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

                                    FORM 10-Q
(Mark One)
[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the quarterly period ended June 30, 1999

                                       or

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period from _______________ to _________________

         Commission file number 33-97090




                               ACG HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                       62-1395968
(State or other jurisdiction of                        (I.R.S. employer
 incorporation or organization)                     identification number)

                               100 Winners Circle
                           Brentwood, Tennessee 37027
                                 (615) 377-0377

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)



                          AMERICAN COLOR GRAPHICS, INC.
             (Exact name of registrant as specified in its charter)

            New York                                      16-1003976
(State or other jurisdiction of                        (I.R.S. employer
 incorporation or organization)                     identification number)

                               100 Winners Circle
                           Brentwood, Tennessee 37027
                                 (615) 377-0377

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)


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 that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes  X   No
    ---     ---

ACG Holdings, Inc. has 142,393 shares outstanding of its Common Stock, $.01 Par
Value, as of July 31, 1999 (all of which are privately owned and not traded on a
public market).


<PAGE>




                                      INDEX


Part I.        Financial Information                                    Page No.
               ---------------------                                    --------

  Item 1.      Condensed Consolidated Financial Statements

               Condensed Consolidated Balance Sheets as of
               June 30, 1999 and March 31, 1999                            3

               Condensed Consolidated Statements of Operations for
               the three months ended June 30, 1999 and 1998               5

               Condensed Consolidated Statements of Cash Flows for
               the three months ended June 30, 1999 and 1998               6

               Notes to Condensed Consolidated Financial Statements        7

  Item 2.      Management's Discussion and Analysis of
               Financial Condition and Results of Operations              12

  Item 3.      Quantitative and Qualitative Disclosures
               About Market Risk                                          21

Part II.       Other Information
               -----------------

  Item 1.      Legal Proceedings                                          22

  Item 2.      Changes in Securities and Use of Proceeds                  22

  Item 6.      Exhibits and Reports on Form 8-K                           22


               Signatures                                                 23

               Exhibit Index                                              24










                                       2
<PAGE>


                               ACG HOLDINGS, INC.
                      Condensed Consolidated Balance Sheets
                    (Dollars in thousands, except par values)


<TABLE>
<CAPTION>
                                                           June 30, 1999    March 31, 1999
                                                           -------------    --------------
                                                            (Unaudited)

<S>                                                          <C>               <C>
Assets
------

Current assets:
   Cash                                                      $       0               0
   Receivables:
      Trade accounts, less allowance
        for doubtful accounts of $2,622
        and $2,860 at June 30, 1999 and March 31,
        1999, respectively                                      49,872          57,895
Other                                                            2,304           2,082
                                                             ---------       ---------
               Total receivables                                52,176          59,977


Inventories                                                      8,366           8,343
Prepaid expenses and other current assets                        3,360           3,271
                                                             ---------       ---------
               Total current assets                             63,902          71,591

Property, plant and equipment                                  268,102         263,191
Less accumulated depreciation                                 (126,954)       (119,576)
                                                             ---------       ---------
               Net property, plant and equipment               141,148         143,615

Excess of cost over net assets acquired, less
  accumulated amortization of $45,213 and
  $44,587 at June 30, 1999 and March 31, 1999,
  respectively
                                                                71,403          72,029

Other assets                                                    11,659          11,765
                                                             ---------       ---------
               Total assets                                  $ 288,112         299,000
                                                             =========       =========

</TABLE>


See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>


                               ACG HOLDINGS, INC.
                      Condensed Consolidated Balance Sheets
                    (Dollars in thousands, except par values)

<TABLE>
<CAPTION>
                                                           June 30, 1999    March 31, 1999
                                                           -------------    --------------
                                                            (Unaudited)

<S>                                                         <C>              <C>
Liabilities and Stockholders' Deficit
-------------------------------------

Current liabilities:
  Current installments of long-term debt and
    capitalized leases                                      $   8,141            7,994
  Trade accounts payable                                       24,606           37,096
  Accrued expenses                                             31,326           30,756
  Income taxes                                                    723            1,196
                                                            ---------        ---------
        Total current liabilities                              64,796           77,042

Long-term debt and capitalized leases, excluding
  current installments                                        279,868          281,595
Deferred income taxes                                           7,897            7,916
Other liabilities                                              50,433           51,753
                                                            ---------        ---------
        Total liabilities                                     402,994          418,306

Stockholders' deficit:

Common stock, voting, $.01 par value, 5,852,223
  shares authorized, 142,393 and 134,250 shares
  issued and outstanding at June 30,1999 and
  March 31,1999, respectively
                                                                    1                1
Preferred Stock, $.01 par value, 15,823 shares
  authorized, 3,622 shares Series AA convertible
  preferred stock issued and outstanding,
  $40,000,000 liquidation preference,
  1,606 shares Series BB convertible preferred
  stock issued and outstanding,
  $17,500,000 liquidation preference                               --               --

Additional paid-in capital                                     58,286           58,286
Accumulated deficit                                          (170,639)        (174,905)
Other accumulated comprehensive loss, net of tax               (2,530)          (2,688)
                                                            ---------        ---------

        Total stockholders' deficit                          (114,882)        (119,306)
                                                            ---------        ---------
Commitments and contingencies

        Total liabilities and stockholders' deficit         $ 288,112          299,000
                                                            =========        =========

</TABLE>




See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>


                               ACG HOLDINGS, INC.
                 Condensed Consolidated Statements of Operations
                                 (In thousands)
                                   (Unaudited)

                                                     Three Months Ended June 30,
                                                     ---------------------------
                                                         1999            1998
                                                         ----            ----

Sales                                                  $ 123,608        127,813
Cost of sales                                            102,345        109,269
                                                       ---------      ---------
      Gross profit                                        21,263         18,544
Selling, general and administrative expenses               7,525          8,999
Amortization of goodwill                                     626            636
                                                       ---------      ---------
      Operating income                                    13,112          8,909
Other expense (income):
  Interest expense                                         8,493          9,417
  Interest income                                            (32)           (23)
  Other, net                                                (178)            63
                                                       ---------      ---------
  Total other expense                                      8,283          9,457
                                                       ---------      ---------
      Income (loss) from continuing operations
         before income taxes and extraordinary item        4,829           (548)
Income tax expense                                          (563)          (875)
                                                       ---------      ---------

      Income (loss) from continuing operations
        before extraordinary item                          4,266         (1,423)

Extraordinary loss on early extinguishment
      of debt                                                --          (4,020)
                                                       ---------      ---------
         Net income (loss)                             $   4,266         (5,443)
                                                       =========      =========









See accompanying notes to condensed consolidated financial statements.

                                       5

<PAGE>



                               ACG HOLDINGS, INC.
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)

                                                              Three Months Ended
                                                                  June  30,
                                                              ------------------
                                                               1999       1998
                                                               ----       ----
Cash flows provided (used) by operating activities:

  Net income (loss)                                          $ 4,266     (5,443)

  Adjustments to reconcile net income (loss)
    to cash provided by operating activities:

  Depreciation                                                 7,357      7,296

  Amortization of goodwill and other assets                    1,043        935

  Amortization of deferred financing costs                       326        413

  Extraordinary non-cash charges from early
    retirement of debt, net                                     --        4,020

  (Increase) decrease in working capital and other            (6,473)    12,694
                                                             -------    -------

       Net cash provided by operating activities               6,519     19,915

Cash flows provided (used) by investing activities:

  Purchases of property, plant and equipment                  (4,782)    (1,910)

  Proceeds from sales of property, plant and equipment             1          7

  Other                                                           14         37
                                                             -------    -------

       Net cash used by investing activities                  (4,767)    (1,866)

Cash flows provided (used) by financing activities:

  Proceeds (repayment) of long-term debt, including
    current maturities                                           218    (61,678)

  Proceeds from Term Loan Facilities                            --       75,000

  Net decrease in revolver borrowings                           --      (27,257)

  Repayment of capital lease obligations                      (1,797)    (1,719)

  Payment of deferred financing costs                           (131)    (2,358)

  Other, net                                                      (6)       (36)
                                                             -------    -------

         Net cash used by financing activities                (1,716)   (18,048)

Effect of exchange rates on cash and cash equivalents            (36)        (1)
                                                             -------    -------

Net change in cash                                              --         --

Cash:

  Beginning of period                                           --         --
                                                             -------    -------

  End of period                                              $  --         --
                                                             =======    =======

Non-cash investing activity:

  Equipment purchases under capital leases                   $  --          501
                                                             =======    =======






See accompanying notes to condensed consolidated financial statements.

                                       6
<PAGE>


                               ACG HOLDINGS, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

Description of the Company

ACG Holdings, Inc. ("Holdings") has no operations or significant assets other
than its investment in American Color Graphics, Inc. ("Graphics"). Holdings is
dependent upon distributions from Graphics to fund its obligations. Under the
terms of its debt agreements at June 30, 1999, Graphics' ability to pay
dividends or lend to Holdings was either restricted or prohibited, except that
Graphics may pay specified amounts to Holdings (i) to pay the repurchase price
payable to any officer or employee (or their estates) of Holdings, Graphics or
any of their respective subsidiaries in respect of their stock or options to
purchase stock in Holdings upon the death, disability or termination of
employment of such officers and employees (so long as no Default, or Event of
Default, as defined, has occurred under the terms of the Bank Credit Agreement,
as defined below, and provided the aggregate amount of all such repurchases does
not exceed $2 million) and (ii) to fund the payment of Holdings' operating
expenses incurred in the ordinary course of business and other corporate
overhead costs and expenses (so long as the aggregate amount of such payments
does not exceed $250,000 in any fiscal year) and Holdings' obligations pursuant
to a tax sharing agreement with Graphics. A significant portion of Graphics'
long-term obligations have been fully and unconditionally guaranteed by
Holdings.

The two business segments of the commercial printing industry in which the
Company operates are (i) printing and (ii) digital imaging and prepress services
conducted by its American Color division ("American Color").

1.   Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and are in accordance with instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. The operating results for the three month
period ended June 30, 1999 are not necessarily indicative of the results that
may be expected for the fiscal year ending March 31, 2000. These unaudited
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and footnotes thereto included in the
Company's Form 10-K for the fiscal year ended March 31, 1999 and the Company's
Post-Effective Amendment No. 5 to Registration Statement No.
33-97090 on Form S-1.

Certain prior period amounts have been reclassified to conform with the most
recent period presentation.

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.




                                       7

<PAGE>


                               ACG HOLDINGS, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

2.   Refinancing Transaction

On May 8, 1998, the Company completed a refinancing transaction (the "1998
Refinancing") which included the following: (1) the Company entered into a $145
million credit facility with a syndicate of lenders (the "Bank Credit
Agreement") providing for a $70 million revolving credit facility which is not
subject to a borrowing base limitation (the "Revolving Credit Facility")
maturing on March 31, 2004, a $25 million amortizing term loan facility maturing
on March 31, 2004 (the "A Term Loan Facility") and a $50 million amortizing term
loan facility maturing on March 31, 2005 (the "B Term Loan Facility"); (2) the
repayment of all $57.0 million of indebtedness outstanding under the Company's
previous credit agreement, as amended (the "Old Bank Credit Agreement") (plus
accrued interest to the date of repayment); (3) the repayment of all $25.0
million of indebtedness outstanding under the $25 million term loan facility
which included a $5 million participation by Morgan Stanley Senior Funding,
Inc., a related party, which was to mature on March 31, 2001 (the "Old Term Loan
Facility") (plus accrued interest to the date of repayment) and (4) the payment
of fees and expenses associated with the 1998 Refinancing. In addition, the
Company recorded an extraordinary loss related to early extinguishment of debt
of $4.0 million, net of taxes associated with the write-off of deferred
financing costs related to refinanced indebtedness in the quarter ended June 30,
1998.

Interest under the Bank Credit Agreement is floating based upon existing market
rates plus agreed upon margin levels. In addition, the Company is obligated to
pay specific commitment and letter of credit fees. Such margin levels and fees
reduce over the term of the agreement subject to the achievement of certain
Leverage Ratio measures.

Borrowings under the Bank Credit Agreement are secured by substantially all of
the Company's assets. In addition, Holdings has guaranteed the indebtedness
under the Bank Credit Agreement, which guarantee is secured by a pledge of all
of Graphics' and its subsidiaries' stock. The agreement (1) requires
satisfaction of certain financial covenants including Minimum Consolidated
EBITDA, Consolidated Interest Coverage Ratio and Leverage Ratio requirements,
(2) requires prepayments in certain circumstances including excess cash flows,
proceeds from asset dispositions in excess of prescribed levels and certain
capital structure transactions and (3) contains various restrictions and
limitations on the following items: (a) the level of capital spending, (b) the
incurrence of additional indebtedness, (c) mergers, acquisitions, investments
and similar transactions and (d) dividends and other distributions. In addition,
the agreement includes various other customary affirmative and negative
covenants.

3.   Inventories

The components of inventories are as follows (in thousands):


                                           June 30, 1999         March 31, 1999
                                           -------------         --------------

Paper                                       $  6,409                  6,525

Ink                                              271                    232

Supplies and other                             1,686                  1,586
                                            --------                -------

      Total Inventories                     $  8,366                  8,343
                                            ========                =======

                                       8
<PAGE>


                               ACG HOLDINGS, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

4.   Comprehensive Income (Loss)

Effective April 1, 1998 the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
requires foreign currency translation adjustments, minimum pension liability
adjustments and unrealized gains or losses on available-for-sale securities to
be included in new disclosures related to comprehensive income. Prior to
adoption of SFAS 130, the Company disclosed such items when applicable
separately in Stockholders' deficit. The adoption of SFAS 130 had no impact on
the Company's Net income (loss) or Stockholders' deficit. Total comprehensive
income (loss) for the three months ended June 30, 1999 and 1998 are as follows
(in thousands):

                                              Three Months Ended June 30,
                                              ---------------------------
                                                 1999             1998
                                                 ----             ----
Net income (loss)                              $   4,266           (5,443)(a)
  Foreign currency translation
  adjustment                                         158             (291)
                                               ---------         --------
Total comprehensive income (loss)              $   4,424           (5,734)
                                               =========         ========

 (a) Includes $4.0 million extraordinary loss related to early
     extinguishment of debt associated with the 1998 Refinancing (see note
     2 to the unaudited condensed consolidated financial statements).

5.  Commitments and Contingencies

The Company has employment agreements with one of its principal officers and
four other employees. Such agreements provide for minimum salary levels as well
as for incentive bonuses which are payable if specified management goals are
attained. The aggregate commitment for future salaries at June 30, 1999,
excluding bonuses, was approximately $2.6 million.

On December 21, 1989, Graphics sold to CPS Corp. ("CPS") its ink manufacturing
operations and facilities. Graphics remains contingently liable through January
2000 under $1.5 million of industrial revenue bonds assumed by CPS. CPS assumed
these liabilities and has agreed to indemnify Graphics for any resulting
obligation and has also provided an irrevocable letter of credit in favor of the
holders of such bonds. Accordingly, management believes that any obligation of
Graphics under this contingency is unlikely.

Concurrent with the sale of its ink manufacturing facility, Graphics entered
into a long-term ink supply contract with CPS. The supply contract requires
Graphics to purchase a significant portion of its ink requirements, within
certain limitations and minimums, from CPS. Graphics believes that prices for
products under this contract approximate market prices at the time of purchase
of such products.

In the quarter ended December 31, 1997, the Company entered into multi-year
contracts to purchase a portion of the Company's raw materials to be used in its
normal operations. In connection with such purchase agreements, pricing for a
portion of the Company's raw materials is adjusted for certain movements in
market prices, changes in raw material costs and other specific price increases.
The Company is deferring certain contractual provisions over the life of the
contracts which are being recognized as the purchase commitments are achieved.
The amount deferred at June 30, 1999 is $25.0 million and is included within
Other liabilities in the Condensed Consolidated Balance Sheet.

                                       9
<PAGE>



                               ACG HOLDINGS, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

Graphics, together with over 300 other persons, has been designated by the U.S.
Environmental Protection Agency as a potentially responsible party (a "PRP")
under the Comprehensive Environmental Response Compensation and Liability Act
("CERCLA," also known as "Superfund") at one Superfund site. Although liability
under CERCLA may be imposed on a joint and several basis and the Company's
ultimate liability is not precisely determinable, the PRPs have agreed that
Graphics' share of removal costs is 0.46% and therefore Graphics believes that
its share of the anticipated remediation costs at such site will not be material
to its business or financial condition. Based upon an analysis of Graphics'
volumetric share of waste contributed to the site and the agreement among the
PRPs, the Company maintains a balance sheet reserve of approximately $0.1
million in connection with this liability on its consolidated balance sheet at
June 30, 1999. The Company believes this amount is adequate to cover such
liability.

The Company has been named as a defendant in several legal actions arising from
its normal business activities. In the opinion of management, any liabilities
that may arise from such actions will not, individually or in the aggregate,
have a material adverse effect on the consolidated financial statements of the
Company.

6.   Restructuring Costs

In March 1999, the Company approved a plan for its American Color division which
was designed to consolidate certain facilities in order to improve asset
utilization and operational efficiency, modify the organizational structure as a
result of facility consolidation and other changes and reduce overhead and other
costs. The cost of this plan is being accounted for in accordance with the
guidance set forth in Emerging Issues Task Force Issue 94-3 "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring)" ("EITF 94-3").
The pretax costs of $4.6 million which were incurred as a direct result of this
plan (excluding other special charges related to asset write-offs and
write-downs) includes $2.5 million of employee termination costs, $1.2 million
of lease settlement costs and $0.9 million of other transition and restructuring
expenses. This restructuring charge was recorded in the quarter ended March 31,
1999. The majority of these costs will be paid or settled before March 31, 2000.
The Company made cash payments of $0.5 million in the quarter ended June 30,
1999 related to these costs.

7.   Industry Segment Information

Effective March 31, 1999, the Company adopted the provisions of Statement of
Financial Accounting Standard No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). The Company has restated its
prior period sector disclosures to conform to the requirements of SFAS 131. The
Company has significant operations principally in two industry segments: (1)
printing and (2) digital imaging and prepress services. All of the Company's
printing business and assets are attributed to the printing division and all of
the Company's digital imaging and prepress services business and assets are
attributed to the American Color division (American Color). The Company's
digital visual effects operations (Digiscope) and corporate expenses have been
segregated and do not constitute a reportable segment of the Company as
contemplated by SFAS 131.

The Company has two reportable segments: (1) printing and (2) digital imaging
and prepress services. The printing business produces retail advertising
inserts, comics (newspaper Sunday comics, comic insert advertising and comic
books), and other publications. The Company's digital imaging and prepress
services business assist customers in the capture, manipulation, transmission
and distribution of images. The majority of the digital imaging and prepress
services work leads to the production of four-color separations in a format
appropriate for use by printers.

                                       10
<PAGE>

                               ACG HOLDINGS, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

The accounting policies of the segments are the same as those described in note
1. The Company evaluates performance based on segment EBITDA which is defined as
earnings before net interest expense, income tax expense, depreciation,
amortization, other income (expense) and extraordinary items. The Company
generally accounts for intersegment revenues and transfers as if the revenues or
transfers were to third parties, that is, at current market prices.

The Company's reportable segments are business units that offer different
products and services. They are managed separately because each segment requires
different technology and marketing strategies. A substantial portion of the
revenue, long-lived assets and other assets of the Company's reportable segments
are attributed to or located in the United States.

<TABLE>
<CAPTION>

                                                                    Digital
                                                                   Imaging &     Corporate
(In Thousands of Dollars)                             Printing      Prepress     and Other       Total
-------------------------                           -----------   -----------   -----------    ---------

<S>                                                   <C>            <C>              <C>       <C>
Three Months Ended June 30, 1999

Segment revenues                                      $103,111       19,764           733       123,608

EBITDA                                                $ 19,316        2,897          (701)       21,512
   Depreciation and amortization                         5,705        1,550         1,145         8,400
   Interest expense                                       --           --           8,493         8,493
   Interest income                                        --           --             (32)          (32)
   Other, net                                               17         --            (195)         (178)
                                                      --------     --------      --------      --------
     Income (loss) from continuing operations
       before income taxes and extraordinary item     $ 13,594        1,347       (10,112)        4,829

Total assets                                          $247,200       29,902        11,010       288,112

Total capital expenditures                            $  4,219          555             8         4,782

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

Three Months Ended June 30, 1998

Segment revenues                                      $106,447       20,336         1,030       127,813

EBITDA                                                $ 14,495        3,019          (374)       17,140
   Depreciation and amortization                         5,567        1,606         1,058         8,231
   Interest expense                                       --           --           9,417         9,417
   Interest income                                        --           --             (23)          (23)
   Other, net                                               41           (9)           31            63
                                                      --------     --------      --------      --------
     Income (loss) from continuing
       operations before income taxes and
       extraordinary item                             $  8,887        1,422       (10,857)         (548)

Total assets                                          $259,448       33,628        14,096       307,172

Total capital expenditures                            $  1,172        1,233             6         2,411

</TABLE>
                                       11
<PAGE>



                               ACG HOLDINGS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q (this "Report") contains forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934. Discussions containing such forward-looking statements may be found in
this section, as well as within this Report generally. In addition, when used in
this Report, the words "believes," "anticipates," "expects" and similar
expressions are intended to identify forward-looking statements. Forward-looking
statements include without limitation, our expectation as to when we will
complete the remediation and testing phases of our Year 2000 program, as well
as, any Year 2000 contingency plans, our estimated cost of achieving Year 2000
readiness and our belief that internal systems and equipment will be Year 2000
compliant in a timely manner. Forward-looking statements are subject to a number
of risks and uncertainties. Actual results in the future could differ materially
from those described in the forward-looking statements as a result of many
factors outside of our control, including, but not limited to:
     -   fluctuations in the cost of paper and other raw materials used,
     -   changes in the advertising and printing markets,
     -   actions by our competitors particularly with respect to pricing,
     -   the financial condition of our customers,
     -   our financial condition and liquidity,
     -   the general condition of the United States economy,
     -   demand for our products and services,
     -   the availability of qualified personnel and other information
         technology resources,
     -   the ability to identify and remediate all date sensitive lines of
         computer code,
     -   the ability to replace embedded computer chips in systems affected by
         Year 2000 issues,
     -   the actions of government agencies or other third parties with respect
         to Year 2000 issues, and
     -   the matters set forth in this Report generally.

Consequently, such forward-looking statements should be regarded solely as our
current plans, estimates and beliefs. We do not undertake and specifically
decline any obligation to publicly release the results of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.





                                       12
<PAGE>


                               ACG HOLDINGS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

The following table summarizes our results of operations for the three months
ended June 30, 1999 (the "1999 Three Month Period"), and for the three months
ended June 30, 1998 (the "1998 Three Month Period"):

                                                 Three Months Ended June 30,
                                            -----------------------------------

                                                   1999                 1998
                                                   ----                 ----
                                                     (dollars in thousands)
Sales:
  Printing                                      $ 103,111              106,447
  American Color                                   19,764               20,336
  Other (a)                                           733                1,030
                                                ---------            ---------
     Total                                      $ 123,608              127,813

Gross Profit:
  Printing                                      $  17,085               13,388
  American Color                                    4,610                5,266
  Other (a)                                          (432)                (110)
                                                ---------            ---------
     Total                                      $  21,263               18,544

Gross Margin:
  Printing                                           16.6%                12.6%
  American Color                                     23.3%                25.9%
     Total                                           17.2%                14.5%

Operating Income (Loss):
  Printing                                      $  13,611                8,928
  American Color                                    1,347                1,413
  Other (a) (b)                                    (1,846)              (1,432)
                                                ---------            ---------
     Total                                      $  13,112                8,909



(a) Other operations primarily include revenues and expenses associated with
    our digital visual effects operations ("Digiscope").

(b) Also includes corporate general and administrative expenses, and
    amortization expense.

                                       13
<PAGE>


                               ACG HOLDINGS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

Printing

Sales. Printing sales decreased $3.3 million to $103.1 million in the 1999 Three
Month Period from $106.4 million in the 1998 Three Month Period. The decrease in
the 1999 Three Month Period includes declining paper prices and the impact of a
decrease in printing production volume as a result of our decision to
discontinue doing business with two customers due to significant credit risk.
These decreases were offset in part by certain favorable changes in customer and
product mix.

Gross Profit. Printing gross profit increased $3.7 million to $17.1 million in
the 1999 Three Month Period from $13.4 million in the 1998 Three Month Period.
Printing gross margin increased to 16.6% in the 1999 Three Month Period from
12.6% in the 1998 Three Month Period. The increase in gross profit is primarily
the result of reduced manufacturing costs and favorable changes in customer and
product mix. The increase in gross margin includes these factors coupled with
the impact of declining paper prices.

Selling, General and Administrative Expenses. Printing selling, general and
administrative expenses decreased $1.0 million to $3.5 million, or 3.4% of
printing sales, in the 1999 Three Month Period from $4.5 million, or 4.2% of
printing sales, in the 1998 Three Month Period. This change primarily results
from decreases in certain selling expenses during the 1999 Three Month Period.

Operating Income. As a result of the factors discussed above, operating income
from the printing business increased by 52.5% to $13.6 million in the 1999 Three
Month Period from $8.9 million in the 1998 Three Month Period.

American Color

Sales. American Color's sales decreased $0.5 million to $19.8 million in the
1999 Three Month Period from $20.3 million in the 1998 Three Month Period. The
decrease in the 1999 Three Month Period was primarily the result of reduced
volume.

Gross Profit. American Color's gross profit decreased $0.7 million to $4.6
million in the 1999 Three Month Period from $5.3 million in the 1998 Three Month
Period. American Color's gross margin decreased to 23.3% in the 1999 Three Month
Period from 25.9% in the 1998 Three Month Period. The decreases in gross profit
and gross margin results primarily from reduced sales volume and increased
technical and customer support costs.

Selling, General and Administrative Expenses. American Color's selling, general
and administrative expenses decreased $0.6 million to $3.3 million, or 16.5% of
American Color's sales in the 1999 Three Month Period from $3.9 million, or
18.9% of American Color's sales in the 1998 Three Month Period. This decrease is
due in large part to a reduced sales force as a result of cost containment
measures taken during the 1999 Three Month Period.

Operating Income. As a result of the factors discussed above, operating income
at American Color decreased to $1.3 million in the 1999 Three Month Period from
$1.4 million in the 1998 Three Month Period.

                                       14
<PAGE>




                               ACG HOLDINGS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

Other Operations

Other operations consist primarily of revenues and expenses associated with
Digiscope, corporate general and administrative expenses, other expenses and
amortization expense. Amortization expense for other operations, which primarily
includes goodwill amortization, was $0.7 million and $0.6 million in the 1999
Three Month Period and the 1998 Three Month Period, respectively.

Operating losses from other operations increased to a loss of $1.8 million in
the 1999 Three Month Period from a loss of $1.4 million in the 1998 Three Month
Period. Included in this change is $0.3 million of increased operating losses at
Digiscope due primarily to lower sales volume.

Restructuring Costs

In March 1999, we approved a plan for the American Color division which was
designed to consolidate certain facilities in order to improve asset utilization
and operational efficiency, modify the organizational structure as a result of
facility consolidation and other changes and reduce overhead and other costs.
The cost of this plan is being accounted for in accordance with the guidance set
forth in EITF 94-3. The pretax costs of $4.6 million which were incurred as a
direct result of this plan (excluding other special charges related to asset
write-offs and write-downs) includes $2.5 million of employee termination costs,
$1.2 million of lease settlement costs and $0.9 million of other transition and
restructuring expenses. This restructuring charge was recorded in the quarter
ended March 31, 1999. The majority of these costs will be paid or settled before
March 31, 2000. We made cash payments of $0.5 million in the quarter ended June
30, 1999 related to these costs.

Interest Expense

Interest expense decreased 9.8% to $8.5 million in the 1999 Three Month Period
from $9.4 million in the 1998 Three Month Period. This decrease includes the
impact of both lower levels of indebtedness and reduced borrowing costs
associated with our 1998 Refinancing.

Other, Net

Other, net improved to income of $0.2 million in the 1999 Three Month Period
from expense of $0.1 million in the 1998 Three Month Period.

Income Tax Expense

Income tax expense decreased to $0.6 million in the 1999 Three Month Period from
$0.9 million in the 1998 Three Month Period. The decrease in the 1999 Three
Month Period is primarily due to smaller amounts of taxable income in foreign
jurisdictions.

                                       15
<PAGE>



                               ACG HOLDINGS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

Extraordinary Loss on Early Extinguishment of Debt

As part of the 1998 Refinancing (see note 2 to our unaudited condensed
consolidated financial statements), we recorded an extraordinary loss related to
early extinguishment of debt of $4.0 million, net of taxes. This extraordinary
loss primarily consisted of the write-off of deferred financing costs related to
refinanced indebtedness in the quarter ended June 30, 1998.

Net Income (Loss)

As a result of the factors discussed above, including the $4.0 million
extraordinary loss related to the early extinguishment of debt in the 1998 Three
Month Period, our net income (loss) improved to income of $4.3 million in the
1999 Three Month Period from a loss of $5.4 million in the 1998 Three Month
Period.

Liquidity and Capital Resources

On May 8, 1998, we refinanced all of our existing bank indebtedness in the 1998
Refinancing (see note 2 to our unaudited condensed consolidated financial
statements). The primary objectives of the refinancing were to gain greater
financial and operating flexibility, to reduce our overall cost of capital and
to provide greater opportunity for internal growth and growth through
acquisitions.

The 1998 Refinancing transaction included the following:

  (1) We entered into a $145 million credit facility with a syndicate of lenders
      (the "Bank Credit Agreement") providing for:
      - a $70 million revolving credit facility, which is not subject to a
          borrowing base limitation, maturing on March 31, 2004 (the "Revolving
          Credit Facility"),
      - a $25 million amortizing term loan facility maturing on March 31, 2004
          (the "A Term Loan Facility"), and
      - a $50 million amortizing term loan facility maturing on March 31, 2005
          (the "B Term Loan Facility"),
  (2) The repayment of all $57.0 million of indebtedness outstanding under our
      previous credit agreement as amended (the "Old Bank Credit Agreement")
      (plus accrued interest to the date of repayment);
  (3) The repayment of all $25.0 million of indebtedness outstanding under the
      Old Term Loan Facility (plus accrued interest to the date of repayment);
      and
  (4) The payment of fees and expenses associated with the refinancing
      transaction.

The Revolving Credit Facility provides for a maximum of $70 million borrowing
availability and including up to $40 million of letters of credit. At July 31,
1999, we had total borrowings and letters of credit outstanding under the
Revolving Credit Facility of approximately $26.6 million and, therefore,
additional borrowing availability of approximately $43.4 million.

                                       16
<PAGE>


                               ACG HOLDINGS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

At June 30, 1999, we had total indebtedness outstanding of $288.0 million,
including capital lease obligations, as compared to $304.2 million at June 30,
1998. Of the total indebtedness outstanding at June 30, 1999, $64.3 million was
outstanding under the Bank Credit Agreement at a weighted average interest rate
of 7.2%. Indebtedness under the Bank Credit Agreement bears interest at floating
rates. At June 30, 1999, we had indebtedness other than obligations under the
Bank Credit Agreement of $223.7 million (including $185 million of the 12 3/4%
Senior Subordinated Notes Due 2005, the "Notes"). We are currently in compliance
with all financial covenants set forth in the Bank Credit Agreement.

At June 30, 1999, $20.5 million of the A Term Loan Facility and $43.8 million of
the B Term Loan Facility remained outstanding. On July 12, 1999, we made a $10
million voluntary prepayment of our bank indebtedness which reduced the A Term
Loan Facility by $6.3 million and the B Term Loan Facility by $3.7 million. As a
result, we have no scheduled maturities due under either the A Term Loan
Facility or B Term Loan Facility until June 30, 2001. Scheduled repayments of
capital lease obligations and other senior indebtedness during the remainder of
the fiscal year ending March 31, 2000 ("Fiscal Year 2000") will approximate $5.4
million and $0.7 million, respectively.

During the 1999 Three Month Period, net cash provided by operating activities of
$6.5 million (see our condensed consolidated statements of cash flows) and
proceeds from long-term debt of $0.4 million were primarily used to (1) fund
scheduled principal repayments of indebtedness and financing costs of $2.1
million (including capital lease obligations) and (2) fund cash capital
expenditures of $4.8 million. We plan to continue our program of upgrading our
printing and prepress equipment and currently anticipate that full year Fiscal
Year 2000 cash capital expenditures will approximate $19.3 million and equipment
acquired under capital leases will approximate $3.0 million. Our cash on hand of
approximately $9.3 million is presented net of outstanding checks within trade
accounts payable at June 30, 1999. Accordingly, cash is presented at a balance
of $0 in the June 30, 1999 balance sheet.

Our primary sources of liquidity are cash provided by operating activities and
borrowings under the Revolving Credit Facility. We anticipate that our primary
needs for liquidity will be to conduct our business, meet our debt service
requirements, make capital expenditures and, if we elect, repay, redeem or
repurchase outstanding indebtedness.

A significant portion of Graphics' long-term obligations, including indebtedness
under the Bank Credit Agreement and the Notes, has been fully and
unconditionally guaranteed by Holdings. Holdings is subject to certain
restrictions under its guarantee of indebtedness under the Bank Credit
Agreement, including among other things, restrictions on mergers, acquisitions,
incurrence of additional debt and payment of cash dividends.


                                       17
<PAGE>


                               ACG HOLDINGS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


EBITDA
                                                    Three Months Ended
                                                         June 30,
                                            ---------------------------------

                                                 1999                 1998
                                                 ----                 ----

                                                   (dollars in thousands)
EBITDA:
  Printing                                    $ 19,316                14,495
  American Color                                 2,897                 3,019
  Other  (a)                                      (701)                 (374)
                                              --------               -------
     Total                                    $ 21,512                17,140

EBITDA Margin:
  Printing                                        18.7%                 13.6%
  American Color                                  14.7%                 14.8%
     Total                                        17.4%                 13.4%

(a)  Other operations primarily include revenues and expenses associated with
     our digital visual effects business and corporate general and
     administrative expenses.

EBITDA is presented and discussed because management believes that investors
regard EBITDA as a key measure of a leveraged company's performance and ability
to meet its future debt service requirements. "EBITDA" is defined as earnings
before net interest expense, income tax expense, depreciation, amortization,
other income (expense) and extraordinary items. "EBITDA Margin" is defined as
EBITDA as a percentage of net sales. EBITDA is not a measure of financial
performance under generally accepted accounting principles and should not be
considered an alternative to net income (or any other measure of performance
under generally accepted accounting principles) as a measure of performance or
to cash flows from operating, investing or financing activities as an indicator
of cash flows or as a measure of liquidity. Certain covenants in the Indenture
and the Bank Credit Agreement are based on EBITDA, subject to certain
adjustments.

Printing. As a result of the reasons previously described under "--Printing",
Printing EBITDA increased to $19.3 million in the 1999 Three Month Period from
$14.5 million in the 1998 Three Month Period, representing an increase of $4.8
million or 33.3%. The Printing EBITDA Margin increased to 18.7% in the 1999
Three Month Period from 13.6% in the 1998 Three Month Period.

American Color. As a result of the reasons previously described under
"--American Color", American Color's EBITDA decreased to $2.9 million in the
1999 Three Month Period from $3.0 million in the 1998 Three Month Period,
representing a decrease of $0.1 million or 4.0%. American Color EBITDA Margin
decreased to 14.7% in the 1999 Three Month Period from 14.8% in the 1998 Three
Month Period.

Other. As a result of the reasons previously described under "Other Operations"
(excluding changes in depreciation and amortization expense), other operations
negative EBITDA increased to $0.7 million in the 1999 Three Month Period from
negative EBITDA of $0.4 million in the 1998 Three Month Period.

                                       18
<PAGE>



                               ACG HOLDINGS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

Year 2000 Issue

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000 which could result in
a system failure or miscalculations causing disruptions of operations. In the
spring of 1997 we initiated our review of our Year 2000 information and
manufacturing systems compliance ("Y2K Project"). Our Y2K Project includes four
phases: assessment, remediation, testing, and implementation. Over the past
year, we have made significant progress in each of these areas and believe we
will complete the Y2K Project by October 1999.

Information Technology Systems. To date, we have fully completed our assessment
of all information technology systems that could be significantly affected by
the Year 2000. We have completed 95% of the remediation phase of our information
technology systems and completed software reprogramming and replacement as of
July 1999. To date, we have completed 95% of our testing and have implemented
85% of our remediated systems. All remediated systems are anticipated to be
fully tested by the end of August 1999, with 100% implementation targeted for
September 1999.

Production and Manufacturing Systems. Our strategy includes an on-going program
that focuses on the need to upgrade and maintain our production and
manufacturing systems. As such, we believe our production and manufacturing
systems to be reasonably current and do not anticipate significant Year 2000
issues in this area. We have completed the assessment phase in this area and are
95% complete in the remediation phase of our operating equipment. To date, the
required remediation has been within planned expenditures, and has not been
material to our consolidated financial results. We do not expect full
remediation of our operating equipment to be costly or extensive. We are 80%
complete with the testing of our remediated operating equipment. Once testing is
complete, the operating equipment in most cases will be ready for immediate use.
We expect to complete our remediation efforts by the end of August 1999. Testing
and implementation of affected equipment is expected to be completed by October
1999.

We have nearly completed the process of gathering information about the Year
2000 compliance of our significant suppliers and subcontractors (external
agents). To date, we are not aware of any external agent with a Year 2000 issue
that would materially impact our results of operations, liquidity, or capital
resources. In addition, as a printer and graphics prepress supplier, our
products and services are not generally impacted by the Year 2000 issue.

We are utilizing both internal and external resources to reprogram, or replace,
test, and implement the software and operating equipment necessary for Year 2000
compliance. The total cost of the Y2K Project is estimated at $4.0 million and
is being funded through operating cash flows and our Revolving Credit Facility.
To date, we have incurred costs of approximately $3.0 million, relating to all
phases of the Y2K Project. Of the remaining project costs, approximately $0.8
million is attributable to the purchase of new software and operating equipment,
which will be capitalized. The remaining $0.2 million relates to repair of
hardware and software and will be expensed as incurred.

                                       19
<PAGE>



                               ACG HOLDINGS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

We believe we have an effective program in place to resolve the Year 2000
compliance issue in a timely manner and are monitoring the progress of the Y2K
Project closely. As noted above, we have not yet completed all necessary phases
of the Y2K Project. In the unlikely event that we do not complete any additional
phases, (1) the printing segment would manually enter customer orders, and
collect certain cost, sales history and operating data of a non-critical nature,
and (2) certain digital workflows in our American Color division would be
diverted to existing, less efficient digital workflows, thereby reducing
capacity in affected locations. In addition, disruption in services such as
electrical power, telecommunications and banking, or disruption in the general
retail economy could materially adversely affect us. Although there can be no
assurance that our efforts will prevent a material adverse impact on the results
of operations or financial conditions, we believe that none of these scenarios
are likely. We plan to evaluate the completion status of all phases of the Y2K
Project in September 1999 and determine if and when contingency plans are
necessary.










                                       20
<PAGE>


                               ACG HOLDINGS, INC.
                          Quantitative and Qualitative
                          Disclosures About Market Risk

There have been no significant changes since March 31, 1999. Reference is made
to Item 7A (Quantitative and Qualitative Disclosures About Market Risk)
disclosure in our Form 10-K filed for the fiscal year ended March 31, 1999.













                                       21

<PAGE>


                               ACG HOLDINGS, INC.
                            Part II Other Information

Item 1.   (a) Legal Proceedings

              Reference is made to Item 3 (Legal Proceedings) disclosure in our
              Form 10-K filed for the fiscal year ended March 31, 1999.

Item 2.  Changes in Securities and Use of Proceeds

              Recent Sales of Unregistered Securities

              During the quarter ended June 30, 1999, certain officers exercised
              options to purchase an aggregate of 8,143 shares of Holdings'
              common stock for $.01/share.

              During the fourth quarter of the fiscal year ending March 31,
              1998, certain officers exercised options to purchase an aggregate
              of 8,254 shares of Holdings' common stock for $.01/share.

              The issuance of shares was made pursuant to Section 4(2) of the
              Securities Act of 1933.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

              Exhibit No.   Description
              -----------   -----------
              10.1          Severance Letter dated, September 1, 1995, between
                            Graphics (as successor to Sullivan Graphics, Inc.)
                            and Larry Williams
              10.1(a)       Amendment to Severance Letter, dated June 3, 1999,
                            between Graphics and Larry Williams
              12.1          Statement Re: Computation of Ratio of Earnings to
                            Fixed Charges
              27.0          Financial Data Schedule

         (b)  Reports on Form 8-K

              None filed in the quarter ended June 30, 1999.


                                       22
<PAGE>



                                   SIGNATURES




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


                                        ACG Holdings, Inc.
                                        American Color Graphics, Inc.



Date  August 12, 1999                   By  /s/ Joseph M. Milano
      ---------------                       -----------------------------------
                                            Joseph M. Milano
                                            Executive Vice President and
                                            Chief Financial Officer
                                            (Authorized Officer and
                                            Principal Financial Officer)




Date   August 12, 1999                  By  /s/ Patrick W. Kellick
       ---------------                      -----------------------------------
                                             Patrick W. Kellick
                                             Senior Vice President - Corporate
                                             Controller
                                             (Chief Accounting Officer)



                                       23
<PAGE>


                                  EXHIBIT INDEX


Exhibit No.            Description                                          Page
-----------            -----------                                          ----

 10.1        Severance Letter dated, September 1, 1995, between Graphics
             (as successor to Sullivan Graphics, Inc.) and Larry Williams    25

 10.1(a)     Amendment to Severance Letter, dated June 3, 1999, between
             Graphics and Larry Williams                                     28

 12.1        Statement Re: Computation of Ratio of Earnings to Fixed
             Charges                                                         29

 27.0        Financial Data Schedule                                         30






                                       24