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

                                FORM 10-Q

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

    For the period ended December 26, 1998.

                             OR

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

    For the transition period from ______ to ______

                      Commission file number 1-11427

                    NEW ENGLAND BUSINESS SERVICE, INC.
                    ----------------------------------
       (Exact name of the registrant as specified in its charter)

             Delaware                          04-2942374
             --------                          ----------
     (State or other jurisdiction of        (I.R.S. Employer
      incorporation or organization)         Identification No.)

                           500 Main Street
                    Groton, Massachusetts, 01471
                    ----------------------------
             (Address of principal executive offices)
                             (Zip Code)

                           (978) 448-6111
                           --------------    
          (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Sections 13 and 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
                             ---           ---

The number of common shares of the Registrant outstanding on January 29, 1999
was 14,488,579.



PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
- ----------------------------

                       NEW ENGLAND BUSINESS SERVICE, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEET
                              (In Thousands)


                                                 (unaudited)
                                                   Dec. 26,       June 27,
                                                     1998            1998 
                                                   --------       --------
                                                            
ASSETS
Current Assets
  Cash and cash equivalents                        $  4,709       $ 10,823
  Accounts receivable - net                          57,604         50,985
  Inventories                                        23,323         20,970
  Direct mail advertising and prepaid expenses       10,114         12,289
  Deferred income tax benefit                         5,993          5,993
                                                   --------       --------
     Total current assets                           101,743        101,060
Property and equipment - net                         54,175         51,930
Property held for sale                                1,899          1,131
Deferred income tax benefit                           2,652          2,652
Goodwill - net                                       76,265         75,586
Other assets - net                                   70,290         75,218
                                                   --------       --------
TOTAL ASSETS                                       $307,024       $307,577
                                                   ========       ========
LIABILITIES AND STOCKHOLDERS'EQUITY
Current Liabilities
  Accounts payable                                 $ 15,626       $ 16,038
  Accrued expenses                                   32,032         34,639
                                                   --------       --------
     Total current liabilities                       47,658         50,677
Revolving line of credit                            132,500        141,000
Deferred income taxes                                 1,408          1,395

STOCKHOLDERS'EQUITY
  Common stock                                       15,268         15,185
  Additional paid-in capital                         47,356         44,559
  Accumulated other comprehensive income             (3,106)        (2,337)
  Retained earnings                                  79,610         71,962
                                                   --------       -------- 
     Total                                          139,128        129,369
Less: Treasury stock                                (13,670)       (14,864)
                                                   --------       --------
Stockholders' Equity                                125,458        114,505
                                                   --------       --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY           $307,024       $307,577
                                                   ========       ========

See Notes to Unaudited Consolidated Financial Statements



              
                             NEW ENGLAND BUSINESS SERVICE, INC.
                             CONSOLIDATED STATEMENTS OF INCOME
                                       (unaudited)

                                                Three Months Ended           Six Months Ended
                                                Dec. 26,   Dec. 27,         Dec. 26,   Dec. 27,
                                                 1998       1997             1998       1997
                                               ---------  ---------        ---------  ---------
                                                                                
NET SALES                                      $127,297   $ 81,651         $239,983   $157,266 
OPERATING EXPENSES:
  Cost of sales                                  46,587     30,457           88,499     59,468 
  Selling and advertising                        48,567     27,740           91,162     52,596 
  General and administrative                     17,389     12,478           34,289     24,638 
                                               --------   --------         --------   -------- 
     Total operating expenses                   112,543     70,675          213,950    136,702 
INCOME FROM OPERATIONS                           14,754     10,976           26,033     20,564 
OTHER INCOME/(EXPENSE):
  Interest income                                    25         42               52        107 
  Interest expense                               (2,301)      (477)          (4,480)      (954)
  Gain on pension settlement                        259          -              259        556 
                                               --------   --------         --------   -------- 
INCOME BEFORE TAXES                              12,737     10,541           21,864     20,273 
PROVISION FOR INCOME TAXES                        4,825      4,058            8,474      7,829 
                                               --------   --------         --------   -------- 
NET INCOME                                        7,912      6,483           13,390     12,444 
                                               --------   --------         --------   -------- 
OTHER COMPREHENSIVE INCOME, net of tax             (563)      (195)            (769)      (208)
                                               --------   --------         --------   --------
COMPREHENSIVE INCOME                           $  7,349   $  6,288         $ 12,621   $ 12,236
                                               ========   ========         ========   ========
PER SHARE AMOUNTS:
Basic Earnings Per Share                       $    .55   $    .47         $    .93   $    .91 
                                               ========   ========         ========   ======== 
Diluted Earnings Per Share                     $    .53   $    .46         $    .91   $    .89 
                                               ========   ========         ========   ======== 
Dividends                                      $    .20   $    .20         $    .40   $    .40 
                                               ========   ========         ========   ======== 
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING        14,401     13,707           14,365     13,677 
  Plus incremental shares from assumed
  conversion of stock options                       439        364              390        314
                                               --------   --------         --------   -------- 
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING      14,840     14,071           14,755     13,991 
                                               ========   ========         ========   ======== 

See Notes to Unaudited Consolidated Financial Statements





                     NEW ENGLAND BUSINESS SERVICE, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In Thousands)
                                (unaudited)

                                                        Six Months Ended
                                                     Dec. 26      Dec. 27
                                                      1998         1997
                                                    ---------     ---------
                                                                  
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                          $  13,390     $  12,444
Adjustments to reconcile net income to cash:
  Depreciation                                          6,807         5,279
  Amortization                                          6,079         1,567
  Deferred income taxes                                    82           (28)
  Gain on pension curtailment                             259           556 
  Other non-cash items                                  2,687           668
Changes in assets and liabilities:
  Accounts receivable                                  (8,784)       (4,185)
  Inventories and prepaid expenses                         66        (1,343)
  Accounts payable                                       (342)       (2,964)
  Accrued expenses                                     (3,541)        2,087
                                                    ---------     ---------
    Net cash provided by operating activities          16,703        14,081
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment                    (9,637)       (7,332)
Purchase of investments                                     -        (1,039)
Proceeds from sale of investments                           -           468  
Acquisition of business                                  (174)      (82,782)
Other assets                                              (32)         (330)
                                                    ---------     ---------
    Net cash used in investing activities              (9,843)      (91,015)
                                                                           
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt                                       (40,000)       (7,000)
Proceeds from credit line                              31,500        84,500 
Proceeds from issuing common stock upon stock
  option exercise                                       1,466         1,569 
Purchase of treasury stock                               (147)            - 
Dividends paid                                         (5,742)       (5,466)
                                                    ---------     ---------
    Net cash provided by (used in) financing          (12,923)       73,603
      activities                                                            
EFFECT OF EXCHANGE RATE ON CASH                           (51)          (77)
                                                    ---------     ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS              (6,114)       (3,408) 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR         10,823         7,365 
                                                    ---------     ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD          $   4,709     $   3,957
                                                    =========     =========

See Notes to Unaudited Consolidated Financial Statements



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation/Accounting Policies
- --------------------------------------------
  The consolidated financial statements contained in this report are unaudited 
(except for June 27, 1998 amounts) but reflect all adjustments, consisting only 
of normal recurring adjustments, which are, in the opinion of management, 
necessary for a fair statement of the results of the interim periods reflected. 
Certain information and footnote disclosures normally included in financial 
statements prepared in accordance with generally accepted accounting principles 
have been omitted pursuant to applicable rules and regulations of the 
Securities and Exchange Commission.  The consolidated financial statements 
included herein should be read in conjunction with the financial statements and 
notes thereto, and the Independent Auditors' Report in the Company's Annual 
Report on Form 10-K for the fiscal year ended June 27, 1998.  Reference is made 
to the accounting policies of the Company described in the notes to the 
consolidated financial statements in the Company's Annual Report on Form 10-K 
for the fiscal year ended June 27, 1998.  The Company has consistently followed 
those policies in preparing this report.  The results of operations for the 
interim period reported herein are not necessarily indicative of results to be 
expected for the full year.

2.  Acquisitions
- ----------------
  On December 23, 1997, the Company acquired all of the outstanding common 
stock of Rapidforms, Inc. ("Rapidforms") for consideration of approximately 
$82,136,000 in cash (net of cash acquired).  As part of the purchase accounting 
for the Rapidforms acquisition and included in the allocation of the 
acquisition cost, a liability of $4,000,000 was recorded to cover the 
anticipated costs related to a plan to close redundant Rapidforms' 
manufacturing and warehouse facilities and to reduce manufacturing personnel.  
Approximately $3,700,000 of the liability is allocated for employee termination 
benefits and approximately $300,000 for termination of certain contractual 
obligations.  The liability associated with the Rapidforms integration plan 
remaining as of December 26, 1998 was $2,321,000.

  On June 3, 1998, the Company acquired all of the outstanding common stock of 
McBee Systems, Inc. and all of the assets of McBee Systems of Canada, Inc. 
(collectively "McBee") for consideration of approximately $48,518,000 in cash 
(net of cash acquired), and 382,352 shares of Company common stock valued at 
approximately $12,600,000, for an aggregate purchase price of $61,118,000.  
Purchase price allocations and useful lives are still subject to final 
valuations.  The Company does not believe these initial allocations will change 
materially.

  As part of the purchase accounting for the McBee acquisition and included in 
the allocation of the acquisition costs, a liability of $2,642,000 was recorded 
to cover anticipated costs (primarily employee termination benefits) related to 
a plan to close redundant McBee manufacturing and warehouse facilities and to 
reduce manufacturing personnel. The liability associated with the McBee 
integration plan remaining as of December 26, 1998 was $1,983,000.   

  Should the integration liabilities for McBee and Rapidforms be settled at
amounts less than their original estimates, the excess will reduce the amount
of recorded goodwill.




3. Inventories
- --------------
  Inventories are carried at the lower of first-in, first-out cost or market. 
Inventories at December 26, 1998 and June 27, 1998 consisted of:



                                                 (unaudited) 
                                                  Dec. 26,       June 27,
                                                   1998           1998
                                               -----------    -----------
                                                        
  Raw paper                                    $ 1,935,000    $ 1,622,000 
  Business forms, related office products
    and shipping, warehouse and packaging    
    supplies                                    21,388,000     19,348,000
                                                ----------    -----------
  Total                                        $23,323,000    $20,970,000
                                               ===========    ===========


4. New Accounting Pronouncements
- -------------------------------
  In March 1998, the AICPA issued Statement of Position 98-1 "Accounting for 
the Costs of Computer Software Developed or Obtained for Internal Use."  The 
Company has adopted this Statement in the current fiscal year. In the current 
year-to-date period approximately $751,000 in costs which previously would have 
been expensed have been capitalized under the caption "Property and equipment, 
net."  The Company also implemented the disclosure standard SFAS No. 130 
"Reporting Comprehensive Income" in the first quarter of fiscal year 1999.  The 
AICPA has also issued Statement of Position 98-5 "Reporting on the Costs of 
Start-Up Activities."  The policies promulgated by this statement had 
previously been followed by the Company and thus its implementation will not 
impact the financial statements.

  In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No. 
131 "Disclosures about Segments of an Enterprise and Related Information." In 
February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure about 
Pensions and Other Postretirement Benefits."  In June, 1998, the FASB issued 
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."  
The former two statements are considered to be "disclosure only" standards and 
are not anticipated to have a material impact on the consolidated financial 
statements (these will be implemented in fiscal year 1999).  The latter 
standard does have a direct impact on the consolidated financial statements and 
will be adopted by the Company in fiscal year 1999.  Yet, in the Company's 
situation, such impact is not considered likely to be material in nature.





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

Overview
- --------

  New England Business Service, Inc. (the "Company"), a Delaware corporation 
founded in 1952, incorporated in Massachusetts in 1955 and reincorporated in 
Delaware in 1986, designs, produces and distributes business forms, checks, 
envelopes, labels, greeting cards, signs, stationery and related printed 
products and distributes packaging, shipping and warehouse supplies, software, 
work clothing and other business products through mail order, direct sales, 
telesales, dealers and the internet to small businesses throughout the United 
States, Canada, the United Kingdom and France.

  Any sentence followed by an asterisk (*) in this section constitutes a 
forward-looking statement which reflects the Company's current expectations.
There can be no assurance the Company's actual performance will not differ
materially from those projected in such forward-looking statements due to the 
important factors described in the section to this Management's Discussion and 
Analysis of Financial Condition and Results of Operations titled "Forward-
Looking Information and Risk Factors to Future Performance."

Results of Operations
- ---------------------

  Net sales increased $45.6 million or 55.9% to $127.3 million in the second 
quarter of fiscal year 1999 from $81.7 million in last year's second quarter.  
The sales increase was composed of approximately a $41.3 million, or 50.6%, 
increase associated with the acquisition of Rapidforms, Inc. ("Rapidforms"), 
McBee Systems, Inc. and all of the assets of McBee Systems of Canada, Inc. 
(collectively "McBee") during fiscal year 1998, and a $4.3 million, or 5.3%, 
increase in sales of the Company's other business units.  Sales in fiscal year 
1999 were aided by favorable customer response to the recently launched Company 
Colors(tm) line of work wear.  The second quarter of the fiscal year also is 
the primary time period for seasonal sales of holiday cards for both Rapidforms 
and the Company's other business units.  McBee and Rapidforms were acquired 
subsequent to the end of last year's first quarter.

  Net sales increased $82.7 million or 52.6% to $240.0 million for the first 
six months of fiscal year 1999 from $157.3 million in last year's first six 
months.  The sales increase was composed of approximately a $76.3 million, or 
48.5%, increase associated with the acquisition of Rapidforms and McBee during 
fiscal year 1998, and a $6.4 million, or 4.1%, increase in sales of the 
Company's other business units.  


<PAGE

  For the second quarter of fiscal year 1999, cost of sales decreased to 36.6% 
of sales from 37.3% in last year's comparable period.  This decrease was due to 
an increase in revenue generated by higher margin products associated with the 
recent acquisition of McBee, the addition of Rapidforms' holiday card business 
to the results this year and increased efficiencies in the Company's U.S and 
Canadian operating units primarily selling business forms and related printed 
products. These factors counteracted the impact of $422,000 in costs incurred 
in fiscal year 1999 in conjunction with activities related to integration of 
manufacturing facilities between Rapidforms, McBee and the Company's other 
plants.  Cost of sales as a percent of sales is anticipated to remain 
consistent with the second quarter's results for the remainder of the fiscal 
year, due to anticipated efficiency improvements resulting from manufacturing 
integration activities with recently acquired companies.*

  For the first six months of fiscal year 1999, cost of sales decreased to 
36.9% of sales from 37.8% in last year's comparable period.  This decrease was 
due to similar reasons as in the second quarter results enumerated above, as 
well as a non-recurring increase in freight costs in the previous year's first 
quarter as a result of the UPS strike. Costs of $882,000 were also incurred 
during the six months of fiscal year 1999 related to plant integration 
activities between Rapidforms, McBee and the Company's other plants.

  Selling and advertising expense increased to 38.2% of sales in the second 
quarter of fiscal year 1999 from 34.0% of sales in last year's comparable 
quarter. The increase was due primarily to the direct sales force employed by 
McBee which generates a higher selling and advertising expense as a percentage 
of sales than in the Company's other businesses.  The Company also incurred 
$125,000 in costs during the quarter in connection with efforts to harmonize 
product offerings between Rapidforms, McBee and the Company.  In addition, 
amortization expense related to the intangible assets of acquisitions climbed 
from 0.9% of sales in the second quarter of fiscal year 1998 to 2.4% of sales 
in the second quarter of fiscal year 1999.  Selling and advertising expense as 
a percentage of sales is expected to remain consistent with the second quarter 
for the remainder of the fiscal year.*

  Selling and advertising expense increased to 38.0% of sales in the first six 
months of fiscal year 1999 from 33.4% of sales in last year's comparable 
period. The increase was due to similar reasons as outlined above regarding the 
second quarter results: the addition of McBee, $325,000 of costs related to 
product harmonization and the increase in amortization expenses from year to 
year.

  General and administrative expense decreased to 13.7% of sales in the second 
quarter of fiscal year 1999 from 15.3% in last year's comparable quarter.  The 
decline was principally the result of a lower ratio of general and 
administrative expense to sales associated with the Company's recently acquired 
businesses.  This mix change offset $183,000 of general and administrative 
spending related primarily to systems integration efforts between Rapidforms, 
McBee and the Company.  Even with the decline above, during the second quarter, 
the Company continued to increase spending levels associated with its program 
to re-engineer financial and operational information systems. General and 
administrative expense as a percent of sales is expected to remain consistent 
with the second quarter throughout the remainder of the fiscal year.*

<PAGE

General and administrative expense decreased to 14.3% of sales in the first six 
months of fiscal year 1999 from 15.7% in last year's comparable quarter.  The 
decline was principally the result of a lower ratio of general and 
administrative expense to sales associated with the Company's recently acquired 
businesses, offset in part by spending for systems integration between 
Rapidforms, McBee and the Company of $367,000.

  Interest expense increased to 1.8% of sales in the second quarter of fiscal 
year 1999 and 1.9% for the first six months of the year from 0.6% of sales in 
the prior year's comparable periods.  This increase in expense was attributable 
to debt incurred to finance the acquisitions of Rapidforms and McBee during 
fiscal year 1998.  

  The provision for income taxes as a percentage of pre-tax income decreased to 
37.9% in the second quarter of 1999 from 38.5% in the comparable quarter in 
fiscal year 1998 due to changes in effective state tax rates as a result of a 
change in the mix of businesses in various states, particularly due to the 
addition of Rapidforms and McBee.  On a year-to-date basis, the overall tax 
rate has remained consistent at 38.8% this year compared to 38.6% in the prior 
year.  The Company is beginning to employ strategies to lower the overall tax 
rate by taking advantage of opportunities the recently acquired businesses 
allow.

In March 1998, the AICPA issued Statement of Position 98-1 "Accounting for the 
Costs of Computer Software Developed or Obtained for Internal Use."  The 
Company has adopted this Statement in the current fiscal year. In the current 
year-to-date period approximately $751,000 in costs which previously would have 
been expensed have been capitalized under the caption "Property and equipment, 
net."  The Company also implemented the disclosure standard SFAS No. 130 
"Reporting Comprehensive Income" in the first quarter of fiscal year 1999.  The 
AICPA has also issued Statement of Position 98-5 "Reporting on the Costs of 
Start-Up Activities."  The policies promulgated by this statement had 
previously been followed by the Company and thus its implementation will not 
impact the financial statements.

  In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No. 
131 "Disclosures about Segments of an Enterprise and Related Information." In 
February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure about 
Pensions and Other Postretirement Benefits."  In June, 1998, the FASB issued 
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."  
The former two statements are considered to be "disclosure only" standards and 
are not anticipated to have a material impact on the consolidated financial 
statements (these will be implemented in fiscal year 1999).  The latter 
standard does have a direct impact on the consolidated financial statements and 
will be adopted by the Company in fiscal year 1999.  Yet, in the Company's 
situation, such impact is not considered likely to be material in nature.

<PAGE

YEAR 2000
- ---------
 
  During fiscal year 1996, the Company established a five year plan to upgrade 
the majority of its critical operational information systems. This information 
systems reengineering plan was developed to enhance system performance and to 
address Year 2000 issues. The Company has experienced delays in certain facets 
of the reengineering effort, and as a result has modified its Year 2000 plan to 
focus on system remediation rather than system replacement. The majority of the 
Company's operational information systems have been inventoried and assessed 
for Year 2000 compliance, and approximately 45% of the Company's mission 
critical systems have been remediated as of December 26, 1998. The Company 
believes, based on available information, that it will be able to complete the 
remediation of all critical operating systems by June 1999, which is expected 
to leave an appropriate amount of time prior to the advent of the Year 2000 to 
perform detailed system testing and compliance verification.*
 
  In addition, the Company is communicating with key suppliers, vendors and
business partners in order to assess their ability to maintain normal
operations in the Year 2000. Such key suppliers include, but are not limited
to, MCI WorldCom, R.R. Donnelley and Sons, Appleton Papers, and United Parcel 
Service of America, Inc. To the extent that the Company is not satisfied with 
the status of a vendor's Year 2000 compliance or remediation plans, the Company 
expects to develop and implement appropriate contingency plans.* Such 
contingency plans will include the development of alternative sources for the 
product or service provided by the non-compliant vendor. In addition, the 
Company will monitor the Year 2000 activities of U.S., Canadian and U.K. postal 
services and pertinent local and regional utilities. However, due to the lack 
of alternative sources for such services the Company can make no assurances 
that Year 2000 related disruptions in postal, electrical or similar services 
would not have a material adverse effect on the Company's financial performance 
or long-term prospects.
 
  The Company has also inventoried and assessed the majority of the systems
associated with the functioning of its plant, property and equipment. The
date-related issues associated with the proper functioning of such assets are 
insignificant and are not expected to represent a material risk to the
Company.* Further, the Company has approximately 1.9 million active
customers, and the failure of any one customer due to a Year 2000 issue would 
not have a material adverse impact on the Company's financial performance or 
long-term prospects.*

  The Company's cash outlays for capital improvements and period expenses
associated with the information systems reengineering project and for Year
2000 compliance were projected to cumulatively total $21 million during fiscal 
years 1997 through 2000, of which over one-half has been spent as of December 
26, 1998. Due to the modification of the Company's plans to focus on 
remediation rather than replacement, an additional $7 million has been 
allocated in the Company plans for remediation in fiscal year 1999 and a 
similar amount is likely to be allocated in fiscal year 2000.  While the Year 
2000 issue involves additional costs to the Company, the Company believes, 
based on available information, that it will be able to manage the Year 2000 
transition of its internal systems without having any material adverse effect 
on its business operations or financial prospects.*
 
<PAGE

  For a further discussion of the risks and uncertainties associated with the 
Year 2000 issue and the Company's reliance on individual third-party vendors to 
provide raw materials and services critical to the Company's operation, see 
"Forward Looking Information and Risk Factors to Future Performance" included 
in this Management's Discussion and Analysis of Financial Condition and Results 
of Operations.

Liquidity and Capital Resources
- -------------------------------

  Cash provided by operating activities for the six months ended December 26, 
1998 was $ 16.7 million and represented an increase of $2.6 million from the 
$14.1 million provided in the comparable period last year.  The increase in 
operating cash flow was the result of an increase in net income and non-cash 
depreciation and amortization charges between the comparable periods, offset by 
increased investment in working capital.   

  Working capital at December 26, 1998 amounted to $54.1 million, including 
$4.7 million of cash and short term investments.  At June 27, 1998,  working 
capital amounted to $50.4 million, including cash and short term investments of 
$10.8 million.  The $3.7 million increase in working capital during the year is 
principally the result of increased receivables due to the Company's recent 
seasonal holiday card sales and increases in inventory due to a build up for 
the beginning of the new calendar year, which is generally a busy period, 
offset by the use of the cash balances available at the end of the year to pay 
off  long-term debt shortly after June 27, 1998. The Company intends to try to 
maintain cash and short term investment balances under $5.0 million to support 
operations on an ongoing basis while at the same time minimizing debt.*

  Capital expenditures for the six months ended December 26, 1998 were $9.6 
million versus the $7.3 million expended during last year's comparable period.  
Capital expenditures in the first two quarters of fiscal year 1999 and fiscal 
year 1998 included significant expenditures for information systems 
infrastructure, including an upgrade to the Company's mainframe computer in 
1998.  In addition the Company constructed a $1.7 million addition to their 
facility in Midland, Ontario in the first quarter of fiscal year 1999.  
Significant upgrades to workspaces and furniture in the Groton, Massachusetts 
facility also took place during the first quarter of fiscal year 1999 in order 
to accommodate more employees at that location.  The Company anticipates that 
total capital outlays will approximate $17.0 million in fiscal year 1999, an 
increase of $3.7 million, or 28%, over the $13.3 million expended during fiscal 
year 1998.*

  In addition to its present cash and short-term investment balances, the 
Company has consistently generated sufficient cash internally to fund its needs 
for working capital, dividends and capital expenditures.  In anticipation of 
the acquisitions in 1998, the Company amended on several occasions the terms of 
its committed, unsecured, revolving line of credit agreement, amending the 
credit agreement in May, 1998 to increase the total committed line to $165 
million.  At December 26, 1998, the Company had $132.5 million of outstanding 
debt under this credit facility.  The credit agreement contains various 
restrictive covenants which, among other things, require the Company to 
maintain certain minimum levels of consolidated net worth and specific 
consolidated debt and fixed charge ratios.  The Company is currently in 
compliance with these covenants.

<PAGE


  In order to effectively fix the interest rate on a portion of the debt 
outstanding under the revolving line of credit, the Company has entered into 
interest rate swap agreements with several of the banks party to the credit 
agreement.  These swap agreements contain notional principal amounts and other 
terms determined with respect to the Company's forecasts of future cash flows 
and borrowing requirements.  At December 26, 1998, the notional principal 
amount outstanding of the interest rate swap agreements totaled $115 million.

  In order to minimize the Company's exposure to foreign currency fluctuations 
with respect to intercompany loans to foreign subsidiaries and affiliates, the 
Company has entered into short-term forward exchange rate contracts with a 
major commercial bank in currency amounts directly corresponding to the short-
term intercompany loan amounts.  At December 26, 1998, the Company had 
outstanding forward exchange rate contracts for $ 2.0 million worth of Pound 
Sterling and $98,000 worth of French Francs.

  The Company anticipates that its current cash on hand, cash flow from 
operations and additional availability under the line of credit will be 
sufficient to meet the Company's liquidity requirements for its operations and 
capital expenditures during fiscal year 1999.*  However, the Company may pursue 
additional acquisitions from time to time which would likely be funded through 
the use of available cash, the issuance of stock, the obtaining of additional 
credit, or any combination thereof.*




Forward-Looking Information and Risk Factors to Future Performance 
- ------------------------------------------------------------------
  From time to time, the Company or its representatives have made or may make
forward-looking statements that reflect the Company's current expectations,
orally or in writing, in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, elsewhere in this Quarterly 
Report on Form 10-Q, in other reports filed under the Securities Act of 1934, 
as amended, in press releases or in statements made with the approval of an
authorized executive officer. The words or phrases "is expected," "will
continue," "anticipates," "estimates," or similar expressions in any of these
communications are intended to identify "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934 and Section
27A of the Securities Act of 1933, as enacted by the Private Securities
Litigation Reform Act of 1995.
 
  There can be no assurance the Company's actual performance will not differ
materially from that projected in such forward-looking statements due to
important factors including but not limited to those described below. These
factors include increasing competition, economic cycles, technological change,
paper and postal costs, customer preferences, response rates, prospect lists,
governmental regulations, inherent risks in acquisitions, disruptions to the
Company's operating systems, Year 2000 risks to computer systems and reliance
on vendors, all of which are described in further detail below.

 Increasing Competition; Pressure on Price and Margins
 
  The Company operates in a highly competitive marketplace, in which it
competes with a variety of mail order marketers, retailers, dealers,
distributors and local printers in the marketing of business forms, checks,
stationery and business supplies to small businesses. Over the course of the
past decade, providers of business forms, checks, and stationery have
experienced growth in excess manufacturing capacity. In addition, the Company
has faced increasing competition from low-price, high-volume office supply
chain stores. Improvements in the cost and quality of printing technology have
increasingly allowed dealers, distributors and local printers to gain access
to products of complex design and functionality at competitive prices. The
Company currently anticipates that these trends will continue. No assurance
can be given that competition will not have an adverse effect on the Company's
business. In addition, if any of the Company's competitors were to seek to
gain or retain market share by reducing prices or increasing promotional
discounting, the Company could be compelled to reduce its prices or match the
discounts and thereby reduce its gross margin and profitability.
 
 Economic Cycles; Variability of Performance.
 
  The Company's standardized forms and check business accounts for a majority
of its sales and profitability. The forms and check industry is highly
competitive and generally characterized by mature products designed within
well-established industry standards. The Company relies, in part, on net small
business formations for growth in demand for its standardized form and check
products. As a result, the Company's growth rate is closely correlated to the
strength of its target small business market. The Company's revenue trends and
operating profitability have been materially adversely affected by recession-
related contractions in the small business economy in the past. The Company
will continue to experience quarterly and annual variations in net sales and
net income as a result of changes in the levels of small business formations
and failures or from other economic events having an impact on small
businesses generally.
 
 Technological Change; Product Obsolescence and Risks to Competitive
Advantage.
 
  The Company's standardized business forms and related products are designed
to provide small businesses with the financial and business records required
to manage a business. Steady technological improvements have provided small
businesses in several market segments with alternative means to enact and
record business transactions. PC-based, point-of-sale, electronic form and
electronic transaction systems have been designed to automate several of the
functions performed by the Company's products. The price and performance
characteristics of personal laser and ink-jet printing equipment have improved
markedly in the recent past, thereby allowing small businesses a cost-
competitive means to print low-quality versions of Company forms on plain
paper. In addition, the Internet has the potential to eliminate the Company's
advantage of scale in direct marketing by providing all competitors with equal
access to customers who purchase products over the Internet. In response, the
Company has focused resources on the acquisition, development and procurement
of new products less susceptible to technological obsolescence and has
aggressively moved to develop a comprehensive electronic catalog of products
to be utilized in retail-based kiosks, PC-based software and over the
Internet. It should be noted that the Company's small business customers have
to-date proven to be relatively slow adopters of new technology which has
minimized the adverse impact of these technological trends. However, the
Company can give no assurance that continued technological change will not
have a material adverse impact on the long-term prospects for the Company's
business.
 
 Paper Costs and Postal Rates; Risks to Margins.
 
  The cost of paper used to produce the Company's products, catalogs and
advertising materials constitutes, directly or indirectly, approximately 30% of 
consolidated revenues. In addition, the Company is reliant on the U.S. Postal 
Service for delivery of most of the Company's promotional materials.  Coated 
paper costs for promotional materials have increased steadily over the past few 
years until recently. In addition, certain segments of the paper market have 
demonstrated considerable price volatility in that same time period. Postal 
rates for third class mail have also increased sporadically and at times 
significantly in the past decade.  The Company has been able to counteract the 
impact of postal and paper cost increases with cost reduction programs and 
selected product price increases. Due to increased competition in the small 
business forms, checks, stationery and supplies marketplace, no assurance can 
be given that the Company will be able to increase product pricing to 
compensate for future paper or postal cost increases. The inability to raise 
prices in response to paper or postal cost increases could reduce the Company's 
operating profitability and net income.


<PAGE

 Customer Preferences; Investment Requirements & Sales Risk.
 
  The Company's core business is the direct marketing, manufacturing and
distribution of standardized forms, checks, and related products to small
businesses. Newly-formed small business owners are increasingly demanding
custom and color-coordinated products to create an image in addition to
enabling the management of business transactions. The relative prices charged
by local printers, contract printers and dealers for providing these custom
and full-color printed products have been declining due to technological
advances in composition systems and printing equipment. As a direct result,
the cost advantage inherent to the Company's standardized forms and related
printed products has declined. The Company is responding with focused
investment in the infrastructure required to sell, compose, print and
distribute custom and full-color products. This effort includes installation
of an integrated and flexible information system architecture and the
reengineering of many of the Company's basic business functions. In addition,
the Company expects to continue to invest in its direct sales, dealer and
technology-based channels that more readily support the interactive marketing
required to sell custom and full-color products. However, the Company can give
no assurance that the rate of decline in demand for standardized forms and
related printed products will not accelerate, that the interactive marketing
investments will prove successful, or that the information systems
reengineering effort will not result in operating inefficiencies or unplanned
expense. If any of such potential risks materialize, the Company's future net
sales and net income could be materially adversely affected.
 
 Response Rates and Customer Retention; Sales Risk.
 
  Customer and prospect response rates to the Company's catalogs and
promotional materials have remained relatively stable over time. Continued
stability in prospect response and customer retention is primarily dependent
on the continued relevancy of the range of the Company's products to the small
business marketplace. New product introductions, to date, have generally
offset declines in response rates and retention attributable to product
obsolescence. However, the Company can make no assurances that its new product
introductions will continue to offset the rate of obsolescence of its
standardized forms products in the future. An increase in the rate of product
obsolescence or a decline in new product introductions could negatively impact
response rates and customer retention which, in turn, would have a materially
adverse impact on the Company's long-term financial performance.
 
 Prospect Lists; Sales Risk.
 
  The Company's direct mail business has been characterized by a consistent
level of average annual sales per customer. As such, net sales growth is
dependent, in part, on an increase in customers served by the Company. Growth
in the total number of direct mail customers served by the Company depends
upon continued access to high-quality lists of newly-formed small businesses.
In the past, the Company's ability to compile proprietary prospect lists was a
distinct competitive advantage. However, the external list compilation
industry has grown more sophisticated and currently markets comprehensive
lists of newly-formed businesses to the Company and its competitors. At
present, the Company relies on the speed of its delivery of promotional
materials to prospective customers to gain advantage over competitors.
However, the Company can make no assurances that its promotional material
delivery advantage will be maintained over time. A deterioration in the
Company's delivery advantage could have a materially adverse impact on the
Company's business and financial performance.

 Governmental Regulations; Sales Risk.
 
  Future governmental legislation or regulation including, but not limited to,
the following potential regulatory actions have the potential to have a
material adverse impact on the Company's business prospects: 1) enactment
of privacy laws could constrain the Company's ability to mail promotional
materials or to telemarket to small businesses; 2) modification to U.S. Postal
Service regulations with the effect of increasing postal rates or reducing
postal delivery efficiency could have an adverse impact on the Company's
marketing efforts; and 3) institution of a "general sales tax", "value added
tax" or similar national tax could reduce demand for the Company's products.
Although the Company has no current knowledge or belief that such adverse
regulation, of a material nature, or similar governmental regulation is
pending or imminent, it can make no assurance that adverse governmental
regulation will not have a material adverse impact on the Company's business
in the future.
 
 Acquisitions; Inherent Risk.
 
  From time to time the Company has acquired, or may acquire in the future, a
majority ownership position in a company or substantially all of the assets
related to a specific line of business. Such acquisitions are undertaken to
enhance the Company's competitive position in the marketplace or to gain
access to new markets, products, competencies or technologies. The Company has
performed in the past and will perform in the future a business, financial and
legal due diligence review in advance of an acquisition to corroborate the
assumptions critical to projected future performance of an acquired entity and
to identify the risks inherent to such projections. However, the Company can
make no assurances that its due diligence review will identify all potential
risks associated with the purchase, integration or operation of any acquired
enterprise. If any of such potential risks materialize, the Company's future
net sales and net income could be materially adversely affected.
 
 Operating Systems; Disasters and Disruptions.
 
  The Company has become increasingly dependent upon its manufacturing,
administrative and computer processing infrastructure and operations to
process its high volume of small dollar value orders on an efficient, cost
competitive and profitable basis. The Company has implemented commercially
reasonable safeguards to reduce the likelihood of property loss or service
disruptions and has secured property and business interruption insurance to
minimize the adverse financial consequences arising from a select group of
risks. However, the Company can make no assurances that its infrastructure and
operations are not susceptible to loss or disruption, whether caused by (i)
intentional or unintentional acts of Company personnel or third party service
providers, or (ii) natural disasters including, but not limited to,
earthquakes, fire or severe storms. In addition, the Company can make no
assurance that its insurance coverage will adequately respond to all potential
causes of property loss or service disruption. In the event that any such acts
or disasters lead to property loss or operating system disruption for which
property and business interruption insurance coverage is unavailable or
insufficient, the Company's financial performance and long-term prospects
could be materially adversely affected.


<PAGE

 Computer Systems; Year 2000 Impact
 
  The Company and its vendors have become increasingly reliant on computer
systems to process transactions and to provide relevant business information.
The majority of computer systems designed prior to the mid-1990s are
susceptible to a well-publicized problem associated with an inability to
process date-related information beyond the Year 2000. Without proactive
modifications to routines and programs, many systems of the Company and its
vendors could be rendered useless as early as June of 1999. The Company has
created a comprehensive plan to address the Year 2000 issue with respect to
both internal systems and to systems employed by critical vendors. However,
the Company can make no assurance that all Year 2000 risks to Company and
critical vendor systems can be identified and successfully negated through
modification of existing programs or other means prior to June of 1999. In the
event that any Year 2000 program deficiencies remain undetected, or in the
event that any programming modifications do not adequately address the Year
2000 issues, the Company or its vendors could experience critical operating
system failures. Any such operating system failures could have a material
adverse impact on the Company's financial performance and long-term prospects.
 
 Raw Materials and Services; Reliance on Certain Vendors
 
  The Company has become increasingly reliant on certain individual third-
party vendors to provide raw materials and services critical to the Company's
operations in order to gain the advantage of volume-related favorable pricing 
and, in some instances, favorable contract terms. Such critical vendors and the 
nature of the products or services provided include, but are not limited to, 
governmental postal services for the delivery of marketing materials and in 
some countries, customer packages, MCI WorldCom for the provision of toll-free 
telephone services, R.R. Donnelley and Sons, Inc. for printing and processing 
of marketing materials, Appleton Papers, Inc. for carbonless paper, and United 
Parcel Service of America, Inc. for product delivery services. In the past, the 
Company has been adversely affected by disruption in the services provided or 
lack of availability of the products produced by its critical vendors resulting 
from a variety of factors including labor actions, inclement weather, 
disasters, systems failures and market conditions. The Company can make no 
assurance that its critical vendors will remain capable of providing the level 
of service or quantity of product required to support the Company's business, 
nor that the Company could immediately identify alternative sources for 
provision of the product or service on a similar cost basis. Any such service 
disruption or product shortage could have a material adverse impact on the 
Company's operating performance and net income.
 
 Other Risks; Variability of Performance
 
  The Company has experienced in the past and will experience in the future 
quarterly and annual variations in net sales and net income as a result of many 
factors, including, but not limited to, the timing of catalog mailings, catalog 
response rates, product mix, margins on new product introductions, the timing 
and levels of selling, general and administrative expenses, cost reduction 
programs, timing of holidays and inclement weather. The Company's planned 
operating expenses are based on sales forecasts. If net sales performance falls 
below expectations in any given quarter or year, the Company's operating 
results could be materially adversely affected.



Item 3. Quantitative and Qualitative Disclosures About Market Risk
- ------------------------------------------------------------------
    The Company is exposed to a number of market risks, primarily the effects 
of changes in foreign currency exchange rates and interest rates. Investments 
in and loans and advances to foreign subsidiaries and branches, and their
resultant operations, denominated in foreign currencies, create exposures to
changes in exchange rates. The Company's utilization of its revolving line of
credit creates an exposure to changes in interest rates. The effect of changes
in exchange rates and interest rates on the Company's earnings generally has
been small relative to other factors that also affect earnings, such as
business unit sales and operating margins. For more information on these
market risks and financial exposures, see Note 1 and Note 5 of the Notes to
Consolidated Financial Statements included in the Annual Report on Form 10-K 
for the year ended June 27, 1998.  The Company does not hold or issue financial 
instruments for trading, profit or speculative purposes.
 
  In order to minimize the Company's exposure to foreign currency fluctuations
with respect to the short-term intercompany loans created to fund the
operating cash requirements of the Company's European operations (see Note 2
in the Notes to Consolidated Financial Statements included in the Annual Report 
on Form 10-K for the year ended June 27, 1998), the Company has entered into 
forward exchange rate contracts for the amount of the loans and associated 
interest. The currencies hedged are the British pound and the French franc. 
While there are no specified repayment dates for the loans, the forward 
exchange rate contracts are of limited duration and are replaced periodically 
as they mature.
 
  In order to effectively convert the interest rate of a portion of the
Company's debt from a Eurodollar based floating rate to a fixed rate, the
company has entered into interest rate swap agreements with major
commercial banks. Although the Company is exposed to credit and market risk in
the event of future nonperformance by any of the banks, management has no
reason to believe that such an event will occur.
 
  Upon reviewing its derivatives and other foreign currency and interest rate
instruments, based on historical foreign currency rate movements and the fair
value of market-rate sensitive instruments at year-end, the Company does not
believe that near term changes in foreign currency or interest rates will have
a material impact on its future earnings, fair values or cash flows.

<PAGE


PART II - OTHER INFORMATION
- ---------------------------

Item 1.  LEGAL PROCEEDINGS
- --------------------------
    To the Company's knowledge, no material legal proceedings are pending on 
the date hereof to which the Company is a party or to which any property of the 
Company is subject.

Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
- --------------------------------------------------
    Not applicable

Item 3.  DEFAULTS UPON SENIOR SECURITIES
- ----------------------------------------
    Not applicable.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
    a.  The Annual Meeting of Stockholders was held on October 23, 1998.

    b.  See Item 4(c) below.

    c.  The stockholders fixed the number of Directors to be elected at seven
    and elected the following as Directors:

                                     For      Authority Withheld 
                                     ---      ------------------
        Robert J. Murray           13,388,568       37,277
        Robert L. Gable            13,424,577        1,268
        Benjamin H. Lacy           13,389,616       36,229
        Herbert W. Moller          13,077,377      348,468
        Richard H. Rhoads          13,385,577       40,268
        Brian E. Stern             13,424,237        1,268
        M. Anne Szostak            13,077,237      348,608  


        The stockholders voted to ratify the selection of Deloitte & Touche LLP 
as independent auditors of the Company for the fiscal year ending June 27, 1999

           For           Against         Abstain 
           ---           -------         ------- 
        13,415,292        1,022           9,531

    d.  Not applicable.


<PAGE


Item 5.  OTHER INFORMATION
- --------------------------
Proposals of stockholders intended to be presented at the 1999 Annual Meeting 
of Stockholders must be received by the Company, at its offices at 500 Main 
Street, Groton, Massachusetts 01471, no later than May 14, 1999, in order to be 
considered for inclusion in the Proxy Statement and form of proxy relating to 
that meeting in accordance with Rule 14a-8 promulgated under the Securities 
Exchange Act of 1934.  If a stockholder intends to submit a proposal at the 
1999 Annual Meeting of Stockholders outside of the processes of Rule 14a-8, and 
fails to notify the Company at the foregoing address of such intention no later 
than July 28, 1999, the proxy solicited by the Board of Directors with respect 
to such meeting may grant discretionary authority to the proxies named therein 
to vote with respect to such matter.


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
    a. Exhibits
	
       Exhibit No.  Description
       ----------   -----------

         10(a)      Change in Control agreement dated November 18, 1998 between
                    the Company and Daniel M. Junius.

         10(b)      Second Amendment to Amended and Restated Revolving Credit 
                    Agreement dated as of January 8, 1999, by and among New 
                    England Business Service, Inc., BankBoston, N.A. and Fleet 
                    National Bank (together with certain other financial 
                    institutions, the "Banks"), BankBoston, N.A., as agent for 
                    the Banks, and Fleet National Bank, as documentation agent 
                    for the Banks.

         11         Statement re: computation of per share earnings.

         27         Financial Data Schedule

    b. Reports on Form 8-K.
         Not applicable




  Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned hereunto duly authorized.


                                            NEW ENGLAND BUSINESS SERVICE, INC.
                                            ----------------------------------
                                                      (Registrant)

February 9, 1999                           /s/Daniel M. Junius 
- -----------------                           --------------------
Date                                        Daniel M. Junius
                                            Senior Vice President-Chief  
                                            Financial Officer
                                            (Principal Financial and
                                            Accounting Officer)