================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q
(MARK ONE)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      FOR THE QUARTERLY PERIOD ENDED JULY 31, 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 0-17754

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

              Delaware                                    94-2523965
           --------------                                ------------
      (State or other jurisdiction of        (IRS Employer Identification No.)
       incorporation or organization)

485 Clyde Avenue, Mountain View, California                     94043
- -------------------------------------------                 --------------
  (Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code:  (650) 691-6100
                                                     --------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed under 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 the number of shares outstanding of each of the issuer's classes of
common stock as of September 3, 1998:

Common Stock, $0.01 par value                       8,637,352
-----------------------------                       ---------
         Class                                  Number of Shares


<PAGE>
                               CONSILIUM, INC.

                                    INDEX


                       PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements:

             Condensed Consolidated Balance Sheets
             July 31, 1998 and October 31, 1997

             Condensed Consolidated Statements of Operations
             Three and nine months ended July 31, 1998 and 1997

             Condensed Consolidated Statements of Cash Flows
             Nine months ended July 31, 1998 and 1997

             Notes to Condensed Consolidated Financial Statements


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

Item 3.   Quantitative and Qualitative Disclosures About Market Risks


                         PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings

Item 2.   Changes in Securities

Item 3.   Defaults Upon Senior Securities

Item 4.   Submission of Matters to a Vote of Security Holders

Item 5.   Other Information

Item 6.   Exhibits and Reports on Form 8-K

          Signatures

<PAGE>












                               CONSILIUM, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               (In thousands)
<TABLE>
<CAPTION>
                                                       July 31,     October 31,
                                                       1998         1997
                                                       -----------  -----------
                                                       (unaudited)
<S>                                                    <C>          <C>
ASSETS
Current assets:
  Cash and cash equivalents.......................         $6,665       $7,865
  Accounts receivable, net........................          9,299       11,014
  Other current assets............................            608          590
                                                       -----------  -----------
            Total current assets..................         16,572       19,469

Property and equipment, net.......................          2,630        4,312
Software development costs, net...................          1,991        2,688
Goodwill, net.....................................          2,116        3,092
Other assets......................................            364          406
                                                       -----------  -----------
            TOTAL ASSETS..........................        $23,673      $29,967
                                                       ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Note payable/Line of credit.....................           $917       $3,051
  Accounts payable................................          2,612        6,587
  Accrued liabilities.............................          3,676        3,799
  Accrued acquisition costs.......................            300        1,662
  Deferred revenue................................          5,378        6,437
                                                       -----------  -----------
            Total current liabilities.............         12,883       21,536

Note payable......................................          1,833           --
Accrued lease obligation..........................            157           --
Deferred revenue..................................            467           --
                                                       -----------  -----------
            Total liabilities.....................         15,340       21,536

Stockholders' equity..............................          8,333        8,431
                                                       -----------  -----------
            TOTAL LIABILITIES AND
            STOCKHOLDERS' EQUITY..................        $23,673      $29,967
                                                       ===========  ===========
</TABLE>
 The accompanying notes are an integral part of these condensed consolidated
 financial statements.
<PAGE>






                                CONSILIUM, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                      Three Months Ended    Nine Months Ended
                                     --------------------- ---------------------
                                     July 31,   July 31,   July 31,   July 31,
                                     1998       1997       1998       1997
                                     ---------- ---------- ---------- ----------
<S>                                  <C>        <C>        <C>        <C>
REVENUES:
     Product.........................   $1,945     $4,420     $6,282    $11,234
     Services........................    5,742      6,405     17,922     18,826
     Development.....................       --         84         --        514
                                     ---------- ---------- ---------- ----------
           Total revenues............    7,687     10,909     24,204     30,574
                                     ---------- ---------- ---------- ----------

COST OF REVENUES:
     Product.........................      228        778      1,078      2,483
     Services........................    2,347      3,593      7,980     11,475
     Development.....................       --         --         --        369
                                     ---------- ---------- ---------- ----------
           Total cost of revenues....    2,575      4,371      9,058     14,327
                                     ---------- ---------- ---------- ----------
GROSS MARGIN.........................    5,112      6,538     15,146     16,247
                                     ---------- ---------- ---------- ----------

OPERATING EXPENSES:
     Research and development........    2,048      3,015      6,344      9,250
     Selling and marketing...........    2,135      3,483      7,474     10,094
     General and administrative......      710      1,006      2,167      2,809
                                     ---------- ---------- ---------- ----------
           Total operating expenses..    4,893      7,504     15,985     22,153
                                     ---------- ---------- ---------- ----------
Income (loss) from operations........      219       (966)      (839)    (5,906)
Interest income......................       74         34        166         98
Interest expense.....................      (56)      (102)      (239)      (173)
Gain on sale of business.............       --         --        550         --
                                     ---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
     INCOME TAX  PROVISION...........      237     (1,034)      (362)    (5,981)
PROVISION FOR INCOME TAXES...........       33        147        175        262
                                     ---------- ---------- ---------- ----------
NET INCOME (LOSS)....................      204     (1,181)      (537)    (6,243)
PREFERRED STOCK DIVIDENDS............     (225)        --       (838)        --
                                     ---------- ---------- ---------- ----------
NET LOSS ATTRIBUTABLE TO
     COMMON STOCK....................     ($21)   ($1,181)   ($1,375)   ($6,243)
                                     ========== ========== ========== ==========
NET LOSS PER COMMON SHARE
     Basic and diluted...............   ($0.00)    ($0.15)    ($0.16)    ($0.78)


WEIGHTED AVERAGE COMMON SHARES AND
     EQUIVALENTS
     Basic and diluted...............    8,486      8,018      8,503      7,974

</TABLE>
  The accompanying notes are an integral part of these condensed consolidated
  financial statements.
<PAGE>
















































                                CONSILIUM, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                       Nine Months Ended
                                                    ------------------------
                                                    July 31,     July 31,
                                                    1998         1997
                                                    -----------  -----------
<S>                                                 <C>          <C>
Cash flows from operating activities:
     Net loss......................................      ($537)     ($6,243)
     Adjustments to reconcile net loss to
      net cash used for operating activities:
       Depreciation and amortization...............      2,638        2,694
       Gain on sale of business....................       (550)         --
       Change in assets and liabilities:
          Accounts receivable......................      1,715       (5,221)
          Other assets.............................        (85)        (213)
          Accounts payable.........................     (3,445)         143
          Deferred revenue.........................        328        2,870
          Other liabilities and accrued expenses...       (612)       2,628
                                                    -----------  -----------
            Net cash used for operating activities.       (548)      (3,342)
                                                    -----------  -----------
Cash flows from investing activities:
     Capital expenditures..........................       (242)        (912)
     Capitalized software development costs........       (990)        (525)
     Sales of short-term investments...............        --         1,000
     Cash paid for acquisition of FAST.............       (300)         --
     Cash received from sale of HCP................      1,350          --
                                                    -----------  -----------
            Net cash used for investing activities.       (182)        (437)
                                                    -----------  -----------
Cash flows from financing activities:
     Proceeds from note payable/line of credit.....      2,750        3,051
     Principal payments line of credit/note payable     (3,051)      (1,792)
     Issuance costs of preferred stock.............       (105)         --
     Proceeds from issuance of common stock and
        exercise of options........................        228          288
                                                    -----------  -----------
            Net cash provided by (used for)
              financing activities.................       (178)       1,547
                                                    -----------  -----------
Effect of exchange rate changes on cash............       (292)        (388)
                                                    -----------  -----------
Net decrease in cash and cash equivalents..........     (1,200)      (2,620)

Cash and cash equivalents at beginning of period...      7,865        8,094
                                                    -----------  -----------
Cash and cash equivalents at end of period.........     $6,665       $5,474
                                                    ===========  ===========
</TABLE>
  The accompanying notes are an integral part of these condensed consolidated
  financial statements.
<PAGE>



                                 CONSILIUM, INC.

                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.      INTERIM FINANCIAL DATA

The interim condensed consolidated financial statements of Consilium, Inc. and
its subsidiaries ("the Company") are unaudited but reflect, in the opinion of
management, all normal recurring adjustments necessary to present fairly the
financial information set forth therein.  These interim condensed consolidated
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's annual report on Form
10-K for the year ended October 31, 1997.  The Company believes the results of
operations for the three and nine months ended July 31, 1998 and the cash
flows for the nine months ended July 31, 1998 are subject to fluctuation and
are not necessarily indicative of results of operations and cash flows for any
future period.


2.      NET LOSS PER SHARE

Effective November 1, 1997, the Company adopted SFAS No. 128, "Earnings Per
Share."  All prior-period earnings per share data presented was restated to
conform with SFAS No. 128.  SFAS No. 128 requires companies to compute net
income (loss) per share under two different methods, basic and diluted, and to
disclose the methodology used for the calculation.

        Basic and diluted earnings per common share were computed by dividing
net loss after deduction of preferred stock dividends by the weighted average
number of shares of common stock outstanding during the period.  Potentially
dilutive securities of 2,257,462 and 1,733,070 were not included in the
computation of diluted earnings per common share because to do so would have
been antidilutive for the three quarters ended July 31, 1998 and 1997,
respectively.


3.      LINE OF CREDIT / NOTE PAYABLE

As of April 30, 1998, the Company had $3,051,000 outstanding under the Line of
Credit Agreement dated April 1, 1997 with its existing bank. On July 24, 1998,
the Company entered into a new banking arrangement and paid off all amounts
due under the above mentioned Line of Credit Agreement.  Under this new
facility, the Company can borrow up to $6,500,000, including a $2,750,000
three year term loan (the "Term Loan Agreement"), and an additional line of
credit (the "Revolving Facility Agreement") of up to $3,750,000 based on
eligible accounts receivable.  The term loan agreement is secured by
substantially all of the Company's assets, bears interest at 1.0% above the
prime rate per annum (9.5% at July 31, 1998) and expires on July 24, 2001. 
The revolving facility agreement is secured by substantially all of the
Company's assets, bears interest at 0.5% above the prime rate per annum (9.0%
at July 31, 1998) and expires on July 24, 1999.  At July 31, 1998, $2,750,000
was outstanding under the Term Loan Agreement and no borrowings were
outstanding under the Revolving Facility Agreement.  The Term Loan and
Revolving Facility Agreements require the Company to maintain certain
financial covenants.  The Company is in compliance with all financial
covenants.


4.      NEW ACCOUNTING PRONOUNCEMENTS

        In the first quarter of fiscal 1998, the Company adopted the
provisions of SFAS No. 129, "Disclosure of information about Capital
Structure," which requires companies to disclose certain information about
their capital structure.  The adoption of SFAS No. 129 had no impact on the
Company's financial statements.

        In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use."  SOP 98-1 provides guidance
regarding the determination of whether computer software is internal-use
software, the capitalization of costs incurred for computer software developed
or obtained for internal use and accounting for the proceeds of computer
software originally developed or obtained for internal use and then
subsequently sold to the public.  The Company has not yet determined the
effect, if any, of adopting SOP 98-1, which will be effective for the Company
in fiscal 2000.

        In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities."  The
Statement establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value.  SFAS No. 133 is effective for fiscal
years beginning after June 15, 1999.  Management believes the adoption of SFAS
No. 133 will have no effect on the Company's financial statements.


5. SALE OF HEALTH CARE AND PROCESS BUSINESS UNIT

        In February 1998, the Company sold certain assets of its Healthcare
Products and Process Industries Group that focused on the FlowStream product
line (the "Healthcare Group"), pursuant to an Asset Purchase Agreement dated
February 19, 1998 (the "Asset Purchase Agreement") by and among Base Ten
FlowStream, Inc. (the "Buyer"), Base Ten Systems, Inc. (the "Parent" and
together with the Buyer, "Base Ten") and the Company, for consideration
consisting of $1,500,000 in cash, 20% of all annual revenues in excess of
$3,200,000 recognized by Base Ten from the licensing of the FlowStream product
line during the 1998 and 1999 calendar years, and assumption by Base Ten of
substantially all of the Healthcare Group's liabilities on a going-forward
basis, with some specific obligations being retained by the Company.  Pursuant
to the Asset Purchase Agreement, Base Ten assumed certain liabilities as of
the acquisition date, purchased fixed assets with a net book value of
approximately $500,000 and assumed the Company's rights under certain
contracts with customers and other third parties relating to the FlowStream
product line, except certain patents used within the Company by both the
Healthcare Group and the Semiconductor and Electronics Business Group.  With
regards to these patents, the Company granted to Base Ten a worldwide
royalty-free, non-transferable (except with substantially all of the assets of
the FlowStream Business) license, for the lives of the patents, without the
right to sublicense, to the exclusive use of such patents for developing,
producing, manufacturing and selling manufacturing execution systems limited
to the field of healthcare products (pharmaceutical, medical device and
biotechnology) and chemical industries.  In addition, the Company agreed not
to compete in the business of developing, producing, manufacturing and selling
manufacturing execution systems under the trademark of "FlowStream" for
healthcare products and chemical industries for three years.  Also pursuant to
the Asset Purchase Agreement, the Company agreed to indemnify Base Ten for up
to $1,500,000 for certain representations and warranties relating to
intellectual property and up to an unlimited amount for certain post-closing
covenants, any excluded obligations (as defined in the Asset Purchase
Agreement) and any tax losses (as defined in the Asset Purchase Agreement).





<PAGE>








































ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS 

The discussion in this report contains in addition to historical information,
forward-looking statements which reflect the Company's current views with
respect to future events and financial performance.  These forward-looking
statements are subject to certain risks and uncertainties, including those
discussed in this report.  The Company's actual results could differ
significantly from the results discussed in the forward-looking statements. 
In this report the words "anticipates," "believes," "expects," "intends,"
"may," "future" and similar expressions identify forward-looking statements. 
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof.  The following discussion
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto.

OVERVIEW

In fiscal 1996, the Company began offering systems integration services to the
semiconductor manufacturing industry.  In an effort to grow its systems
integration business, in July 1996, the Company acquired the Taiwan operations
of SDI, a privately-held Washington corporation specializing in the
development of factory automation products and systems integration services
for the semiconductor industry.  The Company purchased two existing
semiconductor plant automation contracts, certain tangible and intangible
assets and assumed certain liabilities of SDI.  The acquisition was accounted
for as a purchase and, accordingly, the results of the Taiwan operations of
SDI since the date of acquisition have been recorded in the Company's
consolidated financial statements.  

In August 1997, the Company again expanded its systems integration business by
acquiring certain assets of FAST, a Singapore corporation specializing in
semiconductor manufacturing automation with operations both in Singapore and
Taiwan.  The Company purchased two existing semiconductor factory automation
contracts, certain tangible and intangible assets and assumed certain
liabilities of FAST.  The acquisition was accounted for as a purchase and
accordingly, the results of FAST from the date of acquisition forward have
been recorded in the Company's consolidated financial statements.  See
"LIQUIDITY AND CAPITAL RESOURCES."

In February 1998, the Company sold certain assets associated with its
FlowStream product line to Base Ten and agreed not to compete in the
FlowStream Business for three years.

RESULTS OF OPERATIONS

REVENUES.       Total revenues for the third quarter of fiscal 1998 decreased
30% to $7,687,000, compared with $10,909,000 in the third quarter of fiscal
1997.  Revenues for the first nine months of fiscal 1998 decreased 21% to
$24,204,000, compared with $30,574,000 in the same period of fiscal 1997. For
the three and nine months ended July 31, 1998, the decreases in total revenues
over the same periods of the previous fiscal year were primarily due to the
sale of the Health Care and Process business unit, a lower level of WorkStream
DFS T product revenues, systems integration services revenues and development
revenues, partially offset by a higher level of consulting revenues from its
Semiconductor and Electronics business unit.
          Percentage of total revenues for the three and nine months ended July
31, 1998 and 1997 by geographic region were as follows (in thousands):
<TABLE>
<CAPTION>
                                     Three Months Ended  Nine Months Ended
                                    ------------------- -------------------
                                    July 31,  July 31,  July 31,  July 31,
                                    1998      1997      1998      1997
                                    --------- --------- --------- ---------
<S>                                 <C>       <C>       <C>       <C>
 North America...................     $3,214    $5,954   $12,167   $14,573
   Percentage of total revenues..         42%       55%       50%       48%
 Europe..........................      1,701     2,306     5,311     5,789
   Percentage of total revenues..         22%       21%       22%       19%
 Asia/Pacific....................      2,772     2,649     6,726    10,212
   Percentage of total revenues..         36%       24%       28%       33%

</TABLE>

The proportional decrease in sales to North America for the three and nine
months ended July 31, 1998 were due to the sale of the Health Care and Process
business unit and lower level of WorkStream product license and maintenance
revenues in the North America region.  The decrease in sales to Europe for the
three and nine months ended July 31, 1998 were due to the sale of the Health
Care and Process business unit.  The proportional increases in sales to
Asia/Pacific for the three months ended July 31, 1998 was due to the mix of a
slight increase in product license sales to Asia/Pacific combined with a
decrease in total revenue during the period.  For the nine months ended July
31, 1998, the proportional decrease in sales to Asia/Pacific was primarily due
to lower WorkStream license revenue and lower systems integration services
revenues in the Asia/Pacific region as a result of the completion of existing
projects, slowdown in the building of new semiconductor fabrications, as well
as currency fluctuations in Asia.

     Percentage of total revenues for the three and six months ended July 31,
1998 and 1997 by business unit were as follows (in thousands):
<TABLE>
<CAPTION>
                                     Three Months Ended  Nine Months Ended
                                    ------------------- -------------------
                                    July 31,  July 31,  July 31,  July 31,
                                    1998      1997      1998      1997
                                    --------- --------- --------- ---------
<S>                                 <C>       <C>       <C>       <C>
Semiconductor and Electronics
Business Unit                                                                 
  (WorkStream DFS(TM))...........     $7,687    $8,875   $22,206   $26,355
   Percentage of total revenues..        100%       81%       92%       86%

Healthcare Products and Process
Industries Business Unit
  (FlowStream(R))................         $0    $2,034    $1,998    $4,219
   Percentage of total revenues..          0%       19%        8%       14%

</TABLE>

        The Company's Semiconductor and Electronics Business Unit markets and
sells WorkStream DFS products to manufacturers who produce their products in
discrete lots or batches, particularly those in the semiconductor and
electronics industries.  The Company's Healthcare Products and Process
Industries Business Unit marketed and sold FlowStream products to regulated or
complex industries that employ batch process manufacturing, particularly those
in the healthcare products (pharmaceutical, medical devices and
biotechnology), chemical and other process industries until the Company sold
substantially all the assets and liabilities of the division on February 19,
1998.

Product Revenues.        Product revenues for the three and nine months ended
July 31, 1998 decreased 56% and 44% over the same periods of the previous
fiscal year.  The decreases were primarily due to lower product revenue levels
from the Company's WorkStream DFS and FlowStream product lines during the
periods, as described below.

        Product revenues attributable to products in the Company's WorkStream
DFS product line decreased 41% to $1,945,000 during the three months ended
July 31, 1998, as compared with $3,307,000 for the same period in fiscal 1997.
For the nine months ended July 31, 1998, product revenues from the WorkStream
DFS product line decreased 45% to $5,340,000, as compared with $9,763,000 in
the previous fiscal year.  The period over period decreases were primarily due
to the continued slowdown in the semiconductor industry, the Asian currency
issues and fluctuations in timing of new orders for WorkStreamr products from
new semiconductor fabrications.

        Product revenues attributable to FlowStream for the three and nine
months ended July 31, 1998 were zero and $910,000, as compared to $1,113,000
and $1,471,000 for the same periods in fiscal 1997.  The decreases were
attributable to the sale of the Health Care and Process business unit in the
second quarter of fiscal 1998.

Services Revenues.      Services revenues for the three months ended July 31,
1998 decreased 10% to $5,742,000, compared with $6,405,000 for the same period
of fiscal 1997.  For the nine months ended July 31, 1998, services revenues
decreased 5% to $17,922,000, compared with $18,826,000 for the same period of
fiscal 1997.  Services revenues are primarily from annual software maintenance
fees, systems integration services relating to the WorkStream DFST product
line, specialized programming services, resident and application consulting
services and customer training.  The decreases in services revenues for the
three and nine months ended July 31, 1998 were primarily due to the sale of
the Health Care and Process business unit, and a decrease in systems
integration services revenues, partially offset by an increase in consulting
services revenues from the Company's WorkStream product line.  Services
revenues normally are subject to fluctuations primarily due to the timing of
new contracts and the completion of existing  projects.  

Development Revenues.           The Company has no development revenues for
the three and nine months ended July 31, 1998, compared with $84,000 and
$514,000 for the same periods of fiscal 1997.  Development revenues include
work associated with porting agreements and development contract work for
third parties.  Under these contracts and agreements, the Company earns
development and porting revenues, with participating third parties having the
right to license and use the software, often sooner than otherwise would have
occurred.  Development revenues can vary significantly from period to period,
depending upon the number of contracts which have been entered into and the
state of completion of such projects. The decreases in development revenues
during the three and nine months ended July 31, 1998 were primarily due to the
completion of all funded development projects.  Based on current internal
development resource allocations and projects planned, the Company expects
that the Company will not have any significant development revenues in fiscal
1998, although the Company may take on additional development projects in the
future if business and strategic objectives of the Company are met by such
projects.

COSTS AND EXPENSES

Cost of Product Revenues.       Cost of product revenues for the three months
ended July 31, 1998 decreased 71% to $228,000, compared with $778,000 for the
same period of the previous fiscal year.  The absolute dollar and percentage
decreases in cost of product revenues for the three months ended July 31, 1998
were primarily due to lower product license sales and lower third party
software product costs, compared with the same period of fiscal 1997.  For the
nine months ended July 31, 1998, cost of product revenues decreased 57% to
$1,078,000, compared with $2,483,000 for the same period of fiscal 1997.  The
absolute dollar and percentage decreases in cost of product revenues for the
nine months ended July 31, 1998 were primarily due to lower product license
sales during the period.  Cost of product revenues includes amortization of
capitalized software development costs, royalties, and purchased software
which is resold to the end customer, typically along with the Company's own
software.  Depending on the mix of sales of proprietary software (and the
variance in associated third party royalties) and additional third party
software relating to specific orders, the associated costs of product revenue
can vary significantly.  Product costs as a percentage of product revenues for
the three and nine months ended July 31, 1998 were 12% and 17%, respectively,
compared with 18% and 22% for the same periods of the previous year.  The
decrease in cost of product revenues for the three months ended July 31, 1998
as a percentage of product revenues was attributable to lower third party
product costs and lower royalties associated with the product revenues during
the period.

Cost of Services Revenues.      Cost of services revenues decreased 35% to
$2,347,000 for the three months ended July 31, 1998, compared with $3,593,000
for the same period of the previous fiscal year.  For the nine months ended
July 31, 1998, cost of services revenues decreased 30% to $7,980,000, compared
with $11,475,000 for the same period of the previous fiscal year.  The
decreases in absolute dollars and percentage of cost of services revenues were
primarily due to lower third party systems integration consulting costs, lower
systems integration services revenues and lower FlowStream services revenues
as a result of the sale of the Health Care and Process business unit in the
second quarter of fiscal 1998, partially offset by the hiring of additional
permanent services personnel to support the systems integration services. 
Cost of services revenues was 41% and 45% of total services revenues for the
three and nine months ended July 31, 1998, respectively, compared with 56% and
61% in the comparable periods of fiscal 1997.  The decrease in cost of
services revenues as a percentage of services revenues was primarily due to an
increase in systems integration projects with higher margins in fiscal 1998.

Cost of Development Revenues.   Cost of development revenues decreased to zero
for the nine months ended July 31, 1998, compared with $369,000 for the same
period of the previous fiscal year.  The absolute dollar decrease in cost of
development revenues for the nine months ended July 31, 1998 was primarily due
to the completion of all funded development projects in fiscal 1997. 
Development costs, which may vary significantly from project to project,
include direct labor costs associated with development contracts and porting
projects as well as  third party consulting expenses.

Research and Development Expenses.    Research and development expenses
represented 27% and 26% of total revenues for the three and nine month periods
ended July 31, 1998, respectively, compared with 28% and 30% for the same
periods of the previous fiscal year.  Research and development expenses were
$2,048,000 and $6,344,000 for the three and nine months ended July 31, 1998,
respectively, as compared to $3,015,000 and $9,250,000 for the same periods of
the previous fiscal year.  The decrease in the percentage of research and
development expenses as a percentage of total revenues and the decrease in the
absolute dollar amount of research and development expenses for the three and
nine months ended July 31, 1998 were primarily due to lower overall research
and development activities as a result of the sale of the Health Care and
Process business unit coupled with the continued move of the Company's
software development group to India by subcontracting with HCL Infosystems,
and the reimbursement of research and development expenses of $324,000 under
an Advanced Technology Program (ATP) award form the National Institute of
Standards and Technology (NIST).  Included in research and development
expenses are costs associated with the development of new products and the
costs of enhancing and maintaining existing products.

        Software development expenditures of $168,000 and $287,000 were
capitalized for the three months ended July 31, 1998 and 1997, respectively. 
The amounts represent approximately 8% and 9% of total research and
development expenditures during such periods, respectively.  The absolute
dollar and percentage decreases were due to a decrease in the amount of
software development costs eligible for capitalization during the quarter
ended July 31, 1998.  In accordance with SFAS No. 86, the amount of research
and development expenditures capitalized in a given time period depends upon
the amount of development work performed subsequent to the establishment of
technological feasibility for a product.  Accordingly, amounts capitalized may
vary from period to period.

Selling and Marketing Expenses. Selling and marketing expenses represented 28%
and 31% of total revenues for the three and nine months ended July 31, 1998,
respectively, as compared with 32% and 33% for the same periods of fiscal
1997. The decrease in sales and marketing expenses as a percentage of total
revenues during the three and nine months ended July 31, 1998 was due to a
lower level of sales activities, partially offset by lower total revenues
during the periods.  Selling and marketing expenses were $2,135,000 and
$7,474,000 for the three and nine months ended July 31, 1998, respectively,
compared with $3,483,000 and $10,094,000 for the same periods of the previous
year.  The decreases in the absolute dollar amount of selling and marketing
expenses for the three and nine months ended July 31, 1998, compared with the
same periods in fiscal 1997, were primarily due to an overall decrease in
headcount and related travel expenses as a result of the sale of the Health
Care and Process business unit and the Company's efforts to control overall
operating expenses relative to  revenues.

General and Administrative Expenses.    General and administrative expenses
represented 9% of total revenues for the three and nine month periods ended
July 31, 1998, respectively, as compared with 9% for the same periods of the
previous fiscal year.  General and administrative expenses were $710,000 and
$2,167,000 for the three and nine months ended July 31, 1998, compared to
$1,006,000 and $2,809,000 for the same periods in fiscal 1997.  The decrease
in absolute dollars for the three and nine months ended July 31, 1998 was
primarily due to an overall decrease in headcount and the Company's efforts to
control operating expenses relative to revenues.  General and administrative
expenses include the costs of the finance, accounting and administrative
operations of the Company.

Interest Income and Expense. Interest income was $74,000 and $166,000 for the
three and nine months ended July 31, 1998, respectively, compared to $34,000
and $98,000 for the same periods in the previous fiscal year.  Higher invested
cash balances and slightly higher interest rate levels accounted for the
increase in interest income.  Interest expense was $56,000 and $239,000 for
the three and nine months ended July 31, 1998, respectively, compared to
$102,000 and $173,000 for the same periods in fiscal 1997.  The increase in
interest expense was primarily due to higher outstanding short term borrowings
in fiscal 1998.

Provision for Income Taxes.   The income tax provision for the nine months
ended July 31, 1998 represents taxes on earnings of certain foreign
subsidiaries, which are profitable, and taxes paid in certain foreign
jurisdictions.  The Company has established a 100% valuation allowance against
its deferred tax asset and reviews this allowance on a periodic basis.  At
such time that the Company believes that it is more likely than not that a
portion of the deferred tax asset will be realized, the valuation allowance
will be reduced.

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS.  The Company's results
of operations historically have fluctuated on a quarterly basis due to
numerous factors.  Factors that may affect operating results of the Company
materially and unpredictably include:  the economic conditions in the
semiconductor and electronics industries generally and in the Company's
geographic markets; the relatively high average selling price of the Company's
products; the relatively small number of transactions; the size and timing of
receipt of orders from customers; the timing of operating expenditures; the
level of market acceptance for the Company's products; the successful
management of systems integration projects; reduced margins from systems
integration projects; changes in average selling price and product mix;
exchange rate fluctuations; increased competition; new product announcements
and releases by the Company and its competitors and subsequent deferrals in
sales orders as new or competitive products are evaluated by prospective
customers; the timing of co-development products with customers; gain or loss
of significant customers; expense levels; renewal of maintenance contracts;
pricing changes by the Company or its competitors; and personnel changes.  Any
unfavorable change in these or other factors could have a material adverse
effect on the Company's operating results for a particular quarter.  

The Company's expense levels will be based, in part, on expectations of future
revenues.  If revenue levels in a particular quarter do not meet expectations,
operating results could be adversely affected.  The slowdown in the
semiconductor industry and in the construction of new wafer fabrication
facilities has resulted in Consilium experiencing rescheduled orders, a
reduction or delay in orders for WorkStream DFS and lower than expected demand
for systems integration services; there can be no assurance that this slowdown
will not continue.  Quarterly revenue and operating results will depend on the
volume and timing of orders received during the quarter, which are difficult
to forecast accurately.  Historically, the Company has often recognized a
substantial portion of its license revenues in the last month of the quarter,
with these revenues frequently concentrated in the last two weeks of the
quarter.  Operating results would be disproportionately affected by a
reduction in revenue because only a small portion of the Company's expense
vary with its revenue.  In addition, the Company's margins in its systems
integration projects are typically lower than its margins from sales of its
WorkStream products and maintenance contracts for such products.  The Company
expects that revenues from its systems integration services will continue to
increase as a percentage of overall revenues, and that its overall margins
will correspondingly decrease.  Additional risk factors are set forth in the
Company's Annual Report on Form 10-K for the year ended October 31, 1997. 
Operating results in any period should not be considered indicative of the
results to be expected for any future period, and there can be no assurance
that the Company's revenues will increase or that the Company will achieve
profitability.  

LIQUIDITY AND CAPITAL RESOURCES.     As of July 31, 1998, the Company had
$6,665,000 in cash and cash equivalents, as compared with $7,865,000 in cash
and cash equivalents and short term investments at October 31, 1997.  The
Company used $548,000 for operating activities during the nine months ended
July 31, 1998, compared with $3,342,000 used for operating activities in the
same period of the previous fiscal year.  The decrease was due primarily to a
decrease in net loss, partially offset by changes in the balances of operating
assets and  liabilities.

        Net cash used for investing activities was $182,000 during the first
nine months of fiscal 1998, as compared with $437,000 of net cash used for
investing activities for the same period in fiscal 1997.  The $182,000 net
cash used for investing activities during the nine months ended July 31, 1998
represented cash received from the sale of the Health Care and Process
business unit, offset by capital expenditures, capitalized software
development costs, and FAST acquisition costs.

        Net cash used for financing activities was $178,000 during the first
nine months of fiscal 1998, which represented proceeds from the issuance of
common stock, offset by preferred stock issuance costs.

        Under the asset purchase agreement to purchase certain tangible and
intangible assets from FAST, the Company may be required to make additional
annual performance-based payments.  Such performance-based payments will be
based upon specified percentages of systems integration and related services
net operating margin, and net product license and maintenance revenue
recognized by the Company in certain countries in Asia for a period of three
years ending on August 1, 2000, as follows:  45% of systems
integration/services net operating margin, 10% of product license net revenue,
and 2.5% of product maintenance net revenue.  Such payments may be made in
cash or Common Stock, at the option of the Company.  The first $1,500,000 of
the performance payments are guaranteed.  As of July 31, 1998, $1,200,000 of
these guaranteed performance payments have been paid, $900,000 by issuance of
234,192 shares of the Common Stock and one cash payment of $300,000.  The last
guaranteed performance payment of $300,000 of cash has been paid in August
1998.  FAST has certain registration rights with respect to the Common Stock
issued.  Shares of common stock issued in fiscal 1997 have been registered by
the Company in fiscal 1998.

As of April 30, 1998, the Company had $3,051,000 outstanding under the Line of
Credit Agreement dated April 1, 1997 with its existing bank. On July 24, 1998,
the Company entered into a new banking arrangement and paid off all amounts
due under the above mentioned Line of Credit Agreement.  Under this new
facility, the Company can borrow up to $6,500,000, including a $2,750,000
three year term loan (the "Term Loan Agreement"), and an additional line of
credit (the "Revolving Facility Agreement") of up to $3,750,000 based on
eligible accounts receivable.  The term loan agreement is secured by
substantially all of the Company's assets, bears interest at 1.0% above the
prime rate per annum (9.5% at July 31, 1998) and expires on July 24, 2001. 
The revolving facility agreement is secured by substantially all of the
Company's assets, bears interest at 0.5% above the prime rate per annum (9.0%
at July 31, 1998) and expires on July 24, 1999.  At July 31, 1998, $2,750,000
was outstanding under the Term Loan Agreement and no borrowings were
outstanding under the Revolving Facility Agreement.  The Term Loan and
Revolving Facility Agreements require the Company to maintain certain
financial covenants.  The Company is in compliance with all financial
covenants.

        Management believes the existing cash and cash equivalents including
cash generated from operations combined with its borrowing capacity under the
new Term Loan and Revolving Facility Agreement will be sufficient to meet the
Company's working capital and capital expenditure requirements for the next
twelve months.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        Not applicable

<PAGE>


























PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings
          -----------------
          None

Item 2.   Changes in Securities
          ---------------------
          None

Item 3.   Defaults upon Senior Securities
          -------------------------------
          None

Item 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

          None

Item 5.   Other Information
          -----------------
          None


Item 6.   Exhibits and Reports on
          Form 8-K
          -----------------------

      (a).  List of Exhibits

<TABLE> 
<CAPTION> 

  Exhibit   
  Number       Exhibit Title
- ----------     --------------------------
<S>            <C> 
  3.1          Certificate of Incorporation of the Company.(2)

  3.2          By-Laws of the Company.(2)

  3.3          Certificate of Designation of Series A Convertible Preferred
               Stock.(3)

  4.1          Form of Warrant Agreement dated April 1, 1997 between the 
               Company and Imperial Bank.(3)

  4.2          Form of 8% Convertible Preferred Stock Subscription Agreement for
               the Sale of an Aggregate $3 million worth of Preferred Shares to
               certain private institutional investors dated August 19, 1997.(3)

  4.3          Form of Warrant Agreement dated August 19, 1997 between the 
               Company and certain placement agents.(3)

 10.2          Master Lease Agreement, dated December 2, 1988, between the
               Company and General Electric Capital Corporation, with 
               schedules.(1)

 10.3          Letter Agreement, dated July 22, 1987, with respect to the 
               employment of Thomas Tomasetti.(1,6)

 10.5          Agreement between the Company and Honeywell, Inc., Industrial
               Automation and Control, dated April 1, 1993.(2,5)

 10.6          Form of Director and Officer Indemnity Agreement.(4)

 10.7          Amended and Restated 1983 Stock Option Plan.(6,7)

 10.8          Forms of Stock Option Agreement used in conjunction with the 
               1983 Stock Option Plan.(6,7)

 10.9          1990 Outside Director's Stock Option Plan.(6,7)

 10.10         Forms of Outside Directors Stock Option Agreement used in
               conjunction with the 1990 Outside Director's Stock Option Plan.
               (6,7)

 10.11         Lease agreement for the Company's principal facility, dated
               August 2, 1995, among the Company and The Prudential Insurance
               Company of America.(7)

 10.12         Letter Agreement, dated August 5, 1994, with respect to the 
               employment of Edward Norton.(6,7)

 10.13         Letter Agreement, dated September 28, 1994, with respect to the 
               employment of Richard Van Hoesen.(6,7)

 10.14         Letter Agreement, dated July 12, 1996 , with respect to the 
               resignation of Thomas Tomasetti.(6,8)

 10.15         Letter Agreement dated June 3, 1996, with respect to the 
               employment of Laurence R. Hootnick.(6,8)

 10.16         Asset Purchase Agreement for the acquisition of the Taiwan
               operations of Systematic Designs International, Inc. dated July
               2, 1996.(10)

 10.17         Letter Agreement dated August 6, 1996, with respect to the 
               employment of Wynn Bowman.(6,9)

 10.18         Letter Agreement dated August 6, 1996, with respect to the 
               employment of Michael J. Field.(6,9)

 10.19         Change of Control Agreement with Laurence R. Hootnick.(6,11)

 10.20         Change of Control Agreement with Jonathan J. Golovin.(6,11)

 10.21         Form of Change of Control Agreement for Executive Officers.(6,11)

 10.22         1996 Stock Option Plan and Forms of Stock Option Agreement.(6,11)

 10.23         Security and Loan Agreement dated April 1, 1997 between the 
               Company and Imperial Bank.(3)

 10.24         Settlement Agreement, dated January 30, 1998, among the Company,
               Consilium Taiwan, Inc., Systematic Designs International, Inc.
               and Jen-Shih Jessi Niou.(12)

 10.25         Asset Purchase Agreement, dated February 19, 1998, among the
               Company, Base Ten FlowStream, Inc. and Base Ten Systems, Inc.(13)

 10.26         Letter Agreement dated January 13, 1998, with respect to the 
               employment of Jim Macek.(6,16)

 10.27         Asset Purchase Agreement for the acquisition of FAST Associates,
               Pte. Dated July 31, 1997. (14)

 10.28         Agreement between the Company and HCL America, Inc., dated 
               May 21, 1997. (5,15)

 10.29         Security and Loan Agreement dated July 24, 1998 
               between the Company and Venture Banking Group. 

 27            Financial Data Schedule (available in EDGAR format only).
</TABLE> 

      (1) Incorporated by reference from exhibits of the same number in
          Registrant's Registration Statement on Form S-1 (File No. 33-27947),
          effective May 9, 1989.

      (2) Incorporated by reference from exhibits 3.1, 3.2 and 10.19,
          respectively, in Registrant's Quarterly Report on Form 10-Q for the
          Quarter ended April 30, 1993.

      (3) Incorporated by reference from exhibits of the same number in
          Registrant's Quarterly Report on Form 10-Q for the Quarter ended July
          31, 1997.

      (4) Incorporated by reference from exhibit 10.6 in Registrant's Quarterly
          Report on Form 10-Q for the Quarter ended July 31, 1994.

      (5) The Securities and Exchange Commission has granted confidential
          treatment for portions of this document.

      (6) Compensatory or employment arrangement.

      (7) Incorporated by reference from exhibits of the same number in
          Registrant's Annual Report on Form 10-K for the Year ended October 31,
          1995.

      (8) Incorporated by reference from exhibits of the same number in
          Registrant's Quarterly Report on Form 10-Q for the Quarter ended July
          31, 1996.

      (9) Incorporated by reference from exhibits of the same number in
          Registrant's Annual Report on Form 10-K for the Year ended October 31,
          1996.

     (10) Incorporated by reference from exhibit 2.1 in Registrant's Report on
          Form 8-K filed on July 26, 1996 for the acquisition of the Taiwan
          operations of Systematic Designs International, Inc.

     (11) Incorporated by reference from exhibits of the same number in
          Registrant's Quarterly Report on Form 10-Q for the Quarter ended
          January 31, 1997.

     (12) Incorporated by reference from exhibits of the same number in
          Registration Statement on Form S-1 (File No. 333-44743), filed January
          22, 1998.

     (13) Incorporated by reference from exhibit 2.1 in Registrant's Report on
          Form 8-K filed on March 3, 1998 for the sale of assets of the
          Healthcare Products and Process Industries Group.

     (14) Incorporated by reference from exhibit 2.1 in Registrant's Quarterly
          Report on Form 10-Q for the Quarter ended July 31, 1997.

     (15) Incorporated by reference from exhibit 10.24 in Registrant's Annual
          Report on Form 10-K/A for the Year ended October 31, 1997.

     (16) Incorporated by reference from exhibits of the same number in
          Registrant's Quarterly Report on Form 10-Q for the Quarter ended
          January 31, 1998.

   (b).  Reports on Form 8-K

               None


<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, a duly authorized officer and the chief financial officer of the
registrant.


                                        CONSILIUM, INC.
                                ------------------------------
                                         (Registrant)



Date   September 11, 1998     by:     /s/ Clifton Wong
     ------------------------      ---------------------------
                                     Clifton Wong
                                     Vice President, Finance and
                                     Chief Financial Officer