F O R M  10 - KSB
                                
               SECURITIES AND EXCHANGE COMMISSION
                                
                     Washington, D.C. 20549
                                
(Mark One)

(X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934     (FEE REQUIRED)
                                                ______________

For the fiscal year ended     December 31, 1997
                         _______________________________

                               OR
                                
(  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     EXCHANGE ACT OF 1934                     (NO FEE REQUIRED)
                                              _________________

For the transition period from  ______________ to _______________

Commission file number   O-7267
                       __________

                      WEB PRESS CORPORATION
_________________________________________________________________

Washington                                   91-0851298
_______________________________              ________________
(State or other jurisdiction of              (I.R.S. Employer
 incorporation or organization)              Identification No.)

22023 68th Avenue South, Kent, Washington        98032
_________________________________________     _____________
(Address of principal executive offices)      (Zip Code)

Registrant's telephone number, including area code (253) 395-3343
                                                   ______________

Securities Registered Pursuant to 12(b) of the Act:

Title of each class     Name of each exchange on which registered

None                    
____                    _________________________________________

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, Par Value $.025
_________________________________________________________________
                         (Title of Class)
                                
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or 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
    _____   ______

All reports during the preceding 12 months have been filed.

State issuer's revenues for its most recent fiscal year....$9,822,433.


<PAGE>


As of March 5, 1998, 3,105,413 common shares were outstanding, and
the aggregate market value of the common shares (based upon the
closing bid price provided by the National Quotation Bureau, Inc.)
held by non-affiliates was approximately $418 thousand.

Documents incorporated by reference:  Exhibits as described in
Part III, Item 13.

<PAGE>


                      WEB PRESS CORPORATION
                                
        TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-KSB
                                
ITEM      DESCRIPTION                                    PAGE
____      ___________                                    ____
   
                             PART I

 1.       BUSINESS........................................ 4
 2.       PROPERTIES...................................... 7
 3.       LEGAL PROCEEDINGS............................... 7
 4.       SUBMISSION OF MATTERS TO A VOTE OF
          SECURITY HOLDERS................................ 7

                             PART II

 5.       MARKET FOR THE REGISTRANT'S COMMON STOCK
          AND RELATED SECURITY HOLDER MATTERS............. 8
 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS... 8
 7        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....13
 8.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ON ACCOUNTING AND FINANCIAL DISCLOSURE..........13

                            PART III

 9.       DIRECTORS AND EXECUTIVE OFFICERS
          OF REGISTRANT...................................14
10.       EXECUTIVE COMPENSATION..........................16
11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
          OWNERS AND MANAGEMENT...........................17
12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..19
13.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES
          AND REPORTS ON FORM 8-K.........................19

<PAGE>

                  ANNUAL REPORT ON FORM 10-KSB
                      WEB PRESS CORPORATION
                             PART I
                                
                                
ITEM 1.   BUSINESS

(A)  General Development of Business

Web Press Corporation (herein referred to as "Web" or "Company")
was founded in late 1967 under the name "Web Press Aid" as a sole
proprietorship.  The company was incorporated in November, 1969
under the laws of the State of Washington.  Initially, the
Company was involved primarily in the rebuilding and repair of
web-fed printing presses and related equipment.  Shortly after
incorporation, the Company undertook the development of a line of
printing press equipment of its own design.  During 1972, the
Company commenced production of this equipment.  While the
manufacture of new equipment is now the Company's primary
business, it continues to deal in rebuilt and used equipment as
an adjunct to its new press sales.  The Company also sells parts
and service for its new equipment.  The sale of new and used
presses accounted for approximately 83% and 2%, respectively, of
the Company's revenues in 1997.  The Company's presses are
primarily designed to print on absorbent paper such as newsprint.
Products produced by the presses are newspapers (both broadsheet
and tabloid sizes), shoppers, advertising inserts, and paperback
books.

During 1984 and 1985, the Company developed four models of a new
high-speed press and added them to its product line.  In 1992,
the Company added a new size cutoff to this line of presses,
increasing the number of models to six.

In 1995, the Company introduced and sold its first integrated
rollstand perfecting unit (IRU).  The IRU has a single roll
position under the perfecting unit in place of a free-standing
two-position rollstand.

(B)  Financial Information About Segments

See Note 7 of Notes to Consolidated Financial Statements for
information about the Company's operations by segment and
geographic area for the years ended December 31, 1997 and 1996.

(C)  Narrative Description of Business

Equipment which Web Press Corporation manufactures consists of
two basic products, the Web Leader and the Atlas.  The Atlas is
made in six different models.  The principal difference between
the Web Leader and the Atlas is that the Atlas is fifty percent
faster.  Each press is composed of standard modules to unwind,
print, cutoff and fold the roll of paper into a finished product.
Each is arranged to meet the particular printer's requirements

<PAGE>

for the number of pages, color, and size of his products.
Following are descriptions of these modules:

PERFECTOR.  Web's perfector is a rotary offset perfecting
printing press unit, consisting of two printing couples running
"back-to-back".  Each perfector will print four broadsheet-size
newspaper pages, in one color, on each revolution of the printing
couples.  Perfectors can be configured to print up to four
colors.  They can print up to 32 broadsheet-size pages.

QUADRA-COLOR UNIT.  Web's Quadra-Color unit consists of four
printing stations mounted around a common impression cylinder.
This unit prints four colors on two broadsheet-size pages at a
time.  It offers better control over color register and thus is
capable of greater accuracy in color printing than conventional,
unit-to-unit methods for color printing.  It is used in
conjunction with the Company's other products to provide close
register, four-color capability in the printing system.

FOLDER.  Web's folder is used in conjunction with perfecting and
Quadra-Color units to fold the printed paper into a finished
product.  The folder cuts the paper off in every plate cylinder
revolution and folds it in standard broadsheet-size newspapers,
tabloid-size papers, and shopping-flyer or magazine-size
products.  The Company also produces two folder styles which have
the capability of making a second parallel fold to produce
"digest"-size signatures which are used in printing some books
and pamphlets.

TWO-POSITION ROLL ROLLSTANDS.  Web's rollstand supports two, 42-
inch diameter rolls of 36-inch wide paper and is used in
conjunction with the perfector and Quadra-Color units.  The
rollstand controls the unwinding of the paper roll and feeds it
to the printing units under controlled tension.

Web Press Corporation markets its products through Company
employed representatives in the United States and Canada.
Foreign sales are made through independent organizations in Latin
America, Asia, Europe, and the Middle East.

The Company's presses are sold in a highly competitive world
market.  Competition is based on a combination of price, service,
quality, and the versatility of the equipment.  Web's presses are
priced competitively with similar products.  The Company believes
that features incorporated in its presses, as well as the
Company's policies of supporting its customers, will allow it to
continue to be very competitive.  Web Press Corporation is the
only manufacturer in the United States producing a Quadra-Color
unit for its market.

The primary competitors of the Company are Goss Graphic Systems,
P.E.C. Corporation (King Press Division), and Harris Graphics.
Certain of these companies have financial resources in excess of
the Company's.

<PAGE>

The most important materials employed in Web's product line are
steel and aluminum (plate and bar stock), tubing, bearings, and
rubber coverings.  All are available through local suppliers.
The Company believes that its sources of supply for these
materials are adequate for its needs and that it is not
substantially dependent upon any one supplier.  Lead times of up
to six months are required at some times for certain materials.

Web Press Corporation maintains an ongoing program of product
development and improvement.  This program consists primarily of
technical improvements and supplementary developments which have
produced features and capabilities that management believes will
result in competitive marketing advantages for Web's product
line.  In 1997, $292 thousand was expended for research and
development compared to $282 thousand in 1996.

Total employment of 50 persons as of December 31, 1997 compares
with approximately 54 at December 31, 1996.

Substantially all of the Company's operations are run by electri
cal energy purchased from a local utility.  The Company has not
experienced energy shortages and does not anticipate any
difficulties in the foreseeable future.  Extended shortages of
energy would have an adverse impact on the Company.

Compliance with federal, state and local environmental protection
laws during 1997 had no material effect upon capital
expenditures, earnings, or the competitive position of Web Press
Corporation.

The Company's computer software systems consist primarily of
programs written for the Company.  Certain of these programs will
need to be upgraded prior to the turn of the century to process
date sensitive items where the year is entered "00" for the year
2000.  The Company has determined which programs will need to be
upgraded and held discussions with outside software vendors and
programmers familiar with the Company's computer software
programs.  Based on their advice, the Company does not believe
upgrading its current computer software programs to recognize the
year 2000 will present the Company with any significant problems.
The Company intends to test and make the necessary upgrades in
1998.  The cost of upgrading the Company's computer software
programs should be immaterial to the financial statements.

(D)  Foreign Operations

The Company's foreign operations consist entirely of export sales
and related services originating at its facilities within the
United States.  Export sales accounted for 56.7% of total sales
in 1997 and 62.3% in 1996.  Further financial information
relating to foreign operations for the two years ended December
31, 1997, is set forth in Note 7 (Segment Information) of the
Notes to Consolidated Financial Statements.

<PAGE>

ITEM 2.   PROPERTIES

OFFICE AND MANUFACTURING FACILITIES.  The Company presently
occupies approximately 49,000 square feet of leased office and
manufacturing space at 22023 68th Avenue South, Kent, Washington.
The term of the lease is ten years, commencing six months from
the date of occupancy by the Company in May 1988, with two five-
year renewal options.  There was no rent for the first six months
after the Company occupied the premises.  In addition, the lease
required the lessor to finance $150,000 of leasehold improvements
and other costs incurred by the Company.  The total monthly
payment, including amortization of the $150,000 financed, is
$14,451.  The Company notified the lessor in September, 1997 that
it would exercise the first extension option of the lease,
covering a period of five years through October, 2003.  The new
monthly rental payment will be $16,155, commencing in November,
1998.

The Company has arrangements for small offices for each of its
three salesmen who are located in Burlington, Vermont; Blue
Springs, Missouri and Charlotte, North Carolina.

ITEM 3.   LEGAL PROCEEDINGS

LITIGATION.  There are no material pending legal proceedings,
other than ordinary legal matters incidental to the Company's
business, to which the Company is a party or in which any of the
Company's property is the subject.

ENVIRONMENTAL PROCEEDINGS.  There are no proceedings against the
Company involving federal, state or local statutes or ordinances
dealing with environmental protection.

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

None.

<PAGE>

                             PART II
                             _______
                                
                                
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
        SECURITY HOLDER MATTERS

(A)  Principal Market, Stock Price, and Dividend Information

Although certain dealers regularly provide quotations on the
Company's stock, actual trading activity is limited.

The following table sets forth the high and low bid quotations
per share for the Company's common stock for the periods
indicated.  These figures were provided by the National Quotation
Bureau, LLC,  and may reflect inter-dealer prices, without retail
mark-up, mark-down or commission.  They do not necessarily
represent actual transactions.

                        1997                         1996
                        ____                         ____

  Quarter            High    Low                 High      Low
  _______            ____    ___                 ____      ___

  First             $.375   $.375               $.375     $.3125
  Second             .375    .1875               .4375     .375
  Third              .1825   .15                 .4375     .375
  Fourth             .25     .17                 .375      .375

The Company has paid no dividends during the two years ended
December 31, 1997.

(B)  Approximate Number of Holders of Common Stock

The number of holders of record for the Company's common stock as
of March 5, 1998 was 548.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

OVERVIEW
________

Web Press operates in a segment of the graphic arts industry.
Its primary business is the manufacture and sale of rotary
offset, web-fed printing presses.  These products are designed
for the use in printing newspapers, shoppers, advertising
inserts, paperback books and similar products.  The market is
dominated by four domestic manufacturers.  Sales in the industry
are sensitive to advertising expenditures, long-term interest
rates and newsprint shortages.  The product is labor intensive;
materials shortages are rare; and technical obsolescence has not
been a significant factor.

OPERATING RESULTS
_________________

                     1997 Compared with 1996
                     _______________________
                                
Sales grew 48.4 percent in 1997 to $9.822 million from 1996 sales
of $6.617 million.  Most of the growth was in new equipment
sales, which increased $2.709 million in 1997 from 1996.  New
equipment sales were 83.2 percent of total sales in 1997,
compared to 82.5 percent in 1996.  Domestic sales of new
equipment in 1997 were $2.908 million, an increase of 84.5
percent from 1996.  The increase included a significantly higher
than normal amount of auxiliary equipment.  Domestic customers
continued to purchase smaller press configurations than
international customers.  International sales of new equipment
continued to grow in 1997, increasing 35.4 percent from 1996 to
$5.263 million--53.6 percent of total sales.  The Company had
major sales to customers in Ireland, Greece, Romania, Germany and
Argentina.  Parts and used equipment sales in 1997 grew too,
increasing $454 thousand and $43 thousand from 1996,
respectively.

The gross profit margin on sales declined to 22.3 percent in
1997, from 26.9 percent in 1996.  The primary reason for the
lower gross profit margin was a decrease in the average gross
profit percentage for new equipment to 27.9 percent in 1997 from
33.2 percent in 1996.  The higher than normal amount of auxiliary
equipment sold in 1997, on which the Company only makes a nominal
gross profit, caused much of the decline.  The gross profit
percentage for new equipment in 1997 would have been 31.1 percent
if it had not included the auxiliary equipment.  In 1997, used
equipment was sold for a total gross loss of $94 thousand,
compared to a gross profit of $59 thousand in 1996.  Cost of
sales in 1997 included a write-down of $57 thousand for obsolete
parts and certain used equipment, compared to a write-down of $80
thousand in 1996.  The gross profit margin on parts increased 7.2
percent in 1997 due to higher selling prices.

Selling, general and administrative expenses declined by $387
thousand in 1997 from 1996.  Expenses in 1996 included a $400
separation payment due the former president/general manager of
the Company.  Selling expenses increased 7.2 percent in 1997.
Incentive compensation increased $44 thousand in 1997 due to
higher sales and promotional and travel expenses were $31
thousand higher.  Excluding the $400 thousand separation payment,
general and administrative expenses decreased 6.3 percent in 1997
compared to 1996.  Compensation expense in 1997 was lower by $92
thousand.  This saving was partially offset by higher bank fees
and accrued termination costs.  Most other selling, general and
administrative expenses did not change significantly.

Interest expense increased 18.7 percent in 1997 from 1996.  In
1997, average short-term borrowings from the bank were $683
thousand, compared to $531 thousand in 1996.  The average
interest rates on all of the Company's short-term borrowings from
the bank were 10.3 percent in 1997 and 10.8 percent in 1996.
Higher de-

<PAGE>

ferred earnings in the DISC, on which the Company must
pay interest, also contributed to the increase in interest
expense in 1997.

In 1997, the Company had an operating profit of $542 thousand,
before federal income tax expense of $187 thousand.  The Company
had an operating loss of $220 thousand in 1996, before a tax
benefit of $76 thousand.  In 1996, the Company would have had a
$180 thousand pre-tax profit had it not been for the $400
thousand separaton expense.  Net earnings for the year were $355
thousand in 1997, compared to a net loss of $144 thousand in
1996.  Higher sales in 1997 are the primary reason for the
improvement in earnings.

                     1996 Compared with 1995
                     _______________________
                                
Sales in 1996 were $6.617 million, a decrease of $2.334 million
from 1995 sales of $8.951 million.  The Company anticipated lower
sales of both used presses and parts in 1996.  The Company had
fewer used presses in inventory to sell and the number of
acceptable used presses being offered as trade-ins has declined.
In 1995, the Company received an exceptionally high number of
very large parts orders for rebuilding presses.  New equipment
sales, domestically, were lower in 1996 because customers bought
smaller press configurations, reducing the average sales price
per order received.  International sales of new equipment
continued to grow in 1996, increasing 7.5 percent to $3.887
million, 58.7 percent of total sales.  The Company sold presses
to new customers in two countries where it previously had no
equipment installed.

The gross profit margin on sales increased to 26.9 percent in
1996, compared to 24.1 percent in 1995.  The improved gross
profit margin was the result of a 16.2 percent improvement in the
average gross profit percentage for new equipment, and because
new equipment sales, which have a higher gross profit margin than
used equipment, were a larger percentage of total sales.  New
equipment accounted for 82.5 percent of total sales in 1996,
compared to 72.9 percent in 1995. Cost of sales in 1996 included
a write-down of $80 thousand for certain used equipment and
obsolete parts.  The gross profit margin on parts sales declined
6.5 percent in 1996, compared to 1995, due to lower sales volume
and because the Company has not raised its selling prices for
parts in over two years.

Selling, general and administrative expenses increased $332
thousand in 1996 from 1995.  The increase was the result of a
$400 thousand separation payment due the former president/general
manager of the Company upon his retirement.  Without that
expense, selling, general and administrative expenses would have
declined $68 thousand, or 4.6 percent in 1996.   Excluding the
$400 thousand separation expense, payroll costs declined $114
thousand in 1996, compared to 1995.  The decrease was the result
of lower incentive compensation in 1996, due to lower sales.  In
1996, advertising costs were $47 thousand higher and the Company
spent 

<PAGE>

$46 thousand more attending several international trade
shows, compared to 1995.  Most other selling, general and
administrative expenses did not change significantly.

Interest expense decreased 16.5 percent in 1996 from 1995.  In
1996, average short-term borrowings from the bank were $531
thousand, compared to $643 thousand in 1995.  The average
interest rate on all of the Company's borrowings from the bank
were 10.8 percent in 1996 and 11.3 percent in 1995.

The Company had an operating loss of $220 thousand in 1996,
before a tax benefit of $76 thousand.  Had it not been for the
$400 thousand separation expense, the Company would have had a
$180 thousand profit from operations in 1996.  In 1995, the
Company had pre-tax operating income of $451 thousand.  Lower
sales in 1996 is the primary reason for the lower operating
income.  The 16.2 percent increase in the average gross profit
percentage on new equipment sales partially offset the lower
sales volume.  The net loss for the year was $144 thousand in
1996, compared to a net earnings of $300 thousand in 1995.


                              1998
                              ____

Because of the high value of each order for the Company's
equipment and the irregular timing of orders, projections for
particular time periods are very difficult to make.

The strength of local economies is the primary determinant of
revenues and, therefore, profits for the Company's customers.  To
the extent the economies of the cities our customers produce and
sell newspapers and other products into remain strong in 1998,
their advertising revenues should continue to grow.  For 1998,
economists are forecasting real domestic economic growth to be 2
percent to 2.4 percent.  The Newspaper Association of America
projects newspaper advertising to grow by 6.7 percent in 1998.
The Company believes that continued strong advertising growth,
well above the overall growth rate for the general economy, will
help domestic sales of presses in 1998.  However, excess printing
capacity still exists, restraining demand and pricing for
printing equpment.  Other factors that should help sales in 1998
are an ample supply of low priced newsprint and that funds for
capital equipment purchases are available at very favorable
interest rates.

The economic problems in Asia resulted in postponement of several
orders in 1997.  It is highly unlikely that the Asian market will
improve in 1998.  The local economies of Western European
countries are strong, Eastern European countries continue to grow
economically and most economies in Central and South America have
improved, too.  The Company has prospects in all of these areas.
Export sales should account for over 50 percent of the Company's
business again in 1998.

<PAGE>

In June 1998, the Company will show for the first time a new 4+4
perfecting unit at the NEXPOr98 trade show in Orlando, Florida.
The new module, called a "QUAD-STACK," will be sold as part of
the Atlas product line.  It has several unique features--most
notable being its inimitable compact size for a 4+4 perfecting
unit.  The compact size will allow pressmen to operate the press
from a ground floor platform.  Initially, two models of the QUAD-
STACK will be available.

In March 1998, the Company installed a new AWEA CNC vertical
machining center in its plant.  The new machine will increase
capacity, reduce production time, and allow the Company to
continue its cost reduction program.  The AWEA joins two
additional new CNC machine tools the Company purchased in 1997.
The new machines will insure that our products are produced to
the highest engineering standards, at an economical cost.

LIQUIDITY
_________

Net working capital was $3.285 million and the current ratio was
2:1 on December 31, 1997.  Changes in working capital components
include an increase in accounts receivable of $2.027 million; a
reduction in total inventories of $650 thousand; an increase in
accrued expenses of $495 thousand; lower customer deposits of
$348 thousand; a net increase in deferred taxes of $224 thousand;
and a federal tax refund of $111 thousand.  Net cash used by
operations was $453 thousand in 1997.

Most of the decrease in inventories was in finished goods, which
were $522 thousand lower in 1997 than in 1996.  Used equipment
inventories and work-in-progress were reduced by $172 thousand
and $111 thousand, respectively.  Raw materials and parts
inventories were up slightly in 1997.

Funds provided by operations are the Company's primary source of
liquidity.  In addition, the Company uses short-term debt from
two separate revolving lines of credit with a commercial bank to
finance flutuating working capital requirements.  On December 31,
1997, the Company had additional borrowing capacity of $176
thousand from its operating line of credit and $752 thousand from
its export working capital line of credit.

In February 1998, the bank renewed the Company's operating line
of credit through April 15, 1999, and increased the borrowing
limit by $500 thousand to $1.2 million.

The Company and the bank currently have an application pending
with the U.S. Export-Import Bank for a working capital guarantee.
The guarantee would support an additional revolving line of
credit with the bank for borrowing up to $1 million to be used to
manufacture equipment for export.  The new loan would have more
flexible terms than the export working capital line that expired
in February 1998.

<PAGE>

CAPITAL RESOURCES
_________________

Total assets increased by $1.309 million in 1997.  Stockholder's
equity increased by $355 thousand; working capital increased by
$1.031 million; non-current deferred income taxes increased by
$23 thousand; and long-term debt increased by $643 thousand.

Long-term financing in the form of secured notes are used to
acquire manufacturing equipment.  The Company incurred $1.111
million of new debt in 1997.  Most of the proceeds were used to
retire term debt with another bank.  The Company made payments of
$1.109 million on its long-term debt in 1997.

In February 1998, the Company secured a second term note from the
bank for $420,700 to purchase a new machine tool.  Monthly
payments will be $6,794, with a final payment of $156 thousand
due in February 2003.

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial statements and supplementary data filed as part of this
report are listed in the index appearing in Item 13 to this Form
10-KSB Annual Report.

ITEM 8.   CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURES

None.

<PAGE>

                            PART III
                            ________


ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers and directors of the Company are:

Name                Position                          Age
____                ________                          ___

G. B. Palmer        President and Director             49


E. P. Beierlorzer   Vice President of Engineering      58
                    and Director

R. G. Mercer        Vice President of Manufacturing    56
                    and Director

R. B. Thompson      Vice President of Technical        57
                    Services and Director

A. W. White         Vice President of Purchasing       43
                    and Director

R. M. Sprague       Director                           58

P. F. Dunn          Director                           49

C. L. Mathison      Secretary/Treasurer                55

C. A. Gath          Vice President of Sales            57


There are no family relationships between any directors or
executive officers of the registrant.  Officers are appointed by
the Board of Directors and serve at its will or until they
resign.

BUSINESS EXPERIENCE:

G. B. Palmer
____________

Mr. Palmer has been president and a director of the Company
since December 1996.  He has served as the Company's director of
manufacturing from August 1990 to December 1996 and has been
employed by the Company since 1986.  Prior to joining the
Company, he was director of manufacturing of Pacific Hoe
Corporation. He is a metallurgical engineer.

<PAGE>

E. P. Beierlorzer
_________________

Mr. Beierlorzer rejoined the Company as director of engineering
in June 1997.  He was elected to the board of directors at that
time and appointed vice president of engineering in November
1997.  From July 1996 to June 1997, he was a consultant.  Mr.
Beierlorzer was chief engineer with the Ecopak division of
Ranpak Corporation from August 1992 to June 1996.  From March
1984 to August 1992, he was director of engineering for the
Company.  He holds four patents for equipment design.

R. G. Mercer
____________

Mr. Mercer has worked for the Company in manufacturing since
1972.  He was elected to the board of directors in June 1997 and
appointed vice president of manufacturing in November 1997.  He
was director of manufacturing from December 1996 to November
1997.  From August 1990 to December 1996, he was production
manager.

R. B. Thompson
______________

Mr. Thompson has worked for the Company in technical services
since 1970.  He was elected to the board of directors in June
1997 and appointed vice president of technical services in
November 1997.  He was customer service manager from October
1985 to November 1997.

A. W. White
___________

Mr. White has worked for the Company in purchasing since 1976.
He was elected to the board of directors in June 1997 and
appointed vice president of purchasing in November 1997.  He has
been the Company's purchasing manager for 21 years.

R. M. Sprague
_____________

Mr. Sprague has been a director of the Company since January
1997.  He is the founder and owner of Sprague Metal Company, a
manufacturer of specialty sheet metal products.  He founded the
company in 1974 and has been employed in the metal trades
business for over 30 years.

P. F. Dunn
__________

Mr. Dunn has been a director of the Company since February 1997.
He has been employed by the Boeing Company in various financial
positions since 1973.  He currently is tax manager for the the
State and Local Division.

<PAGE>

C. L. Mathison
______________

Mr. Mathison has been secretary/treasurer of the Company since
January 1997.  He has served as the Company's controller since
October 1979.  Prior to joining the Company, he was assistant
controller of Bayliner Marine Corporation.

C. A. Gath
__________

Prior to joining the Company as vice president of sales in May
of 1985, Mr. Gath was manager of South and Western Operations in
the Cheshire Division of Xerox Corporation, a manufacturer of
addressing and labeling equipment.  He started with that
division in 1976 as a sales representative and progressed
through several management positions in sales and marketing.


401(K) PLAN:

Effective January 1, 1988, the Company established a 401(K) plan
under the Internal Revenue Service Regulations.  Employees are
eligible to participate after one year of service. Plan
participants self-direct their investments choosing from five
options sponsored by Merrill Lynch.  An employee who elects to
participate may contribute in a year up to the lower of 15% of
gross pay or the dollar limit under the regulations, which in
1997 was $9,500.  The Company contributes a matching amount of
10% of the first $1,000 contributed by an employee in a year.
In addition, the Company may make a discretionary matching
contribution.  The total amount is determined by the Company's
Board of Directors and allocated to the participants based on
their contributions.  There were no discretionary contributions
in 1997 and 1996.

ITEM 10.  EXECUTIVE COMPENSATION

The following table sets forth the aggregate total cash
compensation accrued during the fiscal years ended December 31,
1997, 1996, and 1995 for the chief executive officer of the
Company.

<PAGE>

                       Annual Compensation
                       ___________________
                       
                                           Long-Term    All Other
Name/Principal           Salary    Bonus  Compensation Compensation
   Position       Year     ($)      ($)        $            $
______________    ____   _______   _____  ____________ ____________

G. B. Palmer      1997    65,614     0         0            0
President/        1996    55,000     0         0            0
General Manager/
Director (Effective December 20, 1996)

W. R. Marcouiller 1996   168,301   25,763      0         400,000 (1)
President/General 1995   164,145   64,416      0            0
Manager/Director (Retired December 20, 1996)

(1)  On December 20, 1996, Mr. Marcouiller retired as
     president/general manager of the Company and resigned as a
     director of the Company.  His employment agreement with the
     Company stipulated that a payment of $400 thousand would be due
     him upon termination of his employment.  That amount is included
     in All Other Compensation.

The Compensation Committee has established an incentive plan for the
Company's president.  Effective June 1, 1997, the president's base
salary is $72,500 per year.  The president is to receive a bonus of 5%
of the Company's pre-tax earnings in excess of $600 thousand, plus .5%
of gross sales in excess of $11 million.  No bonus was earned in 1997.

The registrant and Mr. Marcouiller entered into a separation agreement
on March 5, 1997.  Under terms of the agreement, the Company is to pay
Mr. Marcouiller a performance bonus of 12.5% of the pre-tax earnings
of the Company for the six month period ending June 30, 1997.  That
bonus was $7,230.

The vice president of sales is paid commissions equal to 1% of firm
orders accepted.  The remainder of the officers and directors are
under no formal compensation agreements.

During 1997, there were no options outstanding under the Company's
Stock Option Plan.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

The following table sets forth as of February 27, 1998,
information with respect to the beneficial ownership of common
stock of the Company by each person who is known by the Company
to have owned beneficially more than 5% of the Company's common
stock, by each of its officers and directors, and by its
officers and directors as a group:

<PAGE>

                                                       Percent
Name and Address               Shares Owned            Of Class
________________               ____________            ________

Alan W. White                    551,400                17.76%
4702 Fremont Ave. N.
Seattle, WA  98103

Rolynn G. Mercer                 520,667 (1)            16.77%
14409 - 151 Pl. SE
Renton, WA  98056

Roy B. Thompson                  513,000 (2)            16.52%
3901 NE 22
Renton, WA  98056

Gary B. Palmer                   264,833                 8.53%
285 Mt. Rainier Pl.
Issaquah, WA  98027

Edwin P. Beierlorzer             256,500                 8.26%
4714 - 161 Ave. SE
Bellevue, WA  98006

William F. Carmody               155,800 (3)             5.02%
10826 Auburn Ave. S
Seattle, WA  98178

Rufus M. Sprague                  63,200                 2.04%
417 Milwaukee Blvd. N.
Pacific, WA  98047

Charles A. Gath                    6,000 (4)              .19%
640 Jasmine Pl. N.W.
Issaquah, WA  98027

Patrick F. Dunn                     -0-                    *
9768 Waters Ave. S
Seattle, WA  98118

Craig L. Mathison                   -0-                    *
4504 SW Director Pl.
Seattle, WA  98136

All Directors and Officers
 as a Group (9 persons)        2,175,600                70.06%

*  Less than 1%

(1)  Includes 73,894 shares owned by Mr. Mercer's wife.

(2)  Includes 54,605 shares owned by Mr. Thompson's wife.

<PAGE>

(3)  Includes 800 shares held as custodian for Mr. Carmody's
     child as to which he disclaims beneficial ownership.

(4)  Includes 1,000 shares held as custodian for Mr. Gath's
     grandchild as to which he disclaims beneficial ownership.

Except as noted, each person named in the table is believed to
have sole voting and investment power over the shares owned.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

No officer, director, nominee or associate of any officer,
director, or nominee was indebted to the Company in an amount in
excess of $60,000 at any time during the fiscal year ended
December 31, 1997.

R. M. Sprague, a director of the Company and owner of Sprague
Metal Company, has an ongoing relationship with the Company as a
supplier of sheet metal products and other miscellaneous parts.
This relationship is expected to continue in the future.  During
the fiscal year ended December 31, 1997, the Company purchased
parts costing $147,010 from the Sprague Metal Company.  The
Company's management negotiates purchase orders and prices for
the items purchased.  Management believes the prices paid are
competitive with other sources.

ITEM 13.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS
          ON FORM 8-K

(a) (1) and (2)  The response to this portion of Item 13 is
submitted as a separate section of this report.


(a) (3)  The following exhibits are incorporated herein by
reference:

  (3)  Articles of Incorporation and by-laws.  Exhibit 1 to
       Registrant's Form 10-K for the year ended December 31,
       1980, File No. 0-7267.

 (10)                        Material Contracts
     
       (10a)  Exhibit 3 to Registrant's Form 10-K for the year
               ended December 31, 1980, File No. 0-7267 being
               Web Press Corporation's Company Stock Option
               Plan.
       
       (10b)  being the lease for the Company's facilities
               between Web Press Corporation (lessee) and
               William J. Bennett (lessor) dated October 16,
               1987.
       
       (10c)  being the Promissory Note for term financing
               between Web Press Corporation and Washington
               First International Bank dated February 3, 1997.

<PAGE>
       
       The following exhibits are filed herewith:
       
       (10d)  being the Business Loan Agreement between Web
               Press Corporation and Washington First
               International Bank dated February 17, 1998.
       
       (10e)  being the Promissory Note for term financing
               between Web Press Corporation and Washington
               First International Bank dated February 18,
               1998.
       
       
(22)  Subsidiaries of Registrant

 (b)   Report on Form 8-K

      There have been no reports on Form 8-K filed during the
      three months ended December 31, 1997.

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

                                                               
                                   WEB PRESS CORPORATION
                                                               
                                                               
March 20, 1998               By:   _____________________
                                   Gary B. Palmer
                                   President and Chairman
                                   of the Board


March 20, 1998               By:   _____________________
                                   Craig L. Mathison
                                   Secretary/Treasurer
                                   (Principal Accounting
                                    Officer)

<PAGE>

Pursuant to the requirements of the Securities Exchange Act of
1934, this report was signed below by the following persons on
behalf of the Company and in the capacities and on the dates
indicated.

____________________                            March 20, 1998
Gary B. Palmer
President and Chairman
of the Board


____________________                            March 20, 1998
Edwin P. Beierlorzer
Vice President of Engineering
and Director


____________________                            March 20, 1998
Rolynn G. Mercer
Vice President of Manufacturing
and Director


____________________                            March 20, 1998
Roy B. Thompson
Vice President of Technical Services
and Director


____________________                            March 20, 1998
Alan W. White
Vice President of Purchasing
and Director


____________________                            March 20, 1998
Rufus M. Sprague
Director


____________________                            March 20, 1998
Patrick F. Dunn
Director

<PAGE>

                                
                      WEB PRESS CORPORATION
                           FORM 10-KSB
                   ITEMS 7, 13(a) (1) AND (2)
                  INDEX OF FINANCIAL STATEMENTS


     The following financial statements of the registrant and
its subsidiary required to be included in Item 7 are listed
below:

                                                          Page
                                                          ____

Consolidated Financial Statements:
  Independent Auditors' Report............................  23
  Balance Sheet as of December 31, 1997...................  24
  Statements of Operations for each of the two
    years in the period ended December 31, 1997...........  26
  Statements of Stockholders' Equity for each of
    the two years in the period ended December 31, 1997...  27
  Statements of Cash Flows for each of the two
    years in the period ended December 31, 1997...........  28
  Notes to Consolidated Financial Statements..............  30

<PAGE>

       Report of Independent Certified Public Accountants
                                
                                




Board of Directors and Stockholders
Web Press Corporation
Kent, Washington


We have audited the accompanying consolidated balance sheet of
Web Press Corporation (a Washington corporation) and Subsidiary
as of December 31, 1997 and the related consolidated statements
of operations, stockholders' equity, and cash flows for the years
ended December 31, 1997 and 1996.  These financial statements are
the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Web Press Corporation and Subsidiary as of
December 31, 1997, and the consolidated results of their
operations and their consolidated cash flows for the years ended
December 31, 1997 and 1996, in conformity with generally accepted
accounting principles.


/s/ Grant Thornton LLP

Grant Thornton LLP
Seattle, Washington
March 10, 1998

<PAGE>
      
                          
                      WEB PRESS CORPORATION
                                
                   CONSOLIDATED BALANCE SHEET
                     (Dollars in Thousands)
                                
                                
ASSETS                                        December 31, 1997
                                              _________________

Current Assets:
Cash.........................................      $    6
Accounts receivable, less allowance for
  doubtful accounts of $4 (Note 3)...........       3,473
Inventories (Notes 2 and 3)..................       2,750
Refundable income taxes (Note 4).............         111
Deposits.....................................         107
Deferred tax assets (Note 4).................          38
Prepaid expenses.............................          38
                                                   ______
  
Total Current Assets.........................       6,523
  
Machinery and Leasehold Improvements,
  at cost (Notes 2 and 3):
 Machinery and equipment.....................       3,132
 Leasehold improvements......................         195
                                                   ______
                                                    3,327

 Less accumulated depreciation
  and amortization...........................       2,770
                                                   ______
  
Machinery and Leasehold Improvements (Net)...         557
                                                   ______

Total Assets.................................      $7,080
                                                   ______
                                                   ______



The accompanying notes are an integral part of the Consolidated
Financial Statements.

<PAGE>


                      WEB PRESS CORPORATION
                                
                   CONSOLIDATED BALANCE SHEET
                     (Dollars in Thousands)
                                
                                
LIABILITIES AND STOCKHOLDERS'                  December 31, 1997
EQUITY                                         _________________

Current Liabilities:
Note payable to bank (Note 3)...............       $  772
Accounts payable............................          688
Customer deposits...........................          194
Accrued expenses............................        1,308
Current portion of long-term debt...........          276
                                                   ______

Total Current Liabilities...................        3,238

Long-Term Debt, less current
  portion (Note 3)..........................          696

Deferred tax liabilities (Note 4)...........          438

Commitments (Note 6)

Stockholders' Equity (Note 5):
  Common stock, par value $.025
  per share:
    Authorized, 4,000,000 shares
    Issued, 3,436,513 shares                           86
  Paid-in capital..........................           320
  Retained earnings........................         2,399
                                                   ______
                                                    2,805

  Treasury stock, 331,100 shares
    at cost................................           (97)
                                                   ______

Total Stockholders' Equity.................         2,708
                                                   ______

Total Liabilities and Stockholders' Equity.        $7,080
                                                   ______
                                                   ______


The accompanying notes are an integral part of the Consolidated
Financial Statements.

<PAGE>

    
    
                      WEB PRESS CORPORATION
                                
              CONSOLIDATED STATEMENTS OF OPERATIONS
          (Dollars in Thousands Except Per Share Data)
                                  
                                  
                                         Year Ended December 31,
                                         _______________________
                                             1997      1996
                                             ____      ____
    
    Sales (Note 7)......................   $9,822    $6,617
    Cost of Sales.......................    7,629     4,836
                                           ______    ______ 
                                            2,193     1,781
    
    Selling, general and
      administrative expenses (Note 6)..    1,418     1,805
                                           ______    ______
                                              775       (24)
    
    Other income........................        7         7
    Interest expense....................     (240)     (203)
                                           ______    ______
     
                                             (233)     (196)
                                           ______    ______

    Earnings (loss) before taxes
      (benefit).........................      542      (220)
    
    Taxes (benefit) on earnings
      (loss)(Note 4)....................      187       (76)
                                           ______    ______

    Net earnings (loss).................   $  355    $ (144)
                                           ______    ______
                                           ______    ______

    Net earnings (loss) per share.......     $.11     $(.05)
                                             ____     _____
                                             ____     _____
    
    
The accompanying notes are an integral part of the Consolidated
Financial Statements.

<PAGE>
    
    
                                         WEB PRESS CORPORATION

                             CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                               (Dollars in Thousands)


<TABLE>
<CAPTION>
                                 Common Stock        Treasury    Paid-in   Retained
                              __________________    
                              Shares      Amount      Stock      Capital   Earnings
                              ______      ______     ________    _______   ________
<S>                         <C>            <C>        <C>         <C>      <C>                   
Balance, January 31, 1996   3,436,513      $86        $97         $320     $2,188

Net loss for the year                                                       (144)
                            _________      ___        ___         ____     _____

Balance, December 31, 1996  3,436,513       86         97          320      2,044

Net earnings for the year                                                     355
                            _________      ___        ___         ____     ______
 
Balance, December 31, 1997  3,436,513      $86        $97         $320     $2,399
                            _________      ___        ___         ____     ______
                            _________      ___        ___         ____     ______
</TABLE>


The accompanying notes are an integral part of the Consolidated Financial
Statements.

<PAGE>
                             
                                
                                
                      WEB PRESS CORPORATION

              CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (Dollars in Thousands)

                                        Year Ended December 31,
                                        _______________________

                                           1997       1996
                                           ____       ____

Cash flows from operating activities:
  Net earnings (loss)................... $  355     $ (144)
  Adjustments to reconcile net
  earnings (loss) to net cash
  provided (used) by operating
  activities:
     Depreciation and amortization......    211        218
     Provision for losses on accounts
       receivable.......................     (6)         3
     Inventory valuation reserve........     57         80
     Deferred taxes.....................    224       (114)
     Retirement of plant assets.........      2          1

  Increase (Decrease) in cash from
  changes in operating accounts:
     Accounts receivable................ (2,027)       527
     Refundable income taxes............   (111)
     Inventory..........................    650       (543)
     Deposits...........................   (107)
     Prepaid expenses...................     24          7
     Accounts payable...................    147        137
     Customer deposits..................   (348)       529
     Accrued expenses...................    495        156
     Income taxes payable...............    (38)        38
                                         ______     ______

     Total adjustments..................   (827)     1,039
                                         ______     ______

  Net cash provided (used) by operating
  activities                               (472)       895

Cash flows from investing activities:
  Capital expenditures..................   (222)       (92)
  Proceeds from retirement of plant
     assets.............................     19     
                                         ______     ______

  Net cash used in investing activities.   (203)       (92)


(Continued on following page)

<PAGE>

(Continued from previous page)

Cash Flows from financing activities:
  Proceeds from issuance of
     long-term debt....................   1,111         14
  Payments on long-term debt..........   (1,109)       (369)
  Net borrowings (payments) on line
      of credit........................     673        (568)
                                         ______      ______

  Net cash provided (used) by
     financing activities..............     675        (923)
                                         ______      ______

Net increase (decrease) in cash........       0        (120)

Cash at beginning of period............       6         126
                                         ______      ______
Cash at end of period..................  $    6      $    6
                                         ______      ______
                                         ______      ______

Supplemental disclosures of cash
  flow information:

Cash was paid during the year for:

  Interest                                 $215       $241
  Taxes                                     111



The accompanying notes are an integral part of the Consolidated
Financial Statements.

<PAGE>


                      WEB PRESS CORPORATION
                      
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                
                TWO YEARS ENDED DECEMBER 31, 1997
                                
                                
Note 1 - Nature of the Company's Business:

     The Company manufactures web-fed offset printing presses.
It has two product lines, the Web Leader and the Atlas.  The
primary difference between the Web Leader and the Atlas is that
the Atlas is fifty percent faster and is manufactured in three
different broadsheet newspaper page lengths.  The Company's
presses are designed to print on absorbent paper such as
newsprint.  Among the products produced by the presses are
newspapers (both broadsheet and tabloid sizes), shoppers,
advertising inserts, and paperback books.  Each press is
composed of standard modules to unwind, print, cut-off and fold
the roll of paper into a finished product.  The equipment is
arranged to meet the particular printer's requirements for the
number of pages, color, and size of products.

     The Company markets its presses worldwide.  Company
employed sales representatives sell the Company's presses in the
United States and Canada.  Foreign sales are made through
independent agents in Central and South America, Asia, Europe,
and the Middle East.  Sales are based on a combination of price,
service, quality, and the versatility of the equipment.

Note 2 - Summary of Significant Accounting Policies:

Principles of consolidation
___________________________

     The accompanying consolidated financial statements include
the accounts of Web Press Corporation and Web Leader
International, Inc., its wholly-owned Domestic International
Sales Corporation (DISC).  All significant inter-company
accounts and transactions have been eliminated in consolidation.

Inventories
___________
     Raw materials, work-in-progress and finished goods are
stated at the lower of average cost or market.  Used presses and
other related press equipment are stated at the lower of cost

<PAGE>

(specific identification basis) or market.  Inventory costs
include material, labor, and manufacturing overhead.
Inventories were classified as follows at December 31:

                                     (Dollars in Thousands)
                                             1997
                                             ____

     Raw materials and parts
     (including subassemblies)........      $1,224
     Work-in-progress.................         511
     Finished goods...................         770
     Used equipment...................         245
                                            ______

                                            $2,750
                                            ______
                                            ______


Machinery and leasehold improvements
____________________________________

     Machinery and equipment are depreciated on the straight-
line method for financial statement purposes, based upon useful
lives of three to ten years.  Leasehold improvements are
amortized over their useful lives or the term of the lease,
whichever is shorter.  For income tax purposes, accelerated
methods are used for all eligible assets.

     Maintenance and repairs are charged directly to costs or
expenses as incurred.  Equipment of only nominal value and
renewals and betterments which do not appreciably extend the
life of the asset are charged directly to costs or expenses.

     Fully depreciated or fully amortized assets which are no
longer in use or are not identifiable are written off by charges
to the allowance for accumulated depreciation and amortization.
When assets are retired or disposed of, the costs and
accumulated depreciation of such assets are removed from the
accounts and the difference between the net depreciated cost and
the amount received is recorded in the statements of operations.

Research and development costs
______________________________

     Research and development costs are expensed as incurred.
Total research and development costs charged to operations
during the years ended December 31, 1997 and 1996 were $292
thousand and $282 thousand, respectively.

Revenue recognition
___________________

     Revenue from sales of manufactured products under firm
contracts is recognized generally at the time equipment is
available for shipment.  All freight and installation costs are
accrued at the time revenue is recognized.  Estimated costs
related to product warranties are provided at the time of sale.
Proceeds received on contracts prior to recognition as a sale
are recorded as deposits.

<PAGE>

Earnings (loss) per share
_________________________

     Earnings (loss) per share calculations are based on the
weighted average number of shares outstanding.  The weighted
average number of shares outstanding was 3,105,413 in 1997 and
1996.

Estimates
_________

     The Company makes certain cost estimates when it records a
press sale and uses other estimates and assumptions regarding
certain types of assets, liabilities, revenues, and expenses.
Such estimates primarily relate to unsettled transactions and
events as of the date of the financial statements.  All are
reported in conformity with generally accepted accounting
principles.  Company management believes the basis for these
estimates are accurately reflected in the financial statements;
however, actual results may differ from estimated amounts.

Note 3 - Financing:

     On December 31, 1997, the Company had a financing facility
with a commercial bank consisting of a term note and two
separate revolving lines of credit.

     The term note is dated February 3, 1997, and was for $975
thousand.  It requires the Company to make 48 monthly payments,
with the first payment due March 3, 1997, and the final payment
due February 3, 2001.  The interest rate charged is 2 percent
above the bank's prime rate.  On December 31, 1997, the balance
outstanding on the term note was $804 thousand, the interest
rate was 10.5 percent, and the monthly payment was $24,948.

     The Company had a line of credit for borrowing up to $700
thousand that expired on February 3, 1998. On December 31, 1997,
the balance owing on the line was $524 thousand.  The interest
rate charged is 2 percent above the bank's prime rate.  The rate
was 10.5 percent on December 31, 1997.

     In February 1998, the Company and the bank renewed the line
of credit through April 15, 1999, and increased the borrowing
limit to $1.2 million.  The interest rate charged is 2 percent
above the bank's prime rate.

     On December 31, 1997, the Company had a second line of
credit with the bank for borrowing up to an additional $1
million to manufacture equipment for export.  The loan is a
revolving line of credit based on a series of transactions
backed by letter of credit orders acceptable to the bank.  The
interest rate charged is 1.5 percent above the bank's prime
rate.  Borrowings against this line were $248 thousand on
December 31, 1997, and the interest rate charged was 10 percent.
The line is 

<PAGE>

secured by an "export working capital guarantee"
from the Small Business Administration.  The line expired on
February 20, 1998.

     In February 1998, the Company secured a second term note
from the bank for $420,700 to purchase a new machine tool.  The
loan is amortized over 7 years and the interest rate charged is
9 percent.  The first payment was due on March 18, 1998, and is
for interest only, to be followed by 59 monthly payments of
$6,794.  The final payment of $155,675 is due on February 18,
2003.

     Accounts receivable, firm orders in production, inventories
and values in excess of the long-term financing on equipment are
pledged as collateral.

Long-term debt consists of the following:

                                      (Dollars in Thousands)
                                         December 31, 1997
                                         _________________

Term note, 2% above prime rate,
due in monthly installments of $24,948
including interest.  Final payment
due February, 2001.......................        $804

Note payable for equipment, 9.3%,
due in monthly installments of $2,198
including interest.  Final payment due
in March, 2004............................        125

Note payable for equipment and leasehold
improvements, 12%, due in monthly install-
ments of $2,262 including interest.
Final payment due in October, 1998........         21

Note payable for equipment, 10%, due in
monthly installments of $1,039 including
interest.  Final payment due in
November, 1998............................         11

Note payable for equipment, 8.23%, due in
monthly installments of $277 including
interest.  Final payment due in December,
2001......................................         11
                                                 ____

                                                  972

Less current portion......................        276
                                                 ____

                                                 $696
                                                 ____
                                                 ____

     Equipment with an original cost of $200 thousand is pledged
as collateral under the notes payable for equipment.

<PAGE>

     Maturities of the long-term debt for the next five years
are as follows:

                                (Dollars in Thousands)
          1998                           $276
          1999                            270
          2000                            300
          2001                             73
          2002                             33
          Thereafter                       20
                                         ____

                                         $972
                                         ____
                                         ____

     The estimated fair value of long-term debt approximates
carrying value at December 31, 1997 and 1996, based on the
borrowing rates currently available to the Company for bank
loans with similar terms and average maturities.

Note 4 - Income Taxes:

     The taxes (benefit) on earnings (loss) consist of the
following:
                                   (Dollars in Thousands)
                                   Year Ended December 31,
                                   _______________________
                                      1997         1996
                                      ____         ____

Currently payable (refundable)        $(37)        $ 38
Deferred taxes (benefit)               224         (114)
                                      ____         ____

                                      $187         $(76)
                                      ____         ____
                                      ____         ____

     The taxes (benefit) on earnings (loss) differ from the
federal statutory rate as follows:
                                  (Dollars in Thousands)
                                  Year Ended December 31,
                                  _______________________
                                    1997          1996
                                    ____          ____

Taxes (benefit) at statutory rate   $184         $(75)
Permanent difference                   3            3
Prior year tax adjustment                           1
Other                                              (5)
                                    ____         ____
                                    $187         $(76)
                                    ____         ____
                                    ____         ____

<PAGE>


     The components of deferred taxes included in the balance
sheet as of December 31, 1997 are as follows:

                               (Dollars in Thousands)
                               ______________________

Current deferred tax assets:
  Gross margin on deferred sales..    $(246)
  Inventory valuation reserve.....      119
  Compensation payable............       56
  Tax loss carry forward..........       76
  Other...........................       33
                                      _____

                                      $  38
                                      _____
                                      _____

Non-current deferred tax liabilities:
  Deferred DISC income............    $407
  Excess tax depreciation.........      31
                                      ____

                                      $438
                                      ____
                                      ____

     The Company has a net operating loss carryforward of $76
thousand which expires in 2012.

Note 5 - Common Stock:

     The Company's Stock Option Plan permits issuance of stock
options to key employees at prices not less than 100% of market
price at the date of grant.  An aggregate of 600,000 shares of
common stock is reserved in connection with this Plan.  As of
December 31, 1997, no options have been granted under this Plan.

Note 6 - Commitments:

     In October 1987, the Company executed a ten-year lease,
commencing six months from the date of occupancy, for a 49,000
square foot manufacturing and office facility located in Kent,
Washington.  The Company moved into this facility in May 1988.
The lease included two five-year renewal options and required
the lessor to finance $150,000 of leasehold improvements and
other costs incurred by the Company.  The total monthly payment
is $14,451.

     The Company notified the lessor in September, 1997 that it
would exercise the first extension option of the lease, covering
a period of five years through October, 2003.  The new monthly
rental payment will be $16,155, commencing in November, 1998.

     Rental expense was $159 thousand in 1997 and $152 thousand
in 1996.

<PAGE>

Remaining minimum rental commitments are as follows:

                              (Dollars in Thousands)
               1998.........      $  154
               1999.........         194
               2000.........         194
               2001.........         194
               2002.........         194
               Thereafter...         173
                                  ______

                                  $1,103
                                  ______
                                  ______

Note 7 - Market Segment and Concentration Information:

     Substantially all of the Company's operations relate to the
manufacture and sale of printing presses and associated equipment.
The Company markets its presses worldwide.  International sales
accounted for 56.7% of total sales in 1997 and 62.3% in 1996.  The
Company is not dependent on any country or region of the world for
international sales and domestic sales are disseminated throughout
the United States.

     Export sales of equipment by geographical area were as
follows:

                               (Dollars in Thousands)
                               Year Ended December 31,
                               _______________________
                                    1997     1996
                                    ____     ____

     Asia                          $   15   $1,529
     Western Hemisphere             1,416
     Europe                         3,891    2,405
                                   ______   ______

                                   $5,322   $3,934
                                   ______   ______
                                   ______   ______

     The Company normally has one or more individual press sales
which account for more than 10% of revenues in a given year.  It
is uncommon for a customer to place a large order for additional
equipment in the years immediately following purchase of a press.
On an ongoing basis, the Company does not believe it is dependent
on any one customer for a significant portion of its business.

     During 1997, the Company had sales to two separate customers
which, as a percentage of total consolidated sales, were 10.1%
and 22.4%.  In 1996, the Company had sales to two separate
customers which accounted for 17.1% and 20.4% of sales.

Note 8 - Retirement Savings Plan:

  The Company has a 401(k) plan covering all employees who have
completed one year of service.  Plan participants self-direct
their investments choosing from five options sponsored by
Merrill Lynch.  The Company matches up to 10% of the first
$1,000 contributed by the employee in a year.  The Company may

<PAGE>

also make discretionary contributions to the plan.  Fees paid
the insurance company plus the Company's matching contribution
totaled approximately $10 thousand in 1997 and $6 thousand in
1996.

<PAGE>
(/DOCUMENT)