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, 1997

                                       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
           --------                                                ----------
(State or other jurisdiction of                                 (I.R.S. Employer
 incorporation or organization)                           Identification Number)

                        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, 1997.

          Class                                    Outstanding at April 30, 1997
          -----                                    -----------------------------
Common Stock, $.50 Par Value                                   7,917,556


<PAGE>

               CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                      INDEX


<TABLE>
<CAPTION>
<S> <C>

                                                                                                             Page Number
                                                                                                             -----------


Part I.      Financial Information


             Item 1.      Financial Statements

                  Consolidated Balance Sheets --                                                                  3
                     March 31, 1997 and June 30, 1996

                  Consolidated Statements of Income --                                                            4
                     Three and Nine Month Periods Ended
                     March 31, 1997 and 1996

                  Consolidated Statements of Cash Flows --                                                        5
                     Nine Months Ended March 31, 1997 and 1996

                  Notes to Consolidated Financial Statements                                                      6


             Item 2.      Management's Discussion and Analysis of Financial                                       8
                             Condition and Results of Operations



Part II.     Other Information


                  Item 6. Exhibits and Reports on Form 8-K                                                       12

</TABLE>

                                       2
<PAGE>
<TABLE>


                                                 PART I. Financial Information

                                      CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                                  CONSOLIDATED BALANCE SHEETS
                                             (In thousands, except per share data)
<CAPTION>
<S> <C>
                                                                                           March 31,             June 30,
                                                                                              1997                 1996
                                                                                        -----------------      --------------

                                                                                          (Unaudited)

ASSETS
Current assets:
   Cash and cash equivalents                                                           $           3,083      $        1,141
   Accounts receivable, net                                                                       68,674              76,889
   Inventories                                                                                    23,031              23,486
   Deferred income taxes                                                                           1,958               2,150
   Prepaid expenses and other                                                                      3,848               6,062
                                                                                        -----------------      --------------

        Total current assets                                                                     100,594             109,728

Property, plant, and equipment (net of accumulated depreciation
   of $95,919 at March 31, 1997 and $87,474 at June 30, 1996)                                    118,534             116,365
Other assets                                                                                       3,999               3,824
Goodwill and other intangibles, net                                                               50,508              52,846
                                                                                        -----------------      --------------

   Total Assets                                                                        $         273,635      $      282,763
                                                                                        =================      ==============


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Short-term borrowings                                                               $           4,945      $        3,323
   Current maturities of long-term debt                                                              178                 136
   Accounts payable                                                                               30,531              26,361
   Accrued expenses and other liabilities                                                         15,138              20,351
                                                                                        -----------------      --------------

        Total current liabilities                                                                 50,792              50,171

Long-term debt                                                                                    94,319             106,665
Other long-term liabilities                                                                        7,269               9,555
Deferred income taxes                                                                              8,985               8,804

Shareholders' equity:
   Common stock ($.50 par value; authorized shares-16,000,000 shares; issued and
       outstanding shares-7,908,000 at March 31, 1997 and June 30, 1996)                           3,954               3,954
    Capital in excess of par value                                                                52,971              52,971
   Retained earnings                                                                              55,345              50,643
                                                                                        -----------------      --------------

        Total shareholders' equity                                                               112,270             107,568
                                                                                        -----------------      --------------

   Total Liabilities and Shareholders' Equity                                          $         273,635      $      282,763
                                                                                        =================      ==============


See accompanying Notes to Consolidated Financial Statements.


                                       3
<PAGE>




                                            CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                                    CONSOLIDATED STATEMENTS OF INCOME
                                                   (In thousands, except per share data)
                                                               (Unaudited)
<CAPTION>

                                                         Three Months Ended                  Nine Months Ended
                                                             March 31,                           March 31,
                                                    -----------------------------       ----------------------------

                                                      1997                1996            1997              1996
                                                    ----------          ---------       ----------       -----------


Net sales                                          $   97,018          $  84,361       $  288,172       $   244,870

Operating expenses:
    Cost of sales                                      75,350             66,576          224,224           188,469
    Selling and administrative                         15,928             15,505           47,204            44,411
     Restructuring gain
                                                          ---                ---            (250)              ---
                                                   ----------          ---------       ----------       -----------
                                                       91,278             82,081          271,178           232,880

Operating income                                        5,740              2,280           16,994            11,990

Interest and other expenses:
    Interest                                            1,822                955            5,991             3,772
    Other, net
                                                          644                106            1,427               141
                                                   ----------          ---------       ----------       -----------
                                                        2,466              1,061            7,418             3,913
Income before income taxes and
extraordinary item                                      3,274              1,219            9,576             8,077
                                                                        

Income taxes
                                                        1,260                465            3,686             3,071
                                                   ----------          ---------       ----------       -----------

Income before extraordinary item                        2,014                754            5,890             5,006

Extraordinary loss on early  extinguishment of
debt (net of income tax benefit of $487)
                                                          ---                ---              ---             (795)
                                                   ----------          ---------       ----------       -----------

Net income                                         $    2,014         $      754       $    5,890       $     4,211
                                                   ==========         ==========       ==========       ===========


Earnings per share:

    Income before extraordinary item               $      .25          $     .09       $      .73       $       .69

    Extraordinary loss on early
        extinguishment of debt
                                                          ---                ---              ---             (.11)
                                                   ----------          ---------       ----------       -----------

    Net income per share                           $      .25         $      .09      $       .73      $        .58
                                                   ==========         ==========       ==========       ===========

Weighted average common shares
    outstanding                                         8,050              8,169            8,045             7,299
                                                   ==========         ==========       ==========       ===========

Cash dividends per  common share                   $      .05          $     .05       $      .15       $       .15
                                                   ==========         ==========       ==========       ===========



                  See accompanying Notes to Consolidated Financial Statements.




                                       4
<PAGE>



                                CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (In thousands)
                                                    (Unaudited)
<CAPTION>
                                                                                         Nine Months Ended
                                                                                             March 31,
                                                                                    -----------------------------

                                                                                       1997              1996
                                                                                    -----------       -----------
Operating Activities
Net income                                                                         $     5,890       $     4,211
Adjustments to reconcile net income to net cash
     provided by operating activities:
     Restructuring gain                                                                   (250)              ---
     Extraordinary loss on debt prepayment                                                 ---               795
     Depreciation and amortization                                                      13,762            10,040
     Other, net                                                                          2,940             1,163
                                                                                    -----------       -----------

                                                                                        22,342            16,209
                                                                                    -----------       -----------
Changes in assets and  liabilities,  excluding debt and effects of  acquisitions
    and dispositions:
    Accounts receivable, net                                                             6,464            (8,584)
    Inventories                                                                            536            (2,645)
    Accounts payable and accrued expenses                                               (2,635)            7,153
    Payment to fund pension plan                                                        (2,837)              ---
    Other, net                                                                             763            (3,827)
                                                                                    -----------       -----------

                                                                                         2,291            (7,903)
                                                                                    -----------       -----------

Net cash provided by operating activities                                               24,633             8,306
                                                                                    -----------       -----------

Investing Activities
Proceeds from sale of consumer publishing division                                       6,500               ---
Capital expenditures                                                                   (18,022)          (17,884)
Proceeds from sales of property, plant, and equipment                                    2,227               355
Cash paid for businesses acquired                                                          ---           (15,393)
Other, net                                                                                (670)             (682)
                                                                                    -----------       -----------

Net cash used in investing activities                                                   (9,965)          (33,604)
                                                                                    -----------       -----------

Financing Activities
Net proceeds of short-term borrowings                                                    1,622             3,225
Proceeds from long-term borrowings                                                      59,000               ---
Repayment of long-term borrowings                                                      (71,707)          (12,456)
Penalty on early extinguishment of debt                                                    ---            (1,282)
Proceeds from stock offering, net                                                          ---            38,684
Dividends paid                                                                          (1,188)           (1,090)
Proceeds from exercise of stock options                                                    ---               631
Other, net                                                                                (453)             (180)
                                                                                    -----------       -----------

Net cash provided (used) by financing activities                                       (12,726)           27,532
                                                                                    -----------       -----------

Increase in cash and cash equivalents                                                    1,942             2,234

Cash and cash equivalents at beginning of period                                         1,141               226

                                                                                    ===========       ===========
Cash and cash equivalents at end of period                                         $     3,083       $     2,460
                                                                                    ===========       ===========

         See accompanying Notes to Consolidated Financial Statements.
</TABLE>

                                                        5
<PAGE>



               CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   The  accompanying  unaudited  consolidated  financial  statements 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, 1996. In the opinion of management,  all
     adjustments   (consisting  of  normal  recurring  adjustments)   considered
     necessary for a fair  presentation of interim  financial  information  have
     been included.

2.   Net income per common  share is computed  based upon the  weighted  average
     number of shares outstanding during the periods presented.  Shares issuable
     upon exercise of currently  exercisable stock options are treated as common
     stock  equivalents for purposes of computing  primary and fully diluted net
     income per share.  Weighted  average  shares  outstanding  reflects  shares
     issued in connection with the Company's  equity  offering  completed in the
     second quarter of fiscal 1996.

3.   Inventories are valued at the lower of cost or market. Inventory costs have
     been determined by the first-in,  first-out method for approximately 70% of
     inventories at March 31, 1997 and at June 30, 1996. Costs for the remaining
     inventories  have been determined by the last-in,  first-out (LIFO) method.
     Because the inventory  determination under the LIFO method can only be made
     at year-end based on the current  inventory levels and costs,  interim LIFO
     determination,  including that at March 31, 1997, must necessarily be based
     on management's  estimates of expected year-end inventory levels and costs.
     Since future  estimates  of inventory  levels and costs are subject to many
     forces  beyond the control of  management,  interim  financial  results are
     subject to final  year-end LIFO  inventory  adjustments.  Components of net
     inventories  at  March  31,  1997 and June 30,  1996  were as  follows  (in
     thousands):

                                                   March 31,          June 30,
                                                     1997               1996
                                                    ------             ------
           Raw materials and supplies              $ 6,873           $  8,055
           Work in process                          14,874             14,482
           Finished goods                            2,914              2,848
           LIFO reserve                             (1,630)            (1,899)
                                                    ------             ------
           Inventories                             $23,031            $23,486
                                                    ======             ======

4.   April  23,  1997,  the  Company  announced  that  it  will  take a  pre-tax
     restructuring  charge in the range of $17.5 million to $19.5 million ($1.35
     to $1.50 per share after tax) in its fourth  quarter  ending June 30, 1997,
     for actions  directed  toward  improving  the Company's  overall  financial
     performance  and  enhancing the  development  and delivery of the Company's
     marketing   and  graphic   communications   solutions.   The  Company  will
     restructure   its   marketing  and  magazine   businesses,   close  certain
     facilities,  and  write-down  certain  equipment,  investments  in non-core
     businesses, and intangible assets. As part of this action, the Company will
     close  its  Baltimore   promotional  printing  facility,   close  its  Long
     Beach-based   direct   marketing   agency,   consolidate  its  Atlanta  and
     Richmond-based   interactive   divisions,   consolidate   certain   journal
     fulfillment and distribution operations, and substantially reduce personnel
     through the  consolidation  of the journal and magazine  product lines. The
     Company  also   announced   that  it  will   combine  its  former   Graphic
     Communications and Marketing Groups into a new group,  Cadmus Marketing and
     Communications Solutions.

     The Company  estimates that cash outlays  associated with the restructuring
     and realignment charge will total  approximately $6 million,  which will be
     incurred  in calendar  1997.  The  remainder  of the  restructuring  charge
     relates to non-cash  items,  including the write-down of certain  operating
     assets, goodwill, and other intangibles.

     In  anticipation  of the previously  mentioned  restructuring  charge to be
     taken in the quarter ending June 30, 1997, the Company  obtained waivers of
     compliance  and  amendments  to  certain  financial  covenants,   including
     covenants regarding fixed charge coverage and minimum net worth,  contained
     in  the  Company's   $160,000,000   Revolving   Credit/Term  Loan  Facility
     Agreement.

                                       6
<PAGE>

5.   On April 23, 1997,  the Company  announced  that its Board of Directors has
     authorized the  repurchase of up to 750,000 shares of the Company's  common
     stock, or about 9% of shares  outstanding.  Shares will be repurchased from
     time to time in open market or privately  negotiated  transactions over the
     next year.

6.   Results of  operations  for the nine months ended March 31,  1997,  include
     recognition of a $0.3 million gain resulting  from a  restructuring  of the
     Company's publishing operations.  The restructuring gain included income of
     $0.7  million  related to the  September  30,  1996,  sale of its  consumer
     publishing  division,  for total  consideration of $6.5 million,  which was
     offset  by  charges  of  $0.4  million  related  to the  restructuring  and
     repositioning  of  its  custom  publishing   division  into  the  Company's
     Marketing Group.

7.   In October  1996,  the Company  entered into an  agreement  for a revolving
     credit/term  loan  facility of $160 million with its banks,  replacing  the
     former $115 million revolving  credit/term loan facility.  The $160 million
     agreement is composed of a $120 million revolving credit facility, expiring
     in October  2001,  and a $40  million,  seven-year  term loan  expiring  in
     October 2003. The interest rate options and commitment fees are essentially
     the same as under the former $115 million  facility.  Also in October 1996,
     the Company  entered into an interest rate swap  agreement  with a notional
     amount  of $40  million.  This  swap,  which  expires  in  September  2001,
     effectively  converts $40 million of variable-rate debt to fixed-rate debt.
     Under the terms of this  agreement,  the Company makes  payments at a fixed
     rate of 6.7% and receives payments based on 30-day LIBOR.

     Also in October 1996, using the additional capacity available under the new
     $160 million facility  referred to above, the Company repaid $40 million of
     6.74% senior unsecured notes which were borrowed in fiscal 1994 to fund the
     Company's  fiscal 1994  acquisition  of the net assets of the Waverly Press
     division of Waverly,  Inc. There was no prepayment  penalty associated with
     this debt retirement.


                                       7
<PAGE>


               CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Cadmus   Communications   Corporation   ("Cadmus"  or  the   "Company")  is   an
integrated  communications   company   offering  a  broad range of  periodicals,
marketing  and graphic  communications  solutions.  Headquartered  in  Richmond,
Virginia, Cadmus is one of the largest graphic communications companies in North
America.

The Company's  business is somewhat  seasonal,  with the months October  through
June typically stronger than the months July through September. As a result, the
Company's  performance in any quarterly period is not necessarily  indicative of
full-year results.

Effective  April 23,  1997,  the Company  announced a major  restructuring  plan
designed to exit or reshape those businesses which were  underperforming or were
non-core  to Cadmus'  strategy  and to create a more  efficient  and less costly
organizational  structure.  Coincidental  with the  restructuring,  the  Company
reorganized its operational  structure into Cadmus Marketing and  Communications
Solutions and Cadmus Periodicals. Cadmus Marketing and Communications Solutions,
formed by merging  the former  Graphics  Communications  and  Marketing  groups,
includes financial  communications,  specialty packaging,  promotional printing,
point of purchase,  technology  solutions,  direct marketing,  catalogs,  custom
publishing,  and interactive product lines. Cadmus Periodicals  includes journal
and magazine services for scientific,  technical, and medical publishers,  trade
associations, and commercial publishers.

Effective July 1, 1996, the Company had organized its operational structure into
the  Periodicals,  Graphic  Communications,  Marketing,  and Publishing  groups.
Effective  with  the  sale of the  Company's  consumer  publishing  division  in
September 1996, the Publishing  Group ceased to exist and custom  publishing was
realigned into the Marketing Group.

RESULTS OF OPERATIONS

The  following  table  presents  the  major  components  from  the  Consolidated
Statements  of Income as a percentage of net sales for the three and nine months
ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
<S> <C>
                                                       Three Months Ended               Nine Months Ended
                                                            March 31,                       March 31,
                                                      -----------------------------------------------------
                                                      1997             1996            1997            1996
                                                      ----             ----            ----            ----
  Net sales                                          100.0%           100.0%          100.0%          100.0%
  Cost of sales                                       77.7             78.9            77.8            77.0
                                                     -----            -----           -----           -----
  Gross profit                                        22.3             21.1            22.2            23.0
  Selling and administrative expenses                 16.4             18.4            16.4            18.1
  Restructuring gain                                   ---              ---            (0.1)            ---
                                                     -----            -----           -----           -----
  Operating income                                     5.9              2.7             5.9             4.9
  Interest expense                                     1.9              1.1             2.1             1.5
  Other expenses, net                                  0.6              0.1             0.5             0.1
                                                     -----            -----           -----           -----
  Income before income taxes and
    extraordinary item                                 3.4              1.5             3.3             3.3
  Income  taxes                                        1.3              0.6             1.3             1.3
                                                     -----            -----           -----           -----
  Income before extraordinary item                     2.1              0.9             2.0             2.0
  Extraordinary loss on early                                                                           0.3
    extinguishment of debt, net of tax               -----            -----           -----           -----
  Net income                                           2.1%             0.9%            2.0%            1.7%
                                                     =====            =====           =====           =====
</TABLE>


                                       8
<PAGE>


RESULTS OF OPERATIONS (continued)

Sales

Net sales for the third  quarter of fiscal 1997  increased  15% to $97.0 million
compared to $84.4  million for the third  quarter of fiscal 1996.  Excluding the
impact of acquisitions and  divestitures,  net sales declined by 2%. Lower paper
prices had a negative  impact on net sales in the third quarter  compared to the
prior year period.  Adjusted  for  acquisitions,  divestitures,  and lower paper
prices, net sales increased 3% for the third quarter of fiscal 1997.

Net sales for the first  nine  months  of fiscal  1997  increased  18% to $288.2
million from $244.9  million in the same period of fiscal 1996  primarily due to
the acquisitions of Lancaster Press, Inc. ("Lancaster") in the fourth quarter of
fiscal 1996 and  certain  assets of The  Software  Factory,  Inc.  (subsequently
renamed  "Cadmus  Technology  Solutions")  in the second quarter of fiscal 1996.
Excluding the impact of acquisitions,  divestitures, and lower paper prices, net
sales  increased  2% during the first nine  months of fiscal  1997 over the same
period of fiscal 1996.

The table  below  displays  net sales for each of these  groups  expressed  as a
percentage of net sales:
<TABLE>
<CAPTION>
<S> <C>
                                             Three Months Ended            Nine Months Ended
                                                  March 31,                     March 31,
                                             -------------------------------------------------
                                             1997          1996           1997            1996
                                             ----          ----           ----            ----

          Periodicals                        51.5%         45.7%          52.4%           46.4%
          Graphic Communications             35.7          37.9           35.1            36.0
          Marketing                          12.8          13.5           11.7            14.5
          Publishing                          ---           2.9           0 .8             3.1
                                            -------      -------         ------          ------
                                            100.0%       100.0%          100.0%          100.0%
                                            =====        =====           =====           =====
</TABLE>

Periodicals  Group  sales rose 28% and 33% in the third  quarter  and first nine
months of fiscal 1997,  respectively,  due to the  acquisition  of Lancaster and
continued growth in research journals.  Excluding Lancaster sales and the impact
of lower paper prices, research journal sales increased 6% for the third quarter
of fiscal 1997 and 9% for the first nine months of fiscal 1997.  Magazine  sales
declined  27% for both the third  quarter  and the first  nine  months of fiscal
1997 as a result of the Company's  decision to discontinue   relationships  with
non-strategic   customers  and  due  to  lower  paper prices. As a result of the
restructuring  and realignment  described  above,  the magazine product line has
been integrated with research journals.

Graphic  Communications  Group sales  increased 8% and 15% for the third quarter
and first nine months of fiscal 1997, respectively.  The growth in sales was due
to continued  improvement  from the Company's  promotional  printing,  specialty
packaging,   and  financial  communications  product  lines.  In  addition,  the
acquisition  of  certain  assets of Cadmus  Technology  Solutions  in the second
quarter  of fiscal  1996  contributed  to the growth in sales for the nine month
period. Promotional printing sales increased 17% and 19% for the two periods due
to growth from both new and existing clients. Specialty packaging sales rose 56%
and 49% for the two  periods due  primarily  to growth  from  existing  clients.
Financial communications sales rose by 23% and 16% for the two periods primarily
due to  continued  strength in  financial  markets,  an increase in  shareholder
communication  sales,  and  growth  in  full-service  contracts  with  financial
institutions. Offsetting these gains was a decline in point of purchase sales of
13% and 7% for the two periods due to lower  sales to quick  service  restaurant
and beverage  customers,  the loss of a significant account in the first quarter
of fiscal 1997, and a longer than anticipated selling cycle for new business.


                                       9
<PAGE>


RESULTS OF OPERATIONS (continued)

Marketing  Group sales  increased  10% for the third quarter while sales for the
first  nine  months  of  fiscal  1997  declined  5%.  Excluding  the  impact  of
acquisitions,  sales increased 3% for the third quarter but decreased 9% for the
first nine months of fiscal 1997.  Custom  publishing sales declined 24% and 26%
for the two periods due to large one-time  projects in fiscal 1996 which did not
repeat in fiscal 1997.  Direct  marketing sales declined 16% and 14% for the two
periods due  primarily to a change in sales mix.  Catalog sales rose 128% in the
third  quarter  and 13% for the first nine  months of fiscal  1997 due to higher
volume from existing customers.

Operating Expenses

Cost of sales were 77.7% of net sales and 77.8% for the third  quarter and first
nine  months  of  fiscal  1997  compared  to  78.9%  and  77.0%  of  net  sales,
respectively,  for the same periods of fiscal 1996. The  improvement in the cost
of sales  ratio  for the  third  quarter  of  fiscal  1997 was  attributable  to
continued margin  improvement from the Periodicals Group as a result of a better
sales  mix,   improved   manufacturing   efficiencies,   and  the  inclusion  of
higher-margin  Lancaster sales. These improvements in the Periodicals Group were
offset by margin erosion in the Company's  point of purchase,  interactive,  and
custom publishing product lines, due to lower sales and higher production costs.
In addition,  cost of sales was impacted by excess  capacity at certain  Graphic
Communications Group facilities.

Selling and administrative expenses declined to 16.4% of net sales for the third
quarter  and first  nine  months of fiscal  1997,  compared  to 18.4% and 18.1%,
respectively,   for the same periods of fiscal 1996. This decline as a percent-
age of net sales is  primarily  due to the  inclusion of  Lancaster,  which  has
a lower selling  and  administrative  ratio than the Company in  aggregate,  and
to cost control measures implemented in fiscal 1997.

In the first quarter of fiscal 1997 the Company  recorded a $0.3 million  pretax
gain to restructure  the Publishing  Group  operations as it was determined that
the consumer  publishing  division was no longer  consistent  with the Company's
strategy. Therefore,  the consumer  publishing division was sold and the Company
recorded a $0.7 million gain from this sale.  The proceeds from the sale of this
division were used to pay down debt. In addition, as part of this restructuring,
the  Company   recorded  a  $0.4  million   charge   related  to  the  strategic
repositioning  of the custom  publishing  division into the Marketing Group. The
charge  included  costs  of $0.2  million  for  termination  benefits  for  five
associates and $0.2 million for costs related to  repositioning  the client base
to align with the Marketing Group strategies.

Interest and Other Expenses and Income Taxes

Interest expense increased $0.9 million,  or  91%,  for  the  third  quarter  of
fiscal  1997  and  $2.2  million,  or 59%, for the nine month period ended March
31, 1997. These  increases  were  attributable  to debt incurred  related to the
Lancaster acquisition in May 1996.

The  effective  tax rate was  38.5% for the first  nine  months of fiscal  1997,
compared  to 38.0% for the same  period  of fiscal  1996.  The  increase  in the
effective tax rate is due primarily to the acquisition of Lancaster.

Other  expenses,  net  increased  $0.5  million  and  $1.3 million for the third
quarter and nine month  period  ended  March 31,  1997 due to  amortization   of
goodwill associated with fiscal 1996 acquisitions.



                                       10
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

Management  believes that the Company has the financial  resources and access to
capital necessary to fund internal growth and acquisitions.  The Company's major
demands on capital are investments in property,  plant,  and equipment,  working
capital, and acquisitions.

Net cash  provided by operating  activities  totaled $24.6 million for the first
nine months of fiscal 1997,  representing  a $16.3  million  increase  from $8.3
million provided by operating  activities in the comparable prior year period. A
portion of the increase  was  attributable  to a $6.1  million  increase in cash
generated from operations (net income plus  depreciation  and  amortization  and
other non-cash  expenses).  In addition,  there was an $8.4 million improvement,
from the  comparable  prior year period,  in net cash  requirements  to fund the
Company's working capital investment, offset by a $2.8 million cash contribution
in fiscal 1997, to the Company's  pension plan. The lower level of cash required
to fund the Company's working capital  investment was a result of improvement in
accounts receivable collection efforts and lower investment in inventories.

Net cash used in investing  activities  totaled $10.0 million for the first nine
months of fiscal 1997, as compared to $33.6 million used in the comparable prior
year period.  This  reduction was due primarily to proceeds of $6.5 million from
the sale of the Company's  consumer  publishing  division in September 1996, the
absence  of  significant  fiscal  1997  acquisitions   compared  to  acquisition
expenditures of $15.4 million in fiscal 1996, and an increase of $1.9 million in
proceeds  from the sale of  certain  property,  plant,  and  equipment.  Capital
expenditures  totaled  $18.0  million for the first nine months of fiscal  1997.
Major projects included new presses to support the Company's specialty packaging
and  financial  communications  product  lines,  the  expansion of the Company's
Charlotte manufacturing facility, and new business and manufacturing systems.

Net cash used in financing  activities  was $12.7 million  during the first nine
months  of fiscal  1997  compared  with  $27.5  million  provided  by  financing
activities in the comparable  prior year period.  The excess of cash provided by
operating  activities  over cash used in investing  activities and proceeds from
fiscal 1997  dispositions  noted above were used to reduce debt by $11.1 million
in the first nine months of fiscal 1997.

Total debt at March 31, 1997,  was $99.4  million,  down from $110.1  million at
June 30, 1996. In addition,  the Company's  debt-to-capital  ratio  continued to
improve,  down  from  50.6% at June 30,  1996 to 47.0% at March 31,  1997,  as a
result of these lower debt levels.

In  October  1996,  the  Company  entered  into  an  agreement  for a  revolving
credit/term  loan facility of $160 million with its banks,  replacing the former
$115 million revolving credit/term loan facility.  The $160 million agreement is
composed of a $120 million  revolving  credit facility  expiring in October 2001
and a $40 million,  seven-year  term loan expiring in October 2003. The interest
rate options and commitment  fees are  essentially  the same as under the former
$115  million  facility.  Also in October  1996,  the  Company  entered  into an
interest rate swap agreement with a notional  amount of $40 million.  This swap,
which  expires  in  September   2001,   effectively   converts  $40  million  of
variable-rate  debt to fixed-rate debt.  Under the terms of this agreement,  the
Company makes  payments at a fixed rate of 6.7% and receives  payments  based on
30-day LIBOR.

Also in October 1996, using the additional capacity available under the new $160
million  facility  referred to above,  the  Company  repaid $40 million of 6.74%
senior  unsecured notes which were borrowed in fiscal 1994 to fund the Company's
fiscal  1994  acquisition  of the net assets of the  Waverly  Press  division of
Waverly,  Inc.  There  was no  prepayment  penalty  associated  with  this  debt
retirement.

In anticipation of the previously mentioned  restructuring charge to be taken in
the quarter ending June 30, 1997, the Company obtained waivers of compliance and
amendments to certain financial  covenants,  including covenants regarding fixed
charge coverage and minimum net worth,  contained in the Company's  $160,000,000
Revolving Credit/Term Loan Facility Agreement.




                                       11
<PAGE>


**  "Safe Harbor" Statement Under the Private Securities Litigation Reform Act 
    of 1995:

Statements in this Form 10-Q relating to the future impact of the  restructuring
and realignment are  "forward-looking  statements"  and, as such, are subject to
certain  risks and  uncertainties  that  could  cause  actual  results to differ
materially.  Potential risks and  uncertainties  include but are not limited to:
(1) success in integrating the marketing and graphic  communications groups, (2)
successful  completion of the restructuring,  (3) ability to improve performance
of the  point of purchase  and custom  publishing  product lines, (4) more rapid
than expected adoption of digital technology,  (5) ability to sustain margins in
the  Periodicals  Group,  (6) continuing  competitive  pricing in the markets in
which the Company competes, (7) the gain or loss of significant customers or the
decrease in demand from existing customers, (8) the timing of significant orders
received from  customers,  (9) seasonal  changes in the demand for the Company's
products,  (10)  changes in the  Company's  product  sales mix,  (11)  continued
success in the integration of Lancaster,  and (12) the performance of management
and leadership teams in the Company and its divisions.


Item 6. Exhibits and Reports on Form 8-K

a.    Exhibits:

       Exhibit            Description
       -------            -----------
       Exhibit 27         Financial Data Schedule


b.    Reports on Form 8-K:

On January 24,  1997,  the Company  filed a Form 8-K,  which  included the press
release  regarding fiscal 1997 second quarter  financial  results,  as well as a
copy of the  prepared  remarks  made on a  conference  call to  analysts  on the
preceding day.

On April 23,  1997,  the  Company  filed a Form 8-K,  which  included  the press
release regarding fiscal 1997 third quarter financial results, the
restructuring, and the share repurchase program, as well as a copy of the
prepared remarks made on a conference call to analysts on the same date.



                                       12
<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  14, 1997
                               /s/ C. Stephenson Gillispie, Jr.
                              -------------------------------------------------
                               C. Stephenson Gillispie, Jr.
                               Chairman, President, and Chief Executive Officer



Date:   May 14, 1997

                               /s/ Bruce V. Thomas
                              -------------------------------------------------
                               Bruce V. Thomas
                               Senior Vice President and Chief Financial Officer


                                       13