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 March 31, 1998 or

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

                        Commission file number: 333-23519

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

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

                                  201-935-7666
              (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 May 1,  1998,  was
8,788,590 shares.

<PAGE>


                          VESTCOM INTERNATIONAL, INC.
                 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998
                                     INDEX


Part I:  Financial Information                                        Page(s)

Item 1:  Financial Statements

Vestcom International, Inc.:
    Condensed Consolidated Balance Sheets - as 
       of December 31, 1997 and March 31, 1998
             (unaudited)                                                3
    Condensed Consolidated Statements of 
       Operations - For the Three Months Ended March 31,
       1997 (unaudited) and 1998 (unaudited)                            4
    Condensed Consolidated Statements of 
       Cash Flows - For the Three Months Ended March 31,
       1997 (unaudited) and 1998 (unaudited)                            5
    Notes to Condensed Consolidated Financial 
       Statements (unaudited)                                         6-10

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

Overview; Disclosures Regarding Forward 
   Looking Statements; Introduction                                  11-12

Pro Forma Results of Operations                                      12-13

Liquidity and Capital Resources                                        13

Recently Issued Accounting Pronouncements;
  Inflation                                                            14

Part II:  Other Information

Item 2. Changes in Securities and Use of Proceeds                    15-16

Item 6. Exhibits and Reports on Form 8-K                              16

         Signature                                                    16

  Exhibit - Financial Data Schedule (For Electronic Submission Only)  17

<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

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


                                        December 31,         March 31,
                                            1997               1998
                                        ------------        -----------
                                          (note 1)          (unaudited)
                      ASSETS

CURRENT ASSETS:
  Cash and cash equivalents           $   4,092,000        $   4,979,330
  Marketable securities                  13,494,886            1,054,138
  Accounts receivable, net               13,999,511           17,807,065
  Other current assets                    6,076,847            6,940,281
                                         ----------           ----------
         Total current assets            37,663,244           30,780,814

PROPERTY AND EQUIPMENT, net              21,684,918           25,186,168
GOODWILL, net                            54,336,937           61,476,108
OTHER ASSETS                                660,660              496,423
                                        -----------          -----------
         Total assets                 $ 114,345,759        $ 117,939,513
                                       ============        =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term 
    debt and capitalized lease 
    obligation                          $ 2,627,178       $    2,875,807
  Accounts payable                        4,780,082            6,590,274
  Other liabilities                      13,108,691           14,045,662
                                         ----------           ----------
         Total current liabilities       20,515,951           23,511,743

LONG-TERM DEBT AND CAPITAL 
  LEASE OBLIGATIONS                       7,933,572            7,588,422
OTHER NONCURRENT LIABILITIES              2,868,410            2,813,402
                                       ------------         ------------
         Total liabilities            $  31,317,933       $   33,913,567
                                       ============         ============

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
  Preferred  Stock
    Class A convertible, 200 
    shares authorized, issued 
    and outstanding at March 31, 
    1998 and Decmber 31, 1997                
    Class B 1 share  authorized, 
    issued and outstanding at 
    March 31, 1998 and December 
    31, 1997                              2,651,867            2,651,867
    Class C convertible,  100 shares 
    authorized,  issued and outstanding 
    at March 31, 1998 and December 31, 
    1997
  Common stock, no par value; 20,000,000 
    shares authorized; 8,483,811 shares 
    issued and outstanding at March 31, 
    1998 and December 31, 1997           84,229,597          84,229,597
  Accumulated deficit                    (3,770,054)         (2,739,657)
  Cumulative translation adjustment         (83,584)           (115,861)
                                        -----------         -----------
          Total stockholders' equity     83,027,826          84,025,946
                                        -----------         -----------
          Total liabilities and 
            stockholders' equity       $114,345,759        $117,939,513
                                        ===========         ===========

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

<PAGE>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    For the Three Months Ended March 31, 1997
                    and the Three Months Ended March 31, 1998
                                  (unaudited)


                                                  Three Months Ended
                                        ----------------------------------------
                                        March 31, 1997           March 31, 1998
                                        --------------           ---------------

REVENUES                               $    --                    $ 25,559,496
COST  OF REVENUES                           --                      16,231,335
                                         ---------                   ----------
  Gross profit                              --                       9,328,161

SELLING, GENERAL AND 
 ADMINISTRATIVE EXPENSES                   3,897                     7,201,566
                                        ---------                    ----------
   Income (loss) from operations          (3,897)                    2,126,595

OTHER  INCOME (EXPENSE)
  Interest expense                      (26,813)                      (242,519)
  Interest and other income              11,860                        147,543
  Income (loss) before provision       ---------                    ----------
   for income taxes                     (18,850)                     2,031,619

PROVISION  FOR INCOME TAXES                --                        1,001,222
                                        --------                     ---------
  Net income (loss)                    $(18,850)                 $   1,030,397
                                        ========                     =========
Net income per share - basic                                     $         .12  
                                                                     =========
Net income per share - diluted                                   $         .11  
                                                                     =========

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

<PAGE>


                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   For the Three Months Ended March 31, 1997
                   and the Three Months Ended March 31, 1998
                                  (unaudited)


                                             Three Months Ended March 31,
                                             -----------------------------
                                                    1997              1998
                                                    ----              ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                              $  (18,850)        $ 1,030,397
  Adjustments to reconcile net income 
  to net cash provided by operating 
  activities- 
  Depreciation and amortization                       246           1,349,947
  Changes in operating assets (increase)
    decrease in-
    Accounts receivable                              --            (1,128,816)
    Other current assets                       (1,090,814)            791,703
    Other assets                                     --               (69,960)
  Changes in operating liabilities 
    increase (decrease) in-
    Accounts payable                                 --               547,738
    Other current liabilities                     212,257            (562,773)
    Other non-current liabilities                    --               (55,009)
                                                 --------           ----------
        Net cash provided by (used in) 
           operating activities                  (897,161)          1,903,227

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment          (7,587)         (2,179,036)
    Acquisition of businesses, net of cash 
       acquired                                      --            (9,888,483)
    Sale of marketable securities                    --            12,440,748
                                                  --------         -----------
        Net cash provided by (used in) investing
        activities                                 (7,587)            373,229

CASH  FLOWS FROM  FINANCING  ACTIVITIES:
    Collection of subscriptions receivable        279,082               --
    Net payments on borrowings and capital leases    --            (1,356,849)
    Cumulative translation adjustments               --               (32,277)
                                                 ----------         -----------
     Net cash provided by (used in) 
        financing activities                      279,082          (1,389,126)
                                              -----------          -----------
     Net increase (decrease) in cash 
        and cash equivalents                     (625,666)            887,330
                                              ------------          ---------

CASH AND CASH EQUIVALENTS, 
    beginning of period                         1,344,758           4,092,000
                                              ------------          ---------

CASH AND CASH EQUIVALENTS, end of period      $   719,092          $4,979,330
                                              ===========           =========
SUPPLEMENTAL SCHEDULE OF NONCASH 
  INVESTING AND FINANCING ACTIVITIES:
    Capital lease obligations                 $     --             $   24,717
                                               ==========           =========

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

<PAGE>

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


(1)    BASIS OF PRESENTATION

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

(2)      NATURE OF BUSINESS

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

On July 30, 1997,  Vestcom  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
$53,528,475 net of underwriting discounts.

(3)      ACQUISITIONS

Concurrently with the consummation of the Company's initial public offering,  it
acquired seven companies in the computer output and document management services
industry -  Comvestrix  Corp.,  Morris  County  Direct Mail  Services,  Inc. and
related companies,  Image Printing Systems,  Inc.,  Electronic Imaging Services,
Inc., COS Information,  Inc.,  Computer Output Systems,  Inc. and Mystic Graphic
Systems, Inc. (the "Founding  Companies").  The aggregate  consideration paid by
the Company to acquire the Founding  Companies was,  subject to working  capital
adjustments  and  earnouts,  approximately  $16.6  million in cash and 2,852,111
shares of Vestcom  Common Stock.  These  acquisitions  were  accounted for as of
August 1, 1997 using the purchase  method of  accounting  and  accordingly,  the
purchase  price has been  allocated to the assets  acquired and the  liabilities
assumed based upon the fair values at the date of  acquisition.  For purposes of
computing the estimated purchase price for accounting purposes, the value of the
shares was determined  using an estimated fair value of $11.05 per share,  which
represents a discount of fifteen  percent from the initial public offering price
of $13.00  due to  restrictions  on the sale and  transferability  of the shares
issued.  Included  in  other  liabilities  are  approximately  $1.8  million  of
additional   acquisition  costs.  The  acquisitions   resulted  in  goodwill  of
approximately $47.0 million which is being amortized over 30 years, and is based
on preliminary  allocations of the purchase price to the net assets acquired and
is subject to revisions and potential earnout payments.

<PAGE>


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

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

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

As of January 20, 1998, the Company acquired  substantially all of the assets of
Creative Data  Services,  Inc.  ("CDS") and Business Mail Express  ("BME").  The
acquisitions  were  accounted for using the purchase  method of  accounting  and
accordingly,  the purchase price has been  allocated to the assets  acquired and
the  liabilities  assumed based upon the fair values at the date of acquisition.
The combined purchase price was $9,500,000 in cash plus the potential to receive
an  earnout  of up to  $2,500,000  payable  50% in cash and 50% in shares of the
Company's  Common Stock.  The estimated  fair value of the assets  purchased was
$4,705,000 and the estimated goodwill was $4,795,000.  The estimated fair market
values reflected above are preliminary estimates and assumptions and are subject
to revision.  In  management's  opinion,  the  preliminary  allocations  are not
expected to be materially  different than the final allocations,  subject to the
potential earnout.  

The following Pro Forma  Statements  of  Operations  for Vestcom  International,
Inc.,  assume that all acquisitions 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 actual or future results.

                               Three Months Ended        Three Months Ended
                                 March 31, 1997            March 31, 1998
                              Pro Forma Combined        Pro Forma Combined
                              -------------------       -------------------
Revenues                         $26,024,462                  $27,204,418
Income from operations             2,861,472                    2,276,562
Net income                       $ 1,489,815                  $ 1,108,688

Net income per share - basic          $  .17                       $  .13
Net income per share - diluted        $  .16                       $  .12

<PAGE>


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

(4)  EARNINGS PER SHARE

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

Basic EPS includes no dilution and is computed by dividing  income  available to
common stockholders by the weighted-average  number of common shares outstanding
for the period.  Fully  diluted EPS is replaced  with diluted  EPS.  Diluted EPS
reflects the  potential  dilution if certain  securities  are converted and also
includes  certain shares that are contingently  issuable.  SFAS No. 128 requires
dual presentation of basic and diluted EPS by entities that issue any securities
other than ordinary  common stock.  The  computation of net income per share for
the three  months  ended March 31,  1998,  is based upon shares of common  stock
outstanding  and common  stock  equivalents.  The  conversion  of stock  options
outstanding  are  not  included  in  the  computations.  The  following  is  the
computation of earnings per share:

                                      For the Three Months Ended March 31, 1998
                                      ------------------------------------------
                                                                      Per Share
                                        Income           Shares         Amount
                                        ------           ------       ----------
Basic Earnings Per Share:
Net income/weighted average 
  shares outstanding                   $1,030,397       8,541,365     $  0.12
                                        ---------       ---------      ------
Diluted Earnings Per Share:
Net income/weighted average 
  shares outstanding                    1,030,397       8,541,365          
Goodwill adjustment on earnouts           (53,158)
Assumed shares earned
  by Founding Companies                     --            467,533
                                        ---------       ---------

Net income/average weighted shares
  outstanding adjusted for assumed
  conversions to common stock          $  977,239       9,008,898     $  0.11
                                        ---------       ---------     -------

(5)   COMMITMENTS AND CONTINGENCIES

In May 1997 the Company  entered into an agreement with CIBC  Oppenheimer  Corp.
(formerly  known  as  Oppenheimer  &  Co.,  Inc.,  and  referred  to  herein  as
"Oppenheimer")  pursuant  to which  the  Company  agreed to pay  Oppenheimer  an
aggregate  amount  of up to $1.8  million  for  advisory  services  provided  by
Oppenheimer.   In  addition,   Vestcom   reimbursed   Oppenheimer   $75,000  for
out-of-pocket  expenses  related  to such  services.  As of March  31,  1998 the
Company paid  Oppenheimer $1.0 million in connection with that Agreement and has
agreed  to  pay   Oppenheimer   the   additional   $800,000  in  four  quarterly
installments.

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)

Certain of the  companies  acquired by Vestcom are  eligible to earn  additional
amounts,  consisting of a combination of cash and securities,  as adjustments to
the purchase prices paid for those companies.  At December 31, 1997, the Company
recorded an accrual for the estimated  earnout for Computer Output Systems whose
earnout period ended at December 31, 1997, of $278,000 in cash and 54,779 shares
of the Company's  Common Stock. The maximum  additional  earnouts which could be
paid if certain of the other  acquired  companies  attained  their  revenue  and
profit goals during various  periods ending no later than June 30, 1999 would be
$3,630,000  in  cash,  and up to  542,307  shares  of  Common  Stock  plus up to
approximately 114,000 shares of Common Stock (based upon current market prices).

(6)  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 has adopted this standard as of March 31, 1998.

The following represents comprehensive income:

                                   Three months ended March  31,
                                   ------------------------------
                                      1997                1998
                                      ----                ----
Net  income  (loss)                $(18,850)           $1,030,397
Foreign  Currency Translation
  Adjustment                           --                 (32,277)
                                    --------            ----------
Comprehensive Income               $(18,850)           $  998,120
                                    ========            =========

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

<PAGE>

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


 (7)     SUBSEQUENT EVENTS
 
On April 14, 1998, the Company acquired through Mystic Graphic Systems,  Inc., a
wholly owned subsidiary based in Woburn Massachusetts,  substantially all of the
assets of Dee Cee  Graphics  Inc.,  also  located in Woburn  Massachusetts.  The
operations  of Dee Cee Graphics  are being  consolidated  into Mystic  Graphic's
operations. The purchase price was less than $1,000,000.

In  connection  with a  determination  of the  earnout  payments to three of the
Founding  Companies  (including  the  early  settlement  of  the  earnout  which
previously extended through June 1999), in April, 1998, the Company paid, in the
aggregate,  $1,278,000 in cash, and issued 304,779 shares of its Common Stock to
certain former stockholders of those Founding  Companies,  including the amounts
accrued for the earnout for  Computer  Output  Systems,  Inc. In  addition,  the
Company incurred a future  obligation to pay $1,160,000 in cash. The increase to
goodwill as a result of the above payments will be approximately $5,000,000.

<PAGE>

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

OVERVIEW

The following discussion of the financial condition and results of operations of
the  Company  should  be  read  in  conjunction  with  the  Company's  Condensed
Consolidated  Financial  Statements  and the  related  notes  thereto  appearing
elsewhere herein. All dollar amounts are presented in U.S. dollars.

DISCLOSURES REGARDING FORWARD LOOKING STATEMENTS

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

INTRODUCTION

Vestcom  International,  Inc. was  incorporated in September 1996.  Concurrently
with the consummation of the Company's  initial public offering (the "Offering")
on August 4, 1997,  the Company  acquired  seven  computer  output and  document
management  service companies (the "Founding  Companies") each of which had been
operating as a separate independent entity.

For accounting purposes,  the acquisitions of the Founding Companies were deemed
to be made August 1, 1997,  using purchase  accounting,  with the Company as the
acquiror.  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,  the Founding Companies
historical levels of owners' compensation. In connection with the acquisition of
the Founding Companies, these owners and certain key employees agreed to certain
reductions in their  compensation which commenced as of the date of acquisition.
The Company acquired New England Laser Printing, Inc. ("NEL") and Campbell Abbot
Laser Mail  ("CALM") in November  and  December  1997,  respectively,  and as of
January  20,  1998 the  Company  acquired  substantially  all of the  assets  of
Creative Data Services,  Inc. ("CDS") and of DB Acquisition Inc. (d/b/a Business
Mail Express) a wholly owned subsidiary of CDS ("BME").

The  Company's  Condensed  Consolidated  Balance  Sheet  as of March  31,  1998,
includes  the  Founding  Companies  and NEL,  CALM,  CDS and BME. The results of
operations  for the three months ended March 31, 1998, and the statement of cash
flows for the three  months  ended March 31, 1998 include the results of Vestcom
and all of the companies acquired in 1997 for the entire period, and CDS and BME
only from January 20, 1998.

<PAGE>

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

In connection with the Company's acquisitions,  Vestcom has made certain earnout
payments and may be required to pay  additional  earnouts if  specified  revenue
thresholds,  margins or earnings are attained  during various  periods ending no
later than December 31, 1998. At March 31, 1998,  the aggregate  maximum  amount
Vestcom would have been required to pay pursuant to such earnouts was $3,630,000
in  cash  and  542,307  shares  of the  Company's  Common  Stock,  plus up to an
additional  114,000  shares of the  Company's  Common  Stock (based upon current
market prices).  In April,  1998, the Company paid an aggregate of $1,278,000 in
cash and issued 304,779 shares of Vestcom Common Stock to former stockholders of
certain of the Founding  Companies in  connection  with a  determination  of the
earnout  payments  owed to  three  Founding  Companies,  and  incurred  a future
obligation to pay $1,160,000 in cash. After the payments and  determinations  in
April,  the aggregate  maximum earnout payments which Vestcom may be required to
make going forward are $3,110,000 in cash (including the $1,160,000  referred to
above)  and  292,307  shares  of  Vestcom  Common  Stock,  plus  up  to  another
approximately  114,000 shares of Vestcom Common Stock (based upon current market
prices).  Any payments of earnouts will  increase the goodwill  recorded for the
acquisition  of the  applicable  company.  The  amortization  of any  additional
goodwill and the increased  number of shares issued in connection  with earnouts
will negatively affect the Company's future earning per share.

Vestcom, which conducted no operations prior to the consummation of the Offering
other than in connection with the acquisitions of the Founding Companies and the
financing activities related thereto, including the Offering, had no revenues or
operating  expenses in the first three months of 1997.  Therefore,  Management's
Discussion  and Analysis  based on actual  results would compare three months of
operating activity in 1998 to no operating activity in the first three months of
1997.  For this and other  reasons  discussed  above,  management  believes that
Management's  Discussion  and  Analysis  would only be  meaningful  based on the
unaudited  Pro Forma Results of Operations of Vestcom for the three months ended
March 31, 1998 and the three months ended March 31, 1997, which assumes that all
of  the  companies  owned  at  March  31,  1998  were  acquired  on  January  1,
respectively of 1997 and 1998.

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


PRO FORMA RESULTS OF OPERATIONS

Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997

Pro Forma revenues increased $1,180,000, or 4.5%, from $26,024,000 for the three
months ended March 31, 1997 to $27,204,000  for the three months ended March 31,
1998. 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' Pro Forma gross profit increased $690,000, or 7.5%, from $9,173,000 for
the three months ended March 31, 1997 to  $9,863,000  for the three months ended
March 31, 1998.  The Pro Forma gross profit margin  increased from 35.2% in 1997
to 36.3% in 1998 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>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Pro Forma selling, general and administrative expenses increased $1,275,000,  or
20.2% from  $6,312,000  for the three months ended March 31, 1997 to  $7,587,000
for the three months ended March 31, 1998. As a percentage of revenues,  selling
general and  administrative  expenses  increased  from 24.3% in 1997 to 27.9% in
1998. The increase in Pro Forma selling, general and administrative expenses was
primarily due to increased  compensation  expense for new  technical  personnel,
increased commissions,  increased administrative expenses to support the greater
volume of business and the costs associated with the increased Vestcom corporate
management  staff.  The majority of the expenses of the Vestcom  corporate staff
operations  did not come into  existence  until  after the  consummation  of the
initial public offering in August of 1997.

LIQUIDITY AND CAPITAL RESOURCES

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

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

At March 31, 1998, Vestcom had working capital of $7,269,000.  Net cash provided
by  operating  activities  for the  three  months  ended  March  31,  1998,  was
$1,903,000.  Net cash provided from  investing  activities  for the three months
ended March 31, 1998, was $373,000 which consisted of $12,441,000  from the sale
of  marketable  securities,  $9,888,000  of  cash  used  for  acquisitions,  and
$2,179,000  used for the  purchase of property and  equipment.  Net cash used by
financing  activities  for the three months ended March 31, 1998, was $1,389,000
which included debt and capital lease  repayments of  $1,357,000.  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 March 31, 1998,  the entire
credit line was available.

The  Company  incurs  postage  costs on behalf  of  customers  of  approximately
$4,000,000 to $6,000,000  each month.  The Company seeks to collect such postage
costs from its customers in advance.  At March 31, 1998, the Company had postage
advances from customers in the amount of $4,900,000 and had prepaid  postage and
postage  receivables of approximately  $2,000,000.  To the extent the Company is
unsuccessful  in obtaining  postage  costs in advance,  cash flow is  negatively
affected  and Vestcom  may be required to utilize its working  capital or credit
facility  to cover  the  cash  outlay.  Capital  expenditures  of  approximately
$6,000,000 to $8,000,000 for plant and equipment and leasehold  improvements are
anticipated in 1998. This investment, which is expected to be financed primarily
by working capital and vendor  financing,  relates to the  anticipated  facility
consolidations  of  certain  of the  operating  companies  and the  purchase  of
supplemental  production  equipment to meet customer output processing  demands.
There are no other  significant  commitments  for future  capital  expenditures,
although it is likely that cash  outflows for business  acquisitions  and leases
will  continue.  While no assurance can be given,  management  believes that its
cash flow from operations combined with existing cash and marketable  securities
and the  availability  of funds under the Equipment  Loan and  Revolving  Credit
Agreement 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.

<PAGE>

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

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

INFLATION

Inflation has not had a material effect on the Company's results of operations.

<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. (now known as CIBC
Oppenheimer  Corp,  and  referred  to herein as  "Oppenheimer")  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 security holders.  The aggregate
price of the offering amount registered and sold was $57,557,500.

(c) From July 30, 1997 through March 31, 1998, 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 $4,308,897.  Thus,
the total  amount of such  expenses was  $8,337,922  and the net proceeds to the
Company  was  $49,219,578.  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) was a Managing
Director at  Oppenheimer,  one of the  managing  underwriters  of the  Company's
initial  public  offering  and now is a Managing  Director  at an  affiliate  of
Oppenheimer.

(d) From  July 30,  1997  through  March  31,  1998,  the  Company  has used the
following amount of such net proceeds for the following categories enumerated by
the SEC:

                                                                 Reasonable
                  Category                                    Estimated Amount
                  --------                                    ----------------

                  Construction of plant, building and
                  facilities                                         0
                  Purchase and installation of machinery
                  and equipment                               $   2,196,581
                  Purchases of real estate                           0
                  Acquisition of businesses                   $  34,773,648
                  Repayment of indebtedness                   $  12,249,349
                  Working capital                                    0
                  Short term investments                             0
                  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, Chief Executive Officer 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.  As of March 31, 1998, the
Company paid an aggregate of $1.3 million to Oppenheimer  for advisory  services
and has agreed  (pursuant to an agreement  entered into with  Oppenheimer in May
1997) to pay  Oppenheimer an additional  $800,000 for advisory  services in four
quarterly installments which began April 1, 1998.

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

In connection  with the payments of earnouts to three of the companies  acquired
by Vestcom, the Company issued, in April 1998, an aggregate of 304,779 shares of
its Common Stock to certain former stockholders of such acquired companies.

<PAGE>

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:

          On February 4, 1998,  the Company  filed a current  report on Form 8-K
          pertaining to its  acquisition of a substantial  portion of the assets
          and  a  substantial  portion  of  the  liabilities  of  Creative  Data
          Services,  Inc.  ("CDS") and of DB  Acquisition,  Inc. (d/b/a Business
          Mail Express),  a  wholly-owned  subsidiary of CDS. The current report
          contained certain historical  consolidated financial statements of CDS
          and BME and pro forma financial statements of the Company.

                                   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:  May 14, 1998

<PAGE>

Exhibit

Financial Data Schedule