<PAGE>
 
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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                   Form 10-Q
 
                               ----------------
 
(Mark One)
 
  [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
 
                 For the quarterly period ended March 31, 1999
 
                                      OR
 
  [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
 
                   For the transition period from     to
 
                        Commission File Number 0-12954
 
                               ----------------
 
                       CADMUS COMMUNICATIONS CORPORATION
            (Exact name of registrant as specified in its charter)
 
              Virginia                                 54-1274108
                                                    (I.R.S. Employer
   (State or other jurisdiction of               Identification Number)
   incorporation or organization)
 
                       6620 West Broad Street, Suite 240
                           Richmond, Virginia 23230
          (Address of principal executive offices including zip code)
 
              Registrant's telephone number, including area code:
                                (804) 287-5680
 
  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 the number of shares outstanding of each of the issuer's classes of
common stock, as of April 30, 1999.
 
<TABLE>
<CAPTION>
                                                                  Outstanding at
       Class                                                      April 30, 1999
       -----                                                      --------------
     <S>                                                          <C>
     Common Stock, $.50 Par Value................................   9,007,848
</TABLE>
 
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<PAGE>
 
               CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                           Page
                                                                          Number
                                                                          ------
 <C>      <C>     <S>                                                     <C>
 Part I.  Financial Information
 
          Item 1. Financial Statements
 
                  Condensed Consolidated Balance Sheets--March 31, 1999
                  (unaudited) and June 30, 1998........................      3
 
                  Condensed Consolidated Statements of Income
                  (unaudited)--Three and Nine Month Periods Ended March
                  31, 1999 and 1998....................................      4
 
                  Condensed Consolidated Statements of Cash Flows
                  (unaudited)--Nine Month Period Ended March 31, 1999
                  and 1998.............................................      5
 
                  Notes to Condensed Consolidated Financial Statements
                  (unaudited)..........................................      6
 
          Item 2. Management's Discussion and Analysis of Financial
                  Condition and Results of Operations..................      9
 
          Item 3. Quantitative and Qualitative Disclosures about Market
                  Risk.................................................     15
 
 Part II. Other Information
 
          Item 2. Changes in Securities and Use of Proceeds............     16
 
          Item 6. Exhibits and Reports on Form 8K......................     16
</TABLE>
 
                                       2
<PAGE>
 
                         PART I. FINANCIAL INFORMATION
 
                          ITEM 1. FINANCIAL STATEMENTS
 
               CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
 
                     (In thousands, except per share data)
 
<TABLE>
<CAPTION>
                                                            March 31,  June 30,
                                                              1999       1998
                                                           ----------- --------
                                                           (Unaudited)
<S>                                                        <C>         <C>
ASSETS
Current assets:
  Cash and cash equivalents...............................  $    281   $    --
  Accounts receivable, less allowance for doubtful
   accounts...............................................    65,454     70,571
  Inventories.............................................    27,978     25,610
  Deferred income taxes...................................     5,210      3,832
  Prepaid expenses and other..............................     3,892      4,107
                                                            --------   --------
    Total current assets..................................   102,815    104,120
Property, plant, and equipment (net of accumulated
 depreciation of $111,896 at March 31, 1999, and $107,269
 at June 30, 1998)........................................   126,907    133,836
Goodwill and other intangibles, net.......................    50,646     48,158
Other assets..............................................     4,861      5,638
                                                            --------   --------
TOTAL ASSETS..............................................  $285,229   $291,752
                                                            ========   ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Short-term borrowings...................................  $ 12,170   $  2,100
  Current maturities of long-term debt....................     6,089      6,431
  Accounts payable........................................    35,577     41,981
  Accrued expenses........................................    20,202     18,293
  Restructuring reserve...................................     1,136      4,378
                                                            --------   --------
    Total current liabilities.............................    75,174     73,183
Long-term debt, less current maturities...................    65,214     93,224
Other long-term liabilities...............................    10,510      8,867
Deferred income taxes.....................................    13,788      6,662
Shareholders' equity:
  Common stock ($.50 par value; authorized shares--
   16,000,000 shares; issued and outstanding shares--
   7,846,000 at March 31, 1999, and 7,921,000 at June 30,
   1998) .................................................     3,923      3,961
  Capital in excess of par value..........................    52,292     53,532
  Retained earnings.......................................    64,328     52,323
                                                            --------   --------
    Total shareholders' equity............................   120,543    109,816
                                                            --------   --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................  $285,229   $291,752
                                                            ========   ========
</TABLE>
 
     See accompanying Notes to Condensed Consolidated Financial Statements.
 
                                       3
<PAGE>
 
               CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
                     (In thousands, except per share data)
 
                                  (Unaudited)
 
<TABLE>
<CAPTION>
                                            Three Months     Nine Months Ended
                                           Ended March 31,       March 31,
                                          ------------------ ------------------
                                            1999      1998     1999      1998
                                          --------  -------- --------  --------
<S>                                       <C>       <C>      <C>       <C>
Net sales................................ $100,001  $101,234 $308,596  $289,644
                                          --------  -------- --------  --------
Operating expenses:
  Cost of sales..........................   80,595    77,512  246,994   223,706
  Selling and administrative.............   14,073    16,207   42,221    45,933
  Net gain on divestitures...............   (9,521)      --    (9,521)      --
                                          --------  -------- --------  --------
                                            85,147    93,719  279,694   269,639
                                          --------  -------- --------  --------
Operating income.........................   14,854     7,515   28,902    20,005
                                          --------  -------- --------  --------
Interest and other expenses:
  Interest...............................    1,878     1,771    6,085     5,564
  Other, net.............................      737       419    1,387     1,060
                                          --------  -------- --------  --------
                                             2,615     2,190    7,472     6,624
                                          --------  -------- --------  --------
Income before income taxes...............   12,239     5,325   21,430    13,381
Income taxes.............................    4,712     2,050    8,251     5,152
                                          --------  -------- --------  --------
Net income............................... $  7,527  $  3,275 $ 13,179  $  8,229
                                          ========  ======== ========  ========
Earnings per share--basic:
  Net income per share................... $    .96  $    .42 $   1.67  $   1.05
                                          ========  ======== ========  ========
  Weighted-average common shares out-
   standing..............................    7,835     7,859    7,872     7,841
                                          ========  ======== ========  ========
Earnings per share--diluted:
  Net income per share................... $    .94  $    .40 $   1.63  $   1.01
                                          ========  ======== ========  ========
  Weighted-average common shares out-
   standing..............................    7,968     8,176    8,073     8,140
                                          ========  ======== ========  ========
Cash dividends per common share.......... $    .05  $    .05 $    .15  $    .15
                                          ========  ======== ========  ========
</TABLE>
 
 
     See accompanying Notes to Condensed Consolidated Financial Statements.
 
                                       4
<PAGE>
 
               CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                 (In thousands)
 
                                  (Unaudited)
 
<TABLE>
<CAPTION>
                                                           Nine Months Ended
                                                               March 31,
                                                           ------------------
                                                             1999      1998
                                                           --------  --------
<S>                                                        <C>       <C>
Operating Activities
Net income................................................ $ 13,179  $  8,229
Adjustments to reconcile net income to net cash provided
 by operating activities:
  Depreciation and amortization...........................   14,326    13,608
  Net gain on divestitures................................   (9,521)      --
  Other, net..............................................    6,461     3,152
                                                           --------  --------
                                                             24,445    24,989
                                                           --------  --------
Changes in assets and liabilities, excluding debt and
 effects of acquisitions and dispositions:
  Accounts receivable, net................................   (4,523)      655
  Inventories.............................................   (4,846)   (4,555)
  Accounts payable and accrued expenses...................   (8,928)   11,511
  Restructuring reserve (due to cash payments)............   (1,236)   (3,648)
  Other current assets and liabilities....................     (142)      115
  Other long-term liabilities (due to pension plan
   payments)..............................................      --     (1,148)
  Other, net..............................................   (1,252)     (668)
                                                           --------  --------
                                                            (20,927)    2,262
                                                           --------  --------
Net cash provided by operating activities.................    3,518    27,251
                                                           --------  --------
Investing Activities
Purchases of property, plant and equipment................  (12,340)  (28,582)
Proceeds from sale of property, plant and equipment.......      962     4,557
Payments for business acquired............................   (5,192)      --
Proceeds from divested businesses.........................   34,971       --
Other, net................................................     (295)      --
                                                           --------  --------
Net cash provided by (used in) investing activities.......   18,106   (24,025)
                                                           --------  --------
Financing Activities
Proceeds from short-term borrowings.......................   10,070     3,445
Repayment of long-term revolving credit facility..........  (23,500)   (2,500)
Repayment of long-term borrowings.........................   (4,852)   (3,423)
Dividends paid............................................   (1,183)   (1,176)
Repurchase and retirement of common stock.................   (3,864)     (118)
Issuance of stock.........................................    1,986       --
Proceeds from exercise of stock options...................      --        581
                                                           --------  --------
Net cash used in financing activities ....................  (21,343)   (3,191)
                                                           --------  --------
Increase in cash and cash equivalents.....................      281        35
Cash and cash equivalents at beginning of period..........      --        184
                                                           --------  --------
Cash and cash equivalents at end of period................ $    281  $    219
                                                           ========  ========
</TABLE>
 
     See accompanying Notes to Condensed Consolidated Financial Statements.
 
                                       5
<PAGE>
 
              CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
 
  1. The accompanying unaudited condensed consolidated financial statements of
Cadmus Communications Corporation and Subsidiaries have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting, and with applicable quarterly reporting regulations of the
Securities and Exchange Commission. They do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements and, accordingly, should be read in conjunction
with the consolidated financial statements and related footnotes included in
the Company's annual report on Form 10-K for the fiscal year ended June 30,
1998.
 
  In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) considered necessary for a fair presentation of interim
financial information have been included. The results of operations for the
period ended March 31, 1999, are not necessarily indicative of results for the
entire fiscal year.
 
  2. Basic earnings per share is computed on the basis of weighted-average
common shares outstanding from the date of issue. Diluted earnings per share
is computed on the basis of weighted-average common shares outstanding plus
common shares contingently issuable upon exercise of dilutive stock options.
Incremental shares for dilutive stock options, computed under the treasury
stock method, were 133,000 and 317,000 for the quarters ended March 31, 1999
and 1998, respectively.
 
  3. In August 1998, the Board of Directors approved an extension to August
31, 1999, of its fiscal 1997 stock repurchase plan. Under the plan, the
Company is authorized to repurchase up to 750,000 shares of its common stock.
As of March 31, 1999, approximately 297,000 shares have been repurchased under
this plan, including approximately 202,000 shares repurchased during fiscal
1999.
 
  4. Components of inventories at March 31, 1999, and June 30, 1998, were as
follows (in thousands):
 
<TABLE>
<CAPTION>
                                                              March 31, June 30,
                                                                1999      1998
                                                              --------- --------
   <S>                                                        <C>       <C>
   Raw materials and supplies................................  $ 5,967  $ 4,841
   Work in process:
     Materials...............................................    9,974    6,567
     Other manufacturing costs...............................    9,168   11,331
   Finished Goods............................................    2,869    2,871
                                                               -------  -------
   Inventories...............................................  $27,978  $25,610
                                                               =======  =======
</TABLE>
 
  5. On March 1, 1999, the Company consummated the sale of certain assets and
liabilities related to the Company's Financial Communications ("CFC") product
line. Pursuant to the terms of the Asset Purchase Agreement dated February 20,
1999, between the Company and R.R. Donnelley & Sons Company, the Company sold
certain of the assets and was relieved of certain of the liabilities which
were employed by the Company in operating CFC. The assets sold were specific
to CFC's business of marketing, selling and distribution of financial printing
services, mutual fund printing services, shareholder communications printing
services, and activities related thereto.
 
  The Company recorded a gain on the sale of CFC of approximately $12.3
million ($7.5 million or $.94 per diluted share, after taxes). The initial
purchase price for the business was $35 million in cash. The net book value of
CFC was approximately $14.4 million. In connection with the sale, the Company
recorded liabilities for certain purchase price adjustments (approximately
$1.9 million), severance payments, and other transaction costs and recorded
impairments of certain long lived assets as a result of the sale ($2.3
million).
 
                                       6
<PAGE>
 
              CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  The purchase price was established through arms-length negotiations among
the parties. The funds received in the sale were used to pay down debt.
 
  6. On February 26, 1999, the Company completed the sale of its Custom
Publishing product line ("Custom") to Pohly & Partners, Inc. The sales price
was approximately $2.1 million comprised of cash and a note. The Company
recorded a loss on the sale of approximately $2.8 million (approximately $1.7
million or $.22 per share, after taxes).
 
  7. On April 1, 1999, the Company consummated the purchase of all of the
outstanding stock of Melham Holdings, Inc. ("Melham"), a Delaware corporation.
The purchase was pursuant to the terms of a Stock Purchase Agreement dated
April 1, 1999, (the "Melham Agreement"), by and among Cadmus Communications
Corporation, Melham U.S. Inc., Purico (IOM) Limited, and Paul F. Mack.
Immediately prior to consummation of the transactions contemplated by the
Melham Agreement, Melham U.S. Inc., Purico (IOM) Limited, and Paul F. Mack
(collectively the "Sellers") owned 100% of Melham Holdings Inc.
 
  The principal operating subsidiary of Melham is Mack Printing Company
("Mack"), a full-service printer that produces a wide variety of short-to
medium-run magazines and journals generally for customers in the mid-Atlantic
and northeast regions of the United States. Melham indirectly owns 100% of
Mack through Melham, Inc., a Delaware corporation. In connection with the
consummation of the transactions contemplated by the Melham Agreement, Mack
repurchased approximately 15% of its then-outstanding equity securities from
other securityholders and repaid certain indebtedness to such securityholders.
 
  The purchase price was approximately $201 million and consisted of the
following: $70.0 million in bridge financing notes issued to the Sellers,
$40.0 million in bridge financing notes issued to affiliates of J. P. Morgan
and First Union National Bank, approximately $66 million in cash,
approximately $6.4 million of newly issued junior subordinated notes of the
Company and approximately 1.2 million shares of the Company's common stock
(valued at approximately $18.6 million). The Company expects to repay in full
$110 million in bridge financing notes with the proceeds of $125 million of
senior subordinated notes that the Company plans to issue in its fiscal fourth
quarter. The senior subordinated notes are anticipated to have a 10 year term.
In order to satisfy a condition to closing under the Melham Agreement, the
Company elected Mr. Nathu R. Puri, a majority shareholder of Melham U.S. Inc.
and Purico (IOM) Limited, to the Board of Directors of the Company to serve
until the next annual meeting of shareholders of the Company.
 
  The purchase price was established through arms-length negotiations among
the parties.
 
  The facilities of Mack include its headquarters in Easton, Pennsylvania with
manufacturing facilities located in Easton, Ephrata, and East Stroudsburg,
Pennsylvania, and Baltimore, Maryland. The Company intends to continue to use
these facilities for the same or similar purposes.
 
  8. On April 1, 1999, the Company entered into a new $200 million senior
credit facility ("senior credit facility") with various banks and financial
institutions, including Wachovia Bank, N. A., NationsBank, N. A., and First
Union National Bank. The senior facility consists of a $145 million, five-year
revolving credit facility and a $55 million, five-year amortizing term loan
facility.
 
  The proceeds of the loans under the senior credit facility have been and
will be used (1) to refinance indebtedness under the former senior credit
facility and certain other indebtedness, (2) to finance a portion of the
Melham acquisition and related transaction expenses, (3) to finance permitted
acquisitions and (4) for general corporate purposes, including working
capital.
 
                                       7
<PAGE>
 
              CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  The senior credit facility is jointly and severally guaranteed by each of
the Company's present and future significant subsidiaries and is secured by a
pledge of all of the capital stock of present and future significant
subsidiaries.
 
  The revolving credit facility under the senior credit facility will
terminate on March 31, 2004. The term loan facility under the senior credit
facility will be amortized in quarterly installments beginning June 30, 1999
and will also mature on March 31, 2004.
 
  Interest on the senior credit facility will be a function of LIBOR. The
senior credit facility requires the Company to pay unused commitment fees with
respect to the revolving credit facility. The unused commitment fee for an
initial period of approximately seven and one-half months is 0.50%.
Thereafter, the unused commitment fee will be determined by reference to total
debt to EBITDA ratio as it exists from time to time.
 
  The senior credit facility contains certain covenants regarding debt to
EBITDA (as defined), fixed charged coverage and net worth, and contains other
restrictions including limitations on additional borrowings, and the
acquisition, disposition and securitization of assets.
 
  9. On April 1, 1998, the Company acquired Germersheim, Inc., an Atlanta-
based national point of purchase marketing service provider, for $13.7
million. Of $11 million in cash payments made during fiscal 1998, $2 million
were held in escrow at June 30, 1998, as contingent consideration only to be
released if specified performance levels are met during each of the next two
years. On August 31, 1998, the Company, the seller and the Escrow Agent
amended certain terms and conditions of the purchase and escrow agreements
related to this acquisition. Pursuant to these amendments, the Company issued,
in the name of the seller, 93,500 shares of the Company's common stock, at an
aggregate market value of $2 million, and delivered these shares to the Escrow
Agent in exchange for the $2 million of cash held in escrow. These "Escrow
Shares" are subject to certain terms and restrictions, as outlined in the
amended purchase and escrow agreements, and are held in escrow as of March 31,
1999, as contingent consideration, to be released only if specified
performance levels are met during each of the next two years.
 
  10. During the fourth quarter of fiscal 1998, the Company recorded a one-
time restructuring charge of $4.0 million ($2.5 million net of tax) related to
the integration of Germersheim, Inc. with its existing point of purchase
operations. The charge included costs to consolidate facilities, eliminate
duplicate assets and provide severance costs. These actions were initiated in
fiscal 1998 and are substantially complete. The restructuring reserve balance
remaining at March 31, 1999, totaled $0.9 million, and relates to lease
termination costs and excess rent payments. Management believes that the
remaining restructuring reserve is adequate to complete the restructuring
plan.
 
  During the fourth quarter of fiscal 1997, the Company adopted a
restructuring plan that impacted a number of its operations. The plan included
the closure of certain facilities; realignment of certain management,
production and administrative personnel; write-down of certain tangible and
intangible assets; and exiting certain nonstrategic customer relationships and
product lines. All restructuring actions were taken by the end of fiscal 1998.
The restructuring reserve balance remaining at March 31, 1999, totaled $0.3
million, and relates primarily to continuing excess rent and lease termination
costs related to the restructuring. Management believes the remaining
restructuring reserve is adequate to cover such costs.
 
                                       8
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS
 
General
 
  Cadmus Communications Corporation is a leading printer and producer of
scientific, technical and medical (STM) journals, special interest magazines,
point-of-purchase materials and specialty packaging materials. The Company is
organized around two business sectors: Professional Communications, serving
customers that publish information, and Marketing Communications, serving
customers who convey marketing messages. In the third quarter of its fiscal
year 1999, Cadmus divested its Financial Communications and Custom Publishing
businesses.
 
Organizational Structure
 
  Our current organizational structure was effected during fiscal 1997 when we
announced a major restructuring plan. The plan enabled us to exit or reshape
our businesses that were not performing or were not core to our strategy, and
to create a more efficient and cost effective organizational structure. In
conjunction with the restructuring, we reorganized our organizational and
operational structure to form two sectors: Cadmus Professional Communications
and Cadmus Marketing Communications. Our previous organizational structure
consisted of the Periodicals, Graphic Communications, Marketing, and
Publishing groups.
 
r  Cadmus Professional Communications provides a full range of composition,
editorial, production, distribution, and related services for publishers of
STM journals, magazines, association publications and other commercial
publications. Cadmus Marketing Communications provides commercial printing,
graphic solutions, print and broadcast advertising, direct marketing, catalog
and collateral design, point of purchase, specialty packaging, promotional
printing, fulfillment, software duplication and distribution, and interactive
services to customers who convey marketing messages.
 
Results of Operations
 
  The following table presents the major components from the Condensed
Consolidated Statements of Income as a percent of net sales for the three and
nine month periods ended March 31, 1999 and 1998:
 
<TABLE>
<CAPTION>
                                       Three Months Ended    Nine Months Ended
                                            March 31,            March 31,
                                       --------------------  ------------------
                                         1999       1998       1999      1998
                                       ---------  ---------  --------  --------
   <S>                                 <C>        <C>        <C>       <C>
   Net sales..........................     100.0%     100.0%    100.0%    100.0%
   Cost of sales......................      80.6       76.6      80.0      77.2
                                       ---------  ---------  --------  --------
   Gross profit.......................      19.4       23.4      20.0      22.8
   Selling and administrative.........      14.1       16.0      13.7      15.9
   Net gain on divestitures...........      (9.5)       --       (3.1)      --
                                       ---------  ---------  --------  --------
   Operating income...................      14.8        7.4       9.4       6.9
   Interest expense...................       1.9        1.7       2.0       1.9
   Other expenses, net................       0.7        0.4       0.4       0.4
                                       ---------  ---------  --------  --------
   Income before taxes................      12.2        5.3       7.0       4.6
   Income taxes.......................       4.7        2.0       2.7       1.8
                                       ---------  ---------  --------  --------
   Net income.........................       7.5%       3.3%      4.3%      2.8%
                                       =========  =========  ========  ========
</TABLE>
 
                                       9
<PAGE>
 
Comparison of Third Fiscal Quarter of 1999 with Third Fiscal Quarter of 1998
 
 Net Sales
 
  Net sales for the third quarter of fiscal 1999 were $100.0 million, down
1.2% from sales of $101.2 million in the third quarter of fiscal 1998. The
decline in third quarter sales was driven primarily by lower sales from our
financial communications and custom publishing product lines which were
divested on March 1, 1999, and February 26, 1999, respectively. Net sales
declines from divested operations more than offset the addition of Germershiem
and strong growth in our packaging and promotional printing and graphic
solutions product lines. Adjusted for the acquisition of Germersheim, Inc.,
the divestitures of our financial communications and custom publishing product
lines and the estimated impact of paper price changes, net sales growth was
approximately 4.7% for the quarter ended March 31, 1999.
 
  In the Professional Communications sector, fiscal third quarter net sales
rose by 3.3%. Adjusted for lower paper prices, third quarter net sales rose
5.0% compared to the same period last year. This increase was primarily
attributable to net sales growth of 8.6% in the third quarter of fiscal 1999
in our STM journal markets, when adjusted for lower paper prices. This growth
was partially offset by an 8.3% decline in special interest magazine net
sales, due principally to our decision to discontinue servicing certain non-
strategic magazine accounts in fiscal 1998.
 
  Net sales for the Marketing Communications sector declined 5.7% for the
third quarter of fiscal 1999. This reduction was due principally to lower
sales in our financial communications and custom publishing businesses, which
we divested in the third quarter of fiscal year 1999. Adjusted for the
acquisition of Germersheim and the divestitures of our financial
communications and custom publishing product lines, net sales for the
Marketing Communications sector increased by 4.1% for the third quarter of
fiscal 1999. This increase was led by sales growth of 33.8% and 4.8%,
respectively, for our graphic solutions and specialty packaging and
promotional printing product lines. These increases were generally
attributable to the addition of new clients, increased work from existing
clients, and the enhancement of manufacturing and sales capacity within these
businesses. The acquisition of certain assets from Beacon Press in October
1998 also contributed to the increase in this year's third quarter results.
 
 Gross Profit
 
  Our gross profit margin declined to 19.4% of net sales for the third quarter
of fiscal 1999 compared to 23.4% for the same period of fiscal 1998. This
decrease was primarily attributable to several factors including: (1) the
impact of lower margins in our financial communication product line; (2) lower
net sales in our custom publishing product line, and (3) higher costs and
certain production inefficiencies associated with the integration of
Germersheim into our existing point-of-purchase product line. Adjusted for the
divested financial communications and custom publishing product lines, our
gross profit margin was 20.4% in the third quarter compared to 21.8% for the
prior year.
 
 Selling and Administrative Expenses
 
  Selling and administrative expenses expressed as a percentage of net sales
declined to 14.1% in the third quarter of fiscal 1999 compared to 16.0% for
the same period of fiscal 1998. This improvement was largely attributable to
better leverage from top-line sales growth, continued aggressive cost
containment, lower sales and administrative costs in our point of purchase
product line resulting from the integration of Germersheim and lower incentive
compensation and discretionary benefits reflecting lower than anticipated
quarterly performance.
 
 Operating Income
 
  Operating income rose 97.6% to $14.9 million in the third quarter of fiscal
1999 compared to $7.5 million in the same period of fiscal 1998. Adjusted for
the $9.5 million net pre-tax gain from the divestitures of our
 
                                      10
<PAGE>
 
financial communications and custom publishing businesses, and the results of
operations of the divested businesses, operating income rose 22.9% to $6.8
million for the third quarter of fiscal 1999.
 
 Interest Expense and Income Taxes
 
  Interest expense increased $0.1 million for the third quarter of fiscal 1999
compared to the same period last year due to higher interim debt levels
resulting primarily from acquisitions and additional working capital
requirements.
 
  The effective income tax rate was 38.5% for the third quarter of fiscal 1999
and fiscal 1998.
 
Comparison of Nine Months Ended March 31, 1999 with Nine Months Ended March
31, 1998
 
 Net Sales
 
  Net sales for the first nine months of fiscal 1999 increased 6.5% to $308.6
million from $289.6 million for the same period in fiscal 1998. The increase
for the nine-month period was driven primarily by growth from our STM journal,
graphic solutions and specialty packaging and promotional printing product
lines and the inclusion of Germersheim's point-of-purchase operations in the
first nine months of fiscal 1999. Adjusted for the acquisition of Germersheim
and the divestitures of our financial communications and custom publishing
product lines, net sales growth was 5.8% for the nine-month period ended March
31, 1999.
 
  Professional Communications sector net sales rose 2.4% to $154.3 million
during the first nine months of fiscal 1999. This increase was primarily
attributable to net sales growth in our STM journal product line, which was
partially offset by lower magazine net sales. This decline was due principally
to our decision to discontinue serving certain non-strategic magazine accounts
in fiscal 1998.
 
  Net sales for the Marketing Communications sector increased by 11.7% for the
first nine months of fiscal 1999, from $138.9 million to $155.1 million. This
increase was primarily driven by sales growth of 28.5% and 19.4% in our
graphic solutions and specialty packaging and promotional printing product
lines, respectively, and the inclusion of Germersheim's point-of-purchase
operations in the first nine months of fiscal 1999. These increases in net
sales were generally attributable to the addition of new clients, increased
work from existing clients and the expansion of manufacturing and selling
capacity within these businesses. The acquisition of certain assets from
Beacon Press in October 1998 also contributed to the growth in our graphic
solutions product line. These increases were partially offset by lower net
sales from our financial communications and custom publishing product lines,
which were divested in the third quarter of fiscal 1999.
 
 Gross Profit
 
  Our gross profit margin declined to 20.0% for the first nine months of
fiscal 1999, compared to 22.8% for the same period of fiscal 1998. This
decline was attributable to several factors, including: (1) the impact of
lower margins in our financial communications product line; (2) lower net
sales in our custom publishing product line; and (3) higher costs and certain
production inefficiencies associated with the integration of Germersheim into
our existing point-of-purchase product line. Adjusted for the divestitures of
our financial communications and custom publishing product lines, gross profit
margin was 20.3% for the first nine months of fiscal 1999 compared to 21.2%
for the same period last year.
 
 Selling and Administrative Expenses
 
  Selling and administrative expenses expressed as a percentage of net sales
declined to 13.7% in the first nine months of fiscal 1999 from 15.9% for the
same period of fiscal 1998. This improvement was largely attributable to net
sales growth, continued aggressive cost containment, lower sales and
administrative costs in our point-of-purchase product line resulting from the
integration of Germersheim and lower incentive compensation and discretionary
benefits reflecting lower than anticipated year-to-date performance.
 
 
                                      11
<PAGE>
 
 Operating Income
 
  Operating income rose 44.5% for the first nine months of fiscal 1999 to
$28.9 million compared to $20.0 million in the same period of fiscal 1998.
Adjusted for the $9.5 million net pre-tax gain on the divestitures of our
financial communications and custom publishing product lines, and the
operating results of these product lines, our operating income rose 33.5% to
$20.6 million for the first nine months of fiscal 1999 compared to the same
period last year.
 
Interest Expense and Income Taxes
 
  Interest expense increased $0.5 million for the first nine months of fiscal
1999 over the same period last year due to higher interim debt levels
resulting primarily from acquisitions and additional working capital
requirements.
 
  The effective income tax rate remained unchanged at 38.5% for the first nine
months of fiscal 1999 and fiscal 1998.
 
Liquidity and Capital Resources
 
 Operating Activities
 
  Net cash provided by operating activities was $3.5 million for the first
nine months of fiscal 1999, as compared to $27.3 million for the first nine
months of 1998, representing a $23.8 million reduction in cash provided by
operating activities. This change was primarily due to an increase in working
capital demands in the first half of fiscal 1999, which included: (1) seasonal
increases in receivables due to higher net sales over the prior quarter and
pre-billings to customers; (2) seasonal increases to work in process and paper
inventory levels; (3) final payments on certain production equipment purchased
in late fiscal 1998; and (4) the payment of fiscal year 1998 sales and
management incentives. The decrease in cash provided by operating activities
as compared to the prior year was partially offset by a reduction in cash
outflows related to our restructuring plans announced in the fourth quarters
of fiscal years 1998 and 1997 and by a decrease in the required cash
contribution to fund our pension plan.
 
 Investing Activities
 
  Net cash provided by (used in) investing activities was $18.1 million for
the first nine months of fiscal 1999, compared to $(24.0) million in the first
nine months of 1998. This increase was due primarily to the receipt of $35.0
million in proceeds from the sale of the financial communications product
line, offset by an aggregate of $5.2 million paid for the purchase of certain
printing assets of Beacon Press and the acquisition of Dynamic Diagrams, Inc.,
a web information architecture firm. Capital expenditures for the first nine
months of fiscal 1999 were $12.3 million compared to $28.6 million in the
prior period, and primarily consisted of investments in new presses and new
business and manufacturing systems.
 
 Financing Activities
 
  Net cash used in financing activities was $21.3 million for the first nine
months of fiscal 1999 compared to $3.2 million for the same period of the
prior year. We reduced borrowings by $18.3 million in the first nine months of
fiscal 1999. Additional uses of funds include the repurchase of shares of our
common stock for $3.9 million, and dividend payments of $1.2 million.
 
  Total debt at March 31, 1999 was $83.5 million, down from $101.8 million at
June 30, 1998, as proceeds from the sale of the financial communications
product line partially offset an increase in working capital requirements
described above. As a result of the decreased debt level, our debt to total
capital ratio decreased to 40.9% at March 31, 1999, from 48.1% at June 30,
1998.
 
 
                                      12
<PAGE>
 
  On April 1, 1999, we entered into a new five year, $200.0 million senior
credit facility. Initial borrowings under this facility totaled approximately
$145.0 million and were used to pay off borrowings under our former senior
credit facility, to repay certain indebtedness of Mack and to pay the cash
purchase price to the former shareholders of Mack.
 
  Our primary cash requirements will be for debt service, capital expenditures
and working capital. Our primary sources of liquidity will be cash flow
provided by operations and borrowings under our senior credit facility. We
believe that these funds will provide us with sufficient liquidity and capital
resources to meet our anticipated debt service requirements, capital
expenditures and working capital needs through fiscal 2000. We cannot assure
you, however, that our business will generate sufficient cash flow from
operations or that future borrowings will be available under our senior credit
facility or otherwise to enable us to do so. Our future operating performance
and our ability to service or refinance the Notes or to service, extend or
refinance our senior credit facility depends on our ability to implement our
business strategy and on general economic, financial, competitive,
legislative, regulatory and other factors, many of which are beyond our
control.
 
Year 2000 Issue
 
  Many computer systems in use today were designed and developed using two
digits, rather than four, to specify the year. As a result, such systems will
recognize the year 2000 as "00." This could cause many computer applications
to fail completely or to create erroneous results unless corrective measures
are taken. We recognize the need to ensure that our operations will not be
adversely impacted by Year 2000 software failures and are in the process of
preparing for the Year 2000. We are engaged in an ongoing analysis and
remediation of our Year 2000 exposure. Mack, which we acquired on April 1,
1999, was engaged in its own analysis of its Year 2000 exposure at the time we
acquired them. We are actively continuing the process that they started and
are aggressively integrating Mack's Year 2000 response model into our model,
which is discussed below. Because each company's Year 2000 model has operated
separately up to this point, we have presented separate discussions of each
below.
 
 Cadmus
 
  In April 1998, we designated a formal Year 2000 monitoring team to
coordinate, identify, evaluate and implement changes to computer systems and
applications necessary to achieve a Year 2000 date conversion with minimal
effect on customers or disruption to business operations. Cadmus' Year 2000
response model includes the following four phases, each of which are explained
more fully below:
 
  . problem awareness;
 
  . inventory;
 
  . assessment; and
 
  . remediation, testing and implementation.
 
  Problem Awareness: During the problem awareness phase, we held training
sessions for management on potential effects of the change to the year 2000
and notified our employees that we were aware of and addressing the problem.
This phase was completed in October 1998.
 
  Inventory: During this phase, the monitoring team conducted site level
inventories of systems and equipment to survey assets and software for
potential compliance problems. Information technology systems and operational
systems (presses, environmental controls, telecommunications equipment, etc.)
were addressed. These continually updated inventories formed the basis of the
site level remediation, testing and implementation efforts. All formal system
inventories were completed by November 1998.
 
  Assessment: In the assessment phase, we analyzed the results of our
inventories and concluded that our risk of having non-compliant systems was
low. The assessment phase was completed by November 1998.
 
                                      13
<PAGE>
 
  Remediation, Testing and Implementation: This phase began in January 1999.
During this phase, we are implementing planned financial and administrative
system upgrades and Year 2000 compliant replacements. In addition, our manu-
facturing systems also are being made compliant. Programming modifications are
currently being tested and will be placed back into production when the test-
ing is complete. We expect to substantially complete all remediation, testing
and implementation on or before June 30, 1999, with the exception of implemen-
tation and testing of some systems (primarily embedded components) for which
vendors are currently developing upgrades. We expect those systems to be com-
pliant by July 31, 1999.
 
  We believe that our most reasonably likely worst case Year 2000 scenario may
involve non-compliant vendors or non-compliant customers who may experience
business outages. Accordingly, we are currently communicating with all third
parties with which we have a material relationship (including vendors,
financial institutions and customers) and identifying potentially non-
compliant parties. We then will compile a list of non-compliant parties for
the purpose of assessing the degree of exposure and risk. Contingency plans
specific to those parties (including, with respect to vendors, alternative
vendor relationships) will be developed at that time. This process is expected
to be completed by July 31, 1999.
 
  We estimate the total cost of achieving Year 2000 compliance to be $0.4
million to $0.6 million in excess of our normal software upgrades and
replacements. Some of these costs have already been incurred during fiscal
1998. The remainder will be incurred in fiscal 1999 and will be expensed
through operations.
 
 Mack
 
  We have substantially completed the inventory and assessment process for the
Mack entities and have made progress in their remediation.
 
  Prior to our acquisition of Mack, they recognized the need to ensure that
their business operations would not be adversely affected by the Year 2000 and
were aware of the time-sensitive nature of the problem. Mack has assessed and
we are completing our assessment of how Mack may be impacted by the Year 2000.
Mack had formulated and commenced a comprehensive plan to address all known
aspects of the Year 2000 problem: information systems, production and
facilities equipment, suppliers and customers. We are currently making
inquiries of Mack's customers and suppliers to assess their Year 2000
readiness. We are also in the process of testing Mack's information technology
systems, as well as all other systems and verifying that vendor-supplied or
outsourced systems will be Year 2000 compliant. Any systems that are not
compliant will be repaired or replaced. Mack executives have represented that
they have substantially completed their assessment of how Mack may be
impacted, have completed the development of plans to address the testing and
remediation of their systems and have completed more than half of their
testing and remediation activities. In collaboration with former Mack
executives, we have estimated that Mack will complete this process prior to
October 1999.
 
  The identifiable costs of assessing and modifying Mack's computer software
and hardware and its production facilities and equipment, incurred as of March
31, 1999, were $1.8 million. The estimated costs yet to be incurred are $2.0
million. In conjunction with our purchase of Mack, $2.0 million of the
purchase price has been placed in escrow to cover the expected Year 2000
costs. The current assessment (and therefore the escrow) does not include
costs related to software and hardware replaced in the normal course of
business other than replacements accelerated due to the Year 2000 issue.
 
  We believe that the most reasonably likely worst-case Year 2000 scenario for
Mack may involve non-compliant vendors or non-compliant customers who may
experience business outages. Accordingly, we are currently communicating with
all third parties with which Mack has a material relationship (including
vendors, financial institutions and customers) and identifying potentially
non-compliant parties. We will compile a list of non-compliant parties for the
purpose of assessing the degree of exposure and risk. Contingency plans
specific to those parties (including, with respect to vendors, alternative
vendor relationships) will be developed at that time. We expect to complete
this entire process for Mack prior to November 1999.
 
 
                                      14
<PAGE>
 
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
  There have been no material changes to the information concerning the
Company's "Quantitative and Qualitative Disclosures about Market Risk" as
previously reported in the Company's Report on Form 10-K for the year ended
June 30, 1998.
 
                                       15
<PAGE>
 
                          PART II--OTHER INFORMATION
 
Item 2. Changes in Securities and Use of Proceeds.
 
(c) On February 1, 1999, the Company issued 16,506 shares of its common stock
    to Paul Kahn and 16,506 shares of its common stock to Krzysztof Lenk. The
    common stock of the Company was issued to Mr. Kahn and Mr. Lenk in
    connection with the purchase by Cadmus Journal Services, Inc. ("CJS"), a
    subsidiary of the Company, of a portion of the stock of Dynamic Diagrams,
    Inc., a privately held company, owned by Mr. Kahn and Mr. Lenk and in
    partial satisfaction of the purchase price of the stock of Dynamic
    Diagrams, Inc. purchased by CJS. The Company issued these shares of its
    common stock to Mr. Kahn and Mr. Lenk in reliance upon the exemption from
    registration under Section 4(2) of the Securities Act of 1933, as the
    issuance by the Company did not involve a public offering of such shares.
 
Item 6. Exhibits and Reports on Form 8-K.
 
(a)Exhibits:
 
<TABLE>
   <C>          <S>
   Exhibit 10.1 $200,000,000 Credit Agreement dated as of April 1, 1999 among
                Cadmus Communications Corporation, The Banks Listed Therein,
                NationsBank, N.A., as Documentation Agent, First Union National
                Bank, as Syndication Agent and Wachovia Bank, N.A, as Agent
   Exhibit 10.2 Senior Subordinated Increasing Rate Notes, Series A Indenture
                Dated April 1, 1999, among Cadmus Communications Corporation,
                Cadmus Journal Services, Inc., Washburn Graphics, Inc.,
                American Graphics, Inc., Expert Graphics, Inc., Cadmus Direct
                Marketing, Inc., Three Score, Inc., Mack Printing Company, Port
                City Press, Inc., Mack Printing Group, Inc., Science Craftsman
                Incorporated, each of the Cadmus Communications Corporation's
                Restricted Subsidiaries that in the future executes a
                supplemental indenture in which such Restricted Subsidiary
                agrees to be bound by the terms of this Indenture as a
                Guarantor and Wilmington Trust Company
   Exhibit 10.3 Senior Subordinated Increasing Rate Notes, Series B Indentures
                dated April 1, 1999, among Cadmus Communications Corporation ,
                Cadmus Journal Services, Inc., Washburn Graphics, Inc.,
                American Graphics, Inc., Expert Graphics, Inc., Cadmus Direct
                Marketing, Inc., Three Score, Inc., Mack Printing Company, Port
                City Press, Inc., Mack Printing Group, Inc., Science Craftsman
                Incorporated, each of the Cadmus Communications Corporation's
                Restricted Subsidiaries that in the future executes a
                supplemental indenture in which such Restricted Subsidiary
                agrees to be bound by the terms of this Indenture as a
                Guarantor and Wilmington Trust Company
   Exhibit 10.4 Senior Subordinated Increasing Rate Notes, Series C Indenture
                Dated April 1, 1999, among Cadmus Communications Corporation ,
                Cadmus Journal Services, Inc., Washburn Graphics, Inc.,
                American Graphics, Inc., Expert Graphics, Inc., Cadmus Direct
                Marketing, Inc., Three Score, Inc., Mack Printing Company, Port
                City Press, Inc., Mack Printing Group, Inc., Science Craftsman
                Incorporated, each of the Cadmus Communications Corporation's
                Restricted Subsidiaries that in the future executes a
                supplemental indenture in which such Restricted Subsidiary
                agrees to be bound by the terms of this Indenture as a
                Guarantor and Wilmington Trust Company
   Exhibit 27   Financial Data Schedule
</TABLE>
 
(b)Reports on Form 8-K:
 
  On January 26, 1999, the Company filed a Form 8-K, which included the press
  release dated January 26, 1999 regarding fiscal 1999 second quarter
  financial results, as well as a copy of the prepared remarks made on a
  conference call to analysts on the same date.
 
 
                                      16
<PAGE>
 
  On February 26, 1999, the Company filed a Form 8-K, which included the
  press release dated February 26, 1999 regarding the Company's decision to
  sell its financial communications and custom publishing divisions, as well
  as a copy of the prepared remarks made on a conference call to analysts on
  the same date.
 
  On March 12, 1999, the Company filed a Form 8-K, dated March 1, 1999, which
  included a copy of the Purchase Agreement by and among Washburn Graphics,
  Inc., Washburn of New York, Inc., Cadmus Communications Corporation, and R.
  R. Donnelley & Sons Company, related to the sale of certain assets and
  liabilities of the Company's Financial Communications division to R. R.
  Donnelley & Sons Company.
 
                                      17
<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.
 
                                          Cadmus Communications Corporation
 
Date: May 13, 1999                          /s/ C. Stephenson Gillispie, Jr.
                                          _____________________________________
                                              C. Stephenson Gillispie, Jr.
                                             Chairman, President, and Chief
                                                    Executive Officer
 
Date: May 13, 1999                                 /s/ Bruce V. Thomas
                                          _____________________________________
                                                     Bruce V. Thomas
                                             Senior Vice President and Chief
                                                    Financial Officer
 
                                       18