<PAGE>

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

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

<Table>
<C>          <S>
    [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934



              FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002



                                   OR




    [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934



           FOR THE TRANSITION PERIOD FROM           TO
</Table>

                         COMMISSION FILE NUMBER 1-16431

                      APPLIED GRAPHICS TECHNOLOGIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<Table>
<S>                                            <C>
                   DELAWARE                                      13-3864004
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)
             450 WEST 33RD STREET                                  10001
                 NEW YORK, NY                                    (ZIP CODE)
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</Table>

                                  212-716-6600
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                                      N/A
              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                         IF CHANGED SINCE LAST REPORT)

     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.

                              [X]  Yes     [ ]  No

     The number of shares of the registrant's common stock outstanding as of
April 30, 2002, was 9,067,565.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                      APPLIED GRAPHICS TECHNOLOGIES, INC.
                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
              (IN THOUSANDS OF DOLLARS, EXCEPT PER-SHARE AMOUNTS)

<Table>
<Caption>
                                                              MARCH 31,   DECEMBER 31,
                                                                2002          2001
                                                              ---------   ------------
<S>                                                           <C>         <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $   3,577    $   4,949
  Trade accounts receivable (net of allowances of $7,802 in
     2002 and $7,981 in 2001)...............................     78,833       89,825
  Due from affiliates.......................................      4,218        4,028
  Inventory.................................................     19,456       14,837
  Prepaid expenses..........................................      4,886        4,712
  Deferred income taxes.....................................     18,411       19,973
  Other current assets......................................      2,999        2,325
  Net assets held for sale..................................     30,825       37,498
                                                              ---------    ---------
     Total current assets...................................    163,205      178,147
Property, plant, and equipment -- net.......................     61,843       63,307
Goodwill....................................................     77,374      405,839
Other intangible assets -- net..............................      1,130        1,210
Deferred income taxes.......................................      1,029
Other assets................................................      9,494        9,747
                                                              ---------    ---------
     Total assets...........................................  $ 314,075    $ 658,250
                                                              =========    =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable and accrued expenses.....................  $  64,465    $  62,919
  Current portion of long-term debt and obligations under
     capital leases.........................................     15,332       15,398
  Due to affiliates.........................................        715        1,278
  Other current liabilities.................................     42,377       44,071
                                                              ---------    ---------
     Total current liabilities..............................    122,889      123,666
Long-term debt..............................................    191,828      195,140
Subordinated notes..........................................     26,468       27,012
Obligations under capital leases............................        418          593
Deferred income taxes.......................................                   1,485
Other liabilities...........................................     12,141       12,874
                                                              ---------    ---------
     Total liabilities......................................    353,744      360,770
                                                              ---------    ---------
Commitments and contingencies
Minority interest -- Redeemable Preference Shares issued by
  subsidiary................................................     39,246       38,776
                                                              ---------    ---------
Stockholders' Equity (Deficit):
  Preferred stock (no par value, 10,000,000 shares
     authorized; no shares outstanding).....................
  Common stock ($0.01 par value, 150,000,000 shares
     authorized; shares issued and outstanding: 9,067,565 in
     2002 and 2001).........................................         91           91
  Additional paid-in capital................................    389,467      389,464
  Accumulated other comprehensive income (loss).............         75         (239)
  Retained deficit..........................................   (468,548)    (130,612)
                                                              ---------    ---------
     Total stockholders' equity (deficit)...................    (78,915)     258,704
                                                              ---------    ---------
     Total liabilities and stockholders' equity (deficit)...  $ 314,075    $ 658,250
                                                              =========    =========
</Table>

             See Notes to Interim Consolidated Financial Statements
                                        1
<PAGE>

                      APPLIED GRAPHICS TECHNOLOGIES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)

<Table>
<Caption>
                                                              FOR THE THREE MONTHS
                                                                ENDED MARCH 31,
                                                              --------------------
                                                                2002        2001
                                                              ---------   --------
<S>                                                           <C>         <C>
Revenues....................................................  $ 118,299   $117,728
Cost of revenues............................................     77,248     82,795
                                                              ---------   --------
Gross profit................................................     41,051     34,933
                                                              ---------   --------
Selling, general, and administrative expenses...............     38,153     35,530
Amortization of intangibles.................................         80      3,389
Loss (gain) on disposal of property and equipment...........       (116)        28
Impairment charge...........................................      7,164
                                                              ---------   --------
Total operating expenses....................................     45,281     38,947
                                                              ---------   --------
Operating loss..............................................     (4,230)    (4,014)
Interest expense............................................     (4,700)    (5,989)
Interest income.............................................         95        203
Other income (expense) -- net...............................        (87)     1,402
                                                              ---------   --------
Loss before provision for income taxes and minority
  interest..................................................     (8,922)    (8,398)
Provision (benefit) for income taxes........................        551       (357)
                                                              ---------   --------
Loss before minority interest...............................     (9,473)    (8,041)
Minority interest...........................................       (588)      (600)
                                                              ---------   --------
Loss before cumulative effect of change in accounting
  principle.................................................    (10,061)    (8,641)
Cumulative effect of change in accounting principle.........   (327,875)
                                                              ---------   --------
Net loss....................................................   (337,936)    (8,641)
Other comprehensive income (loss)...........................        314       (435)
                                                              ---------   --------
Comprehensive loss..........................................  $(337,622)  $ (9,076)
                                                              =========   ========
Basic loss per common share:
  Loss before cumulative effect of change in accounting
     principle..............................................  $   (1.11)  $  (0.95)
  Cumulative effect of change in accounting principle.......     (36.16)
                                                              ---------   --------
  Total.....................................................  $  (37.27)  $  (0.95)
                                                              =========   ========
Diluted loss per common share:
  Loss before cumulative effect of change in accounting
     principle..............................................  $   (1.11)  $  (0.95)
  Cumulative effect of change in accounting principle.......     (36.16)
                                                              ---------   --------
  Total.....................................................  $  (37.27)  $  (0.95)
                                                              =========   ========
Weighted average number of common shares:
  Basic.....................................................      9,068      9,068
  Diluted...................................................      9,068      9,068
</Table>

             See Notes to Interim Consolidated Financial Statements
                                        2
<PAGE>

                      APPLIED GRAPHICS TECHNOLOGIES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<Table>
<Caption>
                                                              FOR THE THREE MONTHS
                                                                 ENDED MARCH 31,
                                                              ---------------------
                                                                 2002        2001
                                                              ----------   --------
<S>                                                           <C>          <C>
Cash flows from operating activities:
Net loss....................................................  $(337,936)   $(8,641)
Adjustments to reconcile net loss to net cash from operating
  activities:
  Depreciation and amortization.............................      4,557      8,862
  Deferred taxes............................................       (914)      (398)
  Provision for bad debts...................................      1,003        769
  Cumulative effect of change in accounting principle.......    328,529
  Impairment charge.........................................      7,164
  Other.....................................................       (284)        30
Changes in Operating Assets and Liabilities:
  Trade accounts receivable.................................     10,641     12,009
  Due from/to affiliates....................................       (754)        21
  Inventory.................................................     (4,646)      (584)
  Other assets..............................................       (870)    (1,619)
  Accounts payable and accrued expenses.....................       (488)    (7,143)
  Other liabilities.........................................     (2,031)     1,138
  Net assets held for sale..................................      1,122
  Net cash provided by operating activities of discontinued
     operations.............................................                 6,128
                                                              ---------    -------
Net cash provided by operating activities...................      5,093     10,572
                                                              ---------    -------
Cash flows from investing activities:
  Property, plant, and equipment expenditures...............     (3,149)    (4,459)
  Proceeds from sale of available-for-sale securities.......                 1,675
  Proceeds from sale of property and equipment..............        244
  Other.....................................................                (3,297)
  Net cash used in investing activities of discontinued
     operations.............................................                  (186)
                                                              ---------    -------
Net cash used in investing activities.......................     (2,905)    (6,267)
                                                              ---------    -------
Cash flows from financing activities:
  Repayments of notes and capital lease obligations.........       (249)      (363)
  Repayments of term loans..................................                  (927)
  Borrowings (repayments) under revolving credit
     line -- net............................................     (3,300)     4,445
  Net cash used in financing activities of discontinued
     operations.............................................                   (25)
                                                              ---------    -------
Net cash provided by (used in) financing activities.........     (3,549)     3,130
                                                              ---------    -------
Net increase (decrease) in cash and cash equivalents........     (1,361)     7,435
Effect of exchange rate changes on cash and cash
  equivalents...............................................        (11)        36
Cash and cash equivalents at beginning of period............      4,949      6,406
                                                              ---------    -------
Cash and cash equivalents at end of period..................  $   3,577    $13,877
                                                              =========    =======
</Table>

             See Notes to Interim Consolidated Financial Statements
                                        3
<PAGE>

                      APPLIED GRAPHICS TECHNOLOGIES, INC.
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<Table>
<Caption>
                                                     FOR THE THREE MONTHS ENDED MARCH 31, 2002
                                                  -----------------------------------------------
                                                                         ACCUMULATED
                                                           ADDITIONAL       OTHER
                                                  COMMON    PAID-IN     COMPREHENSIVE   RETAINED
                                                  STOCK     CAPITAL     INCOME (LOSS)    DEFICIT
                                                  ------   ----------   -------------   ---------
<S>                                               <C>      <C>          <C>             <C>
BALANCE AT JANUARY 1, 2002......................   $91      $389,464        $(239)      $(130,612)
Compensation cost of stock options issued to
  non-employees.................................                   3
Reclassification adjustment for losses realized
  in net income.................................                               58
Reclassification of cumulative effect of change
  in accounting principle.......................                                6
Unrealized gain from foreign currency
  translation adjustments.......................                              250
Net loss........................................                                         (337,936)
                                                   ---      --------        -----       ---------
BALANCE AT MARCH 31, 2002.......................   $91      $389,467        $  75       $(468,548)
                                                   ===      ========        =====       =========
</Table>

             See Notes to Interim Consolidated Financial Statements
                                        4
<PAGE>

                      APPLIED GRAPHICS TECHNOLOGIES, INC.

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                           (IN THOUSANDS OF DOLLARS)

1.  BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements of
Applied Graphics Technologies, Inc. and its subsidiaries (the "Company"), which
have been prepared in accordance with the instructions to Form 10-Q and,
therefore, do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles, should be read in
conjunction with the notes to consolidated financial statements contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001. In
the opinion of the management of the Company, all adjustments (consisting
primarily of normal recurring accruals) necessary for a fair presentation have
been included in the financial statements. The operating results of any quarter
are not necessarily indicative of results for any future period.

     Certain prior-period amounts in the accompanying financial statements have
been reclassified to conform with the 2002 presentation.

2.  SALE OF PUBLISHING BUSINESS

     In connection with the Company's adoption of a plan approved by its Board
of Directors in June 2000 to sell its publishing business, the results of
operations of that business were reported as a discontinued operation in the
Company's financial statements. Since as of June 30, 2001, one year from the
measurement date, the Company had not reached definitive terms with a potential
buyer, the net assets of the publishing business previously reported as a
discontinued operation were reclassified as "Net assets held for sale" in the
Company's Consolidated Balance Sheet. Commencing July 1, 2001, the assets of the
publishing business are no longer depreciated and its results of operations are
included as part of continuing operations.

     The Company sold the publishing business in April 2002. Net proceeds from
the sale were approximately $33,500, of which $31,500 were used in April 2002 to
repay term loans outstanding under the Company's credit facility and $2,000 are
being held in escrow under the terms of the sale. The escrow will be available
to satisfy any claims related to the working capital transferred at closing and
contractual warranties. Any remaining escrow balance as of March 31, 2003, will
be used to further repay the outstanding term loans. The final terms of the sale
deviated sufficiently from the original plan to require the Company to obtain a
consent from its lenders that the sale satisfied a contingency of the Company's
credit facility, and therefore a new measurement date was established in April
2002. In April 2002 the Company began reporting the publishing business as a
discontinued operation in accordance with Statement of Financial Accounting
Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets."

     At March 31, 2002, the Company recognized an impairment charge related to
the publishing business of $7,164 that was based on the terms of the April 2002
sale and is subject to change based on potential working capital adjustments
resulting from the finalization of the closing date balance sheet.

                                        5
<PAGE>
                      APPLIED GRAPHICS TECHNOLOGIES, INC.

       NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The results of operations of the publishing business for the three months
ended March 31, 2001, are presented as Discontinued Operations in the
accompanying Consolidated Statement of Operations as follows:

<Table>
<S>                                                           <C>
Revenues....................................................     $18,429
                                                                 =======
Income from operations before income taxes..................     $   822
Provision equivalent to income taxes........................       1,018
                                                                 -------
Loss from operations........................................        (196)
Reversal of loss on disposal................................         196
                                                                 -------
Income from discontinued operations.........................     $    --
                                                                 =======
</Table>

     The results of operations of the publishing business include an allocation
of interest expense of $321 for the three months ended March 31, 2001. The
allocated interest expense consisted solely of the interest expense on the
Company's borrowings under its credit facility, which represents the interest
expense not directly attributable to the Company's other operations. Interest
expense was allocated based on the ratio of the net assets of the discontinued
operation to the sum of the consolidated net assets of the Company and the
outstanding borrowings under the Company's credit facility.

     The revenues, gross profit, and operating income from the publishing
business included in the Company's results of continuing operations for the
three months ended March 31, 2002, were $19,778, $10,195, and $2,599,
respectively. The net assets of the publishing business include $262 of
long-term debt and obligations under capital leases, inclusive of the current
portion, at March 31, 2002.

3.  GOODWILL AND OTHER INTANGIBLE ASSETS

     On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." Under SFAS No.
142, acquired goodwill and other intangible assets with indefinite useful lives
are no longer amortized over an estimated useful life, but instead are subject
to an impairment test. Intangible assets with finite useful lives continue to be
amortized over their useful lives.

     Upon the initial application of SFAS No. 142, the Company incurred an
impairment charge of $328,529 relating to its goodwill, of which $321,952
related to the Company's content management services business and $6,577 related
to the Company's broadcast media distribution services business. The fair value
of each reporting unit was determined based on applying a multiple to each
reporting unit's earnings before interest, taxes, depreciation, and
amortization. The Company reported the impairment charge, net of a tax benefit
of $654, as a cumulative effect of a change in accounting principle.

                                        6
<PAGE>
                      APPLIED GRAPHICS TECHNOLOGIES, INC.

       NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company's intangible assets not subject to amortization under SFAS No.
142 consist entirely of goodwill. The changes in the carrying amount of goodwill
during the three months ended March 31, 2002, and the full year ended December
31, 2001, were as follows:

<Table>
<Caption>
                                                    2002                     2001
                                           ----------------------   ----------------------
                                            CONTENT       OTHER      CONTENT       OTHER
                                           MANAGEMENT   OPERATING   MANAGEMENT   OPERATING
                                            SERVICES    SEGMENTS     SERVICES    SEGMENTS
                                           ----------   ---------   ----------   ---------
<S>                                        <C>          <C>         <C>          <C>
Balance at beginning of period...........  $ 397,087     $ 8,752     $405,973     $15,716
Impairment losses........................   (321,952)     (6,577)                  (7,176)
Contingent purchase price................                                           1,440
Amortization.............................                             (11,579)     (1,086)
Other....................................         64                    2,693        (142)
                                           ---------     -------     --------     -------
Balance at end of period.................  $  75,199     $ 2,175     $397,087     $ 8,752
                                           =========     =======     ========     =======
</Table>

     The Company's intangible assets subject to amortization under SFAS No. 142
consist entirely of contract acquisition costs, which represent consideration
paid by the Company to enter into certain long-term contracts. Contract
acquisition costs are amortized on a straight-line basis over the life of the
underlying contract. The gross carrying amount and accumulated amortization of
contract acquisition costs were as follows:

<Table>
<Caption>
                                                              MARCH 31,   DECEMBER 31,
                                                                2002          2001
                                                              ---------   ------------
<S>                                                           <C>         <C>
Gross carrying amount.......................................   $ 2,446      $ 2,821
Accumulated amortization....................................    (1,316)      (1,611)
                                                               -------      -------
Net carrying amount.........................................   $ 1,130      $ 1,210
                                                               =======      =======
</Table>

     Amortization expense associated with contract acquisition costs for the
three months ended March 31, 2002 and 2001, was $80 and $200, respectively. The
estimated amortization expense for each of the next five full fiscal years is as
follows:

<Table>
<S>                                                           <C>
2002........................................................  $289
2003........................................................  $310
2004........................................................  $210
2005........................................................  $210
2006........................................................  $191
</Table>

     The adjusted net loss and loss per share for the three months ended March
31, 2001, reflecting the add back of the amortization of goodwill, were as
follows:

<Table>
<S>                                                           <C>
Net loss as reported........................................  $(8,641)
Add back: Amortization of goodwill -- net of tax............    2,988
                                                              -------
Adjusted net loss...........................................  $(5,653)
                                                              =======
Loss per share as reported (basic and diluted)..............  $ (0.95)
Amortization of goodwill....................................     0.33
                                                              -------
Adjusted loss per share (basic and diluted).................  $ (0.62)
                                                              =======
</Table>

                                        7
<PAGE>
                      APPLIED GRAPHICS TECHNOLOGIES, INC.

       NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4.  RESTRUCTURING

     The Company initiated various restructuring plans in prior periods (the
"2001 Fourth Quarter Plan," the "2001 Second Quarter Plan," the "2000 Second
Quarter Plan," the "1999 Fourth Quarter Plan," and the "1998 Fourth Quarter
Plan," respectively) under which it continues to make certain payments. The
amounts included in "Other current liabilities" in the accompanying Consolidated
Balance Sheet as of March 31, 2002, for the future costs of the various
restructuring plans, and the amounts charged against the respective
restructuring liabilities during the three months ended March 31, 2002, were as
follows:

<Table>
<Caption>
                                             2001      2001      2000      1999      1998
                                            FOURTH    SECOND    SECOND    FOURTH    FOURTH
                                            QUARTER   QUARTER   QUARTER   QUARTER   QUARTER
                                             PLAN      PLAN      PLAN      PLAN      PLAN
                                            -------   -------   -------   -------   -------
<S>                                         <C>       <C>       <C>       <C>       <C>
Balance at January 1, 2002................  $11,994    $ 594     $584      $382      $176
Facility closure costs....................     (506)              (46)                (11)
Employee termination costs................     (592)    (124)
Abandoned equipment.......................      (23)                        (34)
                                            -------    -----     ----      ----      ----
Balance at March 31, 2002.................  $10,873    $ 470     $538      $348      $165
                                            =======    =====     ====      ====      ====
</Table>

5.  INVENTORY

     The components of inventory were as follows:

<Table>
<Caption>
                                                              MARCH 31,   DECEMBER 31,
                                                                2002          2001
                                                              ---------   ------------
<S>                                                           <C>         <C>
Work-in-process.............................................   $17,274      $12,465
Raw materials...............................................     2,182        2,372
                                                               -------      -------
Total.......................................................   $19,456      $14,837
                                                               =======      =======
</Table>

6.  LONG TERM DEBT

     Under the terms of its credit facility, as amended, the Company was
obligated to satisfy certain milestones in connection with raising amounts to
repay borrowings. The consummation of the sale of the publishing business
satisfied one such milestone and resulted in the elimination of a previous
increase in interest rates of 100 basis points that had been in effect since
January 1, 2002. The Company failed, however, to satisfy two other milestones
with deadlines of February 28, 2002, and April 30, 2002. Failure to satisfy the
first milestone resulted in a fee of $500 being paid to the Company's lenders.
Failure to satisfy the second milestone resulted in, effective May 1, 2002, an
increase in interest rates of 100 basis points and the issuance of warrants with
an exercise price of $0.01 to the Company's lenders to purchase 453,378 shares
of the Company's common stock. Such warrants become exercisable upon the earlier
of the fifth anniversary of the date of grant or an event of default under the
credit facility.

                                        8
<PAGE>
                      APPLIED GRAPHICS TECHNOLOGIES, INC.

       NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7.  DERIVATIVES

     The fair value of the Company's interest rate swaps was a net loss of
$1,773 and $1,370 at March 31, 2002 and 2001, respectively. For the three months
ended March 31, 2002 and 2001, the Company recognized a non-cash benefit of $353
and a non-cash charge of $238, respectively, which consisted of the following:

<Table>
<Caption>
                                                              2002    2001
                                                              -----   ----
<S>                                                           <C>     <C>
Change in fair market value of swaps not designated as
  hedges....................................................  $(462)
Ineffectiveness of swaps designated as hedges...............          $253
Reclassification of loss in "Accumulated other comprehensive
  income (loss)"............................................     99
Reclassification of cumulative effect recorded upon adoption
  of SFAS No. 133...........................................     10    (15)
                                                              -----   ----
Total charge (benefit)......................................  $(353)  $238
                                                              =====   ====
</Table>

     The company expects $212 of the loss in "Accumulated other comprehensive
income (loss)" to be reclassified into earnings in the next twelve months.

8.  INCOME TAXES

     In connection with the impairment of goodwill incurred upon the initial
adoption of SFAS No. 142 (see Note 3 to the Interim Consolidated Financial
Statements), the Company recognized a deferred tax asset of $16,806, resulting
in a consolidated deferred tax asset of $35,592 as of March 31, 2002. Based on
its most recent projections, the Company does not believe that it is more likely
than not that the benefit associated with the deferred tax assets will be
entirely realized in the future. Accordingly, at March 31, 2002, the Company
established a valuation allowance in the amount of $16,152, all of which was
included as part of the cumulative effect of a change in accounting principle.

9.  RELATED PARTY TRANSACTIONS

     Sales to, purchases from, and administrative charges incurred with related
parties during the three months ended March 31, 2002 and 2001, were as follows:

<Table>
<Caption>
                                                               2002     2001
                                                              ------   ------
<S>                                                           <C>      <C>
Affiliate sales.............................................  $1,315   $2,708
Affiliate purchases.........................................  $    5   $   24
Administrative charges......................................  $  361   $  536
</Table>

     Administrative charges include charges for certain legal, administrative,
and computer services provided by affiliates and for rent incurred for leases
with affiliates.

10.  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

     Payments of interest and income taxes for the three months ended March 31,
2002 and 2001, were as follows:

<Table>
<Caption>
                                                               2002     2001
                                                              ------   ------
<S>                                                           <C>      <C>
Interest paid...............................................  $5,602   $5,986
Income taxes paid -- net of refunds.........................  $  134   $1,507
</Table>

                                        9
<PAGE>
                      APPLIED GRAPHICS TECHNOLOGIES, INC.

       NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Noncash investing and financing activities for the three months ended March
31, 2002 and 2001, were as follows:

<Table>
<Caption>
                                                              2002   2001
                                                              ----   ----
<S>                                                           <C>    <C>
Fair value of stock options issued to non-employees.........   $3    $ 10
Additions to intangible assets for contingent payments......         $720
Reduction of goodwill from amortization of excess
  tax-deductible goodwill...................................         $ 52
</Table>

11.  SEGMENT INFORMATION

     Segment information relating to results of operations for the three months
ended March 31, 2002 and 2001, was as follows:

<Table>
<Caption>
                                                                2002       2001
                                                              --------   --------
<S>                                                           <C>        <C>
REVENUE:
Content Management Services.................................  $ 92,075   $110,767
Publishing..................................................    19,778
Other operating segments....................................     6,446      6,961
                                                              --------   --------
Total.......................................................  $118,299   $117,728
                                                              ========   ========
OPERATING INCOME (LOSS):
Content Management Services.................................  $  7,204   $  6,715
Publishing..................................................     2,599
Other operating segments....................................         9       (422)
                                                              --------   --------
Total.......................................................     9,812      6,293
Other business activities...................................    (6,914)    (6,890)
Amortization of intangibles.................................       (80)    (3,389)
Gain (loss) on disposal of property and equipment...........       116        (28)
Interest expense............................................    (4,700)    (5,989)
Interest income.............................................        95        203
Other income (expense)......................................       (87)     1,402
Impairment charge...........................................    (7,164)
                                                              --------   --------
Consolidated loss before provision for income taxes and
  minority interest.........................................  $ (8,922)  $ (8,398)
                                                              ========   ========
</Table>

     Segment information relating to the Company's assets as of March 31, 2002,
and December 31, 2001, was as follows:

<Table>
<Caption>
                                                              MARCH 31,   DECEMBER 31,
                                                                2002          2001
                                                              ---------   ------------
<S>                                                           <C>         <C>
TOTAL ASSETS:
Content Management Services.................................  $250,269      $579,742
Other operating segments....................................    14,103        20,997
Other business activities...................................    18,878        20,013
Net assets held for sale....................................    30,825        37,498
                                                              --------      --------
Total.......................................................  $314,075      $658,250
                                                              ========      ========
</Table>

                                        10
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     Certain statements made in this Quarterly Report on Form 10-Q are
"forward-looking" statements (within the meaning of the Private Securities
Litigation Reform Act of 1995, as amended). Such statements involve known and
unknown risks, uncertainties, and other factors that may cause actual results,
performance, or achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied by such
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, the Company's actual results could differ materially from those set
forth in the forward-looking statements. Certain factors that might cause such a
difference include the following: the ability of the Company to maintain
compliance with the financial covenant requirements under its credit facility;
the ability of the Company to successfully renegotiate the terms of its credit
facility; the ability of Kmart Corporation ("Kmart") to successfully emerge from
bankruptcy; the impact of technological advancements on the ability of customers
and competitors to provide services comparable to those provided by the Company;
the continued softness in the advertising market; the timing of completion and
the success of the Company's restructuring plans and integration efforts; the
rate and level of capital expenditures; and the adequacy of the Company's credit
facility and cash flows to fund cash needs.

     The results of operations of the Company's publishing business were
reported as part of continuing operations for the three months ended March 31,
2002, and as a discontinued operation for the three months ended March 31, 2001.
The following discussion and analysis (in thousands of dollars) should be read
in conjunction with the Company's Interim Consolidated Financial Statements and
notes thereto.

     Management must make certain estimates and assumptions in preparing the
financial statements of the Company. Certain of these estimates and assumptions
relate to matters that are inherently uncertain as they pertain to future
events. These estimates and assumptions include the fair value of net assets
held for sale, the fair value of goodwill, future estimated taxable income, the
collectibility of accounts receivable, and the timing and amount of the
settlement on certain lease obligations relating to restructuring charges. While
management believes that the estimates and assumptions used were appropriate,
actual results could differ significantly from those estimates under different
conditions.

RESULTS OF OPERATIONS

  THREE MONTHS ENDED MARCH 31, 2002, COMPARED WITH 2001

     Revenues in the first quarter of 2002 were $571 higher than in the
comparable period in 2001. Exclusive of the publishing business, which was
reported as a discontinued operation for the first quarter of 2001, revenues in
the first quarter of 2002 were $19,207 lower than the first quarter of 2001.
Revenues in the 2002 period decreased by $18,692 from content management
services and $515 from digital services. Decreased revenues from content
management services primarily resulted from a weaker advertising market in the
first quarter of 2002 as compared to the 2001 period, which adversely impacted
the Company's prepress operations servicing advertising agencies and magazine
publishers.

     Gross profit increased $6,118 in the first quarter of 2002. The gross
profit percentage in the first quarter of 2002 was 34.7% as compared to 29.7% in
the 2001 period. Exclusive of the publishing business, the gross profit
percentage was 31.3% in the 2002 period. This increase primarily resulted from
improved operating efficiencies and cost cutting related to the Company's
restructuring and integration efforts.

     Selling, general, and administrative expenses in the first quarter of 2002
were $2,623 higher than in the 2001 period, and as a percent of revenue
increased to 32.3% in the 2002 period from 30.2% in the 2001 period. Selling,
general, and administrative expenses in the 2002 period include charges of $499
for nonrestructuring-related employee termination costs and $627 for consultants
retained to assist the Company with its restructuring and integration efforts.
The 2002 period also includes the results of operations of the publishing
business, which business incurs selling, general, and administrative costs at a
higher rate than the Company's other businesses. Selling, general, and
administrative expenses in 2001 include a charge of $419 for
nonrestructuring-related employee termination costs. Exclusive of the publishing
business, and adjusting for

                                        11
<PAGE>

these other charges, selling general, and administrative expenses as a percent
of revenue were 29.9% and 29.8% in 2002 and 2001, respectively.

     The Company incurred an impairment charge of $7,164 in the first quarter of
2002 in connection with the sale of its publishing business in April 2002.

     Interest expense in the first quarter of 2002 was $1,289 lower than in the
2001 period due primarily to reduced borrowings outstanding under the Company's
credit facility and a non-cash credit of $353 related to two interest rate swap
agreements (see Note 6 to the Interim Consolidated Financial Statements).

     The Company recorded an income tax provision of $551 in the first quarter
of 2002. The provision recognized was at a lower rate than the statutory rate
due primarily to the projected annual permanent items related to the
nondeductible portion of the impairment charge and meals and entertainment
expenses.

     On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." Under SFAS No.
142, acquired goodwill and other intangible assets with indefinite useful lives
are no longer amortized over an estimated useful life, but instead are subject
to an impairment test. Intangible assets with finite useful lives continue to be
amortized over their useful lives. Upon the initial application of SFAS No. 142,
the Company incurred an impairment charge of $328,529 relating to its goodwill.
The Company reported the impairment charge, net of a tax benefit of $654, as a
cumulative effect of a change in accounting principle.

     Revenues from business transacted with affiliates for the three months
ended March 31, 2002 and 2001, totaled $1,315 and $2,708, respectively,
representing 1.1% and 2.3%, respectively, of the Company's revenues.

FINANCIAL CONDITION

     In March 2002, the Company entered into an amendment to its credit facility
(the "Sixth Amendment") that extended the maturity through April 2003. In
connection with the Sixth Amendment, the Company incurred fees of $250 and
agreed to issue warrants with a nominal exercise price to its lenders to
purchase 5% of the Company's outstanding common stock. The warrants become
immediately issuable if an agreement in principle for an overall restructuring
of the credit facility is not reached by June 30, 2002, or if a definitive
agreement for such restructuring is not entered into by September 30, 2002. In
addition, as part of the Sixth Amendment, available borrowings under the
Company's revolving credit line were reduced to $66,000 from $81,000. The
Company does not believe that the reduced borrowing capacity will have a
material adverse effect on its financial condition or liquidity. The Company had
available borrowing capacity under its revolving credit line of $40,953 as of
March 31, 2002.

     Under the terms of its credit facility, as amended, the Company was
obligated to satisfy certain milestones in connection with raising amounts to
repay borrowings. The consummation of the sale of the publishing business
satisfied one such milestone and resulted in the elimination of a previous
increase in interest rates of 100 basis points that had been in effect since
January 1, 2002. The Company failed, however, to satisfy two other milestones
with deadlines of February 28, 2002, and April 30, 2002. Failure to satisfy the
first milestone resulted in a fee of $500 being paid to the Company's lenders.
Failure to satisfy the second milestone resulted in, effective May 1, 2002, an
increase in interest rates of 100 basis points and the issuance of warrants with
an exercise price of $0.01 to the Company's lenders to purchase 453,378 shares
of the Company's common stock. Such warrants become exercisable upon the earlier
of the fifth anniversary of the date of grant or an event of default under the
credit facility.

     Under the terms of its credit facility, as amended, the Company must comply
with certain quarterly covenants related to leverage ratios, interest coverage
ratios, fixed charge coverage ratios, and capital spending. In addition, the
Company must satisfy a minimum cumulative EBITDA (as defined in the credit
facility) covenant. If the Company does not satisfy such minimum cumulative
EBITDA covenant for any non-quarter month end, the Company's short-term
borrowing availability would be limited until such time as the Company is in
compliance with the covenant, but such failure would not constitute an event of
default. The Company was in compliance with all covenants at March 31, 2002.
Based on current projections, the Company believes

                                        12
<PAGE>

that it will be able to remain in compliance with the amended covenant
requirements throughout 2002, although there can be no assurance that such
compliance will be maintained.

     The Company is engaged in discussions with its lenders to renegotiate the
terms of its credit facility. These discussions have covered a wide range of
alternatives and are currently focused on either a forgiveness of a portion of
the debt by the lenders or the deferral of cash interest payments on a portion
of the debt, an extension of the maturity of the credit facility by several
years, and several other significant modifications. Any renegotiation of terms
is likely to be subject to various contingencies, including those relating to
the settlement of the Company's other debt obligations. In connection with any
such agreement, the lenders would likely receive warrants for an additional
portion of the Company's outstanding common stock. There can be no assurances as
to the terms or the success of any renegotiation of the Company's credit
facility.

     On January 22, 2002, Kmart, one of the Company's two largest customers,
filed for protection under Chapter 11 of the United States Bankruptcy Code. A
particular class of vendors was afforded critical vendor status by the
bankruptcy court. The Company has been treated as a critical vendor, and has
been paid substantially all of its accounts receivable for services rendered to
Kmart prior to its bankruptcy filing. The Company continues to be paid under its
normal trade terms for services rendered to Kmart subsequent to January 22,
2002.

     During the first three months of 2002, the Company repaid $3,300 of the
borrowings under its credit facility, repaid $249 of notes and capital lease
obligations, and invested $3,149 in facility construction and new equipment.
Such amounts were primarily funded by cash from operating activities.

     Cash flows from operating activities of continuing operations during the
first three months of 2002 decreased by $473 as compared to the comparable
period in 2001 due primarily to the timing of customer collections and growth in
inventory, partially offset by the timing of vendor payments and an increase in
cash from operating income.

     The Company expects to spend approximately $14,000 over the course of the
next twelve months for capital improvements, essentially all of which is for
modernization. The Company intends to finance these expenditures under operating
or capital leases, sale and leaseback arrangements, or with working capital or
borrowings under its credit facility.

     The Company believes that the cash flow from operations, including
potential improvements in operations as a result of its integration and
restructuring efforts, and available borrowing capacity, subject to the
Company's ability to remain in compliance with the financial covenants under its
credit facility, will provide sufficient cash flows to fund its cash needs
throughout 2002.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's primary exposure to market risk is interest rate risk. The
Company had $204,711 outstanding under its credit facility at March 31, 2002.
Interest rates on funds borrowed under the Company's credit facility vary based
on changes to the prime rate or LIBOR. The Company partially manages its
interest rate risk through two interest rate swap agreements under which the
Company pays a fixed rate and is paid a floating rate based on the three month
LIBOR rate. The notional amounts of the two interest rate swaps totaled $50,000
at March 31, 2002. A change in interest rates of 1.0% would result in a change
in income before taxes of $1,547 based on the outstanding balance under the
Company's credit facility and the notional amounts of the interest rate swap
agreements at March 31, 2002.

                                        13
<PAGE>

                          PART II -- OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     In May 2002, pursuant to the terms of its credit facility, the Company
issued warrants with an exercise price of $0.01 to its lenders to purchase
453,378 shares of the Company's common stock. Such warrants become exercisable
upon the earlier of the fifth anniversary of the date of grant or an event of
default under the Company's credit facility. The issuance of such securities by
the Company were effected without registration based on reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act of
1933 for private placements.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     As previously disclosed in its Annual Report on Forms 10-K for the years
ended December 31, 2001 and 2000, a subsidiary of the Company, Wace Group
Limited ("Wace"), is in arrears on the dividend payments related to its 8%
Cumulative Convertible Redeemable Preference Shares. Wace has been prohibited
from making dividend payments due to the lack of distributable reserves in Wace,
and has not made a dividend payment since July 1999. The arrearage, which is
included as part of "Minority interest" in the Consolidated Balance Sheets,
totals $5,823,000 at May 14, 2002.

ITEM 5.  OTHER INFORMATION

     (a) In May 2002, the Board of Directors of the Company appointed Fred
Drasner as Chief Executive Officer of the Company. Mr. Drasner continues to
serve as Chairman of the Board of Directors.

     (b) On April 11, 2002, pursuant to a Stock Purchase Agreement entered into
by and among DPG Holdings, Inc., Devon Group, Inc., and Applied Graphics
Technologies, Inc. (the "Company"), the Company sold all of the outstanding
common stock of Portal Publications Ltd. ("Portal"), an indirect wholly-owned
subsidiary, to Lynx Private Equity II, L.P. The assets sold represent the
entirety of the Company's publishing business. In connection with the sale, the
Company received approximately $33,500,000 in cash, of which $31,500,000 was
used to repay borrowings outstanding under the Company's credit facility and
$2,000,000 was deposited into an escrow account under the terms of the sale.

     The following pro forma financial information is presented for
informational purposes. The pro forma consolidated balance sheet as of March 31,
2002, is presented as if the disposition of Portal had occurred on March 31,
2002. The pro forma statements of operations for the three months ended March
31, 2002, and for the year ended December 31, 2001, are presented as if the
disposition of Portal had occurred on January 1, 2001. The pro forma financial
information does not purport to present the financial position or results of
operations of the Company had the transaction and events assumed therein
occurred on the dates specified, nor are they necessarily indicative of the
results of operations in the future. The pro forma financial information is
based on certain assumptions and adjustments described in the Notes to Pro Forma
Financial Information and should be read in conjunction therewith and with the
financial statements and related notes included in this Quarterly Report on Form
10-Q and in the Company's Annual Report on Form 10-K for the year ended December
31, 2001.

                                        14
<PAGE>

                      APPLIED GRAPHICS TECHNOLOGIES, INC.
                 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2002
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<Table>
<Caption>
                                                                      PRO FORMA        PRO FORMA
                                                       HISTORICAL    ADJUSTMENTS       ADJUSTED
                                                       ----------    -----------       ---------
<S>                                                    <C>           <C>               <C>
ASSETS
Current Assets:
  Cash and cash equivalents..........................  $   3,577      $     -- (A)     $   3,577
  Trade accounts receivable -- net...................     78,833                          78,833
  Inventory..........................................     19,456                          19,456
  Deferred income taxes..............................     18,411                          18,411
  Other current assets...............................     12,103         2,000 (A)        14,103
  Net assets held for sale...........................     30,825       (30,825)(A)
                                                       ---------      --------         ---------
     Total current assets............................    163,205       (28,825)          134,380
  Property, plant, and equipment -- net..............     61,843                          61,843
  Goodwill and other intangible assets -- net........     78,504                          78,504
  Other assets.......................................     10,523                          10,523
                                                       ---------      --------         ---------
     Total assets....................................  $ 314,075      $(28,825)        $ 285,250
                                                       =========      ========         =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable and accrued expenses..............  $  64,465                       $  64,465
  Other current liabilities..........................     58,424      $  2,675 (A)        61,099
                                                       ---------      --------         ---------
     Total current liabilities.......................    122,889         2,675           125,564
  Long-term debt.....................................    191,828       (31,500)(A)       160,328
  Subordinated notes.................................     26,468                          26,468
  Other liabilities..................................     12,559                          12,559
                                                       ---------      --------         ---------
     Total liabilities...............................    353,744       (28,825)          324,919
                                                       ---------      --------         ---------
Minority interest -- Redeemable Preference Shares
  issued by subsidiary...............................     39,246                          39,246
                                                       ---------      --------         ---------
Stockholders' Deficit:
  Common stock.......................................         91                              91
  Additional paid-in capital.........................    389,467                         389,467
  Accumulated other comprehensive income.............         75                              75
  Retained deficit...................................   (468,548)                       (468,548)
                                                       ---------      --------         ---------
     Total stockholders' deficit.....................    (78,915)                        (78,915)
                                                       ---------      --------         ---------
     Total liabilities and stockholders' deficit.....  $ 314,075      $(28,825)        $ 285,250
                                                       =========      ========         =========
</Table>

                  See Notes to Pro Forma Financial Information
                                        15
<PAGE>

                      APPLIED GRAPHICS TECHNOLOGIES, INC.
            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                   FOR THE THREE MONTHS ENDED MARCH 31, 2002
                                  (UNAUDITED)
                     (IN THOUSANDS, EXCEPT PER-SHARE DATA)

<Table>
<Caption>
                                                         HISTORICAL
                                                   ----------------------    PRO FORMA    PRO FORMA
                                                   CONSOLIDATED   PORTAL    ADJUSTMENTS   ADJUSTED
                                                   ------------   -------   -----------   ---------
<S>                                                <C>            <C>       <C>           <C>
Revenues.........................................    $118,299     $19,778                  $98,521
Cost of revenues.................................      77,248       9,583                   67,665
                                                     --------     -------                  -------
Gross profit.....................................      41,051      10,195                   30,856
                                                     --------     -------                  -------
Selling, general, and administrative expenses....      38,153       7,596                   30,557
Amortization of intangibles......................          80                                   80
Gain on disposal of property and
  equipment -- net...............................        (116)                                (116)
Impairment charge................................       7,164                 $(7,164)(B)
                                                     --------     -------     -------      -------
Total operating expenses.........................      45,281       7,596      (7,164)      30,521
                                                     --------     -------     -------      -------
Operating income (loss)..........................      (4,230)      2,599       7,164          335
Interest income (expense) -- net.................      (4,605)          7         630(C)    (3,982)
Other income (expense) -- net....................         (87)          9                      (96)
                                                     --------     -------     -------      -------
Income (loss) before provision for income taxes
  and minority interest..........................      (8,922)      2,615       7,794       (3,743)
Provision (benefit) for income taxes.............         551       1,304         258(D)      (495)
                                                     --------     -------     -------      -------
Income (loss) before minority interest...........      (9,473)      1,311       7,536       (3,248)
Minority interest................................        (588)                                (588)
                                                     --------     -------     -------      -------
Income (loss) before cumulative effect of change
  in accounting principle........................    $(10,061)    $ 1,311     $ 7,536      $(3,836)
                                                     ========     =======     =======      =======
Loss before cumulative effect of change in
  accounting principle per common share:
  Basic..........................................    $  (1.11)                             $ (0.42)
  Diluted........................................    $  (1.11)                             $ (0.42)
Weighted average number of common shares:
  Basic..........................................       9,068                                9,068
  Diluted........................................       9,068                                9,068
</Table>

                  See Notes to Pro Forma Financial Information
                                        16
<PAGE>

                      APPLIED GRAPHICS TECHNOLOGIES, INC.
            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2001
                                  (UNAUDITED)
                     (IN THOUSANDS, EXCEPT PER-SHARE DATA)

<Table>
<Caption>
                                                        HISTORICAL
                                                  -----------------------    PRO FORMA    PRO FORMA
                                                  CONSOLIDATED    PORTAL    ADJUSTMENTS   ADJUSTED
                                                  ------------   --------   -----------   ---------
<S>                                               <C>            <C>        <C>           <C>
Revenues........................................   $ 507,043     $ 41,843                 $465,200
Cost of revenues................................     338,579       18,931                  319,648
                                                   ---------     --------                 --------
Gross profit....................................     168,464       22,912                  145,552
                                                   ---------     --------                 --------
Selling, general, and administrative expenses...     157,631       16,793                  140,838
Amortization of intangibles.....................      13,463                                13,463
Impairment charge...............................     106,718                 $(97,766)(B)    8,952
Restructuring charge............................      16,167                                16,167
Loss on disposal of property and
  equipment -- net..............................       2,810           41                    2,769
                                                   ---------     --------    --------     --------
Total operating expenses........................     296,789       16,834    (97,766)      182,189
                                                   ---------     --------    --------     --------
Operating income (loss).........................    (128,325)       6,078      97,766      (36,637)
Interest income (expense) -- net................     (24,032)          34       1,874(C)   (22,192)
Other income -- net.............................       1,584          376                    1,208
                                                   ---------     --------    --------     --------
Income (loss) before provision for income taxes
  and minority interest.........................    (150,773)       6,488      99,640      (57,621)
Provision (benefit) for income taxes............      (7,968)       2,355         769(D)    (9,554)
                                                   ---------     --------    --------     --------
Income (loss) before minority interest..........    (142,805)       4,133      98,871      (48,067)
Minority interest...............................      (2,373)                               (2,373)
                                                   ---------     --------    --------     --------
Income (loss) from continuing operations........   $(145,178)    $  4,133    $ 98,871     $(50,440)
                                                   =========     ========    ========     ========
Loss from continuing operations per common
  share:
  Basic.........................................   $  (16.01)                             $  (5.56)
  Diluted.......................................   $  (16.01)                             $  (5.56)
Weighted average number of common shares:
  Basic.........................................       9,068                                 9,068
  Diluted.......................................       9,068                                 9,068
</Table>

                  See Notes to Pro Forma Financial Information
                                        17
<PAGE>

                      APPLIED GRAPHICS TECHNOLOGIES, INC.
                    NOTES TO PRO FORMA FINANCIAL INFORMATION
                           (IN THOUSANDS OF DOLLARS)

     (A) The pro forma adjustments reflect cash proceeds received of $33,500,
and the use of such proceeds to repay $31,500 of amounts outstanding under the
Company's credit facility and to deposit $2,000 into an escrow account under the
terms of the sale. The pro forma adjustments also reflect an accrual $2,675 for
estimated expenses and sales price adjustments related to the sale.

     (B) The proforma adjustments reflect the elimination of the impairment
charges in continuing operations related to the sale of Portal.

     (C) The pro forma adjustments reflect the reduction of interest expense
associated with the repayment of borrowings in accordance with the terms of the
Company's credit facility. In 2001, the pro forma adjustment also reflects
additional interest expense for amounts previously allocated to Portal as a
discontinued operation.

     (D) The pro forma adjustments to the provision for income taxes reflect the
tax provision associated with the pro forma adjustments to interest expense.

                                        18
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits:

<Table>
<S>          <C>
 2.1         Agreement and Plan of Merger, dated as of February 13, 1998,
             by and among Devon Group, Inc., Applied Graphics
             Technologies, Inc., and AGT Acquisition Corp. (Incorporated
             by reference to Exhibit No. 2.2 forming part of the
             Registrant's Report on Form 10-K (File No. 0-28208) filed
             with the Securities and Exchange Commission under the
             Securities Exchange Act of 1934, as amended, for the fiscal
             year ended December 31, 1997).
 2.2         Stock Purchase Agreement dated as of April 11, 2002, by and
             among DPG Holdings, Inc., Devon Group, Inc., and Applied
             Graphics Technologies, Inc.
 3.1(a)      First Restated Certificate of Incorporation (Incorporated by
             reference to Exhibit No. 3.1 forming part of the
             Registrant's Registration Statement on Form S-1 (File No.
             333-00478) filed with the Securities and Exchange Commission
             under the Securities Act of 1933, as amended).
 3.1(b)      Certificate of Amendment of First Restated Certificate of
             Incorporation (Incorporated by reference to Exhibit No.
             3.1(b) forming part of the Registrant's Report on Form 10-Q
             (File No. 0-28208) filed with the Securities and Exchange
             Commission under the Securities Exchange Act of 1934, as
             amended, for the quarterly period ended June 30, 1998).
 3.1(c)      Second Certificate of Amendment of First Restated
             Certificate of Incorporation (Incorporated by reference to
             Exhibit No. 3.1(c) forming part of the Registrant's Report
             on Form 10-K (File No. 0-28208) filed with the Securities
             and Exchange Commission under the Securities Exchange Act of
             1934, as amended, for the fiscal year ended December 31,
             2000).
 3.2(a)      Amended and Restated By-Laws of Applied Graphics
             Technologies, Inc. (Incorporated by reference to Exhibit No.
             3.2 forming part of Amendment No. 3 to the Registrant's
             Registration Statement on Form S-1 (File No. 333-00478)
             filed with the Securities and Exchange Commission under the
             Securities Act of 1933, as amended).
 3.2(b)      Amendment to Amended and Restated By-Laws of Applied
             Graphics Technologies, Inc. (Incorporated by reference to
             Exhibit No. 3.3 forming part of the Registrant's
             Registration Statement on Form S-4 (File No. 333-51135)
             filed with the Securities and Exchange Commission under the
             Securities Act of 1933, as amended).
 3.2(c)      Amendment to Amended and Restated By-Laws of Applied
             Graphics Technologies, Inc. (Incorporated by reference to
             Exhibit No. 3.2(c) forming part of Registrant's Report on
             Form 10-Q (File No. 0-28208) filed with the Securities and
             Exchange Commission under the Securities Exchange Act of
             1934, as amended, for the quarterly period ended September
             30, 2000).
 4           Specimen Stock Certificate (Incorporated by reference to
             Exhibit 7 forming part of Registrant's Registration
             Statement on Form 8-A (File No. 1-16431) filed with the
             Securities and Exchange Commission under the Securities
             Exchange Act of 1934, as amended, on April 5, 2001).
10.2         Applied Graphics Technologies, Inc. 1996 Stock Option Plan
             (Incorporated by reference to Exhibit No. 10.2 forming part
             of Amendment No. 3 to the Registrant's Registration
             Statement on Form S-1 (File No. 333-00478) filed with the
             Securities and Exchange Commission under the Securities Act
             of 1933, as amended).
10.3         Applied Graphics Technologies, Inc. Non-Employee Directors
             Nonqualified Stock Option Plan (Incorporated by reference to
             Exhibit No. 10.3 forming part of Amendment No. 3 to the
             Registrant's Registration Statement on Form S-1 (File No.
             333-00478) filed with the Securities and Exchange Commission
             under the Securities Act of 1933, as amended).
10.6(a)(i)   Employment Agreement, effective as of November 30, 2000,
             between the Company and Joseph D. Vecchiolla (Incorporated
             by reference to Exhibit No. 10.6(a) forming part of the
             Registrant's Report on Form 10-K (File No. 0-28208) filed
             with the Securities and Exchange Commission under the
             Securities Exchange Act of 1934, as amended, for the fiscal
             year ended December 31, 2000).
</Table>

                                        19
<PAGE>
<Table>
<S>          <C>
10.6(a)(ii)  Amendment No. 1 to Employment Agreement, dated as of March
             1, 2002, by and between the Company and Joseph D.
             Vecchiolla. (Incorporated by reference to Exhibit No.
             10.6(a)(ii) forming part of the Registrant's Report on Form
             10-K (File No. 1-16431) filed with the Securities and
             Exchange Commission under the Securities Exchange Act of
             1934, as amended, for the fiscal year ended December 31,
             2001).
10.6(b)      Agreement and General Release, effective June 4, 2000,
             between the Company and Louis Salamone, Jr. (Incorporated by
             reference to Exhibit No. 10.6 (b) forming part of the
             Registrant's Report on Form 10-Q (File No. 0-28208) filed
             with the Securities and Exchange Commission under the
             Securities Exchange Act of 1934, as amended, for the
             quarterly period ended June 30, 2000).
10.6(c)      Agreement and General Release, dated December 15, 2000,
             between the Company and Derek Ashley (Incorporated by
             reference to Exhibit No. 10.6(c)(ii) forming part of the
             Registrant's Report on Form 10-K (File No. 0-28208) filed
             with the Securities and Exchange Commission under the
             Securities Exchange Act of 1934, as amended, for the fiscal
             year ended December 31, 2000).
10.6(d)      Separation Agreement, effective December 18, 2000, between
             the Company and Scott Brownstein (Incorporated by reference
             to Exhibit No. 10.6(d)(iii) forming part of the Registrant's
             Report on Form 10-K (File No. 0-28208) filed with the
             Securities and Exchange Commission under the Securities
             Exchange Act of 1934, as amended, for the fiscal year ended
             December 31, 2000).
10.7         Form of Registration Rights Agreement (Incorporated by
             reference to Exhibit No. 10.7 forming part of Amendment No.
             3 to the Registrant's Registration Statement on Form S-1
             (File No. 333-00478) filed with the Securities and Exchange
             Commission under the Securities Act of 1933, as amended).
10.8         Applied Graphics Technologies, Inc., 1998 Incentive
             Compensation Plan, as Amended and Restated (Incorporated by
             reference to Exhibit No. 10.8 forming part of Registrant's
             Report on Form 10-Q (File No. 0-28208) filed with the
             Securities and Exchange Commission under the Securities
             Exchange Act of 1934, as amended, for the quarterly period
             ended June 30, 1999).
10.8(a)      Amendment No. 1, dated as of May 8, 2000, to the Applied
             Graphics Technologies, Inc., Amended and Restated 1998
             Incentive Compensation Plan (Incorporated by reference to
             Exhibit No. 10.8(a) forming part of the Registrant's Report
             on Form 10-Q (File No. 0-28208) filed with the Securities
             and Exchange Commission under the Securities Exchange Act of
             1934, as amended, for the quarterly period ended June 30,
             2000).
10.9(a)      Amended and Restated Credit Agreement, dated as of March 10,
             1999, among Applied Graphics Technologies, Inc., Other
             Institutional Lenders as Initial Lenders, and Fleet Bank,
             N.A. (Incorporated by reference to Exhibit No. 99.2 of the
             Registrant's Report on Form 8-K (File No. 0-28208) filed
             with the Securities and Exchange Commission under the
             Securities Exchange Act of 1934, as amended, on March 22,
             1999).
10.9(b)      Amendment No. 1, dated as of June 2, 1999, to the Amended
             and Restated Credit Agreement among Applied Graphics
             Technologies, Inc., Other Institutional Lenders as Initial
             Lenders, and Fleet Bank, N.A. (Incorporated by reference to
             Exhibit No. 10.9(b) forming part of Registrant's Report on
             Form 10-Q (File No. 0-28208) filed with the Securities and
             Exchange Commission under the Securities Exchange Act of
             1934, as amended, for the quarterly period ended June 30,
             1999).
10.9(c)      Amendment No. 2, dated July 28, 1999, to the Amended and
             Restated Credit Agreement among Applied Graphics
             Technologies, Inc., Other Institutional Lenders as Initial
             Lenders, and Fleet Bank, N.A. (Incorporated by reference to
             Exhibit No. 10.9(c) forming part of Registrant's Report on
             Form 10-Q (File No. 0-28208) filed with the Securities and
             Exchange Commission under the Securities Exchange Act of
             1934, as amended, for the quarterly period ended September
             30, 1999).
</Table>

                                        20
<PAGE>

<Table>
<S>     <C>
10.9(d) Amendment No. 3, dated as of July 21, 2000, to the Amended and Restated Credit Agreement among
    Applied Graphics Technologies, Inc., Other Institutional Lenders as Initial Lenders, and Fleet Bank,
    N.A. (Incorporated by reference to Exhibit No. 10.9(d) forming part of the Registrant's Report on
    Form 10-Q (File No. 0-28208) filed with the Securities and Exchange Commission under the Securities
    Exchange Act of 1934, as amended, for the quarterly period ended June 30, 2000).
10.9(e) Amendment No. 4, dated as of August 11, 2000, to the Amended and Restated Credit Agreement among
    Applied Graphics Technologies, Inc., Other Institutional Lenders as Initial Lenders, and Fleet Bank,
    N.A. (Incorporated by reference to Exhibit No. 10.9(e) forming part of the Registrant's Report on
    Form 10-Q (File No. 0-28208) filed with the Securities and Exchange Commission under the Securities
    Exchange Act of 1934, as amended, for the quarterly period ended June 30, 2000).
10.9(f) Fifth Amendment, dated as of July 27, 2001, to the Amended and Restated Credit Agreement by and
    among Applied Graphics Technologies, Inc., the lenders party thereto, and Fleet National Bank, as
    agent. (Incorporated by reference to Exhibit No. 10.9(f) forming part of the Registrant's Report on
    Form 10-Q (File No. 1-16431) filed with the Securities and Exchange Commission under the Securities
    Exchange Act of 1934, as amended, for the quarterly period ended June 30, 2001).
10.9(g) Sixth Amendment, dated March 21, 2002, to the Amended and Restated Credit Agreement by and among
    Applied Graphics Technologies, Inc., the lenders party thereto, and Fleet National Bank, as agent.
    (Incorporated by reference to Exhibit No. 10.9(g) forming part of the Registrant's Report on Form
    10-K (File No. 1-16431) filed with the Securities and Exchange Commission under the Securities
    Exchange Act of 1934, as amended, for the fiscal year ended December 31, 2001).
10.10 Consulting Agreement, dated as of March 1, 2001, by and between the Company and Knollwood
    Associates, LLC. (Incorporated by reference to Exhibit No. 10.10 forming part of the Registrant's
    Report on Form 10-Q (File No. 1-16431) filed with the Securities and Exchange Commission under the
    Securities Exchange Act of 1934, as amended, for the quarterly period ended March 31, 2001).
</Table>

     (b) The Registrant did not file any reports on Form 8-K during the quarter
         ended March 31, 2002.

                                        21
<PAGE>

                                   SIGNATURES

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

                                          APPLIED GRAPHICS TECHNOLOGIES, INC.
                                          (Registrant)

<Table>
<S>                                                      <C>
Date: May 15, 2002                                                     By: /s/ JOSEPH D. VECCHIOLLA
                                                           ----------------------------------------------------
                                                                           Joseph D. Vecchiolla
                                                                  President and Chief Operating Officer

Date: May 15, 2002                                                       /s/ KENNETH G. TOROSIAN
                                                           ----------------------------------------------------
                                                                           Kenneth G. Torosian
                                                                          Senior Vice President
                                                                         Chief Financial Officer
                                                                      (Principal Financial Officer)
</Table>

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