SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549
                                 FORM 10-Q

             Quarterly Report Pursuant to Section 13 or 15(d)
                  of the Securities Exchange Act of 1934
                          
   For Quarterly Period Ended             January 31, 1998
   Commission file number         1-683

                         Multigraphics, Inc.     
               (Exact name of registrant as specified in its charter)

   Delaware                                           34-0054940
   (Sate or other jurisdiction of                        (I.R.S.
   incorporation or organization)                    Identification No.)

   431 Lakeview Court Mt. Prospect, IL                          60056
   (Address of principal executive offices)                    (Zip Code)
  

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

                    AM International, Inc.
                    (Former Name)

   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 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 ____
   
   Indicate the number of shares outstanding of each of the issuer's
   classes of common stock, as of the latest practicable date.

                     2,826,957 shares of Registrant's
   Common Stock, $.025 par value, were outstanding as of February 27, 1998
                                   1998.
<PAGE>
                            MULTIGRAPHICS, INC.

                                   INDEX
   
   PART I -       Financial Information

        Item 1 -  Condensed Consolidated Statement of
                  Operations for the Six Months Ended January 31, 1998
                  and February 1, 1997 (unaudited).                      1
                  
                  Condensed Consolidated Balance Sheet
                  as of January 31, 1998 (unaudited) and
                  July 31, 1997.                                         2

                  Condensed Consolidated Statement of
                  Cash Flows for the Six Months Ended
                  January 31, 1998 and February 1, 1997
                  (unaudited).                                           3

                  Notes to Condensed Consolidated Financial
                  Statements (unaudited).                               4-9 

        Item 2 -  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations.                 10-14

   
   Part II             Other Information

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

        Item 6    -    Exhibits

<TABLE>                              
                              PART I - FINANCIAL INFORMATION
Item 1 - Financial Stateements
                                    MULTIGRAPHICS, INC.
                      CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                      (Dollars in thousands except per share amounts)
                              
                              Three Months Ended            Six Months Ended
                            January 31,  February 1,    January 31,  February 1,
                               1998         1997          1998          1997
<S>                        <C>           <C>            <C>          <C>
Revenues
  Machines and Supplies    $  12,966     $  9,962       $  23,126    $  25,708
  Services                     9,233       10,805          19,773       22,758
Total Revenues                22,199        20,767          42,899       48,466

Cost of Sales
  Machines and Supplies       10,292         8,489          18,149       21,282
  Services                     6,543         6,720          13,841       14,380
Total Cost of Sales           16,835        15,209          31,990       35,662

Gross Margin                   5,364         5,558          10,909       12,804
  Selling, general and         4,786         6,145           9,822       14,530
     administrative
  Unusual items, net             0            0                0         (2,095)

Operating income (loss)          578         (587)           1,087          369
                              
Non-operating income 
  (expense):
   Interest income                41         431              161          727
   Interest expense             (349)       (701)            (722)      (1,554)
   Other, net                     (6)         -                (6)         120

Income (loss) before 
 income taxes                    264        (857)             520         (338)
   Income tax (expense) benefit (100)         0              (197)          -

   Net income (loss)       $     164     $   (857)      $      323   $     (338)

   Net income (loss) per 
    common share :
         Basic             $    0.06      $ (0.31)      $     0.11    $    (0.12)
         Diluted           $    0.06      $ (0.31)      $     0.11    $    (0.12)
     
 (a) Weighted average shares 
     of common stock and common 
     stock equivalents outstanding 
     (in thousands):                        
         Basic                 2,831        2,803           2,818         2,803
         Diluted               2,893        2,803           2,844         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 effected 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>                                      
                           
                          MULTIGRAPHICS, INC.
                   CONDENSED CONSOLIDATED BALANCE SHEET
              (Dollars in thousands except per share amounts)
         
<TABLE>                              
                               Multigraphics, Inc.
                          Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
<CAPTION>                                                             
                                        January 31,   July  31,
                                            1998        1998
<S>                                       <C>        <C>
Assets
Current assets:
  Cash and cash equivalents               $  2,352   $ 10,376
  Accounts receivable, net                  11,847     10,746
  Inventories, net                          12,539     11,893
  Prepaid expenses and other assets            699        744

Total current assets                        27,437     33,759

Property, plant and equipment, net          10,032     10,222
Goodwill                                     2,832         __
Other assets, net                              947        919

Total assets                                41,248     44,900
             
Liabilities and Shareholders' Equity
Current liabilities:
  Short-term borrowings and current          7,674      6,273
  maturities of long-term debt
  Accounts payable                           5,246      5,217
  Service contract deferred income          11,022     11,738
  Payroll related expenses                   4,881      6,803
  Other current liabilities                  7,621      9,652

Total current liabilities                   36,444     39,683

Long-term debt                               4,974      5,245
Other long-term liabilities                 11,210     11,872

Total liabilities                           52,628     56,800
             
Shareholders Equity:
Common stock, $.025 par value; 9.5
million shares authorized;
  2,826,957 issued as of January 31, 1998 
  and
  2,815,337 issued as of July 31, 1997         70          70
  Capital in excess of par value           22,359      22,162
  Accumulated earnings (deficit)          (33,809)    (34,132)

Total shareholders' equity                (11,380)    (11,900)

Total liabilities and shareholders'        41,248      44,900
equity

The Notes to Consolidated Financial Statements are
an integral part of these financial statements.
</TABLE>
<PAGE>            

                         MULTIGRAPHICS, INC.
              CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
             (Dollars in thousands, except per share amounts)

<TABLE>                                                       
                                                        Six Months Ended
                                                    January 31,    February 1,
                                                      1998            1997
<S>                                              <C>            <C>
   Cash Flows from Operating Activities:     
   Net income / ( Loss )                            $   323        $   (338)
   Adjustments to reconcile net income
     to cash flow
     from operating activities:
     Depreciation of property, plant and               913            963
     equipment
     Amortization of Goodwill                            6              0
     Benefit from operating loss                       197              0
     carryforwards
     Change in assets and liabilities:
     Accounts receivable, net                        2,308           8,358
     Inventory, net                                  2,119          (1,333)
     Prepaid expenses and other assets                 129             766
     Accounts payable                               (3,275)        (10,353)
     Other current liabilities                      (4,268)        (11,312)
     Other, net                                     (1,421)            122
   Cash flow from operating activities              (2,969)        (13,127)

   Cash Flows from Investing Activities:
     Acquisition activities                         (5,415)               0
     Capital expenditures                             (270)         (1,100)
     Net proceeds from divested                          0          50,638
     operations
     Proceeds from disposition of PP&E                   0              35

   Cash flow from investing activities              (5,685)          49,573

   Cash Flows from Financing Activities:
     Net borrowings (payments) under
     revolving
     credit facilities                               2,975          (5,430)
     Payments of Bankruptcy Claims                  (1,999)         (2,094)
     Payments under capital lease                     (346)           (874)
     arrangements

   Cash flow from financing activities                 630          (8,398)
          
   Increase (decrease) in cash and
     cash equivalents                               (8,024)         28,048

   Cash and cash equivalents at                     10,376           2,560
     beginning of period

   Cash and cash equivalents at end of            $  2,352        $ 30,608
     period
                               
The Notes to Consolidated Financial Statements are an integral part 
of these financial statements.
</TABLE>
<PAGE>                            
                            
                            MULTIGRAPHICS, INC.
                CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars in thousands, except per share amounts)


   Note 1 - Basis of Presentation

   The Condensed Consolidated Financial Statements included herein have
   been prepared by the Company, without audit, pursuant to the rules
   and regulations of the Securities and Exchange Commission.  In the
   opinion of management, the Condensed Consolidated Financial
   Statements reflect all adjustments, which are of a recurring nature,
   necessary for fair presentation.  Certain prior year amounts have
   been reclassified to conform with the current year presentation.  The
   accompanying Condensed Consolidated Financial Statements and the
   related notes should be read in conjunction with the Consolidated
   Financial Statements and the related notes thereto included in the
   Company's Annual Report on Form 10-K for the year ended July 31,
   1997.

   Note 2 - Acquisitions

   In December, 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 leading regional dealer of graphic arts
   equipment and supplies serving customers in Northern Illinois. The
   aggregate purchase price was approximately $6.0 million including
   expenses of the transactions, and could increase by a maximum of $2.1
   million, contingent upon the companies' attainment of certain
   operating targets over the next two years.  The purchases included
   intangibles such as trademarks and goodwill that have been assigned
   preliminary value of approximately $2.8 million, which will be
   written off 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.

   Both acquisitions will be accounted for as purchases and, accordingly
   the financial statements include results of operations from the
   respective dates 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>
   Note 2    Acquisitions (continued)

   Revenues                 $    24,866    $28,218   $51,734   $62,692
   Net Income                       151       (790)      365     (221)

   Earning per share:
        Basic                     0.05      (0.28)      0.13    (0.08)
        Diluted                   0.05      (0.28)      0.13    (0.08)
   
   Note 3 - Borrowing Arrangements

   The Company's short and long-term borrowings are comprised of the
   following:

                                                      January 31,   July 31,
                                                        1998          1997

      Revolving Credit Facility                       $  2,975      $  -
      General Unsecured Claims & Priority Tax Claims     7,543        9,042
      Capital Leases                                     2,130        2,476

                      Total                           $ 12,648      $11,518 


   Classified in the Consolidated Balance Sheet
   as follows:
      Short-term                                      $  7,674      $ 6,273
   
      Long-term                                          4,974        5,245

                      Total                           $ 12,648      $11,518

<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.  At January 31, 1998 the Company had
   borrowings of $2,975 under the Revolving Credit Facility and was
   utilizing approximately $2,268 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.  At January 31, 1998 the reference 
   rate was 8.5%.  Letter of credit fees are 1.5% 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 provides 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.  At January 31, 1998 
   the Company was in compliance with the covenants of the Revolving Credit
   Facility.  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 borrowing 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.  As of January 31, 1998 the
   calculated borrowing base was approximately $9,100.  The Company is
   operating its business with existing cash reserves and liquidity
   provided by the Foothill Revolving Credit Facility which, based on
   current projections, are adequate to finance current operations.

   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.  The timing of
   payments of disputed claims commence with the allowance of the claim
   by the Bankruptcy Court and may occur at a rate different from the
   equal quarterly payments made to holders of the allowed general
   unsecured claims discussed above.  At January 31, 1998 the Company
   had $1,703 of restricted cash which pertains to the settlement of
   disputed claims in accordance with the Plan.
<PAGE>   
   Note 4 - Capital Structure

   On May 1, 1997 the Board of Directors declared a dividend of $2.00
   per common share, payable to holders of record as of May 13, 1997.
   The dividend of 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.  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.

   Restated for the reverse stock split and the payment of the $2.00 per
   share dividend, as of January 31, 1998 the Company's 1994 Long Term
   Incentive Plan provides for the issuance of 560,000 shares of 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 the 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.  At January 31, 1998 options to purchase 333,999 shares were
   outstanding at option prices ranging from $2.1875 to $8.2139.  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.  The Company's warrants
   issued in accordance with the Plan expired unexercised.
   
   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 January 31, 1998
   disputed claims amounted to  approximately $8,205.  The disputed
   claims are primarily comprised of environmental and product liability
   claims.  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 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.
<PAGE>
   Note 6 - Components of Certain Balance Sheet Accounts

                                                January 31,      July 31,
                                                   1998           1997

   Accounts receivable:
      Accounts receivable                        $12,240        $11,080
      Allowance for doubtful accounts              (393)          (334)
         Total accounts receivable, net          $11,847        $10,746


   Inventories: 
     Raw materials and Work-in-process           $   200        $   225
         Finished goods                           12,339         11,668

             Total inventories, net              $12,539        $11,893

   Inventories and cost of goods sold reported in the interim financial
   statements are based, in part, on accounting estimates relating to
   inventory obsolescence and differences resulting from periodic
   physical inventories which are conducted on dates on or about the
   Company's fiscal year end.  Accumulated depreciation deducted from
   property, plant and equipment was $5,105 at January 31, 1998 and
   $7,077 at July 31, 1997.  The policy of the Company with respect to
   fully depreciated assets is to adjust the gross cost and accumulated
   depreciation at the date of disposition, and to recognize gains or
   losses as incurred.  During the quarter ended January 31, 1998 the
   Company recorded adjustments to write off the gross cost and
   accumulated depreciation values of fully depreciated assets disposed
   as a result of its exit from machine manufacturing activities.  There
   was no gain or loss recognized in the current period, and no impact
   on depreciation expense as a result of this process.
   
   Note 7 - Unusual Items, Net

   On September 20, 1996 the Company completed the sale of its 2,148,000
   shares of AM Japan Co., Ltd. ("AM Japan")  and the Company 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 December 2, 1996, the Company and Xeikon,  N. V. entered into an
   agreement under which the parties agreed not to renew the
   distribution agreement pursuant to which the Company sold and
   serviced 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 liabilities 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.
<PAGE>
   Note 8  Earnings Per Share

   In February 1997, Statement of Financial Accounting Standards No. 128
   "Earnings per share" ("SFAS 128") was issued by the Financial
   Accounting Standards Board ("FASB").  SFAS 128 specifies
   modifications to the calculation of earnings per share from that
   currently used by the Company.  Under SFAS 128, "basic earnings per
   share" is calculated based upon the weighted average number of common
   shares actually outstanding, and "diluted earnings per share" is
   calculated based upon the weighted average number of common shares
   outstanding and other potential common shares if they are dilutive.
   Common share equivalents consisting of common shares issuable on
   exercise of outstanding options are computed using the treasury
   method.
   
   Item 2.
                   MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   The discussion of the results of operations and financial condition
   presented below should be read in conjunction with Management's
   Discussion and Analysis included in the Company's Annual Report to
   Shareholders for the year ended July 31, 1997.

   The interim results of operations for the periods ended February 1,
   1997 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.

   The results of operations for the three month period ended January 31,
   1998 include the post-acquisition results of Hanley Graphic
   Products Company and Publishing Solutions, Inc., which were acquired
   by the Company in separate transactions consummated on December 11,
   1997 and December 18, 1997, respectively.  These acquisitions have
   been accounted for as purchases and, accordingly, the consolidated
   financial statements include the operations since their respective
   acquisition dates.

   Consolidated Results of Operations
   
   ($ in millions)            Quarter Ended               Six Months Ended
                          January 31,  February 1,    January 31,  February 1,
                               1998          1997          1998         1997
   Revenues               $     22.2   $    20.8      $     42.9   $   48.5
   Gross Margin                  5.4         5.6            10.9       12.8
   Gross Margin %               24.2%       26.8%           25.4%      26.4%
   Operating Expenses            4.8         6.2             9.8       14.5
   Unusual Items, net (income)    -           -               -        (2.1)
   Operating Income/(Loss)       0.6        (0.6)            1.1        0.4
   Non-operating expenses, net   0.3         0.3             0.6        0.7
   Net income/(Loss) before tax  0.3        (0.9)            0.5       (0.3)
   Net Income/(Loss)       $     0.2   $    (0.9)     $      0.3   $   (0.3)
<PAGE>
   Second Quarter
   
   The net income for the quarter ended January 31, 1998 was $0.2
   million ($0.06 per common share), an improvement of $1.1 million over
   the prior year comparable period. The improvement in net income is
   largely the result of cost reduction actions taken by the Company to
   reduce headcount, facility and other operating expenses.

   Second quarter revenues of $22.2 million increased by $1.4 million
   over the comparable prior year period. As previously reported, the
   market for press products has experienced long term decline due to
   inroads from competing printing technologies, which has eroded the
   Company's installed base of press equipment and led to decreased
   sales of related pressroom equipment, supplies and services.  Growth
   in revenues over the prior year period has resulted from an increased
   focus on the distribution of new products and product lines acquired
   from existing vendors, the addition of third party service
   agreements, and acquisitions of regional graphic arts dealers and
   distributors which, collectively, have more than offset the $1.9
   million decline in revenues from discontinued product lines and other
   traditional service revenues since the prior year quarter.    The
   Company continues to execute its growth strategy to offset the long
   term decline cited above, and believes additional increases in
   revenues could improve profitability, since the Company has
   infrastructure and systems capable of absorbing  greater volumes of
   transactions.

   Gross margin of $5.4 million was $0.2 million lower than the
   comparable prior year period.  Lower gross margins resulting from the
   declines in traditional service revenues and discontinued product
   lines were largely offset by increased margins from products added to
   the product offering.  Although  the Company has sought to replace
   the revenues previously derived from its historical higher margin
   manufactured products, product lines added through distribution
   agreements, joint ventures, affiliations with third parties, and
   acquisitions generally have lower margins.  To offset the lower
   margin rates, the Company has invested in information systems and has
   undertaken other reorganization measures to increase efficiency and
   lower expenses.

   Operating expenses in the second quarter of $4.8 million were $1.4
   million lower than the prior year period.  The decrease in expenses
   was primarily the result of cost reduction actions taken by the
   Company which have lowered headcount, facility and other selling,
   general and administrative costs.

   Six Months
   
   For the six months ended January 31, 1998 the Company had net income
   of $0.3 million ($0.11 per common share ).  In the prior year
   comparable period, the Company had a gain of $2.6 million on the
   divestiture of its interest in AM Japan Co., Ltd. which reduced its
   net loss to $0.3 million ($0.12 per common share).  Excluding the
   gain on the divestiture, net operating income improved by $3.2
   million in the first six months of 1998.
<PAGE>
   Revenues for the first six months ended January 31, 1998 of $42.9
   million were $5.6 million below the corresponding prior year period.
   The decrease in revenues is largely due to the divestiture of
   subsidiaries in Japan and Canada, and the exits from machine
   manufacturing and other unprofitable product lines which collectively
   had contributed $6.9 million to the comparable prior year period.

   The Company has developed strategies to increase revenues through
   product line additions, distribution agreements, joint ventures,
   third party service agreements and acquisitions, and believes an
   increase in revenue levels could improve profitability since the
   Company has infrastructure and systems capable of absorbing greater
   volumes of transactions.  The Company is now focused on selling
   supplies, graphic arts equipment and integration services, and
   providing maintenance service and parts to its chosen markets.  The
   additional revenues from acquisitions and investments in
   infrastructure targeted to improve efficiency in supply chain
   management have begun to offset the declining demand for products and
   services historically offered by the Company.

   Gross margin of $10.9 million for the first half of 1998 was $1.9
   million lower than the comparable prior year period, largely due to
   lower revenue volume and lower margin rates resulting from the
   factors noted above.  As previously noted, the Company has sought to
   replace revenues previously derived from its historical higher margin
   manufactured products with product lines added through distribution
   agreements, joint ventures, 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.

   Operating expenses for the six months ended January 31, 1998 of $9.8
   million were $4.7 million below the comparable prior year period.
   The decrease in expenses was largely due to the divestiture of
   foreign operations, discontinued product lines and costs associated
   with the Company's exit from manufacturing operations, which
   collectively added $2.2 million to the prior year.  The remainder of
   the decrease in expenses resulted from  reductions in selling,
   general and administrative and corporate expenses as the Company
   transitioned to a distribution organization.

   Unusual item income in the prior year quarter resulted from a  $2.6
   million gain on the sale of the Company's majority ownership interest
   in AM Japan Co., Ltd. in a transaction completed on September 20,
   1996, net of a $0.5 million loss recorded on the disposition of net
   assets employed following the decision to exit distribution of the
   Xeikon digital color press.

   Non-operating expenses decreased $0.1 million from the prior year
   primarily due to a $0.8 million decrease in interest expense offset
   by a $0.6 million decrease in interest income.  The $0.8 million
   decrease in interest expense was primarily due to reduction in
   prepetition debt obligations, and lower interest costs incurred on
   postretirement benefit obligations.  The $0.6 million decrease in
   interest income was primarily due to lower investment balances in
   1998 largely resulting from payment of a $14.1 million dividend in
   May, 1997.
<PAGE>
   The Company recorded income tax expense of $0.2 million during the
   six months ending January 31, 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 carryforwards available to the Company.

   Liquidity and Capital Resources
   (six months ended January 31, 1998 and February 1, 1997)

   The Company's cash and cash equivalents were $2.4 million as of
   January 31, 1998, having decreased $8.0 million from the $10.4
   million balance on July 31, 1997. Net borrowings and other debt
   increased by $1.1 million during the first six months of the current
   year.  This overall use of liquidity was primarily attributable to
   acquisitions of regional graphics arts dealers which the Company
   completed in the second quarter, as discussed below, and payments of
   bankruptcy claims.

   Operating Activities.  In the six months ended January 31, 1998 the
   Company had a cash outflow from operating activities of $3.2 million
   as compared with a cash outflow of $13.1 million in the comparable
   period ended February 1, 1997.  Net income was $0.3 million in 1998,
   as compared with a net loss of $0.3 million in the comparable prior
   year period.

   Accounts receivable decreased by $2.3 million during the first six
   months of 1998 and $8.4 million in the first six months of 1997 as a
   result of the collection of relatively higher outstanding balances
   which exist at the inception of each fiscal year. Inventories
   decreased $2.1 million in 1998 due primarily to lower stocking levels
   of machines which resulted from an increase in drop shipment sales,
   and improved supplies and service parts turnover rates reflective of
   the transition from a manufacturing to a distribution operation.
   During the prior year period, inventories increased by $1.3 million
   primarily as a result of increases in supplies and service parts
   stock levels to improve product availability.  In the first six
   months of 1998 accounts payable decreased $3.3 million due primarily
   to lower inventory purchases. In the prior year period, accounts
   payable decreased $10.4 million due to a paydown of past due
   creditors.  Other current liabilities were reduced by $4.3 million
   during the first six months of 1998 primarily due to payment of $1.9
   million of payroll related liabilities, payment of $0.6 million to
   settle a recourse obligation of a divested operation, and
   restructuring payments of approximately $1.0 million related to the
   Company's phase-out of its manufactured machine product line and
   other exit costs of a previously divested foreign subsidiary.  In the
   prior year period, other current liabilities declined $11.3 million
   due primarily to restructuring payments for severance, accrued
   vacation and the settlement of a lease obligation related to a
   divested foreign subsidiary.
<PAGE>
   Investing Activities.  During the second quarter of 1998 the Company
   expended $5.4 million related to its acquisition of  Itasca, Illinois
   based Hanley Graphic Products Company and Akron, Ohio based
   Publishing Solutions, Inc.  These expenditures were financed from
   existing cash reserves.  During the first six months of 1997 the
   Company had capital expenditures of $1.1 million primarily to upgrade
   systems and equipment, and the Company received $50.6 million of net
   proceeds from the divestitures of its Sheridan Systems division and
   AM Japan subsidiary.

   Financing Activities.  During the second quarter of 1998 the Company
   had net borrowings under its Revolving Credit Facility of $3.0
   million which occurred as a result of the operating and investing
   activities discussed above.  Payments of general unsecured claims and
   priority tax claims were $2.0 million in the first six months of 1998
   and $2.1 million in the first six months of 1997 in accord with 
   scheduled Plan payments.  In the first quarter of 1997 the Company
   repaid outstanding borrowings under its Revolving Credit Facility of
   $5.4 million with proceeds from the divestitures.

   The Company's primary source of financing is its $10 million three
   year secured revolving credit facility which it entered into in May,
   1997.  The Company believes that its existing cash reserves and the
   liquidity provided by the credit facility are sufficient to finance
   current operations and to support future growth strategies which may
   include the acquisitions of other regional dealers or distributors in
   the graphic arts industry.
   
   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, 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.

   PART II - OTHER INFORMATION
<PAGE>   
   Item 4.   Submission of Matters to a Vote of Security Holders.

   On November 21, 1997, Registrant held its Annual Meeting of
   Stockholders for the fiscal year ended July 31, 1997.

   Registrant's stockholders reelected the five incumbent members of the
   Board of Directors to serve until the next annual meeting or until
   their successors are elected and qualified.  The Board of Directors
   consists of Robert E. Anderson III, Jeffrey D. Benjamin, Robert N.
   Dangremond, Jeff M. Moore, and Thomas D. Rooney.

   Registrant's stockholders also ratified the appointment of Arthur
   Andersen LLP as the Registrant's independent public accountants for
   the fiscal year ending July 31, 1998.  The vote total was 2,751,753
   votes "for", 1,065 votes "against", and 1,857 votes to "abstain".

<PAGE>
   Item 6.   Exhibits

             (a)    Exhibits

             10.1   Amended and Restated Loan and Security Agreement by
                    and among Registrant, Publishing Solutions, Inc.
                    and Foothill Capital Corporation dated as of
                    February 19, 1998.

             10.2   Employment Agreements between the Registrant and
                    Donald W. Hanigan, Raymond T. Leach and
                    Keith E. Stewart, respectively.

             27     Financial Data Schedule
             
             (b)    Reports on form 8-K
                    None
   
<PAGE>   
   Pursuant to the requirements of the Securities Exchange Act of 1934,
   the registrant had duly caused this report to be signed on its behalf
   by the undersigned thereunto duly authorized.

                                 MULTIGRAPHICS, INC.

                                 /s/ Gregory T, Knipp
   Date:  March 17, 1998         Gregory T. Knipp
                                 Vice President and Chief Financial Officer
                                 (authorized officer and principal
                                 accounting officer)