SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ______________________

                                    FORM 10-K

 [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the fiscal year ended December 31, 1997.

 [ ] Transition  Report  Pursuant  to  Section 13 or 15(d) of  the  Securities
     Exchange Act of 1934  for the transition period from ___ to ___

                             Commission File Number
                                    333-23519

                           VESTCOM INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)


       New Jersey                                           22-3477425
(State or other jurisdiction of                  (I.R.S. Employer Identification
 incorporation or organization)                               Number)

      1100 Valley Brook Avenue, Lyndhurst, New Jersey 07071; (201) 935-7666
   (Address, including zip code, and telephone number, including area code, of
                    registrant's principal executive office)

        Securities registered pursuant to Section 12(b) of the Act: none.

           Securities registered pursuant to Section 12(g) of the Act:

                               Title of each class

                           Common Stock, no par value

     Indicate  by  checkmark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                     Yes [X]                   No [ ]

     Indicate by checkmark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

     Aggregate market value of voting stock held by  non-affiliates  as of March
1, 1998 was approximately $60.7 million.

     Number  of  shares  of  Common  Stock  outstanding  as of  March  1,  1998:
8,483,811.

     Documents  incorporated  by reference:  Definitive  Proxy Statement for the
registrant's 1998 Annual Meeting of Shareholders (Part III).

<PAGE>


                           VESTCOM INTERNATIONAL, INC.

                                TABLE OF CONTENTS

                                     Part I
                                                                           PAGE
Item 1  Business............................................................  3
Item 2  Properties.......................................................... 16
Item 3  Legal Proceedings................................................... 16
Item 4  Submission of Matters to a Vote of Security Holders................. 16
Item 4A Executive Officers of the Registrant................................ 16

                                     Part II

Item 5  Market for the Registrant's Common Equity and Related
        Stockholder Matters................................................. 18
Item 6  Selected Financial Data............................................. 20
Item 7  Management's Discussion and Analysis of Results of
          Operations and Financial Condition................................ 21
Item 7A Quantitative and Qualitative Disclosures About Market Risk.......... 24
Item 8  Financial Statements and Supplementary Data......................... 24
Item 9  Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure............................... 24

                                    Part III

Item 10 Directors of the Registrant......................................... 24
Item 11 Executive Compensation.............................................. 24
Item 12 Security Ownership of Certain Beneficial Owners and
          Management........................................................ 24
Item 13 Certain Relationships and Related Transactions...................... 24

                                     Part IV

Item 14 Exhibits, Financial Statement Schedules and Reports
          on Form 8-K....................................................... 25

Signatures.................................................................. 28

<PAGE>

                                     PART I

Item 1.  Business

General

     Vestcom   International,   Inc.   ("Vestcom"   or  the   "Company")  is  an
international  provider of computer  output and  document  management  services.
Vestcom was founded in September  1996.  Concurrently  with the  consummation of
Vestcom's  initial  public  offering  (the  "IPO") on August  4,  1997,  Vestcom
acquired seven computer output and document  management  service  companies (the
"Founding  Companies"),  which  operated 19 facilities in nine states and in the
Province  of  Quebec,  Canada.  Since the IPO,  the  Company  has  expanded  its
operations  through  internal growth and by acquiring four additional  operating
companies with  facilities in five  additional  states and in Toronto,  Ontario,
Canada. The companies acquired by Vestcom since the IPO, along with the Founding
Companies,  are referred to herein as the  "Operating  Companies."  Prior to the
IPO,  Vestcom did not conduct any operations.  Unless otherwise  indicated,  all
references  to the  business  of the  Company  prior  to the  IPO  refer  to the
businesses of the Founding  Companies as they were  conducted on an  independent
basis.

     The  Company's  knowledge of the  industry,  its  technological  expertise,
resources  and  operating  efficiencies  enable it to  provide a broad  range of
services from multiple locations at a competitive cost. The Operating  Companies
provide  a number of  value-added  services  including  (i) the  production  and
distribution of time-sensitive computer-generated documents, including invoices,
statements,  reports and point-of-purchase  shelf labels, (ii) demand publishing
and marketing materials  fulfillment,  (iii) commingling,  intelligent inserting
and mailing services and (iv) forms management.  The Company maintains a website
at vestcomintl.com.

     The Company  provides  services to a broad range of  industries,  including
financial,   telecommunications,   pharmaceutical,   health  care,   publishing,
retailing and manufacturing  industries.  The Company believes that its services
afford its customers an opportunity to obtain improved quality,  reliability and
turnaround  of  documents,  at a reduced cost.  The  Company's  services  enable
customers to:

       o  Utilize a broad range of computer output services to create documents
          for their specific needs

          The Company believes that one of its key competitive advantages is its
significant  computer  processing and  programming  capabilities.  The Company's
technical  staff  designs and  implements  the  software  and systems to produce
customized output for customers.  The Company's  capabilities  provide customers
with the flexibility to obtain small or large volumes of documents with the same
high  quality,   while  permitting  each  document  to  contain   customized  or
individualized  information.  The  Company  produces  documents  for most of its
customers on a regular basis,  either daily,  weekly,  monthly,  quarterly or as
otherwise required by the customer.

        o  Obtain computer output and document management services at a reduced
           cost

          The  Company's   advanced   computer   processing   and   distribution
capabilities  permit  customers to reduce  their  production,  distribution  and
mailing  costs.  Customers  can also reduce  their  overhead  and fixed costs by
decreasing or eliminating equipment, floor space, personnel, utilities and other
related expenses. The Company's specialized equipment can be utilized 24 hours a
day,  seven days a week,  to meet  customers'  needs.  In contrast,  in order to
perform  many  computer  output  and  document   management  services  in-house,
customers are required to make  significant  capital  expenditures for equipment
which may not be utilized cost-effectively.

         o  Reduce turnaround time and substantially reduce downtime

          The  Company  reduces  turnaround  time and  downtime  through its (i)
advanced technology, including direct customer data links which speed processing
time, (ii)  distributed  processing,  by which the Company  maximizes  equipment
utilization  and  distributes  data  received from  customers to  geographically
dispersed  output  and  production   centers,   enabling   customers  to  reduce
distribution  costs while improving  delivery time and (iii) internal  equipment
redundancy  and  multi-site  production   capabilities,   which  provide  backup
protection for equipment failure.

         o  Gain access to the newest technologies

          The  Company  keeps  abreast of  frequent  changes in  technology  and
equipment in the  computer  output and document  management  services  industry,
enabling its  customers to (i) receive the  benefits of  technological  advances
without making significant investments in hardware and software, (ii) retain the
flexibility  to change the  equipment  and  technologies  they  utilize as their
respective needs change and (iii) select from among a variety of medium, such as
paper,  compact  disc and  microfiche.  The Company is  planning to  introduce a
service to enable customers to distribute  documents  through the Internet.  The
Company shares its technological expertise and resources Company-wide.

          This  Annual  Report on Form  10-K  contains  certain  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995  ("Forward-Looking  Statements").  Such statements are subject to risks and
uncertainties  that could cause actual results to differ  materially  from those
projected  in such  Forward-Looking  Statements.  Certain  factors  which  could
materially  affect such  results and the future  performance  of the Company are
described herein under "Risk Factors."

Industry Overview

          The  computer  output and  document  management  services  business is
highly  fragmented  and is  characterized  by  many  small  companies,  numerous
in-house operations and several national service providers. The Company believes
that many of these  companies  serve local markets and provide a narrow range of
services.   As  a  result   of  the   increased   complexity   and   volume   of
computer-generated   documents  and  the  increased  costs  of  producing  these
documents in-house,  a growing number of companies have looked to outsourcing as
an alternative to performing  computer output and document  management  services
in-house. The Company believes that many computer output and document management
services businesses:  (i) have insufficient  capital for expansion;  (ii) do not
invest  sufficiently in rapidly changing  technologies;  and (iii) are unable to
meet the needs of large and/or geographically dispersed clients.

          The  Company  believes  that the  growth of the  computer  output  and
document  management  services  market  is  being  driven  by  several  factors,
including:  (i) the increasing  trend of businesses to outsource  their non-core
functions;  (ii) the growth of the  companies  and  industries  in the Company's
customer  base,  which has  resulted in an increase in the volume and variety of
documents which these companies need to generate;  (iii) the increased demand of
managers,   employees  and  customers  for   time-sensitive   computer-generated
documents as a result of recent  advances in  information  technology;  and (iv)
government  regulations  that require the reporting and retention of, and access
to, a broad range of information.

Strategy

          The  Company  believes  it is  well-positioned  to pursue  its goal of
becoming a leading provider of computer output and document management services,
initially  in the U.S.  and  portions  of Canada,  and  eventually  on a broader
international  scale.  The Company has implemented the following  strategies for
both internal  growth and growth through  selective  acquisitions as it seeks to
pursue this goal:

         Strategy for Internal Growth:

Provide a Broad Range of High Quality Services at a Competitive Cost from
Multiple Locations

          The Company provides a broad range of high quality computer output and
document management services at a competitive cost from multiple locations.  The
Company's  experience  combined  with its size and  scope of  service  offerings
enables it to provide  customers with "one stop" computer  output  shopping at a
competitive cost.

Achieve Cost Savings Through Consolidation and Economies of Scale

          The Company intends to achieve economies of scale by (i) consolidating
a number of  administrative  functions;  (ii)  combining the  purchasing of such
items as materials and supplies,  equipment  maintenance and employee  benefits;
(iii)  reducing or  eliminating  redundant  functions and  facilities;  and (iv)
utilizing a  communications  network to maximize  equipment  utilization  and to
speed delivery.

Capitalize on Cross-Selling Opportunities

          The Company has initiated cross-selling efforts and intends to further
capitalize  on the  expertise of the various  Operating  Companies to expand the
range of  services  provided  to  existing  customers  as well as to broaden the
Company's  customer  base.  For example,  the Company  believes that its mailing
services could be marketed to customers for whom the Company presently  produces
computer-generated  documents,  while its output  services  could be marketed to
customers that presently  utilize the Company's  mailing  services.  The Company
further believes that new technologies shared among the Operating Companies will
increase the Company's cross-selling opportunities.  In addition, certain of the
Operating  Companies have  expertise in particular  industries and with specific
types of  customers,  such as  financial  institutions,  supermarket  chains and
telecommunications  companies.  The Company  believes that this  expertise  will
enhance its ability to obtain and service  customers in the same  industries  in
additional geographic areas.

Provide Complete Outsourcing Solutions for Clients

          The  Company  intends  to  provide  a  turnkey   document  output  and
distribution  service in which the Company  assumes most of the document  output
and  distribution   responsibilities  previously  performed  by  the  customer's
in-house  operations.  The Company  believes that, in most cases, it can perform
these  services  more  cost-effectively  than  the  customer  can  perform  them
internally.   The  Company   believes   that  its  knowledge  of  the  industry,
technological  expertise,  resources and operating efficiencies will enhance its
ability to successfully market this service.

          Acquisition Strategy:

          Concurrently  with the  consummation of its IPO,  Vestcom acquired the
Founding  Companies,  which  operated  19  facilities  in nine states and in the
Province  of  Quebec,  Canada.  Since the IPO,  the  Company  has  expanded  its
operations  through  internal growth and by acquiring four additional  operating
companies in five additional states and in Toronto, Ontario, Canada. The Company
plans to acquire additional companies in the  highly-fragmented  computer output
and document management services industry.

          As the Company grows, it will seek to expand into targeted  geographic
areas in the United States,  Canada and abroad by acquiring  companies that have
specified characteristics. Targeted geographical areas include those areas which
have  a  high   concentration   of   potential   customers   with   high-volume,
computer-generated  output. In identifying potential acquisition candidates, the
Company  will  look  for  companies  (i)  with  services  that  are  similar  or
complementary to those provided by the Company;  (ii) serving geographic markets
targeted  by  the   Company;   (iii)  with  strong   management   and   customer
relationships;  and (iv) that are  expected  to be  accretive  to the  Company's
earnings per share or otherwise provide strategic value to the Company.

          In addition,  as opportunities arise, the Company will seek to augment
the  operations  of the  Operating  Companies  and to capitalize on economies of
scale with "tuck-in"  acquisitions  in the same or contiguous  areas that can be
assimilated into existing operations.  The Company believes that it can increase
market share through  tuck-ins by adding  additional  customers  and  leveraging
operational  efficiencies through the sharing of capacities and capabilities and
the  elimination  of  duplicate  overhead.  The Company  also intends to grow by
acquiring the in-house computer output centers of targeted corporations.

          For a  discussion  of  certain  risks  associated  with the  Company's
acquisition  strategy,   see  "Risk  Factors--Risks  Related  to  the  Company's
Acquisition Strategy" and "--Need for Additional Financing."

          The  Company is  regularly  engaged  in  discussions  with  additional
acquisition  candidates  and may from time to time enter into  letters of intent
with respect to the acquisition of such  businesses.  No assurance can be given,
however, that the Company will acquire any additional businesses.

Services

          The  Company  provides  a variety  of  computer  output  and  document
management  services for its  customers  based on their  specific  needs.  These
services include the following:

Output Services

         Production and Distribution of Time-Sensitive Documents

          The Company converts  electronic data received from its customers into
informative,  accurate and customized  documents  such as brokerage  statements,
bank  statements,   invoices,  pension  reports,  credit  union  statements  and
management  reports  (including sales reports,  financial and accounting reports
and inventory  reports).  The Company's  technical  staff  develops  specialized
systems and software to meet its customers' needs. Upon receipt of computer data
from its customers,  the data are processed through the specialized  systems and
software  generally  developed  by the Company to provide,  among other  things,
customized  formatting of output,  cost-effective  and speedy  postal  delivery,
intelligent insertion, selective distribution and quality control. The Company's
processing  of its  customers'  data  enables the  Company to create  customized
output,  such as selective  marketing  messages and highlight color on invoices.
The  Company's  capabilities  enable  it to  image  small or  large  volumes  of
documents with the same high quality,  while permitting each document to contain
customized  or  individualized  information.  The  Company's  capabilities  also
include the  distribution  of data  received  from  customers to  geographically
dispersed  output  and  production   centers,   enabling   customers  to  reduce
distribution  costs while improving delivery time The Company produces documents
for most of its customers on a regular  basis,  either daily,  weekly,  monthly,
quarterly or as otherwise required by the customer.

     The Company offers its customers a variety of medium for the production and
distribution  of  documents,  including  paper,  compact  disc,  microfiche  and
microfilm. Compact disc is primarily used for rapid access to information and in
situations  where the user needs to manipulate  the data easily.  Microfiche and
microfilm are used  primarily for archiving and for other purposes which are not
highly  time-sensitive.  The Company is also  planning to introduce a service to
enable customers to distribute documents through the Internet.

         Production and Distribution of Computer-Generated Labels

     The Company produces and distributes  computer-generated  point-of-purchase
labels for  supermarkets,  grocery  stores,  drug stores and discount and retail
department stores. These labels generally display the product's price (including
unit price),  a bar-code for scanning and information  about the product such as
its  size and  weight.  The  Company  utilizes  high-speed  laser  printers  and
specialized  finishing equipment to produce such labels. The Company offers both
vinyl and paper laminated  labels to its customers.  The Company  provides rapid
turnaround of labels to its customers'  stores and  distribution  centers daily,
weekly or as otherwise required to reflect changes in the information  contained
on the labels.

         Demand Publishing and Marketing Materials Fulfillment


     The Company prints,  packages and distributes documents that are subject to
frequent revision or unpredictable  demand, such as product instruction manuals,
training manuals and technical  materials.  For example, a software company that
provides  instruction  manuals to its  customers  may need to update the manuals
frequently  to reflect  changes in its product.  The  Company's  print on demand
system   permits   the   customer   to  revise   the   instruction   manual  and
cost-effectively produces the number of copies the customer requires at the time
the information is needed.  The flexibility of the Company's  system enables the
customer to make product  enhancements  (such as corrections or  improvements to
product manuals) without maintaining costly inventories of documents which might
quickly become  outdated.  The Company  provides  complete  assembly of software
packages,  including  coordination of software duplication and production of the
applicable documentation.

     In  addition  to the  electronic  storage  of  data  for  print  on  demand
requirements,  the Company also receives printed marketing and related materials
from  customers,  stores them and then ships the materials to various  locations
upon the  receipt of a  customer  order.  The  Company  receives  orders to ship
materials by telephone,  computer,  phone mail,  fax, mail,  electronic mail and
Electronic Data Interchange (EDI). The Company's inbound  telemarketing  service
includes   customer  service   representatives   who  take  orders  and  provide
information  concerning  inventory  availability,  anticipated  delivery and the
status of  previously  placed  orders.  The  Company  also  produces  customized
computer  reports which track the volume and frequency of shipments of materials
to various locations.

Commingling, Intelligent Inserting and Mailing Services

     The Company  provides  cost-effective  and rapid  distribution of completed
documents and is able to obtain postal discounts of up to approximately  25% off
the current U.S. first class single piece postage rate. By maximizing  equipment
utilization  and  distributing  data received from  customers to  geographically
dispersed output and production centers, the Company enables customers to reduce
distribution costs while improving delivery time.

     Commingling

     By combining  volumes of mail from a number of customers  and adding postal
bar-codes,  the Company is able to generate postal  discounts for customers that
do not produce sufficient volume to obtain these benefits on their own.

     Insertion

     The  Company  provides  both  selective   (intelligent)  and  non-selective
insertion services. The Company's insertion equipment folds and inserts reports,
bills, invoices and other marketing materials into envelopes.

         Presorting

     The  Company  sorts  mail to United  States  and  Canadian  Postal  Service
specifications  and  adds  postal  bar-codes  in order to  obtain  the  greatest
available discount and speed delivery.

Computer Center Document Outsourcing Services

     As contrasted with the Company's individualized applications for customers,
the  Company's  Computer  Center  Document  Outsourcing  Services  is a  turnkey
document  output  and  distribution   service  to  meet  the  customer's  output
processing needs, and which may also include mailing services.  The Company will
typically assume most of the document output and  distribution  responsibilities
previously performed by the customer's in-house operations. The Company believes
that this service will often enable the customer to close its in-house  computer
output printing center.  The customer transmits its  computer-generated  data to
the Company's output and production centers, which then processes,  produces and
distributes all of the reports,  invoices,  statements and other computer output
documents needed by the customer.  The Company intends to increase its marketing
efforts  related  to this  service,  and  believes  that  its  knowledge  of the
industry,  technological  expertise,  resources and operating  efficiencies will
enhance its ability to successfully market this service.

Forms Management

     The Company's  services  include the purchase,  storage and  maintenance of
printed forms, envelopes,  letterhead and marketing materials for customers. The
Company also offers limited offset printing services to print forms,  stationery
and other marketing materials.

Development of New Services

     The  Company  believes  that its future  success  depends on its ability to
enhance  its  current  services  and  develop  new  services  that  address  the
increasingly  sophisticated needs of its customers. For example, during the last
five years,  several of the Operating  Companies have  increased  their document
storage  capabilities.  While previously  offering only microfiche and microfilm
technology,  several of the Operating Companies now offer customers compact disc
technologies.  In addition,  as postal regulations have changed,  several of the
Operating  Companies  have improved and updated their software  capabilities  in
order to process  nine digit zip codes and use bar coding to take  advantage  of
new postal discounts.

     The  Company  continually  faces  challenges  in  keeping  abreast  of  new
technologies.  As an example of a future challenge,  many companies may increase
their use of the Internet to transmit information to employees or customers. The
Company is planning to  introduce a service to enable  customers  to  distribute
documents,  such as statements and invoices,  though the Internet.  No assurance
can be given that the Company  will be able to provide this service to customers
or that it will be  commercially  viable  for the  Company  to do so.  To remain
competitive, the Company may need to be prepared to offer its customers services
that  utilize  other  technologies.   The  Company  attempts  to  keep  up  with
technological advances by attending trade shows and by maintaining close contact
with its principal customers and equipment/technology vendors.

Confidentiality of Customer Information

     A substantial  portion of the Company's  business  involves the handling of
documents  containing  confidential  and  other  sensitive  information  of  its
customers.  The Company has implemented a uniform policy  throughout the Company
to protect confidential information, and has an ongoing process of requiring all
new  employees  and, to the extent  practical,  existing  employees,  to execute
confidentiality  agreements to the extent not previously executed.  In addition,
the Company has  obtained  printer's  error  insurance  to attempt to reduce the
economic  impact of any  breach.  A breach of  confidentiality  would  also have
collateral damaging effects on the Company's business reputation.

Sales and Marketing

     The Company's  sales efforts are handled  principally  through its in-house
direct sales staff of  approximately  60 people  located in 11 states and in the
Provinces of Quebec and Ontario,  Canada.  The Company's  sales  representatives
generally have  expertise in specific  industries,  such as the  pharmaceutical,
telecommunications  and financial  services  industries,  and in specific output
services, such as statements, computer-generated point-of-purchase shelf labels,
compact  discs and demand  publishing.  The  Company  employs  customer  service
representatives to provide on-going support to existing customers and to oversee
the implementation of new customer projects.

     Vestcom's management augments the work of the local sales personnel through
a  variety  of direct  marketing  techniques,  including  direct  mail,  regular
participation   in  industry   trade  shows  and   conferences,   articles   and
advertisements  in trade journals and  Company-sponsored  seminars for customers
and prospective  customers.  Management also works with local sales personnel to
structure regional sales programs,  national accounts programs and cross-selling
programs and to discuss the development of new services.

     The  Company  provides  Company-wide  marketing  support to its sales staff
through the production and  distribution of marketing  materials,  telemarketing
and  seminars.  The  Company's  sales and customer  service  personnel  interact
extensively  with the customer  and the  Company's  operations  staff to address
specific customer needs.

Customers

     The Company's customer's include financial institutions, telecommunications
companies,  pharmaceutical  companies,  health  care  institutions,   publishing
companies,  supermarkets and other retailers,  and  manufacturing  firms. No one
customer presently accounts for over 3% of the Company's revenues.

     The Operating  Companies have  demonstrated the ability to retain customers
over the long-term under short-term  contracts,  and in many instances,  without
written  contracts.  The Company believes that quality of performance,  on-going
customer support and the  technologically  advanced customized services provided
by the  Operating  Companies  have  contributed  to this  record  of  successful
customer  retention.  No assurance can be given that the Company will be able to
retain these customers, or the customers of other companies that the Company may
acquire in the future. The Company may also lose customers or have difficulty in
acquiring new customers as a result of the highly competitive  industry in which
the Company operates or a customer deciding to discontinue  outsourcing  certain
applications.

Competition

     The Company operates in a highly competitive industry. A significant source
of competition  is the in-house  document  handling  capability of the Company's
target  customer  base.  There can be no assurance  that these  businesses  will
outsource more of their computer  output and document  management  needs or that
such businesses will not bring in-house services that they currently  outsource.
In addition,  with respect to those  services that are  outsourced,  the Company
competes  with a variety  of  companies,  many of which have  greater  financial
resources  than the  Company.  A number of the  Company's  current  suppliers of
equipment and services are also a source of  competition.  The  Company's  major
competitors include Xerox Business Services,  Pitney Bowes Management  Services,
Anacomp,   First  Image  (a  subsidiary  of  First  Data  Corporation),   Output
Technologies  (a division of DST Systems),  IKON Office  Solutions and Lason, as
well as smaller local providers.

     Certain of the Company's  competitors  operate in broader  geographic areas
than the  Company,  and  others  may  choose  to enter  the  Company's  areas of
operation  in the  future.  In  addition,  the  Company  intends  to  enter  new
geographic  areas through internal growth and by acquiring  existing  companies,
and expects to encounter significant competition from established competitors in
each of these new areas. As a result of this highly competitive environment, the
Company may lose customers or have difficulty in acquiring new customers and new
companies and its results of operations may be adversely affected.

     The Company  believes that the principal  competitive  factors in providing
computer  output  and  document   management   services  include   technological
expertise,  quality  and  accuracy,  turnaround  time,  price,  reliability  and
security  of  service,  reputation,  client  industry  expertise,  capacity  and
customer support and service.  The Company  believes that it competes  favorably
with respect to these  factors,  although there can be no assurance that it will
continue to do so.

Employees

     At December 31, 1997, the Company had  approximately  885 full-time and 130
part-time  employees.  No  employees of the Company are  represented  by a labor
union. The Company considers its relations with its employees to be good.

                                  RISK FACTORS

Absence of Combined Operating History; Risks of Integration

     Prior to the  consummation of the IPO and the  acquisitions of the Founding
Companies  on August 4, 1997,  Vestcom  conducted  no  operations  other than in
connection  with the IPO and the  acquisitions  of the Founding  Companies.  The
Company has acquired four  additional  operating  companies since the IPO. These
companies,  together with the Founding Companies,  are referred to herein as the
"Operating  Companies."  Prior to their respective  acquisitions,  the Operating
Companies  operated  as  separate,  independent  businesses.  Consequently,  the
historical and pro forma financial  information  herein may not be indicative of
the Company's financial  condition and future operating results.  The Company is
in the process of establishing  centralized  accounting and other administrative
systems.  Until this  centralization  is complete,  the Company will rely on the
separate  systems of the  Operating  Companies.  The success of the Company will
depend,  in part, on the extent to which the Company is able to centralize these
functions,   eliminate  the  unnecessary  duplication  of  other  functions  and
otherwise  integrate the Operating  Companies and such additional  businesses as
the Company may acquire into a cohesive,  efficient enterprise. No assurance can
be given that the Company's  senior  management  group,  which has been recently
formed,  will be able to manage effectively the combined entity or implement the
Company's acquisition or operating strategy.

     A number of the  Operating  Companies  offer  different  services,  utilize
different capabilities and technologies and target different geographic markets.
While the Company believes that there are substantial potential opportunities as
a consequence of integrating  these businesses,  these differences  increase the
difficulties  involved in  successfully  completing such  integration.  Further,
there can be no assurance that the Company's goal of becoming a leading provider
of computer output and document  management  services will be attained,  or that
the Company's target customer  segments will accept the Company as a provider of
such services. In addition, there can be no assurance that the operating results
of the Company will match or exceed the combined  individual  operating  results
achieved by the Operating Companies prior to their respective acquisitions.

Risks Related to the Company's Acquisition Strategy

     The Company  intends to expand its  operations  through the  acquisition of
additional  businesses  which provide  computer  output and document  management
services.  There can be no assurance  that the Company will be able to identify,
acquire or profitably  manage  additional  businesses or successfully  integrate
acquired businesses,  if any, into the Company without substantial costs, delays
or other  operational  or  financial  difficulties.  Further,  acquisitions  may
involve a number of special risks,  including  adverse  effects on the Company's
operating results,  diversion of management's  attention,  failure to retain key
personnel,  risks  associated  with  unanticipated  events and  amortization  of
acquired  intangible assets,  some or all of which could have a material adverse
effect on the Company's business,  financial condition or results of operations.
In addition,  if competition for acquisition  candidates  develops or increases,
the  cost  of  acquiring  businesses  could  increase  materially.   Unfavorable
developments at a single acquired  company could have a material  adverse impact
on the reputation and business of the Company as a whole. In addition, there can
be no assurance  that  acquired  businesses,  if any,  will achieve  anticipated
revenues and earnings.  The inability of the Company to implement and manage its
acquisition strategy  successfully may have an adverse effect on the business or
future prospects of the Company.

     The Company is regularly engaged in discussions with additional acquisition
candidates  and may from time to time enter into  letters of intent with respect
to the acquisition of such businesses.  No assurance can be given, however, that
the Company will acquire any additional businesses.

No Assurance of Sustained Internal Growth

     A key element of the Company's  strategy is to generate  internal growth by
capitalizing  on  cross-selling  opportunities,  generating new clients  through
aggressive  marketing and expanding its service offerings.  Internal growth will
depend  upon  factors  including  the  effective  initiation,   development  and
maintenance of client relationships;  the expansion of marketing operations; the
Company's  ability to maintain the high quality of the services it offers and to
expand such services; and the recruitment, motivation and retention of qualified
management and other personnel.  Sustaining  growth will also require  continued
access by the Company to capital,  the successful  cross-selling of products and
services  among the  Operating  Companies  and  realization  by the  Company  of
economies of scale. There can be no assurance that the Company's strategies will
continue to generate  internal  growth or that it will be able to generate  cash
flow adequate for its operations and to support growth.

Need for Additional Financing

     The Company may use its Common Stock as a portion of the  consideration  to
be paid in  connection  with  future  acquisitions.  The  Company  has issued an
aggregate  of 134,520  shares of Common Stock since the IPO in  connection  with
acquisitions,  all of which shares were unregistered. The Company has registered
2,000,000  shares  of  Common  Stock  which  may be  used as  consideration  for
acquisitions  by  the  Company  in the  future,  all of  which  shares  remained
available  as of March 1, 1998.  The extent to which the Company will be able or
willing to use its Common Stock as consideration  for acquisitions in the future
will  depend on the market  value of the Common  Stock from time to time and the
willingness of potential  acquisition  candidates to accept Common Stock as part
of the consideration  for the sale of their businesses.  The market price of the
Common  Stock may be subject to  significant  fluctuations  from time to time in
response to numerous  factors.  See  "Possible  Volatility  of Stock  Price" and
"Effect of Potential Fluctuations in Quarterly Operating Results." To the extent
the Company is unable or unwilling to use its Common  Stock in  connection  with
future acquisitions,  it would be required to use more of its cash resources, if
available,  to maintain its  acquisition  program.  If the Company does not have
sufficient  cash  resources,  its growth  could be limited  unless it is able to
obtain additional capital through additional debt or equity financing. There can
be no assurance  that the Company  will be able to obtain such  financing if and
when it is needed  or that,  if  available,  it will be  available  on terms the
Company  deems  acceptable.  As  a  result,  the  Company  might  be  unable  to
successfully  implement or manage its  acquisition  strategy,  which may have an
adverse effect on the business or future prospects of the Company.

     The Company  expects to pay $277,000 in cash and issue 54,779  unregistered
shares of Common Stock as payment of the deferred  purchase price for one of the
Founding Companies,  subject to final review. Up to an additional  $3,630,000 in
cash and up to an additional  624,614 shares of the Company's  Common Stock plus
up to another  125,000  shares of Common Stock (based on current  market prices)
may be used by the Company to pay  deferred  purchase  prices for certain of the
other  Operating  Companies which may be earned during various periods ending no
later than June 30, 1999 if the applicable gross margins and operating  earnings
thresholds  of certain of the Operating  Companies  are achieved.  Any earn-outs
will  increase  goodwill  recorded  for  these  acquisition  transactions.   The
amortization  of any  additional  goodwill  and the  increased  number of shares
issued if the earn-outs are achieved will negatively affect the Company's future
earnings per share. The Company will also need additional funds to implement its
acquisition  and  internal  growth  strategies.  The  Company  entered  into  an
Equipment Loan and Revolving Credit Agreement in August 1997 with Summit Bank in
the amount of $30 million  (which  includes a $5 million  line to be used solely
for  equipment  financing).  As of March 1, 1998,  the entire line of credit was
available.  The Company  intends to use this credit facility for working capital
and other general  corporate  purposes,  which may include future  acquisitions.
There can be no assurance,  however,  that this or any other line of credit will
be sufficient for the Company's needs or that, if any other line is offered,  it
will be on terms that are acceptable to the Company.

Competition

     The services provided by the Company are highly competitive.  A significant
source  of  competition  is the  in-house  capability  of the  Company's  target
customer base.  There can be no assurance that these  businesses  will outsource
more of their  computer  output  and  document  management  needs  or that  such
businesses will not bring in-house  services that they currently  outsource.  In
addition,  with  respect to those  services  that are  outsourced,  the  Company
competes with a variety of competitors, many of which have substantially greater
financial  resources  than  the  Company.  A  number  of the  Company's  current
suppliers of equipment and services are also a source of competition.  There can
be no assurance  that the Company will be able to compete  successfully  against
current or future  competitors  or that  competitive  pressures  will not have a
material  adverse  effect on the  Company's  business,  financial  condition  or
results of operations.

     Certain of the Company's  competitors  operate in broader  geographic areas
than the  Company,  and  others  may  choose  to enter  the  Company's  areas of
operation  in the  future.  In  addition,  the  Company  intends  to  enter  new
geographic  areas through internal growth and by acquiring  existing  companies,
and expects to encounter significant competition from established competitors in
each of these new areas. As a result of this highly competitive environment, the
Company may lose  customers,  may need to reduce  prices to retain  customers or
have  difficulty in acquiring new customers and new companies and its results of
operations may be adversely affected.

     The Company also competes for acquisition candidates in the computer output
and document management services industry. The Company's ability to grow through
acquisitions could be adversely affected by such competition.

Reliance on Key Personnel

     The Company's  operations  are  dependent on the  continued  efforts of its
executive  officers  and  technical  staff and on the senior  management  of the
Operating  Companies.  Furthermore,  the Company will likely be dependent on the
senior  management  of companies  that may be acquired in the future.  If any of
these individuals  elect not to continue in their roles with the Company,  or if
the Company is unable to attract and retain senior  management and other skilled
employees,  including computer  programmers and other technical  personnel,  the
Company's business could be adversely affected.

Dependence on Technology

     The  success of the  Company  will be highly  dependent  on its  ability to
acquire  and  utilize  competitive   computer  output  and  document  production
technologies  that are not readily  available on a  cost-effective  basis to the
Company's  existing  and  potential  customers,  thereby  creating  the  need to
outsource.  The Company's services could be rendered  noncompetitive or obsolete
by   technological   advances  made  by  the  Company's   current  or  potential
competitors.  In addition,  the Company could make a  significant  investment in
equipment  or  technology  which  quickly  becomes  obsolete.  There  can  be no
assurance  that the  Company  will be able to obtain  the rights to use any such
technologies, that it will be able to implement effectively such technologies on
a cost-effective basis or that such technologies will not render  noncompetitive
or obsolete  the  Company's  role as a provider of computer  output and document
management services.

Impact of the Year 2000 Issue

     The Year 2000 Issue is  primarily  the result of  computer  programs  being
written using two digits rather than four to define the applicable year. Certain
computer  programs may  recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in a system failure or miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send  invoices or engage in similar  normal  business
activity.

     Based on a recent internal assessment,  the Company has determined that the
cost to modify its existing  software and/or to convert to new software will not
be significant. However, if customers, suppliers or others with whom the Company
does business experience problems relating to the Year 2000 Issue, the Company's
business,  financial  condition  or results of  operations  could be  materially
adversely affected.

Development of New Services

     The  Company  believes  that its future  success  depends on its ability to
enhance  its  current  services  and  develop  new  services  that  address  the
increasingly  sophisticated needs of its customers. The introduction of services
incorporating  new  technologies  and the emergence of new  technical  standards
could render some or all of the Company's services unmarketable.  The failure of
the Company to develop and introduce  enhancements  and new services in a timely
and  cost-effective  manner in  response to  changing  technologies  or customer
requirements  could have a material  adverse  effect on the Company's  business,
financial condition or results of operations.

Potential Liability for Breach of Confidentiality

     A substantial  portion of the Company's  business  involves the handling of
documents containing confidential and other sensitive information.  There can be
no assurance that  unauthorized  disclosure  will not result in liability to the
Company.  It is possible  that such  liabilities  could have a material  adverse
effect on the Company's reputation and results of operations.

Control by Certain Stockholders

     As of March 1, 1998,  the directors and executive  officers of the Company,
and entities affiliated with them, beneficially owned approximately 30.2% of the
outstanding  shares of Common  Stock.  Such amount  does not  include  shares of
Common  Stock that were issued to other  former  shareholders  of the  Operating
Companies and shares which may be issued to such persons in the future  pursuant
to certain earnout provisions.  These stockholders acting together would be able
to elect a  sufficient  number of directors  to control the  Company's  Board of
Directors and would likely be able to approve or disapprove any matter submitted
to a vote of stockholders.


Risk of Business Interruptions and Dependence on Single Facilities for
Certain Services; Insurance

     The  Company  believes  that  its  future  results  of  operations  will be
dependent  in large  part upon its  ability  to  provide  prompt  and  efficient
services to its customers.  Certain of the Company's operations are performed at
a single  location and are  dependent on  continuous  computer,  electrical  and
telephone  service.  As a result,  any  disruption of the  Company's  day-to-day
operations could have a material  adverse effect upon the Company.  There can be
no assurance that a fire, flood,  earthquake,  power loss, phone service loss or
other event affecting one or more of the Company's  facilities would not disable
these  services.  Any  significant  damage to any such facility or other failure
that causes  significant  interruptions  in the Company's  operations may not be
covered by insurance.  Any uninsured or underinsured  loss could have a material
adverse  effect on the  Company's  business,  financial  condition or results of
operations.

Effect of Potential Fluctuations in Quarterly Operating Results

     The Company may experience  significant quarter to quarter  fluctuations in
its results of  operations.  Quarterly  results of operations may fluctuate as a
result of a variety of  factors,  including,  but not  limited  to, the size and
timing of customer jobs,  changes in customer  budgets,  the addition or loss of
customers,  variations in the cost of paper and other materials,  the opening of
new facilities, the size and timing of acquisitions, the integration of acquired
businesses  into the Company's  operations,  the number and timing of new hires,
the demand for the Company's  services,  the timing of the  introduction  of new
services and service enhancements by the Company or its competitors,  the market
acceptance of new services,  competitive  conditions in the industry and general
economic conditions.

     As a result,  the Company  believes  that period to period  comparisons  of
results  of  operations  are not  necessarily  meaningful  and  not  necessarily
indicative of the results that the Company may achieve in any subsequent quarter
or a full year. Such  fluctuations  may result in volatility in the price of the
Common Stock,  and it is possible that in future quarters the Company's  results
of operations  could be below the  expectations  of public  market  analysts and
investors.  Such an event  could  have a material  adverse  effect on the market
price of the Company's Common Stock.

Fluctuations in the Price of Supplies; Alternative Technologies

     Prices for paper, film, compact discs,  postage and other materials used by
the  Company  may  increase  from time to time in the  future.  Any  significant
increases in the prices of these materials that cannot be passed on to customers
could  have a  material  adverse  effect on the  Company's  business,  financial
condition  or results of  operations.  In  addition,  increases in the prices of
supplies  and other  materials  might cause some of the  Company's  customers to
utilize  alternative  technologies  in their  respective  businesses that do not
involve the use of paper or the mail, such as the Internet. While the Company is
planning to  introduce a service to enable  customers  to  distribute  documents
through the Internet, there can be no assurance that the Company will be able to
provide this service,  that it will be commercially viable for the Company to do
so, or that other technologies (whether now existing or developed in the future)
may not in the future reduce or supplant the demand for the Company's  services,
which could in turn adversely affect the Company's business.

Regulatory Compliance

     As a public company,  the Company is subject to continuing  compliance with
federal  securities  laws and may also be subject  to  increased  scrutiny  with
respect to laws  applicable to all  businesses,  such as employment,  safety and
environmental  laws. The Company's  management  group has limited  experience in
managing a public  company.  There can be no assurance that  management  will be
able to effectively and timely  implement  programs and policies that adequately
respond to such increased legal and regulatory compliance requirements.

Possible Volatility of Stock Price

     The  market  price  of the  Common  Stock  may be  subject  to  significant
fluctuations  from  time to time in  response  to  numerous  factors,  including
variations  in the  reported  financial  results  of the  Company  and  changing
conditions in the economy in general or in the Company's industry in particular.
In addition,  the stock market has, from time to time, experienced extreme price
and volume  volatility.  These  fluctuations  may be unrelated to the  operating
performance of particular  companies  whose shares are publicly  traded.  Market
fluctuations  may  adversely  affect the market  price of the  Company's  Common
Stock. See "Effect of Potential Fluctuations in Quarterly Operating Results."

Potential Effects of Shares Eligible for Future Sale on Price of Common Stock

     As of March 16, 1998,  8,483,811  shares of Common Stock were  outstanding.
The 4,427,500  shares of Common Stock sold in the IPO (other than shares held by
affiliates  of  the  Company)  are  freely   tradeable.   The  remaining  shares
outstanding  may be sold publicly only following  their  effective  registration
under the Securities Act of 1933, as amended (the "Securities Act"), or pursuant
to an  available  exemption  (such as provided  by Rule 144  following a holding
period for previously unregistered shares) from the registration requirements of
the  Securities  Act.  The  holders of 278,334 of those  remaining  shares  have
certain  rights  to  have  their  shares  registered  in the  future  under  the
Securities  Act but have  agreed not to  exercise  such  rights  until two years
following the consummation of the IPO.

     As of March 16, 1998,  the Company had  outstanding  under its Stock Option
Plan  options  to  purchase  an  aggregate  of 507,850  shares of Common  Stock.
Generally,  such options vest in 25% annual increments commencing one year after
the date of grant.  The Company has registered the shares issuable upon exercise
of options  granted under the Stock Option Plan, and,  accordingly,  such shares
are eligible for resale in the public market.

     The former Founding  Company  shareholders  have agreed in their respective
acquisition  agreements  not to sell or transfer any of the 2,852,111  shares of
Common Stock  acquired in the  acquisitions  for a period of two years after the
consummation of the IPO unless they obtain the prior written consent of Vestcom.
CIBC Oppenheimer  Corp.  (formerly named Oppenheimer & Co., Inc. and referred to
herein as "Oppenheimer"),  one of the Representatives of the Underwriters in the
IPO, and its  affiliates  have agreed not to sell or transfer the 100,000 shares
of Common  Stock which they  acquired as part of the initial  capitalization  of
Vestcom  for a period  of two  years  after  the  consummation  of the IPO.  The
shareholders  of the  companies  which the  Company  acquired  in  November  and
December 1997,  have agreed in their  respective  acquisition  agreements not to
sell or transfer the 134,520 shares of Common Stock in the aggregate  which they
received  for a  period  of  two  years  following  the  consummation  of  their
respective acquisitions by the Company.

     The 2,000,000 shares of Common Stock registered by the Company for possible
use in connection with future  acquisitions  will generally be freely  tradeable
after their issuance, unless the sale thereof is contractually restricted or the
shares are acquired by affiliates of the Company.

     Sales of a  substantial  number of shares  of  Common  Stock in the  public
market could adversely affect the market price of the Common Stock.

Effect of Certain Charter Provisions

     The Board of  Directors  of the Company is  empowered to issue common stock
and  preferred  stock  without   stockholder   action.  The  existence  of  this
"blank-check"  common stock and preferred  stock could render more  difficult or
discourage  an  attempt to obtain  control  of the  Company by means of a tender
offer,  merger,  proxy  contest  or  otherwise  and  may  adversely  affect  the
prevailing  market  price of the  Common  Stock.  In  addition,  the New  Jersey
Shareholders  Protection Act prohibits certain persons from engaging in business
combinations with the Company.

No Future Dividends

     The Company does not anticipate  paying any cash dividends on shares of the
Common Stock in the foreseeable future and intends to retain future earnings, if
any, for use in its business.

Item 2.  Properties

     The Company currently  operates 36 computer output and document  management
service  facilities,   aggregating  approximately  685,600  square  feet.  These
facilities  are located in 14 states and in the Provinces of Quebec and Ontario,
Canada.  All of  these  facilities  are  leased  and are  used  for  operations,
administrative  and  storage   functions.   The  Company  leases  an  additional
approximately  165,000  square foot  facility  which it may occupy in the future
depending on its needs. Leases vary in term remaining from month-to-month to six
years and in some cases, include options to extend the lease term.

Item 3.  Legal Proceedings

     The Company is, from time to time, a party to legal proceedings  arising in
the normal  course of its business.  Management  believes that none of the legal
proceedings  currently  outstanding  will have a material  adverse effect on the
Company's business, financial condition or results of operations.

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

     During the fourth  quarter of the year ended  December 31, 1997, no matters
were submitted to a vote of the Company's security holders.

Item 4A.  Executive Officers of the Registrant

         The Company's executive officers are as follows:

Name                      Age*   Positions with the Company

Joel Cartun              58    President, Chief Executive Officer and
                               Director of Vestcom; President of Comvestrix

Brendan Keating          43    Executive Vice President and Chief Operating
                               Officer of Vestcom; Chief Operating Officer of
                               Comvestrix

Harvey Goldman           51    Executive Vice President, Chief Financial Officer
                               and Treasurer of Vestcom

Peter J. McLaughlin      59    Executive Vice President of Vestcom

Leslie M. Abcug          50    Vice President--Finance and Administration of
                               Vestcom; Vice President of Finance and
                               Administration of Comvestrix

Sheryl Bernstein Cilenti 29    Vice President, General Counsel and Secretary of
                               Vestcom

Robert R. Rogus          56    Vice President--Sales of Vestcom

Cynthia Ward             37    Vice President--Marketing and Product Development
                               of Vestcom

____________________
*  Ages are as of March 1, 1998.

<PAGE>

     Joel Cartun has been the President,  Chief Executive Officer and a director
of Vestcom  since its  incorporation  in  September  1996.  Mr.  Cartun  founded
Comvestrix Corp. ("Comvestrix"), one of the Founding Companies, in 1969, and has
served as President,  Chief Executive Officer and a director of that corporation
since its  incorporation.  Mr.  Cartun was a founder of Xplor  International,  a
trade association for the electronic printing industry.

     Brendan  Keating has served as Executive Vice President and Chief Operating
Officer of Vestcom and as Chief  Operating  Officer of Comvestrix  since October
1997.  He served as Vice  President of Bowne & Co.,  Inc. (a financial  printing
company)  from 1991 until  October  1997.  He also served as Vice  President  of
Operations of Bowne of New York City,  Inc. from 1985 to 1991,  and as President
of Bowne Business Communications from 1993 to 1995.

     Harvey  Goldman has served as Executive  Vice  President,  Chief  Financial
Officer and Treasurer of Vestcom  since May 1997. He served as President,  Chief
Executive  Officer  and  Chairman  of  the  Board  of  Conversion   Technologies
International, Inc. (a publicly traded specialty materials company) from 1994 to
May 1997.  From June 1991 to March 1994,  Mr.  Goldman  served as Executive Vice
President and as a director of Air & Water Technologies Corporation,  a publicly
held  environmental  technologies  company (and successor to  Research-Cottrell,
Inc.),  and as its Chief  Financial  Officer  from June 1987  through June 1991.
Prior to joining Research  Cottrell,  Inc. in 1985, Mr. Goldman was a partner at
Arthur  Young & Co.  (now Ernst & Young  LLP),  where he served as  Director  of
Financial  Consulting  in New York City and National  Director of  Environmental
Consulting.

     Peter J. McLaughlin has served as Executive Vice President of Vestcom since
March 1997 and as a  consultant  to  Vestcom  from July 1996 to March  1997.  He
served as Chief  Financial  Officer and  Treasurer of Vestcom from March 1997 to
May 1997. Mr. McLaughlin also served as a director of Vestcom from its inception
through the consummation of the IPO, at which time he resigned as a director. He
was a partner from 1994 to 1996 in the merger and acquisition firm of McLaughlin
& Tonra. Prior thereto, he held several positions,  most recently as Senior Vice
President  of the Eastern  Region,  with Zytron (a Dun &  Bradstreet  subsidiary
specializing in computer output services) and its successor company, First Image
Management, from 1986 to 1993. He was the founder and Chief Executive Officer of
Micrographics  Systems, a computer output microfilm service bureau that was sold
to Dun & Bradstreet in 1986.

     Leslie M. Abcug has served as Vice President--Finance and Administration of
Vestcom since January 1997 and as Vice  President of Finance and  Administration
of Comvestrix since 1986.

     Sheryl  Bernstein  Cilenti has served as Vice President and General Counsel
of Vestcom  since  October 1997 and as Secretary of the Company  since  November
1997.  From  September  1993 until  joining  the  Company,  Ms.  Cilenti  was an
associate at Lowenstein Sandler PC in Roseland,  New Jersey, where she practiced
law primarily in the areas of mergers and acquisitions and securities.

     Robert  R.  Rogus has  served as Vice  President--Sales  of  Vestcom  since
February 1998. Prior thereto, he served as Vice President of Sales of Comvestrix
for in excess of five years.

     Cynthia   Ward  has  served  as  Vice   President--Marketing   and  Product
Development  of  Vestcom  since  February  1998.  Prior  thereto,  she served as
Director of Marketing of Comvestrix for in excess of five years.


                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

     The Company's  Common Stock has traded on the Nasdaq  National Market since
July 30, 1997,  under the symbol "VESC".  The Company's  initial public offering
price to the public was $13.00  per share.  The  following  table sets forth the
range of high and low sales prices for the Common  Stock on the Nasdaq  National
Market for the periods indicated:

                                              High             Low
Year ended December 31, 1997:
         Third quarter (from July 30)      $ 21.125       $   13.00*
         Fourth quarter                      22.625           17.00

_________________
  *Represents the initial public offering price.

     The last  reported  sale price of the Common  Stock on the Nasdaq  National
Market  on March 24,  1998 was  $10.0625.  As of March 1,  1998,  there  were 78
holders of record of the Common Stock.

     The Company has not declared or paid any dividends on its Common Stock. The
Company  currently intends to retain earnings to support its growth strategy and
does not  anticipate  paying  dividends in the  foreseeable  future.  Payment of
future  dividends,  if any, will be at the discretion of the Company's  Board of
Directors  after taking into account  various  factors,  including the Company's
financial condition,  results of operations,  current and anticipated cash needs
and  plans  for  expansion  and any  restrictions  that  may be  imposed  by the
Company's  future credit  facilities.  The Company's credit facility with Summit
Bank restricts the Company's  ability to pay cash dividends on its Common Stock.
The credit facility provides that the Company may declare and pay quarterly cash
dividends on its Common  Stock only if after  giving  effect to any such payment
the Company would not be in default  under any of the  provisions of such credit
facility.

     The  Company's   initial  public  offering  was  effected   pursuant  to  a
registration  statement on Form S-1  (No.  333-23519)  declared effective by the
Securities  and Exchange  Commission  (the "C" on July 29, 1997. The offering
commenced  on July 30,  1997 and  terminated  after all  securities  were  sold.
Pursuant to Rule 463 promulgated by the SEC, the Company  provides the following
information regarding its initial public offering:

     (a) The managing  underwriters  were Oppenheimer and Prudential  Securities
Incorporated.

     (b) The title of the class of stock  registered  was Common  Stock,  no par
value.  The Company sold all 4,427,500  shares that were  registered  (including
577,500  shares which were sold  pursuant to the  exercise of the  Underwriters'
over-allotment  option).  There were no selling security holders.  The aggregate
price of the offering amount registered and sold was $57,557,500.

     (c) From July 30, 1997  through  March 1, 1998,  the  Company's  reasonable
estimate  of the  amount of  expenses  incurred  for the  Company's  account  in
connection with the issuance and  distribution of the securities  registered for
underwriting  discounts and commissions was $4,029,025,  for finders' fees was $
0, for expenses paid to or for  underwriters  was $ 0 and for other expenses was
$4,308,897.  Thus,  the total amount of such expenses was $8,337,922 and the net
proceeds to the Company was $49,219,578.  Except as set forth below, none of the
above-mentioned expenses represented direct or indirect payments to directors or
officers of the Company or their  associates,  to persons  owning ten percent or
more of any class of equity  security  of the  Company or to  affiliates  of the
Company. As set forth in the above-mentioned  registration statement, one of the
Company's  directors  (Richard D. White) is a Managing  Director at CIBC Capital
Partners  and  was a  Managing  Director  at  Oppenheimer,  one of the  managing
underwriters of the Company's initial public offering.

     (d)  From  July 30,  1997  through  March 1,  1998,  the  Company  used the
following amount of such net proceeds for the following categories enumerated by
the SEC:

                                                           Reasonable Estimated
         Category                                                  Amount


    Construction of plant, building and facilities                  0

    Purchase and installation of machinery and
    equipment                                            $  2,130,356

    Purchases of real estate                                        0

    Acquisition of other businesses                      $ 22,987,378

    Repayment of indebtedness                            $ 11,061,087

    Working capital                                                 0

    Short term investments                               $ 13,040,757

    Other purposes for which at least $100,000
    has been used                                                   0

     None of the above-mentioned uses of proceeds represented direct or indirect
payments to directors or officers of the Company or their associates, to persons
owning ten percent or more of any class of equity  security of the Company or to
affiliates  of the Company  other than as set forth  below.  As described in the
Company's  registration  statement,  simultaneously with the consummation of the
Company's initial public offering,  the Company acquired the Founding Companies.
The  following  directors  and  executive  officers of the Company  received the
following  cash  payments  as  part  of  the  consideration   paid  to  them  as
stockholders of their respective Founding Companies:  Joel Cartun (the Company's
President  and  Chairman of the Board)  received  $4,129,610,  Gary  Marcello (a
director of the Company)  received  $3,271,303,  Howard April (a director of the
Company)  received  $502,640  and  Leslie  Abcug (an  executive  officer  of the
Company) received $90,813. As of March 1, 1998, the Company paid an aggregate of
$1.3 million to Oppenheimer for advisory services and has agreed (pursuant to an
agreement  entered  into with  Oppenheimer  in May 1997) to pay  Oppenheimer  an
additional  $800,000  for  advisory  services  in  four  quarterly  installments
beginning April 1, 1998.

     None of the uses described above represents a material change in the use of
proceeds described in the above-mentioned registration statement.

     During the year ended December 31, 1997, the Company issued an aggregate of
2,986,631  shares of Common Stock which were not registered under the Securities
Act of 1933 (the  "Securities  Act"). Of such amount,  an aggregate of 2,852,111
shares of Common Stock were issued to the shareholders of the Founding Companies
in connection with the  acquisition of such companies,  which occurred on August
4, 1997,  simultaneously  with the closing of the Company's IPO. An aggregate of
134,520  shares were  issued on November  14, 1997 and  December  15,  1997,  in
connection with the Company's acquisitions of New England Laser Printing,  Inc.,
and Campbell  Abbot Laser Mail.  All of the  unregistered  shares  issued by the
Company  during  1997 were  issued in reliance  upon the  exemption  provided by
Section 4(2) of the Securities Act. None of the unregistered issuances of Common
Stock described above involved an underwriter.

Item 6.  Selected Financial Data

     Vestcom acquired the Founding Companies on August 4, 1997 concurrently with
the  consummation  of the Company's  IPO. For financial  statement  presentation
purposes,  Vestcom  has been  identified  as the  accounting  acquiror.  Vestcom
acquired two  additional  Operating  Companies  in November  and December  1997,
respectively.  The following selected historical financial data of Vestcom as of
December  31, 1996 and 1997 and for the period from  inception  to December  31,
1996 and the year ended  December  31, 1997 have been  derived  from the audited
financial statements of Vestcom included elsewhere in this Annual Report on Form
10-K. The Statements of Operations Data included below reflect the operations of
the acquired companies from the respective dates of their acquisition.

                             SELECTED FINANCIAL DATA
                (Dollars in thousands, except per share amounts)

                                                                    For the
                                               For the               Period
                                                Year                  from
                                                Ended             Inception to
                                            December 31,          December 31,
                                                1997                  1996
Statement of Operations Data:

Revenues...........................      $    29,777                  $ --

Income (loss) from
  operations.......................            2,671                 (1,633)

Net income (loss) - Basic..........           $1,308                $(5,078)
Net income (loss) - Diluted                   $1,249                $(5,078)
Net income per share - Basic                 $   .31
Net income per share - Diluted               $   .29


                                                               December 31, 1997

Balance Sheet Data:

     Working capital.................................               $  17,628
     Total assets....................................                 114,346
     Long term obligations...........................                  11,282
     Stockholders' equity............................                  83,028
             __________________

<PAGE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

     The  following  discussion  of  the  financial  condition  and  results  of
operations  of the  Company  should be read in  conjunction  with the  Company's
Consolidated  Financial  Statements  and the  related  notes  thereto  appearing
elsewhere herein. All dollar amounts are presented in U.S. dollars.

     This discussion  contains  forward-looking  statements made pursuant to the
safe harbor provisions of the Private  Securities  Litigation Reform Act of 1995
("Forward-Looking  Statements"),  which  involve  risks and  uncertainties.  The
Company's  actual  results  may  differ  form  the  results   discussed  in  the
Forward-Looking  Statements.  Factors  that could  cause or  contribute  to such
differences include,  without limitation,  those discussed in this Annual Report
on Form 10-K under  "Business,"  including  "Business - Risk  Factors," and this
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," as well as those discussed  elsewhere in this Annual Report on Form
10-K. Such factors may also cause substantial  volatility in the market price of
the Company's Common Stock.

Introduction

     Vestcom   International,   Inc.  was   incorporated   in  September   1996.
Concurrently with the consummation of the Company's initial public offering (the
"Offering")  on August 4, 1997, the Company  acquired seven computer  output and
document  management service companies (the "Founding  Companies") each of which
had been operating as a separate independent entity.

     For accounting  purposes,  the acquisitions of the Founding  Companies were
deemed to be made August 1, 1997, using purchase accounting, with the Company as
the acquiror.  The Founding Companies were managed prior to their acquisition as
independent private companies, and their results of operations reflect different
tax  structures  (S  corporations  and C  corporations  for  the  U.S.  Founding
Companies),  which have influenced,  among other things, the Founding Companies'
historical levels of owners' compensation. In connection with the acquisition of
the Founding Companies, these owners and certain key employees agreed to certain
reductions in their  compensation which commenced as of the date of acquisition.
The Company  acquired New England Laser Printing,  Inc. (NEL) and Campbell Abbot
Laser  Mail  (CALM)  in  November  and  December  1997,  respectively,  and such
acquisitions also were accounted for as purchases.

     The Company's  Consolidated Balance Sheet as of December 31, 1997, includes
the Founding  Companies and NEL and CALM. The results of operations for the year
ended  December  31,  1997,  and the  statement of cash flows for the year ended
December  31, 1997  includes the results of Vestcom for the entire  period,  the
results  of the  acquired  Founding  Companies  from  August  1,  1997,  the NEL
acquisition  from November 14, 1997 and the CALM  acquisition  from December 15,
1997.

     Vestcom,  which  conducted no operations  prior to the  consummation of the
Offering  other  than  in  connection  with  the  acquisitions  of the  Founding
Companies (the  "Acquisitions")  and the financing  activities  related thereto,
including  the  Offering,  had  no  revenues  or  operating  expenses  in  1996.
Therefore,  Management's  Discussion  and Analysis based on actual results would
compare  five months of operating  activity in 1997 to no operating  activity in
1996.  For this and other  reasons  discussed  above,  management  believes that
Management's  Discussion  and  Analysis  would only be  meaningful  based on the
unaudited Pro Forma  Results of  Operations of Vestcom for 1997 and 1996,  which
assumes that all of the  companies  owned at December 31, 1997 were  acquired on
January 1, respectively of 1996 and 1997.

     The  following  discussion  of  Pro  Forma  Results  of  Operations  is not
necessarily indicative of the results the Company would have obtained had all of
these  acquisitions  actually then occurred or of the Company's actual or future
results.
<TABLE>
<CAPTION>

                                                                       Unaudited Pro Forma
                                                                      Results of Operations
                                                                         (in thousands)
                                                                1997                    1996

<S>                                                            <C>                    <C>
       Net sales...............................................$79,273                $71,201
       Gross profit............................................$29,531                $24,511
       Selling, general & administrative expenses..............$18,984                $17,008
       Income from operations..................................$ 8,418                $ 5,524

</TABLE>

Pro Forma Results of Operations

Year Ended December 31, 1997 Compared to the Year Ended December 31, 1996

     Pro forma revenues  increased  $8,072,000 or 11.3% from $71,201,000 for the
year ended  December  31, 1996 to  $79,273,000  for the year ended  December 31,
1997. This increase was primarily attributable to increased volume of production
of statements,  point of purchase  labels and other imaging  services,  although
revenues also increased in other areas.

     Pro forma gross profit  increased  $5,020,000 or 20.5% from $24,511,000 for
the year ended December 31, 1996 to $29,531,000  for the year ended December 31,
1997. The pro forma gross profit margin increased from 34.4% in 1996 to 37.3% in
1997 primarily due to improved capacity utilization resulting from the increased
volume of  business  and the  refinancing  through  capital  leases  of  certain
existing  production  equipment  which resulted in reduced lease and maintenance
costs.

     Pro  forma  selling,   general  and   administrative   expenses   increased
$1,976,000,  or 11.6% from  $17,008,000  for the year ended December 31, 1996 to
$18,984,000  for the year ended  December 31, 1997. As a percentage of revenues,
selling,  general and administrative expenses remained constant at approximately
23.9% in 1996 and 1997.

     Pro  forma  income  from  operations  increased  $2,894,000  or 52.4%  from
$5,524,000 for the year ended December 31, 1996 to $8,418,000 for the year ended
December 31, 1997 for the reasons discussed above.

Liquidity and Capital Resources

     The following  discussion of liquidity and capital  resources  reflects the
Company's  actual results of operations  and financial  position for the periods
discussed.

     On July 30, 1997,  the Company  announced  the initial  public  offering of
3,850,000  shares  of its  common  stock at a price of  $13.00  per  share.  The
Company's  underwriters  exercised  in full an option to purchase an  additional
577,500  shares of the Company's  common stock at $13.00 per share to cover over
allotments of the initial public  offering.  The capital raised by this offering
was  approximately   $54,000,000,   net  of  underwriting  discounts,  of  which
approximately  $23,000,000  was  used  for the  cash  portion  of the  Company's
acquisitions  and  approximately  $11,000,000 was used for the repayment of debt
and capital leases.

     At  December  31,  1997,  Vestcom  had  working  capital  of  approximately
$17,628,000.  Net cash  provided by operating  activities  for the twelve months
ended December 31, 1997, was  approximately  $8,272,000.  Cash used in investing
activities for the year ended December 31, 1997, was $76,228,000 which consisted
of  $60,600,000  of cash and stock for  acquisitions,  $13,500,000 in short term
investments and $2,100,000 for the purchase of property and equipment.  Net cash
provided by financing  activities  for the year ended  December  31,  1997,  was
approximately $70,703,000, which included $78,700,000 for the issuance of common
stock  relating  to the  initial  public  offering  and the  acquisition  of the
Founding Companies and $2,700,000 for the issuance of preferred stock, offset by
debt repayment of approximately $11,000,000.

     On August 13,  1997,  the Company and Summit Bank entered into an Equipment
Loan and Revolving  Credit  Agreement in the amount of $30,000,000.  At December
31, 1997, there were no outstanding borrowings under this credit line.

     The Company  incurs  postage costs on behalf of customers of  approximately
$4,000,000 to $6,000,000  each month.  The Company seeks to collect such postage
costs from its  customers  in  advance.  At  December  31,  1997 the Company had
postage  advances  from  customers in the amount of  $4,878,000  and had prepaid
postage and postage receivables of approximately  $2,700,000.  To the extent the
Company is  unsuccessful  in obtaining  postage  costs in advance,  cash flow is
negatively  affected and Vestcom may be required to utilize its working  capital
or credit facility to cover the expense.  Capital  expenditures of approximately
$6,000,000 to $8,000,000 for plant and equipment and leasehold  improvements are
anticipated in 1998. This investment, which is expected to be financed primarily
by working capital and vendor  financing,  relates to the  anticipated  facility
consolidations  of  certain  of the  Operating  Companies  and the  purchase  of
supplemental  production  equipment to meet customer output processing  demands.
There are no other  significant  commitments  for future  capital  expenditures,
although it is likely that cash  outflows for business  acquisitions  and leases
will  continue.  While no assurance can be given,  management  believes that its
cash flow from operations combined with existing cash and marketable  securities
and the  availability  of funds under the Equipment  Loan and  Revolving  Credit
Agreement will be sufficient to meet its working  capital,  capital  expenditure
and debt  service  requirements  and its  current  plans to  acquire  additional
related businesses for the foreseeable future.

Year 2000 Issue

     The Year 2000 Issue is  primarily  the result of  computer  programs  being
written using two digits rather than four to define the applicable year. Certain
computer  programs may  recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in a system failure or miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send  invoices or engage in similar  normal  business
activity.

     Based on a recent internal assessment,  the Company has determined that the
cost to modify its existing  software and/or to convert to new software will not
be significant. However, if customers, suppliers or others with whom the Company
does business experience problems relating to the Year 2000 Issue, the Company's
business,  financial  condition  or results of  operations  could be  materially
adversely affected.


Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

           Not applicable.

Item 8.    Financial Statements and Supplementary Data

                         Index to Financial Statements:

                                                                      Page

Report of Independent Public Accountants                              F-1
Vestcom International, Inc. and Subsidiaries
  Consolidated Balance Sheets at December 31, 1997 and 1996           F-2
Vestcom International, Inc. and Subsidiaries
  Consolidated Statements of Operations for the year ended
  December 31, 1997 and for the period from inception
  (September 19, 1996) to December 31, 1996                           F-4
Vestcom International, Inc. and Subsidiaries
  Consolidated Statements of Stockholders'
  Equity for the period from inception (September 19, 1996)
  to December 31, 1996 and the year ended December 31, 1997           F-5
Vestcom International, Inc. and Subsidiaries
  Consolidated Statements of Cash Flows for the
  year ended December 31, 1997 and the period
  from inception (September 19, 1996) to December 31, 1996            F-6
Vestcom International, Inc. and Subsidiaries
  Notes to Consolidated Financial Statements                          F-7

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Vestcom International, Inc.

     We have audited the  accompanying  consolidated  balance  sheets of Vestcom
International,  Inc. (a New Jersey corporation) and Subsidiaries, as of December
31,  1997 and 1996,  and the related  statements  of  operations,  stockholders'
equity and cash flows for the year ended  December  31,  1997 and for the period
from inception  (September 19, 1996) through  December 31, 1996. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
repsonsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in all material  respects,  the financial  position of Vestcom
International,  Inc. and  Subsidiaries  as of December 31, 1997 and 1996 and the
results of its  operations  and its cash flows for the year ended  December  31,
1997 and for the period from inception (September 19, 1996) through December 31,
1996 in conformity with generally accepted accounting principles.


                                             ARTHUR ANDERSEN LLP

Roseland, New Jersey
February 25, 1998


                                      F-1

<PAGE>


<TABLE>
<CAPTION>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996



                                                                                         1997                 1996
                                                                                         ----                 ----

    ASSETS

<S>                                                                             <C>                         <C>
    CURRENT ASSETS
    Cash and cash equivalents                                                    $      4,092,000          $  1,344,758
    Marketable securities                                                              13,494,886               -
    Accounts receivable, net of allowance for
    doubtful accounts of $354,952 and $0 in 1997 and 1996,
    respectively                                                                       13,999,511               -

    Supplies inventory                                                                  2,221,725               -

    Prepaid expenses and other current assets                                           3,855,122               392,664
                                                                                -----------------             ----------

                        Total current assets                                           37,663,244             1,737,422

    PROPERTY AND EQUIPMENT, at cost, net of depreciation and
    amortization                                                                       21,684,918               -

    GOODWILL, net                                                                      54,336,937               -

    OTHER ASSETS                                                                          660,660               -
                                                                                -----------------         -------------

                        Total assets                                            $     114,345,759           $ 1,737,422
                                                                                -----------------          ------------


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

                                       F-2
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                 VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES
                                          CONSOLIDATED BALANCE SHEETS
                                         DECEMBER 31, 1997 AND 1996

                                                                                       1997                   1996
                                                                                       ----                   ----
<S>                                                                                <C>                   <C>
    LIABILITIES & STOCKHOLDERS'
    EQUITY


    CURRENT LIABILITIES
    Current portion of long term debt                                              $    191,184          $    -
    Current portion of capital lease obligations                                      2,435,994               -
    Accounts payable                                                                  4,780,082               -
    Accrued expenses                                                                 11,698,803              320,230
    Notes payable to related parties                                                        -              1,292,732
    Income taxes payable                                                              1,210,235               -
    Other current liabilities                                                           199,653               -
                                                                                ---------------        -------------

                        Total current liabilities                                    20,515,951            1,612,962

    LONG-TERM DEBT                                                                       38,835                -

    CAPITAL LEASE OBLIGATIONS                                                         7,894,737                -

    DEFERRED CHARGES & OTHER LIABILITIES                                              1,427,037                -

    DEFERRED INCOME TAXES                                                             1,441,373                -
                                                                                ---------------          ------------

                          Total liabilities                                          31,317,933            1,612,962
    STOCKHOLDERS' EQUITY:
    Preferred stock
        Class A convertible, 200 shares authorized,
          issued and outstanding at December 31, 1997; no shares
          issued and outstanding at December 31, 1996                                   -                     -
        Class B, 1 share authorized, issued and outstanding at
          December 31, 1997; no shares issued and outstanding at
          December 31, 1996                                                           2,651,867                -
        Class C convertible, 100 shares authorized,
          issued and outstanding at December 31, 1997; no shares
          issued and outstanding at December 31, 1996                                   -                     -
     Common stock, no par value; 20,000,000 shares authorized;
            8,483,811 shares issued and outstanding at December 31, 1997;            84,229,597            5,481,501
            1,295,192 shares issued and outstanding at December 31, 1996

    Subscription receivable                                                               -                 (279,082)
    Accumulated deficit                                                              (3,770,054)          (5,077,959)
    Cumulative translation adjustment                                                   (83,584)                -
                                                                                ----------------         -------------

                        Total stockholders' equity                                   83,027,826              124,460
                                                                                ----------------         -------------

                        Total liabilities & stockholders' equity                 $  114,345,759         $   1,737,422
                                                                                ===============         ==============


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

                                      F-3

</TABLE>


<PAGE>


<TABLE>
<CAPTION>

                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1997
   AND FOR THE PERIOD FROM INCEPTION (SEPTEMBER 19, 1996) TO DECEMBER 31, 1996


                                                             1997                      1996
                                                             ----                      ----


<S>                                                 <C>                         <C>
    REVENUES                                        $        29,777,283         $      -
    COST OF REVENUES
                                                             18,317,401                -
                                                    -------------------         ---------------
                          Gross Profit                       11,459,882                -

    SELLING, GENERAL & ADMINISTRATIVE
    EXPENSES                                                  8,789,000                1,633,042
                                                    -------------------         ----------------

          Income (loss) from operations                      2,670,882               (1,633,042)

    OTHER INCOME (EXPENSE)

         Interest expense                                     (660,607)               (3,444,917)
         Interest income and other, net                        603,685                   -
                                                    -------------------         ----------------
                                                               (56,922)               (3,444,917)
                                                    -------------------         -----------------

           Income (loss)  before provision                   2,613,960                (5,077,959)
              for income taxes

    PROVISION FOR INCOME TAXES                               1,306,055                   -
                                                    --------------------        -----------------

           Net income (loss)                      $          1,307,905         $     (5,077,959)
                                                              =========              ===========

    Net income per share-basic                    $               0.31
                                                                  ====

    Net income per share - diluted                $               0.29
                                                                  ====

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

                                       F-4


</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                                                VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES

                                                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                       FOR THE PERIOD FROM INCEPTION (SEPTEMBER 19, 1996) TO DECEMBER 31,1996
                                                                        AND THE YEAR ENDED DECEMBER 31, 1997





                                                                                             CUMULATIVE  TOTAL
                              COMMON STOCK     PREFERRED STOCK   SUBSCRIPTIONS ACCUMULATED TRANSLATION  STOCKHOLDERS'
                            SHARES     AMOUNT   SHARES   AMOUNT   RECEIVABLE     DEFICIT    ADJUSTMENT   EQUITY

<S>                        <C>         <C>                                                               <C>
ISSUANCE OF COMMON STOCK   791,346   $39,965       -     $ -        $  -         $   -          $ -   $   39,965

ISSUANCE OF COMMON STOCK   503,846  5,441,536      -       -       (279,082)        -          -       5,162,454

NET LOSS                     -          -          -       -           -       (5,077,959)     -      (5,077,959)
                         ---------  ---------    ------ -------   ------------ ----------- --------   ----------

BALANCE AT DECEMBER
  31, 1996               1,295,192  5,481,501      -       -       (279,082)   (5,077,959)     -         124,460
SHARES RETURNED           (170,856)(1,363,745)     -       -           -            -          -      (1,363,745)

SHARES RETURNED           ( 54,656)(  436,255)     -       -           -            -          -        (436,255)

INITIAL PUBLIC OFFERING
NET OF UNDERWRITING
   DISCOUNTS             4,427,500 53,528,475      -       -           -            -          -      53,528,475

ISSUANCE OF STOCK TO
  FOUNDING
COMPANIES, NET OF
  DISCOUNT               2,852,111 24,555,061     301  2,651,867       -           -            -     27,206,928
PAYMENT OF SUBSCRIPTIONS
  RECEIVABLE                 -         -           -       -       279,082         -          -          279,082

ISSUANCE OF COMMON STOCK IN
CONNECTION WITH ACQUISITIONS,
NET OF DISCOUNT            134,520  2,464,560      -       -           -            -          -       2,464,560

TRANSLATION ADJUSTMENT       -           -         -       -           -            -      (83,584)      (83,584)

NET INCOME                   -           -         -       -           -        1,307,905      -       1,307,905
                         --------- ---------- -------- --------- ----------   ----------- ---------    ---------

BALANCE AT
  DECEMBER 31, 1997      8,483,811 $84,229,597     301  $2,651,867 $    -      $(3,770,054)$(83,584) $83,027,826
                         --------- ----------- -------- --------- ----------   ----------- ---------  ----------

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

                                      F-5

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE PERIOD
              FROM INCEPTION (SEPTEMBER 19, 1996) TO DECEMBER 31, 1996

                                                                                      1997             1996
                                                                                      ----             ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                             <C>                  <C>
   Net income (loss)                                                            $   1,307,905       $(5,077,959)
   Adjustments to reconcile net income (loss) to net cash provided by
   operating activities-
     Depreciation and amortization                                                  1,926,638              -
     Provision for losses on accounts receivable                                       16,000              -
     Discount on issuance of stock                                                       -            5,074,233
     Changes in operating assets (increase) decrease in-
     Accounts receivable                                                           (1,287,591)              -
     Supplies inventory                                                              (257,568)              -
     Prepaid  expenses and other current assets                                       942,222          (392,664)
     Other assets                                                                    (277,160)              -
   Changes in operating liabilities increase (decrease) in-
     Accounts payable                                                                (382,210)              -
     Accrued expenses                                                               3,848,609           320,230
     Income taxes payable and other current liabilities                               753,590               -
     Deferred charges & other liabilities                                           1,681,842               -
                                                                                --------------          --------
          Net cash provided by (used in)
             operating activities                                                   8,272,277           (76,160)

CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of property and equipment                                           (2,130,356)              -
   Acquisition of businesses, net of cash acquired                                (60,602,754)              -
   Net increase in  marketable securities                                         (13,494,886)              -
                                                                                --------------        ----------

          Net cash provided by (used in)
             investing activities                                                 (76,227,996)              -

CASH FLOWS FROM FINANCING ACTIVITIES
   Collection of subscriptions receivable                                              279,082               -
   Net (payments) proceeds on borrowings                                           (10,892,500)        1,292,732
   Issuances of common stock                                                        78,748,096           128,186
   Issuances of preferred stock                                                      2,651,867               -
   Cumulative translation adjustment                                                   (83,584)              -
                                                                                ---------------       ----------

          Net cash provided by (used in)
             financing activities                                                  70,702,961         1,420,918
                                                                                --------------        ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                           2,747,242         1,344,758

CASH AND CASH EQUIVALENTS, beginning of period                                      1,344,758                -

CASH AND CASH EQUIVALENTS, end of period                                       $    4,092,000      $  1,344,758
                                                                                    =========         =========


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
   Capital lease obligation incurred                                          $   1,155,456        $         -

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
      Cash paid for interest                                                        638,179                  -
      Cash paid for income taxes                                                    729,224                  -


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

                                      F-6


</TABLE>

<PAGE>



                  VESTCOM INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   NATURE OF BUSINESS AND BASIS OF PRESENTATION:

     Vestcom  International,  Inc. (a New Jersey corporation)  ("Vestcom" or the
"Company"),  was formed in September 1996 to create an international provider of
computer output and document management services. The Company's primary strategy
is to acquire,  integrate and facilitate the growth of similar and complementary
companies  in the highly  fragmented  computer  output and  document  management
industry.

     On July  30,  1997,  Vestcom  announced  the  initial  public  offering  of
3,850,000  shares  of its  Common  Stock at a price of  $13.00  per  share.  The
Company's  underwriters  exercised  in full an option to purchase an  additional
577,500  shares of the Company's  Common Stock at $13.00 per share to cover over
allotments  of the initial  public  offering.  The initial  public  offering was
consummated  on  August  4,  1997.  The  capital  raised  by this  offering  was
$53,528,475 net of underwriting discounts.

     The accompanying  consolidated financial statements include the accounts of
the Company and its wholly  owned  subsidiaries.  All  significant  intercompany
transactions  have been  eliminated.  The results of  operations  for the twelve
months ended December 31, 1997 are not indicative of the results for a full year
because the results of operations of the acquired Founding Companies (as defined
below)  included  herein are for the period from  August 1, 1997 (the  effective
date of acquisition for financial statement purposes) to December 31, 1997.

2.   ACQUISITIONS:

     Concurrently   with  the  consummation  of  the  Company's  initial  public
offering,  it acquired  seven  companies  in the  computer  output and  document
services industry - Comvestrix Corp.,  Morris County Direct Mail Services,  Inc.
and  related  companies,   Image  Printing  Systems,  Inc.,  Electronic  Imaging
Services,  Inc.,  COS  Information,  Computer  Output  Systems,  Inc. and Mystic
Graphic Systems, Inc. ("Founding  Companies").  The aggregate consideration paid
by the Company to acquire the Founding Companies was, subject to working capital
adjustments  and  earnouts,  approximately  $16.6  million in cash and 2,852,111
shares of Vestcom Common Stock.  The  Acquisitions  were accounted for using the
purchase  method of  accounting  and  accordingly,  the purchase  price has been
allocated to the assets acquired and the liabilities assumed based upon the fair
values at the date of  acquisition.  For  purposes of  computing  the  estimated
purchase price for accounting  purposes,  the value of the shares was determined
using an estimated fair value of $11.05 per share,  which  represents a discount
of fifteen  percent  from the  initial  public  offering  price of $13.00 due to
restrictions on the sale and  transferability of the shares issued.  Included in
accrued expenses are approximately $2.9 million of additional acquisition costs.
The acquisitions  resulted in goodwill of  approximately  $46.8 million which is
being  amortized over 30 years,  and is based on preliminary  allocations of the
purchase  price to the net assets  acquired.  The following  unaudited Pro Forma
Statements  of  Operations  for Vestcom  assumes  that the  acquisitions  of the
Founding Companies were consummated on January 1 of the periods presented.  This
information is not necessarily  indicative of the results the Company would have
obtained had these events  actually  then  occurred or of the  Company's  future
results:

<TABLE>
<CAPTION>


                                                           Pro Forma               Pro Forma
                                                          Year Ended              Year Ended
                                                      December 31, 1997       December 31, 1996
                                                             (Unaudited, in thousands,
                                                              except per share data)

<S>                                                        <C>                      <C>
Net sales............................................      $  71,651                $ 65,287
Income from operations...............................      $   7,580                $  4,861
Net income...........................................      $   3,906                $  2,436
Earnings per share:      basic.......................      $     .46                $    .31
                         diluted.....................      $     .45                $    .31

</TABLE>


                                       F-7
<PAGE>
     On November 14, 1997, the Company acquired  substantially all of the assets
of Rhode Island based New England Laser Printing,  Inc. ("NEL"). On December 15,
1997, the Company acquired the stock of Moreau Promotional Services, Inc., doing
business as Campbell - Abbot Laser Mail ("CALM"), an Ontario corporation located
in  Toronto,  Canada.  The  aggregate  price  paid for  these  acquisitions  was
approximately  $7,000,000  in cash and  134,520  unregistered  shares of Vestcom
Common  Stock,  the fair  market  value of which was based on a fifteen  percent
discount  from the fair market value due to length and type of  restrictions  in
the  purchase   agreements.   The  estimated  goodwill   associated  with  these
acquisitions aggregated approximately $8,200,000.

     The above  acquisitions  were  accounted  for using the purchase  method of
accounting and accordingly,  the purchase price has been allocated to the assets
acquired and the  liabilities  assumed based upon the fair values at the date of
acquisition.  The  estimated  goodwill  values  reflected  above  are  based  on
preliminary   estimates  and  assumptions  and  are  subject  to  revision.   In
management's  opinion  the  preliminary  allocations  are  not  expected  to  be
materially different than the final allocations.

     Set forth below is unaudited pro forma financial information for the twelve
months ended  December 31, 1997 and December 31, 1996.  The  unaudited pro forma
data give effect to: (i) the acquisitions of the Founding  Companies and NEL and
CALM; and (ii) compensation and other adjustments for all transactions as if the
transactions had occurred on January 1, 1997 and January 1, 1996,  respectively.
This information is not necessarily  indicative of the results the Company would
have obtained had these events actually then occurred or of the Company's future
results:

<TABLE>
<CAPTION>

                                                       Pro Forma               Pro Forma
                                                      Year Ended              Year Ended
                                                   December 31, 1997       December 31, 1996
                                                             (Unaudited, in thousands,
                                                              except per share data)


<S>                                                    <C>                       <C>
Net sales............................................  $79,273                   $71,201
Income from operations...............................  $ 8,418                   $ 5,524
Net income...........................................  $ 4,270                   $ 2,695
Earnings per share:      basic.......................  $   .52                   $   .33
                         diluted.....................  $   .48                   $   .30
</TABLE>

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  reported  amount of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

     Cash and Cash Equivalents

     Restricted cash of $850,000 was held in escrow at December 31, 1996 only to
be used to pay  expenses  associated  with the  formation  of the  Company,  the
acquisitions, and the Company's initial public offering (the "Offering").

     Deferred Offering Costs

     At  December  31,  1996,  the  Company  had  deferred  all costs of raising
capital. These costs were offset against the capital generated by the Offering.

     Supplies Inventory

     Supplies inventory consists of paper, toner, developer and other disposable
chemicals,  film,  compact  discs  and  micrographic  chemicals,  and  packaging
materials.  Supplies  are valued at cost,  which  approximates  market with cost
determined using the first-in-first-out method.

     Property and Equipment

     Property  and  equipment  are  recorded at cost.  Depreciation  is computed
principally  using the  straight-line  method over the estimated useful lives of
the assets.  Leasehold  improvements  are  capitalized  and  amortized  over the
shorter of the estimated  useful lives of the assets or the terms of the related
leases.

     Expenditures  for  repairs  and  maintenance  are  charged to expense  when
incurred.  Expenditures  for major  renewals and  betterments,  which extend the
useful  lives of existing  equipment,  are  capitalized  and  depreciated.  Upon
retirement  or  disposition  of  property  and  equipment,  the cost and related
accumulated depreciation are removed from the accounts and any resulting gain or
loss is recognized in the statements of operations.

     Revenue Recognition

     Revenues are recognized when the services are rendered.

     Income Taxes

     The Company follows the liability  method of accounting for income taxes in
accordance with Statement of Financial  Accounting  Standards  ("SFAS") No. 109.
Under this method,  deferred  income taxes are recorded  based upon  differences
between the financial  reporting and tax bases of assets and liabilities and are
measured  using the  enacted  tax rates and laws that will be in effect when the
underlying assets or liabilities are received or settled.

     Earnings per Share

     In February 1997, the Financial Accounting Standards Board issued Statement
No. 128,  "Earnings per Share".  This  statement  supersedes APB Opinion No. 15,
"Earnings  per Share" and  simplifies  the  computation  of  earnings  per share
("EPS").  Primary EPS is replaced with a  presentation  of basic EPS.  Basic EPS
includes no dilution  and is computed  by dividing  income  available  to common
stockholders by the weighted-average number of common shares outstanding for the
period. Fully diluted EPS is replaced with diluted EPS. Diluted EPS reflects the
potential dilution if certain securities are converted and also includes certain
shares that are contingently  issuable.  SFAS No. 128 requires dual presentation
of basic and  diluted  EPS by  entities  that  issue any  securities  other than
ordinary common stock. SFAS No. 128 which is effective for financial  statements
for both  interim and annual  periods  ending after  December 15, 1997  requires
retroactive  restatement of all EPS data presented.  The Company has adopted the
statement on December 31, 1997. The following is the computation of earnings per
share:

<TABLE>
<CAPTION>

                                                        For the year ended December 31, 1997
                                                        -----------------------------------
                                                                                      Per-Share
                                              Income                  Shares           Amount
                                              ------                  ------          ---------
<S>                                        <C>                   <C>                  <C>
Basic Earnings Per Share:
Net income/weighted average
     shares outstanding                    $1,307,905                4,157,891            $.31
                                           ==========                =========             ===

Diluted Earnings Per Share:
Net income/weighted average
  shares outstanding                        1,307,905
Goodwill adjustment on earnouts               (59,284)
Assumed earned shares
  by Founding Companies                                                149,383
Options                                                                 34,092
                                           -----------             ------------
Net income/average weighted shares
  outstanding adjusted for assumed
  conversions to common stock              $1,248,621                4,341,366            $.29
                                           ==========              ============            ===
</TABLE>


     Foreign Currency

     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
52, "Foreign Currency Translation",  income statement accounts are translated at
the  average  exchange  rates in effect  during  the  period,  while  assets and
liabilities  are  translated at the rates of exchange at the balance sheet date.
The resulting  balance  sheet  translation  adjustment  was $83,584 for the year
ended December 31, 1997.

     Intangible Assets

     Intangible  assets  consist  primarily  of excess  purchase  price over net
assets acquired  (goodwill),  which is being amortized over its estimated useful
life  of 30  years.  In  conformance  with  Statement  of  Financial  Accounting
Standards ("SFAS") No. 121,  "Accounting for the Impairment of Long-Lived Assets
and  for  Long-Lived  Assets  to  be  Disposed  Of",  the  Company's  management
continually  evaluates  whether  events  and  circumstances  indicate  that  the
remaining  estimated useful life of intangible  assets may warrant  revisions or
that the remaining  balance of intangibles or other long-lived assets may not be
recoverable.   To  make  this   evaluation,   management  uses  an  estimate  of
undiscounted  net income over the  remaining  life of the  intangibles  or other
long-lived assets. Accumulated amortization at December 31, 1997 was $688,641.

     Concentration of Credit Risk

     Financial  instruments that potentially expose the Company to concentration
of credit risk, as defined by SFAS No. 105 , "Disclosure  of  Information  about
Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with
Concentration of Credit Risk," consist  primarily of trade accounts  receivable.
The Company's  customers are  concentrated  in North  America,  primarily in the
financial,   telecommunications,   pharmaceutical,   health  care,   publishing,
retailing,  and manufacturing  industries.  The Company establishes an allowance
for doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends, and other information.

     New Accounting Pronouncements

     The Financial  Accounting  Standards  Board has issued two new  statements.
Statements   of  Financial   Accounting   Standards   Numbers  130,   "Reporting
Comprehensive  Income" (SFAS 130),  and 131,  "Disclosures  About Segments of an
Enterprise and Related Information" (SFAS 131).

     SFAS 130 establishes  standards for reporting and displaying  comprehensive
income and its components in a full set of general purpose financial statements.
The  objective of SFAS 130 is to report a measure of all changes in equity of an
enterprise that result from transactions and other economic events of the period
other than  transactions  with owners  ("comprehensive  income").  Comprehensive
income is the total of net  income  and all other  non-owner  changes in equity.
SFAS 130 is effective for fiscal years  beginning  after December 15, 1997, with
earlier application allowed but not required. Upon adoption, reclassification of
comparative financial statements provided for prior periods is required.

     SFAS  131  introduces  a  new  model  for  segment  reporting,  called  the
"management  approach."  The  management  approach  is based on the way that the
chief operating  decision maker  organizes  segments within a company for making
operating decisions and assessing performance.  Reportable segments are based on
products and services,  geography,  legal structure,  management structure - any
manner in which  management  disaggregates  a company.  The management  approach
replaces  the  notion of  industry  and  geographic  segments  in  current  FASB
standards. SFAS 131 is effective for fiscal periods beginning after December 15,
1997  and  requires  restatement  of  all  prior  period  information  reported.
Management  believes  that  adoption  of SFAS 131 will not have an impact on its
method  of  reporting  since it  believes  that  its  business  operates  in one
reportable segment.

4.   MARKETABLE SECURITIES

     Marketable  securities  classified as  available-for  sale  securities  are
carried at fair market  value with  unrealized  gains and losses  excluded  from
income and recorded, net of income tax, as a separate component of stockholders'
equity. The Company has no securities classified as trading or held-to maturity.

     Gains and losses on investment  transactions  are recognized  when realized
based on trade dates.  Dividends are recorded in income based on payment  dates.
Interest is recognized when earned.

     Marketable securities consist of the following at December 31:


                                                    1997              1996

       Commercial paper                         $ 1,540,439           $--
       Money market funds                         4,454,447            --
       Taxable auction rate
       securities with maturities
        of 1 to 28 days                           7,500,000            --
                                                  ---------          ----------

                                                $13,494,886           $--
                                                 ==========           ==========

5.   ALLOWANCE FOR DOUBTFUL ACCOUNTS AND NOTES RECEIVABLE:

     The activity in the allowance for doubtful accounts and notes receivable is
as follows:

<TABLE>
<CAPTION>

                                            Balance at                 Charged to                Balance at
                                            Beginning     Balance     Costs and                   End of
                                            of Period    Acquired      Expenses    Write-offs     Period

<S>                                        <C>          <C>           <C>          <C>           <C>
Twelve Months Ended December 31, 1997
Allowance for doubtful accounts             $--          $342,900     $16,000      $3,948         $354,952
Period From Inception (September 19,1996)
to December 31, 1996                        $--          $--          $--          $--            $--

</TABLE>

<PAGE>

6.  PREPAID EXPENSES AND OTHER CURRENT ASSETS:

     Prepaid  expenses  and other  current  assets  consist of the  following at
December 31:

                                                  1997                   1996
                                              -----------               --------
     Prepaid postage                         $  2,340,522               $--
     Postage receivable                           345,088                --
     Prepaid offering costs                        --                    392,664
     Other                                      1,169,512                --
                                              -----------               --------
                                              $ 3,855,122               $392,664
                                              ===========               ========

7.   PROPERTY AND EQUIPMENT

     Property and equipment consists of the following at December 31:
<TABLE>
<CAPTION>

                                                                                      Estimated
                                                                                     Useful Lives
                                                         1997               1996       (Years)

<S>                                                   <C>                              <C>
Software............................................. $    217,142          $--           3-5
Machinery and equipment..............................   20,333,332           --           5-10
Furniture and fixtures...............................      745,875           --           10
Leasehold improvements...............................    1,626,566           --           2-7
                                                       -----------          ----
                                                        22,922,915           --
                                                       -----------          ----
Less - Accumulated depreciation and amortization.....  ( 1,237,997)          --
                                                       ------------         ----
Property and equipment, net.......................... $ 21,684,918         $ --
                                                       ===========          ====

</TABLE>

     Leased  equipment  under capital leases  (included  above)  consists of the
following at December 31:

<TABLE>
<CAPTION>

                                                                           1997           1996
<S>                                                                     <C>               <C>
Equipment........................................................       $13,028,202       $--
Less - Accumulated amortization..................................          (961,952)       --
                                                                        ------------      -----
                                                                        $ 12,066,250      $--
                                                                         ===========      =====
</TABLE>

     Depreciation and amortization  expense on property and equipment charged to
operations  for the period from  inception  (September 19, 1996) to December 31,
1996 and the year ended December 31, 1997 was $0 and $1,237,997, respectively.

     At December 31, 1997 minimum  annual  payments  under capital leases are as
follows:

       1998....................................................$ 2,435,994
       1999....................................................  2,519,695
       2000....................................................  2,489,027
       2001....................................................  2,442,798
       2002 and thereafter.....................................    443,217
                                                               -----------
       Total minimum payments excluding interest.............   10,330,731
       Less - Current portion of capital lease obligations.....  2,435,994
                                                               -----------
         Long-term portion of capital lease obligations........  7,894,751
                                                               ===========
       Interest payments for term of capital leases............$ 2,025,311
                                                               ===========

     The interest  rates on the  capitalized  leases range from 4.8% up to 15.6%
and are imputed based on the fair market value of the equipment at the inception
of the lease. Subsequent to the acquisitions of the Founding Companies,  capital
leases aggregating approximately $1,000,000 were repaid.

<PAGE>

8.   ACCRUED EXPENSES:

     Accrued expenses consist of the following at December 31:
<TABLE>


                                                                       1997               1996
<S>                                                                   <C>                 <C>
Accrued payroll and payroll related expenses......................   $ 1,476,526        $  --
Accrued professional fees.........................................       815,670           --
Acquisition related liabilities...................................     2,890,764           --
Accrued deferred offering costs...................................        --             320,230
Advanced postage..................................................     4,877,691           --
Other accruals....................................................     1,638,152           --
                                                                      ----------         -------
                                                                     $11,698,803        $320,230
                                                                      ==========         =======
</TABLE>


9.   DEBT:

     Long-term obligations

         Long-term obligations consist of the following:

<TABLE>
<CAPTION>

                                                      December 31, 1997          December 31, 1996
<S>                                                      <C>                         <C>
Equipment notes payable to a bank and
an equipment manufacturer at interest
rates ranging from 7% - 14% with
monthly payments of $10,979 through
     December 1998.....................................$117,183                     --
Notes payable to an equipment manufacturer
at interest rates ranging from 1%-4.8% with a
final payment due in June 1999......................... 112,836
                                                       --------
                                                        230,019
     Less current maturities........................... 191,184
                                                       --------
                                                       $ 38,835
                                                       ========
</TABLE>

     Maturities of Long-Term Obligations

     As of December 31, 1997, maturities of long-term obligations are as follows
(in thousands):

         Years Ending December 31:

                  1998..................................................$191,184
                  1999..................................................  38,835
                                                                         -------
                           Total........................................$230,019
                                                                        ========

     On August 13,  1997,  the Company and Summit Bank entered into a three year
Equipment Loan and Revolving Credit Agreement in the amount of $30,000,000.  The
interest rate is based on certain financial performance ratios plus a rate equal
to LIBOR or a Summit  Bank  alternate  base rate.  The  Agreement  is subject to
various covenant  restrictions,  the most restrictive of which requires tangible
net worth to be a minimum of 25% of stated net worth. At December 31, 1997 there
were no outstanding borrowings under this line of credit.

10.   STOCKHOLDERS' EQUITY:

     The  Company  initially  issued  791,346  shares  of its  Common  Stock  in
September 1996 for $39,965.  In December  1996, an additional  503,846 shares of
its Common Stock were issued for $367,303.  In connection  therewith the Company
recorded a non-recurring non-cash charge to compensation and interest expense of
approximately $5.1 million,  representing the difference between the amount paid
for the shares and the estimated fair value of the shares at the date of sale.

     In March, 1997, the  Company filed a Restated  Certificate of Incorporation
which  modified  the capital  stock  structure  of the Company to provide for 30
million  shares,  divided into 20 million  shares of Common Stock and 10 million
shares of undesignated stock.

     In May and July, 1997, CIBC Oppenheimer Corp. (formerly named Oppenheimer &
Co.,  Inc.  and  referred  to herein as  Oppenheimer)  returned  to  Vestcom  an
aggregate of 225,512 shares of common stock which was previously issued.

     In July 1997, the Company filed an amendment to its Restated Certificate of
Incorporation  which created 200 shares of Class A Convertible  Preferred Stock,
one  share of Class B  Preferred  Stock and 100  shares  of Class C  Convertible
Preferred Stock,  with each share having a liquidation  value of $.10 per share.
The Class A shares  were issued to certain  former  shareholders  of  Electronic
Imaging  Services,  Inc.  and the Class C shares were  issued to certain  former
shareholders of Image Printing  Systems,  Inc. The shares of Class A and Class C
Convertible  Preferred Stock were issued  pursuant to the earnout  provisions of
the applicable acquisition agreements.  The one share of Class B Preferred Stock
was  issued to a Canadian  Founding  Company  and is equal to 239,988  shares of
Common Stock valued at $11.05 per share and has equal voting rights.

     On July 30, 1997, Vestcom International,  Inc. announced the initial public
offering of 3,850,000 shares of its Common Stock at a price of $13.00 per share.
The Company's underwriters exercised in full an option to purchase an additional
577,500  shares of the Company's  Common Stock at $13.00 per share to cover over
allotments  of the initial  public  offering.  The initial  public  offering was
consummated on August 4, 1997.

11.  STOCK OPTION PLAN:

     In March 1997, the Company  approved the 1997 Equity  Compensation  Program
(the "Stock Option  Plan") which  provides for the granting or awarding of stock
options and stock appreciation  rights to non-employee  directors,  officers and
other  key  employees  and  consultants  (including  officers  of  the  Founding
Companies).  The number of shares authorized and reserved for issuance under the
Plan is limited to the greater of 700,000  shares or 10 percent of the number of
shares of Common Stock outstanding.  In general,  the terms of the option awards
(including vesting schedules) will be established by the Compensation  Committee
of the Board of Directors.

     The  Stock  Option  Plan  also  provides  for  automatic  option  grants to
directors who are not employed by Vestcom or its subsidiaries. Upon commencement
of service,  a  non-employee  director  will  receive a  nonqualified  option to
purchase 10,000 shares of Common Stock,  and continuing  non-employee  directors
will receive  annual  options to purchase  5,000 shares of Common Stock,  all at
fair  market  value on the date of the grant.  Options  granted to  non-employee
directors   become  fully   exercisable  one  year  after  the  date  of  grant.
Non-employee directors' options have a term of ten years from the date of grant.

     Upon consummation of the acquisitions and the Offering, options covering an
aggregate  of 289,050  shares of Common Stock were  outstanding  under the Stock
Option Plan  including  (i) options to purchase  10,000  shares of common  stock
which have been granted to each non-employee director,  (ii) options to purchase
15,000 shares of common stock which have been granted to Mr.  April,  a director
and employee of the Company, and (iii) options to purchase an additional 231,550
shares of Common Stock which have been granted to other employees of the Company
and its  subsidiaries.  All of these options  expire ten years after the date of
grant (except for Mr. April's options, which will expire on January 2, 2001) and
have an exercise  price,  subject to  adjustment,  equal to the  initial  public
offering  price  of the  Common  Stock in the  Offering.  Such  options  will be
exercisable  annually in 25% increments  beginning with the first anniversary of
the date of grant,  except for the  options  granted to  non-employee  directors
which become fully exercisable one year after the date of grant. In October 1997
an additional 115,000 options were granted to officers of the Company.

     At December 31, 1997, 404,050 options were outstanding.

<TABLE>
<CAPTION>


                                                                       Options Outstanding
                                                                                      Exercise
                                                                  Shares              Price Per Share
<S>                                                              <C>                    <C>
       Balance at inception....................................   --                    $ --
       Granted.................................................   --                      --
       Balance, December 31, 1996..............................   --                      --
       Granted.................................................  404,050                $13-$21.625
                                                                 ----------              --------------
       Exercised................................................. --                      --

                                                                 ----------              --------------
       Balance, December 31, 1997..............................  404,050                $13-$21.625
                                                                 ==========              ==============
       Exercisable, December 31, 1997..........................    0                     $--
                                                                 ==========              ==============
</TABLE>

     As of  September  19,  1996,  SFAS No.  123,  "Accounting  for  Stock-Based
Compensation," was effective for the Company. SFAS No. 123 permits, but does not
require, a fair value-based method of accounting for employee stock option plans
which  results  in  compensation  expense  recognition  when stock  options  are
granted.  As  permitted  by SFAS No. 123,  the Company  has  provided  pro forma
disclosure of net income and earnings per share, as applicable,  in the notes to
consolidated financial statements.

     The weighted  average fair value of options granted in 1997 at market value
was $9.72.  The weighted  average  exercise price of options  granted in 1997 at
market value was $15.38.

     The fair value of each stock  option  grant is  estimated as of the date of
grant using the Black-Scholes  option pricing model with the following  weighted
average assumptions:

                                                                 1997
          Risk-Free Interest Rate                                6.5 %
          Expected Lives                                         10.0 years
          Expected Volatility                                    23.0%

<PAGE>

The following table summarizes  information  about stock options  outstanding at
December 31, 1997:


                              Number of           Weighted
                              Options             Average
                              Outstanding         Remaining        Weighted
                              at December 31,     Contractual      Average
  Range of Exercise Price       1997                Life         Exercise Price
  ------------------------------------------------------------------------------

     $ 13.00 - $18.75           304,050              9.59           $ 13.33
     $ 21.625                   100,000              9.75           $ 21.625
     ---------------            -------              ----             ------
     $ 13.00 - $21.625          404,050              9.63           $ 15.38

Had  compensation  expense for all stock options granted in 1997 been determined
consistent  with SFAS No.  123,  the  Company's  net income and income per share
would have been as follows:

                                                              1997
                                                              -----
     Net Income:                   As Reported             $ 1,307,905
                                   Pro Forma               $ 1,116,821
     Net Income Per Share:         As Reported  - basic       $ .31
                                   Pro Forma    - basic       $ .27
                                   As Reported - diluted      $ .29
                                   Pro Forma   - diluted      $ .24


The  effects  of  applying  SFAS No.  123 in this pro forma  disclosure  are not
indicative  of  future  amounts  and  additional  awards  in  future  years  are
anticipated.


12.  EMPLOYEE BENEFIT PLANS:

     Certain of the acquired U.S.  companies had qualified defined  contribution
employee  benefit  plans  (the  "Plans"),  the  majority  of which  allowed  for
voluntary pretax  contributions by employees.  The operating  companies paid all
general  and  administrative  expenses  of the  Plans  and in  some  cases,  the
operating companies made matching and discretionary  contributions to the Plans.
The operating  companies offer no post-employment  or post-retirement  benefits.
The  expense  incurred  related to the Plans by the  Company  was  approximately
$49,218 for the period from August 1, 1997 to December 31, 1997.

     Effective  on  January 1,  1998,  the  Company  established  a new  defined
contribution  profit  sharing  401K  plan.  The  Plan is  available  to all U.S.
operating companies of Vestcom.

13.  INCOME TAXES:

     The provision for federal and state income taxes consists of the following:

<TABLE>
<CAPTION>

                                                                                   Period From Inception
                                                 Twelve Months Ended              (September 19, 1996) to
                                                  December 31, 1997                  December 31, 1996
                                                 -------------------              ------------------------
<S>                                               <C>                             <C>
       Federal                                   $    1,012,191                     $     -
       State                                            293,864                           -
                                                      ----------                    ----------
                                                 $    1,306,055                     $     -
                                                      ==========                    ==========

</TABLE>

<PAGE>

     The  differences  in income taxes  provided and the amounts  determined  by
applying  the federal  statutory  tax rate (34%) to income  before  income taxes
result from the following:

<TABLE>
<CAPTION>

                                                                                       Period From Inception
                                                     Twelve Months Ended              (September 19,1996) to
                                                      December 31, 1997                  December 31, 1996
<S>                                                  <C>                               <C>
              Tax at statutory rate                  $  888,746                           $     -
              Add (deduct) --
                  State income taxes                    193,950                                 -
                  Nondeductible expenses                223,359                                 -
                                                     ----------                           ------------
                                                     $1,306,055                           $     -
                                                      =========                          ============

</TABLE>

     Deferred  taxes  result  primarily  from cash to  accrual  differences  and
differences  in the  reporting  of  depreciation,  the  allowance  for  doubtful
accounts and other non-deductible accruals.

<PAGE>

14.  LEASE COMMITMENTS

     The Company and its subsidiaries lease various office buildings, machinery,
equipment, and vehicles under operating leases expiring at various dates through
2004.  Most of the real  property  leases  have  escalation  clauses  related to
increases in real property taxes.  Future minimum lease payments under operating
leases are as follows:

Years Ending December 31                                         Operating
                                                                   Leases

       1998....................................................$  4,232,000
       1999....................................................   3,651,000
       2000....................................................   2,949,000
       2001....................................................   2,079,000
       2002....................................................   1,357,000
       Thereafter..............................................   2,376,000
                                                                  ---------
       Total minimum lease payments............................$ 16,644,000
                                                                 ==========

     Rent expense for all operating  leases for the twelve months ended December
31, 1997 and the period from inception (September 19, 1996) to December 31, 1996
was approximately $1,436,000 and $5,000, respectively.


15.  RELATED-PARTY TRANSACTIONS:

     Leasing Transactions

     Certain of the Operating  Companies lease their  operating  facilities from
selling  parties  who  remained  employees  or  directors  of the  Company.  The
Company's chairman has a 50% interest in the partnership which owns the property
used by the Company and  Comvestrix in Lyndhurst,  New Jersey.  The  partnership
leases  the  property  to  Comvestrix.   The  current  lease  expires  in  2001.
Comvestrix's  related  party rent expense for this  property for the period from
August 1, 1997 to December  31, 1997 was  $232,000.  The current  annual rent is
$394,000 per year  (exclusive  of building  operating  expenses and real estate
tax)  which the  Company  believes  to be the fair  market  rental  value of the
property.

     A director and employee of the Company owns  interests  ranging from 75% to
100% in the  partnerships  which own the  properties  used by DMS in Dover,  New
Jersey and  Scranton,  Pennsylvania  and which lease such  property to DMS.  The
current  leases  expire at various  times from 1998 through  2004.  DMS' related
party rent  expense  for these  properties  for the period  from  August 1, 1997
through December 31, 1997 was $286,000. The current annual rent for all of these
properties is approximately  $825,000 per year (inclusive of real estate taxes),
which the Company believes to be the fair market rental value of the property.

     Two officers of Image  Printing  Systems,  Inc.  ("IPS"),  own the property
leased to and used by IPS,  in  Milwaukee,  Wisconsin.  The lease will expire in
2002 subject to an option to renew the lease for an additional five years.  IPS'
related  party rent expense for these  properties  for the period from August 1,
1997 to December 31, 1997 was $94,000 inclusive of building operating costs. The
rent payable by IPS under the lease is $80,000 per year,  triple net,  which the
Company believes to be the fair market rental value of the property.


<PAGE>


     Consulting Agreement

     An executive vice president of the Company received $74,400 from Vestcom in
1997 for consulting  services rendered to Vestcom during 1996, which is included
in deferred  offering  costs in the  accompanying  balance sheet at December 31,
1996. In addition, upon consummation of the Offering, Vestcom paid a partnership
in which that executive  vice president held a 50% interest,  the sum of $75,000
in payment of consulting  services  rendered by that firm in connection with the
acquisitions and the Offering.

     Notes payable

     On September 19, 1996 and December 31, 1996, the Company issued  Promissory
Notes and Senior Notes to related parties in the aggregate amount of $1,292,732.
The principal and interest were initially due on the earlier of the Offering, or
June 30,  1997.  The due date of the notes were  extended  to the earlier of the
Offering or December  31, 1997.  All notes bore  interest at a rate equal to the
fluctuating  interest rate announced by a certain bank as its prime rate (8-1/4%
at December 31, 1996). In August, 1997, the Notes were repaid in full out of the
proceeds of the Offering.


16.  COMMITMENTS AND CONTINGENCIES:

     Litigation

     The  Company is, from time to time,  a party to  litigation  arising in the
normal  course of its business.  Management  believes that none of these actions
will have a material  adverse  effect on the  financial  position  or results of
operations of the Company.

     Contracts

     In May  1997,  the  Company  entered  into an  agreement  with  Oppenheimer
pursuant to which the Company agreed to pay  Oppenheimer an aggregate  amount of
up to $1.8 million for advisory services  provided by Oppenheimer.  In addition,
Vestcom  reimbursed  Oppenheimer  $75,000 for out-of-pocket  expenses related to
such services.

     Certain  executives  of the  Company  have  each  entered  into  employment
agreements with the Company. In general, the employment agreements provide that,
in the event of a termination of employment by the Company  without cause,  such
employee will be entitled to receive from the Company an amount in cash equal to
the employee's then current annual base salary for the remainder of the term.

     Earnouts

     Certain of the Founding Companies are eligible to earn additional  amounts,
consisting  of a  combination  of cash and  securities,  as  adjustments  to the
purchase  prices paid for those  companies.  At December 31,  1997,  the Company
recorded an accrual for the estimated  earnout for Computer Output Systems whose
earnout  period  ended at December  31,  1997,  of $277,000  payable in cash and
54,779 shares of common stock of the Company.  The maximum  additional  earnouts
which could be paid if certain of the other  Founding  Companies  attained their
revenue and profit goals would be approxinmately  $2,400,000 in cash and 625,000
shares of common stock.

17.  SUBSEQUENT EVENT:

     As of January 20,  1998,  the  Company  acquired  substantially  all of the
assets of Creative Data Services, Inc. ("CDS") which specializes in retail shelf
label  printing and related  services and Business  Mail Express  ("BME")  which
specializes  in  expedited  print  and  mail  services.  The  acquisitions  were
accounted  for using the purchase  method of  accounting  and  accordingly,  the
purchase  price has been  allocated to the assets  acquired and the  liabilities
assumed  based upon the fair  values at the date of  acquisition.  The  combined
purchase price was  $9,500,000  million in cash plus the potential to receive an
earnout of up to  $2,500,000  million  payable  50% in cash and 50% in shares of
common stock.  The estimated  fair value of the assets  purchased was $4,705,000
and the estimated  goodwill was  $4,795,000.  The  estimated  fair market values
reflected  above are  preliminary  estimates and  assumptions and are subject to
revision. In management's opinion, the preliminary  allocations are not expected
to be materially different than the final allocations.  In connection with those
acquisitions, CIBC Oppenheimer was paid an advisory service fee of $300,000.

     Set forth below is unaudited pro forma financial information for the twelve
months ended  December 31, 1997. The unaudited pro forma data give effect to the
acquisitions of CDS and BME as well as compensation and other  adjustments as if

<PAGE>
all the  acquisitions  had occurred on January 1, 1997. This  information is not
necessarily  indicative of the results the Company would have obtained had these
events actually then occurred or of the Company's future results:

                                                          Pro Forma
                                                         Year Ended
                                                      December 31, 1997
                                                  (Unaudited, in thousands,
                                                   except per share data)

Net sales............................................       $101,153
Income from operations...............................       $  9,050
Net income...........................................       $  4,657
Earnings per share:      basic.......................       $    .55
                         diluted.....................       $    .52


Item 9. Changes  in  and  Disagreements  with  Accountants  on  Accounting   and
        Financial Disclosure

         None.


                                    Part III

Item 10.   Directors of the Registrant

     The registrant  incorporates by reference  herein  information set forth in
its definitive proxy statement for its 1998 annual meeting of shareholders  that
is responsive to the information required with respect to this Item.

Item 11.   Executive Compensation

     The registrant  incorporates by reference  herein  information set forth in
its definitive proxy statement for its 1998 annual meeting of shareholders  that
is responsive to the information required with respect to this Item.

Item 12.   Security Ownership of Certain Beneficial Owners and Management.

     The registrant  incorporates by reference  herein  information set forth in
its definitive proxy statement for its 1998 annual meeting of shareholders  that
is responsive to the information required with respect to this Item.

Item 13.   Certain Relationships and Related Transactions.

     The registrant  incorporates by reference  herein  information set forth in
its definitive proxy statement for its 1998 annual meeting of shareholders  that
is responsive to the information required with respect to this Item.


                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a) (1) Financial Statements.

     For the  financial  statements  filed as part of this Annual Report on Form
10-K refer to "Index to  Financial  Statements"  included in "Item 8 - Financial
Statements and Supplementary Data" of this Annual Report on Form 10-K.

     (2) Financial Statement Schedules.

     All financial statement schedules are omitted because they are not required
or the required  information  is shown in the Company's  consolidated  financial
statements or the notes thereto.

     (3) The following  exhibits are  incorporated by reference  herein or filed
with this Annual Report on Form 10-K.


Exhibit
Number    Description

2.1       Agreement and Plan of  Reorganization,  dated as of February 28, 1997,
          by and among Vestcom International,  Inc., Computer Output Acquisition
          Corp.,  Computer  Output  Systems,  Inc.  and the  Stockholders  named
          therein,  is incorporated by reference to Exhibit 2.1 to the Company's
          Registration Statement on Form S-1 (no. 333-23519).

2.2       Agreement and Plan of  Reorganization,  dated as of February 28, 1997,
          by and  among  Vestcom  International,  Inc.,  Comvestrix  Acquisition
          Corp.,  Comvestrix  Corp.  and  the  Stockholders  named  therein,  is
          incorporated by reference to Exhibit 2.2 to the Company's Registration
          Statement on Form S-1 (no. 333-23519).

2.3       Agreement and Plan of  Reorganization,  dated as of February 28, 1997,
          by  and  among  Vestcom   International,   Inc.,   Electronic  Imaging
          Acquisition  Corp.,   Electronic   Imaging  Services,   Inc.  and  the
          Stockholders  named therein,  is  incorporated by reference to Exhibit
          2.3  to  the  Company's   Registration  Statement  on  Form  S-1  (no.
          333-23519).

2.4       Agreement and Plan of  Reorganization,  dated as of February 28, 1997,
          by and among Vestcom International, Inc., Imaging Printing Acquisition
          Corp.,  Image  Printing  Systems,  Inc.  and  the  Stockholders  named
          therein,  is incorporated by reference to Exhibit 2.4 to the Company's
          Registration Statement on Form S-1 (no. 333-23519).

2.5       Agreement and Plan of  Reorganization,  dated as of February 28, 1997,
          by  and  among  Vestcom  International,  Inc.,  Direct  Mail  Services
          Acquisition Corp.,  Quality Control Printing  Acquisition Corp., First
          Class Presort  Acquisition Corp.,  Morris County Direct Mail Services,
          Inc.,  Quality Control Printing,  Inc., First Class Presort,  Inc. and
          the  Stockholders  named  therein,  is  incorporated  by  reference to
          Exhibit 2.5 to the Company's  Registration  Statement on Form S-1 (no.
          333-23519).

2.6       Agreement and Plan of  Reorganization,  dated as of February 28, 1997,
          by and among Vestcom  International,  Inc., Mystic Graphic Acquisition
          Corp.,  Mystic  Graphic  Systems,  Inc.  and  the  Stockholders  named
          therein,  is incorporated by reference to Exhibit 2.6 to the Company's
          Registration Statement on Form S-1 (no. 333-23519).

2.7       Share  Purchase  Agreement  dated March 10, 1997 by and among  Vestcom
          International,  Inc., LIRPACO Acquisition Corp.,  LIRPACO Inc. and the
          Stockholders  named therein,  is  incorporated by reference to Exhibit
          2.7  to  the  Company's   Registration  Statement  on  Form  S-1  (no.
          333-23519).

2.8       Asset Purchase  Agreement,  dated as of January 20, 1998, by and among
          Vestcom  International,   Inc.,  Creative  Data  Services,   Inc.,  DB
          Acquisition,  Inc.,  d/b/a  Business  Mail  Express and certain  other
          parties,  is incorporated by reference to the Company's Current Report
          on Form 8-K dated February 4, 1998.

3.1       Restated Certificate of Incorporation of Vestcom International,  Inc.,
          as  amended,  is  incorporated  by  reference  to  Exhibit  3.1 to the
          Company's Quarterly Report on Form 10-Q for the Period Ending June 30,
          1997.

3.2       By-laws of Vestcom  International,  Inc. are incorporated by reference
          to Exhibit 3.2 to the  Company's  Registration  Statement  on Form S-1
          (no. 333-23519).

4.1       Form of  certificate  evidencing  ownership of Common Stock of Vestcom
          International,  Inc., is  incorporated  by reference to Exhibit 4.1 to
          the Company's Registration Statement on Form S-1 (no. 333-23519).

10.1      Vestcom  International,  Inc.  1997 Equity  Compensation  Program,  is
          incorporated   by  reference   to  Exhibit   10.1  to  the   Company's
          Registration Statement on Form S-1 (no. 333-23519).

10.2      Employment  Agreement,  dated as of March  10,  1997,  by and  between
          Vestcom  International,  Inc.  and Joel  Cartun,  is  incorporated  by
          reference to Exhibit 10.2 to the Company's  Registration  Statement on
          Form S-1 (no. 333-23519).

10.3      Employment  Agreement,  dated March 1, 1997,  by and  between  Vestcom
          International,  Inc.  and  Peter J.  McLaughlin,  is  incorporated  by
          reference to Exhibit 10.3 to the Company's  Registration  Statement on
          Form S-1 (no. 333-23519).

10.4      Employment Agreement. dated as of March 10, 1997, between DMS and Gary
          J.  Marcello,  is  incorporated  by  reference  to Exhibit 10.4 to the
          Company's Registration Statement on Form S-1 (no. 333-23519).

10.5      Employment  Agreement,  dated  as  of  March  10,  1997,  between  COS
          Information  and Howard April, is incorporated by reference to Exhibit
          10.5  to  the  Company's  Registration  Statement  on  Form  S-1  (no.
          333-23519).

10.6      Employment  Agreement,  dated as of March 10, 1997, between Comvestrix
          and Leslie M. Abcug,  is  incorporated by reference to Exhibit 10.6 to
          the Company's Registration Statement on Form S-1 (no. 333-23519).

10.7      Note and Stock Purchase  Agreement,  dated December 31, 1996,  between
          Vestcom International,  Inc. and certain investors, is incorporated by
          reference to Exhibit 10.7 to the Company's  Registration  Statement on
          Form S-1 (no. 333-23519).

10.8      Letter  Agreement,   between  Oppenheimer  &  Co.,  Inc.  and  Vestcom
          International,  Inc., is  incorporated by reference to Exhibit 10.8 to
          the Company's Registration Statement on Form S-1 (no. 333-23519).

10.9      Employment  Letter  Agreement,  dated May 21,  1997,  between  Vestcom
          International,  Inc. and Harvey Goldman,  is incorporated by reference
          to Exhibit 10.9 to the  Company's  Registration  Statement on Form S-1
          (no. 333-23519).

10.10     Employment Letter Agreement, dated September 23, 1997, between Vestcom
          International.  Inc. and Brendan Keating, is incorporated by reference
          to Exhibit 10.10 to the Company's  Registration  Statement on Form S-4
          (no. 333-39077).

21.1      List of subsidiaries of Vestcom International, Inc.

23.1      Consent of Arthur Andersen LLP.

24.1      Power of Attorney.

27.1      Financial Data Schedule

99.1      Audited  Financial  Statements for certain of the Founding  Companies
          as of August 1, 1997 and for the seven months then ended.

         (b)      Reports on Form 8-K

     During the quarter  ended  December 31, 1997,  the Company  filed a Current
Report on Form 8-K,  dated November 17, 1997,  pertaining to its  acquisition of
substantially  all of the assets of New  England  Laser  Printing,  Inc.,  and a
Current  Report  on  Form  8-K,  dated  December  17,  1997,  pertaining  to its
acquisition of Campbell Abbot Laser Mail. On February 4, 1998, the Company filed
a Current  Report on Form 8-K  pertaining  to its  acquisition  of a substantial
portion of the assets and a substantial  portion of the  liabilities of Creative
Data Services,  Inc.  ("CDS") and of DB Acquisition,  Inc.,  d/b/a Business Mail
Express, a wholly-owned subsidiary of CDS. The latter Current Report on Form 8-K
contained certain historical  consolidated  financial  statements of CDS and pro
forma financial statements of the Company.

<PAGE>

                                                               SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date:  March 31, 1998                         VESTCOM INTERNATIONAL, INC.

                                              By: /s/Harvey Goldman
                                              ___________________________
                                              Harvey Goldman
                                              Executive Vice President and
                                              Chief Financial Officer


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Annual  Report on Form  10-K has been  signed by the  following  persons  in the
capacities indicated on the date indicated.


Signatures                    Title                                   Date

*/s/ Joel Cartun              President, Chief Executive        March 31, 1998
________________              Officer and Director
      Joel Cartun

*/s/ Howard April                 Director                      March 31, 1998
 ________________
  Howard April

*/s/ Gary J. Marcello             Director                      March 31, 1998
_________________
Gary J. Marcello

*/s/ Stephen R. Bova              Director                      March 31, 1998
__________________
Stephen R. Bova

                                  Director                      March 31, 1998

___________________
Leonard J. Fassler

*/s/Fred S Lafer                  Director                      March 31, 1998
 __________________
Fred S. Lafer

*/s/ Richard D, White             Director                      March 31, 1998
___________________
Richard D. White

/s/Harvey Goldman                 Executive Vice President,     March 31, 1998
__________________                Chief Financial Officer
                                  and Treasurer (Principal
                                  Financial and Accounting
Harvey Goldman                    Officer)

                           *By:/s/Harvey Goldman
                                 ______________________________
                               Harvey Goldman, Attorney-in-Fact