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 September 30, 1998 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: 333-23519

                          VESTCOM INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)
 
     New Jersey                                                22-3477425
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

                            1100 Valley Brook Avenue
                          Lyndhurst, New Jersey 07071
          (Address of principal executive office, including zip code)

                                  201-935-7666
              (Registrants telephone number, including area code)


________________________________________________________________________________
     (Former name, former address and former fiscal year, if changed since
                                  last report)


Indicate by check mark whether  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 [   ]


The number of shares of common  stock  outstanding  as of November 1, 1998,  was
8,788,590 shares. 

<PAGE>

           VESTCOM INTERNATIONAL, INC. FORM 10-Q FOR THE QUARTER ENDED
                            SEPTEMBER 30, 1998 INDEX


Part I:  Financial Information                                          Page(s)

Item 1:  Financial Statements

     Condensed Consolidated Balance Sheets - as of December 
          31, 1997 and September 30, 1998 (unaudited)                     3
     Condensed Consolidated Statements of Operations - 
          For the Three Months and Nine Months Ended 
          September 30, 1997 (unaudited) and 1998 (unaudited)             4
     Condensed Consolidated Statements of Cash Flows - For 
          the Nine Months Ended September 30, 1997 
          (unaudited) and 1998 (unaudited)                                5
     Notes to Condensed Consolidated Financial Statements (unaudited)    6-9

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

Overview; Disclosures Regarding Forward Looking Statements; Introduction   10-11

Pro Forma Results of Operations                                            11-12

Liquidity and Capital Resources                                            12-13

Impact of the Year 2000 Issue                                              13-14

Recently Issued Accounting Pronouncements                                    14

Part II:  Other Information

Item 6: Exhibits and Reports on Form 8-K                                     15

         Signature                                                           15

         Exhibit - Financial Data Schedule (For Electronic Submission Only)  16

<PAGE>
<TABLE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                 As of December 31, 1997 and September 30, 1998


                                     ASSETS
<CAPTION>

                                                       December 31,  September 30,
                                                          1997            1998
                                                         (note 1)       (unaudited)
CURRENT ASSETS:
<S>                                                    <C>             <C>         
   Cash and cash equivalents                           4,092,000       $  2,572,885
   Marketable securities                              13,494,886            356,277
   Accounts receivable, net                           13,999,511         18,891,328
   Other current assets                                6,076,847          9,365,309
                                                    ------------       ------------
          Total current assets                        37,663,244         31,185,799

PROPERTY AND EQUIPMENT, net                           21,684,918         27,648,131
GOODWILL, net                                         54,336,937         70,160,518
OTHER ASSETS                                             660,660            684,324
                                                    ------------       ------------
          Total assets                              $114,345,759       $129,678,772
                                                    ============       ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Current portion of long-term debt 
        and capitalized lease obligation               2,627,178          2,989,088
     Accounts payable                                  4,780,082          8,487,212
     Other liabilities                                13,108,691         15,045,387
                                                      ----------         ----------
          Total current liabilities                   20,515,951         26,521,687
                                   
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS           7,933,572         12,593,328
OTHER NONCURRENT LIABILITIES                           2,868,410          2,129,057
                                                      ----------         ----------
          Total liabilities                         $ 31,317,933        $41,244,072
                                                    ============        ===========
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS'  EQUITY:
   Preferred  Stock
     Class A convertible, 200 shares authorized, 
       issued and outstanding at December 31, 1997 
       and -0- shares authorized, issued and 
       outstanding at September 30, 1998,  
       respectively
     Class B, 1 share authorized, issued and 
       outstanding at December 31, 1997 and 
       September 30, 1998                              2,651,867          2,651,867
     Class C convertible, 100 shares authorized,
       issued and outstanding at December 31,
       1997 and September 30, 1998 
     Common stock, no par value; 20,000,000 
       shares authorized; 8,483,811 and 8,788,590 
       shares issued and outstanding at December 
       31, 1997 and September 30, 1998 respectively   84,229,597         86,782,015
     Accumulated deficit                              (3,770,054)          (654,924)
     Cumulative translation adjustment                   (83,584)          (344,258)
                                                      -----------        -----------
             Total stockholders' equity               83,027,826         88,434,700
             Total liabilities and stockholders' 
                    equity                          $114,345,759       $129,678,772
                                                    ============       ============
</TABLE>

     The accompanying notes to condensed consolidated financial statements
                 are an integral part of these balance sheets.

<PAGE>
<TABLE>
<CAPTION>


                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
     For the Three Months and Nine Months Ended September 30, 1997 and 1998
                                  (unaudited)


                                                       Three Months Ended                    Nine Months  Ended
                                                  September  30,    September 30       September 30,      September 30,
                                                       1997               1998             1997                 1998

<S>                                               <C>               <C>              <C>                      <C>          
REVENUES                                          $ 11,050,965      $27,066,068      $ 11,050,965             $  78,364,313
COST  OF REVENUES                                    6,668,305       16,918,761         6,668,305                49,779,001
                                                    ----------       ----------        ----------              ------------

     Gross Profit                                    4,382,660       10,147,307         4,382,660                28,585,312

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES                                           3,557,758        7,752,193         3,904,449                22,086,845
                                                    ----------        ---------         ---------                ----------
     Income from operations                            824,902        2,395,114           478,211                 6,498,467

OTHER INCOME (EXPENSE)
     Interest expense                                (358,555)        (291,280)          (413,249)                (771,902)
     Interest and other income                        275,962           95,015            292,840                  357,530
                                                     ---------       ----------          ---------               ----------
Income before provision for income taxes              742,309        2,198,849            357,802                6,084,095

PROVISION FOR INCOME TAXES                            393,823        1,015,974            240,020                2,968,965
                                                     --------        ---------            -------                ---------
     Net income                                   $   348,486       $1,182,875           $117,782              $ 3,115,130
                                                   ==========        =========            =======                =========
Net income per share - basic                      $       .06       $      .13           $    .04              $       .35
                                                   ==========        =========            =======                =========
Net income per share - diluted                    $       .06       $      .13           $    .04              $       .34
                                                   ==========        =========            =======                =========

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

</TABLE>


<PAGE>

<TABLE>


                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
             For the Nine Months Ended September 30, 1997 and 1998
                                  (unaudited)
<CAPTION>


                                                       Nine Months Ended September 30,
                                                            1997              1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                    <C>                  <C>       
Net income                                             $  117,782           $3,115,130
     Adjustments to reconcile net income to net cash
       provided by operating activities-
     Depreciation and amortization                        683,431            4,593,366
     Changes in operating assets (increase) 
        decrease in-
          Accounts receivable                             145,441           (1,877,725)
          Other current assets                            956,688           (1,440,114)
          Other assets                                      9,813                4,999
     Changes in operating liabilities increase 
            (decrease) in-
          Accounts payable                                    --             2,369,858
          Other current liabilities                      (643,543)             421,151
          Other non-current liabilities                 2,200,038             (739,353)
                                                        ---------            ----------
               Net cash provided by 
                  operating activities                  3,469,650            6,447,312

CASH FLOWS FROM INVESTING ACTIVITIES:
     Acquisition of property and equipment               (794,499)          (6,676,965)
     Acquisition of businesses, net of cash acquired  (49,449,722)         (20,481,152)
     Sale of marketable securities                    (23,280,965)          13,138,609
                                                      ------------         -----------
               Net cash used in investing activities  (73,525,186)         (14,019,508)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Collection of subscriptions receivable               279,082                  --
     Net borrowings                                    (7,772,187)           3,761,337
     Issuance of common stock                          76,316,434            2,552,418
     Issuance of preferred stock                        2,651,867                  --
     Cumulative translation adjustments                     6,388             (260,674)
                                                       ----------            ----------
          Net cash provided by financing activities    71,481,584            6,053,081
     
          Net increase (decrease) in cash and 
               cash equivalents                         1,426,048           (1,519,115)
                                                       ----------           -----------
CASH AND CASH EQUIVALENTS, beginning of period          1,344,758            4,092,000
                                                       ----------           -----------
CASH AND CASH EQUIVALENTS, end of period             $  2,770,806           $2,572,885
SUPPLEMENTAL SCHEDULE OF NONCASH                      ===========           ==========
     INVESTING AND FINANCING ACTIVITIES:
          Capital lease obligations                  $    904,836           $   24,717
                                                      ===========            =========
</TABLE>

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

<PAGE>


                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

(1)  BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
     been prepared in accordance with generally accepted  accounting  principles
     for interim  financial  information and 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 generally  accepted  accounting
     principles  for complete  financial  statements.  The financial  statements
     include  the  accounts  of  Vestcom  International,   Inc.  (a  New  Jersey
     corporation)  ("Vestcom"  or the  "Company"),  the Founding  Companies  (as
     defined  below),   and  subsequent   acquisitions  since  their  respective
     acquisition  dates. The balance sheet at December 31, 1997 has been derived
     from the  audited  financial  statements  at that date.  In the  opinion of
     management,  all adjustments  (consisting of normal recurring  adjustments)
     considered necessary for a fair presentation have been included.  Operating
     results for the three-month and nine-month periods ended September 30, 1998
     are not necessarily  indicative of the results that may be expected for the
     year  ending  December  31,  1998.  The  condensed  consolidated  financial
     statements  should be read in conjunction with the  consolidated  financial
     statements  of the  Company  and the notes  related  thereto  contained  in
     Vestcom's  Annual Report on Form 10-K for the year ended December 31, 1997.

(2)  NATURE OF BUSINESS

     Vestcom was formed in September 1996 to create an international provider of
     computer output and document  management  services.  The Company's  primary
     strategy is to acquire,  integrate and facilitate the growth of similar and
     complementary  companies  in the  highly  fragmented  computer  output  and
     document management services industry.  


     On July  30,  1997,  Vestcom  announced  the  initial  public  offering  of
     3,850,000  shares of its common  stock (the "Common  Stock") at a price of
     $13.00 per share. The Company's underwriters exercised in full an option to
     purchase an  additional  577,500  shares of the  Company's  Common Stock at
     $13.00 per share to cover over  allotments of the initial public  offering.
     The initial public  offering was consummated on August 4, 1997. The capital
     raised by this offering was $53,528,475 net of underwriting discounts. 

(3)  ACQUISITIONS

     Concurrently   with  the  consummation  of  the  Company's  initial  public
     offering,  it acquired seven  companies in the computer output and document
     management  services industry - Comvestrix Corp., Morris County Direct Mail
     Services,  Inc.  and  related  companies,  Image  Printing  Systems,  Inc.,
     Electronic   Imaging  Services,   Inc.,  COS  Information,   Inc.,  Vestcom
     Connecticut,  Inc.  (formerly known as Computer  Output Systems,  Inc.) and
     Vestcom  Massachusetts,  Inc.  (formerly  known as Mystic Graphic  Systems,
     Inc.) (collectively the "Founding Companies").  The aggregate consideration
     paid by the Company to acquire the Founding  Companies  (including  certain
     earnouts) was, subject to working capital adjustments,  approximately $19.1
     million in cash (which includes an obligation to pay $580,000 in the future
     in  connection  with an earnout)  and  3,156,890  shares of Vestcom  Common
     Stock. These acquisitions were accounted for as of August 1, 1997 using the
     purchase method of accounting and accordingly,  the purchase price has been
     allocated  to the assets  acquired and the  liabilities  assumed based upon
     the fair values at the date of  acquisition.  For purposes of computing the
     estimated purchase price for accounting  purposes,  the value of the shares
     was  determined  using a discount of fifteen  percent from  the   estimated
     fair market value at date of issuance  due to restrictions  on the sale and
     transferability  of the shares  issued.  The acquisitions of the  Founding 
     Companies   resulted   in  goodwill  of approximately  $52.6 million which 
     is being amortized over 30 years, and is based on  preliminary  allocations
     of  the  purchase  price  to  the net assets acquired  and  is  subject  to
     revisions  and  certain  remaining  earnout determinations. 

<PAGE>

              VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO
             CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (unaudited)

     On November,  14, 1997 the Company acquired substantially all of the assets
     of  Vestcom  Rhode  Island,  Inc.  (formerly  known  as New  England  Laser
     Printing,  Inc.).  On December 15, 1997, the Company  acquired the stock of
     Moreau  Promotional  Services,  Inc., now doing business as Vestcom Ontario
     (formerly  known as Campbell  Abbot  Laser  Mail),  an Ontario  corporation
     located in Toronto, Canada. The aggregate price paid for these acquisitions
     was  approximately  $7,000,000 in cash and 134,520  unregistered  shares of
     Vestcom Common Stock, the fair market value of which was based on a fifteen
     percent  discount  from the fair  market  value due to  length  and type of
     restrictions in the purchase agreements.  The estimated goodwill associated
     with these acquisitions aggregated approximately $8,200,000.

     As of January 20,  1998,  the  Company  acquired  substantially  all of the
     assets of Creative Data Services,  Inc. ("CDS") and D.B. Acquisition,  Inc.
     doing  business as Business  Mail Express  ("BME").  The combined  purchase
     price was $9,500,000 in cash plus the potential to receive an earnout of up
     to $2,500,000 payable 50% in cash and 50% in shares of the Company's Common
     Stock.  The estimated fair value of the assets purchased was $4,705,000 and
     the estimated goodwill was $4,795,000.

     The above four acquisitions were accounted for using the purchase method of
     accounting  and  accordingly,  the purchase price has been allocated to the
     assets acquired and the  liabilities  assumed based upon the fair values at
     the dates of acquisition. The estimated goodwill values reflected above are
     based on preliminary estimates and assumptions and are subject to revision.
     In management's opinion the preliminary  allocations are not expected to be
     materially  different than the final  allocations  subject to the potential
     earnout for CDS and BME.

     On April 14, 1998, the Company acquired through Vestcom Massachusetts, Inc.
     (formerly known as Mystic Graphic Systems, Inc.), a wholly owned subsidiary
     based in Woburn  Massachusetts,  substantially all of the assets of Dee Cee
     Graphics Inc., also located in Woburn Massachusetts.  The operations of Dee
     Cee Graphics were  consolidated  into the Vestcom Massachusetts operations.
     Dee  Cee's  1997   revenues  were  less  than $1,000,000.

     On August 4, 1998, the Company,  through  Vestcom Retail  Solutions  Group,
     Inc., one of its wholly-owned  subsidiaries,  acquired substantially all of
     the assets and liabilities of Graphic Technology  Systems,  Inc. ("GTS"), a
     company  based  in Los  Angeles,  California.  GTS  had  1997  revenues  of
     approximately $3 million.

     The following Pro Forma  Statements of Operations  for Vestcom  assume that
     all acquisitions were consummated on January 1,  respectively,  of 1997 and
     1998.  This  information is not  necessarily  indicative of the results the
     Company would have  obtained had these events  actually then occurred or of
     the Company's  actual or future results.  The nine months ending  September
     30,  1997,  results  include  corporate  expenses  only  from  the  date of
     acquisition of the Founding Companies.
<TABLE>
<CAPTION>

                                                 Three Months Ended                                      Nine Months Ended
                                      September 30, 1997       September 30,  1998        September 30,  1997    September 30, 1998
                                        Pro Forma                Pro Forma                   Pro Forma                Pro Forma
                                          Combined                Combined                     Combined               Combined

<S>                                    <C>                      <C>                         <C>                  <C>          
Revenues                               $25,192,983              $27,277,661                 $78,424,680          $  81,836,829
Income from operations                   1,914,074                2,457,207                   7,648,538              7,094,742
Net income                             $ 1,081,106              $ 1,222,101                 $ 3,970,045          $   3,454,659
Net  income per share - basic                $ .12                  $   .14                        $.45                   $.39
Net income per share - diluted               $ .12                  $   .13                        $.43                   $.37

</TABLE>


<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (unaudited)

(4)  EARNINGS PER SHARE 


     In  December  1997,  the  Company   adopted  the  provisions  of  Financial
     Accounting  Standards Board Statement No. 128,  "Earnings per Share".  This
     statement   supersedes  APB  Opinion  No.  15,  "Earnings  per  Share"  and
     simplifies the  computation  of earnings per share ("EPS").  Primary EPS is
     replaced with a presentation of basic EPS.

     Basic EPS includes no dilution and is computed by dividing income available
     to common  stockholders  by the  weighted-average  number of common  shares
     outstanding for the period. Fully diluted EPS is replaced with diluted EPS.
     Diluted EPS  reflects  the  potential  dilution if certain  securities  are
     converted and also includes certain shares that are contingently  issuable.
     SFAS No.  128  requires  dual  presentation  of basic  and  diluted  EPS by
     entities that issue any securities  other than ordinary  common stock.  The
     computation  of net  income per share for the three and nine  months  ended
     September  30, 1998, is based upon shares of common stock  outstanding  and
     common stock equivalents.  The following is the computation of earnings per
     share:

<TABLE>
<CAPTION>

                                   For the Three Months Ended                For the Nine Months Ended
                                        September 30, 1998                           September 30,  1998
                                                             Per Share                                 Per Share
                                   Net Income     Shares      Amount       Net Income    Shares         Amount


Basic  Earnings Per Share:
<S>                               <C>           <C>             <C>          <C>            <C>            <C>
Net income/weighted average
  shares outstanding              $1,182,875    8,968,356       $0.13        $ 3,115,130    8,849,829      $0.35
                                   ---------    ---------        ----         ----------    ---------       ----
Diluted Earnings Per Share:

Net income/weighted average 
  shares outstanding               1,182,875    8,968,356                      3,115,130    8,849,829

Goodwill adjustment on 
  earnouts                           (25,787)                                    (77,361) 

Stock Options                                         466                                       2,354
Assumed shares earned
  by Founding Companies                           110,715                                     185,599
                                  ----------     --------     -----------        ---------    -------       -----
Net income/weighted average 
  shares outstanding adjusted 
  for assumed conversions to 
  common stock                     $1,157,088   9,079,537       $0.13         $3,037,769    9,037,782      $0.34
                                  -----------   ---------   -----------       ----------    ---------      ----- 
</TABLE>

(5)  COMMITMENTS AND CONTINGENCIES

     In May 1997 the Company  entered  into an agreement  with CIBC  Oppenheimer
     Corp. (formerly known as Oppenheimer & Co., Inc., and referred to herein as
     "Oppenheimer")  pursuant to which the Company agreed to pay  Oppenheimer an
     aggregate  amount of up to $1.8 million for advisory  services  provided by
     Oppenheimer.  In  addition,  Vestcom  reimbursed  Oppenheimer  $75,000  for
     out-of-pocket  expenses related to such services.  As of September 30, 1998
     the Company  had paid  Oppenheimer  $1.6  million in  connection  with that
     Agreement and had agreed to pay Oppenheimer  the remaining  $200,000 in one
     final installment in December.

     Certain  of  the  companies  acquired  by  Vestcom  are  eligible  to  earn
     additional amounts,  consisting of a combination of cash and securities, as
     adjustments to the purchase prices paid for those companies.  In connection
     with  a  determination  of an  earnout  payment  to  one  of  the  Founding
     Companies,  the Company  incurred a future  obligation to pay $1,160,000 in
     cash of which $580,000 was paid in September, 1998.

<PAGE>



                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (unaudited)

     After the September  payment,  the  aggregate  maximum  earnouts  which the
     Company could be required to pay if certain of the other acquired companies
     attained their revenue and profit goals during certain periods ending on or
     before  July  31,  1999 is  $2,610,000  in  cash  (including  the  $580,000
     remaining  on the  $1,160,000  obligation  referred  to  above,)  and up to
     approximately  328,000  shares of Common Stock  (based upon current  market
     prices).

(6)  COMPREHENSIVE INCOME
 
     Statement  of  Financial   Accounting   Standards  Number  130, "Reporting
     Comprehensive Income" ("SFAS 13"), establishes standards for reporting and
     displaying comprehensive income and its components in a full set of general
     purpose  financial  statements.  The  objective  of SFAS 130 is to report a
     measure  of all  changes  in  equity  of an  enterprise  that  result  from
     transactions   and  other   economic   events  of  the  period  other  than
     transactions with owners ("comprehensive income").  Comprehensive income is
     the total of net income and all other non-owner changes in equity. SFAS 130
     is  effective  for fiscal years  beginning  after  December 15, 1997,  with
     earlier   application   allowed   but   not   required.    Upon   adoption,
     reclassification  of comparative  financial  statements  provided for prior
     periods is required. The Company has adopted this standard as of January 1,
     1998.

     The following represents comprehensive income:
<TABLE>
<CAPTION>

                                           Three Months Ended        Nine Months Ended
                                                September 30,             September 30,
                                          1997           1998          1997         1998

<S>                                     <C>          <C>              <C>       <C>        
Net income                              $348,486     $ 1,182,875      $117,782  $ 3,115,130
Foreign Currency Translation 
Adjustment                                 6,388         (99,161)      (89,972)    (260,674)
                                         -------      -----------      --------   ----------
Comprehensive Income                    $354,874     $ 1,083,714      $ 27,810  $ 2,854,456
                                        ========      ==========       =======   ==========
</TABLE>


(7)  NEW ACCOUNTING PRONOUNCEMENTS

     The  Financial  Accounting  Standards  Board  has  issued a new  statement.
     Statement of Financial Accounting Standards Number 131, "Disclosures about
     Segments of an Enterprise and Related Information" ("SFAS 131"), introduces
     a new model for segment reporting, called the "management approach."

     The  management  approach  is based on the way  that  the  chief  operating
     decision maker  organizes  segments  within a company for making  operating
     decisions  and  assessing  performance.  Reportable  segments  are based on
     products and services,  geography, legal structure,  management structure -
     any manner in which  management  disaggregates  a company.  The  management
     approach replaces the notion of industry and geographic segments in current
     FASB  standards.  SFAS 131 is effective  for fiscal years  beginning  after
     December 15, 1997 and early adoption is encouraged.  However, SFAS 131 need
     not be applied to interim  statements  in the initial year of  application.
     SFAS 131 requires  restatement  of all prior period  information  reported.
     Management  believes  that  adoption of SFAS 131 will not have an impact on
     its method of reporting since it believes that its business operates in one
     reportable segment.

(8)  SUBSEQUENT EVENT

     On October 30,  1998,  the  Company,  through  Vestcom  Northwest,  Inc., a
     wholly-owned  subsidiary,  acquired  substantially  all of the  assets  and
     assumed substantially all of the liabilities of Manus Services Corporation,
     a company based in Seattle,  Washington ("Manus").  Manus' revenues for the
     12 month period ending September 30, 1998, were approximately $8 million.

<PAGE>

Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS 

     OVERVIEW

     The  following  discussion  of  the  financial  condition  and  results  of
     operations of the Company should be read in conjunction  with the Company's
     Condensed  Consolidated  Financial Statements and the related notes thereto
     appearing elsewhere herein.

     DISCLOSURES REGARDING FORWARD LOOKING STATEMENTS

     This Quarterly Report on Form 10-Q contains forward-looking statements made
     pursuant to the safe harbor provisions of the Private Securities Litigation
     Reform Act of 1995 ("Forward-Looking Statements"),  which involve risks and
     uncertainties.  Important factors that could cause actual results to differ
     materially from those indicated by such Forward-Looking  Statements include
     the risks and  uncertainties  relating to the Company's  ability to acquire
     and successfully integrate acquired companies and the costs associated with
     the integration, to execute its growth strategy, to conduct activities in a
     competitive  environment,   to  develop  and  implement  new  products  and
     services, to attract and retain customers and key executives, to assess and
     implement its Year 2000 program and to the variations in quarterly results,
     the  sufficiency  of the  Company's  working  capital,  the  ability of the
     Company  to  obtain   consolidation   synergies,   including   through  the
     consolidation of administrative functions and facilities,  and  the effects
     of cross selling on the Company's revenue,  as well as the factors referred
     to in the Company's  Annual Report on Form 10-K for the year ended December
     31, 1997 filed with the  Securities and Exchange  Commission.  Such factors
     also may  cause  substantial  volatility  in the  Company's  Common  Stock.

     INTRODUCTION  

     Vestcom   International,   Inc.  was   incorporated   in  September   1996.
     Concurrently with the consummation of the Company's initial public offering
     (the  "Offering")  on August 4, 1997,  the Company  acquired seven computer
     output and document management service companies (the "Founding Companies")
     each of which had been  operating  as a separate  independent  entity.  For
     accounting purposes, the acquisitions of the Founding Companies were deemed
     to be made August 1, 1997, using purchase  accounting,  with the Company as
     the acquirer.  Following the Offering,  the Company has acquired additional
     computer  output  and  document  management  services  companies  which are
     detailed below (collectively with the Founding Companies referred to herein
     as "Acquired Companies").

     The Company  acquired  Vestcom Rhode Island,  Inc.  (formerly  known as New
     England  Laser  Printing,  Inc.) and  Vestcom  Ontario  (formerly  known as
     Campbell Abbot Laser Mail) in November and December 1997, respectively, and
     as of January 20, 1998 the Company acquired substantially all of the assets
     of Creative Data Services,  Inc.  ("CDS") and of DB Acquisition Inc. (d/b/a
     Business Mail Express),  a wholly owned subsidiary of CDS ("BME"). On April
     14, 1998 the Company acquired through Vestcom Massachusetts, Inc. (formerly
     known  as  Mystic  Graphic  Systems,  Inc.),  a  wholly  owned  subsidiary,
     substantially  all of the assets of Dee Cee Graphics Inc. ("Dee Cee").  The
     operations   of  Dee  Cee   Graphics   were   consolidated   into   Vestcom
     Massachusetts'  operations. On August 4, 1998, the Company, through Vestcom
     Retail  Solutions  Group,  Inc.,  one  of  its  wholly-owned  subsidiaries,
     acquired  substantially  all of  the  assets  and  liabilities  of  Graphic
     Technology Systems,  Inc. ("GTS").  The operations of GTS were consolidated
     into Vestcom  Retail  Solutions'  operations.  The Acquired  Companies were
     managed prior to their acquisition as independent  private  companies,  and
     their  results  of   operations   reflect   different  tax   structures  (S
     corporations and C corporations  for the U.S.  Acquired  Companies),  which
     have  influenced,  among other things,  the Acquired  Companies  historical
     levels of owners'  compensation.  In connection with the acquisition of the
     Acquired  Companies,  these  owners and  certain  key  employees  agreed to
     certain  reductions in their compensation which commenced as of the date of
     acquisition.

<PAGE>

                          MANAGEMENT'S DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

     The Company's Condensed Consolidated Balance Sheet as of September 30, 1998
     includes the Founding  Companies and Vestcom Rhode  Island,  Inc.,  Vestcom
     Ontario, CDS, BME, Dee Cee and GTS. The results of operations for the three
     months and nine months ended  September 30, 1998, and the statement of cash
     flows for the nine months ended September 30, 1998,  include the results of
     Vestcom and all of the  companies  acquired in 1997 for the entire  period,
     and  the  companies  acquired  in  1998  from  their  respective  dates  of
     acquisition.

     In  connection  with the Company's  acquisitions,  Vestcom has made certain
     earnout  payments  and  may be  required  to  pay  additional  earnouts  if
     specified  revenue  thresholds,  margins or earnings  are  attained  during
     certain periods ending July 31, 1999. In connection with a determination of
     an earnout for one of the Founding Companies, the Company incurred a future
     obligation  to pay  $1,160,000  in  cash  of  which  $580,000  was  paid in
     September, 1998. After the September payment, the aggregate maximum earnout
     payments which Vestcom may be required to make going forward are $2,610,000
     in cash (including $580,000 remaining on the $1,160,000 obligation referred
     to above) and up to another  approximately 328,000 shares of Vestcom Common
     Stock (based upon current  market  prices).  Any payments of earnouts  will
     increase  the  goodwill  recorded  for the  acquisition  of the  applicable
     company.  The  amortization  of any  additional  goodwill and the increased
     number of shares issued in connection with earnouts will negatively  affect
     the Company's future earnings per share.

     Vestcom,  which  conducted no operations  prior to the  consummation of the
     Offering  other than in connection  with the  acquisitions  of the Founding
     Companies  and the  financing  activities  related  thereto,  including the
     Offering, had no revenues and limited corporate expenses in the first seven
     months of 1997.  Therefore,  Management's  Discussion and Analysis based on
     actual results would compare three and nine months of operating activity in
     1998 to two months  operating  activity in the three months and nine months
     of 1997. Accordingly,  management believes that Management's Discussion and
     Analysis would only be meaningful  based on the unaudited Pro Forma Results
     of Operations of Vestcom for the three and nine months ended  September 30,
     1998 and the three and nine months ended September 30, 1997,  which assumes
     that all of the  companies  owned at  September  30, 1998 were  acquired on
     January 1, respectively, of 1997 and 1998.

     The  following  discussion  of  Pro  Forma  Results  of  Operations  is not
     necessarily  indicative  of the results the Company would have obtained had
     all of these acquisitions actually then occurred or of the Company's actual
     or future results.

     PRO FORMA RESULTS OF OPERATIONS

     Nine Months Ended September 30, 1998 Compared to Nine Months 
     Ended September 30, 1997

     Pro Forma revenues increased $3,412,000,  or 4.4%, from $78,425,000 for the
     nine months ended  September  30, 1997 to  $81,837,000  for the nine months
     ended  September  30, 1998.  This increase was  primarily  attributable  to
     increased  sales to new and existing  customers  primarily in the financial
     services and retail industry.  This increase was net of lower revenues from
     two of the companies  acquired in 1998.  These two companies closed certain
     facilities in 1997, prior to their acquisition by Vestcom,  in an effort to
     downsize  and reduce  costs,  resulting in a decrease in revenues for those
     companies in 1998.

     Vestcom's  Pro Forma  gross  profit  increased  $2,591,000,  or 9.4%,  from
     $27,444,000 for the nine months ended September 30, 1997 to $30,035,000 for
     the nine months ended September 30, 1998. The Pro Forma gross profit margin
     increased  from 35.0% in 1997 to 36.7% in 1998  primarily  due to  improved
     capacity  utilization  resulting from the increased  volume of business and
     also through  consolidated  procurement  savings negotiated with several of
     the Company's vendors.

     Pro  Forma  selling,   general  and   administrative   expenses   increased
     $3,144,000,  or 15.9%, from $19,796,000 for the nine months ended September
     30, 1997 to $22,940,000  for the nine months ended September 30, 1998. As a
     percentage  of  revenues,   selling  general  and  administrative  expenses
     increased  from 25.2% in 1997 to 28.0% in 1998.  The  increase in Pro Forma
     selling, general and administrative expenses was primarily due to increased
     compensation  expense for new technical personnel,  increased  commissions,
     increased administrative expenses

<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

     to support the greater volume of business,  investment  spending in selling
     programs and the costs  associated  with the  increased  Vestcom  corporate
     management  staff.  The majority of the  expenses of the Vestcom  corporate
     staff  operations did not come into existence until after the  consummation
     of the initial public offering in August of 1997.

     Three  Months  Ended  September  30, 1998  Compared to Three  Months  Ended
     September 30, 1997

     Pro Forma revenues increased $2,085,000,  or 8.3%, from $25,193,000 for the
     three months ended  September 30, 1997 to $27,278,000  for the three months
     ended  September  30, 1998.  This increase was  primarily  attributable  to
     increased  sales to new and existing  customers  primarily in the financial
     services and retail industry.  This increase was net of lower revenues from
     two of the companies  acquired in 1998.  These two companies closed certain
     facilities in 1997, prior to their acquisition by Vestcom,  in an effort to
     downsize  and reduce  costs,  resulting in a decrease in revenues for those
     companies in 1998.

     Vestcom's  Pro Forma gross  profit  increased  $1,564,000,  or 17.9%,  from
     $8,715,000 for the three months ended September 30, 1997 to $10,279,000 for
     the three  months  ended  September  30,  1998.  The Pro Forma gross profit
     margin  increased  from  34.6% in 1997 to 37.7%  in 1998  primarily  due to
     improved  capacity  utilization  resulting  from the  increased  volume  of
     business and also through consolidated  procurement savings negotiated with
     several of the Company's vendors.

     Pro  Forma  selling,   general  and   administrative   expenses   increased
     $1,020,000,  or 15.0%, from $6,801,000 for the three months ended September
     30, 1997 to $7,821,000 for the three months ended  September 30, 1998. As a
     percentage  of  revenues,   selling  general  and  administrative  expenses
     increased  from 27.0% in 1997 to 28.7% in 1998.  The  increase in Pro Forma
     selling,  general and  administrative  expenses was due to the same factors
     discussed in the nine month comparison.  In addition,  the Company incurred
     costs in connection with its efforts to integrate its acquired companies in
     either geographic or vertical market operating units.  These costs included
     redundant  overhead and facility  costs.  The Company  expects that it will
     continue  to incur such  costs in future  periods  in  connection  with its
     integration and regionalization process.

     LIQUIDITY AND CAPITAL RESOURCES

     The following  discussion of liquidity and capital  resources  reflects the
     Company's  actual  results of  operations  and  financial  position for the
     periods discussed.

     On July 30, 1997 Vestcom  International,  Inc. announced the initial public
     offering of  3,850,000  shares of its Common Stock at a price of $13.00 per
     share. The Company's  underwriters  exercised in full an option to purchase
     an additional  577,500  shares of the Company's  Common Stock at $13.00 per
     share to cover over allotments of the initial public offering.  The capital
     raised by this offering was  approximately  $54,000,000 net of underwriting
     discounts, of which approximately $35,000,000 was used for the cash portion
     of the Company's  acquisitions and  approximately  $12,000,000 was used for
     the repayment of debt and capital leases.

     At  September  30,  1998,  Vestcom  had  working  capital of  approximately
     $4,664,000.  Net cash provided by operating  activities for the nine months
     ended  September 30, 1998, was  approximately  $6,447,000 and was generated
     primarily from net income and depreciation and  amortization  charges.  Net
     cash used in investing  activities for the nine months ended  September 30,
     1998,  was  approximately  $14,019,000  which  consisted  of  approximately
     $13,139,000   from  the  sale  of  marketable   securities,   approximately
     $20,481,000 of cash used for  acquisitions,  and  approximately  $6,677,000
     used for the  purchase  of property  and  equipment.  Net cash  provided by
     financing  activities  for the nine months ended  September  30, 1998,  was
     approximately  $6,053,000 which included approximately  $3,761,000 from net
     borrowings  and  $2,552,000  from the  issuance  of common  stock to former
     stockholders  of certain  of the  Founding  Companies  in  connection  with
     earnout provisions. On August 13, 1997, the Company and Summit Bank entered
     into  an  Equipment  Loan  and  Revolving  Credit  Agreement  ("the  Credit
     Facility") in the amount of $30,000,000. On September 30, 1998, $23,337,000
     remained available under the Credit Facility.

<PAGE>


               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (Continued)

     The Company  incurs  postage costs on behalf of customers of  approximately
     $4,000,000  to  $6,000,000  each month.  The Company  seeks to collect such
     postage  costs from its customers in advance.  At September  30, 1998,  the
     Company had postage  advances from customers in the amount of approximately
     $4,300,000 and had prepaid postage and postage receivables of approximately
     $3,100,000.  To the extent the Company is unsuccessful in obtaining postage
     costs in  advance,  cash flow is  negatively  affected  and  Vestcom may be
     required  to utilize its  working  capital or credit  facility to cover the
     cash outlay.

     Capital  expenditures of  approximately  $6,000,000 to $8,000,000 for plant
     and equipment and leasehold  improvements  are  anticipated  in 1998.  This
     investment,  which is expected to be financed  primarily by working capital
     and vendor financing, relates to the anticipated facility consolidations of
     certain  of the  operating  companies  and  the  purchase  of  supplemental
     production  equipment to meet customer  output  processing  demands.  As of
     September 30, 1998,  the Company had incurred  approximately  $6,677,000 of
     such anticipated  expenditures.  There are no other significant commitments
     for future capital  expenditures,  although it is likely that cash outflows
     for business acquisitions and leases will continue.  While no assurance can
     be given,  management  believes that its cash flow from operations combined
     with existing cash and the availability of funds under the Credit Facility,
     and potential  additional  credit capacity,  will be sufficient to meet its
     working capital,  capital expenditure and debt service requirements and its
     current plans to acquire  additional related businesses for the foreseeable
     future. The immediately  preceding  sentence  constitutes a forward-looking
     statement under the Private Securities Litigation Reform Act of 1995.


     IMPACT OF THE YEAR 2000 ISSUE

     The Company utilizes computer technologies in the form of both software and
     hardware  (including  electronic digital printers) to effectively carry out
     its day-to-day operations. In addition to information technology,  there is
     embedded computer technology in the Company's facilities and equipment. The
     Company is  utilizing  a  multi-phased  concurrent  approach  to  determine
     whether  its  systems  are  capable  of  recognizing  and  processing  date
     sensitive  information  properly  as the year 2000  approaches.  The phases
     included in the Company's approach are awareness, assessment,  remediation,
     validation and implementation.

     The  Company has  separate  plans to  complete  the Y2000  project for each
     region,  with central review and audit being performed by the  headquarters
     organization.  All regions have  completed  the  awareness  and  assessment
     phases. Remediation, validation and implementation are scheduled to be near
     completion in most regions in 1998. Full validation and  implementation  is
     scheduled  to be  complete  by July  1999.  Since  Vestcom  processes  data
     prepared  by its  customers,  and does not have  extensive  date  dependent
     proprietary  software to repair or replace,  management  believes  that the
     required  changes  to  Vestcom's   systems  will  not  be  extensive.   The
     immediately preceding sentences constitute forward-looking statements under
     the Private Securities Litigation Reform Act of 1995.

     Vestcom has contacted its major  software and hardware  suppliers to verify
     that the systems  Vestcom uses are Year 2000  compliant.  Most vendors have
     replied,  however,  written responses are still to be obtained from certain
     vendors.  Their can be no assurances that other companies' systems on which
     the  Company's  systems  rely  will be  timely  converted  or that any such
     failure to convert by another  company would not have a materially  adverse
     effect on the Company's systems. Certain of Vestcom's customers may need to
     make  appropriate  changes  to modify the data that they send to Vestcom to
     make the information Year 2000 compliant.  The Company is in the process of
     assessing the extent to which its customers may experience Year 2000 Issues
     and has begun testing with certain  customers.  If customers or others with
     whom the Company does  business  experience  problems  relating to the Year
     2000 issue,  the  Company's  business,  financial  condition  or results of
     operations  could be adversely  affected.  A loss of business  could result
     from the  Company's  customers'  inability to implement  new work  projects
     while focusing their information  technology  resources on Year 2000 issues
     within their existing systems.

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

     The Company estimates that the aggregate cost of its Year 2000 project will
     be approximately  $750,000,  including costs already incurred.  Significant
     portions of these costs are not likely to be incremental  costs, but rather
     will represent the redeployment of existing resources. This reallocation of
     resources is not expected to have a  significant  impact on the  day-to-day
     operations  of the  Company.  Total costs of  approximately  $200,000  were
     incurred by the Company  for this  project  during the first nine months of
     1998, of which $100,000 was incremental  expense.  The anticipated costs of
     the project,  as well as the date on which the Company  expects to complete
     the project  are based on  management's  best  estimate  using  information
     currently available and numerous  assumptions about future events.  However
     there can be no guarantee that these  estimates will be achieved and actual
     results  could differ  materially  from those  plans.  Based on its current
     estimates  and  information   currently  available  the  Company  does  not
     anticipate that the costs associated with this project will have a material
     adverse effect on the Company's consolidated financial position, results of
     operations or cash flows in the future. The immediately  preceding sentence
     constitutes  a  forward-looking  statement  under  the  Private  Securities
     Litigation Reform Act of 1995.

     In the event that the  efforts of the  Company's  Year 2000  project do not
     address all relevant problems,  the Company intends to develop  contingency
     plans.  In addition,  the  Company's  decentralized  operational  structure
     allows for a single  region to have a software or hardware  failure,  while
     another region can provide backup support.  This provides reduced risk if a
     single region does not successfully complete the required changes to become
     Year 2000 compliant as planned.

     The  Company is  continuing  its  efforts to timely  address  the Year 2000
     issues.  Actual results could differ  materially  from the  forward-looking
     statements contained herein as a result of a variety of factors,  including
     potential  unavailability of technological  resources,  increased  expenses
     associated  with obtaining such resources and  unanticipated  technological
     difficulties.

     The Company is currently evaluating the Year 2000 readiness of the business
     and assets  acquired from Manus Services  Corporation  ("Manus") on October
     30,1998. As such the above discussion does not reflect the impact of Manus.

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     The Financial  Accounting  Standards Board has issued Statement Number 131,
     "Disclosures  About  Segments of an  Enterprise  and  Related  Information"
     ("SFAS 131").

     SFAS  131  introduces  a  new  model  for  segment  reporting,  called  the
     "management approach". The management approach is based on the way that the
     chief  operating  decision maker  organizes  segments  within a company for
     making operating decisions and assessing  performance.  Reportable segments
     are based on products and services, geography, legal structure,  management
     structure - any manner in which  management  disaggregates  a company.  The
     management approach replaces the notion of industry and geographic segments
     in current FASB standards. SFAS 131 is effective for fiscal years beginning
     after December 15, 1997 and early adoption is encouraged. However, SFAS 131
     need  not  be  applied  to  interim  statements  in  the  initial  year  of
     application.  SFAS 131 requires restatement of all prior period information
     reported.  Management  believes  that adoption of SFAS 131 will not have an
     impact on its  method of  reporting  since it  believes  that its  business
     operates in one reportable segment.

<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)


                           Part II: Other Information

Item 6 - Exhibits and Reports on Form 8-K

         (a)      Exhibits:

27.1 Financial Data Schedule (For Electronic Submission Only)

         (b)      Reports on Form 8-K:

None


                                   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.

                            VESTCOM INTERNATIONAL, INC.



                            By:  /s/ Harvey Goldman
                                 Harvey Goldman, Executive Vice President
                                 and Chief Financial Officer

Dated:  November 13, 1998