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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

[X]    Annual Report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

                    For the fiscal year ended July 31, 1997

[ ]    Transition Report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 For the transition period from ____ to ___

                        Commission file number: 0-22974

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

DELAWARE                                       62-1434910
(State of incorporation)                       (IRS Employer Identification No.)

4950 PATRICK HENRY DRIVE, SANTA CLARA, CA      95054
(Address of principal executive offices)       (Zip Code)

Registrant's telephone number, including area code:  (408) 982-9999

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

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, 
$.01 par value per share

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


[X] Yes     [  ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]

State the aggregate market value of the voting stock held by non-affiliates of 
the registrant:  $56,260,919 at October 9, 1997.

Shares of Common Stock, $.01 par value per shares outstanding at 
September 30, 1997:  6,930,713

                      DOCUMENTS INCORPORATED BY REFERENCE

Documents incorporated by reference and the Part of the Form 10-K into which the
document is incorporated:

Portions of the Proxy Statement relating to the 1997 Annual Meeting of 
Shareholders:  Part III

Portions of the 1997 Annual Report to Shareholders:  Part II,  Part IV (2)

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                                     PART I

Item 1.  Business

         CMC, Industries, Inc. ("CMC" or the "Company") together with its
predecessor business, has been a leading manufacturer of telecommunications
systems and equipment for over 30 years. The Company was incorporated in 1990 to
acquire from Alcatel Network Systems, Inc. ("Alcatel"), certain businesses
operated from 1960 to 1987 by ITT and from 1987 to 1990 by Alcatel, n.v., a
joint venture between ITT and Compagnie Generale d'Electricite. In August 1993,
the Company transferred certain assets and related liabilities associated with
its telecommunications business to Cortelco Systems Holding Corp. ("Cortelco")
in exchange for 1,000,000 shares of Preferred Stock of Cortelco. These
transactions effectively transferred to Cortelco all of the Company's assets and
liabilities not related to its electronic manufacturing business. The Company
has provided independent electronic manufacturing services to a diverse base of
customers in both the telecommunications and computer electronics industries.

         The Company manufactures a wide range of products for its customers
including sophisticated telecommunications equipment, personal computers,
computer peripherals and subassemblies and printed circuit board ("PCB")
assemblies. CMC provides a broad spectrum of manufacturing services primarily
based on the manufacture of PCB assemblies utilizing automated pin-through-hole
technology ("PTH"), surface mount technology ("SMT") and ball grid array ("BGA")
placement techniques. PTH technology involves the attachment of electronic
components to a PCB by inserting the leads of the components through holes in
the board and soldering the leads on the underside of the board. SMT and BGA
technologies involve the attachment of electronic components directly to the
surface of the board, and accordingly permits components to be mounted on each
side of the board. In addition, the Company provides full systems integration
assembly and test, materials procurement, distribution, product design and
engineering support services. The Company has manufacturing facilities in
Corinth, Mississippi and Santa Clara, California (Silicon Valley) and is in the
process of establishing a manufacturing facility in Hermosillo, Mexico. The
Company believes that these locations enable it to meet the cost and geographic
distribution requirements of its customers. The Company's major customers
include Cortelco, Micron Electronics ("Micron"), Global Village Communications
("Global Village") and RELTEC Corporation ("RELTEC").

Customers and Marketing

         Telecommunications products have been manufactured at CMC's facility in
Corinth, Mississippi for over 30 years. From 1960 to 1987, the operations at
Corinth were owned and operated by ITT, which established a reputation for
quality manufacturing of telecommunications products and services to its
customers. The Company believes the telecommunications manufacturing expertise
that it has acquired over three decades is a competitive strength, allowing it
to meet customer requirements for strict quality control, prompt turnaround and
flexible response to design changes. Capitalizing on this expertise, the Company
has expanded into the manufacture of computer equipment and related peripherals
and data networking equipment. The Company is seeking to leverage its capacity
and manufacturing expertise by expanding sales to new customers with products
that are similar to its current customer base in the telecommunications, data
communications, computer-related products and value-added electronics
industries. In addition, the Company seeks to position its manufacturing
operations at strategic sites throughout the United States and worldwide.
Corinth, Mississippi is located in close proximity to major North American
freight hub locations, allowing for inexpensive ground transport and overnight
air delivery throughout the country. The Company's California facility is
located in Santa Clara, in the heart of Silicon Valley, the site of many of the
Company's current and potential customers. In October 1997, the Company
announced plans to build a manufacturing facility in Hermosillo, Mexico and to
open an international purchasing office in Taiwan. Hermosillo will offer an
attractive cost structure and solid logistics for current and prospective
customers and the location between two leading technical universities within the
city provides access to a pool of qualified engineers and technicians. The
purchasing office in Taiwan will provide localized procurement capabilities in
Asia, increasing access to lowest cost pricing and material availability.

         CMC provides electronic manufacturing services to major 
telecommunications OEMs as well as suppliers of computer monitors, computer
peripherals, data networking equipment and other electronic components. In turn,
CMC's customers sell these manufactured products to domestic and worldwide
markets. Products manufactured by the Company include telephones, ISDN
equipment, key and PBX/ACD systems, various data communications products and
telecommunications switching equipment and printed circuit board assemblies for
computer and communications equipment. Services provided


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include design for manufacturability and test, materials procurement,
prototyping, plastic injection molding, printed circuit board assembly, full
board-level test, system integration and configuration, full system test,
packaging, distribution and field return and repair support. Generally,
relationships between the Company and its customers for the manufacture of
product and related services are defined by a succession of purchase orders
placed by the customer and performed upon by CMC.

         The Company offers electronic manufacturing services to its customers
on both a turnkey and consignment basis, with over 95% of the Company's net
sales derived from turnkey projects. In turnkey relationships, the Company both
procures components and other supplies and provides full manufacturing services.
In consignment relationships, the customer purchases and then provides
components and other supplies to the Company, and the Company charges for only
labor and overhead. The establishment of a turnkey relationship requires
significant investment of resources by both an OEM customer and a contract
manufacturer. An OEM customer must incur expense to qualify a contract
manufacturer by certifying the quality of the manufacturer's processes and
services and, in some cases, must also qualify a contract manufacturer's sources
of component supply. The OEM customer also works with a contract manufacturer to
refine product design and manufacturing processes in order to optimize
manufacturability. The Company believes that OEM customers seek to establish
relationships with turnkey manufacturing partners they perceive will be able to
meet their production requirements over a long period of time and for successive
product generations. The Company believes that these relationships, once
established, tend to be sustaining in nature due to the significant investment
of time and resources by both the Company and the OEM customer. Accordingly, the
Company believes that its emphasis on turnkey manufacturing results in greater
stability of its customer base. However, the Company's results of operations
have been in the past and may be in the future materially adversely affected in
the event customers for whom the Company manufactures products should cancel or
reschedule their existing and forecast orders. Such cancellations or
rescheduling could result in inefficient utilization of equipment and personnel
dedicated to the manufacture of the specific products. Moreover, because of such
stability, the Company may be unable to secure turnkey manufacturing projects
from new OEM customers working with competitors of the Company. The failure of
the Company to develop relationships with new OEM customers also may materially
and adversely affect the Company's results of operations.

         CMC develops and maintains customer relationships through the efforts
of the Company's direct sales force and management, program managers, project
engineers and customer service personnel. Project engineers and customer service
personnel receive extensive training in the Company's manufacturing and service
capabilities in order to respond to the specific needs of customers. CMC's
project engineers work with the customers' engineers and technical personnel to
ensure a close working relationship and understanding of the specific needs of
each customer.

         The Company's four largest customers in fiscal 1997 and their
respective percentages of CMC's net sales for 1997 and 1996, respectively, were
as follows: Micron, 21% and 0%; Cortelco, 15% and 23%; Global Village, 14% and
13% and RELTEC, 11% and 2%.

         The Company derives revenues primarily from OEM arrangements which
prohibit the selling of the products manufactured to anyone other than the OEM
customer. As a result, the Company does not typically allow its customers to
return products, other than for repairs of defective materials. In such cases,
the Company charges the customer for the repair unless the defect resulted from
faulty manufacturing and occurred within an applicable warranty period.
This policy applies to both affiliated and non-affiliated customers.

         It has been the Company's experience that orders for production of a
given product or product line typically decline over time as the customer's
product or product line matures. Generally, the Company has customers with
products at various stages in the product life cycles including development,
volume production and end-of-life production. In the event that the Company is
unable to compensate for any material reduction in sales of a given product over
time through production of replacement or new products for the customer or
through new business with alternative customers, the Company's revenues and
operating results could be materially adversely affected.

Manufacturing

         Manufacturing Services

         The Company's vertically-integrated turnkey manufacturing services 
include component procurement and testing, PCB assembly using SMT, PTH and BGA
techniques, post-assembly PCB testing, in-circuit test development, full system



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integration and test, and product design and engineering support services. The
Company provides a complete, vertically-integrated manufacturing solution with
manufacturing capabilities as diverse as plastic injection molding, final unit
assembly and testing. The Company delivers finished products to the OEM or, if
requested, delivers products directly to the OEMs' customers.

         The Company offers comprehensive and advanced manufacturing solutions
to its customers. The Company's broad range of manufacturing capabilities
includes both automated PTH and more advanced SMT processes, including BGA
assemblies. The Company offers vertical services such as component procurement,
test, product design, and other engineering services. Accordingly, the Company's
production processes can accommodate the manufacture of a broad range of
communications and electronics components and products. While the Company
continually seeks to improve the flexibility of its production systems, the
commencement of production of new products typically involves startup costs,
lower yields and other inefficiencies. Achievement of volume production for a
new product typically requires a period as short as several days for products
substantially similar to those previously manufactured by the Company, to as
many as several months for completely new products.

         Since turnkey manufacturing may be a substitute for all or a portion of
a customer's in-house manufacturing capability, continuous technical and
administrative communication between the Company and its customer is required.
CMC establishes a close relationship with each OEM customer in the early stages
of product development to assist the customer in the evaluation of board designs
and thereby improve manufacturability and testability. Building on this
knowledge, CMC's technical staff monitors manufacturing process yields and may
propose engineering changes for product improvement and cost reductions. Certain
of the products manufactured by CMC are in the early stages of their life cycles
and may therefore have ongoing design or engineering changes. The Company
believes a critical element of turnkey manufacturing services is the ability to
respond rapidly to engineering design changes. The Company believes that its
history in design and manufacturing, particularly in the telecommunications
industry, and its close working knowledge of its customers' products enables the
Company to meet its customers' needs effectively.

         A key element in turnkey manufacturing services is the procurement of
materials, which consists of the planning, purchasing, expediting, warehousing
and financing of the components and other materials required to assemble a PCB
or system-level assembly. OEMs increasingly have required contract manufacturers
to purchase all or some components directly from component manufacturers or
distributors and to warehouse and finance the components and materials. The
Company orders materials and components based on purchase orders received and
accepted and seeks to minimize its inventory of materials or components that are
not identified for use in filling specific orders. Electronic components are
purchased directly by the Company and, in certain circumstances, the Company
bears the risk of component price fluctuations. The electronics industry has
been characterized by shortages from time to time of microprocessors and other
semiconductor components, which shortages have led to allocations by third-party
suppliers. These delays to date have not had a material adverse effect on the
Company's results of operations. If component shortages occur, the Company may
not be able to secure quantities required to fulfill orders, which could result
in delays in shipments, cancellation or delays in orders, or losses resulting
from price increases by suppliers of parts or components, all of which could
have a material adverse effect on the Company's results of operations.

         CMC provides complete turnkey manufacturing solutions for its customers
from its vertically-integrated 350,000 square foot facility in Corinth,
Mississippi and its 75,000 square foot facility in Santa Clara, California. The
Company expects to commence operations from a new 55,000 square foot facility in
Hermosillo, Mexico in the third quarter of fiscal 1998. The Company plans to
provide full SMT assembly as well as complete system integration, test and
box-build capabilities at this location.

Manufacturing Processes

         CMC manufactures for its customers a wide variety of complex and 
technologically advanced products that require a coordinated manufacturing
process. The process requires the application of advanced manufacturing
technologies and computerized in-circuit, functional and system testing
techniques. Current processes at CMC include fine-pitch SMT, PTH, BGA and system
box-build assemblies. CMC seeks to add product lines that require advanced
technological processes, in order to further develop its manufacturing
expertise. Company employees regularly attend training seminars on the latest
developments in manufacturing technologies.



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         In PTH production, components are attached by pins (also called
"leads") inserted through and soldered to plated holes in the PCB. In SMT
production, the leads on integrated circuits and other electronic components are
soldered to the surface of the PCB rather than inserted into holes. SMT can
accommodate a substantially higher number of leads in a given area than PTH,
thereby permitting the PCB to interconnect a greater density of integrated
circuits, which permits tighter component spacing and a reduction in the PCB
dimensions. Additionally, SMT allows components to be placed on both sides of
the PCB, thereby permitting even greater density. The substantially finer
lead-to-lead spacing or "pitch" in SMT requires a manufacturing process far more
exacting than the PTH interconnect products. Because of their high number of
leads, most very large scale integrated circuits are configured for SMT
production. SMT components are constantly changing, with BGA becoming the
package selection of many component manufacturers. The BGA assembly process uses
small balls of solder (instead of leads that could bend and break), located
directly underneath the part, to interconnect the component and circuit board.
X-ray equipment is instrumental in the development of BGA process parameters,
since the balls are located underneath the component and are not visible through
standard inspection techniques.

         The Company utilizes a computerized material requirements planning
system to direct the flow of materials through the manufacturing cycle. Printed
circuit board assemblies with PTH components are assembled using automatic
insertion machines for all eligible components, including axial, dual inline
package, radial and square-wire pins, which for most products allows over 90% of
the total PTH components to be automatically inserted. Manually assembled
components are either purchased or prepared in-house to allow for "drop-in"
assembly on a moving assembly conveyor that feeds the PCB assemblies directly
into an automated soldering system that solders the pins to the PCB. For SMT
printed circuit assemblies, CMC has full capability to run either "top-side,"
"bottom-side" or "mixed-technology" PCB assemblies. Equipment capabilities
include screen-printing with vision and computer-controlled alignment;
high-speed, in-line epoxy dispensing; surface-mount component placement with
speeds up to 44,500 components per hour per machine; assembly of fine-pitch
components and computer-controlled infrared reflow soldering.

         The Company subjects assembled and soldered boards to board-level
in-circuit and functional testing. As part of the final unit assembly process,
the Company also functionally tests all products to verify conformance to
customer specifications. If desired, product testing can include burn-in at
elevated temperatures utilizing the Company's in-house burn-in chambers. Printed
circuit boards utilized for telecommunication systems receive final system tests
to verify the functional integrity of each system.

         Quality

         The Company believes that the quality of its manufacturing and customer
services is critical to customer satisfaction and long-term success. CMC has
emphasized the pursuit of high quality for many years. From 1960 to 1987, CMC's
Corinth facility was part of ITT, which pioneered many quality improvement
processes. Many of CMC's manufacturing and customer support personnel were
trained in quality principles and practices as employees of ITT. CMC's quality
assurance engineers have for many years received training through in-house
programs and by attending seminars, including enrollment in The ITT Quality
College.

         The Company has achieved ISO 9001 certification at its Mississippi
facility and ISO 9002 certification at its California facility. The Company
believes that the process of attaining ISO certification serves as an excellent
tool for quality improvement, enabling the Company to provide consistency and
excellence in its products and services. Also, since certain potential customers
prefer or require manufacturers to have achieved ISO certification, such
certification may offer certain competitive advantages. The Company believes
that compliance with ISO will allow it to expand its bid opportunities,
especially with customers who participate in world-wide markets.

         In addition to ISO certification, CMC Mississippi has achieved
certification to British Approval Board for Telecommunications (BABT). Achieving
BABT certification broadens CMC's opportunities with telecommunication customers
by providing manufacturing solutions that meet the United Kingdom national
requirements or Common Technical Regulations under Directive 91/263/EEC.

Environmental Controls

         The Company is subject to a variety of regulations concerning
environmental laws related to the use, storage, discharge and disposal of
hazardous chemicals utilized during the manufacturing process and constantly
monitors its operations to avoid violations. Although the Company believes that
its facilities are currently in compliance with 



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applicable environmental laws, there can be no assurance that violations have
not occurred and will not occur. In the event of any violations of environmental
laws, the Company could be held liable for damages and for the costs of remedial
actions and could also be subject to revocation of its effluent discharge
permits. Any such revocation could require the Company to cease or limit
production at either or both of its facilities, thereby having a material
adverse impact on the Company's business and results of operations. To date,
environmental regulations have not restricted the Company's ability to operate
or expand its manufacturing operations or caused the Company to incur
significant expense. Environmental laws, however, could become more stringent
over time, imposing greater compliance costs and increasing risks and penalties
associated with a violation. See "Legal Proceedings."

Competition

         The electronics manufacturing services industry is highly competitive.
Competitive manufacturing services are available from many independent sources
as well as in-house manufacturing operations of current and potential customers.
In addition, certain large electronics manufacturers are transforming existing
manufacturing facilities into contract manufacturing operations. The Company
also competes with foreign contract manufacturers which, due to lower cost of
labor, have become significant competitors with respect to high volume products
or those with a high labor content.

         The Company believes that its primary competitors are Solectron
Corporation, Avex, Inc., Flextronics International Ltd., Jabil Circuit, Inc.,
and SCI Systems, Inc. CMC believes that the primary competitive issues in the
markets in which it focuses are quality of manufacturing processes, surface
mount capacity and total production capacity, responsiveness to customer needs,
price, quality, reliable delivery and financial resources. CMC believes that it
competes favorably with respect to most of these factors. However, certain of
the Company's competitors have greater SMT and total production capacity and
greater financial resources than the Company. In addition, certain overseas
competitors are able to offer low-cost production for certain types of products,
particularly those which require a higher labor content. To remain competitive,
the Company must continue to expand its advanced manufacturing technologies,
provide superior quality and service, and be price competitive. In addition, the
Company's planned manufacturing facility in Hermosillo, Mexico is an effort to
expand manufacturing capacity while reducing costs. If the Company were to
become unable to compete effectively in terms of quality, delivery, advanced
manufacturing, service or price, the Company's business, financial condition and
results of operations could be materially adversely affected.

Backlog

         The Company's backlog was approximately $56.9 million at July 31, 1997
and $30.5 million at July 31, 1996. Backlog consists of purchase orders received
by the Company primarily for shipment within 180 days. Cancellation and
postponement of purchase orders occasionally occur, and the Company negotiates
charges to such customers that vary depending on the timing and circumstances of
the cancellation or postponement. Because of possible rescheduling and
cancellation, backlog does not necessarily reflect future sales levels.

Patents and Trademarks

         The Company owns four patents related to telephone equipment, but does
not believe that patent or trademark protection is an important competitive
factor in its market.

Employees

         At July 31, 1997, the Company had 931 full time employees and 180
temporary employees. At such date, the Company had 871 hourly employees and 240
salaried employees, including 874 in manufacturing, 52 in manufacturing support,
99 in engineering and quality, 32 in sales and marketing, and 54 in general and
administrative. None of the Company's employees are represented by a labor
union, and the Company has never experienced a work stoppage or strike.
The Company believes its relationships with its employees are good.

Factors That May Affect The Company

         The foregoing discussion of the Company's business, operations and
competitive position contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E 



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of the Securities Exchange Act of 1934, as amended. Actual results could
differ materially from those projected in the forward-looking statements as a
result of certain of the risk factors set forth below and elsewhere in this
document. In addition to the other information contained and incorporated by
reference in this document, the following factors should be considered carefully
in evaluating the Company and its business.

         Potential Fluctuations in Operating Results. The Company's operating
results are affected by a number of factors, including the timing and mix of
manufacturing projects, capacity utilization, price competition, the degree of
automation that can be used in the assembly process, the efficiencies that can
be achieved by the Company in managing inventories and fixed assets, the timing
of orders from customers, fluctuations in demand for customer products, the
timing of expenditures in anticipation of increased sales, customer product
delivery requirements, increased costs and shortages of components or labor and
economic conditions generally. All of these factors can cause substantial
fluctuations in the Company's operating results. The Company's expenditures
(including, but not limited to, equipment, inventory and labor) are based, in
part, on its expectations as to future revenues and, to a large extent, are
fixed in the short term. Accordingly, the Company has in the past and may in the
future be unable to adjust spending in a timely manner to compensate for any
unexpected shortfall in revenues, and any significant shortfall of demand in
relation to the Company's expectations or any material delay or cancellation of
customer orders could have an almost immediate material adverse effect on the
Company's operating results. As a result, it is possible that in some future
period, the Company's operating results could fail to meet the expectations of
public market analysts or investors. In such events, or in the event that
adverse conditions prevail or are perceived to prevail generally or with respect
to the Company's business, the trading price of Company's Common Stock could
drop significantly.

         The Company's gross profit as a percentage of sales in future periods
may be materially adversely affected by various factors associated with the
Company's production of new product lines, acquisition of new manufacturing
equipment and continued dependence on turnkey contracts (and the inventory risks
inherent therein). Expansion of capacity will result in a higher fixed cost
structure which will require increased revenue and/or significant improvements
in operating efficiencies in order to maintain historical gross margins.
Additionally, the commencement of production of new products typically involves
significant startup costs, lower yields and other inefficiencies. New products
do not generate gross margins as high as products which have been in volume
production for several months. The Company also expects that competition may
continue to intensify, which could also result in lower gross margins.

         Customer Concentration; Dependence on Industry Trends. A small number
of customers are currently responsible for a significant portion of the
Company's net sales. In the fiscal years ended July 31, 1997, 1996 and 1995, the
Company's four largest customers in such periods accounted for approximately
61%, 63%, and 69%, respectively, of consolidated net sales. Sales to Micron
Electronics, Inc. accounted for approximately 21% of the Company's revenues for
the fiscal year ended July 31, 1997. Any material delay, cancellation or
reduction of orders from these or other customers could have a material adverse
effect on the Company's results of operations.

         The percentage of the Company's sales to its major customers may
fluctuate from period to period. Significant reductions in sales to any of these
customers could have a material adverse effect on the Company's results of
operations. In addition, customer contracts can be canceled and volume levels
can be materially changed or delayed. The timely replacement of canceled,
delayed or reduced contracts with new business cannot be assured. These risks
are exacerbated because the Company's sales are to customers in segments of the
electronics industry subject to rapid technological change and product
obsolescence. The factors affecting these industries in general, or any of the
Company's major customers in particular, could have a material adverse effect on
the Company's results of operations.

         Competition. The electronics manufacturing services industry is
comprised of a large number of companies, several of which have achieved
substantial market share. The Company also faces competition from current and
prospective customers, which evaluate the Company's capabilities against the
merits of manufacturing products internally. The Company competes with different
companies depending on the type of service or geographic area. Certain of the
Company's competitors have broader geographic breadth. They also may have
greater manufacturing, financial, research and development and marketing
resources than the Company. The Company believes that the primary basis of
competition in its targeted markets is manufacturing technology, quality,
responsiveness, and the provision of value-added services and price. To be
competitive, the Company must provide technologically advanced manufacturing
services, high product quality levels, flexible delivery schedules and reliable
delivery of finished products on a timely and price competitive basis. The
Company currently may be at a competitive disadvantage as to price when compared
to manufacturers with lower cost structures, particularly with respect to
manufacturers with established facilities where labor costs are lower.



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         Shortages of Electronics Components. Most of the Company's net sales
are derived from turnkey manufacturing services in which the Company procures
components from third-party suppliers and bears the risk of component shortages.
The electronics industry has been characterized by shortages from time to time
in semiconductor and other components, which shortages have led to allocations
by third-party suppliers. The Company's inability to procure desired supplies of
certain components has in the past led, and may in the future lead, to some
delays in shipments by the Company to its customers. These delays to date have
not had a material adverse effect on the Company's results of operations. If
these component shortages persist or intensify, however, the Company may not be
able to secure quantities required to fulfill customer orders, which could
result in delays in shipments, or cancellation or delays in customer orders,
each of which could have a material adverse effect on the Company's results of
operations.

         Management of Growth. There can be no assurance that the Company will
successfully manage the integration of new business and the growth, if any, of
the Company's operations. In addition, the Company may experience certain
inefficiencies as it manages geographically dispersed operations. Should the
Company increase its expenditures in anticipation of a future level of sales
which does not materialize, its results of operations could be materially
adversely affected. On occasion, customers may require rapid increases in
production which can place an excessive burden on the Company's resources. There
can be no assurance that the Company will be capable of meeting the demands
placed upon the Company's resources by these or any other customers.

         Environmental Compliance. The Company is subject to a variety of
environmental regulations relating to the use, storage, discharge and disposal
of hazardous chemicals used during its manufacturing process. Any failure by the
Company to comply with present and future regulations could subject it to future
liabilities or the suspension of production. In addition, such regulations could
restrict the Company's ability to expand its facilities or could require the
Company to acquire costly equipment or to incur other significant expenses to
comply with environmental regulations. In this regard, see "Legal Proceedings."

         Risk of Defects. The electronics products manufactured for customers by
the Company are highly complex and may at times contain undetected design and/or
manufacturing errors or failures. Such defects have been discovered in the past,
and there can be no assurance that, despite the Company's quality control and
quality assurance efforts, such defects will not occur in the future. If such
defects occur in quantities or too frequently, the Company's business and
operating results may be materially and adversely affected.

         Dependence on Key Personnel and Skilled Employees. The Company's
continued success depends to a large extent upon the efforts and abilities of
key managerial and technical employees. The loss of services of certain key
personnel could have a material adverse effect on the Company. The Company's
business also depends upon its ability to continue to attract and retain senior
managers and sales representatives and other skilled employees. Failure to do so
could have a material adverse effect on the Company's operations.

         Possible Volatility of Market Price of Common Stock. The trading price
of the Company's Common Stock is subject to significant fluctuations in response
to variations in quarterly operating results, general conditions in the
electronics manufacturing services industry as well as the industries of the
Company's customers, and other factors. In addition, the stock market is subject
to price and volume fluctuations which affect the market price for many high
technology companies in particular, and which may or may not be unrelated to
operating performance. There can be no assurance as to the trading price of the
Company's Common Stock at any time in the future.

Item 2. Properties.

         The Company's principal facility is a 350,000 square foot manufacturing
plant located on sixty-four acres in Corinth, Mississippi. The plant and land
are leased at the rate of approximately seven thousand dollars annually,
pursuant to a lease with the Industrial Development Board of Alcorn County,
Mississippi, with options to renew the lease until 2060. The Company also leases
a 75,000 square foot facility in Santa Clara, California, and 20,000 square feet
of warehouse space in Corinth, Mississippi. The Company has announced plans to
build a 55,000 square foot manufacturing facility in Hermosillo, Mexico and to
open an international purchasing office in Taiwan in the 1998 fiscal year.
Although there are currently no specific plans for further expansion, the
Company continually evaluates customer needs and market opportunities to expand
its facilities geographically.




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Item 3. Legal Proceedings.

         The Company is involved from time to time in litigation incidental to
its business. Management believes that the outcome of current litigation will
not have a material adverse effect upon the results of operations or financial
condition of the Company and will not disrupt the normal operations of the
Company.

         In December 1993, the Company retained the services of an industrial
safety consultant to assist in quantifying the potential exposure to the Company
in connection with clean-up and related costs of a former manufacturing site,
commonly known as the ITT Telecommunications site in Milan, Tennessee and more
particularly described as a 50.1 acre tract surveyed by Construction Layout
Service of Milan, Tennessee. The consultant initially estimated that the cost to
remove the contaminated soil and deliver it to an appropriate hazardous waste
site would be approximately $200,000. Based upon this advice, the Company
subsequently entered into a voluntary agreement to investigate the site with the
Tennessee Department of Environment and Conservation. In addition, the Company
agreed to reimburse a tenant of the site $115,000 for expenditures previously
incurred to investigate environmental conditions at the site. The Company
recorded a total provision of $320,000 based on these estimates. In fiscal 1995,
an environmental expert concluded that the cost of a full study combined with
short and long-term remediation of the site may cost between $3 and $4 million.
During fiscal 1996, the State of Tennessee's Department of Environment and
Conservation named certain potentially responsible parties ("PRPs") in relation
to the former facility. The Company was not named as a PRP. However, Alcatel,
Inc., a PRP named by the State of Tennessee's Department of Environment and
Conservation and a former owner of the Company, is seeking indemnification from
the Company. To date, Alcatel has not filed any legal proceedings to enforce its
indemnification claim. However, there can be no assurance that Alcatel will not
initiate such proceedings or that any other third parties will not assert claims
against the Company relating to remediation of the site. In the event any such
proceedings are initiated or any such claim is made, the Company believes it has
numerous defenses which it will vigorously assert. There can be no assurance
that if any proceedings are initiated or any such claim is asserted, defense or
resolution of such matter will not have a material adverse effect on the
Company's financial position or results of operations.

Item 4. Submission of Matters to Vote of Security Holders


        None.





                                       9
<PAGE>   10


                                    PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

         On December 9, 1993, the Securities and Exchange Commission declared
effective the Company's Registration Statement with respect to an initial public
offering of 1,750,000 shares of Common Stock. The Common Stock is listed on the
Nasdaq National Market under the symbol "CMCI."

         The following table sets forth, for the periods indicated, the high and
low sale prices for the Company's Common Stock as reported on the Nasdaq
National Market. Such prices represent prices between dealers and do not include
retail mark-ups, mark-downs or commissions and may not represent actual
transactions.

<TABLE>
<CAPTION>
                                                       High               Low
                                                       ----               ---
Fiscal Year 1996:
-----------------
<S>                                                   <C>               <C>
First quarter                                         $ 4.75            $ 2.75
Second quarter                                          4.63              3.63
Third quarter                                           6.25              4.00
Fourth quarter                                          9.19              5.75

Fiscal Year 1997:
-----------------
First quarter                                           8.88              5.63
Second quarter                                         12.63              7.88
Third quarter                                          13.50              5.50
Fourth quarter                                          9.13              6.25
</TABLE>

         There were approximately 211 holders of record of the Common Stock as
of September 30, 1997. The Company believes it had in excess of 1,000 beneficial
shareholders as of September 30, 1997. The Company had 6,930,713 shares
outstanding as of September 30, 1997.

         The Company has not paid any cash dividends and does not anticipate
paying any cash dividends in the foreseeable future.

Item 6. Selected Financial Data.

         The Company's Selected Financial Data is hereby incorporated by
reference to page 8 of its 1997 Annual Report to Shareholders. Excerpts of such
Annual Report are filed as Exhibit 13.1 hereto.

Item 7. Management's Discussion and Analysis of Financial Condition and 
        Results of Operation.

         The Company's Management's Discussion and Analysis of Financial
Condition and Results of Operation is hereby incorporated by reference to pages
9 through 16 of its 1997 Annual Report to Shareholders. Excerpts of such Annual
Report are filed as Exhibit 13.1 hereto.

Item 8. Financial Statements and Supplementary Data.

         The information set forth in the Consolidated Financial Statements
contained in excerpts of the 1997 Annual Report to Shareholders is incorporated
herein by reference. An index to the Company's Consolidated Financial Statements
is set forth at Part IV, Item 14(2) at page 13.

         The selected quarterly financial data set forth under the caption
"Quarterly Results" at page 11 of excerpts of the 1997 Annual Report to
Shareholders is incorporated herein by this reference.




                                       10

<PAGE>   11

Item 9.  Changes in and Disagreements With Accountants on Accounting And 
         Financial Disclosure.

         None.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

         Information with respect to the directors and executive officers of the
Company is incorporated by reference from the Company's Proxy Statement relating
to the 1997 Annual Meeting of Shareholders. Such Proxy Statement has been filed
previously with the Securities and Exchange Commission.

Item 11. Executive Compensation.

         Certain information relating to executive compensation included in the
Proxy Statement relating to the 1997 Annual Meeting of Shareholders is
incorporated herein by reference. Such Proxy Statement has been filed previously
with the Securities and Exchange Commission.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

         Certain information relating to stock ownership included in the Proxy
Statement relating to the 1997 Annual Meeting of Shareholders is incorporated
herein by reference. Such Proxy Statement has been filed previously with the
Securities and Exchange Commission.

Item 13. Certain Relationships and Related Transactions.

         Certain information relating to transactions with management included
in the Proxy Statement relating to the 1997 Annual Meeting of Shareholders is
incorporated herein by reference. Such Proxy Statement has been filed previously
with the Securities and Exchange Commission.





                                       11
<PAGE>   12


                                    PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(1) Exhibits

<TABLE>
<CAPTION>
Exhibit   Description
Number    -----------
-------   
<S>       <C>
3.1*      Restated Certificate of Incorporation.
3.2*      Amended and Restated Bylaws.
4.1*      Form of Common Stock Certificate.
4.2***    Securities Purchase Agreement, dated as of May 15, 1996, by and between
          the Company and each of the investors listed therein.
10.1*     Agreement and Plan of Reorganization between CMC Industries, Inc. and 
          International Telecommunication Asia PTE, Ltd. dated as of October 2, 1993.
10.2*     Lease Agreement between The Board of Supervisors of Alcorn County, 
          Mississippi and International Telephone and Telegraph Corp. dated
          August 1, 1961, as amended and supplemented and related documents.
10.3*     Lease Agreement between Corinth Telecommunications Corp. (now known as 
          CMC Manufacturing, Inc.) and Douglas Jumper and Truitt Stockton d/b/a 
          Jumper-Stockton Warehouses for the Pinecrest Road warehouse dated 
          October 20, 1992.
10.4*     Lease Agreement between Corinth Telecommunications Corp. (now known as 
          CMC Manufacturing, Inc.) and Douglas Jumper and Truitt Stockton d/b/a/ 
          Jumper-Stockton Warehouses for the Sawyers Road warehouse dated 
          October 20, 1992.
10.5*     Loan and Security Agreement dated August 23, 1993 between CMC 
          Manufacturing, Inc. and Continental Bank, N.A. and related documents.
10.6*     License Agreement between ITT Corporation and ITT Telecom Products 
          Corporation (now known as CMC Manufacturing, Inc.) dated 
          December 30, 1986.
10.7*     Agreement between Cortelco International, Inc. and CMC Manufacturing, 
          Inc. dated as of September 1, 1993.
10.8*     Cortelco USA, Inc. (now known as CMC Manufacturing, Inc.) Profit 
          Sharing Savings Plan and Trust for Salaried Employees.
10.9*     Hourly Pension Plan for Employees of ITT Telecom Products Corporation 
          (now known as CMC Manufacturing, Inc.) at Corinth.
10.10**** CMC Industries, Inc. 1990 Equity Incentive Plan, amended and restated 
          as of November 15, 1996.
10.11*    Form of Indemnification Agreement between CMC Industries, Inc. and 
          certain officers and directors.
10.12**   Lease Agreement between Guzik Investments, L.P. and CMC Industries 
          dated June 14, 1995.
10.13**** CMC Industries, Inc. 1996 Employee Stock Purchase Plan.
10.14     Executive Employment Agreement between CMC Industries, Inc. and 
          Jack O'Rear dated  August 1, 1997.
13.1      Excerpts from the 1997 Annual Report to Shareholders.
21.1      Subsidiaries of the Registrant.
23.1      Consent of Independent Accountants.
27.1      Financial Data Schedule (For SEC electronic filing purposes only)
</TABLE>

*    Incorporated by reference to exhibits filed with the Registrant's 
     Registration Statement on Form S-1, Registration No.  33-70126.

**   Incorporated by reference to exhibits filed with the Registrant's Annual
     Report on Form 10-K for the year ended July 31, 1995.

***  Incorporated by reference to exhibits filed with the Registrant's Current
     Report on Form 8-K filed the Securities and Exchange Commission on 
     May 24, 1996.

**** Incorporated by reference to exhibits filed with the Registrant's Proxy
     Statement on Schedule 14A filed with the Securities and Exchange Commission
     on October 22, 1996.


                                       12

<PAGE>   13

(2) Financial Statements and Schedules

      Consolidated Financial Statements of CMC Industries, Inc. and subsidiaries

               Consolidated Balance Sheets as of July 31, 1997 and 1996
               Consolidated Statements of Income for the Years Ended July 31,
               1997, 1996 and 1995 
               Consolidated Statements of Changes In Stockholders' Equity for 
               the Years Ended July 31, 1997, 1996 and 1995 
               Consolidated Statements of Cash Flows for the Years Ended July 
               31, 1997, 1996 and 1995 
               Notes to Consolidated Financial Statements 
               Report of Independent Accountants

      The Financial Statements are hereby incorporated by reference to pages
17 to 35 of the Company's 1997 Annual Report to Shareholders. Excerpts of such
Annual Report are filed as Exhibit 13.1 hereto.

      All schedules specified by the Securities and Exchange Commission are
inapplicable or omitted pursuant to Regulation S-X since the information is
included in the Consolidated Financial Statements or related notes.

(3) Reports on Form 8-K

      No reports on Form 8-K were filed during the quarter ended July 31, 1997.





                                       13
<PAGE>   14


                                   SIGNATURES


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


                                            CMC INDUSTRIES, INC.

                                            /s/ Matthew G. Landa
                                            ------------------------------------
Date:  October 28, 1997                     Matthew G. Landa,  President,
                                            Chief Executive Officer and Director


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

<TABLE>
<CAPTION>
         Signature                            Title                           Date
         ---------                            -----                           ----  
<S>                                  <C>                                <C>
/s/ David S. Lee                     Chairman of the Board              October 28, 1997    
------------------------------
David S. Lee


/s/ Matthew G. Landa                 President, Chief Executive         October 28, 1997
------------------------------       Officer and Director
Matthew G. Landa                     


/s/ Andrew J. Moley                  Executive Vice President,          October 28, 1997
------------------------------       Chief Financial Officer and
Andrew J. Moley                      Director
                                     

/s/ Ira Coron                        Director                           October 28, 1997
------------------------------
Ira Coron


/s/ Frederick W. Gibbs               Director                           October 28, 1997
------------------------------
Frederick W. Gibbs


/s/ Charles Holloway                 Director                           October 28, 1997
------------------------------
Charles Holloway
</TABLE>


                                       14