<PAGE>



                       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, 2002 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.)

                                5 Henderson Drive
                         West Caldwell, New Jersey 07006
           (Address of principal executive office, including zip code)

                                  973-882-7000
              (Registrant's telephone number, including area code)

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

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 August 1, 2002 was
9,056,806 shares.


<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                  FORM 10-Q FOR THE QUARTER ENDED June 30, 2002

                                      INDEX
<TABLE>
<CAPTION>

Part I:  Financial Information
                                                                                                         Page(s)
                                                                                                         -------
Item 1:  Financial Statements
-------  --------------------
<S>                                                                                                           <C>
    Condensed Consolidated Balance Sheets - as of December 31, 2001 and
         June 30, 2002 (unaudited)                                                                             3
    Condensed Consolidated Statements of Operations - For the Three and Six Months
         Ended June 30, 2001 (unaudited) and 2002 (unaudited)                                                  4
    Condensed Consolidated Statements of Cash Flows - For the Six Months Ended
         June 30, 2001 (unaudited) and 2002 (unaudited)                                                        5
    Notes to Condensed Consolidated Financial Statements (unaudited)                                           6

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

Overview; Disclosures Regarding Forward Looking Statements; Results of Operations                              8

Liquidity and Capital Resources                                                                               11

Item 3:  Quantitative and Qualitative Disclosures About Market Risk                                           12
-------------------------------------------------------------------


Part II:  Other Information

Item 6: Exhibits and Reports on Form 8-K                                                                      12
----------------------------------------

Signature                                                                                                     12
</TABLE>


                                       2
<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    As of December 31, 2001 and June 30, 2002


                                     ASSETS
<TABLE>
<CAPTION>

                                                                                  December 31,          June 30,
                                                                                     2001                 2002
                                                                                 ------------          -----------
                                                                                   (note 1)            (unaudited)

<S>                                                                               <C>                  <C>
CURRENT ASSETS:
     Cash and cash equivalents                                                     $    951,060         $    731,552
     Accounts receivable, net                                                        27,294,527           23,692,902
     Other current assets                                                            11,561,464           11,691,731
                                                                                   ------------         ------------
                           Total current assets                                      39,807,051           36,116,185

PROPERTY AND EQUIPMENT, net                                                          35,976,873           32,897,079
GOODWILL, net                                                                        71,163,373           38,763,373
OTHER ASSETS                                                                            387,643              364,664
                                                                                   ------------         ------------
                           Total assets                                            $147,334,940         $108,141,301
                                                                                   ============         ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Current portion of long-term debt and capital lease obligations                  3,293,630            2,736,623
     Accounts payable                                                                11,875,927            9,963,531
     Other liabilities                                                               15,259,911           14,221,137
                                                                                   ------------         ------------
                           Total current liabilities                                 30,429,468           26,921,291

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                                         16,904,732           13,981,138
OTHER NONCURRENT LIABILITIES                                                          8,449,529            8,052,638
                                                                                   ------------         ------------

                           Total liabilities                                       $ 55,783,729         $ 48,955,067
                                                                                   ------------         ------------

STOCKHOLDERS' EQUITY:
   Preferred Stock
     Class B, 1 share authorized, issued and outstanding at
       December 31, 2001 and June 30, 2002                                            1,240,274            1,240,274
   Common stock, no par value; 20,000,000 shares authorized;
       9,056,806 shares issued and outstanding at
       December 31, 2001 and June 30, 2002                                           90,300,456           90,300,456
   Deferred Compensation                                                                (80,556)             (63,889)
   Retained earnings (Accumulated Deficit)                                              645,426          (31,877,995)
   Accumulated other comprehensive (loss)                                              (554,389)            (412,612)
                                                                                   ------------         -------------

                           Total stockholders' equity                              $ 91,551,211         $ 59,186,234
                                                                                   ------------         -------------

                           Total liabilities and stockholders' equity              $147,334,940         $108,141,301
                                                                                   ============         ============
</TABLE>


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

                                       3
<PAGE>
                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            For the Three and Six Months Ended June 30, 2001 and 2002
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                Three Months Ended                   Six Months Ended
                                                                ------------------                   ----------------
                                                           June 30, 2001   June 30, 2002        June 30, 2001   June 30, 2002
                                                           --------------  --------------      --------------   --------------
<S>                                                       <C>              <C>                  <C>             <C>
REVENUES                                                  $ 39,112,539     $ 35,850,860         $ 77,445,026    $ 79,168,237
COST OF REVENUES                                            28,682,266       27,966,404           58,245,547      59,182,852
                                                          ------------     ------------         ------------    ------------
     Gross profit                                           10,430,273        7,884,456           20,922,690      18,262,174

SELLING, GENERAL AND ADMINISTRATIVE
       EXPENSES                                              8,718,185        7,548,125           17,879,205      15,707,476

GOODWILL AMORTIZATION                                          686,598                -            1,373,194               -

IMPAIRMENT OF LONG LIVED ASSETS                                      -        2,555,924                    -       2,555,924
RESTRUCTURING AND OTHER NON-
RECURRING CHARGES (CREDITS)                                    384,337          275,000              384,337         275,000
                                                          ------------     ------------         ------------    ------------
Income (loss) from operations                                  641,153       (2,494,593)           1,285,954        (276,226)

OTHER INCOME (EXPENSE)

     Interest expense                                         (525,583)        (249,205)          (1,067,023)       (550,594)
     Other income (loss)                                        22,575             (949)              86,267         (30,392)
                                                          ------------     ------------         ------------    ------------
     Income (loss) before provision (benefit) for
         income taxes                                          138,145       (2,744,747)             305,198        (857,212)


PROVISION (BENEFIT) FOR INCOME TAXES                            75,980       (1,098,802)             167,859        (333,790)
                                                          ------------     ------------         ------------    ------------
     Income (loss) before Cumulative Effect of Change
     in Accounting Principle                              $     62,165     $ (1,645,945)        $    137,339    $   (523,422)
                                                          ------------     ------------         ------------    ------------

Cumulative Effect of Change in Accounting Principle
     (net of tax benefit of $400,000)                                -                -                    -     (32,000,000)
                                                          ------------     ------------         ------------    ------------

       Net income (loss)                                  $     62,165     $ (1,645,945)        $    137,339    $(32,523,422)
                                                          ============     ============         ============    ============

Net income (loss) per share before Cumulative Effect of
Change in Accounting Principle
 - basic                                                  $        .01     $       (.18)        $        .02    $       (.06)
                                                          ============     ============         ============    ============

 - diluted                                                $        .01     $       (.18)        $        .02    $       (.06)
                                                          ============     ============         ============    ============
Net income (loss) per share from Cumulative Effect of
Change in Accounting Principle
 - basic                                                  $          -     $          -         $          -    $      (3.53)
                                                          ============     ============         ============    ============

 - diluted                                                $          -     $          -         $          -    $      (3.53)
                                                          ============     ============         ============    ============

Net income (loss) per share
 - basic                                                  $        .01     $       (.18)        $        .02    $      (3.59)
                                                          ============     ============         ============    ============

 - diluted                                                $        .01     $       (.18)        $        .02    $      (3.59)
                                                          ============     ============         ============    ============
</TABLE>

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

                                       4
<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 2001 and 2002
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                     Six Months Ended
                                                                                     ----------------
                                                                             June 30, 2001       June 30, 2002
                                                                             -------------       -------------

<S>                                                                          <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                            $     137,339        $ (32,523,422)
     Adjustments to reconcile net income (loss) to net cash
     provided by operating activities-
         Depreciation and amortization                                           5,459,409            4,558,216
         Loss on disposal of equipment                                                 971               30,383
         Restructuring Charges                                                     216,743                    -
         Impairment of Long Lived Assets                                                 -            2,555,924
         Cumulative Effect of Change in Accounting Principle                             -           32,000,000
     Changes in operating assets (increase) decrease in-
         Accounts receivable                                                     4,988,922            3,601,625
         Other current assets                                                     (427,254)            (130,267)
         Other assets                                                               81,921               46,355
     Changes in operating liabilities (decrease) increase in-
         Accounts payable                                                       (1,740,657)          (1,912,396)
         Other current liabilities                                              (3,907,767)          (1,038,774)
         Other non-current liabilities                                                (725)               3,110
                                                                          ----------------      ----------------
                  Net cash provided by operating activities                      4,808,902            7,190,754

CASH FLOWS FROM INVESTING ACTIVITIES:
     Acquisition of property and equipment                                      (3,039,337)          (4,097,245)
     Proceeds from sale of assets                                                    1,421                9,140
                                                                          ----------------     ----------------
                   Net cash used in investing activities                        (3,037,916)          (4,088,105)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net (repayments) of long term debt                                           (840,679)          (3,480,601)
     Amortization of Deferred Compensation                                               -               16,667
                                                                          ----------------     ----------------

             Net cash (used in) financing activities                              (840,679)          (3,463,934)
                                                                          ----------------     ----------------

EFFECTS OF EXCHANGE RATES ON CASH BALANCES                                         (60,995)             141,777

             Net (decrease) increase in cash and cash equivalents                  869,312             (219,508)
                                                                          ----------------     ----------------

CASH and CASH EQUIVALENTS, beginning of period                                     633,567              951,060
                                                                          ----------------     ----------------

CASH and CASH EQUIVALENTS, end of period                                  $      1,502,879     $        731,552
                                                                          ================     ================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Capital lease obligation incurred                                    $              -     $        350,000
     Cash paid for interest                                                      1,060,433              448,380
     Cash paid for income taxes                                           $      1,191,558     $        369,080
</TABLE>

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


                                       5
<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
       balance sheet at December 31, 2001 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 and six-month periods ended June 30, 2002 are not
       necessarily indicative of the results that may be expected for the full
       year ending December 31, 2002. The condensed consolidated financial
       statements should be read in conjunction with the consolidated financial
       statements of the Company and the related notes thereto contained in
       Vestcom's Annual Report on Form 10-K for the year ended December 31,
       2001.

(2)    EARNINGS PER SHARE (EPS)

       Basic EPS is calculated by dividing income available to common
       shareholders by the weighted average number of shares of common stock
       outstanding during the period. The weighted average number of shares of
       common stock used in determining basic EPS was 9,056,806 for the three
       and six months ended June 30, 2002 and 2001, respectively.

       Diluted EPS is calculated by dividing income available to common
       shareholders by the weighted average number of shares of common stock
       outstanding, plus additional common shares that could be issued in
       connection with potentially dilutive securities (i.e., stock options).
       The weighted average number of shares of common stock used in determining
       diluted EPS was 9,056,806 and 9,056,962 for the three months ended June
       30, 2002 and 2001, respectively; and 9,056,806 and 9,060,110 for the six
       months ended June 30, 2002 and 2001, respectively.

       Options covering approximately 389,571, 1,799,642, 781,784 and 1,662,490
       shares of Common Stock were not included in computing earnings per share
       for the three months ended June 30, 2002 and 2001 and the six months
       ended June 30, 2002 and 2001, respectively, because their effects were
       antidilutive. In addition, options covering 184,743and 89,815 shares, for
       the three and six month ended June 30, 2002, respectively, were excluded
       due to the net losses for those periods.

(3)    COMPREHENSIVE INCOME (LOSS):

       Comprehensive income (loss) includes foreign currency translation gains
       and losses. The balance sheet translation adjustment was $147,800 and
       $81,757 for the three months ended June 30, 2002 and 2001, respectively;
       and $141,777 and ($60,995) for the six months ended June 30, 2002 and
       2001, respectively.

                                       6
<PAGE>

(4)    RECENT ACCOUNTING REQUIREMENTS:

       In July 2001, the Financial Accounting Standards Board (FASB) issued FASB
       Statements Nos. 141 and 142 (FAS 141 and FAS 142), "Business
       Combinations" and "Goodwill and Other Intangible Assets". FAS 141
       replaces APB16 and eliminates pooling-of-interests accounting
       prospectively. It also provides guidance on purchase accounting related
       to the recognition of intangible assets and accounting for negative
       goodwill. FAS 142 changes the accounting for goodwill from an
       amortization method to an impairment-only approach. Under FAS 142,
       goodwill will be tested annually and whenever events or circumstances
       occur that indicate the Company's goodwill might be impaired. FAS 141 and
       FAS 142 are effective for all business combinations completed after June
       30, 2001. Upon adoption of FAS 142, amortization of goodwill recorded for
       business combinations consummated prior to July 1, 2001 will cease, and
       intangible assets acquired prior to July 1, 2001 that do not meet the
       criteria for recognition under FAS 141 will be reclassified to goodwill.
       Companies are required to adopt FAS 142 for fiscal years beginning after
       December 15, 2001, and early adoption is permitted in some cases. The
       Company adopted FAS 142 on January 1, 2002 and no longer is amortizing
       goodwill and indefinite-lived intangible assets. In connection with the
       adoption of FAS 142, and with the proposed acquisition by Cornerstone
       Equity Investors IV, L.P., (see Note 6) the Company determined that an
       impairment loss on the Company's intangible assets was probable and that
       a reasonable estimate of such loss could be made as of June 30, 2002.
       Accordingly, the Company has recognized an estimated loss of $32,000,000
       net of tax as a Cumulative Effect of a Change in Accounting Principle.
       This amount, which is based on the difference between the expected
       goodwill to be recorded in connection with the proposed acquisition of
       Vestcom and the value of the Company's existing goodwill, will be subject
       to adjustment in subsequent reporting periods based on the measurement of
       the impairment process. Below is a reconciliation of net income adjusted
       to exclude amortization expense for 2001.

<TABLE>
<CAPTION>

       Reconciliation of Net Income for 2001                         Three months ended      Six months ended June
                                                                     -------------------    ---------------------
                                                                        June 30, 2001             30, 2001
                                                                        -------------             --------
<S>                                                                      <C>                    <C>
       Reported net income                                                  $62,165                $137,339
       Add back:  Goodwill amortization, net of tax effects                 608,626               1,217,252
                                                                          ----------             -----------
       Adjusted net income                                                 $670,791              $1,354,591
                                                                          ==========             ===========
</TABLE>


<TABLE>
<CAPTION>

       Reconciliation of EPS Basic and Diluted for 2001              Three months ended       Six months ended June
                                                                     -------------------      ----------------------
                                                                        June 30, 2001               30, 2001
                                                                        -------------               --------
<S>                                                                         <C>                      <C>
       Reported EPS                                                         $0.01                    $0.02
       Add back:  Goodwill amortization, net of tax effects                 $0.06                    $0.13
                                                                           -------                 --------
       Adjusted EPS                                                         $0.07                    $0.15
                                                                           =======                 ========
</TABLE>

       Emerging Issues Task Force Issue No. 01-14 (EITF 01-14), formerly topic
       D-103, "Income Statement Characterization of Reimbursements Received for
       'Out-of-Pocket' Expenses Incurred", requires that reimbursements received
       for freight and other "out-of-pocket" expenses be characterized as
       revenue. Companies are required to apply this announcement in financial
       reporting periods beginning after December 15, 2001. Vestcom adopted EITF
       01-14 effective January 2002, and has reclassified approximately
       $1,400,000 and $1,500,000 for the three month periods ended June 30, 2002
       and 2001, respectively; and approximately $3,800,000 and $3,100,000 for
       the six month periods ended June 30, 2002 and 2001, respectively to
       revenues from costs of revenues. The Company also manages postage costs
       on behalf of customers, and requires postage deposits in advance, which
       it does not believe meet the requirements of the EITF for classification
       as revenues and cost of revenues, and accordingly has not reflected
       approximately $16,400,000 and $19,300,000 of these costs as revenues or
       cost of revenues in the accompanying statements of income for the three
       month periods ended June 30, 2002 and 2001, respectively and
       approximately $34,300,000 and $36,200,000 for the six month periods ended
       June 30, 2002 and 2001, respectively. These amounts have no impact on
       gross profit or income from operations or net income.

                                       7
<PAGE>


                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

       In July 2002, The FASB issued Statement No. 146, "Accounting for Costs
       Associated with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 will
       spread out the reporting of expenses related to restructurings initiated
       after 2002 because a commitment to a plan to exit an activity or dispose
       of long-lived assets will no longer be enough to record a liability for
       the anticipated costs. Instead, companies will record exit and disposal
       costs when they are "incurred" and can be measured at fair value, and
       they will subsequently adjust the recorded liability for the changes in
       estimated cash flows. We are required to adopt SFAS 146, effective
       calendar year 2003. We do not expect the adoption of SFAS 146 to have a
       material impact on our future consolidated operations or financial
       position, as we are now constituted.

(5)    IMPAIRMENT OF LONG LIVED ASSETS:

       During the second quarter of 2002, the Company decided to shutdown its
       Randolph, NJ facility and relocate all production to its West Caldwell,
       NJ site. This decision supports the strategic plan of reducing the
       Company's operating cost structure by reducing the number of facilities.
       In connection therewith, the Company recorded an impairment charge of
       $2,555,924 for the write-down of fixed assets, primarily leasehold
       improvements, associated with the Randolph facility. In addition to these
       charges, the Company also incurred lease exit costs of $275,000, which
       were recorded in the second quarter of 2002. The Company will also incur
       additional lease costs to close the facility and severance costs for the
       termination of employees related to the closing and/or relocation of the
       operating facility, which the Company expects will occur during the third
       quarter of 2002.

(6)    MERGER AGREEMENT:

       On June 12, 2002 the Company announced that it had entered into a
       definitive agreement to be acquired by a newly formed corporation
       organized by Cornerstone Equity Investors IV, L.P. The agreement provides
       that the acquirer will pay $6.25 in cash for each outstanding share of
       the Company's Common Stock. The aggregate value of the transaction,
       including the amount of debt to be repaid, is expected to be
       approximately $75,000,000. Consummation of the Cornerstone transaction is
       contingent on receiving shareholder approval and obtaining the necessary
       financing. As of August 13, 2002, adequate financing to pay the merger
       consideration and estimated fees associated with the transaction had not
       been fully obtained. General Electric Capital Corporation has indicated
       to Cornerstone that it currently is prepared to fund the senior debt
       portion of the required transaction amount at a level that may be
       slightly less than what is currently estimated to be required to close
       the transaction. Cornerstone currently is engaged in discussions with
       other possible lenders and has received a proposal letter for a
       sufficient amount of funding from one of them. Although no assurance can
       be given that the transaction will close, Cornerstone has indicated that
       it remains committed to the $6.25 per share merger consideration and
       confident that it will obtain adequate financing for the transaction, and
       the Company hopes to close the transaction at the end of the third
       quarter or the beginning of the fourth quarter of 2002. Certain
       management shareholders have agreed to reinvest in the transaction and to
       vote in favor of the transaction.

       The transaction, which is structured as a cash merger, was approved by
       the Company's Board of Directors, acting upon the unanimous
       recommendation of a Special Committee of the Board comprised of five
       non-employee directors. In connection with the proposed transaction, the
       Company has capitalized approximately $276,000 of acquisition related
       costs incurred on behalf of the acquirer. In the event the transaction
       does not close the Company would be required to expense such costs.

                                       8
<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

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
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended that are based on
the beliefs of Vestcom's management as well as assumptions made by and
information currently available to Vestcom's management. Such statements reflect
the current views of Vestcom with respect to future events based on currently
available information and are subject to risks and uncertainties that could
cause actual results to differ materially from those contemplated in such
forward-looking statements. Factors that could cause actual results to differ
materially from Vestcom's expectations include, but are not limited to, the
following: the ability of the Company to execute and manage its growth strategy,
the results of the Company's investment spending, the ability to effectively
consolidate production facilities and functions as part of the Company's
integration program, the ability to realize reduced overhead costs, increased
production capacity and operating efficiencies, improved financial results,
operational synergies and enhanced services at the newly consolidated
facilities, acceptance of Vestcom's products and services, including electronic
and Internet related services, in the marketplace, the entry of new competitors
in the marketplace, the ability to attract and retain key customers, the ability
to positively modify its revenue mix, variations in quarterly results, the
sufficiency of the Company's working capital, changes in the business
communications industry, the availability of suitable acquisition candidates and
the assimilation of new acquisitions with existing business. Other factors are
described from time to time in Vestcom's public filings with the Securities and
Exchange Commission, news releases and other communications. Also, when Vestcom
uses the words "believes", "expects", "anticipates," "estimates," "plans,"
"intends," "objectives," "goals," "aims," "projects" or similar words or
expressions, Vestcom is making forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. Vestcom does not undertake any obligation to release
publicly any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001
-----------------------------------------------------------------------------

Due to the Company's adoption of EITF 01-14, effective January 2002, certain
2001 amounts have been reclassified from cost of revenues to revenues in order
to conform to the 2002 presentation.

Revenues decreased $3,262,000, or 8%, from $39,113,000 for the three months
ended June 30, 2001 to $35,851,000 for the three months ended June 30, 2002.
This decrease was primarily attributable to lower volumes of business
communications services as a result of general economic conditions especially in
the financial services market. In addition, 2001 results included a one-time
privacy mailing. The adoption of EITF 01-14 had no material effect on the change
in revenue over the prior year.

                                       9
<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

Gross profit decreased $2,546,000, or 24%, from $10,430,000 for the three months
ended June 30, 2001 to $7,884,000 for the three months ended June 30, 2002. The
gross profit margin decreased from 27% for the three months ended June 30, 2001
to 22% for the same period in 2002. The decreases in the gross profit and the
gross profit percentage were primarily due to decreased equipment utilization as
a result of the lower volumes in the Company's business communications services.
In addition, the Company reclassified certain expenses for the second quarter of
2002 to cost of revenues. These expenses were previously classified as general
and administrative costs. The Company believes that these expenses relate more
directly to revenue generation activities and more accurately reflect gross
margins.

Selling, general and administrative expenses decreased $1,170,000, or 13%, from
$8,718,000 for the three months ended June 30, 2001 to $7,548,000 for the three
months ended June 30, 2002. As a percentage of revenues, selling general and
administrative expenses decreased from 22% in 2001 to 21% in 2002. The decrease
in selling, general and administrative expenses relates primarily to lower
personnel and facility costs as a result of the Company's ongoing facilities
consolidation efforts. In addition, certain expenses, for the second quarter of
2002, were reclassified from general and administrative costs to cost of
revenues as discussed above.

Effective January 1, 2002 the Company adopted SFAS 142, "Goodwill and Other
Intangible Assets", under which goodwill is no longer amortized for financial
reporting purposes. The 2001 second quarter results included amortization
expense of $687,000.

During the second quarter of 2002, the Company decided to shutdown its Randolph,
NJ facility and relocate all production to its West Caldwell, NJ site. This
decision supports the strategic plan of reducing the Company's operating cost
structure by reducing the number of facilities. In connection therewith, the
Company recorded an impairment charge of $2,555,924 for the write-down of fixed
assets, primarily leasehold improvements, associated with the Randolph facility.
In addition to these charges, the Company also incurred lease exit costs of
$275,000, which were recorded in the second quarter of 2002. The Company will
also incur additional lease costs to close the facility and severance costs for
the termination of employees related to the closing and/or relocation of the
operating facility, which the Company expects will occur during the third
quarter of 2002.

Interest expense decreased $277,000, or 53%, from $526,000 for the three months
ended June 30, 2001 to $249,000 for the three months ended June 30, 2002. This
decrease was attributable to lower interest rates and decreased outstanding
balances on the Company's credit facility, as compared to the same period in the
prior year.

Other income decreased $24,000, from income of $23,000 for the three months
ended June 30, 2001 to expense of $1,000 for the three months ended June 30,
2002. The decrease is primarily due to losses on disposals of fixed assets
during the quarter.

Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001
-------------------------------------------------------------------------

Due to the Company's adoption of EITF 01-14, effective January 2002, certain
2001 amounts have been reclassified from cost of revenues to revenues in order
to conform to the 2002 presentation.

Revenues decreased $1,723,000, or 2%, from $79,168,000 for the six months ended
June 30, 2001 to $77,445,000 for the six months ended June 30, 2002. This
decrease was primarily attributable to lower volumes of business communications
services as a result of general economic conditions especially in the financial
services market. Excluding the adoption of EITF 01-14, revenues decreased 3% for
the six-month period over the prior year.

                                       10
<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

Gross profit decreased $2,661,000, or 13%, from $20,923,000 for the six months
ended June 30, 2001 to $18,262,000 for the six months ended June 30, 2002. The
gross profit margin decreased from 26% for the six months ended June 30, 2001 to
24% for the same period in 2002. The decreases in the gross profit and the gross
profit percentage were primarily due to decreased equipment utilization as a
result of the lower volumes in the Company's business communications services
and increased outsourcing activities as a result of the current revenue mix. In
addition, the Company reclassified certain expenses in 2002 to cost of revenues,
which were previously classified as general and administrative costs. The
Company believes that these expenses relate more directly to revenue generation
activities and more accurately reflect gross margins.

Selling, general and administrative expenses decreased $2,172,000, or 12%, from
$17,879,000 for the six months ended June 30, 2001 to $15,707,000 for the six
months ended June 30, 2002. As a percentage of revenues, selling general and
administrative expenses decreased from 23% in 2001 to 20% in 2002. The decrease
in selling, general and administrative expenses relates primarily to lower
personnel and facility costs as a result of the Company's ongoing facilities
consolidation efforts. In addition, certain expenses in 2002 were reclassified
from general and administrative costs to cost of revenues as discussed above.

Effective January 1, 2002 the Company adopted FAS 142, "Goodwill and Other
Intangible Assets", under which goodwill is no longer amortized for financial
reporting purposes. The six months ended June 30, 2001 results included
amortization expense of $1,373,000.

During the second quarter of 2002, the Company recorded an impairment loss of
$2,556,000 and lease exit fees of $275,000 related to its decision to shutdown
the Randolph, NJ site. See the discussion under the Three months Ended June 30,
2002 Compared to the Three Months Ended June 30, 2001.

Interest expense decreased $516,000, or 48%, from $1,067,000 for the six months
ended June 30, 2001 to $551,000 for the six months ended June 30, 2002. This
decrease was attributable to lower interest rates and decreased outstanding
balances on the Company's credit facility, as compared to the same period in the
prior year.

Other income decreased $116,000, from income of $86,000 for the six months ended
June 30, 2001 to expense of $30,000 for the six months ended June 30, 2002. The
decrease is primarily due to losses on disposals of fixed assets during the six
months.

In connection with the adoption of FAS 142, and with the proposed acquisition by
Cornerstone Equity Investors IV, L.P., (see Note 6) the Company determined that
an impairment loss on the Company's intangible assets was probable and that a
reasonable estimate of such loss could be made as of June 30, 2002. Accordingly,
the Company has recognized an estimated loss of $32,000,000 net of tax as a
Cumulative Effect of a Change in Accounting Principle. This amount, which is
based on the difference between the expected goodwill to be recorded in
connection with the proposed acquisition of Vestcom and the value of the
Company's existing goodwill, will be subject to adjustment in subsequent
reporting periods based on the measurement of the impairment process.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2002, Vestcom had working capital of approximately $9,195,000
compared to approximately $9,378,000 at December 31, 2001. The decrease was
primarily attributable to reductions in accounts receivable and partially offset
by decreases in accrued expenses and accounts payable. Net cash provided by
operating activities for the six months ended June 30, 2002, was approximately
$7,191,000, which consisted primarily of net loss plus non-cash charges of
approximately $32,000,000 from the Cumulative Effect of the Change in Accounting
Principle, $4,558,000 generated from depreciation charges, and $2,556,000 from
the write down of impaired assets from the Randolph facility shutdown, along
with the reduction of accounts receivable, partially offset by the reduction of
accounts payable and accrued expenses. Net cash used in investing activities for
the six months ended June 30, 2002, was approximately $4,088,000, which
consisted primarily of purchases of equipment and software. Net cash used in
financing activities for the six months ended June 30, 2002, was approximately
$3,464,000, primarily from the repayment of long-term debt.

                                       11
<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

The Company and Fleet Bank have entered into an Equipment Loan and Revolving
Credit Agreement (the "Credit Facility"), as amended, in the amount of
$31,500,000 with a maturity date of July 1, 2003. On June 30, 2002, $13,063,000
was outstanding and $14,773,000 remained available for borrowing under the
Credit Facility. Under the terms of the Credit Facility, amounts paid back on
equipment loans are not available for future borrowings.

The Company manages postage costs on behalf of customers of approximately
$2,000,000 to $6,000,000 each month. The Company collects such postage costs
from its customers in advance. At June 30, 2002, the Company had postage
advances from customers in the amount of approximately $5,781,000 and had
prepaid postage and postage receivables of approximately $2,085,000. If, and to
the extent the Company were unsuccessful in obtaining postage costs in advance,
cash flow would be negatively affected and Vestcom may be required to utilize
its working capital or credit facility to cover the cash outlay.

Capital expenditures of approximately $8,000,000 are expected in 2002. The
anticipated expenditures relate to technology and production equipment needs of
the business as well as internally developed capitalized software. However, as
additional revenue generating opportunities arise the Company may be required to
expend additional capital to support those opportunities. As of June 30, 2002,
the Company had incurred approximately $4,097,000 of such anticipated
expenditures.

While no assurance can be given, management believes that its anticipated 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.

Item 3: - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable - no significant change from Annual Report on Form 10-K.

                           Part II: Other Information


Item 6 - Exhibits and Reports on Form 8-K

(a)      Exhibits:

                  None

         (b)      Reports on Form 8-K:

                  On July 23, 2002 the Company filed an 8-K for the Change in
                  Accountants; on June 18, 2002 the Company filed an 8-K to
                  Amend its Bylaws; on June 13, 2002 the Company filed an 8-K
                  Announcing the Merger Agreement.

                                       12
<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                                    Signature

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/ Michael D. Helfand
                              --------------------------------------------------
                                 Michael D. Helfand, Executive Vice President,
                                 Chief Financial Officer and Treasurer

                                 Dated:  August 14, 2002



                                       13