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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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Form 10-Q/A
Amendment No. 1



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|           |  |                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------
|(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, 2002                                           
|           |  |                                                                                         
|           |  | 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 000-12954




CADMUS COMMUNICATIONS CORPORATION




(Exact name of registrant as specified in its charter)


|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Virginia                                                       |  | 54-1274108                             
|                                                               |  |                                        
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification Number)

1801 Bayberry Court, Suite 200
Richmond, Virginia 23226(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, 2002.

|                             |  |                              
|---------------------------- |  | -----------------------------
|Class                        |  | Outstanding at April 30, 2002
|                             |  |                              
|Common Stock, $.50 Par Value |  | 8,975,092                    





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Explanation for Technical Revision to Filed Form 10-Q

This Amendment No. 1 to the Form 10-Q of Cadmus Communications Corporation
(the Company) for the quarter ended March 31, 2002, is being filed solely to
make a technical revisionto the fiscal 2001 accounting treatment of the
January 2002 sale of the Companys Atlanta-based Creative Marketing division.
This technical revision has no impact on the Companys reported net income
(loss) for any period.

The Company sold its Creative Marketing division in January 2002. In
accordance with generally accepted accounting principles, the Company has
treated the results of operations of the Creative Marketing division as a
discontinued operation for fiscal 2002. The Company has determined, however,
not to reclassify the results of the Creative Marketing division as a
discontinued operation for fiscal 2001, because the changes that would result
from such a reclassification would not be material. (See Note 3 (and the
comparison table included therein)to the consolidated financial statements
contained in Item 1 of this Amendment and the discussion of Discontinued
Operations under Managements Discussion and Analysis of Financial Condition
and Results of Operations  Application of Critical Accounting Policies in
Item 2 of this Amendment for a further explanation of the Companys decision
not to reclassify fiscal year 2001 results.)

The Form 10-Q previously filed by the Company for the quarter ended March
31, 2002, did reclassify the Companys fiscal 2001 results of operations by
treating the Creative Marketing divisions results as discontinued
operations for that prior fiscal year. The sole purpose of this Amendment
is to revise that accounting treatment and conform the previously filed Form
10-Q to the Companys decision not to reclassify its fiscal 2001 results of
operations based on the sale of its Creative Marketing division.





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TABLE OF CONTENTS



|                                                         |                               |                                                                                               |                                                           |  |  |  |  | 
|-------------------------------------------------------- | ----------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------- |  |  |  |  | 
|CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES INDEX
|                                                         | PART I. FINANCIAL INFORMATION
|                                                         |                               | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                         |                               |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                    
|                                                         |                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME              
|                                                         |                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS          
|                                                         |                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
|                                                         |                               |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS     
|                                                         |                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|SIGNATURES                                              



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CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX

|       |                                                                                                          |                                                                                                               |  |            
|------ | -------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- |  | -----------
|       |                                                                                                          |                                                                                                               |  | Page Number
|       |                                                                                                          |                                                                                                               |  |            
|Part I |                                                                                                          | Financial Information                                                                                         |  |            
|       |                                                                                                          |                                                                                                               |  |            
|       | Item 1. Financial Statements                                                                             |                                                                                                               |  |            
|       |                                                                                                          |                                                                                                               |  |            
|       |                                                                                                          | Condensed Consolidated Balance Sheets 
March 31, 2002 (unaudited) and June 30, 2001                          |  | 3          
|       |                                                                                                          |                                                                                                               |  |            
|       |                                                                                                          | Condensed Consolidated Statements of Income (unaudited) 
Three and Nine Months Ended March 31, 2002 and 2001 |  | 4          
|       |                                                                                                          |                                                                                                               |  |            
|       |                                                                                                          | Condensed Consolidated Statements of Cash Flows (unaudited) 
Nine Months Ended March 31, 2002 and 2001       |  | 5          
|       |                                                                                                          |                                                                                                               |  |            
|       |                                                                                                          | Condensed Consolidated Statements of Shareholders Equity 
March 31, 2002 (unaudited) and June 30, 2001      |  | 6          
|       |                                                                                                          |                                                                                                               |  |            
|       |                                                                                                          | Notes to Condensed Consolidated Financial Statements (unaudited)                                              |  | 7          
|       |                                                                                                          |                                                                                                               |  |            
|       | Item 2. Managements Discussion and Analysis of Financial
Condition and Results of            Operations | 11                                                                                                           

2



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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES




CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except per share data)

|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |         | 
|---------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------- | -------------------------- | ----- | ----------- | ------- | -------- | ----- | ------ | ------- | 
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       | March 31,   |         | June 30,
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       | 2002        |         | 2001    
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |         
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       | (Unaudited) |         |          |       |       
|ASSETS                                                                                                                       |                                                                                                                                                              |                                                             |                            |       |             |         |          |      
|Current assets:                                                                                                              |                                                                                                                                                              |                                                             |                            |       |             |         |          |      
|                                                                                                                             |                                                                                                                                                              | Cash and cash equivalents                                   |                            | $     | 1,643       |         |          | $     | 3,130  |        
|                                                                                                                             |                                                                                                                                                              | Accounts receivable, net of allowance for doubtful accounts |                            |       | 30,034      |         |          |       | 33,662 |        
|                                                                                                                             |                                                                                                                                                              | Inventories                                                 |                            |       | 19,654      |         |          |       | 24,863 |        
|                                                                                                                             |                                                                                                                                                              | Deferred income taxes                                       |                            |       | 3,641       |         |          |       | 5,690  |        
|                                                                                                                             |                                                                                                                                                              | Prepaid expenses and other                                  |                            |       | 4,461       |         |          |       | 5,922  |        
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |        
|                                                                                                                             |                                                                                                                                                              |                                                             | Total current assets       |       |             | 59,433  |          |       |        | 73,267  | 
|Property, plant, and equipment (net of accumulated depreciation
of $131,350 at March 31, 2002 and $129,663 at June 30, 2001) |                                                                                                                                                              |                                                             | 126,088                    |       |             |         | 138,002  |      
|Goodwill and other intangibles, net                                                                                          |                                                                                                                                                              |                                                             | 168,804                    |       |             |         | 172,436  |      
|Other assets                                                                                                                 |                                                                                                                                                              |                                                             | 13,217                     |       |             |         | 13,723   |      
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |        
|TOTAL ASSETS                                                                                                                 |                                                                                                                                                              | $                                                           | 367,542                    |       |             | $       | 397,428  |      
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                         |                                                                                                                                                              |                                                             |                            |       |             |         |          |      
|Current liabilities:                                                                                                         |                                                                                                                                                              |                                                             |                            |       |             |         |          |      
|                                                                                                                             |                                                                                                                                                              | Current maturities of long-term debt                        |                            | $     |            |         |          | $     | 2,572  |        
|                                                                                                                             |                                                                                                                                                              | Accounts payable                                            |                            |       | 36,293      |         |          |       | 28,021 |        
|                                                                                                                             |                                                                                                                                                              | Accrued expenses                                            |                            |       | 29,392      |         |          |       | 32,580 |        
|                                                                                                                             |                                                                                                                                                              | Restructuring reserves                                      |                            |       | 1,815       |         |          |       | 6,253  |        
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |        
|                                                                                                                             |                                                                                                                                                              |                                                             | Total current liabilities  |       |             | 67,500  |          |       |        | 69,426  | 
|Long-term debt, less current maturities                                                                                      |                                                                                                                                                              |                                                             | 153,108                    |       |             |         | 180,415  |      
|Other long-term liabilities                                                                                                  |                                                                                                                                                              |                                                             | 28,845                     |       |             |         | 29,823   |      
|Deferred income taxes                                                                                                        |                                                                                                                                                              |                                                             | 7,321                      |       |             |         | 8,206    |      
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |        
|                                                                                                                             |                                                                                                                                                              |                                                             | Total liabilities          |       |             | 256,774 |          |       |        | 287,870 | 
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |        
|Shareholders equity:                                                                                                        |                                                                                                                                                              |                                                             |                            |       |             |         |          |      
|                                                                                                                             | Common stock ($.50 par value; authorized shares-16,000,000
shares; issued and outstanding shares-8,975,092 at
March 31, 2002 and 8,937,592 at June 30, 2001) |                                                             |                            | 4,487 |             |         |          | 4,469 |       
|                                                                                                                             |                                                                                                                                                              | Capital in excess of par value                              |                            |       | 67,693      |         |          |       | 67,363 |        
|                                                                                                                             |                                                                                                                                                              | Retained earnings                                           |                            |       | 39,181      |         |          |       | 38,319 |        
|                                                                                                                             |                                                                                                                                                              | Accumulated other comprehensive loss                        |                            |       | (593        | )       |          |       | (593   | )      
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |        
|                                                                                                                             |                                                                                                                                                              |                                                             | Total shareholders equity |       |             | 110,768 |          |       |        | 109,558 | 
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |        
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                   |                                                                                                                                                              | $                                                           | 367,542                    |       |             | $       | 397,428  |      
|                                                                                                                             |                                                                                                                                                              |                                                             |                            |       |             |         |          |       |        |        

See accompanying Notes to Condensed Consolidated Financial Statements.

3



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

|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |         |   | 
|------------------------------------------------------ | ------------------------------------------ | - | ------- | ------------------ | - | ----------------- | ------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- | - | 
|                                                       |                                            |   |         | Three Months Ended |   | Nine Months Ended
|                                                       |                                            |   |         | March 31,          |   | March 31,        
|                                                       |                                            |   |         |                    |   |                  
|                                                       |                                            |   |         | 2002               |   | 2001              |         | 2002    |   | 2001
|                                                       |                                            |   |         |                    |   |                   |         |         |   |     
|Net sales                                              |                                            | $ | 112,656 |                    |   | $                 | 135,617 |         |   | $    | 338,259 |         |   | $ | 404,539 |        
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|Operating expenses:                                    |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       | Cost of sales                              |   |         | 91,989             |   |                   |         | 112,737 |   |      |         | 277,712 |   |   |         | 332,371 |  
|                                                       | Selling and administrative                 |   |         | 13,304             |   |                   |         | 15,849  |   |      |         | 40,487  |   |   |         | 44,061  |  
|                                                       | Restructuring and other charges            |   |         |                    |   |                   |         | 15,490  |   |      |         |        |   |   |         | 17,896  |  
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       |                                            |   | 105,293 |                    |   |                   | 144,076 |         |   |      | 318,199 |         |   |   | 394,328 |        
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|Operating income (loss)                                |                                            |   | 7,363   |                    |   |                   | (8,459  | )       |   |      | 20,060  |         |   |   | 10,211  |        
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|Interest and other expenses:                           |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       | Interest                                   |   |         | 3,773              |   |                   |         | 4,833   |   |      |         | 12,107  |   |   |         | 14,974  |  
|                                                       | Securitization costs                       |   |         | 220                |   |                   |         | 663     |   |      |         | 911     |   |   |         | 2,233   |  
|                                                       | Other, net                                 |   |         | 72                 |   |                   |         | (21     | ) |      |         | 230     |   |   |         | (90     | )
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       |                                            |   | 4,065   |                    |   |                   | 5,475   |         |   |      | 13,248  |         |   |   | 17,117  |        
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|Income (loss) from continuing operations before taxes  |                                            |   | 3,298   |                    |   |                   | (13,934 | )       |   |      | 6,812   |         |   |   | (6,906  | )      
|Income tax expense (benefit)                           |                                            |   | 1,750   |                    |   |                   | (4,390  | )       |   |      | 3,372   |         |   |   | (1,473  | )      
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|Income (loss) from continuing operations               |                                            |   | 1,548   |                    |   |                   | (9,544  | )       |   |      | 3,440   |         |   |   | (5,433  | )      
|Income (loss) from discontinued operations, net of tax |                                            |   | (1,205  | )                  |   |                   |        |         |   |      | (1,236  | )       |   |   |        |        
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|Net income (loss)                                      |                                            | $ | 343     |                    |   | $                 | (9,544  | )       |   | $    | 2,204   |         |   | $ | (5,433  | )      
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|Earnings per share  basic:                            |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       | Income (loss) from continuing operations   |   |         | .17                |   |                   |         | (1.07   | ) |      |         | .38     |   |   |         | (.61    | )
|                                                       | Income (loss) from discontinued operations |   |         | (.13               | ) |                   |         |        |   |      |         | (.14    | ) |   |         |        |  
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       | Net income (loss)                          |   | $       | .04                |   |                   | $       | (1.07   | ) |      | $       | .24     |   |   | $       | (.61    | )
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       | Weighted-average common shares outstanding |   |         | 8,960              |   |                   |         | 8,938   |   |      |         | 8,953   |   |   |         | 8,938   |  
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|Earnings per share  diluted:                          |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       | Income (loss) from continuing operations   |   |         | .17                |   |                   |         | (1.07   | ) |      |         | .38     |   |   |         | (.61    | )
|                                                       | Income (loss) from discontinued operations |   |         | (.13               | ) |                   |         |        |   |      |         | (.14    | ) |   |         |        |  
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       | Net income (loss)                          |   | $       | .04                |   |                   | $       | (1.07   | ) |      | $       | .24     |   |   | $       | (.61    | )
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|                                                       | Weighted-average common shares outstanding |   |         | 9,053              |   |                   |         | 8,938   |   |      |         | 9,019   |   |   |         | 8,938   |  
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        
|Cash dividends per common share                        |                                            | $ | .05     |                    |   | $                 | .05     |         |   | $    | .15     |         |   | $ | .15     |        
|                                                       |                                            |   |         |                    |   |                   |         |         |   |      |         |         |   |   |         |        

See accompanying Notes to Condensed Consolidated Financial Statements.

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CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                                                            |                                               |                                                         |         |                   |        |      |         |        |        |  
|------------------------------------------------------------------------------------------- | --------------------------------------------- | ------------------------------------------------------- | ------- | ----------------- | ------ | ---- | ------- | ------ | ------ | -
|                                                                                            |                                               |                                                         |         | Nine Months Ended
|                                                                                            |                                               |                                                         |         | March 31,        
|                                                                                            |                                               |                                                         |         |                  
|                                                                                            |                                               |                                                         |         | 2002              |        | 2001
|                                                                                            |                                               |                                                         |         |                   |        |     
|Operating Activities                                                                        |                                               |                                                         |         |                   |        |      |         |       
|Net income (loss)                                                                           |                                               | $                                                       | 2,204   |                   |        | $    | (5,433  | )     
|Adjustments to reconcile net income to net cash provided by
(used in) operating activities: |                                               |                                                         |         |                   |        |      |         |       
|                                                                                            |                                               | Depreciation and amortization                           |         |                   | 19,182 |      |         |        | 19,783 |  
|                                                                                            |                                               | Loss on disposal of discontinued operations, net of tax |         |                   | 1,205  |      |         |        |       |  
|                                                                                            |                                               | Restructuring and other charges                         |         |                   |       |      |         |        | 17,896 |  
|                                                                                            |                                               | Other, net                                              |         |                   | 682    |      |         |        | (2,438 | )
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|                                                                                            |                                               |                                                         | 23,273  |                   |        |      | 29,808  |       
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|Changes in operating assets and liabilities, excluding
acquisitions and dispositions:       |                                               |                                                         |         |                   |        |      |         |       
|                                                                                            | Accounts receivable, net                      |                                                         |         | 4,620             |        |      |         | (5,440 | )     
|                                                                                            | Inventories                                   |                                                         |         | 2,752             |        |      |         | (748   | )     
|                                                                                            | Accounts payable and accrued expenses         |                                                         |         | 9,131             |        |      |         | 7,790  |       
|                                                                                            | Restructuring reserves (due to cash payments) |                                                         |         | (3,928            | )      |      |         | (2,786 | )     
|                                                                                            | Pension payments                              |                                                         |         | (141              | )      |      |         | (4,862 | )     
|                                                                                            | Other, net                                    |                                                         |         | 924               |        |      |         | 3,160  |       
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|                                                                                            |                                               |                                                         | 13,358  |                   |        |      | (2,886  | )     
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|Net cash provided by operating activities                                                   |                                               |                                                         | 36,631  |                   |        |      | 26,922  |       
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|Investing Activities                                                                        |                                               |                                                         |         |                   |        |      |         |       
|Purchases of property, plant, and equipment                                                 |                                               |                                                         | (8,776  | )                 |        |      | (13,704 | )     
|Proceeds from sales of property, plant, and equipment                                       |                                               |                                                         | 3,691   |                   |        |      | 3,174   |       
|Investment in unconsolidated business                                                       |                                               |                                                         |        |                   |        |      | (3,080  | )     
|Net proceeds from divested operations                                                       |                                               |                                                         | 1,500   |                   |        |      | 4,207   |       
|Other, net                                                                                  |                                               |                                                         |        |                   |        |      | (1,484  | )     
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|Net cash used in investing activities                                                       |                                               |                                                         | (3,585  | )                 |        |      | (10,887 | )     
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|Financing Activities                                                                        |                                               |                                                         |         |                   |        |      |         |       
|Net payments on receivables securitization program                                          |                                               |                                                         | (4,567  | )                 |        |      | (2,852  | )     
|Repayment of long-term revolving credit facility                                            |                                               |                                                         | (26,400 | )                 |        |      | (15,300 | )     
|Repayment of long-term borrowings                                                           |                                               |                                                         | (2,572  | )                 |        |      | (109    | )     
|Dividends paid                                                                              |                                               |                                                         | (1,342  | )                 |        |      | (1,342  | )     
|Proceeds from exercise of stock options                                                     |                                               |                                                         | 348     |                   |        |      |        |       
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|Net cash used in financing activities                                                       |                                               |                                                         | (34,533 | )                 |        |      | (19,603 | )     
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|Decrease in cash and cash equivalents                                                       |                                               |                                                         | (1,487  | )                 |        |      | (3,568  | )     
|Cash and cash equivalents at beginning of period                                            |                                               |                                                         | 3,130   |                   |        |      | 6,411   |       
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       
|Cash and cash equivalents at end of period                                                  |                                               | $                                                       | 1,643   |                   |        | $    | 2,843   |       
|                                                                                            |                                               |                                                         |         |                   |        |      |         |       

See accompanying Notes to Condensed Consolidated Financial Statements.

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##### Table of Contents






CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(In thousands)

|                                                 |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   |             |   |  |   |         |        |  
|------------------------------------------------ | ------------------ |  | ------------ |  | --------- | - | --------- |  | ------------- | - | ------------- |  | ----- | - | ------ | - | ----- | - | ----------- | - |  | - | ------- | ------ | -
|                                                 |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   | Accumulated |   |  |   |        
|                                                 |                    |  |              |  |           |   |           |  |               |   | Capital in    |  |       |   |        |   | Other |   |             |   | 
|                                                 |                    |  | Common Stock |  | Excess of |   | Retained  |  | Comprehensive |   |               |  |      
|                                                 |                    |  | Shares       |  | Amount    |   | Par Value |  | Earnings      |   | Income (Loss) |  | Total
|                                                 |                    |  |              |  |           |   |           |  |               |   |               |  |      
|Balance at June 30, 2000                         |                    |  | 8,938        |  |           | $ | 4,469     |  |               | $ | 67,363        |  |       | $ | 46,598 |   |       | $ | (488        | ) |  | $ | 117,942 |       
|                                                 |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   |             |   |  |   |         |       
|Net loss                                         |                    |  |             |  |           |   |          |  |               |   |              |  |       |   | (6,490 | ) |       |   |            |   |  |   | (6,490  | )     
|Change in minimum pension liability              |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   | (105        | ) |  |   | (105    | )     
|                                                 |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   |             |   |  |   |         |       
|                                                 | Comprehensive loss |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   |             |   |  |   |         | (6,595 | )
|                                                 |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   |             |   |  |   |         |       
|Cash dividends  $.20 per share                  |                    |  |             |  |           |   |          |  |               |   |              |  |       |   | (1,789 | ) |       |   |            |   |  |   | (1,789  | )     
|                                                 |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   |             |   |  |   |         |       
|Balance at June 30, 2001                         |                    |  | 8,938        |  |           | $ | 4,469     |  |               | $ | 67,363        |  |       | $ | 38,319 |   |       | $ | (593        | ) |  | $ | 109,558 |       
|(the
following data is unaudited)                |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   |             |   |  |   |         |       
|Net income (and comprehensive income)            |                    |  |              |  |           |   |           |  |               |   |               |  |       |   | 2,204  |   |       |   | -          |   |  |   | 2,204   |       
|Cash dividends  $.15 per share                  |                    |  |             |  |           |   |          |  |               |   |              |  |       |   | (1,342 | ) |       |   |            |   |  |   | (1,342  | )     
|Net shares issued upon exercise
of stock options |                    |  | 37           |  |           |   | 18        |  |               |   | 330           |  |       |   |       |   |       |   |            |   |  |   | 348     |       
|                                                 |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   |             |   |  |   |         |       
|Balance at March 31, 2002                        |                    |  | 8,975        |  |           | $ | 4,487     |  |               | $ | 67,693        |  |       | $ | 39,181 |   |       | $ | (593        | ) |  | $ | 110,768 |       
|                                                 |                    |  |              |  |           |   |           |  |               |   |               |  |       |   |        |   |       |   |             |   |  |   |         |       

See accompanying Notes to Condensed Consolidated Financial Statements.

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

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | The accompanying unaudited condensed consolidated financial
statements of Cadmus Communications Corporation (the Company) 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, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |  | In the opinion of management, all 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,
2002, are not necessarily indicative of results for the entire fiscal
year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |  | Certain previously reported amounts have been reclassified to conform
to the current-year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2. |  | In July 2000, the Emerging Issues Task Force (EITF) of the
Financial Accounting Standards Board reached a consensus on Issue
00-10, Accounting for Shipping and Handling Fees and Costs. EITF
00-10 requires companies to classify as revenues any shipping and
handling fees billed to customers. Previously, shipping and postage
revenues and shipping and postage expenses were included in cost of
sales. All periods presented in the Condensed Consolidated Statements
of Income have been reclassified to conform to the current year
presentation. The adoption of this standard increased net sales and
cost of sales by approximately $10.1 million and $13.7 million for the
quarters ended March 31, 2002 and 2001, respectively, and $30.7 million
and $40.9 million for the nine months ended March 31, 2002 and 2001,
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3. |  | In August 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 144
Accounting for the Impairment or Disposal of Long-Lived Assets which
addresses the financial accounting and reporting for the impairment or
disposal of long-lived assets. This statement is effective for fiscal
years beginning after December 15, 2001, and interim periods within
those fiscal years. The Company early adopted SFAS No. 144 in the
third quarter of fiscal 2002. In the third quarter of fiscal 2002,
the Company recorded a $1.2 million loss, net of taxes, in connection
with the sale of its Atlanta-based Creative Marketing division. The
Company has reported the sale as a discontinued operation for fiscal
2002. The Company did not reclassify the results of the Creative
Marketing division as a discontinued operation in the prior year
because, as displayed in the table below, the changes that would result
from a reclassification would not be material to the consolidated
financial statements for fiscal 2001. The Creative Marketing division
accounted for less than 5% of sales, operating income and income from
continuing operations (before restructuring and other charges) for the
three- and nine-month periods ended March 31, 2001, respectively. In
addition, the impact of reclassifying would have no impact on the
Companys reported net income (loss), compliance with loan covenants or
other contractual requirements, and no significant impact on earnings
trends. The Company also notes that fiscal year 2001 was audited by
Arthur Andersen LLP (AA). If the Company were to restate the
consolidated financial statements for fiscal 2001 to reflect the
Creative Marketing division as a discontinued operation, generally
accepted auditing standards would require the Company to either have
the firm that initially audited that year audit any adjustments, or
have the financial statements for that year reaudited. Given AAs
unavailability to reissue its audit report, a reaudit would be
necessary. Since the Company has concluded that the changes would not
be material, the Company has determined, and its Audit Committee has
concurred, that the benefits, if any, of reauditing fiscal 2001 do not
justify the costs of, or the delay associated with, a reaudit.

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|                             |  |                    |         |                   |  |        |        |   |  |   |       |       |  |        |  |     |  |   |         |        |  |   |        |   |  |   |      |  
|---------------------------- |  | ------------------ | ------- | ----------------- |  | ------ | ------ | - |  | - | ----- | ----- |  | ------ |  | --- |  | - | ------- | ------ |  | - | ------ | - |  | - | ---- | -
|                             |  | Three Months Ended |         | Nine Months Ended
|                             |  | March 31, 2001     |         | March 31, 2001   
|                             |  |                    |         |                  
|                             |  |                    |         |                   |  | Income |        |   |  |   |       |       |  |        |  |     |  |   |         | Income |  |   |        |  
|(In thousands)               |  | Sales              |         | (Loss)            |  | EPS    |        |   |  |   |       | Sales |  | (Loss) |  | EPS
|                             |  |                    |         |                   |  |        |        |   |  |   |       |       |  |        |  |    
|As reported                  |  | $                  | 135,617 |                   |  | $      | (9,544 | ) |  | $ | (1.07 | )     |  |        |  |     |  | $ | 404,539 |        |  | $ | (5,433 | ) |  | $ | (.61 | )
|Impact of Creative Marketing |  |                    | 3,194   |                   |  |        | (93    | ) |  |   | (.01  | )     |  |        |  |     |  |   | 12,184  |        |  |   | 409    |   |  |   | .04  |  
|                             |  |                    |         |                   |  |        |        |   |  |   |       |       |  |        |  |    
|As Adjusted                  |  | $                  | 132,423 |                   |  | $      | (9,451 | ) |  | $ | (1.06 | )     |  |        |  |     |  | $ | 392,355 |        |  | $ | (5,842 | ) |  | $ | (.65 | )
|                             |  |                    |         |                   |  |        |        |   |  |   |       |       |  |        |  |    

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. |  | 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 93,000
shares and 66,000 shares for the three and nine months ended March 31,
2002, respectively. There were no incremental shares for dilutive
stock options for either the three or nine months ended March 31, 2001,
respectively.
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5. |  | Components of net inventories at March 31, 2002 and June 30, 2001,
were as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                           |  |             |        |          |  |   |        | 
|-------------------------- |  | ----------- | ------ | -------- |  | - | ------ | 
|                           |  | March 31,   |        | June 30,
|                           |  | 2002        |        | 2001    
|                           |  |             |        |         
|                           |  | (Unaudited) |        |          |  |  
|Raw materials and supplies |  | $           | 7,977  |          |  | $ | 9,772  | 
|Work in process            |  |             | 10,144 |          |  |   | 13,613 | 
|Finished goods             |  |             | 1,533  |          |  |   | 1,478  | 
|                           |  |             |        |          |  |   |        | 
|                           |  | $           | 19,654 |          |  | $ | 24,863 | 
|                           |  |             |        |          |  |   |        | 

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. |  | The Company is focused around its Publisher Services segment which
provides products and services to both not-for-profit societies and
commercial publishers in three primary product lines: scientific,
technical and medical (STM) journals, special interest and trade
magazines, and books and directories. Publisher Services provides a
full range of content management, editorial, prepress, printing,
warehousing and distribution services under the division names of
Cadmus Professional Communications, Cadmus Specialty Publications
(formerly CadmusMack), and Cadmus Port City Press. In addition, the
Companys Specialty Packaging segment provides high quality specialty
packaging, assembly, fulfillment and distribution services to consumer
product and other customers.
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |  | Other sales and operating income presented in the following table relate
to the Companys Atlanta-based Creative Marketing division, which was
divested in the third quarter of fiscal 2002. The Company has reported
the sale as a discontinued operation for fiscal 2002. As discussed in
Footnote 3, fiscal year 2001 results of operations have not been
reclassified to reflect the Companys Creative Marketing division as a
discontinued operation.                                                                                                                                                                                                                                                                                                                                       
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |  | The accounting policies for the segments are the same as those described
in Note 1 Significant Accounting Policies in the Companys annual
report on Form 10-K for the fiscal year ended June 30, 2001. The Company
primarily evaluates the performance of its operating segments based on
operating income, excluding amortization of goodwill, gains/losses on
sales of assets, and restructuring charges. Intergroup sales are not
significant. The Company manages income taxes on a consolidated basis.                                                                                                                                                                                                                                                                                    

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##### Table of Contents



Summarized group data is as follows:

|                                   |                                    |                  |                  |                  |         |           |        |           |        |        |        |   |        |   |   |   |         |         |         | 
|---------------------------------- | ---------------------------------- | ---------------- | ---------------- | ---------------- | ------- | --------- | ------ | --------- | ------ | ------ | ------ | - | ------ | - | - | - | ------- | ------- | ------- | 
|                                   |                                    |                  |                  |                  |         | Publisher |        | Specialty |        |        |        |   |        |   |   |  
|(In thousands)                     |                                    | Services         |                  | Packaging        |         | Other     |        | Total    
|                                   |                                    |                  |                  |                  |         |           |        |          
|                                   | Three Months Ended March 31, 2002: |                  |                  |                  |         |           |        |           |        |        |        |   |        |   |   |   |        
|                                   |                                    |                  |                  | Net sales        |         | $         | 98,203 |           |        | $      | 14,453 |   |        | $ |  |   |         | $       | 112,656 | 
|                                   |                                    |                  |                  | Operating income |         |           | 9,365  |           |        |        | 1,021  |   |        |   |  |   |         |         | 10,386  | 
|Three Months Ended March 31, 2001: |                                    |                  |                  |                  |         |           |        |           |        |        |        |   |        |   |   |  
|                                   |                                    | Net sales        |                  | $                | 115,162 |           |        | $         | 17,261 |        |        | $ | 3,194  |   |   | $ | 135,617 |        
|                                   |                                    | Operating income |                  |                  | 10,645  |           |        |           | (338   | )      |        |   | (45    | ) |   |   | 10,262  |        
|Nine Months Ended March 31, 2002:  |                                    |                  |                  |                  |         |           |        |           |        |        |        |   |        |   |   |  
|                                   |                                    |                  | Net sales        |                  | $       | 299,097   |        |           | $      | 39,162 |        |   | $      |  |   |   | $       | 338,259 |        
|                                   |                                    |                  | Operating income |                  |         | 29,298    |        |           |        | 1,264  |        |   |        |  |   |   |         | 30,562  |        
|Nine Months Ended March 31, 2001:  |                                    |                  |                  |                  |         |           |        |           |        |        |        |   |        |   |   |  
|                                   |                                    | Net sales        |                  | $                | 345,371 |           |        | $         | 46,984 |        |        | $ | 12,184 |   |   | $ | 404,539 |        
|                                   |                                    | Operating income |                  |                  | 36,323  |           |        |           | (841   | )      |        |   | 1,079  |   |   |   | 36,561  |        

A reconciliation of group data to consolidated data is as follows:

|                                                                    |  |                    |        |                   |  |      |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                    |  | Three Months Ended |        | Nine Months Ended
|                                                                    |  | March 31,          |        | March 31,        
|                                                                    |  |                    |        |                  
|(In thousands)                                                      |  | 2002               |        | 2001              |  | 2002 |         | 2001
|                                                                    |  |                    |        |                   |  |      |         |     
|Earnings from operations:                                           |  |                    |        |                   |  |      |         |      |  |   |         |   |  |   |         |  
|Reportable group operating income                                   |  | $                  | 10,386 |                   |  | $    | 10,262  |      |  | $ | 30,562  |   |  | $ | 36,561  |  
|Unallocated shared services and
other                      expenses |  |                    | (1,835 | )                 |  |      | (1,969  | )    |  |   | (6,525  | ) |  |   | (4,670  | )
|Amortization of goodwill                                            |  |                    | (1,174 | )                 |  |      | (1,254  | )    |  |   | (3,551  | ) |  |   | (3,850  | )
|Gain (loss) on sale of fixed assets                                 |  |                    | (14    | )                 |  |      | (8      | )    |  |   | (426    | ) |  |   | 66      |  
|Restructuring and other charges                                     |  |                    |       |                   |  |      | (15,490 | )    |  |   |        |   |  |   | (17,896 | )
|Interest expense, net                                               |  |                    | (3,773 | )                 |  |      | (4,833  | )    |  |   | (12,107 | ) |  |   | (14,974 | )
|Securitization costs                                                |  |                    | (220   | )                 |  |      | (663    | )    |  |   | (911    | ) |  |   | (2,233  | )
|Other                                                               |  |                    | (72    | )                 |  |      | 21      |      |  |   | (230    | ) |  |   | 90      |  
|                                                                    |  |                    |        |                   |  |      |         |      |  |   |         |   |  |   |         |  
|Income (loss) from continuing
operations before income taxes        |  | $                  | 3,298  |                   |  | $    | (13,934 | )    |  | $ | 6,812   |   |  | $ | (6,906  | )
|                                                                    |  |                    |        |                   |  |      |         |      |  |   |         |   |  |   |         |  

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. |  | The Company recorded restructuring and other charges totaling $15.5
million ($10.0 million net of taxes) in the third quarter of fiscal 2001.
These charges related to the consolidation of the Companys Atlanta-based
packaging logistics operations, the consolidation of two Richmond-based
commercial and magazine printing operations and other actions to reduce
operating costs. Total restructuring and other costs in the third quarter
of fiscal 2001 consisted of asset write-downs of $5.0 million, the
write-off of intangible assets related primarily to the Companys
Atlanta-based packaging logistics operation totaling $4.0 million,
involuntary termination costs of $2.7 million, contract termination costs
of $3.3 million and other post-closure shutdown costs of $0.5 million.
Involuntary termination costs related to approximately 200 employees.
Year to date restructuring and other charges totaling $17.9 million for
fiscal 2001 also included $2.7 million related to the final settlement of
certain post-closing contingencies and other facility closure costs
associated with the sale of the Companys Dynamic Diagrams subsidiary.

9



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##### Table of Contents



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | The $1.8 million restructuring reserve balance at March 31, 2002 resulted
from prior year restructuring activity: $0.8 million for involuntary
termination costs for approximately 50 associates, $0.8 million for contract
termination costs and $0.2 million for other post closure shutdown costs.
For the nine-month period ended March 31, 2002, the Company made severance
payments totaling $1.6 million to approximately 140 associates, paid $1.7
million in contract termination costs and $0.6 million in other post closure
shutdown costs. Restructuring actions are expected to be substantially
completed by September 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|8.  |  | In September 2001, the Company entered into a fixed interest rate to
floating interest rate swap agreement covering a notional amount of debt
of $35.0 million. This swap was entered into to convert $35.0 million of
the 9.75% senior subordinated notes due in 2009 to floating rate debt. The
initial term of this swap agreement expires in 2009, and the counterparty
to the swap agreement has an option to terminate the agreement in fiscal
2004. The Company receives interest payments at a fixed rate of 9.75% and
pays a variable interest rate that is based on six-month LIBOR plus a
spread. The six-month LIBOR rate is reset each December 1 and June 1. The
Companys strategy to effectively convert fixed rate financing to variable
rate financing through the aforementioned swap agreement resulted in a
reduction of interest expense of $0.4 million and $0.6 million for the
three and nine-month periods ended March 31, 2002, respectively. Based on
the change in rates during the quarter, the interest rate swap agreement
had a fair market value to the Company of negative $0.9 million as of
March 31, 2002 offset by an equal change in the market value of the
underlying debt. In accordance with Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, this swap qualifies as a hedge against the debt. Therefore,
its value is recorded in other long-term liabilities with an equal offset
in long-term debt on the Condensed Consolidated Balance Sheets. The change
in value of the swap has no impact on earnings.
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |  | At July 1, 2000, the Company had two fixed-to-floating interest rate swap
agreements which, when adjusted to fair value, resulted in a gain of $1.5
million for the nine-month period ended March 31, 2001. The Company
terminated these interest rate swap agreements in the second quarter of
fiscal 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|9.  |  | The Company uses an accounts receivable securitization program to fund
some of its working capital requirements. At March 31, 2002 and 2001,
approximately $33.4 million and $41.4 million, respectively, of net
accounts receivable had been sold by the Companys wholly-owned,
bankruptcy-remote subsidiary to an unrelated third party purchaser under
the securitization program. The sales were reflected in the Condensed
Consolidated Balance Sheets as a reduction of accounts receivable with
proceeds used to repay a corresponding amount of borrowing under the
Companys senior bank facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10. |  | On June 30, 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 142
Goodwill and Other Intangible Assets which changed the accounting for
goodwill and intangible assets. SFAS No. 142 requires that goodwill no
longer be amortized. Rather, goodwill will be subject to at least an
annual assessment for impairment by applying a fair-value-based test.
Annual goodwill impairment losses will be classified as a component of
income from continuing operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |  | The Company is required to adopt SFAS No. 142 on July 1, 2002 and perform a
fair market valuation analysis of goodwill as of the same date. The Company
expects to perform this valuation and identify whether an impairment exists
under this statement by the end of the first quarter of fiscal 2003.
Impairment losses, if any, as a result of the adoption, will be recognized
as a cumulative effect of a change in accounting principle.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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

GENERAL

Headquartered in Richmond, Virginia, Cadmus Communications Corporation
(Cadmus or the Company) provides end-to-end, integrated graphic
communications services to professional publishers, not-for-profit societies
and corporations. Cadmus is the largest provider of content management and
production services to scientific, technical and medical (STM) journal
publishers in the world, the fourth largest publications printer in North
America, and a leading provider of specialty packaging products and services.

The Company is focused around its Publisher Services segment which provides
products and services to both not-for-profit societies and commercial
publishers in three primary product lines: STM journals, special interest and
trade magazines, and books and directories. Publisher Services provides a full
range of content management, editorial, prepress, printing, warehousing and
distribution services under the division names of Cadmus Professional
Communications (CPC), Cadmus Specialty Publications (formerly CadmusMack),
and Port City Press. In addition, the Company provides high quality specialty
packaging, assembly, fulfillment and distribution services to consumer product
and other customers.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

In December 2001, the Securities and Exchange Commission issued Financial
Reporting Release No. 60 that requires all companies to include a discussion of
critical accounting policies or methods used in the preparation of their
financial statements. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the dates of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. The Company considers
the following accounting policies to be critical policies which involve various
estimation processes:



| |  | Allowance for doubtful accounts            
|- |  | -------------------------------------------
| 
| |  | Valuation of intangible assets and goodwill
| 
| |  | Pension benefits                           
| 
| |  | Income taxes                               
| 
| |  | Discontinued operations                    

Allowance for doubtful accounts. Cadmus policy with respect to its trade and
notes receivable is to maintain an adequate allowance or reserve for doubtful
accounts for estimated losses from the inability of its customers or
noteholders to make required payments. The Companys process to estimate the
collectibility of its trade accounts receivable balances consists of two steps.
First, the Company evaluates specific accounts for which it has information
that the customer may have an inability to meet its financial obligations
(e.g., bankruptcy). In these cases, the Company uses its judgment, based on
available facts and circumstances, and records a specific allowance for that
customer against the receivable to reflect the amount it expects to ultimately
collect. Second, the Company then establishes an additional reserve for all
customers based on a range of percentages applied to aging categories, based on
managements best estimate. The Company periodically evaluates the adequacy of
its reserves on notes receivable based on the available facts and circumstances
at the time. If the financial condition of Cadmus customers or noteholders
were to deteriorate and result in an impairment of their ability to make
payments, additional allowances may be required.

Valuation of intangible assets and goodwill. Through fiscal 2002, the Company
amortized costs in excess of fair value of net assets of businesses acquired
(goodwill) using the straight-line method over a period not to exceed 40 years.
Accordingly, recoverability was reviewed annually or sooner if events or
changes in circumstances indicated that the carrying amount may not be
recovered. Recoverability is determined by comparing the undiscounted net cash
flows of the assets to which the goodwill applied to the net book value,
including goodwill, of those assets.

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On June 30, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142 Goodwill and
Other Intangible Assets which changed the accounting for goodwill and
intangible assets. SFAS No. 142 requires that goodwill no longer be amortized.
Rather, goodwill will be subject to at least an annual assessment for
impairment by applying a fair-value-based test. Annual goodwill impairment
losses will be classified as a component of income from continuing operations.

The Company is required to adopt SFAS No. 142 on July 1, 2002 and perform a
fair market valuation analysis of goodwill as of the same date. The Company
will test goodwill for impairment using the two-step process prescribed in SFAS
No. 142. The first step is a screen for potential impairment, while the second
step measures the amount of the impairment. The Company expects to perform the
required impairment tests of goodwill to identify whether an impairment exists
under this statement by the end of the first quarter of fiscal 2003. Based on
steps the Company has taken to prepare for the adoption of SFAS No. 142, the
Company anticipates that between $45 million and $60 million of the goodwill
related to the Publisher Services business will be impaired using the
impairment test required by SFAS No. 142. Any impairment charge resulting from
these transitional impairment tests will be reflected as a cumulative effect of
a change in accounting principle in the first quarter of fiscal 2003. At March
31, 2002, the Company had $168.8 million in goodwill and other intangible
assets.

Pension and other post retirement benefits. The Company sponsors pension and
other postretirement plans covering employees who meet eligibility
requirements. Several statistical and other factors which attempt to
anticipate future events are used to calculate the expense and liability
related to the plans. These factors include assumptions determined by the
Company about the discount rate, expected return on plan assets, and rate of
future compensation increases. In addition, the Companys actuarial
consultants use subjective factors such as withdrawal and mortality rates to
estimate the impact of these trends on expense and liability amounts. The
actuarial assumptions used by the Company may differ materially from actual
results due to changing market and economic conditions, higher or lower
withdrawal rates or longer or shorter life spans of participants. While the
Company believes its assumptions are appropriate, significant differences in
actual experience or significant changes in the Companys assumptions may
materially affect its pension and other postretirement obligations and its
future expense.

Income Taxes. As part of the process of preparing the consolidated financial
statements, the Company is required to estimate income taxes in each of the
jurisdictions in which the Company operates. In addition to estimating the
actual current tax liability, the Company must assess future tax effects of
temporary differences between the tax bases of assets and liabilities and
amounts reported in the accompanying consolidated balance sheets, and operating
loss carryforwards. Such differences result in deferred tax assets and
liabilities, which are recorded on the Companys Consolidated Balance Sheets.
Management then assesses the likelihood that deferred tax assets will be
recovered from future taxable income, and, to the extent recovery is not
considered likely, establishes a valuation allowance against those assets. The
valuation allowance is based on estimates of future taxable income by
jurisdictions in which the Company operates and the period over which the
deferred tax assets will be recoverable. Judgment is involved in determining
the provision for income taxes, the deferred tax assets and liabilities, and
any valuation allowance recorded against the net deferred tax assets.

To the extent that actual results differ from managements estimates, new
information results in changes to estimates, or there is a material change in
the actual tax rates or time period within which the underlying temporary
differences become taxable or deductible, the Company may need to establish an
additional valuation allowance or adjust the effective tax rate which could
materially impact the Companys financial position and results of operations.

Discontinued Operations. In the third quarter of fiscal 2002, the Company
recorded a $1.2 million loss, net of taxes, in connection with the sale of its
Atlanta-based Creative Marketing division. The Company has reported the sale
as a discontinued operation for fiscal 2002. The Company did not reclassify
the results of the Creative Marketing division as a discontinued operation in
the prior year because, as displayed in the table below, the changes that would
result from a reclassification would not be material to the consolidated
financial statements for fiscal 2001. The Creative Marketing division
accounted for less than 5% of sales, operating income and income from
continuing operations (before restructuring and other charges) for the three-
and nine-month periods ended March 31, 2001, respectively. In addition, the
impact of reclassifying would have no impact on the Companys reported net
income (loss), compliance with loan covenants or other

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contractual requirements, and no significant impact on earnings trends. The
Company also notes that fiscal year 2001 was audited by Arthur Andersen LLP
(AA). If the Company were to restate the consolidated financial statements
for fiscal 2001 to reflect the Creative Marketing division as a discontinued
operation, generally accepted auditing standards would require the Company to
either have the firm that initially audited that year audit any adjustments, or
have the financial statements for that year reaudited. Given AAs
unavailability to reissue its audit report, a reaudit would be necessary.
Since the Company has concluded that the changes would not be material, the
Company has determined, and its Audit Committee has concurred, that the
benefits, if any, of reauditing fiscal 2001 do not justify the costs of, or the
delay associated with, a reaudit.

|                             |  |                    |         |                   |  |        |        |   |  |   |       |       |  |        |  |     |  |   |         |        |  |   |        |   |  |   |      |  
|---------------------------- |  | ------------------ | ------- | ----------------- |  | ------ | ------ | - |  | - | ----- | ----- |  | ------ |  | --- |  | - | ------- | ------ |  | - | ------ | - |  | - | ---- | -
|                             |  | Three Months Ended |         | Nine Months Ended
|                             |  | March 31, 2001     |         | March 31, 2001   
|                             |  |                    |         |                  
|                             |  |                    |         |                   |  | Income |        |   |  |   |       |       |  |        |  |     |  |   |         | Income |  |   |        |  
|(In thousands)               |  | Sales              |         | (Loss)            |  | EPS    |        |   |  |   |       | Sales |  | (Loss) |  | EPS
|                             |  |                    |         |                   |  |        |        |   |  |   |       |       |  |        |  |    
|As reported                  |  | $                  | 135,617 |                   |  | $      | (9,544 | ) |  | $ | (1.07 | )     |  |        |  |     |  | $ | 404,539 |        |  | $ | (5,433 | ) |  | $ | (.61 | )
|Impact of Creative Marketing |  |                    | 3,194   |                   |  |        | (93    | ) |  |   | (.01  | )     |  |        |  |     |  |   | 12,184  |        |  |   | 409    |   |  |   | .04  |  
|                             |  |                    |         |                   |  |        |        |   |  |   |       |       |  |        |  |    
|As Adjusted                  |  | $                  | 132,423 |                   |  | $      | (9,451 | ) |  | $ | (1.06 | )     |  |        |  |     |  | $ | 392,355 |        |  | $ | (5,842 | ) |  | $ | (.65 | )
|                             |  |                    |         |                   |  |        |        |   |  |   |       |       |  |        |  |    

RESULTS OF OPERATIONS
Results of operations for the current and prior periods reflect the adoption of
Issue 00-10, Accounting for Shipping and Handling Fees and Costs as set forth
by the Emerging Issues Task Force (EITF) of the Financial Accounting
Standards Board in July 2000. EITF 00-10 requires companies to classify as
revenues any shipping and handling fees billed to customers. Previously,
shipping and postage revenues and shipping and postage expenses were included
in cost of sales.

The following table presents the major components of the Condensed Consolidated
Statements of Income as a percent of net sales for the three and nine-month
periods ended March 31, 2002 and 2001, respectively. Results of operations for
fiscal 2002 reflect the Companys sale of its Atlanta-based Creative Marketing
operation in January 2002, which has been reported as a discontinued operation.
As discussed above, fiscal year 2001 results of operations have not been
reclassified to reflect the Companys Creative Marketing division as a
discontinued operation.

|                                                       |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |   
|------------------------------------------------------ |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | --
|                                                       |  | Three Months Ended |       | Nine Months Ended
|                                                       |  | March 31,          |       | March 31,        
|                                                       |  |                    |       |                  
|                                                       |  | 2002               |       | 2001              |  | 2002 |       | 2001
|                                                       |  |                    |       |                   |  |      |       |     
|Net sales                                              |  |                    | 100.0 | %                 |  |      | 100.0 | %    |  |  | 100.0 | % |  |  | 100.0 | % 
|Cost of sales                                          |  |                    | 81.7  |                   |  |      | 83.1  |      |  |  | 82.1  |   |  |  | 82.2  |   
|                                                       |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |   
|Gross profit                                           |  |                    | 18.3  |                   |  |      | 16.9  |      |  |  | 17.9  |   |  |  | 17.8  |   
|Selling and administrative expenses                    |  |                    | 11.8  |                   |  |      | 11.7  |      |  |  | 12.0  |   |  |  | 10.9  |   
|Restructuring and other charges                        |  |                    |      |                   |  |      | 11.4  |      |  |  |      |   |  |  | 4.4   |   
|                                                       |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |   
|Operating income                                       |  |                    | 6.5   |                   |  |      | (6.2  | )    |  |  | 5.9   |   |  |  | 2.5   |   
|Interest expense                                       |  |                    | 3.3   |                   |  |      | 3.6   |      |  |  | 3.6   |   |  |  | 3.7   |   
|Securitization costs                                   |  |                    | 0.2   |                   |  |      | 0.5   |      |  |  | 0.2   |   |  |  | 0.5   |   
|Other, net                                             |  |                    | 0.1   |                   |  |      |      |      |  |  | 0.1   |   |  |  |      |   
|                                                       |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |   
|Income (loss) from continuing operations,
before taxes |  |                    | 2.9   |                   |  |      | (10.3 | )    |  |  | 2.0   |   |  |  | (1.7  | ) 
|Income tax expense (benefit)                           |  |                    | 1.5   |                   |  |      | (3.3  | )    |  |  | 1.0   |   |  |  | (0.4  | ) 
|                                                       |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |   
|Income (loss) from continuing operations               |  |                    | 1.4   |                   |  |      | (7.0  | )    |  |  | 1.0   |   |  |  | (1.3  | ) 
|Income (loss) from discontinued operations,
net of tax |  |                    | (1.1  | )                 |  |      |      |      |  |  | (0.4  | ) |  |  |      |   
|                                                       |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |   
|Net income                                             |  |                    | 0.3   | %                 |  |      | (7.0  | )%   |  |  | 0.6   | % |  |  | (1.3  | )%
|                                                       |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |   

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Net Sales
Net sales for the third quarter of fiscal 2002 were $112.7 million, compared to
$135.6 million in the same quarter last year. These amounts included shipping
and postage fees billed to customers totaling $10.1 million and $13.7 million
for the three months ended March 31, 2002 and 2001, respectively. Excluding
the impact of divested and closed operations, net sales totaled $122.7 million
for the third quarter of fiscal 2001. For the first nine months of fiscal
2002, net sales totaled $338.3 million, compared to $404.5 million in the prior
year. These amounts included shipping and postage fees billed to customers
totaling $30.7 million and $40.9 million for the nine months ended March 31,
2002 and 2001, respectively. Adjusted for divested and closed operations, net
sales were $359.3 million for the nine months ended March 31, 2001.

Net sales in the Publisher Services segment, which includes the STM journal
services, special interest magazines and books and directories divisions, were
$98.2 million in the third quarter of fiscal 2002 compared to $115.2 million in
the corresponding period of the prior year. These amounts included shipping and
postage fees billed to customers totaling $9.4 million and $12.4 million for
the three months ended March 31, 2002 and 2001, respectively. Excluding the
impact of operations that were divested or closed in fiscal 2001, net sales for
the Publisher Services segment were $108.8 million in the third quarter of
fiscal 2001. For the nine months ended March 31, 2002, net sales in the
Publisher Services segment were $299.1 million compared to $345.4 million in
the corresponding period of fiscal 2001. These amounts included shipping and
postage fees billed to customers totaling $28.5 million and $37.4 million for
the nine months ended March 31, 2002 and 2001, respectively. Excluding the
impact of operations that were divested or closed in fiscal 2001, net sales for
the Publisher Services segment totaled $321.8 million for the nine-month period
ended March 31, 2001. Within the Publisher Services segment, net sales for CPC
declined for the three- and nine-month periods ended March 31, 2002 compared to
the prior year. The decline in CPC net sales was attributable to volume and
pricing pressures resulting from customer consolidation in the STM market and
lower paper prices. Net sales for CadmusMack declined for both the three- and
nine-month periods ended March 31, 2002, respectively, compared to fiscal 2001,
due to continued softness in advertising pages, lower paper prices and general
industry overcapacity in the special interest magazine market. Port City Press
also experienced a decline in net sales for the third quarter of fiscal 2002
and for the nine months ended March 31, 2002 compared to the prior year,
primarily as a result of competitive pricing pressures, a temporary decline in
sales to a major customer and lower paper prices.

Specialty Packaging net sales were $14.5 million and $39.2 million for the
three and nine-month periods ended March 31, 2002, respectively, compared to
$17.3 million and $47.0 million in the corresponding periods of the prior year.
Adjusted for operations that were closed in fiscal 2001, net sales for
Specialty Packaging totaled $13.9 million and $37.5 million for the three and
nine-month periods ended March 31, 2001. The 4% increase in Specialty
Packaging sales for both the three and nine-months periods ended March 31, 2002
compared to the prior year was a result of new business wins and increased
business from existing accounts.

Net sales for the Companys Creative Marketing operation, which was sold in
January 2002, totaled $3.2 million and $12.2 million for the three- and
nine-month periods ended March 31, 2001, respectively. As discussed above, the
Company has reported fiscal 2002 results for Creative Marketing as a
discontinued operation.

Gross Profit
Gross profit increased to 18.3% of net sales for the third quarter of fiscal
2002, compared to 16.9% of net sales for the third quarter of fiscal 2001, and
increased to 17.9% of net sales for the first nine months of fiscal 2002,
compared to 17.8% of net sales for the same period of fiscal 2001. The margin
improvement was attributable to company-wide cost reduction efforts,
improvement in facility efficiencies, improved offshore workflows within the
Publisher Services segment and favorable product mix within the Specialty
Packaging division.

Selling and Administrative Expenses
Selling and administrative expenses were 11.8% of net sales for the third
quarter of fiscal 2002, compared to 11.7% for the same period of the prior
year. For the first nine months of fiscal 2002, selling and administrative
expenses were 12.0% of net sales compared to 10.9% of net sales in the
corresponding period of the prior year. The increased ratios reflected the
impact of declining sales in fiscal 2002 and the effects in fiscal 2001 of (i)
a $1.5 million gain recognized under Statement of Financial Accounting
Standards No. 133 Accounting for Derivative Instruments and Hedging
Activities and (ii) a $0.7 million gain resulting from the demutualization of
one of the Companys insurance providers. Excluding these special one-time
gains, selling and

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administrative expenses would have been 11.9% and 11.4% of net sales for the
three and nine-month periods ended March 31, 2001, respectively.

Restructuring and Other Charges
The Company recorded restructuring and other charges totaling $15.5 million
($10.0 million net of taxes) in the third quarter of fiscal 2001. These
charges related to the consolidation of the Companys Atlanta-based packaging
logistics operations, the consolidation of two Richmond-based commercial and
magazine printing operations and other actions to reduce operating costs.
Total restructuring and other costs in the third quarter of fiscal 2001
consisted of asset write-downs of $5.0 million, the write-off of intangible
assets related primarily to the Companys Atlanta-based packaging logistics
operation totaling $4.0 million, involuntary termination costs of $2.7 million,
contract termination costs of $3.3 million and other post-closure shutdown
costs of $0.5 million. Involuntary termination costs related to approximately
200 employees. Year to date restructuring and other charges totaling $17.9
million for fiscal 2001 also included $2.7 million related to the final
settlement of certain post-closing contingencies and other facility closure
costs associated with the sale of the Companys Dynamic Diagrams subsidiary.

The $1.8 million restructuring reserve balance at March 31, 2002 resulted from
prior year restructuring activity: $0.8 million for involuntary termination
costs for approximately 50 associates, $0.8 million for contract termination
costs and $0.2 million for other post closure shutdown costs. For the
nine-month period ended March 31, 2002, the Company made severance payments
totaling $1.6 million to approximately 140 associates, paid $1.7 million in
contract termination costs and $0.6 million in other post closure shutdown
costs. Restructuring actions are expected to be substantially completed by
September 30, 2002.

Operating Income
The Company recorded operating income of $7.4 million for the third quarter of
fiscal 2002 compared to an operating loss of $8.5 million in the same quarter
of the prior year. Operating income for the first nine months of fiscal 2002
was $20.1 million, compared to $10.2 million for the comparable period of
fiscal 2001. Excluding restructuring and other charges in fiscal 2001,
operating income improved to 6.5% of net sales for the third quarter of fiscal
2002 compared to 5.2% of net sales for the corresponding period of the prior
year. For the nine months ended March 31, 2002, operating income totaled 5.9%
of net sales compared to 6.9% in fiscal 2001, excluding restructuring and other
charges. Company-wide cost reduction efforts and improved facility
efficiencies led to improvements in operating income for the quarter serving to
offset continued reduction in advertising pages and pricing pressures which
negatively impacted year to date results.

Interest and Other Expenses
Interest expense and securitization costs in the third quarter of fiscal 2002
declined to $4.0 million compared to $5.5 million in the prior year. For the
first nine months of fiscal 2002, interest expense and securitization costs
declined to $13.0 million from $17.2 million for the comparable period in the
prior year. The decrease in interest expense was due to lower debt levels and
lower year-over-year short-term interest rates.

Income Taxes
The Company recognized income tax expense (benefits) for the three and
nine-month periods of fiscal 2002 and 2001, respectively, at the effective tax
rates indicated below:

|                                            |  |                    |      |                   |  |      |       |      |  |  |      |   |  |  |       |   
|------------------------------------------- |  | ------------------ | ---- | ----------------- |  | ---- | ----- | ---- |  |  | ---- | - |  |  | ----- | --
|                                            |  | Three Months Ended |      | Nine Months Ended
|                                            |  | March 31,          |      | March 31,        
|                                            |  |                    |      |                  
|                                            |  | 2002               |      | 2001              |  | 2002 |       | 2001
|                                            |  |                    |      |                   |  |      |       |     
|Effective income tax expense (benefit) rate |  |                    | 53.1 | %                 |  |      | (31.5 | )%   |  |  | 49.5 | % |  |  | (21.3 | )%

The variation in rates from statutory rates was primarily attributable to the
impact of non-tax deductible goodwill amortization. The 53.1% tax rate for the
third quarter of fiscal 2002 was due to a cumulative adjustment to increase the
effective tax rate for the first nine months to a revised estimated tax rate of
49.5% for fiscal 2002.

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LIQUIDITY AND CAPITAL RESOURCES

Operating Activities
Net cash provided by operating activities for the first nine months of fiscal
2002 totaled $36.6 million, compared to $26.9 million for the first nine months
of fiscal 2001. This $9.7 million increase was primarily attributable to
reduced working capital requirements as a result of inventory reduction
initiatives, collection efforts and lower net sales which reduced accounts
receivable, a $4.7 million decrease in cash contributions to the Companys
pension plan, and a $1.0 million Federal income tax refund. This increase was
partially offset by a $1.1 million increase in restructuring payments made
during fiscal 2002.

Investing Activities
Net cash used in investing activities was $3.6 million for the first nine
months of fiscal 2002 compared to $10.9 million in the prior year. Capital
expenditures for the first nine months of fiscal 2002 totaled $8.8 million
compared to $13.7 million for the corresponding period of the prior year, and
included investments primarily in an 8-unit sheetfed press, digital prepress
equipment, new business and manufacturing systems, and building improvements.
Reported capital expenditures in fiscal 2002 do not reflect the impact of
transferred and redeployed production equipment as a result of the Companys
consolidation of its operations in fiscal 2001 and 2002. Proceeds from the
sale of property, plant and equipment in fiscal 2002 totaled $3.7 million, and
related primarily to the sale of a composition facility located in Akron,
Pennsylvania, a press at the Companys Charlotte facility, and a warehouse
facility located in Lancaster, Pennsylvania. Net proceeds from divested
operations totaled $1.5 million and related to the sale of the Companys
Atlanta-based Creative Marketing division.

Proceeds from the sale of property, plant and equipment of $3.2 million in
fiscal 2001 related primarily to the sale of a press and building related to
the Companys former point of purchase division. Net proceeds from divested
operations totaled $4.2 million in fiscal 2001 and related to the sale of the
Companys Dynamic Diagrams division. The Company also made a strategic
investment of $3.1 million in Xyvision Enterprise Solutions, Inc., a developer
of XML content management and publishing software, in fiscal 2001.

The Company estimates that capital expenditures for fiscal 2002 will be
approximately $15 million.

Financing Activities
Net cash used in financing activities was $34.5 million for the first nine
months of fiscal 2002 compared to $19.6 million for the first nine months of
fiscal 2001. Cash provided by operating activities was used to pay down $26.4
million on the Companys revolving credit facility, to pay off a $2.6 million
mortgage on the Companys Lancaster facility and to fund $1.3 million in
dividend payments. The Company also received $0.4 million in proceeds from the
exercise of stock options. Lower sales and funding rates at March 31, 2002
combined with the removal of receivables from the securitization program for
closed operations resulted in a reduction of $4.6 million in funding under the
Companys receivables securitization program.

In September 2001, the Company entered into a fixed interest rate to floating
interest rate swap agreement covering a notional amount of debt of $35.0
million. This swap was entered into to convert $35.0 million of the 9.75%
senior subordinated notes due in 2009 to floating rate debt. The initial term
of this swap agreement expires in 2009, and the counterparty to the swap
agreement has an option to terminate the agreement in fiscal 2004. The Company
receives interest payments at a fixed rate of 9.75% and pays a variable
interest rate that is based on six-month LIBOR plus a spread. The six-month
LIBOR rate is reset each December 1 and June 1. The Companys strategy to
effectively convert fixed rate financing to variable rate financing through the
aforementioned swap agreement resulted in a reduction of interest expense of
$0.4 million and $0.6 million for the three and nine-month periods ended March
31, 2002, respectively. Based on the change in rates during the quarter, the
interest rate swap agreement had a fair market value to the Company of negative
$0.9 million as of March 31, 2002 offset by an equal change in the market value
of the underlying debt. In accordance with Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, this swap qualifies as a hedge against the debt. Therefore, its
value is recorded in other liabilities with an equal offset in long-term debt
on the Condensed Consolidated Balance Sheets. The change in value of the swap
has no impact on earnings.

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For the nine months ended March 31, 2001, the Company utilized cash provided by
operations to pay down $15.3 million in debt and to fund $1.3 million in
dividend payments. At March 31, 2001 there was a reduction of $2.9 million in
funding under the Companys receivables securitization program.

Long-term debt at March 31, 2002, was $153.1 million, down $29.9 million from
$183.0 million at June 30, 2001. The Companys debt to capital ratio, defined
as long-term debt as a percentage of total long-term debt plus total
shareholders equity, was 58.0% at March 31, 2002, down from 62.6% at June 30,
2001, primarily due to the reduction in overall debt levels.

The Company uses an accounts receivable securitization program to fund some of
its working capital requirements. At March 31, 2002 and 2001, approximately
$33.4 million and $41.4 million, respectively, of net accounts receivable had
been sold by the Companys wholly-owned, bankruptcy-remote subsidiary to an
unrelated third party purchaser under the securitization program. The sales
were reflected in the Condensed Consolidated Balance Sheets as a reduction of
accounts receivable with proceeds used to repay a corresponding amount of
borrowing under the Companys senior bank facility.

The primary cash requirements of the Company are for debt service, capital
expenditures, and working capital. The primary sources of liquidity are cash
flow provided by operations and unused capacity under the Companys senior
credit and receivables securitization facilities. The future operating
performance and the ability to service or refinance the Companys debt depends
on the ability to implement the business strategy and on general economic,
financial, competitive, legislative, regulatory and other factors, many of
which are beyond the control of the Company. The Company believes that these
sources will provide sufficient liquidity and capital resources to meet its
operating requirements for capital expenditures and working capital
requirements.

Statements contained in this report relating to Cadmus future prospects and
performance are forward-looking statements that are subject to risks and
uncertainties, both known and unknown, that could cause actual results to
differ materially from those expressed or implied by such statements. Factors
that could cause actual results to differ materially from managements
projections, forecasts, estimates and expectations may include factors that are
beyond the Companys ability to control or estimate precisely, such as
estimates of future market conditions and the behavior of other market
participants. Other potential risks and uncertainties include but are not
limited to: (1) the overall economic environment in North America, (2) our
ability to develop and market new capabilities and services to take advantage
of technology changes in the publishing process, especially for scientific,
technical and medical journals, (3) significant price pressure in the markets
in which we compete, (4) the loss of significant customers or the decrease in
demand from customers, (5) our ability to continue to obtain improved
efficiencies and lower production costs, (6) adverse changes in our product
sales mix, (7) the impact of industry consolidation among key customers, (8)
our ability to successfully complete certain consolidation initiatives and
effect other restructuring actions, and (9) our ability to operate profitably
and effectively with high levels of indebtedness. Other risk factors are
detailed from time to time in our Securities and Exchange Commission filings.
The information provided in this report is provided only as of the date of this
report, and we undertake no obligation to update any forward-looking statements
made therein.

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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: |  | September 26, 2002                                                  
|      |  |                                                                     
|      |  | /s/ Bruce V. Thomas                                                 
|      |  |                                                                     
|      |  | Bruce V. Thomas
President and Chief Executive Officer               
|      |  |                                                                     
|Date: |  | September 26, 2002                                                  
|      |  |                                                                     
|      |  | /s/ Stephen E. Hare                                                 
|      |  |                                                                     
|      |  | Stephen E. Hare
Executive Vice President and Chief Financial Officer

Certification of CEO/CFO pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 enclosed separately as correspondence with this filing.

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