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

                                    FORM 10-Q
(Mark One)

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended June 30, 2003

                                       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 No. 333-50995

                               PHOENIX COLOR CORP.
             (Exact name of Registrant as specified in its charter)

           Delaware                                      22-2269911
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

     540 Western Maryland Parkway
         Hagerstown, Maryland                              21740
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:    (301) 733-0018

      Indicate by check X whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

      Indicate by check X whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes |_| No |X|

      As of August 12, 2003, there were 11,100 shares of the Registrant's Class
A Common Stock issued and outstanding and 7,794 of the Registrant's Class B
Common Stock issued and outstanding.


<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                          Index to Financial Statements

                                                                        Page No.

Consolidated Balance Sheets
            June 30, 2003 and December 31,  2002                          1

Consolidated Statements of Operations
            Three and Six Months Ended June 30, 2003  and 2002            2

Consolidated Statements of Cash Flows
            Six Months Ended June 30, 2003  and 2002                      3


Notes to Consolidated Financial Statements                                4

<PAGE>

                      PHOENIX COLOR CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                           December 31,
                                                                                      June 30, 2003            2002
                                                                                       (Unaudited)          (Unaudited)
                                                                                      -------------       -------------
                                      ASSETS
<S>                                                                                   <C>                 <C>
Current assets:
     Cash and cash equivalents .................................................      $      82,573       $     109,297
     Accounts receivable, net of allowance for doubtful accounts
     and rebates of $2,045,324 in 2003 and $1,524,631 in 2002 ..................         20,665,319          18,343,018
     Inventory .................................................................          6,781,717           6,198,822
     Income tax receivable .....................................................            481,138             481,138
     Prepaid expenses and other current assets .................................          2,342,919           2,645,563
                                                                                      -------------       -------------
         Total current assets ..................................................         30,353,666          27,777,838

Property, plant and equipment, net .............................................         58,480,405          62,254,886
Goodwill .......................................................................         13,302,809          13,302,809
Deferred financing costs, net ..................................................          2,606,825           2,885,048
Other assets ...................................................................         12,353,415          13,304,922
                                                                                      -------------       -------------
         Total assets ..........................................................      $ 117,097,120       $ 119,525,503
                                                                                      =============       =============

                        LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities:
     Notes payable .............................................................      $     545,592       $     545,592
     Capital lease obligations .................................................            779,641             725,060
     Accounts payable ..........................................................          8,135,434           7,344,110
     Accrued expenses ..........................................................         11,734,841          11,162,492
                                                                                      -------------       -------------
         Total current liabilities .............................................         21,195,508          19,777,254
10 3/8% Senior subordinated notes ..............................................        105,000,000         105,000,000
MICRF Loan .....................................................................            500,000             500,000
Notes payable ..................................................................            136,398             409,194
Capital lease obligations ......................................................          2,961,033           3,364,187
Revolving line of credit .......................................................          8,709,343           9,082,100
Deferred income taxes ..........................................................            625,457             625,457
                                                                                      -------------       -------------
         Total liabilities .....................................................        139,127,739         138,758,192
                                                                                      -------------       -------------

Commitments and contingencies (Note 8)

Stockholders' deficit
     Common Stock, Class A, voting, par value $0.01 per share, authorized
         20,000 shares, 14,560 issued shares, 11,100 outstanding shares ........                146                 146
     Common Stock, Class B, non-voting, par value $0.01 per share,
     authorized 200,000 shares, 9,794 issued shares, 7,794 outstanding shares ..                 98                  98
     Additional paid in capital ................................................          2,126,804           2,126,804
     Accumulated deficit .......................................................        (22,366,805)        (19,561,675)
     Stock subscriptions receivable ............................................            (21,632)            (28,832)
     Treasury stock, at cost:  Class A, 3,460 shares and Class B, 2,000
       shares ..................................................................         (1,769,230)         (1,769,230)
                                                                                      -------------       -------------
         Total stockholders' deficit ...........................................        (22,030,619)        (19,232,689)
                                                                                      -------------       -------------
         Total liabilities & stockholders' deficit .............................      $ 117,097,120       $ 119,525,503
                                                                                      =============       =============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       1
<PAGE>

                      PHOENIX COLOR CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                       (Unaudited)                     (Unaudited)
                                                               Three Months Ended June 30,      Six Months Ended June 30,
                                                               ----------------------------    ----------------------------
                                                                    2003           2002             2003           2002
                                                               ----------------------------    ----------------------------
<S>                                                            <C>             <C>             <C>             <C>
Sales ......................................................   $ 34,068,154    $ 35,844,237    $ 67,890,473    $ 66,066,078
Cost of sales ..............................................     27,773,963      27,258,654      54,630,684      52,681,942
                                                               ------------    ------------    ------------    ------------
Gross profit ...............................................      6,294,191       8,585,583      13,259,789      13,384,136
                                                               ------------    ------------    ------------    ------------
Operating expenses:
      Selling and marketing expenses .......................      1,820,283       1,815,924       3,746,815       3,777,014
      General and administrative expenses ..................      3,134,547       2,709,552       6,221,101       5,982,102
      Loss (gain) on sale of assets ........................         91,848           3,650          19,358         (27,580)
      Lease termination charges ............................             --       1,483,000              --       1,483,000
                                                               ------------    ------------    ------------    ------------
Total operating expenses ...................................      5,046,678       6,012,126       9,987,274      11,214,536
                                                               ------------    ------------    ------------    ------------
Income from operations .....................................      1,247,513       2,573,457       3,272,515       2,169,600
Other expenses:
      Interest expense .....................................      3,059,822       3,256,590       6,133,967       6,384,667
      Other (income) expense ...............................        (25,615)        179,392         (56,322)        161,039
                                                               ------------    ------------    ------------    ------------
Loss before income taxes ...................................     (1,786,694)       (862,525)     (2,805,130)     (4,376,106)
Income tax benefit .........................................             --              --              --      (3,269,000)
                                                               ------------    ------------    ------------    ------------
Net loss ...................................................   ($ 1,786,694)   ($   862,525)   ($ 2,805,130)   ($ 1,107,106)
                                                               ============    ============    ============    ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements


                                       2
<PAGE>

                                  PHOENIX COLOR CORP. AND SUBSIDIARIES

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                   Six Months Ended June 30,
                                                                                   (Unaudited)    (Unaudited)
                                                                                      2003           2002
                                                                                   -----------    -----------
<S>                                                                                <C>            <C>
Operating activities
   Net loss ....................................................................   ($2,805,130)   ($1,107,106)
   Adjustments to reconcile net loss to net cash provided by operating
   activities:
     Depreciation and amortization of property, plant and equipment ............     5,093,705      5,018,618
     Amortization of deferred financing costs ..................................       278,224        271,689
     Provision for uncollectible accounts ......................................       279,324        212,936
     Lease termination charge...................................................            --      1,483,000
     Deferred income taxes ....................................................             --     (3,269,000)
     Loss (gain) on disposal of assets .........................................        19,358        (27,580)
   Increase (decrease) in cash resulting from changes in assets and
   liabilities:
     Accounts receivable .......................................................    (2,601,626)    (2,960,327)
     Inventory .................................................................      (582,895)       136,910
     Prepaid expenses and other assets .........................................     1,332,639     (4,373,987)
     Accounts payable ..........................................................       600,529       (185,191)
     Accrued expenses ..........................................................       572,349        340,743
     Income tax refund receivable ..............................................            --      3,522,313
                                                                                   -----------    -----------
       Net cash provided by (used in) operating activities .....................     2,186,477       (936,982)
                                                                                   -----------    -----------
   Investing activities:
     Proceeds from sale of equipment ...........................................       153,500         31,230
     Capital expenditures ......................................................    (1,301,287)      (175,149)
     Equipment deposits ........................................................       (78,488)       136,071
                                                                                   -----------    -----------
       Net cash used in investing activities ...................................    (1,226,275)        (7,848)
                                                                                   -----------    -----------
   Financing activities:
     Net (payments) borrowings from revolving line of credit ...................      (372,757)     1,040,894
     Principal payments on long term borrowings and capital leases .............      (621,369)        (6,266)
     Payment of stock subscription .............................................         7,200         19,200
                                                                                   -----------    -----------
       Net cash (used in) provided by financing activities .....................      (986,926)     1,053,828
                                                                                   -----------    -----------
       Net (decrease) increase in cash .........................................       (26,724)       108,998
   Cash and cash equivalents at beginning of period ............................       109,297        122,101
                                                                                   -----------    -----------
   Cash and cash equivalents at end of period ..................................   $    82,573    $   231,099
                                                                                   ===========    ===========

   Non-cash investing and financing activities:
     Equipment included in accounts payable ....................................   $   190,795    $    25,216
                                                                                   ===========    ===========
     Equipment financed through capital lease obligations ......................            --    $ 3,591,046
                                                                                   ===========    ===========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       3
<PAGE>

                      PHOENIX COLOR CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of Presentation.

      The accompanying interim financial statements of Phoenix Color Corp. and
its subsidiaries (the "Company") do not include all of the information and
disclosures generally required for annual financial statements and are
unaudited. In the opinion of management, the accompanying unaudited financial
statements contain all material adjustments (consisting of normal recurring
accruals), necessary to present fairly the Company's financial position as of
June 30, 2003, and the results of its operations for the three and six month
periods ended June 30, 2003 and 2002. The unaudited interim financial statements
should be read in conjunction with the Company's audited Consolidated Financial
Statements for the year ended December 31, 2002, included in the Company's
Annual Report filed on Form 10-K.

2.    New Accounting Pronouncements.

      In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 requires companies with a
variable interest in a variable interest entity to apply this guidance to that
entity as of the beginning of the first interim period beginning after June 15,
2003 for existing interests and immediately for new interests. The application
of the guidance could result in the consolidation of a variable interest entity.
The Company does not believe FIN 46 will have any material impact on its
financial position or results of operations.

      In May 2003, the FASB issued SFAS No. 150 ("SFAS 150"), "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity." SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). SFAS 150 is
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003, except for mandatorily redeemable financial
instruments of non-public entities. The Company is presently evaluating the
impact, if any, that this standard will have on its consolidated financial
statements

3.    Inventory.

      Inventory consists of the following:

                                      June 30, 2003     December 31, 2002
                                      -------------     -----------------
      Raw materials .................  $ 4,361,046         $ 4,477,238
      Work in process ...............    2,420,671           1,721,584
                                       -----------         -----------
                                       $ 6,781,717         $ 6,198,822
                                       ===========         ===========

4.    Other Assets.

      Other assets at June 30, 2003 and December 31, 2002 include equipment
deposits of $3,066,945 and $2,988,457, respectively.

5.    Accrued Expenses.

      Accrued expenses at June 30, 2003 and December 31, 2002 include accrued
interest expense of $4,565,459 and $4,554,905, respectively.


                                     4
<PAGE>

6.    Restructuring.

      In September 2000, the Company announced a plan to restructure its
operations, which resulted in the Company recording a one-time operating expense
totaling $11.4 million. The restructuring plan involved the closing of
TechniGraphix, Inc. and the Company's Taunton, Massachusetts facility in order
to reduce costs and improve productivity.

      The following table displays the activity and balances of the
restructuring accrual account from January 1, 2003 to June 30, 2003:

<TABLE>
<CAPTION>
                                    January 1,                                      June 30,
                                      2003                                           2003
      Type of Cost                   Balance        Additions      Deductions       Balance
                                   ----------      ----------      ----------      ----------

<S>                                <C>                             <C>             <C>
      Lease termination costs      $2,597,000              --      $   54,000      $2,543,000
</TABLE>

7.    Debt.

      In February 1999, the Company issued $105.0 million of 10 3/8% Senior
Subordinated Notes due 2009 ("Senior Subordinated Notes") in a private offering
under Rule 144A of the Securities Act of 1933. The Senior Subordinated Notes
were issued under an indenture and are uncollateralized senior subordinated
obligations of the Company with interest payable semiannually on February 1 and
August 1 of each year. All of the Company's current and future "restricted
subsidiaries," as defined in the Senior Subordinated Notes indenture, are
guarantors of the Senior Subordinated Notes on an uncollateralized senior
subordinated basis. The Senior Subordinated Notes indenture contains limitations
on the payment of dividends, the distribution or redemption of stock, sales of
assets and subsidiary stock, and additional Company and subsidiary debt subject
to certain financial covenants.

      The Company has an Amended and Restated Loan Agreement (the "Senior Credit
Facility") with a commercial bank for a three year $20,000,000 revolving credit
facility through August 1, 2004. Borrowings under the Senior Credit Facility are
subject to a borrowing base as defined in the agreement and are collateralized
by all of the assets of the Company. The Senior Credit Facility contains
limitations on the payment of dividends, the distribution or redemption of
stock, sales of assets and subsidiary stock, limitations on additional Company
and subsidiary debt and as amended on August 14, 2001, compliance with a fixed
coverage charge ratio. As of December 31, 2002 and June 30, 2003, the Company
was in compliance with the fixed coverage charge ratio.

      In May 2000 the Company entered into a five year $500,000 loan agreement
with Maryland Industrial and Commercial Redevelopment Fund (MICRF) with interest
at 4.38% per annum. Pursuant to its terms, if the Company employs 543 people in
Maryland in each of the years of the loan, then the loan and all accrued
interest thereon shall be forgiven. If the Company does not meet the employment
requirements, it will be required to repay the loan and accrued interest thereon
in quarterly installments until repaid in full. As of June 30, 200 3, the
Company employed over 600 people in the State of Maryland.

8.   Commitments and Contingencies.

      In December 1998, the Company filed a complaint against Krause Biagosch
GmbH ("Krause Germany") and Krause America, Inc. ("Krause America" and together
with Krause Germany "Krause"), which was tried in October 2000 in the United
States District Court for the District of Maryland, based on breach of contract
and statutory warranties on certain prepress equipment which the Company had
agreed to purchase from Krause. The Company attempted to operate the equipment,
and contended that the equipment failed to perform as warranted. During 1999,
the Company removed the portion of the


                                       5
<PAGE>

equipment actually delivered, and sought recovery of the approximately $2.0
million paid on this equipment, which included amounts for deposits on the
balance of the equipment not yet delivered. On January 27, 2000, the court
granted summary judgment in favor of the Company with respect to the three
machines previously delivered to the Company. On October 24, 2000, a jury
rendered a verdict against Krause for $1.9 million. On December 27, 2001, the
Federal Court of Appeals for the 4th Circuit rendered a decision confirming the
lower court's decision without modification. Due to recent efforts by Krause
America to avoid enforcement of the judgment, the Company has been forced to
file a new lawsuit in the U.S. District Court for the District of Maryland
against Krause America, Krause CTP, Limited, Krause Germany, and Jurgen
Horstmann, Krause Germany's sole shareholder. The Company and Krause have signed
an agreement in settlement of the monies due the Company. The amount of the
settlement is $1.4 million, comprised of a down payment of $200,000 and four
annual installments of $300,000, to be paid beginning in January 2004. As a
result of these developments, the Company recognized a non-cash charge of
approximately $745,000 in the fourth quarter of 2002. As of June 30, 2003 and
December 31, 2002, the Company included in other non-current assets receivables
from Krause of approximately $1.0 million and $1.2 million, respectively.

      On May 20, 2002, Xerox Corporation ("Xerox") filed a complaint against
Phoenix Color Corp. ("Phoenix") in United States District Court for the District
of Maryland alleging accounts due and owing pursuant to various equipment leases
between Xerox and Phoenix's subsidiary TechniGraphix, Inc. ("TechniGraphix").
TechniGraphix ceased operations pursuant to the Company's restructuring plan in
September 2000. Phoenix filed a motion to dismiss based on Xerox's failure to
state a claim upon which relief may be granted and failure to name an
indispensable party. On July 19, 2002, Xerox filed an amended complaint naming
Phoenix and TechniGraphix as defendants. The amended complaint alleges that
Phoenix has an account due and owing of $2.7 million and that Phoenix and
TechniGraphix are jointly liable for an account due and owing of $.5 million. On
August 1, 2002, Phoenix and TechniGraphix filed motions to dismiss the claims
against them based on Xerox's failure to identify the specific accounts at issue
and state a claim on which relief may be granted. On October 29, 2002, the Court
issued an Order denying the motions to dismiss filed by Phoenix and
TechniGraphix. On April 7, 2003, Xerox moved for a partial summary judgment
against Phoenix based on $2 million of Xerox's claims. On April 21, 2003,
Phoenix filed its opposition to Xerox's motion and moved for summary judgment.
On July 14, 2003, the Court issued an order denying Xerox's motion for summary
judgment and denying in part and granting in part Phoenix's summary judgment
motion. The case is scheduled for a November 3, 2003 trial date.

      The Company is not a party to any other legal proceedings, other than
claims and lawsuits arising in the normal course of its business. Although the
outcome of these claims and lawsuits against the Company can not be accurately
predicted the Company does not believe that any of the claims and lawsuits
described above or in this paragraph, individually or in the aggregate, will
have a material adverse effect on its business, financial condition, results of
operations and cash flows for any quarterly or annual period.

9.    Guarantor Subsidiaries.

      Phoenix Color Corp. ("Parent") currently has no independent operations and
the guarantees made by all of its subsidiaries, which are all 100% owned, are
full and unconditional and joint and several. The Company currently does not
have any direct or indirect non-guarantor subsidiaries. All consolidated amounts
in the Parent's financial statements would be representative of the combined
guarantors.

10.   Income Taxes.

      The Company did not recognize an income tax benefit for its pre-tax loss
during the six months ended June 30, 2003, due to the uncertainty of the
utilization of its deferred tax asset. The Company's effective tax rate for the
six months ended June 30, 2002 was a benefit of 74.7% due to the impact of the


                                       6
<PAGE>

reversal of $3.3 million of the Company's valuation allowance associated with
net operating loss carry forwards which were carried back to the prior five
years in which the Company paid income taxes pursuant to the Jobs Creation and
Workers Assistance Act ( the "Act") signed into law in March 2002.

11.   Reclassification

      Certain prior year amounts have been reclassified to conform with the
      current year presentation.

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

Forward Looking Statements

      Some of the statements in this Quarter Annual Report on Form 10-Q are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. These statements include our indications
regarding our intent, beliefs or current expectations. In some cases, you can
identify forward-looking statements by terminology such as "may," "estimates,"
"anticipates," "intends," "will," "should," "could," "expects," "believes,"
"continues" or "predicts." These statements involve a variety of known and
unknown risks, uncertainties, and other factors that may cause our actual
results to differ materially from intended or expected results. These factors
include (i) the risk factors and other information presented in our Registration
Statement filed with the Securities and Exchange Commission, File No. 333-50995,
which became effective May 13, 1999, (ii) the sufficiency of funds to finance
our current operations, remaining capital expenditures and internal growth for
the year 2003, and (iii) the outcome of any claims and lawsuits filed,
threatened to be filed or pending against us. You should not place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. We expressly decline any obligation to publicly release the results of
any revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

      The following discussion and analysis should be read in conjunction with
our unaudited Consolidated Financial Statements and the Notes thereto included
elsewhere in this Form 10-Q.

Critical Accounting Policies

      The preparation of financial statements requires us to make difficult and
subjective estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosure of contingent assets
and liabilities. We continually re-evaluate our estimates, including those
related to bad debts, inventories, goodwill, income taxes, restructuring,
contingencies and litigation. We base our estimates and judgments on historical
experience and on various other assumptions which we believe are reasonable
under the circumstances and are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions. We believe the following critical accounting policies affect our
more significant judgments and estimates used in the preparation of our
consolidated financial statements:

Revenue Recognition

      We recognize revenue upon shipment of our products to or on behalf of our
customers.

      Allowance for Doubtful Accounts

      We maintain allowances for doubtful accounts for estimated losses
resulting from the inability of our customers to make payments for products
shipped. If the financial condition of our customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances might be


                                       7
<PAGE>

required. As of June 30, 2003, our accounts receivable balance, net of
allowances for doubtful accounts and rebates of $2.0 million, was $20.7 million.

Inventory

      Our inventory is stated at the lower of cost or market value, as
determined under the first-in, first-out ("FIFO") method.

Intangible Assets

      Our goodwill represents the excess of the purchase price over the fair
value of identifiable net tangible assets acquired. Our total goodwill of $13.3
million consists of $4.7 million and $8.6 million associated with the 1996 and
1999 acquisitions of New England Book Holding Corporation, and Mid-City
Lithographers, Inc., respectively. We test for impairment to the value of
goodwill based on a comparison of undiscounted cash flow to the recorded value.
We test goodwill for impairment at least annually, but more often when
circumstances or events so dictate. We performed the required annual test and
determined that goodwill was not impaired. If actual market conditions
deteriorate from those we projected, or if other events or circumstances occur
that would reduce the recorded value of goodwill below undiscounted cash flow,
we might be required to recognize impairment charges to our goodwill.

Long Lived Assets

      We evaluate quarterly the carrying value of property, equipment and
tangible assets for impairment. We consider our historical performance and
anticipated future results by evaluating the carrying value of the assets in
relation to the operating performance of the business and future undiscounted
cash flows expected to result from the use of these assets. We recognize an
impairment loss on assets when the value of the assets is less than the sum of
the expected cash flows from those assets. At June 30, 2003, no impairment
exists.

Restructuring

      As part of our restructuring costs, we provided for the estimated cost of
the net lease expense for equipment that is no longer being used. The cost is
based on the contractual future minimum lease payments reduced by estimated
future sublease receipts. At June 30, 2003, our accrued restructuring liability
related to net lease payments and other related charges was $2.5 million. We may
incur additional restructuring charges if market conditions are less favorable
than we originally projected.

Deferred Tax Valuation Allowance

      As of June 30, 2003, we recorded a valuation allowance of $8.8 million
against our net deferred tax assets of approximately $8.2 million. Statement of
Financial Accounting Standards No. 109 ("SFAS No. 109") requires us to evaluate
the likely realization of the tax asset, and if evidence exists that would
create doubt as to the realization of the tax asset, to provide an allowance
against it. Our results over the past three years created a large cumulative
loss and represented sufficient negative evidence to require us to provide for a
valuation allowance against the tax asset. We intend to maintain this valuation
allowance until such time as sufficient positive evidence exists to support its
reversal.


                                       8
<PAGE>

Results of Operations

      The following table sets forth, for the periods indicated, certain
information derived from the Company's Consolidated Statements of Operations
(dollars in millions):

<TABLE>
<CAPTION>
                                                    Three Months Ended June 30,         Six Months Ended June 30,
                                              ----------------------------------  ----------------------------------
                                                2003       %      2002       %      2003       %     2002        %
                                              -------    -----  -------    -----  -------    -----  -------    -----
<S>                                           <C>        <C>    <C>        <C>    <C>        <C>    <C>        <C>
Sales ....................................... $  34.1    100.0  $  35.8    100.0  $  67.9    100.0  $  66.1    100.0
Cost of sales ...............................    27.8     81.5     27.2     76.0     54.6     80.4     52.7     79.7
Gross profit ................................     6.3     18.5      8.6     24.0     13.3     19.6     13.4     20.3
Operating expenses ..........................     5.0     14.7      6.0     16.8     10.0     14.7     11.2     17.0
Income from operations ......................     1.3      3.8      2.6      7.2      3.3      4.9      2.2      3.3
Interest ....................................     3.1      9.1      3.3      9.2      6.1      9.0      6.4      9.7
Other (Income) expense ......................      --       --      0.2      0.5       --       --      0.2      0.3
Loss before income taxes ....................    (1.8)    (5.3)    (0.9)    (2.5)    (2.8)    (4.1)    (4.4)    (6.7)
Income tax provision benefit ................      --       --       --       --       --       --     (3.3)    (5.0)
Net loss ....................................    (1.8)    (5.3)    (0.9)    (2.5)    (2.8)    (4.1)    (1.1)    (1.7)
</TABLE>

Three Months Ended June 30, 2003 and 2002

      Net sales decreased $1.7 million, or 4.7%, to $34.1 million for the three
months ended June 30, 2003, from $35.8 million for the same period in 2002. The
decrease occurred primarily as a result of decreased sales volume in the
components business unit, which resulted from weakness in the publishing
industry. Sales of books increased over the prior year.

      Gross profit decreased $2.3 million, or 26.7%, to $6.3 million for the
three months ended June 30, 2003, from $8.6 million for the same period in 2002.
This decrease was primarily the result of decreased sales combined with
increases in overhead costs for repairs and maintenance and employee welfare
benefits.

      Operating expenses decreased $1.0 million or 16.7% to $5.0 million for the
three months ended June 30, 2003, from $6.0 million for the same period in 2002.
In 2002, we recognized a lease termination charge of $1.5 million. Excluding the
charge in 2002, operating expenses increased $500,000 or 11.1% to $5.0 million
for the three months ended June 30, 2003, from $4.5 million for the same period
in 2002. The increase was caused by increases in many expense categories, with
no individual expense category accounting for a significant amount.

      Interest expense decreased $200,000 to $3.1 million for the three months
ended June 30, 2003, from $3.3 million for the same period in 2002, primarily
due to reductions in borrowings under long term debt.

      For the three months ended June 30, 2003 and 2002, we did not record a tax
benefit due to the uncertainty of realizing our deferred tax asset.

      Net loss increased $900,000 or 100% to $1.8 million for the three months
ended June 30, 2003, from $900,000 for the same period in 2002. The change in
net loss was due to the factors described above.


                                       9
<PAGE>

Six Months Ended June 30, 2003 and 2002

      Net sales increased $1.8 million, or 4.7%, to $67.9 million for the six
months ended June 30, 2003, from $66.1 million for the same period in 2002. The
increase occurred as a result of increased sales in book manufacturing, which
resulted from strong sales efforts combined with our manufacturing to meet our
customers' time sensitive delivery requirements. Sales of book components
remained flat.

      Gross profit decreased $100,000, or 0.7%, to $13.3 million for the six
months ended June 30, 2003, from million for the same period in 2002. The
decrease was primarily the result of increases in overhead costs associated with
the repair and maintenance of our equipment and facilities.

      Operating expenses decreased $1.2 million or 10.7% to $10.0 million for
the six months ended June 30, 2003, from $11.2 million for the same period in
2002. In 2002, we recognized a lease termination charge of $1.5 million.
Excluding the charge in 2002, operating expenses increased $300,000 or 3.0% to
$10.0 million for the six months ended June 30, 2003, from $9.7 million for the
same period in 2002. The increase was caused by increases in many expense
categories, with no individual expense category accounting for a significant
amount.

      Interest expense decreased $300,000 to $6.1 million for the six months
ended June 30, 2003, from $6.4 million for the same period in 2002, primarily
due to reductions in borrowings under the revolving line of credit.

      For the six months ended June 30, 2003, we did not record a tax benefit
due to the uncertainty of realizing our deferred tax asset. For the six months
ended June 30, 2002, we recorded a tax benefit of $3.3 million due to the
carryback of net operating losses permitted by the passage of the Jobs Creation
and Workers Assistance Act in March 2002.

      Net loss increased $1.7 million or 154.5% to $2.8 million for the six
months ended June 30, 2003, from $1.1 million for the same period in 2002. The
change in net loss was due to the factors described above.

      Liquidity and Capital Resources

      During the first six months of 2003, we used approximately $27,000 of
cash. Net cash provided by operating activities was approximately $2.2 million,
which consisted principally of a net loss of $2.8 million by non-cash expenses
of $5.7 million , offset by investment in additional working capital of
$700,0003. Net cash used in investing activities was $1.2 million due to capital
and equipment expenditures. Net cash used in financing activities was $1 .0
million, resulting from repayments of the Senior Credit Facility long term debt
and long term borrowings associated with capital leases.

      Working capital increased $1.2 million to $9.2 million as of June 30,
2003, from $8.0 million at December 31, 2002. This increase is primarily
attributable an increase in accounts receivable of $2.6 million 2.6resulting
from increased sales and inventory of $0.6 million, offset by increases in
accounts payable and accrued liabilities of $1.6 million.

      We historically have financed our operations with internally generated
funds, external short and long-term borrowings and operating leases. We believe
that funds generated from operations, together with existing cash amounts,
available credit under the Senior Credit Facility ($11.3 million as of June 30,
2003) and other financial sources will be sufficient to finance our current
operations, remaining capital expenditure requirements and internal growth for
the year 2003. Should we fail to achieve results in 2003 equal at least to the
year 2002, or should a decrease in demand for our products, or inability to
reduce


                                       10
<PAGE>

costs, adversely affect the availability of funds, such decrease in the
availability of funds could have a material adverse effect on our business
prospects or results of operations.

      If we were to make any significant acquisitions for cash, it may be
necessary to obtain additional debt or equity financing. There can be no
assurance that such financing would be available on satisfactory terms or at
all. We have no current agreements with respect to any acquisitions.

      In April 2003, we contracted for the acquisition of a $1.8 million eight
color printing press to manufacture book components. The equipment vendor has
agreed to accept installment payments over a six month period commencing upon
delivery of the press and we intend to pay for it through operating cash flows.
The press was delivered in August as is being erected.


      The following is a summary of our future payments under contractual
obligations as of June 30, 2003. In the event of a default, many of the
contracts provide for acceleration of payments.

<TABLE>
<CAPTION>
                                                                    Payments Due by Period
                                                                    (in thousands of dollars)
      Contractual Obligations                                   Less than    1-3        4-5       After
                                                       Total     1 year     years      Years     5 years
<S>                                                  <C>        <C>        <C>        <C>        <C>
      Long-Term Debt .............................   $105,682   $    546   $    136   $     --   $105,000
      Capital Lease Obligations ..................      4,177      1,013      2,026      1,138         --
      Operating Leases ...........................     28,246      6,529     13,739      7,203        775
      Unconditional Purchase Obligations .........         --         --         --         --         --
      Other Long-Term Obligations ................         --         --         --         --         --
                                                     --------   --------   --------   --------   --------
      Total Contractual Cash Obligations .........   $138,105   $  8,088   $ 15,901   $  8,341   $105,775
                                                     ========   ========   ========   ========   ========
</TABLE>

      The following is a summary of our other commercial commitments by
commitment expiration date as of June 30, 2003:

<TABLE>
<CAPTION>
                                                              Amount of Commitment Expiration Per Period
                                                                      (in thousands of dollars)
            Other Commercial Commitments                        Less than    1-3        4-5       After
                                                       Total     1 year     years      Years     5 years
<S>                                                  <C>        <C>        <C>        <C>        <C>
      Lines of Credit ............................   $ 20,000   $     --   $ 20,000   $     --   $     --
      Standby Letter of Credit ...................         --         --         --         --         --
      Guarantees .................................         --         --         --         --         --
      Standby Repurchase Obligations .............         --         --         --         --         --
      Other Commercial Commitments ...............         --         --         --         --         --
                                                     --------   --------   --------   --------   --------
      Total Commercial Commitments ...............   $ 20,000   $     --   $ 20,000   $     --   $     --
                                                     ========   ========   ========   ========   ========
</TABLE>

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

      The Company believes its current exposure to interest rate changes is
immaterial because approximately 93% of the Company's debt bears a fixed rate of
interest. However, if the ratio of debt with fixed interest were to materially
decline or interest rates were to materially increase it could have a material
adverse effect on the Company's business and results of operations.


                                       11
<PAGE>

Item 4. Controls and Procedures

      The Company's Chief Executive Officer and Chief Financial Officer have
concluded that the Company's disclosure controls and procedures, (as defined in
17CRF 240. 13(a) - 15(e) and 240. 15(d) - 15(e)) are effective based upon their
evaluation of these controls and procedures as of the end of the period covered
by this report.

      There have been no changes in the Company's internal controls over
financial reporting that occurred during the second quarter of 2003 that has
materially affected or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

      In December 1998, the Company filed a complaint against Krause Biagosch
GmbH ("Krause Germany") and Krause America, Inc. ("Krause America" and together
with Krause Germany "Krause"), which was tried in October 2000 in the United
States District Court for the District of Maryland, based on breach of contract
and statutory warranties on certain prepress equipment which the Company had
agreed to purchase from Krause. The Company attempted to operate the equipment,
and contended that the equipment failed to perform as warranted. During 1999,
the Company removed the portion of the equipment actually delivered, and sought
recovery of the approximately $2.0 million paid on this equipment, which
included amounts for deposits on the balance of the equipment not yet delivered.
On January 27, 2000, the court granted summary judgment in favor of the Company
with respect to the three machines previously delivered to the Company. On
October 24, 2000, a jury rendered a verdict against Krause for $1.9 million. On
December 27, 2001, the Federal Court of Appeals for the 4th Circuit rendered a
decision confirming the lower court's decision without modification. Due to
recent efforts by Krause America to avoid enforcement of the judgment, the
Company has been forced to file a new lawsuit in the U.S. District Court for the
District of Maryland against Krause America, Krause CTP, Limited, Krause
Germany, and Jurgen Horstmann, Krause Germany's sole shareholder. The Company
and Krause have signed an agreement in settlement of the monies due the Company.
The amount of the settlement is $1.4 million, comprised of a down payment of
$200,000 and four annual installments of $300,000, to be paid beginning in
January 2004. As a result of these developments, the Company recognized a
non-cash charge of approximately $745,000 in the fourth quarter of 2002. As of
June 30, 2003 and December 31, 2002, the Company included in other non-current
assets receivables from Krause of approximately $1.0 million and $1.2 million,
respectively.

      On May 20, 2002, Xerox Corporation ("Xerox") filed a complaint against
Phoenix Color Corp. ("Phoenix") in United States District Court for the District
of Maryland alleging accounts due and owing pursuant to various equipment leases
between Xerox and Phoenix's subsidiary TechniGraphix, Inc. ("TechniGraphix").
TechniGraphix ceased operations pursuant to the Company's restructuring plan in
September 2000. Phoenix filed a motion to dismiss based on Xerox's failure to
state a claim upon which relief may be granted and failure to name an
indispensable party. On July 19, 2002, Xerox filed an amended complaint naming
Phoenix and TechniGraphix as defendants. The amended complaint alleges that
Phoenix has an account due and owing of $2.7 million and that Phoenix and
TechniGraphix are jointly liable for an account due and owing of $.5 million. On
August 1, 2002, Phoenix and TechniGraphix filed motions to dismiss the claims
against them based on Xerox's failure to identify the specific accounts at issue
and state a claim on which relief may be granted. On October 29, 2002, the Court
issued an Order denying the motions to dismiss filed by Phoenix and
TechniGraphix. On April 7, 2003, Xerox moved for a partial summary judgment
against Phoenix based on $2 million of Xerox's claims. On April 21, 2003,
Phoenix filed its opposition to Xerox's motion and moved for summary judgment.
On July 14, 2003, the Court issued an order denying Xerox's motion for summary
judgment


                                       12
<PAGE>

and denying in part and granting in part Phoenix's summary judgment motion. The
case is scheduled for a November 3, 2003 trial date.

      The Company is not a party to any other legal proceedings, other than
claims and lawsuits arising in the normal course of its business. Although the
outcome of these claims and lawsuits against the Company can not be accurately
predicted the Company does not believe that any of the claims and lawsuits
described above or in this paragraph, individually or in the aggregate, will
have a material adverse effect on its business, financial condition, results of
operations and cash flows for any quarterly or annual period.

Item 2. Change in Securities and Use of Proceeds.

      None.

Item 3. Defaults upon Senior Securities.

      None.

Item 4. Submission of Matters to a Vote of Security Holders.

      None.

Item 5. Other Information.

      None.

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

      (a)   Exhibits. Exhibits filed as part of this report are listed below:

31.1  Certification of the Chief Executive Officer pursuant to Rule
      13(a)-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.

31.2  Certification of the Chief Financial Officer pursuant to Rule
      13(a)-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.

32.1  Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002..

32.2  Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002..

      (b)   Reports on Form 8-K

            None.


                                       13
<PAGE>

                                   SIGNATURES

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

DATE: August 12, 2003

                                                PHOENIX COLOR CORP.


                                                By: /s/ Louis LaSorsa
                                                    ----------------------------
                                                    Louis LaSorsa, Chairman
                                                    and Chief Executive Officer


                                                By: /s/ Edward Lieberman
                                                    ----------------------------
                                                    Edward Lieberman
                                                    Chief Financial Officer
                                                    and Chief Accounting Officer


                                       14