<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

(Mark One)

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 2001 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _________ to _________.

        Commission file number:  333-23519

                           VESTCOM INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

     New Jersey                                      22-3477425
     (State or other jurisdiction of              (I.R.S. Employer
     incorporation or organization)               Identification No.)

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

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

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

Indicate by check mark whether registrant (1) has filed all reports required to
be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.


                                 Yes [X] No [ ]


The number of shares of common stock outstanding as of August 1, 2001 was
9,056,806 shares.


<PAGE>


                  FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2001
                                      INDEX


Part I:  Financial Information

<TABLE>
<CAPTION>

                                                                                                   Page(s)
                                                                                                   -------
<S>                                                                                                <C>
Item 1:  Financial Statements

    Condensed Consolidated Balance Sheets - as of December 31, 2000 and
         June 30, 2001 (unaudited)                                                                    3
    Condensed Consolidated Statements of Operations - For the Three Months and Six Months
         Ended June 30, 2000 (unaudited) and 2001 (unaudited)                                         4
    Condensed Consolidated Statements of Cash Flows - For the Six Months Ended
         June 30, 2000 (unaudited) and 2001 (unaudited)                                               5
    Notes to Condensed Consolidated Financial Statements (unaudited)                                  6

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

Overview; Disclosures Regarding Forward Looking Statements; Results of Operations                     7

Liquidity and Capital Resources                                                                      10

Item 3:  Quantitative and Qualitative Disclosures About Market Risk                                  11


Part II:  Other Information

Item 4: Submission of Matters to a Vote of Security Holders                                          11

Item 6: Exhibits and Reports on Form 8-K                                                             11

Signature                                                                                            11

</TABLE>

                                       2

<PAGE>


                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    As of December 31, 2000 and June 30, 2001

<TABLE>
<CAPTION>

                                     ASSETS

                                                                                      December 31,          June 30,
                                                                                         2000                  2001
                                                                                   ---------------       --------------
                                                                                       (note 1)            (unaudited)
<S>                                                                                <C>                   <C>
CURRENT ASSETS:
     Cash and cash equivalents                                                     $     633,567          $   1,502,879
     Accounts receivable, net                                                         31,263,745             26,274,823
     Other current assets                                                             10,430,464             10,857,718
                                                                                   -------------          -------------
                           Total current assets                                       42,327,776             38,635,420

PROPERTY AND EQUIPMENT, net                                                           39,313,069             37,837,728
GOODWILL, net                                                                         73,912,726             72,539,532
OTHER ASSETS                                                                             390,609                518,016
                                                                                   -------------          -------------
                           Total assets                                            $ 155,944,180          $ 149,530,696
                                                                                   =============          =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Current portion of long-term debt and capital lease obligations               $   4,111,132          $   4,057,266
     Accounts payable                                                                 14,913,615             13,172,958
     Other liabilities                                                                16,983,588             13,075,821
                                                                                   -------------          -------------
                           Total current liabilities                                  36,008,335             30,306,045

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                                          20,084,858             19,298,045
OTHER NONCURRENT LIABILITIES                                                           7,772,610              7,771,885
                                                                                   -------------          -------------

                           Total liabilities                                       $  63,865,803          $  57,375,975
                                                                                   -------------          -------------

STOCKHOLDERS' EQUITY:
   Preferred Stock
     Class B, 1 share authorized, issued and outstanding at
       December 31, 2000 and June 30, 2001                                         $   1,240,274          $   1,240,274
   Common stock, no par value; 20,000,000 shares authorized;
       9,056,806 shares issued and outstanding at
       December 31, 2000 and June 30, 2001                                            90,300,456             90,300,456
   Retained Earnings                                                                     861,565                998,904
   Accumulated other comprehensive (loss)                                               (323,918)              (384,913)
                                                                                   -------------          -------------

                           Total stockholders' equity                              $  92,078,377          $  92,154,721
                                                                                   -------------          -------------

                           Total liabilities and stockholders' equity              $ 155,944,180          $ 149,530,696
                                                                                   =============          =============

</TABLE>


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

                                       3

<PAGE>


                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
        For the Three Months and Six Months Ended June 30, 2000 and 2001
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                  Three Months Ended                       Six Months Ended
                                                         ----------------------------------      ---------------------------------
                                                          June 30, 2000       June 30, 2001       June 30, 2000       June 30, 2001
                                                         --------------      --------------      --------------      --------------
<S>                                                      <C>                 <C>                 <C>                 <C>
REVENUES                                                 $ 33,669,461        $ 37,660,563        $ 69,412,543        $ 76,032,320
COST OF REVENUES                                           24,446,645          27,230,290          49,429,782          55,109,630
                                                         ------------        ------------        ------------        ------------
     Gross profit                                           9,222,816          10,430,273          19,982,761          20,922,690

SELLING, GENERAL AND ADMINISTRATIVE
       EXPENSES                                             8,255,343           9,404,783          16,583,503          19,252,399
RESTRUCTURING AND OTHER NON-
     RECURRING CHARGES (CREDITS)                             (104,416)            384,337            (104,416)            384,337
                                                         ------------        ------------        ------------        ------------
     Income from operations                                 1,071,889             641,153           3,503,674           1,285,954

OTHER INCOME (EXPENSE)
     Interest expense                                        (734,438)           (525,583)         (1,485,965)         (1,067,023)
     Other income                                              40,655              22,575             104,030              86,267
                                                         ------------        ------------        ------------        ------------
     Income before provision for
         income taxes                                         378,106             138,145           2,121,739             305,198


PROVISION FOR INCOME TAXES                                    189,053              75,980           1,060,870             167,859
                                                         ------------        ------------        ------------        ------------
     Net income                                          $    189,053        $     62,165        $  1,060,869        $    137,339
                                                         ============        ============        ============        ============

Net income per share - basic                             $        .02        $        .01        $        .12        $        .02
                                                         ============        ============        ============        ============

Net income per share - diluted                           $        .02        $        .01        $        .12        $        .02
                                                         ============        ============        ============        ============

</TABLE>

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

                                       4

<PAGE>


                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 2000 and 2001
                                   (unaudited)

<TABLE>
<CAPTION>


                                                                                     Six Months Ended
                                                                            ---------------------------------
                                                                            June 30, 2000       June 30, 2001
                                                                            -------------      --------------
<S>                                                                         <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                   $ 1,060,869        $   137,339
     Adjustments to reconcile net income to net cash
     provided by operating activities-
         Depreciation and amortization                                         4,685,659          5,459,409
         Loss on disposal of equipment                                            20,868                971
         Restructuring Charges                                                   279,442            216,743
     Changes in operating assets (increase) decrease in-
         Accounts receivable                                                     865,581          4,988,922
         Other current assets                                                  1,856,277           (427,254)
         Other assets                                                             62,712             81,921
     Changes in operating liabilities (decrease) in-
         Accounts payable                                                     (2,131,205)        (1,740,657)
         Other current liabilities                                              (352,687)        (3,907,767)
         Other non-current liabilities                                          (530,917)              (725)
                                                                             -----------        -----------
                  Net cash provided by operating activities                    5,816,599          4,808,902

CASH FLOWS FROM INVESTING ACTIVITIES:
     Acquisition of property and equipment                                    (3,935,389)        (3,039,337)
     Proceeds from sale of assets                                                  6,000              1,421
                                                                             -----------        -----------
                   Net cash used in investing activities                      (3,929,389)        (3,037,916)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net borrowings (repayments) of long term debt                            (2,327,952)          (840,679)
                                                                             -----------        -----------

             Net cash used in financing activities                            (2,327,952)          (840,679)
                                                                             -----------        -----------

EFFECTS OF EXCHANGE RATES ON CASH BALANCES                                       (47,818)           (60,995)

             Net (decrease) increase in cash and cash equivalents               (488,560)           869,312
                                                                             -----------        -----------

CASH, beginning of period                                                      1,458,613            633,567
                                                                             -----------        -----------

CASH, end of period                                                          $   970,053        $ 1,502,879
                                                                             ===========        ===========


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
     Capital lease obligations                                                   351,553                  -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid for interest                                                    1,404,697          1,060,433
     Cash paid (refunded) for income taxes                                   $  (353,817)       $ 1,191,558

</TABLE>

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

                                       5

<PAGE>


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

(1)    BASIS OF PRESENTATION

       The accompanying unaudited condensed consolidated financial statements
       have been prepared in accordance with generally accepted accounting
       principles for interim financial information and with the instructions to
       Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
       include all of the information and footnotes required by generally
       accepted accounting principles for complete financial statements. The
       financial statements include the accounts of Vestcom International, Inc.
       (a New Jersey corporation) and its wholly owned subsidiaries
       (collectively, "Vestcom" or the "Company"). The balance sheet at December
       31, 2000 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 six-month period ended June
       30, 2001 are not necessarily indicative of the results that may be
       expected for the full year ending December 31, 2001. The condensed
       consolidated financial statements should be read in conjunction with the
       consolidated financial statements of the Company and the related notes
       thereto contained in Vestcom's Annual Report on Form 10-K for the year
       ended December 31, 2000.



(2)    EARNINGS PER SHARE ("EPS")

       Basic EPS is calculated by dividing income available to common
       shareholders by the weighted average number of shares of common stock
       outstanding during the period. The weighted average number of shares of
       common stock used in determining basic EPS was 9,056,806 for the three
       months and six months ended June 30, 2001 and 2000, respectively.

       Diluted EPS is calculated by dividing income available to common
       shareholders, adjusted to reflect the effects of earnouts and stock
       options, by the weighted average number of shares of common stock
       outstanding, plus additional common shares that could be issued in
       connection with potentially dilutive securities. The weighted average
       number of shares of common stock used in determining diluted EPS was
       9,056,962 and 9,113,767 for the three months ended June 30, 2001 and
       2000, respectively; and 9,060,110 and 9,109,972 for the six months ended
       June 30, 2001 and 2000, respectively and reflects 156 and 3,304
       additional shares issuable in connection with stock options, for the
       three and six months ended June 30, 2001, respectively.

       The computation of diluted earnings per share excluded 1,799,642 and
       646,460 shares, for the three months ended June 30, 2001 and 2000,
       respectively, and 1,662,490 and 671,899 shares for the six months ended
       June 30, 2001 and 2000, respectively because the effects of their
       inclusion would have been antidilutive.

(3)    COMPREHENSIVE INCOME (LOSS):

       Comprehensive income includes foreign currency translation gains and
       losses. The balance sheet translation adjustment was $81,757 and
       ($50,928) for the three months ended June 30, 2001 and 2000,
       respectively; and ($60,995) and ($47,818) for the six months ended June
       30, 2001 and 2000, respectively.



(4)    RESTRUCTURING AND OTHER NON-RECURRING CHARGES:

       During 1999, the Company recorded an aggregate restructuring charge of
       $5,178,000, which was comprised of the costs related to the consolidation
       and integration of operations in three of the Company's operating
       locations: the Mid-Atlantic area, the New England area and Canada. During
       the

                                       6

<PAGE>


       second quarter of 2001, the Company reversed approximately $250,000
       of those previously recorded restructuring reserves that were no longer
       required due to the revision of certain estimates. At June 30, 2001, the
       Company had approximately $113,000 of the 1999 restructuring reserves
       remaining, which relate to facility exit costs.

       During the second quarter of 2001, the Company recorded a restructuring
       charge of approximately $634,000. The Company's second quarter 2001
       restructuring plan is comprised of the consolidation and integration of
       facilities in the Company's Connecticut, Wisconsin and Michigan locations
       (the "Second Quarter 2001 Restructuring Plan"). The Second Quarter 2001
       Restructuring Plan is aimed at reducing the Company's operating cost
       structure by reducing the number of facilities. The restructuring charge
       includes the lease costs to close facilities of $189,000, the write-down
       of fixed assets associated with these facilities of $217,000 and
       personnel costs of $228,000 related to severance costs for the
       termination of employees related to the closing and/or relocation of the
       operating facilities. At June 30, 2001, the Company had $389,000 of
       remaining restructuring reserves on its balance sheet relating to the
       Second Quarter 2001 Restructuring Plan. This reserve was comprised of
       $203,000 related to severance costs and $186,000 related to the lease
       costs to close the facilities. In addition to the costs included in the
       restructuring charge, during the second quarter of 2001, the Company
       incurred $134,000 of moving related costs that were included in the
       operating results.

(5)    FUTURE ACCOUNTING REQUIREMENTS:

       In July 2001, the Financial Accounting Standards Board (FASB) issued FASB
       Statements Nos. 141 and 142 (FAS 141 and FAS 142), "Business
       Combinations" and "Goodwill and Other Intangible Assets". FAS 141
       replaces APB16 and eliminates pooling-of-interests accounting
       prospectively. It also provides guidance on purchase accounting related
       to the recognition of intangible assets and accounting for negative
       goodwill. FAS 142 changes the accounting for goodwill from an
       amortization method to an impairment-only approach. Under FAS 142,
       goodwill will be tested annually and whenever events or circumstances
       occur indicating that goodwill might be impaired. FAS 141 and FAS 142 are
       effective for all business combinations completed after June 30, 2001.
       Upon adoption of FAS 142, amortization of goodwill recorded for business
       combinations consummated prior to July 1, 2001 will cease, and intangible
       assets acquired prior to July 1, 2001 that do not meet the criteria for
       recognition under FAS 141 will be reclassified to goodwill. Companies are
       required to adopt FAS 142 for fiscal years beginning after December 15,
       2001, and early adoption is permitted in some cases. The Company is not
       eligible for early adoption and will adopt FAS 142 on January 1, 2002. In
       connection with the adoption of FAS 142, the Company will be required to
       perform a transitional goodwill impairment assessment. The Company has
       not yet determined the impact these standards will have on its results of
       operations and financial position. The Company has recorded approximately
       $1,373,000 of amortization expense for the six months ended June 30,
       2001.

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

OVERVIEW

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


                                       7

<PAGE>

DISCLOSURES REGARDING FORWARD LOOKING STATEMENTS

         This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended that are based on
the beliefs of Vestcom's management as well as assumptions made by and
information currently available to Vestcom's management. Such statements reflect
the current views of Vestcom with respect to future events based on currently
available information and are subject to risks and uncertainties that could
cause actual results to differ materially from those contemplated in such
forward-looking statements. Factors that could cause actual results to differ
materially from Vestcom's expectations include, but are not limited to, the
following: the ability of the Company to execute and manage its growth strategy,
the results of the Company's investment spending, the ability to effectively
consolidate production facilities and functions as part of the Company's
integration program, the ability to realize reduced cost savings including
overhead costs, increased production capacity and operating efficiencies,
improved financial results, operational synergies and enhanced services at the
newly consolidated facilities, acceptance of Vestcom's products and services,
including electronic and Internet related services, in the marketplace, the
entry of new competitors in the marketplace, the ability to attract and retain
key customers, the ability to positively modify its revenue mix, variations in
quarterly results, the sufficiency of the Company's working capital, changes in
the business communications industry, the availability of suitable acquisition
candidates and the assimilation of new acquisitions with existing business.
Other factors are described from time to time in Vestcom's public filings with
the Securities and Exchange Commission, news releases and other communications.
Also, when Vestcom uses the words "believes", "expects", "anticipates,"
"estimates," "plans," "intends," "objectives," "goals," "aims," "projects" or
similar words or expressions, Vestcom is making forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. Vestcom does not undertake
any obligation to release publicly any revisions to these forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

Revenues increased $3,992,000 or 12%, to $37,661,000 for the three months ended
June 30, 2001, from $33,669,000 for the three months ended June 30, 2000. This
increase was primarily attributable to increased sales to new and existing
customers in the financial services and retail markets. Additionally, the
Company had increased revenues from new customers for fulfillment services.

Gross profit increased $1,207,000, or 13%, to $10,430,000 for the three months
ended June 30, 2001, from $9,223,000 for the three months ended June 30, 2000.
The gross profit margin increased from 27% for the three months ended June 30,
2000 to 28% for the same period in 2001. The increase in gross profit was
primarily attributable to the increased sales activity over the prior year.
However, the increased margins were burdened by increased costs related to the
new business products and services as well as costs associated with facility
consolidations and integrations during the quarter.

Selling, general and administrative expenses increased $1,150,000, or 14%, to
$9,405,000 for the three months ended June 30, 2001, from $8,255,000 for the
three months ended June 30, 2000. As a percentage of revenues, selling, general
and administrative expenses remained constant at 25% for the quarter in both
2001 and 2000. The increase in the dollar amount of selling, general and
administrative expenses was primarily due to increased compensation expense
including commissions on sales to both new and existing customers, increased
commission rates on new products and services and increased staffing of sales
and other administrative personnel. The Company also incurred certain moving
costs associated with the facilities consolidations and integration during the
second quarter, which also burdened selling, general and administrative
expenses. In addition, as part of its plan to become a marketing services
company, the Company made investments to enhance its technology and
infrastructure, as well as to support its sales and

                                       8

<PAGE>

marketing initiatives aimed at branding its products and services. These
investments and initiatives increased the selling, general and administrative
expenses during the quarter. As part of its consolidation and integration plan,
the Company will continue to review the appropriateness of additional facility
consolidations.

During 1999, the Company recorded an aggregate restructuring charge of
$5,178,000, which was comprised of the costs related to the consolidation and
integration of operations in three of the Company's operating locations: the
Mid-Atlantic area, the New England area and Canada. During the second quarter of
2001, the Company reversed approximately $250,000 of those previously recorded
restructuring reserves no longer required due to the revision of certain
estimates.

During the second quarter of 2001, the Company recorded a restructuring charge
of $634,000. The Company's Second Quarter 2001 Restructuring Plan is comprised
of the consolidation and integration of facilities in the Company's Connecticut,
Wisconsin and Michigan locations. The Second Quarter 2001 Restructuring Plan is
aimed at reducing the Company's operating cost structure by reducing the number
of facilities. The restructuring charge includes the lease costs to close
facilities of $189,000, the write-down of fixed assets associated with these
facilities of $217,000 and personnel costs of $228,000 related to severance
costs for the termination of employees related to the closing and/or relocation
of the operating facilities.

Interest expense decreased $208,000, or 28%, to $526,000 for the three months
ended June 30, 2001, from $734,000 for the three months ended June 30, 2000.
This decrease was attributable to lower interest rates and decreased outstanding
balances on the Company's credit facility as compared to the same period in the
prior year.

Other income decreased $18,000, to $23,000 for the three months ended June 30,
2001, from $41,000 for the three months ended June 30, 2000. There were no
significant variances in other income from the prior year. Other income relates
to non-operating activities that do not reflect core operations.

Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

Revenues increased $6,619,000, or 10%, to $76,032,000 for the six months ended
June 30, 2001, from $69,413,000 for the six months ended June 30, 2000. This
increase was primarily attributable to increased volumes from new and existing
customers in the financial services and retail markets and in fufillment
services. The Company did however experience lower volumes of business
communications services, as a result of general economic conditions, which
negatively impacted revenues.

Gross profit increased $940,000, or 5%, to $20,923,000 for the six months ended
June 30, 2001, from $19,983,000 for the six months ended June 30, 2000. The
increase in gross profit was attributable to the increase in sales activity. The
gross profit margin decreased from 29% for the six months ended June 30, 2000 to
28% for the same period in 2001. The decrease in the gross profit margin was due
to increased costs related to the new business products and services and
decreased equipment utilization as a result of the lower volumes in the
Company's business communications services, as well as costs associated with the
Company's facilities consolidations and integration during the second quarter of
2001. To reduce costs, during the first quarter of 2001 the Company reduced
staffing levels.

Selling, general and administrative expenses increased $2,668,000, or 16% to
$19,252,000 for the six months ended June 30, 2001 from $16,584,000 for the six
months ended June 30, 2000. As a percentage of revenues, selling, general and
administrative expenses increased from 24% to 25%. The increase in selling,
general and administrative expenses was primarily due to increased compensation
expense including commissions on sales to both new and existing customers,
increased commission rates on new products and services and increased staffing
of sales and other administrative personnel. The Company also incurred certain
moving


                                       9

<PAGE>

costs associated with the consolidation and integration, which burdened the
selling, general and administrative expenses in the period. In addition, as part
of its plan to become a marketing services company, the Company has made
investments in technology and infrastructure. The Company also implemented sales
and marketing initiatives aimed at branding its products and services. As part
of its consolidation and integration plan, the Company will continue to review
the appropriateness of additional facility consolidations.

During 1999, the Company recorded an aggregate restructuring charge of
$5,178,000, which was comprised of the costs related to the consolidation and
integration of operations in three of the Company's operating locations: the
Mid-Atlantic area, the New England area and Canada. During the second quarter of
2001, the Company reversed approximately $250,000 of those previously recorded
restructuring reserves no longer required due to the revision of certain
estimates.

During the second quarter of 2001, the Company recorded a net restructuring
charge of $384,000. See the discussion under the Three Months Ended June 30,
2001 Compared to the Three Months Ended June 30, 2000.

Interest expense decreased $419,000, or 28%, to $1,067,000 for the six months
ended June 30, 2001 from $1,486,000 for the six months ended June 30, 2001. This
decrease was attributable to lower interest rates and decreased outstanding
balances on the Company's credit facility as compared to the same period in the
prior year.

Other income decreased $18,000, to $86,000 for the three months ended June 30,
2001, from $104,000 for the three months ended June 30, 2000. There were no
significant variances from the prior year. Other income relates to non-operating
activities that do not reflect core operations.


LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2001, Vestcom had working capital of approximately $8,329,000
compared to approximately $6,319,000 at December 31, 2000. The increase was
primarily attributable to the reduction in accrued expenses and accounts payable
partially offset by decreases in accounts receivable. Net cash provided by
operating activities for the six months ended June 30, 2001, was approximately
$4,809,000, which consisted of approximately $5,459,000 generated primarily from
depreciation and amortization charges, partially offset by decreases in accounts
receivable and accrued expenses. Net cash used in investing activities for the
six months ended June 30, 2001, was approximately $3,038,000, which consisted
primarily of purchases of property and equipment and leasehold improvements. Net
cash used in financing activities for the six months ended June 30, 2001, was
approximately $841,000 from net repayments of long-term debt.

The Company and Fleet Bank (formerly known as Summit Bank) have entered into an
Equipment Loan and Revolving Credit Agreement ("the Credit Facility"), as
amended, in the amount of $31,500,000 with a maturity date of October 1, 2002.
On June 30, 2001, $17,706,000 was outstanding and $11,364,000 remained available
under the Credit Facility. Under the terms of the Credit Facility, amounts paid
back on equipment loans are not available for future borrowings.

The Company incurs postage costs on behalf of customers of approximately
$2,000,000 to $5,000,000 each month. The Company seeks to collect such postage
costs from its customers in advance. At June 30, 2001 the Company had postage
advances from customers in the amount of approximately $4,552,000 and had
prepaid postage and postage receivables of approximately $2,017,000. To the
extent the Company is unsuccessful in obtaining postage costs in advance, cash
flow is negatively affected and Vestcom may be required to utilize its working
capital or credit facility to cover the cash outlay.


                                       10

<PAGE>

Capital expenditures of approximately $9,000,000 are expected in 2001. However,
as additional revenue generating opportunities arise the Company may be required
to expend additional capital to support those opportunities. The anticipated
expenditures relate to technology and production equipment needs of the business
as well as internally developed capitalized software. As of June 30, 2001, the
Company had incurred approximately $3,039,000 of such anticipated expenditures.

While no assurance can be given, management believes that its anticipated cash
flow from operations combined with existing cash and the availability of funds
under the Credit Facility, and potential additional credit capacity, will be
sufficient to meet its working capital, capital expenditure and debt service
requirements and its current plans to acquire additional related businesses for
the foreseeable future. The immediately preceding sentence constitutes a
forward-looking statement.

New Accounting Pronouncement

In July 2001, the Financial Accounting Standards Board (FASB) issued FASB
Statements Nos. 141 and 142 (FAS 141 and FAS 142), "Business Combinations" and
"Goodwill and Other Intangible Assets". FAS 141 replaces APB16 and eliminates
pooling-of-interests accounting prospectively. It also provides guidance on
purchase accounting related to the recognition of intangible assets and
accounting for negative goodwill. FAS 142 changes the accounting for goodwill
from an amortization method to an impairment-only approach. Under FAS 142,
goodwill will be tested annually and whenever events or circumstances occur
indicating that goodwill might be impaired. FAS 141 and FAS 142 are effective
for all business combinations completed after June 30, 2001. Upon adoption of
FAS 142, amortization of goodwill recorded for business combinations consummated
prior to July 1, 2001 will cease, and intangible assets acquired prior to July
1, 2001 that do not meet the criteria for recognition under FAS 141 will be
reclassified to goodwill. Companies are required to adopt FAS 142 for fiscal
years beginning after December 15, 2001, and early adoption is permitted in some
cases. The Company is not eligible for early adoption and will adopt FAS 142 on
January 1, 2002. In connection with the adoption of FAS 142, the Company will be
required to perform a transitional goodwill impairment assessment. The Company
has not yet determined the impact these standards will have on its results of
operations and financial position. The Company has recorded approximately
$1,373,000 of amortization expense for the six months ended June 30, 2001

Item 3: - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

                           Part II: Other Information

Item 6 - Submission of Matters to a Vote of Security Holders

The Company's Annual Meeting of Shareholders was held on May 23, 2001. All of
the Board's nominees for director were elected, with the following votes:

                                       For           Authority Withheld
                                       ---           ------------------
        Stephen R. Bova             7,070,149             794,360
        Joel Cartun                 7,070,149             794,360
        Leonard Fassler             7,070,149             794,360
        Brendan Keating             7,070,149             794,360
        Robert J. Levenson          7,070,149             794,360
        David Walke                 7,070,149             794,360
        Richard D. White            7,070,149             794,360


Item 6 - Exhibits and Reports on Form 8-K

         (a) Exhibits:

             10.13 Secured Promissory Note issued to Vestcom International, Inc.
             by Brendan Keating, dated as of May 25, 2001 with a maturity date
             of May 25, 2004.

         (b) Reports on Form 8-K:

             None

                                    Signature

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

                         VESTCOM INTERNATIONAL, INC.



                         By: /s/ Michael D. Helfand
                            --------------------------------------------------
                            Michael D. Helfand, Chief Financial Officer
                            Dated:  August 13, 2001

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