<PAGE>


                                 UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSIONPRIVATE ~
                             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, 1999
                                       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, 1999
-----------------------------                    -----------------------------
Common Stock, $1.00 par value                        121,128,867  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, 1999 and 1998                                 3

            Consolidated Balance Sheets - March 31, 1999
                     and June 30, 1998                                       4

            Consolidated Statements of Cash Flows -
                     Nine months ended March 31, 1999 and 1998               5

            Notes to Consolidated Financial Statements -
                     March 31, 1999                                        6-7

Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                           7-13

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

Item 6.  Exhibits and Reports on Form 8-K                                   14

SIGNATURE                                                                   15



                                       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
                                                                     --------------------------   ------------------------
                                                                        1999           1998          1999          1998
                                                                     -----------   ------------   -----------   ----------
<S>                                                                <C>           <C>            <C>           <C>        
Net sales                                                          $      746.9  $       660.5  $    1,981.3  $   1,926.7
Interest, royalties and sundry income                                       8.5            9.0          24.1         27.1
                                                                     -----------   ------------   -----------   ----------
                                                                          755.4          669.5       2,005.4      1,953.8
Deductions from income:
   Cost of products sold                                                  507.9          451.5       1,352.5      1,312.2
   Selling, administrative and general expense                            112.8           98.6         320.2        299.0
   Research and development expense                                        15.8           16.0          46.5         46.0
   Interest expense                                                         7.5            5.8          21.6         17.4
   Amortization of goodwill                                                 3.6            3.0          10.2          9.0
                                                                     -----------   ------------   -----------   ----------
                                                                          647.6          574.9       1,751.0      1,683.6
                                                                     -----------   ------------   -----------   ----------

Income before income taxes                                                107.8           94.6         254.4        270.2
Income taxes                                                               38.8           34.1          91.6         97.3
                                                                     -----------   ------------   -----------   ----------
Net income                                                                 69.0           60.5         162.8        172.9

Retained earnings at beginning of period                                1,901.4        1,780.4       1,840.3      1,706.0
Cash dividends:  $.13  and  $.12  per share for the
  three months ended March 31, 1999 and 1998,
  respectively; $.39 and $.36  per share for the nine months
  ended March 31, 1999 and 1998, respectively                             (15.7)         (15.7)        (47.8)       (47.7)
Exercise of stock options                                                  (3.2)          (2.3)         (3.8)        (8.3)
                                                                     -----------   ------------   -----------   ----------

Retained earnings at end of period                                 $    1,951.5  $     1,822.9  $    1,951.5  $   1,822.9
                                                                     ===========   ============   ===========   ==========

Basic earnings per share                                           $        .57  $         .47  $      1 .33  $     1 .31
                                                                     ===========   ============   ===========   ==========
Diluted earnings per share                                         $        .56  $         .46  $      1 .32  $     1 .29
                                                                     ===========   ============   ===========   ==========
Shares used in computation (in thousands)
   Basic earnings per share                                                                          122,265      132,415
                                                                                                  ===========   ==========
   Diluted earnings per share                                                                        123,594      134,444
                                                                                                  ===========   ==========



</TABLE>






See notes to consolidated financial statements.

                                       3


<PAGE>


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

<TABLE>
<CAPTION>
                                                                    March 31                June 30
                                                                      1999                    1998
                                                                 ---------------        ---------------
                                                                  (Unaudited)
<S>                                                              <C>                    <C>
ASSETS
Current
assets
   Cash and cash equivalents                                   $          179.9     $            138.0
                                                                          518.4                  468.6
Receivables
                                                                          338.6                  381.0
Inventories
   Prepaid expenses and other                                             127.6                  125.4
                                                                 ---------------        ---------------
          Total current assets                                          1,164.5                1,113.0
                                                                 ---------------        ---------------

Other assets
   Cost in excess of net assets of businesses
     acquired, less amortization                                          367.0                  357.4
   Investments in affiliates                                               75.3                   73.9
                                                                          122.1                  121.9
Miscellaneous
                                                                 ---------------        ---------------
                                                                          564.4                  553.2
                                                                 ---------------        ---------------

Property, plant and equipment, at cost                                  1,831.7                1,773.1
   Less allowances for depreciation                                       953.4                  891.4
                                                                 ---------------        ---------------
                                                                          878.3                  881.7
                                                                 ---------------        ---------------
                                                               $        2,607.2       $        2,547.9
                                                                 ===============        ===============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current
liabilities
   Notes payable and current portion of long-term debt         $          114.7       $           22.6
   Accounts payable                                                       210.7                  215.6
   Accrued salaries, wages and other compensation                          66.4                   52.1
   Other accrued expenses                                                 142.3                  159.3
   Income                                                                  30.3                   22.1
taxes
                                                                 ---------------        ---------------
          Total current liabilities                                       564.4                  471.7
                                                                 ---------------        ---------------

Long-term debt, less current portion                                      221.2                  222.5
Deferred income taxes                                                      54.5                   60.9
Accrued postretirement benefits other than pensions                       159.5                  157.9
Other noncurrent liabilities                                              104.7                  103.8
                                                                 ---------------        ---------------
         Total noncurrent liabilities                                     539.9                  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 March 31, 1999 and
        June 30, 1998                                                     140.1                  140.1
   Retained earnings                                                    1,951.5                1,840.3
   Accumulated other comprehensive income                                (27.1)                 (19.2)
   Unamortized restricted stock award                                     ( .3)                  ( .7)
                                                                 ---------------        ---------------
                                                                        2,064.2                1,960.5
   Less cost of common stock in treasury-  19.0 shares
    at March 31, 1999 and  13.3 shares at June 30, 1998                   561.3                  429.4
                                                                 ---------------        ---------------
          Total shareholders' equity                                    1,502.9                1,531.1
                                                                 ---------------        ---------------
                                                               $        2,607.2     $          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)
                                                                              Nine Months Ended
                                                                                  March 31
                                                                   --------------------------------------
                                                                        1999                    1998
                                                                   ---------------         --------------
<S>                                                                <C>                     <C>
Operating Activities
Net income                                                     $            162.8      $    
                                                                                                   172.9
Adjustments  to  reconcile   net  income  to  net  cash  provided  by  operating
    activities:
      Depreciation and amortization                                         105.3           
                                                                                                    97.9
      Deferred income taxes                                                   6.0                     .3
      Undistributed earnings of affiliates                                  (3.5)           
                                                                                                   (1.7)
      Changes in operating  assets and  liabilities net of effects of businesses
        acquired:
          Receivables                                                                       
                                                                           (39.6)                 (28.3)
          Inventories and prepaid expenses                                   39.3           
                                                                                                  (27.0)
          Accounts payable and accrued expenses                            (12.7)           
                                                                                                  (54.7)
          Accrued income taxes                                               10.8           
                                                                                                     3.6
          Other - net                                                       (5.2)           
                                                                                                     2.8
                                                                   ---------------         --------------
            Net cash provided by operating activities                                       
                                                                            263.2                  165.8
                                                                   ---------------         --------------

Investing Activities
  Purchase of property, plant and equipment                                (85.0)           
                                                                                                 (102.5)
  Proceeds from property and other asset disposals                            3.8           
                                                                                                     5.3
  Cash invested in businesses acquired                                     (34.1)                (18 .1)
  Investment in affiliates                                                  ( .8)           
                                                                                                   (4.7)
                                                                   ---------------         --------------
            Net cash used for investing activities                                          
                                                                          (116.1)                (120.0)
                                                                   ---------------         --------------

Financing Activities
  Purchase of common stock for treasury                                   (145.8)           
                                                                                                 (326.8)
  Net increase of short-term notes payable                                   91.1           
                                                                                                    42.2
  Repayment of long-term debt                                              (2 .8)                  ( .3)
  Stock option transactions                                                   8.7           
                                                                                                     8.4
  Dividends paid                                                           (47.8)           
                                                                                                  (47.7)
                                                                   ---------------         --------------
            Net cash used by financing activities                                           
                                                                           (96.6)                (324.2)
                                                                   ---------------         --------------

Effect of foreign exchange rate changes on cash
  and cash equivalents                                                      (8.6)           
                                                                                                     4.8
                                                                   ---------------         --------------
Increase (decrease) in cash and cash equivalents                             41.9           
                                                                                                 (273.6)
Cash and cash equivalents at beginning of year                              138.0           
                                                                                                   430.3
                                                                   ---------------         --------------
Cash and cash equivalents at end of period                     $                       $    
                                                                            179.9                  156.7
                                                                   ===============         ==============


</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,  1999 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:

                                Nine months ended
                                    March 31
                                                 -------------------------
                                 (in thousands)
                                    1999 1998
                                                 -------           -------
Denominator for basic earnings per share         122,265           132,415
  -weighted average shares outstanding
Dilutive effect of employee stock options          1,329             2,029
                                                 -------           -------
Denominator for diluted earnings per share       123,594           134,444

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 nine month
periods ended March 31, 1999 and 1998 are as follows:

                      Three Months Ended Nine Months Ended
                                March 31 March 31
                                           ------------------  -----------------
                                             1999      1998     1999     1998
                                             ----      ----     ----     ----
                                  (in millions)
 Net income                                  $69.0    $60.5    $162.8   $172.9
 Foreign currency translation adjustments    (21.2)    (4.9)     (7.9)    (9.0)
                                             -----    -----     -----    -----
 Comprehensive income                        $47.8    $55.6    $154.9   $163.9
                                             =====    =====    ======   ======

Accumulated other comprehensive income on the accompanying  Consolidated Balance
Sheets is net of deferred income tax benefits of $21.6 million and $16.7 million
at March 31, 1999 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:

                                                     March 31        June 30
                                                       1999            1998
                                                     --------        --------
         Finished products and work-in-process        $253.6          $294.6
         Materials and supplies                         85.0            86.4
                                                     --------        --------
                                                      $338.6          $381.0


Intangible Assets
-----------------

The Company  reviews the  recoverability  of the carrying  amount of goodwill by
assessing  significant changes in the extent or manner in which an asset is used
and considers a significant physical change in the asset and significant adverse
changes in legal factors or the business  climate that could affect the value of
the asset.  The company also considers  current  period  operating and cash flow
losses  or  a  projection  or  forecast  that  demonstrates   continuing  losses
associated  with an asset used for producing  revenue.  Goodwill and  associated
long-lived  assets are considered  impaired to the extent the carrying amount of
the asset exceeds its fair market value.

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

Merger
------

On February 1, 1999,  the Company and Rohm and Haas Company  announced  that the
companies had entered into a definitive merger agreement.  Under that agreement,
Rohm

                                       7

<PAGE>



and Haas would  acquire  the Company in a cash and stock  transaction  valued at
$4.9 billion including debt assumption through a two-step transaction, the first
step of which was a tender offer for up to 80,916,766  shares of Company  common
stock at  $37.125  per  share.  When  the  tender  offer  was  unsuccessful,  in
accordance  with the terms of the merger  agreement,  Rohm and Haas withdrew its
tender offer,  and proceeded to seek to complete its  acquisition of the Company
through a  single-step  merger  under  which the  Company's  shareholders  would
receive a mixture  of cash and Rohm and Haas  common  stock for their  shares of
Company common stock.

Subject to the approval by the  Company's  and Rohm and Haas'  shareholders  and
other customary conditions, the Company will merge with a subsidiary of Rohm and
Haas Company and will be the surviving  corporation in the merger.  The required
regulatory  clearances have been received,  and the Company currently expects to
complete the merger by the end of June 1999.

The  Company  has set a record  date of May 4,  1999 for a  special  meeting  of
shareholders  to approve  the merger  agreement.  Shareholders  of record at the
close of business on that date will be entitled to attend the meeting to be held
on a date to be  announced  in the notice for the meeting and vote on the merger
proposal.

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

Net income for the third quarter of fiscal 1999 was $69.0 million, up 14 percent
from $60.5 million for the third quarter of fiscal 1998. Sales of $746.9 million
for the third  quarter of the current  fiscal year showed a 13 percent  increase
from the third quarter of fiscal 1998. The salt business turned in the strongest
results,  benefiting  from excellent ice control sales both in North America and
Europe.  Comparisons  for the salt  business  were aided by last  year's El Nino
weather pattern, which reduced ice control salt demand;  however,  severe winter
storms in several of  Morton's  key markets in this year's  third  quarter  also
meant a substantial  amount of ice control salt was sold.  Many of the specialty
chemicals  product  lines also had strong  performances,  which helped  overcome
disappointing  results from the electronic materials product lines. Earnings per
share were up 21 percent and 22 percent to 57 cents and 56 cents for the quarter
on a basic and diluted basis, respectively.

For the nine month period ending March 31, 1999, sales were  approximately  $2.0
billion,  3 percent above the same period in the prior year.  Net income for the
first nine months of fiscal 1999 was $162.8  million  versus $172.9  million for
the first nine months of fiscal 1998, a 6 percent  decrease.  Basic earnings per
share were $1.33 for the first nine months of fiscal 1999  compared to $1.31 for
the same period of fiscal 1998.  Fully  diluted  earnings per share  increased 2
percent  from $1.29 in the first nine months of fiscal 1998 to $1.32 in the same
period of fiscal 1999.

In the third quarter of fiscal 1999,  specialty chemical sales were up 2 percent
to $437.8  million  versus  $429.4  million in the same  period of fiscal  1998.
Volume and price both  declined by 1 percent in the  quarter  versus last year's
third quarter, but positive foreign
                                       8

<PAGE>



exchange  comparisons  and the results of three  recent  acquisitions  more than
offset the declines. The electronic materials group was down as a result of both
volume and price  declines.  Third  quarter  operating  earnings  for  specialty
chemicals  were $62.7  million,  up 1 percent  from the third  quarter of fiscal
1998.   The  increase  was  related  to  adhesives  and  polymers  and  chemical
specialties.  Operating  margins for the quarter were 14.3  percent  versus 14.5
percent in last year's third quarter.

Product  lines  which  had good  sales  growth  in the  third  quarter  included
packaging  adhesives,  industrial  adhesives,   performance  chemicals,  plastic
additives,  dyes and industrial,  automotive and powder  coatings.  The combined
sales of these product lines  contributed  76 percent of the group's total sales
and grew 11 percent over the third quarter of fiscal 1998. The sales improvement
in packaging  adhesives and chemical  specialties  benefited  from  acquisitions
earlier in the fiscal year.  Morton's  breakthrough  Lamineer(  powder  coatings
product had increased sales in the quarter. Product lines with positive earnings
comparisons  in the quarter  were  packaging  adhesives,  industrial  adhesives,
waterbased polymers, thermoplastic polyurethanes, performance chemicals, plastic
additives,  polysulfide  sealants,  dyes and automotive  coatings.  Earnings for
these product  lines  constituted  83 percent of the group's total  earnings and
collectively  showed a 25 percent  improvement  over the third quarter of fiscal
1998. Electronic materials sales during the quarter were almost 20 percent below
last year's  third  quarter;  the business  group also showed a small  operating
loss.  Excluding  electronic  materials  results,  chemical earnings and margins
improved by 15 percent and 140 basis points, respectively.

Specialty  chemical  sales for the first  nine  months of fiscal  1999 were $1.3
billion,  flat with the same period last year. Electronic materials was the only
group which showed negative sales comparisons. Results for the first nine months
of fiscal 1999 were favorably impacted by $41.1 million increased sales from the
three  acquisitions  subsequent to the second quarter of fiscal 1998.  Operating
earnings for the  specialty  chemicals  group for the nine months of fiscal 1999
declined by 7 percent to $182.7  million from $195.6  million for the first nine
months of fiscal 1998. The most significant earnings declines were in electronic
materials and industrial coatings. Chemical operating margins for the first nine
months were 14.2 percent versus 15.2 percent for the prior year.

Among the product  lines that had good sales  improvement  during the first nine
months  of  fiscal  1999  were  packaging   adhesives,   industrial   adhesives,
performance  chemicals,  plastic  additives,  dyes  and  automotive  and  powder
coatings.  Cumulatively, they contributed 64 percent to chemical group sales and
improved 7 percent  from the first nine  months of fiscal  1998.  These  product
lines  contributed  86 percent of total  operating  earnings and had a 5 percent
earnings improvement from fiscal 1998 to fiscal 1999 in the first nine months.

Morton's  salt  business  had sales of $309.1  million  in the third  quarter of
fiscal 1999, a 34 percent  increase  compared to sales of $231.1  million in the
year ago third  quarter.  North  American  sales were up 33 percent and European
salt sales were up 35  percent.  Ice  control  salt and most other salt  product
lines contributed to the increase in North America,

                                       9

<PAGE>



while ice control  salt volume was the primary  contributor  to the  increase in
Europe.  Salt operating  earnings in the third quarter were $64.8 million,  a 30
percent increase compared to last year's third quarter of $50.0 million. Overall
operating  margins  for the same  period came in at 21.0  percent  against  last
year's 21.6 percent. North American salt operating margins were almost 300 basis
points  below last year due to lower ice control  pricing  while  European  salt
operating margins were up dramatically to almost 18 percent.

For the nine month period ending March 31, 1999,  salt sales were $693.3 million
or 9 percent  greater than $637.0 million  recorded in the prior year. The sales
increase  reflected  an 8 percent  increase  in North  America  and a 13 percent
increase in Europe. The increase was caused by the same products noted above for
the third  quarter.  Operating  earnings for the same period of fiscal 1999 were
$125.3 million,  flat with operating earnings in the nine months ended March 31,
1998.  Reasons  include  the lack of early fill up orders due to last  year's El
Nino impact on ice control  inventories  and pricing plus mild winter weather in
the second quarter.

Morton's corporate costs for the third quarter of fiscal 1999 were up 12 percent
compared to the same period of the prior year.  The majority of the increase was
caused by increased net interest  expense  resulting  from the  company's  stock
repurchase  program.  For the first nine months of fiscal 1999,  corporate costs
were up 7 percent.  An increase in net interest  cost  exceeded the reduction in
corporate administrative expenses and other costs.

In the fourth  quarter of fiscal year 1998,  the company  announced its plans to
divest two  businesses:  highway  traffic  marking and  injected  colorants  for
plastics.  The  injected  colorants  business  was  sold in  March  1999,  and a
definitive  agreement  was  entered  into  for the sale of the  highway  traffic
marking  business.  In April 1999,  the company sold its global latex floor care
product  line.  These  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 nine month periods ended March
31, 1999 and 1998,  providing  $263.2 million and $165.8 million,  respectively.
Net income was $162.8 million during the first nine months of fiscal 1999 versus
$172.9  million for the same period of fiscal 1998.  In the first nine months of
the current fiscal year,  depreciation  and  amortization  provided $7.4 million
more funds than during the same period of the prior year.  Changes in  operating
assets  and  liabilities  resulted  in a use of $7.4  million  in the first nine
months of fiscal 1999  compared to a $103.6  million use of funds last year.  In
the first nine months of fiscal 1999,  inventories and prepaid expenses provided
funds of $39.3  million  versus a $27.0  million  use for the same period of the
prior year. Accounts payable and accrued expenses were a $12.7 million and $54.7
million  use of funds for the first nine  months of fiscal  years 1999 and 1998,
respectively.  Nine month  changes  in  inventories  and  prepaid  expenses  and
accounts  payable  and  accrued  expenses  were  significantly  influenced  by a
reduction in inventory and increased payables and accrued

                                       10

<PAGE>



expenses  at March 31,  1999 due to  increased  ice  control  sales in the third
quarter of fiscal 1999 versus the same period in fiscal 1998.

Investing  activities in the first nine months of fiscal 1999 were primarily the
result of capital spending,  which used $85.0 million of cash compared to $102.5
million in the same period in fiscal 1998,  and $34.1  million cash  invested in
businesses  acquired in fiscal 1999  compared to $18.1  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 nine months
of fiscal 1999 was for the acquisition of two small Italian chemical companies.

Financing  activities  for the nine month  period  ending  March 31, 1999 were a
$96.6 million use of funds  compared to a $324.2 million use of funds during the
same period in the prior year. The common stock repurchase program resulted in a
use of funds of $145.8  million  in the  first  nine  months of fiscal  1999 and
$326.8  million  during the same  period of last year.  Since the spinoff in May
1997,  Morton has repurchased  20.4 million shares as of March 31, 1999 bringing
the shares  outstanding  to 121.1 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 March 31, 1999.
Short-term  notes payable resulted in a source of funds of $91.1 million for the
first nine months of fiscal  1999 versus a source of funds of $42.2  million for
the same period of fiscal  1998.  This  increase  was  primarily  related to the
short-term financing of the stock repurchases. Dividends paid were $47.8 million
and $47.7  million at the end of the first nine  months of fiscal 1999 and 1998,
respectively.

The  Company's  current  ratio was 2.1 at March 31, 1999,  versus a 2.4 ratio at
June 30, 1998. Total debt as a percentage of total  capitalization  at March 31,
1999 was 17.7 percent compared to 13.3 percent at June 30, 1998.

As of March 31, 1999, the Company had unexpended  authorizations for fixed asset
spending of $103.6 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  requirements,   fixed  asset  spending,  dividend
payments, business acquisitions and share repurchases in the foreseeable future.


                                       11

<PAGE>



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 are expensed as incurred,  while the costs of
new software are capitalized and amortized over the software's  useful life. The
Company  currently does not expect the cost of such  modifications  to exceed $5
million, of which over sixty percent has been spent through March 31, 1999.

The Company engaged  various  consultants to review certain aspects of Year 2000
readiness at selected manufacturing  locations. In addition, the Company has and
continues to test its systems  software for Year 2000 readiness.  As a result of
these reviews, no significant issues were identified.

The Company  also has  communicated  with its major and critical  suppliers  and
large customers,  as well as many others, to determine the extent and steps they
are  taking to be Year 2000  compliant.  Such  communications  included  initial
letters,  second requests to non-respondents  and phone calls and site visits to
selected critical  customers and suppliers.  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 or that the  failure  to be timely  converted  would not have an  adverse
effect on the  Company's  businesses.  The Company  expects  the  communications
process  to be  completed  by  June  30,  1999.  In  addition,  the  Company  is
identifying and qualifying alternative sources of supply and, where practicable,
will stockpile  selected  materials and supplies.  This contingency plan will be
completed during the second half of 1999.

Although the Company  believes its internal systems will be Year 2000 ready, the
Company could experience a loss of access to services from public utilities as a
result of the utilities'  failure to be Year 2000  compliant.  In the worst case
scenario,  the  Company's  access to power  sources  could be  cut-off  at major
facilities  for an  extended  period.  The  Company  believes  this  scenario is
unlikely and any form of alternative  power  replacement  for an extended period
would be cost prohibitive. Accordingly, no contingency plan has been developed.

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

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<PAGE>



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 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.

                                       13

<PAGE>



                          PART II - OTHER INFORMATION


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

(1)      Exhibits (numbered in accordance with Item 601 of Regulation S-K)

     (10)(a)   Employment Agreement,  dated as of January 31, 1999, by and among
               Rohm and Haas  Company,  Morton  International,  Inc.  and S. Jay
               Stewart,  incorporated by reference to Exhibit 5 to the Company's
               Schedule 14D-9 filed February 5, 1999.

     (10)(b)   Amendment,  dated as of January  31,  1999,  by and among  Morton
               International,  Inc.,  Rohm  and  Haas  Company  and  William  E.
               Johnston, to Employment Agreement, dated as of March 22, 1990, by
               and between the Company and William E. Johnston,  incorporated by
               reference  to Exhibit 6 to the  Company's  Schedule  14D-9  filed
               February 5, 1999.


     (27)(a) Financial Data Schedules for the third quarter of fiscal 1999.

(2)       Reports on Form 8-K.

               During the  quarter,  the  Company  filed the  following  current
               report on Form 8-K: Dated February 1, 1999, Agreement and Plan of
               Merger  among the  Company,  Rohm and Haas  Company,  a  Delaware
               corporation,  and Gershwin Acquisition Corp. (now known as Morton
               Acquisition  Corp.),  an Indiana  corporation  and a wholly-owned
               subsidiary of Rohm and Haas Company.


                                       14

<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:      April 29, 1999                    BY:       /s/ L. N. Liszt
      ---------------------------              --------------------------------
                                                           L. N. Liszt
                                                           Controller
                                                  (Principal Accounting Officer)



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