Item 1.

Financial Statements

1)

The accompanying unaudited statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of results for the full year. Operating results for the nine-month period ended September 27, 2003 are not necessarily indicative of the results that may be expected for the year ended December 31, 2003.

The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the financial statements and footnotes thereto included in the Company's 2002 annual report.

On March 14, 2003, MOD-PAC CORP. was spun off from Astronics Corporation (Astronics) by means of a tax-free distribution ("The Distribution") of all of the outstanding shares of MOD-PAC CORP.'s common stock and Class B Stock. The Astronics Board of Directors set a one-for-two distribution ratio, in which (i) each Astronics common stock holder received one share of MOD-PAC CORP. common stock for every two shares of Astronics common stock owned on the record date for the Distribution and (ii) each Astronics Class B stock owner received one share of MOD-PAC CORP. Class B for every two shares of Astronics Class B stock owned on the record date for the Distribution. As a result of the Distribution, MOD-PAC CORP. became a separately traded, publicly held company.

At March 14, 2003 the Company paid Astronics all amounts due at the time of the spin-off with a portion of the proceeds of a $10 million term loan facility with HSBC Bank USA. At September 27, 2003 the Company has $9.6 million outstanding under the term loan facility, which is repayable in quarterly installments through 2010. Interest is paid monthly at floating rates 125 basis points over LIBOR.

Prior to the Distribution, the Company was recapitalized. Astronics exchanged its existing shares of MOD-PAC CORP. common stock for approximately 2,934,489 share of MOD-PAC CORP. Common stock and approximately 1,010,912 shares of MOD-PAC CORP. Class B stock. The accompanying financial statements give retroactive effect to this recapitalization.

The Company accounts for its stock-based awards using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25 and its related interpretations. The measurement prescribed by APB Opinion No. 25 does not recognize compensation expense if the exercise price of the stock option equals the market price of the underlying stock on the date of grant. Accordingly, no compensation expense related to stock options has been recorded in the financial statements.

For purpose of pro forma disclosures, the estimated fair value of the MOD-PAC stock options at the date of grant is amortized to expense over the option's vesting period. The Company's pro forma information for the 2003 and 2002 are presented in the table below.

NINE MONTHS

THREE MONTHS

2003

2002

2003

2002

(in thousands)

Net income as reported

$

1,382

$

1,240

$

510

$

460

Adjustments to record compensation expense for stock option awards under the fair value method of accounting

(83

)

(65

)

(21

)

(22

)

Pro forma net income

$

1,299

$

1,175

$

489

$

438

Pro forma basic earnings per share

$

0.34

$

0.29

$

0.13

$

0.11

Pro forma diluted earnings per share

$

0.34

$

0.28

$

0.13

$

0.11

2)

Inventories are stated at the lower of cost or market, cost being determined in accordance with the first-in, first-out method. Inventories are as follows:

(in thousands)

September 27, 2003
(Unaudited)

December 31, 2002

Finished Goods

$2,494

$1,655

Work in Progress

173

237

Raw Material

1,019

976

$3,686

$2,868

3)

The Company performed printing and order fulfillment services for VistaPrint Limited, resulting in net sales of $9,756,000 and $4,299,000, respectively for the first nine months of 2003 and 2002. VistaPrint owed MOD-PAC CORP. $3,014,000 and $927,000 at September 27, 2003 and December 31, 2002 respectively, related to such services. Roberts S. Keane, the son of Kevin T. Keane, is a shareholder in and chief executive officer of VistaPrint Limited. In addition, Kevin T. Keane is a shareholder in VistaPrint Limited, holding less than 5% of its capital stock.

The Company has a supply agreement with VistaPrint Limited pursuant to which the Company is VistaPrint Limited's exclusive North American supplier of printed products. Printed products delivered to VistaPrint Limited's customers pursuant to this agreement are billed to VistaPrint Limited at the Company's fully burdened cost divided by 0.75. VistaPrint Limited is obligated to pay the Company for such shipments within 40 days of invoice. This agreement expires April 2, 2011.

The Company has an additional supply agreement with VistaPrint Limited for outside of North America, whereby VistaPrint Limited is obligated to give the Company a commercially reasonable opportunity to bid for the manufacturing rights of VistaPrint Limited's printed products outside North America. Pursuant to this agreement, the price for products shall be negotiated, but in no event shall they exceed the Company's fully burdened cost divided by 0.75. This agreement also expires April 2, 2011

Item 2.

Management's Discussion and Analysis of Financial Condition
and Results of Operations

The following table sets forth income statement data as a percent of net sales:

Percent of Net Sales

Percent of Net Sales

Nine Months Ended September 27

Three Months Ended September 27

2003

2002

2003

2002

Net Sales:

100.0

%

100.0

%

100.0

%

100.0

%

Cost of products sold

76.0

75.2

76.3

74.9

Selling, general and

administrative expenses

15.9

15.9

15.0

15.1

Interest expenses, net

.5

.0

.8

.0

92.4

%

91.1

%

92.1

90.0

%

Income before provision

for income taxes

7.6

%

8.9

%

7.9

%

10.0

%

Provision for taxes

2.8

3.4

2.9

4.0

Net Income

4.8

%

5.5

%

5.0

%

6.0

%

NET SALES

For the third quarter of 2003 net sales were $10.2 million compared with $7.7 million in 2002, an increase of 32.5%. This increase of $2.5 million was due to the $1.8 million increase in short run commercial printing net sales and a $0.6 million increase in net sales for the custom folding carton product line.

Net sales for the first nine months of 2003 were $28.8 million compared to $22.5 million, an increase of $6.3 million or 28.0%. This was due to the $5.5 million increase in short run commercial printing net sales and a $0.6 million increase in net sales for the custom folding carton product line.

EXPENSES AND MARGINS

Cost of products sold as a percentage of net sales for the three months ended September 27, 2003 was 76.3% compared to 74.8% for the second quarter of 2002, an increase of 1.5%, because of costs associated with increased capacity to meet current and future demand and costs associated with initial production runs of new items for existing and new customers.

Cost of products sold as a percentage of net sales for the nine months ended September 27, 2003 was 76.0% compared to 75.2% for the first nine months of 2002, an increase of 0.8%, because of costs associated with increased capacity to meet current and future demand and costs associated with initial production runs of new items for existing and new customers.

Selling, general and administrative costs, as a percentage of net sales, is slightly improved to 15.0 %, for the three months ended September 27, 2003 compared to 15.1% for the three months ended September 28, 2002 a decrease of 0.1%. However, when applied to higher net sales this equates to an increase of $362,000 to $1,526,000 in the third quarter of 2003 compared to $1,164,000 in the third quarter 2002. This increase is reflective of higher administrative employee costs due to our expansion, and costs associated with the transition to, and being, a separate public company. This increase and the reasons for the increase are consistent with what we experienced during the first half of 2003. As a result, selling, general and administrative costs for the three quarters of 2003 were up $1,021,000 to $4,588,000 from $3,567,000 in the first nine months of 2002.

As a result of the 1.5% increase, as a percentage of net sales, in cost of products sold offset by the .1% decrease, as a percentage of net sales, in selling, general and administrative costs, earnings before interest and taxes (EBIT), as a percentage of net sales, was down 1.4% to 8.7% in the third quarter 2003 from 10.1% in the third quarter 2002. For the year to date comparisons, EBIT was down 0.8% of net sales to 8.1% compared to 8.9% because cost of products sold increased 0.8% as a percentage of net sales.

Interest expense increased to $83,000 for the quarter and $151,000 for the year-to-date in 2003 compared to $2,000 for the quarter and $9,000 for the year-to-date in 2002. This is mainly a result of the borrowings to finance our expansion. Most of which occurred since March 14, 2003, the date of the spin-off.

TAXES

Income tax rates were lower for the quarter 2003 compared to 2002, 36.6% compared to 40.4% in 2002. For the year to date the tax rates were 36.5% and 37.9%, respectively, for 2003 and 2002.

NET INCOME
AND EARNINGS PER
SHARE

Net income for the third quarter of 2003 was $510,000, up $50,000 or 10.9%, from the 2002 third quarter; diluted earnings per share were $.14 compared to $.12. For the nine months of 2003, our bottom line performance was $1,382,000 compared to last year's first nine-month performance of $1,240,000, an increase of $142,000 or 11.5%.

Average shares outstanding for purposes of the diluted earnings per share calculation were 7.5% lower in 2003 compared to 2002, which impacted the calculation by $0.02 per share for the quarter and $0.03 per share for the year to date calculation.

LIQUIDITY

Cash provided by operating activities was $2,300,000 during the first nine months of 2003. Net income plus depreciation, amortization and other non-cash expenses was $4,569,000, which was offset by an increase in working capital components of $2,269,000. Cash provided by operating activities was $5,524,000 during the first nine months of 2002. Net income plus depreciation, amortization and other non-cash expenses was $3,801,000 plus a decrease in working capital components of $1,723,000.

The Company's capital expenditures of $7,460,000 for the nine months of 2003 were up by $5,024,000 from 2002 level. In the three quarters of 2003 we continued and nearly completed the expansion program started in September of 2002. This program increases our printing capacity by over 50% and will enable us to produce our own electric power in order to have a sufficient, stable and scaleable power source for our current and future needs.

To fund our expansion we borrowed $10 million under a term-loan facility. Interest on the loan is at 1.25% over LIBOR and the principal must be repaid quarterly over seven years. The first quarterly installment was made August 1,2003. We have a $6 million dollar line of credit facility available to us. At September 27, 2003 we borrowed $1,650,000 on this line of credit. Interest on the line of credit is either, 1.25% over LIBOR or the prime rate, at the company's option.

COMMITMENTS

The Company has commitments for items that it purchases in the normal on-going affairs of the business. The Company is not aware of any obligations in excess of normal market conditions, or of any long-term commitments that would have a material adverse affect on its financial condition.

MARKET RISK

As a result of the commissioning of its 2.0-megawatt co-generation facility, over 90% company's power needs are met through natural gas. The company is investigating supply contracts of various lengths; it made no such arrangements beyond 30 days at September 30, 2003. The price of natural gas has fluctuated widely in the past 24 months. A one-dollar per decatherm change in the price of natural gas would effect the company's annual net income by $32,000. An alternative power source would be a diesel-powered generator. The company has made arrangements for and tested this alternative.

CRITICAL ACCOUNTING POLICIES

Specifically, and with respect to deferred tax assets, MOD-PAC had a gross deferred tax asset at September 27, 2003 of $1.5 million, which relates primarily to New York State Investment Tax Credits. These credits are subject to certain statutory provisions, such as the length of available carry forward period and minimum tax, which reduces the probability of realization of the full value of such credits. Management established a valuation allowance of $0.7 million for these credits based on actual historical realization rates and the statutory carry forward period. The valuation allowance is reviewed at least annually.

NEW ACCOUNTING
PRONOUNCEMENTS

In 2002, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 146, Costs Associated with Disposal Activities. This new accounting standard is effective for our 2003 fiscal year and no material impact on our financial position or results of operations is expected because we do not expect to engage in any asset disposal nor exit any activities in the foreseeable future.

FORWARD-LOOKING STATEMENTS

This Quarterly Report contains "forward-looking statements". Such statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results expressed or implied by such statements, including general economic and business conditions affecting our customers and suppliers, competitors' responses to our products and services, particularly with respect to pricing, the overall market acceptance of such products and services' and successful completion of our capital expansion program. We use words like "will," "may," "should," "plan," "believe," "expect," "anticipate." "intend," "future" and other similar expressions to identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of their respective dates. These forward-looking statements are based on our current expectations and are subject to number of risks and uncertainties. Our actual o perating results could differ materially from those predicted in these forward-looking statements, and any other events anticipated in the forward-looking statements may not actually occur.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 1.

Legal Proceedings.

None.

Item 2.

Changes in Securities and Use of Proceeds.

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Submission of Matters to a Vote of Securities Holders.

None.

Item 5.

Other Information.

None.

Item 6.

Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 11. Computation of Per Share Earnings

Exhibit 31.1 Section 302 Certification Chief Executive Officer

Exhibit 31.2 Section 302 Certification Chief Financial Officer

Exhibit 32. Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

The Company filed an 8-K on 10/24/2003 regarding its press release of its third quarter earnings.