---

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-Q

|(Mark One)                                       |                                                                                         
|------------------------------------------------ | ----------------------------------------------------------------------------------------
|ý                                                | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|For the quarterly period ended December 31, 2002
|or                                              
|o                                                | 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

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

|Delaware(State or other jurisdiction
of incorporation or organization)                                                                                                            |  | 62-1395968(I.R.S. Employer
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)

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

|New York(State or other jurisdiction
of incorporation or organization)                                                                                                            |  | 16-1003976(I.R.S. Employer
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)

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter 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 ý    No o

ACG
Holdings, Inc. has 163,411 shares outstanding of its Common Stock, $.01 Par Value, as of January 31, 2003 (all of which are privately owned and not traded on a public
market).

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INDEX

|         |         |                                                                                                      |                                                                                       | Page No.
|-------- | ------- | ---------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | --------
|Part I.  |         | Financial Information                                                                                |                                                                                       |         
|         | Item 1. |                                                                                                      | Financial Statements                                                                  |         
|         |         | Condensed Consolidated Balance Sheets as of December 31, 2002 and March 31, 2002                     |                                                                                       | 3       
|         |         | Condensed Consolidated Statements of Income for the Three Months Ended December 31, 2002 and 2001    |                                                                                       | 5       
|         |         | Condensed Consolidated Statements of Income for the Nine Months Ended December 31, 2002 and 2001     |                                                                                       | 6       
|         |         | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2002 and 2001 |                                                                                       | 7       
|         |         | Notes to Condensed Consolidated Financial Statements                                                 |                                                                                       | 8       
|         | Item 2. |                                                                                                      | Management's Discussion and Analysis of Financial Condition and Results of Operations |         
|         | Item 3. |                                                                                                      | Quantitative and Qualitative Disclosures About Market Risk                            |         
|         | Item 4. |                                                                                                      | Controls and Procedures                                                               |         
|Part II. |         | Other Information                                                                                    |                                                                                       |         
|         | Item 1. |                                                                                                      | Legal Proceedings                                                                     |         
|         | Item 2. |                                                                                                      | Changes in Securities and Use of Proceeds                                             |         
|         | Item 6. |                                                                                                      | Exhibits and Reports on Form 8-K                                                      |         
|         |         | Signatures                                                                                           |                                                                                       | 23      
|         |         | Certifications                                                                                       |                                                                                       | 24      
|         |         | Exhibit Index                                                                                        |                                                                                       | 26      

2

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ACG HOLDINGS, INC.  Condensed Consolidated Balance Sheets  (In thousands)

|                                                                                                                          |                                           | December 31, 2002                                                                                                               |                                   | March 31, 2002 |         
|------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | -------------- | --------
|
|Assets                                                                                                                    |                                           |                                                                                                                                 |                                   |                |         
|Current assets:                                                                                                           |                                           |                                                                                                                                 |                                   |                |         
|                                                                                                                          | Cash                                      |                                                                                                                                 | $                                 | 0              |         
|                                                                                                                          | Receivables:                              |                                                                                                                                 |                                   |                |         
|                                                                                                                          |                                           | Trade accounts, less allowance for doubtful accounts of $2,474 and $2,557 at December 31, 2002 and March 31, 2002, respectively |                                   |                | 54,615  
|                                                                                                                          |                                           | Other                                                                                                                           |                                   |                | 3,001   
|                                                                                                                          |                                           |                                                                                                                                 |                                   |                |         
|                                                                                                                          |                                           |                                                                                                                                 | Total receivables                 |                |         
|                                                                                                                          | Inventories                               |                                                                                                                                 |                                   | 12,592         |         
|                                                                                                                          | Deferred income taxes                     |                                                                                                                                 |                                   | 7,564          |         
|                                                                                                                          | Prepaid expenses and other current assets |                                                                                                                                 |                                   | 4,846          |         
|                                                                                                                          |                                           |                                                                                                                                 |                                   |                |         
|                                                                                                                          |                                           |                                                                                                                                 | Total current assets              |                |         
|Property, plant and equipment                                                                                             |                                           |                                                                                                                                 | 317,704                           |                | 303,166 
|Less accumulated depreciation                                                                                             |                                           |                                                                                                                                 | (187,170                          | )              | (180,676
|                                                                                                                          |                                           |                                                                                                                                 |                                   |                |         
|                                                                                                                          |                                           |                                                                                                                                 | Net property, plant and equipment |                |         
|Excess of cost over net assets acquired, less accumulated amortization of $53,274 at December 31, 2002 and March 31, 2002 |                                           |                                                                                                                                 | 66,548                            |                | 66,548  
|Other assets                                                                                                              |                                           |                                                                                                                                 | 11,571                            |                | 12,443  
|                                                                                                                          |                                           |                                                                                                                                 |                                   |                |         
|                                                                                                                          |                                           |                                                                                                                                 | Total assets                      |                | $       
|                                                                                                                          |                                           |                                                                                                                                 |                                   |                |         

See
accompanying notes to condensed consolidated financial statements.

3

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

|                                                                      |                                                                                                                                                                                                                                                                                             | December 31, 2002 |                                             | March 31, 2002 |        
|--------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------------------------------------------- | -------------- | -------
|
|Liabilities and Stockholders' Deficit                                 |                                                                                                                                                                                                                                                                                             |                   |                                             |                |        
|Current liabilities:                                                  |                                                                                                                                                                                                                                                                                             |                   |                                             |                |        
|                                                                      | Current installments of long-term debt and capitalized leases                                                                                                                                                                                                                               |                   | $                                           | 29,500         |        
|                                                                      | Trade accounts payable                                                                                                                                                                                                                                                                      |                   |                                             | 43,831         |        
|                                                                      | Accrued expenses                                                                                                                                                                                                                                                                            |                   |                                             | 31,871         |        
|                                                                      |                                                                                                                                                                                                                                                                                             |                   |                                             |                |        
|                                                                      |                                                                                                                                                                                                                                                                                             |                   | Total current liabilities                   |                |        
|Long-term debt and capitalized leases, excluding current installments |                                                                                                                                                                                                                                                                                             |                   | 216,723                                     |                | 232,846
|Deferred income taxes                                                 |                                                                                                                                                                                                                                                                                             |                   | 3,008                                       |                | 2,933  
|Other liabilities                                                     |                                                                                                                                                                                                                                                                                             |                   | 54,264                                      |                | 60,857 
|                                                                      |                                                                                                                                                                                                                                                                                             |                   |                                             |                |        
|                                                                      |                                                                                                                                                                                                                                                                                             |                   | Total liabilities                           |                |        
|Commitments and contingencies (Note 5)                                |                                                                                                                                                                                                                                                                                             |                   |                                             |                |        
|Stockholders' deficit:                                                |                                                                                                                                                                                                                                                                                             |                   |                                             |                |        
|                                                                      | Common stock, voting, $.01 par value, 5,852,223 shares authorized, 163,411 and 143,399 shares issued and outstanding at December 31, 2002 and March 31, 2002, respectively                                                                                                                  |                   |                                             | 2              |        
|                                                                      | Preferred stock, $.01 par value, 15,823 shares authorized, 3,617 shares Series AA convertible preferred stock issued and outstanding, $39,442,551 liquidation preference, and 1,606 shares Series BB convertible preferred
stock issued and outstanding, $17,500,000 liquidation preference |                   |                                             |               |        
|                                                                      | Additional paid-in capital                                                                                                                                                                                                                                                                  |                   |                                             | 58,672         |        
|                                                                      | Accumulated deficit                                                                                                                                                                                                                                                                         |                   |                                             | (132,538       | )      
|                                                                      | Other accumulated comprehensive loss, net of tax                                                                                                                                                                                                                                            |                   |                                             | (14,062        | )      
|                                                                      |                                                                                                                                                                                                                                                                                             |                   |                                             |                |        
|                                                                      |                                                                                                                                                                                                                                                                                             |                   | Total stockholders' deficit                 |                |        
|                                                                      |                                                                                                                                                                                                                                                                                             |                   |                                             |                |        
|                                                                      |                                                                                                                                                                                                                                                                                             |                   | Total liabilities and stockholders' deficit |                | $      
|                                                                      |                                                                                                                                                                                                                                                                                             |                   |                                             |                |        

See
accompanying notes to condensed consolidated financial statements.

4

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

|                                             |                  | Three Months Ended
December 31, |           
|-------------------------------------------- | ---------------- | ------------------------------- | ----------
|
|Sales                                        |                  | $                               | 142,565   
|Cost of sales                                |                  |                                 | 123,482   
|                                             |                  |                                 |           
|                                             |                  | Gross profit                    |           
|Selling, general and administrative expenses |                  |                                 | 9,263     
|Amortization of goodwill                     |                  |                                 |          
|                                             |                  |                                 |           
|                                             |                  | Operating income                |           
|Other expense (income):                      |                  |                                 |           
|                                             | Interest expense |                                 |           
|                                             | Interest income  |                                 |           
|                                             | Other, net       |                                 |           
|                                             |                  |                                 |           
|                                             |                  | Total other expense             |           
|                                             |                  |                                 |           
|                                             |                  | Income before income taxes      |           
|Income tax expense                           |                  |                                 | 418       
|                                             |                  |                                 |           
|                                             |                  |                                 | Net income
|                                             |                  |                                 |           

See
accompanying notes to condensed consolidated financial statements.

5

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

|                                             |                  | Nine Months Ended
December 31, |           
|-------------------------------------------- | ---------------- | ------------------------------ | ----------
|
|Sales                                        |                  | $                              | 401,768   
|Cost of sales                                |                  |                                | 344,928   
|                                             |                  |                                |           
|                                             |                  | Gross profit                   |           
|Selling, general and administrative expenses |                  |                                | 25,849    
|Amortization of goodwill                     |                  |                                |          
|                                             |                  |                                |           
|                                             |                  | Operating income               |           
|Other expense (income):                      |                  |                                |           
|                                             | Interest expense |                                |           
|                                             | Interest income  |                                |           
|                                             | Other, net       |                                |           
|                                             |                  |                                |           
|                                             |                  | Total other expense            |           
|                                             |                  |                                |           
|                                             |                  | Income before income taxes     |           
|Income tax expense                           |                  |                                | 1,333     
|                                             |                  |                                |           
|                                             |                  |                                | Net income
|                                             |                  |                                |           

See
accompanying notes to condensed consolidated financial statements.

6

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

|                                                    |                                                                               | Nine Months Ended
December 31,                   |                                          
|--------------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------ | -----------------------------------------
|
|Cash flows provided (used) by operating activities: |                                                                               |                                                  |                                          
|                                                    | Net income                                                                    |                                                  | $                                        
|                                                    | Adjustments to reconcile net income to cash provided by operating activities: |                                                  |                                          
|                                                    |                                                                               | Depreciation                                     |                                          
|                                                    |                                                                               | Amortization of goodwill and other assets        |                                          
|                                                    |                                                                               | Amortization of deferred financing costs         |                                          
|                                                    |                                                                               | Decrease (increase) in working capital and other |                                          
|                                                    |                                                                               |                                                  |                                          
|                                                    |                                                                               |                                                  | Net cash provided by operating activities
|Cash flows provided (used) by investing activities: |                                                                               |                                                  |                                          
|                                                    | Purchases of property, plant and equipment                                    |                                                  |                                          
|                                                    | Proceeds from sales of property, plant and equipment                          |                                                  |                                          
|                                                    | Other                                                                         |                                                  |                                          
|                                                    |                                                                               |                                                  |                                          
|                                                    |                                                                               |                                                  | Net cash used by investing activities    
|Cash flows provided (used) by financing activities: |                                                                               |                                                  |                                          
|                                                    | Repayment of long-term debt, net                                              |                                                  |                                          
|                                                    | Net increase in revolver borrowings                                           |                                                  |                                          
|                                                    | Repayment of capital lease obligations                                        |                                                  |                                          
|                                                    | Payment of deferred financing costs, net                                      |                                                  |                                          
|                                                    | Other, net                                                                    |                                                  |                                          
|                                                    |                                                                               |                                                  |                                          
|                                                    |                                                                               |                                                  | Net cash used by financing activities    
|                                                    | Effect of exchange rates on cash and cash equivalents                         |                                                  |                                          
|                                                    |                                                                               |                                                  |                                          
|Net change in cash                                  |                                                                               |                                                  | (4,547                                   
|Cash:                                               |                                                                               |                                                  |                                          
|                                                    | Beginning of period                                                           |                                                  |                                          
|                                                    |                                                                               |                                                  |                                          
|                                                    | End of period                                                                 |                                                  | $                                        
|                                                    |                                                                               |                                                  |                                          
|Non-cash investing activity:                        |                                                                               |                                                  |                                          
|                                                    | Equipment purchases under capital leases                                      |                                                  | $                                        
|                                                    |                                                                               |                                                  |                                          

See
accompanying notes to condensed consolidated financial statements.

7

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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"),
(collectively the "Company"). Holdings owns 100% of the outstanding voting shares of Graphics. The two business segments of the commercial printing industry in which the Company operates are
(i) print and (ii) premedia 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 accounting principles generally accepted in the
United States for interim financial information and are in accordance with the 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 accounting principles generally accepted in the United States 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 and nine-month periods ended
December 31, 2002 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2003. 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, 2002 and the Company's Post-Effective Amendment No. 8 to Registration Statement No. 33-97090 on Form S-1.

The
preparation of the financial statements in conformity with accounting principles generally accepted in the United States 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.

2.    Inventories

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

December 31,
2002

March 31,
2002Paper

$
10,308

7,158Ink


166

169Supplies and other


2,118

1,810Total inventories

$
12,592

9,137


3.    Notes Payable and Long-Term Debt

The Company is currently in compliance with the financial covenants contained in the bank credit agreement, as amended.

4.    Comprehensive Income

Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," requires foreign currency translation adjustments, minimum pension
liability adjustments and unrealized gains or losses on available-for-sale securities to be included in comprehensive income. Total

8

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comprehensive income for the three and nine months ended December 31, 2002 and 2001 are as follows (in thousands):

|                           |                                         | Three Months Ended
December 31, |       | Nine Months Ended
December 31, |      
|-------------------------- | --------------------------------------- | ------------------------------- | ----- | ------------------------------ | -----
|
|Net income                 |                                         | $                               | 2,221 |                                | 3,632
|                           | Foreign currency translation adjustment |                                 |       | (67                            | )    
|                           | Minimum pension liability               |                                 |       |                               |      
|                           |                                         |                                 |       |                                |      
|Total comprehensive income |                                         | $                               | 2,154 |                                | 3,447
|                           |                                         |                                 |       |                                |      

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. In addition, the Company has consulting agreements with two former employees. The aggregate commitment for future
compensation at December 31, 2002, excluding bonuses, was approximately $2.5 million.

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 December 31, 2002
is $30.6 million and is included within Other liabilities in the Company's condensed consolidated balance sheet.

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 reserve of approximately $0.1 million in connection with this liability on its condensed consolidated balance sheet at December 31, 2002. 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 condensed consolidated financial statements of the Company.

6.    Restructuring Costs

In January 2002, the Company's Board of Directors approved a restructuring plan for the print and premedia services segments designed to improve asset
utilization, operating efficiency and profitability. This plan included the closing of a print facility in Hanover, Pennsylvania and a premedia services facility in West Palm Beach, Florida, the
downsizing of a Buffalo, New York premedia services

9

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facility and the elimination of certain administrative personnel. These combined actions resulted in the elimination of 189 positions within the Company.

As
a result of this plan, the Company recorded a pre-tax restructuring charge of approximately $8.6 million in the fourth quarter of the fiscal year ended
March 31, 2002. This charge was classified within restructuring costs and other special charges in the consolidated statement of income in the fiscal year ended March 31, 2002. The cost
of this restructuring plan was 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 restructuring charge included severance and related termination
benefits, lease termination costs primarily related to future lease commitments, equipment deinstallation costs directly associated with the disassembly of certain printing presses and other
equipment, and other costs primarily including legal fees, site clean-up costs and the write-off of certain press related parts that provide no future use or functionality.

The
following table summarizes the activity related to this restructuring plan for the nine months ended December 31, 2002 (in thousands):

03/31/02
Restructuring
Reserve

Current
Nine Months
Payments

12/31/02
Restructuring
ReserveSeverance and other employee costs

$
3,519

(1,982
)
1,537Lease termination costs


1,289

(561
)
728Other costs


423

(350
)
73$
5,231

(2,893
)
2,338


As
of December 31, 2002, the Company believes the restructuring reserve of approximately $2.3 million is adequate. The process of closing two facilities and downsizing one
facility, including equipment deinstallation and relocation of that equipment to other facilities within the Company, was completed by March 31, 2002. The Company anticipates that approximately
$0.6 million of the remaining costs will be paid before March 31, 2003, and the remainder of the costs will be paid by March 31, 2004. These costs will be funded through cash
generated from operations and borrowings under the Company's revolving credit facility.

7.    Industry Segment Information

The Company has significant operations principally in two industry segments: (1) print and (2) premedia services. All of the Company's print
business and assets are attributed to the print division and all of the Company's premedia services business and assets are attributed to the American Color division. The Company's digital visual
effects operations ("Digiscope") and corporate expenses have been aggregated and do not constitute a reportable segment of the Company as contemplated by Statement of Financial Accounting Standard
No. 131, "Disclosures about Segments of an Enterprise and Related Information".

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

The
accounting policies of each of the segments are the same as those used by the Company in its consolidated financial statements. The Company evaluates performance based on segment
EBITDA which is defined as earnings before net interest expense, income tax expense, depreciation, amortization

10

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and other expense (income). 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. Certain
reclassifications have been made to prior year balances to conform with the current year presentation.

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.

|(In thousands)                      |                               | Print                             |         | Premedia
Services |        | Corporate
and Other |        | Total  |        
|----------------------------------- | ----------------------------- | --------------------------------- | ------- | ----------------- | ------ | ------------------- | ------ | ------ | -------
|Nine Months Ended December 31, 2002 |                               |                                   |         |                   |        |                     |        |        |        
|Segment revenues                    |                               | $                                 | 354,576 |                   | 44,868 |                     | 2,324  |        | 401,768
|EBITDA                              |                               | $                                 | 43,869  |                   | 8,488  |                     | (3,293 | )      | 49,064 
|                                    | Depreciation and amortization |                                   |         | 14,573            |        | 3,192               |        | 308    |        
|                                    | Interest expense              |                                   |         |                  |        |                    |        | 21,454 |        
|                                    | Interest income               |                                   |         |                  |        |                    |        | (83    | )      
|                                    | Other, net                    |                                   |         | 179               |        | 234                 |        | 72     |        
|                                    |                               |                                   |         |                   |        |                     |        |        |        
|                                    |                               | Income (loss) before income taxes |         | $                 | 29,117 |                     | 5,062  |        | (25,044
|Total assets                        |                               | $                                 | 259,458 |                   | 18,802 |                     | 13,011 |        | 291,271
|Total goodwill                      |                               | $                                 | 64,656  |                   | 1,892  |                     |       |        | 66,548 
|Total capital expenditures          |                               | $                                 | 24,005  |                   | 1,664  |                     |       |        | 25,669 

---

|                                    |                               |                                   |         |        |        |       |        |        |        
|----------------------------------- | ----------------------------- | --------------------------------- | ------- | ------ | ------ | ----- | ------ | ------ | -------
|Nine Months Ended December 31, 2001 |                               |                                   |         |        |        |       |        |        |        
|Segment revenues                    |                               | $                                 | 364,141 |        | 54,225 |       | 2,779  |        | 421,145
|EBITDA                              |                               | $                                 | 50,117  |        | 10,027 |       | (2,338 | )      | 57,806 
|                                    | Depreciation and amortization |                                   |         | 16,525 |        | 4,045 |        | 2,969  |        
|                                    | Interest expense              |                                   |         |       |        |      |        | 22,735 |        
|                                    | Interest income               |                                   |         |       |        |      |        | (105   | )      
|                                    | Other, net                    |                                   |         | 3      |        | 277   |        | 53     |        
|                                    |                               |                                   |         |        |        |       |        |        |        
|                                    |                               | Income (loss) before income taxes |         | $      | 33,589 |       | 5,705  |        | (27,990
|Total assets                        |                               | $                                 | 256,736 |        | 24,051 |       | 15,329 |        | 296,116
|Total goodwill                      |                               | $                                 | 65,176  |        | 2,101  |       |       |        | 67,277 
|Total capital expenditures          |                               | $                                 | 17,317  |        | 1,932  |       | 239    |        | 19,488 

---

|                                     |                               |                                   |         |       |        |       |        |       |        
|------------------------------------ | ----------------------------- | --------------------------------- | ------- | ----- | ------ | ----- | ------ | ----- | -------
|Three Months Ended December 31, 2002 |                               |                                   |         |       |        |       |        |       |        
|Segment revenues                     |                               | $                                 | 126,981 |       | 14,932 |       | 652    |       | 142,565
|EBITDA                               |                               | $                                 | 14,020  |       | 3,392  |       | (1,212 | )     | 16,200 
|                                     | Depreciation and amortization |                                   |         | 5,224 |        | 1,085 |        | 71    |        
|                                     | Interest expense              |                                   |         |      |        |      |        | 7,149 |        
|                                     | Interest income               |                                   |         |      |        |      |        | (6    | )      
|                                     | Other, net                    |                                   |         | (22   | )      | 50    |        | 10    |        
|                                     |                               |                                   |         |       |        |       |        |       |        
|                                     |                               | Income (loss) before income taxes |         | $     | 8,818  |       | 2,257  |       | (8,436 
|Total assets                         |                               | $                                 | 259,458 |       | 18,802 |       | 13,011 |       | 291,271
|Total goodwill                       |                               | $                                 | 64,656  |       | 1,892  |       |       |       | 66,548 
|Total capital expenditures           |                               | $                                 | 3,549   |       | 550    |       |       |       | 4,099  

---

11

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|                                     |                               |                                   |         |       |        |       |        |       |        
|------------------------------------ | ----------------------------- | --------------------------------- | ------- | ----- | ------ | ----- | ------ | ----- | -------
|Three Months Ended December 31, 2001 |                               |                                   |         |       |        |       |        |       |        
|Segment revenues                     |                               | $                                 | 130,007 |       | 16,832 |       | 451    |       | 147,290
|EBITDA                               |                               | $                                 | 18,268  |       | 2,669  |       | (1,215 | )     | 19,722 
|                                     | Depreciation and amortization |                                   |         | 5,672 |        | 1,281 |        | 984   |        
|                                     | Interest expense              |                                   |         |      |        |      |        | 7,325 |        
|                                     | Interest income               |                                   |         |      |        |      |        | (30   | )      
|                                     | Other, net                    |                                   |         | (21   | )      | 82    |        | 211   |        
|                                     |                               |                                   |         |       |        |       |        |       |        
|                                     |                               | Income (loss) before income taxes |         | $     | 12,617 |       | 1,306  |       | (9,705 
|Total assets                         |                               | $                                 | 256,736 |       | 24,051 |       | 15,329 |       | 296,116
|Total goodwill                       |                               | $                                 | 65,176  |       | 2,101  |       |       |       | 67,277 
|Total capital expenditures           |                               | $                                 | 2,664   |       | 400    |       | 8      |       | 3,072  
|                                     |                               |                                   |         |       |        |       |        |       |        

8.    Impact of Recently Issued Accounting Pronouncements

Goodwill was amortized on a straight-line basis by business segment through the fiscal year ended March 31, 2002. Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), is effective for fiscal years beginning after December 15, 2001. In compliance with this
pronouncement, the Company adopted SFAS 142 on April 1, 2002. For the nine-month period ended December 31, 2001, excluding the effect of goodwill amortization,
operating income and net income would have been $36.6 million and $11.9 million, respectively. In the quarter ended December 31, 2001, excluding the effect of goodwill
amortization, operating income and net income would have been $12.5 million and $4.4 million, respectively. Application of the non-amortization provisions of SFAS 142
is expected to result in an increase in pre-tax income of approximately $2.8 million in the fiscal year ending March 31, 2003. In the quarter ended September 30, 2002,
the Company performed its initial assessment of impairment as of April 1, 2002 and noted no impairment. The Company performed the first of the required annual impairment tests of goodwill as of
December 31, 2002 and noted no impairment.

In
August 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"), which provides clarifications of certain implementation issues within Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of" ("SFAS 121"), along with additional guidance on the accounting for the impairment or
disposal of long-lived assets. SFAS 144 supercedes SFAS 121 and applies to all long-lived assets. SFAS 144 develops one accounting model (based on the
model in SFAS 121) for long-lived assets that are to be disposed of by sale, as well as addresses the principal implementation issues. SFAS 144 is effective for financial
statements issued for fiscal years beginning after December 15,
2001. In compliance with this pronouncement, the Company adopted SFAS 144 on April 1, 2002. The adoption of SFAS 144 has not had a material effect on the Company's results of
operations or financial position.

In
April 2002, the FASB issued Statement of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13, and Technical Corrections" ("SFAS 145"). SFAS 145 rescinds Statement of Financial Accounting Standards No. 4, "Reporting Gains and Losses from Extinguishment of
Debt" ("SFAS 4"), which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. As a
result, the criteria in Accounting Principles Board Opinion No. 30 will now be used to classify those gains and losses. SFAS 145 amends Statement of Financial Accounting Standards
No. 13, "Accounting for Leases" ("SFAS 13") to require that certain

12

---

lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. SFAS 145 also
makes technical corrections to existing pronouncements. While those corrections are not substantive in nature, in some instances, they may change accounting practice. The provisions of SFAS 145
are effective for financial statements issued for fiscal years beginning after May 15, 2002, and interim periods within those fiscal years. The Company does not anticipate that the adoption of
SFAS 145 will have a material effect on the Company's results of operations or financial position.

In
June 2002, the FASB issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146").
SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF 94-3. SFAS 146 requires that a liability for a
cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost (as generally defined in EITF
94-3) was recognized at the date of an entity's commitment to an exit plan. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after
December 31, 2002. In compliance with this pronouncement, the Company adopted SFAS 146 on January 1, 2003. The Company does not anticipate that the adoption of SFAS 146
will have a material effect on the Company's results of operations or financial position.

13

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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 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:



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.

14

---



The following table, including certain reclassifications in prior year results to conform with current year presentation, summarizes our results of operations for the three months ended
December 31, 2002 (the "2002 Three-Month Period"), the three months ended December 31, 2001 (the "2001 Three-Month Period"), the nine months ended December 31, 2002 (the "2002
Nine-Month Period") and the nine months ended December 31, 2001 (the "2001 Nine-Month Period"):

|                         |                | Three Months Ended
December 31, |   | Nine Months Ended
December 31, |        
|------------------------ | -------------- | ------------------------------- | - | ------------------------------ | -------
|
|
|Sales:                   |                |                                 |   |                                |        
|                         | Print          |                                 | $ | 126,981                        |        
|                         | American Color |                                 |   | 14,932                         |        
|                         | Other(a)       |                                 |   | 652                            |        
|                         |                |                                 |   |                                |        
|                         |                | Total                           |   | $                              | 142,565
|Gross Profit:            |                |                                 |   |                                |        
|                         | Print          |                                 | $ | 15,026                         |        
|                         | American Color |                                 |   | 4,145                          |        
|                         | Other(a)       |                                 |   | (88                            | )      
|                         |                |                                 |   |                                |        
|                         |                | Total                           |   | $                              | 19,083 
|Gross Margin:            |                |                                 |   |                                |        
|                         | Print          |                                 |   | 11.8                           | %      
|                         | American Color |                                 |   | 27.8                           | %      
|                         |                | Total                           |   |                                | 13.4   
|Operating Income (Loss): |                |                                 |   |                                |        
|                         | Print          |                                 | $ | 8,796                          |        
|                         | American Color |                                 |   | 2,307                          |        
|                         | Other(a)(b)    |                                 |   | (1,283                         | )      
|                         |                |                                 |   |                                |        
|                         |                | Total                           |   | $                              | 9,820  

---

Print

Sales.In the 2002 Nine-Month Period, print sales decreased $9.5 million to
$354.6 million from $364.1 million in the 2001 Nine-Month Period. The decrease in the 2002 Nine-Month Period is primarily attributable to the impact of decreased
paper prices and an increase in customer supplied paper. These decreases were offset in part by an approximate 7% increase in print production volume.

In
the 2002 Three-Month Period, print sales decreased $3.0 million to $127.0 million from $130.0 million in the 2001 Three-Month Period. The decrease in the 2002
Three-Month Period is primarily attributable to the impact of decreased paper prices, an increase in customer supplied paper and certain changes in product and customer mix. These decreases were
offset in part by an approximate 6% increase in print production volume.

15

---

Gross Profit.In the 2002 Nine-Month Period, print gross profit decreased
$1.8 million to $45.7 million from $47.5 million in the 2001 Nine-Month Period. In the 2002 Nine-Month Period, print gross margin decreased to 12.9% from
13.1% in the 2001 Nine-Month Period. The decrease in gross profit includes certain expenses incurred during the 2002 Nine-Month Period associated with the installation and
start-up of 12 printing presses including seven presses relocated from our other print facilities, the impact of competitive pricing and certain changes in product and customer mix. These
decreases were offset in part by the increased print production volume. The decrease in gross margin includes these
items offset in part by the impact of decreased paper prices and increased levels of customer supplied paper reflected in sales.

In
the 2002 Three-Month Period, print gross profit decreased $3.3 million to $15.0 million from $18.3 million in the 2001 Three-Month Period. In the 2002 Three-Month
Period, print gross margin decreased to 11.8% from 14.0% in the 2001 Three-Month Period. The decrease in gross profit includes certain expenses incurred during the 2002 Three-Month Period associated
with the installation and start-up of 12 printing presses including seven presses relocated from our other print facilities, the impact of competitive pricing and certain changes in
product and customer mix. These changes were offset in part by the increased print production volume. The decrease in gross margin includes these items, offset in part by the impact of decreased paper
prices and increased levels of customer supplied paper reflected in sales.

Selling, General and Administrative Expenses.In the 2002 Nine-Month Period, print
selling, general and administrative expenses increased $2.5 million to $16.4 million, or 4.6% of print sales, from $13.9 million, or 3.8% of print sales in the 2001
Nine-Month Period. The increase in the 2002 Nine-Month Period includes the impact of increased selling and selling related expenses and various other employee related
administrative cost increases.

In
the 2002 Three-Month Period, print selling, general and administrative expenses increased $0.5 million to $6.2 million, or 4.9% of print sales, from $5.7 million,
or 4.4% of print sales in the 2001 Three-Month Period. The increase in the 2002 Three-Month Period includes the impact of increased selling and selling related expenses and various other employee
related administrative cost increases.

Operating Income.As a result of the factors discussed above, print operating income decreased to
$29.3 million in the 2002 Nine-Month Period from $33.6 million in the 2001 Nine-Month Period and decreased to $8.8 million in the 2002 Three-Month Period
from $12.6 million in the 2001 Three-Month Period.

American Color(Premedia Services)

Sales.In the 2002 Nine-Month Period, American Color's sales decreased
$9.3 million to $44.9 million from $54.2 million in the 2001 Nine-Month Period. The decrease in the 2002 Nine-Month Period was primarily the result of
reduced premedia production volume associated with weak market conditions in this segment, including the impact of certain premedia facility closures.

In
the 2002 Three-Month Period, American Color's sales decreased $1.9 million to $14.9 million from $16.8 million in the 2001 Three-Month Period. The decrease in the
2002 Three-Month Period was primarily the result of reduced premedia production volume associated with weak market conditions in this segment, including the impact of certain premedia facility
closures.

Gross Profit.In the 2002 Nine-Month Period, American Color's gross profit decreased
$2.0 million to $11.5 million from $13.5 million in the 2001 Nine-Month Period. In the 2002 Nine-Month Period, American Color's gross margin increased to
25.6% from 24.9% in the 2001 Nine-Month Period. The decrease in gross profit for the 2002 Nine-Month Period is primarily the result of the reduced premedia production volume,
offset in part by reduced manufacturing costs related to various cost containment programs and certain premedia facility closures.

16

---

In
the 2002 Three-Month Period, American Color's gross profit increased $0.2 million to $4.1 million from $3.9 million in the 2001 Three-Month Period. In the 2002
Three-Month Period, American Color's gross margin increased to 27.8% from 23.0% in the 2001 Three-Month Period. The increases in gross profit and gross margin for the 2002 Three-Month Period are
primarily the result of reduced manufacturing costs related to various cost containment programs and certain premedia facility closures. These increases were offset in part by reduced premedia
production volume.

Selling, General and Administrative Expenses.In the 2002 Nine-Month Period, American
Color's selling, general and administrative expenses decreased $1.3 million to $6.2 million, or 13.8% of American Color's sales, from $7.5 million, or 13.9% of American Color's
sales in the 2001 Nine-Month Period. The decrease in the 2002 Nine-Month Period is primarily attributable to decreased selling expenses.

In
the 2002 Three-Month Period, American Color's selling, general and administrative expenses decreased $0.7 million to $1.8 million, or 12.3% of American Color's sales,
from $2.5 million, or 14.8% of American Color's sales in the 2001 Three-Month Period. The decrease in the 2002 Three-Month Period is primarily attributable to decreased selling expenses.

Operating Income.As a result of the factors discussed above, American Color's operating income
decreased to $5.3 million in the 2002 Nine-Month Period from $6.0 million in the 2001 Nine-Month Period and increased to $2.3 million in the 2002
Three-Month Period from $1.4 million in the 2001 Three-Month Period.

Other Operations

Other operations consist primarily of revenues and expenses associated with Digiscope and corporate general, administrative and other expenses, including
amortization expense. In the 2002 Nine-Month Period, operating losses from other operations improved to a loss of $3.6 million from a loss of $5.3 million in the 2001
Nine-Month Period. In the 2002 Three-Month Period, operating losses from other operations improved to a loss of $1.3 million from a loss of $2.2 million in the 2001
Three-Month Period. Included in the 2002 Nine-Month Period is a reduction in goodwill amortization expense of $2.3 million, offset in part by increased corporate general and
administrative expenses. Included in the 2002 Three-Month Period is a reduction in goodwill amortization expense of $0.8 million and decreased operating losses at Digiscope of
$0.3 million. These operating loss reductions during the 2002 Three-Month Period were offset in part by increased corporate general and administrative expenses. See discussion of goodwill
amortization below.

Goodwill
was amortized on a straight-line basis by business segment through the fiscal year ended March 31, 2002 ("Fiscal Year 2002"). Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), is effective for fiscal years beginning after December 15, 2001. In compliance with this
pronouncement, we adopted SFAS 142 on April 1, 2002. As a result, we did not amortize goodwill during the 2002 Nine-Month Period. In the 2001 Nine-Month Period,
goodwill amortization expense within other operations was $2.3 million and in the 2001 Three-Month Period goodwill amortization expense within other operations was $0.8 million.
Application of the non-amortization provisions of SFAS 142 is expected to result in an increase in pre-tax income of approximately $2.8 million in fiscal year
ending March 31, 2003 ("Fiscal Year 2003"). In the quarter ended September 30, 2002, we performed the initial assessment of impairment as of April 1, 2002 and noted no impairment.
We performed the first of the required annual impairment tests of goodwill as of December 31, 2002 and noted no impairment.

Interest Expense

In the 2002 Nine-Month Period, interest expense decreased to $21.5 million from $22.7 million in the 2001 Nine-Month Period
and in the 2002 Three-Month Period interest expense decreased to

17

---

$7.1 million from $7.3 million in the 2001 Three-Month Period. This decrease reflects both lower levels of indebtedness and lower borrowing costs.

Other, Net

In the 2002 Nine-Month Period, Other, net increased to expense of $0.5 million from expense of $0.3 million in the 2001
Nine-Month Period and in the 2002 Three-Month Period, Other, net decreased to expense of less than $0.1 million from expense of $0.3 million in the 2001 Three-Month Period.

Income Taxes

In the 2002 Nine-Month Period, income tax expense decreased to $1.3 million from $1.7 million in the 2001 Nine-Month Period.
In the 2002 Three-Month Period income tax expense decreased to $0.4 million from $0.6 million in the 2001 Three-Month Period. The decrease in both the 2002 Nine-Month Period
and the 2002 Three-Month Period is primarily due to lower amounts of U.S. and foreign taxable income, offset in part by a decreased reduction in the valuation allowance. Management continues to
evaluate the need for a valuation allowance for deferred tax assets. In the 2002 Nine-Month Period and the 2002 Three-Month Period, there have been no changes in circumstances that would
cause a change in judgment with respect to the realization of deferred tax assets in future years.

Net Income

As a result of the factors discussed above, net income decreased to $7.8 million in the 2002 Nine-Month Period from $9.6 million in the
2001 Nine-Month Period and in the 2002 Three-Month Period, net income decreased to $2.2 million from $3.6 million in the 2001 Three-Month Period.

Liquidity and Capital Resources

We have a $145 million credit facility with a syndicate of lenders (the "Bank Credit Agreement") that provides for:



At
December 31, 2002, we had total borrowings and letters of credit outstanding under the Revolving Credit Facility of approximately $30.9 million and additional borrowing
availability of approximately $17.2 million.

At
December 31, 2002, $5.3 million of the A Term Loan Facility and $35.0 million of the B Term Loan Facility remained outstanding. The scheduled A Term Loan Facility
and B Term Loan Facility payments due over the remainder of Fiscal Year 2003 are $1.1 million and $0.1 million, respectively. Scheduled repayments of existing capital lease obligations
and other senior indebtedness during the remainder of Fiscal Year 2003 are approximately $1.4 million and $1.1 million, respectively.

During
the 2002 Nine-Month Period, we repurchased in the open market, an aggregate principal amount of $1.7 million of our 123/4% Senior Subordinated
Notes Due 2005 (the "Notes") for approximately $1.7 million.

18

---

During
the 2002 Nine-Month Period, we used net cash provided by operating activities of $27.9 million, net revolver borrowings of $10.7 million, the
$4.5 million cash balance from March 31, 2002 and $0.3 million of proceeds from the sale of fixed assets to fund the following expenditures:



Our
cash-on-hand of approximately $4.1 million is presented net of outstanding checks within trade accounts payable at December 31, 2002.
Accordingly, cash is presented at a balance of $0 in the December 31, 2002 balance sheet. We plan to continue our program of upgrading our print and premedia equipment and currently anticipate
that full year Fiscal Year 2003 cash capital expenditures will be approximately $28.2 million and equipment acquired under capital leases will be approximately $0.8 million.

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, redeem, repay or repurchase outstanding indebtedness, to the extent permitted by our Bank
Credit Agreement.

At
December 31, 2002, we had total indebtedness, including capital lease obligations, of $246.2 million, as compared to $256.0 million at December 31, 2001,
representing a net reduction in total indebtedness of $9.8 million. Of the total debt outstanding at December 31, 2002, $51.0 million (excluding letters of
credit) was outstanding under the Bank Credit Agreement at a weighted-average interest rate of 4.1%. Indebtedness under the Bank Credit Agreement bears interest at floating rates. At
December 31, 2002, we had indebtedness other than obligations under the Bank Credit Agreement of $195.2 million (including $170.1 million of the Notes). We are currently in
compliance with the financial covenants contained in the Bank Credit Agreement, as amended.

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.

19

---

EBITDA

Three Months Ended
December 31,

Nine Months Ended
December 31,2002

2001

2002

2001(Dollars in thousands)EBITDA:Print

$
14,020

18,268

43,869

50,117American Color


3,392

2,669

8,488

10,027Other (a)


(1,212
)
(1,215
)
(3,293
)
(2,338
)Total

$
16,200

19,722

49,064

57,806EBITDA Margin:Print


11.0
%
14.1
%
12.4
%
13.8
%American Color


22.7
%
15.9
%
18.9
%
18.5
%Total


11.4
%
13.4
%
12.2
%
13.7
%


---

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, and other expense (income). "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 Senior Subordinated Notes Indenture and the Bank Credit Agreement are based on EBITDA, subject to certain adjustments.

20

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ACG HOLDINGS, INC.    Part I

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes since March 31, 2002. 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, 2002.

Item 4. Controls and Procedures.

As of December 31, 2002, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-14(c)
and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended). Based on that evaluation, the Company's management including the Chief Executive Officer and Chief
Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of December 31, 2002. There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect internal controls subsequent to December 31, 2002.

21

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ACG HOLDINGS, INC.  Part II  Other Information

Item 1.    Legal Proceedings.

There have been no significant changes since March 31, 2002. Reference is made to Item 3 (Legal Proceedings) disclosure in our Form 10-K
filed for the fiscal year ended March 31, 2002.

Item 2.    Changes in Securities and Use of Proceeds.



During the third quarter of Fiscal Year 2003, certain officers exercised options to purchase an aggregate of 20,012 shares of Holdings' common stock for
$.01/share. The securities that were sold were exempt from registration on the basis that all such officers are "accredited investors" as defined by the rules of the Securities Act of 1933, as
amended.

During
the third quarter of fiscal year ended March 31, 2000, certain officers exercised options to purchase an aggregate of 1,106 shares of Holdings' common stock for $.01/share.
The securities that were sold were exempt from registration on the basis that all such officers are "accredited investors" as defined by the rules of the Securities Act of 1933, as amended.

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



|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1(f)     |  | October 17, 2002, Sixth Amendment to Amended and Restated Credit Agreement dated May 8, 1998, among Holdings, Graphics, GE Capital Corporation as Documentation Agent, Morgan Stanley Senior Funding, Inc. as
Syndication Agent, Bankers Trust Company as Administrative Agent and the parties signatory thereto  
|10.1(g)     |  | February 7, 2003, Seventh Amendment to Amended and Restated Credit Agreement dated May 8, 1998, among Holdings, Graphics, GE Capital Corporation as Documentation Agent, Morgan Stanley Senior Funding, Inc. as Syndication Agent, Bankers Trust
Company as Administrative Agent and the parties signatory thereto
|12.1        |  | Statement Re: Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                   
|99.1        |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350                                                                                                                                                                                                           



None
filed in the quarter ended December 31, 2002.

22

---



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: February 13, 2003 |  | By:                                             
|Date: February 13, 2003 |  | By:                                             

23

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CERTIFICATIONS

I,
Stephen M. Dyott, Chief Executive Officer, certify that:





|Date: February 13, 2003 |  | By: | /s/STEPHEN M. DYOTTStephen M. Dyott
Chief Executive Officer
|----------------------- |  | --- | -----------------------------------------------------------

24

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CERTIFICATIONS

I,
Patrick W. Kellick, Chief Financial Officer, certify that:





|Date: February 13, 2003 |  | By: | /s/PATRICK W. KELLICKPatrick W. Kellick
Chief Financial Officer
|----------------------- |  | --- | ---------------------------------------------------------------

25

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EXHIBIT INDEX

|Exhibit No. |     | Description                                                                                                                                                                                                                                                                                                        |  | Page
|----------- | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|10.1        | (f) | October 17, 2002, Sixth Amendment to Amended and Restated Credit Agreement dated May 8, 1998, among Holdings, Graphics, GE Capital Corporation as Documentation Agent, Morgan Stanley Senior Funding, Inc. as
Syndication Agent, Bankers Trust Company as Administrative Agent and the parties signatory thereto   |  | 27  
|10.1        | (g) | February 7, 2003, Seventh Amendment to Amended and Restated Credit Agreement dated May 8, 1998, among Holdings, Graphics, GE Capital Corporation as Documentation Agent, Morgan Stanley Senior Funding, Inc. as Syndication Agent, Bankers Trust
Company as Administrative Agent and the parties signatory thereto |  | 32  
|12.1        |     | Statement Re: Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                    |  | 37  
|99.1        |     | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350                                                                                                                                                                                                            |  | 38  

26

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