could affect us in the future.

Introduction

We are a leading specialty printer offering a full range of printing and value-added support services for the journal, catalog, magazine, book and article reprint markets. We provide a wide range of printing services and value-added support services, such as electronic publishing support, digital proofing, preflight checking, offshore key stroking and copy editing, online peer review systems, manuscript tracking systems, subscriber database maintenance, mail sortation and distribution, customer audits and training classes, and back issue fulfillment. We utilize a decentralized management structure, which provides our customers with access to the resources of a large company, while maintaining the high level of service and flexibility of a smaller company.

Overview

Buyout and acquisition transactions

On August 21, 2003, TSG Holdings Corp. purchased 100% of the outstanding capital stock of The Sheridan Group, Inc. from its existing stockholders (the “Buyout”) for total cash consideration of $142.0 million less net debt (as defined in the stock purchase agreement), resulting in cash of $79.9 million being paid to the selling stockholders. The accounting purchase price was $186.6 million, which was comprised of the $79.9 million of cash paid to the selling stockholders, $51.4 million of assumed liabilities and $55.3 million of refinanced debt. We funded the acquisition price and

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the related fees and expenses with the proceeds of the sale of $105,000,000 aggregate principal amount of our 10¼% Senior Secured Notes due 2011 (the “2003 Notes”) and equity investments in TSG Holdings Corp. We refer to the Buyout, the sale of the 2003 Notes, the closing of our working capital facility and the equity investments collectively as the “Buyout Transactions.”

On May 25, 2004, The Sheridan Group, Inc., through a newly formed subsidiary, purchased substantially all of the assets and business of The Dingley Press (the “Dingley Acquisition”).  The accounting purchase price was $95.4 million, which was comprised of cash paid of $65.5 million, $26.0 million of assumed liabilities and $3.9 million of financing costs. We funded the acquisition price and the related fees and expenses with the proceeds of the sale of $60,000,000 aggregate principal amount of our 10¼% Senior Secured Notes due 2011 (the “2004 Notes”), available cash and equity investments in TSG Holdings Corp. The 2003 Notes and the 2004 Notes are fully and unconditionally guaranteed on a joint and several basis by all of our subsidiaries. We refer to the Dingley Acquisition, the sale of the 2004 Notes, the amendment of our working capital facility and the equity investments collectively as the “Dingley Transactions.”

This discussion and analysis of our results of operations only covers the historical financial condition and results of operations of The Dingley Press since May 25, 2004, the date of the Dingley Acquisition.

Facility shutdown

Due to trends in the short-run journal business and the high capital investment necessary to maintain two manufacturing facilities serving the same market, our Board of Directors, on December 15, 2005, approved a restructuring plan to consolidate all short-run journal printing operations into one site. During the first quarter of 2006, we consolidated the printing of short-run journals at The Sheridan Press in Hanover, Pennsylvania and closed the Capital City Press facility in Berlin, Vermont. Approximately 200 positions were eliminated as a result of the closure. Of the 200 employees affected, approximately 45 Publication Services employees are now employed with one of our subsidiaries, Dartmouth Journal Services.

We recorded $2.7 million of restructuring costs during 2006, related primarily to guaranteed severance payments of $1.5 million, employee health benefits of $0.7 million and other one-time costs of $0.5 million. There were no restructuring liabilities outstanding as of December 31, 2006. We estimate an additional $0.2 million of charges resulting in future cash expenditures will be charged during fiscal year 2007 related to the restructuring. Total restructuring costs, including charges of $0.4 million recorded in 2005, are projected to be $3.3 million. We also recorded non-cash charges of $2.4 million during 2006 associated with the accelerated depreciation and amortization of plant and equipment and the Capital City Press trade name, which was disposed of as a result of the shutdown. During May 2006, excess equipment at Capital City Press was sold through a public auction for cash proceeds of approximately $0.3 million, resulting in a gain of approximately $0.1 million. On August 31, 2006, the Capital City Press land and building, which had a carrying value of approximately $1.6 million, was sold, resulting in a negligible gain.

In connection with the shutdown of Capital City Press, we transferred certain tangible assets, primarily production equipment, to our other subsidiaries. We also transferred intangible assets, which consisted of goodwill and customer relationships, to The Sheridan Press. The tangible and intangible assets were transferred at carryover, historical cost basis since the transfers took place between entities under common control.

Internal Controls

Since 2004, we have invested significant resources to comprehensively document and analyze our system of internal controls over financial reporting, which included contracting with outside consultants, the hiring of a Manager of Financial Controls to lead the internal audit function, along with the initiation of a Company-wide internal controls improvement project. The focus of the improvement project, and the steering committee founded to oversee the project, has been to design, implement and maintain a system of internal controls, including financial policies and procedures, sufficient to satisfy our reporting obligations as a public company. Throughout 2006, we continued to document significant processes and identify areas requiring improvement, and we are in the process of designing enhanced processes and controls to address the concerns identified. We plan to continue these initiatives as well as prepare for our first management report on internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, for the year ending December 31, 2007.

We believe adequate resources and expertise, both internal and external, have been put in place to meet the Section 404 requirements. Though we have taken efforts to remediate existing control deficiencies by the end of 2007, there is no guarantee that our efforts will result in a management assurance, or an attestation by our independent registered public accounting firm, that the operating effectiveness and design of our internal controls are adequate.

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Critical Accounting 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 at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and the differences could be material. We consider the following accounting policies to be critical policies which involve various estimation processes:

·Allowance for doubtful accounts;

·Goodwill and other long-lived assets;

·Income taxes; and

·Self-insurance.

Allowance for Doubtful Accounts

Our policy with respect to trade accounts and notes receivable is to maintain an adequate allowance or reserve for doubtful accounts for estimated losses from the inability of our customers to make required payments. The process to estimate the collectibility of our trade accounts receivable balances consists of two steps. First, we evaluate specific accounts for which we have information that the customer may have an inability to meet its financial obligations (e.g., bankruptcy). In these cases, using our judgment based on available facts and circumstances, we record a specific allowance for that customer against the receivable to reflect the amount we expect to ultimately collect. Second, we then establish an additional reserve for all customers based on a range of percentages applied to aging categories, based on management’s best estimate. If the financial condition of our customers were to deteriorate and result in an impairment of their ability to make payments, additional allowances may be required.

Goodwill and Other Long-Lived Assets

We conduct impairment reviews of long-lived assets and goodwill in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” and SFAS No. 142, “Goodwill and Other Intangible Assets.”

On an annual basis or as circumstances dictate, we review goodwill and evaluate events or other developments that may indicate impairment in the carrying amount. As of December 31, 2006, we tested goodwill for impairment using the two-step process prescribed in SFAS No. 142. The first step was to screen for potential impairment, while the second step measured the amount of the impairment, if any. This assessment indicated that goodwill related to the Dingley Acquisition was impaired resulting in a write-down of goodwill totaling $12.8 million which was recorded during the fourth quarter of 2006. We also performed the required impairment tests of goodwill to identify whether impairment existed on December 31, 2005. No impairments were noted as a result of these tests. At December 31, 2006, we had $44.7 million in goodwill. While significant judgment is required, we believe that our estimates of fair value are reasonable. However, should our assumptions change in future years, our fair value models could result in lower fair values for goodwill, which could materially affect the value of goodwill and our results of operations.

We review long-lived assets, consisting primarily of property, plant and equipment and identified intangibles subject to amortization, for impairment, pursuant to SFAS No. 144, by analyzing the future undiscounted cash flows whenever events or changes in circumstances indicate that the carrying value may not be recoverable. No impairments were noted as a result of these tests. While significant judgment is required, we believe that our estimates of future undiscounted cash flows are reasonable. However, should our assumptions change in future years, our fair value models could result in lower fair values of long-lived assets, which could materially affect the value of long-lived assets and the results of operations.

Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. In addition to estimating the actual current tax liability, we must assess future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reflected on our consolidated balance sheets, and operating loss carryforwards. Such differences result in deferred tax assets and liabilities, which are recorded in our consolidated balance sheets. We then assess the likelihood that deferred tax assets will be recovered from future taxable income, and, to the extent recovery is not considered likely, establish a valuation allowance against those assets. The valuation allowance is based on estimates of future taxable income in jurisdictions in which we operate and the period over which the deferred tax assets will be recoverable. We use our best judgment in determining the provision for income taxes, the deferred tax assets and liabilities and any valuation allowance recorded against the net

15

deferred tax assets.

To the extent that actual results differ from our estimates, new information results in changes to estimates or there is a material change in the actual tax rates or time periods within which the underlying temporary differences become taxable or deductible, we may need to establish an additional valuation allowance, reduce our existing valuation allowance or adjust the effective tax rate, all of which could materially impact our financial position and results of operations.

In addition, as part of the financial statement process, we assess the positions taken on our tax returns and establish tax reserves for tax contingencies that in our judgment are probable and estimable. These estimates could change as the tax returns are reviewed by the tax authorities or as statutes of limitations close on the returns; however, we believe that we have adequately provided for all such tax contingencies.

Self-Insurance

We are self-insured for healthcare and workers’ compensation costs. We seek to mitigate the risk related to our ultimate claims exposure under these self-insurance arrangements through the purchase of various levels of individual and aggregate claims stop-loss insurance coverage with third-party insurers. We periodically review health insurance and workers’ compensation claims outstanding and estimates of incurred but not reported claims with our third-party claims administrators and adjust our reserves for self-insurance risk accordingly. Provisions for medical and workers’ compensation claims are based on estimates, which are subject to differing financial outcomes based upon the nature and severity of those claims. As a result, additional reserves may be required in future periods.

Results of Operations

Our business includes three reportable segments comprised of “Short–run Journals,” “Specialty Catalogs” and “Other Publications.”  Short–run Journals are primarily medical, technical, scientific or scholarly journals and related reprints with run lengths of less than 5,000 copies. The Specialty Catalogs segment, which is comprised of the assets and operations of The Dingley Press acquired on May 25, 2004, is focused on catalog merchants that require run lengths between 300,000 and 10,000,000 copies. The Other Publications business segment is comprised of three operating segments, which produce specialty magazines, medium–run journals and short–run books.

The following tables set forth, for the periods indicated, information derived from our consolidated statements of income, the relative percentage that those amounts represent to total net sales (unless otherwise indicated), and the percentage change in those amounts from period to period. These tables should be read in conjunction with the commentary that follows them.

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Comparison of Years Ended December 31, 2006 and December 31, 2005

	Year ended December 31,						Increase (decrease)					Percent of revenue Year ended December 31,
(in thousands)	2006			2005			Dollars			Percentage		2006		2005
Net sales
Short-run journals	$	92,180		$	99,955		$	(7,775	)	(7.8	)%	27.3	%	28.7	%
Specialty catalogs	99,060			111,846			(12,786		)	(11.4	)%	29.3	%	32.1	%
Other publications	150,497			141,643			8,854			6.3	%	44.6	%	40.7	%
Intersegment sales elimination	(4,197		)	(5,485		)	1,288			23.5	%	(1.2	)%	(1.5	)%
Total net sales	337,540			347,959			(10,419		)	(3.0	)%	100.0	%	100.0	%
Cost of sales	272,164			283,503			(11,339		)	(4.0	)%	80.6	%	81.5	%
Gross profit	65,376			64,456			920			1.4	%	19.4	%	18.5	%
Selling and administrative expenses	40,339			39,594			745			1.9	%	12.0	%	11.3	%
Loss on disposition of fixed assets	255			586			(331		)	(56.5	)%	0.1	%	0.2	%
Restructuring costs	2,736			429			2,307			537.8	%	0.8	%	0.1	%
Amortization of intangibles	3,782			1,950			1,832			93.9	%	1.1	%	0.6	%
Impairment of goodwill	12,775			—			12,775			N/A		3.8	%	—
Total operating expenses	59,887			42,559			17,328			40.7	%	17.7	%	12.2	%
Operating income
Short-run journals	10,910			12,618			(1,708		)	(13.5	)%	11.8	%	12.6	%
Specialty catalogs	(12,695		)	2,599			(15,294		)	(588.4	)%	(12.8	)%	2.3	%
Other publications	9,566			8,678			888			10.2	%	6.4	%	6.1	%
Corporate expenses	(2,292		)	(1,998		)	(294		)	(14.7	)%	N/A		N/A
Total operating income	5,489			21,897			(16,408		)	(74.9	)%	1.6	%	6.3	%
Other (income) expense
Interest expense	18,818			18,968			(150		)	(0.8	)%	5.6	%	5.5	%
Interest income	(226		)	(280		)	54			19.3	%	(0.1	)%	(0.1	)%
Other, net	(316		)	(407		)	91			22.4	%	(0.1	)%	(0.1	)%
Total other expense	18,276			18,281			(5		)	(0.0	)%	5.4	%	5.3	%
(Loss) income before income taxes	(12,787		)	3,616			(16,403		)	(453.6	)%	(3.8	)%	1.0	%
Income tax (benefit) provision	(4,444		)	2,436			(6,880		)	(282.4	)%	(1.3	)%	0.7	%
Net (loss) income	$	(8,343	)	$	1,180		$	(9,523	)	(806.8	)%	(2.5	)%	0.3	%

Net sales were $337.5 million in 2006, a $10.4 million or 3.0% decrease compared to net sales of $348.0 million for 2005, due primarily to customer attrition. Net sales for the short-run journals segment for 2006 decreased by 7.8% due mainly to planned customer attrition as a result of the shutdown of the Capital City Press facility and the transfer of publication services work to Dartmouth Journal Services, which is included in other publications. Net sales for the specialty catalogs segment decreased by 11.4% primarily due to customer attrition as well as reductions in run lengths for specific customers. Net sales for the other publications segment grew by 6.3% primarily due to new work awarded to us in the book and medium-run journal markets, as well as the transfer of publication services work as a result of the Capital City Press shutdown.

Gross profit for 2006 was $65.4 million, a $0.9 million or 1.4% increase compared to gross profit of $64.5 million for 2005. Gross margin for 2006 increased to 19.4% of net sales compared to 18.5% for 2005. The gross profit and margin increases were attributable primarily to productivity improvements, lower healthcare costs due to plan changes and the shutdown of Capital City Press, partially offset by the impact of decreased sales.

As a result of our decision to shut down the operations of Capital City Press and consolidate the production of short-run journals at The Sheridan Press, we recorded restructuring costs of $2.7 million in 2006, a $2.3 million increase compared to restructuring costs of $0.4 million in 2005. The restructuring costs in 2006 related primarily to guaranteed severance payments of $1.5 million, employee health benefits of $0.7 million and other one-time costs of $0.5 million. The restructuring costs in 2005 related primarily to guaranteed severance payments of $0.3 million and other one-time costs of $0.1 million.

Amortization expense for 2006 was $3.8 million, a $1.8 million increase compared to amortization expense of $2.0 million for 2005. The increase in amortization expense in 2006 was due to a $1.9 million charge associated with

17

accelerated amortization on an intangible asset, the Capital City Press trade name, which was disposed of as a result of the shutdown of Capital City Press.

In connection with our annual assessment of goodwill, we concluded that the goodwill related to the Dingley Acquisition was impaired. This resulted in a non-cash impairment charge of $12.8 million during the fourth quarter of 2006. There were no indications of impairment as a result of our annual goodwill assessment in 2005.

Operating income of $5.5 million in 2006 represented a $16.4 million or 74.9% decrease compared to operating income of $21.9 million in 2005. This decrease was due principally to the full impairment of the specialty catalogs segment goodwill related to the Dingley Acquisition and the costs associated with the shutdown of Capital City Press, partially offset by the decrease in costs associated with the compliance requirements of the Sarbanes-Oxley Act of 2002. Operating income of $10.9 million for the short-run journals segment in 2006 was $1.7 million lower than the operating income for the same period in 2005 primarily due to the accelerated amortization of intangible assets recorded in connection with the shutdown of the Capital City Press facility partially offset by the absence in 2006 of losses realized on the disposal of equipment of $0.4 million which occurred in 2005. The operating loss of $12.7 million for the specialty catalogs segment in 2006 represented a $15.3 million decline as compared to the same period last year. The impairment of goodwill, the decrease in net sales and an increase in the allowance for doubtful accounts of $1.1 million related to the liquidity concerns for a specific customer were the primary reasons for the operating income decline. These adverse impacts were partially offset by productivity improvements, lower healthcare costs due to plan changes, as well as cost containment of materials and maintenance costs. Operating income for the other publications segment increased by $0.9 million in 2006.  Increases in net sales due to growth in short-run books and medium-run journals as well as the impact of the transfer of publication services work resulting from the Capital City Press consolidation partially offset by additional operating costs were the primary reasons for the increase.

Loss before income taxes for 2006 was $12.8 million, a $16.4 million decrease as compared to income before income taxes of $3.6 million for 2005. Loss before income taxes margin for 2006 was negative 3.8%, a decrease of 4.8 margin points compared to a 1.0% margin for 2005. The decrease in income before income taxes margin for 2006 was mainly the result of the full impairment of the specialty catalogs segment goodwill related to the Dingley Acquisition, the restructuring costs and accelerated amortization expense resulting from the shutdown of the Capital City Press facility, an increase in the allowance for doubtful accounts for a specific customer in the specialty catalogs segment partially offset by productivity improvements, lower healthcare costs due to plan changes and the decrease in costs associated with the compliance requirements of the Sarbanes-Oxley Act of 2002.

Our effective income tax rate in 2006 was 34.8% compared to 67.4% in 2005. The 2006 and 2005 effective tax rates reflect the impact of apportioning the Company’s taxable income to states with unitary tax filing requirements and higher tax rates. The 2006 effective tax rate reflects a lower than expected tax benefit resulting from the impact of taxable income, despite a consolidated loss, incurred in states that do not have unitary tax filing requirements. The 2005 effective rate reflects a higher than expected tax expense resulting from the recognition of taxable income in unitary tax states with higher state rates as well as non-unitary tax filing states.

Net loss for 2006 was $8.3 million, a $9.5 million decrease from net income of $1.2 million for 2005. The decrease in net income for 2006 was principally due to the full impairment of goodwill related to the Dingley Acquisition, the restructuring costs and accelerated amortization expense resulting from the shutdown of the Capital City Press facility partially offset by cost containment efforts and the income tax benefit.

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Comparison of Years Ended December 31, 2005 and December 31, 2004

	Year ended December 31,						Increase (decrease)					Percent of revenue Year ended December 31,
(in thousands)	2005			2004			Dollars			Percentage		2005		2004
Net sales
Short-run journals	$	99,955		$	97,277		$	2,678		2.8	%	28.7	%	33.8	%
Specialty catalogs	111,846			64,204			47,642			74.2	%	32.1	%	22.3	%
Other publications	141,643			131,172			10,471			8.0	%	40.6	%	45.6	%
Intersegment sales elimination	(5,485		)	(5,140		)	(345		)	(6.7	)%	(1.6	)%	(1.7	)%
Total net sales	347,959			287,513			60,446			21.0	%	100.0	%	100.0	%
Cost of sales	283,503			226,731			56,772			25.0	%	81.5	%	78.9	%
Gross profit	64,456			60,782			3,674			6.0	%	18.5	%	21.1	%
Selling and administrative expenses	39,594			37,404			2,190			5.9	%	11.4	%	13.0	%
Loss (gain) on disposition of fixed assets	586			(172		)	758			440.7	%	0.2	%	0.0	%
Restructuring costs	429			256			173			67.6	%	0.1	%	0.1	%
Amortization of intangibles	1,950			1,838			112			6.1	%	0.6	%	0.6	%
Total operating expenses	42,559			39,326			3,233			8.2	%	12.2	%	13.7	%
Operating income
Short-run journals	12,618			13,344			(726		)	(5.4	)%	12.6	%	13.7	%
Specialty catalogs	2,599			3,483			(884		)	(25.4	)%	2.3	%	5.4	%
Other publications	8,678			6,885			1,793			26.0	%	6.1	%	5.2	%
Corporate expenses	(1,998		)	(2,256		)	258			11.4	%	N/A		N/A
Total operating income	21,897			21,456			441			2.1	%	6.3	%	7.4	%
Other (income) expense
Interest expense	18,968			16,678			2,290			13.7	%	5.5	%	5.8	%
Interest income	(280		)	(183		)	(97		)	(53.0	)%	(0.1	)%	(0.1	)%
Other, net	(407		)	(134		)	(273		)	(203.7	)%	(0.1	)%	(0.1	)%
Total other expense	18,281			16,361			1,920			11.7	%	5.3	%	5.6	%
Income before income taxes	3,616			5,095			(1,479		)	(29.0	)%	1.0	%	1.8	%
Income tax provision	2,436			2,765			(329		)	(11.9	)%	0.7	%	1.0	%
Net income	$	1,180		$	2,330		$	(1,150	)	(49.3	)%	0.3	%	0.8	%

Net sales were $348.0 million in 2005, a $60.5 million or 21.0% increase compared to net sales of $287.5 million for 2004. The Dingley Acquisition, completed in May 2004, added the specialty catalogs segment and accounted for $47.6 million of the sales growth. Significant growth in other publications combined with slightly stronger net sales in short-run journals accounted for the rest of the increase.

Net sales for the short-run journals segment were $100.0 million in 2005, a $2.7 million or 2.8% increase compared to net sales of $97.3 million for 2004. The increase in net sales for the short-run journals segment was primarily attributable to higher paper and shipping revenue as well as new titles that were awarded to us partially offset by declines in revenue related to prepress services. Net sales for the specialty catalogs segment were $111.8 million in 2005, a $47.6 million or 74.2% increase compared to net sales of $64.2 million for 2004. The Dingley Acquisition added the specialty catalogs segment of the printing market. This segment has been included in our results since the May 2004 acquisition date which primarily accounts for the comparative sales growth for 2005. Net sales for the other publications segment for 2005 were $141.6 million, a $10.4 million or 8.0% increase compared to $131.2 million for 2004. Continued growth in medium-run journals and magazine revenues accounted for most of the growth in the other publications segment.

Gross profit for 2005 was $64.5 million, a $3.7 million or 6.0% increase compared to gross profit of $60.8 million for 2004. Gross margin for 2005 decreased to 18.5% of net sales compared to 21.1% for 2004. The gross margin decline for 2005 was attributable primarily to the inclusion of a full year’s gross margin for The Dingley Press as a result of the Dingley Acquisition, as the specialty catalogs segment has a lower gross margin than our other businesses. Increases in paper and shipping expenses, which are primarily pass-through costs for our businesses, as well as pricing pressures also contributed to the gross margin decline in 2005.

Selling and administrative expenses for 2005 were $39.6 million, a $2.2 million or 5.9% increase compared to $37.4 million for 2004. The increase for 2005 was due mainly to the inclusion of a full year of selling and administrative

19

expenses for The Dingley Press as a result of the Dingley Acquisition.

Gain or losson fixed asset dispositions for 2005 was a loss of $0.6 million as compared to a gain of $0.2 million for 2004.

Restructuring expenses related to the shutdown of Capital City Press were $0.4 million in 2005. In December 2005, our Board of Directors approved a plan to shut down the operations of Capital City Press and consolidate the production of short-run journals at The Sheridan Press. This decision resulted from trends in the short-run journals industry and the capital investment required for maintaining two facilities serving the same market. The $0.4 million charge recorded in the fourth quarter of 2005 related primarily to guaranteed severance payments and other one-time costs. Restructuring expenses related to the closure of the Sheridan Books facility in Fredericksburg, Virginia were $0.3 million in 2004.

Amortization expense for 2005 was $2.0 million, a $0.2 million increase compared to amortization expense of $1.8 million for 2004. The increase in amortization expense in 2005 was due to the recognition of intangible assets associated with the Dingley Acquisition in May 2004.

Operating income for 2005 was $21.9 million, a $0.4 million or 2.1% increase compared to operating income of $21.5 million for 2004. Operating margin for 2005 was 6.3%, reflecting a 1.2 margin point decrease compared to an operating margin of 7.5% for 2004. Operating margins were lower in 2005 due primarily to the acquisition of The Dingley Press in May 2004, as the specialty catalogs segment has a lower operating margin than our other businesses. Operating margins were also adversely impacted by higher paper and freight costs as well as pricing pressure.

Operating income for the short-run journals segment for 2005 was $12.6 million, a $0.7 million or 5.4% decrease compared to operating income of $13.3 million for 2004. The decrease in operating income was primarily attributable to declines in revenues related to prepress services, resulting from continued pricing pressure and the loss of business to lower cost offshore suppliers, as well as $0.4 million of restructuring costs associated with the decision to shutdown the operations of Capital City Press and consolidate the production of short-run journals at The Sheridan Press. Operating margin for the short-run journals segment was 12.6% for 2005, reflecting a 1.1 margin point decrease compared to an operating margin of 13.7% for 2004. The decline in prepress service sales, pricing pressures, increases in paper and shipping costs and restructuring costs were primarily responsible for the decrease in operating margins for 2005. Operating income for the specialty catalogs segment for 2005 was $2.6 million, a $0.9 million or 25.4% decrease compared to operating income of $3.5 million for 2004. Operating margin for the specialty catalogs segment was 2.3% for 2005, reflecting a 3.1 margin point decrease compared to an operating margin of 5.4% for 2004. Increases in transportation costs and utility rates, coupled with pricing pressures and a full year’s allocation of corporate overhead were primarily responsible for the lower operating income and operating margins experienced in the specialty catalogs segment for 2005. Increases in paper costs, although a pass-through item to customers, also adversely impacted the operating margin for specialty catalogs in 2005. Operating income for the other publications segment for 2005 was $8.7 million, a $1.8 million or 26.0% increase compared to operating income of $6.9 million for 2004. Operating margin for the other publications segment was 6.1% for 2005, reflecting a 0.9 margin point increase compared to an operating margin of 5.2% for 2004. The increased operating income and operating margin in the other publications segment were primarily due to manufacturing labor and overhead savings realized from the closing of the Sheridan Books facility in Fredericksburg, Virginia and the consolidation of the manufacturing operations into our facility in Chelsea, Michigan during the third and fourth quarters of 2004.

Interest expense in 2005 was $19.0 million, a $2.3 million or 13.7% increase compared to interest expense of $16.7 million for 2004. This increase was primarily attributable to recording a full year of interest expense for the debt associated with the Dingley Acquisition for 2005 as compared to a partial year in 2004 since the Dingley Acquisition was finalized in May 2004.

Other income (including interest income) for 2005 was $0.7 million, a $0.4 million increase compared to other income (including interest income) of $0.3 million for 2004. This increase was due primarily to increases in the market value of investments held in deferred compensation funds as well as interest income earned on tax refunds during 2005.

Income before income taxes for 2005 was $3.6 million, a $1.5 million or 29.0% decrease as compared to income before income taxes of $5.1 million for 2004. Income before income taxes margin for 2005 of 1.0% decreased 0.8 margin points compared to a 1.8% margin for 2004. The decrease in income before income taxes margin for 2005 was mainly the result of higher interest expense associated with the financing of the Dingley Acquisition in May 2004, poorer operating results in our specialty catalogs segment and the restructuring costs recorded in connection with the shutdown of Capital City

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Press partially offset by improved profitability in other publications.

Our effective income tax rate in 2005 was 67.4% compared to 54.3% in 2004. The increase was primarily the result of the impact of increased state tax apportionment in states with unitary tax filing requirements, primarily Maine and New Hampshire, as well as other high tax states. The decline in pre-tax operating income in 2005 also contributed to the higher effective income tax rate.

Net income for 2005 was $1.2 million, a $1.1 million or 49.3% decrease from net income of $2.3 million for 2004. The decrease in net income for 2005 was principally due to higher interest expense associated with the financing of the Dingley Acquisition in May 2004, poorer operating results in our specialty catalogs segment and the restructuring costs recorded in connection with the shutdown of Capital City Press partially offset by improved profitability in the other publications segment.

Liquidity and Capital Resources

Operating Activities

Net cash provided by operating activities was $24.3 million for 2006, an increase of $0.8 million as compared to $23.5 million for 2005. The net cash provided by operating activities for 2006 reflects a net loss of $8.3 million offset by $28.5 million of non-cash charges and favorable working capital changes of $4.1 million. The non-cash charges consisted primarily of depreciation, amortization, goodwill impairment and an increase in the reserve for doubtful accounts partially offset by a deferred tax benefit.  The working capital changes consisted primarily of decreases in accounts receivable, due mainly to the decrease in sales during 2006 as compared to 2005, and an increase in accrued expenses, due mainly to an increase in the amount of customer-owned paper inventory held by us as of December 31, 2006 as compared to December 31, 2005.

Net cash provided by operating activities was $23.5 million for 2005 compared to $22.7 million for 2004. This $0.8 million increase was primarily the result of $2.5 million of additional depreciation and amortization in 2005 as a result of the Dingley Acquisition and reductions in working capital deployed, partially offset by lower earnings.

We had cash of $7.8 million as of December 31, 2006 compared to $8.0 million as of December 31, 2005. During 2006 and 2005, we utilized cash provided by operating activities to make investments in new equipment and make the semi-annual interest payments on the 2003 Notes and the 2004 Notes.

Investing Activities

Net cash used in investing activities was $24.5 million for 2006 compared to $20.3 million for 2005. This $4.2 million increase was primarily the result of a $5.0 million increase in plant and equipment purchased in the ordinary course of business and the one-time impact of insurance proceeds of $0.8 million received in 2005 as a result of a property damage claim, partially offset by proceeds from the sale of excess equipment and the Capital City Press facility in 2006 of $2.0 million.

Net cash used in investing activities was $20.3 million for 2005 compared to $85.0 million for 2004. This $64.7 million decrease was primarily the result of the abscence in 2005 of the $65.5 million of cash paid related to the Dingley Acquisition offset by $0.8 million of proceeds received from our insurer in 2005 as a result of property damage suffered in September 2004 at our manufacturing facility in Ashburn, Virginia.

Financing Activities

Net cash provided by financing activities for 2006 was negligible. Net cash used in financing activities for 2005 was $0.2 million which primarily resulted from the payment of a cash dividend.

Net cash used in financing activities for 2005 was $0.2 million which primarily resulted from the payment of a cash dividend. Net cash provided by financing activities for 2004 totaled $57.3 million and consisted of $61.2 million of proceeds from the sale of the 2004 Notes less $3.9 million of costs paid in connection with such sale in conjunction with the Dingley Acquisition.

Total debt outstanding at December 31, 2006 was $164.9 million which was unchanged as compared to $164.9 million outstanding at December 31, 2005.

Indebtedness

As of December 31, 2006, we had total indebtedness of $164.9 million comprised entirely of amounts due under the 2003 Notes and the 2004 Notes, all with a scheduled maturity of August 2011. We will have significant interest payments due on the outstanding notes as well as interest payments due on any borrowings under our working capital facility, under which there were no amounts outstanding as of December 31, 2006. Total cash interest payments related to our working capital facility and the 2003 Notes and the 2004 Notes are expected to be in excess of $16.9 million on an annual basis.

 The terms of our working capital facility are substantially as set forth below. Revolving advances are available from the lenders in an aggregate principal amount of up to $30.0 million, subject to a borrowing base test. We are able to repay and re-borrow such advances until the May 2009 maturity date.

Our working capital facility and the indenture governing the 2003 Notes and the 2004 Notes contain various covenants which limit our discretion in the operation of our businesses. Additionally, our working capital facility contains various restrictive covenants. Among other things, it prohibits us from prepaying other indebtedness, including the 2003 Notes and the 2004 Notes, and it requires us to satisfy certain financial tests including an interest coverage ratio and requires us to maintain a minimum EBITDA (as defined in and calculated pursuant to our working capital facility) (such EBITDA

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being referred to hereinafter as “WCF EBITDA”), both calculated for the period consisting of the four preceding consecutive fiscal quarters. WCF EBITDA is defined in and calculated pursuant to our working capital facility and is used below solely for purposes of calculating our compliance with the covenants in our working capital facility. Failure to satisfy the financial tests in our working capital facility would constitute a default under our working capital facility. The required interest coverage ratio is 2.00 to 1.00 and the minimum WCF EBITDA requirement (calculated on a rolling twelve months) was $33.0 million through the end of the third quarter of 2006 and $36.0 million thereafter. For the year ended December 31, 2006, our interest coverage ratio was 2.43 to 1.00 and our WCF EBITDA for purposes of our working capital facility was $41.9 million. In addition, our working capital facility restricts our ability to declare or pay any dividends and prohibits us from making any payments with respect to the 2003 Notes and the 2004 Notes if we fail to perform our obligations under, or fail to meet the conditions of, our working capital facility or if payment creates a default under our working capital facility.

WCF EBITDA calculated pursuant to the working capital facility is defined as net income (loss) before interest expense, income taxes, depreciation, amortization and other non-cash charges (including all fees and costs relating to thetransactions contemplated by the working capital facility) as defined in the working capital facility. WCF EBITDA calculated pursuant to the working capital facility is not an indicator of financial performance or liquidity under generally accepted accounting principles and may not be comparable to similarly captioned information reported by other companies. In addition, it should not be considered as an alternative to, or more meaningful than, income before income taxes, cash flows from operating activities or other traditional indicators of operating performance.

WCF EBITDA is reconciled directly to cash flow from operations as follows (in thousands):

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2006			2005			2004
Net cash provided by operating activities	$	24,336		$	23,543		$	22,692
Accounts receivable	(1,174		)	704			1,697
Inventories	9			556			(6,658		)
Other current assets	(83		)	611			897
Refundable income taxes	(671		)	(1,935		)	1,293
Other assets	171			846			816
Accounts payable	536			(3,357		)	(1,363		)
Accrued expenses	(3,214		)	(125		)	2,877
Accrued interest	1			119			(2,604		)
Other liabilities	(507		)	(509		)	(543		)
Provision for doubtful accounts	(1,220		)	(53		)	(196		)
Provision for inventory realizability and LIFO value	(106		)	(64		)	(136		)
Deferred income tax benefit (expense)	7,235			269			(332		)
(Loss) gain on disposition of fixed assets, net	(254		)	(586		)	172
Income tax (benefit) provision	(4,444		)	2,436			2,765
Cash interest expense	17,215			17,201			14,989
Management fees	784			827			769
Non cash adjustments:
Purchase accounting write-up of inventory	—			—			257
Adjustments to LIFO value	51			30			30
Increase in market value of investments	120			(85		)	(66		)
Amortization of prepaid lease costs	83			83			83
Loss on disposition of fixed assets	317			695			1,010
Restructuring costs	2,736			429			256
Gain on sale of Fredericksburg, VA land and building, net of exit costs	—			—			(776		)
The Dingley Press EBITDA from January 1, 2004 through May 24, 2004 (a)	—			—			4,327
Working Capital Facility EBITDA	$	41,921		$	41,635		$	42,256

(a)For covenant calculation purposes, WCF EBITDA for The Dingley Press prior to the Dingley Acquisition was included

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with our results for the full year.

The indenture governing the 2003 Notes and the 2004 Notes also contains various restrictive covenants. It, among other things: (i) limits our ability and the ability of our subsidiaries to incur additional indebtedness, issue shares of preferred stock, incur liens and enter into certain transactions with affiliates; (ii) places restrictions on our ability to pay dividends or make certain other restricted payments; and (iii) places restrictions on our ability and the ability of our subsidiaries to merge or consolidate with any other person or sell, assign, transfer, convey or otherwise dispose of all or substantially all of our assets.

Our principal sources of liquidity are expected to be cash flow generated from operations and borrowings under our working capital facility. Our principal uses of cash are expected to be to meet debt service requirements, finance our capital expenditures and provide working capital. We estimate that our capital expenditures for 2007 will total about $15.1 million. Based on our current level of operations, we believe that our cash flow from operations, available cash and available borrowings under our working capital facility will be adequate to meet our future short-term and long-term liquidity needs. Our future operating performance and ability to extend or refinance our indebtedness will be dependent on future economic conditions and financial, business and other factors that may be beyond our control.

Contractual Obligations

The following table summarizes our future minimum non-cancelable contractual obligations as of December 31, 2006:

	Remaining Payments Due by Period
					2008 to		2010 to		2012 and
(in thousands)	Total		2007		2009		2011		beyond
Long term debt, including interest (1)	$	243,221	$	16,913	$	33,825	$	192,483	$	—
Operating leases	11,133		4,922		5,394		810		7
Purchase obligations (2)	12,480		11,723		757		—		—
Other long-term obligations (3)	1,164		247		451		302		164
Total	$	267,998	$	33,805	$	40,427	$	193,595	$	171

(1)Includes the $105.0 million aggregate principal amount due on the 2003 Notes and the $60.0 million aggregate principal amount due on the 2004 Notes plus interest at 10.25% payable semi-annually through August 15, 2011.

(2)Represents payments due under purchase agreements for consumable raw materials and commitments for construction projects and equipment acquisitions.

(3)Represents payments due under non-compete arrangements with our former Chairman of the Board and the Chairman of The Dingley Press.

Off-Balance Sheet Arrangements

At December 31, 2006 and 2005, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We are, therefore, not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Effect of Inflation

Inflation generally affects us by increasing our costs of labor, equipment and new materials. We do not believe that inflation has had any material effect on our results of operations during 2006, 2005 and 2004.

Recently Issued Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN 48”), which clarifies the accounting for uncertain tax positions. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that we recognize in the financial statements, the impact of a tax position, if it is more likely than not that the tax position will be sustained on audit, based on the technical merits of the

23

position. FIN 48 also provides guidance on derecognition, balance sheet classification, interest and penalties, accounting in interim periods and disclosure. FIN 48 will be effective for us beginning January 1, 2007. We do not believe the adoption of FIN 48 will have a material effect on our consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS 157 does not require any new fair value measurements. Under SFAS 157, fair value is established by the price that would be received to sell the item or the amount to be paid to transfer the liability (an exit price), as opposed to the price to be paid for the asset or received to assume the liability (an entry price).  SFAS 157 is effective for all assets valued in financial statements for fiscal years beginning after November 15, 2007. We are currently evaluating whether the adoption of SFAS 157 will have a material effect on our consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R),” (“SFAS 158”). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. SFAS 158 is effective for fiscal years ending after June 15, 2007. We do not believe the adoption of SFAS 158 will have a material effect on our consolidated financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. ).  SFAS 159 is effective for fiscal years beginning after November 15, 2007. We do not believe the adoption of SFAS 159 will have a material effect on our consolidated financial position, results of operations or cash flows.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (“SAB 108”). SAB 108 provides interpretive guidance on the process of quantifying financial statement misstatements. The interpretations in SAB 108 address the diversity in practice in quantifying financial statement misstatements and the potential under current practice for the build up of improper amounts on the balance sheet. As permitted by SAB 108, the provisions under SAB 108 will be applied in the first annual period ending after November 15, 2006. The adoption of SAB 108 did not have a material effect on our consolidated financial position, results of operations or cash flows.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of changes in value of a financial instrument, derivative or non-derivative, caused by fluctuations in interest rates, foreign exchange rates and equity prices. Changes in these factors could cause fluctuations in results of our operations and cash flows. In the ordinary course of business, we are exposed to foreign currency and interest rate risks. These risks primarily relate to the sale of products and services to foreign customers and changes in interest rates on our long-term debt.

Foreign Exchange Rate Market Risk

We consider the U.S. dollar to be the functional currency for all of our entities. All of our net salesand our expenses in fiscal years 2006, 2005 and 2004 were denominated in U.S. dollars. Therefore, foreign currency fluctuations did not impact our financial results in those periods.

Interest Rate Market Risk

We could be exposed to changes in interest rates. Our working capital facility is variable rate debt. Interest rate changes, therefore, generally do not affect the market value of such debt but do impact the amount of our interest payments and, therefore, our future earnings and cash flows, assuming other factors are held constant. We currently do not have any borrowings under our working capital facility. During 2006, we did have borrowings under our working capital facility and we estimate that a 1.0% increase in interest rates would have resulted in a negligible amount of additional interest expense for the year ended December 31, 2006. All of our other debt carries fixed interest rates.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Board of Directors and the Stockholder
of the Sheridan Group, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in the stockholder’s equity and of cash flows present fairly, in all material respects, the financial position of The Sheridan Group, Inc. and Subsidiaries (the “Company”) at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.  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 conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).  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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for share-based compensation in 2006.

/s/ PricewaterhouseCoopers LLP

Baltimore, Maryland

March 30, 2007

25

The Sheridan Group, Inc. and Subsidiaries
Consolidated Balance Sheets
At December 31, 2006 and 2005

	December 31,			December 31,
	2006			2005
Assets
Current assets
Cash and cash equivalents	$	7,800,258		$	7,962,406
Accounts receivable, net of allowance for doubtful accounts of $1,951,420 and $956,612, respectively	31,150,309			33,544,025
Due from parent company	226,147			—
Inventories, net	18,957,879			19,055,266
Other current assets	4,043,345			4,125,713
Refundable income taxes	437,504			677,061
Deferred income taxes	1,803,716			1,167,836
Total current assets	64,419,158			66,532,307
Property, plant and equipment, net	129,665,739			119,219,511
Intangibles, net	42,985,424			46,549,163
Goodwill	44,697,800			56,983,043
Deferred financing costs, net	5,324,014			6,915,181
Other assets	4,474,484			4,521,350
Total assets	$	291,566,619		$	300,720,555
Liabilities
Current liabilities
Accounts payable	$	20,502,823		$	19,401,927
Accrued expenses	27,433,944			24,220,519
Total current liabilities	47,936,767			43,622,446
Notes payable	164,915,478			164,903,580
Deferred income taxes	27,909,465			33,740,457
Other liabilities	4,116,999			3,457,939
Total liabilities	244,878,709			245,724,422
Commitments and contingencies
Stockholder’s Equity
Common stock, $0.01 par value; 100 shares authorized; 1 share issued and outstanding at December 31, 2006 and 2005	—			—
Additional paid-in capital	51,010,425			50,975,800
(Accumulated deficit) retained earnings	(4,322,515		)	4,020,333
Total stockholder’s equity	46,687,910			54,996,133
Total liabilities and stockholder’s equity	$	291,566,619		$	300,720,555

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

26

The Sheridan Group, Inc. and Subsidiaries
Consolidated Statements of Operations
Years Ended December 31, 2006, 2005 and 2004

	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2006			2005			2004
Net sales	$	337,540,314		$	347,958,675		$	287,513,124
Cost of sales	272,164,460			283,502,625			226,730,754
Gross profit	65,375,854			64,456,050			60,782,370
Selling and administrative expenses	40,338,796			39,594,103			37,404,454
Loss (gain) on disposition of fixed assets	254,742			585,617			(172,405		)
Restructuring costs	2,736,027			429,231			256,481
Amortization of intangibles	3,781,944			1,950,204			1,838,073
Impairment of goodwill	12,774,931			—			—
Total operating expenses	59,886,440			42,559,155			39,326,603
Operating income	5,489,414			21,896,895			21,455,767
Other (income) expense
Interest expense	18,818,043			18,967,623			16,678,096
Interest income	(225,759		)	(280,254		)	(183,296		)
Other, net	(315,874		)	(406,853		)	(133,516		)
Total other expense	18,276,410			18,280,516			16,361,284
(Loss) income before income taxes	(12,786,996		)	3,616,379			5,094,483
Income tax (benefit) provision	(4,444,148		)	2,436,000			2,764,851
Net (loss) income	$	(8,342,848	)	$	1,180,379		$	2,329,632

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

27

The Sheridan Group, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholder’s Equity
Years Ended December 31, 2006, 2005 and 2004

					(Accumulated
			Additional		Deficit)			Total
	Common Stock		Paid-In		Retained			Stockholder’s
	Shares	Amount	Capital		Earnings			Equity
Balance as of December 31, 2003	1	—	$	47,000,000	$	760,213		$	47,760,213
Capital contribution from parent company	—	—	3,975,000		—			3,975,000
Net income	—	—	—		2,329,632			2,329,632
Balance as of December 31, 2004	1	—	50,975,000		3,089,845			54,064,845
Cash dividend	—	—	—		(249,891		)	(249,891		)
Capital contribution from parent company - stock options exercised	—	—	800		—			800
Net income	—	—	—		1,180,379			1,180,379
Balance as of December 31, 2005	1	—	$	50,975,800	$	4,020,333		$	54,996,133
Capital contribution from parent company - stock options exercised	—	—	1,200		—			1,200
Income tax benefit from stock options exercised	—	—	655		—			655
Share-based compensation	—	—	32,770		—			32,770
Net loss	—	—	—		(8,342,848		)	(8,342,848		)
Balance as of December 31, 2006	1	—	$	51,010,425	$	(4,322,515	)	$	46,687,910

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

28

The Sheridan Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31, 2006, 2005 and 2004

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2006			2005			2004
Cash flows provided by operating actvities:
Net (loss) income	$	(8,342,848	)	$	1,180,379		$	2,329,632
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Depreciation	15,209,022			15,121,343			12,755,046
Amortization of intangible assets	3,781,944			1,950,204			1,838,073
Impairment of goodwill	12,774,931			—			—
Provision for doubtful accounts	1,219,661			53,074			195,961
Provision for inventory realizability and LIFO value	106,228			63,950			136,110
Share-based compensation	32,770			—			—
Amortization of deferred financing costs and debt discount, included in interest expense	1,603,065			1,766,857			1,689,413
Deferred income tax (benefit) expense	(7,235,320		)	(269,136		)	332,614
Loss (gain) on disposition of fixed assets	254,742			585,617			(172,405		)
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed:
Accounts receivable	1,174,055			(704,029		)	(1,697,032		)
Inventories	(8,841		)	(556,346		)	6,657,930
Other current assets	82,368			(610,456		)	(896,973		)
Refundable income taxes	670,647			1,934,664			(1,292,999		)
Other assets	(171,339		)	(845,880		)	(816,179		)
Accounts payable	(535,703		)	3,357,249			1,363,309
Accrued expenses	3,214,047			125,202			(2,877,309		)
Accrued interest	(622		)	(118,767		)	2,604,371
Other liabilities	506,730			509,253			542,515
Net cash provided by operating activities	24,335,537			23,543,178			22,692,077
Cash flows used in investing activities:
Purchases of property, plant and equipment	(26,295,867		)	(21,282,193		)	(21,827,456		)
Proceeds from sale of fixed assets	2,022,474			165,926			2,404,366
Proceeds from insurance coverage	—			809,971			—
Acquisition of business, net of cash acquired	—			—			(65,529,531		)
Advances paid to parent company	(226,147		)	—			—
Net cash used in investing activities	(24,499,540		)	(20,306,296		)	(84,952,621		)
Cash flows provided by (used in) financing activities:
Borrowing of revolving line of credit	42,341,000			21,568,000			9,274,000
Repayment of revolving line of credit	(42,341,000		)	(21,568,000		)	(9,274,000		)
Payment of deferred financing costs in connection with issuance of long term debt	—			—			(3,882,593		)
Proceeds from issuance of long term debt	—			—			61,200,000
Payment of dividend	—			(249,891		)	—
Proceeds from capital contribution from parent company	1,200			800			—
Realized income tax benefit from stock options exercised	655			—			—
Net cash provided by (used in) financing activities	1,855			(249,091		)	57,317,407
Net (decrease) increase in cash and cash equivalents	(162,148		)	2,987,791			(4,943,137		)
Cash and cash equivalents at beginning of period	7,962,406			4,974,615			9,917,752
Cash and cash equivalents at end of period	$	7,800,258		$	7,962,406		$	4,974,615
Supplemental disclosure of cash flow information
Cash paid during the year for
Interest	$	17,215,599		$	17,319,533		$	14,092,645
Income taxes, net of refunds	$	2,062,831		$	738,852		$	3,699,852
Non-cash investing and financing activities
Asset additions in accounts payable	$	2,577,331		$	940,732		$	2,420,474
Issuance of stock as purchase consideration	$	—		$	—		$	3,975,000

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

29

The Sheridan Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2006, 2005 and 2004

1. Business Organization

The Sheridan Group, Inc. (“TSG” or the “Company”) is one of the leading specialty printers in the United States, offering a full range of printing and value-added support services for the journal, magazine, book, catalog and article reprint markets. The Company provides a wide range of printing services and value-added support services, such as electronic copy editing, composition, digital proofing, subscriber database maintenance, distribution services and electronic publishing support. TSG has eight wholly-owned subsidiaries: The Sheridan Press, Inc. (“TSP”), United Litho, Inc. (“ULI”), Dartmouth Printing Company (“DPC”), Capital City Press, Inc. (“CCP”), Sheridan Books, Inc. (“SBI”), Dartmouth Journal Services, Inc. (“DJS”), The Dingley Press, Inc. (“TDP”) and The Sheridan Group Holding Company (collectively with TSG, the “Company”).

On August 21, 2003, the Company became a wholly-owned subsidiary of TSG Holdings Corp. (“Holdings”), when Holdings purchased 100% of the outstanding capital stock of TSG from its existing stockholders (the “Sheridan Acquisition.”) The Company funded the acquisition price and the related fees and expenses with the proceeds of the sale of $105.0 million aggregate principal amount of 10¼% Senior Secured Notes due 2011 (the “2003 Notes”) and equity investments in Holdings.

Holdings is owned 84.8% by its equity sponsors, Bruckmann, Rosser, Sherrill & Co. LLC (“BRS”) and Jefferies Capital Partners (“JCP”), and 15.2% by the management and directors of TSG.

2. Acquisition

The Dingley Press, Inc.

On March 5, 2004, the Company entered into an agreement to purchase substantially all of the assets and business of The Dingley Press of Lisbon, Maine (the “Dingley Acquisition”). On May 25, 2004, the Company completed a private debt offering of 10.25% senior secured notes (the “2004 Notes”) totaling $60.0 million, priced to yield 9.86%, that mature August 15, 2011. The 2004 Notes have identical terms to the 2003 Notes. Proceeds from the 2004 Notes of $61.2 million (which included a premium), together with approximately $4.0 million of stock issued by TSG Holdings Corp., which was contributed to the Company as additional paid-in capital, were used to fund the Dingley Acquisition and to cover fees and expenses of the 2004 Notes offering and the Dingley Acquisition. The total purchase price for the Dingley Acquisition was $95.4 million, which consisted of cash paid of $65.5 million, liabilities assumed of $26.0 million and financing costs of $3.9 million. The results of operations of The Dingley Press have been included in the Company’s results of operations since the date of the Dingley Acquisition.

The Dingley Acquisition was accounted for as a purchase in accordance with SFAS No. 141, “Business Combinations,” and the Company accordingly allocated the purchase price of The Dingley Press based upon the fair value of net assets acquired and liabilities assumed. The purchase price of The Dingley Press was based on the projected business growth and future cash flows of The Dingley Press and indicated a value that was in excess of the net book value of the business, resulting in the recognition of various intangible assets (primarily customer relationships) and goodwill. The total purchase price was allocated to the acquired assets and liabilities based on their respective fair values at May 25, 2004 as follows (in thousands):

Current assets	$	26,926
Property, plant & equipment	49,711
Intangible assets	3,978
Goodwill	14,829
Total assets acquired	95,444
Liabilities assumed	(26,006		)
Net assets acquired	$	69,438

30

The following unaudited pro forma summary for the year ended December 31, 2004 presents the consolidated results of operations as if the Dingley Acquisition had occurred as of January 1, 2004. The summary includes adjustments for depreciation and amortization of noncurrent assets, income taxes, interest expense on the debt incurred to fund the Dingley Acquisition, management fees and transaction costs which would have been incurred had the Dingley Acquisition occurred as of the beginning of the periods presented. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the Dingley Acquisition and other transactions occurred as of that date or results which may occur in the future.

	(Unaudited)
	December 31,
(Dollars in thousands)	2004
Revenue	$	324,453
Net income	$	2,074

3. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of The Sheridan Group, Inc. and its wholly-owned subsidiaries, TSP, ULI, DPC, CCP, SBI, TDP, DJS and The Sheridan Group Holding Company. All material intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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.

Revenue Recognition

In accordance with Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition,” the Company records revenue when realized or realizable and earned when all of the following criteria are met:

·   Persuasive evidence of an arrangement exists,

·   Delivery has occurred or services have been rendered,

·   The seller’s price to the buyer is fixed and determinable, and

·   Collectibility is reasonably assured.

As such, substantially all revenue is recognized when a product is shipped and title and risk of loss transfers to the customer. Shipping and handling fees billed to customers are included in net sales and any cost of shipping and handling is included in cost of sales.

Cash and Cash Equivalents

Cash and cash equivalents include amounts invested in accounts which are readily convertible to known amounts or have original maturities of three months or less when purchased.

Business and Credit Concentrations

The Company’s customers are not concentrated in any specific geographic region, but are concentrated in the journal, magazine, book, specialty catalog and article reprint markets. There were no significant accounts receivable from a single customer. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of probable credit losses in its existing accounts receivable. The Company

31

reviews the allowance for doubtful accounts on a regular basis. Past due balances over 120 days are reviewed for collectibility and form the basis of the Company’s reserve. When the Company determines that a particular customer poses a credit risk, a specific reserve is established. Account balances are charged off against the allowance when the Company feels it is probable the receivable will not be recovered. The Company does not have any off-balance sheet credit exposure related to its customers.

A rollforward of the allowance for doubtful accounts is as follows:

	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2006			2005			2004
Balance at beginning of period	$	956,612		$	1,136,719		$	1,089,139
Charged to expense	1,219,661			53,074			195,961
Deductions	(224,853		)	(233,181		)	(549,793		)
Other (a)	—			—			401,412
Balance at end of period	$	1,951,420		$	956,612		$	1,136,719

(a) Represents the opening balance in the allowance resulting from the acquisition of The Dingley Press during 2004.

Inventories

Inventories are stated at the lower of cost or market with the cost of TSP’s paper inventory and SBI’s work-in-process inventory determined by the last-in, first-out (“LIFO”) cost method. The cost of the remaining inventory (approximately 92% of inventories at December 31, 2006 and 2005, respectively) is determined using the first-in, first-out (“FIFO”) method.

Property and Equipment

Property, plant and equipment are recorded at cost, except those assets acquired through acquisitions, in which case they are recorded at fair value. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, as follows: 3-11 years for machinery and equipment; and 10-40 years for buildings and land improvements. Leasehold improvements are amortized over their estimated useful lives or the term of the underlying lease, whichever is shorter. Upon disposal of property, plant and equipment, the cost of the asset and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in earnings.

Expenditures for renewals and improvements which extend the original estimated lives of the assets are capitalized. Expenditures for maintenance and repairs are charged to operations as incurred.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable pursuant to SFAS No. 144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets.” Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell.

Income Taxes

Deferred income taxes are recognized for the tax consequences of applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. A valuation allowance is recorded against deferred tax assets when it is more likely than not that a deferred tax asset will not be realized.

Goodwill

The Company reviews goodwill and indefinite-lived assets at least annually for impairment. Separable intangible

32

assets that have finite useful lives are amortized over their useful lives.

Goodwill is tested for impairment at the reporting unit level at adoption and at least annually thereafter, utilizing a two-step methodology. The initial step requires the Company to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill, of such unit. If the fair value exceeds the carrying value, no impairment loss is recognized. However, if the carrying value of the reporting unit exceeds its fair value, the goodwill of this unit may be impaired. The amount, if any, of the impairment is then measured in the second step by comparing the implied fair value of goodwill to the carrying value of goodwill for each reporting unit. To determine the implied fair value of goodwill, the Company made a hypothetical allocation of the reporting unit’s estimated fair value to the tangible and intangible assets (other than goodwill) of the reporting unit. Based on this methodology, the Company concluded that $12.8 million of the specialty catalogs segment goodwill was impaired and was required to be expensed as a non-cash charge to continuing operations during the fourth quarter of 2006.

Identified Intangible and Other Long-Lived Assets

Identified intangible assets, which primarily consist of customer relationships and trade names, were valued at fair value with the assistance of independent appraisers, effective with acquisitions. All long-lived assets are amortized over the estimated useful lives. The Company periodically reviews long-lived assets for impairment using undiscounted future cash flows whenever events or changes in circumstances indicate that the carrying value may not be recoverable, and does not believe there is any impairment of intangible assets or other long-lived assets as of December 31, 2006 and 2005 pursuant to SFAS 144.

Deferred Financing Costs

Deferred financing costs incurred in connection with the 2003 Notes and the 2004 Notes are being amortized over the term of the related debt using the effective interest method. Deferred financing costs incurred in connection with establishing the revolving credit agreement are being amortized over the term of the agreement using the straight-line method. Accumulated amortization as of December 31, 2006 and 2005 was $5,440,381 and $3,849,214, respectively.

Accounting for Stock Based Compensation

Our parent company, TSG Holdings Corp. (“Holdings”) established the 2003 Stock-based Incentive Compensation Plan (the “2003 Plan”), pursuant to which Holdings has reserved for issuance 55,500 shares of its Common Stock. There is currently no public trading market for the Common Stock. When necessary, the Company determines fair value through internal valuations based on historical financial information and/or through a third party service provider. As of December 31, 2006, 150 shares were available for future grants. Stock options are granted at exercise prices not less than the fair market value of the stock at the date of grant. Options generally vest ratably over a five-year period, except those options granted to officers, portions of which vest ratably over five years, and the remainder of which vest upon the achievement of certain performance targets, the occurrence of certain future events, including the sale of the Company or a qualified public offering, or after eight years from the date of grant, as specified in the 2003 Plan. Options expire ten years from the date of grant. The Company has a policy of issuing new shares to satisfy share options upon exercise.

Year ended December 31, 2006

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment,” (“SFAS 123R”). SFAS 123R requires that the cost of equity-based service awards be measured based on the grant-date fair value of the award. The cost will be recognized over the period during which an employee is required to provide service in exchange for the award or the requisite service period. This statement became effective for the Company on January 1, 2006. The Company adopted the “Modified Prospective Application” transition method which does not result in restatement of previously issued financial statements upon adoption. Awards that are granted after this date will be measured and non-cash compensation expense will be recognized in the consolidated statement of income in accordance with SFAS 123R. In addition, non-vested awards that were granted prior to the effective date of SFAS 123R also result in recognition of non-cash compensation expense after the date of adoption. The Company recognizes stock-based compensation expense ratably over the vesting periods of options, adjusted for estimated forfeitures.

For the year ended December 31, 2006, the Company recognized non-cash stock-based compensation expense of approximately $32,800 (approximately $20,300 net of taxes) which is included in selling and administrative expenses.

The Company values options using the Black-Scholes option-pricing model which was developed for use in estimating the fair value of traded options that are fully transferable and have no vesting restrictions. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected term of the options is an output

33

of the option-pricing model and estimates the period of time that options are expected to remain unexercised. The Company uses historical data to estimate the timing and amount of option exercises and forfeitures. The expected volatility is calculated by averaging the 12-month volatility for five peer group companies and a small-cap index. The following summarizes the assumptions used for estimating the fair value of stock options granted during the year ended December 31, 2006:

Risk-free interest rate	4.03%-4.69%
Average expected years until exercise	5.0 years
Expected volatility	35%
Weighted-average expected volatility	35%
Dividend yield	0.0%

The following is a summary of option activity for the year December 31, 2006:

					Weighted
					Average
			Weighted		Remaining
	Number		Average		Contractual	Aggregate
	of		Exercise		Term	Intrinsic
(in thousands, except per share data and years)	Shares		Price		(in years)	Value
Options outstanding at December 31, 2005	52,400		$	10.00
Granted	5,700		24.75
Exercised	(120	)	10.00
Forfeited	(2,830	)	10.00
Options outstanding at December 31, 2006	55,150		$	11.52	7.4	$	729,388
Options exercisable at December 31, 2006	14,950		$	10.09	7.4	$	219,185

The following is a summary of non-vested options:

			Weighted
			Average
	Number		Grant
	of		Date
	Shares		Fair Value
Nonvested options outstanding at December 31, 2005	42,280		$	2.67
Granted	5,700		9.35
Vested	(5,190	)	2.44
Forfeited	(2,590	)	2.45
Nonvested options outstanding at December 31, 2006	40,200		$	3.32

The total compensation cost related to nonvested awards not yet recognized as of December 31, 2006 is approximately $126,500 and will be recognized over a weighted average period of approximately 4.9 years.

During the year ended 2006, 120 options to purchase Holdings Common Stock were exercised and $1,200 of proceeds were received. The total intrinsic value, the difference between the exercise price and the fair value of Holdings Common Stock on the date of exercise, of options exercised during the year ended December 31, 2006, was $1,770.

Year Ended December 31, 2005

The Company used the intrinsic value method as defined in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” to account for stock options issued to employees. Accordingly, no compensation expense was recognized for stock options granted, as the exercise prices of the options were in excess of or equal to the fair value of the underlying common stock on the date of the option grants.

The following table reflects pro forma net income had the Company elected to adopt the fair value approach of SFAS No. 123, “Accounting for Stock-Based Compensation”:

34

	Year ended		Year ended
	December 31,		December 31,
	2005		2004
Net income as reported	$	1,180,379	$	2,329,632
Less: Stock-based compensation, net of tax	13,615		12,460
Pro forma net income	$	1,166,764	$	2,317,172

The estimated fair value of each option on the date of grant was calculated using the Black-Scholes option-pricing model. The following table summarizes the weighted-average of the assumptions used for stock options granted:

	December 31,			December 31,
	2005			2004
Risk-free interest rate	4.38		%	3.95		%
Average expected years until exercise	5.6 years			6.5 years
Expected volatility	0		%	0		%
Dividend yield	0		%	0		%
Weighted average fair value per share	$	2.17		$	2.26

Plan activity in 2005 was as follows:

	Year ended
	December 31,
	2005
Shares under option at beginning of year	55,500
Options granted (weighted average exercise price of $10.00)	900
Options canceled (weighted average exercise price of $10.00)	(3,920	)
Options exercised (exercise price of $10.00)	(80	)
Shares under option at end of year	52,400

At December 31, 2005, the remaining weighted average life of the outstanding options was approximately 8 years. All options issued since plan inception were granted with an exercise price of $10.00, which equaled the fair market value of Holdings Common Stock on the date of grant. At December 31, 2005, 10,120 options were exercisable. During 2005, 80 options to purchase Holdings Common Stock were exercised and the $800 of proceeds received was contributed from Holdings to the Company.

Fair Value Information

The Company believes that the carrying amounts of cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses reported in the consolidated balance sheets approximate their fair values due to the short maturity of these instruments. The estimated fair value of the Company’s publicly traded debt, based on quoted market prices, was approximately $171.6 million and $169.7 million as of December 31, 2006 and 2005, respectively.

Advertising Costs

The Company expenses advertising costs as the advertising occurs in accordance with American Institute of Certified Public Accountants, Statement of Position 93-7, “Reporting on Advertising Costs.” Advertising expense, included in selling and administrative expenses in the consolidated statements of operations, was approximately $379,000, $469,000 and $491,000, for the years ended December 31, 2006, 2005 and 2004, respectively.

New Accounting Standards

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN 48”), which clarifies the accounting for uncertain tax positions. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that the Company recognize in the financial statements, the impact of a tax position, if it is more likely than not that the tax position will be sustained on audit, based on the technical

35

merits of the position. FIN 48 also provides guidance on derecognition, balance sheet classification, interest and penalties, accounting in interim periods and disclosure. FIN 48 will be effective for the Company beginning January 1, 2007. The Company does not believe the adoption of FIN 48 will have a material effect on its consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS 157 does not require any new fair value measurements. Under SFAS 157, fair value is established by the price that would be received to sell the item or the amount to be paid to transfer the liability (an exit price), as opposed to the price to be paid for the asset or received to assume the liability (an entry price).  SFAS 157 is effective for all assets valued in financial statements for fiscal years beginning after November 15, 2007. The Company is currently evaluating whether the adoption of SFAS 157 will have a material effect on its consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R),” (“SFAS 158”). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. SFAS 158 is effective for fiscal years ending after June 15, 2007. The Company does not believe the adoption of SFAS 158 will have a material effect on its consolidated financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities.  SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company does not believe the adoption of SFAS 159 will have a material effect on its consolidated financial position, results of operations or cash flows.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (“SAB 108”). SAB 108 provides interpretive guidance on the process of quantifying financial statement misstatements. The interpretations in SAB 108 address the diversity in practice in quantifying financial statement misstatements and the potential under current practice for the build up of improper amounts on the balance sheet. As permitted by SAB 108, the provisions under SAB 108 will be applied in the first annual period ending after November 15, 2006. The adoption of SAB 108 did not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

4. Inventories

Inventories consist of the following:

	December 31,			December 31,
	2006			2005
Work-in-process	$	8,966,708		$	9,998,419
Raw materials (principally paper)	10,101,504			9,116,711
	19,068,212			19,115,130
Excess of current cost over LIFO inventory value	(110,333		)	(59,864		)
	$	18,957,879		$	19,055,266

The Company maintained a reserve for the realizability of inventory in the amounts of $90,796 and $95,988 for the years ended December 31, 2006 and 2005, respectively, which are included in the amounts in the table above relating to work-in-process and raw materials. A rollforward of this inventory reserve is as follows:

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	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2006			2005			2004
Balance at beginning of period	$	95,988		$	127,144		$	72,608
Charged to expense	55,759			34,351			105,845
Deductions	(60,951		)	(65,507		)	(51,309		)
Balance at end of period	$	90,796		$	95,988		$	127,144

5. Property, Plant and Equipment

Property, plant and equipment consist of the following:

	December 31,			December 31,
	2006			2005
Land	$	4,893,202		$	5,235,310
Buildings and improvements	39,880,509			39,934,420
Machinery and equipment	123,875,309			103,704,298
	168,649,020			148,874,028
Accumulated depreciation	(38,983,281		)	(29,654,517		)
Property, plant and equipment, net	$	129,665,739		$	119,219,511

Depreciation and amortization expense for the years ended December 31, 2006, 2005 and 2004, was $15,209,022, $15,121,343, and $12,755,046, respectively.

6. Intangible Assets

In conjunction with previous acquisitions, the Company acquired intangible assets relating to customer relationships, trade names and technology. The customer relationships, trade names and technology are being amortized using the straight-line method over their estimated useful lives as described below. Amortization expense for the years ended December 31, 2006 and 2005, related to customer relationships, trade name and technology intangible assets was $3,563,739 and $1,731,999, respectively. Amortization expense for the year ended December 31, 2006 included $1,881,962, representing the write-off of the Capital City Press trade name, which had an original value of $2,000,000, as a result of the shutdown of the Capital City Press facility.

		December 31, 2006						December 31, 2005
				Accumulated						Accumulated
	Useful Life	Cost		Amortization		Net		Cost		Amortization		Net
Customer relationships	25 years	$	27,800,000	$	3,652,018	$	24,147,982	$	27,800,000	$	2,540,241	$	25,259,759
Trade names	40 years	20,400,000		1,706,392		18,693,608		22,400,000		1,314,430		21,085,570
Technology	5 years	300,000		156,166		143,834		300,000		96,166		203,834
		$	48,500,000	$	5,514,576	$	42,985,424	$	50,500,000	$	3,950,837	$	46,549,163

The Company estimates annual amortization expense related to these intangibles as follows:

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Years Ended December 31,	Amortization
2007	$	1,682,000
2008	1,682,000
2009	1,645,834
2010	1,622,000
2011	1,622,000
Thereafter	34,731,590
Total	$	42,985,424

7. Goodwill

Goodwill, which arises from the purchase price exceeding the assigned value of the net assets of an acquired business, represents the value attributable to unidentifiable intangible elements being acquired. Goodwill at December 31, 2006 and 2005 totaled $44.7 million and $57.0 million, respectively. Goodwill resulted from the Sheridan Acquisition as a result of a stock purchase and; therefore, is not deductible for tax purposes and from the Dingley Acquisition as a result of an asset purchase and is deductible for tax purposes.

As of December 31, 2006, the initial step in the Company’s annual test for goodwill impairment indicated potential impairment in the specialty catalogs segment, as a result of declining results at TDP. The Company completed the second step by comparing the implied fair value of goodwill to the carrying value of goodwill for TDP. As a result of the second step, the Company determined that the carrying value of goodwill at TDP was fully impaired. The changes in the carrying amount of goodwill for the years ended December 31, 2005 and 2006 are as follows:

	Short-Run		Specialty			Other
	Journals		Catalogs			Publications		Consolidated
Balance at December 31, 2004	$	24,069,401	$	14,333,285		$	19,360,621	$	57,763,307
Realization of tax goodwill benefit related to the Dingley Acquisition	—		(780,264		)	—		(780,264		)
Balance at December 31, 2005	$	24,069,401	$	13,553,021		$	19,360,621	$	56,983,043
Realization of tax goodwill benefit related to the Dingley Acquisition	—		(778,090		)	—		(778,090		)
Adjustment of deferred tax liabilities related to assets acquired in the Sheridan Acquisition	768,448		—			—		768,448
Adjustment of current tax liabilities related to assets acquired in the Sheridan Acquisition	347,000		—			—		347,000
Adjustment of other liabilities related to assets acquired in the Sheridan Acquisition	152,330		—			—		152,330
Impairment charge	—		(12,774,931		)	—		(12,774,931		)
Balance at December 31, 2006	$	25,337,179	$	—		$	19,360,621	$	44,697,800

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8. Other Assets

Other assets consist of the following:

	December 31,		December 31,
	2006		2005
Notes and other receivables, net	$	1,409,750	$	1,172,148
Prepaid expenses and deposits	2,904,721		3,327,091
Non-compete agreements, net	363,875		582,080
Deferred compensation plan assets	3,750,995		3,477,251
Other	88,488		88,493
Total	8,517,829		8,647,063
Less: current portion	4,043,345		4,125,713
Long-term portion	$	4,474,484	$	4,521,350

Notes receivable are presented net of an allowance of $194,820 as of December 31, 2005. There were no notes receivable outstanding as of December 31, 2006. Non-compete agreements are presented net of accumulated amortization of $1,340,134 and $1,121,929 as of December 31, 2006 and 2005, respectively. Amortization expense related to the non-compete agreements (which is included in amortization of intangibles in the consolidated statements of income and cash flows) for the years ended December 31, 2006, 2005 and 2004, was $218,205, $218,205 and $178,368, respectively.

9. Notes Payable and Revolving Credit Facility

In conjunction with the Sheridan Acquisition, on August 21, 2003, the Company completed a private debt offering of 10.25% senior secured notes totaling $105.0 million, priced to yield 10.50%, that mature August 15, 2011. The carrying value of the 2003 Notes was $104.0 million and $103.9 million as of December 31, 2006 and 2005, respectively.

In conjunction with the Dingley Acquisition, on May 25, 2004, the Company completed a private debt offering of 10.25% senior secured notes totaling $60.0 million, priced to yield 9.86%, that mature August 15, 2011. The carrying value of the 2004 Notes was $60.9 million and $61.0 million as of December 31, 2006 and 2005, respectively. The 2004 Notes have identical terms to the 2003 Notes.

The 2003 Notes and the 2004 Notes are collateralized by security interests in substantially all of the assets of the Company and its subsidiaries, subject to permitted liens. The capital stock, securities and other payment rights of the Company’s subsidiaries will constitute collateral for the 2003 Notes and the 2004 Notes only to the extent that Rule 3-10 and Rule 3-16 of Regulation S-X under the Securities Act do not require separate financial statements of a subsidiary to be filed with the SEC. Payment obligations under the 2003 Notes and the 2004 Notes are guaranteed jointly and severally, irrevocably and unconditionally, by all of the Company’s subsidiaries. The Sheridan Group, Inc. (the stand-alone parent company) owns 100% of the outstanding stock of all of its subsidiaries and has no material independent assets or operations. There are no restrictions on the ability of The Sheridan Group, Inc. (the stand-alone parent company) to obtain funds by dividend, advance or loan from its subsidiaries.

In connection with the offerings of the 2003 Notes and the 2004 Notes (the “Offerings”), the Company entered into registration rights agreements pursuant to which the Company was required to register the 2003 Notes and the 2004 Notes with the SEC. The Company filed Registration Statements on Form S-4 with the SEC in connection with exchange offers of its outstanding 2003 Notes and 2004 Notes for like principal amounts of new senior secured notes. The Registration Statement covering the 2003 Notes was declared effective on October 13, 2004. The Registration Statement covering the 2004 Notes was declared effective on October 25, 2004. The new senior secured notes are identical in all material respects to the 2003 Notes and the 2004 Notes, except that the new senior secured notes do not bear legends restricting the transfer thereof.

The terms of the registration rights agreement relating to the 2003 Notes required the Company to have had an exchange registration statement for the 2003 Notes filed with the SEC and declared effective by February 17, 2004. Because of additional SEC requirements as a result of the Dingley Acquisition, the Company was not able to satisfy this requirement until October 13, 2004. Consequently, during 2004 the Company paid liquidated damages with respect to the 2003 Notes totaling approximately $319,000, which is included in interest expense for the year ended December 31, 2004. The 2004 Notes did not accrue any liquidated damages since the registration of the 2004 Notes was declared effective prior to November 21, 2004.

In an event of default, the holders of at least 25% in aggregate principal amount of the 2003 Notes and the 2004 Notes, may declare the principal, premium, if any, and accrued and unpaid interest on the 2003 Notes and the 2004 Notes to be due and payable immediately.

39

Concurrent with the offering of the 2003 Notes, the Company entered into a revolving credit agreement (the “Revolver”). The Revolver was amended concurrent with the offering of the 2004 Notes. Terms of the Revolver allow for revolving debt of up to $30.0 million, including letters of credit commitments of up to $5.0 million, subject to a borrowing base test. Borrowings under the Revolver bear interest at the bank’s base rate or the LIBOR rate plus a margin of 1.75% at the Company’s option and mature in May 2009. Interest is payable monthly in arrears. The Company has agreed to pay an annual commitment fee on the unused portion of the Revolver at a rate of 0.35%. In addition, the Company has agreed to pay an annual fee of 1.875% on all letters of credit outstanding. As of December 31, 2006, the Company had no borrowings outstanding under the Revolver, had unused amounts available of $26,596,437 and had $1,895,000 in outstanding letters of credit.

Borrowings under the Revolver are collateralized by the assets of the Company and its subsidiaries, subject to permitted liens. The Revolver contains various covenants including provisions that prohibit the Company from incurring and prepaying other indebtedness and places restrictions on the Company’s ability to pay dividends. It also requires the Company to satisfy financial tests, such as an interest coverage ratio and the maintenance of a minimum amount of earnings before interest, taxes depreciation and amortization (as defined in the Revolver). The Company has complied with all of the restrictive covenants as of December 31, 2006.

In an event of default, all principal and interest due under the Revolver shall be immediately due and payable.

10. Accrued Expenses

Accrued expenses consist of the following:

	December 31,		December 31,
	2006		2005
Payroll and related expenses	$	4,674,621	$	5,508,232
Profit sharing accrual	2,226,696		2,219,059
Accrued interest	6,375,204		6,375,826
Customer prepayments	7,182,562		3,670,677
Deferred revenue	1,333,852		1,515,840
Self-insured health and worker’s compensation accrual	2,728,251		3,075,622
Other	2,912,758		1,855,263
	$	27,433,944	$	24,220,519

11. Other Liabilities

Other liabilities consist of the following:

	December 31,		December 31,
	2006		2005
Non-compete agreements	$	785,238	$	971,327
Deferred compensation	3,228,927		2,394,894
Other	102,834		91,718
Total	$	4,116,999	$	3,457,939

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12. Income Taxes

The components of the income tax (benefit) provision are as follows:

	December 31,			December 31,			December 31,
	2006			2005			2004
Current
Federal	$	2,066,843		$	2,151,489		$	1,819,044
State	724,329			553,647			613,193
	2,791,172			2,705,136			2,432,237
Deferred
Federal	(6,570,263		)	(1,173,117		)	(45,795		)
State	(665,057		)	903,981			378,409
	(7,235,320		)	(269,136		)	332,614
	$	(4,444,148	)	$	2,436,000		$	2,764,851

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets and liabilities were as follows:

	December 31,			December 31,
	2006			2005
Deferred tax assets
Incentive and vacation accrual	$	1,434,550		$	1,156,191
Bad debt reserve	725,715			435,811
Self insurance accrual	689,402			553,939
Intangible assets	645,901			607,128
Amortization of financing costs	485,979			425,981
Inventory-additional costs capitalized for tax	225,165			220,918
Net operating loss carryforwards-Federal	319,012			420,791
Net operating loss carryforwards-States	868,690			691,603
Fixed asset basis related to state disallowance of bonus depreciation	148,434			227,177
Goodwill	4,504,641			—
Other	59,462			44,677
Valuation allowance	(1,205,168		)	(978,482		)
Total deferred tax assets	8,901,783			3,805,734
Deferred tax liabilities
Intangible assets	16,656,287			18,273,862
Inventory basis difference	275,729			277,078
Property and equipment	16,877,091			16,539,330
Land	1,048,297			1,112,861
Prepaid insurance	150,128			175,224
Total deferred tax liabilities	35,007,532			36,378,355
Net deferred tax liabilities	$	26,105,749		$	32,572,621

41

	December 31,		December 31,
	2006		2005
Included in the balance sheet
Noncurrent deferred tax liabilities in excess of assets	$	27,909,465	$	33,740,457
Current deferred tax assets in excess of liabilities	1,803,716		1,167,836
Net deferred tax liability	$	26,105,749	$	32,572,621

As a result of the impairment of tax deductible goodwill related to the Dingley Acquisition, deferred tax assets were increased by approximately $4.7 million to record the future tax benefit.

In accordance with FAS 109, “Accounting for Income Taxes”, the Company will realize a tax benefit associated with the amount of tax goodwill in excess of book goodwill associated with the Dingley Acquisition. The Company will only recognize the benefit when realized on future tax returns and will apply the benefit first to reduce book goodwill associated with the acquisition to zero, second to reduce to zero other noncurrent intangible assets related to the acquisition, and third to reduce income tax expense. During 2006 and 2005, the Company realized a tax benefit of $0.8 million and $0.8 million, respectively, associated with the realization of tax deductible goodwill in excess of book goodwill. Such amount has been recorded as a reduction to book goodwill for the years ending December 31, 2006 and 2005 (see Note 7). During 2006, deferred tax liabilities were increased by $0.8 million to correct an immaterial error that existed as of the Sheridan Acquisition date with a corresponding increase to book goodwill for the year ending December 31, 2006 (see Note 7.)

The Internal Revenue Code and various state taxing jurisdictions place certain limitations on the annual amount of NOL carryforwards which can be utilized if certain changes in the Company’s ownership occur. In connection with the Company’s 1998 acquisition of CCP, a change in ownership occurred, resulting in a limitation on the utilization of CCP’s preacquistion NOLs. During 2004, the Company elected to adopt an alternative method of determining the limitation on the use of the NOLs pursuant to IRS Notice 2003-65, which resulted in a decrease to the limitation on the use of Federal and certain State NOLs. As a result, the Company received U.S. Federal and State of Vermont income tax refunds of approximately $1,322,000, generated from additional use of the net operating losses against taxable income in 2000, 2001, and 2002. Thus, management concluded during 2004 that it is more likely than not that the remaining U.S. Federal net operating losses in the table shown below and the related State net operating losses will be utilized. Accordingly, the related valuation allowance of approximately $1,220,000 was fully reversed in 2004. This reversal of valuation allowance resulted in a reduction to goodwill since the valuation allowance had been established through purchase accounting upon the acquisition of CCP.

At December 31, 2006 and 2005, the Company had U.S. Federal net operating loss (“NOL”) deduction carryforwards of approximately $938,000 and $1,238,000, respectively, attributable to one of its subsidiaries. The remaining Federal NOLs as of December 31, 2006 are subject to limitations which allow for approximately $299,000 of NOLs to be available for use each year. The Company’s Federal NOLs will expire approximately as follows:

Amount of Regular	Year of
Net Operating Loss	Expiration
85,000	2009
674,000	2010
179,000	2012

As of December 31, 2006 and 2005, the Company had state NOLs with a tax effected value of approximately $869,000 and $692,000, respectively, in various jurisdictions, which begin to expire in 2008. Management has determined that a valuation allowance is needed for approximately $853,000 and $623,000 as of December 31, 2006 and 2005, respectively, against net operating losses in State jurisdictions without sufficient prior earnings.

The Company utilized NOLs against Federal and State taxable income, which reduced tax expense for 2006 by approximately $102,000.

The Company has also determined that valuation allowances of approximately $352,000 and $355,000 as of December 31, 2006 and 2005, respectively, are needed for a deferred tax asset relating to transaction costs from the Sheridan Acquisition which is deductible for tax purposes upon sale of the Company. Given the indefinite timing of this reversal, a valuation allowance was established.

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The Company has provided for contingencies related to income taxes in accordance with SFAS No. 5. At December 31, 2006 and December 31, 2005, the Company has reserves of approximately $616,000 and $559,000, respectively, related to transaction costs for the Sheridan Acquisition. In analyzing the need for the provision of tax contingency reserves, including interest, management reviewed applicable statutes, rules, regulations and interpretations and established these reserves based on past experiences and judgments about potential actions by taxing jurisdictions.

A rollforward of the Company’s valuation allowance is as follows:

	Year Ended		Year Ended		Year ended
	December 31,		December 31,		December 31,
	2006		2005		2004
Balance at beginning of period	$	978,482	$	669,180	$	1,870,660
Charged to expense	226,686		309,302		319,551
Reductions	—		—		(1,223,505		)
Other, net	—		—		(297,526		)
Balance at end of period	$	1,205,168	$	978,482	$	669,180

The Company’s income tax provision differs from taxes computed using the U.S. Federal statutory tax rate as follows:

	Years ended			Years ended			Years ended
	December 31,			December 31,			December 31,
	2006			2005			2004
Income before income taxes	$	(12,786,996	)	$	3,616,379		$	5,094,483
U.S. Federal statutory tax rate	$	(4,347,579	)	$	1,229,569		$	1,732,125
Increase (decrease) in tax expense resulting from
Tax reserves	57,039			31,620			21,957
Non-deductible meals and entertainment	67,485			79,459			82,218
Change in valuation allowance	226,686			309,302			319,551
State income taxes, net of U.S. Federal income tax benefit	(137,730		)	168,352			(91,584		)
Change in state tax apportionment and rates	(275,872		)	780,198			554,080
Domestic production activity deduction	(41,060		)	(65,179		)	—
Other, net	6,883			(97,321		)	146,504
Income tax provision	$	(4,444,148	)	$	2,436,000		$	2,764,851

During 2006, the Company reported a decrease in its deferred State tax provision of approximately $276,000 to properly reflect the lower anticipated State effective income tax rates due to decreased apportionment of the Company’s taxable income to states with high tax rates. During 2005, the Company reported an increase in its deferred State tax provision of approximately $780,000 to properly reflect higher anticipated State effective income taxes due primarily to increased apportionment of the Company’s taxable income to states with unitary filing requirements and other high tax states.

On October 22, 2004, the President of the U.S. signed into law the American Jobs Creation Act of 2004. The Company realized a benefit of approximately $41,000 and $65,000 from the deduction associated with domestic production activities in 2006 and 2005, respectively. This special deduction is 3% of qualifying income for years 2005 and 2006, 6% in years 2007 through 2009 and 9% thereafter.

13. Commitments

In February 1998, the Company entered into an employment agreement with its former Chairman of the Board.

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This agreement includes a 10 year non-compete arrangement, which expires in 2008. The liability for this agreement is to be paid out in increments increasing from $126,000 to $151,200 per year, over 15 years. Included in other liabilities as of December 31, 2006 is approximately $640,000 related to the net present value of the obligation under this agreement.

In May 2004, the Company entered into an employment agreement with the Chairman of The Dingley Press. This agreement includes a 5 year non-compete arrangement, which expires in 2009. The liability for this agreement is to be paid out in increments of $108,000 per year over 5 years. Included in other liabilities as of December 31, 2006 is approximately $145,000 related to the net present value of the obligation under the agreement.

The Company leases warehouse, plant and office space, printing equipment, computer equipment and delivery equipment under non-cancelable operating leases. Rental expense relating to these leases was approximately $5,208,000, $5,441,000 and $4,806,000 for the years ended December 31, 2006, 2005 and 2004, respectively. As of December 31, 2006 approximate minimum future rental payments under non-cancelable operating leases are as follows:

Years Ended December 31,
2007	4,922,000
2008	3,436,000
2009	1,958,000
2010	579,000
2011	231,000
Thereafter	7,000
Total	$	11,133,000

In exchange for certain pricing arrangements, the Company has entered into agreements to purchase consumable raw materials. The Company has also entered into agreements to acquire additional plant and equipment. As of December 31, 2006, approximate future payments related to these agreements are as follows:

	Raw		Plant and
Years Ended December 31,	materials		equipment
2007	$	2,856,000	$	8,867,000
2008	377,000		9,000
2009	371,000		—
2010	—		—
2011	—		—
Thereafter	—		—
Total	$	3,604,000	$	8,876,000

14. Employee Benefit Plans

The Company sponsors a 401(k) retirement plan (the “Plan”). The Company determines annual discretionary contributions to the Plans. Contributions of approximately $3,067,000, $2,886,000 and $2,103,000 were charged to operations for the years ended December 31, 2006, 2005 and 2004, respectively.

The Company maintains a non-qualified deferred compensation plan for certain employees which allows participants to annually elect (via individual contracts) to defer a portion of their compensation on a pre-tax basis and which allows for make-whole contributions for participants whose pre-tax deferrals are limited under the Company’s 401(k) Plan and other discretionary contributions. Employee and Company contributions are maintained in an irrevocable trust. Legally, the assets remain those of the Company; however, access to the trust assets is severely restricted. The trust cannot be revoked by the employer or an acquirer, but the assets are subject to the claims of the Company’s general creditors. The employee has no right to assign or transfer contractual rights in the trust. The participants are fully vested in their compensation deferred; however, the make-whole contributions and any employer discretionary contributions are subject to vesting requirements. The Company accounts for the plan in accordance with Emerging Issues Task Force (“EITF”) No. 97-14, “Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested.” Pursuant to EITF 97-14, as of December 31, 2006 and 2005, the Company recorded a deferred compensation liability of approximately $3,229,000 and $2,395,000, respectively, in other non-current liabilities in the accompanying consolidated balance sheets. The change in the deferred compensation obligation related to changes in the fair value of the vested diversified assets held in trust is recorded in accordance with SFAS 115 as income (loss) in compensation expense with an offsetting entry to other income (loss), respectively. The diversified assets held in trust were approximately $3,751,000 and $3,477,000 as of

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December 31, 2006 and 2005, respectively, and are recorded at their fair value, based on quoted market prices, in other non-current assets on the accompanying consolidated balance sheets.

During the fourth quarter of 2006, the Company recorded an adjustment to the deferred compensation liability of approximately $0.6 million to correct an immaterial error in the deferred compensation liability as of December 31, 2006. Of this amount, approximately $0.4 million was charged to selling and administrative expense and approximately $0.2 million was recorded as additional goodwill to reflect the liability that existed as of the date of the Sheridan Acquisition.

15. Related Party Transactions

In connection with the Sheridan Acquisition, the Company entered into a 10 year management agreement with BRS and JCP. The management fee is equal to the greater of $500,000 or 2% of earnings before interest, taxes depreciation and amortization (as defined in the management agreement), plus reasonable out-of-pocket expenses. The Company incurred and paid approximately $784,000, $827,000 and $769,000 in such fees for the years ended December 31, 2006, 2005 and 2004, respectively.

During 2006, the Company advanced $226,147 to its sole shareholder, Holdings, to fund due diligence efforts related to a potential acquisition by Holdings. The Company anticipates that this advance will be repaid during 2007.

J. M. Dryden Hall, Jr., a member of the Company’s board of directors, previously served the Company as legal counsel. Fees paid to Mr. Hall for the years ended December 31, 2005 and 2004, were approximately $50,000 and $56,000, respectively. Effective January 1, 2006, Mr. Hall no longer served as legal counsel to the Company.

16. Contingencies

The Company is party to legal actions as a result of various claims arising in the normal course of business. The Company believes that the disposition of these matters will not have a material adverse effect on the financial condition, results of operations or liquidity of the Company.

17. Business Segments

The Company is a specialty printer in the United States offering a full range of printing and value-added support services for the journal, catalog, magazine, book and article reprint markets. The Company’s business includes three business reporting segments comprised of “Short-run Journals”, “Specialty Catalogs” and “Other Publications.” Short-run Journals are primarily medical, technical, scientific or scholarly journals and related reprints with run lengths of less than 5,000 copies. The Specialty Catalogs segment, which is comprised of the assets and operations of The Dingley Press acquired on May 25, 2004, is focused on catalog merchants that require run lengths between 300,000 and 10,000,000 copies. The Other Publications business segment is comprised of three operating segments which produce specialty magazines, medium-run journals and short-run books. Certain operations within the Company’s Other Publications segment have been aggregated following the provisions of SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” due to the similar characteristics of their financial performance and operations, including the nature of their service offerings, processes supporting the delivery of the services, customers, and marketing and sales processes.

The accounting policies of the operating segments are the same as those described in the Summary of Significant Accounting Policies. The results of each segment include certain allocations for general, administrative and other shared costs. However, certain costs, such as corporate profit sharing and bonuses and the amortization of a non-compete agreement with the Company’s former Chairman of the Board (Note 13), are not allocated to the segments. The Company’s customer base resides in the continental United States and its manufacturing, warehouse and office facilities are located throughout the East Coast and Midwest.

The Company had one customer which accounted for 12.0% and 13.6 % of consolidated net sales for the years ended December 31, 2006 and 2005, respectively. Net sales for this customer are reported in the Specialty Catalogs segment. The Company had another customer which accounted for 10.3% of consolidated net sales for the year ended December 31, 2006. Net sales for this customer are reported in both the Short-run Journals and Other Publications segments.

The following table provides segment information for continuing operations (in thousands):

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	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2006			2005			2004
Net sales
Short-run journals	$	92,180		$	99,955		$	97,277
Specialty catalogs	99,060			111,846			64,204
Other publications	150,497			141,643			131,172
Intersegment eliminations	(4,197		)	(5,485		)	(5,140		)
Consolidated total	$	337,540		$	347,959		$	287,513
Operating income (loss)
Short-run journals	$	10,910		$	12,618		$	13,344
Specialty catalogs	(12,695		)	2,599			3,483
Other publications	9,566			8,678			6,885
Corporate	(2,292		)	(1,998		)	(2,256		)
Consolidated total	$	5,489		$	21,897		$	21,456
Assets
Short-run journals	$	102,140		$	98,535		$	94,442
Specialty catalogs	69,335			85,633			88,147
Other publications	118,911			113,722			112,348
Corporate	1,181			2,831			4,202
Consolidated total	$	291,567		$	300,721		$	299,139
Depreciation and amortization
Short-run journals	$	6,182		$	4,796		$	4,604
Specialty catalogs	5,777			5,785			3,424
Other publications	6,803			6,281			6,399
Corporate	229			210			166
Consolidated total	$	18,991		$	17,072		$	14,593
Capital expenditures
Short-run journals	$	6,304		$	8,992		$	4,583
Specialty catalogs	3,959			3,552			5,815
Other publications	16,008			8,522			11,122
Corporate	25			216			307
Consolidated total	$	26,296		$	21,282		$	21,827
Goodwill
Short-run journals	$	25,337		$	24,069		$	24,069
Specialty catalogs	—			13,553			14,333
Other publications	19,361			19,361			19,361
Consolidated total	$	44,698		$	56,983		$	57,763
Intangible assets
Short-run journals	$	23,720		$	26,507		$	27,463
Specialty catalogs	3,026			3,208			3,390
Other publications	16,239			16,834			17,428
Consolidated total	$	42,985		$	46,549		$	48,281

18. Restructuring and Other Exit Costs

Due to trends in the short-run journal business and the high capital investment necessary to maintain two manufacturing facilities serving the same market, the Company’s Board of Directors, on December 15, 2005, approved a restructuring plan to consolidate all short-run journal printing operations into one site. During the first quarter of 2006, the

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Company consolidated the printing of short-run journals at The Sheridan Press in Hanover, Pennsylvania and closed the Capital City Press facility in Berlin, Vermont. Approximately 200 positions were eliminated as a result of the closure. Of the 200 employees affected, approximately 45 Publication Services employees were offered jobs with one of the Company’s subsidiaries, Dartmouth Journal Services.

The Company recorded $2.7 million of restructuring costs during 2006, related primarily to guaranteed severance payments of $1.5 million, employee health benefits of $0.7 million and other one-time costs of $0.5 million. There were no restructuring liabilities outstanding as of December 31, 2006. The Company estimates an additional $0.2 million of charges resulting in future cash expenditures will be charged during fiscal year 2007 related to the restructuring. Total restructuring costs, including charges of $0.4 million recorded in 2005, are projected to be $3.3 million. The Company also recorded non-cash charges of $2.4 million during 2006 associated with the accelerated depreciation and amortization of plant and equipment and the Capital City Press trade name, which was disposed of as a result of the shutdown. During May 2006, excess equipment at Capital City Press was sold through a public auction for cash proceeds of approximately $0.3 million, resulting in a gain of approximately $0.1 million. On August 31, 2006, the Capital City Press land and building, which had a carrying value of approximately $1.6 million, was sold, resulting in a negligible gain.

In connection with the shutdown of Capital City Press, the Company transferred certain tangible assets, primarily production equipment, to our other subsidiaries. The Company also transferred intangible assets, which consisted of goodwill and customer relationships, to The Sheridan Press. The tangible and intangible assets were transferred at carryover, historical cost basis since the transfers took place between entities under common control.

On August 31, 2005 the Company announced plans to reduce the scope of its Publications Services operation at Capital City Press and eliminate approximately 35 positions involved with composition and graphics work and also lay off about 10 printing operations employees due to a reduced volume of printing work. In connection with these layoffs, the Company recorded approximately $74,000 of restructuring costs in 2005, primarily related to severance payments. The Company also incurred a charge of approximately $70,000, included in cost of sales, in 2005 related to the write-off of equipment.

In September 2004, the Company closed the Sheridan Books, Inc. facility in Fredericksburg, VA, which was part of the Other Publications segment, and moved most of the manufacturing operations equipment from this facility to its facility in Chelsea, Michigan. As a result of this action, the Company incurred approximately $256,000 of restructuring costs related to employee termination and other closure-related expenses. No amounts were accrued related to this restructuring at December 31, 2004.

The Fredericksburg facility and excess equipment were sold during 2004. The sale of the land and building, which had a carrying value of approximately $952,000, resulted in a gain of approximately $919,000.  In connection with the sale of the land and building, the Company incurred approximately $143,000 of costs related to vacating the facility.  The sale and disposal of the excess equipment, which had a carrying value of approximately $484,000, resulted in a loss of approximately $435,000.

19. Quarterly Financial Information (unaudited)

Quarterly financial information for the years ended December 31, 2006 and 2005 is as follows (in thousands):

	First			Second		Third		Fourth
2006	Quarter			Quarter		Quarter		Quarter
Net sales	$	86,150		$	80,751	$	84,241	$	86,398
Gross profit	14,148			16,351		17,765		17,112
Operating (loss) income	(380		)	5,612		7,423		(7,166		)
Net (loss) income	$	(2,555	)	$	525	$	1,607	$	(7,920	)

	First		Second		Third		Fourth
2005	Quarter		Quarter		Quarter		Quarter
Net sales	$	84,995	$	84,124	$	87,403	$	91,437
Gross profit	16,326		15,302		16,534		16,294
Operating income	5,762		4,785		5,780		5,570
Net income	$	469	$	91	$	498	$	122

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The results for the first quarter of 2006 reflect the impact of the restructuring charges in connection with the shutdown of CCP (see Note 18.)  The results for the fourth quarter of 2006 reflect the impact of the full impairment of goodwill at TDP (see Note 7.)

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

Not applicable.

ITEM 9A.   CONTROLS AND PROCEDURES

As of the end of the period covered by this Annual Report on Form 10-K, we conducted an evaluation, under the supervision and with the participation of the principal executive officer (“CEO”) and principal financial officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.   OTHER INFORMATION

Not applicable.

PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

We are a wholly-owned subsidiary of TSG Holdings Corp., whose stockholders include affiliates of Bruckmann, Rosser, Sherrill & Co., LLC and Jefferies Capital Partners, and members of our senior management.

Our Equity Sponsors

Bruckmann, Rosser, Sherrill & Co., LLC, or BRS, is a New York-based private equity investment firm with about $1.2 billion under management. BRS was founded in 1995 and has since invested in approximately 40 companies in the following industries: restaurants, consumer goods, specialty retail, recreation/leisure, apparel, home furnishings, industrial and commercial services (including equipment rental), commercial equipment manufacturing, wholesale distribution and healthcare services. BRS and its affiliates are collectively referred to as “BRS.”

Jefferies Capital Partners, or JCP, is a New York-based private equity investment firm with over $1.0 billion in equity commitments under management. Since 1994, JCP’s professionals have invested in approximately 50 companies in a variety of industries. JCP focuses on partnering with entrepreneurs and management teams in industries in which JCP has expertise. JCP invests in management buyouts, recapitalizations, industry consolidations and growth equity. JCP and its affiliates are collectively referred to as “JCP.”

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Directors and Executive Officers

Our executive officers and directors are as follows:

Name	Age	Position
John A. Saxton	57	President and Chief Executive Officer and Director
Robert M. Jakobe	53	Executive Vice President and Chief Financial Officer and Secretary
Douglas R. Ehmann	50	Vice President and Chief Technology Officer
Dale A. Tepp	50	Vice President—Human Resources
Joan B. Davidson	45	Group President—Sheridan Publication Services
Patricia A. Stricker	42	President and Chief Operating Officer—The Sheridan Press, Inc. (“TSP”)
Gary J. Kittredge	56	President and Chief Operating Officer—Dartmouth Printing Company (“DPC”) and Dartmouth Journal Services (“DJS”)
Robert M. Moore	41	President and Chief Operating Officer—The Dingley Press, Inc. (“TDP”)
Michael J. Seagram	50	President and Chief Operating Officer—Sheridan Books, Inc. (“SBI”)
J. Kenneth Garner	53	President and Chief Operating Officer—United Litho, Inc. (“ULI”)
G. Paul Bozuwa	46	Vice President—Global Business Development
Christopher A. Pierce	58	Chairman—The Dingley Press, Inc. (“TDP”)
Thomas J. Baldwin	48	Director
Nicholas Daraviras	33	Director
Craig H. Deery	59	Director
Gary T. DiCamillo	56	Director
J. Rice Edmonds	36	Director
J. M. Dryden Hall, Jr.	73	Director
James L. Luikart	61	Director
Nicholas R. Sheppard	32	Director
George A. Whaling	70	Director

The table above provides a current list of our executive officers and their respective current positions. Effective January 1, 2007, the following organizational changes were implemented.  Mr. Jakobe became Executive Vice President and Chief Financial Officer and Secretary of TSG, Ms. Stricker became President and Chief Operating Officer of TSP, Ms. Davidson became Group President, Sheridan Publication Services, and Mr. Bozuwa became Vice President, Global Business Development.  The new titles are used in the following biographies.

John A. Saxton, President, Chief Executive Officer and Director. Mr. Saxton joined us in 1995 as our President and Chief Executive Officer and has served on our board of directors since 1991. Prior to joining us, Mr. Saxton held various positions at The Procter & Gamble Company, most recently serving as President of the Noxell Corporation following its acquisition by The Procter & Gamble Company in 1990. Mr. Saxton is a member of the National Association for Printing Leadership’s Walter E. Soderstrom Society, which honors individuals in the printing industry who have significantly contributed to the development and the progress of the graphic arts. Mr. Saxton holds a B.S. from Bucknell University.

Robert M. Jakobe, Executive Vice President and Chief Financial Officer and Secretary. Mr. Jakobe joined us in 1994 and effective January 1, 2007, Mr. Jakobe began serving as Executive Vice President and Chief Financial Officer and Secretary of TSG. Mr. Jakobe served as our Vice President and Chief Financial Officer through 2006. Prior to joining us, he worked at various positions within The Procter & Gamble Company, most recently serving as Division Comptroller and Vice President of Finance for the Noxell Corporation. Mr. Jakobe holds a B.A. from the University of Notre Dame.

Douglas R. Ehmann, Vice President and Chief Technology Officer. Mr. Ehmann joined us in 1998 as our Vice President and Chief Technology Officer. Prior to joining us, he worked at Northrop Grumman Corporation as a Sector Chief Information Officer for Information Systems from 1995 to 1998 and in the Management Systems Division at the Procter & Gamble Company from 1981 to 1995. Mr. Ehmann serves on the Executive Committee of the Print Industries Market Information and Research (PRIMIR) organization. He holds a B.S., an M.E. and an M.B.A. from Cornell University.

Dale A. Tepp, Vice President—Human Resources. Ms. Tepp joined us in September 2006 as Vice President, Human Resources.  Prior to joining us, she worked in various Human Resources positions with Great Northern Nekoosa Corporation, Georgia-Pacific Corporation, Color-Box and Cenveo, most recently serving as Executive Director of Human Resources.  She holds a B.S. degree from the University of Wisconsin.

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Joan B. Davidson, Group President—Sheridan Publication Services.  Ms. Davidson joined us in 1995, and effective January 1, 2007, began serving as Group President, Sheridan Publication Services. Ms. Davidson served as President and Chief Operating Officer of TSP from 1996 through 2006. From 1995 to 1996, she served as Finance Manager of TSP. Prior to joining us; Ms. Davidson worked in various positions in the marketing and finance departments of The Procter & Gamble Company, most recently serving as a Finance Manager. Ms. Davidson is active in the industry as Chairman of the National Association for Printing Leadership and as past Secretary and past Treasurer of the Print and Graphic Scholarship Foundation of the Graphic Arts. She is a member of the National Association for Printing Leadership’s Walter E. Soderstrom Society. Ms. Davidson holds a B.S. from the College of Notre Dame of Maryland and an M.B.A. from Loyola College in Maryland.

Patricia A. Stricker, President and Chief Operating Officer—TSP. Ms. Stricker joined us in 1998 and effective January 1, 2007, began serving as President and Chief Operating Officer of TSP.  Ms. Stricker served as Vice President, Operations and Human Resources for TSG from January 2003 through 2006. From 2000 to 2003, she served as President of SBI. Ms. Stricker served as our Vice President, Corporate Development from 1999 to 2000, and as our Projects Manager from 1998 to 1999. Prior to joining us, Ms. Stricker held various positions at General Physics Corporation, most recently serving as Vice President, Finance and Administration. She holds a B.A. from the College of Notre Dame of Maryland.

Ms. Stricker, President and Chief Operating Officer of TSP, and Ms. Davidson, Group President, Sheridan Publication  Services, are sisters.

Gary J. Kittredge, President and Chief Operating Officer—DPC and DJS.  Mr. Kittredge joined us in 2000, and effective April 1, 2006 began serving as President and Chief Operating Officer of DPC and DJS. From 2002 to 2006, he served as President and Chief Operating Officer of CCP. From 2000 to 2002, he served as Executive Vice President of CCP. Prior to joining us, Mr. Kittredge was the General Manager and Vice President of Manufacturing for IPD Printing. Prior to that, he served as a Business Unit Manager and Manager of Technical Development of Litho-Krome Co., a subsidiary of Hallmark Cards, Incorporated. Mr. Kittredge is a member of the Board of Directors of the Printing Industry of New England. He holds a B.S. and an M.S. from Rochester Institute of Technology.

Robert M. Moore, President and Chief Operating Officer—TDP. Mr. Moore joined us in 2000, and since April 1, 2006 has served as President and Chief Operating Officer of TDP. From 2003 to 2006, he served as President and Chief Operating Officer of SBI. From November 2001 to January 2003, he served as Vice President of Finance of SBI, and, from 2000 to November 2001, Mr. Moore served as Director of Finance of SBI. Prior to joining us, Mr. Moore held several positions at The Procter & Gamble Company, most recently serving as Assistant Brand Manager, New Business Development from 1999 to 2000. He served as Finance Manager, Commercial Products Group from 1998 to 1999 and as Manager, Profit Forecasting for the Food and Beverage Sector from 1997 to 1998. Mr. Moore holds a B.A. from the University of Cincinnati.

Michael J. Seagram, President and Chief Operating Officer—SBI. Mr. Seagram joined us in 2003, and since April 1, 2006 has served as President and Chief Operating Officer of SBI. From 2003 to 2006, he served as Vice President of Sales and Marketing of SBI. Before joining SBI, Mr. Seagram was Owner and President of Aristoplay, Ltd., a publisher of children’s games, from 1997 to 2003. He was also the Owner and President of the marketing firm, Seagram & Singer, Inc. from 1986 to 1998. Mr. Seagram holds a B.S. from Wayne State University.

J. Kenneth Garner, President and Chief Operating Officer—ULI. Mr. Garner joined us in 1975 and has served as President and Chief Operating Officer of ULI since 1994. From 1985 to 1993, he served as Executive Vice President and Chief Operating Officer of ULI. Mr. Garner is very active in industry affairs and is a past Chairman of the National Association for Printing Leadership (“NAPL”), a member of the Walter E. Soderstrom Society and the recipient of the 2002 Soderstrom Award. He is a former chairman of the Graphic Arts Education & Research Foundation, Environmental Conservation Board, and the Printing Industries of America’s (“PIA’s”) Executive Development Committee. He is a former director of the Graphic Arts Show Company and the Printing Industries of Virginia. He is a current director for the Virginia Printing Foundation. Mr. Garner holds a B.A. from Randolph-Macon College.

G. Paul Bozuwa, Vice President—Global Business Development. Mr. Bozuwa joined us in 1991 and effective January 1, 2007, Mr. Bozuwa began serving as Vice President, Global Business Development.  Mr. Bozuwa served as President of DJS from 2002 to 2006.  From 1995 to 2002, Mr. Bozuwa served as President and Chief Operating Officer of CCP. From 1991 to 1995, he served as Chief Financial Officer of CCP. Mr. Bozuwa is active in industry affairs serving as Chair of the task force on Science, Journals, Poverty and Human Development, past Chairman of the Finance Committee and past Treasurer of the Council of Science Editors. Prior to joining us, he was an Associate of Kearsarge Ventures, a venture fund, from 1989 to 1991. Mr. Bozuwa holds a B.A. from Dartmouth College and an M.B.A. from the University of New Hampshire.

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Christopher A. Pierce—Chairman—TDP. Mr. Pierce joined us in May 2004, upon the consummation of the Dingley Acquisition, and since April 1, 2006, has served as Chairman of TDP. From 2004 to 2006, he served as President and Chief Operating Officer of TDP. From 1980 to the time of the Dingley Acquisition, Mr. Pierce served as President of The Dingley Press. Mr. Pierce holds a B.A. from Bowdoin College.

Thomas J. Baldwin, Director. Mr. Baldwin has been a member of our board of directors since 2003.  Mr. Baldwin is a Managing Director of BRS. He joined BRS in 2000. From 1995 to 2000, Mr. Baldwin was a Principal at PB Ventures, Inc. From 1988 to 1995, he served as Vice President and then Managing Director of The INVUS Group, Ltd., a private equity investment firm. Prior to that he was a consultant with the Boston Consulting Group, a strategy consulting firm. Mr. Baldwin holds a B.B.A. from Siena College and an M.B.A. from Harvard Business School. Mr. Baldwin is also a director of Eurofresh, Inc., Lazy Days, Inc. and Totes Isotoner Corporation.

Nicholas Daraviras, Director. Mr. Daraviras has been a member of our board of directors since August 2003.  Mr. Daraviras is a Managing Director of JCP. Mr. Daraviras joined JCP in 1996. Mr. Daraviras holds a B.S. and an M.B.A. from the Wharton School of the University of Pennsylvania. Mr. Daraviras also serves as a director of Edgen Corp. and various private companies in which JCP has an interest.

Craig H. Deery, Director. Mr. Deery has been a member of our board of directors since August 2003.  He was also member of our board of directors from 1998 through early 2002.  Mr. Deery was a Managing Director of JCP from 2002 to 2003. He previously served as a member of our board of directors from 1995 to 2001. From 1987 to 2002, Mr. Deery was a Managing Director at BancBoston Capital, where he served on the management committee of BancBoston Capital. While at BancBoston Capital, Mr. Deery supervised a direct investment portfolio of $500 million, including mezzanine securities and equity as a minority, co-invest, and control investor. Prior to 1987, Mr. Deery spent fifteen years at BancBoston, serving as a team leader in domestic lending and as Senior Credit Officer and Chairman of the Credit Committee of BancBoston Australia, Ltd. Mr. Deery holds a B.A. from Bucknell University and an M.B.A. from New York University. Mr. Deery is also a director of First Ipswich Bancorp.

Gary T. DiCamillo, Director. Mr. DiCamillo has been a member of our board of directors since 1989. Mr. DiCamillo has served as President and Chief Executive Officer of American Crystal, Inc. in Dedham, Massachusetts since 2005. From 2002 to 2005, Mr. DiCamillo served as President, Chief Executive Officer, and Director of TAC Worldwide Companies. From 1995 to 2002, he was Chairman and Chief Executive Officer of Polaroid Corporation and from 1993 to 1995 he was President of Worldwide Power Tools for Black & Decker Corporation. Mr. DiCamillo holds a B.S. from Rensselaer Polytechnic Institute and an M.B.A. from Harvard Business School. Mr. DiCamillo is also a director of Pella Corporation, 3Com Corporation and Whirlpool Corporation.

J. Rice Edmonds, Director. Mr. Edmonds has been a member of our board of directors since 2003.  Mr. Edmonds is a Managing Director at BRS. He joined BRS in 1996. From 1993 to 1996, he worked in the high yield finance group of Bankers Trust. Mr. Edmonds holds a B.S. from the University of Virginia McIntire School of Commerce and an M.B.A. from The Wharton School of the University of Pennsylvania. Mr. Edmonds is also a director of McCormick & Schmick Restaurant Corporation, Town Sports International, Inc. and several private companies in which BRS has an interest.

J. M. Dryden Hall, Jr., Director. Mr. Hall has been a member of our board of directors since 1967. Mr. Hall formed and has been the principal in the law firm of J.M.D. Hall, Jr., P.A. and its predecessors in Baltimore, Maryland since 1962. Mr. Hall holds a B.A. from Johns Hopkins University and an L.L.B. from New York University Law School.

James L. Luikart, Director. Mr. Luikart has been a member of our board of directors since 2003.  Mr. Luikart is Executive Vice President of JCP. Mr. Luikart joined JCP in 1994 after spending over twenty years with Citicorp, the last seven years of which were as a Vice President of Citicorp Venture Capital, Ltd. Mr. Luikart holds a B.A. from Yale University and an M.I.A. from Columbia University. Mr. Luikart also serves as a director of W & T Offshore, Inc., Edgen Corp. and various private companies in which JCP has an interest.

Nicholas R. Sheppard, Director. Mr. Sheppard has been a member of our board of directors since 2003.  Mr. Sheppard is a Vice President at BRS. He joined BRS in 2000. From 1997 to 2000, he worked as a Consultant in the London and New York offices of Marakon Associates, a strategy consulting firm. Mr. Sheppard is a graduate of the London School of Economics. Mr. Sheppard is a director of Penhall International, Inc.

George A. Whaling, Director. Mr. Whaling has been a member of our board of directors since 1998 and is Chairman of Kingston Capital Corporation in New York. From 1980 to 1997, he was Chairman and owner of the Petty Printing Company, a commercial web printer. Mr. Whaling holds a B.A. from Colgate University and is a Trustee and Director of Colgate University, Chairman of the Hamilton Initiative LLC, on the board of directors of the Burr & Burton Academy in Manchester, VT, and a director of Augusta Glenn Partners, LLC.

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Board Composition and Director Independence

The securities holders agreement among BRS, JCP and the other stockholders of TSG Holdings Corp. provides that TSG Holdings Corp.’s and our board of directors will consist of ten members, including four designees of BRS (who currently are Messrs. Baldwin, DiCamillo, Edmonds and Sheppard), four designees of JCP (who currently are Messrs. Daraviras, Deery, Luikart and Whaling) and two directors jointly designated by both BRS and JCP (who currently are Messrs. Hall and Saxton). Pursuant to the securities holders agreement, we may not take certain significant actions without the approval of each of BRS and JCP.   Although our securities are not listed on the New York Stock Exchange, for purposes of this item we have adopted the definition of “independence” applicable under the listing standards of the New York Stock Exchange.  Using such definition, the board of directors has determined that each of Messrs. DiCamillo, Hall and Whaling is independent.  If we were listed on the New York Stock Exchange, we would be exempt from certain independence requirements with respect to our board of directors and board committees under the “controlled company” exemption.  See Part III, Item 13, “Certain Relationships and Related Transactions—Securities Holders Agreement.”

Audit Committee

The board of directors has an audit committee. The audit committee consists of Messrs. Daraviras, DiCamillo, Edmonds, Hall and Whaling. The audit committee reviews our financial statements and accounting practices, selects our independent registered public accounting firm and oversees our internal audit function. The responsibilities of the Audit Committee are defined in a charter, which has been approved by the Board of Directors. In carrying out their responsibilities, the Committee has reviewed and discussed the Company’s audited financial statements with management, and it has discussed the matters which are required to be discussed by Statement on Auditing Standards No. 61, as amended by Statement on Auditing Standards No. 90 (Communication with Audit Committees), with the Company’s Independent Registered Public Accounting Firm. In addition, the Committee has reviewed the written disclosures required by Independence Standards Board Standard No. 1, which were received from the Company’s Independent Registered Public Accounting Firm, and has discussed the Independent Registered Public Accounting Firm’s independence with them. The Audit Committee has reviewed the fees of the Independent Registered Public Accounting Firm for non-audit services and believes that such fees are compatible with the independence of the Independent Registered Public Accounting Firm.

Based on these reviews and discussions, the Committee recommended to the Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

The Board of Directors has determined that Mr. DiCamillo, the chairman of the audit committee, is the “audit committee financial expert” as defined in applicable SEC rules and regulations. Mr. DiCamillo is “independent” as defined in the listing standards of the New York Stock Exchange.

Code of Business Conduct

Our Code of Business Conduct applies to all employees of The Sheridan Group, Inc. and all its wholly-owned subsidiaries.  Each supervisor and above has been required to sign that they have read, understand and will comply with the Code. This Code is posted on our Internet website at http://www.sheridan.com.  If any substantive amendments are made to the Code of Business Conduct or the Board of Directors grants any waiver from a provision of the Code to any officers of The Sheridan Group, Inc. or its wholly-owned subsidiaries, the nature of such amendment or waiver will be disclosed on the website at the above address.

ITEM 11.EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

This Compensation Discussion and Analysis (“CD&A”) provides an overview of the Company’s executive compensation program together with a description of the material factors underlying the decisions which resulted in the compensation provided to the Company’s Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and certain other executive officers (collectively, the named executive officers) for 2006 (as presented in the tables which follow this CD&A).

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Compensation Committee

The board of directors has a compensation committee. The compensation committee consists of three members, Messrs. Baldwin, Deery and Luikart. The compensation committee has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The role of the compensation committee is to make recommendations to our board of directors concerning salaries, incentive compensation and employee benefit programs. The compensation committee reviews and approves employment agreements and compensation programs or benefit plans for all of our executive officers, including the named executive officers, and certain other management employees. The compensation committee periodically compares our executive compensation levels with those of companies with which we believe that we compete in recruitment and retention of senior executives. The compensation committee also reviews and makes recommendations with respect to succession planning and management development. The CEO recommends changes in compensation for his direct reports to the compensation committee for approval. The compensation committee recommends changes in compensation for the CEO to the full board for approval.

Compensation Philosophy and Objectives

In reviewing our compensation programs, the compensation committee applies a philosophy which is based on the premise that our achievements result from the coordinated efforts of all individuals working toward common objectives. We have developed a compensation policy that is designed to attract and retain qualified senior executives, reward executives for actions that result in the long-term enhancement of stockholder value and reward results with respect to our financial and operational goals.

Setting Executive Compensation

Based on the foregoing philosophy, the company’s annual and long-term incentive-based cash and non-cash executive compensation has been structured to (a) pay competitive levels of compensation in order to attract and retain qualified executives, (b) motivate executives to achieve the short-term and long-term business goals set by the Company and reward the executives for achieving such goals and (c) reward long-term Company performance. The Company competes with many larger companies for top executive-level talent.  Competitors include RR Donnelley, Quebecor, Cenveo (previously Cadmus), Quad Graphics, Edwards Brothers, and numerous other printing companies. We consider these our primary competitors because we compete against these companies in each of our market segments. Accordingly, the base salary for executive-level talent is generally set at the 50th percentile of compensation paid to similarly situated executives at these larger corporations. Variations to this objective may occur as dictated by the experience level of the individual and market factors. A significant percentage of total compensation is allocated to incentive compensation. However, there is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Rather, market data, internal equity and performance are the factors considered in determining the appropriate level and mix of incentive compensation.

2006 Executive Compensation Components

For the fiscal year ending December 31, 2006, the principal components of compensation for named executive officers were:

·Base salary;

·Non-equity annual incentive compensation;

·Stock-based incentive compensation;

·Non-qualified deferred compensation program; and

·Perquisites and other benefits.

The Company has also entered into employment agreements and/or change in control arrangements with all of the named executive officers. In addition to the compensation components listed above, these agreements provide for post-employment severance payments and benefits in the event of a termination of employment under certain circumstances.  The terms of these agreements are described in more detail below (see the section entitled “Potential Payments on Termination or a Change in Control”). The Company believes that these agreements provide an incentive to the named executive officers to remain with the Company and serve to align the interest of the executives and the stockholders in the event of a potential acquisition of the Company. Additionally, retention awards were provided to certain named executive officers employees (excluding our CEO) whose retention is determined by our board of directors to be critical to our ongoing success.

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Base Salary

The Company provides the named executive officers with base salaries to compensate them for services rendered during the fiscal year. The base salaries for our CEO and Mr. Bozuwa and Ms. Davidson are contained in their respective employment agreements and are subject to increase at the discretion of our board of directors.  The base salaries of Messrs. Jakobe and Kittredge were not the subject of employment agreements in 2006 (however the Company did enter into employment agreements with these individuals in March of 2007.) Base salary levels are intended to reflect an individual’s responsibilities, performance and expertise and are designed to be competitive with salary levels in effect at other manufacturing companies, and in particular companies within the printing industry. Accordingly, we establish salaries for the named executive officers on the basis of personal performance and by reviewing available national (prepared by Watson Wyatt) and printing industry compensation data, including published salary surveys regarding compensation of officers of larger and smaller companies, both within and outside the printing industry. The compensation committee has reviewed the base salaries of our named executive officers for 2006 and is of the opinion that such salaries are in line with market data.

Annual Incentive Compensation

Management Performance Incentive Plan.  Annual cash bonuses are included in our executive compensation program because the Company believes that a significant portion of each named executive officer’s compensation should be contingent on the annual performance of the Company, as well as the individual contribution of the executive.  Accordingly, our named executive officers participate in a management performance incentive plan, which compensates them for achievement of certain objectives established annually by our board of directors. For 2006, these objectives are based on our earnings before interest, taxes, depreciation and amortization (“EBITDA”), the EBITDA of each executive’s operating subsidiary and individual performance.   Since the company is owned by private equity investors, it is operated to maximize cash flow and EBITDA is the primary measure of the cash flow generated by the company.  Under the management performance incentive plan, our executive officers are eligible to receive a maximum award of 50% of base salary, except Mr. Saxton, whose maximum award is 80% of base salary.   Maximum award amounts are developed based on market data but also set at a level to insure that a significant portion of potential compensation is tied to delivering results.  For fiscal year 2006, management performance incentive awards were based upon achievement of corporate EBITDA financial objectives and individual performance objectives.  Upon completion of the fiscal year, the compensation committee assesses the performance of the Company for each corporate financial objective, comparing actual year-end results to the objectives.  Then individual performance is evaluated and an overall award is calculated.

The board of directors established the following financial and discretionary objectives for our named executive officers for 2006   The objectives are set based on the annual plan that is approved by the Board of Directors.  The maximum target is set to be approximately 2-4% above the target and the minimum is set to be approximately 8-10% below the target.  As stated earlier, EBITDA is the primary measure that private equity investors like ours use to determine the success of their portfolio companies, since this is a good measure of the cash flow generation capability of a company.  We have focused all of the company’s reward systems on EBITDA generation.  This is very typical for companies owned by private equity investors.  TSG and operating company subsidiary EBITDA targets are set at levels to incent improvement over previous-year operating results and are designed to be challenging to achieve, consistent with the company annual financial plan that is approved by the board of directors. As detailed below, TSG financial targets have been achieved in one out of the last three fiscal years.  With the exception of the 2005 DPC/DJS EBITDA target set for Mr. Bozuwa, operating company subsidiary EBITDA targets have been achieved at least at the threshold level in each of the last three years.

Mr. Saxton was eligible for a maximum award of 80% of base salary in 2006.  75% of this award was based on attainment of TSG financial objectives and 25% was discretionary based on individual performance.  The financial threshold was not achieved; therefore, no bonus for EBITDA was earned.  There is no minimum threshold for the discretionary bonus.  This is totally discretionary based on the board’s view of an individual’s contribution to the company’s success.  Mr. Saxton received an incentive award equal to 25% of the maximum award as a discretionary award based on the board’s evaluation of his effectiveness as CEO.  This amount was equal to $102,000, or approximately 20% of his base salary.  For 2005, TSG financial targets were not met and only the discretionary portion of the bonus was earned.  In 2004, 70% of a maximum of 75% was awarded for achievement of TSG and individual company financial targets and an additional 25% was awarded as discretionary bonus, resulting in an award equal to 95% of Mr. Saxton’s total bonus potential for the year.  Mr. Saxton’s bonus payments for 2005 and 2004, respectively, were $102,000 and $380,000.

Mr. Jakobe was eligible for a maximum award of 50% of base salary in 2006.  75% of this award was based on attainment of TSG financial objectives and 25% was discretionary based on individual performance.  The financial threshold was not achieved; therefore, no bonus for EBITDA was earned.  There is no minimum threshold for the discretionary bonus.  This is totally discretionary based on the board’s view of an individual’s contribution to the company’s success.  Mr. Jakobe received an incentive award equal to 25% of the maximum award as a discretionary award based on the board’s view of his effectiveness as CFO.  This amount was equal to $30,000, or approximately 12.5% of his base salary.   For 2005, TSG

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financial targets were not met and only the discretionary portion of the bonus was earned.  In 2004, 70% of a maximum of 75% was awarded for achievement of TSG and individual company financial targets and an additional 25% was awarded as discretionary bonus, resulting in an award equal to 95% of Mr. Jakobe’s total bonus potential for the year.  Mr. Jakobe’s bonus payments for 2005 and 2004, respectively, were $30,000 and $106,900.

Ms. Davidson was eligible for a maximum award of 50% of base salary in 2006.  50% of this award was based on attainment of TSP financial objectives, 25% was based on attainment of TSG financial objectives and 25% was discretionary based on individual performance.  Ms. Davidson received an incentive award equal to 75% of the maximum award as follows:  50% for achieving TSP maximum EBITDA, and 25% for individual performance based on the board’s view of her effectiveness as President and COO of TSP. This amount was equal to $95,700, or approximately 37.5% of her base salary.   The TSG threshold was not achieved; therefore, no bonus for TSG EBITDA was earned.  There is no minimum threshold for the discretionary bonus.  This is totally discretionary based on the board’s view of an individual’s contribution to the company’s success.  For 2005, 36.3% of a maximum of 50% was awarded for achievement of TSP financial targets and 25% was awarded for individual performance.  TSG financial targets were not met, so there was no payout for that component. This resulted in an award equal to 61.3% of Ms. Davidson’s total bonus potential for the year.  In 2004, both TSG and TSP maximum financial targets were achieved as well as the discretionary bonus, resulting in payment of full bonus potential for the year.  Ms. Davidson’s bonus payments for 2005 and 2004, respectively, were $78,300 and $120,000.

Mr. Bozuwa was eligible for a maximum award of 50% of base salary in 2006.  25% of this award was based on attainment of DPC/DJS financial objectives, 25% was for obtaining new DPC/DJS long-run journal sales, 25% was based on TSG EBITDA and 25% was discretionary based on individual performance.  Mr. Bozuwa received an incentive award equal to 43.1% of the maximum award as follows: 13.1% for achieving threshold DPC/DJS financial targets, 25% for individual performance based on the board’s view of his effectiveness as Vice President – Global Business Development, and 5% for special projects.  This amount was equal to $50,000, or approximately 21% of his base salary.  There was no award for DPC/DJS new long-run journal sales because the threshold was not achieved.   The TSG threshold was also not achieved; therefore, no bonus for TSG EBITDA was earned.  There is no minimum threshold for the discretionary bonus.  This is totally discretionary based on the board’s view of an individual’s contribution to the company’s success.  For 2005, 18.2% of a maximum of 25% was awarded for achievement of new DPC/DJS long-run journal sales, 25% was awarded for individual performance and 0% for DPC/DJS EBITDA and 0% for TSG EBITDA. This resulted in an award equal to 43.2% of Mr. Bozuwa’s total bonus potential for the year.  In 2004, 29% of a maximum of 50% was awarded for achievement of company financial targets.  Maximum TSG EBITDA was achieved resulting in an additional 25% of bonus earned and the 25% discretionary bonus was also earned, for a total payment of 79% of maximum bonus.  Mr. Bozuwa’s bonus payments for 2005 and 2004, respectively, were $50,200 and $89,300.

Mr. Kittredge was eligible for a maximum award of 50% of base salary in 2006.  50% of this award was based on attainment of DPC financial objectives, 25% was based on TSG EBITDA, and 25% was discretionary based on individual performance.  Mr. Kittredge received an incentive award equal to 49.4% of the maximum award as follows: 24.4% for achieving threshold DPC financial targets and 25% for individual performance based on the board’s view of his effectiveness as President and Chief Operating Officer of DPC and DJS.  This amount was equal to $48,200, or approximately 25% of his base salary.   The TSG threshold was not achieved; therefore, no bonus for TSG EBITDA was earned.  There is no minimum threshold for the discretionary bonus.  This is totally discretionary based on the board’s view of an individual’s contribution to the company’s success.   During 2005 and 2004, Mr. Kittredge was President and COO of Capital City Press.  For 2005, 33.2% of a maximum of 50% was awarded for achievement of company financial targets as well as the 25% discretionary bonus.  TSG financial targets were not met so there was no payout for that component.  This resulted in an award equal to 58.2% of Mr. Kittredge’s total bonus potential for the year.  In 2004, maximum financial targets for both CCP and TSG were attained as well as the discretionary bonus, resulting in 100% of the maximum bonus award being earned.  Mr. Kittredge’s bonus payments for 2005 and 2004, respectively, were $56,800 and $92,500.

Awards for 2006, 2005 and 2004 appear as “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table.  Plan threshold, target and maximum are disclosed in the Grants of Plan-Based Awards table.

Profit Sharing Plan.  The Sheridan Group Profit Sharing Plan is a broad-based incentive program provided to all eligible employees at each location, excluding Capital City Press and The Dingley Press, Inc. The annual discretionary profit sharing contribution for each participating operating subsidiary company is determined by a formula approved each year by our board of directors.

Under the formula approved for 2006, a guideline has been established of 10% of EBITDA for TSP, SBI and DPC, and 5% for ULI.  If company EBITDA is a positive number, the Company’s established percent of EBITDA is put into

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the profit sharing pool.  The total dollar contribution for an operating subsidiary cannot exceed 10% (or 5% for ULI) of its total payroll for the year.

All of the companies that participate in the Profit Sharing Plan, except for Dartmouth Printing Company, currently deposit profit sharing contributions into the employees’ accounts in our 401(k) plan; however if the contribution would otherwise exceed the contribution limits applicable to the 401(k) plan under the Internal Revenue Code, then the excess will be contributed to the nonqualified deferred compensation plan, discussed below. Dartmouth Printing Company had an established cash payment policy when they were acquired, which remains in place, although employees may choose to put their cash into their 401(k) accounts.

Amounts awarded to the named executive officers for 2006 under the Profit Sharing Plan were $22,000, $22,000, $0, $8,924, and $22,000 for each of Messrs. Saxton, Jakobe, Bozuwa and Kittredge and Ms. Davidson, respectively.  These amounts are reported in the “All Other Compensation” column in the Summary Compensation Table shown below.

Stock-Based Incentive Compensation

TSG Holdings Corp., our parent company, adopted a Stock-Based Incentive Compensation Plan in October 2003. The purpose of the 2003 Stock-Based Incentive Compensation Plan is to provide long-term equity incentives to assist us in attracting and retaining valued management employees through the award of options to purchase common stock of TSG Holdings Corp.  Option grants are designed to align the interests of officers and employees with those of the stockholders, to provide each individual with a significant incentive to manage our business from the perspective of an owner and to remain employed by us.  Eligible employees will receive options on terms determined by our board of directors.  The compensation committee considers awards made by our board of directors under the Stock-Based Incentive Plan in conjunction with the recipient’s level of responsibility and relative position within the company, past performance, potential and annual base salary.  The stock option awards are recommended by the CEO to the compensation committee, who then makes a recommendation to our board of directors for approval.

Options granted under the Stock-Based Incentive Compensation Plan have exercise prices equal to or above the fair market value of the underlying common stock (as determined under the Stock-Based Incentive Compensation Plan) on the grant date and are equally split 50% between a time-based vesting schedule and a company performance-based vesting schedule.  Time-based awards vest 20% per year over five years subject to the executive’s continued employment with us.  Performance-based awards vest 20% per year over five years based on the Company achieving a per share equity value each year as determined by the board. The per share equity value is calculated as a multiple of the Company’s trailing twelve month EBITDA minus net debt. If an annual performance target is not met in any of the five years, but is achieved by meeting subsequent year targets, shares will vest for all preceding plan years

In fiscal 2006, the only named executive officer to receive an option award was Mr. Kittredge, who was granted an option to purchase 300 shares of TSG Holdings Corp. common stock on April 27, 2006. Mr. Kittredge was reassigned to DPC and DJS and was given additional options to bring his total option grants in line with other executives with similar potential to impact the company’s results.  The targets for the performance based options were established based upon the original objectives that BRS and JCP established when they bought the company in 2003 and wanted to incent management to deliver the rate of return expected on their investment in the company.

The Company does not require its named executive officers to maintain a minimum ownership interest in the Company or its affiliates.

Nonqualified Deferred Compensation

In General.  Our nonqualified deferred compensation program serves primarily to attract and retain qualified executives by providing them with enhanced tax deferral opportunities and retirement benefits in addition to those provided under our broad-based 401(k) plan.  Under the nonqualified deferred compensation plan, officers, directors and certain management employees may annually elect (via individual contracts) to defer a portion of their compensation, on a pre-tax basis. The benefit is based on the amount of compensation (salary and bonus) deferred, company “make-whole” contributions, employer discretionary contributions and earnings on these amounts.  Make-whole contributions are matching and profit sharing contributions which the Company would have made to the participants’ accounts under the 401(k) plan were the Company not prohibited from making such contribution under the limits applicable to the 401(k) plan under the Internal Revenue Code.  For example, if a participant was eligible to receive 10% of compensation in a profit sharing contribution and the limit on compensation that could be taken into account in determining contribution amounts to the 401(k) plan for 2006 was $220,000, the maximum contribution the participant could receive under the 401(k) plan would be $22,000.  The make-whole contribution to the deferred compensation plan takes the difference between the participant’s salary and $220,000 and multiplies that number by the profit sharing contribution percentage of 10%.   Individuals are fully

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vested in deferred salary and bonus amounts; however, the make-whole contributions vest in full after three years of employment, which is the same schedule applicable to employer contributions under the 401(k) plan. The employer discretionary contributions become vested pursuant to a vesting schedule as determined by the Company.

Salary and bonus amounts deferred by named executive officers in 2006 under the nonqualified deferred compensation plan are shown in the “Executive Contributions” column of the Deferred Compensation Table below.  Company make whole and discretionary contributions for 2006 are shown in the “Registrant Contributions” column of the Deferred Compensation Table and in the “All Other Compensation” column of the Summary Compensation Table.

Retention Awards.  Annual retention awards are employer discretionary contributions paid to certain management employees whose retention is determined by our board of directors to be critical to our ongoing success. These awards are deposited in the deferred compensation plan under the employee’s name and vest after five years.  Distribution is made on a date previously elected by the executive. Other than the awards paid in accordance with the employment agreements of Mr. Bozuwa and Ms. Davidson, these awards are solely awarded at the board of directors’ discretion. Any awards made outside of an employment agreement were equal to 10% of base salary.

In 2006, our board of directors continued to provide retention awards to Mr. Bozuwa in the amount of $118,000 and Ms. Davidson in the amount of $63,750 in accordance with their employment agreements.  These awards for our named executive officers are captured under “All Other Compensation” on the Summary Compensation Table and in the Nonqualified Deferred Compensation table above under Registrant Contributions.

Other Compensation, Perquisites and Other Benefits

401(k) Plan.  We sponsor a defined contribution plan, or 401(k) Plan, intended to qualify under section 401 of the Internal Revenue Code. Substantially all of our employees are eligible to participate in the 401(k) Plan on the first day of the month in which the employee has attained 18 years of age and 90 days of employment. Employees may make pre-tax contributions of their eligible compensation, not to exceed the limits under the Internal Revenue Code.  We match 50% of the employee’s contributions, up to a maximum of 4% of the employee’s eligible compensation.  In addition, most of the companies that participate in the Profit Sharing Plan deposit their Profit Sharing Plan contributions into the 401(k) plan.  Certain participating companies also make a 1% of pay fixed contribution, for which the 90-day service requirement is waived.  Employees may direct their investments among various pre-selected investment alternatives.  Employer contributions to the 401(k) plan, including profit sharing contributions, fixed contributions and employer matching contributions, vest after three years of employment.

Perquisites and Other Benefits.  The named executive officers are not generally entitled to benefits that are not otherwise available to all of our employees.  In this regard it should be noted that the Company does not provide pension arrangements (other than the 401(k) plan and the nonqualified deferred compensation plan), post-retirement health coverage or similar benefits for its executives. However, some of the named executive officers are entitled to certain insurance benefits, relocation benefits and an executive physical program.  These amounts are noted in the “All Other Compensation” column in the Summary Compensation Table.  The Company and the Committee believe that these benefits are consistent with the goal of attracting and retaining superior executive talent.

Tax and Accounting Implications

Deductibility of Certain Compensation.  Section 162(m) of the Internal Revenue Code imposes a $1.0 million limit on the deductibility of compensation paid to certain executive officers of public companies, unless the compensation meets certain requirements for “performance-based” compensation.  In determining executive compensation, the compensation committee considers, among other factors, the possible tax consequences to us and to the executives.  However, tax consequences, including but not limited to tax deductibility by us, are subject to many factors (such as changes in the tax laws and regulations or interpretations thereof and the timing and nature of various decisions by executives regarding options and other rights) that are beyond our control.  In addition, the compensation committee believes that it is important for it to retain maximum flexibility in designing compensation programs that meet its stated objectives.  For all of the foregoing reasons, the compensation committee, while considering tax deductibility as one of its factors in determining compensation, will not limit compensation to those levels or types of compensation that will be deductible.  The compensation committee will, of course, consider alternative forms of compensation, consistent with its compensation goals, which preserve deductibility.

Accounting Impact.   Considerations of accounting impacts do not affect decisions on grants of equity compensation.

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Compensation Committee Report

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this annual report for the fiscal year ending December 31, 2006.

Thomas J. Baldwin

Craig H. Deery

James L. Luikart

The following table summarizes compensation awarded or paid by us during 2006, 2005 and 2004 to our President and Chief Executive Officer, our Executive Vice President and Chief Financial Officer, and our three next most highly compensated executive officers (our “named executive officers”).  Perquisites and other benefits included in the All Other Compensation column are disclosed and itemized in the “All Other Compensation” table below.

Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Bonus ($) (1)	Stock Awards ($)	Option Awards ($) (2)	Non-Equity Incentive Plan Compensation ($) (3)	All Other Compensation ($) (4)	Total ($)
John A. Saxton	2006	510,016	—	—	2,102	102,000	138,295	752,413
President and Chief	2005	509,939	—	—	—	102,000	135,841	747,780
Executive Officer	2004	509,648	—	—	—	380,000	234,135	1,123,783
Robert M. Jakobe	2006	240,032	—	—	2,102	30,000	47,259	319,393
Executive Vice President	2005	240,032	—	—	—	30,000	70,835	340,867
and Chief Financial Officer	2004	229,043	25,000	—	—	106,900	64,305	425,248
Joan B. Davidson	2006	257,239	40,135	—	1,338	95,700	115,786	510,198
Group President Sheridan	2005	254,893	135	—	—	78,300	114,789	448,117
Publication Services	2004	244,359	135	—	—	120,000	105,788	470,282
G. Paul Bozuwa	2006	236,465	10,000	—	1,147	50,000	131,223	428,835
Vice President Global	2005	231,885	—	—	—	100,200	65,544	397,629
Business Development	2004	225,885	—	—	—	89,300	64,650	379,835
Gary J. Kittredge	2006	195,000	40,000	—	1,333	48,200	115,576	400,109
President - DPC & DJS	2005	195,000	—	—	—	56,800	29,403	281,203
	2004	185,000	—	—	—	92,500	11,122	288,622

(1) The amounts reported as “Bonus” for 2006 consist of payments made as part of a special incentive related to the closing of CCP and the transition of work from CCP to TSP. The additional $135 amounts in 2006, 2005 and 2004 for Ms. Davidson were Christmas bonuses.  Mr. Jakobe received a $25,000 cash bonus in 2004 upon completion of the Dingley Acquisition.

(2) Mr. Kittredge was the only Named Executive Officer who received additional Stock Options in 2006 in the amount of 300 shares. This option grant is disclosed in the Grants of Plan-Based Awards table. The amounts reflected are the stock based compensation expense recognized pursuant to FAS 123(R) in 2006 for these options. Assumptions used in the calculation of these amounts are disclosed in footnote 3 to our audited financial statements for the fiscal year ending December 31, 2006, included in this annual report.

(3) The amounts reported as “Non-Equity Incentive Plan Compensation” for 2006, 2005 and 2004 consist of bonuses paid as management performance incentive compensation.

(4) The amounts reported as “All Other Compensation” for 2006, 2005 and 2004 are itemized in the “All Other Compensation” table below.

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All Other Compensation

			Taxable	Taxable		Additional			GTL		Profit		401k	401(k)	Total
		Spousal	Relocation	Travel	Retention	Disability	Taxable	Physical	Taxable	Profit	Sharing	401k	Fixed	Make	All Other
Name	Year	Travel	Income	Income	Awards	Coverage	Term Life	Program	Income	Sharing	Make Whole	Match	1%	Whole	Comp
		($)	($)	($)	($)	($)	($)	($)	($)	($)	($)	($)	($)	($)	($)
John A. Saxton	2006	1,238	—	—	—	4,000	12,230	140	3,695	22,000	67,994	4,400	2,200	20,398	138,295
President and Chief	2005	717	—	—	—	3,992	12,230	5,819	3,695	21,000	63,145	4,200	2,100	18,943	135,841
Executive Officer	2004	288	—	—	—	3,195	113,849	—	3,617	20,500	64,023	4,100	2,050	22,513	234,135
Robert M. Jakobe	2006	—	—	—	—	—	—	—	858	22,000	13,693	4,400	2,200	4,108	47,259
Executive Vice President	2005	1,148	—	—	24,000	—	—	—	858	21,000	13,484	4,200	2,100	4,045	70,835
and Chief Financial Officer	2004	351	—	—	22,500	—	—	1,719	795	20,500	9,454	4,100	2,050	2,836	64,305
Joan B. Davidson	2006	605	—	—	63,750	268	—	—	599	22,000	17,017	4,400	2,200	4,947	115,786
Group President Sheridan	2005	1,015	—	—	63,750	268	—	3,652	400	21,000	14,202	4,200	2,100	4,202	114,789
Publication Services	2004	845	—	—	60,000	170	—	—	373	20,788	13,827	4,100	2,050	3,635	105,788
G. Paul Bozuwa	2006	—	—	3,855	118,000	2,198	—	—	546	—	—	4,400	—	2,224	131,223
Vice President Global	2005	471	—	—	58,000	—	—	—	514	—	—	4,199	—	2,360	65,544
Business Development	2004	—	—	—	56,500	—	—	1,982	390	—	—	3,653	—	2,125	64,650
Gary J. Kittredge	2006	—	98,012	—	—	—	—	—	1,316	8,924	—	4,400	1,177	1,747	115,576
President - DPC & DJS	2005	424	—	—	19,500	—	—	3,090	912	—	—	4,200	—	1,277	29,403
	2004	—	—	—	—	—	—	—	881	5,049	—	4,100	—	1,092	11,122

Retention awards, profit share and make-whole contributions are invested in the deferred compensation plan. 401(k) match and 1% fixed contributions are invested in the 401(k) plan.

Grants of Plan-Based Awards

								All Other	Exercise	Grant
								Option Awards	or Base	Date
		Estimated Possible Payouts			Estimated Future Payouts			Number of	Price of	Fair
		Under Non-Equity			Under Equity Incentive			Securities	Option	Value of
		Incentive Plan Awards			Plan Awards			Underlying	Awards	Option
Name	Grant Date	Threshold	Target	Maximum	Threshold	Target	Maximum	Options	($/sh)	Awards
		($)	($)	($)	(#)	(#)	(#)	(#)	($)
John A. Saxton	N/A	102,000	332,500	408,000
President and Chief
Executive Officer
Robert M. Jakobe	N/A	30,000	97,800	120,000
Executive Vice President
and Chief Financial Officer
Joan B. Davidson	N/A	31,875	103,600	127,500
Group President Sheridan
Publication Services
G. Paul Bozuwa	N/A	29,000	72,800	116,000
Vice President Global
Business Development
Gary J. Kittredge	N/A	24,375	79,400	97,500
President - DPC & DJS	4/27/2006					150		150	24.75	2,784

(1) The “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” for 2006 consist of Entry, Plan and Maximum bonus earnings possible under the Management Performance Incentive Plan. The maximum bonus potential for Mr. Saxton is 80% of annual base salary. For Messrs. Jakobe, Bozuwa and Kittredge and Ms. Davidson, the maximum bonus potential is 50% of annual base salary. All bonus payments are reviewed and approved by our board of directors.

(2) Mr. Kittredge was awarded 300 additional stock options under the Stock-Based Incentive Compensation Plan in 2006 in connection with his expanded role as President and COO of DPC and DJS. Fifty percent (50%) of the options vest over time and fifty percent vest based on company performance. There were no threshold or maximum performance levels for vesting of the stock. Time-based options vest 20% per year over five years. Performance options vest upon the achievement of certain performance targets, the sale of the Company or a qualified public offereing, or after eight years from the date of grant.

(3) Refer to Non-Equity Incentive Plan Compensation in the summary compensation table for actual payments of incentive plan awards for years ending December 31, 2006.

(4) There is currently no public trading market for the common stock of TSG Holdings Corp. An independent appraiser engaged by TSG Holdings Corp.has determined that the fair market value of the common stock of TSG Holdings Corp. was $24.75 per share on the grant date.

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Outstanding Equity Awards at Fiscal Year-End

	Option Awards
			Equity
			Incentive
			Plan
	Number of		Awards:
	Securities	Number of	Number of
	Underlying	Securities	Securities
	Unexercised	Underlying	Underlying
	Options (#)	Unexercised	Unexercised	Option	Option
	(Exercisable)	Options (#)	Unearned	Exercise	Expiration
Name	(1)	(Unexercisable)	Options (#)	Price ($)	Date
John A. Saxton	1,650		3,850	10.00	11/16/2013
Robert M. Jakobe	1,650		3,850	10.00	11/16/2013
Joan B. Davidson	1,050		2,450	10.00	11/16/2013
G. Paul Bozuwa	900		2,100	10.00	11/16/2013
Gary J. Kittredge	810		1,890	10.00	11/16/2013
			300	24.75	4/26/2016

(1) Stock option awards, with the exception of the 300 shares awarded to Mr. Kittredge in 2006, were awarded on October 16, 2003. The shares began vesting on January 1, 2004. As of December 31, 2006, 40% of the Named Executive Officers’ time-based shares were vested. Because 2006 company performance targets were not met, only 20% of performance shares vested through December 31, 2006. The established performance-based option targets (per share equity values) are $20/share on 1/1/05, $52/share on 1/1/06, $86/share on 1/1/07, $118/share on 1/1/08, $148/share on 1/1/09, $178/share on 1/1/10. See Stock-Based Incentive Compensation under the Compensation Discussion and Analysis for details on the vesting schedule.

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Option Exercises and Stock Vested in Last Fiscal Year

	Option Awards
	Number of
	Shares
	Acquired on	Value
	Exercise (#)	Realized on
Name	(1)	Exercise ($)
John A. Saxton	—	—
President and Chief
Executive Officer
Robert M. Jakobe	—	—
Executive Vice President
and Chief Financial Officer
Joan B. Davidson	—	—
Group President Sheridan
Publication Services
G. Paul Bozuwa	—	—
Vice President Global
Business Development
Gary J. Kittredge	—	—
President - DPC & DJS

(1) No options were exercised during 2006.

Nonqualified Deferred Compensation

			Registrant
			Contributions
			in Last FY ($)		Aggregate		Aggregate		Aggregate
	Executive		(Retention Bonus		Earnings		Withdrawals/		Balance
	Contributions		and Make-Wholes)		in Last		Distributions		at Last
Name	in last FY ($)		(a)(b)		FY ($)		($)		FYE ($)
John A. Saxton	$	20,800	$	88,392	$	15,848	$	299,054	$	257,648
Robert M. Jakobe	$	—	$	17,801	$	29,998	$	58,876	$	225,597
Joan B. Davidson	$	10,290	$	85,714	$	34,122	$	24,210	$	451,513
G. Paul Bozuwa	$	—	$	120,224	$	61,145	$	—	$	605,308
Gary J. Kittredge	$	25,598	$	1,747	$	13,178	$	—	$	142,187

(a) Registrant contributions for Fiscal Years ending 2006, 2005 and 2004, respectively, that were included in the Summary Compensation Table are as follows: Mr. Saxton - Make Whole Contributions of $88,392, $82,088 and $86,536; Mr. Jakobe – Make Whole Contributions of $17,801, $17,529 and $12,290 and Retention Awards of $0, $24,000 and $22,500; Ms. Davidson – Make Whole Contributions of $21,964, $18,404 and $17,462 and Retention Awards of $63,750, $63,750 and $60,000; Mr. Bozuwa – Make Whole Contributions of $2,224, $2,360 and $2,125 and Retention Awards of $118,000, $58,000 and $56,500; and Mr. Kittredge – Make Whole Contributions of $1,747, $1,277 and $1,092 and a Retention Award in 2005 of $19,500. Retention awards and employer make-whole contributions (described below) are reported in the Summary Compensation Table in the “All Other Compensation” column.

The types of compensation that may be deferred under our nonqualified deferred compensation plan are salary and bonus, deferred at the employee’s election, employee retention awards, employer make-whole contributions, employer discretionary contributions and earnings on the deferrals. The individuals are fully vested in the compensation deferred; however, the make-whole contributions and the employer discretionary contributions and employee retention awards are subject to vesting requirements. Make-whole contributions vest once the employee has attained three years of service.  Employee retention awards cliff vest after five years.  Employees may defer up to 20% of their base salary and up to 100% of

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any earned bonus into the deferred compensation program on an annual basis.  Earnings under the nonqualified plan are calculated by reference to the return on investment funds selected by the executives from a menu of investment fund options offered under the plan.  These investment fund options are the same options as are available to all participants under our 401(k) plan.  Participants may change their investment fund elections at any time.   A participant may elect distribution of their vested account balance at a fixed payment date, no earlier than the third calendar year after the calendar year in which the initial election is made, five years after a subsequent election is made, or upon separation of service from the company.

The table below shows the funds available under our 401(k) plan and their annual rate of return for the calendar year ended December 31, 2006:

Deferred Compensation Investment Options

Name of Fund	Rate of Return	Name of Fund	Rate of Return
Maxim Money Market Portfolio	1.19	Legg Mason Value, FI	9.95
Legg Mason Investment Grade Income	1.68	Franklin Small-Mid-Cap Growth Fund A	6.23
PIMCO Low Duration Fund - A	0.71	Legg Mason Special Investment FI	9.54
American Funds Wash Mutual A	6.35	Pennsylvania Mutual Fund Consultant CI	8.32
Legg Mason American Leading Trust	8.22	American Funds EuroPacific A	8.67

Potential Payments on Termination or Change of Control

Our employment agreements with Mr. Saxton, Mr. Bozuwa and Ms. Davidson provide that if the executive is terminated by us without “cause” (as defined in the agreements) or by the executive for “good reason” (as defined in the agreements), the executive will be entitled to receive the following amounts:  (1) severance pay equal to his or her annual base salary and average annual incentive bonus during the two years preceding the termination for a period of 18 months in the case of Mr. Bozuwa and Ms. Davidson, and 24 months in the case of Mr. Saxton, (2) all amounts credited to the executive under our deferred compensation plan will fully vest and become payable in a single lump sum and (3) the executive will continue to have coverage under our health insurance plan for 18 months, or 24 months in the case of Mr. Saxton.

In addition, we have entered into change in control arrangements with Mr. Jakobe and Mr. Kittredge that provide that if the executive is terminated by us without “cause” (as defined in the agreements) or by the executive for “good reason” (as defined in the agreements) within 18 months following any change in control, the executive will be entitled to receive the following amounts:  (1) severance pay equal to his or her annual base salary and average annual incentive bonus during the two years preceding the termination for a period of 18 months,  (2) all amounts credited to the executive under our deferred compensation plan will fully vest and become payable in a single lump sum and (3) the executive will continue to have coverage under our health insurance plan for 18 months.  In March of 2007, we entered into employment agreements with Mr. Jakobe and Mr. Kittredge which provide for the same severance benefits upon a termination without cause or for good reason without regard to a change in control.

The employment agreements contain non-compete and non-solicitation language prohibiting such actions for the term of the severance period.  Additionally, the severed employee is prohibited from disclosing proprietary company information to any person, firm, corporation, association or entity, during or after their term of employment.  Any breach of these terms will be subject to appropriate injunctive and equitable relief.

The following table summarizes potential benefits that each of the Named Executive Officers would have received under their employment agreements or change in control arrangements on December 31, 2006, if a termination without cause or for good reason occurred, or they had been terminated following a change in control.

Named Executive	Severance		Incentive		Deferred		COBRA
Officer	Pay		Pay		Compensation		(Employer’s Portion)
John A. Saxton	$	1,020,000	$	204,000	$	257,648	$	16,513
Robert M. Jakobe	$	360,000	$	45,000	$	225,597	$	12,384
Joan B. Davidson	$	382,500	$	130,500	$	451,513	$	11,702
G. Paul Bozuwa	$	348,000	$	75,150	$	605,308	$	18,935
Gary J. Kittredge	$	292,500	$	78,375	$	142,187	$	17,190

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Compensation of Directors

Each director who is not also one of our executive officers or an employee of BRS or JCP receives a fee of $16,000 per year for their service on our board of directors. The chairman of the audit committee (Mr. DiCamillo) receives an additional fee of $4,000 per year. All directors are reimbursed for any personal expenses incurred in the conduct of their duties as a director. There were no stock options awarded to directors during 2006.

	Fees Earned
	or Paid in		All Other
Name	Cash		Compensation	Total
	($)		($)	($)
Gary T. DiCamillo	20,000	*	—	20,000
Craig H. Deery	16,000	*	—	16,000
J. M. Dryden Hall, Jr.	16,000		—	16,000
George A. Whaling	16,000		—	16,000

* Messrs. DiCamillo and Deery have elected deferred payment of their annual director’s fees.

Their fees are invested in TSG’s Non-Qualified Deferred Compensation Plan rather than paid in cash.

See Compensation Discussion and Analysis for further details.

Compensation Committee Interlocks and Insider Participation

In 2006, the compensation committee consisted of Messrs. Baldwin, Deery and Luikart. None of the members of the compensation committee are currently, or have been at any time since the time of our formation, one of our officers or employees.

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

We are a wholly-owned subsidiary of TSG Holdings Corp. The following table sets forth certain information regarding the beneficial ownership of TSG Holdings Corp., as of March 29, 2007, by (i) each person or entity known to us to own more than 5% of any class of TSG Holdings Corp.’s outstanding securities, (ii) each member of our board of directors and each of our named executive officers and (iii) all of the members of the board of directors and executive officers as a group. TSG Holdings Corp.’s outstanding securities consist of about 539,800 shares of TSG Holdings Corp. common stock and about 45,327 shares of TSG Holdings Corp. preferred stock, the terms of which are described in more detail below. Additionally, there are 14,290 options to purchase common stock outstanding that are held by our executive officers. To our knowledge, each of such stockholders will have sole voting and investment power as to the stock shown unless otherwise noted. Beneficial ownership of the securities listed in the table has been determined in accordance with the applicable rules and regulation promulgated under the Exchange Act.

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	Number and Percent of Shares of TSG Holdings Corp.(1)
	Preferred Stock			Common Stock
	Number	Percent		Number	Percent
Greater than 5% Stockholders:
Bruckmann, Rosser, Sherrill & Co. II, L.P.(2)
126 East 56th Street New York, New York 10022	19,209.704	42.4	%	228,687	42.4	%
Funds affiliated with Jefferies Capital Partners(3)
520 Madison Avenue, 12th Floor New York, New York 10022	19,209.704	42.4	%	228,687	42.4	%
Christopher A. Pierce(4)(5)	3,096.224	6.8	%	38,140	7.0	%
Named Executive Officers and Directors:
John A. Saxton(4)(6)(7)	1,340.426	3.0	%	18,157	3.4	%
Robert M. Jakobe(4)(8)(9)	108.190		*	3,488	*
Joan B. Davidson(4)(10)	67.021		*	2,198	*
Gary J. Kittredge(4)(11)	22.340		*	1,376	*
G. Paul Bozuwa(4)(12)	268.085		*	4,391	*
Thomas J. Baldwin(13)(14)	19,209.704	42.4	%	228,687	42.4	%
Nicholas Daraviras(15)	—	—		—	—
Craig H. Deery(4)	244.616		*	2,912		*
Gary T. DiCamillo(4)	268.085		*	3,191		*
J. Rice Edmonds(13)	—	—		—	—
J. M. Dryden Hall, Jr.(4)	89.362		*	1,064		*
James L. Luikart(15)(16)	19,209.704	42.4	%	228,687	42.4	%
Nicholas R. Sheppard(13)	—	—		—	—
George A. Whaling(4)	272.040		*	3,239		*
All executive officers and directors as a group (21 persons)(17)	44,422.261	98.0	%	543,126	98.0	%

* indicates less than 1%

(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person has beneficial ownership of any securities as to which such person, directly or indirectly, through any contract, arrangement, undertaking, relationship or otherwise has or shares voting power and/or investment power and as to which such person has the right to acquire such voting and/or investment power within 60 days. Percentage of beneficial ownership as to any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person by the sum of the number of shares outstanding as of such date and the number of shares as to which such person has the right to acquire voting and/or investment power within 60 days.

(2)The Sheridan Group Holdings (BRS), LLC (the “BRSLLC”) is controlled by Bruckmann, Rosser, Sherrill & Co. II, L.P. (the “BRS Fund”) which is a private equity investment fund managed by Bruckmann, Rosser, Sherrill & Co., LLC. BRSE, L.L.C. (“BRSE”) is the general partner of the BRS Fund and by virtue of such status may be deemed to be the beneficial owner of the shares owned by BRSLLC. BRSE has the power to direct BRSLLC as to the voting and disposition of shares held by BRSLLC. No single person controls the voting and dispositive power of BRSE with respect to the shares owned by BRSLLC. Bruce Bruckmann, Harold O. Rosser, Stephen C. Sherrill, Paul D. Kaminski and Thomas J. Baldwin are the managers of BRSE, and none of them individually has the power to direct or veto the voting or disposition of shares owned by BRSLLC. BRSE expressly disclaims beneficial ownership of the shares owned by BRSLLC. Each of Messrs. Bruckmann, Rosser, Sherrill, Kaminski and Baldwin expressly disclaims beneficial ownership of the shares owned by BRSLLC.

(3)The Sheridan Group Holdings (Jefferies), LLC is controlled by ING Furman Selz Investors III L.P., ING Barings U.S. Leveraged Equity Plan LLC and ING Barings Global Leveraged Equity Plan Ltd. which are private equity investment funds managed by Jefferies Capital Partners. Brian P. Friedman and Mr. Luikart are the Managing Members of JCP and may be considered the beneficial owners of the shares owned by The Sheridan Group Holdings (Jefferies), LLC, but each of Messrs. Friedman and Luikart expressly disclaim beneficial ownership of such shares, except to the extent of each of their pecuniary interests therein.

(4)The address of each of Mr. Saxton, Mr. Jakobe, Ms. Davidson, Mr. Kittredge, Mr. Bozuwa, Mr. Pierce, Mr. Deery, Mr. DiCamillo, Mr. Hall and Mr. Whaling is c/o The Sheridan Group, Inc., 11311 McCormick Road, S260, Hunt Valley, Maryland 21031.

(5)Includes options to purchase 1,280 shares of TSG Holdings Corp. common stock exercisable within 60 days.

(6)Includes 15,957 shares which are owned by LMWW Custodian FBO John A. Saxton Roll-over IRA. Mr. Saxton may be deemed to beneficially own such shares.

(7)Includes options to purchase 2,200 shares of TSG Holdings Corp. common stock exercisable within 60 days.

(8)Includes 1,288 shares which are owned by LMWW Custodian FBO Robert M. Jakobe Roll-over IRA. Mr. Jakobe may be deemed to beneficially own such shares.

(9)Includes options to purchase 2,200 shares of TSG Holdings Corp. common stock exercisable within 60 days.

(10)Includes options to purchase 1,400 shares of TSG Holdings Corp. common stock exercisable within 60 days.

(11)Includes options to purchase 1,110 shares of TSG Holdings Corp. common stock exercisable within 60 days.

(12)Includes options to purchase 1,200 shares of TSG Holdings Corp. common stock exercisable within 60 days.

(13)The address of each of Mr. Baldwin, Mr. Edmonds and Mr. Sheppard is c/o Bruckmann, Rosser, Sherrill & Co., Inc., 126 East 56th Street, New York, New York 10022.

(14)Consists of 19,209.704 shares of TSG Holdings Corp. preferred stock and 228,687 shares of TSG Holdings Corp. common stock owned and/or controlled by the BRSLLC. Mr. Baldwin may be deemed to share beneficial ownership of

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the shares owned of record and/or controlled by BRSLLC by virtue of his status as a manager of BRSE, but he expressly disclaims such beneficial ownership of the shares owned and/or controlled by BRSLLC. The members and managers of BRSE share investment and voting power with respect to securities owned and/or controlled by BRSE, but no individual controls such investment or voting power.

(15)The address of each of Mr. Daraviras and Mr. Luikart is c/o Jefferies Capital Partners, 520 Madison Avenue, 12th Floor, New York, New York 10022.

(16)Consists of 19,209.704 shares of TSG Holdings Corp. preferred stock and 228,687 shares of TSG Holdings Corp. common stock owned by The Sheridan Group Holdings (Jefferies), LLC. Mr. Luikart is a Managing Member of JCP and may be considered the beneficial owner of such shares, but he expressly disclaims such beneficial ownership of the shares owned by The Sheridan Group Holdings (Jefferies), LLC, except to the extent of his pecuniary interest therein.

(17)Includes options to purchase 14,290 shares of TSG Holdings Corp. common stock exercisable within 60 days.

TSG Holdings Corp. Preferred Stock

TSG Holdings Corp.’s Certificate of Incorporation provides that TSG Holdings Corp. may issue 100,000 shares of preferred stock, 75,000 of which is designated as 10% Series A Cumulative Compounding Preferred Stock and 25,000 of which is undesignated. TSG Holdings Corp. preferred stock has a stated value of $1,000 per share and is entitled to annual dividends when, as and if declared, which dividends will be cumulative, whether or not earned or declared, and will accrue at a rate of 10%, compounding annually. As of March 29, 2007, there are issued and outstanding about 45,327 shares of TSG Holdings Corp. preferred stock.

Except as otherwise required by law, the TSG Holdings Corp. preferred stock is not entitled to vote. TSG Holdings Corp. may not pay any dividend upon (except for a dividend payable in Junior Stock, as defined below), or redeem or otherwise acquire shares of, capital stock junior to the TSG Holdings Corp. preferred stock (including the common stock) (“Junior Stock”) unless all cumulative dividends on the TSG Holdings Corp. preferred stock have been paid in full. Upon liquidation, dissolution or winding up of TSG Holdings Corp., holders of TSG Holdings Corp. preferred stock are entitled to receive out of the legally available assets of TSG Holdings Corp., before any amount shall be paid to holders of Junior Stock, an amount equal to $1,000 per share of TSG Holdings Corp. preferred stock, plus all accrued and unpaid dividends to the date of final distribution. If the available assets are insufficient to pay the holders of the outstanding shares of TSG Holdings Corp. preferred stock in full, the assets, or the proceeds from the sale of the assets, will be distributed ratably among the holders.  The TSG Holdings Corp. preferred stock is not redeemable.

TSG Holdings Corp. Common Stock

The Certificate of Incorporation of TSG Holdings Corp. provides that TSG Holdings Corp. may issue 1,000,000 shares of TSG Holdings Corp. common stock. About 539,800 shares of TSG Holdings Corp. common stock are issued and outstanding as of March 29, 2007. The holders of TSG Holdings Corp. common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders.

Equity Compensation Plan Information

The following table sets forth information as of December 31, 2006 regarding all of our existing compensation plans pursuant to which equity securities are authorized for issuance to employees and non-employee directors.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights(1)		Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation plans approved by security holders	N/A	N/A		N/A
Equity compensation plans not approved by security holders	55,150	$	11.52	150
Total	55,150	$	11.52	150

(1)As of December 31, 2006.

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ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Securities Holders Agreement

At the closing of the Buyout Transactions, TSG Holdings Corp. entered into a securities holders agreement with BRS, JCP and the management investors. The securities holders agreement provides that TSG Holdings Corp.’s and our board of directors will consist of ten members, including four designees of BRS, four designees of JCP and two directors jointly designated by both BRS and JCP. Also pursuant to the securities holders agreement, we may not take certain significant actions, such as incurrences of indebtedness in excess of certain thresholds or a sale of all or substantially all of our assets, without the approval of each of BRS and JCP.

The securities holders agreement generally restricts the transfer of shares of TSG Holdings Corp. common stock or TSG Holdings Corp. preferred stock without the consent of BRS and JCP. Exceptions to this restriction include transfers to affiliates and transfers for estate planning purposes, in each case so long as any transferee agrees to be bound by the terms of the agreement.

Each of TSG Holdings Corp., BRS and JCP has a right of first refusal under the securities holders agreement with respect to sales of shares of TSG Holdings Corp. by management investors. Under certain circumstances, the stockholders have “tag-along” rights to sell their shares on a pro rata basis with the selling stockholder in certain sales to third parties. If BRS and JCP approve a sale of TSG Holdings Corp., they have the right to require the other stockholders of TSG Holdings Corp. to sell their shares on the same terms. The securities holders agreement also contains a provision that gives TSG Holdings Corp. the right to repurchase a management investor’s shares upon termination of that management stockholder’s employment or removal or resignation from the board of directors.

Registration Rights Agreement

At the closing of the Buyout Transactions, TSG Holdings Corp., BRS, JCP and the management investors entered into a registration rights agreement. Pursuant to the registration rights agreement, upon the written request of either BRS or JCP, TSG Holdings Corp. has agreed to, on one or more occasions, prepare and file a registration statement with the SEC concerning the distribution of all or part of the shares of TSG Holdings Corp. common stock held by BRS or JCP or certain of their respective affiliates, as the case may be, and use its best efforts to cause the registration statement to become effective. Following an initial public offering of TSG Holdings Corp., BRS, JCP and the management investors also have the right, subject to certain exceptions and rights of priority, to have their shares included in certain registration statements filed by TSG Holdings Corp. Registration expenses of the selling stockholders (other than underwriting discounts and commissions and transfer taxes applicable to the shares sold by such stockholders or the fees and expenses of any accountants or other representatives retained by a selling stockholder) will be paid by TSG Holdings Corp. TSG Holdings Corp. has also agreed to indemnify the stockholders against certain customary liabilities in connection with any registration.

Management Agreement

In connection with the Buyout Transactions, we entered into a management agreement with BRS and JCP pursuant to which BRS and JCP may provide financial, advisory and consulting services to us. In exchange for these services, BRS and JCP will be entitled to an annual management fee. The total management fee will be equal to the greater of 2% of EBITDA (as defined in the Management Agreement) or $0.5 million per year, plus reasonable out-of-pocket expenses and will be split equally between BRS and JCP. In addition, BRS and JCP may negotiate with us to provide additional services in connection with any transaction in which we may be, or may consider becoming, involved. At the closing of the Sheridan Acquisition, BRS and JCP also were paid a transaction fee of about $1.0 million, plus reasonable out-of-pocket expenses, pursuant to the management agreement. The management agreement has an initial term of ten years. The agreement automatically renews for additional one year terms unless either we or BRS and JCP give written notice of termination within 90 days prior to the expiration of the initial term or any extension thereof. There are no minimum levels of service required to be provided pursuant to the management agreement. The management agreement includes customary indemnification provisions in favor of BRS and JCP.

Other Related Party Transactions and Matters

In May 2005 our two principal stockholders, BRS and funds affiliated with Jefferies Capital Partners, each entered into a separate limited liability company agreement with John A. Saxton, our chief executive officer, pursuant to which each principal stockholder contributed their preferred and common stock of TSG Holdings Corp., our parent corporation, to a limited liability company, or LLC, called The Sheridan Group Holdings (BRS), LLC and The Sheridan Group Holdings (Jefferies), LLC, respectively, in exchange for limited liability company interests in the LLC, and Mr. Saxton acquired an interest in the LLC for nominal consideration. Mr. Saxton’s interest in each LLC entitles him to receive a portion of any profit earned by the LLC on the shares of TSG Holdings Corp. stock held by it, after the principal

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stockholder has received back its entire investment in such shares, plus a specified return on its investment. Under each limited liability company agreement, Mr. Saxton will forfeit his interest in the LLCs if he terminates or we terminate his employment for any reason; however, if Mr. Saxton’s employment is terminated as a result of his death, one–third of his interest in the LLC will not be forfeited for each year of his service following the date of the limited liability company agreement.

Policy for Approval of Related Transactions

We do not have a written policy for the treatment of transactions required to be disclosed under Item 404(a) of Regulation S-K.  Our securities holder agreement described above generally prohibits entry into such transactions without the consent of BRS and JCP.

Director Independence

See Part III, Item 10, “Directors, Executive Officers and Corporate Governance – Board Composition and Director Independence.”

ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES

The Company incurred fees for services performed by PricewaterhouseCoopers LLP as follows:

	Year ended		Year ended
	December 31,		December 31,
(Dollars in thousands)	2006		2005
Audit fees (includes the review of interim consolidated financial statements, annual audit of the consolidated financial statements and assistance with SEC filings)	$	829	$	654
Audit-related fees (includes review of internal controls and due diligence related to acquisitions)	14		2
Tax fees (includes tax compliance, transactional consulting and advice for state tax issues)	131		123
All other fees (includes license fees for online financial reporting and assurance literature)	2		2
Total	$	976	$	781

All services performed by PricewaterhouseCoopers LLP have been approved by the audit committee prior to performance in accordance with legal requirements.

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PART IV

ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)  The following documents are filed as part of this Annual Report on Form 10-K:

(1)All Financial Statements:

	Page No.
Reports of Independent Registered Public Accounting Firm	25
Consolidated balance sheets as of December 31, 2006 and 2005	26
Consolidated statements of operations for the years-ended December 31, 2006, 2005 and 2004	27
Consolidated statements of changes in stockholder’s equity for the years-ended December 31, 2006, 2005 and 2004	28
Consolidated statements of cash flows for the years-ended December 31, 2006, 2005 and 2004	29
Notes to consolidated financial statements	30-48

(2) Financial Statement Schedules:

All schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements and the footnotes thereto.

(3) Exhibits

The following is a list of exhibits filed as part of this Annual Report on Form 10-K.  Where so indicated by footnote, exhibits which were previously filed are incorporated by reference.

2.1	Stock Purchase Agreement, dated as of August 1, 2003, by and among Sheridan Acquisition Corp., The Sheridan Group, Inc. and the shareholders, optionholders and warrantholders named therein.†
2.2	First Amendment to Stock Purchase Agreement, dated as of August 21, 2003, by and among Sheridan Acquisition Corp., The Sheridan Group, Inc. and BancBoston Ventures Inc. and John A. Saxton, on behalf of and solely in their capacity as representatives of all of the Sellers (as defined in the Stock Purchase Agreement).†
2.3	Asset Purchase Agreement, dated as of March 5, 2004, by and among The Sheridan Group, Inc., Lisbon Acquisition Corp. and The Dingley Press.†
3.1	Amended and Restated Certificate of Incorporation of TSG Holdings Corp.†
3.2	Amended and Restated Bylaws of TSG Holdings Corp.†
3.3	Amended and Restated Articles of Incorporation of The Sheridan Group, Inc.†
3.4	Amended and Restated Bylaws of The Sheridan Group, Inc.†
3.5	Restated and Amended Articles of Association of Capital City Press, Inc.†
3.6	Restated and Amended By-laws of Capital City Press, Inc.†
3.7	Articles of Incorporation of Dartmouth Journal Services, Inc.†
3.8	Bylaws of Dartmouth Journal Services, Inc.†
3.9	Articles of Agreement of Dartmouth Printing Company, as amended.†
3.10	By-Laws of Dartmouth Printing Company.†
3.11	Certificate of Incorporation of Sheridan Books, Inc., as amended.†
3.12	By-laws of Sheridan Books, Inc.†
3.13	Certificate of Incorporation of The Sheridan Group Holding Company.†
3.14	By-Laws of The Sheridan Group Holding Company.†
3.15	Amended and Restated Articles of Incorporation of The Sheridan Press, Inc.†
3.16	By-Laws of The Sheridan Press, Inc.†
3.17	Amendment and Restatement of Articles of Incorporation of United Litho, Inc.†
3.18	By-Laws of United Litho, Inc.†
3.19	Amended and Restated Certificate of Incorporation of The Dingley Press, Inc.†
3.20	Amended and Restated Bylaws of The Dingley Press, Inc.^
4.1	Indenture, dated as of August 21, 2003, among Sheridan Acquisition Corp. and The Bank of New York, as trustee and notes collateral agent.†
4.2	Supplemental Indenture, dated as of August 21, 2003, among Capital City Press, Inc., Dartmouth Printing Company, Dartmouth Journal Services, Inc., Sheridan Books, Inc., The Sheridan Group Holding Company, The Sheridan Press, Inc., United Litho, Inc. and The Bank of New York, as trustee and notes collateral agent.†
4.3	Form of 10¼% Senior Secured Note Due 2011 (included in Exhibit 4.1).†

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4.4	Registration Rights Agreement, dated as of August 21, 2003, by and between Sheridan Acquisition Corp. and Jefferies & Company, Inc.†
4.5	Joinder to the Registration Rights Agreement, dated as of August 21, 2003, by and among Capital City Press, Inc., Dartmouth Printing Company, Dartmouth Journal Services, Inc., Sheridan Books, Inc., The Sheridan Group Holding Company, The Sheridan Press, Inc., United Litho, Inc. and Jefferies & Company, Inc.†
4.6	Second Supplemental Indenture, dated as of May 11, 2004, by and among The Sheridan Group, Inc., Lisbon Acquisition Corp. and The Bank of New York, as trustee and notes collateral agent.†
4.7	Third Supplemental Indenture, dated as of May 11, 2004, by and among The Sheridan Group, Inc., Capital City Press, Inc., Dartmouth Printing Company, Dartmouth Journal Services, Inc., Lisbon Acquisition Corp., Sheridan Books, Inc., The Sheridan Group Holding Company, The Sheridan Press, Inc., United Litho, Inc. and The Bank of New York, as trustee and notes collateral agent.†
4.8	Registration Rights Agreement, dated as of May 25, 2004, by and among The Sheridan Group, Inc., Capital City Press, Inc., Dartmouth Printing Company, Dartmouth Journal Services, Inc., Lisbon Acquisition Corp., Sheridan Books, Inc., The Sheridan Group Holding Company, The Sheridan Press, Inc., United Litho, Inc. and Jefferies & Company, Inc.†
10.1	Amended and Restated Revolving Credit Agreement, dated as of May 25, 2004, by and among The Sheridan Group, Inc., Fleet National Bank, as administrative agent, issuer and a lender, and the other financial institutions party thereto.†
10.2	Intercreditor Agreement, dated as of August 21, 2003, among Sheridan Acquisition Corp., The Sheridan Group, Inc., the guarantors signatory thereto, The Bank of New York, as trustee and collateral agent, and Fleet National Bank.†
10.3	Securities Holders Agreement, dated as of August 21, 2003, by and among TSG Holdings Corp., Bruckmann, Rosser, Sherrill & Co. II, L.P., ING Furman Selz Investors III L.P., ING Barings Global Leveraged Equity Plan Ltd., ING Barings U.S. Leveraged Equity Plan LLC and the management investors named therein.†
10.4	Registration Rights Agreement, dated as of August 21, 2003, by and among TSG Holdings Corp., Bruckmann, Rosser, Sherrill & Co. II, L.P., ING Furman Selz Investors III L.P., ING Barings Global Leveraged Equity Plan Ltd., ING Barings U.S. Leveraged Equity Plan LLC and the management investors named therein.†
10.5	Securities Purchase Agreement, dated as of August 21, 2003, by and among TSG Holdings Corp., Bruckmann, Rosser, Sherrill & Co. II, L.P., ING Furman Selz Investors III L.P., ING Barings Global Leveraged Equity Plan Ltd. and ING Barings U.S. Leveraged Equity Plan LLC.†
10.6	Securities Purchase and Exchange Agreement, dated as of August 21, 2003, by and among TSG Holdings Corp. and the management investors named therein.†
10.7	Management Agreement, dated as of August 21, 2003, by and among Bruckmann, Rosser, Sherrill & Co., LLC, FS Private Investments III LLC (d/b/a Jefferies Capital Partners) and Sheridan Acquisition Corp.†
10.8	Employment and Non-Competition Agreement, dated as of January 2, 1998, between The Sheridan Group, Inc. and John A. Saxton, as amended by First Amendment to Employment Agreement, dated as of April 1, 2000.†*
10.9	Employment and Non-Competition Agreement, dated as of June 30, 2001, between The Sheridan Group, Inc. and G. Paul Bozuwa, as amended by First Amendment to Employment Agreement, dated as of April 18, 2003.†*
10.10	Employment and Non-Competition Agreement, dated as of October 31, 2001, between The Sheridan Group, Inc. and Joan B. Davidson.†*
10.11	TSG Holdings Corp. 2003 Stock-Based Incentive Compensation Plan.†*
10.12	The Sheridan Group, Inc. Executive and Director Deferred Compensation Plan.†*
10.13	The Sheridan Group, Inc. Change-of-Control Incentive Plan for Corporate Staff.~
10.14	The Sheridan Group, Inc. Change-of-Control Incentive Plan for Key Management Employees.~
10.15	Amendment No. 1 to Intercreditor Agreement, dated as of May 11, 2004, by and among The Sheridan Group, Inc., the guarantors signatory thereto, The Bank of New York, as trustee and collateral agent, and Fleet National Bank.†
10.16	Securities Purchase Agreement, dated as of May 25, 2004, by and among TSG Holdings Corp. and the management investors named therein.†
10.17	Joinder Agreement—Securities Holders Agreement, dated as of May 25, 2004, by and among Christopher A. Pierce, Eric Lane, William Braley, Kenneth Stickley, Jr. and TSG Holdings Corp.†
10.18	Joinder Agreement—Registration Rights Agreement, dated as of May 25, 2004, by and among Christopher A. Pierce, Eric Lane, William Braley, Kenneth Stickley, Jr., TSG Holdings Corp., Bruckmann, Rosser, Sherrill & Co. II, L.P., ING Furman Selz Investors III L.P., ING Barings U.S. Leveraged Equity Plan LLC and ING Barings Global Leveraged Equity Plan Ltd.†
10.19	Employment and Non-Competition Agreement, dated as of May 25, 2004, among The Dingley Press, Inc., Christopher A. Pierce and The Sheridan Group, Inc.*†
10.20	Limited Liability Company Agreement dated as of May 10, 2005, of The Sheridan Group Holdings (BRS), LLC by and between Bruckmann, Rosser, Sherrill & Co. II, L.P. and John A. Saxton.^^
10.21	Limited Liability Company Agreement dated as of May 10, 2005, of The Sheridan Group Holdings

69

	(Jefferies), LLC by and among ING Furman Selz Investors III L.P., ING Barings U.S. Leveraged Equity Plan LLC, ING Barings Global Leveraged Equity Plan Ltd. and John A. Saxton.^^
10.22	Joinder Agreement—Securities Holders Agreement and Registration Rights Agreement, dated as of August 3, 2004, by and among William P. Walters and TSG Holdings Corp.^
10.23	Employment and Non-Competition Agreement, dated as of March 28, 2006, among Robert M. Moore and The Sheridan Group, Inc.*^
10.24	First Amendment to Employment Agreement, dated as of March 28, 2006, between The Sheridan Group, Inc. and Christopher A. Pierce.*^
10.25	First Amendment to Employment Agreement, dated as of March 29, 2007, between The Sheridan Group, Inc. and Christopher A. Pierce.*
10.26	Employment and Non-Competition Agreement, dated as of March 29, 2007, between The Sheridan Group, Inc. and Robert M. Moore.*
10.27	Employment and Non-Competition Agreement, dated as of March 29, 2007, between The Sheridan Group, Inc. and Douglas R. Ehmann.*
10.28	Employment and Non-Competition Agreement, dated as of March 29, 2007, between The Sheridan Group, Inc. and Gary J. Kittredge.*
10.29	Employment and Non-Competition Agreement, dated as of March 29, 2007, between The Sheridan Group, Inc. and G. Paul Bozuwa, as amended by First Amendment to Employment Agreement, dated as of April 18, 2003.†*
10.30	Employment and Non-Competition Agreement, dated as of March 29, 2007, between The Sheridan Group, Inc. and John A. Saxton, as amended by First Amendment to Employment Agreement, dated as of April 1, 2000.†*
10.31	Employment and Non-Competition Agreement, dated as of March 29, 2007, between The Sheridan Group, Inc. and Joan B. Davidson.†*
10.32	Employment and Non-Competition Agreement, dated as of March 29, 2007, between The Sheridan Group, Inc. and Patricia A. Stricker.*
10.33	Employment and Non-Competition Agreement, dated as of March 29, 2007, between The Sheridan Group, Inc. and Robert M. Jakobe.*
21.1	Subsidiaries of The Sheridan Group, Inc.†
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by John A. Saxton, President and Chief Executive Officer of The Sheridan Group, Inc. and Robert Jakobe, Chief Financial Officer of The Sheridan Group, Inc.

†Filed as a like numbered exhibit to the Registrant’s Registration Statement on Form S-4 (File No. 333-110441) and incorporated herein by reference.

^Filed as a like numbered exhibit to the Registrant’s Annual Report on Form 10K for the year ended December 31, 2005, filed on March 30, 2006 and incorporated herein by reference.

^^Filed as a like numbered exhibit to the Registrant’s Quarterly Report on Form 10Q for the quarter ended March 31, 2005, filed on May 13, 2005 and incorporated herein by reference.

~Filed as a like numbered exhibit to the Registrant’s Annual Report on Form 10K for the year ended December 31, 2004, filed on March 31, 2005 and incorporated herein by reference.

*Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

THE SHERIDAN GROUP, INC.
By:	/s/ John A. Saxton
	Name:	John A. Saxton
	Title:	President and Chief Executive Officer and Director
	Date:	March 30, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ John A. Saxton	President and Chief Executive Officer and Director	March 30, 2007
John A. Saxton	(Principal Executive Officer)
/s/ Robert M. Jakobe	Chief Financial Officer	March 30, 2007
Robert M. Jakobe	(Principal Financial and Accounting Officer)
/s/ Thomas J. Baldwin	Director	March 30, 2007
Thomas J. Baldwin
/s/ Nicholas Daraviras	Director	March 30, 2007
Nicholas Daraviras
/s/ Craig H. Deery	Director	March 30, 2007
Craig H. Deery
/s/ Gary T. DiCamillo	Director	March 30, 2007
Gary T. DiCamillo
/s/ J. Rice Edmonds	Director	March 30, 2007
J. Rice Edmonds
/s/ J. M. Dryden Hall, Jr.	Director	March 30, 2007
J. M. Dryden Hall, Jr.
/s/ James L. Luikart	Director	March 30, 2007
James L. Luikart
/s/ Nicholas R. Sheppard	Director	March 30, 2007
Nicholas R. Sheppard
/s/ George A. Whaling	Director	March 30, 2007
George A. Whaling

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EX-10.25

Exhibit 10.25

SECOND AMENDMENT
TO THE
EMPLOYMENT AND NON-COMPETITION AGREEMENT

The Dingley Press, Inc. (the “Employer”), Christopher A. Pierce (the “Employee”), and, solely for purposes of Section 4, The Sheridan Group, Inc. (“Sheridan”) wish to amend the Employee’s Employment and Non-Competition Agreement (the “Employment Agreement”), dated May 25, 2004 and subsequently amended effective April 1, 2006, to bring the Agreement into compliance with the requirements of Internal Revenue Code section 409A and the Treasury Regulations and other authoritative guidance issued under that section.

Accordingly, effective April 1, 2007, the Employment Agreement is amended as follows:

1.             The final sentence of Section 4(b) is amended to read:  “In accordance with applicable Federal law, the Incentive Bonus, if any, will be paid by the March 15 following the fiscal year during which the Employee becomes vested in his or her Incentive Bonus.”

2.             The first phrase in Section 6(e) (i)(A) is amended to read: “severance payments, in accordance with the Employer’s payroll practices in existence on the date of Separation from Service at an annual rate equal to the sum of.”

3.             Section 6(e) (i) is amended by adding the following sentences to the end of that Section:  “No payment will be made under this Section 6(e) unless the Employee experiences a Separation from Service (as defined below).  Once payments commence under Section 6(e) (i) (A), there shall be no changes made to the payment schedule.  Any reimbursements paid under Section 6(e) (i) (C) shall be paid by the December 31 of the second calendar year following the year in which the Employee experiences a Separation from Service.”

4.             A new Section 6(e) (iv) is added as follows:

“(iv)        The Employee experiences a “Separation from Service” if the Employee dies, retires, or otherwise has a termination of employment with the Employer, within the meaning of Internal Revenue Code section 409A.  A “Separation from Service” shall occur if the Employee ceases to perform significant services for the Employer (for example, if the annual level of services and remuneration are reduced to less than twenty percent (20%) [or less than fifty percent (50%), if the Employee becomes an independent contractor] of average prior levels,  based on the last three full calendar years of employment (or the actual employment period, if shorter).

A “Separation from Service” shall not occur if the Employee is on military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment with the Employer is provided either by statute or by contract. If the period of leave exceeds six months and the Employee’s right to reemployment is not provided either by statute or by contract, a “Separation from Service” is deemed to occur on the first date immediately following such six-month period.”

In all other respects, the Employment Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed, effective as specified herein.

		THE SHERIDAN GROUP, INC.
By:	/s/ John A. Saxton
	John A. Saxton
	President and Chief Executive Officer
			/s/ Christopher A. Pierce
			Christopher A. Pierce
			March 29, 2007

EX-10.26

Exhibit 10.26

EMPLOYMENT AND NON-COMPETITION AGREEMENT

(Robert M. Moore)

This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”), dated as of March 29, 2007, is between The Sheridan Group, Inc., a Maryland corporation (the “Employer”), and Robert M. Moore (the “Employee”).

WHEREAS, the Employer wishes to employ the Employee as an executive officer of the Employer, and the Employee wishes to work as an executive officer of the Employer, on the terms set forth below.

NOW, THEREFORE, it is hereby agreed as follows:

§1.      EMPLOYMENT.  The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.

§2.      DUTIES.  The Employee shall be employed as the President and Chief Operating Officer of The Dingley Press, a Delaware corporation.  In such capacity, the Employee shall have the executive responsibilities and duties assigned by the Employer’s Board of Directors (the “Board”) and shall report directly to the President of the Employer.  The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer.  Nothing contained herein shall be construed as prohibiting the Employee from serving as a director of any entity that is not in the Designated Industry, as defined in  §8, so long as such activity does not involve a substantial time commitment and otherwise does not interfere with the performance of his duties under this Agreement.

§3.      TERM.  The term of employment of the Employee hereunder shall commence on April 1, 2007 (the “Commencement Date”) and shall continue until March 31, 2008 (the “Initial Term”), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms thereafter unless terminated by either party by written notice to the other party given at least ninety (90) days prior to the expiration of the then current term.

§4.      COMPENSATION AND BENEFITS.  During the term of the Employee’s employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate the Employee as follows:

(a)      Base Salary.  The Employer shall pay the Employee, in accordance with the Employer’s current payroll practices, a base salary (the “Base Salary”).  The Base Salary will be paid at an annual rate of $235,000.  The Base Salary may be increased from time to time at the discretion of the Board and is in addition to the other benefits set forth herein.

(b)      Management Incentive Bonus.  The Employee shall be eligible to receive from the Employer, for each of the fiscal years of the Employer ended after the date hereof, a management incentive bonus (the “Incentive Bonus”) in an amount up to fifty percent (50%) of the Base Salary for such fiscal year, in accordance with an incentive bonus plan to be adopted by the Board prior to the end of the first fiscal quarter for each such fiscal year.  In accordance with applicable Federal law, the Incentive Bonus, if any, will be paid by the March 15 following the fiscal year during which the Employee becomes vested in his Incentive Bonus.

(c)      Insurance; Other Benefits.  Accident, disability, and health insurance for the Employee shall be provided by the Employer under group accident, disability, and health insurance plans maintained by the Employer for, and on the terms and conditions generally applicable to, its full-time, salaried employees as such employment benefits may be modified from time to time by the Employer for all full-time, salaried employees.  The amount and extent of such coverage shall be subject to the discretion of the Board.  The Employee shall also be eligible to participate in any deferred compensation or retirement plans maintained by the Employer, in accordance with the terms of such plans as in effect from time to time.

§5.      EXPENSES.  The Employer shall reimburse the Employee for all reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder.  The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.

§6.      TERMINATION.  The Employee’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, and any extension of such term pursuant to §3, except that the employment of the Employee hereunder shall earlier terminate:

(a)      Death or Disability.  Upon the death of the Employee during the term of his employment hereunder or, at the option of the Employer, in the event of the Employee’s physical or mental disability, upon thirty (30) days’ written notice from the Employer.  The Employee shall be deemed disabled if an independent medical doctor (selected by the Employer’s health or disability insurer) certifies that the Employee has for 180 days, consecutive or non-consecutive, in any twelve (12) month period been physically or mentally disabled in a manner which seriously interferes with his ability to perform his responsibilities under this Agreement.  Any refusal by the Employee to submit to a medical examination for the purpose of certifying physical or mental disability under this §6(a) shall be deemed to constitute conclusive evidence of the Employee’s physical or mental disability.

(b)      For Cause.  For “Cause” immediately upon written notice by the Employer to the Employee.  For purposes of this Agreement, a termination shall be for Cause if any one or more of the following has occurred:

(i)      the Employee shall have committed an act of fraud, embezzlement or misappropriation against the Employer, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Employer’s business; or

(ii)     the Employee shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any crime involving moral turpitude; or

(iii)    the Employee shall have refused, after explicit written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or

(iv)    the Employee has been chronically absent from work (excluding vacations, illnesses or leaves of absence approved by the Board); or

(v)     the Employee shall have failed to perform the duties incident to his employment with the Employer on a regular basis, and such failure shall have continued for a period of twenty (20) days after written notice to the Employee specifying such failure in reasonable detail (other than as a result of the Employee’s Disability); or

(vi)    the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs on the Employer’s premises; or

(vii)   the Employee shall have breached any one or more provisions of the Stock Purchase Agreement, dated as of August 1, 2003, among the Employer and its stockholders as amended and in effect from time to time, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail.

(c)      Resignation Without Good Reason; Without Cause.  Upon thirty (30) days’ written notice by the Employer to the Employee without Cause or by the Employee to the Employer without Good Reason (as defined below).

(d)      Resignation With Good Reason.  Upon written notice by the Employee to the Employer for Good Reason specifying in reasonable detail the basis for such termination, provided, that such notice shall be given no more than thirty (30) days following the event or condition which gives rise to such termination.  For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any of the events or conditions described in subparagraphs (i) through (ii) hereof without the Employee’s express written consent which is not corrected within twenty (20) days after delivery by the Employee of written notice to the Employer:

2

(i)      a material reduction in the Employee’s status, position, scope of authority or responsibilities, the assignment to the Employee of any duties or responsibilities which are materially inconsistent with such status, position, authority or responsibilities; involuntary relocation of the Employee to an extent requiring an increase in his commute to his normal place of employment of more than 50 miles; or any removal of the Employee from or failure to reappoint him to any of positions to which the Employee has been appointed by the Employer, except in connection with the termination of his employment; or

(ii)     a material reduction by the Employer in the Employee’s compensation or benefits, except in conjunction with a general reduction by the Employer in the salaries of it’s executive level employees or the TDP site management team.

(e)      Rights and Remedies Upon Termination.

(i)      If the Employee’s employment hereunder is terminated by the Employer without Cause pursuant to §6(c) or by the Employee with Good Reason pursuant to §6(d), then the Employee shall be entitled to receive (A) severance payments, in accordance with the Employer’s payroll practices in existence on the date of Separation from Service at an annual rate equal to the sum of (1) the Employee’s Base Salary in effect at the time of such termination plus (2) the average of the Incentive Bonuses earned by the Employee for the two fiscal years immediately preceding the date of termination, for a period equal to eighteen (18) months (the “Severance Period”), (B) provided that the Employee elects continuation coverage, commonly known as COBRA coverage, under the health insurance plan maintained by the Employer for its full time salaried employees, the Employer, during the Severance Period, will pay the excess of the   required COBRA premium for the Employee (and his spouse and dependents to the extent covered by the Employer’s health insurance plan at the time of Executive’s termination of employment) over the premium paid by the Employee for such coverage immediately prior to the Employee’s termination of employment, (C) payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination (which shall be made by the December 31 of the second calendar year following the year in which the Employee   experiences a Separation from Service), and (D) immediate vesting of the Employee’s deferred compensation account in accordance with the Deferred Compensation Plan.  No payment will be made under this Section 6(e) unless the Employee experiences a Separation from Service (as defined in subsection (iv) below).  Once payments commence under §6(e) (i) (A), there shall be no changes made to the payment schedule.

(ii)     Notwithstanding the provisions of §6(e)(i), in the event the Employee accepts other employment during the Severance Period, the Employer shall be entitled to reduce the amount payable under §6(e)(i) by an amount equal to the income received by the Employee pursuant to such new employment during the Severance Period.

(iii)    Except as otherwise set forth in this §6(e), the Employee shall not be entitled to any severance or other compensation after termination.

(iv)    An employee experiences a “Separation from Service” if the employee dies, retires, or otherwise has a termination of employment with the Employer, within the meaning of Internal Revenue Code section 409A.  A “Separation from Service” shall occur if the Employee ceases to perform significant services for the Employer (for example, if the annual level of services and remuneration are reduced to less than twenty percent (20%) [or less than fifty percent (50%), if the Employee becomes an independent contractor] of average prior levels,  based on the last three full calendar years of employment (or the actual employment period, if shorter).

(v)     A “Separation from Service” shall not occur if the Employee is on military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment with the Employer is provided either by statute or by contract. If the period of leave exceeds six months and the Employee’s right to reemployment is not provided either by statute or by contract, a “Separation from Service” is deemed to occur on the first date immediately following such six-month period.

§7.      INVENTIONS; ASSIGNMENT.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Employer’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, and for a period of six (6) months thereafter, either alone or with others and whether or not during working hours or by the use of the facilities of the Employer (“Inventions”), shall be the exclusive property of the Employer.  The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other

3

documents the Employer may deem necessary to protect or perfect its rights therein, and shall assist the Employer, at the Employer’s expense, in obtaining, defending and enforcing the Employer’s rights therein.  The Employee hereby appoints the Employer as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer to protect or perfect its rights to any Inventions.

§8.      CONFIDENTIAL INFORMATION.  The Employee recognizes and acknowledges that certain proprietary and confidential information of the Employer, including without limitation information regarding customers, pricing policies, methods of operation, proprietary computer programs, sales, products, profits, costs, markets, key personnel, formulae, product applications, technical processes, and trade secrets (hereinafter called “Confidential Information”) are valuable, special, and unique assets of the Employer and its affiliates.  The Employee shall not, during or after his term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder and except as required by law, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder.  In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information.

§9.      NON-COMPETITION.  In consideration of the Employer’s obligations hereunder, during the term of the Employee’s employment hereunder and during the Designated Period (as defined herein), the Employee will not (i) anywhere within North America, engage, directly or indirectly, alone or as a shareholder (other than as a holder of stock of the Employer (or any of its affiliates) or as a holder of less than five percent (5%) of the common stock of any publicly traded corporation), partner, officer, director, employee or consultant of any other business organization that (A) is engaged or becomes engaged in the business of providing publishing and printing services journals, catalogs, and books or (B) is engaged in any other business activity that the Employer is conducting at the time of the Employee’s termination or any activity related thereto of which the Employee had knowledge that the Employer proposes to conduct (the “Designated Industry”), (ii) divert to any competitor of the Employer any customer of the Employer, or (iii) solicit or encourage any officer, employee or consultant of the Employer to leave its employ for employment by or with any competitor of the Employer.  The term “Designated Period” shall mean a period following the termination of the Employee’s employment hereunder equal to the longer of (a) twelve (12) months and (b) the Severance Period.  If at any time the provisions of this §9 shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

§10.    GENERAL.

(a)      Notices.  All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):

If to the Employer, to:

c/o The Sheridan Group, Inc.

11311 McCormick Road, Ste. 260

Hunt Valley, Maryland  21031-1437

Attention:  President

With a copy to:

Carmen Romano

Dechert LLP

Cira Centre Building

2929 Arch Street

Philadelphia, PA  19104-2808

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If to the Employee, to:

Robert M. Moore

4 Merion Way

Cumberland, ME 04021

(b)      Equitable Remedies.  Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of his obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.

(c)      Severability.  If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.

(d)      Waivers.  No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

(e)      Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(f)        Assigns.  This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto.

(g)      Arbitration of Disputes.  Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall, to the extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties, or in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Baltimore, Maryland in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Notwithstanding the foregoing, this §10(g) shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, provided that any other relief shall be pursued through an arbitration proceeding pursuant to this §10(g).  The prevailing party shall be entitled to collect reasonable fees and expenses incurred by the prevailing party in connection with such arbitration or litigation from the other party to such arbitration or litigation.

(h)      Entire Agreement.  This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended except by a written instrument hereafter signed by each of the parties hereto.

(i)        Governing Law.  This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Maryland.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written

THE SHERIDAN GROUP, INC.
By:	/s/ John A. Saxton
	John A. Saxton
	President and Chief Executive Officer
	/s/ Robert M. Moore
	Robert M. Moore

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EX-10.27

Exhibit 10.27

EMPLOYMENT AND NON-COMPETITION AGREEMENT

(Douglas R. Ehmann)

This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”), dated as of March 29, 2007, is between The Sheridan Group, Inc., a Maryland corporation (the “Employer”), and Douglas R. Ehmann (the “Employee”).

WHEREAS, the Employer wishes to employ the Employee as an executive officer of the Employer, and the Employee wishes to work as an executive officer of the Employer, on the terms set forth below.

NOW, THEREFORE, it is hereby agreed as follows:

§1. EMPLOYMENT.  The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.

§2. DUTIES.  The Employee shall be employed as the Vice President and Chief Technology Officer of The Sheridan Group, Inc., a Maryland corporation.  In such capacity, the Employee shall have the executive responsibilities and duties assigned by the Employer’s Board of Directors (the “Board”) and shall report directly to the President of the Employer.  The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer.  Nothing contained herein shall be construed as prohibiting the Employee from serving as a director of any entity that is not in the Designated Industry, as defined in §8, so long as such activity does not involve a substantial time commitment and otherwise does not interfere with the performance of his duties under this Agreement.

§3. TERM.  The term of employment of the Employee hereunder shall commence on April 1, 2007 (the “Commencement Date”) and shall continue until March 31, 2008 (the “Initial Term”), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms thereafter unless terminated by either party by written notice to the other party given at least ninety (90) days prior to the expiration of the then current term.

§4. COMPENSATION AND BENEFITS.  During the term of the Employee’s employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate the Employee as follows:

(a) Base Salary.  The Employer shall pay the Employee, in accordance with the Employer’s current payroll practices, a base salary (the “Base Salary”).  The Base Salary will be paid at an annual rate of $210,000.  The Base Salary may be increased from time to time at the discretion of the Board and is in addition to the other benefits set forth herein.

(b) Management Incentive Bonus.  The Employee shall be eligible to receive from the Employer, for each of the fiscal years of the Employer ended after the date hereof, a management incentive bonus (the “Incentive Bonus”) in an amount up to fifty percent (50%) of the Base Salary for such fiscal year, in accordance with an incentive bonus plan to be adopted by the Board prior to the end of the first fiscal quarter for each such fiscal year.  In accordance with applicable Federal law, the Incentive Bonus, if any, will be paid by the March 15 following the fiscal year during which the Employee becomes vested in his or her Incentive Bonus.

(c) Insurance; Other Benefits.  Accident, disability, and health insurance for the Employee shall be provided by the Employer under group accident, disability, and health insurance plans maintained by the Employer for, and on the terms and conditions generally applicable to, its full-time, salaried employees as such employment benefits may be modified from time to time by the Employer for all full-time, salaried employees.  The amount and extent of such coverage shall be subject to the discretion of the Board.  The Employee shall also be eligible to participate in any deferred compensation or retirement plans maintained by the Employer, in accordance with the terms of such plans as in effect from time to time.

§5. EXPENSES.  The Employer shall reimburse the Employee for all reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder.  The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.

§6. TERMINATION.  The Employee’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, and any extension of such term pursuant to §3, except that the employment of the Employee hereunder shall earlier terminate:

(a) Death or Disability.  Upon the death of the Employee during the term of his employment hereunder or, at the option of the Employer, in the event of the Employee’s physical or mental disability, upon thirty (30) days’ written notice from the Employer.  The Employee shall be deemed disabled if an independent medical doctor (selected by the Employer’s health or disability insurer) certifies that the Employee has for 180 days, consecutive or non-consecutive, in any twelve (12) month period been physically or mentally disabled in a manner which seriously interferes with his ability to perform his responsibilities under this Agreement.  Any refusal by the Employee to submit to a medical examination for the purpose of certifying physical or mental disability under this §6(a) shall be deemed to constitute conclusive evidence of the Employee’s physical or mental disability.

(b) For Cause.  For “Cause” immediately upon written notice by the Employer to the Employee.  For purposes of this Agreement, a termination shall be for Cause if any one or more of the following has occurred:

(i) the Employee shall have committed an act of fraud, embezzlement or misappropriation against the Employer, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Employer’s business; or

(ii) the Employee shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any crime involving moral turpitude; or

(iii) the Employee shall have refused, after explicit written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or

(iv) the Employee has been chronically absent from work (excluding vacations, illnesses or leaves of absence approved by the Board); or

(v) the Employee shall have failed to perform the duties incident to his employment with the Employer on a regular basis, and such failure shall have continued for a period of twenty (20) days after written notice to the Employee specifying such failure in reasonable detail (other than as a result of the Employee’s Disability); or

(vi) the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs on the Employer’s premises; or

(vii) the Employee shall have breached any one or more provisions of the Stock Purchase Agreement, dated as of August 1, 2003, among the Employer and its stockholders as amended and in effect from time to time, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail.

(c) Resignation Without Good Reason; Without Cause.  Upon thirty (30) days’ written notice by the Employer to the Employee without Cause or by the Employee to the Employer without Good Reason (as defined below).

(d) Resignation With Good Reason.  Upon written notice by the Employee to the Employer for Good Reason specifying in reasonable detail the basis for such termination, provided, that such notice shall be given no more than thirty (30) days following the event or condition which gives rise to such termination.  For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any of the events or conditions described in subparagraphs (i) through (ii) hereof without the Employee’s express written consent which is not corrected within twenty (20) days after delivery by the Employee of written notice to the Employer:

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(i) a material reduction in the Employee’s status, position, scope of authority or responsibilities, the assignment to the Employee of any duties or responsibilities which are materially inconsistent with such status, position, authority or responsibilities; involuntary relocation of the Employee to an extent requiring an increase in his commute to his normal place of employment of more than 50 miles; or any removal of the Employee from or failure to reappoint him to any of positions to which the Employee has been appointed by the Employer, except in connection with the termination of his employment; or

(ii) a material reduction by the Employer in the Employee’s compensation or benefits, except in conjunction with a general reduction by the Employer in the salaries of it’s executive level employees or the TSG management team.

(e)      Rights and Remedies Upon Termination.

(i) If the Employee’s employment hereunder is terminated by the Employer without Cause pursuant to §6(c) or by the Employee with Good Reason pursuant to §6(d), then the Employee shall be entitled to receive (A) severance payments, in accordance with the Employer’s payroll practices in existence on the date of Separation from Service at an annual rate equal to the sum of (1) the Employee’s Base Salary in effect at the time of such termination plus (2) the average of the Incentive Bonuses earned by the Employee for the two fiscal years immediately preceding the date of termination, for a period equal to eighteen (18) months (the “Severance Period”), (B) provided that the Employee elects continuation coverage, commonly known as COBRA coverage, under the health insurance plan maintained by the Employer for its full time salaried employees, the Employer, during the Severance Period, will pay the excess of the required COBRA premium for the Employee (and his spouse and dependents to the extent covered by the Employer’s health insurance plan at the time of Executive’s termination of employment) over the premium paid by the Employee for such coverage immediately prior to the Employee’s termination of employment, (C) payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination (which shall be made by the December 31 of the second calendar year following the year in which the Employee experiences a Separation from Service), and (D) immediate vesting of the Employee’s deferred compensation account in accordance with the Deferred Compensation Plan.  No payment will be made under this Section 6(e) unless the Employee experiences a Separation from Service (as defined in subsection (iv) below).  Once payments commence under §6(e)(i)(A), there shall be no changes made to the payment schedule. 

(ii) Notwithstanding the provisions of §6(e)(i), in the event the Employee accepts other employment during the Severance Period, the Employer shall be entitled to reduce the amount payable under §6(e)(i) by an amount equal to the income received by the Employee pursuant to such new employment during the Severance Period.

(iii) Except as otherwise set forth in this §6(e), the Employee shall not be entitled to any severance or other compensation after termination.

(iv) An employee experiences a “Separation from Service” if the employee dies, retires, or otherwise has a termination of employment with the Employer, within the meaning of Internal Revenue Code section 409A.  A “Separation from Service” shall occur if the Employee ceases to perform significant services for the Employer (for example, if the annual level of services and remuneration are reduced to less than twenty percent (20%) [or less than fifty percent (50%), if the Employee becomes an independent contractor] of average prior levels,  based on the last three full calendar years of employment (or the actual employment period, if shorter).

(v) A “Separation from Service” shall not occur if the Employee is on military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment with the Employer is provided either by statute or by contract. If the period of leave exceeds six months and the Employee’s right to reemployment is not provided either by statute or by contract, a “Separation from Service” is deemed to occur on the first date immediately following such six-month period.

§7. INVENTIONS; ASSIGNMENT.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Employer’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, and for a period of six (6) months thereafter, either alone or with others and whether or not during working hours or by the use of the facilities of the Employer (“Inventions”), shall be the exclusive property of the Employer.  The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect its rights therein, and shall assist the Employer, at the Employer’s expense, in obtaining, defending and enforcing the Employer’s rights therein.  The Employee hereby appoints the

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Employer as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer to protect or perfect its rights to any Inventions.

§8. CONFIDENTIAL INFORMATION.  The Employee recognizes and acknowledges that certain proprietary and confidential information of the Employer, including without limitation information regarding customers, pricing policies, methods of operation, proprietary computer programs, sales, products, profits, costs, markets, key personnel, formulae, product applications, technical processes, and trade secrets (hereinafter called “Confidential Information”) are valuable, special, and unique assets of the Employer and its affiliates.  The Employee shall not, during or after his term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder and except as required by law, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder.  In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information.

§9. NON-COMPETITION.  In consideration of the Employer’s obligations hereunder, during the term of the Employee’s employment hereunder and during the Designated Period (as defined herein), the Employee will not (i) anywhere within North America, engage, directly or indirectly, alone or as a shareholder (other than as a holder of stock of the Employer (or any of its affiliates) or as a holder of less than five percent (5%) of the common stock of any publicly traded corporation), partner, officer, director, employee or consultant of any other business organization that (A) is engaged or becomes engaged in the business of providing publishing and printing services journals, catalogs, and books or (B) is engaged in any other business activity that the Employer is conducting at the time of the Employee’s termination or any activity related thereto of which the Employee had knowledge that the Employer proposes to conduct (the “Designated Industry”), (ii) divert to any competitor of the Employer any customer of the Employer, or (iii) solicit or encourage any officer, employee or consultant of the Employer to leave its employ for employment by or with any competitor of the Employer.  The term “Designated Period” shall mean a period following the termination of the Employee’s employment hereunder equal to the longer of (a) twelve (12) months and (b) the Severance Period.  If at any time the provisions of this §9 shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. 

§10. GENERAL.

(a) Notices.  All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):

If to the Employer, to:

c/o The Sheridan Group, Inc.
11311 McCormick Road, Ste. 260

Hunt Valley, Maryland  21031-1437

Attention:  President

With a copy to:

Carmen Romano

Dechert LLP

Cira Centre Building

2929 Arch Street

Philadelphia, PA  19104-2808

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If to the Employee, to:

Douglas R. Ehmann

14215 Sawmill Court

Phoenix, Maryland 21131

(b) Equitable Remedies.  Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of his obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.

(c) Severability.  If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.

(d) Waivers.  No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

(e) Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(f) Assigns.  This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto.

(g) Arbitration of Disputes.  Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall, to the extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties, or in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Baltimore, Maryland in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Notwithstanding the foregoing, this §10(g) shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, provided that any other relief shall be pursued through an arbitration proceeding pursuant to this §10(g).  The prevailing party shall be entitled to collect reasonable fees and expenses incurred by the prevailing party in connection with such arbitration or litigation from the other party to such arbitration or litigation.

(h) Entire Agreement.  This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended except by a written instrument hereafter signed by each of the parties hereto.

(i) Governing Law.  This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Maryland.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written

THE SHERIDAN GROUP, INC.
By:	/s/ John A. Saxton
	John A. Saxton
	President and Chief Executive Officer
	/s/ Douglas R. Ehmann
	Douglas R. Ehmann

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EX-10.28

Exhibit 10.28

EMPLOYMENT AND NON-COMPETITION AGREEMENT

(Gary J. Kittredge)

This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”), dated as of March 29, 2007, is between The Sheridan Group, Inc., a Maryland corporation (the “Employer”), and Gary J. Kittredge (the “Employee”).

WHEREAS, the Employer wishes to employ the Employee as an executive officer of the Employer, and the Employee wishes to work as an executive officer of the Employer, on the terms set forth below.

NOW, THEREFORE, it is hereby agreed as follows:

§1. EMPLOYMENT.  The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.

§2. DUTIES.  The Employee shall be employed as the President and Chief Operating Officer of Dartmouth Printing Company, a New Hampshire corporation.  In such capacity, the Employee shall have the executive responsibilities and duties assigned by the Employer’s Board of Directors (the “Board”) and shall report directly to the Group President, Sheridan Publication Services, of the Employer.  The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer.  Nothing contained herein shall be construed as prohibiting the Employee from serving as a director of any entity that is not in the Designated Industry, as defined in §8, so long as such activity does not involve a substantial time commitment and otherwise does not interfere with the performance of his duties under this Agreement.

§3. TERM.  The term of employment of the Employee hereunder shall commence on April 1, 2007 (the “Commencement Date”) and shall continue until March 31, 2008 (the “Initial Term”), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms thereafter unless terminated by either party by written notice to the other party given at least  ninety (90) days prior to the expiration of the then current term.

§4. COMPENSATION AND BENEFITS.  During the term of the Employee’s employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate the Employee as follows:

(a) Base Salary.  The Employer shall pay the Employee, in accordance with the Employer’s current payroll practices, a base salary (the “Base Salary”).  The Base Salary will be paid at an annual rate of $210,000.  The Base Salary may be increased from time to time at the discretion of the Board and is in addition to the other benefits set forth herein.

(b) Management Incentive Bonus.  The Employee shall be eligible to receive from the Employer, for each of the fiscal years of the Employer ended after the date hereof, a management incentive bonus (the “Incentive Bonus”) in an amount up to fifty percent (50%) of the Base Salary for such fiscal year, in accordance with an incentive bonus plan to be adopted by the Board prior to the end of the first fiscal quarter for each such fiscal year.  In accordance with applicable Federal law, the Incentive Bonus, if any, will be paid by the March 15 following the fiscal year during which the Employee becomes vested in his Incentive Bonus.

(c) Insurance; Other Benefits.  Accident, disability, and health insurance for the Employee shall be provided by the Employer under group accident, disability, and health insurance plans maintained by the Employer for, and on the terms and conditions generally applicable to, its full-time, salaried employees as such employment benefits may be modified from time to time by the Employer for all full-time, salaried employees.  The amount and extent of such coverage shall be subject to the discretion of the Board.  The Employee shall also be eligible to participate in any deferred compensation or retirement plans maintained by the Employer, in accordance with the terms of such plans as in effect from time to time.

§5. EXPENSES.  The Employer shall reimburse the Employee for all reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder.  The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.

§6. TERMINATION.  The Employee’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, and any extension of such term pursuant to §3, except that the employment of the Employee hereunder shall earlier terminate:

(a) Death or Disability.  Upon the death of the Employee during the term of his employment hereunder or, at the option of the Employer, in the event of the Employee’s physical or mental disability, upon thirty (30) days’ written notice from the Employer.  The Employee shall be deemed disabled if an independent medical doctor (selected by the Employer’s health or disability insurer) certifies that the Employee has for 180 days, consecutive or non-consecutive, in any twelve (12) month period been physically or mentally disabled in a manner which seriously interferes with his ability to perform his responsibilities under this Agreement.  Any refusal by the Employee to submit to a medical examination for the purpose of certifying physical or mental disability under this §6(a) shall be deemed to constitute conclusive evidence of the Employee’s physical or mental disability.

(b) For Cause.  For “Cause” immediately upon written notice by the Employer to the Employee.  For purposes of this Agreement, a termination shall be for Cause if any one or more of the following has occurred:

(i)  the Employee shall have committed an act of fraud, embezzlement or misappropriation against the Employer, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Employer’s business; or

(ii)  the Employee shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any crime involving moral turpitude; or

(iii)  the Employee shall have refused, after explicit written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or

(iv)  the Employee has been chronically absent from work (excluding vacations, illnesses or leaves of absence approved by the Board); or

(v)  the Employee shall have failed to perform the duties incident to his employment with the Employer on a regular basis, and such failure shall have continued for a period of twenty (20) days after written notice to the Employee specifying such failure in reasonable detail (other than as a result of the Employee’s Disability); or

(vi)  the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs on the Employer’s premises; or

(vii)  the Employee shall have breached any one or more provisions of the Stock Purchase Agreement, dated as of August 1, 2003, among the Employer and its stockholders as amended and in effect from time to time, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail.

(c) Resignation Without Good Reason; Without Cause.  Upon thirty (30) days’ written notice by the Employer to the Employee without Cause or by the Employee to the Employer without Good Reason (as defined below).

(d) Resignation With Good Reason.  Upon written notice by the Employee to the Employer for Good Reason specifying in reasonable detail the basis for such termination, provided, that such notice shall be given no more than thirty (30) days following the event or condition which gives rise to such termination.  For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any of the events or conditions described in subparagraphs (i) through (ii) hereof without the Employee’s express written consent which is not corrected within twenty (20) days after delivery by the Employee of written notice to the Employer:

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(i) a material reduction in the Employee’s status, position, scope of authority or responsibilities, the assignment to the Employee of any duties or responsibilities which are materially inconsistent with such status, position, authority or responsibilities; involuntary relocation of the Employee to an extent requiring an increase in his commute to his normal place of employment of more than 50 miles; or any removal of the Employee from or failure to reappoint him to any of positions to which the Employee has been appointed by the Employer, except in connection with the termination of his employment; or

(ii) a material reduction by the Employer in the Employee’s compensation or benefits, except in conjunction with a general reduction by the Employer in the salaries of it’s executive level employees or the  DPC site management team.

(e) Rights and Remedies Upon Termination.

(i) If the Employee’s employment hereunder is terminated by the Employer without Cause pursuant to §6(c) or by the Employee with Good Reason pursuant to §6(d), then the Employee shall be entitled to receive (A) severance payments, in accordance with the Employer’s payroll practices in existence on the date of Separation from Service at an annual rate equal to the sum of (1) the Employee’s Base Salary in effect at the time of such termination plus (2) the average of the Incentive Bonuses earned by the Employee for the two fiscal years immediately     preceding the date of termination, for a period equal to eighteen (18) months (the “Severance Period”), (B) provided that the Employee elects continuation coverage, commonly known as COBRA coverage, under the health insurance plan maintained by the Employer for its full time salaried employees, the Employer, during the Severance Period, will pay the excess of the required COBRA premium for the Employee (and his spouse and dependents to the extent covered by the Employer’s health insurance plan at the time of Executive’s termination of employment) over the premium paid by the Employee for such coverage immediately prior to the Employee’s termination of employment, (C) payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination (which shall be  made by the December 31 of the second calendar year following the year in which the Employee experiences a Separation from Service), and (D) immediate vesting of the Employee’s deferred compensation account in accordance with the Deferred Compensation Plan.  No payment will be made under this Section 6(e) unless the Employee experiences a Separation from Service (as defined in subsection (iv) below).  Once payments commence under §6(e)(i)(A), there shall be no changes made to the payment schedule.

(ii) Notwithstanding the provisions of §6(e)(i), in the event the Employee accepts other employment during the Severance Period, the Employer shall be entitled to reduce the amount payable under §6(e)(i) by an amount equal to the income received by the Employee pursuant to such new employment during the Severance Period.

(iii) Except as otherwise set forth in this §6(e), the Employee shall not be entitled to any severance or other compensation after termination.

(iv) An employee experiences a “Separation from Service” if the employee dies, retires, or otherwise has a termination of employment with the Employer, within the meaning of Internal Revenue Code section 409A.  A “Separation from Service” shall occur if the Employee ceases to perform significant services for the Employer (for example, if the annual level of services and remuneration are reduced to less than twenty percent (20%) [or less than fifty percent (50%), if the Employee becomes an independent contractor] of average prior levels,  based on the last three full calendar years of employment (or the actual employment period, if shorter).

(v) A “Separation from Service” shall not occur if the Employee is on military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment with the Employer is provided either by statute or by contract. If the period of leave exceeds six months and the Employee’s right to reemployment is not provided either by statute or by contract, a “Separation from Service” is deemed to occur on the first date immediately following such six-month period.

§7. INVENTIONS; ASSIGNMENT.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Employer’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, and for a period of six (6) months thereafter, either alone or with others and whether or not during working hours or by the use of the facilities of the Employer (“Inventions”), shall be the exclusive property of the Employer.  The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other

3

documents the Employer may deem necessary to protect or perfect its rights therein, and shall assist the Employer, at the Employer’s expense, in obtaining, defending and enforcing the Employer’s rights therein.  The Employee hereby appoints the Employer as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer to protect or perfect its rights to any Inventions.

§8. CONFIDENTIAL INFORMATION.  The Employee recognizes and acknowledges that certain proprietary and confidential information of the Employer, including without limitation information regarding customers, pricing policies, methods of operation, proprietary computer programs, sales, products, profits, costs, markets, key personnel, formulae, product applications, technical processes, and trade secrets (hereinafter called “Confidential Information”) are valuable, special, and unique assets of the Employer and its affiliates.  The Employee shall not, during or after his term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder and except as required by law, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder.  In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information.

§9. NON-COMPETITION.  In consideration of the Employer’s obligations hereunder, during the term of the Employee’s employment hereunder and during the Designated Period (as defined herein), the Employee will not (i) anywhere within North America, engage, directly or indirectly, alone or as a shareholder (other than as a holder of stock of the Employer (or any of its affiliates) or as a holder of less than five percent (5%) of the common stock of any publicly traded corporation), partner, officer, director, employee or consultant of any other business organization that (A) is engaged or becomes engaged in the business of providing publishing and printing services  journals, catalogs, and books or (B) is engaged in any other business activity that the Employer is conducting at the time of the Employee’s termination or any activity related thereto of which the Employee had knowledge that the Employer proposes to conduct (the “Designated Industry”), (ii) divert to any competitor of the Employer any customer of the Employer, or (iii) solicit or encourage any officer, employee or consultant of the Employer to leave its employ for employment by or with any competitor of the Employer.  The term “Designated Period” shall mean a period following the termination of the Employee’s employment hereunder equal to the longer of (a) twelve (12) months and (b) the Severance Period.  If at any time the provisions of this §9 shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

§10. GENERAL.

(a) Notices.  All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):

If to the Employer, to:

c/o The Sheridan Group, Inc.
11311 McCormick Road, Ste. 260
Hunt Valley, Maryland  21031-1437
Attention:  President

With a copy to:

Carmen Romano
Dechert LLP
Cira Centre Building
2929 Arch Street
Philadelphia, PA  19104-2808

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If to the Employee, to:

Gary J. Kittredge
5 Twin Brooks Drive
Hanover, New Hampshire 03755

(b) Equitable Remedies.  Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of his obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.

(c) Severability.  If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.

(d) Waivers.  No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

(e) Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(f) Assigns.  This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto.

(g) Arbitration of Disputes.  Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall, to the extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties, or in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Baltimore, Maryland in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Notwithstanding the foregoing, this §10(g) shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, provided that any other relief shall be pursued through an arbitration proceeding pursuant to this §10(g).  The prevailing party shall be entitled to collect reasonable fees and expenses incurred by the prevailing party in connection with such arbitration or litigation from the other party to such arbitration or litigation.

(h) Entire Agreement.  This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended except by a written instrument hereafter signed by each of the parties hereto.

(i) Governing Law.  This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Maryland.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written

THE SHERIDAN GROUP, INC.
By:	/s/ John A. Saxton
	John A. Saxton
	President and Chief Executive Officer
	/s/ Gary J. Kittredge
	Gary J. Kittredge

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EX-10.29

Exhibit 10.29

EMPLOYMENT AND NON-COMPETITION AGREEMENT

(G. Paul Bozuwa)

This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”), dated as of March 29, 2007, is between The Sheridan Group, Inc., a Maryland corporation (the “Employer”), and G. Paul Bozuwa (the “Employee”).

WHEREAS, the Employer wishes to employ the Employee as an executive officer of the Employer, and the Employee wishes to work as an executive officer of the Employer, on the terms set forth below.

NOW, THEREFORE, it is hereby agreed as follows:

§1. EMPLOYMENT.  The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.

§2. DUTIES.  The Employee shall be employed as the Vice President, Global Business Development of The Sheridan Group, a Maryland corporation.  In such capacity, the Employee shall have the executive responsibilities and duties assigned by the Employer’s Board of Directors (the “Board”) and shall report directly to the President of the Employer.  The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer.  Nothing contained herein shall be construed as prohibiting the Employee from serving as a director of any entity that is not in the Designated Industry, as defined in  §8, so long as such activity does not involve a substantial time commitment and otherwise does not interfere with the performance of his duties under this Agreement.

§3. TERM.  The term of employment of the Employee hereunder shall commence on April 1, 2007 (the “Commencement Date”) and shall continue until March 31, 2008 (the “Initial Term”), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms thereafter unless terminated by either party by written notice to the other party given at least  ninety (90) days prior to the expiration of the then current term.

§4. COMPENSATION AND BENEFITS.  During the term of the Employee’s employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate the Employee as follows:

(a) Base Salary.  The Employer shall pay the Employee, in accordance with the Employer’s current payroll practices, a base salary (the “Base Salary”).  The Base Salary will be paid at an annual rate of $240,000.  The Base Salary may be increased from time to time at the discretion of the Board and is in addition to the other benefits set forth herein.

(b) Management Incentive Bonus.  The Employee shall be eligible to receive from the Employer, for each of the fiscal years of the Employer ended after the date hereof, a management incentive bonus (the “Incentive Bonus”) in an amount up to fifty percent (50%) of the Base Salary for such fiscal year, in accordance with an incentive bonus plan to be adopted by the Board prior to the end of the first fiscal quarter for each such fiscal year.  In accordance with applicable Federal law, the Incentive Bonus, if any, will be paid by the March 15 following the fiscal year during which the Employee becomes vested in his or her Incentive Bonus.

(c) Insurance; Other Benefits.  Accident, disability, and health insurance for the Employee shall be provided by the Employer under group accident, disability, and health insurance plans maintained by the Employer for, and on the terms and conditions generally applicable to, its full-time, salaried employees as such employment benefits may be modified from time to time by the Employer for all full-time, salaried employees.  The amount and extent of such coverage shall be subject to the discretion of the Board.  The Employee shall also be eligible to participate in any deferred compensation or retirement plans maintained by the Employer, in accordance with the terms of such plans as in effect from time to time.

§5. EXPENSES.  The Employer shall reimburse the Employee for all reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder.  The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.

§6. TERMINATION.  The Employee’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, and any extension of such term pursuant to §3, except that the employment of the Employee hereunder shall earlier terminate:

(a) Death or Disability.  Upon the death of the Employee during the term of his employment hereunder or, at the option of the Employer, in the event of the Employee’s physical or mental disability, upon thirty (30) days’ written notice from the Employer.  The Employee shall be deemed disabled if an independent medical doctor (selected by the Employer’s health or disability insurer) certifies that the Employee has for 180 days, consecutive or non-consecutive, in any twelve (12) month period been physically or mentally disabled in a manner which seriously interferes with her ability to perform his responsibilities under this Agreement.  Any refusal by the Employee to submit to a medical examination for the purpose of certifying physical or mental disability under this §6(a) shall be deemed to constitute conclusive evidence of the Employee’s physical or mental disability.

(b) For Cause.  For “Cause” immediately upon written notice by the Employer to the Employee.  For purposes of this Agreement, a termination shall be for Cause if any one or more of the following has occurred:

(i) the Employee shall have committed an act of fraud, embezzlement or misappropriation against the Employer, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Employer’s business; or

(ii) the Employee shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any crime involving moral turpitude; or

(iii)  the Employee shall have refused, after explicit written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or

(iv)  the Employee has been chronically absent from work (excluding vacations, illnesses or leaves of absence approved by the Board); or

(v)   the Employee shall have failed to perform the duties incident to his employment with the Employer on a regular basis, and such failure shall have continued for a period of twenty (20) days after written notice to the Employee specifying such failure in reasonable detail (other than as a result of the Employee’s Disability); or

(vi)   the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs on the Employer’s premises; or

(vii)    the Employee shall have breached any one or more provisions of the Stock Purchase Agreement, dated as of August 1, 2003, among the Employer and its stockholders as amended and in effect from time to time, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail.

(c) Resignation Without Good Reason; Without Cause.  Upon thirty (30) days’ written notice by the Employer to the Employee without Cause or by the Employee to the Employer without Good Reason (as defined below).

(d) Resignation With Good Reason.  Upon written notice by the Employee to the Employer for Good Reason specifying in reasonable detail the basis for such termination, provided, that such notice shall be given no more than thirty (30) days following the event or condition which gives rise to such termination.  For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any of the events or conditions described in subparagraphs (i) through (ii) hereof without the Employee’s express written consent which is not corrected within twenty (20) days after delivery by the Employee of written notice to the Employer:

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(i) a material reduction in the Employee’s status, position, scope of authority or responsibilities, the assignment to the Employee of any duties or responsibilities which are materially inconsistent with such status, position, authority or responsibilities; involuntary relocation of the Employee to an extent requiring an increase in his commute to his normal place of employment of more than 50 miles; or any removal of the Employee from or failure to reappoint him to any of positions to which the Employee has been appointed by the Employer, except in connection with the termination of his employment; or

(ii) a material reduction by the Employer in the Employee’s compensation or benefits, except in conjunction with a general reduction by the Employer in the salaries of it’s executive level employees or the TSG site management team.

(e)      Rights and Remedies Upon Termination.

(i) If the Employee’s employment hereunder is terminated by the Employer without Cause pursuant to §6(c) or by the Employee with Good Reason pursuant to §6(d), then the Employee shall be entitled to receive (A) severance payments, in accordance with the Employer’s payroll practices in existence on the date of Separation from Service at an annual rate equal to the sum of (1) the Employee’s Base Salary in effect at the time of such termination plus (2) the average of the Incentive Bonuses earned by the Employee for the two fiscal years immediately preceding the date of termination, for a period equal to eighteen (18) months (the “Severance Period”), (B) provided that the Employee elects continuation coverage, commonly known as COBRA coverage, under the health insurance plan maintained by the Employer for its full time salaried employees, the Employer, during the Severance Period, will pay the excess of the required COBRA premium for the Employee (and his spouse and dependents to the extent covered by the Employer’s health insurance plan at the time of Executive’s termination of employment) over the premium paid by the Employee for such coverage immediately prior to the Employee’s termination of employment, (C) payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination (which shall be made by the December 31 of the second calendar year following the year in which the Employee experiences a Separation from Service), and (D) immediate vesting of the Employee’s deferred compensation account in accordance with the Deferred Compensation Plan.  No payment will be made under this Section 6(e) unless the Employee experiences a Separation from Service (as defined in subsection (iv) below).  Once payments commence under §6(e)(i)(A), there shall be no changes made to the payment schedule.

(ii) Notwithstanding the provisions of §6(e)(i), in the event the Employee accepts other employment during the Severance Period, the Employer shall be entitled to reduce the amount payable under §6(e)(i) by an amount equal to the income received by the Employee pursuant to such new employment during the Severance Period.

(iii) Except as otherwise set forth in this §6(e), the Employee shall not be entitled to any severance or other compensation after termination.

(iv) An employee experiences a “Separation from Service” if the employee dies, retires, or otherwise has a termination of employment with the Employer, within the meaning of Internal Revenue Code section 409A.  A “Separation from Service” shall occur if the Employee ceases to perform significant services for the Employer (for example, if the annual level of services and remuneration are reduced to less than twenty percent (20%) [or less than fifty percent (50%), if the Employee becomes an independent contractor] of average prior levels,  based on the last three full calendar years of employment (or the actual employment period, if shorter).

(v) A “Separation from Service” shall not occur if the Employee is on military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment with the Employer is provided either by statute or by contract. If the period of leave exceeds six months and the Employee’s right to reemployment is not provided either by statute or by contract, a “Separation from Service” is deemed to occur on the first date immediately following such six-month period.

§7. INVENTIONS; ASSIGNMENT.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Employer’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, and for a period of six (6) months thereafter, either alone or with others and whether or not during working hours or by the use of the facilities of the Employer (“Inventions”), shall be the exclusive property of the Employer.  The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect its rights therein, and shall assist the Employer, at the

3

Employer’s expense, in obtaining, defending and enforcing the Employer’s rights therein.  The Employee hereby appoints the Employer as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer to protect or perfect its rights to any Inventions.

§8. CONFIDENTIAL INFORMATION.  The Employee recognizes and acknowledges that certain proprietary and confidential information of the Employer, including without limitation information regarding customers, pricing policies, methods of operation, proprietary computer programs, sales, products, profits, costs, markets, key personnel, formulae, product applications, technical processes, and trade secrets (hereinafter called “Confidential Information”) are valuable, special, and unique assets of the Employer and its affiliates.  The Employee shall not, during or after his term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder and except as required by law, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder.  In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information.

§9. NON-COMPETITION.  In consideration of the Employer’s obligations hereunder, during the term of the Employee’s employment hereunder and during the Designated Period (as defined herein), the Employee will not (i) anywhere within North America, engage, directly or indirectly, alone or as a shareholder (other than as a holder of stock of the Employer (or any of its affiliates) or as a holder of less than five percent (5%) of the common stock of any publicly traded corporation), partner, officer, director, employee or consultant of any other business organization that (A) is engaged or becomes engaged in the business of providing publishing and printing services  journals, catalogs, and books or (B) is engaged in any other business activity that the Employer is conducting at the time of the Employee’s termination or any activity related thereto of which the Employee had knowledge that the Employer proposes to conduct (the “Designated Industry”), (ii) divert to any competitor of the Employer any customer of the Employer, or (iii) solicit or encourage any officer, employee or consultant of the Employer to leave its employ for employment by or with any competitor of the Employer.  The term “Designated Period” shall mean a period following the termination of the Employee’s employment hereunder equal to the longer of (a) twelve (12) months and (b) the Severance Period.  If at any time the provisions of this §9 shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

§10. GENERAL.

(a) Notices.  All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):

If to the Employer, to:

c/o The Sheridan Group, Inc.
11311 McCormick Road, Ste. 260
Hunt Valley, Maryland  21031-1437
Attention:  President

With a copy to:

Carmen Romano
Dechert LLP
Cira Centre Building
2929 Arch Street
Philadelphia, PA  19104-2808

4

If to the Employee, to:

G. Paul Bozuwa
395 Main Street
Norwich, VT 05055

(b) Equitable Remedies.  Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of her obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.

(c) Severability.  If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.

(d) Waivers.  No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

(e) Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(f) Assigns.  This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto.

(g) Arbitration of Disputes.  Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall, to the extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties, or in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Baltimore, Maryland in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Notwithstanding the foregoing, this §10(g) shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, provided that any other relief shall be pursued through an arbitration proceeding pursuant to this §10(g).  The prevailing party shall be entitled to collect reasonable fees and expenses incurred by the prevailing party in connection with such arbitration or litigation from the other party to such arbitration or litigation.

(h) Entire Agreement.  This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended except by a written instrument hereafter signed by each of the parties hereto.

(i) Governing Law.  This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Maryland.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written

THE SHERIDAN GROUP, INC.
By:		/s/ John A. Saxton
		John A. Saxton
		President and Chief Executive Officer
	/s/ G. Paul Bozuwa
	G. Paul Bozuwa

5

EX-10.30

Exhibit 10.30

AMENDED AND RESTATED

EMPLOYMENT AND NON-COMPETITION AGREEMENT

(John A. Saxton)

This AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”), effective as of March 29, 2007, is between The Sheridan Group, Inc., a Maryland corporation (the “Employer”), and John A. Saxton (the “Employee”).

WHEREAS, the Employer wishes to amend and restate the Employment Agreement originally dated February 2, 1998 and amended April 1, 2000 between the Employer and the Employee to comply with the requirements of Internal Revenue Code section 409A; and

WHEREAS, the Employer wishes to employ the Employee as an executive officer of the Employer, and the Employee wishes to work as an executive officer of the Employer, on the terms set forth below.

NOW, THEREFORE, it is hereby agreed as follows:

§1. EMPLOYMENT.  The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.

§2. DUTIES.  The Employee shall be employed as the President and Chief Executive Officer of the Employer  In such capacity, the Employee shall have the executive responsibilities and duties assigned by the Employer’s Board of Directors (the “Board”).  The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer.  Nothing contained herein shall be construed as prohibiting the Employee from serving as a director of any entity that is not in the Designated Industry, as defined in §8, so long as such activity does not involve a substantial time commitment and otherwise does not interfere with the performance of his duties under this Agreement.

§3. TERM.  The term of employment of the Employee hereunder shall commence on April 1, 2007 (the “Commencement Date”) and shall continue until March 31, 2008 (the “Initial Term”), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms thereafter unless terminated by either party by written notice to the other party given at least  ninety (90) days prior to the expiration of the then current term.

§4. COMPENSATION AND BENEFITS.  During the term of the Employee’s employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate the Employee as follows:

(a) Base Salary.  The Employer shall pay the Employee, in accordance with the Employer’s current payroll practices, a base salary (the “Base Salary”).  The Base Salary will be paid at an annual rate of $560,000.  The Base Salary may be increased from time to time at the discretion of the Board and is in addition to the other benefits set forth herein.

(b) Management Incentive Bonus.  The Employee shall be eligible to receive from the Employer, for each of the fiscal years of the Employer ended after the date hereof, a management incentive bonus (the “Incentive Bonus”) in an amount up to one hundred percent (100%) of the Base Salary for such fiscal year, in accordance with an incentive bonus plan to be adopted by the Board prior to the end of the first fiscal quarter for each such fiscal year.  In accordance with applicable Federal law, the Incentive Bonus, if any, will be paid by the March 15 following the fiscal year during which the Employee becomes vested in his or her Incentive Bonus.

(c) Insurance; Other Benefits.  Accident, disability, and health and life insurance for the Employee shall be provided by the Employer under group accident, disability, and health and life insurance plans maintained by the Employer for, and on the terms and conditions generally applicable to, its full-time, salaried employees as such employment benefits may be modified from time to time by the Employer for all full-time, salaried employees.  The amount and extent of such coverage shall be subject to the discretion of the Board.  The Employee shall also be eligible to participate in any deferred compensation or retirement plans maintained by the Employer, in accordance with the terms of such plans as in effect from time to time.  In addition, the Employer shall continue to pay the premiums with respect to NY Life Insurance Policy #38 231 112.

§5. EXPENSES.  The Employer shall reimburse the Employee for all reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder.  The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.

§6. TERMINATION.  The Employee’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, and any extension of such term pursuant to §3, except that the employment of the Employee hereunder shall earlier terminate:

(a) Death or Disability.  Upon the death of the Employee during the term of his employment hereunder or, at the option of the Employer, in the event of the Employee’s physical or mental disability, upon thirty (30) days’ written notice from the Employer.  The Employee shall be deemed disabled if an independent medical doctor (selected by the Employer’s health or disability insurer) certifies that the Employee has for 180 days, consecutive or non-consecutive, in any twelve (12) month period been physically or mentally disabled in a manner which seriously interferes with her ability to perform his responsibilities under this Agreement.  Any refusal by the Employee to submit to a medical examination for the purpose of certifying physical or mental disability under this §6(a) shall be deemed to constitute conclusive evidence of the Employee’s physical or mental disability.

(b) For Cause.  For “Cause” immediately upon written notice by the Employer to the Employee.  For purposes of this Agreement, a termination shall be for Cause if any one or more of the following has occurred:

(i) the Employee shall have committed an act of fraud, embezzlement or misappropriation against the Employer, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Employer’s business; or

(ii) the Employee shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any crime involving moral turpitude; or

(iii)  the Employee shall have refused, after explicit written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or

(iv)  the Employee has been chronically absent from work (excluding vacations, illnesses or leaves of absence approved by the Board); or

(v)  the Employee shall have failed to perform the duties incident to his employment with the Employer on a regular basis, and such failure shall have continued for a period of twenty (20) days after written notice to the Employee specifying such failure in reasonable detail (other than as a result of the Employee’s Disability); or

(vi)  the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs on the Employer’s premises; or

(vii)  the Employee shall have breached any one or more provisions of the Stock Purchase Agreement, dated as of August 1, 2003, among the Employer and its stockholders as amended and in effect from time to time, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail.

(c) Resignation Without Good Reason; Without Cause.  Upon thirty (30) days’ written notice by the Employer to the Employee without Cause or by the Employee to the Employer without Good Reason (as defined below).

(d) Resignation With Good Reason.  Upon written notice by the Employee to the Employer for Good Reason specifying in reasonable detail the basis for such termination, provided, that such notice shall be given no more than thirty (30) days following the event or condition which gives rise to such termination.  For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any of the events or conditions described in subparagraphs (i) through (ii) hereof without the Employee’s express written consent which is not corrected within twenty (20) days after delivery by the Employee of written notice to the Employer:

(i) a material reduction in the Employee’s status, title, position, scope of authority or responsibilities, the assignment to the Employee of any duties or responsibilities which are materially inconsistent with such status, title,

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position, authority or responsibilities; involuntary relocation of the Employee to an extent requiring an increase in his commute to his normal place of employment of more than 50 miles; or any removal of the Employee from or failure to reappoint him to any of positions to which the Employee has been appointed by the Employer, except in connection with the termination of his employment for Cause, as a result of his death or disability or by the Employee other than for Good Reason; or

(ii) a material reduction by the Employer in the Employee’s compensation or benefits.

(e) Rights and Remedies Upon Termination.

(i)  If the Employee’s employment hereunder is terminated by the Employer without Cause pursuant to §6(c) or by the Employee with Good Reason pursuant to §6(d), then the Employee shall be entitled to receive (A) severance payments, in accordance with the Employer’s payroll practices in existence on the date of Separation from Service at an annual rate equal to the sum of (1) the Employee’s Base Salary in effect at the time of such termination plus (2) the average of the Incentive Bonuses earned by the Employee for the two fiscal years immediately preceding the date of termination, for a period equal to the longer of the remainder of the then current employment term or two years (the “Severance Period”), (B) provided that the Employee elects continuation coverage, commonly known as COBRA coverage, under the health insurance plan maintained by the Employer for its full time salaried employees, the Employer, during the Severance Period, will pay the excess of the required COBRA premium for the Employee (and his spouse and dependents to the extent covered by the Employer’s health insurance plan at the time of Executive’s termination of employment) over the premium paid by the Employee for such coverage immediately prior to the Employee’s termination of employment, (C) payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination (which shall be made by the December 31 of the second calendar year following the year in which the Employee experiences a Separation from Service), and (D) immediate vesting of the Employee’s deferred compensation account in accordance with the Deferred Compensation Plan.  No payment will be made under this Section 6(e) unless the Employee experiences a Separation from Service (as defined in subsection (iv) below).  Once payments commence under §6(e)(i)(A), there shall be no changes made to the payment schedule.

(ii) Except as otherwise set forth in this §6(e), the Employee shall not be entitled to any severance or other compensation after termination.

(vi) An employee experiences a “Separation from Service” if the employee dies, retires, or otherwise has a termination of employment with the Employer, within the meaning of Internal Revenue Code section 409A.  A “Separation from Service” shall occur if the Employee ceases to perform significant services for the Employer (for example, if the annual level of services and remuneration are reduced to less than twenty percent (20%) [or less than fifty percent (50%), if the Employee becomes an independent contractor] of average prior levels,  based on the last three full calendar years of employment (or the actual employment period, if shorter).

(vii) A “Separation from Service” shall not occur if the Employee is on military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment with the Employer is provided either by statute or by contract. If the period of leave exceeds six months and the Employee’s right to reemployment is not provided either by statute or by contract, a “Separation from Service” is deemed to occur on the first date immediately following such six-month period.

§7. INVENTIONS; ASSIGNMENT.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Employer’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, and for a period of twelve (12) months thereafter, either alone or with others and whether or not during working hours or by the use of the facilities of the Employer (“Inventions”), shall be the exclusive property of the Employer.  The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect its rights therein, and shall assist the Employer, at the Employer’s expense, in obtaining, defending and enforcing the Employer’s rights therein.  The Employee hereby appoints the Employer as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer to protect or perfect its rights to any Inventions.

§8. CONFIDENTIAL INFORMATION.  The Employee recognizes and acknowledges that certain proprietary and confidential information of the Employer, including without limitation information regarding customers, pricing policies,

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methods of operation, proprietary computer programs, sales, products, profits, costs, markets, key personnel, formulae, product applications, technical processes, and trade secrets (hereinafter called “Confidential Information”) are valuable, special, and unique assets of the Employer and its affiliates.  The Employee shall not, during or after his term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder and except as required by law, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder.  In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information.

§9. NON-COMPETITION.  In consideration of the Employer’s obligations hereunder, during the term of the Employee’s employment hereunder and during the Designated Period (as defined herein), the Employee will not (i) anywhere within North America, engage, directly or indirectly, alone or as a shareholder (other than as a holder of stock of the Employer (or any of its affiliates) or as a holder of less than five percent (5%) of the common stock of any publicly traded corporation), partner, officer, director, employee or consultant of any other business organization that (A) is engaged or becomes engaged in the business of providing publishing and printing services for periodicals, magazines, books, journals or catalogs or (B) is engaged in any other business activity that the Employer is conducting at the time of the Employee’s termination or any activity related thereto of which the Employee had knowledge that the Employer proposes to conduct (the “Designated Industry”), (ii) divert to any competitor of the Employer any customer of the Employer, or (iii) solicit or encourage any officer, employee or consultant of the Employer to leave its employ for employment by or with any competitor of the Employer.  The term “Designated Period” shall mean a period following the termination of the Employee’s employment hereunder equal to the longer of (a) twelve (12) months and (b) the Severance Period.  If at any time the provisions of this §9 shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

§10. GENERAL.

(a) Notices.  All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):

If to the Employer, to:

c/o The Sheridan Group, Inc.
11311 McCormick Road, Ste. 260
Hunt Valley, Maryland  21031-1437
Attention:  President

With a copy to:

Carmen Romano
Dechert LLP
Cira Centre Building
2929 Arch Street
Philadelphia, PA  19104-2808

If to the Employee, to:

John A. Saxton
12313 Cleghorn Road
Hunt Valley, Maryland 21030

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(b) Equitable Remedies.  Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of her obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.

(c) Severability.  If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.

(d) Waivers.  No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

(e) Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(f) Assigns.  This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto.

(g) Arbitration of Disputes.  Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall, to the extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties, or in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Baltimore, Maryland in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Notwithstanding the foregoing, this §10(g) shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, provided that any other relief shall be pursued through an arbitration proceeding pursuant to this §10(g).  The prevailing party shall be entitled to collect reasonable fees and expenses incurred by the prevailing party in connection with such arbitration or litigation from the other party to such arbitration or litigation.

(h) Entire Agreement.  This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended except by a written instrument hereafter signed by each of the parties hereto.

(i) Governing Law.  This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Maryland.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written

THE SHERIDAN GROUP, INC.
By:	/s/ Robert M. Jakobe
	Title: Robert M. Jakobe
	Chief Financial Officer
	/s/ John A. Saxton
	John A. Saxton

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EX-10.31

Exhibit 10.31

EMPLOYMENT AND NON-COMPETITION AGREEMENT

(Joan B. Davidson)

This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”), dated as of March 29, 2007, is between The Sheridan Group, Inc., a Maryland corporation (the “Employer”), and Joan B. Davidson (the “Employee”).

WHEREAS, the Employer wishes to employ the Employee as an executive officer of the Employer, and the Employee wishes to work as an executive officer of the Employer, on the terms set forth below.

NOW, THEREFORE, it is hereby agreed as follows:

§1.    EMPLOYMENT.  The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.

§2.    DUTIES.  The Employee shall be employed as the Group President, Sheridan Publication Services of The Sheridan Group, Inc., a Maryland corporation.  In such capacity, the Employee shall have the executive responsibilities and duties assigned by the Employer’s Board of Directors (the “Board”) and shall report directly to the President of the Employer.  The Employee agrees to devote her full time and best efforts to the performance of her duties to the Employer.  Nothing contained herein shall be construed as prohibiting the Employee from serving as a director of any entity that is not in the Designated Industry, as defined in §8, so long as such activity does not involve a substantial time commitment and otherwise does not interfere with the performance of her duties under this Agreement.

§3.    TERM.  The term of employment of the Employee hereunder shall commence on April 1, 2007 (the “Commencement Date”) and shall continue until March 31, 2008 (the “Initial Term”), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms thereafter unless terminated by either party by written notice to the other party given at least  ninety (90) days prior to the expiration of the then current term.

§4.    COMPENSATION AND BENEFITS.  During the term of the Employee’s employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate the Employee as follows:

(a)     Base Salary.  The Employer shall pay the Employee, in accordance with the Employer’s current payroll practices, a base salary (the “Base Salary”).  The Base Salary will be paid at an annual rate of $290,000.  The Base Salary may be increased from time to time at the discretion of the Board and is in addition to the other benefits set forth herein.

(b)    Management Incentive Bonus.  The Employee shall be eligible to receive from the Employer, for each of the fiscal years of the Employer ended after the date hereof, a management incentive bonus (the “Incentive Bonus”) in an amount up to fifty percent (50%) of the Base Salary for such fiscal year, in accordance with an incentive bonus plan to be adopted by the Board prior to the end of the first fiscal quarter for each such fiscal year.  In accordance with applicable Federal law, the Incentive Bonus, if any, will be paid by the March 15 following the fiscal year during which the Employee becomes vested in her Incentive Bonus.

(c)     Insurance; Other Benefits.  Accident, disability, and health insurance for the Employee shall be provided by the Employer under group accident, disability, and health insurance plans maintained by the Employer for, and on the terms and conditions generally applicable to, its full-time, salaried employees as such employment benefits may be modified from time to time by the Employer for all full-time, salaried employees.  The amount and extent of such coverage shall be subject to the discretion of the Board.  The Employee shall also be eligible to participate in any deferred compensation or retirement plans maintained by the Employer, in accordance with the terms of such plans as in effect from time to time.

(d)    Retention Bonus.  In addition to the Incentive Bonus, if the Employee remains employed hereunder on December 31st of any year, the Employee shall be entitled to receive from the Employer an additional annual bonus for each year (the “Retention Bonus”) in an amount equal to 25% of the Base Salary then in effect.  This Retention Bonus will be paid by February 15 of the following year into a deferred compensation account in accordance with the Employer’s Deferred Compensation Plan (the “Deferred Compensation Plan”).  The Retention Bonus will be administered and subject to a five (5) year vesting requirement as provided in the Deferred Compensation Plan.

§5.    EXPENSES.  The Employer shall reimburse the Employee for all reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder.  The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.

§6.    TERMINATION.  The Employee’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, and any extension of such term pursuant to §3, except that the employment of the Employee hereunder shall earlier terminate:

(a)     Death or Disability.  Upon the death of the Employee during the term of her employment hereunder or, at the option of the Employer, in the event of the Employee’s physical or mental disability, upon thirty (30) days’ written notice from the Employer.  The Employee shall be deemed disabled if an independent medical doctor (selected by the Employer’s health or disability insurer) certifies that the Employee has for 180 days, consecutive or non-consecutive, in any twelve (12) month period been physically or mentally disabled in a manner which seriously interferes with her ability to perform his responsibilities under this Agreement.  Any refusal by the Employee to submit to a medical examination for the purpose of certifying physical or mental disability under this §6(a) shall be deemed to constitute conclusive evidence of the Employee’s physical or mental disability.

(b)    For Cause.  For “Cause” immediately upon written notice by the Employer to the Employee.  For purposes of this Agreement, a termination shall be for Cause if any one or more of the following has occurred:

(i)    the Employee shall have committed an act of fraud, embezzlement or misappropriation against the Employer, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Employer’s business; or

(ii)   the Employee shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any crime involving moral turpitude; or

(iii)  the Employee shall have refused, after explicit written notice, to obey any lawful resolution of or direction by the Board which is consistent with her duties hereunder; or

(iv)  the Employee has been chronically absent from work (excluding vacations, illnesses or leaves of absence approved by the Board); or

(v)   the Employee shall have failed to perform the duties incident to her employment with the Employer on a regular basis, and such failure shall have continued for a period of twenty (20) days after written notice to the Employee specifying such failure in reasonable detail (other than as a result of the Employee’s Disability); or

(vi)  the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs on the Employer’s premises; or

(vii) the Employee shall have breached any one or more provisions of the Stock Purchase Agreement, dated as of August 1, 2003, among the Employer and its stockholders as amended and in effect from time to time, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail.

(c)     Resignation Without Good Reason; Without Cause.  Upon thirty (30) days’ written notice by the Employer to the Employee without Cause or by the Employee to the Employer without Good Reason (as defined below).

(d)    Resignation With Good Reason.  Upon written notice by the Employee to the Employer for Good Reason specifying in reasonable detail the basis for such termination, provided, that such notice shall be given no more than thirty (30) days following the event or condition which gives rise to such termination.  For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any of the events or conditions described in subparagraphs (i) through (ii) hereof without the Employee’s express written consent which is not corrected within twenty (20) days after delivery by the Employee of written notice to the Employer:

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(i)  a material reduction in the Employee’s status, position, scope of authority or responsibilities, the assignment to the Employee of any duties or responsibilities which are materially inconsistent with such status, position, authority or responsibilities; involuntary relocation of the Employee to an extent requiring an increase in his commute to his normal place of employment of more than 50 miles; or any removal of the Employee from or failure to reappoint him to any of positions to which the Employee has been appointed by the Employer, except in connection with the termination of his employment; or

(ii) a material reduction by the Employer in the Employee’s compensation or benefits, except in conjunction with a general reduction by the Employer in the salaries of it’s executive level employees or the  TSG management team.

(e)     Rights and Remedies Upon Termination.

(i)   If the Employee’s employment hereunder is terminated by the Employer without Cause pursuant to §6(c) or by the Employee with Good Reason pursuant to §6(d), then the Employee shall be entitled to receive (A) severance payments, in accordance with the Employer’s payroll practices in existence on the date of Separation from Service at an annual rate equal to the sum of (1) the Employee’s Base Salary in effect at the time of such termination plus (2) the average of the Incentive Bonuses earned by the Employee for the two fiscal years immediately preceding the date of termination, for a period equal to eighteen (18) months (the “Severance Period”), (B) provided that the Employee elects continuation coverage, commonly known as COBRA coverage, under the health insurance plan maintained by the Employer for its full time salaried employees, the Employer, during the Severance Period, will pay the excess of the required COBRA premium for the Employee (and his spouse and dependents to the extent covered by the Employer’s health insurance plan at the time of Executive’s termination of employment) over the premium paid by the Employee for such coverage immediately prior to the Employee’s termination of employment, (C) payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination (which shall be made by the December 31 of the second calendar year following the year in which the Employee experiences a Separation from Service), and (D) immediate vesting of the Employee’s deferred compensation account in accordance with the Deferred Compensation Plan. No payment will be made under this Section 6(e) unless the Employee experiences a Separation from Service (as defined in subsection (iv) below).  Once payments commence under §6(e)(i)(A), there shall be no changes made to the payment schedule.

(ii)Notwithstanding the provisions of §6(e)(i), in the event the Employee accepts other employment during the Severance Period, the Employer shall be entitled to reduce the amount payable under §6(e)(i) by an amount equal to the income received by the Employee pursuant to such new employment during the Severance Period.

(iii)Except as otherwise set forth in this §6(e), the Employee shall not be entitled to any severance or other compensation after termination.

(iv)An employee experiences a “Separation from Service” if the employee dies, retires, or otherwise has a termination of employment with the Employer, within the meaning of Internal Revenue Code section 409A.  A “Separation from Service” shall occur if the Employee ceases to perform significant services for the Employer (for example, if the annual level of services and remuneration are reduced to less than twenty percent (20%) [or less than fifty percent (50%), if the Employee becomes an independent contractor] of average prior levels,  based on the last three full calendar years of employment (or the actual employment period, if shorter) .

(v)A “Separation from Service” shall not occur if the Employee is on military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment with the Employer is provided either by statute or by contract. If the period of leave exceeds six months and the Employee’s right to reemployment is not provided either by statute or by contract, a “Separation from Service” is deemed to occur on the first date immediately following such six-month period.

§7.    INVENTIONS; ASSIGNMENT.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Employer’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, and for a period of six (6) months thereafter, either alone or with others and whether or not during working hours or by the use of the facilities of the Employer (“Inventions”), shall be the exclusive property of the Employer.  The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect its rights therein, and shall assist the Employer, at the

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Employer’s expense, in obtaining, defending and enforcing the Employer’s rights therein.  The Employee hereby appoints the Employer as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer to protect or perfect its rights to any Inventions.

§8.    CONFIDENTIAL INFORMATION.  The Employee recognizes and acknowledges that certain proprietary and confidential information of the Employer, including without limitation information regarding customers, pricing policies, methods of operation, proprietary computer programs, sales, products, profits, costs, markets, key personnel, formulae, product applications, technical processes, and trade secrets (hereinafter called “Confidential Information”) are valuable, special, and unique assets of the Employer and its affiliates.  The Employee shall not, during or after her term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder and except as required by law, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Employee of her confidentiality obligations hereunder.  In the event of the termination of her employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with her any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information.

§9. NON-COMPETITION.  In consideration of the Employer’s obligations hereunder, during the term of the Employee’s employment hereunder and during the Designated Period (as defined herein), the Employee will not (i) anywhere within North America, engage, directly or indirectly, alone or as a shareholder (other than as a holder of stock of the Employer (or any of its affiliates) or as a holder of less than five percent (5%) of the common stock of any publicly traded corporation), partner, officer, director, employee or consultant of any other business organization that (A) is engaged or becomes engaged in the business of providing publishing and printing services  journals, catalogs, and books or (B) is engaged in any other business activity that the Employer is conducting at the time of the Employee’s termination or any activity related thereto of which the Employee had knowledge that the Employer proposes to conduct (the “Designated Industry”), (ii) divert to any competitor of the Employer any customer of the Employer, or (iii) solicit or encourage any officer, employee or consultant of the Employer to leave its employ for employment by or with any competitor of the Employer.  The term “Designated Period” shall mean a period following the termination of the Employee’s employment hereunder equal to the longer of (a) twelve (12) months and (b) the Severance Period.  If at any time the provisions of this §9 shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

§10. GENERAL.

(a)     Notices.  All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):

If to the Employer, to:

c/o The Sheridan Group, Inc.

11311 McCormick Road, Ste. 260

Hunt Valley, Maryland 21031-1437

Attention: President

With a copy to:

Carmen Romano

Dechert LLP

Cira Centre Building

2929 Arch Street

Philadelphia, PA  19104-2808

4

If to the Employee, to:

Joan B. Davidson

712 Weil Mandel Way

Hunt Valley, Maryland 21030

(b)    Equitable Remedies.  Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of her obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.

(c)     Severability.  If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.

(d)    Waivers.  No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

(e)     Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(f)     Assigns.  This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto.

(g)    Arbitration of Disputes.  Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall, to the extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties, or in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Baltimore, Maryland in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Notwithstanding the foregoing, this §10(g) shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, provided that any other relief shall be pursued through an arbitration proceeding pursuant to this §10(g).  The prevailing party shall be entitled to collect reasonable fees and expenses incurred by the prevailing party in connection with such arbitration or litigation from the other party to such arbitration or litigation.

(h)    Entire Agreement.  This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended except by a written instrument hereafter signed by each of the parties hereto.

(i)      Governing Law.  This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Maryland.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written

	THE SHERIDAN GROUP, INC.
By:		/s/ John A. Saxton
		John A. Saxton
		President and Chief Executive Officer
		/s/ Joan B. Davidson
		Joan B. Davidson

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EX-10.32

Exhibit 10.32

EMPLOYMENT AND NON-COMPETITION AGREEMENT

(Patricia A. Stricker)

This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”), dated as of March 29, 2007, is between The Sheridan Group, Inc., a Maryland corporation (the “Employer”), and Patricia A. Stricker (the “Employee”).

WHEREAS, the Employer wishes to employ the Employee as an executive officer of the Employer, and the Employee wishes to work as an executive officer of the Employer, on the terms set forth below.

NOW, THEREFORE, it is hereby agreed as follows:

§1.    EMPLOYMENT.  The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.

§2.    DUTIES.  The Employee shall be employed as the President and Chief Operating Officer of The Sheridan Press, a Maryland corporation.  In such capacity, the Employee shall have the executive responsibilities and duties assigned by the Employer’s Board of Directors (the “Board”) and shall report directly to the Group President, Sheridan Publication Services of the Employer.  The Employee agrees to devote her full time and best efforts to the performance of her duties to the Employer.  Nothing contained herein shall be construed as prohibiting the Employee from serving as a director of any entity that is not in the Designated Industry, as defined in §8, so long as such activity does not involve a substantial time commitment and otherwise does not interfere with the performance of her duties under this Agreement.

§3.    TERM.  The term of employment of the Employee hereunder shall commence on April 1, 2007 (the “Commencement Date”) and shall continue until March 31, 2008 (the “Initial Term”), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms thereafter unless terminated by either party by written notice to the other party given at least ninety (90) days prior to the expiration of the then current term.

§4.    COMPENSATION AND BENEFITS.  During the term of the Employee’s employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate the Employee as follows:

(a)     Base Salary.  The Employer shall pay the Employee, in accordance with the Employer’s current payroll practices, a base salary (the “Base Salary”).  The Base Salary will be paid at an annual rate of $230,000.  The Base Salary may be increased from time to time at the discretion of the Board and is in addition to the other benefits set forth herein.

(b)    Management Incentive Bonus.  The Employee shall be eligible to receive from the Employer, for each of the fiscal years of the Employer ended after the date hereof, a management incentive bonus (the “Incentive Bonus”) in an amount up to fifty percent (50%) of the Base Salary for such fiscal year, in accordance with an incentive bonus plan to be adopted by the Board prior to the end of the first fiscal quarter for each such fiscal year.  In accordance with applicable Federal law, the Incentive Bonus, if any, will be paid by the March 15 following the fiscal year during which the Employee becomes vested in her Incentive Bonus.

(c)     Insurance; Other Benefits.  Accident, disability, and health insurance for the Employee shall be provided by the Employer under group accident, disability, and health insurance plans maintained by the Employer for, and on the terms and conditions generally applicable to, its full-time, salaried employees as such employment benefits may be modified from time to time by the Employer for all full-time, salaried employees.  The amount and extent of such coverage shall be subject to the discretion of the Board.  The Employee shall also be eligible to participate in any deferred compensation or retirement plans maintained by the Employer, in accordance with the terms of such plans as in effect from time to time.

§5.    EXPENSES.  The Employer shall reimburse the Employee for all reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder.  The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.

§6.    TERMINATION.  The Employee’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, and any extension of such term pursuant to §3, except that the employment of the Employee hereunder shall earlier terminate:

(a)     Death or Disability.  Upon the death of the Employee during the term of her employment hereunder or, at the option of the Employer, in the event of the Employee’s physical or mental disability, upon thirty (30) days’ written notice from the Employer.  The Employee shall be deemed disabled if an independent medical doctor (selected by the Employer’s health or disability insurer) certifies that the Employee has for 180 days, consecutive or non-consecutive, in any twelve (12) month period been physically or mentally disabled in a manner which seriously interferes with her ability to perform his responsibilities under this Agreement.  Any refusal by the Employee to submit to a medical examination for the purpose of certifying physical or mental disability under this §6(a) shall be deemed to constitute conclusive evidence of the Employee’s physical or mental disability.

(b)    For Cause.  For “Cause” immediately upon written notice by the Employer to the Employee.  For purposes of this Agreement, a termination shall be for Cause if any one or more of the following has occurred:

(i)      the Employee shall have committed an act of fraud, embezzlement or misappropriation against the Employer, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Employer’s business; or

(ii)     the Employee shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any crime involving moral turpitude; or

(iii)    the Employee shall have refused, after explicit written notice, to obey any lawful resolution of or direction by the Board which is consistent with her duties hereunder; or

(iv)    the Employee has been chronically absent from work (excluding vacations, illnesses or leaves of absence approved by the Board); or

(v)     the Employee shall have failed to perform the duties incident to her employment with the Employer on a regular basis, and such failure shall have continued for a period of twenty (20) days after written notice to the Employee specifying such failure in reasonable detail (other than as a result of the Employee’s Disability); or

(vi)    the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs on the Employer’s premises; or

(vii) the Employee shall have breached any one or more provisions of the Stock Purchase Agreement, dated as of August 1, 2003, among the Employer and its stockholders as amended and in effect from time to time, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail.

(c)     Resignation Without Good Reason; Without Cause.  Upon thirty (30) days’ written notice by the Employer to the Employee without Cause or by the Employee to the Employer without Good Reason (as defined below).

(d)    Resignation With Good Reason.  Upon written notice by the Employee to the Employer for Good Reason specifying in reasonable detail the basis for such termination, provided, that such notice shall be given no more than thirty (30) days following the event or condition which gives rise to such termination.  For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any of the events or conditions described in subparagraphs (i) through (ii) hereof without the Employee’s express written consent which is not corrected within twenty (20) days after delivery by the Employee of written notice to the Employer:

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(i)  a material reduction in the Employee’s status, position, scope of authority or responsibilities, the assignment to the Employee of any duties or responsibilities which are materially inconsistent with such status, position, authority or responsibilities; involuntary relocation of the Employee to an extent requiring an increase in his commute to his normal place of employment of more than 50 miles; or any removal of the Employee from or failure to reappoint him to any of positions to which the Employee has been appointed by the Employer, except in connection with the termination of his employment; or

(ii) a material reduction by the Employer in the Employee’s compensation or benefits, except in conjunction with a general reduction by the Employer in the salaries of it’s executive level employees or the  TSP site management team.

(iii) A failure of the Employer to fulfill a request for reassignment of employment by the Employee to either The Sheridan Group or another mutually agreed upon assignment.

(e)      Rights and Remedies Upon Termination.

(i)  If the Employee’s employment hereunder is terminated by the Employer without Cause pursuant to §6(c) or by the Employee with Good Reason pursuant to §6(d), then the Employee shall be entitled to receive (A) severance payments, in accordance with the Employer’s payroll practices in existence on the date of Separation from Service at an annual rate equal to the sum of (1) the Employee’s Base Salary in effect at the time of such termination plus (2) the average of the Incentive Bonuses earned by the Employee for the two fiscal years immediately preceding the date of termination, for a period equal to eighteen (18) months (the “Severance Period”), (B) provided that the Employee elects continuation coverage, commonly known as COBRA coverage, under the health insurance plan maintained by the Employer for its full time salaried employees, the Employer, during the Severance Period, will pay the excess of the required COBRA premium for the Employee (and his spouse and dependents to the extent covered by the Employer’s health insurance plan at the time of Executive’s termination of employment) over the premium paid by the Employee for such coverage immediately prior to the Employee’s termination of employment, (C) payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination (which shall be made by the December 31 of the second calendar year following the year in which the Employee experiences a Separation from Service), and (D) immediate vesting of the Employee’s deferred compensation account in accordance with the Deferred Compensation Plan.  No payment will be made under this Section 6(e) unless the Employee experiences a Separation from Service (as defined in subsection (iv) below).  Once payments commence under
§6(e)(i)(A), there shall be no changes made to the payment schedule.

(ii) Notwithstanding the provisions of §6(e)(i), in the event the Employee accepts other employment during the Severance Period, the Employer shall be entitled to reduce the amount payable under §6(e)(i) by an amount equal to the income received by the Employee pursuant to such new employment during the Severance Period.

(vi)      Except as otherwise set forth in this §6(e), the Employee shall not be entitled to any severance or other compensation after termination.

(vii)     An employee experiences a “Separation from Service” if the employee dies, retires, or otherwise has a termination of employment with the Employer, within the meaning of Internal Revenue Code section 409A.  A “Separation from Service” shall occur if the Employee ceases to perform significant services for the Employer (for example, if the annual level of services and remuneration are reduced to less than twenty percent (20%) [or less than fifty percent (50%), if the Employee becomes an independent contractor] of average prior levels,  based on the last three full calendar years of employment (or the actual employment period, if shorter).

(viii)    A “Separation from Service” shall not occur if the Employee is on military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment with the Employer is provided either by statute or by contract. If the period of leave exceeds six months and the Employee’s right to reemployment is not provided either by statute or by contract, a “Separation from Service” is deemed to occur on the first date immediately following such six-month period.

§7.      INVENTIONS; ASSIGNMENT.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Employer’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment

3

hereunder, and for a period of six (6) months thereafter, either alone or with others and whether or not during working hours or by the use of the facilities of the Employer (“Inventions”), shall be the exclusive property of the Employer.  The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect its rights therein, and shall assist the Employer, at the Employer’s expense, in obtaining, defending and enforcing the Employer’s rights therein.  The Employee hereby appoints the Employer as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer to protect or perfect its rights to any Inventions.

§8.    CONFIDENTIAL INFORMATION.  The Employee recognizes and acknowledges that certain proprietary and confidential information of the Employer, including without limitation information regarding customers, pricing policies, methods of operation, proprietary computer programs, sales, products, profits, costs, markets, key personnel, formulae, product applications, technical processes, and trade secrets (hereinafter called “Confidential Information”) are valuable, special, and unique assets of the Employer and its affiliates.  The Employee shall not, during or after her term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder and except as required by law, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Employee of her confidentiality obligations hereunder.  In the event of the termination of her employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with her any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information.

§9. NON-COMPETITION.  In consideration of the Employer’s obligations hereunder, during the term of the Employee’s employment hereunder and during the Designated Period (as defined herein), the Employee will not (i) anywhere within North America, engage, directly or indirectly, alone or as a shareholder (other than as a holder of stock of the Employer (or any of its affiliates) or as a holder of less than five percent (5%) of the common stock of any publicly traded corporation), partner, officer, director, employee or consultant of any other business organization that (A) is engaged or becomes engaged in the business of providing publishing and printing services  journals, catalogs, and books or (B) is engaged in any other business activity that the Employer is conducting at the time of the Employee’s termination or any activity related thereto of which the Employee had knowledge that the Employer proposes to conduct (the “Designated Industry”), (ii) divert to any competitor of the Employer any customer of the Employer, or (iii) solicit or encourage any officer, employee or consultant of the Employer to leave its employ for employment by or with any competitor of the Employer.  The term “Designated Period” shall mean a period following the termination of the Employee’s employment hereunder equal to the longer of (a) twelve (12) months and (b) the Severance Period.  If at any time the provisions of this §9 shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

§10. GENERAL.

(a)     Notices.  All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):

If to the Employer, to:

c/o The Sheridan Group, Inc.
11311 McCormick Road, Ste. 260

Hunt Valley, Maryland  21031-1437

Attention:  President

With a copy to:

Carmen Romano

Dechert LLP

Cira Centre Building

2929 Arch Street

Philadelphia, PA  19104-2808

4

If to the Employee, to:

Patricia A. Stricker

112 Sagewood Court

Sparks, Maryland 21152

(b)    Equitable Remedies.  Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of her obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.

(c)     Severability.  If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.

(d)    Waivers.  No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

(e)     Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(f)     Assigns.  This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto.

(g)    Arbitration of Disputes.  Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall, to the extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties, or in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Baltimore, Maryland in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Notwithstanding the foregoing, this §10(g) shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, provided that any other relief shall be pursued through an arbitration proceeding pursuant to this §10(g).  The prevailing party shall be entitled to collect reasonable fees and expenses incurred by the prevailing party in connection with such arbitration or litigation from the other party to such arbitration or litigation.

(h)    Entire Agreement.  This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended except by a written instrument hereafter signed by each of the parties hereto.

(i)      Governing Law.  This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Maryland.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written

	THE SHERIDAN GROUP, INC.
By:		/s/ John A. Saxton
		John A. Saxton
		President and Chief Executive Officer
		/s/ Patricia A. Stricker
		Patricia A. Stricker

5

EX-10.33

Exhibit 10.33

EMPLOYMENT AND NON-COMPETITION AGREEMENT

(Robert M. Jakobe)

This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”), dated as of March 29, 2007, is between The Sheridan Group, Inc., a Maryland corporation (the “Employer”), and Robert M. Jakobe (the “Employee”).

WHEREAS, the Employer wishes to employ the Employee as an executive officer of the Employer, and the Employee wishes to work as an executive officer of the Employer, on the terms set forth below.

NOW, THEREFORE, it is hereby agreed as follows:

§1.    EMPLOYMENT.  The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.

§2.    DUTIES.  The Employee shall be employed as the Executive Vice President and Chief Financial Officer of The Sheridan Group, Inc., a Maryland corporation.  In such capacity, the Employee shall have the executive responsibilities and duties assigned by the Employer’s Board of Directors (the “Board”) and shall report directly to the President of the Employer.  The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer.  Nothing contained herein shall be construed as prohibiting the Employee from serving as a director of any entity that is not in the Designated Industry, as defined in §8, so long as such activity does not involve a substantial time commitment and otherwise does not interfere with the performance of his duties under this Agreement.

§3.    TERM.  The term of employment of the Employee hereunder shall commence on April 1, 2007 (the “Commencement Date”) and shall continue until March 31, 2008 (the “Initial Term”), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms thereafter unless terminated by either party by written notice to the other party given at least  ninety (90) days prior to the expiration of the then current term.

§4.    COMPENSATION AND BENEFITS.  During the term of the Employee’s employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate the Employee as follows:

(a)     Base Salary.  The Employer shall pay the Employee, in accordance with the Employer’s current payroll practices, a base salary (the “Base Salary”).  The Base Salary will be paid at an annual rate of $270,000.  The Base Salary may be increased from time to time at the discretion of the Board and is in addition to the other benefits set forth herein.

(b)    Management Incentive Bonus.  The Employee shall be eligible to receive from the Employer, for each of the fiscal years of the Employer ended after the date hereof, a management incentive bonus (the “Incentive Bonus”) in an amount up to fifty percent (50%) of the Base Salary for such fiscal year, in accordance with an incentive bonus plan to be adopted by the Board prior to the end of the first fiscal quarter for each such fiscal year.  In accordance with applicable Federal law, the Incentive Bonus, if any, will be paid by the March 15 following the fiscal year during which the Employee becomes vested in his Incentive Bonus.

(c)     Insurance; Other Benefits.  Accident, disability, and health insurance for the Employee shall be provided by the Employer under group accident, disability, and health insurance plans maintained by the Employer for, and on the terms and conditions generally applicable to, its full-time, salaried employees as such employment benefits may be modified from time to time by the Employer for all full-time, salaried employees.  The amount and extent of such coverage shall be subject to the discretion of the Board.  The Employee shall also be eligible to participate in any deferred compensation or retirement plans maintained by the Employer, in accordance with the terms of such plans as in effect from time to time.

§5.    EXPENSES.  The Employer shall reimburse the Employee for all reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder.  The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.

§6.    TERMINATION.  The Employee’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, and any extension of such term pursuant to §3, except that the employment of the Employee hereunder shall earlier terminate:

(a)     Death or Disability.  Upon the death of the Employee during the term of his employment hereunder or, at the option of the Employer, in the event of the Employee’s physical or mental disability, upon thirty (30) days’ written notice from the Employer.  The Employee shall be deemed disabled if an independent medical doctor (selected by the Employer’s health or disability insurer) certifies that the Employee has for 180 days, consecutive or non-consecutive, in any twelve (12) month period been physically or mentally disabled in a manner which seriously interferes with his ability to perform his responsibilities under this Agreement.  Any refusal by the Employee to submit to a medical examination for the purpose of certifying physical or mental disability under this §6(a) shall be deemed to constitute conclusive evidence of the Employee’s physical or mental disability.

(b)    For Cause.  For “Cause” immediately upon written notice by the Employer to the Employee.  For purposes of this Agreement, a termination shall be for Cause if any one or more of the following has occurred:

(i)    the Employee shall have committed an act of fraud, embezzlement or misappropriation against the Employer, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Employer’s business; or

(ii)   the Employee shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any crime involving moral turpitude; or

(iii)  the Employee shall have refused, after explicit written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or

(iv)  the Employee has been chronically absent from work (excluding vacations, illnesses or leaves of absence approved by the Board); or

(v)   the Employee shall have failed to perform the duties incident to his employment with the Employer on a regular basis, and such failure shall have continued for a period of twenty (20) days after written notice to the Employee specifying such failure in reasonable detail (other than as a result of the Employee’s Disability); or

(vi)  the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs on the Employer’s premises; or

(vii) the Employee shall have breached any one or more provisions of the Stock Purchase Agreement, dated as of August 1, 2003, among the Employer and its stockholders as amended and in effect from time to time, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail.

(c)     Resignation Without Good Reason; Without Cause.  Upon thirty (30) days’ written notice by the Employer to the Employee without Cause or by the Employee to the Employer without Good Reason (as defined below).

(d)    Resignation With Good Reason.  Upon written notice by the Employee to the Employer for Good Reason specifying in reasonable detail the basis for such termination, provided, that such notice shall be given no more than thirty (30) days following the event or condition which gives rise to such termination.  For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any of the events or conditions described in subparagraphs (i) through (ii) hereof without the Employee’s express written consent which is not corrected within twenty (20) days after delivery by the Employee of written notice to the Employer:

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(i)  a material reduction in the Employee’s status, position, scope of authority or responsibilities, the assignment to the Employee of any duties or responsibilities which are materially inconsistent with such status, position, authority or responsibilities; involuntary relocation of the Employee to an extent requiring an increase in his commute to his normal place of employment of more than 50 miles; or any removal of the Employee from or failure to reappoint him to any of positions to which the Employee has been appointed by the Employer, except in connection with the termination of his employment; or

(ii) a material reduction by the Employer in the Employee’s compensation or benefits, except in conjunction with a general reduction by the Employer in the salaries of it’s executive level employees or the  TSG site management team.

(e)     Rights and Remedies Upon Termination.

(i)   If the Employee’s employment hereunder is terminated by the Employer without Cause pursuant to §6(c) or by the Employee with Good Reason pursuant to §6(d), then the Employee shall be entitled to receive (A) severance payments, in accordance with the Employer’s payroll practices in existence on the date of Separation from Service at an annual rate equal to the sum of (1) the Employee’s Base Salary in effect at the time of such termination plus (2) the average of the Incentive Bonuses earned by the Employee for the two fiscal years immediately preceding the date of termination, for a period equal to eighteen (18) months (the “Severance Period”), (B) provided that the Employee elects continuation coverage, commonly known as COBRA coverage, under the health insurance plan maintained by the Employer for its full time salaried employees, the Employer, during the Severance Period, will pay the excess of the required COBRA premium for the Employee (and his spouse and dependents to the extent covered by the Employer’s health insurance plan at the time of Executive’s termination of employment) over the premium paid by the Employee for such coverage immediately prior to the Employee’s termination of employment, (C) payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination (which shall be made by the December 31 of the second calendar year following the year in which the Employee experiences a Separation from Service), and (D) immediate vesting of the Employee’s deferred compensation account in accordance with the Deferred Compensation Plan.  No payment will be made under this Section 6(e) unless the Employee experiences a Separation from Service (as defined in subsection (iv) below).  Once payments commence under §6(e)(i)(A), there shall be no changes made to the payment schedule.

(ii)  Notwithstanding the provisions of §6(e)(i), in the event the Employee accepts other employment during the Severance Period, the Employer shall be entitled to reduce the amount payable under §6(e)(i) by an amount equal to the income received by the Employee pursuant to such new employment during the Severance Period.

(iii) Except as otherwise set forth in this §6(e), the Employee shall not be entitled to any severance or other compensation after termination.

(iv)       An employee experiences a “Separation from Service” if the employee dies, retires, or otherwise has a termination of employment with the Employer, within the meaning of Internal Revenue Code section 409A.  A “Separation from Service” shall occur if the Employee ceases to perform significant services for the Employer (for example, if the annual level of services and remuneration are reduced to less than twenty percent (20%) [or less than fifty percent (50%), if the Employee becomes an independent contractor] of average prior levels,  based on the last three full calendar years of employment (or the actual employment period, if shorter).

(v) A “Separation from Service” shall not occur if the Employee is on military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment with the Employer is provided either by statute or by contract. If the period of leave exceeds six months and the Employee’s right to reemployment is not provided either by statute or by contract, a “Separation from Service” is deemed to occur on the first date immediately following such six-month period.

§7.    INVENTIONS; ASSIGNMENT.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Employer’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, and for a period of six (6) months thereafter, either alone or with others and whether or not during working hours or by the use of the facilities of the Employer (“Inventions”), shall be the exclusive property of the Employer.  The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect its rights therein, and shall assist the Employer, at the

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Employer’s expense, in obtaining, defending and enforcing the Employer’s rights therein.  The Employee hereby appoints the Employer as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer to protect or perfect its rights to any Inventions.

§8.      CONFIDENTIAL INFORMATION.  The Employee recognizes and acknowledges that certain proprietary and confidential information of the Employer, including without limitation information regarding customers, pricing policies, methods of operation, proprietary computer programs, sales, products, profits, costs, markets, key personnel, formulae, product applications, technical processes, and trade secrets (hereinafter called “Confidential Information”) are valuable, special, and unique assets of the Employer and its affiliates.  The Employee shall not, during or after his term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder and except as required by law, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder.  In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information.

§9.      NON-COMPETITION.  In consideration of the Employer’s obligations hereunder, during the term of the Employee’s employment hereunder and during the Designated Period (as defined herein), the Employee will not (i) anywhere within North America, engage, directly or indirectly, alone or as a shareholder (other than as a holder of stock of the Employer (or any of its affiliates) or as a holder of less than five percent (5%) of the common stock of any publicly traded corporation), partner, officer, director, employee or consultant of any other business organization that (A) is engaged or becomes engaged in the business of providing publishing and printing services  journals, catalogs, and books or (B) is engaged in any other business activity that the Employer is conducting at the time of the Employee’s termination or any activity related thereto of which the Employee had knowledge that the Employer proposes to conduct (the “Designated Industry”), (ii) divert to any competitor of the Employer any customer of the Employer, or (iii) solicit or encourage any officer, employee or consultant of the Employer to leave its employ for employment by or with any competitor of the Employer.  The term “Designated Period” shall mean a period following the termination of the Employee’s employment hereunder equal to the longer of (a) twelve (12) months and (b) the Severance Period.  If at any time the provisions of this §9 shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

§10.  GENERAL.

(a)     Notices.  All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):

If to the Employer, to:

c/o The Sheridan Group, Inc.
11311 McCormick Road, Ste. 260

Hunt Valley, Maryland  21031-1437

Attention:  President

With a copy to:

Carmen Romano

Dechert LLP

Cira Centre Building

2929 Arch Street

Philadelphia, PA  19104-2808

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If to the Employee, to:

Robert M. Jakobe

14609 Manor Road

Phoenix, Maryland 21131

(b)    Equitable Remedies.  Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of his obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.

(c)     Severability.  If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.

(d)    Waivers.  No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.

(e)     Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(f)     Assigns.  This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto.

(g)    Arbitration of Disputes.  Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall, to the extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties, or in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Baltimore, Maryland in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Notwithstanding the foregoing, this §10(g) shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate, provided that any other relief shall be pursued through an arbitration proceeding pursuant to this §10(g).  The prevailing party shall be entitled to collect reasonable fees and expenses incurred by the prevailing party in connection with such arbitration or litigation from the other party to such arbitration or litigation.

(h)    Entire Agreement.  This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended except by a written instrument hereafter signed by each of the parties hereto.

(i)      Governing Law.  This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Maryland.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written

	THE SHERIDAN GROUP, INC.
By:		/s/ John A. Saxton
		John A. Saxton
		President and Chief Executive Officer
		/s/ Robert M. Jakobe
		Robert M. Jakobe

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

18 U.S.C. SECTION 1350

I, John A. Saxton, certify that:

1.      I have reviewed this Annual Report on Form 10-K of The Sheridan Group, Inc.;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)   disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 30, 2007	By:	/s/ John A. Saxton
			John A. Saxton
			President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

18 U.S.C. SECTION 1350

I, Robert M. Jakobe, certify that:

1.      I have reviewed this Annual Report on Form 10-K of The Sheridan Group, Inc.;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)   disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 30, 2007	By:	/s/ Robert M. Jakobe
			Robert M. Jakobe
			Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

18 U.S.C. SECTION 1350

In connection with The Sheridan Group, Inc. (the “Company”) Annual Report on Form 10-K for the fiscal year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, John A. Saxton, President and Chief Executive Officer of the Company, and Robert M. Jakobe, Vice President and Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March 30, 2007	By:	/s/ John A. Saxton
			John A. Saxton
			President and Chief Executive Officer
Date:	March 30, 2007	By:	/s/ Robert M. Jakobe
			Robert M. Jakobe
			Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.