<PAGE>

                                  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 December 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 December 31, 1998
------------------------------               --------------------------------
 Common Stock, $1.00 par value                      120,759,195 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 Six months ended
                      December 31, 1998 and 1997                         3

               Consolidated Balance Sheets - December 31, 1998
                      and June 30, 1998                                  4

               Consolidated Statements of Cash Flows -
                      Six months ended December 31, 1998 and 1997        5

               Notes to Consolidated Financial Statements -
                      December 31, 1998                                6-7

Item 2.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations                          7-12

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

Item 4. Submission of Matters to a Vote of Security Holders             12

Item 6.  Exhibits and Reports on Form 8-K                               13

SIGNATURE                                                               14


                                       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               Six Months Ended
                                                                                 December 31                     December 31
                                                                     -----------------------------   ------------------------------
                                                                         1998              1997             1998             1997
                                                                     -------------   -------------   --------------   -------------
<S>                                                                  <C>             <C>             <C>              <C>         
Net sales                                                            $      640.6    $      664.9    $     1,234.4    $    1,266.2
Interest, royalties and sundry income                                         9.4             8.0             15.6            18.1
                                                                     -------------   --------------   --------------   -------------
                                                                            650.0           672.9          1,250.0         1,284.3
Deductions from income:
   Cost of products sold                                                    441.0           451.9            844.6           860.7
   Selling, administrative and general expense                              106.6           105.5            207.4           200.4
   Research and development expense                                          15.8            15.6             30.7            30.0
   Interest expense                                                           7.7             6.0             14.1            11.6
   Amortization of goodwill                                                   3.3             3.0              6.6             6.0
                                                                     -------------   -------------   --------------   -------------
                                                                            574.4           582.0          1,103.4         1,108.7
                                                                     -------------   -------------   --------------   -------------

Income before income taxes                                                   75.6            90.9            146.6           175.6
Income taxes                                                                 27.2            32.7             52.8            63.2
                                                                     -------------   -------------   --------------   -------------
Net income                                                                   48.4            58.2             93.8           112.4

Retained earnings at beginning of period                                  1,869.3         1,739.3          1,840.3         1,706.0
Cash dividends:  $.13  and  $.12  per share for the
  three months ended December 31, 1998 and 1997,
  respectively; $.26 and $.24  per share for the six months
  ended December 31, 1998 and 1997, respectively                            (15.8)          (15.7)           (32.1)          (32.0)
Exercise of stock options                                                    ( .5)           (1.4)            ( .6)           (6.0)
                                                                     -------------   -------------   --------------   -------------

Retained earnings at end of period                                   $    1,901.4    $    1,780.4    $     1,901.4    $    1,780.4
                                                                     =============   =============   ==============   =============

Basic earnings per share                                             $        .40    $        .44    $         .76    $        .84
                                                                     =============   =============   ==============   =============
Diluted earnings per share                                           $        .40    $        .44    $         .76    $        .83
                                                                     =============   =============   ==============   =============
Shares used in computation (in thousands)
   Basic earnings per share                                                                                122,929         133,735
                                                                                                     ==============   =============
   Diluted earnings per share                                                                              123,967         135,816
                                                                                                     ==============   =============





</TABLE>




See notes to consolidated financial statements.

                                       3
<PAGE>

                           MORTON INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                                                        December 31               June 30
                                                                          1998                      1998
                                                                   -----------------          ---------------
                                                                      (Unaudited)
<S>                                                                <C>                        <C>
ASSETS
Current assets
   Cash and cash equivalents                                       $          169.5           $        138.0
   Receivables                                                                494.5                    468.6
   Inventories                                                                432.5                    381.0
   Prepaid expenses and other                                                 126.9                    125.4
                                                                     ---------------          ---------------
          Total current assets                                              1,223.4                  1,113.0
                                                                     ---------------          ---------------

Other assets
   Cost in excess of net assets of businesses
     acquired, less amortization                                              372.9                    357.4
   Investments in affiliates                                                   75.5                     73.9
   Miscellaneous                                                              133.8                    121.9
                                                                     ---------------          ---------------
                                                                              582.2                    553.2
                                                                     ---------------          ---------------
 
Property, plant and equipment, at cost                                      1,867.8                  1,773.1
   Less allowances for depreciation                                           966.3                    891.4
                                                                     ---------------          ---------------
                                                                              901.5                    881.7
                                                                     ---------------          ---------------
                                                                   $        2,707.1         $        2,547.9
                                                                     ===============          ===============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
   Notes payable and current portion of long-term debt             $          215.4         $           22.6
   Accounts payable                                                           238.1                    215.6
   Accrued salaries, wages and other compensation                              50.6                     52.1
   Other accrued expenses                                                     157.0                    159.3
   Income taxes                                                                22.7                     22.1
                                                                     ---------------          ---------------
          Total current liabilities                                           683.8                    471.7
                                                                     ---------------          ---------------

Long-term debt, less current portion                                          222.3                    222.5
Deferred income taxes                                                          73.3                     60.9
Accrued postretirement benefits other than pensions                           158.6                    157.9
Other noncurrent liabilities                                                  107.5                    103.8
                                                                     ---------------          ---------------
         Total noncurrent liabilities                                         561.7                    545.1
                                                                     ---------------          ---------------

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 December 31 and
        June 30, 1998                                                         140.1                    140.1
   Retained earnings                                                        1,901.4                  1,840.3
   Accumulated other comprehensive income                                      (5.9)                   (19.2)
   Unamortized restricted stock award                                          ( .6)                    ( .7)
                                                                     ---------------          ---------------
                                                                            2,035.0                  1,960.5
   Less cost of common stock in treasury-  19.4 shares
    at December 31, 1998 and  13.3 shares at June 30, 1998                    573.4                    429.4
                                                                     ---------------          ---------------
          Total shareholders' equity                                        1,461.6                  1,531.1
                                                                     ---------------          ---------------
                                                                   $        2,707.1       $          2,547.9
                                                                     ===============          ===============

</TABLE>


See notes to consolidated financial statements.

                                       4
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                  Cash Provided (Used)
                                                                                     Six Months Ended
                                                                                         December 31
                                                                         --------------------------------------
                                                                                1998                   1997
                                                                         ---------------         --------------
 
<S>                                                                      <C>                     <C>
Operating Activities
Net income                                                               $         93.8          $       112.4
Adjustments to reconcile net income
    to net cash provided by operating activities:
      Depreciation and amortization                                                69.7                   67.1
      Deferred income taxes                                                         3.6                     .1
      Undistributed earnings of affiliates                                         (3.4)                  (3.9)
      Changes in operating assets and liabilities
        net of effects of businesses acquired:
          Receivables                                                               5.0                  (58.2)
          Inventories and prepaid expenses                                        (37.2)                 (43.6)
          Accounts payable and accrued expenses                                    (2.7)                 (34.3)
          Accrued income taxes                                                     (1.8)                 (11.3)
          Other - net                                                             (11.1)                   6.0
                                                                         ---------------         --------------
            Net cash provided by operating activities                             115.9                   34.3
                                                                         ---------------         --------------
 
Investing Activities
  Purchase of property, plant and equipment                                       (55.5)                 (71.3)
  Proceeds from property and other asset disposals                                  1.7                    4.9
  Cash invested in businesses acquired                                            (30.7)                  ( .6)
  Investment in affiliates                                                         ( .8)                  (3.9)
                                                                         ---------------         --------------
            Net cash used for investing activities                                (85.3)                 (70.9)
                                                                         ---------------         --------------
 
Financing Activities
  Purchase of common stock for treasury                                          (145.8)                (239.2)
  Net increase (decrease) of short-term notes payable                             188.2                   (8.7)
  Repayment of long-term debt                                                      ( .1)                  ( .2)
  Stock option transactions                                                         1.0                    6.5
  Dividends paid                                                                  (32.1)                 (32.0)
                                                                         ---------------         --------------
            Net cash provided (used) by financing activities                       11.2                 (273.6)
                                                                         ---------------         --------------

Effect of foreign exchange rate changes on cash
  and cash equivalents                                                            (10.3)                   4.0
                                                                         ---------------         --------------
Increase (decrease) in cash and cash equivalents                                   31.5                 (306.2)
Cash and cash equivalents at beginning of year                                    138.0                  430.3
                                                                         ---------------         --------------
Cash and cash equivalents at end of period                               $        169.5          $       124.1
                                                                         ===============         ==============


</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 six months ended
December 31, 1998 are not  necessarily  indicative of the results to be expected
for the fiscal year ending June 30,  1999.  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, 1998.

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

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:

                                                       Six months ended
                                                          December 31
                                                    -----------------------
                                                        (in thousands)
                                                     1998            1997
                                                     ----            ----
Denominator for basic earnings per share            122,929         133,735
  -weighted average shares outstanding
Dilutive effect of employee stock options             1,038           2,081
                                                    -------         -------
Denominator for diluted earnings per share          123,967         135,816
                                                    =======         =======

Comprehensive Income
--------------------

As of July 1, 1998, the Company adopted the Financial Accounting Standards Board
Statement No. 130, "Reporting  Comprehensive  Income." Statement 130 establishes
new  rules  for the  reporting  and  display  of  comprehensive  income  and its
components;  however,  the  adoption  of this  Statement  had no  impact  on the
Company's net income.  Statement 130 requires  unrealized gains or losses on the
Company's foreign currency translation adjustments, which prior to adoption were
reported   separately  in  shareholders'   equity,   to  be  included  in  other
comprehensive  income.  The June 30, 1998  Consolidated  Balance  Sheet has been
reclassified to conform to the requirements of Statement 130. 


                                       6
<PAGE>

The components of comprehensive  income, net of tax, for the three and six month
periods ended December 31, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>

                                                 Three Months Ended         Six Months Ended
                                                    December 31                December 31
                                                 ------------------         -----------------
                                                 1998       1997             1998       1997
                                                 ----       ----             ----       ----
                                                                 (in millions)
<S>                                              <C>        <C>             <C>        <C>   
    Net income                                   $48.4      $58.2           $ 93.8     $112.4
    Foreign currency translation adjustments       (.2)      (2.3)            13.3       (4.1)
                                                 ------     ------          ------     -------
    Comprehensive income                         $48.2      $55.9           $107.1     $108.3
                                                 =====      =====           ======     ======
</TABLE>




Accumulated other comprehensive income on the accompanying  Consolidated Balance
Sheets is net of deferred  income tax benefits of $4.2 million and $16.7 million
at December 31 and June 30, 1998, respectively.

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

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

                                                        Dec. 31        June 30
                                                          1998          1998
                                                        -------        -------
            Finished products and work-in-process       $342.3         $294.6
            Materials and supplies                        90.2           86.4
                                                        ------         ------
                                                        $432.5         $381.0


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

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

Net income for the second  quarter  of fiscal  1999 was $48.4  million,  down 17
percent  from $58.2  million  for the second  quarter of fiscal  1998.  Sales of
$640.6  million  for the second  quarter of the  current  fiscal year showed a 4
percent  decrease  from the  second  quarter  of fiscal  1998.  While  specialty
chemicals business sales results were somewhat below last year, the major reason
for the sales  decline was the lack of ice control  salt due to mild  weather in
the current  year second  quarter.  Earnings per share were down 9 percent to 40
cents for the quarter on both a basic and diluted basis.

For the six month period ending  December 31, 1998,  sales were $1.2 billion,  3
percent  below the same period in the prior  year.  Net income for the first six
months of fiscal 1999 was $93.8 million  versus $112.4 million for the first six
months of fiscal 1998, a 17 percent  decrease.  Basic earnings per share were 76
cents for the first six months of fiscal 1999  compared to 84 cents for the same
period of fiscal 1998. Fully diluted earnings per share 

                                       7
<PAGE>

decreased  8 percent  from 83 cents in the first six months of fiscal 1998 to 76
cents in the same period of fiscal 1999.

In the  second  quarter of fiscal  1999,  specialty  chemical  sales were down 1
percent to $423.9  million  versus  $426.6  million in the same period of fiscal
1998.  Volume  declined  by 3 percent in the quarter  versus last year's  second
quarter, and price was down 2 percent, but positive foreign exchange comparisons
and the results of three recent acquisitions  partially offset the declines.  Of
Morton's four business groups, only the electronic materials group was down as a
result of both volume and price declines.  Second quarter operating earnings for
specialty  chemicals were $55.6 million,  down 8 percent from the second quarter
of fiscal 1998.  Much of the decline was related to weakness in both  electronic
materials and industrial  coatings.  Operating margins for the quarter were 13.1
percent versus 14.2 percent in last year's second quarter.

Product  lines  which had good  sales  growth  in the  second  quarter  included
packaging  adhesives,   waterbased  polymers,   performance  chemicals,  plastic
additives,  automotive coatings and powder coatings. The combined sales of these
product  lines  contributed  61 percent of the  group's  total  sales and grew 6
percent  over the  second  quarter  of fiscal  1998.  The sales  improvement  in
packaging  adhesives came from the acquisition of  Poliolchimica,  S.p.A. in the
first quarter.  Product lines with positive earnings  comparisons in the quarter
were packaging  adhesives,  waterbased polymers,  plastic additives,  automotive
coatings and powder  coatings.  Earnings for these product lines  constituted 63
percent of the  group's  total  earnings  and  collectively  showed a 17 percent
improvement over the second quarter of fiscal 1998.

Specialty  chemical  sales for the first six months of fiscal  1999 were  $850.2
million  versus  $860.3  million  for the first six months of fiscal  1998,  a 1
percent decline,  with the electronic  materials group the only one which showed
negative sales comparisons. Results for the first six months of fiscal 1999 were
favorably impacted by $22.8 million sales from the three acquisitions subsequent
to the second  quarter of fiscal  1998.  Operating  earnings  for the  specialty
chemicals  group for the first six months of fiscal 1999  declined by 10 percent
to $120.0  million from $133.5  million for the first six months of fiscal 1998.
The  most  significant  earnings  declines  were  in  electronic  materials  and
industrial  coatings.  Chemical  operating margins for the first six months were
14.1 percent versus 15.5 percent for the prior year.

Among the  product  lines that had good sales  improvement  during the first six
months of fiscal 1999 were packaging adhesives, waterbased polymers, performance
chemicals and powder  coatings.  Cumulatively,  they  contributed  45 percent to
chemical  group sales and improved 6 percent from the first six months of fiscal
1998. These product lines 

                                       8
<PAGE>

contributed 55 percent of total operating earnings and had a 10 percent earnings
improvement from fiscal 1998 to fiscal 1999 in the first six months.

Morton's  salt  business  had sales of $216.7  million in the second  quarter of
fiscal 1999, a 9 percent decline compared to sales of $238.3 million in the year
ago second  quarter.  Salt sales in the  United  States and Canada  came in well
below last year for the quarter reflecting ice control salt weakness,  which was
down 39 percent.  Several  product  lines did show growth in the second  quarter
including  water  conditioning  and grocery salt.  European salt sales were up 8
percent in the quarter,  primarily  due to stronger ice control  sales  volumes.
Salt operating  earnings in the second quarter were $37.7 million,  a 21 percent
decline  compared  to last  year's  second  quarter  of $47.9  million.  Overall
operating  margins  for the same  period came in at 17.4  percent  against  last
year's 20.1 percent.  Operating  margins in the European salt business were 12.3
percent, an improvement over first quarter fiscal 1999 margins but below margins
of 13.1 percent in the second quarter last year.

For the six month  period  ending  December  31,  1998,  salt sales were  $384.2
million or 5 percent less than $405.9  million  recorded in the prior year.  The
sales shortfall was due to North America  operations which reflected weakness in
ice control  sales.  However,  improved  sales over the prior fiscal  year's six
months were reflected in other product lines  including water  conditioning  and
grocery salt.  European salt operations gained a 3 percent sales increase in the
first six months of fiscal 1999  versus the same  period of the prior year.  For
the six months ended December 31, 1998, operating earnings for the salt business
were down 19 percent to $60.5  million  from  $74.9  million in the prior  year.
Operating  margins for the first six months in fiscal 1999 in the European  salt
business  were below the same  period last year due in part to the strike in the
first quarter.

Morton's  corporate  costs  for the  second  quarter  of  fiscal  1999 were flat
compared  to the same  period of the prior year.  Corporate  administrative  and
other  expenses  came in below last year's  second  quarter,  but were offset by
increased net interest  expense  resulting from the company's  stock  repurchase
program.  For the first six  months of fiscal  1999,  corporate  costs were up 3
percent.  The factors  noted above were still  present  with the increase in net
interest cost  exceeding the reduction in other costs.

In the fourth  quarter of fiscal year 1998,  the company  announced its plans to
divest two product lines:  highway  traffic  marking and injected  colorants for
plastics.  In January 1999,  letters of intent were signed to sell these product
lines.  Based on the terms of the  letters of intent,  the sales will not have a
material impact on the company's results of operations.

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

Operating  activities  were a  source  of cash in the six  month  periods  ended
December  31,  1998 and  1997,  providing  $115.9  million  and  $34.3  million,
respectively.

                                       9
<PAGE>

Net cash provided by operating  activities  was $115.9  million during the first
six months of fiscal  1999  versus  $34.3  million for the same period of fiscal
1998.  In the first six months of the  current  fiscal  year,  depreciation  and
amortization provided $2.6 million more funds than during the same period of the
prior year.  Changes in operating  assets and  liabilities  resulted in a use of
$47.8  million  in the first six  months of  fiscal  1999  compared  to a $141.4
million  use of funds  last  year.  In the  first six  months  of  fiscal  1999,
receivables  provided  funds of $5.0 million  versus a $58.2 million use for the
same period of the prior year.  This change was caused by a stronger U.S. dollar
and lower receivables in all business groups at December 31, 1998.

Investing  activities in the first six months of fiscal 1999 were  primarily the
result of capital  spending,  which used $55.5 million of cash compared to $71.3
million in the same period in fiscal 1998,  and $30.7  million cash  invested in
businesses  acquired  in fiscal 1999  compared  to $.6  million in fiscal  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.  Cash invested in businesses  acquired in the first six months
of fiscal 1999 was for the first  quarter  acquisition  of two Italian  chemical
companies.

Financing  activities  for the six month period ending  December 31, 1998 were a
$11.2 million  source of funds  compared to a $273.6 million use of funds during
the same  period  in the  prior  year.  Accounting  for much of the  change  was
short-term notes payable,  which resulted in a source of funds of $188.2 million
for the first six months of fiscal  1999  versus a use of funds of $8.7  million
for the same period of fiscal 1998.  This increase was primarily  related to the
short-term  financing  of the stock  repurchases.  The common  stock  repurchase
program  resulted in a use of funds of $145.8 million in the first six months of
fiscal 1999 and $239.2  million  during the same period of last year.  Since the
spinoff in May 1997,  Morton has repurchased  20.4 million shares as of December
31, 1998  bringing  the shares  outstanding  to 120.7  million at that date.  On
October 22, 1998, the Company's Board of Directors approved the repurchase of an
additional  8.0 million  shares of which .4 million  shares were  repurchased at
December 31, 1998.  Dividends  paid were $32.1  million and $32.0 million at the
end of the first six months of fiscal 1999 and 1998, respectively.

The Company's  current ratio was 1.8 at December 31, 1998, versus a 2.4 ratio at
June 30, 1998.  Total debt as a percentage of total  capitalization  at December
31, 1998 was 22.2 percent compared to 13.3 percent at June 30, 1998.

As of December 31, 1998,  the Company had  unexpended  authorizations  for fixed
asset spending of $104.5  million.  These  authorizations  related  primarily to
chemical facility expansion,  product  improvements,  and facility upgrades on a
company-wide basis.

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

                                       10
<PAGE>

requirements, fixed asset spending, dividend payments, business acquisitions and
share repurchases in the foreseeable future.

Year 2000 Compliance
--------------------

In 1997 management  initiated a  comprehensive  study and program to prepare the
Company's computer,  manufacturing and facility systems, and the related systems
applications,  for the Year 2000.  The Company is  utilizing  both  internal and
external  resources to identify,  correct or reprogram  and test the systems for
Year 2000  compliance.  The  Company  expected  these  efforts  to be  completed
primarily  by  December  31,  1998,  and  most  of the  target  systems  are now
compliant.  The few remaining  systems will be completed on a timely basis. Some
operations are already running  successfully on Year 2000 compliant systems that
were purchased and installed more than three years ago.

Maintenance or modification costs will be expensed as incurred,  while the costs
of new software will be capitalized  and amortized  over the  software's  useful
life. The Company  currently does not expect the amounts required to be incurred
to have a material effect on its financial  condition,  results of operations or
liquidity.

The Company also has  communicated  with its major suppliers and large customers
to determine the extent and steps they are taking to be Year 2000 compliant.  To
date no  significant  issues  have  been  identified;  however,  there can be no
guarantee that the systems of other companies on which the Company's  businesses
rely will be converted in a timely  manner and would not have an adverse  effect
on the Company's businesses.

The costs of the  project  and the date on which the  Company  believes  it will
complete  the Year 2000  modifications  are based on  management's  current best
estimates,  which were derived utilizing numerous  assumptions of future events,
including  the  continued   availability  of  certain   resources,   third-party
modification  plans and other factors.  However,  there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those anticipated.  Specific factors that might cause such material  differences
include,  but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, the
availability  of new software and the ability of our  customers and suppliers to
be Year 2000 compliant.

Euro Conversion
---------------

The euro was introduced on January 1, 1999, at which time the  conversion  rates
between existing sovereign  currencies  ("legacy  currencies") and the euro were
set for the participating  European Monetary Union states.  However,  the legacy
currencies  in those  states will  continue to be used as legal  tender  through
January 1, 2002. Thereafter, the

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<PAGE>

legacy  currencies will be canceled and euro bills and coins will be used in the
participating states.

Transition  to the euro  creates a number of issues  for the  Company.  Business
issues that must be addressed  include product pricing policies and ensuring the
continuity of business and financial  contracts.  Finance and accounting  issues
include the conversion of accounting systems,  statutory records,  tax books and
payroll  systems to the euro,  as well as  conversion of bank accounts and other
treasury and cash management activities.

The Company is addressing these transition  issues and currently does not expect
the  transition  to the euro and the  costs to be  incurred  to have a  material
effect on its liquidity, financial condition or results of operations.

Forward Looking-Cautionary Statement
------------------------------------

Except  for  the  historical   information  and  discussions  contained  herein,
statements   contained  in  this  Form  10-Q  may  constitute  "forward  looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995. These statements reflect  management's current expectations and involve
a number of risks and  uncertainties.  Actual  results  could differ  materially
depending  on a variety  of  factors,  including  the  risks  and  uncertainties
discussed in the Company's  Annual Report on Form 10-K filed with the Securities
and Exchange Commission on September 21, 1998.

                           PART II - OTHER INFORMATION

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

The 1998 annual meeting of  shareholders  of the Registrant  occurred on October
22, 1998. The following matters were voted upon at the meeting:  the election as
a director of the  Registrant  of each of W. James  Farrell,  Richard L. Keyser,
Rebecca A. McDonald and Roger W. Stone;  and the ratification of the appointment
of Ernst & Young LLP as independent auditors of the Registrant.

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<PAGE>

The results of the voting were as follows:
 
 
                             Votes         Votes Withheld/
Matter Voted                  For              Against*       Abstained

Election of
W. James Farrell           105,589,245        976,310

Election of
Richard L. Keyser          105,592,485        973,070

Election of
Rebecca A. McDonald        105,561,879      1,003,676
 
Election of
Roger W. Stone             105,538,254      1,027,301


Approval of
Ernst & Young LLP          126,183,379        188,842            193,334
 
 
*Numbers shown for Director  elections are votes withheld.  For the ratification
of Ernst & Young LLP as auditors, numbers shown are votes against.

In  addition to the  directors  elected at the  meeting,  the  directors  of the
Registrant  whose  terms of office  continued  after the meeting  are:  Ralph M.
Barford,  James R.  Cantalupo,  Dennis C. Fill,  William E. Johnston,  Edward J.
Mooney and S. Jay Stewart.


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

(1)    Exhibits (numbered in accordance with Item 601 of Regulation S-K).
 
    (27) (a)     Financial Data Schedules for the second quarter of fiscal 1999.

(2)    Reports on Form 8-K.

The Company did not file any reports on Form 8-K during the fiscal quarter ended
December 31, 1998.

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<PAGE>



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

                                    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:      January 28, 1999             BY:      /S/ L. N. Liszt
     ---------------------------           ----------------------------------
                                                    L. N. Liszt
                                                     Controller
                                             (Principal Accounting Officer)



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