UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   ----------
                                    FORM 10-K

                                   (MARK ONE)

     [X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
          EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

                                       OR

     [_]  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
          EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION  PERIOD FROM
          __________ TO __________.

                        COMMISSION FILE NUMBER 000-24021
                            ------------------------

                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            NEW JERSEY                                   22-3561164
(STATE OR OTHER JURISDICTION                   (IRS EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)

          629 GROVE STREET                                07310
        JERSEY CITY, NEW JERSEY                         (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (201) 217-1990
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:
                      COMMON STOCK, NO PAR VALUE PER SHARE
                                (TITLE OF CLASS)

     Indicate  by check mark  whether the  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[_].

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of December 31, 1998:

                    COMMON STOCK, NO PAR VALUE -- $41,871,513

     The  number  of  shares  outstanding  of the  issuer's  common  stock as of
December 31, 1998:

                     COMMON STOCK, NO PAR VALUE - 5,305,000

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the  Registrant's  Proxy Statement for the Annual  Shareholders
Meeting to be held on or about May 11, 1999 to be filed with the  Securities and
Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act
of 1934, as amended, are incorporated by reference into Part III of this Report.
Such Proxy Statement,  except for the parts therein which have been specifically
incorporated by reference,  shall not be deemed "filed" for the purposes of this
report on Form 10-K.


<PAGE>


                                        TABLE OF CONTENTS

 ITEM                                    DESCRIPTION                        PAGE
--------------------------------------------------------------------------------

                                     PART I
  1.  Business                                                                3
  2.  Properties                                                             14
  3.  Legal Proceedings                                                      14
  4.  Submission of Matters to a Vote of Security Holders                    14

                                     PART II

  5.  Market for Registrant's Common Equity and Related Stockholder
      Matters                                                                15
  6.  Selected Consolidated Financial Data                                   16
  7.  Management's Discussion and Analysis of Financial Condition            17
  7A  Quantitative and Qualitative Disclosures about Market Risk             24
  8.  Financial Statements and Supplementary Data                            24
  9.  Changes in and Disagreements with Accountants on Accounting            25

                                    PART III

 10.  Directors and Executive Officers of the Registrant                     25
 11.  Executive Compensation                                                 25
 12.  Security Ownership of Certain Beneficial Owners and Management         25
 13.   Certain Relationships and Related Transactions                        25

                                     PART IV

 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K       25



                                       2
<PAGE>


                                     PART I

ITEM 1. BUSINESS

GENERAL

     Cunningham Graphics  International,  Inc., a New Jersey  corporation,  (the
"Company") provides a wide range of graphic communications services to financial
institutions   and   corporations,   focusing  on  printing   and   distributing
time-sensitive  analytical  research and  marketing  materials  and on providing
on-demand  printing  services.  The  Company  operates  in select  international
markets through its facilities in the United States,  the United  Kingdom,  Hong
Kong and  Singapore.  The  Company is a major  producer  of  financial  research
reports and provides services,  on a non-exclusive  basis, to a variety of major
international investment banking firms.

     The Company's  executive  offices are located at 629 Grove  Street,  Jersey
City, New Jersey 07310 and its telephone number is (201) 217-1990.

     Recently,  the Company has expanded significantly from its original base of
operations in metropolitan New York. The Company commenced  operations in London
in April 1998 through the acquisition of Roda Limited ("Roda"), in Hong Kong and
Singapore in January 1999 through the  acquisition of Workable  Company  Limited
("Workable")  and  in  Boston,   Massachusetts  in  February  1999  through  the
acquisition of the business of Boston Towne Press, Inc. ("Boston Towne Press").

     Graphic  communications  services  provided by the Company  include digital
communications,  document management,  offset printing,  digital printing,  data
output, bindery,  fulfillment services, mailing services and outsource services.
The  Company  prints  brochures,   booklets,   confirmations  of  trade,  client
statements and adhesive books to meet the daily, weekly and monthly needs of its
customers.  To facilitate  the rapid  distribution  of documents  globally,  the
Company has designed and  implemented the World Research  Link(TM),  an array of
electronic data communication  networks linking each of the Company's facilities
with its  major  customers.  To date,  the  Company  has  established  extensive
non-exclusive  client  relationships  with leading  companies  in the  financial
services, insurance and publishing industries, providing certain of the printing
and graphic  communication  needs of Credit  Suisse  First  Boston  Corporation,
Deutsche Morgan Grenfell,  Goldman,  Sachs & Co., Lehman Brothers Inc.,  Merrill
Lynch & Co.,  Inc.,  The Prudential  Insurance  Company of America,  Empire Blue
Cross/Blue Shield, New York Life Insurance Company, and The McGraw-Hill Company,
among others.

     On April 22,  1998  Cunningham  Graphics,  Inc.  (the  "Predecessor"),  the
predecessor to the Company, reorganized (the "Reorganization") such that all the
stockholders  of the Predecessor  contributed  all of the outstanding  shares of
common stock of the Predecessor to Company, in exchange for a total of 2,595,260
shares of common  stock,  no par value of the Company (the  "Common  Stock") and
promissory  notes (the "Exchange  Notes") in the aggregate  principal  amount of
$2.6 million. In the Reorganization,  the Company also assumed the Predecessor's
obligations  under  promissory  notes in the aggregate  principal amount of $2.2
million,   representing   undistributed   S  corporation   taxable  income  (the
"Distribution  Notes").  Collectively the Exchange Notes and Distribution  Notes
are known as the "Reorganization  Notes."  Concurrently with the Reorganization,
the Company sold 2,530,000  shares of Common Stock in an initial public offering
(the "Offering").  The Company used a portion of the proceeds of the Offering to
repay the Reorganization Notes.


                                       3
<PAGE>


INDUSTRY BACKGROUND

     The  printing and document  management  industry has evolved  significantly
over the last several years driven in large part by rapid advances in publishing
and electronic information  technology.  The Company believes that the growth of
the printing and document  production  industry has been due to various factors,
including (i) the  increasing  volume,  complexity  and variety of documents and
printed materials produced by businesses  worldwide,  (ii) the increasing demand
by businesses for the international dissemination of time-sensitive information,
and (iii) the growing trend of businesses to outsource  their in-house  printing
operations (e.g., print shops, copy centers and document management  facilities)
to document  professionals  equipped to provide these services more  efficiently
and cost-effectively.

BUSINESS STRATEGY

     The  Company   believes   that  the   fragmented   nature  of  the  graphic
communications  industry  and the limited  capital  resources  available to many
small,  private operators provide the Company with significant  opportunities to
expand  its base of  operations.  The  Company  intends to  continue  its growth
strategy by (i) pursuing  acquisitions and establishing  strategic  alliances to
expand and strengthen the Company's  business reach in target markets worldwide,
(ii) pursuing  outsourcing  opportunities  through the  assimilation of in-house
printing  operations of third-party  businesses,  (iii)  expanding the scope and
volume of services offered, (iv) actively  cross-selling existing or newly-added
products or services to its customers worldwide, and (v) improving the operating
efficiency of its existing operations.

Pursue Acquisitions and Establish Strategic Alliances.

     The Company will seek to acquire  complementary  operations  throughout the
United  States,  United  Kingdom and other  international  markets,  which,  the
Company believes, possess attractive  characteristics,  including concentrations
of prospective  customers with  significant  printing  needs,  such as financial
institutions.  The Company  intends to target  acquisition  candidates  with (i)
annual net sales  ranging from $3.0 to $25.0  million;  (ii)  attractive  growth
prospects within their respective  markets;  (iii)  complementary  technological
capabilities;  (iv)  opportunities for economies of scale and synergies with the
Company;  (v) a solid reputation with established  customer  relationships;  and
(vi)  an  experienced  management  team.  The  Company  will  also  seek to make
"tuck-in" acquisitions as a means to expand its existing operations, add product
lines and services as well as expand its customer base.

     The  Company  will also seek to  establish  new  alliances  with  strategic
partners in targeted  geographic  markets.  This incremental  approach to growth
enables the Company to expand the scope of its  operations  without the need for
substantial  capital  investments  while  mitigating the risks  associated  with
start-up facilities in new markets. In addition,  the Company believes that such
relationships  foster  significant   cross-selling   opportunities  across  each
partners'  respective  customer bases.  The Company believes that such alliances
also provide for future  acquisition  opportunities.  Pursuant to this strategy,
the Company initially  established  alliances with Roda in London and a Workable
in Hong Kong, both of which were subsequently purchased, thereby solidifying the
Company's presence in the United Kingdom, European and Asian printing markets.

Expand Provision of Outsourcing Services

     To date,  the  Company has grown,  in part,  through  the  assimilation  of
certain in-house printing  operations of third-party  businesses,  including the
print shop and data output center of Goldman, Sachs & Co. and the print shops of
Empire Blue Cross/Blue Shield,  The McGraw-Hill  Company and Schroder & Co. Inc.
The Company believes that it is a cost effective and an efficient  provider of a
wide  range of  in-house  printing  services.  The  Company  typically  provides
outsourcing  services  by  assuming  all or  part  of the  document  output  and
distribution responsibilities previously performed by a customer's in-house


                                       4
<PAGE>


operations. In some instances, the Company may take over the management of a
customer's in-house operations.

Expand the Scope and Volume of Services Offered.

     The Company  intends to continue to expand the scope and volume of services
provided to its  customers  through the addition of  complementary  products and
services.  The  Company  also  continually  evaluates  opportunities  to add new
equipment to its existing  facilities or enhance its current technology in order
to satisfy the evolving  needs of its customer  base.  In addition,  the Company
regularly evaluates  opportunities to add capacity to its existing operations to
meet any anticipated increase in demand of its larger customers.

Capitalize on Cross-Selling Opportunities

     The Company also intends  actively to cross-sell  existing and  newly-added
products or services to its customers worldwide. By taking advantage of the wide
range of products and services  offered through its facilities in  international
geographic  markets,  the Company believes that it can better serve the needs of
international customers by offering a "one-stop shopping" approach to satisfying
international printing needs. In addition, the Company also believes that it can
cultivate new customer  relationships as a result of  introductions  made by its
international  operations whose respective customers may require printing output
in the  United  States or other  markets  served  by the  Company.  The  Company
believes  that its  ability to  cross-sell  the  products  and  services  of its
international operations provides it with a distinct competitive advantage.

Improve Efficiency of its Existing Operations

     Central to the Company's  business strategy is to improve the profitability
of its operations by maximizing the efficiency of its existing  facilities while
actively managing its operating and  administrative  costs. The Company believes
that  significant  economies of scale may be achieved by taking advantage of its
underutilized    daytime   production   capacity   through   the   increase   of
non-time-sensitive   business.   A   significant   portion   of  the   Company's
time-sensitive business is currently processed overnight, resulting in available
daytime capacity.  The Company also expects to achieve significant  economies of
scale in conjunction with its acquisition  strategy. In this regard, the Company
expects to (i) consolidate duplicative functions or facilities of newly-acquired
businesses;  (ii) leverage its purchasing  power with its suppliers and employee
benefit  providers;  and (iii) use its  communication  network  to  improve  the
coordination of production, maximize equipment utilization and enhance delivery.

Graphic Communications Services

Time-Sensitive Services

     The Company's  primary business focuses on the production of time-sensitive
documents for major financial institutions and corporations.  The Company offers
a wide range of  time-sensitive  services  including the printing,  assembly and
dissemination  of folders,  booklets and adhesive  books on a daily,  weekly and
monthly  basis.  The Company also prints  prospectuses,  annual and  semi-annual
reports for mutual fund customers.

     Typically, the Company converts electronic data received from its customers
on a daily basis into tailored analytical research reports which are printed and
delivered to the  Company's  customers  prior to the start of the next  business
day. The Company's production processes include digital  communications,  offset
and digital printing,  multiple binding  procedures,  branch  fulfillment,  list
maintenance and prompt distribution.  The Company's  technological  capabilities
enable it to produce colorful,  attractive products. In addition,  the Company's
World Research Link(TM) network enables the Company to print and distribute


                                       5
<PAGE>


these   documents,   in   conjunction   with   its   international   operations,
contemporaneously in several international locations.

     The  demand for  printed  research  and other  time-sensitive  reports  has
continued  to  grow  despite   continuing   developments   in  electronic   data
transmission,  such as the Internet,  which provide  customers with  alternative
methods of transmitting time-sensitive information. The Company expects that the
demand for time-sensitive printed documents will continue to grow due to (i) the
increasing globalization of its customers,  particularly financial institutions,
(ii) the growth and  expansion of  international  capital  markets and (iii) the
increasing volume, complexity and variety of document and printed materials. The
Company  believes that printed  research  reports not only serve as  information
tools,  but serve as marketing tools as well. As such, the Company believes that
customers will continue to demand high quality and colorful  research reports as
they seek to distinguish themselves in their own competition for clients.

Outsourcing Services

     The Company typically provides outsourcing services by assuming all or part
of the document output and distribution responsibilities previously performed by
a third party's in-house operations. This service often enables such third party
to focus on its core business and to close all or portions of its in-house print
shop  and/or  document  management  and copy  centers and permits the Company to
operate and perform all  services on a remote  basis.  Such third party can also
achieve  significant  cost  savings  on the  cost of  technology,  material  and
services  such as paper and shipping by taking  advantage  of the bulk  purchase
arrangements  which the Company has with its  suppliers.  Thereafter,  the third
party may transmit  computer-generated  data to one of the Company's  production
and printing facilities,  which then processes,  produces and distributes all of
the  reports,  statements  and other  computer-output  documents on an as needed
basis. The Company believes that it can operate print shop,  document management
and copy center  functions  more  efficiently  and cost  effectively  than can a
non-graphic communications company.

     The  Company  has an  established  track  record of  assimilating  into its
existing  operations  the assets and  workforce  of third party  in-house  print
operations,  including its assimilation of the print shop and data output center
of Goldman,  Sachs & Co. and the print shops of Empire Blue  Cross/Blue  Shield,
The  McGraw-Hill  Company  and  Schroder & Co.,  Inc.  In each of the  foregoing
transactions, the Company acquired selected equipment and inventory on favorable
terms and retained a majority of the employees.

Data Output Services

     The  Company  provides a variety of data  output  services,  including  the
production  of  trade   confirmations  and  brokerage  and  investment   account
statements for a major financial institution.  In addition, the Company provides
certain database management services to its customers,  including the ability to
output  data  files of  addresses  directly  onto  envelopes  or  other  printed
material,  insert flyers and other  materials  into mailings as well as to offer
presorting of first class mail with bulk postal drop services.

Commercial Printing

     The Company  produces a broad range of  commercial  printing  products that
include  catalogs,  directories,   brochures,  booklets,  folders,  newsletters,
flyers,  sales and marketing kits and manuals.  The type of printing varies from
simple one-color documents to complex  multi-color  documents on a wide range of
paper stocks. The Company's  customers for commercial  printing products include
its  financial   institution  clients,   insurance  companies,   healthcare  and
pharmaceutical  companies  and trade  associations.  The Company  also  provides
"overflow"  printing for a number of in-house  print  operations  of  investment
banking firms.  Given the  non-time-sensitive  nature of many of these projects,
the Company typically produces these products during non-critical daytime hours.
The Company  expects to continue  to increase  the volume of daytime  commercial
printing  to  take  advantage  of its  available  non-time-sensitive  production
capacity.


                                       6
<PAGE>


Printing Operations

     The Company provides a broad range of graphic communications services for a
wide variety of commercial purposes.  These services commence with the intake of
data,  and  continue  through the  prepress and press  processes,  binding,  and
conclude with fulfillment and distribution. The Company continuously reviews its
printing equipment needs and evaluates  advances in computer hardware,  software
and peripheral equipment,  computer networking and telecommunications systems as
they relate to the Company's operations.

Telecommunications and Order Entry

     The Company's capital investment in state-of-the-art telecommunications and
customer  on-line  ordering  systems  allows the  Company to offer its  services
internationally and throughout its customers' organizational network. In lieu of
manual   delivery   of   customer   data  files  or   artwork,   the   Company's
telecommunications  capabilities  allow it to  receive  direct  transmission  of
files,  saving  both  time and  expense  while  increasing  quality  of the work
produced.

     Customers  have  many  alternatives  for  sending  electronic  files to the
Company.  Using a modem,  customers can contact the Company's private and secure
electronic  bulletin  board,  log-in and  transmit  or access  data  files.  For
customers with advanced telecommunications requirements, the Company offers ISDN
line  communication  capability.  For  some of the  Company's  most  significant
customers,  specialized  equipment,  such  as  fractional  T1  lines  have  been
installed.  Customers  having  Internet  access may use available  File Transfer
Protocol  ("FTP") and World Wide Web  applications to send and receive data in a
secure manner.  Secure router-based  connections through proxy servers allow the
Company to control traffic and direct files  containing the text and graphics of
research reports,  marketing materials,  mailing lists, order entry, job tickets
and work  orders,  internationally  through  the  World  Research  Link(TM).  In
addition, the Company has developed a customized order entry system. This system
links the  customer  with the Company and can be accessed by  customers  through
desktop  computers,  thereby  permitting  customers  to  create  an order  while
submitting digital files.

Prepress Operations

     At each of its facilities,  the Company operates a prepress department that
prepares   customer-supplied   text,  data,  artwork  and  images  for  document
production. Using computerized prepress equipment, the Company processes digital
files,  scanned  images and graphics  into  "composed  electronic  files." These
electronic  files are used with a variety of output options,  including  digital
printing,  conventional offset printing or for electronic publishing, such as on
the Internet. In addition,  the Company can distribute composed electronic files
that  include text and graphics in various  formats  through the World  Research
Link(TM) to other facilities for document production.

     The Company believes that enhanced digital printing technology will further
facilitate  multi-purpose  uses by its customers of the same  electronic  files.
Digital printing  technology will augment the Company's ability to return to the
customer a printed  document plus a reformatted  document which can then be used
on multiple media  platforms  including the Internet,  the customer's  intranet,
multiple on-line information services and broadcast faxing.

Press Operations

     The Company operates twenty-five presses in the New York metropolitan area,
nine of which are web  presses and sixteen of which are  sheet-fed  presses.  In
Boston,  the Company  operates  three presses,  all of which are  sheet-fed.  In
Singapore,  Hong Kong and London the Company  operates  one,  four and  fourteen
presses, respectively, all of which are sheet-fed presses. The Company's presses
vary in size and speed and can  produce  printed  materials  that  range in page
size, type of paper, number of pages and the amount of color required.


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     The Company  currently  has five  digital  presses  located in the New York
metropolitan  area, two digital  presses located in Hong Kong and intends to add
digital press capability in London.  Two of the Company's digital presses in the
New York metropolitan area have in-line binding  attachments which allow for the
production  of  finished  booklets.  These  presses  are linked  directly to the
Company's  computerized  network  and  are  currently  being  utilized  for  the
production   of  research   reports,   personalized   health   care   documents,
confirmations  of trade,  client  statements  and general  print  products.  The
Company has  developed  the ability to provide  digital  printing  services as a
complement  to offset  printing.  For  smaller  runs,  digital  printing is more
efficient and reliable than printing on traditional presses and often results in
a product of higher quality and better resolution. Digital printing involves the
integration of a variety of systems that compile data, scan images,  and compose
data and images.  Through  high-speed  computers,  data may be received directly
from  customers  and  put  directly  on  the  press,   eliminating   the  costly
intermediate steps involved in the traditional printing process.

Binding Services

     At each facility,  the Company operates a bindery  department which provide
various finishing services. The Company's finishing services include cutting and
folding, saddle stitching,  punching, collation and inserting, and at the Jersey
City facility,  perfect  binding and  shrink-wrapping.  By offering a variety of
finishing  services,  the Company can offer its clients  expeditious  service as
well as a wide range of finishing service options.

Fulfillment Services

     At each facility, the Company also operates a fulfillment department.  Many
of  the  documents   prepared  for  customers  need  to  be  stored  for  future
distribution,  both  electronically  and physically.  The Company's  fulfillment
department  stores materials and assembles orders for distribution upon customer
request. Printed components are assembled into kits and are packed individually,
or in bulk, for delivery.  Upon completion of the order, the fulfillment  system
relieves  the  distribution  from the  customer's  inventory  and  generates  an
activity  report for  inventory  control.  For those  customers who require mail
distribution,  the Company operates a mailing department in each location. Using
inkjet and cheshire labeling machines, electronic mailing lists are addressed on
envelopes. Documents are inserted into envelopes, sealed and sorted for mail.

Management Information System

     The Company's  personnel utilize a comprehensive and integrated  management
information  system  which  gathers  data  from  all  departments  and  provides
management  with job status and  historical  information.  The system is divided
into several fully  integrated  modules  consisting of  estimating,  production,
purchasing,  inventory and accounting modules.  This system gives management the
ability to monitor  all work orders and  department  costs  against  budgets and
profit  goals.  Using  this  system,  management  can also track the status of a
particular  work order as it moves through the  production  process.  The system
permits the Company to (i) determine the most efficient and cost-effective means
of completing  particular  work orders,  (ii) give customers  pricing  estimates
quickly,  (iii) measure  pressroom  efficiency  and waste,  (iv) analyze  buying
patterns,  pricing  and usage for  inventory  control  purposes  and (v) produce
customized financial statements, reports and analyses.

International Network

     In 1994, the Company,  in conjunction  with its then strategic  partners in
London and Hong Kong,  developed  an  international  network  known as the World
Research  Link(TM)  designed  to  facilitate  the  expeditious  distribution  of
time-sensitive   financial  research  reports  throughout  select  international
financial  markets,  24 hours a day.  Presently,  through the use of  high-speed
electronic links among the Company's


                                       8
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facilities in the United States, London, Hong Kong and Singapore, the Company is
able to print  research  reports  concurrently  throughout  these four principal
international financial markets.

     The  Company  intends to  continue  to expand its World  Research  Link(TM)
through the  establishment of new strategic  alliances in Europe,  South America
and Asia. The Company's  international  relationships have offered cross-selling
opportunities  and the Company intends to develop new joint marketing  alliances
as a means for the Company and its  strategic  partners to each derive  business
from their respective customers' operations in various international markets.

SALES AND MARKETING

     The Company's  marketing  activities are handled  primarily through its own
sales  force   consisting   of  fifteen   individuals.   The   Company's   sales
representatives  are generally organized among customer industry groups, such as
financial  services,  healthcare  and  insurance  and by specific  printing  and
document output  services,  such as research  reports and on-demand  mutual fund
reports and  commercial  printing.  In addition,  the Company  employs  customer
service representatives to provide on-going support to existing customers and to
oversee the implementation of new customer projects.

     The Company currently has approximately 350 customers in the United States,
20  customers  in  London,  45  customers  in Hong  Kong and  Singapore  and 130
customers in Boston,  including financial  institutions,  healthcare  companies,
trade  organizations  and retail and  manufacturing  firms.  The Company's three
largest customers, Goldman, Sachs & Co., Credit Suisse First Boston Corporation,
and Lehman Brothers accounted for approximately 24%, 15%, and 10%, respectively,
of the Company's net sales on a pro forma basis for the year ended  December 31,
1998.  See  Note  15 to the  Company's  Consolidated  Financial  Statements  for
financial information about domestic and foreign sales and income.

     The Company intends to add sales representatives and customer support staff
to further  increase its customer base in additional  markets and to augment its
volume of non-financial commercial printing.

COMPETITION

     The  commercial   printing  and  document  production  industry  is  highly
competitive.  The Company  competes with a variety of  companies,  many of which
possess significantly greater financial and other resources than the Company. In
the New York and Boston  markets,  the Company  competes  with Bowne & Co., R.R.
Donnelly,  Xerox Business Services, Big Flower Press Holdings,  Inc. and Merrill
Corporation,  and numerous smaller operations, in the printing of time-sensitive
documents.  A major  competitor  in the London  market is  Williams  Lea Ltd. (a
strategic partner of Bowne & Co.). In the Hong Kong market, the Company competes
with M. Graphics, Speedflex, XPRESS Printing and CIS.

     The Company  believes that the principal  competitive  factors in providing
printing and document output services include technological  expertise,  quality
and accuracy,  turnaround time,  fulfillment,  price,  reliability,  security of
service,  reputation,  client  industry  expertise,  capacity  and  personalized
customer  support and service.  No assurances can be given that the Company will
be able to compete  effectively  against the larger  companies  in the  printing
industry.

EMPLOYEES

     As of December 31, 1998, the Company had  approximately  491 employees (400
employed in the United States and 91 employed in the United Kingdom). As of such
date,  282 United  States  -based  employees  were  members of the Paper  Allied
Industrial  Chemical  and Energy  Workers  International  Union,  with which the
Company has a contract  which expires on June 30, 2000. As of December 31, 1998,
60  United  Kingdom-based  employees  were  members  of the  National  Graphical
Association  labor union.  At the time of the acquisition of Workable in Asia in
January  1999,  there  were 112 and 13  employees  in Hong  Kong and  Singapore,
respectively. At the time of the acquisition of Boston Towne Press in February


                                        9
<PAGE>

1999,  there were 35  employees.  The Company  believes that it is in compliance
with its labor agreements and that its labor relations are good.

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

     The Company is subject to the  environmental  laws and  regulations  of the
United  States,  the  foreign  jurisdictions  in  which  the  Company  maintains
facilities,  and the applicable state and local laws and regulations  concerning
air  emissions,  discharges  into  waterways  and the  generation,  handling and
disposal of wastes.  The printing business generates  substantial  quantities of
inks,  solvents  and other  waste  materials  requiring  disposal.  The  Company
typically  recycles  waste  paper and  contracts  for the removal of other waste
materials.  The  Company  believes  that it is in material  compliance  with all
applicable  environmental  laws and  regulations,  as well as  other  applicable
employee health and safety laws and regulations. The Company does not anticipate
the  need  for  significant  capital  expenditures  for  environmental   control
facilities during the current fiscal year or in the next fiscal year.

RISK FACTORS

Reliance on Limited Number of Customers

     The Company's five largest customers accounted for approximately 53% of its
net sales on a pro  forma  basis  for the year  ended  December  31,  1998.  The
Company's largest customer, Goldman, Sachs & Co. accounted for approximately 24%
of the  Company's  net sales on a pro forma basis during  1998.  The Company and
Goldman,  Sachs & Co. have  entered into an agreement  which  provides  that the
Company will supply certain print-related products and services through December
30, 1999.  Although the Company has had  long-term  relationships  with Goldman,
Sachs  & Co.  and its  other  significant  customers,  the  Company's  customers
generally may terminate their  relationships  with the Company upon minimal,  if
any, advance notice and there can be no assurance that these  relationships will
continue.  The termination of the relationships with any one or more significant
customers  could  have a  material  adverse  effect on the  Company's  business,
financial  condition and results of  operations.  In addition,  there has been a
trend toward  consolidation in the financial  services  industry and a merger or
acquisition  involving any of the Company's principal customers resulting in the
termination of such a relationship  could have a material  adverse effect on the
Company.

Dependence on Financial Services Industry

     To date, the Company has focused the marketing of its services primarily on
companies  within the  financial  services  industry and the Company  expects to
continue this focus.  As a result,  the Company's  results of operations will be
particularly  sensitive  to  fluctuations  in the economy or  financial  markets
affecting this industry.  Any event adversely  affecting the financial  services
industry could adversely affect the Company. The Company's success in increasing
its revenues  will also depend,  in part, on its ability to attract new business
from  customers  outside the financial  services  industry.  No assurance can be
given that the  Company  will be  successful  in  attracting  new  customers  in
different industries.

Risks Related to the Company's Expansion Strategy

     The  Company  intends  to  seek  to  expand  its  operations   through  the
acquisition  of  additional  businesses  which provide  commercial,  digital and
time-sensitive  printing  services and through the expansion of its  outsourcing
business by assimilating  additional customers' document management  operations.
There  can  be  no  assurance  that  the  Company  will  be  able  to  identify,
successfully  integrate or profitably  manage any such businesses or operations.
The proposed expansion may involve a number of special risks, including possible
adverse effects on the Company's  operating  results,  diversion of management's
attention,   inability  to  retain  key   personnel,   risks   associated   with
unanticipated  events and the financial statement effect of potential impairment
of acquired intangible assets, any of which could have a material adverse effect
on the Company's business, financial condition and results of operations. In


                                       10
<PAGE>


addition,  if competition for acquisition  candidates or assumed operations were
to increase,  the cost of acquiring businesses or assuming customers' operations
could increase materially.  The inability of the Company to implement and manage
its expansion  strategy  successfully  may have a material adverse effect on the
business and future prospects of the Company.

Management of Growth

     The Company continues to experience  significant growth,  which has placed,
and could  continue to place,  a strain on the  Company's  managerial  and other
resources. From December 1995 through February 1999, the number of the Company's
employees increased from 186 to 651 and further increases are anticipated during
1999. The Company's future  performance and profitability  will depend, in large
part,  on its  ability  to manage its  growth,  particularly  with  respect to a
workforce that is  geographically  dispersed,  while continuing to integrate the
operations of additional companies and to expand its current business.  In order
to manage  growth  successfully,  the  Company  will be  required to continue to
improve its operational,  financial and other internal systems and the training,
motivation and  management of its employees.  If the Company is unable to manage
growth effectively,  the Company's business,  financial condition and results of
operations could be materially adversely affected.

Need for Additional Financing

     The Company will need  additional  funds to implement its  acquisition  and
internal  growth  strategies.  If the  Company  does  not have  sufficient  cash
resources,  its growth could be limited  unless it is able to obtain  additional
capital through additional debt or equity financings.  Moreover, the Company may
seek to use its  Common  Stock for all or a portion of the  consideration  to be
paid in future  acquisitions,  the  issuance  of which may result in dilution to
existing  investors.  The extent to which the Company will be able or willing to
use its Common  Stock for this purpose will depend on its market value from time
to time and the willingness of potential acquisition candidates to accept Common
Stock as part of the  consideration  for the sale of  their  businesses.  If the
Company  is unable to use its  Common  Stock to make  future  acquisitions,  the
Company may be  required to use more of its cash  resources,  if  available,  to
initiate and maintain its  acquisition  program.  There can be no assurance that
the Company will be able to obtain additional  financing as needed. As a result,
the Company might be unable to implement its acquisition  strategy,  which would
have a material adverse effect on the future prospects of the Company.

Risk of International Operations

     On a pro forma,  basis after giving  effect to the  acquisition  of Roda in
London,  sales to customers  outside the United States would have  accounted for
13% of the Company's net sales in the year ended  December 31, 1998. The Company
anticipates  that foreign  sales will account for a  significant  portion of net
sales in the foreseeable future.  Risks inherent in the Company's  international
business activities include the fluctuation of currency exchange rates,  various
and changing  regulatory  requirements,  increased sales and marketing expenses,
political and economic instability,  difficulty in staffing and managing foreign
operations, potentially adverse taxes, complex foreign laws and treaties and the
possibility of difficulty in accounts  receivable  collections.  There can be no
assurance  that any of these factors will not have a material  adverse effect on
the Company's business, financial condition and results of operations.

Dependence on Technology; Risk of Technological Obsolescence

     The  success of the  Company  will be highly  dependent  on its  ability to
acquire  and  utilize  competitive   computer  output  and  document  production
technologies  that are not readily  available on a  cost-effective  basis to the
Company's existing and potential  customers,  thereby creating the incentive for
such customers to outsource  various services to the Company.  Increasing use of
the Internet and other  electronic  means of  delivering  information  which has
traditionally  been  delivered  in paper  form  could  substantially  erode  the
Company's core business of printing financial research reports. There can be no


                                       11
<PAGE>


assurance that one or more non-paper-based technologies (whether now existing or
developed in the future)  will not reduce or supplant  the physical  delivery of
documents as a preferred medium for the Company's customers, which could in turn
adversely  affect  the  Company's   business.   The  emergence  of  services  by
competitors of the Company  incorporating new technologies  could render some or
all  of  the  Company's  services  unmarketable  or  obsolete.  There  can be no
assurance that the Company will be able to obtain the rights to use any such new
technologies,   that  it  will  be  able  to  implement   effectively  such  new
technologies on a cost-effective  basis or that new technologies will not render
noncompetitive  or obsolete the Company's role as a provider of computer  output
and  document   management   services.   In  addition,   in  order  to  maintain
state-of-the-art technologies, the Company will have to make significant capital
expenditures,  which will  require the Company to obtain  additional  financing.
There  can be no  assurance  that  the  Company  will  be able  to  obtain  such
additional financing.

Variability of Quarterly Results

     The Company's quarterly operating results have been and will continue to be
subject to variation,  depending  upon factors such as the mix of business among
the  Company's   services,   the  cost  of  materials,   labor  and  technology,
particularly  in connection  with the delivery of business  services,  the costs
associated with initiating new outsourcing contracts,  the economic condition of
the Company's target markets,  seasonal  concerns and the costs of acquiring and
integrating new businesses.  Although most of the Company's  long-term contracts
for the  provision  of business  services  provide for  pricing  adjustments  to
reflect the actual costs of materials incurred by the Company, these adjustments
typically  occur on a  quarterly  and  annual  basis  and  therefore  may add to
fluctuations in quarterly and annual operating results of the Company.

Risk of Business Interruptions and Dependence on Single Facilities for Certain
Services

     The Company's  business is particularly  sensitive to meeting deadlines and
performing  services for numerous  clients on an overnight  basis. The Company's
operations  at  each of its  locations  are  dependent  on the  availability  of
continuous  computer,  electrical  and  telephone  service.  As  a  result,  any
disruption of day-to-day  operations  could have a material  adverse effect upon
the  Company.  While  the  Company  has,  and  intends  to  develop  additional,
reciprocal  relationships with major printing and document production  companies
in locations  elsewhere  in the United  States and near London and Hong Kong for
back-up  facilities in the event of emergencies,  there can be no assurance that
the loss or  disruption  of any services  affecting one or more of the Company's
facilities  would not disable the Company's  operations at such  facilities,  at
least temporarily.  Any interruption in its ability to provide services, however
brief,  could result in the Company being unable to satisfy the needs of clients
and could adversely affect the Company's  business and its reputation within the
industry.

Fluctuations in the Price and Availability of Supplies

     Prices for paper and other raw  materials  used by the Company may increase
from time to time in the  future.  Any  significant  increases  in the prices of
these  materials  that  cannot be passed on to  customers  could have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations. In addition, increases in the prices of supplies and other materials
might cause some of the Company's customers to utilize alternative  technologies
in their respective businesses that do not involve the use of paper or the mail,
such as the Internet. Although the Company purchases raw materials from a varied
group of  suppliers,  it is dependent  upon a stable  availability  of paper and
other supplies to continue its operations.  Should shortages  develop either for
any of the Company's  suppliers or generally  within the  industry,  the Company
would be unable to  produce  printed  materials  on a  consistent  basis and its
business would be materially adversely affected.


                                       12
<PAGE>


Reliance on Senior Management

     The  Company's  operations  will  continue to be dependent on the continued
services of its  executive  officers,  including  the senior  management  of its
foreign  subsidiaries  and  additional  senior  management  personnel  which the
Company intends to employ. Furthermore,  the Company will likely be dependent on
the senior  management of any companies that may be acquired in the future.  The
Company has employment  agreements with each of its senior executive officers at
each operating  subsidiary.  However,  if any of these  individuals elect not to
continue in their roles with the Company, or if the Company is unable to attract
and  retain  senior  management,  the  Company's  business  could  be  adversely
affected.

Need to Attract and Retain Key Personnel in Highly Competitive Marketplace;
Labor Delays

     The Company's  performance will depend, to a large extent, on the continued
service  of key  technical  employees  and its  ability to  attract,  retain and
motivate such personnel. Competition for such personnel is intense, particularly
for highly skilled and experienced technical personnel who perform the Company's
information  technology  services.  Such technical personnel are in great demand
and are likely to remain a limited  resource for the foreseeable  future.  There
can be no  assurance  that  the  Company  will be able to  attract,  retain  and
motivate such  personnel in the future,  and the inability to do so could have a
material  adverse effect upon the Company's  business,  financial  condition and
results of operations.  In addition,  a strike or other  labor-related  delay or
stoppage  could have a material  adverse  effect  upon the  Company's  business,
operations and financial condition.

Control by Certain Stockholders

     The directors  and other  executive  officers of the Company,  and entities
affiliated  with them,  beneficially  own  approximately  47% of the outstanding
shares of Common Stock. Accordingly, present management of the Company is likely
to continue to exercise  substantial  control over the Company's affairs.  These
stockholders,  acting  together,  would be able to elect a sufficient  number of
directors  to control  the  Company's  Board of  Directors  and would be able to
approve  or  disapprove  any  matter  submitted  to a vote of  stockholders.  In
addition,  because  the Company  has  adopted a  staggered  Board of  Directors,
stockholders  will be  less  able to  alter  the  composition  of the  Board  of
Directors.

Effect of Certain Charter Provisions

     The Board of  Directors  of the Company is  empowered to issue common stock
and  preferred  stock  without   stockholder   action.  The  existence  of  this
"blank-check"  common stock and preferred  stock could render more  difficult or
discourage  an  attempt to obtain  control  of the  Company by means of a tender
offer,  merger,  proxy  contest  or  otherwise  and  may  adversely  affect  the
prevailing  market price of the Common Stock. The Company currently has no plans
to issue any such securities.

Dividend Policy

     The Company  expects to retain any earnings to finance the  operations  and
expansion of the Company's business.  The terms of the Company's existing credit
facility may limit the amount of dividends the Company could pay before  causing
a default.  Moreover, any additional debt financing that the Company arranges in
the future is likely to  restrict  the  payment  of  dividends.  Therefore,  the
payment of any cash dividends on the Common Stock is unlikely in the foreseeable
future.


                                       13
<PAGE>


ITEM 2. PROPERTIES

     As of March 2, 1999, the Company's principal facilities consisted primarily
of printing facilities that contain  production,  storage and office space. With
the exception of the  facilities in Hong Kong,  all of the Company's  facilities
are leased from  unaffiliated  third  parties.  The  facilities in Hong Kong are
leased  from the selling  shareholders  of  Workable,  the  Company's  Hong Kong
subsidiary, who continue to manage its day-to-day operations.

                                                                APPROXIMATE
         LOCATION                                             SQUARE FOOTAGE
--------------------------------------------------------------------------------
Jersey City, New Jersey (629 Grove Street)                       110,000
New York, New York (111 8th Avenue)                               25,000
New York, New York (250 54th Street)                              10,000
London, England                                                   11,200
Chai Wan, Hong Kong                                               28,000
Singapore                                                          1,000
Boston, Massachusetts (215 A Street)                              22,000

     On February 3, 1999,  the Company  purchased a 150,000 square foot facility
in Jersey City, New Jersey (the "Premises") for approximately $5.5 million.  The
Company  obtained a loan for $7.4 million  through its existing  bank to finance
the  acquisition  and make necessary  improvements.  The acquired  building will
replace the current  Jersey  City and 8th Avenue New York City  facilities.  The
Company  anticipates  moving into the new building in the third quarter of 1999.
The lease for the  midtown  New York  facility  expires on  December  31,  1999,
however,  the lessor has agreed to allow the Company to  terminate  the lease on
July 1, 1999 without penalty.  The lease for the Jersey City facility expires in
February  2000,  however the Company  believes that it will be able to terminate
the  lease  early  without  penalty  because  of the high  demand  for  space by
potential lessees in the Jersey City area.

     The Company also has contracted  with the sellers of the Premises,  for the
acquisition  of an unimproved  parcel of land  adjacent to the  Premises,  for a
purchase price of $975,000.  The closing of such  transaction is contingent upon
the completion of certain  environmental  remediation to the satisfaction of the
Company and the New Jersey Department of Environmental Protection.

ITEM 3. LEGAL PROCEEDINGS

     The Company is, from time to time, a party to legal proceedings  arising in
the normal  course of its business.  The Company  maintains  insurance  coverage
against  potential  claims  in an  amount  which  it  believes  to be  adequate.
Management  believes that none of the legal  proceedings  currently  outstanding
will  have a  material  adverse  effect  on the  Company's  business,  financial
condition and results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None


                                       14
<PAGE>


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED 
        SHAREHOLDER MATTERS

     (a) The Common Stock is traded on the Nasdaq Stock Market  National  Market
System ("Nasdaq NMS") (symbol:  CGII). As of March 2, 1999 there were 40 holders
of  record  of the  Common  Stock  and the  Company  estimates  that  there  are
approximately  800 beneficial  holders of the Common Stock.  The following table
sets  forth,  for the  periods  indicated,  the  range of the high and low sales
prices for the Common Stock as reported by Nasdaq NMS:

                                                    High           Low
                                                  --------       -------
                                                                
      April 22, 1998 - June 30, 1998              $ 21.75        $16.625
      Quarter ended September 30, 1998            $ 20.50        $ 9.125
      Quarter ended December 31, 1998             $ 17.75        $10.875
                                                                
     The Company  currently intends to retain all future earnings to finance the
continuing  development  of its  business  and does not  anticipate  paying cash
dividends on the Common Stock in the foreseeable  future.  Any payment of future
dividends  will be at the  discretion  of the Board of Directors and will depend
upon, among other things, the Company's earnings,  financial condition,  capital
requirements,  level of indebtedness,  contractual  restrictions with respect to
the payment of dividends and other relevant factors.  The terms of the Company's
existing credit facility may limit the amount of dividends the Company could pay
before causing a default.

     (b)  The  Securities  and  Exchange   Commission   declared  the  Company's
Registration  Statement on Form S-1 (File No. 333-46541)  effective on April 21,
1998.  The Company's  Registration  Statement on Form S-1 (File No.  333-50713),
filed  pursuant to Rule 462(b)  under the  Securities  Act of 1933,  as amended,
became  effective  on April 22,  1998.  Pursuant to the  foregoing  Registration
Statements,  the Company's  initial public  offering (the  "Offering") of Common
Stock,  began on April 22,  1998.  All of the  2,530,000  shares of Common Stock
offered by the Company, inclusive of 330,000 shares subject to an over-allotment
option,  were sold on April 22 and 23, 1998. The managing  underwriters  for the
Offering were Schroder & Co. Inc. and Prudential Securities Incorporated.

     The aggregate  offering price of the securities sold was  $32,890,000.  The
Company  incurred  underwriting  discounts and  commissions  of  $2,302,300  and
reasonably  estimates  that it incurred  $1,250,000 on account of Securities and
Exchange  Commission  registration fees, NASD filing fee, Nasdaq National Market
Fee,  "Blue Sky" fees,  legal and accounting  fees,  printing costs and transfer
agent fees. None of the expenses were incurred to directors, officers or persons
owning 10% or more of any class of the Company's securities.

     The net  proceeds of the  Offering,  after  deducting  expenses,  was $29.3
million, which has been utilized through December 31, 1998 as follows:

Acquisition of Roda                                                      $ 6,100
Advance to Roda for repayment of indebtedness                              1,429
Payment of indebtedness due to stockholders of the
 Company prior to the offering                                             4,800
Payment of indebtedness to bank                                            2,200
Payment of trade creditors to take advantage of discounts                  2,162
Equipment purchases                                                        4,615
                                                                         =======
Total                                                                    $21,306
                                                                         =======


                                       15
<PAGE>


ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

     The summary of historical  financial data  presented  below is derived from
the historical audited financial  statements of the Company and the Predecessor.
The  operations  of the Roda  acquisition  has been  included in the  historical
income  statement  data  of the  Company  from  April  27,  1998,  the  date  of
acquisition.  The data presented  below should be read in  conjunction  with the
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  the historical  financial  statements and the related notes thereto
included elsewhere herein.

<TABLE>
<CAPTION>
                                                           Years Ended December 31,
                                         ---------------------------------------------------------
                                           1994        1995         1996       1997        1998
                                         ---------   ----------  ----------  ----------  ---------
                                              (in thousands, except share and per share data)
<S>                                      <C>         <C>         <C>         <C>         <C>
Statement of Income Data:
Net sales                                $ 15,927    $ 17,327    $ 23,193    $ 35,744    $ 53,146
Operating expenses:
   Costs of production                     12,085      12,860      17,616      26,894      37,694
   Selling, general and administrative      3,151       3,441       4,270       5,794       7,783
   Depreciation and amortization              448         498         563         694       1,252
                                         --------    --------    --------    --------    --------
                                           15,684      16,799      22,449      33,382      46,729
                                         --------    --------    --------    --------    --------
Income from operations                        243         528         744       2,362       6,417
   Interest (expense) income                 (173)       (257)       (234)       (250)         75
   Other income                                 -           2          48          35           5
                                         --------    --------    --------    --------    --------
Income before income taxes                     70         273         558       2,147       6,497
   Provision for income taxes                   7           6          56         129       2,489
                                         --------    --------    --------    --------    --------
Net income                               $     63    $    267    $    502    $  2,018    $  4,008
                                         ========    ========    ========    ========    ========
</TABLE>

<TABLE>
<CAPTION>
<S>                                                                                      <C>
Pro Forma Data (unaudited):
Income before income taxes                                                               $  6,497
   Pro forma provision for income taxes                                                     2,809
                                                                                         ---------
Pro forma net income                                                                     $  3,688
                                                                                         =========
Pro forma earnings per share:
   Basic                                                                                 $   0.80
                                                                                         =========
   Diluted                                                                               $   0.80
                                                                                         =========
Weighted average shares outstanding
   Basic                                                                                 4,587,941
                                                                                         =========
   Diluted                                                                               4,637,024
                                                                                         =========
</TABLE>

<TABLE>
<CAPTION>
                                                                     At December 31,
                                            ------------------------------------------------------
                                           1994        1995        1996        1997        1998
                                          -------    --------    --------    --------    --------
<S>                                      <C>         <C>         <C>         <C>         <C>
Balance Sheet Data:                                                                    (in thousands)
Cash and cash equivalents                $    144    $      1    $    543    $     67    $  2,179
Working capital                               338          32        (867)        728       5,484
Total assets                                5,680       5,568       9,471      10,938      43,589
Long-term debt and capitalized lease
obligations, net of current portion         1,414       1,151       1,300       1,517       1,985
Stockholders' equity                        1,084         830       1,344       3,151      32,510
</TABLE>


                                       16
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
        RESULTS OF OPERATIONS

     The following discussions contain forward-looking information.  Readers are
cautioned  that such  information  involves risks and  uncertainties,  including
those created by general market conditions, competition and the possibility that
events may occur  which  limit the ability of the Company to maintain or improve
its  operating  results or execute its  primary  growth  strategy  of  acquiring
additional  printing   businesses.   Although  the  Company  believes  that  the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions  could be  inaccurate,  and there can therefore be no assurance that
the forward-looking  statements  included herein will prove to be accurate.  The
inclusion of such information  should not be regarded as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved.

     Unless  otherwise  indicated  or  the  context  otherwise   requires,   all
references to the Company  include the accounts and results of operations of the
Predecessor  (defined  below) for the period  January 1, 1998 through  April 22,
1998 and the  consolidated  results of the Company  from April 23, 1998  through
December 31, 1998,  including the results of  operations  of Roda  Limited,  the
Company's London-based  subsidiary ("Roda") from April 27, 1998 through December
31, 1998.  The  references to December 31, 1997 and December 31, 1996  represent
the results of operations of the Predecessor for the years then ended.

GENERAL

     The  Company  provides a wide range of graphic  communications  services to
financial institutions and corporations,  focusing on producing and distributing
time-sensitive   analytical  research  and  marketing  materials  and  providing
on-demand  printing services.  To date, the Company has experienced  significant
domestic  growth through the (i) expansion of its existing  customer base,  (ii)
addition of products  and  services,  (iii)  assimilation  of in-house  printing
operations,  (iv)  acquisition  of  selected  assets  and (v)  establishment  of
strategic  alliances  which,  in the case of Roda and Workable  Company  Limited
("Workable"), the Company's subsidiary in Hong Kong, led to both companies being
acquired.

     On  April  22,  1998,   Cunningham   Graphics,   Inc.  (the  "Predecessor")
reorganized  (the  "Reorganization")  such  that  all  the  stockholders  of the
Predecessor  contributed  all of the  outstanding  shares of common stock of the
Predecessor to the Company in exchange for a total of 2,595,260 shares of Common
Stock and  promissory  notes (the "Exchange  Notes") in the aggregate  principal
amount of $2.6  million.  In the  Reorganization,  the Company  also assumed the
Predecessor's  obligations  under  promissory  notes in the aggregate  principal
amount of $2.2 million,  representing undistributed S corporation taxable income
(the  "Distribution  Notes").  Collectively  the Exchange Notes and Distribution
Notes  are  known  as  the   "Reorganization   Notes."   Concurrently  with  the
Reorganization,  the Company sold 2,530,000 shares of Common Stock in an initial
public offering (the "Offering").  The Company used a portion of the proceeds to
repay the Reorganization Notes.

     On April 27, 1998, the Company closed the acquisition  (the  "Acquisition")
of the outstanding  ordinary share capital of Roda for consideration  consisting
of cash in the amount of $4.1 million and 169,739 shares of Common Stock, valued
at the  Offering  price of $13.00 per share.  In addition  on June 4, 1998,  the
Company  purchased  the  outstanding  preference  share capital of Roda for $1.8
million.  The excess of the purchase price over the net assets acquired  totaled
approximately $11.0 million and was recorded as goodwill.  The goodwill is being
amortized over a 40-year period.

         On January 13, 1999, the Company,  through its wholly-owned subsidiary,
Cunningham  Graphics   International  S.A.,  acquired  all  of  the  issued  and
outstanding capital stock of Workable, a Hong Kong corporation. In addition, the
Company acquired from the Sellers the 60% of the outstanding capital stock


                                       17
<PAGE>


of Plainduty  Limited,  a Hong Kong  corporation,  which was not already held by
Workable. Workable also has a wholly owned subsidiary in Singapore.

     The purchase price of the Workable acquisition was $13.1 million, which was
paid as follows:  (i) the issuance of 398,216 shares of common stock, at a price
of $15.52 per share (the fair market value of the  Company's  Common  Stock) and
(ii) a cash  payment in the amount of $6.2  million.  In  addition,  the Company
assumed $0.7 million of  indebtedness.  The Company  utilized  proceeds from its
initial public offering of Common Stock to fund the cash portion of the purchase
price. Pursuant to the purchase and sale agreement,  the Company may be required
to pay to the  sellers up to an  additional  $3.8  million,  depending  upon the
earnings  of  Workable  during  the  years  1999,  2000 and 2001.  The  goodwill
generated from the transaction of approximately  $8.8 million is being amortized
over 40 years.

     On February 16, 1999, the Company acquired  substantially all of the assets
and assumed  certain  liabilities  of Boston Towne Press.  The purchase price of
Boston  Towne  Press  was $5.4  million,  which  was paid in cash.  The  Company
utilized available cash reserves and borrowed on its revolving line of credit to
fund the  purchase  price.  Pursuant to the  purchase  and sale  agreement,  the
Company  may be  required  to  pay  the  seller  up to an  additional  $700,000,
depending  upon the  earnings of Boston  Towne  Press  during the years 1999 and
2000. The goodwill  generated from the transaction of approximately $2.9 million
is being amortized over 40 years.

     The Company's net sales are derived  primarily from providing  printing and
distribution  services for  customers in the financial  services,  insurance and
publishing  industries,  a  substantial  component  of which is the printing and
distribution  of financial and analytical  research and marketing  materials for
the financial services industry.  The Company also derives part of its net sales
from providing fulfillment services, including labeling, mailing, inserting, kit
assembly,  and  inventory  management  for its  customers.  Finally  the Company
provides computer and data output services and other  document-related  services
for customers.

     The Company's  operating  expenses  consist of the following:  (i) costs of
production,   (ii)  selling,  general  and  administrative  expenses  and  (iii)
depreciation and amortization. Costs of production consist primarily of the cost
of paper and other production materials, labor, outside services,  insurance and
other production  expenses including repairs and maintenance and rent.  Selling,
general  and   administrative   expenses   consist   primarily  of   management,
administrative  and  marketing  expenses,  salaries for  officers,  salaries and
commissions earned by sales persons and professional fees.


                                       18
<PAGE>


Results of Operations

     The following tables set forth certain items from the Company's  Statements
of Income as a percentage of net sales for the periods indicated:





                                                   1996        1997        1998
                                                  -----       -----       -----

Net Sales                                         100.0%      100.0%      100.0%
    Costs of production                            76.0        75.3        70.9
    Selling, general and administrative            18.4        16.2        14.6
    Depreciation and amortization                   2.4         1.9         2.4
                                                  -----       -----       -----
Income from operations                              3.2         6.6        12.1
    Interest income (expense)                      (1.0)       (0.7)        0.1
    Other income (expense)                          0.2         0.1         0.0
                                                  -----       -----       -----
Income before income taxes                          2.4         6.0        12.2
    Provision for income taxes                      0.2         0.4         4.7
                                                  -----       -----       -----
Net income                                          2.2%        5.6%        7.5%
                                                  =====       =====       =====



Year ended December 31, 1998 compared to year ended December 31, 1997

     Net sales.  The Company  reported  net sales of $53.1  million for the year
ended December 31, 1998 compared to $35.7 million for 1997, an increase of $17.4
million or 48.7%. The increase was attributable to the inclusion of $7.1 million
of Roda's net sales in 1998,  together  with an increase of $10.3 million in net
sales from domestic operations.  The domestic growth resulted primarily from the
increase in net sales with existing  customers and the  assimilation  of certain
in-house printing operations of third-party businesses, including the print shop
and data output centers of The McGraw-Hill Company and Schroder & Co. Inc.

     Costs of  production.  Costs of production  were $37.7 million for the year
ended  December 31, 1998,  as compared to $26.9 million for 1997, an increase of
$10.8 million or 40.1%.  Costs of  production  were  approximately  71.0% of net
sales for the year  ended  December  31,  1998,  compared  to 75.3% for the same
period in 1997.  The  reduction of costs of  production  as a percentage  of net
sales was  attributable  to the  inclusion of Roda's lower  percentage  costs of
production  in 1998 and certain  improvements  and benefits  resulting  from the
fixed nature of certain costs in the domestic operations.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses were $7.8 million for the year ended December 31, 1998,
as compared to $5.8 million for 1997, an increase of $2.0 million or 34.5%. This
increase was a result of the inclusion of Roda's operations and an investment in
new  marketing and  management  personnel in London and  domestically.  Selling,
general and administrative  expenses were 14.6 % of net sales for the year ended
December 31, 1998 compared to 16.2% for 1997.  The decrease in selling,  general
and  administrative  expenses as a percentage of net sales reflects the benefits
resulting from the fixed nature of certain costs associated with the increase in
net sales domestically and from the Acquisition.

     Depreciation and amortization.  Depreciation and amortization expenses were
$1.3 million for the year ended  December 31, 1998,  as compared to $694,000 for
the same period in 1997, an increase of


                                       19
<PAGE>


$558,000,  or 80.4%.  The  increase  was the result of the  inclusion  of Roda's
depreciation expenses after the Acquisition,  goodwill  amortization  associated
with the Acquisition and the purchase of new equipment.

     Interest  expense and interest  income.  Interest  expense was $400,000 for
1998,  as compared to $250,000  for 1997,  an increase of $150,000 or 60%.  Such
increase was largely  attributable  to higher levels of borrowings  during 1998,
principally  capital lease  obligations.  Interest expense reflects  interest on
notes payable,  capital lease obligations and on utilization of line of credits.
Interest  income was  $475,000  for 1998,  as compared to $0 for 1997.  Interest
income  reflects  interest on the unused  portion of the cash  proceeds from the
initial public offering.

     Provision for income taxes. On April 22, 1998 the Company converted from an
S  corporation  to a C  corporation  for  tax  purposes  (the  "Conversion")  in
conjunction  with  the  Reorganization.   For  comparative  purposes  pro  forma
provision for income taxes was  calculated as if the  Conversion had occurred on
January 1, 1997.  The pro forma  provision for income taxes was $2.8 million for
the year ended  December 31, 1998,  as compared to the pro forma  provision  for
income taxes of $880,000 for the same period in 1997. As a percentage of profits
before  taxes the tax rates on a pro forma  basis  were 43.2% for the year ended
December  31,  1998 and 41.0% for the same period in 1997.  The  increase is the
result  of the  recording  of  $94,000  of  deferred  taxes as a  result  of the
conversion from an S corporation to a C corporation.

     Net  income.  Net income  was $4.0  million or $0.80 per share on a diluted
basis with 4,637,024  weighted  average common shares  outstanding  for the year
ended  December  31, 1998  compared to pro forma net income of $1.3  million for
1997.

Year ended December 31, 1997 compared to year ended December 31, 1996

     Net sales.  The Company  reported  net sales of $35.7  million for the year
ended  December 31, 1997 compared to $23.2  million for the year ended  December
31, 1996, an increase of $12.5 million or 54%. The majority of this increase was
attributable  to an increase  in  business  with  existing  customers,  with the
balance attributable to the addition of new customers.  In 1997, the Company had
four  customers  each of whom  represented  in excess of 10% of net  sales,  and
together  represented an aggregate of 57% of net sales. In 1996, the Company had
three  customers  each of whom  represented  in excess of 10% of net sales,  and
together represented an aggregate of 42% of net sales.

     Costs of  production.  Costs of production  were $26.9 million for 1997, as
compared to $17.6 million for 1996, an increase of $9.3 million or 53%. Costs of
production  were  approximately  75% of net  sales  for  1997,  as  compared  to
approximately  76% of net sales for 1996. The decrease in costs of production as
a percentage of net sales was primarily a result of economies of scale resulting
from improved utilization of the Company's existing facilities.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses  increased to approximately  $5.8 million for 1997 from
approximately  $4.3 million for 1996, an increase of $1.5 million.  The increase
was  attributable to costs  associated with the addition of personnel to support
future growth. As a percentage of net sales, selling, general and administrative
expenses  decreased from  approximately  18% for 1996 to  approximately  16% for
1997,  primarily  reflecting  greater economies of scale as the Company improved
the utilization of its existing facilities.

     Depreciation and  amortization.  Depreciation and amortization  expense was
$694,000 for 1997 as compared to $563,000  for 1996,  an increase of $131,000 or
23%. The increase in depreciation and  amortization  expense was attributable to
the addition of equipment by the Company during 1997.

     Interest  expense.  Interest  expense was $250,000 for 1997, as compared to
$234,000  for 1996,  an  increase of $16,000 or 7%.  Such  increase  was largely
attributable to higher levels of borrowings during


                                       20
<PAGE>


1997.  Interest  expense  reflects  interest  on notes  payable,  capital  lease
obligations and on utilization of the line of credit with Summit Bank.

     Other  income.  Other  income  included  $35,000  for 1997,  as compared to
$48,000 for 1996, a decrease of $13,000.  Other income primarily reflected gains
on the sale of certain depreciated equipment.

     Provision  for income  taxes.  Provision  for income taxes was $129,000 for
1997, as compared to $56,000 for 1996.  The increase is  attributable  to higher
income generated during the period.  As discussed above, upon termination of the
Company's  S  corporation  status,  the  Company  became  subject to federal and
additional state income taxes.

     Net income. As a result of the aforementioned, net income increased to $2.0
million for 1997 from  $502,000  for 1996,  an increase  of $1.5  million.  As a
percentage of net sales, net income increased to 6% in 1997 from 2% in 1996.

Liquidity and Capital Resources

     As a result of the  Offering,  the  Company  received  approximately  $29.3
million of net proceeds,  after deducting underwriting discounts and commissions
and other  offering  expenses.  All of such net proceeds  have been  expended as
follows:  $6.1 million to pay for the  acquisition of Roda,  $4.8 million to pay
notes to stockholders of the Predecessor,  $3.6 million to repay indebtedness of
the  Company and Roda,  $2.2  million  for  payment to trade  creditors  to take
advantage of discounts,  $4.6 million for equipment purchases,  $6.5 million for
the  acquisition  of  Workable  in  January  1999,  and  $1.5  million  for  the
acquisition of real property in Jersey City, New Jersey in February 1999.

     Until the closing of the  Offering,  the Company  financed its  operations,
including  working  capital and equipment  acquisitions,  using bank  borrowing,
vendor  financing,  financing  lease  transactions,  as well as from  cash  flow
generated  from  operating   activities,   and   stockholder   debt  and  equity
contributions.

     Net cash  provided by operating  activities  were $3.2 million for the year
ended December 31, 1998.

     Net cash used in investing  activities was $10.6 million for the year ended
December 31, 1998. The net cash used in investing  activities for the year ended
December 31, 1998 consists of $6.2 million for the  acquisition of Roda and $4.6
million for the acquisition of property and equipment.

     Net cash  provided by financing  activities  was $19.2 million for the year
ended  December  31,  1998.  Net  cash  provided  by  financing   activities  is
attributable to the $29.3 million net proceeds of the Offering, reduced by, $2.2
million  to  repay  the  bank  indebtedness,   $1.4  million  to  repay  certain
indebtedness  of Roda and $6.3  million to repay  indebtedness  incurred  in the
Reorganization and to make distributions to the stockholders of the Predecessor.

     On July 9, 1998 the Company entered into a $30.0 million  revolving line of
credit  facility  with a bank.  The  revolving  line of  credit  may be used for
acquisitions and includes  sub-limits of $5.0 million for purchases of equipment
and $7.5  million for working  capital.  The  facility has a term of three years
through July 9, 2001 and has annual  extension  options.  The revolving  line of
credit contains certain covenants that include, among other things,  limitations
on the  disposition  of  material  amounts  of  assets  and  the  incurrence  of
additional indebtedness.  In addition certain financial covenants, as to minimum
net worth,  maximum leverage and debt coverage ratios must be maintained.  These
covenants may restrict the ability of the Company to pay dividends on the Common
Stock,  although the Company does not have the intention of paying dividends for
the foreseeable  future.  After giving effect to the acquisition of Boston Towne
Press,  1999, $24.5 million  remained  available for borrowing under the line of
credit subject to the sub-limits stated above.


                                       21
<PAGE>


     Roda has a credit facility with a bank (the "Roda Facility")  consisting of
a $2.0 million  ((pound)1.2  million) term loan and a $750,000  ((pound)450,000)
revolving  line of credit.  The line of credit is reviewed by the bank  annually
for  renewal,   but  is  payable  on  demand.  The  debt  is  collateralized  by
substantially  all of Roda's  assets.  As of December  31,  1998,  approximately
$419,000  ((pound)252,000)  was  outstanding  on the  credit  facility  and $1.2
million  ((pound)716,000)  was outstanding under the term loan. The term loan is
payable in equal monthly  installments  through  October 20, 2001. On August 10,
1998 the Company,  through its  revolving  credit  facility  with its  principal
domestic  lender,  issued a  standby  letter of  credit  to  guarantee  the Roda
Facility and in consideration  therefor,  the bank eliminated existing financial
covenants under such line of credit.

     The operations of Workable are financed through  internally  generated cash
flow.

     Management  believes that the cash flow provided  from  operations  and its
existing  revolving  line of credit  facility is  sufficient to fund its ongoing
operations.  In  addition,  while  the  revolving  line of  credit  facility  is
sufficient for the Company to pursue its acquisition strategy in the short-term,
the long-term  growth  prospects of the Company will require  additional debt or
equity  financing.  There can be no  assurance  that the Company will be able to
obtain such financing on acceptable terms.

YEAR 2000

General  Description  of the Year 2000 Issue and the  Nature and  Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems

     The "Year 2000  Issue" is the result of  computer  programs  being  written
using two digits  rather  than four to define the  applicable  year.  Any of the
Company's  computer  programs or hardware that have  date-sensitive  software or
embedded  chips may recognize a date using "00" as the year 1900 rather than the
year 2000.  This could  result in a system  failure or  miscalculations  causing
disruptions of operation,  including,  among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

     The Company has undertaken various initiatives  intended to ensure that its
computer  equipment and software will function properly with respect to dates in
the year 2000 and thereafter. For this purpose, the term "computer equipment and
software" includes systems that are commonly thought of as IT systems, including
accounting,   data  processing,   and  telephone/PBX  systems,  cash  registers,
hand-held  terminals,  scanning equipment,  and other miscellaneous  systems, as
well as systems  that are not commonly  thought of as IT systems,  such as alarm
systems, fax machines, or other miscellaneous  systems. In addition,  the review
included the printing and binding  equipment  used in the Company's  operations.
Both IT and non-IT systems may contain imbedded  technology,  which  complicates
the Company's year 2000  identification,  assessment,  remediation,  and testing
efforts.

     Based  on  recent  assessments,  the  Company  determined  that  it will be
required to modify or replace  portions of its software and certain  hardware so
that those systems will properly  utilize  dates beyond  December 31, 1999.  The
Company  presently  believes that with  modification or replacements of existing
software and certain hardware, the Year 2000 Issue can be mitigated. However, if
such  modifications  and replacements are not made, or are not completed timely,
the Year 2000  Issue  could  have a  material  impact on the  operations  of the
Company.

     The  Company's  plan to resolve the Year 2000 Issue  involves the following
four phases: assessment,  remediation, testing, and implementation. To date, the
Company  has  fully  completed  its  assessment  of all  systems  that  could be
significantly affected by the year 2000. The completed assessment indicated that
most of the  Company's  significant  information  technology  systems  could  be
affected,   particularly  the  general  ledger,   billing,  and  production  and
manufacturing  systems.  The  Company  prints  and  distributes   time-sensitive
analytical research and marketing materials, and accordingly does not have


                                       22
<PAGE>


any exposure as it relates to the products being sold. In addition,  the Company
has  gathered   information  about  the  year  2000  compliance  status  of  its
significant   suppliers  and  subcontractors  and  continues  to  monitor  their
compliance.

Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase

     For its information technology exposures,  to date the Company has received
the upgrade from its software  manufacturer  and expects to complete the upgrade
no later than March 31, 1999.  Once the  software is upgraded,  the Company will
begin its testing and  implementation.  Completion  of the testing phase for all
significant  systems is  expected  to be  complete  by June 30,  1999,  with all
remediated systems fully tested and implemented by September 30, 1999.

     The  Company  is  currently  in the  process  of  assessing  its  operating
equipment  and  believes  there is  minimal  risk with  regards to the Year 2000
Issue. As such, the Company is 80% complete in the remediation and testing phase
of its operating equipment and is expected to be completed by March 31, 1999.

Nature and Level of Importance  of Third Parties and their  Exposure to the Year
2000.

     The Company has had communications with all of its significant customers to
determine the extent to which the Company's  interface systems are vulnerable to
any  failure  by third  parties.  The  Company  believes  that  its  significant
customers are addressing the issues and will timely adjust their systems.

     The Company has questioned  its  significant  suppliers and  subcontractors
that do not share information systems with the Company ("external  agents").  To
date, the Company is not aware of any external agent with a Year 2000 Issue that
would  materially  impact the  Company's  results of  operation,  liquidity,  or
capital resources.  However,  the Company has no means of ensuring that external
agents will be year 2000 ready.  The  inability  of external  agents to complete
their year 2000 resolution  process in a timely fashion could materially  impact
the  Company.   The  effect  of   non-compliance   by  external  agents  is  not
determinable.

Costs of the Year 2000 Issue

     The cost of the  upgrade to the  Company  is  included  in its  maintenance
contract  with its  software  vendor and will not have a material  impact on the
Company's  future  financial  results.   The  Company  also  believes  that  the
miscellaneous hardware required to be purchased to become year 2000 compliant is
not material.

Risks of the Year 2000

     Management of the Company believes it has an effective  program in place to
resolve the Year 2000 Issue in a timely manner.  As noted above, the Company has
not yet completed all  necessary  phases of the year 2000 program.  In the event
that the Company does not complete any additional  phases,  the Company would be
unable to take customer orders, manufacture and ship products, invoice customers
or collect payments. In addition, disruptions in the economy generally resulting
from year 2000 issues could also materially  adversely  affect the Company.  The
Company could be subject to litigation for computer systems product failure, for
example,  equipment  shutdown or failure to properly date business records.  The
amount of potential liability and lost revenue cannot be reasonably estimated at
this time.


                                       23
<PAGE>


Contingency Plan

     The Company  currently  has no  contingency  plans in place in the event it
does not  complete  all phases of the year 2000  program.  The Company  plans to
evaluate the status of completion in June 1999 and determine whether such a plan
is necessary.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The  Company is exposed to changes in interest  rates and foreign  currency
exchange primarily in its cash, debt and foreign currency transactions.

     A discussion of the Company's accounting policies for financial instruments
is included in the Summary of  Significant  Accounting  Policies in the Notes to
the  Consolidated  Financial  Statements.  Additional  information  relating  to
financial instruments and debt is included in Note 8 - Revolving Line of Credit,
Long-Term Debt and Obligations Under Capital Leases.

     International operations, excluding U.S. export sales which are principally
denominated  in  U.S.  dollars,  constitute  13% of the  revenues  and 8% of the
identifiable  assets of the Company as of December 31,  1998,  all of which were
denominated in British pounds. The Company has loans to foreign affiliates which
are denominated in foreign currencies. Foreign currency changes against the U.S.
dollar affect the foreign currency  translation  adjustment of the Company's net
investment in these affiliates and the foreign currency transaction  adjustments
on long-term  advances to affiliates,  which impact  consolidated  equity of the
Company.  International  operations result in a large volume of foreign currency
commitment and transaction  exposures and significant foreign currency net asset
exposures.  With the  acquisition  of Workable on January 13, 1999,  the Company
prints in a number  of  locations  around  the world and has a cost base that is
diversified over a number of different  currencies,  as well as the U.S. dollar,
which serves to counterbalance  partially its foreign currency transaction risk.
The Company does not hedge its exposure to translation gains and losses relating
to  foreign  currency  net asset  exposures;  however,  currently  in the United
Kingdom,  it borrows in British Pounds to reduce such exposure.  Currently,  the
Hong Kong  dollar is "pegged" to he United  States  dollar,  so there is minimal
foreign  currency   translation   adjustment  with  respect  to  the  Hong  Kong
operations.

     The  Company's  cash  position  includes  amounts  denominated  in  foreign
currencies.  The Company  manages its worldwide  cash  requirements  considering
available funds among its  subsidiaries  and the cost  effectiveness  with which
these funds can be accessed.  The  repatriation of cash balances from certain of
the Company's  affiliates could have adverse tax  consequences.  However,  those
balances are generally  available  without legal  restrictions  to fund ordinary
business operations.

     The Company regularly invests excess operating cash in overnight repurchase
agreements   that  are  subject  to  changes  in  short-term   interest   rates.
Accordingly,  the Company believes that the market risk arising from its holding
of these financial instruments is minimal.

     The Company's interest expense is most sensitive to changes in the general
level of U.S. interest rates. In this regard, changes in U.S. interest rates
affect the interest paid on its debt. To mitigate the impact of fluctuations in
U.S. interest rates, the Company generally maintains a portion of its debt as
fixed rate in nature.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The  consolidated  financial  statements of the Company,  together with the
report  thereon  of Ernst & Young LLP dated  February  3,  1999,  including  the
information  required by Item 302 of Regulation  S-K, are set forth on pages F-1
through F-20 hereof.  The schedule  required  under  Regulation  S-X is included
herein on page S-1.


                                       24
<PAGE>

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTS ON ACCOUNTING AND 
          FINANCIAL DISCLOSURE

          None

                                    PART III

     The information called for by "Item 10. Directors and Executive Officers of
the Registrant", "Item 11. Executive Compensation", "Item 12. Security Ownership
of  Certain   Beneficial   Owners  and   Management",   and  "Item  13.  Certain
Relationships and Related Transactions",  is hereby incorporated by reference to
the Company's Proxy Statement for its Annual Meeting of Shareholders  (scheduled
to be held on May 11, 1999) to be filed with the SEC pursuant to Regulation  14A
under the Securities Exchange Act of 1934 as amended.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K

(a)  (1)  Financial Statements:

          See the index to the Consolidated Financial Statements on page F-1
          hereof

(a)  (2)  Financial Statement Schedules:

          See "Index to the Consolidated Financial Statements and Financial
          Statement Schedule"

(a)  (3)  Exhibits

     The  following  documents are filed as Exhibits to this report on Form 10-K
or incorporated by reference herein.  Any document  incorporated by reference is
identified by a parenthetical  referencing the filing with the Commission  which
included such document.


Exhibit No.                         Description

2.1  Reorganization Agreement among Stockholders of Cunningham Graphics, Inc.
     and the Company (Exhibit 2.1 to Amendment No. 2 to Registration Statement
     on Form S-1 No. 333-46541)

2.2  Agreement  for the Sale and Purchase of the Entire  Issued Share Capital of
     Roda Limited  dated  January 16, 1998 between P.L.  Furlonge and others and
     Cunningham  Graphics,  Inc. (Exhibit 1.2 to Registration  Statement on Form
     S-1 No. 333-46541)

2.3  Supplemental Agreement dated March 24, 1998 between P.L. Furlonge and
     others and Cunningham Graphics, Inc. (Exhibit 1.2(a) to Amendment No. 2 to
     Registration Statement on Form S-1 No. 333-46541)

3.1  Certificate of Incorporation (Exhibit 3.1 to Registration Statement on Form
     S-1 No. 333-46541)

3.2  By-Laws (Exhibit 3.2 to Registration Statement on Form S-1 No. 333-46541)

10.1 1998 Stock Option Plan (Exhibit 10.1 to Amendment No. 1 to Registration
     Statement on Form S-1 No. 333-46541)

10.2 Directors' Stock Option Plan (Exhibit 10.2 to Registration Statement on
     Form S-1 No. 333-46541)

10.3 Employment Agreement between the Company and M.R. Cunningham (Exhibit 10.3
     to Amendment No. 2 to Registration Statement on Form S-1 No. 333-465411)

10.4 Employment Agreement between the Company and G. Mays (Exhibit 10.4 to
     Amendment No. 2 to Registration Statement on Form S-1 No. 333-465411)


                                       25
<PAGE>


10.5      Employment Agreement between the Company and T. Mays (Exhibit 10.5 to
          Amendment No. 2 to Registration Statement on Form S-1 No. 333-465411)

10.6      Employment Agreement between the Company and R. Needle (Exhibit 10.6
          to Amendment No. 2 to Registration Statement on Form S-1 No.
          333-465411)

10.7      Service Agreement between Roda Limited and P.L. Furlonge (Exhibit 10.7
          to Registration Statement on Form S-1 No. 333-46541)

10.8      Employment Agreement between the Company and Robert M. Okin (Exhibit
          10.8 to Amendment No. 2 to Registration Statement on Form S-1 No.
          333-46541)

10.13     Roda Lease (Exhibit 10.13 to Amendment No. 1 to Registration Statement
          on Form S-1 No. 333-46541)

10.15     Employment Agreement between the Company and I. Lykogiannis (Exhibit
          10.15 to Amendment No. 2 to Registration Statement on Form S-1 No.
          333-46541)

10.16     Employment Agreement between the Company and R. Zanisnik (Exhibit
          10.16 to Amendment No. 2 to Registration Statement on Form S-1 No.
          333-46541)

10.17     Credit and Security  Agreement  dated July 9, 1998 between Summit Bank
          and the Company  (Exhibit  10.17 to Quarterly  Report on Form 10-Q for
          the quarter ended June 30, 1998)

10.18     Agreement for the sale and purchase of the entire issued share capital
          of Workable  Company  Limited and 60% of the issued  share  capital of
          Plainduty  Limited  dated as of January  13, 1999 by and among Lam Hok
          Ling,  Tung  Hok Ki,  Hacienda  Resources  Limited,  the  Company  and
          Cunningham  Graphics  International,  S.A.  (Exhibit  10.18 to Current
          Report on Form 8-K for the event occurring on January 13, 1999)

10.19     Service  Agreement  dated as of  January  13,  1999  between  Workable
          Company  Limited and Evan Lam (Exhibit 10.19 to Current Report on Form
          8-K for the event occurring on January 13, 1999)

10.20     Service  Agreement  dated as of  January  13,  1999  between  Workable
          Company  Limited and Timothy Tung (Exhibit  10.20 to Current Report on
          Form 8-K for the event occurring on January 13, 1999)

10.21     Tenancy  Agreement  dated as of  January  13,  1999  between  Workable
          Company Limited and Many Best  Development  Limited  (Exhibit 10.21 to
          Current  Report on Form 8-K for the event  occurring  on  January  13,
          1999)

10.22     Tenancy  Agreement  dated as of  January  13,  1999  between  Workable
          Company Limited and Splendour Chief Development Limited (Exhibit 10.22
          to Current  Report on Form 8-K for the event  occurring on January 13,
          1999)

10.23     Loan  Agreement  dated February 3, 1999 among Summit Bank, the Company
          and  Cunningham  Graphics  Realty,  L.L.C.  (Exhibit  10.23 to Current
          Report on Form 8-K for the event occurring on February 3, 1999)

10.24     Agreement of Sale dated October 28, 1998 between Willco  Associates-1,
          L.L.C.  and the Company  (Exhibit  10.24 to Current Report on Form 8-K
          for the event occurring on February 3, 1999)

10.25     Amendment to Agreement of Sale between Willco Associates-1, L.L.C. and
          the Company dated February 3, 1999 (Exhibit 10.25 to Current Report on
          Form 8-K for the event occurring on February 3, 1999)

10.26     Agreement of Sale dated October 28, 1998 between Willco  Associates-2,
          L.L.C.  and the Company  (Exhibit  10.26 to Current Report on Form 8-K
          for the event occurring on February 3, 1999)

10.27     Amendment to Agreement of Sale between Willco Associates-2, L.L.C. and
          the Company dated February 3, 1999 (Exhibit 10.27 to Current Report on
          Form 8-K for the event occurring on February 3, 1999)

10.28     Assignment  of Agreement of Sale (Exhibit  10.28 to Current  Report on
          Form 8-K for the event occurring on February 3, 1999)

10.29     Asset purchase agreement dated February 17, 1999 for the sale and
          purchase of certain assets and the assumption of certain liabilities
          of Boston Towne Press, Inc. by and among Boston Towne Press, Inc.,
          John R. Henesey, Jr., Cunningham Graphics International, Inc. and BTP
          Acquisition Corp.

10.30     Employment Agreement dated as of February 17, 1999 between BTP
          Acquisition Corp. and John R. Henesey Jr.

21        Subsidiaries of the Company


                                       26
<PAGE>


23   Consent of Ernst & Young LLP

24   Power of attorney

27   Financial Data Schedule

(b) Reports on Form 8-K:

     There were no reports on Form 8-K filed for the quarter ended  December 31,
1998.

     PURSUANT  TO THE  REQUIREMENTS  OF  SECTION  13 OR 15(D) OF THE  SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNDER DULY AUTHORIZED.

                                       CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                                       By: /s/  Michael R. Cunningham
                                           --------------------------
                                                Michael R. Cunningham
                                       President, Chief Executive Officer
                                                         And
                                       Chairman of the Board of Directors

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT
HAS BEEN SIGNED BY THE FOLLOWING  PERSONS ON BEHALF OF THE REGISTRANT AND IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>

   Date                            Signature                                Title
<S>                        <C>                                <C>
March 3, 1999              /s/ Michael R. Cunningham          President, Chief Executive Officer
                           -------------------------          And
                            Michael R. Cunningham             Chairman of the Board of Directors


March 3, 1999                       *                         Executive Vice President
                           --------------------------         And Director
                             Gordon J. Mays

March 3, 1999              /s/ Robert M. Okin                 Executive Vice President
                           --------------------------         And Chief Financial Officer
                             Robert M. Okin                   (Principal Financial and Accounting Officer)


March 3, 1999                       *                         Director
                           --------------------------
                             Arnold Spinner

March 3, 1999                       *                         Director
                           --------------------------
                             James J. Cunningham

March 3, 1999                       *                         Director
                           --------------------------
                             Laurence Gerber

March 3, 1999                       *                         Director
                           --------------------------
                             Stanley J. Moss
</TABLE>

/s/ Michael R. Cunningham
---------------------------------------------
*  Michael R. Cunningham, as Attorney-In-Fact


                                       27
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
                          Index to Financial Statements
                        And Financial Statement Schedule

                                    Contents

Report of Independent Auditors............................................F-2

Financial Statements

Consolidated Balance Sheets as of December 31, 1997  and 1998.............F-3

Consolidated Statements of Income for the years ended
 December 31,  1996,  1997 and  1998........................ .............F-4

Consolidated Statements of Stockholders' Equity for the
 years ended December 31, 1996, 1997 and 1998.............. ..............F-5

Consolidated Statements of Cash Flows for the years ended
 December 31, 1996, 1997 and 1998........................ ................F-6

Notes to Consolidated Financial Statements................................F-7

Financial Statement Schedule .............................................

Schedule II - Valuation and Qualifying Accounts                           S-1

All other  schedules for which  provision is made in the  applicable  accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.


                                      F-1
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS


To the Board of Directors and Stockholders of
Cunningham Graphics International, Inc.


We have  audited the  accompanying  consolidated  balance  sheets of  Cunningham
Graphics  International,  Inc. as of December 31, 1997 and 1998, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three  years in the period  ended  December  31,  1998.  Our audits  also
included the  financial  statement  schedule  listed in the Index at Item 14(a).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Cunningham Graphics
International,  Inc.  at  December  31,  1997 and 1998,  and the  results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1998, in conformity with generally accepted accounting  principles.
Also, in our opinion, the related financial statement schedule,  when considered
in relation to the basic financial statements taken as a whole,  presents fairly
in all material respects the information set forth therein.


                                                            /s/Ernst & Young LLP


Princeton, New Jersey
February 3, 1999


                                       F-2
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1998
               (in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
                                                                                      1997               1998
                                                                                     -------            -------
<S>                                                                                  <C>                <C>
Assets
Current assets:
   Cash and cash equivalents                                                         $    67            $ 2,179
   Accounts receivable (net of allowance for
     doubtful accounts of $50 and $146, respectively)                                  5,673              9,199
   Inventories                                                                           940              1,301
   Prepaid expenses and other current assets                                              78                383
   Notes and advances receivable - stockholder/officers                                  136               --
   Deferred income taxes                                                                  47                520
                                                                                     -------            -------
Total current assets                                                                   6,941             13,582
Cash held for acquisitions and building addition                                        --                9,700
Property and equipment - net                                                           3,579              8,652
Other assets                                                                             418                860
Goodwill, net of accumulated amortization of $176 in 1998                               --               10,795
                                                                                     -------            -------
                                                                                     $10,938            $43,589
                                                                                     =======            =======

Liabilities and stockholders' equity Current liabilities:
   Revolving line of credit                                                          $   300            $   419
   Current portion of long-term debt                                                     407                580
   Current portion of obligations under capital leases                                   178                493
   Accounts payable                                                                    3,854              3,102
   Accrued expenses                                                                    1,474              3,005
   Income taxes payable                                                                                     499
                                                                                     -------            -------
Total current liabilities                                                              6,213              8,098
Long-term debt, net of current portion                                                 1,185                769
Obligations under capital leases- net of current portion                                 332              1,216
Deferred income taxes                                                                     57                932
Other long-term liabilities                                                             --                   64

Commitments and contingencies

Stockholders' equity:
   Common stock of Predecessor, 2,507 shares authorized, 119 shares
     issued and outstanding, stated at $50 per share                                       6               --
   Preferred stock, no par value; 1997 - no shares authorized; 1998 -
      10,000,000 shares authorized, none issued and outstanding                         --                 --
   Common stock, no par value; 30,000,000 shares
      authorized, 5,305,000 shares issued and outstanding                               --               29,395
   Accumulated other comprehensive income                                               --                    1
   Additional paid-in capital                                                            734               --
   Retained earnings                                                                   2,411              3,114
                                                                                     -------            -------
Total stockholders' equity                                                             3,151             32,510
                                                                                     -------            -------
                                                                                     $10,938            $43,589
                                                                                     =======            =======
</TABLE>

                             See accompanying notes.

                                       F-3
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
                  CONSOLIDATED STATEMENTS OF INCOMEYEARS ENDED
                        DECEMBER 31, 1996, 1997 AND 1998
               (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                1996                 1997              1998
                                             --------              --------          --------

<S>                                          <C>                   <C>               <C>
Net sales                                    $ 23,193              $ 35,744          $ 53,146
Operating expenses:
   Costs of production                         17,616                26,894            37,694
   Selling, general and administrative          4,270                 5,794             7,783
   Depreciation and amortization                  563                   694             1,252
                                             --------              ----------        ----------
                                               22,449                33,382            46,729
                                             --------              ----------        ----------
Income from operations                            744                 2,362             6,417
   Interest expense                              (234)                 (250)             (400)
   Interest income                               --                    --                 475
   Other income                                    48                    35                 5
                                             --------              ----------        ----------
Income before income taxes                        558                 2,147             6,497
   Provision for income taxes                      56                   129             2,489
                                             --------              ----------        ----------
Net income                                   $    502              $  2,018          $  4,008
                                             ========              ==========        ==========
</TABLE>

<TABLE>
<CAPTION>
<S>                                                                <C>               <C>
Pro Forma Data (unaudited):
Income before income taxes                                         $    2,147        $    6,497
   Pro forma provision for income taxes                                   880             2,809
                                                                   ----------        ----------
Pro forma net income                                                    1,267        $    3,688
                                                                   ==========        ==========
Pro forma earnings per common share:
   Basic                                                           $     0.43        $     0.80
                                                                   ==========        ==========
   Diluted                                                         $     0.43        $     0.80
                                                                   ==========        ==========

Pro forma weighted average number of common shares:
   Basic                                                            2,964,492         4,587,941
                                                                   ==========        ========== 
                                                                                     
   Diluted                                                          2,964,492         4,637,024
                                                                   ==========        ==========
</TABLE>

                             See accompanying notes.


                                       F-4
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                               -------------------------
                                                    Common Stock                            Accumulated
                                               -------------------------     Additional        Other
                                                                              Paid-in      Comprehensive   Retained
                                                 Shares         Amount        Capital          Income       Earnings         Total
                                               ----------     ----------    -----------    -------------   ---------     ----------
<S>                                            <C>            <C>            <C>            <C>           <C>
Balance at December 31, 1995                          118     $        6     $      722     $     --      $      102     $      830
   Sale of common stock                                 1                            12                                          12
   Net income                                                                                                    502            502
                                               ----------     ----------     ----------     ----------    ----------     ----------
Balance at December 31, 1996                          119              6            734           --             604          1,344
   Distributions                                                                                                (211)          (211)
   Net income                                                                                                  2,018          2,018
                                               ----------     ----------     ----------     ----------    ----------     ----------
Balance at December 31, 1997                          119              6            734           --           2,411          3,151
   Elimination of Predecessor's
      common stock in the
      Reorganization                                 (119)            (6)                         --                             (6)
   Reorganization of the
      Predecessor                               2,595,261         (2,191)          (734)          --          (1,846)        (4,771)
   Issuance of common stock:
     Initial public offering                    2,530,000         29,249                          --                         29,249
     Acquisition                                  169,739          2,207                          --                          2,207
   Exercise of stock options                       10,000            130                          --                            130
   Distributions                                                                                              (1,459)        (1,459)
   Net Income                                                                                                  4,008          4,008
   Currency translation
    Adjustment                                                                                       1                            1
                                                                                                                         ----------
   Comprehensive income                                                                                                       4,009
                                               ----------     ----------     ----------     ----------    ----------     ----------
Balance at December 31, 1998                    5,305,000     $   29,395     $     --       $        1    $    3,114     $   32,510
                                               ==========     ==========     ==========     ==========    ==========     ==========
</TABLE>

                             See accompanying notes.


                                       F-5
<PAGE>


                                    CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
                                                 (in thousands)


<TABLE>
<CAPTION>
                                                                        1996           1997           1998
                                                                      --------       --------       --------
<S>                                                                   <C>            <C>            <C>
Cash flows from operating activities
Net income                                                            $    502       $  2,018       $  4,008
Adjustments to reconcile net income to net cash
   Provided by operating activities
   Depreciation and amortization                                           563            694          1,252
   Gain on sale of equipment                                               (48)           (18)          --
   Deferred income taxes                                                    32            (31)           292
   Changes in  operating  assets and  liabilities, 
     net of  effects of  acquired business:
     Accounts receivable                                                (2,161)        (1,066)        (1,880)
     Inventories                                                           509           (399)          (165)
     Prepaid expenses and other current assets                             (86)            (8)          (235)
     Other assets                                                          (45)          (324)           313
     Notes and advances receivable - stockholder/officers                  (94)            22            136
     Accounts payable                                                    1,835            193         (1,580)
     Accrued expenses                                                      664            369          1,134
     Other liabilities                                                    --             --              (60)
                                                                      --------       --------       --------
Net cash provided by operating activities                                1,671          1,450          3,215
Cash flows from investing activities
   Proceeds from the disposition of equipment                               71          1,349            182
   Acquisition of property and equipment                                (1,711)        (2,146)        (4,614)
   Acquisition of Roda Limited, net of cash acquired                      --             --           (6,149)
                                                                      --------       --------       --------
Net cash used in investing activities                                   (1,640)          (797)       (10,581)
Cash flows from financing activities
   Net principal proceeds payments on revolving
     Line of credit                                                        444         (1,050)          (352)
   Proceeds from long-term borrowings                                      614          1,023
   Principal payments on long-term borrowings                             (302)          (476)        (3,127)
   Principal payments on obligations under capital lease                  (139)          (188)          (468)
   Proceeds from issuance of notes payable - related parties                24           --             --
   Principal payments on notes payable - related parties                  (142)          (227)          --
   Shareholder distributions                                              --             (211)        (6,236)
   Net proceeds from sale of common stock                                   12           --           29,249
   Proceeds from the exercise of stock options                            --             --              130
                                                                      --------       --------       --------
Net cash provided by (used in) financing activities                        511         (1,129)        19,196
Effect of exchange rate changes on cash and cash equivalents                                             (18)
                                                                      --------       --------       --------
Net (decrease) increase in cash                                            542           (476)        11,812
Cash and cash equivalents, beginning of year                                 1            543             67
                                                                      --------       --------       --------
Cash and cash equivalents, end of year                                $    543       $     67       $ 11,879
                                                                      ========       ========       ========
Supplemental disclosure of cash flow data
   Income taxes paid                                                  $     40       $    169       $  1,963
                                                                      ========       ========       ========
   Interest paid                                                      $    235       $    251       $    400
                                                                      ========       ========       ========
Supplemental disclosure of noncash investing and
financing activities
   Acquisition of equipment under capital lease                       $    422       $   --         $    967
                                                                      ========       ========       ========
   Stock issued for acquisition                                       $   --         $   --         $  2,207
                                                                      ========       ========       ========
</TABLE>

                             See accompanying notes.


                                       F-6
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
                (dollars in thousands, except per share amounts)


1.   ORGANIZATION AND DESCRIPTION OF BUSINESS

On April 22, 1998 Cunningham Graphics, Inc. (the "Predecessor") reorganized (the
"Reorganization") such that all the stockholders of the Predecessor  contributed
all of the  outstanding  shares of common stock of the Predecessor to Cunningham
Graphics  International,  Inc.  (the  "Company"),  in  exchange  for a total  of
2,595,261  shares of  common  stock,  no par  value  (the  "Common  Stock")  and
promissory  notes (the "Exchange  Notes") in the aggregate  principal  amount of
$2.6 million. In the Reorganization,  the Company also assumed the Predecessor's
obligations  under  promissory  notes in the aggregate  principal amount of $2.2
million,   representing   undistributed    S corporation   taxable  income  (the
"Distribution Notes").  Collectively,  the Exchange Notes and Distribution Notes
are known as the "Reorganization  Notes."  Concurrently with the Reorganization,
the Company sold 2,530,000  shares of Common Stock in an initial public offering
(the  "Offering").  The  Company  used a portion  of the  proceeds  to repay the
Reorganization Notes.

On April 27, 1998, the Company  acquired all of the  outstanding  ordinary share
capital of Roda  Limited,  an English  corporation  ("Roda")  for  consideration
consisting  of cash in the amount of $4.1  million and 169,739  shares of Common
Stock,  valued at the Offering price of $13.00 per share. In addition on June 4,
1998, the Company purchased the outstanding preference share capital of Roda for
$1.8  million.  The excess of the  purchase  price over the net assets  acquired
totaled approximately $11.0 million and was recorded as goodwill.

The Company provides a wide range of graphic communication services to financial
institutions  and  corporations  throughout  the  United  States  and the United
Kingdom,  focusing  on  producing  and  distributing  time-sensitive  analytical
research and marketing materials and on providing on-demand printing services.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The  Reorganization  has been  accounted for in a manner similar to a pooling of
interests and,  accordingly,  the historical  carrying  values of the assets and
liabilities  of the  Predecessor  were not affected by the  Reorganization.  The
Company conducted no business prior to the Reorganization and,  accordingly,  it
was  not  included  in  the  results  of  operations  of  the  Predecessor.  The
accompanying  December  31,  1996  and 1997  financial  statements  include  the
accounts and results of operations of the  Predecessor for the years then ended.
The accompanying  consolidated financial statements as of and for the year ended
December  31,  1998  include  the  accounts  and  results of  operations  of the
Predecessor  for the period from January 1, 1998 through  April 22, 1998 and the
results of the Company from April 23, 1998 through December 31, 1998,  including
the results of operations of Roda from April 27, 1998 through December 31, 1998.


                                       F-7
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
                (dollars in thousands, except per share amounts)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

BASIS OF PRESENTATION (CONTINUED)

Selected unaudited statement of income data for the year ended December 31, 1998
are as follows:


                                              April 23, 1998 to     Year ended
                               January 1 to     December 31,       December 31,
                              April 22, 1998        1998               1998
                              --------------  -----------------    ------------
                                                                  
Net sales                        $13,390           $39,756            $53,146
                                 =======           =======            =======

Income from operations           $ 1,044           $ 5,373            $ 6,417
                                 =======           =======            =======

Income before income taxes       $   973           $ 5,524            $ 6,497

Provision for income taxes            79             2,410              2,489

                                 =======           =======            =======
Net income                       $   894           $ 3,114            $ 4,008
                                 =======           =======            =======



All significant  intercompany  accounts and transactions have been eliminated in
consolidation.

PRO FORMA ADJUSTMENTS

The pro forma  provision for income taxes  represents  the income tax provisions
that  would have been  reported  had the  Company  been  subject to federal  and
additional  state income  taxes during the year ended  December 31, 1997 and the
period  January 1, 1998 through  April 22,  1998.  The  unaudited  pro forma net
income for the year ended  December  31,  1997 and 1998  reflects an increase of
$751 and $320 for the year ended  December  31,  1997 and the period  January 1,
1998  through  April 22, 1998,  respectively  for income taxes based upon income
before  income  taxes as if the  Company  had  become  subject  to  federal  and
additional state income taxes on that date.

CASH AND CASH EQUIVALENTS

Cash  and  cash  equivalents   include  all  cash  balances  and  highly  liquid
investments with a maturity of three months or less when acquired.

CONCENTRATION OF CREDIT RISK

The Company performs periodic credit  evaluations of its customers and generally
does not require collateral.


                                       F-8
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
                (dollars in thousands, except per share amounts)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVENTORIES

Inventories  are  stated  at the  lower  of  cost  or  market  by  the  specific
identification method. Inventory consists of raw materials and work in process.
Finished goods are shipped upon completion.

PROPERTY AND EQUIPMENT

Property and  equipment are stated at cost.  Depreciation  and  amortization  of
assets,   including   those  under  capital   lease,   are  computed  using  the
straight-line  method  over the  lesser  of the  estimated  useful  lives of the
related assets or the lease term. Useful lives range from 3 to 10 years.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company records impairment losses on long-lived  assets,  including goodwill
resulting from business  acquisitions,  when events and  circumstances  indicate
that the assets might be impaired and the  undiscounted  cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.
No such event has occurred.

GOODWILL

Goodwill  represents  the  excess  of cost  over  the  estimated  fair  value of
identifiable  assets  of  businesses  acquired  and  is  being  amortized  on  a
straight-line  basis over 40 years.  Amortization  expense was $176 for the year
ended December 31, 1998.

INCOME TAXES

Through  April 22, 1998,  the  Predecessor  and its  shareholders  elected to be
treated as an S corporation  for federal income tax purposes.  As a result,  any
income or loss generated  through such date was passed  through  directly to the
stockholders.  Effective  April 23, 1998,  the Company's S corporation  election
terminated.

The Company  uses the  liability  method to account for income  taxes.  Deferred
income taxes  reflect the net tax effects of temporary  differences  between the
carrying amounts of assets and liabilities for financial  reporting purposes and
the amounts used for income tax purposes.

REVENUE RECOGNITION

Revenue is recognized upon shipment of products to customers.

USE OF ESTIMATES

The presentation of financial  statements in conformity with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.


                                       F-9
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
                (dollars in thousands, except per share amounts)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --(CONTINUED)

FOREIGN CURRENCY TRANSLATION

The 1998 financial  statements  include the results of Roda which are translated
from the British Pound, its functional currency, into U.S. dollars from the date
of acquisition.  The balance sheet is translated at the year-end  exchange rate.
Results of operations  are  translated at average  rates  prevailing  during the
year. The effects of  translation  at the balance sheet date are  accumulated as
the cumulative foreign currency translation adjustment in stockholders' equity.

SEGMENTS

Effective  January  1,  1998,  the  Company  adopted  the  Financial  Accounting
Standards  Board's  Statement  of  Financial   Accounting   Standards  No.  131,
Disclosures about Segments of an Enterprise and Related  Information  (Statement
131).  Statement 131 superseded FASB Statement No. 14,  Financial  Reporting for
Segments of a Business Enterprise.  Statement 131 establishes  standards for the
way that public business enterprises report information about operating segments
in annual  financial  statements  and  requires  that those  enterprises  report
selected  information  about operating  segments in interim  financial  reports.
Statement 131 also established  standards for related disclosures about products
and services, geographic areas, and major customers.

REPORTING COMPREHENSIVE INCOME

The Company adopted Statement of Financial  Standards (SFAS) No. 130,  Reporting
Comprehensive  Income in 1998. SFAS No. 130 establishes  standards for reporting
and  display of  comprehensive  income  (all  changes in equity  during a period
except those resulting from  investments by owners and  distributions to owners)
and its components in the financial statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The  carrying  amounts of cash and cash  equivalents,  accounts  receivable  and
accounts payable  approximate fair value because of their short-term nature. The
carrying  amounts of the revolving line of credit and long-term debt approximate
fair value because their interest rates are reflective of rates that the Company
would be able to obtain on debt with similar terms and conditions.

STOCK-BASED COMPENSATION

As permitted by FASB Statement No. 123 Accounting for  Stock-Based  Compensation
(FASB 123), the Company has elected to follow Accounting Principal Board Opinion
No.  25,  Accounting  for  Stock  Issued  to  Employees  (APB  25)  and  related
interpretations  in accounting for its employee  stock options plans.  Under APB
25, no  compensation  expense is recognized at the time of option grant when the
exercise  price of the employee  stock option  equals or exceeds the fair market
value of the underlying common stock on the date of grant.


                                      F-10
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
                (dollars in thousands, except per share amounts)

3.   ACQUISITION

As discussed in Note 1, the Company  acquired  all of the  outstanding  ordinary
share  capital  of Roda for  consideration  consisting  of cash in the amount of
$4,100 and  169,739  shares of Common  Stock,  valued at the  Offering  price of
$13.00 per share. In addition,  the Company purchased the outstanding preference
share  capital  of Roda on  June 4,  1998  for  cash in the  amount  of  $1,800.
Additional  acquisition costs aggregated $200. The acquisition was accounted for
using the purchase method. Under this method, the purchase price is allocated to
the assets and liabilities of the acquired enterprise as of the acquisition date
based on their estimated  respective fair values and are subject to revision for
a period not to exceed one year from the date of acquisition.  The excess of the
purchase price over the net assets acquired totaled  approximately $11.0 million
and was recorded as goodwill.

The following table sets forth unaudited pro forma information assuming that the
acquisition of Roda was completed on January 1, 1997.

                                                        Year Ended December 31,
                                                       -------------------------
                                                          1997           1998
                                                       ----------     ----------
Sales                                                  $   42,705     $   55,885
Net Income                                             $    1,674     $    3,709
Basic earnings per share of common stock               $     0.44     $     0.76
Diluted earnings per share of common stock             $     0.44     $     0.76


The preceding  unaudited pro forma results are based on assumptions  and are not
necessarily  indicative of the actual results which would have occurred had this
acquisition  occurred on January 1, 1997, or of the future results of operations
of the combined Company.

4.   CASH HELD FOR ACQUISITIONS AND BUILDING ADDITION

The cash  held for  acquisitions  and  building  addition  represents  cash used
subsequent to year-end for business acquisitions and the purchase of a building.

5.   INVENTORIES

Inventories consists of the following at December 31:

                                                                 1997       1998
                                                               ------     ------

Raw materials (net of valuation allowance of $194
   and $143, respectively)                                     $  805     $1,214
Work-in-process                                                   135         87
                                                               ======     ======
                                                               $  940     $1,301
                                                               ======     ======


                                      F-11
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
                (dollars in thousands, except per share amounts)


6.   PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:

                                                          1997           1998
                                                        --------       --------

Machinery and equipment                                 $  4,813       $ 10,364
Furniture, fixtures and office equipment                     974          1,669
Leasehold improvements                                       471            685
Autos and transportation equipment                           280            326
                                                        --------       --------
                                                           6,538         13,044
Accumulated depreciation and amortization                 (2,959)        (4,392)
                                                        ========       ========
                                                        $  3,579       $  8,652
                                                        ========       ========


The gross amount of the leased  property  included in property and  equipment is
$1,069 and $2,380, and accumulated amortization is $386 and $184 at December 31,
1997 and 1998, respectively. Amortization ($105, $119 and $113 in 1996, 1997 and
1998,  respectively)  of assets under capital leases is included in depreciation
expense.


7. OTHER ASSETS

Included in other  assets at December  31, 1997 is  approximately  $342 of costs
related to the anticipated  initial public offering and the acquisition of Roda.
Included  in other  assets  at  December  31,  1998 is a  deposit  for $755 on a
building.

8.   ACCRUED EXPENSES

Other accrued liabilities consists of the following at December 31:

                                                          1997          1998
                                                         ------        ------

Employee compensation                                    $  689        $1,529
Other                                                       785         1,476
                                                         ------        ------
                                                         $1,474        $3,005
                                                         ======        ======


                                      F-12
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
                (dollars in thousands, except per share amounts)


9.   REVOLVING LINE OF CREDIT, LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL
     LEASE

On July 9, 1998 the  Company  entered  into a $30,000  revolving  line of credit
facility with a bank (the "Revolver").  The revolving line of credit may be used
for acquisitions and includes sub-limits of $5,000 for purchase of equipment and
$7,500 for working capital.  The facility has a term of three years through July
2001 and has annual extension  options.  At the Company's  option,  the facility
bears interest at either: (i) the bank's base rate less a number of basis points
depending upon the Company's maximum leverage ratio, as defined in the agreement
or (ii) the  Eurodollar  rate plus a number of basis points  depending  upon the
Company's  maximum  leverage ratio, as defined.  The Revolver  contains  certain
covenants  including,  among other things,  limitations  on the  disposition  of
assets  in  excess  of $500,  the  incurrence  of  additional  indebtedness  and
limitations  on the  Company's  rights to pay  dividends.  In addition,  certain
financial covenants, as to minimum net worth, maximum leverage and debt coverage
ratios must be  maintained.  As of December 31, 1998,  the Company had a standby
letter of credit outstanding for $2,200 securing the outstanding  balance on the
Roda Facility,  referred to below. No other amounts were  outstanding  under the
revolver.

Roda has a credit  facility  with a bank (the "Roda  Facility")  consisting of a
$2,000 ((pound)1.2 million) term loan and a $750 ((pound)450)  revolving line of
credit. The line of credit is reviewed by the bank annually for renewal,  and is
payable  on  demand.  The term loan is  payable  in equal  monthly  installments
through October 2001.The debt bears interest at 1% above the banks base rate, as
defined,  and is  collateralized  by substantially  all of Roda's assets.  As of
December 31, 1998, approximately $419 ((pound)252) was outstanding on the credit
facility  and  $1,183  ((pound)716)  was  outstanding  under the term  loan.  As
mentioned  above,  the Company  issued a standby letter of credit to the bank to
guarantee the Roda Facility and in consideration  therefor,  the bank eliminated
existing financial covenants under such line of credit.

At  December  31,  1997,  the  Company had a Loan and  Security  Agreement  that
provided  for a $2,000  revolving  line of credit and a $1,000  3-year term loan
(the "Term  Loan").  Borrowings  under both the line of credit and the Term Loan
incurred interest at the bank's prime rate or at the Company's option LIBOR plus
2.25% (8.5% at December 31, 1997). The debt was  collateralized by substantially
all of the Company's  assets. At December 31, 1997, the revolving line of credit
and the Term Loan had balances outstanding of $300 and $1,000, respectively. The
amounts were repaid with proceeds from the Offering.

The Company  leases  property and  equipment  under capital  leases  expiring in
various years through 2003.


                                      F-13
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
                (dollars in thousands, except per share amounts)


9.   REVOLVING LINE OF CREDIT, LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL
     LEASES (CONTINUED)

Long-term debt and obligations under capital leases consists of the following at
December 31:

<TABLE>
<CAPTION>
                                                                                1997         1998
                                                                             ---------    ----------

<S>                                                                          <C>          <C>
Term loans                                                                   $   1,000    $    1,189
Notes  payable  to  finance  company,  payable  in  monthly  installments
bearing  interest  at  8.5%,  through  April  1999  (secured  by  certain
equipment with a carrying value of approximately $300)                             262             7
Non-interest   bearing  note  payable  in  monthly  installments  through
December 1999 (discounted based on imputed interest rate of 8%)                    308           153
Various capital lease obligations                                                  510         1,709
Other (secured by equipment with a carrying value of $135)                          22            --
                                                                             ---------    ----------
                                                                                 2,102         3,058
Less current maturities                                                            585         1,073
                                                                             ---------    ----------
                                                                             $   1,517     $   1,985
                                                                             =========    ==========
</TABLE>


The weighted average interest rate on short-term borrowings is 8.5% and 7.25% at
December 31, 1997 and 1998, respectively.

The aggregate fair value of the instruments representing the Company's revolving
line of credit,  long-term debt and obligations  under capital lease approximate
their  carrying  value at  December  31,  1997 and 1998.  Such fair  values  are
estimated  based on  discounting  the  estimated  future  cash  flows  using the
Company's incremental borrowing rate for similar debt instruments.

Maturities of long-term debt and obligations  under capital lease (principal and
interest) for each of the next five years are as follows:

                                                                    Obligations
                                                    Long-Term     Under Capital
                                                      Debt             Lease
                                                    ---------     -------------

1999                                                $  507            $  649
2000                                                   373               573
2001                                                   398               456
2002                                                    71               296
2003                                                                      61
                                                   $ 1,349
Total long-term debt                               =======            ------
Total minimum lease payments                                           2,035
Less amount representing interest                                        326
                                                                      ------
Present value of net minimum lease payments                           $1,709
                                                                      ======


                                      F-14
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
         (dollars in thousands, except per share amounts) -(continued )


10.  INCOME TAXES

The provision for income taxes consists of the following:

                                         1996             1997             1998
                                      -------          -------          -------
Current:
  Federal                             $    --          $    --          $ 1,351
  State                                    24              160              764
  Foreign                                  --               --              136
                                      -------          -------          -------
                                           24              160            2,251

Deferred:
  Federal                                  --               --               17
  State                                    32              (31)              (4)
  Foreign                                  --               --              225
                                      -------          -------          -------
                                           32              (31)             238
                                      -------          -------          -------
Total                                 $    56          $   129          $ 2,489
                                      =======          =======          =======

The  differences  between the  provisions  for income taxes and the amounts that
would  result form  applying  the  statutory  federal tax rate to income  before
income taxes for the year ended December 31, 1998 is summarized as follows:


Statutory federal income tax rate                                         34.0%
State income tax, net of federal benefit                                   7.7
Income attributable to "S" corporation period                             (5.0)
Other                                                                      1.6
                                                                          ----
Effective income tax rate                                                 38.3%
                                                                          ====

The significant  components of the Company's deferred tax assets and liabilities
were as follows at December 31:


                                                              1997         1998
                                                             -----        -----

Current deferred tax assets:
     Allowance for doubtful accounts                         $   3        $  83
     Employee compensation                                      17          219
     Inventory                                                  14           90
     Accrued liabilities                                        13          128
                                                             -----        -----
Total current deferred tax assets                               47          520

Non-current deferred tax liabilities
     Fixed assets                                               57          932
                                                             -----        -----
Total non-current deferred tax liabilities                      57          932
                                                             -----        -----
Net deferred tax liabilities                                 $ (10)       $(412)
                                                             =====        =====


                                      F-15
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
         (dollars in thousands, except per share amounts) -(continued )


10.  INCOME TAXES (CONTINUED)

The Company has unremitted foreign earnings of approximately  $1,200 at December
31, 1998. It is the Company's  intention to permanently  reinvest those earnings
in its foreign  operations.  Accordingly,  no federal  deferred  taxes have been
provided on those earnings. If such earnings were to be remitted, it is possible
there would be withholding  taxes  (although not readily  determinable)  on such
remittances.

11.  RELATED PARTY TRANSACTIONS

Notes and advances receivable -- stockholder/officers  represented cash advances
with no specific repayment terms. The amounts were repaid during 1998.

12.  STOCK OPTION PLANS

In February 1998, the Board of Directors and the sole stockholder of the Company
adopted the 1998 Stock Option Plan ("1998 Plan") and reserved  450,000 shares of
Common  Stock for  issuance  thereunder.  The Plan  provides for the granting to
employees (including employee directors and officers) of incentive stock options
and nonstatutory  stock options to employees and  consultants.  During 1998, the
Board of Directors  granted  options to purchase  243,700 shares of Common Stock
under the 1998 Plan.

Additionally,  in February 1998,  the Board of Directors of the Company  adopted
the Directors'  Stock Option Plan (the  "Directors'  Plan") and reserved 150,000
shares of Common Stock for issuance thereunder. Directors of the Company who are
not  employees  of  the  Company  or any of its  subsidiaries  are  eligible  to
participate  in the plan.  The Board of  Directors  granted  options to purchase
60,000 shares of Common Stock under the Directors' Plan.

Options issued under both the 1998 Plan and the Directors' Plan expire ten years
from the date of grant.  The vesting  period for options  granted under the 1998
Plan  varies  among  employees  and ranges from six months to three  years.  The
vesting  period for  options  granted  under the  Directors'  Plan is six months
following the date of grant.  Options granted under the plans are exercisable at
an exercise price equal to but not less than the fair market value of the common
stock on the grant date.

The  following  summarizes  the  activity  in the  options  outstanding  for the
combined plans during 1998:

                                                                   Weighted
                                                 Number of         Average
                                                 Options        Exercise Price
                                                 ---------      --------------

Outstanding at January 1, 1998                        --           $   --
Granted                                          303,700            13.00
Canceled                                          (3,950)           13.00
Exercised                                        (10,000)           13.00
                                                 -------
Outstanding at December 31, 1998                 289,750            13.00
                                                 =======

Exercisable at December 31, 1998                 225,000            13.00
                                                 =======

At December 31, 1998, the weighted  average  remaining  contractual  life of the
options outstanding is 9.3 years.


                                      F-16
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
         (dollars in thousands, except per share amounts) -(continued )


12.  STOCK OPTION PLANS (CONTINUED)

At  December  31,  1998,  an  aggregate  of 590,000  shares of common  stock are
reserved for issuance under the plans.

Had the Company used the fair  value-based  method of  accounting  for the stock
option  plans   prescribed  by  SFAS  No.  123,   Accounting   for   Stock-Based
Compensation,  and charged  compensation expense against income over the vesting
period  based on the fair value of options at the date of grant,  net income and
diluted  earnings per share would have been reduced to the  following  pro forma
amounts:

                                              For the Year Ended December 31,
                                                          1998
                                              -------------------------------
                                                As Reported       Pro Forma
                                                -----------       ---------

Net income                                      $   3,688         $   2,529
Diluted earnings per share                      $    0.80         $    0.55

The pro forma  compensation  expense may not be representative of future amounts
because options vest over several years and additional options may be granted in
future years.

The  weighted-average  grant date fair value of options  granted during 1998 was
$4.83. The  weighted-average  grant date fair value of options was determined by
utilizing  the  Black-Scholes   option-pricing  model  with  the  following  key
assumptions:

                                                 1998
                                               ---------
          
          Dividend yield                          0%
          Expected volatility                    30%
          Risk-free interest rate                5.75%
          Expected life                          5 years
          
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options,  which have no vesting  restrictions and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the  Company's  employee  stock  options  have   characteristics   significantly
different from those of trade options,  and because changes in subjective  input
assumptions  can  materially  affect the fair value  estimate,  in  management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

13.  EMPLOYEE BENEFIT PLAN

The Company has defined contribution employee benefit plans in the United States
and  at  Roda  covering  substantially  all  employees.   The  Company,  at  its
discretion,  may elect to contribute to the plan at amounts and dates determined
by the Board of Directors of the Company and Roda.  For the years ended December
31,  1996,  1997 and 1998 the Company  made  contributions  of $0, $52 and $118,
respectively, to the plans.


                                      F-17
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
         (dollars in thousands, except per share amounts) -(continued )


14.  COMMITMENTS AND CONTINGENCIES

The  Company  leases  office  and   manufacturing   facilities,   equipment  and
automobiles  under  noncancelable  operating  leases  expiring in various  years
through 2003. One of the facility  leases requires the Company to pay additional
rents based on its proportionate share of certain costs of the facility.

In March 1997, the Company entered into a sale-leaseback arrangement.  Under the
arrangement,  the Company sold  equipment and leased it back for a period of six
years.  The leaseback has been accounted for as an operating  lease.  No gain or
loss was recorded on the transaction.  Upon expiration of the lease, the Company
has the option to acquire the  equipment  at terms more fully  described  in the
lease agreement.

Future  minimum  rental  payments  for each of the next  five  years  and in the
aggregate under the above lease agreements are as follows:


                 1999                   $1,015
                 2000                      292
                 2001                      208
                 2002                      200
                 2003                      160
                                        ------
                                        $1,875
                                        ======

Rent expense  under all operating  leases was $463,  $631 and $887 for the years
ended December 31, 1996, 1997 and 1998, respectively.

15.  CONCENTRATIONS

Sales to customers  representing  10% or more of the  Company's  total net sales
(three customers in 1996, 15%, 15% and 13% each respectively; four in 1997, 24%,
13%, 10% and 10% each  respectively;  and three  customers in 1998, 24%, 15% and
10% each  respectively)  represented  total net  sales of  $9,812,  $20,375  and
$25,752,  respectively.  Included in trade  accounts  receivable are amounts due
from these  customers  of $2,989 and $3,127 as of  December  31,  1997 and 1998,
respectively.

The Company has 491 employees of which 342 of whom are members of a union.


                                      F-18
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
         (dollars in thousands, except per share amounts) -(continued )


16.  SEGMENT AND GEOGRAPHIC INFORMATION

The Company's  single  business  segment is the production and  distribution  of
time-sensitive   analytical   research  marketing  materials  and  on  providing
on-demand printing services.

All of the Company's  financial results prior to April 27, 1998, the date of the
Roda  acquisition,   were  from  U.S.   operations  only,   accordingly  segment
information  for the year ended  December 31, 1997 has not been  presented.  The
following table presents financial information based on the Company's geographic
segments for the year ended December 31, 1998 (dollars in thousands):

                                             Income
                                              from         Identifiable
                            Net Sales       Operations       Assets
                            ---------       ----------     ------------

United Kingdom              $ 7,141         $ 1,442         $ 3,312
United States                46,005           4,974          40,070
                            -------         -------         -------
Total                       $53,146         $ 6,416         $43,382
                            =======         =======         =======

17.  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
                                                                                      December 31, 1997       December 31, 1998
                                                                                      ------------------      ------------------
<S>                                                                                      <C>                      <C>
Numerator:
   Pro forma net income for basic and diluted earnings per share                         $     1,267              $    3,688
                                                                                         ===========              ==========

Denominator
   Denominator for basic earnings per share - weighted average common shares               2,946,492               4,587,941
   Effect of dilutive securities - employee stock options                                         --                  49,083
                                                                                         -----------              ----------
   Denominator for diluted earnings per share- adjusted weighted average common
shares and assumed conversion                                                              2,964,492               4,637,024
                                                                                         ===========              ==========

Basic earnings per common share                                                          $      0.43              $     0.80
                                                                                         ===========              ==========
Diluted earnings per common share                                                        $      0.43              $     0.80
                                                                                         ===========              ==========
</TABLE>


                                      F-19
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998
         (dollars in thousands, except per share amounts) -(continued )


18.  SUBSEQUENT EVENTS

Acquisition of Workable

On  January  13,  1999,  the  Company,   through  its  wholly-owned  subsidiary,
Cunningham  Graphics   International  S.A.,  acquired  all  of  the  issued  and
outstanding  capital stock of Workable Company Limited,  a Hong Kong corporation
("Workable").  In addition,  the Company acquired from the selling  shareholders
the 60% of the  outstanding  capital  stock of  Plainduty  Limited,  a Hong Kong
corporation,  which was not owned  directly  by  Workable.  Workable  also has a
wholly owned subsidiary in Singapore.

The aggregate purchase price of the acquisition was $13,100, which was comprised
of the  following:  (i)  398,216  shares of Common  Stock,  valued at a price of
$15.52 per share and (ii) cash in the amount of $6,200. In addition, the Company
assumed $700 of  indebtedness.  The Company  utilized  proceeds from its initial
public  offering of Common Stock to fund the cash portion of the purchase price.
Under the terms of the purchase agreement, the Company may be required to pay to
the Sellers up to an additional $3,800, depending upon the earnings, as defined,
of  Workable  during the years 1999  through  2001.  The Company  estimates  the
goodwill generated from the acquisition will be approximately $8,800, which will
be amortized over 40 years.

In connection  with the purchase  agreement,  Workable  entered into  employment
agreements  dated as of January 13,  1999 with each of its selling  shareholders
and lease agreements for the facilities currently being occupied by the acquired
businesses that are owned by such selling  shareholders  under terms it believes
are comparable to market rates.

Acquisition of Real Estate

On  February  3, 1999,  the Company  purchased  a 150,000  square foot  building
located in Jersey  City,  New  Jersey  for  approximately  $5,500.  The  Company
obtained a mortgage  loan for $7,400  through its  existing  bank to finance the
purchase  of the  building  and to make  necessary  improvements.  The  acquired
building  will replace the  Company's  current  Jersey City and midtown New York
City facilities.  The Company  anticipates placing the new building into service
during the third quarter of 1999.  The Company does not anticipate its remaining
lease  obligations  on its current lease  facilities  will be significant at the
date it vacates the  properties.  However  any  unutilized  obligations  will be
charged to operations when the property is vacated.

The  Company  also has  contracted  with the  sellers of the  Premises,  for the
acquisition  of an unimproved  parcel of land  adjacent to the  Premises,  for a
purchase price of $975. The closing of such  transaction is contingent  upon the
completion of certain  environmental  remediation to the satisfaction of the New
Jersey Department of Environmental Protection.

19.  SUBSEQUENT EVENTS - UNAUDITED

On February 16, 1999, the Company acquired  substantially  all of the assets and
assumed certain  liabilities of Boston Towne Press. The purchase price of Boston
Towne Press was $5.4 million, which was paid in cash and partially funded by the
utilization of $3,400 of the revolving line of credit.  Pursuant to the purchase
and sale  agreement,  the  Company  may be  required  to pay the seller up to an
additional  $700,000,  depending  upon the earnings of Boston Towne Press during
the years 1999 and 2000. The Company  estimates the goodwill  generated from the
transaction  will be  approximately  $2.9 million and will be amortized  over 40
years.


                                      F-20
<PAGE>


                     CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>   
<CAPTION>

                                                             Charged to
               Description                   Beginning        Cost and                           Ending
                                              Balance          Expense         Write-offs        Balance
------------------------------------------------------       -----------       -----------       -------
<S>                                           <C>              <C>              <C>              <C>
Year ended December 31, 1998
  Allowances for accounts receivable          $ 50             $ 96             $ --             $146
Year ended December 31, 1997
  Allowances for accounts receivable            28               31                9               50
Year ended December 31, 1996
  Allowances for accounts receivable            30               --                2               28
</TABLE>


<TABLE>
<CAPTION>
                                                              Charged to
               Description                   Beginning         Cost and                          Ending
                                              Balance          Expense         Write-offs        Balance
------------------------------------------   ---------       -----------       -----------       -------
<S>                                           <C>              <C>              <C>              <C>
Year ended December 31, 1998
  Allowances for unsaleable inventories       $194             $ 84             $135             $143
Year ended December 31, 1997
  Allowances for unsaleable inventories        200               86               92              194
Year ended December 31, 1996
  Allowances for unsaleable inventories        200               82               82              200
</TABLE>


                                      S-1
<PAGE>


                                  EXHIBIT INDEX

The  following  documents  are filed as  Exhibits to this report on Form 10-K or
incorporated  by reference  herein.  Any document  incorporated  by reference is
identified by a parenthetical  referencing the filing with the Commission  which
included such document.

2.1       Reorganization Agreement among Stockholders of Cunningham Graphics,
          Inc. and the Company (Exhibit 2.1 to Amendment No. 2 to Registration
          Statement on Form S-1 No. 333-46541)

2.2       Agreement for the Sale and Purchase of the Entire Issued Share Capital
          of Roda Limited dated January 16, 1998 between P.L. Furlonge and
          others and Cunningham Graphics, Inc. (Exhibit 1.2 to Registration
          Statement on Form S-1 No. 333-46541)

2.3       Supplemental Agreement dated March 24, 1998 between P.L. Furlonge and
          others and Cunningham Graphics, Inc. (Exhibit 1.2(a) to Amendment No.
          2 to Registration Statement on Form S-1 No. 333-46541)

3.1       Certificate of Incorporation (Exhibit 3.1 to Registration Statement on
          Form S-1 No. 333-46541)

3.2       By-Laws (Exhibit 3.2 to Registration Statement on Form S-1 No.
          333-46541)

10.1      1998 Stock Option Plan (Exhibit 10.1 to Amendment No. 1 to
          Registration Statement on Form S-1 No. 333-46541)

10.2      Directors' Stock Option Plan (Exhibit 10.2 to Registration Statement
          on Form S-1 No. 333-46541)

10.3      Employment Agreement between the Company and M.R. Cunningham (Exhibit
          10.3 to Amendment No. 2 to Registration Statement on Form S-1 No.
          333-465411)

10.4      Employment Agreement between the Company and G. Mays (Exhibit 10.4 to
          Amendment No. 2 to Registration Statement on Form S-1 No. 333-465411)

10.5      Employment Agreement between the Company and T. Mays (Exhibit 10.5 to
          Amendment No. 2 to Registration Statement on Form S-1 No. 333-465411)

10.6      Employment Agreement between the Company and R. Needle (Exhibit 10.6
          to Amendment No. 2 to Registration Statement on Form S-1 No.
          333-465411)

10.7      Service Agreement between Roda Limited and P.L. Furlonge (Exhibit 10.7
          to Registration Statement on Form S-1 No. 333-46541)

10.8      Employment Agreement between the Company and Robert M. Okin (Exhibit
          10.8 to Amendment No. 2 to Registration Statement on Form S-1 No.
          333-46541)

10.13     Roda Lease (Exhibit 10.13 to Amendment No. 1 to Registration Statement
          on Form S-1 No. 333-46541)

10.15     Employment Agreement between the Company and I. Lykogiannis (Exhibit
          10.15 to Amendment No. 2 to Registration Statement on Form S-1 No.
          333-46541)

10.16     Employment Agreement between the Company and R. Zanisnik (Exhibit
          10.16 to Amendment No. 2 to Registration Statement on Form S-1 No.
          333-46541)

10.17     Credit and Security  Agreement  dated July 9, 1998 between Summit Bank
          and the Company  (Exhibit  10.17 to Quarterly  Report on Form 10-Q for
          the quarter ended June 30, 1998)

10.18     Agreement for the sale and purchase of the entire issued share capital
          of Workable  Company  Limited and 60% of the issued  share  capital of
          Plainduty  Limited  dated as of January  13, 1999 by and among Lam Hok
          Ling,  Tung  Hok Ki,  Hacienda  Resources  Limited,  the  Company  and
          Cunningham  Graphics  International,  S.A.  (Exhibit  10.18 to Current
          Report on Form 8-K for the event occurring on January 13, 1999)

10.19     Service  Agreement  dated as of  January  13,  1999  between  Workable
          Company  Limited and Evan Lam (Exhibit 10.19 to Current Report on Form
          8-K for the event occurring on January 13, 1999)

10.20     Service  Agreement  dated as of  January  13,  1999  between  Workable
          Company  Limited and Timothy Tung (Exhibit  10.20 to Current Report on
          Form 8-K for the event occurring on January 13, 1999)

10.21     Tenancy  Agreement  dated as of  January  13,  1999  between  Workable
          Company Limited and Many Best  Development  Limited  (Exhibit 10.21 to
          Current  Report on Form 8-K for the event  occurring  on  January  13,
          1999)


                                       1
<PAGE>


10.22     Tenancy  Agreement  dated as of  January  13,  1999  between  Workable
          Company Limited and Splendour Chief Development Limited (Exhibit 10.22
          to Current  Report on Form 8-K for the event  occurring on January 13,
          1999)

10.23     Loan  Agreement  dated February 3, 1999 among Summit Bank, the Company
          and  Cunningham  Graphics  Realty,  L.L.C.  (Exhibit  10.23 to Current
          Report on Form 8-K for the event occurring on February 3, 1999)

10.24     Agreement of Sale dated October 28, 1998 between Willco  Associates-1,
          L.L.C.  and the Company  (Exhibit  10.24 to Current Report on Form 8-K
          for the event  occurring  on  February  3, 1999)  

10.25     Amendment to Agreement of Sale between Willco Associates-1, L.L.C. and
          the Company dated February 3, 1999 (Exhibit 10.25 to Current Report on
          Form 8-K for the event occurring on February 3, 1999)

10.26     Agreement of Sale dated October 28, 1998 between Willco  Associates-2,
          L.L.C.  and the Company  (Exhibit  10.26 to Current Report on Form 8-K
          for the event occurring on February 3, 1999)

10.27     Amendment to Agreement of Sale between Willco Associates-2, L.L.C. and
          the Company dated February 3, 1999 (Exhibit 10.27 to Current Report on
          Form 8-K for the event occurring on February 3, 1999)

10.28     Assignment  of Agreement of Sale (Exhibit  10.28 to Current  Report on
          Form 8-K for the event occurring on February 3, 1999)

10.29     Asset purchase agreement dated February 17, 1999 for the sale and
          purchase of certain assets and the assumption of certain liabilities
          of Boston Towne Press, Inc. by and among Boston Towne Press, Inc.,
          John R. Henesey, Jr., Cunningham Graphics International, Inc. and BTP
          Acquisition Corp.

10.30     Employment Agreement dated as of February 17, 1999 between BTP
          Acquisition Corp. and John R. Henesey Jr. 

21        Subsidiaries of the Company

23        Consent of Ernst & Young LLP

24        Power of attorney

27        Financial Data Schedule


                                        2