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 September 30, 2001

                                       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 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 of each of the Registrant's classes of common
stock, as of the latest practicable date: Not Applicable

<PAGE>

                         PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements.


                          Index to Financial Statements

                                                                       Page No.

Consolidated Balance Sheets .......................................        1
         December 31, 2000 and September 30, 2001


Consolidated Statements of Operations..............................        2
         Three and Nine Months Ended September 30, 2000 and 2001


Consolidated Statements of Cash Flows..............................        3
         Nine Months Ended September 30, 2000 and 2001


Notes to Consolidated Financial Statements.........................        4



<PAGE>




                      PHOENIX COLOR CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                                        December 31      September 30
                                                                                           2000             2001
                                                                                         (Audited)        (Unaudited)
                                                                                      --------------   --------------
                                                       ASSETS
<S>                                                                                   <C>              <C>
Current assets:
   Cash and cash equivalents ....................................................     $     367,866    $   1,669,628
   Accounts receivable, net of allowance for doubtful accounts and rebates of
    $1,084,800 in 2000 and $1,089,282 in 2001 ...................................        20,296,011       20,486,291
   Inventory ....................................................................         5,501,544        5,661,752
   Income tax receivable ........................................................           805,905          133,170
   Prepaid expenses and other current assets ....................................         1,321,909        1,295,817
   Deferred income taxes ........................................................         1,032,798             --
                                                                                      -------------    -------------
                Total current assets ............................................        29,326,033       29,246,658


Property, plant and equipment, net ..............................................        73,552,022       69,966,918
Goodwill, net ...................................................................        15,984,065       13,973,123
Deferred financing costs, net ...................................................         3,650,637        3,260,361
Other assets ....................................................................        10,559,495        6,826,533
                                                                                      -------------    -------------
                  Total assets ..................................................     $ 133,072,252    $ 123,273,593
                                                                                      =============    =============

                  LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities:
   Notes payable ................................................................            20,806           10,762
   Accounts payable .............................................................        10,489,654        9,948,831
   Accrued expenses .............................................................        11,055,808        8,610,795
                                                                                      -------------    -------------
                Total current liabilities .......................................        21,566,268       18,570,388

10 3/8% Senior subordinated notes ...............................................       105,000,000      105,000,000
Revolving line of credit ........................................................         8,659,042       12,773,967
MICRF Loan ......................................................................           500,000          500,000
                                                                                      -------------    -------------
                      Total liabilities .........................................       135,725,310      136,844,355
                                                                                      -------------    -------------

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 ..........................................................        (2,911,384)     (13,857,888)
   Stock subscriptions receivable ...............................................           (99,492)         (70,692)
   Treasury stock, at cost:  Class A, 3,460 shares and Class B, 2,000 shares ....        (1,769,230)      (1,769,230)
                                                                                      -------------    -------------
                Total stockholders' deficit .....................................        (2,653,058)     (13,570,762)
                                                                                      -------------    -------------
                Total liabilities & stockholders' deficit .......................     $ 133,072,252    $ 123,273,593
                                                                                      =============    =============

</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               Nine Months Ended
                                                         September 30                     September 30
                                               -------------------------------   -------------------------------
                                                    2000             2001             2000             2001
                                               --------------   --------------   --------------   --------------

<S>                                            <C>              <C>              <C>              <C>
Sales ......................................   $  40,631,522    $  35,275,912    $ 113,972,475    $  99,779,421
Cost of sales ..............................      32,174,986       27,803,101       89,489,873       79,393,767
                                               -------------    -------------    -------------    -------------
Gross profit ...............................       8,456,536        7,472,811       24,482,602       20,385,654
                                               -------------    -------------    -------------    -------------
Operating expenses:
   Selling and marketing expenses ..........       1,938,298        2,064,679        5,614,819        6,210,928
   General and administrative expenses......       4,585,477        3,806,946       13,177,410       11,748,623
   Loss on sale of assets ..................            --            133,104        2,098,416           12,787
   Restructuring Charge ....................      11,425,000         (303,881)      11,425,000         (303,881)
                                               -------------    -------------    -------------    -------------
Total operating expenses ...................      17,948,775        5,700,848       32,315,645       17,668,457
                                               -------------    -------------    -------------    -------------
(Loss) income from operations ..............      (9,492,239)       1,771,963       (7,833,043)       2,717,197
Other expenses:
   Interest expense ........................       3,267,195        3,165,786        9,722,777        9,406,393
   Other income ............................         (77,261)         (13,094)        (103,353)        (142,353)
                                               -------------    -------------    -------------    -------------
Loss before income taxes ...................     (12,682,173)      (1,380,729)     (17,452,467)      (6,546,843)
Income tax (benefit) provision .............      (2,105,993)       4,678,631       (5,616,929)       4,399,661
                                               -------------    -------------    -------------    -------------
Net loss ...................................   $ (10,576,180)   $  (6,059,360)   $ (11,835,538)   $ (10,946,504)
                                               =============    =============    =============    =============
</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>
                                                                                    Nine Months Ended September 30,
                                                                                    -------------------------------
                                                                                     (Unaudited)       (Unaudited)
                                                                                         2000            2001
                                                                                    -------------     -------------
Operating activities
<S>                                                                                 <C>               <C>
  Net loss ......................................................................   $(11,835,538)     $(10,946,504)
  Adjustments to reconcile net loss to net cash provided by operating activities:
        Depreciation and amortization of property, plant and equipment ..........      9,083,331         8,021,709
        Amortization of goodwill ................................................      2,255,066         2,010,943
        Amortization of deferred financing costs ................................        390,276           390,276
        Provision for uncollectible accounts ....................................        485,000           281,751
        Deferred income taxes ...................................................     (5,616,929)        4,399,661
        Loss on disposal of assets ..............................................      2,098,416            12,787
        Impairment loss on restructuring ........................................      7,461,307              --
  Increase (decrease) in cash resulting from changes in assets and liabilities:
        Accounts receivable .....................................................     (5,605,747)         (472,031)
        Inventory ...............................................................       (738,599)         (160,208)
        Prepaid expenses and other assets .......................................       (564,887)         (241,374)
        Accounts payable ........................................................     (2,078,351)         (600,275)
        Accrued expenses ........................................................     (2,663,812)       (2,114,245)
        Accrual of expenses for restructuring charge ............................      3,963,693          (330,770)
        Income tax refund receivable ............................................        195,294           672,734
                                                                                    ------------      ------------
               Net cash provided by (used) operating activities .................     (3,171,480)          924,454
                                                                                    ------------      ------------
  Investing activities:
        Proceeds from sale of equipment .........................................        825,000           306,500
        Capital expenditures ....................................................     (5,355,684)       (4,696,440)
        Equipment deposits ......................................................      1,464,541           633,567
                                                                                    ------------      ------------
              Net cash used in investing activities .............................     (3,066,143)       (3,756,373)
                                                                                    ------------      ------------
  Financing activities:
        Net borrowings from revolving line of credit ............................      5,873,874         4,114,925
        Proceeds from MICRF loan ................................................        500,000              --
        Principal payments on long term borrowings ..............................        (74,237)          (10,044)
        Payment of stock subscription ...........................................         28,300            28,800
                                                                                    ------------      ------------
              Net cash provided by financing activities .........................      6,327,937         4,133,681
                                                                                    ------------      ------------
              Net increase in cash ..............................................         90,314         1,301,762
  Cash and cash equivalents at beginning of period ..............................        270,585           367,866
                                                                                    ------------      ------------
  Cash and cash equivalents at end of period ....................................   $    360,899      $  1,669,628
                                                                                    ============      ============
  Non-cash investing and financing activities:
  Equipment included in accounts payable ........................................   $    476,017      $     59,452
                                                                                    ============      ============

</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
September 30, 2001,  and the results of its  operations  for the three month and
nine month periods  ended  September  30, 2001 and 2000.  The unaudited  interim
financial  statements  should be read in conjunction with the Company's  audited
Consolidated Financial Statements for the year ended December 31, 2000, included
in the Company's Annual Report filed on Form 10-K.

2.   New Accounting Pronouncements

     In July of 2001, the Financial  Accounting  Standards  Board finalized SFAS
141,  "Business  Combinations"("SFAS  141")  and SFAS 142,  "Goodwill  and Other
intangible Assets," ("SFAS 142"), which are effective for fiscal years beginning
after December 15, 2001. The Company is required to and will adopt both SFAS 141
and SFAS 142  beginning  in 2002.  Upon  adoption of SFAS 141 and SFAS 142,  the
Company will cease to amortize goodwill recorded on prior business  combinations
and will annually review the recorded goodwill for impairment.

3.       Inventory.

     Inventory consists of the following:

<TABLE>
<CAPTION>
                                 December 31, 2000      September 30, 2001
                                 -----------------      ------------------
  <S>                                <C>                     <C>
  Raw materials...............       $4,273,345              $3,816,292
  Work in process.............        1,228,199               1,845,460
                                     ----------              ----------
                                     $5,501,544              $5,661,752
                                     ==========              ==========
</TABLE>


4.   Other Assets.

     Other assets at December 31, 2000 and September 30, 2001 include  equipment
deposits of $3,636,062 and $3,002,306, respectively.


5.   Accrued Expenses.

     Accrued  expenses  at  December  31, 2000 and  September  30, 2001  include
accrued interest expense of $4,558,462 and $1,955,190, 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. ("TechniGraphix") and the Company's Taunton,  Massachusetts
facility in order to reduce costs and improve productivity.  In August 2001, the
Company and one of its lessors reached an agreement  reducing the balance due to
the  lessor  which had  previously  been  accrued  as part of the  restructuring
accrual.   Accordingly,  the  Company  has  reduced  its  accrued  liability  by
approximately $304,000.

         The following table displays the activity and balances of the
restructuring accrual account from January 1, 2001 to September 30, 2001:

                             January 1,   Additions               September 30,
                               2001          and                       2001
Type of Cost                  Balance    (Reductions)   Payments     Balance
                             ----------  ------------   --------  -------------

Lease termination costs...   $3,656,000   ($304,000)    $324,000    $3,028,000


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,  as  amended.  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 limitations on
additional Company and subsidiary debt subject to certain financial covenants.

     As of  September  30, 2001,  the Company has an Amended and  Restated  Loan
Agreement (the "Senior Credit  Facility")  with a commercial bank (the "Lender")
for a $20,000,000  revolving  credit  facility with a maturity date of August 1,
2004.  Borrowings  under the Senior  Credit  Facility are subject to a borrowing
base as defined in the Senior Credit Facility 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 compliance  with a financial  covenant.  As of September 30, 2001, the
Company was in compliance  with its financial  covenant  under the Senior Credit
Facility.

     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 September
30, 2001, the Company employed over 700 people in the State of Maryland.


                                       5
<PAGE>

8.   Commitments and Contingencies.

     In December  1998, the Company filed a complaint  against  Krause  Biagosch
GmbH and Krause America, Inc. ("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 the
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 26,  2000,  a jury  rendered a verdict in favor of the
Company on all but one of the  remaining  pieces of  equipment.  A  judgment  of
$1,899,247 has been entered  against Krause America,  Inc. Krause America,  Inc.
has filed an appeal,  and the Company has filed a cross  appeal with  respect to
the piece of  equipment  which was not  included  in the  original  verdict  and
judgment, and on the issue of pre-judgment interest. Oral argument on the appeal
occurred on November 2, 2001.  No decision  has been  rendered by the  appellate
court yet. As of December 31, 2000 and September 30, 2001, the Company  included
in other  non-current  assets a  receivable  from Krause of  approximately  $2.0
million.

     In August 1999,  the Company filed a complaint  against  Motion  Technology
Horizons,  Inc. in the Circuit Court for Washington County,  Maryland to recover
approximately  $300,000 in deposits made on equipment which failed to perform in
accordance  with  manufacturer's  warranties,  and  $703,000 for the purchase of
substitute equipment.  Motion Technology has counterclaimed for $250,000 for the
balance of the purchase price for the equipment,  plus incidental  charges.  The
case is currently  in  discovery.  Trial in this case is scheduled  for April 1,
2002.

     The  Company  is not a party to any other  legal  proceedings,  other  than
claims and lawsuits arising in the normal course of the Company's business.  The
Company does not believe that such claims and lawsuits,  individually  or in the
aggregate,  will  have a  material  adverse  effect on the  Company's  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

     During the third  quarter  of 2001,  the  Company  recognized  a  valuation
allowance  of  approximately  $4.7  million  against the net deferred tax asset.
Management believes that, based on a number of factors,  the available objective
evidence  creates  sufficient   uncertainty  regarding  the  likelihood  of  the
realization of the future benefit of this asset.

     The Company's  effective  tax rate for the nine months ended  September 30,
2001 of (67.2%) differed from the Company's  effective tax rate of 31.8% for the
year ended  December 31, 2000 due primarily to the  recognition of the valuation
allowance  and the impact of certain  nondeductible  expenses in relation to the
projected current year pretax results.


                                       6
<PAGE>


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


Forward Looking Statements

     Some  of  the  statements  in  this  Quarterly  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 indications regarding
the intent,  belief or current  expectations  of the Company and its management,
including without limitation expectations regarding (i) the sufficiency of funds
generated from the Company's operations,  together with existing cash, available
credit under the Senior Credit Facility and other financial sources,  to finance
the Company's current operation,  remaining capital expenditure requirements and
internal growth for the year 2001, (ii) the need for additional financing if the
Company were to make any significant  acquisition,  and (iii) whether any claims
or lawsuits  filed,  threatened  or to be filed or pending  against the Company,
individually  or in the  aggregate,  will have a material  adverse effect on the
Company's business, financial condition, results of operations or cash flows. In
some cases, you can identify  forward-looking  statements by terminology such as
"may,"  "estimates,"  "anticipates,"  "intends,"  "will,"  "should,"  "expects,"
"believes,"  "continue" or  "predicts."  These  statements  involve a variety of
known and unknown  risks,  uncertainties,  and other  factors that may cause the
Company's actual results to differ materially from intended or expected results.
These factors  include (i) the risk factors and other  information  presented in
the Company's  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 the  Company's  current  operations,  remaining
capital  expenditures  and  internal  growth  for the year  2001,  and (iii) the
outcome of any  claims and  lawsuits  filed,  threatened  to be filed or pending
against the Company.  Readers are cautioned not to place undue reliance on these
forward-looking statements,  which speak only as of the date hereof. The Company
undertakes  no  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.


                                       7
<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 September 30                  Nine Months Ended September 30
                                    -----------------------------------------         ------------------------------------------
                                       2000        %        2001         %               2000         %        2001         %
                                    --------     ------   --------     ------         ---------     ------   --------     ------

<S>                                 <C>          <C>      <C>          <C>            <C>           <C>      <C>          <C>
Sales ...........................   $  40.6      100.0    $  35.3      100.0          $  114.0      100.0    $  99.8      100.0
Cost of sales ...................      32.2       79.3       27.8       78.8              89.5       78.5       79.4       79.6
Gross profit ....................       8.4       20.7        7.5       21.2              24.5       21.5       20.4       20.4
Operating expenses ..............      17.9       44.1        5.7       16.1              32.3       28.3       17.7       17.7
(Loss) income from operations...       (9.5)     (23.4)       1.8        5.1              (7.8)      (6.8)       2.7        2.7
Interest ........................       3.3        8.1        3.2        9.1               9.7        8.5        9.4        9.4
Other income ....................      (0.1)      (0.2)        --         --              (0.1)      (0.1)      (0.1)      (0.1)
Loss before income taxes ........     (12.7)     (31.3)      (1.4)      (4.0)            (17.4)     (15.3)      (6.6)      (6.6)
Income tax (benefit) provision...      (2.1)      (5.2)       4.7       13.3              (5.6)      (4.9)       4.4        4.4
Net loss ........................     (10.6)     (26.1)      (6.1)     (17.3)            (11.8)     (10.4)     (11.0)     (11.0)
</TABLE>



Three Months Ended September 30, 2001 and 2000

     Net sales decreased $5.3 million,  or 13.1%, to $35.3 million for the three
months ended September 30, 2001, from $40.6 million for the same period in 2000.
The decrease was a result of a decline in orders of book components  caused by a
contraction  in  the  publishing   industry  and   exacerbated  by  the  further
contraction  of the U.S.  economy  in  general  after  the  September  11,  2001
terrorist attacks.

     Gross profit  decreased  $900,000,  or 10.7%, to $7.5 million for the three
months ended  September  30, 2001 from $8.4 million for the same period in 2000.
As noted above,  this decrease was primarily the result of decreased  sales. The
gross profit margin  increased 0.5% to 21.2% from 20.7% primarily as a result of
material and labor savings in relation to sales in the  manufacture  of books at
its Hagerstown, Maryland and Rockaway, New Jersey facilities.

     Operating expenses  decreased $12.2 million,  or 68.2%, to $5.7 million for
the three months ended September 30, 2001 from $17.9 million for the same period
in 2000.  Operating expenses in the year 2000 included a restructuring charge of
$11.4 million for the closing of  TechniGraphix  and the closing of the Taunton,
Massachusetts  facility.  In 2001,  operating  expenses were reduced by $300,000
pursuant to a  settlement  reached with an  equipment  lessor of  TechniGraphix.
Exclusive of the foregoing  charges and credits,  operating  expenses  decreased
$500,000, or 7.7%, to $6.0 million for the three months ended September 30, 2001
from $6.5 million for the same period in 2000.  This  decrease was primarily the
result of cost cutting  measures,  including  the impact of closing the Taunton,
Massachusetts facility in December 2000.

     Interest expense decreased $100,000, or 3.0%, to $3.2 million for the three
months ended  September  30, 2001 from $3.3 million for the same period in 2000.
The decrease was the result of less average outstanding debt during the period.


                                       8
<PAGE>


     The Company's  effective tax rate for the three months ended  September 30,
2001 was a  provision  of 338.9%  compared  to a  benefit  of 16.5% for the same
period in 2000.  The change in the effective rate is primarily  attributable  to
the recognition of a valuation  allowance in 2001 against the Company's deferred
tax asset due to the uncertainty  regarding the likelihood of the realization of
this asset.

     Net loss  decreased $4.5 million,  or 42.5%,  to $6.1 million for the three
months ended  September 30, 2001 from $10.6 million for the same period in 2000.
The change in net loss was due to the factors described above.

Nine Months Ended September 30, 2001 and 2000

     Net sales decreased $14.2 million,  or 12.5%, to $99.8 million for the nine
months  ended  September  30, 2001,  from $114.0  million for the same period in
2000. The decrease was a result of a decline in orders of book components caused
by a  contraction  in the  publishing  industry and  exacerbated  by the further
contraction  of the U.S.  economy  in  general  after  the  September  11,  2001
terrorist attacks.

     Gross profit  decreased  $4.1 million,  or 16.7%,  to $20.4 million for the
nine months ended  September  30, 2001 from $24.5 million for the same period in
2000.  This  decrease  was  primarily  the  result  of  decreased  sales in book
components  offset by  material  and labor cost  savings at the  Company's  book
manufacturing  facilities in Hagerstown,  Maryland and Rockaway, New Jersey. The
gross profit margin  declined 1.1% to 20.4% from 21.5%  primarily as a result of
increased labor costs in the manufacture of book components,  offset by material
and labor savings in relation to sales in book manufacturing.

     Operating expenses decreased $14.6 million,  or 45.2%, to $17.7 million for
the nine months ended  September 30, 2001 from $32.3 million for the same period
in 2000.  Operating expenses in the year 2000 included a restructuring charge of
$11.4 million for the closing of  TechniGraphix  and the closing of the Taunton,
Massachusetts  facility,  and a loss on sale of  equipment of $2.0  million.  In
2001,  operating  expenses  were  further  reduced  by  $300,000  pursuant  to a
settlement  reached with an equipment lessor of TechniGraphix.  Exclusive of the
foregoing charges and credits,  operating expenses decreased $800,000,  or 4.3%,
to $18.0 million for the nine months ended September 30, 2001 from $18.8 million
for the same  period in 2000.  This was  primarily  the  result of cost  cutting
measures, including the impact of closing the Taunton, Massachusetts facility in
December 2000.

     Interest expense decreased $300,000,  or 3.1%, to $9.4 million for the nine
months ended  September  30, 2001 from $9.7 million for the same period in 2000.
The decrease was the result of less average outstanding debt during the period.

     The Company's  effective tax rate,  on an  annualized  basis,  for the nine
months ended  September 30, 2001 was a provision of 67.2%  compared to a benefit
of 32.2%  for the same  period in 2000.  The  change  in the  effective  rate is
primarily  attributable  to the  recognition  of a valuation  allowance  in 2001
against the Company's  deferred tax asset due to the  uncertainty  regarding the
likelihood of the realization of this asset.

     Net loss decreased $800,000,  or 6.8%, to $11.0 million for the nine months
ended  September  30, 2001 from $11.8  million for the same period in 2000.  The
change in net loss was due to the factors described above.


                                       9
<PAGE>


Liquidity and Capital Resources

     Cash flow during the first nine months of 2001 increased approximately $1.3
million.  During the same period,  net cash from operating  activities  provided
approximately  $900,000,  which consisted of a net loss of $11.0 million, offset
by non-cash charges of $15.1 million and the use of  approximately  $3.2 million
for the reduction of current liabilities.  Net cash used in investing activities
was $3.8 million due to capital and equipment expenditures. Net cash provided by
financing  activities was $4.1 million,  resulting from borrowings on the Senior
Credit Facility.

     Working  capital  increased  $2.9 million to $10.7 million at September 30,
2001,  from $7.8  million at December  31,  2000.  This  increase  is  primarily
attributable to decreases in accrued  liabilities and accounts payable offset by
a decrease in deferred income taxes.

     The Company  historically  has  financed  its  operations  with  internally
generated funds,  external short and long-term  borrowings and operating leases.
The  Company  believes  that funds  generated  from  operations,  together  with
existing  cash,  available  credit  under the Senior  Credit  Facility and other
financial  sources  will  be  sufficient  to  finance  its  current  operations,
remaining  capital  expenditure  requirements  and internal  growth for the year
2001.

     As of September 30, 2001, the Company has a Senior Credit Facility with its
Lender for a  $20,000,000  revolving  credit  with a maturity  date of August 1,
2004.  The  Senior  Credit  Facility  contains  limitations  on the  payment  of
dividends,  the distribution or redemption of stock,  sales of assets and stock,
limitations  on  additional  Company  debt,  and  compliance  with  a  financial
covenant.  As of September  30,  2001,  the Company was in  compliance  with its
financial covenant under the Senior Credit Facility.

     If the Company 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 will be available on satisfactory terms or at all.
The  Company  has no  current  commitments  or  agreements  with  respect to any
acquisitions.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

     The Company  has some  exposure  to market  risk based upon  interest  rate
changes;  however, because approximately 90% of the Company's debt bears a fixed
rate of interest, the Company's exposure is immaterial.


                                       10
<PAGE>



                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

     In December  1998, the Company filed a complaint  against  Krause  Biagosch
GmbH and Krause America, Inc. ("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 the
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 26,  2000,  a jury  rendered a verdict in favor of the
Company on all but one of the  remaining  pieces of  equipment.  A  judgment  of
$1,899,247 has been entered  against Krause America,  Inc. Krause America,  Inc.
has filed an appeal,  and the Company has filed a cross  appeal with  respect to
the piece of  equipment  which was not  included  in the  original  verdict  and
judgment, and on the issue of pre-judgment interest. Oral argument on the appeal
occurred on November 2, 2001.  No decision  has been  rendered by the  appellate
court yet. As of December 31, 2000 and September 30, 2001, the Company  included
in other  non-current  assets a  receivable  from Krause of  approximately  $2.0
million.

     In August 1999,  the Company filed a complaint  against  Motion  Technology
Horizons,  Inc. in the Circuit Court for Washington County,  Maryland to recover
approximately  $300,000 in deposits made on equipment which failed to perform in
accordance  with  manufacturer's  warranties,  and  $703,000 for the purchase of
substitute equipment.  Motion Technology has counterclaimed for $250,000 for the
balance of the purchase price for the equipment,  plus incidental  charges.  The
case is currently  in  discovery.  Trial in this case is scheduled  for April 1,
2002.

     The  Company  is not a party to any other  legal  proceedings,  other  than
claims and lawsuits arising in the normal course of the Company's business.  The
Company does not believe that such claims and lawsuits,  individually  or in the
aggregate,  will  have a  material  adverse  effect on the  Company's  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.


                                       11
<PAGE>

Item 5. Other Information.

         None.

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

         (a)  Exhibits.
<TABLE>
<CAPTION>


Exhibit
Number                                     Description
------    -------------------------------------------------------------------------------------
<S>       <C>
 2.1      Acquisition Agreement dated as of November 30, 1998 among the Company, Carl E.
          Carlson, Wayne L. Sorensen, Donald Davis, Margaret Davis and Viking Leasing
          Partnership (schedules and exhibits omitted)**
 2.2      Acquisition Agreement dated as of February 3, 1999 among the Company,
          TechniGraphix, Inc., Debra A. Barry and Jack L. Tiner (schedules and exhibits
          omitted)**
 2.3      Stock Purchase Agreement dated as of December 27, 1995 among the
          Company and various stockholders of New England Book Holding
          Corporation*
 2.4      Plan and Agreement of Merger of Phoenix Color Corp. (New York) into Phoenix Merger
          Corp. (Delaware)*
 3.1      Certificate of Incorporation of the Company*
 3.2      By-Laws of the Company*
 4.1      Note Purchase Agreement dated January 28, 1999 among the Company, the Guarantors
          and the Initial Purchasers**
 4.2      Indenture dated as of February 2, 1999 among the Company, the Guarantors and Chase
          Manhattan Trust Company, National Association, Trustee**
 4.3      Registration Rights Agreement dated as of February 2, 1999 among the Company, the
          Guarantors and the Initial Purchasers**
 4.4      Form of Initial Global Note (included as Exhibit A to Exhibit 4.2)**
 4.5      Form of Initial Certificated Note (included as Exhibit B to Exhibit 4.2)**
 4.6      Form of Exchange Global Note (included as Exhibit C to Exhibit 4.2)**
 4.7      Form of Exchange Certificated Note (included as Exhibit D to Exhibit 4.2)**
10.1      Employment Agreement dated as of February 12, 1999 between the Company and Jack L.
          Tiner**
10.4(a)   Credit Agreement dated as of September 15, 1998 among the Company, the Guarantors
          and First Union National Bank as Agent, as Issuer and as Lender (schedules
          omitted)**
10.4(b)   First Amendment to Credit Agreement dated as of March 31, 1999 by and
          among Phoenix Color Corp. and its subsidiaries, and the lenders
          referenced therein and First Union National Bank as issuer of letters
          of credit and agent.****
10.4(c)   Second Amendment to Credit Agreement dated as of March 23, 2000 by and
          among Phoenix Color Corp. and its subsidiaries, and the lenders
          referenced therein and First Union National Bank as issuer of letters
          of credit and agent.****
10.4(d)   Third Amendment to Credit Agreement dated as of November 13, 2000 by
          and among Phoenix Color Corp. and its subsidiaries, and the lenders
          referenced therein and First Union National Bank as issuer of letters
          of credit and agent.*****
10.4(e)   Fourth Amendment to Credit Agreement dated as of March 30, 2001 by and
          among Phoenix Color Corp. and its subsidiaries, and the lenders
          referenced therein and First Union National Bank as issuer of letters
          of credit and agent.******
10.4(f)   Fifth Amendment to Credit Agreement dated as of August 13, 2001 by and
          among Phoenix Color Corp. and its subsidiaries, and the lenders
          referenced therein and First Union National Bank as issuer of letters
          of credit and agent.*******
10.5      Revolving Credit Note dated as of September 15, 1998 executed by the Company and
          the Guarantors**
</TABLE>

                                       12
<PAGE>

         (a)  Exhibits (continued).
<TABLE>
<CAPTION>


Exhibit
Number                                     Description
------    -------------------------------------------------------------------------------------
<S>       <C>
10.6      Master Security Agreement dated as of September 15, 1998 among the
          Company, the Guarantors and First Union National Bank as Collateral
          Agent (schedules omitted)***
10.7      Master Pledge Agreement dated as of September 15, 1998 executed by the stockholders
          of the Company in favor of First Union National Bank, as Collateral Agent
          (schedules omitted)**
10.8      Subsidiary Pledge Agreement dated as of September 15, 1998 executed by the Company
          (schedules omitted**)
10.10     Lease Agreement dated as of March 20, 1998 between the Company and Maurice M.
          Weill, Trustee Under Indenture Dated December 6, 1984 for the facility
          located at 40 Green Pond Road, Rockaway, NJ 07866**
10.11     Lease Agreement dated as of March 31, 1997 between the Company and Constitution
          Realty Company, LLC for the facility located at 555 Constitution Drive, Taunton, MA
          02780**
10.12     Lease Agreement dated as of December 19, 1996 between the Company and CMC Factory
          Holding Company, L.L.C. for the facility located at 47-07 30th Place, Long Island
          City, NY 11101**

</TABLE>


*      Incorporated by reference to the Company's Registration Statement on Form
       S-1 (Reg. No. 333-50995), filed on April 24, 1998.

**     Incorporated by reference to the Company's Amendment No. 1 on Form S-4 to
       Registration  Statement on Form S-1 (Reg. No. 333-50995),  filed on March
       8, 1999.

***    Incorporated by reference to the Company's Amendment No. 2 on Form S-4 to
       Registration Statement on Form S-1 (Reg. No. 333-50995),  filed on May 5,
       1999.

****   Incorporated  by reference in the  Company's  1999 Annual  Report on Form
       10-K filed on March 29, 2000. (Reg. No. 333-50995)

*****  Incorporated by reference in the Company's 1999 Quarterly  Report on Form
       10-Q filed on November 14, 2000. (Reg. No. 333-50995)

****** Incorporated  by reference in the  Company's  2000 Annual  Report on Form
       10-K filed on April 2, 2001. (Reg. No. 333-50995)

*******Incorporated  by reference in the Company's 2001 Quarterly Report on Form
       10-Q filed on August 14, 2001. (Reg. No. 333-50995)


                                       13
<PAGE>


         (b) Reports on form 8-K

                  None.


                                       14
<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: November 14, 2001

                                         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