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, 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 June 30, 2001


Consolidated Statements of Operations ..........................   2
         Three and Six Months Ended June 30, 2000 and 2001


Consolidated Statements of Cash Flows ..........................   3
         Six Months Ended June 30, 2000 and 2001


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


<PAGE>
                      PHOENIX COLOR CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                December 31, 2000      June 30, 2001
                                                                                    (Audited)           (Unaudited)
                                                                                -----------------      -------------
                                     ASSETS
<S>                                                                               <C>                  <C>
Current assets:
  Cash and cash equivalents ..................................................    $     367,866        $     815,033
  Accounts receivable, net of allowance for doubtful accounts and rebates of
   $1,084,800 in 2000 and $870,050 in 2001 ...................................       20,296,011           20,135,201
  Inventory ..................................................................        5,501,544            6,159,941
  Income tax receivable ......................................................          805,905               41,712
  Prepaid expenses and other current assets ..................................        1,321,909            1,072,032
  Deferred income taxes ......................................................        1,032,798            1,032,798
                                                                                  -------------        -------------
   Total current assets ......................................................       29,326,033           29,256,717

Property, plant and equipment, net ...........................................       73,552,022           71,804,731
Goodwill, net ................................................................       15,984,065           14,464,468
Deferred financing costs, net ................................................        3,650,637            3,390,453
Other assets .................................................................       10,559,495           11,836,560
                                                                                  -------------        -------------
   Total assets ..............................................................    $ 133,072,252        $ 130,752,929
                                                                                  =============        =============



                       LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities:
  Notes payable ..............................................................    $      20,806        $      14,142
  Accounts payable ...........................................................       10,489,654           10,514,890
  Accrued expenses ...........................................................       11,055,808           11,308,395
                                                                                  -------------        -------------
   Total current liabilities .................................................       21,566,268           21,837,427

10 3/8% Senior subordinated notes ............................................      105,000,000          105,000,000
Revolving line of credit .....................................................        8,659,042           10,936,504
MICRF Loan ...................................................................          500,000              500,000
                                                                                  -------------        -------------
   Total liabilities .........................................................      135,725,310          138,273,931
                                                                                  -------------        -------------

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)          (7,798,528)
  Stock subscriptions receivable .............................................          (99,492)             (80,292)
  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)          (7,521,002)
                                                                                  -------------        -------------
   Total liabilities & stockholders' deficit .................................    $ 133,072,252        $ 130,752,929
                                                                                  =============        =============
</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,
                                                     -------------------------------     -------------------------------
                                                         2000               2001              2000               2001
                                                     -------------     -------------     -------------     -------------

<S>                                                  <C>               <C>               <C>               <C>
Sales ..........................................     $ 37,057,467      $ 32,359,481      $ 73,340,953      $ 64,503,509
Cost of sales ..................................       29,141,035        26,108,143        57,314,887        51,590,666
                                                     ------------      ------------      ------------      ------------
Gross profit ...................................        7,916,432         6,251,338        16,026,066        12,912,843
                                                     ------------      ------------      ------------      ------------
Operating expenses:
         Selling and marketing expenses ........        2,012,096         2,096,295         3,676,521         4,146,249
         General and administrative expenses....        4,165,385         3,863,275         8,591,933         7,941,677
         Loss (gain) on sale of assets .........        2,006,702           (95,000)        2,098,416          (120,317)
                                                     ------------      ------------      ------------      ------------
Total operating expenses .......................        8,184,183         5,864,570        14,366,870        11,967,609
                                                     ------------      ------------      ------------      ------------
Income (loss) from operations ..................         (267,751)          386,768         1,659,196           945,234
Other expenses:
         Interest expense ......................        3,263,586         3,117,716         6,455,582         6,240,607
         Other income ..........................          (11,100)         (115,342)          (26,092)         (129,259)
                                                     ------------      ------------      ------------      ------------
Loss before income taxes .......................       (3,520,237)       (2,615,606)       (4,770,294)       (5,166,114)
Income tax (benefit) expense ...................       (2,590,894)        1,021,789        (3,510,936)         (278,970)
                                                     ------------      ------------      ------------      ------------
Net loss .......................................     $   (929,343)     $ (3,637,395)     $ (1,259,358)     $ (4,887,144)
                                                     ============      ============      ============      ============

</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)
                                                                                            2000           2001
                                                                                        ------------   ------------
Operating activities
<S>                                                                                     <C>            <C>
  Net loss ........................................................................     $(1,259,358)   $(4,887,144)
  Adjustments to reconcile net loss to net cash provided by operating activities:
     Depreciation and amortization of property, plant and equipment ...............       6,007,033      5,263,596
     Amortization of goodwill .....................................................       1,503,377      1,340,628
     Amortization of deferred financing costs .....................................         260,184        260,184
     Provision for uncollectible accounts .........................................         116,942        165,231
     Deferred income taxes ........................................................      (3,510,936)      (278,970)
     Loss (gain) on disposal of assets ............................................       2,098,416       (120,317)
  Increase (decrease) in cash resulting from changes in assets and liabilities:
     Accounts receivable ..........................................................      (1,872,011)        (4,421)
     Inventory ....................................................................      (1,195,944)      (658,397)
     Prepaid expenses and other assets ............................................        (150,350)       289,468
     Accounts payable .............................................................      (1,692,576)      (218,892)
     Accrued expenses .............................................................         137,141        252,587
     Income tax refund receivable .................................................         216 184        764,193
                                                                                        -----------    -----------
       Net cash provided by operating activities ..................................         658,102      2,167,746
                                                                                        -----------    -----------
Investing activities:
  Proceeds from sale of equipment .................................................         825,000        275,000
  Capital expenditures ............................................................      (3,171,714)    (3,670,988)
  Equipment deposits ..............................................................          37,642       (614,589)
                                                                                        -----------    -----------
       Net cash used in investing activities ......................................      (2,309,072)    (4,010,577)
                                                                                        -----------    -----------
Financing activities:
  Net borrowings from revolving line of credit ....................................       1,667,433      2,277,462
  Proceeds from MICRF loan ........................................................         500,000           --
  Principal payments on long term borrowings ......................................         (71,061)        (6,664)
  Payment of stock subscription ...................................................          18,700         19,200
                                                                                        -----------    -----------
       Net cash provided by financing activities ..................................       2,115,072      2,289,998
                                                                                        -----------    -----------
       Net increase in cash .......................................................         464,102        447,167
  Cash and cash equivalents at beginning of period ................................         270,585        367,866
                                                                                        -----------    -----------
  Cash and cash equivalents at end of period ......................................     $   734,687    $   815,033
                                                                                        ===========    ===========

Non-cash investing and financing activities:
       Equipment included in accounts payable .....................................     $   513,591    $   244,128
                                                                                        ===========    ===========
</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,  2001,  and the results of its  operations  for the three month and six
month periods  ended June 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    June 30, 2001
                                     -----------------    -------------
<S>                                     <C>                 <C>
Raw materials .....................     $4,273,345          $3,832,219
Work in process ...................      1,228,199           2,327,722
                                        ----------          ----------
                                        $5,501,544          $6,159,941
                                        ==========          ==========
</TABLE>


4.   Other Assets.

     Other  assets at  December  31, 2000 and June 30,  2001  include  equipment
deposits of $3,636,062 and $4,494,778, respectively.


                                       4
<PAGE>

5.   Accrued Expenses.

     Accrued  expenses at December  31, 2000 and June 30, 2001  include  accrued
interest expense of $4,558,462 and $4,591,075, respectively.



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, 2001 to June 30, 2001:

                              January 1,                              June 30,
                                2001                                    2001
Type of Cost                   Balance     Additions    Payments      Balance
                              ----------   ---------   ----------    ----------

Lease termination costs...    $3,656,000      -         $240,000     $3,416,000





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.  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 June 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 March 31, 2002.
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 certain  financial  covenants.  As of June 30, 2001, the Company
was not in compliance with its financial  covenants regarding the total leverage
ratio, the interest coverage ratio and the


                                       5
<PAGE>


minimum  consolidated  EBITDA.  On August 14,  2001,  the Company and its Lender
amended the Senior Credit Facility,  such amendment  effective June 30, 2001, to
extend the maturity date to August 1, 2004 and to redefine and eliminate certain
financial covenants. This amendment brought the Company into compliance with its
financial  covenants  under the Senior Credit  Facility as of June 30, 2001. The
amendment  is subject to the  satisfaction  of  certain  conditions  subsequent,
including delivery of a legal opinion.

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

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
is expected to take place during the fourth  quarter of 2001. As of December 31,
2000 and June 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.

     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

                                       6
<PAGE>


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

     The Company's  effective tax rate for the six months ended June 30, 2001 of
5.4% differed from the Company's  effective tax rate of 31.8% for the year ended
December 31, 2000 due primarily to the impact of certain nondeductible  expenses
in relation to the  projected  current  year pretax  results.  As a result,  the
Company recorded a tax expense of $1,021,789 for the three months ended June 30,
2001 to reflect this expected rate.

                                       7
<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.


                                       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,
                                         --------------------------------       ---------------------------------
                                           2001      %      2000      %           2001       %     2000      %
                                         ------   ------  ------   ------       ------   ------  ------   -------

<S>                                       <C>     <C>      <C>     <C>            <C>     <C>      <C>     <C>
Sales ...............................     32.4    100.0    37.1    100.0          64.5    100.0    73.3    100.0

Cost of sales .......................     26.1     80.6    29.1     78.6          51.6     80.0    57.3     78.2

Gross profit ........................      6.3     19.4     7.9     21.4          12.9     20.0    16.0     21.8

Operating expenses ..................      5.9     18.2     8.2     22.2          12.0     18.6    14.4     19.6

Income from operations ..............      0.4      1.2    (0.3)    (0.8)          0.9      1.4     1.7      2.3

Interest ............................      3.1      9.6     3.3      8.9           6.2      9.6     6.5      8.9

Other (Income) expense ..............     (0.1)    (0.3)     --       --          (0.1)    (0.2)     --       --

Income (loss) before income taxes ...     (2.6)    (8.0)   (3.5)    (9.4)         (5.2)    (8.1)   (4.8)    (6.5)

Income tax provision (benefit) ......      1.0      3.1    (2.6)    (7.0)         (0.3)    (0.5)   (3.5)    (4.8)

Net loss ............................     (3.6)   (11.1)   (0.9)    (2.4)         (4.9)    (7.6)   (1.3)    (1.8)

</TABLE>


Three Months Ended June 30, 2001 and 2000

     Net sales decreased $4.7 million,  or 12.7%, to $32.4 million for the three
months ended June 30, 2001,  from $37.1 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.

     Gross profit  decreased  $1.6  million,  or 20.3%,  to $6.3 million for the
three  months ended June 30, 2001 from $7.9 million for the same period in 2000.
As noted above,  this decrease was primarily the result of decreased  sales. The
gross profit margin  declined 2.0% to 19.4% from 21.4%  primarily as a result of
increased labor costs in the manufacture of book components and increases in the
cost of materials for book manufacturing in Hagerstown in relation to sales.

     Operating  expenses  decreased $2.3 million or 28.0% to 5.9 million for the
three  months ended June 30, 2001 from $8.2 million for the same period in 2000.
Operating  expenses  decreased as a  percentage  of sales to 18.2% for the three
months  ended June 30,  2001 from  22.2% for the same  period in 2000 due to the
inclusion  in  2000  of a $2.0  million  loss on the  disposition  of  equipment
compared to a $100,000  gain on the  disposition  of  equipment  in 2001 and the
impact in 2001 of cost cutting measures taken by the Company due to a decline in
sales.

                                       9
<PAGE>

     Interest expense decreased $200,000, or 6.1%, to $3.1 million for the three
months  ended June 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.

     The  Company's  effective tax rate for the three months ended June 30, 2001
was an expense of 38.5%  compared  to a benefit of 74.3% for the same  period in
2000.  The  decrease  in the  effective  rate  is  primarily  attributable  to a
reduction in the  Company's  projected  effective tax rate for December 31, 2001
from 51.0% to 5.4%.

     Net loss  increased  $2.7  million or 300.0% to $3.6  million for the three
months ended June 30, 2001 from $900,000 for the same period in 2000. The change
in net loss was due to the factors described above.

Six Months Ended June 30, 2001 and 2000

     Net sales  decreased $8.8 million,  or 12.0%,  to $64.5 million for the six
months ended June 30, 2001,  from $73.3 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.

     Gross profit decreased $3.1 million, or 19.4%, to $12.9 million for the six
months  ended June 30, 2001 from $16.0  million for the same period in 2000.  As
noted above,  this  decrease was primarily  the result of decreased  sales.  The
gross profit margin  declined 1.8% to 20.0% from 21.8%  primarily as a result of
increased labor costs in the manufacture of book components and increases in the
cost of materials for book manufacturing in Hagerstown in relation to sales.

     Operating  expenses decreased $2.4 million or 16.7% to 12.0 million for the
six months  ended June 30, 2001 from $14.4  million for the same period in 2000.
Operating  expenses  decreased  as a  percentage  of sales to 18.6%  for the six
months  ended June 30,  2001 from  19.6% for the same  period in 2000 due to the
inclusion  in  2000  of a $2.1  million  loss on the  disposition  of  equipment
compared to a $100,000  gain on the  disposition  of  equipment  in 2001 and the
impact in 2001 of cost cutting measures taken by the Company due to a decline in
sales.

     Interest expense decreased  $300,000,  or 4.6%, to $6.2 million for the six
months  ended June 30, 2001 from $6.5  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 six
months ended June 30, 2001 was a benefit of 5.4%  compared to a benefit of 72.9%
for the same period in 2000.  The  decrease in the  effective  rate is primarily
attributable  to a reduction in the Company's  projected  effective tax rate for
December 31, 2001 from 51.0% to 5.4%.

     Net loss  increased  $3.6  million  or 276.9% to $4.9  million  for the six
months  ended June 30, 2001 from $1.3  million for the same period in 2000.  The
change in net loss was due to the factors described above.

                                       10
<PAGE>

Liquidity and Capital Resources

     Cash flow during the first six months of 2001 was  approximately  $447,000.
Net cash from operating  activities provided  approximately $2.2 million,  which
consisted  of a net loss of $4.9  million,  offset by  non-cash  charges of $6.8
million  and net  changes in current  assets and  liabilities  of  approximately
$300,000.  Net cash used in investing activities was $4.0 million due to capital
and equipment  expenditures.  Net cash provided by financing activities was $2.3
million, resulting from borrowings on the Senior Credit Facility.

     Working capital  decreased  $400,000 to $7.4 million at June 30, 2001, from
$7.8 million at December 31, 2000.  This decrease is primarily  attributable  to
increases in accrued liabilities and accounts payable.

     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 June 30, 2001,  the Company was not in compliance  with its financial
covenants under the Senior Credit  Facility  regarding the total leverage ratio,
the interest coverage ratio and the minimum  consolidated  EBITDA. On August 13,
2001,  the  Company  and its Lender  amended the Senior  Credit  Facility,  such
amendment effective June 30, 2001, to extend the maturity date to August 1, 2004
and to redefine and eliminate certain financial covenants. The amendment brought
the Company into compliance with its financial covenants under the Senior Credit
Facility as of June 30, 2001.  The amendment is subject to the  satisfaction  of
certain conditions subsequent, including delivery of a legal opinion.

     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.


                                       11
<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
is expected to take place during the fourth  quarter of 2001. As of December 31,
2000 and June 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.

     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.

                                       12
<PAGE>

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.

<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.****
</TABLE>

                                       13
<PAGE>

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


Exhibit
Number                                     Description
------    -------------------------------------------------------------------------------------
<S>       <C>
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**
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)



                                       14
<PAGE>


        (b) Reports on form 8-K

             None.


                                       15
<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 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

<PAGE>







                                                       Applicable Margin
         Fixed Charge Coverage                ----------------------------------
                Ratio:                        Base Rate Loans   LIBOR Rate Loans
--------------------------------------------  ---------------   ----------------
Greater than or equal to 0.75 to 1.0 but
less than 1.50 to 1.0 ......................       .50%               3.00%

Greater than or equal to 1.50 to 1.0 but
less than 2.00 to 1.0 ......................       .25%               2.75%

Greater than or equal to 2.00 to 1.0 but
less than 2.50 to 1.0 ......................      0.00%               2.50%

Greater than or equal to 2.50 to 1.0 .......      0.00%               2.25%


            Period:                        Maximum Ratio:
   -----------------------                 --------------

           9/30/01                           0.75 to 1.0

          12/31/01                           0.90 to 1.0

           3/31/02                            1.0 to 1.0

           6/30/02                            1.0 to 1.0

   12/31/02 and thereafter                    1.2 to 1.0