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, 1997 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                                   22-2476114
(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
              (Registrant's 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, 1997,  was
8,349,291 shares.


<PAGE>


                                  INDEX TO 10-Q


Part I:  Financial Information                                        Page(s)

Item 1:  Financial Statements

Vestcom International, Inc.:
    Condensed  Consolidated  Balance  Sheets  - As  of  
          December  31,  1996  and September 30, 1997 (unaudited)          4
    Condensed Consolidated Statements of Operations - For the 
          Three Months Ended September 30, 1997 (unaudited) and 
          the Nine Months Ended September 30, 1997 (unaudited)             5
    Condensed Consolidated Statement of Cash Flows - For the Nine 
          Months Ended September 30, 1997 (unaudited)                      6
    Notes to Condensed Consolidated Financial Statements (unaudited)     7-10

Comvestrix Corp.:
    Condensed Balance Sheet - As of December 31, 1996                      11
    Condensed Statements of Income - For the Three Months Ended 
          September 30, 1996 (unaudited) and the One Month 
          Ended August 1, 1997 (unaudited) and the Nine 
          Months Ended September 30,  1996  (unaudited)  
          and the  Seven  Months  Ended  August  1,  1997
         (unaudited)                                                       12  
    Condensed  Statements  of Cash Flows - For the Nine  
          Months Ended September 30, 1996 (unaudited) and 
          the Seven Months Ended August 1, 1997 (unaudited)                13
    Notes to Condensed Financial Statements (unaudited)                    14

Morris County Direct Mail Services, Inc. and related companies:
    Condensed Combined Balance Sheet - As of December 31, 1996             15
    Condensed Combined Statements of Income - For the Three 
          Months Ended September 30, 1996 (unaudited) and 
          the One Month Ended August 1, 1997  (unaudited) 
          and the Nine Months Ended  September 30, 1996  
          (unaudited) and the Seven Months Ended 
          August 1, 1997 (unaudited)                                       16
    Condensed Combined Statements of Cash Flows - For the 
          Nine Months Ended September 30, 1996 (unaudited)
          and the Seven Months Ended August 1, 1997 (unaudited)            17   
    Notes to Condensed Combined Financial Statements (unaudited)           18

Image Printing Systems, Inc.:
    Condensed Balance Sheet - As of December 31, 1996                      19
    Condensed Statements of Income - For the Three Months 
          Ended September 30, 1996 (unaudited) and the 
          One Month Ended August 1, 1997 (unaudited) and 
          the Nine Months Ended September 30, 1996 
          (unaudited) and the Seven Months Ended 
          August 1, 1997 (unaudited)                                       20
    Condensed Statements of Cash Flows - For the Nine Months 
          Ended September 30, 1996 (unaudited) and the 
          Seven Months Ended August 1, 1997 (unaudited)                    21
    Notes to Condensed Financial Statements (unaudited)                    22

Electronic Imaging Services, Inc.:
    Condensed Balance Sheet - As of December 31, 1996                      23
    Condensed Statements of Operations - For the Three 
          Months Ended September 30, 1996 (unaudited) and 
          the One Month  Ended  August 1, 1997 (unaudited)
          and the Nine  Months Ended September 30, 1996  
          (unaudited) and the Seven Months Ended August 1, 
          1997 (unaudited)                                                 24
    Condensed Statements of Cash Flows - For the Nine 
          Months Ended September 30, 1996 (unaudited)
          and the Seven Months Ended August 1, 1997 (unaudited)            25
    Notes to Condensed Financial Statements (unaudited)                    26

<PAGE>

                                                                      Page(s)

Computer Output Systems, Inc.:
    Condensed Balance Sheet - As of December 31, 1996                      27
    Condensed Statements of Income - For the Three Months 
          Ended September 30, 1996 (unaudited) and the 
          One Month Ended August 1, 1997 (unaudited) and 
          the Nine Months Ended September 30, 1996 
          (unaudited) and the Seven Months Ended 
          August 1, 1997 (unaudited)                                       28
    Condensed Statements of Cash Flows - For the Nine 
          Months Ended September 30, 1996 (unaudited)
          and the Seven Months Ended August 1, 1997 (unaudited)            29
    Notes to Condensed Financial Statements (unaudited)                    30

Lirpaco Inc. and Subsidiary:
    Condensed Consolidated Balance Sheet - As of December 31, 1996         31
    Condensed Consolidated Statements of Income - For the Three 
          Months Ended September 30, 1996 (unaudited) and the 
          One Month Ended August 1, 1997  (unaudited) and the
          Nine Months Ended  September 30, 1996  (unaudited) 
          and the Seven Months Ended August 1, 1997 (unaudited)            32
    Condensed Consolidated Statements of Cash Flows - For the 
          Nine Months Ended September 30, 1996 (unaudited) 
          and the Seven Months Ended August 1, 1997 (unaudited)            33
    Notes to Condensed Consolidated Financial Statements (unaudited)       34


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

Introduction                                                               35

Pro Forma Results of Operations                                            36

Liquidity and Capital Resources                                            37

Founding Companies                                                         38


Part II:  Other Information

Item 2. Changes in Securities and Use of Proceeds                       39-40

Item 6. Exhibits and Reports on Form 8-K                                   40

    Signatures                                                             40

    Exhibit - Financial Data Schedule (For Electronic Submission Only)     41


<PAGE>

<TABLE>
<CAPTION>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 As of December 31, 1996 and September 30, 1997


                                                 December 31, 1996       September 30, 1997
                                                                          (unaudited)

                                     ASSETS

CURRENT ASSETS:
<S>                                              <C>                          <C>
    Cash and cash equivalents                    $  1,344,758                 $ 2,770,806
    Marketable securities                               -                      23,280,965
    Accounts receivable, net                            -                      11,749,197
    Other current assets                              392,664                   5,259,967
                                                    ---------                  ----------
         Total current assets                       1,737,422                  43,060,935

PROPERTY AND EQUIPMENT, net                            -                       19,853,238
GOODWILL                                               -                       44,643,138
OTHER ASSETS                                           -                          373,687
                                                  -----------              --------------
         Total assets                            $  1,737,422              $  107,930,998
                                                  ===========              ==============


                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Short-term borrowings                              -                   $       80,585
    Notes payable to related parties             $  1,292,732                         -
    Current portion of long-term debt 
        and capitalized lease obligation               -                        2,478,403
    Accounts payable                                   -                        3,095,048
    Other liabilities                                 320,230                  10,947,647
                                                 ------------                 ------------

         Total current liabilities                  1,612,962                  16,601,683

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS           -                        8,454,477
OTHER NONCURRENT LIABITILIES                           -                        3,378,825
                                                 ------------                 ------------

         Total liabilities                          1,612,962                  28,434,985

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
    Undesignated stock, no shares authorized
      at December 31, 1996; 10,000,000 shares
      authorized at September 30, 1997:  
        Preferred stock, 3,000,000 shares
          authorized, no shares issued
          and outstanding at December 31, 1996;
          301 shares issued and outstanding at
          September 30, 1997                              -                     2,651,867

    Common stock, no par value, 20,000,000 
      shares authorized; 1,295,192 shares 
      issued and outstanding at December 31, 
      1996; 8,349,291 shares issued and 
      outstanding at September 30, 1997              5,481,501                 81,797,935
    Subscriptions receivable                         (279,082)                     -
    Retained earnings (deficit)                    (5,077,959)                 (4,960,177)
    Cumulative translation adjustment                  -                            6,388
                                                   -----------                 -----------
               Total stockholders' equity             124,460                  79,496,013
                                                   ----------                 ------------

               Total liabilities and 
                    stockholders' equity      $     1,737,422               $ 107,930,998
                                               ==============                ============

</TABLE>



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


<PAGE>

<TABLE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

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

<CAPTION>

                                                                  Three Months Ended     Nine Months Ended
                                                                     September 30,       September 30,
                                                                          1997               1997
                                                                 -------------------    -------------------
                                                                    (unaudited)           (unaudited)

<S>                                                             <C>                      <C>           
REVENUES                                                        $     11,050,965         $   11,050,965
COST OF REVENUES                                                       6,668,305              6,668,305
                                                                 ------------------      ---------------
Gross profit                                                           4,382,660              4,382,660

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                                           3,315,510              3,662,201
GOODWILL AMORTIZATION                                                    242,248                242,248
                                                                 ------------------     -----------------
         Income from operations                                          824,902                478,211

OTHER INCOME (EXPENSE)
    Interest expense                                                    (358,555)              (413,249)
    Interest and other income                                            275,962                292,840
                                                                 ------------------     -----------------
         Income before provision for income taxes                        742,309                357,802

PROVISION FOR INCOME TAXES                                               393,823                240,020
                                                                 ------------------     -----------------

         Net income                                              $       348,486              $ 117,782
                                                                 ==================     =================
Earnings per share                                               $          0.06                   0.04
                                                                 ==================     =================

Weighted average shares used in computing
    earnings per share                                                 5,659,000              2,616,000
                                                                 ==================     =================


</TABLE>

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


<PAGE>

<TABLE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  For the Nine Months Ended September 30, 1997
<CAPTION>



                                                                                       1997
                                                                                   (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                             <C>         
    Net income                                                                  $    117,782
    Adjustments to reconcile net income to net cash provided by
       operating activities-
    Depreciation and amortization                                                    683,431
       Changes in operating assets (increase) decrease in-
       Accounts receivable                                                           145,441
       Other current assets                                                          956,688
       Other assets - non-current                                                      9,813
    Changes in operating liabilities increase (decrease) in-
       Other current liabilities                                                    (643,543)
       Other non-current liabilities                                               2,200,038
                                                                                   ---------
         Net cash provided by (used in) operating activities                       3,469,650
                                                                                ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                                           (794,499)
    Acquisition of Founding Companies,
      net of cash acquired                                                       (49,449,722)
    Purchase of marketable securities                                            (23,280,965)
                                                                                -------------

         Net cash (used in) investing activities                                 (73,525,186)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Collection of subscriptions receivable                                           279,082
    Net payments on borrowings                                                    (7,772,187)
    Issuance of common stock                                                      76,316,434
    Issuance of preferred stock                                                    2,651,867
    Cumulative translation adjustments                                                 6,388
                                                                                -------------
         Net cash provided by financing activities                                71,481,584
                                                                                -------------

         Net increase in cash and cash equivalents                                 1,426,048
                                                                                -------------

CASH AND CASH EQUIVALENTS, beginning of period                                     1,344,758
                                                                                -------------

CASH AND CASH EQUIVALENTS, end of period                                      $    2,770,806
                                                                                =============

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
    Capital lease obligations                                                 $      904,836
                                                                                =============

</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
       balance  sheet at  December  31, 1996 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 nine and  three-month  periods  ended  September 30, 1997 are not
       necessarily  indicative  of the results that may be expected for the year
       ended December 31, 1997.

(2)    NATURE OF BUSINESS

       Vestcom International,  Inc. (a New Jersey corporation) ("Vestcom" or the
       "Company"),  was  formed in  September  1996 to  create an  international
       provider  of  computer  output  and  document  management  services.  The
       Company's  primary strategy is to consolidate  similar and  complementary
       companies  in  the  highly   fragmented   computer  output  and  document
       management services industry through acquisition.

       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  initial  public  offering  was  consummated  on August 4, 1997.  The
       capital  raised by this  offering was  approximately  $54,000,000  net of
       underwriting discounts.

(3)    ACQUISITIONS

       Concurrently  with  the  consummation  of the  Company's  initial  public
       offering,  Vestcom  International,  Inc.  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,  Computer Output Systems,  Inc. and Mystic Graphic  Systems,
       Inc. (Founding Companies). The aggregate consideration paid by Vestcom to
       acquire  the  Founding   Companies  was,   subject  to  working   capital
       adjustments  and  earnouts,  approximately  $18.4  million  in  cash  and
       2,852,111 shares of Vestcom common stock. The acquisitions were accounted
       for as  purchases  as of  August  1,  1997.  The  resulting  goodwill  of
       approximately  $45,000,000,  which is being  amortized over 30 years,  is
       based on the  preliminary  allocation  of the  purchase  price to the net
       assets acquired.

(4)    CREDIT FACILITY

       On August 13, 1997, the Company and Summit Bank entered into an Equipment
       Loan and Revolving Credit Agreement in the amount of $30,000,000.

(5)    EARNINGS PER SHARE

       The  computation  of net income  per share for the three and nine  months
       ended  September 30, 1997, is based upon  5,659,000 and 2,616,000  shares
       respectively of common stock outstanding. The conversion of stock options
       outstanding are not included in the  computations.  In February 1997, the
       Financial  Accounting Standards Board issued 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


<PAGE>


                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (unaudited)

       replaced with diluted EPS. Diluted EPS reflects the potential dilution if
       certain securities are converted. SFAS No. 128 requires dual presentation
       of basic and diluted EPS by entities that issue any securities other than
       ordinary  common  stock.  SFAS No. 128 will be  effective  for  financial
       statements  for both interim and annual periods ending after December 15,
       1997, and requires  retroactive  restatements  of all EPS data presented.
       The Company  plans to adopt the  statement  on  December  31,  1997.  The
       Company  does not expect the  effect of  adopting  SFAS No. 128 to have a
       material impact on its EPS calculations,  and, if adopted currently, SFAS
       No. 128 would not have a material impact on the Company's reported EPS.

(6)    CAPITAL STOCK

       In  March,   1997,   the  Company   filed  a  restated   Certificate   of
       Incorporation,  to eliminate  the  Preferred  Stock and create a class of
       10,000,000 shares of Undesignated Stock.

       In May and  July 1997,  Oppenheimer &  Co., Inc.  returned to Vestcom an 
       aggregate of 225,512 shares of common stock.

(7)    COMMITMENTS AND CONTINGENCIES

       In May,  1997 the Company  entered into an agreement  with  Oppenheimer &
       Co.,  Inc.  ("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 has agreed to
       reimburse Oppenheimer for up to $75,000 of out-of-pocket expenses related
       to such services.

       Certain  executives  of the Company  have each  entered  into  employment
       agreements with the Company.  Each of the employment  agreements provides
       that, in the event of a termination of employment by the Company  without
       cause,  such  employee  will be entitled  to receive  from the Company an
       amount in cash equal to the  employee's  then current  annual base salary
       for the remainder of the term.

     
<PAGE>


                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (unaudited)

(8)    NEW ACCOUNTING PRONOUNCEMENTS

       The Financial  Accounting  Standards Board has issued two new statements.
       Statements  of Financial  Accounting  Standards  Numbers 130,  "Reporting
       Comprehensive  Income" (SFAS 130"), and 131,  "Disclosures About Segments
       of an Enterprise and Related Information" (SFAS 131").

       SFAS 130 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
       intends to adopt this  standard  when  required  and is in the process of
       determining the effect of SFAS 130 on the Company's  financial  statement
       presentation.

       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. The Company is required to
       adopt this  standard  as of  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.  The Company  intends to adopt this
       standard when required and is in the process of determining the effect of
       SFAS 131 on the Company's financial statements.

(9)    PRO FORMA SCHEDULES

       The   following  Pro  Forma   Statements   of   Operations   for  Vestcom
       International,  Inc.,  assume  that  the  acquisitions  of  the  Founding
       Companies were  consummated on January 1 of the periods  presented.  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 future results.


<PAGE>


<TABLE>

               VESTCOM INTERNATIONAL, INC. AND FOUNDING COMPANIES

                             PRO FORMA STATEMENTS OF
                 OPERATIONS For the Three Months and Nine Months
                        Ended September 30, 1996 and 1997
                                   (unaudited)

<CAPTION>

                                      Three Months Ended    Three Months Ended    Nine Months Ended      Nine Months Ended
                                        September 30, 1996   September 30, 1997  September 30, 1996     September 30, 1997
                                           Pro Forma             Pro Forma            Pro Forma             Pro Forma
                                            Combined             Combined              Combined              Combined

<S>                                    <C>                     <C>                <C>                    <C>          
Revenues                               $   16,049,377          $ 17,473,419       $  48,367,883          $  53,537,123
Cost of revenues                           10,958,191            11,097,349          31,813,772             33,965,998
                                        -------------          ------------       -------------           ------------
    Gross profit                            5,091,186             6,376,070          16,554,111             19,571,125
Selling, general and
  administrative expenses                   3,943,770             4,348,525          11,566,880             12,603,250
Goodwill amortization                         363,372               363,372           1,090,116              1,090,116
                                        -------------          ------------       --------------          ------------

Income (loss) from operations                 784,044             1,664,173           3,897,115              5,877,759
Other income (expense):
    Interest expense                            -                  (176,885)              -                   (427,156)
    Interest and other income                  79,558               287,018             163,231                323,944
                                         ------------          -------------      --------------             ----------

Income before provision for
  income taxes                                863,602             1,774,306           4,060,346              5,774,547
          Provision for income taxes          490,790               855,071           2,060,185              2,745,865
                                        -------------           -----------      -------------             -----------
Net income                             $      372,812        $      919,235       $   2,000,161         $    3,028,682
                                        =============         ==============      ==============         ==============

Net income per share                   $         0.04        $         0.11       $        0.24         $         0.36
                                        =============        ==============      ==============         ==============

Weighted average shares used
  in computing pro forma net
    income per share                        8,349,291             8,349,291           8,349,291              8,349,291
                                         ============        ==============        ============         ==============

</TABLE>


<PAGE>

<TABLE>

                                COMVESTRIX CORP.

                             CONDENSED BALANCE SHEET
                             As of December 31, 1996

<CAPTION>

                                                                              December 31, 1996


                                     ASSETS
CURRENT ASSETS:
<S>                                                                              <C>          
    Cash and cash equivalents                                                    $     106,610
    Accounts receivable, net                                                         4,135,168
    Other current assets                                                             2,789,112
                                                                                ---------------

         Total current assets                                                        7,030,890

PROPERTY AND EQUIPMENT, net                                                          4,385,047
OTHER ASSETS                                                                           105,750
                                                                                ---------------

         Total assets                                                           $   11,521,687
                                                                                ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term borrowings                                                       $    1,900,000
    Current portion of debt                                                            785,472
    Other current liabilities                                                        3,485,661
                                                                                ---------------

         Total current liabilities                                                   6,171,133

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                                           682,611
DEFERRED EXPENSES                                                                      383,454
                                                                                ---------------

         Total liabilities                                                           7,237,198
                                                                                ---------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
    Common stock                                                                         7,500
    Additional paid-in capital                                                         355,863
    Subscriptions receivable                                                          (106,297)
    Retained earnings                                                                5,465,803
                                                                                ---------------
                                                                                     5,722,869
    Less-Treasury stock                                                             (1,438,380)
                                                                                ---------------
         Total stockholders' equity                                                  4,284,489
                                                                                ---------------
         Total liabilities and stockholders' equity                             $   11,521,687
                                                                                ===============


</TABLE>


            The accompanying notes to condensed financial statements
                   are an integral part of this balance sheet.


<PAGE>

<TABLE>

                                COMVESTRIX CORP.

                         CONDENSED STATEMENTS OF INCOME
            For the Three Months Ended September 30, 1996 and the One
              Month Ended August 1, 1997 and the Nine Months Ended
          September 30, 1996 and the Seven Months Ended August 1, 1997

<CAPTION>

                                                    Three Months           One Month        Nine Months      Seven Months
                                                       Ended                 Ended            Ended              Ended
                                                    September 30,           August 1,       September 30,      August 1,
                                                        1996                 1997              1996               1997
                                                    -------------          ----------       -------------    -------------
                                                    (unaudited)            (unaudited)      (unaudited)       (unaudited)

<S>                                             <C>                     <C>                 <C>               <C>         
REVENUES                                        $   5,167,231           $   2,521,314       $ 15,930,492      $ 14,602,784
COST OF REVENUES                                    3,135,014               1,378,006          9,199,133         7,901,864
                                                -------------           -------------         ----------      ------------
         Gross profit                               2,032,217               1,143,308          6,731,359         6,700,920

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                        1,803,467                 688,854          5,400,941         4,677,958
                                               --------------           -------------         ----------      -------------
         Income from operations                       228,750                 454,454         1,330,418          2,022,962

OTHER INCOME (EXPENSE)
    Interest expense                                  (31,182)                (61,257)         (103,724)          (397,842)
    Interest and other income                          33,419                   6,107            64,307             27,172
                                               --------------           --------------        ----------      -------------
         Income before provision 
           for income taxes                          230,987                  399,304         1,291,001          1,652,292

PROVISION FOR INCOME TAXES                             5,771                    9,982            32,271             41,307
                                               -------------             -------------        ---------       -------------
         Net income                           $      225,216             $    389,322        $1,258,730      $   1,610,985
                                               =============             =============       ==========      ==============

</TABLE>

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


<PAGE>
<TABLE>

                                COMVESTRIX CORP.

                       CONDENSED STATEMENTS OF CASH FLOWS
                  For the Nine Months Ended September 30, 1996
                    and the Seven Months Ended August 1, 1997

<CAPTION>

                                                                 1996                    1997
                                                            ----------------        -------------
                                                             (unaudited)             (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                         <C>                     <C>          
    Net income                                              $   1,258,730           $   1,610,985
    Adjustments to reconcile net income to net cash
       provided by operating activities-
         Depreciation and amortization                            832,448               1,196,387
         (Gain) Loss on sale of property                           (2,598)                  4,266
         Changes in operating assets (increase) decrease in -
                   Accounts receivable                           (336,464)               (564,570)
                   Other current assets                          (486,969)                251,395
                   Other assets                                  (141,536)                (93,662)
         Changes in operating liabilities increase (decrease) in -
                   Other current liabilities                    1,761,964               1,106,851
                   Deferred charges                               208,152                 243,491
                                                              -----------             -----------

                  Net cash provided by operating activities     3,093,727               3,755,143
                                                              -----------             -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                        (868,892)               (459,462)
    Proceeds from sale of equipment                                 9,260                   2,700
                                                              -----------             -----------

                  Net cash used in investing activities         (859,632)                (456,762)
                                                              -----------             -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Collection of subscriptions receivable                        12,832                   15,002
    Net payments on borrowings                                (1,471,623)              (1,096,524)
    Distributions to Stockholders                               (821,475)              (2,215,822)
                                                              -----------             -----------

                  Net cash used in financing activities       (2,280,266)              (3,297,344)
                                                              -----------             -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS             (46,171)                   1,037

CASH AND CASH EQUIVALENTS, beginning of period                   150,832                  106,610
                                                              -----------             -----------

CASH AND CASH EQUIVALENTS, end of period                     $   104,661          $       107,647
                                                             ===========          ===============

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
   AND FINANCING ACTIVITIES:
    Capital lease obligations                                       -             $     6,943,939
                                                            ============          ===============
ISSUANCE OF COMMON STOCK EVIDENCED BY
   SUBSCRIPTIONS RECEIVABLE                                  $   123,000          $       -
                                                             ===========          ===============

</TABLE>


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


<PAGE>


                                COMVESTRIX CORP.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

(1)    BASIS OF PRESENTATION

       The  accompanying  unaudited  condensed  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, 1996 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 seven and one
       month periods ended September 30, 1997 are not necessarily  indicative of
       the  results  that  may  be  expected  for  the  consolidated   financial
       statements for the year ended December 31, 1997.

       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.  Vestcom's  underwriters exercised in full an option to
       purchase an additional 577,500 shares of Vestcom'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.  Concurrently with the Offering, Vestcom acquired
       all of the  outstanding  shares  of  Comvestrix  Corp.  Accordingly,  the
       accompanying  financial statements of Comvestrix do not include a balance
       sheet as of September 30, 1997 and reflect  Comvestrix's  operations  and
       cash flows up until the date of acquisition  by Vestcom.  See the Vestcom
       financial statements included elsewhere herein.

 (2)   SHAREHOLDER DISTRIBUTIONS

       On July 29,  1997,  the Company made  distributions  to  shareholders  of
       $1,618,382.


<PAGE>
<TABLE>


         MORRIS COUNTY DIRECT MAIL SERVICES, INC. AND RELATED COMPANIES

                        CONDENSED COMBINED BALANCE SHEET
                             As of December 31, 1996

<CAPTION>

                                                            December 31, 1996


                                     ASSETS
CURRENT ASSETS:
<S>                                                          <C>          
    Cash and cash equivalents                                $     572,714
    Accounts receivable, net                                     2,647,434
    Other current assets                                           873,099
                                                               ------------

         Total current assets                                    4,093,247

PROPERTY AND EQUIPMENT, net                                      1,504,158
GOODWILL                                                           396,184
OTHER ASSETS                                                       131,488
                                                                -----------

         Total assets                                         $  6,125,077
                                                               ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term borrowings                                     $    160,000
    Current portion of long-term debt and 
          capital lease obligations                                481,807
    Other current liabilities                                    3,004,922
                                                               ------------

         Total current liabilities                               3,646,729

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                       949,482
DEFERRED EXPENSES                                                   11,420
                                                               ------------
         Total liabilities                                       4,607,631
                                                               ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Common stock                                                    19,990
    Additional paid-in capital                                     182,768
    Retained earnings                                            1,716,188
                                                              ------------
                                                                 1,918,946

    Less-Treasury stock                                           (401,500)
                                                              -------------
         Total stockholders' equity                              1,517,446
                                                              -------------
         Total liabilities and stockholders' equity           $  6,125,077
                                                              ============

</TABLE>



            The accompanying notes to condensed financial statements
                   are an integral part of this balance sheet.


<PAGE>

<TABLE>

         MORRIS COUNTY DIRECT MAIL SERVICES, INC. AND RELATED COMPANIES

                     CONDENSED COMBINED STATEMENTS OF INCOME
            For the Three Months Ended September 30, 1996 and the One
              Month Ended August 1, 1997 and the Nine Months Ended
             September 30, 1996 and the Seven Months Ended August 1, 1997

<CAPTION>


                                  Three Months        One Month          Nine Months      Seven Months
                                     Ended              Ended              Ended             Ended
                                   September 30,       August 1,         September 30,      August 1,
                                     1996               1997                1996              1997
                                   -------------      ---------         --------------   -------------
                                   (unaudited)       (unaudited)        (unaudited)      (unaudited)

<S>                              <C>               <C>                 <C>               <C>         
REVENUES                         $  3,071,277      $  1,014,280        $  9,886,654      $  8,029,919
COST OF REVENUES                    2,371,423           981,381           6,681,600         5,727,684
                                  -------------      -----------       ------------     -------------
         Gross profit                 699,854            32,899           3,205,054         2,302,235

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                          831,346          (276,815)          2,531,052         1,747,901
                                  -------------      -----------       ------------     -------------
          Income (loss) from 
               operations            (131,492)         (243,916)            674,002           554,334

OTHER INCOME (EXPENSE)
    Interest expense                  (34,201)          (37,110)            (94,153)         (118,370)
    Interest and other income          23,417             5,060              61,856             9,765
                                   -----------       -----------        ------------         ---------
         (Loss) income before provision 
             for income taxes        (142,276)         (275,966)            641,705           445,729

PROVISION FOR INCOME TAXES              -                  -                 15,786            17,188
                                   ------------     ------------         ----------          --------
         Net (loss) income       $   (142,276)      $  (275,966)       $    625,919     $     428,541
                                  =============     ============       =============    ==============


</TABLE>

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


<PAGE>

<TABLE>

         MORRIS COUNTY DIRECT MAIL SERVICES, INC. AND RELATED COMPANIES

                   CONDENSED COMBINED STATEMENTS OF CASH FLOWS
                  For the Nine Months Ended September 30, 1996
                    and the Seven Months Ended August 1, 1997

<CAPTION>

                                                                           1996                1997
                                                                        -----------        -----------
                                                                       (unaudited)         (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                    <C>                <C>        
    Net income                                                         $    625,919       $   428,541
    Adjustments to reconcile net income to net cash
       provided by (used in) operating activities-
         Depreciation and amortization                                      360,152           340,908
         Gain on sale of property                                              -              (17,617)
         Changes in operating assets (increase) decrease in -
                   Accounts receivable                                   (1,280,995)         (302,459)
                   Other current assets                                     612,872          (295,552)
                   Other assets                                             (49,200)           70,481
         Changes in operating liabilities increase (decrease) in -
                   Other current liabilities                               (136,673)          (64,667)
                   Other liabilities                                       (250,831)           52,403
                                                                         -----------        ----------

                    Net cash provided by (used in) operating activities    (118,756)          212,038
                                                                         -----------        ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                                  (635,800)         (373,901)
    Acquisition of goodwill                                                (412,300)             -
                                                                         ------------       ----------

                    Net cash used in investing activities                (1,048,100)         (373,901)
                                                                         ------------        ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from borrowing                                             969,623           429,325
    Issuance of note receivable                                                 -              61,019
    Distributions to Stockholders                                               -            (539,802)
                                                                         ------------       ---------

                    Net cash provided by (used in) financing activities     969,623           (49,458)
                                                                         ------------       ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                  (197,233)         (211,321)

CASH AND CASH EQUIVALENTS, beginning of period                              534,459           572,714
                                                                         -----------        ----------

CASH AND CASH EQUIVALENTS, end of period                                $   337,226        $  361,393
                                                                        ============       ===========

</TABLE>

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


<PAGE>


                    MORRIS COUNTY DIRECT MAIL SERVICES, INC.
                              AND RELATED COMPANIES

                NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
                                   (unaudited)

(1)    BASIS OF PRESENTATION

       The  accompanying  unaudited  condensed  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, 1996 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 seven and one
       month periods ended September 30, 1997 are not necessarily  indicative of
       the  results  that  may  be  expected  for  the  consolidated   financial
       statements for the year ended December 31, 1997.

       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.  Vestcom's  underwriters exercised in full an option to
       purchase an additional 577,500 shares of Vestcom'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   approximately   $54,000,000,   net  of
       underwriting discounts. Concurrently, with the Offering, Vestcom acquired
       all of the outstanding shares of Morris County Direct Mail Services, Inc.
       and related companies. Accordingly, the accompanying financial statements
       of Morris County Direct Mail Services,  Inc. and related companies do not
       include a balance  sheet as of  September  30,  1997 and  reflect  Morris
       County Direct Mail Services,  Inc. and related companies'  operations and
       cash flows up until the date of acquisition  by Vestcom.  See the Vestcom
       financial statements included elsewhere herein.



<PAGE>
<TABLE>


                          IMAGE PRINTING SYSTEMS, INC.

                             CONDENSED BALANCE SHEET
                             As of December 31, 1996

<CAPTION>

                                                               December 31, 1996


                                     ASSETS
CURRENT ASSETS:
<S>                                                             <C>           
    Cash and cash equivalents                                   $       61,137
    Accounts receivable, net                                         1,422,234
    Other current assets                                               659,389
                                                               -----------------

         Total current assets                                        2,142,760

PROPERTY AND EQUIPMENT, net                                          2,725,129
OTHER ASSETS                                                             -
                                                               -----------------

         Total assets                                          $     4,867,889
                                                               =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term borrowings                                     $        795,494
    Current portion of long-term debt and 
          capital lease obligations                                    468,094
    Other current liabilities                                        1,864,883
                                                                ----------------

         Total current liabilities                                   3,128,471

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                         1,433,810
                                                                ----------------

         Total liabilities                                           4,562,281

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Common stock                                                        15,593
    Retained earnings                                                  291,748
                                                               -----------------
                                                                       307,341
    Less-Treasury stock                                                 (1,733)
                                                               -----------------
         Total stockholders' equity                                    305,608
                                                               -----------------
         Total liabilities and stockholders' equity            $     4,867,889
                                                               =================

</TABLE>

            The accompanying notes to condensed financial statements
                   are an integral part of this balance sheet.


<PAGE>
<TABLE>


                          IMAGE PRINTING SYSTEMS, INC.

                         CONDENSED STATEMENTS OF INCOME
            For the Three Months Ended September 30, 1996 and the One
              Month Ended August 1, 1997 and the Nine Months Ended
          September 30, 1996 and the Seven Months Ended August 1, 1997

<CAPTION>

                                                         Three Months      One Month        Nine Months      Seven Months
                                                           Ended             Ended             Ended             Ended
                                                         September 30,      August 1,       September 30,      August 1,
                                                            1996             1997               1996               1997
                                                         ------------     -----------      -------------     -------------
                                                         (unaudited)      (unaudited)       (unaudited)       (unaudited)

<S>                                                    <C>               <C>              <C>                 <C>       
REVENUES                                               $  2,133,079      $  781,725       $ 6,639,331         $5,900,738
COST OF REVENUES                                          1,499,121         545,574         4,697,261          4,109,688
                                                      -------------      -----------      -----------        ----------

         Gross profit                                       633,958         236,151         1,942,070          1,791,050


SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                                590,256         191,238         1,730,312          1,303,107
                                                      --------------     -----------      ----------           ---------

         Income (loss ) from operations                      43,702          44,913           211,758            487,943

OTHER INCOME (EXPENSE)
    Interest expense                                        (33,996)        (37,770)         (210,226)          (253,089)
    Interest and other income                                  -              1,013              -                 6,916
                                                      --------------     ----------       -----------          ---------
         Net income                                   $       9,706      $    8,156       $     1,532         $  241,770
                                                      ==============     ==========       ===========          =========
</TABLE>




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


<PAGE>

<TABLE>

                          IMAGE PRINTING SYSTEMS, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                  For the Nine Months Ended September 30, 1996
                    and the Seven Months Ended August 1, 1997

<CAPTION>

                                                                      1996              1997
                                                                    (unaudited)     (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                              <C>                <C>      
    Net income (loss)                                            $     1,532        $ 241,770
    Adjustments to reconcile net income (loss) to net cash
       provided by operating activities-
         Depreciation and amortization                               461,960          396,258
         Loss on write-off of subscriptions receivable                10,855             -
         Changes in operating assets (increase) decrease in -
                   Accounts receivable                            (1,001,072)          95,756
                   Other current assets                              195,194          265,724
         Changes in operating liabilities increase (decrease) in -
                   Other current liabilities                        606,937            99,302
                                                                   ---------        ----------
                  Net cash provided by operating activities         275,406         1,098,810
                                                                   ---------          -------


CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                          (108,774)         (412,801)
                                                                  ---------         ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from borrowings                                   (154,569)          (64,725)
    Distributions to Stockholders                                     -              (599,882)
                                                                  ----------       -----------

                  Net cash used in financing activities            (154,569)         (664,607)
                                                                  ----------       -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS                            12,063            21,402

CASH AND CASH EQUIVALENTS, beginning of period                       61,835            61,137
                                                                  ----------       -----------

CASH AND CASH EQUIVALENTS, end of period                       $     73,898       $    82,539
                                                                ===========       ===========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
   AND FINANCING ACTIVITIES:
    Capital lease obligation incurred                          $    151,702       $   761,904
                                                               ============       ===========

</TABLE>
            The accompanying notes to condensed financial statements
                    are an integral part of these statements.


<PAGE>


                          IMAGE PRINTING SYSTEMS, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

(1)    BASIS OF PRESENTATION

       The  accompanying  unaudited  condensed  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, 1996 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 seven and one
       month periods ended September 30, 1997 are not necessarily  indicative of
       the  results  that  may  be  expected  for  the  consolidated   financial
       statements for the year ended December 31, 1997.

       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.  Vestcom's  underwriters exercised in full an option to
       purchase an additional 577,500 shares of Vestcom'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   approximately   $54,000,000,   net  of
       underwriting discounts.  Concurrently with the Offering, Vestcom acquired
       all  of  the  outstanding   shares  of  Image  Printing   Systems,   Inc.
       Accordingly,  the  accompanying  financial  statements of Image  Printing
       Systems,  Inc.,  do not include a balance sheet as of September 30, 1997,
       and reflect Image Printing  Systems,  Inc.'s operations and cash flows up
       until the date of  acquisition  by  Vestcom.  See the  Vestcom  financial
       statements included elsewhere herein.


<PAGE>

                        ELECTRONIC IMAGING SERVICES, INC.

                             CONDENSED BALANCE SHEET
                             As of December 31, 1996


                                                         December 31, 1996


                                     ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                            $        45,089
    Accounts receivable, net                                     826,655
    Other current assets                                         525,906
                                                          ---------------

         Total current assets                                  1,397,650

PROPERTY AND EQUIPMENT, net                                    1,526,992
OTHER ASSETS                                                      54,944
                                                          ---------------

         Total assets                                     $    2,979,586
                                                          ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term borrowings                                 $      662,575
    Current portion of long-term debt and 
     capital lease obligations                                   402,256
    Other current liabilities                                  1,440,516
                                                          ---------------

         Total current liabilities                             2,505,347

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                     817,148
DEFERRED EXPENSES                                                 86,740
PLEDGED STOCK                                                    375,000
                                                          ---------------

         Total liabilities                                     3,784,235
                                                          ---------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Common stock                                                      11
    Accumulated deficit                                         (429,660)
                                                          ---------------
                                                                (429,649)
    Less-Treasury stock                                         (375,000)
                                                          ---------------
         Total stockholders' equity (deficit)                   (804,649)
                                                          ---------------
         Total liabilities and stockholders' equity       $    2,979,586
                                                          ===============

            The accompanying notes to condensed financial statements
                   are an integral part of this balance sheet.


<PAGE>

<TABLE>

                        ELECTRONIC IMAGING SERVICES, INC.

<CAPTION>
                       CONDENSED STATEMENTS OF OPERATIONS
            For the Three Months Ended September 30, 1996 and the One
              Month Ended August 1, 1997 and the Nine Months Ended
          September 30, 1996 and the Seven Months Ended August 1, 1997


                                        Three Months     One Month             Nine  Months     Seven Months
                                           Ended           Ended                   Ended             Ended
                                       September 30,     August 1,            September 30,      August 1, 
                                           1996             1997                  1996              1997
                                       ------------     ------------          -------------      -----------
                                        (unaudited)     (unaudited)            (unaudited)        (unaudited)

<S>                                    <C>              <C>                  <C>                 <C>        
REVENUES                               $  2,058,362     $  807,725           $ 5,522,919         $ 5,208,574
COST OF REVENUES                          1,654,237        599,476             4,545,545           3,963,855
                                          ---------     -----------           ----------          ----------
         Gross profit                       404,125        208,249               977,374           1,244,719

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                346,576        106,588             1,010,363             855,845
                                         ----------      -----------           ---------           ---------

         Income (loss) from operations       57,549        101,661               (32,989)            388,874

OTHER INCOME (EXPENSE)
    Interest expense                        (84,139)       (19,366)             (110,326)           (127,250)
    Interest and other income                12,114             10                26,460             (15,052)
                                         ----------       -----------         -----------           ---------

         Income (loss) before 
          provision for
          income taxes                     (14,476)         82,305              (116,855)            246,572

PROVISION FOR INCOME TAXES                     -            30,343               -                   91,427
                                         -----------     ---------           ------------           --------
         Net income (loss)              $  (14,476)      $  51,962            $ (116,855)           $155,145
                                        ============     =========           ============          =========
</TABLE>



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


<PAGE>



                        ELECTRONIC IMAGING SERVICES, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                  For the Nine Months Ended September 30, 1996
                    and the Seven Months Ended August 1, 1997


                                                      1996              1997
                                                  (unaudited)        (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                            $  (116,855)      $  155,145
    Adjustments to reconcile net income 
       (loss) to net cash provided 
       (used in) by operating activities-
         Depreciation and amortization               187,336          234,664
         Provision for doubtful accounts              36,267           16,700
         Gain on sale property                          -              12,650
         Changes in operating assets 
           (increase) decrease in -
                   Accounts receivable             (143,742)          (26,407)
                   Other current assets            (249,937)          (91,781)
         Changes in operating liabilities 
               increase (decrease) in -            
                   Other current liabilities        252,151          (268,004)
                                                  ----------        ------------
                  Net cash provided by (used in) 
                    operating activities            (34,780)          32,967
                                                  ----------        ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment          (190,479)          (8,324)
                                                  ----------        ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds (repayments) from borrowings       202,361          (69,732)
                                                 -----------       -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS           (22,898)         (45,089)

CASH AND CASH EQUIVALENTS, beginning of period       22,898           45,089
                                                 -----------       -------------
CASH AND CASH EQUIVALENTS, end of period                 -                -    
                                                ============       =============

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
   AND FINANCING ACTIVITIES:
    Capital lease obligation incurred          $    818,700      $   347,559
                                               =============     ===============

    Purchase of  treasury stock 
       through issuance of note                $    375,000               -
                                               ============      ===============

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


<PAGE>


                        ELECTRONIC IMAGING SERVICES, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

(1)    BASIS OF PRESENTATION

       The  accompanying  unaudited  condensed  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, 1996 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 seven and one
       month periods ended September 30, 1997 are not necessarily  indicative of
       the  results  that  may  be  expected  for  the  consolidated   financial
       statements for the year ended December 31, 1997.

       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.  Vestcom's  underwriters exercised in full an option to
       purchase an additional  577,500  shares of the Vestcom'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  approximately  $54,000,000,  net of
       underwriting discounts.  Concurrently with the Offering, Vestcom acquired
       all of the  outstanding  shares  of  Electronic  Imaging  Services,  Inc.
       Accordingly,  the accompanying financial statements of Electronic Imaging
       Services,  Inc.,  do not include a balance sheet as of September 30, 1997
       and reflect Electronic Imaging Services, Inc.'s operations and cash flows
       up until the date of  acquisition by Vestcom.  See the Vestcom  financial
       statements included elsewhere herein.


<PAGE>


                          COMPUTER OUTPUT SYSTEMS, INC.

                             CONDENSED BALANCE SHEET
                             As of December 31, 1996


                                                               December 31, 1996

                                     ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                 $        -
    Accounts receivable, net                                        964,035
    Other current assets                                            341,311
                                                               ------------

         Total current assets                                     1,305,346

PROPERTY AND EQUIPMENT, net                                         472,003
OTHER ASSETS                                                         36,240
                                                               ------------
         Total assets                                          $  1,813,589
                                                               ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Short-term borrowings                                      $      -
    Current portion of long-term debt 
      and capital lease obligations                                 244,584
    Other current liabilities                                       904,389
                                                               -------------

         Total current liabilities                                1,148,973

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                        130,072
DEFERRED EXPENSES                                                      -
                                                               -------------

         Total liabilities                                        1,279,045
                                                               -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Common stock                                                         10
    Additional paid-in capital                                      732,470
    Retained earnings                                              (197,936)
                                                                ------------

         Total stockholders' equity                                 534,544
                                                                ------------
         Total liabilities and stockholders' equity            $  1,813,589
                                                               =============



            The accompanying notes to condensed financial statements
                   are an integral part of this balance sheet.


<PAGE>
<TABLE>


                          COMPUTER OUTPUT SYSTEMS, INC.

                         CONDENSED STATEMENTS OF INCOME
            For the Three Months Ended September 30, 1996 and the One
              Month Ended August 1, 1997 and the Nine Months Ended
          September 30, 1996 and the Seven Months Ended August 1, 1997

<CAPTION>

                                                Three Months        One Month    Nine Months    Seven Months
                                                    Ended             Ended          Ended        Ended
                                                September 30,        August 1,   September 30,   August 1,
                                                    1996               1997          1996           1997   
                                                ------------       ------------  -------------  -------------
                                                (unaudited)        (unaudited)   (unaudited)    (unaudited)

<S>                                            <C>                 <C>          <C>             <C>         
REVENUES                                       $  1,313,551        $  761,036   $  3,681,978    $  4,236,913
COST OF REVENUES                                    798,462           488,270      2,327,822       2,764,962
                                               -------------       ------------ -------------   -------------
        Gross profit                                515,089           272,766      1,354,156       1,471,951

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                        327,237           131,250        864,998         769,576
                                               -------------      ------------- --------------  -------------
        Income from operations                      187,852           141,516        489,158         702,375

OTHER INCOME (EXPENSE)
    Interest expense                                  -                (4,532)      (11,051)         (29,817)
    Interest and other income                         -                   -             -              1,952
                                               ------------       ------------- -------------   -------------
        Income before provision 
          for income taxes                          187,852           136,984       478,107          674,510

PROVISION FOR INCOME TAXES                           13,807            14,041        42,362           69,245
                                               ------------       ------------- -----------     ------------
        Net income                            $     174,045       $   122,943   $   435,745     $    605,265
                                              =============       ===========   =============   =============

</TABLE>

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


<PAGE>
<TABLE>


<CAPTION>
                          COMPUTER OUTPUT SYSTEMS, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                  For the Nine Months Ended September 30, 1996
                    and the Seven Months Ended August 1, 1997


                                                           1996              1997
                                                         --------        ----------
                                                         (unaudited)     (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                    <C>              <C>       
    Net income                                         $   435,745      $  605,265
    Adjustments to reconcile net income to net cash
       provided by operating activities-
        Depreciation and amortization                       94,761          89,496
        Changes in operating assets (increase) decrease in -
               Accounts receivable                         (45,402)        (10,096)
               Other current assets                        (59,697)       (121,656)
        Changes in operating liabilities 
          increase (decrease) in -
               Other current liabilities                  (192,458)        517,794
                                                        -----------   ------------

               Net cash provided by operating activities   232,949       1,080,803
                                                        -----------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                 (102,909)        (90,886)
    Security deposits                                       (1,800)         (1,320)
                                                        -----------  --------------

               Net cash used in investing activities      (104,709)        (92,206)
                                                        -----------  --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds (repayments) from borrowings             (197,925)         45,557
    Distributions to Stockholders                          (17,910)       (927,400)
                                                      -------------  --------------

               Net cash used in financing activities      (215,835)       (881,843)
                                                      -------------  --------------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS       (87,595)        106,754

CASH AND CASH EQUIVALENTS, beginning of period              95,468            -
                                                     --------------  --------------

CASH AND CASH EQUIVALENTS, end of period             $       7,873   $     106,754
                                                     =============   ==============

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
   AND FINANCING ACTIVITIES:
    Capital lease obligations incurred                       -       $     161,183
                                                     =============   ==============

</TABLE>

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


<PAGE>


                          COMPUTER OUTPUT SYSTEMS, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

(1)    BASIS OF PRESENTATION

       The  accompanying  unaudited  condensed  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, 1996 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 seven and one
       month periods ended September 30, 1997 are not necessarily  indicative of
       the  results  that  may  be  expected  for  the  consolidated   financial
       statements for the year ended December 31, 1997.

       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.  Vestcom's  underwriters exercised in full an option to
       purchase an additional  577,500  shares of the Vestcom'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  approximately  $54,000,000  net of
       underwriting discounts.  Concurrently with the Offering, Vestcom acquired
       all  of  the  outstanding   shares  of  Computer  Output  Systems,   Inc.
       Accordingly,  the  accompanying  financial  statements of Computer Output
       Systems,  Inc.  do not include a balance  sheet as  of September 30, 1997
       and reflect  Computer Output System  Inc.'s  operations and cash flows up
       until the date of  acquisition  by  Vestcom.  See the  Vestcom  financial
       statements included elsewhere herein.


<PAGE>

                           LIRPACO INC. AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEET
                             As of December 31, 1996

                                                          December 31, 1996

                                     ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                              $          88,198
    Accounts receivable, net                                         743,380
    Other current assets                                             221,989
                                                           -----------------
         Total current assets                                      1,053,567
PROPERTY AND EQUIPMENT, net                                          661,901
                                                           -----------------
         Total assets                                      $       1,715,468
                                                           =================


                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Current portion of long-term debt and capital leases   $          51,752
    Other current liabilities                                        711,573
                                                           -----------------

         Total current liabilities                                   763,325

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                         245,166
DEFERRED EXPENSES                                                     26,474
                                                           ------------------

         Total liabilities                                         1,034,965
                                                           -----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
    Common stock                                                         102
    Preferred stock                                                  170,206
    Retained earnings                                                474,943
    Cumulative translation adjustments                                35,252
                                                           ------------------

         Total stockholders' equity                                  680,503
                                                           -----------------
         Total liabilities and stockholders' equity          $     1,715,468
                                                           ==================


            The accompanying notes to condensed financial statements
                   are an integral part of this balance sheet.


<PAGE>
<TABLE>


                           LIRPACO INC. AND SUBSIDIARY

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
            For the Three Months Ended September 30, 1996 and the One
              Month Ended August 1, 1997 and the Nine Months Ended
          September 30, 1996 and the Seven Months Ended August 1, 1997


<CAPTION>
                                                 Three Months      One Month         Nine Months        Seven Months
                                                    Ended            Ended              Ended               Ended
                                                 September 30,      August 1,       September 30,         August 1,
                                                    1996              1997              1996                1997
                                                 -------------     -----------      -------------        ------------
                                                  (unaudited)      (unaudited)      (unaudited)          (unaudited)

<S>                                            <C>               <C>              <C>                  <C>          
REVENUES                                       $  1,294,368      $    361,626     $  3,778,489         $   2,499,443
COST OF REVENUES                                    853,467           292,383        2,489,714             1,746,423
                                                -----------      --------------  -------------         -------------
         Gross profit                               440,901            69,243        1,288,775               753,020

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES                                        346,230            80,375          979,419               602,391
                                               -------------    --------------   -------------         --------------
         Income (loss) from operations               94,671           (11,132)         309,356               150,629

OTHER INCOME (EXPENSE)
    Interest expense                                 (4,769)             (908)         (13,428)              (17,139)

    Interest and other income                          -                  -              -                      -
                                               -------------    --------------  --------------         --------------
         Income (loss) before provision for
           income taxes                              89,902           (12,040)         295,928               133,490

PROVISION FOR INCOME TAXES                           12,039               -             63,545                36,383
                                              --------------    --------------- ---------------       --------------
         Net income (loss)                   $       77,863    $      (12,040)   $     232,383        $       97,107
                                             ===============    ==============   =============        ==============


</TABLE>

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


<PAGE>

<TABLE>

                           LIRPACO INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  For the Nine Months Ended September 30, 1996
                    and the Seven Months Ended August 1, 1997


<CAPTION>
                                                                1996                    1997
                                                            (unaudited)             (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                       <C>                       <C>      
    Net income                                            $   232,383               $  97,107

    Adjustments to reconcile net income to net cash
       provided by operating activities-
         Depreciation and amortization                         73,005                  48,099
         Changes in operating assets (increase) decrease
                   Accounts receivables                       129,808                 105,949
                   Other current assets                       210,378                 (38,178)
         Changes in operating liabilities increase (decrease)
                   Other current liabilities                 (130,568)               (175,983)
                   Deferred charges                            36,638                    (195)
                                                            ---------               ----------
                  Net cash provided by operating activities   551,644                  36,799
                                                            ---------               ----------


CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                   (167,058)                 (91,697)
                                                           ----------               ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Cumulative translation adjustment                              2                   41,840
    Net (proceeds) repayments from borrowings               (384,588)                  10,445
                                                           ----------               ----------
                  Net cash provided by 
                    (used in) financing activities          (384,586)                  52,285
                                                           ----------               ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS                      -                       (2,613)

CASH AND CASH EQUIVALENTS, beginning of period                 -                       88,198
                                                          -----------               ----------

CASH AND CASH EQUIVALENTS, end of period                  $    -                    $  85,585
                                                          ===========               ==========


</TABLE>

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


<PAGE>


                           LIRPACO INC. AND SUBSIDIARY

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

(1)    BASIS OF PRESENTATION

        Lirpaco  Inc.  (the  "Company"),  a Canadian  corporation,  is a holding
        company with one subsidiary, COS INFORMATION INC., a Quebec corporation.

        The  accompanying  unaudited  condensed  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, 1996 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 seven and one
        month periods ended September 30, 1997 are not necessarily indicative of
        the  results  that  may  be  expected  for  the  consolidated  financial
        statements for the year ended December 31, 1997.

        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.  Vestcom's underwriters exercised in full an option to
        purchase an  additional  577,500  shares of  Vestcom'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 approximately  $54,000,000,  net
        of  underwriting  discounts.  Concurrently  with the Offering,  Vestcom
        acquired all of the outstanding shares of Lirpaco, Inc. Accordingly, the
        accompanying  financial  statements  of Lirpaco,  Inc. do  not include a
        balance  sheet as of  September  30,  1997 and  reflect  Lirpaco  Inc.'s
        operations  and cash flows up until the date of  acquisition by Vestcom.
        See the Vestcom financial statements included elsewhere herein.


<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 the Founding  Companies,  each of which
had been operating as a separate independent entity.

For accounting  purposes,  the acquisition date was deemed to be August 1, 1997,
at which time the  Founding  Companies  were  consolidated  with the  Company as
Vestcom International, Inc. The Balance Sheet as of September 30, 1997, includes
the Founding Companies.  The Results of Operations for the Three and Nine Months
Ended  September 30, 1997,  and the Statements of Cash Flows for the Nine Months
Ended September 30, 1997,  includes the results of Vestcom for the entire period
and the results of the acquired  Founding  Companies  only since August 1, 1997.
Consequently,  management  believes that individual Founding Companies financial
comparisons are no longer meaningful. Therefore, third quarter 1997 Management's
Discussion  and Analysis of Financial  Condition  and Results of  Operations  is
presented on a pro forma consolidated basis.

The Founding  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. Founding  Companies),
which have influenced,  among other things,  their historical  levels of owners'
compensation.  In connection with the organization of the Company,  these owners
and  certain  key  employees   have  agreed  to  certain   reductions  in  their
compensation commencing on the consummation of the Offering.

Vestcom, which conducted no operations prior to the consummation of the Offering
other than in connection with the  acquisitions  of the Founding  Companies (the
"Acquisitions")  and the financing  activities  related  thereto,  including the
Offering,  intends  to  integrate  these  businesses  and their  operations  and
administrative  functions over a period of time.  This  integration  process may
present  opportunities  to reduce costs through the  elimination  of duplicative
functions  and through  economies of scale,  particularly  in obtaining  greater
volume discounts from suppliers,  but will also necessitate additional costs and
expenditures  for  corporate  management  and  administration  (including  costs
related to the hiring of additional  management  personnel),  corporate expenses
related to being a public company, systems integration and facilities expansion.
These various costs and possible  cost-savings may make comparison of historical
operating  results not comparable to, or indicative of, future  performance.  In
addition, Vestcom may make payments of up to $2.8 million and may issue up to an
additional 844,997 shares of Common Stock in connection with the Acquisitions of
four Founding Companies if specified revenue or earnings thresholds are attained
during various periods ending no later than two years after the first day of the
fiscal  quarter  in which the  Offering  was  consummated.  Any  earn-outs  will
increase goodwill recorded for the Acquisition transactions. The amortization of
any  additional  goodwill  and the  increased  number  of  shares  issued if the
earn-outs are achieved will negatively  affect the Company's future earnings per
share.

For all the reasons set forth above and others, the following  discussion of Pro
Forma  Results of  Operations  should be read with the  foregoing  caveats as to
non-comparability in mind.

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.  The Company's actual results may differ  significantly  from the
results discussed in the  Forward-Looking  Statements.  Factors that might cause
such a difference  include the risks  described under the caption "Risk Factors"
in the  Company's  Prospectus  dated July 30, 1997.  Such factors may also cause
substantial volatility in the market price of the Company's Common Stock.

<PAGE>

PRO FORMA RESULTS OF OPERATIONS
================================================================================

Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996
================================================================================

Pro Forma revenues increased $5,169,000, or 10.7%, from $48,368,000 for the nine
months  ended  September  30,  1996 to  $53,537,000  for the nine  months  ended
September  30, 1997.  This  increase  was  primarily  attributable  to increased
volumes of Vestcom's  production of statements,  point-of-  purchase  labels and
micrographics, although revenues also increased in most other areas of Vestcom's
business.

Vestcom's  Pro  Forma  gross  profit  increased   $3,017,000,   or  18.2%,  from
$16,554,000  for the nine months ended September 30, 1996 to $19,571,000 for the
nine  months  ended  September  30,  1997.  The Pro Forma  gross  profit  margin
increased from 34.2% in 1996 to 36.6% in 1997 primarily due to improved capacity
utilization  resulting from the increased volume of business and the refinancing
through capital leases of certain existing  production  equipment which resulted
in reduced lease and maintenance costs.

Pro Forma selling, general and administrative expenses increased $1,036,000,  or
9.0%  from  $11,567,000  for  the  nine  months  ended  September  30,  1996  to
$12,603,000  for the nine months ended  September  30, 1997.  As a percentage of
revenues,  selling,  general and administrative expenses decreased from 23.9% in
1996 to 23.5% in 1997.  The increase in the dollar amount of Pro Forma  selling,
general and  administrative  expense was  primarily  attributable  to  increased
compensation  expense  for  new  technical  personnel,   increased  commissions,
increased  administrative expenses to support the greater volume of business and
the  costs  associated  with  the new  Vestcom  corporate  structure  while  the
percentage  decrease  was  attributable  to the  increase in revenues  discussed
above.

Pro  Forma  interest  expense  increased  $427,000  or 100% from $0 for the nine
months ended September 30, 1996, to $427,000 for the nine months ended September
30, 1997. The increase in interest expense was due to capitalized leases entered
into in 1997.

Pro Forma interest and other income increased  $161,000 or 99% from $163,000 for
the nine months ended  September  30, 1996 to $324,000 for the nine months ended
September 30, 1997. This increase was due primarily to the temporary  investment
of cash generated by Vestcom's initial public offering.

Pro Forma  net  income  increased  from  $2,000,000  for the nine  months  ended
September 30, 1996 to $3,029,000  for the nine months ended  September 30, 1997,
for the reasons discussed above.

Three Months Ended  September 30, 1997 Compared to Three Months Ended  September
30, 1996
================================================================================
Pro Forma revenues increased $1,424,000, or 8.9%, from $16,049,000 for the three
months  ended  September  30, 1996 to  $17,473,000  for the three  months  ended
September  30, 1997.  This  increase  was  primarily  attributable  to increased
volumes of Vestcom's  production of  statements,  point-of  purchase  labels and
micrographics, although revenues also increased in most other areas of Vestcom's
business.

Vestcom's Pro Forma gross profit increased $1,285,000, or 25.2%, from $5,091,000
for the three months ended September 30, 1996 to $6,376,000 for the three months
ended September 30, 1997. The Pro Forma gross profit margin increased from 31.7%
in  1996 to  36.5%  in  1997  primarily  due to  improved  capacity  utilization
resulting  from the  increased  volume of business and the  refinancing  through
capital  leases of certain  existing  production  equipment  which  resulted  in
reduced lease and maintenance costs.

<PAGE>

Pro Forma selling,  general and administrative  expenses increased $405,000,  or
10.3%  from  $3,944,000  for  the  three  months  ended  September  30,  1996 to
$4,349,000  for the three months ended  September  30, 1997.  As a percentage of
revenues,  selling general and  administrative  expenses increased from 24.6% in
1996  to  24.9%  in  1997.  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 to support the greater volume of business and the costs associated with
the new Vestcom corporate structure.

Pro Forma interest expense increased $177,000 from $0 for the three months ended
September 30, 1996,  to $177,000 for the three months ended  September 30, 1997.
The increase in interest  expense was due to capitalized  leases entered into in
1997.

Pro Forma interest and other income increased  $207,000 or 259% from $80,000 for
the three months ended September 30, 1996 to $287,000 for the three months ended
September 30, 1997. This increase was due primarily to the temporary  investment
of cash generated by Vestcom's initial public offering.

Pro Forma  net  income  increased  from  $373,000  for the  three  months  ended
September  30, 1996 to $919,000 for the three months ended  September  30, 1997,
for the reasons discussed above.

================================================================================
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES
================================================================================

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. On August 13, 1997,
the Company and Summit Bank entered into an Equipment Loan and Revolving  Credit
Agreement in the amount of $30,000,000. At September 30, 1997, the entire credit
line was available.

At September  30, 1997,  Vestcom had working  capital of  $26,460,000.  Net cash
provided by operating  activities  for the nine months ended  September 30, 1997
was $3,470,000. Net cash used in investing acitivities for the nine months ended
September  30, 1997 was  ($73,525,000)  which  includes the  acquisition  of the
Founding  Companies.  Net cash  provided by  financing  activities  for the nine
months ended September 30, 1997 was  $71,481,000  which includes the issuance of
common stock relating to the public offering.

Long term debt of $8,454,000 consists primarily of capital leases with equipment
vendors for  production  equipment.  Vestcom  incurs  postage costs on behalf of
customers of  approximately  $3,000,000 to $6,000,000 each month.  The Company's
policy is to collect such postage  costs from its  customers in advance.  To the
extent the Company is unsuccessful in doing so, cash flow is negatively affected
and Vestcom may be required to utilize its bank credit line.  While no assurance
can be given,  management  of Vestcom  believes  it has  adequate  cash flow and
financing  alternatives  available to it to fund its  operations and its plan to
acquire   additional   related   businesses   for   the   foreseeable    future.
================================================================================


<PAGE>


COMVESTRIX CORP.
================================================================================

On August 4, 1997, all of the outstanding stock of Comvestrix Corp. was acquired
by Vestcom International, Inc. Accordingly, management believes that comparative
analysis of the operating  results of  Comvestrix  for the three months and nine
months ended  September  30, 1996,  to the one month and the seven months ending
August 1, 1997 (the  effective  date of  acquisition  by Vestcom for  accounting
purposes),  as well as a Comvestrix  Liquidity and Capital  Resource  discussion
would not be meaningful. See Vestcom International, Inc. Pro  Forma Consolidated
Management's  Discussion  and  Analysis of  Financial  Condition and Results of 
Operations elsewhere herein.

MORRIS COUNTY DIRECT MAIL SERVICES, INC. and related companies (DMS)
================================================================================

On August 4, 1997, all of the  outstanding  stock of DMS was acquired by Vestcom
International,  Inc. Accordingly,  management believes that comparative analysis
of the  operating  results  of DMS for the three  months and nine  months  ended
September  30, 1996, to the one month and the seven months ending August 1, 1997
(the effective date of acquisition by Vestcom for accounting purposes),  as well
as a DMS Liquidity and Capital Resource discussion would not be meaningful.  See
Vestcom International,  Inc. Pro Forma Consolidated Management's Discussion and
Analysis of Financial  Condition and Results of Operations elsewhere herein.

IMAGE PRINTING SYSTEMS, INC.
================================================================================

On August 4, 1997, all of the outstanding stock of Image was acquired by Vestcom
International,  Inc. Accordingly,  management believes that comparative analysis
of the  operating  results of Image for the three  months and nine months  ended
September  30, 1996, to the one month and the seven months ending August 1, 1997
(the effective date of acquisition by Vestcom for accounting purposes),  as well
as an Image Liquidity and Capital  Resource  discussion would not be meaningful.
See Vestcom International,  Inc. Pro Forma Consolidated  Management's Discussion
and Analysis of Financial  Condition and Results of Operations elsewhere herein.

ELECTRONIC IMAGING SERVICES, INC. (EIS)
================================================================================

On August 4, 1997, all of the  outstanding  stock of EIS was acquired by Vestcom
International,  Inc. Accordingly,  management believes that comparative analysis
of the  operating  results  of EIS for the three  months and nine  months  ended
September  30, 1996, to the one month and the seven months ending August 1, 1997
(the effective date of acquisition by Vestcom for accounting purposes),  as well
as an EIS Liquidity and Capital Resource discussion would not be meaningful. See
Vestcom International,  Inc. Pro Forma Consolidated Management's  Discussion and
Analysis of Financial  Condition and Results of Operations elsewhere herein.

COMPUTER OUTPUT SYSTEMS, INC.
================================================================================

On August 4, 1997, all of the outstanding  stock of Computer Output was acquired
by Vestcom International, Inc. Accordingly, management believes that comparative
analysis of the  operating  results of Computer  Output for the three months and
nine months  ended  September  30,  1996,  to the one month and the seven months
ending  August  1,  1997 (the  effective  date of  acquisition  by  Vestcom  for
accounting  purposes),  as well  as a  Computer  Output  Liquidity  and  Capital
Resource discussion would not be meaningful.  See  Vestcom  International,  Inc.
Pro  Forma  Consolidated  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations elsewhere herein.

COS INFORMATION
================================================================================

On August 4, 1997, all of the outstanding  stock of COS Information was acquired
by Vestcom International, Inc. Accordingly, management believes that comparative
analysis of the operating  results of COS  Information  for the three months and
nine months  ended  September  30,  1996,  to the one month and the seven months
ending  August  1,  1997 (the  effective  date of  acquisition  by  Vestcom  for
accounting  purposes),  as  well  as a COS  Information  Liquidity  and  Capital
Resource discussion would not be meaningful.  See  Vestcom  International,  Inc.
Pro  Forma  Consolidated  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations elsewhere herein.


<PAGE>




                           Part II: Other Information


Item 2 - Changes in Securities and Use of Proceeds


     The  Company's   initial  public  offering  was  effected   pursuant  to  a
registration  statement on Form S-1 (No.  333-23519)  declared  effective by the
Securities  and Exchange  Commission  (the "SEC") on July 29, 1997. The offering
commenced  on July 30,  1997 and  terminated  after all  securities  were  sold.
Pursuant to Rule 463 promulgated by the SEC, the Company  provides the following
information regarding its initial public offering:
 
     (a) The managing  underwriters  were Oppenheimer & Co., Inc. and Prudential
Securities Incorporated.

     (b) The title of the class of stock  registered  was Common  Stock,  no par
value.  The Company sold all 4,427,500  shares that were  registered  (including
577,500  shares which were sold  pursuant to the  exercise of  the Underwriters'
over-allotment  option).  There were no selling  securityholders.  The aggregate
price of the offering amount registered and sold was $57,557,500.

     (c) From July 30, 1997 through September 30, 1997, the Company's reasonable
estimate  of the  amount of  expenses  incurred  for the  Company's  account  in
connection with the issuance and  distribution of the securities  registered for
underwriting discounts and commissions was $4,029,025, for finders' fees was $0,
for  expenses  paid to or for  underwriters  was $ 0 and for other  expenses was
$3,796,402.  Thus,  the total amount of such expenses was $7,825,427 and the net
proceeds to the Company was $49,732,073.  Except as set forth in the immediately
following sentence,  none of the above-mentioned  expenses represented direct or
indirect  payments to directors or officers of the Company or their  associates,
to persons  owning ten  percent or more of any class of equity  security  of the
Company or to  affiliates  of the Company.  As set forth in the  above-mentioned
registration  statement,  one of the Company's directors (Richard D. White) is a
Managing  Director at Oppenheimer & Co., Inc., one of the managing  underwriters
of the Company's initial public offering.

     (d) From July 30, 1997 through September 30, 1997, the Company has used the
following amount of such net proceeds for the following categories enumerated by
the SEC:

                                                          Reasonable Estimated
            Category                                             Amount

            Construction of plant, building and facilities             0

            Purchase and  installation  of  machinery  and
            equipment                                           $   182,537

            Purchases of real estate                                  0

            Acquisition of other businesses                     $16,032,592

            Repayment of indebtedness                           $10,235,979

            Working capital                                           0

            Short term investments                              $23,280,965

            Other  purposes  for  which at least  $100,000
            has been used                                             0
 
None of the  above-mentioned  uses of  proceeds  represented  direct or indirect
payments to directors or officers of the Company or their associates, to persons
owning ten percent or more of any class of equity  security of the Company or to
affiliates  of the Company  other than as set forth  below.  As described in the
Company's  registration  statement,  simultaneously with the consummation of the
Company's  initial public  offering,  the Company acquired seven companies which
provide  computer  output  and  document   management  services  (the  "Founding
Companies").  The  following  directors  and  executive  officers of the Company
received the following cash payments as part of the  consideration  paid to them
as  stockholders  of their  respective  Founding  Companies:  Joel  Cartun  (the
Company's  President  and  Chairman  of the  Board)  received  $4,129,610,  Gary
Marcello  (a director  of the  Company)  received  $3,271,303,  Howard  April (a
director  of the  Company)  received  $502,640  and Leslie  Abcug (an  executive
officer of the Company) received $90,813.

     None of the uses described above represents a material change in the use of
proceeds described in the above-mentioned registration statement.


         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 14, 1997