UNITED STATES
                       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 March 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 No. 1-12825

                           MORTON INTERNATIONAL, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


          Indiana                                       36-4140798
---------------------------------------    ------------------------------------
State of Incorporation or Organization)    (I.R.S. Employer Identification No.)


100 North Riverside Plaza, Chicago, Illinois                        60606-1596
--------------------------------------------                        ----------
 (Address of Principal Executive Offices)                           (Zip Code)

Registrant's Telephone Number                                   (312) 807-2000

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 practical date.

              Class                             Outstanding at March 31, 1998
 -----------------------------                  -----------------------------
 Common Stock, $1.00 par value                        127,715,128 shares




<PAGE>


                           MORTON INTERNATIONAL, INC.
                          QUARTERLY REPORT ON FORM 10-Q




                                                                          INDEX
                                                                          PAGE 
                                                                          -----

PART I.  FINANCIAL INFORMATION:
------------------------------
Item 1.  Financial Statements (Unaudited)

               Consolidated Statements of Income and Retained
                      Earnings - Three months and Nine months ended
                      March 31, 1998 and 1997                               3

               Consolidated Balance Sheets - March 31, 1998
                      and June 30, 1997                                     4

               Consolidated Statements of Cash Flows -
               Nine months ended March 31, 1998 and 1997                    5

               Notes to Consolidated Financial Statements -
                      March 31, 1998                                        6

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                               7-10

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

Item 6. Exhibits and Reports on Form 8-K                                   10

SIGNATURE                                                                  10


                                      -2-
<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

                           MORTON INTERNATIONAL, INC.
       CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
                       (IN MILLIONS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                       Three Months Ended               Nine Months Ended
                                                                          March 31                          March 31
                                                                   ------------------------       ----------------------------
                                                                      1998          1997             1998              1997
                                                                   ----------    ----------       ----------        ----------
<S>                                                                <C>           <C>              <C>               <C>       
Net sales                                                         $    660.5    $    638.5       $  1,926.7        $  1,725.7
Interest, royalties and sundry income                                    9.0           6.9             27.1              27.8
                                                                   ----------    ----------       ----------        ----------
                                                                       669.5         645.4          1,953.8           1,753.5
Deductions from income:
   Cost of products sold                                               451.5         430.5          1,312.2           1,165.3
   Selling, administrative and general expense                          98.6          89.6            299.0             266.8
   Research and development expense                                     16.0          15.1             46.0              44.3
   Interest expense                                                      5.8           6.6             17.4              18.6
   Amortization of goodwill                                              3.0           3.0              9.0               8.1
                                                                   ----------    ----------       ----------        ----------
                                                                       574.9         544.8          1,683.6           1,503.1
                                                                   ----------    ----------       ----------        ----------
Income from continuing operations
  before income taxes                                                   94.6         100.6            270.2             250.4
Income taxes                                                            34.1          36.2             97.3              90.3
                                                                   ----------    ----------       ----------        ----------
Income from continuing operations                                       60.5          64.4            172.9             160.1
Income from discontinued operations,
  net of applicable income taxes                                         -            44.9              -               116.0
                                                                   ----------    ----------       ----------        ----------
Net income                                                              60.5         109.3            172.9             276.1

Retained earnings at beginning of period                             1,780.4       1,799.5          1,706.0           1,675.5
Cash dividends:  $.12  and  $.15  per share for the
  three months ended March 31, 1998 and 1997,
  respectively; $.36 and $.45  per share for the nine months
  ended March 31, 1998 and 1997, respectively                          (15.7)        (21.1)           (47.7)            (63.9)
Exercise of stock options                                               (2.3)          -               (8.3)              -
                                                                   ----------    ----------       ----------        ----------

Retained earnings at end of period                                $  1,822.9    $  1,887.7       $  1,822.9        $  1,887.7
                                                                   ==========    ==========       ==========        ==========

Basic Earnings Per Share:
  Income from continuing operations                               $      .47    $      .46       $    1 .31        $    1 .13
  Income from discontinued operations                                      -           .31                -               .81
                                                                   ----------    ----------       ----------        ----------
  Net income                                                      $      .47    $      .77       $    1 .31        $    1 .94
                                                                   =========     ==========       ==========        ==========

       Shares used in computation (in thousands)                                                    132,415           142,030
                                                                                                  ==========        ==========

Diluted Earnings Per Share:
  Income from continuing operations                               $      .46    $      .45       $    1 .29        $    1 .11
  Income from discontinued operations                                      -           .31                -               .80
                                                                   ----------    ----------       ----------        ----------
  Net income                                                      $      .46    $      .76       $    1 .29        $    1 .91
                                                                   ==========    ==========       ==========        ==========

       Shares used in computation (in thousands)                                                    134,444           143,966
                                                                                                  ==========        ==========
</TABLE>

See notes to consolidated financial statements.


                                      - 3 -


<PAGE>
                           MORTON INTERNATIONAL, INC.
                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                                                    March 31            June 30
                                                                      1998               1997
                                                               -----------------    ---------------
                                                                                        (Note)
<S>                                                           <C>                  <C>
ASSETS
Current assets
   Cash and cash equivalents                                  $          156.7     $        430.3
   Receivables                                                           483.1              466.4
   Deferred income tax benefits                                           13.9               13.7
   Inventories                                                           364.7              351.6
   Prepaid expenses                                                      133.8              128.0
                                                               ---------------      -------------
          Total current assets                                         1,152.2            1,390.0
                                                               ---------------      -------------

Other assets
   Cost in excess of net assets of businesses
     acquired, less amortization                                         342.2              338.4
   Investments in affiliates                                              91.9               91.5
   Miscellaneous                                                         101.6              105.9
                                                               ---------------      -------------
                                                                         535.7              535.8
                                                               ---------------      -------------
 
Property, plant and equipment, at cost                                 1,755.0            1,712.5
   Less allowances for depreciation                                      874.4              833.4
                                                               ---------------      -------------
                                                                         880.6              879.1
                                                               ---------------      -------------
                                                              $        2,568.5     $      2,804.9
                                                               ===============      =============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
   Notes payable and current portion of long-term debt        $           70.7     $         32.7
   Accounts payable                                                      216.5              255.9
   Accrued salaries, wages and other compensation                         45.2               58.4
   Other accrued expenses                                                146.4              156.2
   Income taxes                                                           17.7               19.9
                                                               ---------------      -------------
          Total current liabilities                                      496.5              523.1
                                                               ---------------      -------------

Long-term debt, less current portion                                     225.0              224.1
Deferred income taxes                                                     46.0               46.0
Accrued postretirement benefits other than pensions                      157.5              156.0
Other noncurrent liabilities                                             114.6              121.4
                                                               ---------------      -------------
         Total noncurrent liabilities                                    543.1              547.5
                                                               ---------------      -------------

Shareholders' equity
   Preferred Stock (par value $1.00 per share)
     Authorized - 25.0 shares, none issued
   Common Stock (par value $1.00 per share)
     Authorized - 500.0 shares
     Issued-140.1 shares at March 31, 1998 and
        June 30, 1997                                                    140.1              140.1
   Additional paid-in capital                                              -                   .3
   Retained earnings                                                   1,822.9            1,706.0
   Foreign currency translation adjustment and other                     (33.7)             (16.8)
                                                               ---------------      -------------
                                                                       1,929.3            1,829.6
   Less cost of common stock in treasury- 12.4 shares
    at March 31, 1998 and  3.0 shares at June 30, 1997                   400.4               95.3
                                                               ---------------      -------------
          Total Shareholders' Equity                                   1,528.9            1,734.3
                                                               ---------------      -------------
                                                              $        2,568.5     $      2,804.9
                                                               ===============      =============
</TABLE>

Note: The balance sheet at June 30, 1997 has been derived from the audited 
      consolidated financial statements at that date.

See notes to consolidated financial statements.

                                     - 4 -

<PAGE>
                           MORTON INTERNATIONAL, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                                                             Cash Provided (Used)
                                                                               Nine Months Ended
                                                                                   March 31
                                                                      -------------------------------
                                                                           1998              1997
                                                                      -------------       -----------
<S>                                                                  <C>                 <C>
Operating Activities
  Income from continuing operations                                  $     172.9         $     160.1
  Adjustments to reconcile income from continuing operations
    to net cash provided by operating activities:
      Depreciation and amortization                                         97.9                81.1
      Deferred income taxes                                                   .3                  .8
      Undistributed earnings of affiliates                                  (1.7)               (6.8)
      Changes in operating assets and liabilities
        net of effects of businesses acquired:
          Receivables                                                      (28.3)              (42.4)
          Inventories and prepaid expenses                                 (27.0)               11.9
          Accounts payable and accrued expenses                            (54.7)              (16.4)
          Accrued income taxes                                               3.6                14.2
          Other - net                                                        2.8                (1.4)
                                                                      -----------         -----------
            Net cash provided by operating activities                      165.8               201.1
                                                                      -----------         -----------
 
Investing Activities
  Purchase of property, plant and equipment                               (102.5)              (80.8)
  Proceeds from property and other asset disposals                           5.3                 5.5
  Cash invested in businesses acquired                                     (18.1)             (242.7)
  Investment in affiliates                                                  (4.7)                -
                                                                      -----------         -----------
            Net cash used for investing activities                        (120.0)             (318.0)
                                                                      -----------         -----------
 
Financing Activities
  Purchase of common stock for treasury                                   (326.8)             (125.9)
  Net increase of short-term notes payable                                  42.2               297.8
  Repayment of long-term debt                                               ( .3)               ( .1)
  Stock option transactions                                                  8.4                10.1
  Dividends paid                                                           (47.7)              (63.9)
                                                                      -----------         -----------
            Net cash (used for) provided by financing activities          (324.2)              118.0
                                                                      -----------         -----------

Discontinued Operations
Net transfer from discontinued operations                                    -                  49.9
                                                                      -----------         -----------

Effect of foreign exchange rate changes on cash
  and cash equivalents                                                       4.8                 6.1
                                                                      -----------         -----------
(Decrease) increase in cash and cash equivalents                          (273.6)               57.1
Cash and cash equivalents at beginning of year                             430.3                68.9
                                                                      -----------         -----------
Cash and cash equivalents at end of period                           $     156.7         $     126.0
                                                                      ===========         ===========

</TABLE>

See notes to consolidated financial statements.


                                      - 5 -

<PAGE>
                           MORTON INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Basis of Presentation
---------------------

The interim  financial  statements  have been  prepared in  accordance  with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X and therefore, do not
include all information and footnotes required by generally accepted  accounting
principles for complete financial statements. In the opinion of management,  all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair  presentation  have been  included.  Operating  results for the nine months
ended  March  31,  1998 are not  necessarily  indicative  of the  results  to be
expected  for the fiscal year ending June 30,  1998.  It is  suggested  that the
financial  statements be read in  conjunction  with the  consolidated  financial
statements  and  notes  thereto  included  in the  Company's  Annual  Report  to
Shareholders  and Annual  Report on Form 10-K for the fiscal year ended June 30,
1997.

Earnings Per Share
------------------

In 1997, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
Financial  Accounting  Standards (SFAS) No. 128, "Earnings per Share." Statement
128 replaced the  calculation  of primary and fully  diluted  earnings per share
with basic and diluted  earnings per share.  Unlike primary  earnings per share,
basic earnings per share excludes any dilutive effects of options,  warrants and
convertible  securities.  Diluted  earnings  per  share is very  similar  to the
previously  reported  fully diluted  earnings per share.  All earnings per share
amounts for all periods have been presented,  and where appropriate restated, to
conform to the Statement 128 requirements.

The  numerators  for the  earnings  per share  disclosures  on the  accompanying
unaudited  Consolidated  Statements of Income and Retained Earnings are the same
as the income numbers shown on that  Statement.  Following is the computation of
the denominator for the basic and diluted earnings per share calculations:

                                                         Nine months ended
                                                              March 31
                                                        -----------------------
                                                             (in thousands)
                                                          1998            1997
                                                          ----            ----
       Denominator for basic earnings per share         132,415         142,030
         -weighted average shares outstanding
       Dilutive effect of employee stock options          2,029           1,936
                                                        -------         -------
       Denominator for diluted earnings per share       134,444         143,966
                                                        =======         =======

Inventories
-----------

Inventories  are  stated at the lower of cost  (principally  last-in,  first-out
method) or market. Components of inventories are as follows:

                                                     March 31            June 30
                                                       1998                1997
                                                     --------            -------
                                                            (in millions)
       Finished products and work-in-process           $279.9             $271.8
       Materials and supplies                            84.8               79.8
                                                       ------             ------
                                                       $364.7             $351.6
                                                       ======             ======

                                       -6-
<PAGE>


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

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

Income from continuing operations for the third quarter of fiscal 1998 was $60.5
million,  down 6 percent from income from continuing operations of $64.4 million
for the third quarter of fiscal 1997. An exceptionally mild winter, the slowdown
in the Asian  economy,  foreign  exchange and  competitive  factors  combined to
dampen sales and earnings in the quarter ended March 31, 1998. Overall sales for
the salt and  specialty  chemicals  businesses  rose  only 3  percent  to $660.5
million in the quarter  compared to last year's  third  quarter  sales of $638.5
million. Basic and diluted earnings per share from continuing operations for the
quarter  of 47 cents and 46 cents,  respectively,  were up one cent over  fiscal
1997.

For the nine month period ended March 31, 1998,  sales were $1.9 billion,  up 12
percent over sales from  continuing  operations for the same period of the prior
fiscal  year.  Income from  continuing  operations  for the first nine months of
fiscal 1998 was $172.9  million  versus $160.1 million for the first nine months
of fiscal 1997, an 8 percent increase.  Basic earnings per share from continuing
operations was $1.31 for the first nine months of fiscal 1998, compared to $1.13
for the same period of fiscal 1997.  Diluted  earnings per share from continuing
operations  increased  16 percent  from $1.11 in the first nine months of fiscal
1997 to $1.29 in the same period of fiscal 1998.

Last year, Morton International's  results included its airbag operation,  which
has been  reflected  as a  discontinued  operation.  Including  the  results  of
discontinued operations, earnings per share for the third quarter of fiscal 1997
were 77 cents and 76 cents on a basic and diluted basis,  respectively.  For the
first nine months of fiscal  1997,  earnings  per share  including  discontinued
operations were $1.94 on a basic earnings per share basis and $1.91 on a diluted
basis.

In the third quarter of fiscal 1998, specialty chemicals sales were up 2 percent
to $429.4 million versus $422.6 million in the same period of fiscal 1997. Sales
to Asia in the third  quarter  have  declined  dramatically,  especially  in the
plastics  additives  and  thermoplastic   polyurethanes   product  lines,  while
packaging  adhesives  also felt a slowdown in South  America.  In addition,  the
translation of foreign exchange  negatively  impacted sales by $12.9 million and
earnings by $1.5  million in the third  quarter.  The Company  also  experienced
competitive  pricing  pressures in several product lines,  including  electronic
materials,  dyes, and liquid polysulfides.  Third quarter operating earnings for
specialty  chemicals  were $62.1 million,  an 8 percent  decrease from the third
quarter of fiscal  1997.  Operating  margins fell in the quarter to 14.5 percent
compared to 16.0 percent in the prior year's strong third quarter.

Among those  chemical  product lines which showed good sales growth in the third
quarter were industrial  activities,  waterbased  polymers,  advanced materials,
performance  chemicals,   industrial  coatings,  powder  coatings,  and  traffic
markings.  The combined  sales of these product lines  contributed 46 percent of
the  group's  total  sales and grew 8 percent  over the third  quarter of fiscal
1997.  Those product lines  contributing  good earnings  growth were  industrial
activities,  advanced  materials,  performance  chemicals,  and powder coatings.
Earnings for these  product  lines  constituted  40 percent of the group's total
earnings and collectively  showed a 7 percent improvement over the third quarter
of fiscal 1997.

For the first nine months of fiscal 1998,  specialty chemicals sales increased 6
percent to $1.3 billion  versus $1.2 billion for the first nine months of fiscal
1997.  The results of the first nine months were  impacted  favorably  by volume
growth in  several  product  lines and the  acquisition  of the

                                      -7-
<PAGE>

Italian powder coatings  business  ("Pulverlac")  which increased sales by $35.3
million.  Three months of Pulverlac sales are included in fiscal 1997.  However,
foreign exchange  translations had an unfavorable impact of $52.1 million on the
first nine months  results.  Operating  earnings for the chemical  group for the
first nine  months of fiscal  1998 were $195.6  million,  up 3 percent  from the
results of the same period in fiscal 1997.  Higher volumes,  Pulverlac  earnings
and  successful  cost  control  programs  were  leading  factors in the improved
earnings for the first nine months;  however,  the earnings gain was unfavorably
impacted by $6.4 million as a result of foreign  exchange  translations  and the
previously mentioned slowdown in Asia and competitive pricing pressures.

The product lines which showed sales  improvement  during the third quarter also
performed  above  prior  year  results  for the nine  months  ending  March  31.
Cumulatively,  they  contributed 45 percent of chemical group sales and improved
13 percent  from the first nine  months of fiscal  1997.  In  addition,  certain
product lines which suffered from exchange impact and competitive factors in the
third  quarter  showed a nine  month  year-to-date  improvement  over last year,
including plastics additives,  dyes and organics, and electronic materials.  The
product lines showing improvement in operating earnings over fiscal 1997 for the
third quarter also performed  above prior year for the first nine months.  These
product lines, including Pulverlac's results, were 38 percent of total operating
earnings and showed a 19 percent  improvement from fiscal 1997 to fiscal 1998 in
the first nine months.  Also recording a nine month year-to-date  improvement in
operating earnings were thermoplastic polyurethanes and automotive coatings.

Salt  sales for the third  quarter  of fiscal  1998 were  $231.1  million,  up 7
percent  from fiscal 1997 third  quarter  sales of $215.9  million.  Included in
third  quarter  fiscal 1998 was $50.0  million in sales  generated  by Salins du
Midi,  the European  salt  business  acquired in the latter part of fiscal 1997.
Excluding the results of the  acquisition,  salt sales  decreased 16 percent for
the third  quarter.  The salt  business was  negatively  impacted by the El Nino
effect.  Ice  control  sales were down 33 percent in the  quarter as the mildest
winter on record in North  America  meant less snow for the ice control  product
lines. Europe also experienced a relatively mild,  snow-free winter. The lack of
ice control  sales in this  quarter  meant that what is normally  the best sales
quarter for the salt business  came in below fiscal year 1998's second  quarter.
Non-ice  control  salt  products  showed an increase for the quarter led by food
processing and chemical product lines, up 11 percent, and grocery product lines,
up 10 percent.  Salt operating  earnings were $50.0 million in the third quarter
of fiscal 1998, down 8 percent from $54.4 million in the third quarter of fiscal
1997. Excluding Salins results of $5.3 million,  operating earnings decreased 18
percent in the third  quarter.  Operating  margins for salt were 21.6 percent in
the third  quarter of fiscal  1998  versus  25.2  percent for the same period in
fiscal  1997,  reflecting  the lower  operating  margins of Salins du Midi.  The
Company  settled its  insurance  claim related to the Mines Seleine salt mine in
Quebec  during  the third  quarter.  The net  impact of the  settlement  was not
significant.

For the nine month period ending March 31, 1998, salt sales were $637.0 million,
a 27 percent  improvement  over sales of $503.3 million in the first nine months
of fiscal 1997. Excluding the results of Salins du Midi of $158.7 million, sales
decreased 5 percent. Salt operating earnings for the first nine months of fiscal
1998 were $124.9  million,  up 6 percent from $117.5 million for the same period
last year. Excluding the results of Salins du Midi, operating earnings were down
9 percent primarily due to the impact of the mild winter in North America on ice
control salt sales in the third quarter.

The Company's earnings per share benefited from tight control of corporate costs
as well as fewer shares  outstanding.  Company  corporate  costs were 17 percent
lower in the third  quarter of fiscal 1998 versus the same period of last fiscal
year. For the first nine months of fiscal 1998,  corporate costs were 12 percent
lower  than the same  period of the prior  year.  These  reductions  were due to

                                      -8-
<PAGE>

continued lower corporate administrative  expenses,  higher interest income, and
lower interest expense.

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

Operating activities were a source of cash in the nine month periods ended March
31, 1998 and 1997, providing $165.8 million and $201.1 million, respectively.

Income from  continuing  operations  provided cash of $172.9  million during the
first nine months of fiscal 1998  versus  $160.1  million for the same period of
fiscal 1997. In the first nine months of the current  fiscal year,  depreciation
and  amortization  was $16.8 million  greater than during the same period of the
prior year.  Changes in operating  assets and  liabilities  resulted in a use of
$103.6  million  in the first nine  months of fiscal  1998  compared  to a $34.1
million use of funds last year. The increased use was primarily due to increased
inventories and lower payables and accrued  expenses at March 31, 1998 partially
offset by reduced receivables.

Investing  activities in the first nine months of fiscal 1998 generated a $120.0
million use of funds compared to $318.0 million use of funds for the same period
last year.  The primary use of funds in the current  fiscal year continues to be
the result of capital  spending,  which used  $102.5  million in the nine months
ending March 31, 1998. Expansion related to certain chemical products as well as
basic upkeep of the salt and chemical  manufacturing  facilities  continue to be
the major areas of capital  spending.  The fiscal 1998 capital  spending amounts
include $8.5 million  related to the  businesses  acquired in fiscal 1997.  Cash
invested in  businesses  acquired was $18.1  million in the first nine months of
fiscal 1998 versus $242.7  million in the first nine months of fiscal 1997 which
was primarily  related to the late third quarter  fiscal 1997  acquisition  of a
French salt company and an Italian powder coatings company in December 1996.

Financing  activities  for the nine month  period  ending  March 31, 1998 were a
$324.2  million use of funds compared to a $118.0 million source of funds during
the same  period in the prior  year.  The major use of funds  during  the period
ending March 31, 1998 was the common stock repurchase program.  The total amount
spent to repurchase company stock was $326.8 million in the first nine months of
fiscal 1998 compared to $125.9 million for the same period last year. During the
third  quarter  Morton  continued its share buyback  program,  repurchasing  2.8
million shares of the current 10 million share  repurchase  authorization by its
board (.4 million shares of this  authorization  were  repurchased in the second
quarter).  Since the spinoff  last year,  Morton has  repurchased  13.2  million
shares at an average price of $32.26  bringing the shares  outstanding  to 127.7
million at March 31, 1998.  Dividends paid in the nine month period ending March
31, 1998 were $47.7  million  versus  $63.9  million  for the nine month  period
ending March 31, 1997.  This  decrease was  attributed to a nine cents per share
reduction in dividends paid after discontinuing the airbag business in a spinoff
transaction  coupled with fewer shares  outstanding due to the share  repurchase
program.  Short-term notes payable for the nine months ending March 31, 1998 was
a source  of funds of $42.2  million  compared  to a source  of funds of  $297.8
million in the same  period of the last  fiscal  year.  This  change  reflects a
reduction in the level of  incremental  borrowing  due to the cash on hand which
was received in fiscal 1997 from discontinued operations.

The Company's  current ratio was 2.3 at March 31, 1998,  compared to a 2.7 ratio
at June 30, 1997.  Total debt as a percentage of total  capitalization  at March
31, 1998, was 15.8 percent compared to 12.6 percent at June 30, 1997.

As of March 31, 1998, the Company has unexpended  authorizations for fixed asset
spending of $74.8 million.  These  authorizations  related primarily to chemical
facility   expansion,   product   

                                      -9-
<PAGE>

improvements, and facility upgrades on a company-wide basis.

On May 1, 1998,  the  Company  filed a $1 billion  shelf  registration  with the
Securities  and  Exchange  Commission.  Net  proceeds  from the sale of the debt
securities  will be used  for  general  corporate  purposes  which  may  include
financing  and  re-financing  of  acquisitions,   purchases  of  Company  stock,
repurchases of outstanding long-term debt, capital expenditures,  investments in
subsidiaries,   working  capital  and  repayment  of  borrowings   under  credit
facilities.

Estimated cash flow from operations and current financial  resources,  including
financing  capacity,   are  expected  to  be  adequate  to  fund  the  Company's
anticipated  working  capital  requirements,   fixed  asset  spending,  dividend
payments and share repurchases in the foreseeable future.


                                     PART II

                                OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K

The Company did not file any 8-K Reports  during the fiscal  quarter ended March
31, 1998.


                      *************************************

                                    SIGNATURE


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.


                                                 MORTON INTERNATIONAL, INC.
                                                 --------------------------
                                                         (Registrant)


Date:     May 11, 1998                        BY:   /s/ L. N. Liszt
     ---------------------                       --------------------------
                                                           L. N. Liszt
                                                           Controller
                                                 (Principal Accounting Officer)



                                      -10-