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

                                   FORM 10-Q
                                        
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                        
       (Mark One)

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                      For the quarter ended June 30, 1998

                                      OR

             [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
            For the transition period from __________ to __________

                         COMMISSION FILE NUMBER 0-21040


                         CAMBRIDGE TECHNOLOGY PARTNERS
                             (MASSACHUSETTS), INC.
            (Exact name of registrant as specified in its charter)



             DELAWARE                                  06-1320610
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                Identification Number)


          304 VASSAR STREET,
      Cambridge, Massachusetts                          02139
   (Address of principal executive offices)            (Zip Code)

                                (617) 374-9800
             (Registrant's telephone number, including area code)


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.     Yes   X   No     
                                                  ----      ---

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

     As of July 31, 1998, there were 56,768,796 shares of common stock
outstanding.

================================================================================

<PAGE>
 
              CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                                        
                               TABLE OF CONTENTS
                               -----------------


PART I - FINANCIAL INFORMATION:
 
ITEM 1:  FINANCIAL STATEMENTS
 
  Consolidated Balance Sheets as of June 30, 1998 and
    December 31, 1997                                                        3
                                                                     
  Consolidated Statements of Operations for the Three and            
    Six Months Ended June 30, 1998 and 1997                                  4
                                                                     
  Consolidated Statements of Cash Flows for the Six                  
    Months Ended June 30, 1998 and 1997                                      5
                                                                     
  Notes to Consolidated Financial Statements                                 6
 
ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS                               9 
 
PART II - OTHER INFORMATION:
 
ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                16
                                                                        
ITEM 5:  OTHER INFORMATION                                                  16
                                                                        
ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K                                   17
 
SIGNATURES                                                                  18
 
EXHIBIT INDEX                                                               19

                                       2
<PAGE>
 
              CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                          CONSOLIDATED BALANCE SHEETS
                (in thousands, except share and per share data)
<TABLE>
<CAPTION>
 
                                                                 June 30,      December 31,
                                                                   1998            1997
                                                                -----------    -------------
                                                                (unaudited)
<S>                                                             <C>          <C>
ASSETS
Current assets:
 Cash and cash equivalents                                        $ 51,683       $ 39,496
 Investments held to maturity                                       21,712         15,824
 Accounts receivable, less allowance of $3,486 and $2,607
   at June 30, 1998 and December 31, 1997, respectively            134,203        101,887
 Unbilled revenue on contracts                                       9,687          8,231
 Deferred income taxes                                                 950            950
 Prepaid expenses and other current assets                          36,699         27,733
                                                                  --------       --------
   Total current assets                                            254,934        194,121
 
Property and equipment, net                                         41,975         35,403
Other assets                                                         6,518          5,624
Goodwill, net                                                        1,675          2,094
                                                                  --------       --------
   Total assets                                                   $305,102       $237,242
                                                                  ========       ========
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                                 $ 18,574       $ 18,998
 Accrued expenses                                                   47,373         36,235
 Deferred revenue                                                   14,356          9,502
 Income taxes payable                                               21,983         19,361
 Obligations under capital leases, current                             127            143
 Other current liabilities                                               -          1,952
                                                                  --------       --------
   Total current liabilities                                       102,413         86,191
 
Obligations under capital leases                                       225            341
Deferred income taxes                                                  923            923
 
Commitments and contingencies
 
Stockholders' equity:
 Common stock, $.01 par value, authorized 250,000,000
   shares;  issued and outstanding 56,571,122 and 54,969,004
   at June 30, 1998 and December 31, 1997, respectively                566            550
 Additional paid-in capital                                        102,788         75,253
 Retained earnings                                                 102,084         76,445
 Accumulated other comprehensive loss                               (3,897)        (2,461)
                                                                  --------       --------
   Total stockholders' equity                                      201,541        149,787
                                                                  --------       --------
   Total liabilities and stockholders' equity                     $305,102       $237,242
                                                                  ========       ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

                                       3
<PAGE>
 
              CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                  (unaudited)
<TABLE>
<CAPTION>
 
                                                                                   
                                                                                   
                                                    Three Months Ended June 30,     Six Months Ended June 30, 
                                                    ----------------------------    -------------------------- 
                                                       1998            1997           1998             1997
                                                    ---------       ----------      ---------        ---------
<S>                                              <C>              <C>               <C>            <C>
Net revenues                                        $146,330         $96,526          $279,816        $178,748
Costs and expenses:                                                                               
 Project personnel                                    65,156          43,444           125,177          79,864
 General and administration                           16,307          11,462            31,288          20,888
 Sales and marketing                                  14,670           8,514            27,143          16,420
 Other costs                                          28,098          18,506            54,410          33,930
                                                    --------         -------          --------        --------
   Total operating expenses                          124,231          81,926           238,018         151,102
                                                    --------         -------          --------        --------
                                                                                                  
Income from operations                                22,099          14,600            41,798          27,646
                                                                                                  
Other income (expense):                                                                           
 Interest income                                         571             659             1,173           1,001
 Interest expense                                        (38)            (43)              (83)            (76)
 Foreign exchange (loss) gain                            (24)             36              (157)              5
                                                    --------         -------          --------        --------
                                                                                                  
Income before income taxes                            22,608          15,252            42,731          28,576
Provision for income taxes                             9,043           6,131            17,092          11,501
                                                    --------         -------          --------        --------
                                                                                                  
Net income                                          $ 13,565         $ 9,121          $ 25,639        $ 17,075
                                                    ========         =======          ========        ========
                                                                                                  
Basic net income per share                          $    .24         $   .17          $    .46        $    .32
                                                    ========         =======          ========        ========
                                                                                                  
Diluted net income per share                        $    .22         $   .16          $    .42        $    .30
                                                    ========         =======          ========        ========
                                                                                                  
Weighted average number of                                                                        
 common shares outstanding                            56,306          52,544            55,901          52,274
                                                    ========         =======          ========        ========
Weighted average number of                                                        
 common and common                                                                
 equivalent shares outstanding                        61,723          58,079            61,334          58,008
                                                    ========         =======          ========        ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

                                       4
<PAGE>
 
              CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
                                  (unaudited)
<TABLE>
<CAPTION>
 
                                                                Six Months Ended June 30,
                                                               ---------------------------
                                                                   1998           1997
                                                               -------------  ------------
<S>                                                            <C>            <C>
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
Net income                                                       $ 25,639        $ 17,075
Amounts that reconcile net income to net cash provided                          
 by operating activities:                                                       
 Depreciation and amortization                                      6,268           3,637
 Tax benefit from exercise of stock options                        10,189           4,984
 Changes in assets and liabilities:                                             
   Increase in accounts receivable                                (32,640)        (26,434)
   (Increase) decrease in unbilled revenue on contracts            (1,545)            848
   Increase in prepaid expenses and other current assets           (9,063)         (2,303)
   (Decrease) increase in accounts payable                           (408)          4,968
   Increase in accrued expenses                                     9,968           9,717
   Increase in deferred revenue                                     4,846           7,890
   Increase in income taxes payable                                 2,591           2,867
   Other, net                                                        (875)         (1,671)
                                                                 --------        --------
     Net cash provided by operating activities                     14,970          21,578
                                                                 --------        --------
                                                                                
CASH FLOWS FROM INVESTING ACTIVITIES:                                           
                                                                                
Additions to property and equipment                               (12,520)        (10,439)
Purchase of investments held to maturity                          (13,557)         (9,255)
Maturity of investments                                             7,669           7,511
                                                                 --------        --------
     Net cash used for investing activities                       (18,408)        (12,183)
                                                                 --------        --------
                                                                                
CASH FLOWS FROM FINANCING ACTIVITIES:                                           
                                                                                
Repayment of loan                                                    (823)              -
Obligations under capital leases                                     (121)            (33)
Dividend distribution                                              (1,129)         (1,817)
Proceeds from employee stock purchase plan                          3,390           2,140
Proceeds from exercise of stock options                            13,972           4,564
                                                                 --------        --------
     Net cash provided by financing activities                     15,289           4,854
                                                                 --------        --------
                                                                                
                                                                                
Effect of foreign exchange rate changes on cash                       336            (235)
                                                                                
Net increase in cash and cash equivalents                          12,187          14,014
Cash and cash equivalents at beginning of period                   39,496          26,087
                                                                 --------        --------
Cash and cash equivalents at end of period                       $ 51,683        $ 40,101
                                                                 ========        ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

                                       5
<PAGE>
 
              CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

A.  BASIS OF REPORTING
    ------------------

The accompanying consolidated financial statements of Cambridge Technology
Partners (Massachusetts), Inc. (the "Company") include the accounts of the
Company and all of its wholly owned subsidiaries.  All significant intercompany
transactions and balances have been eliminated in consolidation. In November
1997, the Company acquired all of the outstanding capital stock of Peter
Chadwick Holdings Limited ("Peter Chadwick").  The acquisition of Peter Chadwick
was accounted for using the pooling of interests method of accounting. All prior
period historical consolidated financial statements presented herein have been
restated to include the financial position, results of operations, and cash
flows of Peter Chadwick.  Certain prior period amounts have been reclassified to
conform to current period presentation.  In the opinion of management, the
consolidated financial statements reflect all normal and recurring adjustments,
which are necessary for a fair presentation of the Company's financial position,
results of operations, and cash flows as of the dates and for the periods
presented.  The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information.  Consequently, these statements do not include all the disclosures
normally required by generally accepted accounting principles for annual
financial statements nor those normally made in the Company's Annual Report on
Form 10-K.  Accordingly, reference should be made to the Company's Annual Report
on Form 10-K for additional disclosures, including a summary of the Company's
accounting policies.  The consolidated results of operations for the three and
six months ended June 30, 1998, are not necessarily indicative of results for
the full year.

B.  REVOLVING CREDIT FACILITY
    -------------------------

In June 1998, the Company obtained a commitment from The Chase Manhattan Bank
("Chase") to provide a $50.0 million unsecured senior revolving credit facility
(the "Facility") through a syndication arrangement. The Facility, which is
expected to be in place by August 31, 1998, expires three years from its closing
date and replaces the Company's previously maintained $20.0 million revolving
credit facility that expired on June 30, 1998. The Facility will be administered
by Chase and will carry a commitment fee, payable quarterly in arrears,
calculated based on the unused portion of the Facility and a price grid as set
forth in the credit agreement currently under negotiation with Chase. The
Facility will permit the Company to elect any of three possible interest rate
formulas as defined in the credit agreement. Interest will be payable in arrears
based on an interest period determined by the interest rate elected by the
Company. The Facility will require, among other things, the Company to maintain
certain financial ratios, including debt service coverage, debt to capital, and
net worth. At June 30, 1998 and December 31, 1997, the Company had no balance
outstanding under its revolving credit facility.

C.   OTHER CURRENT LIABILITIES
     -------------------------

In April 1997, Peter Chadwick acquired the assets of a training facility located
in the United Kingdom.  Peter Chadwick entered into a loan agreement with
National Westminister Bank (the "Loan Agreement") to finance this acquisition.
In March 1998, the Company terminated this Loan Agreement and repaid the
outstanding principal balance of approximately $823,000.

D.  NET INCOME PER SHARE
    --------------------

The Company adopted Statement of Financial Accounting Standard No. 128,
"Earnings per Share," ("SFAS 128") beginning with the year ended December 31,
1997, which includes retroactively restating

                                       6
<PAGE>
 
earnings per share for all prior periods for which earnings per share ("EPS")
data is presented. SFAS 128 requires the presentation of basic and diluted EPS.
Basic net income per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted net income per share is computed using the weighted average
number of common shares outstanding plus the dilutive effect of common stock
equivalents (using the treasury stock method). The following table presents the
calculation of earnings per share for the three and six months ended June 30,
1998 and 1997 (in thousands except per share data):


<TABLE>
<CAPTION>
 
                                               Three Months Ended             Six Months Ended
                                            -----------------------        ----------------------
                                             1998            1997           1998           1997
                                           -------          ------         -------        -------
<S>                                      <C>             <C>           <C>            <C>

Net income                                 $13,565         $ 9,121        $25,639        $17,075
                                           =======         =======        =======        =======
                                                                                  
Basic:                                                                            
 Weighted average common                                                          
   shares outstanding                       56,306          52,544         55,901         52,274
                                           =======         =======        =======        =======
 Net income per share                      $   .24         $   .17        $   .46        $   .32
                                           =======         =======        =======        =======
                                                                                  
Diluted:                                                                          
 Weighted average common                                                          
   shares outstanding                       56,306          52,544         55,901         52,274
 Dilutive effects of stock options                                                
   and warrants                              5,417           5,535          5,433          5,734
                                           -------         -------        -------        -------
 Weighted average common and                                                      
   common equivalent shares                                                       
   outstanding                              61,723          58,079         61,334         58,008
                                           =======         =======        =======        =======
                                                                                  
 Net income per share                      $   .22         $   .16        $   .42        $   .30
                                           =======         =======        =======        =======
</TABLE>

E.  FOREIGN EXCHANGE CONTRACTS
    --------------------------

The Company maintains foreign exchange contracts to mitigate the risk of changes
in foreign exchange rates associated with intercompany balances.  The contracts
generally have maturities of one month.  The impact of exchange rate movements
on contracts is recorded in other income in the period in which the exchange
rates change, generally consistent with the term of the contract.  As of June
30, 1998, the Company held foreign exchange forward contracts of approximately
$10.2 million and there were no related deferred gains and losses.  The Company
does not hold foreign exchange contracts for trading purposes.

F.  COMPREHENSIVE INCOME
    --------------------

The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130").  SFAS 130 requires the
presentation of comprehensive income and its components.  Comprehensive income
presents a measure of all changes in equity that result from recognized
transactions and other economic events during the period other than transactions
with stockholders.  SFAS 130 requires restatement of all prior period financial
statements presented and is effective for the periods beginning after December
15, 1997.  The Company has elected to disclose this information in its annual
Statement of Stockholders' Equity.  The following table presents the calculation

                                       7
<PAGE>
 
of comprehensive income and its components for the three and six months ended
June 30, 1998 and 1997 (in thousands):
<TABLE>
<CAPTION>
 
                                    Three Months Ended    Six Months Ended
                                   -------------------  --------------------
                                     1998       1997       1998      1997
                                   ---------  --------  ---------  ---------
                                                        
<S>                                <C>        <C>       <C>        <C>
 Comprehensive income:                                  
   Net income                        $13,565   $9,121    $25,639    $17,075
   Foreign currency translation                         
     adjustments                         237     (849)    (1,436)    (2,024)
                                     -------   ------    -------    -------
   Comprehensive income              $13,802   $8,272    $24,203    $15,051
                                     =======   ======    =======    =======
</TABLE>

G.  NEW ACCOUNTING PRONOUNCEMENTS
    -----------------------------

In March 1998, Statement of Position 98-1, "Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"), was issued.  SOP
98-1 provides guidance on applying generally accepted accounting principles in
addressing whether and under what condition the costs of internal-use software
should be capitalized.  SOP 98-1 is effective for transactions entered into in
fiscal years beginning after December 15, 1998, however earlier adoption is
encouraged.  The Company adopted the guidelines of SOP 98-1 as of January 1,
1998.

In July 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"), which is effective for fiscal
years beginning after December 15, 1997.  Interim reporting disclosures are not
required in the first year of adoption.  SFAS 131 specifies revised guidelines
for determining an entity's operating segments and the type and level of
financial information to be disclosed.  SFAS 131 changes current practice under
SFAS 14 by establishing a new framework on which to base segment reporting and
expands the required disclosures for each segment. The Company will adopt SFAS
131 in the fourth quarter of 1998 and is currently determining the impact of
such adoption on its reporting as currently presented.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999 (January 1, 2000 for
the Company). SFAS 133 requires that all derivative instruments be recorded on
the balance sheet at their fair value. Changes in the fair value of derivatives
are recorded for each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The Company is currently
determining the impact of the adoption of SFAS 133 on the Company's results of
operations and financial position.

                                       8
<PAGE>
 
              CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

OVERVIEW

Cambridge Technology Partners (Massachusetts), Inc. (the "Company") is an
international management consulting and systems integration firm.  The Company
combines management consulting, information technology ("IT") strategy, process
innovation and implementation, custom and package software deployment, network
services, and educational services to rapidly deliver end-to-end business
systems for clients. In performing its services, the Company employs a rapid
development methodology that features an iterative approach and conducts
facilitated workshops that bring together key client users, executives, and IT
professionals to achieve consensus on the business case, strategic objectives,
and functionality of a business solution.  The Company believes that this
approach permits the delivery of results in unprecedented time frames, typically
within three to twelve months.  Working primarily with a fixed-price, fixed-
timetable model with client involvement at all stages of the process, the
Company continued to post strong operating results for the quarter ended June
30, 1998.  Net revenues for the second quarter of 1998 increased 52% to $146.3
million compared to $96.5 million for the same period in 1997, reflecting
increased demand for the Company's services worldwide.  Net income for the
quarter ended June 30, 1998, increased 49% to $13.6 million, or $.22 per share
(diluted) compared to $9.1 million, or $.16 per share (diluted) for the
comparable period in 1997.

In the second quarter of 1998, the Company continued to experience increased
demand for its services worldwide. North American net revenues grew 54% for the
quarter ended June 30, 1998, compared to the same period in 1997. This growth in
North American net revenues was fueled by increased demand across all geographic
areas for the Company's services, including custom and package client/server
applications, enterprise resource planning ("ERP") solutions, management
consulting services, and interactive solutions. Internationally, net revenues
grew 47% in the second quarter of 1998 compared to the same period a year ago.
In the second quarter of 1998, the Company commenced approximately 230 new
engagements worldwide. In order to support the increased demand for the
Company's services, total company headcount increased to 3,487 at June 30, 1998,
from 3,071 at December 31, 1997. The Company will continue to focus on hiring
and assimilating appropriate personnel to service its clients in the upcoming
quarters of 1998. While the Company's employee turnover has increased to an
annualized rate of 25% in 1998 from 23% in 1997, the Company expects that this
increase should not have a detrimental impact on the Company's ability to meet
its growth goals. The Company is continuing to hire in accordance with its
current and anticipated demand requirements and had 178 offers of employment
accepted as of July 31, 1998 for 1998 start dates.

In the second quarter of 1998, the Company generated an increased number of
cross business unit engagements, particularly driven by the Company's most
recent acquisition, Peter Chadwick.  Demand for the Company's ERP business
remained strong in the second quarter of 1998 as the Company continued to grow
its Cambridge Momentum (SM) service offerings.  The Company also developed and
introduced a rapid, fixed-time/fixed-price ERP deployment strategy for middle-
market organizations in the first quarter of 1998.  Customer response to these
new service offerings has been positive.

During the first half of 1998, the Company strengthened its operations in Europe
by adding offices in Copenhagen, Denmark, Utrecht, Netherlands, Brussels,
Belgium, and Paris, France, bringing worldwide total office count to 49
locations at June 30, 1998.  Committed to investing in the global expansion of
the Company, management believes that the Company is well positioned for
business growth going into the third quarter of 1998.

                                       9
<PAGE>
 
RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1998, COMPARED TO
  THREE MONTHS ENDED JUNE 30, 1997

Net revenues increased 52% to $146.3 million in 1998 compared to $96.5 million
in 1997 due principally to an increase in the volume of services delivered to
new clients, leveraging the existing client base by undertaking additional
projects, and increased demand for expanded service offerings.  North American
net revenues remained strong, growing 54% to $99.5 million in 1998 from $64.7
million in 1997.  International net revenues grew 47% to $46.8 million in 1998
from $31.8 million in 1997. International net revenue results were negatively
impacted by the strengthening of the U.S. dollar against international
currencies. Excluding an $887,000 negative impact related to changes in foreign
exchange rates, consolidated net revenues for the quarter ended June 30, 1998,
would have been $147.2 million, or a 53% increase in net revenues compared to
the same period in 1997.

Project personnel costs consist principally of payroll and payroll related
expenses for personnel dedicated to client assignments and are directly related
to the level of client services being delivered.  Project personnel costs were
$65.2 million in 1998 and $43.4 million in 1997, or 45% of net revenues for both
periods. The dollar increase resulted from the hiring of additional project
personnel over 1997 staff levels to support the increased volume of services
delivered to clients and the related increase in payroll and payroll related
expenses. Worldwide project personnel headcount increased 33% to 2,868 employees
at June 30, 1998, from 2,162 employees at June 30, 1997. While the Company
anticipates meeting its hiring goals for the remainder of fiscal 1998,
competition for personnel with IT skills is intense and the Company expects
salaries and wages to continue to increase. The Company periodically reviews and
updates its billing rates to cover the expected increase in costs.  The Company
currently expects that project personnel costs as a percentage of net revenues
will increase to approximately 46% for the remainder of 1998 as the Company
invests in hiring and assimilating its employees to support its business growth.

Furthermore, in January 1998, the Company introduced staffing control
initiatives to better monitor its subcontractor costs. While subcontractor costs
continued to be a notable component of project personnel costs, subcontractor
costs were reduced in the first and second quarters of 1998 compared to the
third and fourth quarters of 1997 and were within management's expectations.
Other initiatives that are part of the Company's focus on containing project
personnel costs include the continuous review and measurement of utilization,
employee retention, and billability.  In January 1998, the Company implemented
an improved worldwide time entry system to serve as the basis for its
productivity measurements.

General and administration expenses were $16.3 million or 11% of net revenues in
1998 compared to $11.5 million or 12% of net revenues in 1997.  The percentage
decrease from 1997 is primarily due to the significant increase in net revenues
and the Company's continued focus on cost containment in this area.  The dollar
increase reflects expenses associated with increased staff headcount to support
the Company's continued growth and geographic expansion in North America and
internationally. The Company currently expects to decrease its general and
administration expenses as a percentage of net revenues to approximately 10% for
the remainder of 1998, while continuing to provide sufficient support for the
Company's global growth strategy.

Sales and marketing expenses were $14.7 million or 10% of net revenues in 1998
compared to $8.5 million or 9% in 1997. The dollar and percentage increase are
primarily attributable to an increase in payroll and payroll related expenses
associated with the increase in sales and marketing personnel from

                                       10
<PAGE>
 
165 at June 30, 1997, to 262 at June 30, 1998, the increase in sales commissions
related to the significant increase in net revenues, and travel related expenses
for the field sales and marketing groups. This increased headcount enables the
Company to maximize potential client lead generation through its regional field
marketing staff with subsequent services coordinated by its sales personnel. The
dollar increase also resulted from increased participation in trade shows and
marketing publications in order to provide existing and potential clients with
essential information about the Company and its existing and new service
offerings. The Company continued its investment in marketing initiatives and
educational and training programs through those conducted by its Management Lab
and the Cambridge Information Network (CIN). The Management Lab and CIN enable
clients to participate in both physical and virtual interactive forums to
discuss issues associated with adopting advanced information technology, as well
as key business, technology, and career management issues. The Company expects
to leverage its investment in sales and marketing expenditures made in the first
half of 1998, and thus anticipates an improvement as a percentage of net
revenues in this area. The Company expects its sales and marketing expenses as a
percentage of net revenues to decrease to approximately 9% for the remainder of
1998.

Other costs consist of non-billable expenses directly incurred for client
projects and other associated business costs, including facilities costs and
related expenses, non-billable staff travel, and staff training. Other costs
were $28.1 million in 1998 and $18.5 million in 1997, or 19% of net revenues for
both periods. The dollar increase from 1997 resulted principally from increased
facility, travel, and employee training costs.  As the Company continues its
headcount and facilities growth to support current and anticipated increases in
demand for its services, the Company expects to maintain other costs as a
percentage of net revenues at approximately 19% for the remainder of 1998.

Interest income decreased to $571,000 in 1998 from $659,000 in 1997.  The 1997
amount included a $188,000 one-time gain from the sale of an investment. The
Company's cash and investments consist primarily of tax exempt investment grade
municipal bonds which mature within one year from the date of purchase,
overnight repurchase agreements, and short-term commercial paper.

Foreign exchange loss was $24,000 in 1998 compared to a gain of $36,000 in 1997.
Foreign exchange gains and losses were related to foreign currency exchange rate
fluctuations associated with intercompany balances. The Company maintains
monthly foreign exchange forward contracts to hedge against the risk of changes
in foreign exchange rates associated with intercompany balances.  This risk
coverage is dependent upon forecasted intercompany activities at the beginning
of each month.  The exchange rate gains and losses are directly related to the
accuracy of such forecasted amounts.  As of June 30, 1998, the Company held
foreign exchange contracts of approximately $10.2 million.

The Company's effective income tax rate in 1998 was 40.0% compared to 40.2% a
year ago.  The Company's effective tax rate may vary from period to period based
on the Company's future expansion into areas of varying country, state, and
local statutory income tax rates.

Net income was $13.6 million or $.22 per share (diluted) for the 1998 period as
compared to $9.1 million or $.16 per share (diluted) for the same period in
1997.  The Company increased its net income per share by 38% despite a 6%
increase in the number of common and common equivalent shares outstanding,
primarily due to stock options granted to employees and shares issued under the
employee stock purchase plan.

                                       11
<PAGE>
 
SIX MONTHS ENDED JUNE 30, 1998, COMPARED TO
  SIX MONTHS ENDED JUNE 30, 1997

Net revenues increased 57% to $279.8 million in 1998 compared to $178.8 million
in 1997 due principally to an increase in the volume of services delivered to
new clients, leveraging the existing client base by undertaking additional
projects, and increased demand for expanded service offerings.  North American
net revenues remained strong, growing 60% to $192.3 million in 1998 from $120.5
million in 1997.  International net revenues grew 50% to $87.5 million in 1998
from $58.3 million in 1997. International net revenue results were negatively
impacted by the strengthening of the U.S. dollar against international
currencies. Excluding a $1.9 million negative impact related to changes in
foreign exchange rates, consolidated net revenues for the quarter ended June 30,
1998, would have been $281.7 million, or a 58% increase in net revenues compared
to the same period in 1997.

Project personnel costs were $125.2 million in 1998 and $79.9 million in 1997,
or 45% of net revenues for both periods. The dollar increase resulted from the
hiring of additional project personnel over 1997 staff levels to support the
increased volume of services delivered to clients and the related increase in
payroll and payroll related expenses.  Average worldwide project personnel for
the six-month period ended June 30, 1998, increased 43% from the comparable
period in 1997.

General and administration expenses were $31.3 million or 11% of net revenues in
1998 compared to $20.9 million or 12% of net revenues in 1997.  The percentage
decrease from 1997 is primarily due to the significant increase in net revenues
and the Company's continued focus on cost containment in this area.  The dollar
increase reflects expenses associated with increased staff headcount to support
the Company's continued growth and geographic expansion in North America and
internationally.

Sales and marketing expenses were $27.1 million or 10% of net revenues in 1998
compared to $16.4 million or 9% in 1997. The dollar and percentage increase are
primarily attributable to an increase in payroll and payroll related expenses
associated with a 60% increase in average sales and marketing personnel in the
first half of 1998, compared to the same period in 1997, the increase in sales
commissions related to the significant increase in net revenues, and travel
related expenses for the field sales and marketing groups. This increased
headcount enables the Company to maximize potential client lead generation
through its regional field marketing staff with subsequent services coordinated
by its sales personnel. The dollar and percentage increase also resulted from
increased participation in trade shows and marketing publications.

Other costs were $54.4 million in 1998 and $33.9 million in 1997, or 19% of net
revenues for both periods. The dollar increase from 1997 resulted principally
from increased facility, travel, and employee training costs.

Interest income increased to $1.2 million in 1998 from $1.0 million in 1997.
The increase reflects growth in cash and investment balances in 1998 compared to
1997.  The Company's cash and investments consist primarily of tax exempt
investment grade municipal bonds which mature within one year from the date of
purchase, overnight repurchase agreements, and short-term commercial paper.

Foreign exchange loss was $157,000 in 1998 compared to a gain of $5,000 in 1997.
Foreign exchange gains and losses were related to foreign currency exchange rate
fluctuations associated with intercompany balances. The foreign exchange loss in
1998 is due primarily to unfavorable fluctuations in European and Latin American
currencies in 1998.

                                       12
<PAGE>
 
The Company's effective income tax rate in 1998 decreased to 40.0% from 40.2% a
year ago.  The Company's effective tax rate may vary from period to period based
on the Company's future expansion into areas of varying country, state, and
local statutory income tax rates.

Net income was $25.6 million or $.42 per share (diluted) for the 1998 period
compared to $17.1 million or $.30 per share (diluted) for the same period in
1997.  The Company increased its net income per share by 40% despite a 6%
increase in the number of common and common equivalent shares outstanding,
primarily due to stock options granted to employees and shares issued under the
employee stock purchase plan.

LIQUIDITY AND CAPITAL RESOURCES

The Company continued to operate primarily debt-free and enhance its working
capital position.  Working capital increased to $152.5 million at June 30, 1998,
from $107.9 million at December 31, 1997.  This increase was primarily due to
increases in accounts receivable, prepaid expenses and other current assets,
proceeds from exercise of stock options, and proceeds from shares issued under
the employee stock purchase plan, partially offset by cash used for capital
expenditures related to office expansions and computer equipment for new
employees and increases in accrued expenses, deferred revenue, and income taxes
payable.  The Company's days sales in accounts receivable was 78 days during the
second quarter of 1998 compared to 77 days for the same period in 1997.  The
increase in days sales in accounts receivable in 1998 is primarily due to the
timing of certain major receivable balances which were collected in the first
two weeks of July. In 1998, the Company began to include the reduction in days
sales outstanding as an individual metric for its employee bonus program.  In
addition, the Company's treasury function, which is primarily responsible for
worldwide collection and cash management efforts, continues to focus on its
outstanding receivables by involving the Company's project management staff in
the collection process.

Net cash provided by operating activities was $15.0 million in 1998 compared to
$21.6 million for the comparable period in 1997.  The increases in net income
and tax benefit from exercise of stock options, were more than offset by the
increases in accounts receivable, unbilled revenue on contracts, and prepaid
expenses and other current assets and a decrease in accounts payable.

Capital expenditures of $12.5 million in 1998 were used principally for computer
equipment to support the Company's expanding operations and employee
workstations and leasehold improvements related to the Company's expanding and
opening of new offices worldwide.  Capital expenditures for 1998 are expected to
approximate $25.0 million, principally for leasehold improvements, personal
computers, employee workstations, telecommunication and video conferencing
equipment, and other equipment to support both current and anticipated levels of
customer activities worldwide.  In accordance with the Company's strategic
acquisition plans, the Company evaluates, on an ongoing basis, potential
acquisitions of companies or technologies that may complement its business.

In order to support the Company's current and anticipated business growth, the
Company obtained, in June 1998, a commitment from The Chase Manhattan Bank
("Chase") to provide a $50.0 million unsecured senior revolving credit facility
(the "Facility") through a syndication arrangement. The Facility, which is
expected to be in place by August 31, 1998, expires three years from its closing
date and replaces the Company's previously maintained $20.0 million revolving
credit facility that expired on June 30, 1998. The Facility will be administered
by Chase and will carry a commitment fee, payable quarterly in arrears,
calculated based on the unused portion of the Facility and a price grid as set
forth in the credit agreement currently under negotiation with Chase. The
Facility will permit the Company to elect any of three possible interest rate
formulas as defined in the credit agreement. Interest will be payable in arrears
based on an interest period determined by the interest rate elected by the
Company. The Facility
                                       13
<PAGE>
 
will require, among other things, the Company to maintain certain financial
ratios, including debt service coverage, debt to capital, and net worth. At June
30, 1998 and December 31, 1997, the Company had no balance outstanding under its
revolving credit facility.

In the first quarter of 1998, the Company repaid the outstanding principal
balance of approximately $823,000 under a loan agreement entered into by Peter
Chadwick to finance the purchase of a training facility located in the United
Kingdom. This loan agreement was then terminated. (see Note C of the Notes to
the Consolidated Financial Statements).

In January 1998, the Company entered into an agreement with Boston Properties
Limited Partnership ("Boston Properties") to lease a building to be constructed
and developed by Boston Properties.  This approximately 177,000 square foot
building, which is located in Cambridge, Massachusetts, will house the Company's
Northeast operations, new employee training facility, and corporate departments.
The lease agreement is for a ten-year period, which is expected to commence in
June 1999.  Pursuant to the terms of the lease agreement, the Company paid a
$1.3 million security deposit in January 1998.  The Company's current building
is expected either to continue to be used for project development and other
activities or subleased through its remaining lease term.

The Company expects that cash flows from operations will provide the principal
source of future liquidity for the Company.  However, the Company is currently
experiencing a period of growth, which could place a strain on the Company's
financial resources. The Company currently anticipates that existing cash and
investment balances combined with cash generated from operations and amounts
available under the Facility will be sufficient, at least through 1999, to meet
the Company's working capital requirements and to fund the expansion of the
Company's business.  In order to meet client demand for the Company's services
in 1998, the Company expects to continue to increase its professional staff and
to open additional sales and operations offices in North America and
internationally.  Although the Company's plans to open offices and hire
personnel are in response to increased demand for the Company's services, a
portion of these expenses will be incurred in anticipation of increased demand.
Operating results and liquidity may be adversely affected if market demand and
revenues do not increase as anticipated.  As the Company expands its
international operations, a number of factors, including market acceptance of
the Company's services, significant fluctuations in currency exchange rates, and
changes in general economic, political, and regulatory conditions, could also
adversely affect future results and liquidity.

                                       14
<PAGE>
 
NEW ACCOUNTING PRONOUNCEMENTS

In March 1998, Statement of Position 98-1, "Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use," was issued (see Note G of
Notes to Consolidated Financial Statements).

In July 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which is effective for fiscal years
beginning after December 15, 1997.  Interim reporting disclosures are not
required in the first year of adoption (see Note G of Notes to Consolidated
Financial Statements).

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities."  SFAS 133 is effective for all fiscal quarters of all
fiscal years beginning after June 15, 1999 (January 1, 2000 for the Company)
(see Note G of Notes to Consolidated Financial Statements).

FORWARD-LOOKING STATEMENTS

This Form 10-Q includes forward-looking statements (statements that are not
historical facts) such as statements about future net revenues and profits,
capital expenditures, liquidity sources and needs, working capital needs,
increases in personnel and related costs, opening additional offices, and
project personnel costs, general and administrative expenses, sales and
marketing expenses, and other costs as a percentage of net revenues.  These
forward-looking statements are subject to several risks and uncertainties and
the Company's actual future results may differ significantly from those stated
in any forward-looking statements.  While it is impossible to identify each
factor and event that could affect the Company's results, variations in the
Company's revenues and operating results occur from time to time as a result of
a number of factors, such as the significance of client engagements commenced
and completed during the period, the number of working days in a period,
employee hiring, retention, and utilization rates, acceptance and profitability
of the Company's services in new territories, and integration of companies
acquired.  The timing of revenues is difficult to forecast because the Company's
sales cycle is relatively long in the case of new clients and may depend on
factors such as the size and scope of the assignments and general economic
conditions.  Because a high percentage of the Company's expenses are relatively
fixed, a variation in the timing of the initiation or the completion of client
assignments, particularly at or near the end of any quarter, can cause
significant variations in operating results from period to period.  

                                       15
<PAGE>
 
ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------   ---------------------------------------------------

(a)  The annual meeting of stockholders was held on May 13, 1998.

(b)  Not applicable.

(c)  A vote was proposed to: (1) elect a Board of Directors to serve for the
     ensuing year; (2) amend the Company's Amended and Restated Certificate of
     Incorporation to increase the number of authorized shares of common stock,
     par value $.01 per share (the "Common Stock"), from 120,000,000 shares to
     250,000,000 shares; (3) amend the Company's 1991 Stock Option Plan (the
     "1991 Plan") to increase the number of shares of Common Stock available for
     issuance under the 1991 Plan by 4,000,000 shares; and (4) ratify the
     selection of the firm of Coopers & Lybrand L.L.P. as independent
     accountants for the fiscal year ending December 31, 1998.

The voting results were as follows:

<TABLE>
<CAPTION>
                                                          Votes         Withheld         Votes          Broker
                                        Votes for        Against        Authority      Abstained       Non-votes
                                   -------------------------------------------------------------------------------
<S>                                  <C>              <C>             <C>            <C>             <C>
(1)  James K. Sims                        47,901,844       N/A            1,686,582       N/A              -
     Warren V. Musser                     47,518,362       N/A            2,070,064       N/A              -
     Robert E. Keith, Jr.                 47,941,282       N/A            1,647,144       N/A              -
     Jack L. Messman                      47,908,432       N/A            1,679,994       N/A              -
     John W. Poduska, Sr., Ph.D.          47,526,210       N/A            2,062,216       N/A              -
     James I. Cash, Jr., Ph.D.            47,904,232       N/A            1,684,194       N/A              -
     James D. Robinson, III               47,901,757       N/A            1,686,669       N/A              -

(2)  Increase in authorized shares                                                                                
     of Common Stock                      47,079,081     2,308,946             -        146,631           53,768  
                                                                                                                  
(3)  Increase in number of shares                                                                                 
     under the 1991 Plan                  26,885,802    19,022,787             -        166,259        3,513,578  
                                                                                                                  
(4)  Coopers & Lybrand L.L.P.             49,534,453        17,193             -         36,780            -

(d)  Not applicable.
</TABLE>


ITEM 5.   OTHER INFORMATION
-------   -----------------

Proposals of stockholders intended for inclusion in the proxy statement to be
furnished to all stockholders entitled to vote at the next annual meeting of the
Company's stockholders must be received at the Company's principal executive
offices no later than December 5, 1998. Proposals of stockholders to be made at
the next annual meeting of the Company's stockholders must be delivered to the
Company in accordance with the timing and procedural requirements set forth in
the Company's Amended and Restated By-laws, a copy of which have been filed with
the Securities and Exchange Commission and are incorporated by reference as an
exhibit to this Form 10-Q.

                                       16
<PAGE>
 
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
-------   --------------------------------

(a)  Exhibits:

     3.1     Amended and Restated Certificate of Incorporation of the Company,
             as amended.
     3.2(1)  Amended and Restated By-laws of the Company.
     4(2)    Rights Agreement dated June 23, 1997 between the Company and
             ChaseMellon Shareholders Services, LLC.
     11.1    Statement Regarding Computation of Per Share Earnings.
     27      Financial Data Schedule.

             (1) Incorporated herein by reference to Exhibit 3.2 to the
                 Company's Registration Statement on Form S-1 
                 (File No. 33-56338).
             (2) Incorporated herein by reference to Exhibit 4.1 to the
                 Company's Report on Form 8-K dated June 23, 1997, and filed on
                 July 1, 1997.

(b)  There were no reports on Form 8-K filed for the quarter ended June 30,
     1998.

                                       17
<PAGE>
 
                                  SIGNATURES

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 thereunto duly authorized.


              CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.



        Date:  August 13, 1998      By: /s/ Arthur M. Toscanini
                                       ------------------------  
                                       Arthur M. Toscanini
                                       Executive Vice President and
                                          Chief Financial Officer

                                       18
<PAGE>
 
                                 EXHIBIT INDEX
                                        

Exhibit No.            Description
-----------            -----------

3.1   Amended and Restated Certificate of Incorporation of the Company, as
      amended.
3.2   Amended and Restated By-laws of the Company (1).
4     Rights Agreement dated June 23, 1997 between the Company and ChaseMellon
      Shareholders Services, LLC (2).
11.1  Statement Regarding Computation of Per Share Earnings.
27    Financial Data Schedule.

------------------------------
      (1) Incorporated herein by reference to Exhibit 3.2 to the Company's
          Registration Statement on Form S-1 (File No. 33-56338).
      (2) Incorporated herein by reference to Exhibit 4.1 to the Company's
          Report on Form 8-K dated June 23, 1997, and filed on July 1, 1997.
 

                                       19