SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


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

                                       OR

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


                         Commission file number: 1-8328


                                  Anacomp, Inc.
                   (Exact Name of Registrant as Specified in Its Charter)


      Indiana                                         35-1144230
(State or Other Jurisdiction of                       (I.R.S. Employer
Incorporation or Organization)                         Identification No.)


               12365 Crosthwaite Circle, Poway, California 92064
                               (858) 679-9797
   (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                         Principal Executive Offices)


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

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes X No

      As of July 31, 1999, the number of outstanding  shares of the registrant's
common stock, $.01 par value per share, was 14,118,437.

<PAGE>

                         ANACOMP, INC. AND SUBSIDIARIES
                                      INDEX



  PART I.    FINANCIAL INFORMATION                                 Page
  Item 1.    Financial Statements.

                Condensed Consolidated Balance Sheets at
                   June 30, 1999 and September 30, 1998........     2

                Condensed Consolidated Statements of Operations
                   Three Months Ended June 30, 1999 and 1998...     3

                Condensed Consolidated Statements of Operations
                   Nine Months Ended June 30, 1999 and 1998....     4

                Condensed Consolidated Statements of Cash Flows
                   Nine Months Ended June 30, 1999 and 1998....     5

                Supplemental Disclosures of Cash Flow Information
                   Information and Non-Cash Investing Activities
                   Nine Months Ended June 30, 1999.............     6

                Condensed Consolidated Statements of
                   Stockholders' Equity (Deficit)  Nine Months      7
                   Ended June 30, 1999.........................

                Condensed Consolidated Statements of
                   Comprehensive Income (Loss) Three and Nine       7
                   Months Ended June 30, 1999 and 1998.........

                Notes to the Condensed Consolidated Financial       8
                Statements.....................................

  Item 2.    Management's Discussion and Analysis of Financial
                   Condition and Results of Operations.........     11


  Item 3.    Quantitative and Qualitative Disclosures About         17
             Market Risk.......................................


  PART II.   OTHER INFORMATION

  Item 1.    Legal Proceedings.................................     18

  Item 2.    Changes in Securities and Use of Proceeds.........     18

  Item 6.    Exhibits and Reports on Form 8-K..................     18

  SIGNATURES..................................................      19









<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements



                         ANACOMP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                     June 30,      September 30,
(in thousands)                                         1999           1998
                                                   -------------  -------------
                                                    (Unaudited)
<S>                                                    <C>            <C>
Assets
Current assets:
   Cash and cash equivalents                       $    47,050    $    17,721
   Restricted cash                                         564          4,285
   Accounts and notes receivable, net                   66,026         63,288
   Current portion of long-term receivables, net         2,593          5,642
   Inventories                                          17,884         16,485
   Net assets of discontinued operations                   ---         29,939
   Prepaid expenses and other                            6,446         10,269
                                                   -------------  -------------
Total current assets                                   140,563        147,629
                                                   -------------  -------------

Property and equipment, net                             44,599         35,092
Long-term receivables, net of current portion.           6,952          9,002
Excess of purchase price over net assets of
   businesses acquired and other intangibles, net      117,280        120,654
Reorganization value in excess of identifiable
   assets, net                                          24,965         83,819
Other assets                                            15,350         15,641
                                                   -------------  -------------
                                                   $   349,709    $   411,837
                                                   =============  =============
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
   Current portion of long-term debt               $     1,088    $     1,152
   Accounts payable                                     22,798         28,961
   Accrued compensation, benefits and withholdings      18,356         17,327
   Accrued income taxes                                 13,881         15,197
   Accrued interest                                      9,350         18,158
   Other accrued liabilities                            41,041         39,650
                                                   -------------  -------------
Total current liabilities                              106,514        120,445
                                                   -------------  -------------

Long-term debt, net of current portion                 338,677        338,884
                                                   -------------  -------------

Stockholders' equity (deficit):
   Preferred stock                                          --             --
   Common stock                                            142            143
   Capital in excess of par value                      107,433        109,486
   Cumulative translation adjustment
     (from May 31, 1996)                                (3,543)           447
   Accumulated deficit (from May 31, 1996)            (199,514)      (157,568)
                                                   -------------  -------------
Total stockholders' deficit                            (95,482)       (47,492)
                                                   -------------  -------------
                                                   $   349,709    $   411,837
                                                   =============  =============
</TABLE>


              See the notes to the condensed consolidated financial statements


<PAGE>
                         ANACOMP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                           June 30,
                                                   --------------------------
(in thousands, except per share amounts)              1999          1998
                                                   ------------  ------------
<S>                                                <C>           <C>
Revenues:
   Document Management Solutions                   $   54,151    $   40,480
   Field Services                                      17,531        18,015
   Systems and Supplies                                34,568        36,481
                                                   ------------  ------------
                                                      106,250        94,976
                                                   ------------  ------------
Cost of revenues:
   Cost of Document Management Solutions               34,281        24,923
   Cost of Field Services                               9,084         9,434
   Cost of Systems and Supplies                        19,607        22,741
                                                   ------------  ------------
                                                       62,972        57,098
                                                   ------------  ------------

   Gross Profit                                        43,278        37,878
                                                   ------------  ------------

Operating expenses:
   Research & development                               3,251         2,276
   Selling, general and administrative expenses        22,241        21,851
   Amortization of reorganization asset                17,093        17,807
   Amortization of intangible assets                    5,355         3,181
   Restructuring charges                                  ---         8,494
                                                   ------------  ------------

   Operating loss from continuing operations           (4,662)      (15,371)
                                                   ------------  ------------

Other income (expense):
   Interest income                                        426           463
   Interest expense and fee amortization              (10,118)       (8,562)
   Other                                                 (185)         (272)
                                                   ------------  ------------
                                                       (9,877)       (8,371)
                                                   ------------  ------------
   Loss from continuing operations before
     income taxes                                     (14,539)      (24,102)
Provision (benefit) for income taxes                    1,072        (1,777)
                                                   ------------  ------------
   Loss from continuing operations                    (15,611)      (22,325)
Income from discontinued operations, net
   of taxes                                               ---           576
Gain on sale of discontinued operations, net of
   taxes                                                3,056           ---
                                                   ------------  ------------
   Loss before extraordinary loss on
   extinguishment of debt                             (12,555)      (21,749)
Extraordinary loss on extinguishment of debt              ---        (1,857)
                                                   ------------  ------------
   Net loss                                        $  (12,555)   $  (23,606)
                                                   ============  ============

Basic and diluted loss per share from continuing
   operations                                      $    (1.10)   $    (1.59)
Income per share from discontinued operations            0.00          0.04
Gain on sale of discontinued operations, net of
   taxes                                                 0.22          0.00
Extraordinary loss on extinguishment of debt             0.00         (0.13)
                                                   ------------  ------------
Basic and diluted net loss per share               $    (0.88)   $    (1.68)
                                                   ============  ============

Shares used  to compute basic and diluted income
   (loss) per share                                    14,244        14,078
                                                   ============  ============
</TABLE>
   See the notes to the condensed consolidated financial statements

<PAGE>
                         ANACOMP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Nine Months Ended
                                                           June 30,
                                                   --------------------------
(in thousands, except per share amounts)              1999          1998
                                                   ------------  ------------
<S>                                                   <C>            <C>
Revenues:
   Document Management Solutions                   $  172,166    $  106,554
   Field Services                                      54,398        54,403
   Systems and Supplies                               106,593       117,807
                                                   ------------  ------------
                                                      333,157       278,764
                                                   ------------  ------------
Cost of revenues:
   Cost of Document Management Solutions              108,169        63,222
   Cost of Field Services                              27,997        28,809
   Cost of Systems and Supplies                        62,939        74,486
                                                   ------------  ------------
                                                      199,105       166,517
                                                   ------------  ------------

   Gross Profit                                       134,052       112,247

Operating expenses:
   Research & development                               7,637         6,982
   Selling, general and administrative expenses        69,352        65,918
   Amortization of reorganization asset                52,984        53,423
   Amortization of intangible assets                   14,989         7,858
   Restructuring charges                                  ---         8,494
                                                   ------------  ------------

   Operating loss from continuing operations          (10,910)      (30,428)
                                                   ------------  ------------

Other income (expense):
   Interest income                                      1,505         1,802
   Interest expense and fee amortization              (30,396)      (24,440)
   Other                                                 (816)         (843)
                                                   ------------  ------------
                                                      (29,707)      (23,481)
                                                   ------------  ------------
   Loss from continuing operations before
     income taxes                                     (40,617)      (53,909)
Provision for income taxes                              5,194           640
                                                   ------------  ------------
   Loss from continuing operations                    (45,811)      (54,549)
Income from discontinued operations, net of taxes         809         1,577
Gain on sale of discontinued operations, net of
   taxes                                                3,056           ---
                                                   ------------  ------------
   Loss before extraordinary loss                     (41,946)      (52,972)
Extraordinary loss on extinguishment of debt              ---        (1,857)
                                                   ------------  ------------
   Net loss                                        $  (41,946)   $  (54,829)
                                                   ============  ============

Basic and diluted loss per share from continuing
   operations                                      $    (3.21)   $    (3.92)
Income per share from discontinued operations            0.06          0.11
Gain on sale of discontinued operations, net of
   taxes                                                 0.21           ---
Extraordinary loss on extinguishment of debt              ---         (0.13)
                                                   ------------  ------------
Basic and diluted net loss per share               $    (2.94)   $    (3.94)
                                                   ============  ============

Shares used  to compute basic and diluted income
   (loss) per share                                    14,248        13,921
                                                   ============  ============
</TABLE>

    See the notes to the condensed consolidated financial statements

<PAGE>

                         ANACOMP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                      Nine Months Ended
                                                           June 30,
                                                  ----------------------------
(in thousands)                                        1999          1998
                                                  -------------  -------------
<S>                                               <C>            <C>
Cash flows from operating activities:
   Net loss                                       $  (41,946)    $ (54,829)
   Adjustments to reconcile net loss to net
     cash provided by (used in) continuing
     operations:
    Income from discontinued operations                 (738)       (1,577)
    Gain on sale of discontinued operations
     and other assets                                 (3,485)          ---
    Depreciation and amortization                     82,875        74,893
    Extraordinary loss on extinguishment of debt         ---         1,857
    Non-cash compensation                                844           753
    Non-cash charge in lieu of taxes                   5,190           ---
    Other non-cash items                                 ---           435
      Restricted cash requirements                     3,721         3,148
      Change in assets and liabilities net of
        effects from acquisitions:
      Decrease (increase) in current assets and
        long-term receivables                          3,252       (10,727)
      Decrease in accounts payable and accrued
        expenses                                     (26,558)      (19,334)
      Decrease in other noncurrent liabilities          (223)         (650)
                                                  -------------  -------------
      Net cash provided by (used in) continuing
        operations                                    22,932        (6,031)
      Net operating cash provided by (used in)
        discontinued operations                        1,785          (946)
                                                  -------------  -------------
      Net cash provided by (used in)
        operating activities                          24,717        (6,977)
                                                  -------------  -------------
Cash flows from investing activities:
   Purchases of property, plant and equipment        (19,266)       (7,910)
   Capital expenditures of discontinued
     operations                                         (165)         (676)
   Proceeds from sale of discontinued
     operations and other assets                       39,887           --
   Payments to acquire companies and customer
     rights                                           (13,371)    (164,302)
                                                  -------------  -------------
      Net cash provided by (used in) investing
        activities                                     7,085      (172,888)
                                                  -------------  -------------
Cash flows from financing activities:
   Proceeds from the exercise of options and
     warrants                                          2,183         1,728
   Proceeds from employee stock purchases                782           906
   Repurchases of common stock                        (5,019)           --
   Proceeds from revolving line of credit and
     long-term borrowings                                 --       214,262
   Payments related to the issuance of debt               --        (4,769)
   Principal payments on long-term debt                 (169)      (78,484)
                                                  -------------  -------------
      Net cash provided by (used in) financing
        activities                                    (2,223)      133,643
                                                  -------------  -------------
Effect of exchange rate changes on cash                 (250)         (384)
                                                  -------------  -------------
Increase (decrease) in cash and cash equivalents      29,329       (46,606)
Cash and cash equivalents at beginning of period      17,721        58,060
                                                  -------------  -------------
Cash and cash equivalents at end of period          $ 47,050     $  11,454
                                                  =============  =============
</TABLE>

    See the notes to the condensed consolidated financial statements

<PAGE>


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON-CASH INVESTING
ACTIVITIES (Unaudited):
<TABLE>
<CAPTION>

                                                    Nine Months Ended June 30,
                                                  ---------------------------
  (Dollars in Thousands)                              1999          1998
                                                  ------------- -------------
<S>                                               <C>           <C>
  Cash paid for interest                          $   34,114    $  26,687
                                                  ============= =============
  Cash paid for income taxes                      $    4,525    $   2,599
                                                  ============= =============
  Assets acquired by assuming liabilities         $    1,885    $  11,580
                                                  ============= =============
 Common stock issued as incentive compensation    $      ---    $     584
                                                  ============= =============


</TABLE>




                         ANACOMP, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
                                EQUITY (DEFICIT)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                       Cap. in
                                        excess   Cum. trans-
(in thousands)                 Common     of       lation     Accum.
                               Stock   Par value  adjstmnt.  Deficit    Total
                              ------- ---------  ---------- ---------- --------
<S>             <C> <C>        <C>     <C>       <C>        <C>        <C>
Balance at September 30, 1998  $ 143  $109,486   $   447    $(157,568) $(47,492)
  Common stock issued for the
exercise of options and warrants  --     2,183        --           --     2,183
  Common stock issued for
   employee stock purchases        1       781        --           --       782
  Common stock repurchased        (2)   (5,017)       --           --    (5,019)
  Translation adjustment          --        --    (3,990)          --    (3,990)
  Net loss for nine months        --        --        --      (41,946)  (41,946)
                              ------- ---------  ---------- ---------- --------
Balance at June 30, 1999       $ 142  $107,433   $(3,543)   $(199,514) $(95,482)
                              ======= =========  ========== ========== ========
</TABLE>

See the notes to the condensed consolidated financial statements
<PAGE>


                         ANACOMP, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
                                  INCOME (LOSS)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                            Three Months Ended
                                                 June 30,
                                   ------------------------------------
     (in thousands)                     1999                1998
                                   -----------------  -----------------
<S>                                <C>                <C>
     Net loss                      $   (12,555)       $   (23,606)
     Translation adjustment             (1,282)              (459)
                                   -----------------  -----------------
     Comprehensive loss            $   (13,837)       $   (24,065)
                                   =================  =================


                                            Nine Months Ended
                                                 June 30,
                                   ------------------------------------
     (in thousands)                     1999                1998
                                   -----------------  -----------------
     Net loss                      $   (41,946)       $   (54,829)
     Translation adjustment             (3,990)              (578)
                                   -----------------  -----------------
     Comprehensive loss            $   (45,936)       $   (55,407)
                                   =================  =================



</TABLE>




     See the notes to the condensed consolidated financial statements




                         ANACOMP, INC. AND SUBSIDIARIES
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1.  Basis of Presentation

The  accompanying   condensed  consolidated  financial  statements  include  the
accounts of Anacomp,  Inc.  ("Anacomp" or the  "Company")  and its  wholly-owned
subsidiaries.  All significant  intercompany accounts and transactions have been
eliminated. These financial statements have not been audited but, in the opinion
of the Company's management,  include all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the Company's financial
position, results of operations, and cash flows for all periods presented. These
financial  statements should be read in conjunction with the Company's financial
statements and notes thereto for the year ended September 30, 1998,  included in
the Company's 1998 Annual Report on Form 10-K. Interim operating results are not
necessarily indicative of operating results for the full year.

Note 2.  Management Estimates and Assumptions

The Company's preparation of the accompanying  condensed  consolidated financial
statements in conformity with generally accepted accounting  principles requires
its  management  to make  estimates  and  assumptions  that affect the  reported
amounts of assets and  liabilities,  the  disclosure  of  contingent  assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period.  Estimates have been prepared
on the basis of the most current available  information and actual results could
differ from those estimates.

<PAGE>

Note 3.  Reorganization Asset

As of May 31, 1996, the Company adopted Fresh Start Reporting, which resulted in
material changes to the consolidated  balance sheet - including the valuation of
assets,  intangible  assets,  and  liabilities  at fair  market  value,  and the
valuation of equity based on the appraised  reorganization  value of the ongoing
business.  The net result of the valuations  was that the Company  recognized an
asset  captioned   "Reorganization  value  in  excess  of  identifiable  assets"
("Reorganization  Asset")  totaling  $267.5  million as of May 31, 1996.  Net of
accumulated  amortization,  the Reorganization Asset was $25 million at June 30,
1999. The Reorganization Asset is being amortized over a three and one-half year
period beginning May 31, 1996 and will be fully amortized by November 30, 1999.

Reorganization  Asset  amortization  was $53.0 million and $53.4 million for the
nine-month  periods ended June 30, 1999 and 1998,  respectively.  On a pro forma
basis  for the  nine-month  periods  ended  June 30,  1999 and  1998,  excluding
Reorganization  Asset amortization,  the Company would have reported income from
continuing operations as follows:
<TABLE>

                        Pro Forma Condensed Consolidated Statement of Operations

                                                      Nine months ended
                                                           June 30,
                                                  ---------------------------
                                                      1999          1998
                                                  ------------- -------------
<CAPTION>
<S>                                               <C>           <C>

   Pro forma income (loss) from continuing
   operations                                     $      7,173  $    (1,126)
                                                  ============= =============

   Pro forma basic earnings (loss) per share
   from continuing operations                     $       0.50  $     (0.08)
                                                  ============= =============

   Pro forma diluted earnings (loss) per share
   from continuing operations                     $       0.47  $     (0.08)
                                                  ============= =============

</TABLE>


Note 4.  Comprehensive Income

The Company adopted Financial  Accounting Standards Board ("FASB") Statement No.
130 Reporting  Comprehensive  Income - effective October 1, 1998. This statement
requires the presentation of comprehensive  income,  as defined,  as part of the
basic financial statements.  Comprehensive income includes all changes in equity
during a period except those resulting from investments by and  distributions to
owners.

Note 5.  First Image Acquisition

Effective   June  1,  1998,   the  Company   completed  its   acquisition   (the
"Acquisition")  of assets  constituting  substantially  all of the  business and
operations  (the "First Image  Businesses")  of First Image  Management  Company
("First Image"), a division of First Financial Management  Corporation ("FFMC"),
which in turn is a  wholly  owned  subsidiary  of First  Data  Corporation.  The
Company also assumed  substantially all of the ongoing  liabilities of the First
Image  Businesses.  The  purchase  price  paid by the  Company  to FFMC was $150
million,  although a post-closing  adjustment  resulted in FFMC returning to the
Company $4.4 million to reflect a shortfall in the  agreed-upon  working capital
for the First Image Businesses.  The Acquisition was accounted for as a purchase
and the excess of the purchase price over the estimated fair value of net assets
acquired (referred to as "goodwill")  approximated $100 million,  which is being
amortized over a 15-year period on a straight-line basis.
<PAGE>

The First Image  Businesses  consisted of (i) image access  services,  primarily
Computer Output to Microfilm  ("COM") and Compact Disc ("CD") services (the "IAS
Business"),  (ii) document print and  distribution  services such as laser print
and mail and  demand  publishing  services  (the  "DPDS  Business"),  and  (iii)
document acquisition services such as health care and insurance claims entry and
data capture services (the "DAS  Business").  The Company sold the DPDS Business
and the DAS Business during the three-month period ended September 30, 1998. The
Company  retained and continues to operate the IAS Business,  whose revenues and
earnings are included in the Company's results of operations for the nine months
ended June 30, 1999.

Note 6.  Inventories
                                                    June 30,    September 30,
                                                      1999         1998
                                                  ------------ --------------
  Finished goods                                  $   10,912   $    9,248
  Work in process                                      1,222        2,071
  Raw materials and supplies                           5,750        5,166
                                                  ------------ --------------
                                                  $   17,884   $   16,485
                                                  ============ ==============

Note 7.  Income Taxes

The Company's  amortization  of the  Reorganization  Asset is not deductible for
income tax  purposes.  Accordingly,  the Company  incurs income tax expense even
though it reports a pre-tax loss due to such amortization.

For the nine months ended June 30, 1999 and 1998, income tax expense is reported
for the  Company  based upon an  estimated  effective  tax rate of 42% of pretax
income before  amortization  of the  Reorganization  Asset.  For the nine months
ended June 30, 1999,  the limited tax benefit of the U.S.  Federal net operating
loss  carryforwards  ("NOL") of the  Company  resulted  in a  reduction  of $5.2
million in the Company's U.S. Federal income tax liability.

Note 8.  Loss Per Share

Basic  earnings  (loss) per share is computed  based upon the  weighted  average
number of shares of the  Company's  common stock  outstanding  during the period
presented. Diluted earnings (loss) per share is computed based upon the weighted
average number of shares of common stock  outstanding  and dilutive common stock
equivalents  during the  period  presented.  Common  stock  equivalents  include
options  granted under the Company's stock option plans using the treasury stock
method and shares of common  stock  expected  to be issued  under the  Company's
employee  stock  purchase  plan.  Common  stock  equivalents  were  not  used to
calculate  diluted  earnings  (loss) per share  because  of their  anti-dilutive
effect.  There are no reconciling  items in calculating  the numerator for basic
and diluted earnings (loss) per share for any of the periods presented.

Note 9.  Acquisitions

During the nine months  ended June 30, 1999,  the Company  acquired the customer
bases and other specified assets of ten businesses.  Total consideration paid at
the closings of the acquisitions was $13.4 million, of which approximately $10.2
million was assigned to goodwill.  Three of the acquisition  agreements  include
provisions for contingent cash payments of up to  approximately  $0.7 million in
the aggregate.

On July 30, 1999, the Company acquired the stock of Litton Adesso Software, Inc.
("Adesso")  from TASC,  Inc.  for a payment at the closing of $15  million.  The
agreement also included a provision for a post-closing purchase price adjustment
to reflect any change in the agreed-upon  working capital for Adesso, as well as
a provision for an additional  payment to TASC of up to $2.1 million if Adesso's
revenues exceed a target amount for the year ended July 31, 1999.
<PAGE>

Note 10.  Sale of Magnetics Solutions Division

In  February  1999,  the  Company  adopted a plan to  dispose  of its  Magnetics
Solutions Group Division ("the Magnetics Division"),  and on April 28, 1999, the
Company signed a definitive  agreement to sell the Magnetics Division.  The sale
was  effective  May 1, 1999,  and the final  price of $40 million  included  $37
million  in cash at  closing,  a $3 million  subordinated  note,  and  incentive
payments based upon sales of magnetic  media products to the Company's  customer
base over the next two years.  The  Company  recognized  a gain  after  taxes of
approximately $3.1 million in the third quarter as a result of the sale.

The  assets  and  liabilities  of the  Magnetics  Division  have  been  reported
separately as "Net assets of discontinued  operations" in the restated condensed
consolidated  balance  sheet as of  September  30,  1998.  The net assets of the
Magnetics Division are summarized as follows (in thousands):

                                                September 30,
                                                    1998
                                               --------------
Accounts and notes receivable                  $   15,821
Inventories                                        12,133
Property and equipment                              6,657
Reorganization value in excess of
  identifiable assets                               4,412
Other assets                                          232
Accounts payable and other accrued liabilities     (9,316)
                                               --------------
Net assets                                     $   29,939
                                               ==============


Similarly,  the  results  of  operations  of the  Magnetics  Division  have been
reported  separately  as "Income  from  discontinued  operations,  net of income
taxes" in the condensed  consolidated  statements of operations  for the periods
ended June 30, 1999 and 1998.

The operating  results of the discontinued  operations are summarized as follows
(in thousands):
<TABLE>
                       Three       Three        Six         Nine
                       Months      Months      Months       Months
                       Ended       Ended       Ended        Ended
                      June 30,    June 30,    March 31,    June 30,
                        1999        1998       1999         1998
                     ----------   ---------  ----------  -----------
<CAPTION>
<S>                  <C>          <C>        <C>         <C>
Revenues             $     ---    $  26,046  $  50,544   $  77,664
                     ==========   =========  ==========  ============

Operating income     $     ---    $   1,671  $   2,763   $   4,755
Income taxes               ---        1,095      1,954       3,178
                     ----------   ---------  ----------  ------------
Net income (loss)    $     ---    $     576  $     809   $   1,577
                     ==========   =========  ==========  ============
</TABLE>
<PAGE>

Note 11.  Research and Development

<TABLE>
                       Three Months Ended        Nine Months Ended
                            June 30,                 June 30,
                     ----------------------  -----------------------
                         1999        1998       1999         1998
                     -----------  ---------  ----------  -----------
<CAPTION>
<S>                  <C>          <C>        <C>         <C>
Digital              $   2,614    $     690  $   5,013   $   2,072
COM and other              637        1,586      2,624       4,910
                     -----------  ---------  ----------  -----------
Total                $   3,251    $   2,276  $   7,637   $   6,982
                     ===========  =========  ==========  ===========
</TABLE>

Note 12.  Stock Repurchase Program

During the third quarter of 1999, the Company  repurchased 160,400 shares of its
common stock in accordance with a previously  announced  stock buyback  program.
These  purchases  bring the total  purchases  during  the year to  approximately
535,000 shares.

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

Certain  statements in this  "Management's  Discussion and Analysis of Financial
Condition and Results of  Operations"  constitute  "forward-looking  statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other  important  factors that could cause the actual  results,  performance  or
achievements of the Company,  or industry results, to differ materially from any
future  results,  performance  or  achievements  expressed  or  implied  by such
forward-looking  statements.  Such  risks,  uncertainties  and  other  important
factors  include,  among  others:  general  economic  and  business  conditions;
industry  trends;  industry  capacity;  competition;  raw  materials  costs  and
availability;  currency  fluctuations;  the loss of any significant customers or
suppliers;  changes in business  strategy or  development  plans;  availability,
terms and deployment of capital;  availability of qualified  personnel;  changes
in, or the failure or inability to comply with, government regulation; and other
factors referenced in this report. These  forward-looking  statements speak only
as of the date of this report.

Pro Forma Statements of Operations

      As of May 31,  1996,  the Company  adopted  Fresh Start  Reporting,  which
resulted in material  changes to the  consolidated  balance sheet. See Note 3 to
the accompanying  condensed  consolidated financial statements for a description
of the Company's  Reorganization  Asset. To facilitate a better understanding of
the Company's  operating  performance  after the  Reorganization  Asset is fully
amortized,  pro forma  condensed  consolidated  statements of operations for the
three and nine months  ended June 30, 1999 and 1998 have been  presented  below.
The  only  difference  from  the  Company's  reported  results  is a  pro  forma
adjustment to exclude the amortization of the Reorganization Asset.

<PAGE>

           PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

<TABLE>
                                           Three Months Ended June 30,
                                      ------------------------------------
(in thousands, except per share            1999               1998
amounts)                              ----------------- ------------------
<CAPTION>
<S>                                   <C>        <C>    <C>         <C>
Revenues                              $ 106,250  100.0% $  94,976   100.0%

Operating costs and expenses             93,819   88.3%    84,406    88.9%
Restructuring charges                       ---             8,494     8.9%
                                      ----------        ---------
Total operating costs and expenses       93,819            92,900    97.8%

Operating income from continuing
   operations                            12,431   11.7%     2,076     2.2%
                                      ----------        ---------

Income (loss) from continuing
   operations                             1,482    1.4%    (4,518)   (4.8%)
Gain on Sale of discontinued
   operations, net of taxes               3,056               ---
Income from discontinued operations,
   net of taxes                             ---               576
Loss on extinguishment of debt              ---            (1,857)
                                      ------------       ------------
Net income (loss)                    $    4,538          $ (5,799)
                                      ============       ============

Basic income per share from
   continuing operations              $     0.10         $   0.03
                                      ============       ============

Diluted income per share from
   continuing operations              $     0.10         $   0.03
                                      ============       ============

Shares used to compute basic income
   per share                              14,244            14,078
                                      ============       ============
Shares used to compute diluted
   income per share                       15,194            15,028
                                      ============       ============
</TABLE>
<PAGE>

<TABLE>
                                           Nine Months Ended June 30,
                                      ------------------------------------
(in thousands, except per share              1999               1998
amounts)                              ----------------- ------------------
<CAPTION>
<S>                                   <C>        <C>    <C>         <C>
Revenues                              $  333,157 100.0% $   278,764 100.0%

Operating costs and expenses             291,083  87.4%     247,275  88.7%
Restructuring charges                        ---              8,494   3.1%
                                      ------------       ------------
Total operating costs and expenses       291,083  87.4%     255,769  91.8%

Operating income from continuing          42,074  12.6%      22,995   8.2%
   operations                         ------------       ------------

Income (loss) from continuing
   operations                              7,173   2.2%      (1,126)  0.4%
Gain on Sale of discontinued
   operations, net of taxes                3,056                ---
Income from discontinued operations,
   net of taxes                              809              1,577
Loss on extinguishment of debt               ---             (1,857)
                                      ------------       ------------
Net income (loss)                     $   11,038         $   (1,406)
                                      ============       ============

Basic income per share from
   continuing operations              $     0.50         $     0.08
                                     ============       ============

Diluted income per share from
   continuing operations              $     0.47         $     0.08
                                     ============       ============

Shares used to compute basic income
   per share                              14,248             13,921
                                     ============       ============
Shares used to compute diluted
   income per share                       15,198             13,921
                                     ============       ============
</TABLE>


Results of Operations

Three Months Ended June 30, 1999 vs. Three Months Ended June 30, 1998

     General.  Anacomp reported a net loss of $12.6 million for the three months
ended  June 30,  1999,  compared  to a net loss of $23.6  million  for the three
months ended June 30, 1998. Earnings from continuing operations before interest,
other  income,  taxes,  depreciation,  amortization  and  restructuring  charges
("EBITDA") were $23.1 million, or 21.7% of revenues,  for the three months ended
June 30, 1999.  This compares to EBITDA of $17.0 million,  or 17.9% of revenues,
for the three months ended June 30, 1998.

     As a result of the divestiture of its Magnetics  Division,  the Company has
reorganized  it's  internal and public  reporting  around three primary lines of
business.  Document  Management  Solutions  ("DMS"),  which includes  analog and
digital services as well as software  solutions;  Field Services,  which include
COM and  third-party  maintenance  services;  and  Systems and  Supplies,  which
includes both COM and digital hardware plus related supplies.

     Revenues. The Company's DMS revenues in the third quarter of 1999 increased
33.8%, or $13.7 million versus the third quarter of 1998. This was primarily the
result of the  inclusion  of the IAS  Business  operating  results for the three
months ended June 30, 1999 versus one month for the similar  period in 1998.  In
addition,  digital service revenues  increased in 1999 due to an increase in the
number of images produced.

     The  Company's  Field  Services  revenues  in the  third  quarter  of  1999
decreased 2.7% or $0.5 million versus the third quarter of 1998,  with decreases
in  COM  maintenance   revenue  largely  offset  by  increases  in  third  party
maintenance revenue.

      The Company's  Systems and Supplies  revenues in the third quarter of 1999
decreased  5.2% or $1.9  million  versus  the third  quarter  of 1998.  This was
primarily  the result of the Company's  discontinuance  of the sale of duplicate
microfilm to the reseller market.

      Gross  Margins.  The  Company's  gross margin  increased  14.3% from $37.9
million  (39.9% of revenues)  for the three months ended June 30, 1998, to $43.3
million  (40.7% of  revenues)  for the three  months  ended June 30,  1999.  The
increase in gross  margins was  largely the result of  increases  in Systems and
Supplies margins related to increased hardware sales.

     Research and  development.  Research and  development  expense in the third
quarter of 1999 increased  42.8% compared to the third quarter of 1998. This was
due to  increased  spending  of  $1.9  million  in the  development  of  digital
services, which was partially offset by a $0.9 million reduction in spending for
the development of COM system capabilities.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  ("SG&A")  expenses  increased  1.7% from $21.9 million (23.0% of
revenues)  for the three months ended June 30, 1998 to $22.2  million  (20.9% of
revenues)  for the three months ended June 30, 1999.  This increase is primarily
the result of operating  costs of the IAS  Business and of costs  related to new
strategic  marketing  initiatives.  SG&A costs,  as a  percentage  of  revenues,
decreased 2.1  percentage  points,  primarily  because of the added IAS Business
sales volume.

     Amortization  of  intangible  assets.  Amortization  of  intangible  assets
increased  68.3% from $3.2 million (3.3% of revenues) for the three months ended
June 30,  1998,  to $5.4 million  (5.0% of revenues)  for the three months ended
June 30, 1999.  This increase is principally  the result of the  amortization of
goodwill  associated  with the IAS Business  acquisition in fiscal year 1998 and
with the ten acquisitions completed in fiscal year 1999.

     Interest  Expense.  Interest expense  increased 18.2% from $8.6 million for
the three  months  ended June 30,  1998,  to $10.1  million for the three months
ended June 30, 1999. This increase was the result of additional  borrowings used
to finance the IAS Business acquisition.

      Provision for Income Taxes.  The Company's  effective tax rate remained at
42% of taxable income for both periods presented. See Note 7 to the accompanying
condensed consolidated financial statements for a further discussion.

     Discontinued  Operations.  During the second  quarter of 1999,  the Company
adopted a plan to dispose of its Magnetics  Division.  For  financial  reporting
purposes the disposal was effective as of the end of the second quarter 1999. As
a result,  the third  quarter  Magnetics  Division  loss from  operations of $71
thousand  has been  included  in the  calculation  of the gain  from the sale of
discontinued  operations.  The  Magnetics  Division  operating  income  was $576
thousand during the third quarter of 1998.

Nine Months Ended June 30, 1999 vs. Nine Months Ended June 30, 1998

      General.  Anacomp reported a net loss of $41.9 million for the nine months
ended June 30, 1999, compared to a net loss of $54.8 million for the nine months
ended June 30, 1998.  EBITDA was $71.9  million,  or 21.6% of revenues,  for the
nine months ended June 30, 1999.  This compares to EBITDA of $49.1  million,  or
17.6% of revenues for the nine months ended June 30, 1998.

     Revenues.  The Company's  continuing  revenues  increased 19.5% from $278.8
million for the nine months ended June 30, 1998, to $333.2  million for the nine
months ended June 30, 1999. The Company  experienced  increased  revenues in its
DMS  line of  business  and  decreased  revenues  in its  Systems  and  Supplies
business.

     The  increase  in DMS  revenues  resulted  primarily  from the June 1, 1998
acquisition  of the IAS Business and the inclusion of its operating  results for
the nine  months  ended  June 30,  1999.  Digital  Service  revenues,  which are
included  in DMS,  increased  255% from the prior year to $20.4  million for the
nine months ended June 30, 1999.

      The  decrease  in  Systems  and  Supplies  revenues  was the result of the
Company's  discontinuance  of the sale of  duplicate  microfilm  to the reseller
market,  as well as declining  sales of original  COM  microfilm  and  duplicate
microfilm,  which is consistent with the gradual decline of COM units in service
worldwide.

      Gross Margins.  The Company's  gross margins  increased  19.4% from $112.2
million  (40.3% of revenues)  for the nine months ended June 30, 1998, to $134.1
million (40.2% of revenues) for the nine months ended June 30, 1999.

     DMS margins,  as a percentage of revenue,  decreased 3.5 percentage  points
from 1998 to 1999.  This decrease was the result of decreases in average selling
prices and because of costs incurred for the  consolidation of IAS Business data
centers.  Field  Services  margins,  as a percentage  of revenue,  increased 1.5
percentage  points  from 1998 to 1999  principally,  of a  reduction  in related
operating costs. Systems and Supplies gross margins, as a percentage of revenue,
increased 4.2 percentage points because of increased hardware sales.

     Research and development.  Research and development  expense increased 9.4%
from $7.0 for the nine months ended June 30, 1998,  to $7.6 million for the nine
months ended June 30, 1999.  This increase  reflects a $2.9 million  increase in
spending for the development of digital services,  which was offset partially by
a $2.3  million  reduction  in  spending  for  the  development  of  COM  system
capabilities.  The Company expects to continue to increase its investment in the
digital services area.

      Selling, general and administrative expenses. SG&A expenses increased 5.2%
from $65.9  million  (23.6% of revenues) for the nine months ended June 30, 1998
to $69.4  million  (20.8% of revenues)  for the nine months ended June 30, 1999.
This increase in expense  resulted  primarily  from  operating  costs of the IAS
Business and costs related to new strategic marketing  initiatives.  SG&A costs,
as a percentage of revenues,  decreased 2.8 percentage  points primarily because
of the added IAS Business sales volume.

     Amortization  of  intangible  assets.  Amortization  of  intangible  assets
increased  90.7% from $7.9 million  (2.8% of revenues) for the nine months ended
June 30, 1998,  to $15.0  million  (4.5% of revenues)  for the nine months ended
June 30,  1999.  This  increase  is  primarily  related to the  amortization  of
goodwill  associated  with the IAS Business  acquisition in fiscal year 1998 and
with the ten acquisitions completed in fiscal year 1999.

     Interest  Expense.  Interest expense increased 24.4% from $24.4 million for
the nine months ended June 30, 1998,  to $30.4 million for the nine months ended
June 30, 1999.  This  increase was the result of additional  borrowings  used to
finance the acquisition of the IAS Business.

     Provision  for Income Taxes.  The Company's  effective tax rate remained at
42% of taxable income for both periods presented. See Note 7 to the accompanying
condensed consolidated financial statements for a further discussion.

     Discontinued  Operations.  During  the second  quarter of 1999 the  Company
adopted a plan to dispose of its Magnetics  Division.  For  financial  reporting
purposes the disposal was  effective as of the end of the second  quarter  1999.
The Magnetics  Division  recognized  income from  operations  for the six months
ended March 31, 1999 of $809 thousand.  The Magnetics  Division operating income
was $1,577 thousand during the nine months ended June 30, 1998.

Liquidity and Capital Resources

     Anacomp's  working capital at June 30, 1999 was $34.0 million,  compared to
$27.2 million at September 30, 1998. Net cash provided by continuing  operations
was $22.9 million for the nine months ended June 30, 1999,  compared to a use of
$6.0  million  in  cash in the  comparable  prior  period.  The  current  period
benefited  from  improved  operating  results  over  1998  and  an  increase  in
depreciation and amortization of approximately $8.0 million, which was primarily
the result of increased  goodwill and  depreciable  assets from the IAS Business
acquisition.  The current  period also  benefited  from a $5.2 million  non-cash
charge  for  taxes  resulting  from  the  utilization  of a net  operating  loss
carry-forward.

     Net cash from investing  activities was $7.1 million in the current period,
compared to the use of cash of $172.9  million in the  comparable  prior period.
The cash from investing  activities in the current year was primarily the result
of the proceeds from the sale of the Magnetics division,  compared to the use of
capital needed to acquire the IAS Business in 1998.

     Net cash used in financing activities was $2.2 during the nine months ended
June 30, 1999.  This  reflected the  Company's  stock buyback of $5.0 million of
Company common stock, which was offset by proceeds from the exercise of options,
warrants and employee stock purchases. Net cash provided by financing activities
was $133.6  million for the nine months ended June 30, 1998, due to the issuance
of subordinated debt to finance the acquisition of the IAS business.

      The Company's cash balance (including restricted cash) as of June 30, 1999
was $47.6 million  compared to $22.0 million at September 30, 1998.  The Company
also has  available  a $75  million  revolving  credit  facility.  There were no
amounts outstanding under the revolving credit facility as of June 30, 1999.

     The Company has significant debt service obligations.  As of June 30, 1999,
the Company had $335 million of 10-7/8% Senior  Subordinated  Notes outstanding,
which are due in April 2004. The ability of the Company to meet its debt service
and other obligations will depend upon its future  performance and is subject to
financial,  economic  and other  factors,  some of which are beyond its control.
However, the Company believes that cash generated from operations, cash on hand,
and cash  available  under its revolving  credit  facility will be sufficient to
fund its debt service requirements,  acquisition strategies, and working capital
requirements in the foreseeable future.

Year 2000

      Anacomp  has  undertaken  a  comprehensive  "year  2000"  program  for the
products that it sells or  distributes in the  marketplace.  Under this program,
the Company has assessed all of its critical  software and hardware  products to
determine what remediation,  if any, is necessary for the proper  functioning of
these  systems in the year 2000 and  beyond.  The  Company  has worked  with its
outside suppliers to ensure that they will continue to support the products that
they supply to Anacomp for resale, including the performance by the suppliers of
any required  year 2000  remediation.  Anacomp has also analyzed and updated for
year  2000  purposes   certain  software  and  hardware  systems  that  it  uses
internally.  The  Company  continues  to  consider  year 2000 issues for all new
products  and services as well as those in  development  or included in business
acquisitions.

      State of Readiness.  Anacomp's  overall state of readiness can be assessed
by describing its specific readiness in four key areas,  namely its products and
services,  its suppliers' products and services,  its internal systems,  and its
products in development.

      Anacomp has completed the  assessment,  remediation  and year 2000 testing
phases  of  nearly  all  supported   products  and  services,   including  those
responsible  for  generating  the  material  portion  of its  revenues.  Anacomp
summarizes the status of each  completed  product or service in a written report
to the  Company's  year 2000  steering  committee for archiving in the Company's
year 2000 database.  These  processes have been reviewed and approved by a third
party consultant retained for this purpose.

      The  implementation  phase of the Company's year 2000 project depends upon
the response of the Company's  customers  who may require  upgrades or migration
paths.  Anacomp has  communicated in writing,  sometimes on multiple  occasions,
with all known  customers of many products and has no reason to believe that all
customers who require  upgrades or migration will not receive them. To this end,
Anacomp has offered and  continues to offer  financial  incentives  to encourage
early  responses and avoid peak demand loads,  although no assurance can be made
that  the  demand  will  be  spread   sufficiently   to   eliminate   delays  in
implementation.  Customers  who refuse to upgrade are asked to sign a release of
year 2000  liability  for the benefit of Anacomp.  Anacomp has also launched its
"Analog  as a Fail  Safe"  campaign  to  educate  customers  about  the value of
microfilm as a way to minimize the risk of the year 2000. Although customers may
divert expenditures away from these products and services in order to fund other
year 2000 remediation,  Anacomp encourages  customers to consider these products
and services as a cost-effective backup to digital storage because the retrieval
of data stored on microfilm does not require digital technology.

      Anacomp has  categorized  approximately  850 of its suppliers  into one of
four categories depending upon the criticality of the product or service and the
amount of time  necessary to implement the  contingency  plans which Anacomp has
identified.  If a supplier  does not declare its  readiness to Anacomp in enough
time to permit implementation of its contingency plans before December 31, 1999,
Anacomp may replace the supplier, have the supplier hold additional inventory of
the supplier's products,  or implement  alternative  contingency plans depending
upon the product or service provided.

      As of June 30, 1999,  Anacomp had received written  responses to Anacomp's
year 2000 readiness  questionnaire  from approximately 98% of the 165 suppliers,
which  Anacomp deems  critical to its  operations.  Anacomp has either  received
declarations  of  readiness  from,  or  established  contingency  plans for, all
critical suppliers.  For example,  Anacomp is currently interviewing alternative
sources of key products as part of its contingency planning but has no reason to
believe that any of its critical  suppliers  will not be ready in time.  Anacomp
continues to monitor the readiness of its critical and non-critical suppliers.

      For those Anacomp  products that incorporate the products of a third party
supplier,  Anacomp  continues  to  request  that  its  suppliers  disclose  test
procedures and results. Anacomp has also requested that its vendors in the human
resources area, such as its retirement,  health and insurance providers, respond
in  writing  as to their  readiness,  but  there can be no  assurance  that such
vendors  will  either  respond or achieve  readiness  in a timely  fashion.  The
contingency  planning for these vendors is based upon their level of criticality
and in some cases  requires  manual  processing of claims or  replacement of the
vendor.

      Anacomp has identified all internal software and hardware products used in
its corporate  headquarters  in San Diego,  California,  including those used to
assimilate and report financial  information and to handle billing,  collections
and electronic commerce.  In those instances where remediation or renovation was
required,  Anacomp has either completed or has nearly completed such remediation
or renovation. Anacomp is in the process of completing the documentation of such
efforts for its year 2000  archives.  All critical  building  facilities  at the
Company's San Diego  headquarters  have been assessed,  remediated,  tested and,
where necessary,  changes have been  implemented,  except for the  headquarters'
HVAC and door-entry security systems,  which are scheduled to be replaced by the
end of the fiscal year.

      The Company continues to develop new products and services and acquire new
businesses.  Anacomp  develops  and tests each new product,  sometimes  with the
assistance of an outside  consultant,  for year 2000 readiness.  Businesses that
Anacomp  acquires are subject to the same assessment,  remediation,  testing and
implementation phases as those described above.

      Costs. Anacomp estimates that total expenditures on its year 2000 project,
including costs of outside  parties such as consultants and attorneys,  costs of
hardware  and software  remediation,  internal  labor,  travel and out of pocket
expenses,  will total  approximately $0.3, $2.3, and $1.5 million in fiscal year
1997,  1998, and 1999,  respectively.  These figures include  estimates from the
engineering,  manufacturing, legal and information technology departments of the
Company.

      Risks.  There can be no  assurance  that the  Company  and its vendors and
suppliers will be able to identify all year 2000 issues before problems manifest
themselves or to complete all  remediation in the required time frame.  Further,
it is possible  that the future level of expenses in the  Company's  remediation
efforts could rise significantly.

      The Company  relies upon the  continuous  provision of services from third
parties such as electrical and telecommunication utilities around the world, and
the Company plans to enhance its electronic data transmission capabilities.  Any
sustained  disruption of such service or capability  could adversely  impact the
Company's ability to operate its business.

      Finally, there can be no assurance that, if left unremedied,  the products
or services that the Company sells or  distributes  would remain  competitive in
the marketplace or the products that the Company uses internally  would not have
a  material  effect  upon the  ability of the  Company  to report its  financial
results.

      Contingency  Plans. In those  instances where the Company  determines that
year 2000  problems  with its  operational  facilities  may not be identified or
remediated in time, the Company believes that its business will still be able to
function without substantial interruption. For example, the Company has prepared
a  contingency  plan which will enable data centers  which  experience a loss of
power due to a third  party  utility's  failure  to  identify  or  remediate  an
isolated  year  2000  problem  to shift  work to  another  data  center  without
substantial  interruption.  The  plan  includes  the  potential  replacement  of
electronic  transmission of data with manual delivery of data upon completion of
certain  modifications.  In those  instances  where an  installed  COM  customer
experiences a year 2000 problem while  operating its own COM equipment,  Anacomp
will offer its COM  services  to the  customer at one of its data  centers  upon
completion of certain  modifications.  This seamless nature of many of Anacomp's
products and services forms the basis of Anacomp's ongoing contingency planning.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

      The Company does not have any significant financial instruments other than
fixed rate  indebtedness.  The general level of U.S.  interest rates,  the LIBOR
rate or both affects the  Company's  revolving  credit  facility.  However,  the
Company had no amounts  outstanding under this revolving credit facility on June
30, 1999.

                           PART II - OTHER INFORMATION

Item 1.       Legal Proceedings.

      The Company and its  subsidiaries  are  potential or named  defendants  in
several  lawsuits and claims arising in the ordinary  course of business.  While
the outcome of such claims,  lawsuits or other  proceedings  against the Company
cannot be predicted with certainty,  management expects that any liability under
the  foregoing,  to the extent not provided for through  insurance or otherwise,
will not have a material  adverse effect on the financial  conditions or results
of operations of the Company.

     On August 29, 1997,  Access Solutions  International,  Inc. ("ASI") filed a
complaint for patent infringement in the U.S. District Court,  District of Rhode
Island, against Data/Ware Development,  Inc. ("Data/Ware"),  of which Anacomp is
the successor by merger, and The Eastman Kodak Company ("Kodak").  The complaint
seeks injunctive relief and unspecified damages,  including attorney's fees, for
the alleged  infringement  by Data/Ware and Kodak of ASI's United States Letters
Patent No. 4,775,969 for "Optical Disk Storage Format,  Method and Apparatus for
Emulating a Magnetic  Tape Drive" and No.  5,034,914  for "Optical  Disk Storage
Method and  Apparatus  with  Buffered  Interface."  The  Company has assumed the
defense of this matter on behalf of both Data/Ware and Kodak.  Discovery in this
case  continues,  with any  trial to occur  probably  not  before  the  fourth
calendar quarter of 1999.  Although there can be no assurance as to the eventual
outcome of this matter,  the Company believes that it has numerous meritorious
arguments and intends to pursue them vigorously.

     In a related matter,  the Company has brought a lawsuit in California State
court against the principal  shareholder  of Data/Ware,  seeking to enforce that
shareholder's  obligation  to indemnify the Company in the ASI  litigation.  The
state court recently  granted the Company's  motion for summary  adjudication of
the  shareholder's  duty to fund most of the defense of the ASI case, a decision
which the  shareholder  is contesting.  Discovery in the state court  litigation
continues.

Item 2.  Changes in Securities and Use of Proceeds.

(c)  Unregistered  Securities - Pursuant to the 1996  Non-employee  Director
     Stock  Option  Plan   (Amended  and  Restated  as  of  December  1,  1997),
     non-employee  directors  of the Company may elect to receive  their  annual
     retainer  in the form of options to acquire  common  stock of the  Company.
     Pursuant to such elections,  during the three-month  period ending June 30,
     1999,  an  aggregate  of 1,875  options was granted to directors in lieu of
     aggregate  cash  compensation  of $9,375.  The issuance of such options was
     effected in  reliance  upon the private  placement  exemption  set forth in
     Section 4 (2) of the  Securities  Act of 1933 (the  "Securities  Act"),  as
     amended,  on the basis of the directors'  familiarity with the business and
     affairs of the Company.  No underwriting  fees or discounts were applicable
     to the transactions. The options are first exercisable six months after the
     date of grant and remain  exercisable  through the tenth anniversary of the
     grant date, at an exercise price of $16.0625 per share.

     On May 3, 1999, the Company's  Board of Directors  approved the issuance of
     14,400  unregistered shares of Anacomp common stock to a former shareholder
     of WorkSmart, Incorporated ("WorkSmart"),  whose stock the Company acquired
     in January 1998,  in  fulfillment  of the  Company's  obligation to pay the
     shareholder additional consideration for his WorkSmart shares. The issuance
     of the Anacomp shares to the former  WorkSmart  shareholder was effected in
     the reliance upon the private placement exemption set forth in Section 4(2)
     of the Securities Act, on the basis of the familiarity of such  shareholder
     and his adviser with the business and affairs of the Company.

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

(a)  Exhibit 27.1 - Financial Data Schedule.

(b)  On June 25, 1999, the Company filed a Form 8-K with the Securities and
     Exchange Commission related to the sale of the Magnetics Division.

<PAGE>


                                   SIGNATURES



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


                                                ANACOMP, INC.



                                                /s/ David B. Hiatt
                                                David B. Hiatt
                                                Executive Vice President and
                                                  Chief Financial Officer
Date: August 13, 1999