83.txt

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<SEC-DOCUMENT>0000002310-98-000013.txt : 19981029
<SEC-HEADER>0000002310-98-000013.hdr.sgml : 19981029
ACCESSION NUMBER:		0000002310-98-000013
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	19980731
FILED AS OF DATE:		19981028
SROS:			AMEX

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MULTIGRAPHICS INC
		CENTRAL INDEX KEY:			0000002310
		STANDARD INDUSTRIAL CLASSIFICATION:	PRINTING TRADES MACHINERY & EQUIPMENT [3555]
		IRS NUMBER:				340054940
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0731

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		
		SEC FILE NUMBER:	001-00683
		FILM NUMBER:		98732186

	BUSINESS ADDRESS:	
		STREET 1:		431 LAKEVIEW COURT
		CITY:			MT PROSPECT
		STATE:			IL
		ZIP:			60056
		BUSINESS PHONE:		7088181294

	MAIL ADDRESS:	
		STREET 1:		431 LAKEVIEW COURT
		CITY:			MT PROSPECT
		STATE:			IL
		ZIP:			60056

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AM INTERNATIONAL INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ADDRESSOGRAPH MULTIGRAPH CORP
		DATE OF NAME CHANGE:	19790322
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<TEXT>

<PAGE>
                  SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                              FORM 10-K
                     FOR ANNUAL AND TRANSITION REPORTS
                 PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934

   x ANNUAL REPORT  PURSUANT TO SECTION  13 OR 15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

                For the fiscal year ended July 31, 1998
                     Commission File Number 1-683

                          MULTIGRAPHICS, INC.
        (Exact Name of Registrant as Specified in Its Charter)
     DELAWARE                           34-0054940
       (State of Incorporation) (I.R.S. Employer Identification No.)
     431 Lakeview Court
     Mt. Prospect, Illinois                               60056
     (Address of Principal Executive Offices)          (Zip Code)

   Registrant's telephone number, including area code:  (847) 375-1700

   Securities registered pursuant to Section 12(b) of the Act:
                                             Name of each exchange on
   Title of each class                          which registered

   Common Stock, $0.025 par value            American Stock Exchange

   Securities registered pursuant to Section 12(g) of the Act:
                                  None

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

                            Yes   X      No
              Indicate by check mark 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]

              The  aggregate  market  value  of  voting  stock  held  by
   nonaffiliates of the Registrant as of October 21, 1998:

   Common Stock, $0.025 par value:                    $8.0 million

              Indicate by  check mark whether  the Registrant has  filed
   all documents and reports required to be filed by Sections 12, 13  or
   15(d) of  the  Securities Exchange  Act  of 1934  subsequent  to  the
   distribution of securities under a plan confirmed by a court.

                            Yes   X      No
 <PAGE>

              Indicate   the  number  of   shares  outstanding  of   the
   Registrant's classes of common stock as of October 21, 1998:

              2,828,960  shares of Registrant's common stock, par  value
   $0.025 per share.

   DOCUMENTS INCORPORATED BY REFERENCE

   Portions of Registrant's Annual Report to Stockholders for the fiscal
   year ended July 31, 1998 (the "1998 Annual Report") are  incorporated
   by reference into Parts  I, II and  IV of this  report.  Portions  of
   Registrant's  definitive  proxy  statement  for  Registrant's  Annual
   Meeting of Stockholders  to be held  on December  3, 1998 (the  "1998
   Proxy Statement") are incorporated by reference into Part III.

                                  PART I

   ITEM 1. BUSINESS

   (a)  General Development of Business and Recent Events.

        1.  Introduction.

            Multigraphics, Inc. is  incorporated in Delaware.   As  used
   herein, "Registrant" or the "Company" means Multigraphics, Inc.,  and
   its subsidiaries, unless the context indicates the contrary.

            Registrant  is  a  distributor  of  an  extensive  range  of
   equipment and supplies  and a service  provider to  the U.S.  graphic
   arts industry.    Registrant  has completed  its  transition  from  a
   manufacturer of  offset  duplicating  machines  to  focus  solely  on
   distribution of equipment and supplies  and providing service to  the
   graphic arts industry.  The Registrant sells a variety of  equipment,
   systems  and  supplies  under  the  Multigraphics  brand  name   and
   increasingly   is   selling   products   carrying   the    applicable
   manufacturers' brand names.

            Since  December of  1997,  the  Company  has  acquired  four
   regional graphic arts dealers  as part of  its strategy of  expanding
   its target  customer base  in the  in-plant and  smaller to  mid-size
   commercial printing market segments.  The acquisitions have broadened
   the Company's product-line, service capabilities and opportunities.

            In  the last  thirty-six  months,  as  previously  reported,
   Registrant has divested its Sheridan  Systems and AM Multigraphics  -
   International business  segments.    On  May 28,  1997,  Registrant's
   stockholders  approved   a  change   in  corporate   name  from   "AM
   International, Inc."  to "Multigraphics,  Inc." to  reflect the  name
   known to customers of  Registrant's sole remaining business  segment,
   and to reflect the fact that the Company has exited its international
   operations.

            On August  27, 1996,  Registrant sold  substantially all  of
   the assets  and  liabilities  of the  Sheridan  Systems  division,  a
   leading supplier of systems and components  to both the printing  and
   newspaper publishing industries,  to Heidelberger Druckmaschinen  AG.
   The sale included substantially all of the assets and liabilities  of
   Registrant's AM Graphics International Limited subsidiary in  Slough,
   England.
 <PAGE>

            The disposition  of  the AM  Multigraphics  -  International
   business segment took  place in  stages, as  Registrant divested  its
   unprofitable foreign subsidiaries as well as  its 67% interest in  AM
   Japan Co., Ltd.  In February, 1996, Registrant's AM International  UK
   Limited  subsidiary  in  England   entered  into  an   Administration
   Proceeding, which resulted in  the sale of  certain portions of  that
   business.  In  March, 1996, Registrant  sold its Netherlands  holding
   company, including its  subsidiaries in the  Netherlands, France  and
   Belgium, to  a local  management buyout  team.   In September,  1996,
   Registrant sold its interest  in AM Japan Co.,  Ltd., and on  October
   17,  1996,  Registrant's  Canadian  subsidiary  initiated  bankruptcy
   proceedings.

            All financial information has  been restated to reflect  the
   Sheridan Systems and the AM Multigraphics - International  operations
   as discontinued operations.

        2.  Bankruptcy Proceedings.

            On   May  17,   1993,   Registrant   and   its   subsidiary,
   Addressograph-Multigraph Corporation  ("AMC"), filed  for  protection
   under Chapter 11 of the United States Bankruptcy Code, in The  United
   States Bankruptcy Court for the District of Delaware (the "Bankruptcy
   Court")  case  numbers   93-582  through   93-583  (the   "Bankruptcy
   Proceedings").  Registrant also filed on that date a proposed Plan of
   Reorganization.   The  Chapter  11  filing  related  to  Registrant's
   domestic operations and did not include its foreign subsidiaries.

            On August 26,  1993, a hearing  was held  by the  Bankruptcy
   Court  to  consider  approval  of   a  Disclosure  Statement  to   be
   distributed to creditors and stockholders of Registrant.  After  that
   hearing, and by Order of the Bankruptcy Court dated August 26,  1993,
   the Second Amended Disclosure Statement (hereinafter the  "Disclosure
   Statement") was approved.  Further  information on the First  Amended
   Plan of Reorganization as amended by  Amendment No. 1 thereto (as  so
   amended the  "Reorganization  Plan")  and  the  disclosures  made  in
   connection therewith, is  available in the  Disclosure Statement  and
   the Reorganization Plan incorporated herein by reference to  Exhibits
   28 and 10(A), respectively,  to the Company's  Annual Report on  Form
   10-K for the fiscal year ended July 31, 1993, File No. 1-683.

        3.  Events Leading to Bankruptcy Proceedings.

            Reference  is  made  to  Section  D  of  Part  III  of   the
   Disclosure  Statement  (pages  22  to  29),  incorporated  herein  by
   reference to Exhibit 28 to the  Company's Annual Report on Form  10-K
   for the  fiscal  year  ended  July 31,  1993,  File  No.  1-683,  for
   information on the general development of the business of  Registrant
   and events which led to commencement of the Bankruptcy Proceedings on
   May 17, 1993.

        4.  Corporate Structure of Registrant.
 <PAGE>
            Registrant,    Multigraphics,    Inc.,    was     originally
   incorporated  in  Delaware  in   1924  as  Addressograph   Securities
   Corporation.  Registrant has had several  name changes, one of  which
   was Addressograph-Multigraph Corporation for  the period May 6,  1931
   to January 2, 1979.  As noted above, Registrant changed its name from
   "AM International, Inc."  to "Multigraphics, Inc."  on May 28,  1997.
   Registrant has one active subsidiary, Publishing Solutions Inc.

   (b)  Financial Information About Industry Segments.

            The  information  in  the  section  entitled   "Management's
   Discussion  and  Analysis  of  Financial  Condition  and  Results  of
   Operations" and in Note  13 to the  "Notes to Consolidated  Financial
   Statements"  under   the  section   entitled  "Geographic   Segments"
   contained in  the  1998  Annual Report  are  incorporated  herein  by
   reference.

   (c) Narrative Description of Business.

            Registrant is a distributor of equipment and supplies and  a
   service provider to  the graphic arts  industry, and  has exited  the
   engineering and  manufacturing of  offset duplicating  equipment  and
   supplies to focus exclusively  on one business segment,  distributing
   equipment and supplies, and providing parts and service, to in-plant,
   franchise, and commercial printers.  The Registrant's strategy is  to
   achieve growth  within  the  graphic arts  market  by  expanding  its
   product offerings, enhancing its digital support capabilities, taking
   advantage of its unique national service capabilities and  increasing
   market penetration and coverage through a program of acquisitions  of
   regional dealers that compete in the fragmented graphic arts market.

            Since December 1997, Registrant  has acquired four  regional
   graphic arts dealers which  serve the same  general customer base  as
   the Registrant.  In December,  Registrant acquired certain assets  of
   Hanley Graphic Products Company, a  graphic arts dealer operating  in
   northern Illinois  with annual  revenues of  over  $18 million.    In
   December, Registrant also acquired the stock of Publishing  Solutions
   Inc., a  privately held  Akron, Ohio  based systems  integrator  with
   annual revenues  of approximately  $9 million.    In June  1998,  the
   Company  acquired  certain  assets   of  Chicago  based   Progressive
   Lithoplate  and  Supply  Company,   which  had  annual  revenues   of
   approximately $5 million.  In September of 1998, the Company acquired
   certain assets  of Texas  PrePress Systems,  Inc., an  Austin,  Texas
   based prepress systems integrator  with revenues of approximately  $2
   million.

            The  acquisitions  complement   the  Registrant's   internal
   efforts to expand its product  offerings, and bring enhanced  digital
   sales and support capabilities, as well as an expanded customer  base
   in the  Registrant's  key markets.    In addition,  the  Company  has
   undertaken a marketing program focusing on obtaining national service
   accounts with  manufacturers and national retail outlets.
<PAGE>
            In  the  last  three  years,  Registrant  has  divested  its
   Sheridan Systems and AM Multigraphics - International business  units
   in previously reported transactions.  In December of 1996, Registrant
   and Xeikon, N.V. entered into  an agreement, as previously  reported,
   pursuant to which the  parties agreed not  to renew the  distribution
   agreement under which the Registrant distributed and serviced  Xeikon
   digital color presses in North America.

            Registrant currently has approximately 670 employees in  the
   United States and is headquartered in Mount Prospect, Illinois where,
   historically, it  has manufactured  and distributed  a broad  product
   line of equipment and supplies and provided services for the graphic
   arts industry through its own direct sales and service organizations.
   The Company's  products  traditionally  have  included  small  offset
   printing equipment, automated copy/duplicating systems, pre and  post
   press products and supplies.

            Presently, the  Company  has  completed its  exit  from  the
   engineering and  manufacturing  of offset  duplicating  equipment  to
   focus  entirely  on  distribution  of  equipment  and  supplies   and
   providing services  to  the  graphic  arts  industry.    The  Company
   primarily  serves  in-plant  printers  and  small  to  medium   sized
   commercial printers.   Declining market demand  for the  Registrant's
   traditional offset duplicator products, due to inroads by alternative
   technologies,  resulted  in  the  re-evaluation  of  its  traditional
   strategy and the  decision to exit  manufacturing.   The Company  has
   licensed the rights to manufacture  certain of its offset  duplicator
   products, and  therefore has  available to  it  and its  customers  a
   continuing supply of offset duplicator products.
<PAGE>
            The Company's supplies  and equipment  offerings consist  of
   consumable products used in the production of printed materials  such
   as films, inks, plates, rubber rollers, cleaning solutions and cotton
   pads, as well  as equipment  products such  as digital  imagesetters,
   platesetters, presses, folders  and cutters.   The Registrant  tracks
   various categories of these products, none of which accounts for more
   than 10% of its revenues.

            The Company's service  and parts  offerings include  service
   on over 250 models  of printing equipment  installed in in-plant  and
   small to  medium  sized  commercial  print  shops,  governmental  and
   educational institutions, as  well as national  retail outlets.   The
   Company  has  342   service  representatives,   and  offers   service
   capabilities in all 50 states.

            The following table sets forth the breakdown of revenues
   among machines, supplies and services in the United States, Canada
   and Japan for fiscal 1998, 1997 and 1996:
<TABLE>
                          1998           1997           1996
   <S>                 <C>            <C>           <C>
   UNITED STATES
        Machines       $12,989        $ 9,407       $ 39,598
        Supplies        41,189         34,440         40,921
        Services        41,073         42,618         47,511
                        95,251         86,465        128,030

   CANADA
        Machines             -            220          4,352
        Supplies             -            363          2,312
        Services             -            462          3,287
                             -          1,045          9,951
   JAPAN
        Machines             -            292         13,574
        Supplies             -            552         11,361
        Services             -            307          5,136
                             -          1,151         30,071
   TOTAL               $95,251        $88,661       $168,052
</TABLE>

            Registrant also distributes  products through  approximately
   51 independent dealers selling in approximately 46 countries.

            The  principal   distribution  and   service  customers   of
   Registrant include in-plant print  shops, franchised and  independent
   quick print  shops, small  to medium  sized commercial  printers  and
   governmental and educational institutions, and its service  customers
   also include manufacturers and national retail accounts.   Registrant
   has approximately 20,000  customers.  No  customer accounts for  more
   than 10% of Registrant's revenues.

   5.  Competition and Competitive Conditions.
<PAGE>
            The Company  operates  in  a highly  competitive  market  in
   which  price,  delivery  and   customer  service  are  key   factors.
   Historically, the Registrant developed its customer base of in-plant,
   quick print  and  small  to  medium  size  commercial  printers,  and
   governmental and  educational institutions  through the  sale of  its
   proprietary small offset duplicator presses.  Because the market  for
   such presses  is  mature  and  continues  to  face  competition  from
   alternative  technologies,  the  Company  has  had  to  refocus   its
   marketing  approach  to  emphasize   its  distribution  and   service
   capabilities in continuing to serve its market segments.

            As described above, the Company has completed its exit  from
   the manufacture  of  offset  duplicators  and  has  divested  certain
   unprofitable businesses  and product  lines.   These  cost  reduction
   efforts have contributed  to the Company's  return to  profitability,
   and the Company has developed strategies for achieving growth in  its
   traditional markets by expanding its product offerings, enhancing its
   digital support capabilities, taking advantage of its unique national
   service organization, and  by acquiring regional  dealers that  serve
   the same general customer base.   The Company has initiated  internal
   sales and marketing  programs which have  offset the  decline in  its
   supplies distribution  operations,  and has  recently  acquired  four
   regional  dealers   to   expand  its   product   offerings,   digital
   capabilities and customer base.   The Company  has also undertaken  a
   marketing program to  reverse the  long-term decline  in its  service
   operations by  focusing  on  manufacturers,  franchise  accounts  and
   national   retail   operations   which   prefer   national    service
   capabilities.

            Gross margins have decreased as  the Company has ceased  its
   manufacturing operations  and  switched  to  product  lines  obtained
   through distribution agreements, joint ventures and affiliations with
   third parties, and  acquisitions.  To  offset the  lower margins  the
   Company has invested in information systems and has undertaken  other
   reorganization measures to  increase efficiency  and lower  expenses.
   These  cost  reduction  efforts  continue.    The  Company  has  also
   undertaken  marketing  efforts  to  increase  both  its  distribution
   customer base and its higher margin service revenues.


            The  competitive  market  is  also  one  of  heavy  regional
   competition, with hundreds of regional  dealers.  A consolidation  of
   dealers, distributors  and suppliers  is  occurring, resulting  in  a
   consolidation of  buying power  and distribution  cost  efficiencies.
   The Registrant's  investments  in information  systems,  distribution
   outlets and other capabilities, its  marketing efforts to expand  its
   business opportunities with existing customers, its leveraging of its
   national service capabilities, and the addition of new customers  and
   capabilities through  acquisitions,  are  intended  to  increase  the
   Company's profitability  by  increasing  revenues  without  incurring
   proportionate increases in expense levels.  Registrant believes  that
   its renewed focus on its traditional customer base, the expansion  of
   its product lines,  and   its strategy  to make  acquisitions in  the
   graphic arts industry provide a sound basis for continued growth.

        6.  Cyclical Nature of Business and Liquidity.
<PAGE>
            The revenues of Registrant are dependent upon trends in  the
   printing industry,  which are  a function  of (among  other  factors)
   overall economic factors and advertising expenditures.   Registrant's
   backlog is less  than 5%  of annual revenues  and is  not a  material
   factor in  the conduct  of the  business.   Registrant believes  that
   substantially all of  this backlog will  be shipped  during the  1999
   fiscal year.

        7.  Research and Development; Patents and Trademarks.

            Although   Registrant   actively    seeks   new    marketing
   opportunities, Registrant's  research,  development  and  engineering
   expenditures  ceased  when  the   Company  exited  manufacturing   of
   products.

            Registrant owns  or is  licensed under  various patents  and
   trademarks.  Registrant does not believe that its business as a whole
   is materially dependent on  any one patent or  trademark or group  of
   patents or trademarks.

   ITEM 2.  PROPERTIES

            Registrant's principal executive offices are located in  Mt.
   Prospect, Illinois.  Registrant moved its corporate headquarters from
   Rosemont, Illinois to  its current headquarters  in September,  1996,
   following the disposition of Registrant's Sheridan Systems division.

            In 1994  and 1995,  Registrant undertook  the relocation  of
   its  AM  Multigraphics  operations  from  its  700,000  square   foot
   manufacturing and office facility in Mt. Prospect to newer, more cost
   efficient facilities.   The project consisted  of three  parts:   (1)
   relocation of the business offices to  a 64,400 square foot  facility
   in Mt.  Prospect; (2)  relocation of  the  distribution center  to  a
   79,700  square foot complex in nearby Arlington Heights, Illinois  to
   enhance the Registrant's distribution capabilities; and, (3) the sale
   of its former Mount  Prospect, Illinois facility.   The Mt.  Prospect
   and Arlington Heights facilities  are leased until  2005 and are  the
   Registrant's principal facilities.


            Registrant leases  16  additional  distribution,  sales  and
   service facilities  throughout the  United States  with total  square
   footage of  94,600.   Registrant  believes  that the  properties  and
   equipment included  therein are  well maintained,  in good  operating
   condition and adequate for the current needs of its operations.

   ITEM 3.   LEGAL PROCEEDINGS
<PAGE>
             Reference is made to Item 1,  Section (a) Paragraph 2,  for
   information on Registrant's Bankruptcy Proceedings.  The commencement
   of the  Bankruptcy  Proceedings  resulted in  an  automatic  stay  of
   certain litigation against Registrant pursuant to Section 362 of  the
   Bankruptcy Code  as  of  May  17,  1993.    Therefore,  with  certain
   exceptions, all legal  proceedings against Registrant  pending as  of
   May 17,  1993,  will  be resolved  through  the  bankruptcy  process.
   Although the  vast majority  of the  claims filed  in the  Bankruptcy
   Proceedings have  been  expunged  or resolved  within  the  Company's
   reserves, a few  significant disputed  claims remain  pending in  the
   Bankruptcy Proceeding.  Registrant  believes the resolution of  these
   legal proceedings and claims will not have a material adverse  effect
   on the business or the financial position of Registrant.

             Registrant  has  been  notified  of  various  environmental
   matters in connection  with certain  current or  former locations  in
   Illinois, Indiana, Ohio, Pennsylvania, and Rhode Island.   Registrant
   believes that the legal liability relating  to such matters, if  any,
   will either be resolved consensually between Registrant and  relevant
   governmental authorities or will be subject to resolution through the
   bankruptcy  process  as  with  other  disputed  claims.    Registrant
   believes the resolution  of these matters  will not  have a  material
   adverse  effect  on  the  business  or  the  financial  position   of
   Registrant.

             Registrant is involved in various other administrative  and
   legal proceedings  incidental  to  its  business,  including  product
   liability and general liability lawsuits against which Registrant  is
   partially insured.  The resolution of these other proceedings is  not
   expected to have  a material adverse  effect on the  business or  the
   financial position of Registrant.

   ITEM 4.   SUBMISSION OF MATTERS TO A
             VOTE OF SECURITY HOLDERS

             None.

   ITEM 4(A).     EXECUTIVE OFFICERS OF THE REGISTRANT

             The following  is a  list  of the  names  and ages,  as  of
   October 21, 1998, of all of the executive officers of Registrant  and
   all positions and offices of Registrant held by each person and  each
   such person's occupation or  employment on such  date and during  the
   preceding five years.   All such persons have  been elected to  serve
   until their successors are elected or until their earlier resignation
   or retirement.
<PAGE>
                                    Positions and Offices Held and
                                    Principal Occupations or Employment

   Name                    Age      During the Past Five Years

   Thomas D. Rooney        51       President and Chief Executive 
                                    Officer of the Company since May 
                                    28, 1997.  Prior to that date,
                                    Mr. Rooney served as President of 
                                    the AM Multigraphics business unit 
                                    since August of 1996, and also held
                                    the positions of Vice President of
                                    Registrant since February 1986, 
                                    Chief Financial Officer since 
                                    August 1993, and Controller and 
                                    Chief Accounting Officer of 
                                    Registrant from September 1989 to 
                                    August 1993.  From 1986 to 1989,
                                    Mr. Rooney was President of 
                                    Registrant's former AM Bruning 
                                    division, a manufacturer and 
                                    distributor of equipment, supplies 
                                    and services for the engineering 
                                    graphics market.

   Steven R. Andrews       45       Vice President, General Counsel  and
                                    Secretary of  Registrant since  June
                                    1994.     Mr.   Andrews   was   Vice
                                    President,   General   Counsel   and
                                    Secretary  of  Amana  Refrigeration,
                                    Inc.,   a  manufacturer   of   major
                                    household appliances, from  February
                                    1993 to June 1994 and Senior  Deputy
                                    General Counsel  of Registrant  from
                                    January  1992   to  February   1993.
                                    From 1988  to 1991  Mr. Andrews  was
                                    Associate   General   Counsel    and
                                    Assistant   Secretary    of    Tonka
                                    Corporation,    an     international
                                    manufacturer  and marketer  of  toys
                                    and games.
                                    

                                    Positions and Offices Held and 
                                    Principal Occupations or Employment
<PAGE>
   Name                    Age      During the Past Five Years

   Mark F. Duchesne        41       Vice President, Distribution 
                                    Operations since May 27, 1997.   Mr.
                                    Duchesne joined Multigraphics in 
                                    January, 1995 as Vice President of 
                                    Marketing and Business Development 
                                    and was assigned the  responsibility
                                    for distribution operations in 
                                    January, 1996.  From January, 1994 
                                    to January, 1995 he served as Vice 
                                    President of Engineering and 
                                    Customer Service for Sheridan 
                                    Systems, Dayton, Ohio, formerly a 
                                    sister company of Multigraphics 
                                    serving the high end newspaper and 
                                    publications market.  From 1987 to 
                                    1994 Mr. Duchesne served as 
                                    Director of Engineering and 
                                    Customer Satisfaction for the 
                                    Advanced Imaging Products Business 
                                    Unit of AM Graphics in Dayton, OH.

   Donald W. Hanigan       60       Vice  President  of  Registrant  and
                                    President, Hanley  Graphic  Products
                                    Division  since  December 11,  1997.
                                    Prior to that,  Mr. Hanigan was  CEO
                                    and  President  of  Hanley   Graphic
                                    Products Company,  a privately  held
                                    graphic   arts   dealer   based   in
                                    Itasca, Illinois.

   Gregory T. Knipp        43       Vice President  and Chief  Financial
                                    Officer since  May  27, 1997.    Mr.
                                    Knipp  was Treasurer  of  Registrant
                                    from September,  1995 to May,  1997.
                                    From 1987  to 1994,  Mr. Knipp  held
                                    several treasury-related  management
                                    positions of  Registrant,  including
                                    that  of  Assistant  Treasurer  from
                                    1994 to  1995.  From  1981 to  1987,
                                    Mr. Knipp  was the  Cash Manager  of
                                    Woodland  Services Co.,  a  spin-off
                                    company  of  Masonite   Corporation.
                                    Prior  to 1981,  Mr.  Knipp  was  an
                                    auditor with  Peat Marwick  Mitchell
                                    & Co.

   Raymond T. Leach        32       Vice President since December 18, 
                                    1997 and President, Publishing 
                                    Solutions Inc. since July, 1988, 
                                    when Mr. Leach and Mr. Stewart 
                                    founded Publishing Solutions.  Mr. 
                                    Leach is primarily responsible for 
                                    Publishing Solutions' national 
                                    electronic sales and product 
                                    research.
  <PAGE>

                                    Positions and Offices Held and
                                    Principal Occupations or Employment
   Name                    Age      During the Past Five Years

   Charles T. Richards     54       Vice President, Service Operations 
                                    since May 27, 1997.  Mr. Richards 
                                    served as Vice President of 
                                    Manufacturing from September 1994 
                                    to April 1996, and then as Vice 
                                    President, Service Business until 
                                    May, 1997.  Prior to 1994, Mr. 
                                    Richards held a number of  technical
                                    and commercial positions with the 
                                    Company.  He joined the Company in 
                                    1960.

   Keith E. Stewart        32       Vice President since December 18, 
                                    1997 and CEO, Publishing Solutions 
                                    Inc. since July 1988, when 
                                    Mr. Stewart and Mr. Leach founded
                                    Publishing Solutions.  Mr. Stewart 
                                    is primarily responsible for 
                                    management of Publishing  Solutions'
                                    general operations and its national
                                    electronic services.
    
                                PART II

   ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY  AND RELATED
             STOCKHOLDER MATTERS

        (a)   Market and Other Information.

             At the Annual Meeting of Stockholders held on May 28, 1997,
   Registrant's  stockholders  approved  an  amendment  to  the   Second
   Restated Certificate  of  Incorporation to  change  the  Registrant's
   corporate name and to reduce the  authorized number of shares of  all
   classes of  capital stock  the Company  shall have  the authority  to
   issue from fifty million (50,000,000) to ten million (10,000,000), of
   which five  hundred thousand  (500,000) may  be issued  as  preferred
   shares.  Registrant's stockholders also approved an amendment to  the
   Second Restated Certificate  of Incorporation to  effect a 1 for 2 1/2
   share reverse stock split (the "Reverse  Stock Split") of the  issued
   and outstanding  shares of  the Registrant's  Common Stock,  with  an
   increase of the par value from $0.01 per share to $0.025 per share.

             Following  the  Reverse  Stock  Split  and  the  change  in
   Registrant's corporate name,  Registrant's new  Common Stock,  $0.025
   par value, commenced trading  on the American  Stock Exchange on  May
   29, 1997 under the ticker symbol "MTI."
<PAGE>

             Registrant's  Plan  of  Reorganization  provided  for   the
   amendment   and   restatement   of   Registrant's   Certificate    of
   Incorporation and  Bylaws.   The new  charter authorized  50  million
   shares of stock of which 40 million shares were reserved for issuance
   as new Common Stock and 10 million shares were reserved for  issuance
   as new Preferred Stock.  On the Effective Date of the Plan, the Board
   of Directors  authorized the  issuance of  7  million shares  of  new
   Common Stock, $0.01 par value, to holders of claims and interests  as
   described in Note 4 of  "Notes to Consolidated Financial  Statements"
   contained in  the  1997  Annual Report  and  incorporated  herein  by
   reference.  On the Effective  Date, Registrant also issued  1,095,000
   new Warrants to Purchase Common Stock at an exercise price of  $18.00
   per share which expired  on October 15, 1996,  and are of no  further
   effect.

             At the Annual Meeting of  Stockholders held on December  8,
   1994, Registrant's stockholders approved the 1994 Long-Term Incentive
   Plan (the "Plan").  In conjunction therewith, an additional aggregate
   of 1,400,000 Common Stock shares were made available pursuant to  and
   in accordance with the terms of  the Plan, subject to adjustments  as
   provided in Section 6.7 of the Plan.  The shares available under  the
   Plan, as well as all awards thereunder, have been adjusted to 560,000
   common shares to reflect  the 1 for 2-1/2  share Reverse Stock  Split
   effected on May 28, 1997.

             On October 20,  1998, the Registrant's  Board of  Directors
   adopted the  1998  Stock  Incentive  Plan  for  Directors,  which  is
   intended to align the interests of the Registrant's stockholders  and
   non-employee directors  by increasing  the proprietary  interests  of
   non-employee directors in the Registrant's growth and success, and to
   enable the Company to attract and  retain non-employee directors.   A
   total of 140,000 Common Stock shares are available under the plan for
   option grants and  other stock incentives  for the Registrant's  non-
   employee directors.

             For information regarding  quarterly stock  prices for  the
   Common Stock, see  Note 14 to  the "Notes  to Consolidated  Financial
   Statements" in Registrant's 1998  Annual Report, incorporated  herein
   by reference.

        (b)  Holders.

             As of  October 21, 1998, Registrant had approximately  1000
   stockholders of record.

        (c)  Dividends.

             On May  27, 1997,  Registrant paid  a special  dividend  of
   $2.00 per share to holders of record as of   May 13, 1997.  Prior  to
   that time, Registrant had not paid cash dividends on its Common Stock
   since August  15,  1981.   Registrant's  current  Loan  and  Security
   Agreement restricts the  payment of  dividends.   See Note  3 to  the
   "Notes to  Consolidated Financial  Statements" in  Registrant's  1998
   Annual Report, incorporated herein by reference.

   ITEM 6.   SELECTED FINANCIAL DATA
<PAGE>

             The  information  in  the   section  entitled  "Five   Year
   Financial  Summary"   contained  in   the  1998   Annual  Report   is
   incorporated herein by reference.

   ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
             AND RESULTS OF OPERATIONS

             The   information   in   the   section   entitled
   "Management's Discussion  and  Analysis of  Financial  Condition  and
   Results of  Operations" of  the 1998  Annual Report  is  incorporated
   herein by reference.

   ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

             The "Consolidated Financial Statements", including the Notes
   thereto and the Report of Arthur Andersen LLP, included in the 1998
   Annual Report are incorporated herein by reference.

   ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
             AND FINANCIAL DISCLOSURE

             None.
                                 PART III

   ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

             See the information  with respect to  the Directors of  the
   Registrant which is set  forth in the  section entitled "Election  of
   Directors" of the 1998  Proxy Statement.   Except for the  paragraphs
   relating  to  the   remuneration  of  directors,   this  section   is
   incorporated herein by reference.

             For information regarding Executive Officers of Registrant,
   see Item  4(A)  of  this  Report  which  is  incorporated  herein  by
   reference.


   ITEM 11.  EXECUTIVE COMPENSATION

             See the  information set  forth  in the  sections  entitled
   "Remuneration of Directors" and "Executive Compensation" in the  1998
   Proxy Statement which is incorporated herein by reference.


   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT

             See the  information set  forth  in the  sections  entitled
   "Principal Stockholders"  and "Security  Ownership of  Directors  and
   Executive  Officers"   in  the   1998  Proxy   Statement,  which   is
   incorporated herein by reference.


   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

             See the section entitled "Compensation Committee Interlocks
   and Insider  Participation" in  the 1998  Proxy Statement,  which  is
   incorporated herein by reference.
<PAGE>

                                PART IV

   ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
            FORM 8-K

   (1)      Financial Statements.

            The "Consolidated Financial Statements" including the  Notes
            thereto  and  the  Report  of  Arthur  Andersen  LLP   dated
            September 25, 1998  included in the  1998 Annual Report  are
            incorporated herein by reference.

   (2)      Financial Statement Schedule.

            The financial  statement  schedule listed  below  should  be
            read  in   conjunction   with   Registrant's   "Consolidated
            Financial Statements"  including the  Notes thereto
            incorporated herein  by reference  from  the 1998 Annual  Report.
            Schedules not  listed here  have been  omitted because  they
            are not applicable  or they are  immaterial or the required
            information  is  included   in  Registrant's "Consolidated
            Financial Statements" including the Notes thereto.

                                    Schedule                   Page
                                        No.                     No.

            Valuation and 
              Qualifying Accounts       II                        17



   (3)      Exhibits.

            Reference is made  to the separate  exhibit index  contained
   on page 19 hereof.

    (b)     Reports on Form 8-K

            None.
                              SIGNATURES

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

   Dated:  October 27, 1998

                                    MULTIGRAPHICS, INC.
                                         (Registrant)


                                    By  /s/Thomas D. Rooney
                                    Thomas D. Rooney, President and
                                    Chief Executive Officer
<PAGE>

            Pursuant to the requirements of the Securities Exchange  Act
   of 1934,  this report  has been  signed on  October 27,  1998 by  the
   following persons on behalf of the  Registrant and in the  capacities
   indicated.

                 Signature                           Title

   /s/Jeff M. Moore                        Chairman  of  the  Board
   Jeff Moore                              and Director


   /s/Thomas D. Rooney                     President,  Chief   Executive
   Thomas D. Rooney                        Officer and Director

   /s/Gregory T. Knipp                     Chief    Financial    Officer
   Gregory T. Knipp                        (principal accounting &
                                           financial officer)


   /s/Robert E. Anderson III               Director
   Robert E. Anderson III 

   /s/Jeffrey D. Benjamin                  Director
   Jeffrey D. Benjamin

   /s/Robert N. Dangremond                 Director
   Robert N. Dangremond

 <TABLE>

                                SCHEDULE II

                            MULTIGRAPHICS, INC.
                      VALUATION & QUALIFYING ACCOUNT
                  FOR THE THREE YEARS ENDED JULY 31, 1998
                          (Dollars in Thousands)

     
                                                   Accounts
                                                  Receivable
                                                   Reserves
   <S>                                            <C>
   Balance July 31, 1995                          $ 1,312
       Additions Charged to Cost & Expenses           193
       Reclassification to Assets Held for Sale      (171)
       Deductions from Reserve                       (512)
                                                 
   Balance July 31, 1996                              822
       Additions Charged to Cost & Expenses           150
       Deductions from Reserve                       (637)

  Balance July 31, 1997                               335
          Additions Charged to Cost & Expenses        175
          Deductions From Reserve                    (210)
                                   
   Balance July 31, 1998                          $   300
</TABLE>
<PAGE>

      REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
                                                   
   To Multigraphics, Inc.:

   We have  audited,  in  accordance with  generally  accepted  auditing
   standards,  the   consolidated  financial   statements  included   in
   Multigraphics, Inc.'s Annual Report  to Stockholders incorporated  by
   reference in this Form 10-K, and have issued our report thereon dated
   September 25, 1998.  Our audit was made for the purpose of forming an
   opinion on those statements taken as a whole.  The schedule listed in
   Part IV,  Item  14(a)(2)  is  the  responsibility  of  the  Company's
   management and is presented  for the purposes  of complying with  the
   Securities and Exchange  Commission's rules and  is not  part of  the
   basic financial statements.  This schedule has been subjected to  the
   auditing procedures  applied  in the  audit  of the  basic  financial
   statements and,  in  our  opinion,  fairly  states  in  all  material
   respects the financial data required to  be set forth therein in  re-
   lation to the basic financial statements taken as a whole.


   ARTHUR ANDERSEN LLP



   Chicago, Illinois,
   September 25, 1998




                               EXHIBIT INDEX
   No.      Description

   3        Certificate of Incorporation and By-laws
            (A)Second   Restated   Certificate   of   Incorporation   of
               Registrant.*
            (B)By-laws of Registrant effective as of October 13, 1993.*
            (C)Certificate   of  Amendment   to  the   Second   Restated
               Certificate of Incorporation of Registrant  (incorporated
               by reference  to Exhibit 3(B)  to Registrant's Report  on
               Form 10-Q filed with the Commission on May 3, 1997).
            (D)Amendment to  Bylaws Of  Registrant effective  as of  May
               27, 1997  (incorporated by reference  to Exhibit 3(D)  to
               Registrant's Form 10-K for the year ended July 31,  1997,
               filed with the Commission October 22, 1997).

   10       Material Contracts
            (A)AM  International,  Inc. 401(k)  Employees'  Savings  and
               Investment Plan, Amendment 1995-1.* **
            (B)Multigraphics,  Inc. Executive Incentive  Compensation
               Plan Fiscal Year 1999.**
            (C)AM  International, Inc.  Retirement  Accumulation  Plan.*
               **
<PAGE>
            (D)Letter   Agreement  dated   December  8,   1994   between
               Registrant  and   Steven  R.  Andrews  (incorporated   by
               reference  to Exhibit  10(B)  to Registrant's  Report  on
               Form  10-Q  filed  with  the  Commission  on  March   13,
               1995).**
            (E)Change-In-Control  and  Termination  Benefits  Agreements
               dated  July  7,  1995  between  Registrant  and   Messrs.
               Andrews and Rooney (incorporated by reference to  Exhibit
               10(H) to Registrant's Annual Report on Form 10-K for  the
               year ended  July 31, 1995, filed  with the Commission  on
               October 26, 1995.**
            (F)AM  International,  Inc. 1994  Long-Term  Incentive  Plan
               (incorporated   by   reference  to   Exhibit   10(A)   to
               Registrant's  Annual Report  on Form  10-K for  the  year
               ended  July  31,  1994,  filed  with  the  Commission  on
               October 27, 1994).**
            (G)Engagement  Letter   dated  January   27,  1994   between
               Registrant  and Jay  Alix &  Associates (incorporated  by
               reference to Exhibit 10(B) to Registrant's Annual  Report
               on Form  10-K for  the year  ended July  31, 1994,  filed
               with the Commission on October 27, 1994).**
            (H)AM  International,  Inc. 401(k)  Employees'  Savings  and
               Investment Plan  (Restated December  17, 1993,  effective
               January 1,  1989) (incorporated by  reference to  Exhibit
               10(F) to Registrant's Annual Report on Form 10-K for  the
               year ended  July 31, 1994, filed  with the Commission  on
               October 27, 1994).**
            (I)First  Amended   Plan  of   Reorganization,  as   amended
               September 29, 1993 (incorporated by reference to  Exhibit
               10(A) to Registrant's Annual Report on Form 10-K for  the
               year ended  July 31, 1993, filed  with the Commission  on
               October 29, 1993).*
            (J)Amendment   1991-1   to  the   AM   International,   Inc.
               Supplemental Executive  Retirement Plan (incorporated  by
               reference to Exhibit 10(M) to Registrant's Annual  Report
               on Form  10-K for  the year  ended July  31, 1991,  filed
               with the Commission on October 29, 1991).**
            (K)AM International, Inc. Supplemental Executive  Retirement
               Plan  (incorporated  by reference  to  Exhibit  10(N)  to
               Registrant's  Annual Report  on Form  10-K for  the  year
               ended  July  31,  1987,  filed  with  the  Commission  on
               October 28, 1987).**
            (L)Retirement   Plan    for   Outside   Directors   of    AM
               International,   Inc.  (incorporated   by  reference   to
               Exhibit 10(Q) to Registrant's Annual Report on Form  10-K
               for  the  year  ended  July  31,  1987,  filed  with  the
               Commission on October 28, 1987).**
            (M)Amendment to Retirement Plan for Outside Directors of  AM
               International,   Inc.  (incorporated   by  reference   to
               Exhibit 10(M) to Registrant's Annual Report on Form  10-K
               for  the  year  ended  July  31,  1988,  filed  with  the
               Commission on October 25, 1988).**
            (N)Letter  Agreement  dated as  of  March  3,  1997  between
               Registrant and Steven R. Andrews, filed as Exhibit  10(T)
               to Registrant's  Report on Form 10-K  for the year  ended
               July 31, 1997, filed  with the Commission on October  22,
               1997.**
<PAGE>
            (O)Letter Agreement dated April 10, 1997 between  Registrant
               and  Thomas  D.   Rooney,  filed  as  Exhibit  10(U)   to
               Registrant's  Report on  Form  10-K for  the  year  ended
               July 31, 1997, filed  with the Commission on October  22,
               1997.**
            (P)Letter   Agreement  dated   October  29,   1996   between
               Registrant  and   Thomas  D.   Rooney  (incorporated   by
               reference to Exhibit 10.1 of Registrant's Report on  Form
               10-Q filed with the Commission on December 17, 1996).**
            (Q)Amended and  Restated Loan and  Security Agreement  dated
               as of  February 19, 1998  between Registrant,  Publishing
               Solutions   Inc.   and   Foothill   Capital   Corporation
               (incorporated   by  reference   to  Exhibit   10(.1)   to
               Registrant's  Report   on  Form  10-Q   filed  with   the
               Commission on March 17, 1998).
            (R)Amendment to Registrant's  1994 Long Term Incentive  Plan
               dated May 1,  1997 (incorporated by reference to  Exhibit
               10(X) to Registrant's Report Form 10K for the year  ended
               July 31,  1997 field with the  commission on October  22,
               1997).**
            (S)Employment Agreements  between Registrant  and Donald  W.
               Hanigan,  Keith   E.  Stewart  and   Raymond  T.   Leach,
               respectively (incorporated  by reference to Exhibit  10.2
               to  Registrant's  Report on  Form  10-Q  filed  with  the
               commission on March 17, 1998).**
            (T)First Amendment  to Amended and  Restated Loan  Agreement
               between Registrant,  Publishing Solutions  Inc. and Foothill
               Capital Corporation dated as of July 30, 1998.

   13       Annual Report to Stockholders for the year ended July 31, 
            1998.

   23       Consent of Arthur Andersen LLP

   24       Powers of Attorney

   99       Additional exhibits
               Second  Amended  Disclosure Statement  dated  August  26,
               1993 (incorporated  by reference  to Registrant's  Annual
               Report  for  the  year ended  July  31,  1993,  filed  as
               Exhibit 28 with the Commission on October 29, 1993).

   *         Incorporated herein by reference to exhibit of the same
   number filed with the Registrant's Annual Report for the year ended
   July 31, 1993, as filed with the Commission on October 29, 1993.

   **        Management contract or compensatory plan, contract or
   arrangement.
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.B
<SEQUENCE>2
<TEXT>

   <PAGE>
                               EXHIBIT 10B
                            MULTIGRAPHICS, INC.

                   EXECUTIVE INCENTIVE COMPENSATION PLAN

                             FISCAL YEAR 1999


   I.   PLAN OBJECTIVES

   A.   To provide competitive levels of compensation to enable
   Multigraphics, Inc. (the "Company") to attract and retain the people
   needed to successfully manage the business.

   B.   To provide a financial incentive for selected employees upon
   achievement of key performance goals, consisting both of financial
   and operating objectives set by the Compensation and Management
   Committee of the Board of Directors (the "Committee").

   II.  POLICY

   It is the Company's policy to pay base salaries and annual Executive
   Incentive Compensation Plan ("EICP") awards which are competitive and
   which promote the objectives set by the committee for the plan year.

   Under this policy, each participant's annual EICP award will be based
   on the degree to which the Company achieves specific financial and
   operating goals.

   III. ELIGIBILITY AND PARTICIPATION

   In general, participants in the EICP are to be selected from that
   group of employees whose activities are determined by the Committee
   to have significant impact on business results and whose base
   compensation is in excess of $50,000 annually.

   Categories of participants will be established with target and
   maximum award potential as follows:

       Category       Threshold       Target         Maximum
          A                  10.0           40.0           80.0
          B                  7.5%            30%            60%
          C                 6.25%            25%            50%
          D                    5%            20%            40%
          E                 3.75%            15%            30%
          F                  2.5%            10%            20%

   IV.  PERFORMANCE GOALS

   Each participant will be measured based on the achievement of pre-
   established financial goals: profitability, cash flow and revenue
   growth; and pre-established operational objectives: identification
   and achievement of an average transaction cost index and the
   attainment of a customer satisfaction index as defined.  Goals
   (threshold, target and maximum) will be suggested by the Chief
   Executive Officer and approved by the Committee.

   Performance goals for FY99, both financial and operational, are shown
   on Attachment A.
<PAGE>
   V.   TARGET BONUS POOL

   A participant's Target Bonus equals a percentage (generally 10
   percent to 40 percent) of the base annual salary at the target level
   set by the Committee.   The Target Bonus Pool is the sum of the
   Target Bonuses for all participants.  The Target Bonus Pool is
   reached based upon satisfaction or attainment of performance goals
   set up by the Committee.  The Actual Bonus Pool will vary depending
   upon the relationship of achievement of performance goals (for example,
   profitability, cash flow) to target performance.

   VI.  INDIVIDUAL AWARDS

   NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS PLAN, ALL AWARDS ARE
   DISCRETIONARY WITH THE COMMITTEE, WHETHER PERFORMANCE GOALS HAVE BEEN
   MET OR NOT.

   The payout of individual awards shall be based on the attainment of
   the performance goals set by the Committee.

   A participant's share of the Bonus Pool will be based on the category
   or target bonus set for the individual by the Committee and on
   achievement of performance goals, unless the Committee sets other
   criteria.  Actual bonus payouts will not exceed 200% of the Target
   Bonus.

   VII. DISCRETIONARY AWARDS

   An amount equal to three (3) percent of the Actual Bonus Pool may be
   made available for discretionary bonuses to non-participants in the
   Plan, but shall be subject to the approval of the Committee.

   VIII.     APPROVAL AND TIMING OF AWARD PAYMENTS

   No participant shall have any claim or right to be granted an award
   under the Plan.  The Plan may be amended by the Company at any time
   and from time to time.  Neither the Plan nor any action taken
   pursuant to the Plan shall be construed as giving to any  employee
   the right to be retained in the employ of the Company.  Except as
   otherwise provided herein, the Committee of the Company's Board of
   Directors shall have full power and authority to interpret, construe
   and administer the Plan, including the right to adjust the amount
   payable to you under any award to reflect any special circumstances
   that the Committee deems relevant or to terminate it at any time.
   All approved award payments will be made not later than ninety (90)
   days after the end of the award fiscal year, provided, however, upon
   receipt of a written request from any participant delivered before
   the end of the year, the Committee may defer payment for a period not
   to exceed one year.

   IX.  COMMUNICATION

   In order for the plan to be effective, it is essential that each
   participant have a clear understanding of how the plan operates and
   that each participant be informed of his or her inclusion shortly
   after the beginning of the plan year.

   X.   ADMINISTRATIVE DECISIONS AND PROCEDURES
<PAGE>
   A.   The Plan Year will be the same as the Company's fiscal year,
   i.e. August 1, 1998 through July 31, 1999.

   B.   Current Awards

   All awards will be paid in cash as soon as practical after approval
   (no later than 90 days after the end of the award fiscal year).  The
   amounts required by law to be withheld for income tax and Social
   Security taxes will be deducted from the award payments.

   C.   Eligible Participants and Salary
   The salary of each participant on September 1 of the Plan Year will
   be used as the salary of record for all calculations.  Initial
   calculations will be based upon an estimate of September 1 salaries
   for those employees who would be eligible for September increases,
   and would be finalized after the September increases have become
   effective.

   D.   Change in Status During the Year

   1.   New Hire, Transfer, Promotion

   A newly hired employee or an employee transferred or promoted during
   the Plan Year to a position qualifying for participation may receive
   a pro rata award based on the percentage of the Plan Year (actual
   months/full year times the amount granted for a full-year award for
   that position) the employee is in the participating position.

   2.   Demotion

   No award will be paid to an employee who has been demoted during the
   Plan Year to a position not eligible for participation.

   3.   Discharge

   An employee discharged during the Plan Year shall not be eligible to
   be paid for an award, even if his or her severance agreement extends
   past year-end.

   4.   Resignation

   An employee must be an active employee as of the bonus payment date
   to be eligible to be paid an award.  An employee who resigns or is
   terminated prior to the payment date will not be entitled to be paid
   for an award.

   5.   Death, Disability, Retirement, Leave of Absence

   An employee whose status as an active employee is changed during the
   Plan Year for any of the reasons cited in the heading of this section
   may, at the discretion of the Committee, be eligible to be paid for a
   pro rata award.

   E.   Miscellaneous

   1.   The Committee shall have the right, in its sole discretion, to
   modify the Plan from time to time or to terminate the Plan or to
   remove any participant from the Plan.
<PAGE>
   2.   The decision of the Committee with respect to any issues
   concerning individuals selected for award, the amount, terms, form
   and time of payment of awards and interpretation of any Plan
   guidelines or requirements shall be final and binding.

   3.   By acceptance of an award, each employee agrees that such award
   is special additional compensation and that it will not affect any
   employee benefit, e.g. life insurance, savings plan, etc. in which
   the employee participates except as provided in paragraph 4 below.

   4.   Payments of awards made under the Plan shall be included in the
   employee's compensation for purposes of the Company's retirement
   programs.

   5.   The receipt of an award shall not give an employee any right to
   continued employment and the right and power to dismiss any employee
   is specifically reserved to the Company.  The receipt of an award
   shall not entitle an employee to an award with respect to any
   subsequent Plan Year.

   6.   When a performance goal is based on income, it may be necessary
   to exclude significant non-budgeted or not-controllable gains or
   losses from actual results in order to properly measure performance.
   The Committee will decide those items that shall be considered for
   exclusion.  Examples are:

        a.   Any gains or losses which will be treated as extraordinary
   in the Company's published financial statements.

        b.   Profits or losses of companies acquired during the Plan
   Year, assuming they were not included in the budget and/or the goal.

        c.   Material gains or losses not in the budget and/or which are
   of a nonrecurring nature and are not considered to be in the ordinary
   course of business.  Some of these would be as follows:

             . Gains or losses from the sale or disposal of real estate
               or property.

             . Gains resulting from insurance recoveries when such
               gains relate to claims filed in previous years.

             . Losses resulting from natural catastrophes, when the
               cause of the catastrophe is beyond the control of the
               Company and did not result from any failure or
               negligence on the Company's part.

        d.   In the event of an acquisition or divestiture of a
   business, product line or other similar transaction that would affect
   the attainment of performance goals, the Committee will endeavor to
   adjust the performance goals to reflect the expected impact of the
   transaction preferably at the time the transaction is approved.

   XI.  BASIS FOR DETERMINING MEASUREMENT OF RECOMMENDED AWARDS:


   Award payouts will be determined upon attainment of performance goals
   set by the Committee, which may consist of financial and operational
   performance objectives.  Payments for the attainment of performance
   goals will be weighted at the levels set forth on the plan summary
   attached hereto.
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.T
<SEQUENCE>3
<TEXT>

<PAGE>

                          EXHIBIT 10T
                        FIRST AMENDMENT TO
            AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

            THIS FIRST  AMENDMENT TO  AMENDED AND  RESTATED  LOAN AND
   SECURITY AGREEMENT (this "Amendment")  is entered into  as of July
   30, 1998, among MULTIGRAPHICS, INC. f/k/a  AM INTERNATIONAL, INC.,
   a Delaware  corporation  ("Multigraphics"),  PUBLISHING  SOLUTIONS
   INC., an Ohio corporation ("PSI") and FOOTHILL CAPITAL CORPORATION
   ("Lender").

            WHEREAS, Multigraphics,  PSI  and Lender  are  parties to
   that certain  Amended  and Restated  Loan  and Security  Agreement
   dated as of February 19, 1998  (as amended, the "Loan Agreement");
   and

            WHEREAS,    Multigraphics    and    PSI    (collectively,
   "Borrowers") have requested  that Lender amend  various provisions
   of the Loan Agreement, and Lender  has agreed to do  so subject to
   the terms and conditions contained herein;

            NOW THEREFORE,  in  consideration  of  the  premises  and
   mutual agreements herein  contained, the  parties hereto  agree as
   follows:

             1.   Defined Terms.   Unless  otherwise  defined herein,
   capitalized terms used herein shall have  the meanings ascribed to
   such terms in the Loan Agreement.

             2.   Amendments to Loan Agreement.

             (a)  Section 1.1.

             (i)  A new  definition of  the term  "EBITDA"  is hereby
        added  to  Section  1.1   of  the  Loan   Agreement,  in  the
        appropriate alphabetical order, as follows:

                  "'EBITDA' means,  for any  period, the  sum of
             net income  (or net  loss) before  interest, taxes,
             depreciation and amortization for  such period, all
             as determined for Borrowers on a consolidated basis
             in accordance with GAAP."

             (ii) The  definition  of  the  term  "Maximum  Revolving
        Amount" contained  in Section  1.1 of  the Loan  Agreement is
        hereby amended and restated in its entirety, as follows:
<PAGE>
                  "'Maximum     Revolving     Amount'     means
             $10,000,000; provided,  that  from  time  to  time
             Borrowers  may  increase  the   Maximum  Revolving
             Amount in increments  of $1,000,000,  by providing
             Foothill with written  notice thereof  at least  3
             Business Days prior to the effective  date of such
             increase as  specified in  such notice;  provided,
             further,  that  (i)  no  such  increase  shall  be
             effective at any time  that a Default or  an Event
             of Default  is  in  effect and  (ii)  the  Maximum
             Revolving  Amount   shall   at  no   time   exceed
             $15,000,000.  Each  such notice of  increase shall
             be irrevocable when  given by Borrowers  and shall
             be accompanied  by the  appropriate line  increase
             fee set forth in Section 2.11 (a)."

           (iii)  A  new definition  of  the term  "Renewal  Date" is
        hereby added to  Section 1.1  of the  Loan Agreement,  in the
        appropriate alphabetical order, as follows:

       "'Renewal Date' has the meaning set forth in Section 3.4."



            (iv)  The  definition  of  the  term  "Termination  Date"
        contained in  Section 1.1  of  the Loan  Agreement  is hereby
        deleted.

             (b)  Section 2.1(a).    Clause  (y) of the definition of
   the term "Borrowing Base" applicable to  each of Multigraphics and
   PSI, respectively,  and contained  in Section  2.1(a) of  the Loan
   Agreement, is  hereby  amended by  deleting  therefrom the  amount
   "$5,000,000" and inserting in its place the amount "$7,000,000".

             (c)  Section  2.6(b).   Section  2.6(b)   of   the  Loan
   Agreement is  hereby  amended and  restated  in  its entirety,  as
   follows:

                  "(b)    Letter of Credit Fee.  Each Borrower
             shall pay  Foothill a  fee  (in addition  to  the
             charges, commissions, fees,  and costs set  forth
             in Section 2.2(d)) equal to 0.75% per annum times
             the aggregate undrawn  amount of all  outstanding
             Letters of Credit issued for the account  of such
             Borrower;  provided,  that  such  fee  shall   be
             prospectively reduced  by one-quarter  percentage
             point  one  day  after   receipt  by  Lender   of
             Borrowers' unqualified  annual audited  financial
             statements for  the  1998 fiscal  year  delivered
             pursuant to Section 6.3(b), if the  interest rate
             applicable to the Obligations is being reduced on
             such date pursuant to Section 2.6(a)."

             (d)  Section 2.6(c).    Clause (ii) of Section 2.6(c) of
   the Loan Agreement is hereby amended and restated in its entirety,
   as follows:
<PAGE>
                  "(ii)     the Letter of  Credit fee provided
             in  Section   2.6(b)   shall   be   prospectively
             increased to  a  per  annum  rate  equal to  2.00
             percentage points above  the otherwise applicable
             Letter of Credit fee provided in Section 2.6(b)."

             (e)  Section 2.11(a).    Section  2.11(a)  of  the  Loan
   Agreement is  hereby  amended and  restated  in  its entirety,  as
   follows:

                  "(a)     Line  Increase Fee.   A fee  equal to
             1.00% of the amount of each increase in the Maximum
             Revolving Amount, payable on the  effective date of
             such increase."

            (f)   Section  2.11(d).    The  last  clause  of  Section
   2.11(d) is  hereby  amended  and  restated  in  its  entirety,  as
   follows:

                  "and, on  each  anniversary  of  May 30,  1997
             prior to the  date that this  Agreement terminates,
             Foothill's customary fee of $1,000 per year for its
             loan documentation review."

             (g)        Section  3.4.      Section  3.4  of the  Loan
   Agreement is hereby amended and restated in its entirety, as follows:

                  "3.4       Term; Automatic Renewal.

                  This Agreement shall become effective upon the
             execution and delivery hereof by  each Borrower and
             Foothill and  shall  continue  in  full  force  and
             effect for  a  term ending  on  May  30, 2002  (the
             "Renewal Date") and automatically  shall be renewed
             for one additional  year period  thereafter, unless
             terminated pursuant  to the  terms hereof.   Either
             party may terminate this Agreement effective on the
             Renewal Date  or on  the first  anniversary  of the
             Renewal Date by giving the other  party at least 60
             days  prior   written   notice.     The   foregoing
             notwithstanding, Foothill shall  have the  right to
             terminate  its  obligations  under  this  Agreement
             immediately and without notice  upon the occurrence
             and during the continuance of an Event of Default."

             (h)  Section 3.5. Section  3.5 of the  Loan Agreement is
   hereby amended by adding the following at the end thereof:

                  "If  Borrowers   have   sent   a   notice   of
             termination pursuant to  the provisions  of Section
             3.4 for a termination on the Renewal Date, but fail
             to pay  the Obligations  in  full on  the  date set
             forth in said notice, then Foothill  may, but shall
             not be  required to,  renew this  Agreement  for an
             additional term of one year."

             (i)  Section 3.6. Section  3.6 of the  Loan Agreement is
   hereby amended and restated in its entirety, as follows:
<PAGE>

                  "3.6      Early Termination by Borrowers.

                  The  provisions  of  Section  3.4  that  allow
                  termination of this Agreement by   Borrowers
                  only  on   the   Renewal   Date  and   certain
                  anniversaries     thereof     notwithstanding,
                  Borrowers have the option, at any time upon 60
                  days prior  written  notice  to  Foothill,  to
                  terminate  this   Agreement   by   paying   to
                  Foothill, in  cash, the  Obligations,  in full
                  (provided, that  any  contingent reimbursement
                  obligations of either Borrower with respect to
                  outstanding  Letters   of   Credit  shall   be
                  satisfied in the  manner set forth  in Section
                  2.2(e)), together with  a premium  (the "Early
                  Termination Premium") equal  to (a) 2%  of the
                  Maximum Revolving  Amount if  such termination
                  occurs on or before November 30,  1998, (b) 3%
                  of  the  Maximum  Revolving   Amount  if  such
                  termination occurs  after  November 30,  1998,
                  but on or before November 30,  1999, (c) 2% of
                  the   Maximum   Revolving   Amount   if   such
                  termination occurs after November 30, 1999 but
                  on or before November 30, 2000,  (d) 1% of the
                  Maximum Revolving  Amount if  such termination
                  occurs after November 30, 2000  but before May
                  30, 2002 and (e) if this  Agreement is renewed
                  pursuant to  Section  3.4, 1%  of  the Maximum
                  Revolving Amount if such termination occurs on
                  or after the  Renewal Date but  before May 30,
                  2003; provided,  that  if Borrowers  terminate
                  this Agreement  due to  Foothill's  refusal to
                  consent to a  proposed acquisition  that would
                  violate Section  7.13(a)  or (c)    below, the
                  applicable Early Termination  Premium shall be
                  reduced by  one-half of  the  amount otherwise
                  payable hereunder."

             (j)  Section 7.20(c).  A  new Section  7.20(c)  is
             hereby added to the Loan Agreement, as follows:

                  "(c)     EBITDA.  EBITDA  of at least $1,300,000 on
             the last day of each fiscal  quarter commencing with the
             first fiscal quarter of the 1999 fiscal year, for the 12
             month period ending on such day."

             (k)  Section 7.21. Section 7.21 of the Loan Agreement is
   hereby amended and restated in its entirety, as follows:

                  "7.21     Capital Expenditures.

                  Make capital expenditures  in any  fiscal year
             in excess of $ 1,000,000 in  the aggregate for both
             Borrowers."
<PAGE>
            3.  Ratification and Effectiveness.  This Amendment shall
   constitute an amendment to the Loan Agreement  and all of the Loan
   Documents as  appropriate  to  express  the  agreements  contained
   herein.   Upon  proper  execution  by  Borrowers  and  Lender  and
   satisfaction of the  conditions set  forth herein,  this Amendment
   shall be deemed to have been effective as of July _, 1998.  In all
   other respects, the  Loan Agreement  and the Loan  Documents shall
   remain unchanged and in  full force and effect  in accordance with
   their original terms.

            4.    Miscellaneous.

            (a)   Warranties and Absence  of Defaults.   In  order to
   induce Lender to enter  into this Amendment,  each Borrower hereby
   warrants to Lender, as of the date hereof, that:

             (i)  The warranties  of each  Borrower contained  in the
        Loan Agreement, as herein amended, are true and correct as of
        the date hereof as if made on the date hereof.

             (ii) All information, reports and other  papers and data
        heretofore  furnished  to   Lender  by  either   Borrower  in
        connection with this  Amendment, the  Loan Agreement  and the
        other Loan Documents are accurate and correct in all material
        respects and  complete insofar  as may  be necessary  to give
        Lender true  and  accurate knowledge  of  the subject  matter
        thereof.  Each Borrower has disclosed to Lender every fact of
        which it  is  aware which  would  reasonably  be expected  to
        materially and adversely  affect the business,  operations or
        financial condition  of  either Borrower  or  the ability  of
        either  Borrower  to  perform  its   obligations  under  this
        Amendment, the Loan Agreement or under  any of the other Loan
        Documents.  None of the information furnished to Lender by or
        on  behalf   of  either   Borrower  contained   any  material
        misstatement of fact or  omitted to state a  material fact or
        any fact necessary to make the statements contained herein or
        therein not materially misleading.

             (iii)     No Event  of  Default  or  event  which,  with
        giving of notice or the passage of time, or both would become
        an Event of Default, exists a of the date hereof.

             (b)  Expenses.  Borrowers jointly and severally agree to
   pay on  demand all  costs and  expenses of  Lender  (including the
   reasonable fees  and expenses  of outside  counsel for  Lender) in
   connection with the preparation,  negotiation, execution, delivery
   and administration of this Amendment and  all other instruments or
   documents provided  for herein  or  delivered or  to  be delivered
   hereunder or  in  connection  herewith.    In addition,  Borrowers
   jointly and severally agree to pay,  and save Lender harmless from
   all liability for, any stamp  or other taxes which  may be payable
   in connection with the execution or  delivery of this Amendment or
   the Loan  Agreement,  as amended  hereby,  and  the execution  and
   delivery of any  instruments or  documents provided for  herein or
   delivered or to be delivered hereunder  or in connection herewith.
   All obligations provided  in this  Section 4(b) shall  survive any
   termination of this  Amendment and  the Loan Agreement  as amended
   hereby.
<PAGE>
             (c)  Governing Law.  This Amendment shall  be a contract
   made under  and governed  by the  internal  laws of  the  State of
   California.

             (d)  Counterparts.   This Amendment  may be  executed in
   any number of counterparts, and by the  parties hereto on the same
   or separate counterparts, and each such counterpart, when executed
   and delivered, shall  be deemed  to be an  original, but  all such
   counterparts shall  together  constitute  but  one  and  the  same
   Amendment.

             (e)  Reference to  Loan  Agreement.   On  and after  the
   effectiveness of the amendment to the  Loan Agreement accomplished
   hereby, each reference in  the Loan Agreement  to "this Agreement",
   "hereunder," "hereof," "herein" or words of  like import, and each
   reference to the  Loan Agreement in  any Loan Documents,  or other
   agreements, documents or other instruments  executed and delivered
   pursuant to the Loan Agreement,  shall mean and be  a reference to
   the Loan Agreement, as amended by this Amendment.

             (f)  Successors.  This  Amendment shall be  binding upon
   each Borrower, Lender and their respective successors and assigns,
   and shall inure to the benefit of  each Borrower, Lender and their
   respective successors and assigns.

               IN WITNESS  WHEREOF, the  parties hereto  have  caused
   this  Amendment  to  be  executed  by  their  respective  officers
   thereunto duly authorized and delivered as of the date first
   above written.

                                                                    
   MULTIGRAPHICS, INC. f/k/a
   AM INTERNATIONAL, INC.

   By ___________________________________

   Its  _________________________________

   
   PUBLISHING SOLUTIONS INC.

   By  __________________________________

   Its  __________________________________


   FOOTHILL CAPITAL CORPORATION

   By  __________________________________

   Its   __________________________________

         
<PAGE>


























                                   

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>4
<TEXT>

   <PAGE>
                               EXHIBIT 13
                   MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
       
   The following table sets forth for the years indicated certain items
   from the Condensed Consolidated Statements of Operations (expressed
   in millions of dollars). The operating results for the years ended
   July 31, 1997 and 1996 include the results of two foreign
   subsidiaries which have been divested.  The Company sold its interest
   in AM Japan Co., Ltd. in September, 1996, and on October 17, 1996,
   the Company's Canadian subsidiary filed a voluntary assignment in
   bankruptcy.

   During the fiscal year ended July 31, 1998, the Company acquired
   certain assets of Hanley Graphic Products Company and Progressive
   Lithoplate and Supply Company, both graphic arts dealers competing in
   Northern Illinois, and purchased all of the outstanding shares of
   capital stock of Akron, Ohio based Publishing Solutions Inc., a
   systems integrator.  All acquisitions have been accounted for as
   purchases and, accordingly, the Company's consolidated financial
   statements include the post-acquisition results of these operations
   since their respective acquisition dates. All per share data is
   presented on a diluted basis.
<TABLE>
   OPERATING RESULTS (Continuing Operations)

   Years ended July 31,               1998           1997        1996
   <S>                               <C>            <C>        <C>
   Revenues                          $95.3          $88.7      $168.1
   Gross margin                       25.2           24.8        37.6
   Operating expenses                 21.9           23.5        54.0
   Operating income (loss)             3.3            1.3       (16.4)
   Non-operating expenses              1.6            1.2         3.8
   Income (loss) before taxes         $1.7           $0.1      ($20.2)
   Net income (loss)                  $1.1           $0.1      ($20.1) 
</TABLE>

   Comparison of 1998 to 1997  

   Net income in 1998 of $1.1 million ($0.37 per common share) improved
   by $1.0 million over the prior year net income of $0.1 million ($0.04
   per common share). In the prior year, the Company had a gain of $2.6
   million on the divestiture of its interest in AM Japan Co., Ltd.
   Excluding the gain on the divestiture, net income improved by $3.6
   million from the prior year. The improved result in 1998 was
   primarily due to a reduction in operating expense levels which
   resulted from the Company's elimination of unprofitable product
   lines, its exit from machine manufacturing,  efficiency improvements
   in distribution and service activities, and increased gross margins
   on higher revenue levels attributable to the acquisitions made in the
   current year.
 <PAGE>
   Revenues in 1998 of $95.3 million increased by $6.6 million over the
   prior year.  The 7% growth in revenues was largely attributable to
   the acquisitions of the three regional graphic arts dealers over the
   last eight months of the fiscal year.  The acquired businesses serve
   the same customer base as the Company.  The acquisitions complement
   the Company's internal efforts to expand its product offerings, and
   bring enhanced digital sales and support capabilities as well as an
   expanded customer base in the Company's traditional markets.  In
   addition, the Company has undertaken marketing programs focusing on
   obtaining national service accounts with manufacturers and national
   retail outlets.  Market demand for the Company's manufactured
   duplicator press products, particularly in the in-plant market
   segment, has experienced long term decline due in part to inroads
   from competing printing technologies.  As a result, the installed
   base of the Company's duplicator press equipment has declined which
   has led to decreased sales of duplicator supplies and services.
   Revenues from acquisitions, new products and increased service
   offerings collectively were more than sufficient to offset the
   decline in revenues from the prior year divestitures of operations in
   Japan and Canada, the discontinuance of unprofitable product lines,
   and the exit from manufacturing duplicator presses which,
   collectively, had contributed revenues of $7.5 million to the prior
   year.

   Gross margin of $25.2 million was $0.4 million higher than the prior
   year largely as a result of increased revenue volume.  The overall
   gross margin rate declined 1.6 percentage points to 26.4%.  The lower
   margin rate largely resulted from the shift in revenue mix from the
   Company's traditional higher margin manufactured products and service
   offerings, the demand for which has been in long term decline, to
   revenues derived from product lines added through distribution
   agreements, affiliations with third parties, and acquisitions of
   graphic arts dealers.  In anticipation of the decline in margins, the
   Company invested in information systems and instituted various
   reorganization measures which increased operational efficiency and
   lowered expense levels.

   Operating expenses decreased by $4.2 million in 1998 from 1997, after
   adjusting 1997 to exclude the $2.6 million gain from the divestiture
   of AM Japan Co. Ltd.  The decrease in expenses was largely due to the
   divestiture of foreign operations, discontinued product lines and
   elimination of costs associated with the Company's exited
   manufacturing operation which collectively added $2.4 million in the
   prior year.  The remainder of the decrease in expenses resulted from
   reductions in selling, general and administrative expenses as the
   Company transitioned to a distribution and service organization.

   Non-operating expenses increased $0.4 million in 1998, largely due to
   a $1.1 million reduction in interest income due to lower investment
   balances in 1998 following the $14.1 million dividend in May, 1997,
   offset by a $0.7 million reduction in interest expense. The decrease
   in interest expense was primarily due to lower prepetition debt
   obligations, which have been reduced by scheduled payments, and lower
   interest costs on post retirement benefit obligations.
 <PAGE>
   The Company recorded income tax expense of $0.6 million during 1998.
   Fresh start reporting rules require recognition of tax expense
   although the Company had no requirement to pay U.S. Federal taxes due
   to utilization of net operating loss carry forwards available to the
   Company.  Net income from continuing operations improved by $1.0
   million over 1997 due to the factors cited above.


   Comparison of 1997 to 1996

   Net income in 1997 of $0.1 million ($0.04 per common share) improved
   significantly over the net loss of $20.2 million from continuing
   operations in 1996.  The improved results in 1997 was primarily due
   to restructuring initiatives the Company had formulated and executed
   during 1995 and 1996.

   Declining market demand for the Company's traditional offset
   duplicator products, due to inroads by alternative technologies,
   resulted in the re-evaluation of its traditional strategy and the
   decision to exit manufacturing.  The Company's growth strategy in the
   graphic arts market is focused on expanding its product offering,
   enhancing its digital support capabilities, taking advantage of
   unique national service capabilities and increasing market
   penetration and coverage through acquisitions of regional dealers.

   Revenues in 1997 of $88.7 million decreased by $79.4 million from
   1996.  The revenue decrease was primarily the result of: 1) the
   divestitures of foreign subsidiaries in Japan and Canada which
   accounted for a revenue decline of $37.8 million, and 2) a $35.0
   million decrease due to the discontinuance of certain unprofitable
   product lines, including manufactured offset duplicator presses.

   Gross margin decreased in 1997 from 1996 due largely to the lower
   revenue level; however, the gross margin rate improved by 5.6
   percentage points over the previous year due to a more favorable
   product mix and the elimination of manufacturing overhead costs.

   Operating expenses decreased by $30.5 million in 1997 from 1996.  The
   decrease in expenses was due to: 1) a $12.0 million reduction in
   selling, general and administrative expenses which reflected improved
   efficiencies as the business transitioned to a distribution and
   service organization, and a reduction in corporate expenses; 2) the
   elimination of foreign operations, which accounted for $12.5 million
   of the reduction, including a $2.6 million gain on the divestiture of
   AM Japan Co., Ltd.; and 3) a reduction of $6.4 million in
   restructuring charges as compared with the prior year.

   Non-operating expenses decreased in 1997 by $2.6 million due to the
   elimination in 1997 of borrowings under the revolving credit
   agreement, lower interest costs on general unsecured claims, and
   interest income which was earned on divestiture proceeds received in
   1997 from the sales of the Sheridan Systems segment and the Company's
   interest in AM Japan Co., Ltd.  Net income of $0.1 million in 1997
   improved by $20.3 million over 1996 due to improved gross margin
   rates and lower expenses as described.
 <PAGE>
   LIQUIDITY AND CAPITAL RESOURCES (three years ended July 31, 1998)

   The Company's total cash and cash equivalents of $2.9 million as of
   July 31, 1998 decreased by $7.5 million during the fiscal year,
   following an increase in cash balances of $7.8 million in 1997, and a
   $10.0 million decrease in cash in 1996.


   Operating Activities

   In 1998, the Company had a cash outflow from operating activities of
   $2.8 million.  The 1998 cash outflow was primarily due to a $5.1
   million reduction in accrued liabilities largely from restructuring
   payments which included payments for severance, accrued vacation and
   the settlement of a lease recourse obligation from a discontinued
   business, and a $1.8 million reduction in trade payables primarily
   due to lower inventory purchases.  A $1.8 million reduction in
   inventories partially offset other outflows and was due to lower
   stocking levels of machines resulting from an increase in drop
   shipment sales, and improved supplies and parts turnover rates
   reflective of the transition from a manufacturing to a distribution
   and service operation.

   In 1997, the Company had a cash outflow from operating activities of
   $15.6 million. The 1997 cash outflow was primarily due to a $10.2
   million reduction in trade payables as extended credit terms were
   reduced with vendors, and a $14.7 million reduction in accrued
   liabilities primarily due to restructuring payments which included
   payments for severance, accrued vacation and the settlement of a
   lease obligation.  A $9.0 million reduction in accounts receivable
   partially offset other outflows and was due to improved collection
   rates, the collection of receivables from the phased out manufactured
   machine product line, and a lower revenue level.  Inventories
   increased $0.3 million in supplies and parts to improve product
   availability.

   In 1996, the Company had a cash outflow of $3.9 million, which
   improved by $1.0 million over 1995.  The net loss of $45.5 million in
   1996 was largely offset by a $26.3 million reduction in the net
   assets of discontinued operations, primarily accounts receivable and
   leases receivables, and reductions in the accounts receivable and
   inventories of the continuing business.  The inventory reduction was
   the result of the phase out of machine manufacturing and general
   reductions in stock levels due to liquidity problems.

   Depreciation and amortization remained flat from 1997 to 1998 at $1.9
   million, but 1997 decreased by $2.3 million from 1996.  In 1996 an
   additional $2.0 million was provided against certain manufacturing
   assets following the decision to phase out manufacturing. The
   Company's fixed assets consist primarily of leasehold improvements
   and computer systems.
 <PAGE>
   Investing Activities

   In 1998, the Company invested $6.9 million in the acquisitions of
   three regional graphic arts equipment and supply dealers.  In 1997,
   the Company received net proceeds of $50.6 million from the
   divestitures of Sheridan Systems and AM Japan Co., Ltd.  In 1996, the
   Company received  $6.8 million from the disposition of property,
   primarily from the sale of its Mt. Prospect, IL manufacturing and
   headquarters facility.  Capital expenditures of $0.6 million in 1998
   and $1.9 million in 1997 were made to upgrade information systems and
   customer service capabilities, and to maintain facilities.  Capital
   expenditures in 1996 of $9.0 million were primarily for leasehold
   improvements of new facilities in conjunction with the planned exit
   from the Company's manufacturing facilities, and to upgrade
   information systems equipment.

   Financing Activities

   In 1998 the Company had a net inflow of $2.8 million from financing
   activities, as compared to net outflows in 1997 and 1996 of $25.5
   million and $2.7 million, respectively.  In 1998 the Company borrowed
   $7.8 million under its revolving credit agreement to finance the
   operating and investing activities noted above.  In 1997 the Company
   repaid its outstanding balance under its revolving credit agreement
   of $5.4 million with the proceeds from divestitures.   The borrowings
   in 1996 were necessitated by operating losses.  The Company has made
   payments of $4.3 million, $5.3 million and $5.1 million in 1998, 1997
   and 1996, respectively, to resolve unsecured claims and priority tax
   claims in accordance with the Reorganization Plan of 1993.  In 1997
   the Board of Directors declared a $2.00 per share special dividend to
   holders of record as of May 13, 1997.  The dividend totaling $14.1
   million was paid on May 27, 1997.  In 1996 the Company received $4.0
   million, primarily from capital lease agreements, which was utilized
   to fund leasehold improvements and computer system upgrades.  In 1996
   discontinued operations had a $6.7 million outflow which resulted
   primarily from reductions in long term debt and capital lease
   obligations.

   The Company's primary source of financing is its revolving credit
   facility which was established in May, 1997 and which has
   subsequently been amended to provide liquidity needed to execute the
   Company's growth strategy.  The Company believes that its existing
   cash reserves and the liquidity provided by the credit facility are
   sufficient to finance current operations and support future growth
   strategies, which may include the acquisitions of other regional
   dealers or distributors in the graphic arts industry. The Company may
   also seek to increase its capital availability to expand its growth
   strategy beyond its current sources of liquidity.
 <PAGE>
   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   The Company is exposed to market risk related to change in interest
   rates.  At July 31, 1998, the Company had approximately $7.8 million
   of debt outstanding on a revolving credit facility with floating
   interest rates tied to the prime rate.  If this rate was to increase
   10 percent, the increase in interest payments would not have a
   material impact on the Company's net income or cash flows.  In
   addition, the Company has fixed rate financing arrangements under
   capital lease obligations in the amount of $1.7 million.  A 10
   percent change in interest rates would not have a material impact on
   the fair market value of this debt.

   YEAR 2000 DISCLOSURE

   The Company's information systems will require certain modifications
   to enable them to be able to process information without regard to
   whether the date occurs prior to or after the year 2000.  Currently,
   some information systems do not properly identify a year that begins
   with "20" instead of the familiar "19".   These and similar issues
   are generally referred to as "Year 2000" issues.  The Company's
   information systems are relatively new, and its recent systems
   implementation in the Fall of 1997 achieved near compliance in the
   Company's operating systems and full compliance in its host hardware.
   Based on the Company's experience in the new system implementation
   and its analysis of the work remaining, the Company anticipates that
   expenditures for modifying the systems will be approximately $0.2
   million, and the work necessary to complete all modifications will be
   complete by mid 1999.  The Company is working with its software and
   systems licensor in completing this project.  Accordingly, the
   Company does not believe that the remaining actions or the associated
   costs will be material to the Company's operating results.

   The Company has also undertaken a review of its other equipment and
   operating systems, and has begun the process of contacting its
   significant vendors and service providers to assess the possible
   impact on the Company of such third parties' failure to address Year
   2000 issues.  Although the Company cannot verify the results of its
   inquiries of third parties, it has not received any information which
   would lead it to believe that there will be material problems in
   obtaining products, supplies and services from its third party
   service providers and vendors.  Nevertheless, any significant or
   prolonged interruption in the supply of essential services or
   products could adversely effect the Company's revenues and financial
   results.  Similarly, problems with any significant portion of the
   Company's 20,000 customers in processing and paying invoices from the
   Company could result in cash flow shortages and liquidity problems.
 <PAGE>
   The Company is undertaking a number of steps to address potential
   Year 2000 problems.  The systems issues and supplier contacts
   described above are a part of those efforts.  In the event that the
   Company identifies potential problems with a service provider or
   other vendor, it will attempt to obtain services and products from
   other sources.  The Company has available to it a broad range of
   products, however, and it is unlikely that serious shortages will
   materialize.  Similarly, although the Company will have completed and
   tested its systems capabilities in advance of the year 2000, the
   Company is preparing to operate without significant portions of its
   operating and information systems.  Customer service representatives
   are trained to take orders without access to the information systems,
   purchasing representatives are trained to purchase parts without
   access to the information systems, and the Company's finance
   department is preparing to invoice and bill customers without access
   to the information systems, if necessary.  The Company is unable to
   anticipate whether significant customers or significant numbers of
   its customers will have difficulty processing and paying its
   invoices.

   FORWARD LOOKING STATEMENTS

   This document contains certain forward-looking statements and other
   statements that are not historical facts concerning, among other
   things, market conditions and the Company's strategies for growth and
   expansion.  These statements are highly dependent upon a variety of
   important factors that could cause such results or events to differ
   materially.  These factors include, but are not limited to, changing
   market conditions, the availability and cost of products, maintenance
   of principal vendor relations, the impact of competitive products and
   pricing, the Company's ability to execute its strategic plans, the
   continued availability of sources of financing to assist in the
   execution of the Company's strategic plans, and other risks detailed
   herein and from time-to-time in the Company's Securities and Exchange
   Commission filings.  There can be no assurance that the Company has
   accurately identified and properly weighed all of the factors that
   affect market conditions and demand for the Company's products and
   services, that the public information on which the Company has relied
   is accurate or complete or that the Company's analysis of the market
   and demand for its products and services is correct and, as a result,
   that the strategies based on such analysis will be successful.
<PAGE>
<TABLE>
                              Multigraphics, Inc.
                     Consolidated Statements of Operations
                (Dollars in thousands, except per share amounts)
 

                                                Twelve Months Ended

                                       July 31,     July 31,   July 31,
                                         1998         1997       1996

  <S>                                    <C>        <C>        <C>
  Revenues
   Machines and Supplies                 $  54,990  $  45,274   $112,118
   Services                                 40,261     43,387     55,934

         Total Revenues                     95,251     88,661    168,052

  Cost of Sales
   Machines and Supplies                     42,724    37,335     94,448
   Services                                  27,346    26,536     35,973

         Total Cost of Sales                 70,070     63,871   130,421

  Gross Margin                               25,181     24,790    37,631
  Operating Expenses
       Selling, general and administrative   21,910     25,616    47,048
       Unusual items, net (income) expense        -    (2,095)     7,032

         Total Operating Expenses            21,910     23,521    54,080
  Operating Income (Loss)                     3,271      1,269   (16,449)
  Non-operating income (expense):
       Interest income                          211      1,288       169
       Interest expense                      (1,723)    (2,574)   (3,762)
   Other, net                                   (42)       120      (212)

  Income (loss) from continuing
  operations before income taxes               1,717       103   (20,254)

    Income tax expense (benefit)                 646         -       (97)

  Net income (loss) from continuing
  operations                                   1,071       103   (20,153)

  Net income (loss) from discontinued
  operations, net of tax                           -         -   (25,342)


  Net Income (Loss)                          $ 1,071   $   103  $(45,499)


  Per share of common stock: (a)
   Basic:
  Income (loss) from continuing operations   $  0.38   $  0.04   $ (7.19)
  Income (loss) from discontinued
  operations                                       -         -     (9.04)

              Net income (loss)              $  0.38   $  0.04   $(16.23)

   Diluted:
  Income (loss) from continuing operations   $  0.37   $  0.04   $ (7.19)
  Income (loss) from discontinued
  operations                                       -         -     (9.04)

              Net income (loss)              $  0.37   $  0.04   $(16.23)


  Weighted average shares of common stock
  and common stock equivalents outstanding
   (in thousands)

                          Basic                2,823     2,807      2,803                         Diluted
                          Diluted              2,895     2,811      2,803


   (a)  The weighted average number of common shares outstanding
        and net income per common share have been restated to reflect
        the effect of the 1 for 2 1/2 share reverse stock split which
        was approved by the Company's shareholders on May 28,1997.
        The Notes to Consolidated Financial Statements are an integral
        part of these financial statements.
</TABLE>
<PAGE>
<TABLE>

                         Multigraphics, Inc.
                     Consolidated Balance Sheets
           (Dollars in thousands, except per share amounts)

                                                  July       July
                                                  31,        31,
                                                  1998       1997

   <S>
                     ASSETS                       <C>       <C>
   Current assets:
       Cash and cash equivalents                  $2,869    $10,376

       Accounts receivable, net                   14,629     10,746

       Inventories, net                           13,188     11,893

       Prepaid expenses and other assets             726        744

   Total current assets                           31,412     33,759

   Property, plant and equipment, net              9,554     10,222

   Goodwill                                        3,681          -

   Other assets, net                                 992        919

        Total assets                             $45,639    $44,900



      LIABILITIES AND SHAREHOLDERS' EQUITY
   Current liabilities:
   Short-term borrowings and current 
   maturities of long-term debt                  $10,844     $5,773

   Accounts payable                                7,312      5,217

   Service contract deferred income               12,013     11,738

   Payroll related expenses                        5,709      6,803

   Other current liabilities                       6,737     10,152

  Total current liabilities                       42,615     39,683

   Post-retirement benefit obligations             8,626      9,729

   Long-term debt                                  1,048      3,352

   Other long-term liabilities                     3,494      4,036

        Total liabilities                         55,783     56,800

   Shareholders' equity:
   Preferred stock, 0.5 million shares
   authorized; no shares issued                        -          -
   Common stock, $.025 par value; 9.5
   million shares authorized;
   2,829,526 issued as of July 31,
   1998 and 2,815,337 issued
   as of July 31, 1997                                70         70

   Capital in excess of par value                 22,847     22,162

   Accumulated earnings (deficit)               (33,061)   (34,132)

        Total shareholders' equity              (10,144)   (11,900)

   Total liabilities and shareholders' equity    $45,639    $44,900


   The Notes to Consolidated Financial Statements are an
   integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>   
                              Multigraphics, Inc.
                     Consolidated Statements of Cash Flows
                            (Dollars in thousands)



                                                   Twelve Months Ended

                                              July 31,  July 31,   July 31,
                                                1998      1997       1996
   <S>                                         <C>       <C>       <C>
   Cash Flows from Operating
   Activities:
   Net income (loss)                           $ 1,071   $   103   $(45,499)
   Adjustments to reconcile net income to
   cash flow from operating activities:

   Depreciation of property, plant
     and equipment                               1,859     1,836       3,769
   Amortization and writedown of
     other assets                                   42         -         407
   Benefit from operating loss
     carryforwards                                 646         -           -
   Discontinued  operations                          -         -      26,284      Net assets held for sale
   Net assets held for sale                          -         -      (2,682)
   Change in assets and
     liabilities:
   Accounts receivable, net                         27     9,028       6,308
   Inventory, net                                1,750     (291)      13,056
   Prepaid expenses and other assets               193       858        (334)
   Accounts payable and accruals                (6,633)  (26,132)     (2,434)
   Other, net                                   (1,719)   (1,041)     (2,794)

   Cash flow from operating
   activities                                   (2,764)  (15,639)     (3,919)


   Cash Flows from Investing
     Activities:
   Acquisition Activities                       (6,873)        -           -
   Capital expenditures                           (638)   (1,862)     (8,990)
   Proceeds from Divested Operations                 -    50,638           -
   Proceeds from disposition of
     property                                        -       149       6,822
   Cash flow from investing activities          (7,511)   48,925      (3,430)
         
   Cash Flows from Financing
     Activities:
   Net borrowings (payments) under
   revolving credit facilities                   7,768    (5,430)      5,430

   Payment of Bankruptcy Claims                 (4,285)   (5,318)     (5,106)

   Borrowings under capital lease
     and other arrangements                          -         -       4,041

   Payments under capital lease
     arrangements                                 (715)     (642)       (358)

   Payment of special dividend                       -   (14,080)          -

   Discontinued operations                           -         -      (6,661)

   Cash flow from financing
     activities                                  2,768   (25,470)     (2,654)

   Increase (decrease) in cash and
     cash equivalents                           (7,507)    7,816     (10,003)
   Cash and cash equivalents at
     beginning of period                        10,376     2,560      12,563

   Cash and cash equivalents at end of
   period                                      $ 2,869   $10,376    $  2,560

   The Notes to Consolidated Financial Statements are an integral part of
   these financial statements.
</TABLE>
<PAGE>
<TABLE>
                                          Multigraphics, Inc.
                            Consolidated Statement of Shareholders' Equity
                                         (Dollars in thousands)
                                                               
                                                                 
                               Common  Stock     Treasury  Stock         Warrants                                           Total
                            -----------------    ----------------  ----------------   Capital in  Accumulated  Cumulative   Share-
                             Number               Number            Number            Excess of   Earnings/   Translation  holders
                            of Shares  Amount   of Shares  Amount  of Shares  Amount  Par Value   (Deficit)    Adjustment   Equity
                              (a)                  (a)               (a)                          
                            ---------   -----    ------    ------   -------   -----    -------   ---------      -------    -------
<S>                         <C>         <C>        <C>     <C>      <C>       <C>      <C>       <C>             <C>       <C>
Balance at July 31, 1995    2,804,000   $  70      498     $  (6)   438,000   $ 383    $35,637   $  11,265       $  952    $48,301
  Net loss                                                                                         (45,499)                (45,499)
  Aggregate effect of
   current year translation
   adjustments                                                                                                     (734)      (734)
  Purchase of Treasury
   Stock                                           134                                                                           -
  Other, net                                                                               228                                 228
                            ---------   -----    ------    ------   -------   -----    -------   ---------      -------    -------
Balance at July 31, 1996    2,804,000      70      632        (6)   438,000     383     35,865     (34,234)         218      2,296
  Net income                                                                                           103                     103
  Aggregate effect of
   current year translation
   adjustments                                                                                                     (218)      (218)
  Issuance of new common
   stock                       11,969                                                                                            -
  Retirement of Treasury
   Stock                         (632)            (632)        6                            (6)                                  -
  Expiration of Warrants                                            (438,000)  (383)       383                                   -
  Payment of special
   dividend                                                                            (14,080)                            (14,080)
  Other, net                                                                                            (1)                     (1)
                            ---------   -----    ------    ------   -------   -----    -------   ---------      -------    -------
Balance at July 31, 1997    2,815,337      70        -         -          -       -     22,162     (34,132)           -    (11,900)
  Net  Income                                                                                        1,071                   1,071
  Benefit from operating
   loss carryforwards                                                                      646                                 646
  Issuance of new common
   stock                       13,523                                                       39                                  39
  Stock option exercises          666                                                                                            -
                            ---------   -----    ------    ------   -------   -----    -------   ---------      -------    -------
Balance at July 31, 1998    2,829,526   $  70         -    $   -          -   $   -   $ 22,847   $ (33,061)     $     -   $(10,144)
                            =========   =====    ======    ======   =======   =====    =======   =========      =======    ======
 (a) The number of shares have been restated to reflect the effect of
     the 1 for 2 1/2 share reverse stock split which was approved by the
     Company's shareholders on May 28, 1997.

     The Notes to Consolidated Financial Statements are an integral
     part of these financial statements.

</TABLE>  
<PAGE>

   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   (Dollars in thousands, except as otherwise noted and per share
   amounts)

   Note 1 - Nature of Operations and Significant Accounting Policies

   Nature of Operations: Multigraphics, Inc. (the "Company"), a Delaware
   corporation, distributes an extensive range of equipment, supplies,
   and services to the graphic arts industry.  The Company has
   approximately 20,000 customers, including small and mid-size
   commercial printers, quick print franchises, in-plant print shops,
   governmental agencies, and educational institutions.  No individual
   customer accounts for more than 10% of net revenue.

   The Company's headquarters and primary operations are located in Mt.
   Prospect, Illinois.  Products are distributed throughout the United
   States utilizing eight distribution facilities.  To a lesser extent,
   products are distributed internationally through independent dealers.
   The Company employs 342 service technicians throughout the United
   States to provide technical service and training.

   Basis of Presentation: The Consolidated Financial Statements include
   the accounts of Multigraphics, Inc. and its subsidiaries (the
   "Company").  All significant intercompany transactions have been
   eliminated.  The Company's fiscal year end is July 31.  All
   references to years, unless otherwise indicated, refer to the fiscal
   year.  Certain prior year amounts have been reclassified to be
   consistent with current year presentation.

   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
   amounts 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 Equivalents: The Company considers all highly liquid investments
   purchased with a maturity of three months or less to be cash
   equivalents.  It is the Company's policy to invest its excess cash in
   interest bearing deposits with major banks and institutional money
   market funds.

   Inventories: Inventories are valued at the lower of cost determined
   by the first-in, first out (FIFO) method, or market.

   Properties, Equipment and Depreciation: Properties and Equipment are
   stated at cost and are depreciated over estimated useful lives,
   ranging from 3 to 10 years, primarily on a straight-line basis. The
   Company adjusts the net book value to recognize impairments in
   accordance with "SFAS 121: Accounting for the Impairment of Long-
   Lived Assets and Long-Lived assets to be Disposed Of."

   Goodwill: The excess purchase price over the fair market value of net
   assets acquired has been allocated to goodwill.  These amounts are
   amortized over the estimated useful lives not to exceed 40 years.
<PAGE>

   Revenue Recognition: Revenue is recognized from sales when a product
   is shipped.  The Company recognizes warranty and equipment
   installation expenses at the time a product is shipped, if
   applicable.  The expense is estimated considering current warranty
   policies and historical experience. Amounts billed for service
   contracts are credited to Service contract deferred income and
   recognized as revenues over the term of the contracts.

   Income Taxes: Income taxes are provided based on the liability method
   of accounting pursuant to Statement of Financial Accounting Standards
   (SFAS) No. 109, " Accounting for Income Taxes."  Deferred income
   taxes are recorded to reflect the future tax consequences of
   differences between the tax basis of assets and liabilities and their
   financial reporting amounts at each year end.

   Income per Common Share:  "Basic earnings per share" have been
   calculated based upon the weighted average number of shares actually
   outstanding, and "diluted earnings per share" have been calculated
   based upon the weighted average number of common shares outstanding
   and other potential common shares if they were dilutive.


   Note 2 -  Acquisitions

   In December, 1997 the Company purchased all of the outstanding shares
   of Publishing Solutions Inc., and acquired the operating assets of
   Hanley Graphic Products Company.  Publishing Solutions provides its
   customers in northeast and central Ohio with equipment and systems
   integration solutions utilizing digital technologies for design, pre-
   press, imaging, and interactive media applications.  Hanley Graphic
   Products Company is a regional dealer of graphic arts equipment and
   supplies serving customers in Northern Illinois.  In June, 1998 the
   Company acquired the business and certain assets of Progressive
   Lithoplate and Supply Company, a regional graphic arts dealer serving
   customers in Northern Illinois.

   The aggregate purchase price for the three companies was $6,873
   including expenses of the transactions, and could increase by a
   maximum of $1,950, contingent upon the attainment of certain
   operating targets by the acquired companies over the next two years.
   The excess purchase price over the fair market value of net assets
   acquired amounts to a  preliminary value of $3,723, which will be
   amortized over a period not to exceed forty years.  The allocation of
   purchase price was based on preliminary estimates, and may be revised
   at a later date.

   The acquisitions have been accounted for as purchases and,
   accordingly, the financial statements include results of operations
   from the date of acquisition.  The following pro forma summary
   presents the results of operations for the current and prior period
   as though the acquisitions had taken place at the beginning of the
   prior period.  The pro forma amounts give effect to certain
   adjustments including increased interest expense, goodwill
   amortization, estimated income tax expense as well as other factors,
   and do not necessarily reflect the results which would have occurred
   had the businesses operated as a single entity during such periods,
   nor are they necessarily indicative of results which may be obtained
   in the future.
<PAGE>

<TABLE>
                        July 31,    July 31,
                            1998        1997
   <S>                  <C>         <C>
   Revenues             $108,063    $120,385
                        
   Net Income           $  1,110    $    335

   Earning per share:

   Basic                 $  0.39     $  0.12

   Diluted               $  0.38     $  0.12
</TABLE>

   Note 3 - Borrowing Arrangements

   The Company's short and long-term borrowings are comprised of the
   following:
<TABLE>
                                 July 31,        July 31,
                                   1998            1997
    <S>                            <C>           <C>
    Revolving Credit Facility      $ 7,768       $      -
    General Unsecured Claims      
      & Priority Tax Claims          2,364          6,649
    Capital Leases                   1,760          2,476

             Total                 $11,892       $  9,125




   Classified in the Consolidated Balance Sheet
   as follows:
      Short-term                   $10,844       $  5,773
      Long-term                      1,048          3,352

              Total                $11,892       $  9,125

</TABLE>
<PAGE>
   In May, 1997 the Company entered into a $10,000 three year secured
   Revolving Credit Facility (subject to borrowing base limitations)
   with Foothill Capital Corporation ("Foothill").  The Revolving Credit
   Facility includes a $5,000 sub-facility for the issuance of letters
   of credit.  As security for utilization of the Revolving Credit
   Facility, the Company granted a security interest and general lien
   upon all of its assets.  On February 19, 1998 the Revolving Credit
   Facility was amended and restated ("the Amendment") to add the
   Company's wholly owned subsidiary, Publishing Solutions Inc., as a
   co-borrower under the Facility.  The Amendment was made, among other
   things, to allow the eligible assets of Publishing Solutions Inc. to
   be included in the Company's borrowings base and to reset the
   Company's covenant requirements in light of the acquisitions made by
   the Company during the quarter ended January 31, 1998.  On July 30,
   1998 the Revolving Credit Facility was amended further to, among
   other things, (1) grant the Company the ability to increase the
   Revolving Credit Facility limit in increments of $1,000 up to a
   maximum limit of $15,000 and, (2) extend the expiration date an
   additional two years to May 30, 2002 plus an automatic one year
   extension unless terminated pursuant to the terms of the Revolving
   Credit Facility.  On July 31, 1998, the Company increased the
   Revolving Credit Facility limit to $11,000 and the calculated
   borrowing base was approximately $11,000.  As of July 31, 1998, the
   Company had borrowings of $7,768 under the Revolving Credit Facility
   and was utilizing approximately $1,804 of the facility to secure
   outstanding letters of credit.  Interest generally will be charged at
   a spread of 1% above the reference (i.e. prime) rate of Foothill and
   can be reduced in 1/2% increments in each of the next two fiscal
   years if certain performance measures are achieved.  As of July 31,
   1998 the reference rate was 8.5%.  Letter of credit fees are 0.75%
   per annum plus issuance costs and processing fees.  The agreement
   contains restrictive covenants limiting capital expenditures,
   restricting the payment of dividends and other payments and providing
   for quarterly measures of working capital and net worth, among other
   things.  In addition, the agreement limits the Company's ability to
   borrow or to request letters of credit following a material adverse
   change as determined by Foothill.  As of July 31, 1998, the Company
   was in compliance with the covenants of the Revolving Credit
   Facility.

   On October 13, 1993 the Company concluded a reorganization when the
   United States Bankruptcy Court for the District of Delaware confirmed
   the Company's Plan of Reorganization (Plan).  The Plan provides that
   holders of allowed general unsecured claims receive cash payments
   toward satisfaction of the full amount of their claims in equal
   quarterly payments payable on the last business day of each calendar
   quarter ending after October 13, 1993 over a five-year period,
   together with interest at 5% per annum.  Holders of priority tax
   claims are paid 10% of the allowed claim together with accrued and
   unpaid interest at 8% per annum on the then outstanding amount on
   each anniversary of October 13, 1993 which occurs prior to the sixth
   anniversary of the date of assessment, and the
   balances of such claims along with accrued and unpaid interest on the
   sixth anniversary.  For financial reporting purposes interest on
   general unsecured claims has been imputed at 9% per annum.  At July
   31, 1998 the Company had $2,179 of restricted cash which pertains to
   the settlement of disputed claims in accordance with the Plan.

<PAGE>


   Note 3 - Borrowing Arrangements  (Continued)

   As of July 31, 1998, aggregate maturities of total debt and
   capitalized leases, are as follows:
<TABLE>
        <S>
        Due fiscal year ending:
                  <C>                      <C>
                  1999                     $3,078
                  2000                        533
                  2001                        211
                  2002                      7,925
                  2003 and thereafter         145
</TABLE>
   The Revolving Credit Facility is classified as a current liability on
   the balance sheet to comply with the accounting requirements.
   However, for the aggregate debt maturities above,  the Revolving
   Credit Facility amount of $7,768 is reflected in 2002, the year the
   Revolving Credit Facility expires.

   Cash paid for interest was $1,202 during 1998, $1,647 during 1997 and
   $2,282 during fiscal 1996.


   Note 4 - Capital Structure

   On May 1, 1997 the Board of Directors declared a special dividend of
   $2.00 per common share, payable to holders of record as of May 13,
   1997.  The dividend, which totaled approximately $14,080, was
   disbursed on May 27, 1997.

   On May 28, 1997 the Company's shareholders approved amendments to the
   Company's Second Restated Certificate of Incorporation: (1)
   decreasing the authorized number of shares of capital stock from
   50,000,000 shares to 10,000,000 shares with 9,500,000 shares being
   reserved for issuance as Common Stock and 500,000 shares being
   reserved for issuance as Preferred Stock, (2) changing the name of
   the Company to Multigraphics, Inc., and (3) effecting a 1 for 2 1/2
   share reverse stock split thereby decreasing the number of issued and
   outstanding shares of the Company's Common Stock to 2,815,337
   (without giving effect to elimination of fractional shares) and
   increasing the par value of each Common share from $.01 to $.025 per
   share.  The Company has not issued any Preferred Stock.  The Common
   Stock is not subject to conversion or redemption and when issued is
   fully paid and non-assessable and has no preemptive rights.  All
   references in the accompanying financial statements to the number of
   common shares and per-share amounts have been restated to reflect the
   reverse stock split and change in par value.

<PAGE>
   Note 5 - Commitments and Contingencies

   The Company received creditor claims during its bankruptcy
   proceedings which the Company believes are duplicative, erroneous or
   exaggerated and to which the Company believes it has valid defenses.
   The Company has filed objections to these disputed claims in the
   United States Bankruptcy Court in Delaware.  As of July 31, 1998 and
   July 31, 1997, disputed claims amounted to $5,205 and $8,205,
   respectively.  The disputed claims are primarily comprised of
   environmental and product liability claims.  Although the vast
   majority of the claims filed in the bankruptcy proceedings have been
   expunged or resolved within the Company's reserves, a few significant
   disputed claims remain pending in the bankruptcy proceeding.

   The Company has been notified of various environmental matters in
   connection with certain current or former Company locations in
   Illinois, Ohio, Indiana, Pennsylvania, and Rhode Island.  The Company
   is also involved in various other administrative and legal
   proceedings incidental to its business, including product liability
   and general liability lawsuits against which the Company is partially
   insured.

   The disputed claims in the bankruptcy proceedings and the other legal
   proceedings are in many cases in excess of recorded reserves.  At the
   present time, it is management's opinion, based on information
   available to the Company and management's experience in such matters,
   that the resolution of these legal proceedings is not expected to
   have a material adverse effect on the Company's financial condition,
   results of operations or liquidity.



   Note 5 - Commitments and Contingencies (continued)

   The Company has sold certain receivables related to machine sales,
   subject to recourse provisions and repurchase provisions.  Management
   believes unreserved exposures pertaining to these contingencies will
   not materially impact the Company's financial condition, results of
   operations or liquidity.

<PAGE>
   Note 6 - Income Taxes
<TABLE>
   The components of income tax expense (benefit) are as follows:


                                       Twelve Months Ended

                                  July 31,   July 31,   July 31,
                                    1998       1997       1996

   <S>                           <C>         <C>        <C>
   The domestic and foreign components of income (loss)
     from continuing operations are as follows:

   Domestic                      $   1,717    $    366   $(18,857)

   Foreign                               -        (263)    (1,397)

                                 $   1,717    $    103   $(20,254)
                                                      

   Provision (benefit) for income taxes
      for continuing operations:

      Domestic                   $     646    $      -   $      -

      Foreign                            -           -        (97)

                                 $     646    $      -   $    (97)

                                                          

   A reconciliation of the income tax expense (benefit) on income
   (loss) per the U.S. federal statutory rate to the reported
   income tax expense (benefit) follows:

   US Federal statutory rate
   applied to pretax
   income (loss)                 $     584     $    35   $ (6,886)

   Operating loss with no
    current tax benefit and
    varying tax rates of other
    national governments                 -          89      6,597

   Permanent tax differences            19        (124)       192

   State taxes, net of federal
     benefit                            43           -          -

   Income tax expense (recovery) $     646     $     -   $    (97)
   
</TABLE>

<PAGE>
   Note 6 - Income Taxes (continued)

   The Company accounts for income taxes pursuant to Statement of
   Financial Accounting Standard (SFAS) No. 109.  At July 31, 1998 and
   July 31, 1997 the approximate amounts of deferred tax assets and
   deferred tax liabilities resulting from temporary differences and
   carryforwards were as follows:
<TABLE>

                                    1998       1997
  <S>                            <C>         <C>
  Deferred Tax Assets
        Inventory valuation       $ 1,200    $ 1,100
        Insurance reserves          4,400      4,700
        Other                       3,800      6,100

   Subtotal                         9,400     11,900
   Domestic tax operating loss
   carryforwards limited by
   Sec 382.                        21,000     21,000
   Domestic tax operating loss
   carryforwards                   60,000     59,300
   AMT credit carryforward          1,800      1,800

   Deferred Tax assets             92,200     94,000
        Valuation allowance       (92,200)   (94,000)

   Net deferred tax asset         $     -    $     -
</TABLE>


   The Sec. 382 ownership change which resulted from the 1993 bankruptcy
   reorganization imposed a limitation on the usage of pre-
   reorganization domestic tax operating loss carryforwards.  Usage of
   this loss carryforward is limited to $3,689 per year or $55,335 for a
   period of 15 years following the ownership change.  In addition, as
   of July 31, 1998, the Company had domestic tax loss carryforwards of
   approximately $158,000 attributable to post-reorganization periods
   and therefore not subject to limitation.  The domestic tax loss
   carryforwards will expire from 1999 to 2013.  The AMT credit,
   although subject to the Sec. 382 limitation, has no expiration date.

   During 1998, the deferred tax asset and related valuation allowance
   decreased by $1,800 primarily due to decreases in the Company's
   reserve balances.  Due to the uncertainty as to the realizability of
   the deferred tax assets, the Company has established valuation
   allowances in accordance with SFAS No. 109 to offset the asset.

   To the extent the Company realizes a tax benefit as a result of
   future reductions in the valuation allowance related to the
   utilization of pre-reorganization deferred tax assets, fresh start
   accounting rules provide for the reporting of such benefit by
   increasing Capital in excess of par value.  Although the future
   recognition of this benefit will have no impact on net earnings, the
   Company will realize a cash benefit from utilization of the "Pre-
   Reorganization Benefits" against any future tax liabilities.

<PAGE>
   Note 7 - Deferred Compensation

   Restated for the reverse stock split discussed in Note 4, as of July
   31, 1998, the Company's 1994 Long Term Incentive Plan provides for
   the issuance of 560,000 shares of $.025 par value Common Stock.
   Options to purchase the Common Stock are awarded at a price not less
   than 100% of the market price on the date of grant, become
   exercisable at various dates generally from one to four years after
   the date of grant, and expire ten years after the date of grant.  In
   the event a holder of options is no longer employed by the Company,
   the unvested shares are canceled upon the employee's termination and
   any vested shares must be exercised within 90 days or they are also
   canceled
<TABLE>
                                         1998                     1997

                                        Exercise                 Exercise 
                                         Price                    Price
                            Number       Range        Number      Range
                              of                        of
                            Shares     Per Share      Shares     Per Share
   <S>                    <C>      <C>              <C>       <C>
   Outstanding at the                                                  
   Beginning of the Year   293,649 $2.1875-8.660     202,460  $  6.250-8.660

    Granted                129,000 $ 2.500-4.875     179,150  $2.1875-2.4375
    Exercised                (666) $      2.4375    (11,969)* $        3.000
    Canceled              (71,600) $2.1875-8.660    (75,992)  $ 4.6426-6.875

   Outstanding at the End
   of the Period           350,383 $2.1875-8.660     293,649  $ 2.1875-8.660
    
   Exercisable at the End
   of the Period           104,416 $2.1875-8.660      87,039  $ 2.1875-8.660
   

   * All 11,969 shares were issued as share awards and not as options
   under the Company's 1995 Executive Incentive Compensation Plan.
</TABLE>
   As permitted under Statement of Financial Accounting Standards No.
   123 ("SFAS 123"), "Accounting for Stock-Based Compensation," the
   Company has elected to follow Accounting Principles Board Opinion No.
   25, "Accounting for Stock Issued to Employees" ("APB 25"), in
   accounting for stock-based awards to employees.  Under APB No. 25,
   because the exercise price of the Company's employee stock options
   equals the market price of the underlying stock on the date of grant,
   no compensation expense is recognized in the Company's financial
   statements for all periods presented.

   Pro forma information regarding net income and earnings per share is
   required by SFAS No. 123. This information is required to be
   determined as if the Company had accounted for its employee stock
   options granted subsequent to July 31, 1995 under the fair value
   method of that statement. The fair value of options granted in fiscal
   years 1998, 1997 and 1996 reported below has been estimated at the
   date of grant using the following weighted average assumptions:
<PAGE>
<TABLE>
   <S>                           <C>      <C>      <C>
                                 1998     1997     1996
   Risk-free rate (%)            5.90     5.85     5.96
   Volatility  (%)               33.0     25.0     30.0
   Expected Life (in years)      5        5        5
   Dividend Yield                ---      ---      ---
</TABLE>
   Option valuation models require the input of highly subjective
   assumptions, including the expected stock price volatility. Because
   the Company's options have characteristics significantly different
   from those of traded options, and because changes in the subjective
   input assumptions can materially affect the fair value estimate, in
   the opinion of management, the existing models do not necessarily
   provide a reliable single measure of the fair value of its options.
   The weighted average estimated fair value of stock options granted
   through July 31, 1998, 1997 and 1996 was $1.55, $1.72 and $2.38 per
   share, respectively.

   Note 7 - Deferred Compensation (continued)

   For purposes of pro forma disclosures, the estimated fair value of
   the options is amortized to expense over the options' vesting period.
   The Company's pro forma net income and per share data from continuing
   operations is as follows:

<TABLE>
   <S>                             <C>       <C>      <C>
                                    1998      1997     1996
   Pro Forma Net Income (loss):    $1,029    $   94   $ (20,159)

   Pro Forma Per Share Data:
                     Basic         $  .36    $  .03   $   (7.19)
                     Diluted       $  .36    $  .03   $   (7.19)
</TABLE>

   Because the Company anticipates making additional grants and options
   vest over several years, the effects on pro forma disclosures of
   applying SFAS No. 123 are not likely to be representative of the
   effects on pro forma disclosures of future years. SFAS No. 123 is
   applicable only to options granted subsequent to July 31, 1995.


   Note 8 - Unusual Items

   On September 20, 1996, the Company completed the sale of its
   2,148,000 shares of AM Japan Co., Ltd. ("AM Japan") and received
   proceeds of approximately $10,600, net of certain costs.  A gain of
   approximately $2,600 was recorded by the Company in the quarter ended
   November 2, 1996, after providing for expenses related to the sale.

   On October 17, 1996, the Company's Canadian subsidiary filed for
   voluntary assignment in bankruptcy.  Reserves for the cost to exit
   Canada, which had been established in the fiscal year ended July 31,
   1996, were adequate and no additional costs were recognized.
<PAGE>
   On December 2, 1996, the Company and Xeikon, N.V. entered into an
   agreement under which the parties agreed not to renew the
   distribution agreement.  The distribution agreement provided for the
   Company to sell and service Xeikon digital color presses in North
   America.  As part of this agreement, Xeikon America, Inc. has
   acquired certain assets from the Company and assumed certain
   responsibilities of the Company.  The divestiture of the assets
   resulted in a net loss of approximately $500 which the Company
   recorded in the quarter ending November 2, 1996.

   During 1996, the Company had provided $7,032 to cover certain
   restructuring actions to be carried out in 1997.  These restructuring
   actions consisted of: 1) $2,845 of severance and benefits associated
   with the termination of seven employees, including three officers, in
   conjunction with approved plans to close the corporate office and
   consolidate certain functions of the Company, 2) $3,561 to write-off
   net assets of the Company's Canadian subsidiary in connection with
   plans to exit this operation, and 3) $626 of facility closure,
   equipment disposal, and severance costs associated with management's
   plans to exit its manufacturing business.  These actions were
   substantially concluded in 1997.


   Note 9 - Discontinued Operations


   The results of discontinued business units are included in the
   consolidated statements of operations under "discontinued
   operations."  The following table summarizes key financial data
   related to the discontinued operations:
<TABLE> 
                                        Twelve Months ended

                                   July 31,    July 31,   July 31,
                                     1998       1997        1996
   <S>                              <C>        <C>        <C>
   Net sales                        $     -    $     -    $ 149,256

   Gross margin                           -          -       34,709

   Operating income (loss)                -          -      (6,749)

   Non-operating (income)
   expense                                -          -        2,136

   Allocated interest expense             -          -          581
                                         
   Income tax provision
   (benefit) applicable
   to discontinued businesses             -          -          664

   Income (loss) from operations
   of discontinued businesses net
   of taxes                               -          -     (10,130)

   Loss on sale                           -          -     (15,212)

   Income (loss) from
   discontinued operations          $     -    $     -    $(25,342)
</TABLE>
<PAGE>

   
   In August 1996, the Company completed the sale of substantially all
   of the assets and liabilities of the Sheridan Systems division for
   proceeds of $50,100.  A loss of $15,212 was recorded in the fourth
   quarter of the Company's fiscal year ended July 31, 1996 as a result
   of the transaction, with no recorded tax benefit.

   During fiscal year 1996 the Company completed the exit of its
   Multigraphics - International subsidiaries with the sale of its
   subsidiaries in the Netherlands, France, and Belgium and the
   placement of the Company's Multigraphics UK holding company into an
   Administration Proceeding.  The sale of the subsidiaries in the
   Netherlands, France, and Belgium required the Company to provide
   consideration of approximately $3,000 in the form of cash and other
   assets.  No gain or loss was recorded as a result of the exit of the
   Multigraphics - International subsidiaries.   The results of operations
   of Sheridan Systems and the divested Multigraphics - International
   operations are presented in the consolidated financial statements
   as discontinued operations. Interest expense pertaining to the
   Company's Revolving Credit Facility has been allocated based upon
   the ratio of the net assets of the discontinued operations to the
   consolidated capitalization of the Company.  Continuing operations
   and discontinued operations reflect the net tax benefit or tax
   expense generated by the respective operations, limited, however,
   by the income tax benefit or tax expense recognized in the Company's
   historical financial statements. No general corporate expenses have
   been allocated to the discontinued operations.  The results of the
   discontinued operations are not necessarily indicative of the results
   of operations which may have been obtained had the continuing and
   discontinued operations been operating independently.

<PAGE>
<TABLE>
   Note 10 - Balance Sheet Accounts

                                       July 31,   July 31,
                                         1998       1997
   <S>                               <C>         <C>
   Accounts receivable:
     Accounts receivable             $ 14,929    $ 11,080
     Allowance for doubtful
      accounts                          (300)       (334)

   Accounts receivable, net          $ 14,629    $ 10,746

   Property, plant and equipment:
     Machinery and equipment         $ 11,985    $ 14,196
   
     Leasehold improvements             3,338       3,103

                                       15,323      17,299
   Less accumulated depreciation       
   and amortization                   (5,769)     (7,077)

   Property, plant and equipment, net $ 9,554    $ 10,222

   Goodwill:
        Goodwill                     $  3,723    $      -
        Amortization                     (42)           -

        Goodwill,  net               $  3,681    $      -
</TABLE>

   Note 11 - Retirement Benefit Plans

   The Company maintains defined contribution retirement plans for
   domestic employees comprised of a savings plan (401(k)) and a profit
   sharing plan (Retirement Accumulation Plan).  Contributions to these
   plans take the form of (i) Company contributions to match a portion
   of employee contribution and (ii) contributions made at the
   discretion of the Board of Directors.  The Company's contributions to
   the domestic defined contribution plans were $800, $911 and $1,317 in
   1998, 1997 and 1996 respectively.

   In addition, the Company provides limited life insurance and health
   care benefits to certain domestic retired employees and provides for
   certain medical and life insurance benefits for retirees of
   previously closed manufacturing locations.
<PAGE>
   Net post-retirement life and health care cost includes the following
   components:
<TABLE>
                                            Twelve Months Ended

                                       July 31,   July 31,    July 31,
                                         1998       1997        1996

   <S>                                 <C>         <C>        <C>
   Service Cost - benefits earned      
   during the period                   $       3   $      3   $      5
   Interest cost on accumulated post-
   retirement benefit obligation             622        622        843
   Amortization of unrecognized
   actuarial gain                           (50)      (304)          -

   Total life and health care costs    $     575   $    321   $    848

   The plans' funded status at July
   31, was as follows:
                                           1998       1997        1996

   Actuarial present value of benefit
   obligations-
      Retirees                         $   7,323   $  8,348   $  9,617
      Fully eligible active
        participants                         197        224        294

   Accumulated postretirement benefit
   obligation                              7,520      8,572      9,911
   Cumulative unrecognized actuarial
   gain                                    1,106      1,157        253
   Plan assets                                 -          -          -

   Accrued post-retirement life and    
   health care costs                   $   8,626   $  9,729   $ 10,164


   Assumptions used for the Company's retiree life and health care plans
   as of July 31, were as follows:

                                           1998       1997
   Discount rate for determining
   obligations and interest cost           7.25%      7.25%
</TABLE>

   If the health care cost trend rates were increased 1% for all future
   years, the accumulated post-retirement benefit obligation would have
   increased 2.9% at July 31, 1998.  The effect of this change on the
   aggregate of service and interest costs would have been an increase
   of 2.6% for 1998.  An 11% increase in the health care cost trend rate
   was assumed for retirees under age 65 and an 9.0% increase for those
   over the age of 65.  These rates are assumed to decrease gradually to
   5.5% in the year 2001.

<PAGE>
   Note 12 - Lease Transactions

   The Company leases certain real and personal property and is
   responsible for most maintenance, insurance and tax expenses related
   to leased facilities.  At July 31, 1998, the future lease payments
   for continuing operating leases are as follows:
<TABLE>
             <C>                                    <C>
             1999                                   $1,666
             2000                                    1,413
             2001                                    1,264
             2002                                    1,266
             2003                                    1,283
             2004  and thereafter                    2,459

             Total future operating
             lease payments                         $9,351
</TABLE>

   Rental expenses for all operating leases were $2,026, $2,741 and
   $5,184 in 1998, 1997 and 1996, respectively.


   Note 13 - Geographic Segments

   The Company is a distributor of equipment, supplies and services to
   the graphic arts industry.  Its only current operations are in the
   United States.  The Company distributes on a lesser scale
   internationally through foreign dealers.  In September 1996, the
   Company sold all of its interest in its AM Japan subsidiary.

<TABLE>
                          Twelve Months Ended

                    July 31,   July 31,    July 31,
                      1998      1997        1996
   <S>               <C>        <C>      <C>
   Revenues
      North America  $ 95,251   $87,510  $137,981
      Japan                 -     1,151    30,071
             Total   $ 95,251   $88,661  $168,052


   Operating Profit (Loss)
      North America  $  3,271    $1,609  $(16,007)
      Japan                 -     (340)      (442)

             Total   $  3,271    $1,269  $(16,449)


   Assets
      North America  $ 45,639   $44,900  $  47,324
      Japan                 -         -      7,698

             Total   $ 45,639   $44,900  $  55,022
</TABLE>
<PAGE>
   Note 14 - Quarterly Financial Information - (Unaudited)
   A summary of quarterly financial information for fiscal 1998 and 1997
   is as follows:
<TABLE>
                                               Quarter
   <S>                       <C>      <C>       <C>      <C>      <C>
   1998                       1st       2nd      3rd      4th      Total
                                                                    Year
   Revenues                  $20,700  $22,199   $27,431  $24,921  $ 95,251
   Gross Profit                5,546    5,364     7,165    7,107    25,182

   Net income                $   158  $   164   $   555   $  194  $  1,071


   Per Common Share (1):

   Basic                     $  0.06  $  0.06   $  0.20   $ 0.07  $   0.38

   Diluted                   $  0.06 $   0.06   $  0.19   $ 0.07  $   0.37

   Closing Market Price (2)
            High             $ 2.750  $ 4.688   $ 6.375   $8.938   $ 8.938
            Low              $ 1.625  $ 2.500   $ 3.750   $4.750   $ 1.625


                                               Quarter

   1997                       1st       2nd      3rd      4th      Total
                                                                    Year
   Revenues                  $27,699  $20,767   $20,869  $19,326  $ 88,661
   Gross Profit                7,246    5,558     6,277    5,709    24,790
   Net income (loss)         $   519  $ (857)   $   268   $  173  $    103



   Per Common Share (1):
                             
   Basic                     $  0.19  $(0.31)   $  0.10   $ 0.06  $   0.04

   Diluted                   $  0.19  $(0.31)   $  0.10   $ 0.06  $   0.04

   Closing Market Price (2)
            High              $1.700   $1.850   $ 1.500   $2.500  $  2.500
            Low               $0.550   $1.500   $ 1.100   $1.500  $  0.550


   (1) Sum of quarters may not equal the total for the year due to changes
       in the number of shares outstanding during the year.

   (2) The Company's common stock is traded on the American Stock Exchange
       under the ticker symbol "MTI".  Market price has been restated to
       reflect the effect of the 1 for 2-1/2 share reverse stock split
       approved by the Company's shareholders on May 28, 1997.
</TABLE>
<PAGE>

   Note 15 - Five Year Financial Summary
<TABLE>                                                                   
                                                       Sept. 30    Aug. 1
                                                         1993      1993
                                                        Through   Through
                                  Years Ended              
    
    Operations:           July     July    July    July  July 31,  Sept. 29,
                          31,      31,     31,     31,     1994      1993
                         1998      1997   1996    1995
    <S>                 <C>      <C>     <C>     <C>    <C>       <C>
    Revenues            $ 95.3   $ 88.7  $168.1  $191.5 $  163.8  $     26.5
    Gross profit          25.2     24.8    37.6    52.7     51.4         7.0
      as a percent     
      of revenues         26.4%    28.0%   22.4%   27.5%    31.4%      26.4%
    Unusual items
    (inc.) exp.              -     (2.1)    7.0       -        -           -
    Operating
      income (loss)        3.3      1.3   (16.4)   (2.5)     6.8       (2.0)
      as a percent       
      of revenues          3.5%     1.5%   -9.8%   -1.3%     4.2%      -7.5%
    Net income (loss)
      from continuing
      operations           1.1      0.1   (20.2)   (4.2)     2.1        21.8
    Income (loss)
      from discontinued
      operations             -        -   (25.3)    8.8      4.6      (27.8)     

    Extraordinary gain                        -       -        -        58.7
    Net income (loss)   $  1.1   $  0.1  $(45.5) $  4.6 $    6.7  $     52.7
    Capital Employed
      Working Capital    (11.2)    (5.9)  (38.9)   61.5      8.7      (17.6)
      Total Assets        45.6     44.9    98.0   163.1    169.2       164.4
      Long-Term Debt       1.0      3.4     8.5    14.9     19.4        25.5
    Shareholder's Equity (10.1)   (11.9)    2.3    48.3     42.8        36.0
    Per Common Share
     Net income(loss) from
       continuing operations                                             N/A
     
      Basic             $ 0.38   $ 0.04  $(7.19) $(1.48)  $ 0.75
      Diluted           $ 0.37   $ 0.04  $(7.19) $(1.48)  $ 0.75
    Market Price            
      High (1)          $8.938   $2.500  $20.938 $30.625  $29.688        N/A
      Low (1)           $1.625   $0.550  $ 4.688 $20.313  $21.875        N/A
    Average number of common shares
     and equivalents (in thousands) (2)
                        
      Basic             $2,823   $2,807  $2,803  $2,808   $2,802         N/A
      Diluted           $2,895   $2,811  $2,803  $2,808   $2,802         N/A
   Number of Employees
   at Year End             671      651   1,121   1,378    1,520       1,633
   
                
       (1) Trading of Reorganized Company Stock commenced on
           December 6, 1993.
<PAGE>
       (2) The weighted average number of common shares and net income
           per common share have been restated to reflect the effect of
           the 1 for 2 1/2 share reverse stock split which was approved
           by the Company's shareholders on May 28, 1997.  The net income
           per common share and average number of common shares and
           equivalents for the predecessor Company has not been presented
           as this information is not comparable.
</TABLE>



                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


   To the Shareholders and the
   Board of Directors of
   Multigraphics, Inc.

   We have audited the accompanying consolidated balance sheets of
   Multigraphics, Inc. as of July 31, 1998 and 1997, and the related
   consolidated statements of operations, shareholders' equity and cash
   flows for each of the three years in the period ended July 31, 1998.
   These financial statements are the responsibility of the Company's
   management.  Our responsibility is to express an opinion on these
   financial statements based on our audit.

   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 financial statements referred to above present
   fairly, in all material respects, the financial position of
   Multigraphics, Inc. as of July 31, 1998 and 1997, and the results of
   its operations and cash flows for each of the three years in the
   period ended July 31, 1998, in conformity with generally accepted
   accounting principles.


   ARTHUR ANDERSEN LLP


   Chicago, Illinois
   September 25, 1998

<PAGE>

                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                ON SCHEDULE


   To Multigraphics, Inc.:

   We have  audited,  in  accordance with  generally  accepted  auditing
   standards,  the   consolidated  financial   statements  included   in
   Multigraphics, Inc.'s Annual Report  to Stockholders incorporated  by
   reference in this Form 10-K, and have issued our report thereon dated
   September 25, 1998.  Our audit was made for the purpose of forming an
   opinion on those statements taken as a whole.  The schedule listed in
   Part IV,  Item  14(a)(2)  is  the  responsibility  of  the  Company's
   management and is presented  for the purposes  of complying with  the
   Securities and Exchange  Commission's rules and  is not  part of  the
   basic financial statements.  This schedule has been subjected to  the
   auditing procedures  applied  in the  audit  of the  basic  financial
   statements and,  in  our  opinion,  fairly  states  in  all  material
   respects the financial data required to  be set forth therein in  re-
   lation to the basic financial statements taken as a whole.


   ARTHUR ANDERSEN LLP



   Chicago, Illinois,
   September 25, 1998


                       
   COMPANY DESCRIPTION

        Multigraphics, Inc., is a distributor of a broad range of
        equipment and supplies and a service provider to the graphic
        arts industry. The Company employs approximately 670 people and
        is headquartered in Mt. Prospect, Illinois.  In May, 1997 the
        Company's Stockholders approved a change in the name of the
        corporation from "AM International, Inc." to "Multigraphics,
        Inc."

   STOCKHOLDER INFORMATION

        Stock Information

        Multigraphics, Inc.'s Common Stock trades on the American Stock
        Exchange under the ticker symbol "MTI".

        Stockholders of Record

        As of October 21, 1998 the Company had approximately 1,000
        stockholders of record.

        Investor Inquiries
<PAGE>
        Analysts, portfolio managers and representatives of financial
        institutions seeking information about the Company should
        contact Thomas D. Rooney at the corporate headquarters or call
        (847) 375-1700.

        Stock Transfer Agent and Registrar

        First Chicago Trust Company of New York
        P.O. Box 2500
        Jersey City, New Jersey  07310
        (800) 446-2617

        Annual Meeting of Stockholders

        The Annual Meeting of Stockholders for the fiscal year ended
        July 31, 1998 will be held on December 3, 1998 at 11:00 a.m.
        (Central Standard Time) at the Company's headquarters at 431
        Lakeview Court, Mt. Prospect, IL, 60056.

        Reports and Publications

        The Company's Report on Form 10-K (without exhibits other than
        those specifically incorporated therein by reference), Annual
        Report to Stockholders, Proxy Statement, Quarterly Reports or
        other printed corporate literature can be obtained without
        charge, upon written request to the Shareholder Relations
        Department at the corporate headquarters, or by calling (847)
        375-1700.

        Independent Public Accountants     Corporate Headquarters

        Arthur Andersen LLP                Multigraphics, Inc.
        33 West Monroe Street              431 Lakeview Court
        Chicago, Illinois  60603           Mt. Prospect, Illinois
        60056
                                          (847) 375-1700


        Board of Directors

        Jeff M. Moore                      Robert E. Anderson III
        Apollo Advisors, L.P.              Owens & Minor, Inc.

        Jeffrey D. Benjamin                Robert N. Dangremond
        Co-Chief Executive Officer         Principal
        Libra Investments                  Jay Alix & Associates
                                           
        Thomas D. Rooney                   
        President and CEO
        Multigraphics, Inc.

        Committees of the Board
<PAGE>
        Audit Committee           Compensation and Management Committee

        Jeff M. Moore, Chairman           Jeffrey D. Benjamin, Chairman
        Robert E. Anderson III            Robert E. Anderson III
        Jeffrey D. Benjamin               Robert N. Dangremond
        Robert N. Dangremond              Jeff M. Moore

        Executive Officers

        Thomas D. Rooney
        President and
        Chief Executive Officer

        Steven R. Andrews
        Vice President, General Counsel and Secretary

        Mark F. Duchesne
        Vice President Distribution Operations

        Donald W. Hanigan
        Vice President and President,
        Hanley Graphic Products Division

        Gregory T. Knipp
        Vice President, Chief Financial Officer and Treasurer

        Raymond T. Leach
        Vice President and CEO,
        Publishing Solutions Inc.

        Charles T. Richards
        Vice President Service Operations

        Keith E. Stewart
        Vice President and President
        Publishing Solutions Inc.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>5
<TEXT>




                                EXHIBIT 23

            CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS WITH
                          RESPECT TO FORM S-8



   As  independent  public  accountants,   we  hereby  consent  to   the
   incorporation of our  reports included in  this Form  10-K, into  the
   Registrant's previously  filed Registration  Statement  (Registration
   No. 33-87288) on Form S-8.


   ARTHUR ANDERSEN LLP



   Chicago, Illinois
    October 27, 1998


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>6
<TEXT>

                                EXHIBIT 24

                           POWER OF ATTORNEY

        KNOW ALL  MEN  BY  THESE PRESENTS  that  each  individual  whose
   signature appears  below constitutes  and appoints  Thomas D. Rooney,
   Steven R. Andrews and  Gregory T. Knipp, and  each of them, his  true
   and  lawful   attorney-in-fact  and   agent   with  full   power   of
   substitution, for him and in his name, place and stead in any and all
   capacities, to  sign  the Report  on  Form 10-K  and  all  amendments
   thereto, and to  file the same,  with all exhibits  thereto, and  all
   documents in connection therewith,  with the Securities and  Exchange
   Commission, granting unto said attorneys-in-fact and agents, and each
   of them full power and authority to do and perform each and every act
   and thing  requisite and  necessary to  be done  to comply  with  the
   provisions of the Securities  Exchange Act of  1934, as amended,  and
   all requirements of  the Securities and  Exchange Commission,  hereby
   ratifying and confirming all  that said attorneys-in-fact and  agents
   or any of them, or their or his substitutes, may lawfully do or cause
   to be done by virtue thereof.

        Pursuant to the requirements of  the Securities Exchange Act  of
   1934, this  report  has  been  signed on  October  27,  1998  by  the
   following persons in the capacities indicated.

        Signature                     Title

   /s/Jeff M. Moore                 Chairman of the Board and Director
   Jeff M. Moore     


   /s/Thomas D. Rooney              President, Chief  Executive  Officer
   Thomas D. Rooney                 and Director



   /s/Robert E. Anderson III        Director
   Robert E. Anderson III


   /s/Jeffrey D. Benjamin           Director
   Jeffrey D. Benjamin


   /s/Robert N. Dangremond          Director
   Robert N. Dangremond

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>7
<TEXT>

<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          JUL-31-1998
<PERIOD-END>                               JUL-31-1998
<CASH>                                           2,869
<SECURITIES>                                         0
<RECEIVABLES>                                   14,929
<ALLOWANCES>                                     (300)
<INVENTORY>                                     13,188
<CURRENT-ASSETS>                                31,412
<PP&E>                                          15,323
<DEPRECIATION>                                 (5,769)
<TOTAL-ASSETS>                                  45,639
<CURRENT-LIABILITIES>                           42,615
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            70
<OTHER-SE>                                    (10,214)
<TOTAL-LIABILITY-AND-EQUITY>                    45,639
<SALES>                                         95,251
<TOTAL-REVENUES>                                95,251
<CGS>                                           70,070
<TOTAL-COSTS>                                   94,180
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               1,723
<INCOME-PRETAX>                                  1,717
<INCOME-TAX>                                       646
<INCOME-CONTINUING>                              1,717
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     1,071
<EPS-PRIMARY>                                     0.38
<EPS-DILUTED>                                     0.37
        

</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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