<PAGE>   1
================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                   FORM 10-K/A
                                (AMENDMENT NO. 2)

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

                     FOR THE FISCAL YEAR ENDED JUNE 30, 1998

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
                  TRANSITION PERIOD FROM ________ TO ________.

                         COMMISSION FILE NUMBER 0-18708

                                   ----------

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

             TEXAS                                              75-1952080
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

                  1303 E. ARAPAHO ROAD, RICHARDSON, TEXAS 75081
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (972) 234-1769

                                   ----------

        Securities Registered Pursuant to Section 12(b) of the Act: NONE

           Securities Registered Pursuant to Section 12(g) of the Act:
                     COMMON STOCK, PAR VALUE $0.01 PER SHARE
                                (Title of Class)

                                   ----------

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 at October 31, 1998, was approximately $97,746,111.

On October 31, 1998, there were 11,005,073 shares outstanding of the
registrant's Common Stock.

<PAGE>   2

           The item numbers and responses thereto are in accordance with the
requirements of Form 10-K. All capitalized terms used and not otherwise defined
herein shall have the meaning specified in the Company's Annual Report on Form
10-K.

           The Company hereby amends and restates in its entirety each of the
following items of the Company's Annual Report on Form 10-K.


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

OVERVIEW

Micrografx, Inc. was founded in 1982 and incorporated in 1984 in the State of
Texas. Micrografx is a global graphics software leader focused on three business
categories: process management graphics, corporate graphics, and network design.
Additionally, the Company seeks to leverage its strong technology base by
partnering with organizations to maximize the distribution and value of its
intellectual property. The Company sells and distributes its products directly
and through a network of distributors, value-added resellers, OEM customers.

For the fiscal year ended June 30, 1998, the Company reported net revenues of
$71.8 million, an increase of 11 percent from the $64.9 million for the year
ended June 30, 1997. Net income for the year ended June 30, 1998 was $0.6
million, or $0.05 per diluted share. This compares to a net loss of $6.2
million, or $0.60 per diluted share, which includes the in-process research and
development charge of $2.3 million, for fiscal 1997.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
relationship to net revenues of certain items in the Company's Consolidated
Statements of Operations. Historical results and percentage relationships are
not necessarily indicative of operating results for any future period.

<TABLE>
<CAPTION>
                                                            YEARS ENDED JUNE 30,
                                                 ------------------------------------------
                                                   1998             1997             1996
                                                 --------         --------         --------
<S>                                              <C>              <C>              <C> 
Net revenues                                       100%             100%             100%
Cost of revenues                                    30%              31%              24%
Gross profit                                        70%              69%              76%
                                                   
Operating expenses:                                
   Sales and marketing                              48%              53%              49%
   General and administrative                       10%              12%              11%
   Research and development                         12%              11%              10%
   In-process research and development charge       --                3%              --
   Restructuring charges                            --                3%              --
   Acquisition charges                              --               --                5%
Total operating expenses                            70%              82%              75%
                                                   
Income (loss) from operations                       --              (13%)              1%
                                                   
Non operating (income) expense                      (1%)             (1%)             (1%)
                                                   
Income (loss) before income taxes                    1%             (12%)              2%
                                                   
Income taxes                                        --               (2%)              1%
                                                   
Net income (loss)                                    1%             (10%)              1%
</TABLE>                                     


<PAGE>   3


FISCAL 1998 COMPARED TO FISCAL 1997

NET REVENUES

Net revenues for fiscal 1998 were $71.8 million, compared to net revenues for
fiscal 1997 of $64.9 million.

The following table sets forth net revenues by product category and the
percentage relationship to total net revenues. The process management category
includes Micrografx FlowCharter(R), Micrografx EnterpriseCharter(TM), Micrografx
ISOCharter(TM), and Optima(R). The corporate graphics category includes
Micrografx Graphics Suite(TM), Webtricity(TM), Simply3D(TM), Picture
Publisher(R), Micrografx Designer(R), Designer Power Pack, and Small Business
Graphics and Print Studio(R). The personal creativity category includes American
Greetings(R) CreataCard(R) Plus(TM), American Greetings(R) CreataCard(R)
Gold(TM), Crayola(TM)Art Studio(TM), and Hallmark Connections(TM) Card
Studio(TM). Revenues from Windows Draw(R) are categorized as either corporate
graphics or personal creativity depending on the Company's assessment of the
market or channel into which the product is sold. The technology category
results from the Company's use of its library of graphics software in selective
licensing. For fiscal 1998, the technology category consists of licensing of
certain personal creativity software source code to Cendant.


<TABLE>
<CAPTION>
                                                     YEARS ENDED JUNE 30,
                                       ---------------------------------------------
                                          1998          %           1997          %
                                       ---------------------------------------------
<S>                                    <C>             <C>       <C>             <C>
Process management                     $  15,786       22%       $  15,069       23%
Corporate graphics                        31,310       44%          32,723       51%
Personal creativity                       21,671       30%          17,070       26%
Technology                                 3,025        4%               -        0%
                                       ---------------------------------------------

Total revenues                         $  71,792      100%       $  64,862      100%
</TABLE>

PROCESS MANAGEMENT

The five percent increase in process management revenues resulted from the
increasing focus the Company has placed on this area. To this end, the Company
started selling the Optima product at the beginning of the 1998 fiscal year,
which was acquired in the acquisition of AdvanEdge Technologies, Inc.
("AdvanEdge") on June 30, 1997. In the second half of the fiscal year, the
Company introduced EnterpriseCharter and ISOCharter, FlowCharter-based products
which are suited to fill specific needs in growing niches of the process
management market. Revenues from FlowCharter were down slightly from fiscal 1997
to fiscal 1998, however, during the second half of fiscal 1998 revenues from
FlowCharter grew more than 10 percent over the comparable period for the prior
year. Initial acceptance of the new products, the increase in multi-user
licensing, and the second-half growth of FlowCharter revenues all result from
the Company's decision to focus on corporate customers and their graphical
needs.

CORPORATE GRAPHICS

Corporate graphics declined four percent due to the continued decline of
products the Company no longer develops. During fiscal 1997, the Company
discontinued marketing activities for products such as Designer, Designer Power
Pack, Small Business Graphics and Print Studio, as well as products developed by
Visual Software, which merged with the Company in fiscal 1996. The Company chose
to focus its efforts on fewer products, resulting in new releases in fiscal 1998
of Simply3D, Picture Publisher, and Webtricity, all of which resulted in revenue
increases during the year. Further, the Company benefited from OEM agreements
signed at the end of fiscal 1997 and throughout 1998 for these products with
companies such as Hewlett-Packard and Matrox Graphics. An updated version of
Graphics Suite was released during the year with changes geared toward the
corporate customer. With the Company's focus on the corporate customers, the
Company's objective is to increase 


<PAGE>   4

sales of multi-user licensing to corporate customers. However, the selling cycle
to corporate accounts is longer as new releases of the product do not appeal to
the impulse buyer in a retail computer software store, but rather, to larger,
multi-national companies that undergo a stringent and lengthier evaluation
process in order to make intelligent software choices regarding their graphical
needs.

PERSONAL CREATIVITY

The 27 percent growth in this category resulted from the continued growth of the
greeting card software market. The Company's CreataCard products continued its
market share leadership against stiff competition from products published by
Microsoft and Broderbund. The Company also released a new version of Windows
Draw resulting in a significant sales increase. These gains were partially
offset by declines in legacy products such as those licensed under the Crayola
brand name, for which the Company's license expired in the third quarter of
fiscal 1997.

In light of recent consolidation in the consumer software arena, as well as
extremely aggressive retail programs, the Company determined that for a company
with the size and resources of Micrografx, it was growing increasingly difficult
to compete effectively in the consumer retail product category. As a result, the
Company formed a strategic relationship with Cendant Software Corporation
("Cendant") effective June 30, 1998, whereby Micrografx has licensed Cendant a
series of core graphics technologies, information relating to the customers who
have purchased products based on the aforementioned technologies, marketing
information related to those products, and certain associated intellectual
property rights. Additionally, Micrografx has entered into a combination of
worldwide publishing and distribution agreements with Cendant for its personal
creativity software, including Windows Draw Print Studio and Micrografx
SnapShot, which was to be Micrografx's new entry into the consumer digital
imaging arena. The agreements also included the Windows Draw product sold into
corporate channels (shown in the corporate graphics category) which represented
revenue of $6.1 million and $5.4 million in fiscal 1998 and 1997, respectively.
The agreements with Cendant allow the Company to make significant progress in
de-empasizing the consumer software market.

Effective August 31, 1998, Micrografx entered into an agreement that assigns the
Company's distribution rights to American Greetings CreataCard Gold and
CreataCard Plus to TLC. This assignment of rights to TLC concluded all
contractual responsibilities and settles all contractual issues between
Micrografx and American Greetings. With this assignment, the Company has
completed its de-emphasis from the consumer marketplace in order to focus on its
higher value business graphics software.

TECHNOLOGY

The technology category contains the portion of the revenue recognized to date
related to the previously discussed Cendant and TLC relationships. The Company
expects to recognize additional revenue of approximately $18 million from the
relationships spread over the four quarters of fiscal 1999 based on contractual
obligations and risks assumed, with a higher proportion of the revenue to be
recognized in the first half of fiscal 1999. The impact on net income varies
each quarter depending on the costs to the Company of those obligations and
risks.

Net revenues by geographic region and as a percentage of total revenues are as
follows:

<TABLE>
<CAPTION>
                                                     YEARS ENDED JUNE 30,
                                       ---------------------------------------------
                                          1998          %           1997          %
                                       ---------------------------------------------
<S>                                    <C>             <C>       <C>             <C>
Americas                               $  39,737       55%       $  33,287       51%
Europe                                    24,772       35%          20,839       32%
Asia Pacific                               7,283       10%          10,736       17%
                                       ---------------------------------------------

Total net revenues                     $  71,792      100%       $  64,862      100%
</TABLE>



<PAGE>   5

The revenue increase in the Americas resulted from the growth in personal
creativity, most of which is U.S. based. The growth in Europe resulted from the
focus on sales to corporate customers with more than 60 percent growth in
multi-user licenses, primarily from sales of Graphics Suite and FlowCharter. The
Asia Pacific decline resulted from the dramatic decline in the retail sector of
the Japanese economy.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues includes the cost of documentation, diskettes or compact disks
(CDs), packaging and production overhead for the Company's application software
products; amortization of capitalized software development costs and acquired
product rights; and external product royalties. Cost of revenues in fiscal 1998
were $21.5 million, or 30 percent of net revenues, compared to $19.8 million or
31 percent of net revenues in fiscal 1997. The decrease in cost of revenues as a
percentage of net revenues for fiscal 1998 is attributable to the technology
category revenues which have no direct costs associated with them, partially
offset by the accelerated amortization of costs capitalized related to the
development of the personal creativity titles as well as increased royalties due
from the personal creativity revenues. Also contributing to the decline in cost
of revenues as a percent of revenues was a favorable shift in product mix from
boxed products which contain typical content (packaging, manuals, CDs or floppy
disks) to OEM and multi-user license revenues which require substantially less
content.

Regardless of revenue category, the cost to produce each of the Company's
software titles is relatively equal -- each product has CDs, manuals, and
packaging. Due to the specialized functionality in the process management and
corporate graphics titles, their unit prices are significantly higher than the
volume-driven personal creativity titles. As a result, the Company expects the
cost of revenues to continue to decline as a percent of revenue.

SALES AND MARKETING EXPENSE

Sales and marketing expenses include the cost of advertising, promotions,
cooperative and incentive programs with distributors, trade shows, marketing,
technical support, and the Company's sales force. Sales and marketing expenses
in fiscal 1998 were $34.0 million, or 48 percent of net revenues, compared to
$34.1 million, or 53 percent of net revenues, in fiscal 1997. The Company was
able to reduce expenses in absolute dollars despite growing revenue and adding a
significant number of corporate sales people. The additional cost of the sales
people was more than offset by reductions in variable marketing funds spent in
retail channels as well as reduced spending in Japan due to the continuing
economic decline there. The Company expects that sales and marketing expenses
will continue to decline as a percentage of revenue.

GENERAL AND ADMINISTRATIVE EXPENSE

General and administrative expenses include the costs of the Company's
information systems, human resources, finance, and administrative functions.
General and administrative expenses in fiscal 1998 were $7.4 million, or 10
percent of net revenues, compared to $7.9 million, or 12 percent of net
revenues, in fiscal 1997. The decline resulted from savings realized following
the restructuring in fiscal 1997, partially offset by outside legal and
professional fees resulting from the Cendant transaction. The Company expects
general and administrative expenses to remain at the current level for the near
term.

RESEARCH AND DEVELOPMENT EXPENSE

Research and development expenses include compensation, benefits, and incentives
paid to developers. In accordance with Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," the Company capitalizes certain software development costs incurred
after technological feasibility is achieved. These costs are amortized over the
estimated economic life of the products, generally 12 to 18 months. Amortization
of capitalized software development costs is included in cost of revenues.

Research and development expenses (net of amounts capitalized) in fiscal 1998
were $8.5 million, or 12 percent of net revenues, compared to $7.2 million, or
11 percent of net revenues, in fiscal 1997. Gross research and development
expenses, before capitalization, for fiscal 1998 were $12.7 million, or 18
percent of net revenues, compared to $11.0 million, or 17 percent of revenues
for fiscal 1997. The increased spending resulted from an increase in the number
of development employees as well as the ongoing development expenses resulting
from the acquisitions of AdvanEdge Technologies, Inc. ("AdvanEdge") on June 30,
1997, and WebKnight, Inc.

<PAGE>   6

("WebKnight"), on December 31, 1997. The Company expects research and
development expenses to continue to increase in absolute dollars in the near
term.

During fiscal 1998, the Company capitalized approximately $4.3 million in
software development costs and amortized $4.4 million in software development
costs. This compares to capitalization of $3.8 million and amortization of $4.0
million for fiscal 1997.

IN-PROCESS RESEARCH AND DEVELOPMENT CHARGE

On June 30, 1997, the Company acquired AdvanEdge for approximately $3.7 million.
The purchase price consisted of $1 million in cash paid on June 30, 1997, $2.5
million to be paid in cash or Company stock over the subsequent 30 months, and
the assumption of certain liabilities. The acquisition was effected by a merger
of a wholly owned subsidiary of the Company into AdvanEdge Technologies, Inc. A
substantial portion of the purchase price was allocated to in-process research
and development based on an independent valuation study as technological
feasibility had not been established and no alternative commercial use had been
identified. The purchase price allocated to in-process research and development
resulted in a $2.3 million charge to expense, with no related tax benefit in
fiscal 1997. The technology acquired will be utilized in future products. The
Company allocated the total purchase price as follows (in thousands):

<TABLE>
<S>                                                     <C>
    Tangible and intangible assets                      $  1,016
    Purchased in-process research and development          2,250
    Goodwill                                                 481
                                                        --------
          Total                                         $  3,747
</TABLE>


RESTRUCTURING CHARGES

Effective December 31, 1996, J. Paul Grayson resigned as Chairman of the Board
and Chief Executive Officer of the Company. An evaluation of the Company's
organization and operations resulted in the decision to make certain
organization changes. These changes resulted in a charge of $1.8 million for the
termination of seven members of management. The Company also recorded a $0.2
million charge related to the termination of commitments made by the previous
management for which no future benefit will be received. As of June 30, 1998,
the Company has paid approximately $1.7 million in termination benefits under
this restructuring. Approximately $0.2 million of this charge remains classified
as an accrued liability as of June 30, 1998. The Company expects that the
remaining liability will be paid out over the next six months.

EFFECT OF EXCHANGE RATES

Exchange rates during fiscal 1998 had an unfavorable impact on net revenues
reported by the Company. If exchange rates had not changed from their 1997
rates, the Company would have reported approximately $3.0 million more in net
revenues in fiscal 1998. This decrease resulted from the change in exchange
rates of European currencies and the Japanese yen versus the U.S. dollar. Since
European manufacturing costs and European and Japanese operating expenses are
also incurred in those local currencies, the relative translation impact of
exchange rates on net income (loss) is less than on revenues.

The Company periodically enters into foreign exchange contracts to hedge against
certain exposure to changes in foreign currency exchange rates. This exposure
results from the Company's foreign operations in countries including Germany,
France, the United Kingdom, the Netherlands, and Japan that are denominated in
currencies other than the U.S. dollar. See "Foreign Forward Exchange Contracts"
under "Summary of Significant Accounting Policies" in Notes to Consolidated
Financial Statements.

NONOPERATING (INCOME) EXPENSE

Nonoperating (income) expense includes interest income, interest expense, and
other (income) expense. Other (income) expense, net includes the gain or loss
resulting from revaluation of receivables and payables denominated in foreign
currency, and gains or losses when receivables and payables denominated in
foreign currency are settled.


<PAGE>   7

Interest income decreased from $0.8 million in fiscal 1997 to $0.6 million in
fiscal 1998, while unfavorable exchange rate variations charged $0.1 million to
other expense in fiscal 1998 and $0.5 million in 1997.

INCOME TAXES

The Company recognized a tax provision of $0.3 million in fiscal 1998, compared
to a tax benefit of $1.9 million in fiscal 1997. For further information on
income taxes, see Notes to Consolidated Financial Statements.

FISCAL 1997 COMPARED TO FISCAL 1996

NET REVENUES

Net revenues for fiscal 1997 were $64.9 million, compared to net revenues for
fiscal 1996 of $72.9 million.

The following table sets forth net revenues by product category and the
percentage relationship to total net revenues. The process management category
includes Micrografx FlowCharter(R). The corporate graphics category includes
Micrografx Graphics Suite(TM), Micrografx Designer(R), Designer Power Pack,
Webtricity(TM), Simply3D(TM), Picture Publisher(R), Small Business Graphics and
Print Studio(R), PhotoMagic(R), Instant 3D(TM) and Visual Reality(R). The
personal creativity category includes American Greetings(R) CreataCard(R)
Plus(TM), American Greetings(R) CreataCard(R) Gold(TM), Crayola(TM) Amazing Art
Adventure(TM), Crayola(TM) Art Studio(TM), Crayola(TM)Art Studio(TM)2,
Crayola(TM)Art(TM), and Hallmark Connections(TM) Card Studio(TM). Revenues from
Windows Draw(R) are categorized as either corporate graphics or personal
creativity depending on the Company's assessment of the market or channel into
which the product is sold. Optima(R) was acquired on June 30, 1997 through the
acquisition of AdvanEdge and therefore did not contribute revenue in either
year.


<TABLE>
<CAPTION>
                                                      YEARS ENDED JUNE 30,
                                       ---------------------------------------------
                                          1997          %           1996          %
                                       ---------------------------------------------
<S>                                    <C>             <C>       <C>             <C>
Process management                     $  15,069       23%       $  18,750       25%
Corporate graphics                        32,723       51%          37,654       52%
Personal creativity                       17,070       26%          16,515       23%
                                       ---------------------------------------------

Total revenues                         $  64,862      100%       $  72,919      100%
</TABLE>


PROCESS MANAGEMENT

The 20 percent decline in process management resulted from the timing of the
product release cycle as well as the Company's focus on the personal creativity
market. Due to the rapid change in technology related to personal computers and
software, the majority of sales for a version of a software product occur within
the first year following its release. During the first quarter of fiscal 1997,
the Company decided to shift the release of its process management and corporate
graphics software to the third quarter of fiscal 1997, after the close of the
Christmas season. The Company did release FlowCharter English version 7 in
January 1997 and localized versions followed one to two quarters behind. As a
result, the Company had between three and six months during the fiscal year to
generate revenue from the new release of FlowCharter.

CORPORATE GRAPHICS

The 13 percent decline in corporate graphics revenues resulted from the decline
in sales relating to products that the Company no longer actively marketed,
which was not fully offset by growth in the sales of products that the Company
continued to actively market. The lack of growth in sales of products the
Company actively marketed was also the result of the delayed product release
cycle in fiscal 1997. While the Company did release new versions


<PAGE>   8

of Graphics Suite, Simply3D, and Picture Publisher and introduced Webtricity
during the third and fourth quarters of fiscal 1997, the delay in introducing
these products meant that older titles such as Designer Power Pack, Instant 3D,
Visual Reality, and PhotoMagic had lost their prior year sales momentum. The
decline in revenue is also attributable to the delay in corporations adopting
Windows 95 and Windows NT, the operating systems for which the Company's
principal business products are designed. Additionally, the Company released the
Small Business Graphics and Print Studio in the first quarter and revenues for
Windows Draw sold through international corporate channels almost doubled
compared to the prior year.

PERSONAL CREATIVITY

The revenue growth in the Company's personal creativity products resulted from
the release of two new greeting card products partially offset by the
discontinuance of two products. The Company introduced American Greetings(R)
CreataCard(R) Plus(TM) and American Greetings(R) CreataCard(R) Gold(TM) in the
first and third fiscal quarters, respectively, while the Company's agreements to
market the Hallmark and Crayola products expired in the first and third
quarters, respectively. Revenues from the CreataCard products exceeded prior
year sales of the Company's Hallmark product despite lower prices and the
introduction and intense competition from Microsoft's Hallmark Greetings
Workshop. Fiscal 1997 revenues for Windows Draw remained constant with the prior
year. For the year, the CreataCard products represented more than half of the
Company's consumer product revenues. In this category, the Company also bundles
products with those of OEMs. See "Licensing Agreements" under "Trends and Risk
Factors."

Net revenues by geographic region and as a percentage of total revenues are as
follows:

<TABLE>
<CAPTION>
                                                      YEARS ENDED JUNE 30,
                                       ---------------------------------------------
                                          1997          %           1996          %
                                       ---------------------------------------------
<S>                                    <C>             <C>       <C>             <C>
Americas                               $  33,287        51%      $  35,671       49%
Europe                                    20,839        32%         25,196       34%
Pacific Rim                               10,736        17%         12,052       17%
                                       ---------------------------------------------

Total net revenues                     $  64,862       100%      $  72,919      100%
</TABLE>

Revenue declines were across all geographic regions and resulted from the change
in the product release schedule as discussed earlier and the lack of localized
versions of personal creativity products. The effect of delaying the release
schedule approximately two quarters had a more severe impact on international
locations because of the effort required to "localize" the product. Localization
consists of modifying and translating the software, as well as the box and its
contents, to a suitable product for another market such as Germany, France, or
Japan. This additional work usually results in an international version of a
product being released the quarter following the product's English release.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues includes the cost of documentation, diskettes or compact disks
(CDs), packaging and production overhead for the Company's application software
products, amortization of capitalized software development costs and acquired
product rights, and external product royalties. Cost of revenues in fiscal 1997
were $19.8 million, or 31 percent of net revenues, compared to $17.5 million, or
24 percent of net revenues in fiscal 1996. The increase in cost of revenues as a
percentage of net revenues for fiscal 1997 is attributable to lower selling
prices on the Company's greeting card software products, increased amortization
of acquired product rights, and increased external royalties. Also contributing
to the rise in cost of revenues as a percentage of revenues was an unfavorable
shift in product mix to boxed products, which contain typical content
(packaging, manuals, CDs or floppy disks), from OEM and license revenues, which
require substantially less content.

<PAGE>   9

SALES AND MARKETING EXPENSE

Sales and marketing expenses include the cost of advertising, promotions,
co-operative, rebate, and incentive programs with distributors, trade shows,
marketing, technical support, and the Company's sales force. Sales and marketing
expenses in fiscal 1997 were $34.1 million, or 53 percent of net revenues,
compared to $35.1 million, or 49 percent of net revenues, in fiscal 1996. The
decrease in sales and marketing expense in absolute dollars reflects the
efficiencies gained by eliminating duplicate costs subsequent to the acquisition
of Visual, the reduction in executive overhead and management layers, and cost
control measures. The rise in sales and marketing expenses as a percentage of
revenue was due primarily to the increased promotional costs related to selling
product through retail channels in conjunction with the rise of personal
creativity revenues. The effect of the retail promotions coupled with an overall
retail slowdown during the fiscal fourth quarter resulted in lower revenues with
relatively higher costs.

GENERAL AND ADMINISTRATIVE EXPENSE

General and administrative expenses include the costs of the Company's
information systems, human resources, finance, and administrative functions.
General and administrative expenses in fiscal 1997 were $7.9 million, or 12
percent of net revenues, compared to $8.2 million, or 11 percent of net
revenues, in fiscal 1996.

RESEARCH AND DEVELOPMENT EXPENSE

Research and development expenses include compensation, benefits, and incentives
paid to developers. In accordance with Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," the Company capitalizes certain software development costs incurred
after technological feasibility is achieved. These costs are amortized over the
estimated economic life of the products, generally 12 to 18 months. Amortization
of capitalized software development costs is included in cost of revenues.

Research and development expenses (net of amounts capitalized) in fiscal 1997
were $7.2 million, or 11 percent of net revenues, compared to $7.6 million, or
10 percent of net revenues, in fiscal 1996. Gross research and development
expenses, before capitalization, for fiscal 1997 were $11.0 million, or 17
percent of net revenues, compared to $10.9 million, or 15 percent of revenues
for fiscal 1996.

During fiscal 1997, the Company capitalized approximately $3.8 million in
software development costs and amortized $4.0 million in software development
costs. This compares to capitalization of $3.3 million and amortization of $3.3
million for fiscal 1996.

IN-PROCESS RESEARCH AND DEVELOPMENT CHARGE

On June 30, 1997, the Company acquired AdvanEdge resulting in a $2.3 million
charge to expense as previously discussed.

RESTRUCTURING CHARGES

Effective December 31, 1996, the Company restructured, resulting in a charge of
$2.0 million as previously discussed.

<PAGE>   10

ACQUISITION CHARGES

In fiscal 1996, Micrografx acquired all of the issued and outstanding capital
stock and options of Visual Software, Inc. ("Visual"), which was accounted for
as a pooling of interests. As a result of this acquisition, the Company incurred
charges for professional services, the write-off of costs related to certain
software products that were no longer actively marketed, exit costs, and costs
to eliminate excess personnel and duplicate leases of approximately $3,379,000,
of which $1,359,000 was non-cash. Components of the acquisition related charges
consisted of the following (in thousands):

<TABLE>
<S>                                                   <C>
    Acquisition transaction costs                     $  1,115
    Asset write-downs:
          Inventory and accounts receivable                840
          Acquired product rights                          158
          Fixed assets                                     241
     Severance and other                                 1,025
                                                      --------
     Total acquisition charges                        $  3,379
</TABLE>

The severance charges resulted from the closing of Visual's general and
administrative support office and the related termination of 21 Visual
employees. None of this charge remained as an accrued liability as of June 30,
1997.

EFFECT OF EXCHANGE RATES

Exchange rates during fiscal 1997 had an unfavorable impact on net revenues
reported by the Company. If exchange rates had not changed from their 1996
rates, the Company would have reported approximately $2.6 million more in net
revenues in fiscal 1997. This decrease resulted from the change in exchange
rates of European currencies and the Japanese yen versus the U.S. dollar. Since
European manufacturing costs and European and Japanese operating expenses are
also incurred in those local currencies, the relative translation impact of
exchange rates on net income (loss) is less than on revenues.

The Company periodically enters into foreign exchange contracts to hedge against
certain exposure to changes in foreign currency exchange rates. This exposure
results from the Company's foreign operations in countries including Germany,
France, the United Kingdom, the Netherlands, and Japan that are denominated in
currencies other than the U.S. dollar. See "Foreign Forward Exchange Contracts"
under "Summary of Significant Accounting Policies" in Notes to Consolidated
Financial Statements.

NONOPERATING (INCOME) EXPENSE

Non operating (income) expense includes interest income, interest expense and
other (income) expense. Other (income) expense, net includes the gain or loss
resulting from revaluation of receivables and payables denominated in foreign
currency, and gains or losses when receivables and payables denominated in
foreign currency are settled. Interest income decreased from $0.9 million in
fiscal 1996 to $0.8 million in fiscal 1997, while unfavorable exchange rate
variations charged $0.5 million to other expense in fiscal 1997 and $0.4 million
in 1996.

INCOME TAXES

The Company recognized a tax benefit of $1.9 million in fiscal 1997, compared to
a tax provision of $0.5 million in fiscal 1996. For further information on
income taxes, see Notes to Consolidated Financial Statements.



<PAGE>   11


QUARTERLY RESULTS OF OPERATIONS

The following table presents selected financial results for each of the last
eight quarters through June 30, 1998 (in thousands). These financial results are
unaudited. In the opinion of management, however, they have been prepared on the
same basis as the audited financial information and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the information for the periods presented when read in
conjunction with the accompanying Consolidated Financial Statements and notes
thereto.

<TABLE>
<CAPTION>
                                                                  QUARTERS ENDED
-------------------------------------------------------------------------------------------------------
                                                9/30/97       12/31/97        3/31/98      6/30/98
                                            -----------------------------------------------------------
<S>                                            <C>           <C>             <C>          <C>      
Net revenues                                   $  15,531     $  19,357       $  17,262    $  19,642

Gross profit                                      10,825        13,849          12,508       13,144

Income (loss) from operations                       (919)          631             291          370
  
Net income (loss)                                   (547)          558             224          372

Basic and diluted income
(loss) per share                               $    (.05)    $     .05       $     .02    $     .03

Shares used in computing income 
(loss) per share:
     Basic                                        10,472        10,539          10,636       10,783
     Diluted                                      10,472        11,068          11,513       11,424
</TABLE>

<TABLE>
<CAPTION>
                                                                 QUARTERS ENDED
-------------------------------------------------------------------------------------------------------
                                                9/30/96       12/31/96        3/31/97      6/30/97
                                            -----------------------------------------------------------
<S>                                         <C>              <C>             <C>          <C>      
Net revenues                                   $  16,589     $  16,113       $  17,124    $  15,036

Gross profit                                      11,987        10,774          11,990       10,327

Income (loss) from operations                        265        (4,069)(1)         213       (4,814)(2)

  Net income (loss)                                  334        (2,734)(1)         121       (3,908)(2)

Basic and diluted income
(loss) per share                               $    0.03     $   (0.27)(1)   $    0.01        (0.37)(2)

Shares used in computing income 
(loss) per share:
     Basic                                        10,223        10,239          10,235       10,427
     Diluted                                      10,443        10,239          10,241       10,427
</TABLE>

(1)    The financial results for the quarter ended December 31, 1996, include
       the restructuring-related charge of $2.0 million. See Notes to
       Consolidated Financial Statements.

(2)    The financial results for the quarter ended June 30, 1997, include the
       AdvanEdge related in-process research and development charge of $2.3
       million. See Notes to Consolidated Financial Statements.
<PAGE>   12

TRENDS AND RISK FACTORS

The following discusses trends and risk factors inherent in the Company's
business environment.

CHANGE IN COMPANY FOCUS

During fiscal 1998 and in prior years, the Company has generated a significant
portion of its business from the personal creativity software market. Due to
aggressive competition and the Company's belief that its products are well
suited to various high-growth corporate markets, the Company has chosen to
pursue corporate customers. The Company's future financial performance will
depend on the successful transition of internal resources away from its strength
in the retail market while moving toward solving problems currently experienced
by corporations. In order to accomplish its objective, the Company has hired
employees with skills required for the Company's new direction, and is training
existing employees on how to make this change, but there is no assurance that
management's efforts will be successful. In order to succeed, the Company will
have to convince corporations that its products are able to solve their
problems, the Company will have to identify and develop features which corporate
customers desire, and the Company will have to ensure that it has a sales force
and customer support system sufficient in size and expertise to service
corporate customers. In light of the difficulties associated with the transition
of its business focus from consumer retail products to business product sales to
corporate accounts, the Company may confront unanticipated risks and
uncertainties. Therefore, there can be no assurance that the Company's new
business strategy will be successful, and it is possible that the Company's
future results from operations and financial condition will be adversely
affected if it is unable to effectively implement its new business focus.

NEW PRODUCT INTRODUCTIONS

The Company's future financial performance will depend in significant part upon
the successful development and introduction of new and enhanced versions of its
products and customer acceptance of these products, of which there can be no
assurance. Additionally, the timing of new product introductions, which are
updates of previously released products, can have a significant impact on
profitability of the older version of the product. To the extent that the
distributors were unable to sell the older version at the rate they anticipated
when they purchased the product, additional marketing expenditures are generally
required to promote the older version in order to reduce stocking levels in
anticipation of the release of the new version of the product.

LICENSING AGREEMENTS

During fiscal 1998, the Company's business strategy included entering into
licensing agreements with third parties in an effort to increase brand awareness
for the Company's products by associating the Micrografx name with products and
services that customers already know. During fiscal 1998, the Company had a
licensing agreement with American Greetings Corporation relating to American
Greetings CreataCard Plus and the American Greetings CreataCard Gold products.
The agreement was to expire on August 31, 1999. The Company and American
Greetings agreed not to renew the agreement and effective August 31, 1998, the
Company assigned its rights under the licensing agreement to The Learning
Company.

The Company has entered into a licensing agreement with ImageNet, Inc.
("ImageNet") for Network Design products NetworkCharter and NetworkCharter Pro.
The Company has the right to distribute the products to end users and resellers
but the Company does not own the source code. The Company pays ImageNet a
quarterly fee for the right to distribute the software based upon sales of the
NetworkCharter products, with provisions for certain minimum payments regardless
of sales volume. The Company and ImageNet have also agreed to make a good faith
effort to develop NetworkCharter products that utilize the Company's FlowCharter
graphics engine. The agreement expires on April 30, 2001, and automatically
renews for successive terms of one year each, unless terminated by either party
prior to the expiration of the initial term.

TECHNOLOGICAL CHANGE

The personal computer industry is subject to rapid technological change and
continuing development of new and enhanced operating environments. The success
of the Company's products will depend to a large extent upon the Company's
ability to continue to develop and introduce innovative and competitive products
on a cost-effective and timely basis, of which there can be no assurance.
<PAGE>   13

COMPETITION

The personal computer applications software market is highly competitive. The
Company's competitors include many companies that have larger technical staffs,
more established and larger marketing and sales organizations, and significantly
greater financial resources than does the Company. Additionally, merger activity
in the applications software market serves to strengthen the merging companies'
ability to compete.

INTERNATIONAL OPERATIONS

The Company anticipates that international net revenues will continue to account
for a significant portion of total net revenues, which will result in a
significant portion of the Company's net revenues being subject to the risks
inherent in international operations. These risks include unexpected changes in
regulatory requirements, exchange rates, tariffs and other barriers,
difficulties in staffing and managing foreign subsidiary operations, and
potentially adverse tax consequences.

The Company's revenue generated from its Asia Pacific sales offices has declined
more than 30 percent from fiscal 1997 to fiscal 1998 and the Company expects an
additional decline in sales for fiscal 1999. This decline resulted from the
economic uncertainty and recession in Japan, which resulted in a significant
decline in the retail sector of the Japanese economy. The Company has announced
that it will no longer concentrate its efforts on the retail distribution
channel, its strength historically, but will focus on corporate customers in
keeping with the Company's overall strategy. There is no assurance that this
strategy will be successful.

CHANGES IN DISTRIBUTION CHANNELS

The Company is focusing on corporate customers and has de-empasized its personal
creativity business. In doing such, it has to transition its relationships with
the distribution channels to match the change. While the Company does not
anticipate a significant change in the channels used, it must change its sales
and marketing programs to suit the corporate customers buying through those
channels. The Company's success depends in part on the ability to identify and
respond to changes in the distribution channel.

SEASONALITY

Historically, the Company's results of operations are subject to significant
quarterly variations. Causes of these variations include seasonality of the
retail software market, delays in the introduction of new or enhanced versions
of the Company's products, timing and cost of new product upgrades and
introductions, reduced distribution channel sales preceding the introduction of
updated products, and large distribution channel sales following the
introduction of new or updated products. Historically, as is typical in the
retail software industry, the Company has experienced some seasonal variations
in demand, with sales declining somewhat in the summer months and increasing
somewhat during the fourth and first calendar quarters. The Company expects the
seasonality to decline somewhat as it changes its focus from serving the retail
market to selling to corporate customers.

UPGRADES

Product upgrades, which enable users to upgrade from earlier versions of the
Company's products, or from competitors' products, typically have lower prices
than new products, resulting in lower gross profit margins. The Company plans to
continue upgrading successful products in the future.

INTERNET

The Company provides products for use in the Internet market. The Internet
market is rapidly evolving and is characterized by an increasing number of
market entrants. As is typical in the case of a new and evolving industry,
demand and market acceptance for recently introduced products and services are
subject to a high level of uncertainty. Critical issues concerning the
commercial use of the Internet (including security, reliability, cost, ease of
use and access, and quality of service) remain unresolved and may impact the
growth of Internet use, together with the software standards and electronic
media employed in such markets.

<PAGE>   14

GROSS PROFIT

Product margins vary according to product mix and the geographical region in
which the products are sold. Changes in product mix, including the mix of boxed
product (full and upgrade product versions) relative to the amount of non-boxed
product (OEM and multi-user licenses), the transition away from personal
creativity products (which carry lower margins), the transition to "suite"
products accompanied with value-pricing, as well as changes in the components of
direct costs, have in the past and may in the future affect the Company's gross
profit.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1998, the Company's principal sources of liquidity consisted of cash
and cash equivalents of $26.5 million and short-term investments of $1.6
million. Additionally, the Company obtained a $5 million line of credit
effective April 1, 1998, which expires March 30, 1999. Commitment fees related
to the line of credit are 0.25 percent of the unused line of credit per year. At
June 30, 1998, no borrowings on the line were outstanding.

As of September 30, 1998, the Company received approximately $19.5 million from
the Cendant and TLC agreements, approximately $14 million of which was received
on June 30, 1998, with the remainder received during the quarter ended September
30, 1998. The Company expects to receive an additional $1.5 million from these
transactions by December 31, 1998.

CASH FLOWS DURING FISCAL 1998

For the year ended June 30, 1998, cash provided by operating and financing
activities exceeded cash used in investing activities, resulting in an increase
in cash and cash equivalents of $15.3 million. Cash flows from operating
activities generated $18.4 million in cash during fiscal 1998. The cash received
resulting from the Cendant transaction, offset by transactional expenses,
coupled with the adjustment for depreciation and amortization, were partially
offset by the increase in accounts receivable. Accounts receivable allowances
decreased primarily due to the reduced need for rebates and co-op funds
typically associated with personal creativity products.

Cash flows from investing activities used $6.2 million during fiscal 1998 and
consisted primarily of additions to capitalized software development costs and
acquired product rights and purchases of property and equipment. Expenditures
for property and equipment during fiscal 1998 were $1.2 million and consisted
primarily of computer and equipment upgrades. Investments of $6.6 million were
also made in capitalized software development costs and acquired product rights
related to the development of new and enhanced versions of the Company's
products. Cash flows from financing activities provided $3.3 million in cash
during fiscal 1998, due primarily to proceeds received from employee stock
programs. As discussed in the footnotes to the financial statements,
approximately $0.2 million of the $2.0 million restructuring charge remains
classified as an accrued liability as of June 30, 1998.
The Company expects to pay this amount during the next six months.

CAPITAL RESOURCES

As of June 30, 1998, the Company had no significant commitments for capital
expenditures.

The Company believes that cash flow from operations and existing cash will be
sufficient to meet the Company's capital requirements in the short term. The
Company believes that thereafter its liquidity requirements could be met with
cash flow from operations, and existing cash and short-term investment balances.

YEAR 2000 COSTS

The Company is aware of and is addressing a broad range of issues associated
with the programming code in existing computer systems as the year 2000
approaches. The year 2000 problem is complex, as many computer systems will be
affected in some way by the rollover of the two-digit year value to 00. Systems
that do not properly recognize such information could generate erroneous data or
cause a system to fail. The year 2000 issue creates risk for the Company from
unforeseen problems in its own computer systems and from third parties with whom
the Company deals on financial and other transactions worldwide. Failures of the
Company's and/or third parties' computer systems could have a material impact on
the Company's ability to conduct its business.
<PAGE>   15

The Company's financial information system is SAP. This system is believed to be
year 2000 compliant. The Company is analyzing its remaining computer systems to
identify any potential year 2000 issues and will take appropriate corrective
action based on the results of such analysis. Management believes that any costs
that may arise to ensure functionality in the year 2000 would not be material.

In addition, the year 2000 issue could affect the products that the Company
sells. The Company believes that the current versions of its products are year
2000 compliant. The Company's products are subject to ongoing analysis and
review.

OTHER MATTERS

The assets and liabilities of non-U.S. operations are translated into U.S.
dollars at exchange rates in effect as of the respective balance sheet dates,
and revenue and expense accounts of these operations are translated at average
exchange rates during the month the transactions occurred. Unrealized
translation gains and losses are included as an adjustment to shareholders'
equity. The Company has mitigated a portion of its currency exposure through
decentralized sales, marketing and administrative operations. When necessary,
the Company may also hedge to prevent material exposure.

LITIGATION

The Company is party to various legal proceedings arising from the normal course
of business activities, none of which, in management's opinion, is expected to
have a material adverse impact on the Company's results of operations or its
financial position.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive Income" (SFAS
130), which is effective for fiscal years beginning after December 15, 1997.
SFAS 130 establishes standards for reporting and displaying comprehensive income
and its components in the financial statements. This standard does not, however,
require a specific format for the statement, but requires the Company to display
an amount representing total comprehensive income for the period in that
financial statement. The effect of SFAS 130 on the Company has not been
determined.

In June 1997, the FASB issued SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS 131), which is effective for fiscal
years beginning after December 15, 1997. SFAS 131 establishes standards for the
manner in which public business enterprises report information about operating
segments in annual financial statements and requires those enterprises to report
selected information about operating segments in interim financial reports
issued to stockholders. The effect of SFAS 131 on the Company has not been
determined.

In February 1998, the FASB issued SFAS 132, "Employers' Disclosure about
Pensions and Other Postretirement Benefits -- an amendment of FASB Statements
No. 87, 88, and 106" (SFAS 132), which is effective for fiscal years beginning
after December 15, 1997. The Company does not provide pension or other
postretirement benefits, thus SFAS 132 has no impact on the Company.

In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133), which is effective for fiscal years
beginning after June 15, 1999. SFAS 133 establishes accounting and reporting
standards for derivative instruments and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
effect of SFAS 133 on the Company has not yet been determined.


<PAGE>   16

FORWARD-LOOKING STATEMENTS

The Company notes that, with the exception of historical information, the
matters discussed above are forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in these forward-looking statements. Factors that could cause
or contribute to such differences include, without limitation, changes in the
market, new products and announcements from other companies, changes in
technology, and competition from larger, more established competitors as
discussed in the "Trends and Risk Factors" of this item.


<PAGE>   17

                                     PART IV

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

       3.    Exhibits

             The following documents are filed or incorporated by reference as
             exhibits to this report. The exhibit numbers in the exhibit list
             correspond to the numbers assigned to such exhibits in the Exhibit
             Table of Item 601 of Regulations S-K.

   *  10.13  License Agreement between Micrografx, Inc. and Cendant Software 
             Corporation (Exhibit 10.1)

   *  10.14  Noncompetition Agreement between Micrografx, Inc. and Cendant
             Software Corporation (Exhibit 10.2)

      10.17  Asset Purchase and License Agreement dated September 3, 1998,
             between the Company and Learning Company Properties, Inc.

   *         Incorporated by reference to the exhibit shown in parenthesis files
             in the Company's Current Report on Form 8-K/A dated June 30, 1998

<PAGE>   18

                                    SIGNATURE

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-K/A-2 to be
signed on its behalf by the undersigned, thereunto duly authorized.


                                        MICROGRAFX, INC.


                                             By  /s/ John M. Carradine
                                                --------------------------------
                                             John M. Carradine
                                             Chief Financial Officer
                                             and Treasurer


Date:      November 25, 1998

<PAGE>   19

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
     NO.                                  DESCRIPTION
  --------                                -----------
  <S>        <C>

  *  10.13   License Agreement between Micrografx, Inc. and Cendant Software 
             Corporation (Exhibit 10.1)

  *  10.14   Noncompetition Agreement between Micrografx, Inc. and Cendant
             Software Corporation (Exhibit 10.2)

     10.17   Asset Purchase and License Agreement dated September 3, 1998,
             between the Company and Learning Company Properties, Inc.

  *          Incorporated by reference to the exhibit shown in parenthesis files
             in the Company's Current Report on Form 8-K/A dated June 30, 1998
</TABLE>