SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                           --------------------------

                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended June 30, 1998

                                       or

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

         For the transition period from ________ to _________

                         Commission File Number 1-13612

                              CONGOLEUM CORPORATION
             (Exact name of Registrant as specified in Its Charter)

DELAWARE                                                              02-0398678
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

                             3705 Quakerbridge Road
                                  P.O. Box 3127
                           Mercerville, NJ 08619-0127
          (Address of Principal Executive Offices, including Zip Code)
                        Telephone number: (609) 584-3000
              (Registrant's telephone number, including area code)

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

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

                Class                      Outstanding at June 30, 1998
    ----------------------------    --------------------------------------------

        Class A Common Stock                        4,282,800
        Class B Common Stock                        4,755,000


                                  Page 1 of 15
<PAGE>

                              CONGOLEUM CORPORATION

                                      Index

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
PART I.  FINANCIAL INFORMATION

<S>                                                                                                          <C>
Item 1.  Financial Statements:

                  Balance Sheets as of June 30, 1998
                  (unaudited) and December 31, 1997...........................................................3

                  Statements of Operations for the three and six months
                  ended June 30, 1998 and 1997 (unaudited)....................................................4

                  Statements of Changes in Stockholders' Equity for the year
                  ended December 31, 1997 and the six months ended June 30,
                  1998 (unaudited)............................................................................5

                  Statements of Cash Flows for the six months
                  ended June 30, 1998 and 1997 (unaudited)....................................................6

                  Notes to Unaudited Condensed Financial Statements ..........................................7

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

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings 13

Item 2.  Changes in Securities...............................................................................13

Item 3.  Defaults Upon Senior Securities.....................................................................13

Item 4.  Submission of Matters to a Vote of Security Holders.................................................13

Item 5.  Other Information 13

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

Signature       .............................................................................................14

Exhibit Index ...............................................................................................15
</TABLE>


                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                              CONGOLEUM CORPORATION
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                           June 30,          December 31,
                                                                                             1998                1997
                                                                                             ----                ----
                                                                                         (Unaudited)
                                                                                           (Dollars in thousands)
<S>                                                                                       <C>                 <C>     
ASSETS
Current assets:
     Cash and cash equivalents................................................             $13,135             $11,069
     Short-term investments...................................................              10,100               7,900
     Accounts and notes receivable, net.......................................              25,944              14,512
     Inventories..............................................................              49,341              44,434
     Prepaid expenses and other current assets................................               1,086               2,965
     Deferred income taxes....................................................               3,041               3,041
                                                                                          --------            --------
         Total current assets.................................................             102,647              83,921
Property, plant and equipment, net............................................              87,309              88,401
Goodwill, net.................................................................              12,035              12,251
Deferred income taxes.........................................................               2,636               2,636
Other noncurrent assets.......................................................               9,129               9,372
                                                                                          --------            --------
         Total assets.........................................................            $213,756            $196,581
                                                                                          ========            ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable.........................................................              17,255              13,440
     Accrued expenses.........................................................              38,225              28,793
     Accrued income taxes.....................................................               2,370                 918
     Deferred income taxes....................................................               1,752               1,752
                                                                                           -------             -------
         Total current liabilities............................................              59,602              44,903
Long-term debt................................................................              76,594              76,594
Other liabilities.............................................................              22,132              22,305
Noncurrent pension liability..................................................              10,671              11,038
Accrued postretirement benefit obligation.....................................               9,902               9,958
                                                                                           -------             -------
         Total liabilities....................................................             178,901             164,798
                                                                                           -------             -------

STOCKHOLDERS' EQUITY
ClassA common stock, par value $0.01 per share; 20,000,000 
     shares authorized; 4,652,000 shares issued; 4,282,800 
     shares outstanding as of June 30, 1998 and December 31, 1997,
     respectively.............................................................                  47                  47
Class B common stock, par value $0.01 per share; 4,755,000 shares
     authorized, issued and outstanding as of June 30, 1998 and
     December 31, 1997, respectively..........................................                  47                  47
Additional paid-in capital....................................................              49,574              49,574
Retained deficit..............................................................              (9,748)            (12,820)
Minimum pension liability adjustment..........................................              (1,122)             (1,122)
Common stock held in Treasury, at cost; 375,200 shares at June 30, 1998
     and December 31, 1997, respectively......................................              (3,943)             (3,943)
                                                                                          --------            --------
         Total stockholders' equity...........................................              34,855              31,783
                                                                                          --------            --------
         Total liabilities and stockholders' equity...........................            $213,756            $196,581
                                                                                          ========            ========
</TABLE>

                   The accompanying notes are an integral part
                     of the condensed financial statements.


                                       3
<PAGE>

                              CONGOLEUM CORPORATION

                            STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  Three Months Ended                 Six Months Ended
                                                                       June 30,                           June 30,
                                                                ----------------------               ------------------
                                                                1998              1997               1998          1997
                                                                               (In thousands, except
                                                                                 per share amounts)

<S>                                                           <C>                <C>               <C>           <C>     
Net sales..............................................       $69,750            $64,909           $133,625      $125,992
Cost of sales..........................................        48,749             45,104             95,267        87,946
Selling, general and administrative expenses...........        15,943             15,843             31,167        31,060
                                                              -------            -------           --------      --------
         Income from operations........................         5,058              3,962              7,191         6,986
Other income (expense):
     Interest income...................................           282                454                460           959
     Interest expense..................................        (1,671)            (1,616)            (3,346)       (3,599)
     Other income......................................           573                671                668           812
     Other expense.....................................           (76)              (107)              (135)         (174)
                                                              -------            -------           --------      --------
         Income before income taxes....................         4,166              3,364              4,838         4,984
     Provision for income taxes........................         1,521              1,260              1,766         1,867
                                                              -------            -------           --------      --------
         Net income....................................       $ 2,645            $ 2,104           $  3,072      $  3,117
                                                              =======            =======           ========      ========

         Net income per common share, basic & diluted..       $  0.29            $  0.21           $   0.34      $   0.31
                                                              =======            =======           ========      ========

         Weighted average number of common and
           equivalent shares outstanding...............         9,038              9,944              9,038         9,990
                                                              =======            =======           ========      ========
</TABLE>

                   The accompanying notes are an integral part
                     of the condensed financial statements.


                                       4
<PAGE>

                              CONGOLEUM CORPORATION
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  Accumulated
                                   Common Stock                                      Other
                                 par value $0.01       Additional                 Comprehensive                    
                                 ----------------       Paid-in     Retained      Income/(Loss)    Treasury
                               Class A     Class B      Capital      Deficit       Adjustment*       Stock          Total
                               -------     -------      -------      -------       -----------       -----          -----

<S>                            <C>         <C>          <C>         <C>            <C>              <C>          <C>     
Balance, December 31, 1997.... $    47     $    47      $49,574     $(12,820)      $  (1,122)       $(3,943)     $ 31,783

Net income....................                                         3,072                                        3,072
                               -------     -------      -------     --------       ---------        -------      --------
Balance, June 30, 1998........     $47         $47      $49,574     $ (9,748)      $  (1,122)       $(3,943)     $ 34,855
                               =======     =======      =======     ========       =========        =======      ========
</TABLE>

* Entire amount relates to minimum pension liability adjustment.


                   The accompanying notes are an integral part
                     of the condensed financial statements.


                                       5
<PAGE>

                              CONGOLEUM CORPORATION

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                 Six Months Ended
                                                                                                      June 30,
                                                                                           ----------------------------
                                                                                              1998               1997
                                                                                                  (In thousands)

<S>                                                                                         <C>               <C>    
Cash flows from operating activities:
     Net income....................................................................         $ 3,072           $ 3,117
     Adjustments to reconcile net income to net cash provided/(used)
        by operating activities:
         Depreciation..............................................................           4,865             4,672
         Amortization and write-off of deferred refinancing fees...................             474               527
         Gain on disposal of property, plant and equipment.........................              --              (196)
         Changes in certain assets and liabilities:
              Accounts and notes receivable........................................         (11,432)           (2,510)
              Inventories..........................................................          (4,907)          (19,223)
              Prepaid expenses and other current assets............................           1,864             1,188
              Accounts payable.....................................................           3,815            (4,740)
              Accrued expenses.....................................................          10,884             7,543
              Other liabilities....................................................            (596)              681
                                                                                            -------           -------
                   Net cash provided/(used) by operating activities................           8,039            (8,941)
                                                                                            -------           -------
     Cash flows from investing activities:
         Capital expenditures......................................................          (3,773)          (10,142)
         Proceeds from sale of property, plant and equipment.......................              --               244
         Purchase of short-term investments........................................         (11,700)          (28,800)
         Maturities of short-term investments......................................           9,500            21,700
                                                                                            -------           -------
                   Net cash used by investing activities...........................          (5,973)          (16,998)
                                                                                            -------           -------
     Cash flows from financing activities:
         Payments to reduce long-term debt.........................................              --              (825)
         Exercise of stock options.................................................              --                26
         Purchase and retirement of Class B stock..................................              --            (1,005)
         Purchase of treasury stock................................................              --              (801)
                                                                                            -------           -------
                   Net cash used by financing activities...........................              --            (2,605)
                                                                                            -------           -------
Net increase/(decrease) in cash and cash equivalents...............................           2,066           (28,544)
Cash and cash equivalents:
     Beginning of period...........................................................          11,069            30,629
                                                                                            -------           -------
     End of period ................................................................         $13,135           $ 2,085
                                                                                            =======           =======
</TABLE>

                   The accompanying notes are an integral part
                     of the condensed financial statements.


                                       6
<PAGE>

                              CONGOLEUM CORPORATION

                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

                (Dollars in thousands, except per share amounts)

1.       Basis of Presentation

         The condensed financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with Rule 10-01 of Regulation S-X and have not been audited by the Company's
independent accountants. Certain information and note disclosures normally
included in audited financial statements prepared in accordance with generally
accepted accounting principles for complete financial statements have been
condensed or omitted in accordance with the rules and regulations of the
Securities and Exchange Commission. The preparation of condensed financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities and the reported amounts of revenues and expenses during the
reporting period. In the opinion of management, all adjustments (consisting of
normal and recurring adjustments) considered necessary for a fair presentation
of the Company's financial position have been included. The results of
operations for the three and six months ended June 30, 1998 are not necessarily
indicative of the results to be expected for a full year. These condensed
financial statements should be read in conjunction with the Company's audited
financial statements which appear in the Company's Annual Report to Stockholders
for the period ended December 31, 1997.

2.       Inventories

         A summary of the major classifications of inventories is as follows:

                                                   June 30,       December 31,
                                                    1998              1997
                                                ------------    ---------------

               Finished goods.................      $37,200          $34,914
               Work-in-process................        4,417            3,160
               Raw materials and supplies.....        7,724            6,360
                                                    -------          -------
                                                    $49,341          $44,434
                                                    =======          =======

         The LIFO (last-in, first-out) method of determining cost is used for
substantially all inventories.

         If the FIFO (first-in, first-out) method of inventory accounting (which
approximates current cost) had been used, inventories would have been
approximately $1,773 and $340 lower than reported at June 30, 1998 and December
31, 1997, respectively.


                                       7
<PAGE>

3.       Income Per Share

         Income per share is calculated by dividing net income by the weighted
average number of shares of common stock outstanding. Due to the immaterial
effect of common stock equivalents, there is no difference between basic and
diluted net income per common share for the three and six month periods ending
June 30, 1998 and 1997.

4.       Commitments and Contingencies

         The Company is subject to federal, state and local environmental laws
and regulations and certain legal and administrative claims are pending or have
been asserted against the Company. Among these claims, the Company is a named
party in several actions associated with waste disposal sites, asbestos-related
claims, and general liability claims. These actions include possible obligations
to remove or mitigate the effects on the environment of wastes deposited at
various sites, including Superfund sites and certain of the Company's owned and
previously owned facilities. The contingencies also include claims for personal
injury and/or property damage. The exact amount of such future cost and timing
of payments are indeterminable due to such unknown factors as the magnitude of
clean-up costs, the timing and extent of the remedial actions that may be
required, the determination of the Company's liability in proportion to other
potentially responsible parties, and the extent to which costs may be
recoverable from insurance.

         The Company records a liability for environmental remediation,
asbestos-related claim costs, and general liability claims when a clean-up
program or claim payment becomes probable and the costs can be reasonably
estimated. As assessments and clean-ups progress, these liabilities are adjusted
based upon progress in determining the timing and extent of remedial actions and
the related costs and damages. The extent and amounts of the liabilities can
change substantially due to factors such as the nature or extent of
contamination, changes in remedial requirements and technological improvements.
The recorded liabilities are not discounted for delays in future payments and
are not reduced by the amount of estimated insurance recoveries. Such estimated
insurance recoveries are considered probable of recovery.

         Although the outcome of these matters could result in significant
expenses or judgments, management does not believe based on present facts and
circumstances that their disposition will have a material adverse effect on the
financial position of the Company.


                                       8
<PAGE>

5.       Reclassifications

         For comparative purposes, certain amounts have been reclassified to
conform to the current year presentation.


                                       9
<PAGE>

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

Results of Operations

Three and six months ended June 30, 1998 as compared to three and six months
ended June 30, 1997.

         Net sales for the second quarter of 1998 were $69.8 million as compared
to $64.9 million for the second quarter of 1997, an increase of $4.9 million or
7.5%. Year-to-date net sales for the first six months of 1998 were $133.6
million, an increase of $7.6 million or 6.1% from the first six months of 1997.
Sales in the second quarter and first six months of 1998 increased over the same
periods in 1997 as a result of additional sales to the home center channel,
higher sales to the manufactured housing sector, and sales of recently
introduced products.

         Gross profit for the second quarter of 1998 was $21.0, up $1.2 million
from $19.8 million in the second quarter of 1997. Gross profit as a percent of
net sales in the second quarter of 1998 was 30.1%, compared to 30.5% in the
second quarter of 1997. Year-to-date gross profit for the first six months of
1998 was $38.4 million (28.7% of net sales), up from $38.0 million (30.2% of net
sales) in the first six months of 1997. Gross profit in the second quarter and
first six months of 1998 increased over the comparable 1997 periods due to
higher sales. Profit margins declined in the second quarter and first half of
1998 from 1997 levels due to competitive industry conditions, which more than
offset lower raw material costs and improved manufacturing efficiency.

         Selling, general and administrative expenses increased by $0.1 million
or 0.6% to $15.9 million in the second quarter of 1998 from $15.8 million in the
second quarter of 1997. As a percent of net sales, selling, general, and
administrative expenses were 22.9% for the second quarter of 1998 and 24.4% for
the second quarter of 1997. Selling, general, and administrative expenses for
the first six months of 1998 were $31.2 million (23.3% of net sales), compared
to $31.1 million (24.7% of net sales) in the same period last year. Increases in
expenses due to the higher sales in 1998 have been offset by expense reductions
in other areas.

         Income from operations for the second quarter of 1998 was $5.1 million
(7.3% of net sales), compared to $4.0 million (6.1% of net sales) for the second
quarter of 1997, an increase of $1.1 million or 27.7%. This increase was due to
the higher sales and gross profit during the second quarter of 1998. Income from
operations for the six months ended June 30, 1998 totaled $7.2 million (5.4% of
net sales), $0.2 million higher than the $7.0 million (5.5% of net sales) for
the same period in 1997.

         Net income for the second quarter of 1998 was $2.6 million, compared to
$2.1 million for the second quarter of 1997, an increase of $0.5 million,
reflecting the higher income from operations. For the six months ended June 30,
1998, net income was $3.1 million, the same as the first half of 1997.


                                       10
<PAGE>

Liquidity and Capital Resources

         Cash and cash equivalents, including short-term investments, increased
$4.3 million for the six months ended June 30, 1998, to $23.2 million. Working
capital at June 30, 1998 was $43.0 million, up from $39.0 million at December
31, 1997. The ratio of current assets to current liabilities at June 30, 1998
was 1.7 compared to 1.9 at December 31, 1997. The ratio of debt to total capital
at June 30, 1998 was .36 compared to .39 at December 31, 1997. Cash provided by
operations was $8.0 million for the first six months of 1998, compared to $8.9
million used in the first six months of 1997.

         Capital expenditures were $3.8 million for the first six months of
1998, but are expected to increase during the balance of the year. Total capital
spending is projected to be approximately $18 million in 1998 and $20 to $25
million in 1999.

         In 1996, the Company's Board of Directors approved a plan to repurchase
up to $5 million (increased to $10 million in 1997) of the Company's common
stock (Class A and Class B shares) and up to $10 million of its 9% Senior Notes
(increased to $20 million in 1997). At December 31, 1997, $9.6 million had been
expended on stock purchases and $13.4 million had been expended on note
repurchases pursuant to these authorizations. There have been no repurchases in
1998.

         On July 31, 1998 the Company issued $100 million of 8 5/8% Senior Notes
maturing August 1, 2008 priced at 99.505 to yield 8.70%. Proceeds of the
offering will be used to redeem all of the 9% Senior Notes, including accrued
interest and prepayment premium, to pay certain fees and expenses in connection
with the offering, and for working capital and general corporate purposes. In
connection with this offering, the Company will record an extraordinary
after-tax charge of $2.3 million ($0.25 per share) in the third quarter of 1998.

         The Company has recorded what it believes are adequate provisions for
environmental remediation and product-related liabilities, including provisions
for testing for potential remediation of conditions at its own facilities. While
the Company believes its estimate of the future amount of these liabilities is
reasonable, that such amounts will not have a material adverse effect on the
financial position of the Company and that they will be paid over a period of
five to ten years, the timing and amount of such payments may differ
significantly from the Company's assumptions. Although the effect of future
government regulation could have a significant effect on the Company's costs,
the Company is not aware of any pending legislation which could have a material
adverse effect on its results of operations or financial position. There can be
no assurances that such costs could be passed along to its customers.

         The Company has completed an assessment of the steps it believes will
be necessary for its existing and planned data processing systems and equipment
to operate properly when confronted with dates beginning in the year 2000. A
plan has been developed which identifies the systems affected and the steps that
will be required to assure year 2000 compliance. The Company's existing plan to
improve operations by replacing or upgrading systems in the ordinary course of
business during 1998 and 1999 will have the additional benefit of providing year
2000 compliance in many instances. The resources required to make the remaining
systems compliant have been estimated and are being provided by a combination of
existing employees and outside contractors. The Company has retained or believes
it will be able to retain the necessary employees and outside 


                                       11
<PAGE>

resources to accomplish this, and that the cost to achieve compliance will not
be material to the Company's financial position, liquidity or results of
operations. As of June 1998, the Company has completed converting 57% of the
systems identified as requiring modification. The timing and resource
requirements to date have been consistent with the Company's plan, and the
Company anticipates that all of its mission-critical systems will be year 2000
compliant by the end of 1998. However, if any governmental agencies, key
customers or key suppliers are unable to make the necessary computer system
changes on a timely basis, such inability could negatively impact the Company's
results of operations.

         The Company's principal sources of liquidity are net cash provided by
operating activities and borrowings under its Amended and Restated Financing
Agreement. The Company believes that these sources will be adequate to fund
working capital requirements, debt service payments, stock repurchases, and
planned capital expenditures through the foreseeable future.

         Some of the information presented in or incorporated by reference in
this report constitutes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Although the Company believes
that its expectations are based on reasonable assumptions, within the bounds of
its knowledge of its business and operations, there can be no assurance that
actual results will not differ materially from its expectations. Factors that
could cause actual results to differ from expectations include: (i) increases in
raw material prices, (ii) increased competitive activity from companies in the
flooring industry, some of which have greater resources and broader distribution
channels than the Company, (iii) unfavorable developments in the national
economy or in the housing industry in general, (iv) shipment delays, depletion
of inventory and increased production costs resulting from unforeseen
disruptions of operations at any of the Company's facilities or distributors and
(v) the future cost and timing of payments associated with environmental,
product and general liability claims.


                                       12
<PAGE>

PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings:  None

         Item 2.  Changes in Securities:  None

         Item 3.  Defaults Upon Senior Securities:  None

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

                           At the Annual Meeting of Stockholders held on May 14,
                  1998, the following actions were taken:

                           Three nominees were elected as Class B Directors who
                  will hold office until the Annual Meeting of Stockholders in
                  2001 and until their successors are duly elected and qualify.

                  Name                       Votes For           Votes Withheld
                  ----                       ---------           --------------

                    Mark N. Kaplan          12,276,300              87,469
                    Richard G. Marcus       12,276,180              87,619
                    David N. Hurwitz        12,363,330                 469

                           The following persons are the other directors of the
                  Company whose term of office as a director continued after the
                  meeting:

                       C. Barnwell Straut                  Roger S. Marcus
                       Cyril C. Baldwin, Jr.               William M. Marcus
                       John N. Irwin III

         Item 5.  Other Information:  None

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

                       (a)  Exhibits:  4.5    Indenture
                                      10.25   Registration Rights Agreement
                                      11.     Computation of Per Share Earnings
                                      27.     Financial Data Schedule

                       (b)  Reports on Form 8-K:   None


                                       13
<PAGE>

                              CONGOLEUM CORPORATION

                                    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.


                                     CONGOLEUM CORPORATION
                                          (Registrant)


Date:    August 12, 1998             By: /s/ Howard N. Feist III
                                         ---------------------------------------
                                                (signature)

                                     Howard N. Feist III
                                     Sr. Vice President - Finance
                                     (Principal Financial & Accounting Officer)


                                       14
<PAGE>

                                  EXHIBIT INDEX

Exhibit                                                                  Number
-------                                                                  ------

Indenture, dated as of August 3, 1998, by and between Congoleum
Corporation and First Union National Bank                                 4.5

Registration Rights Agreement, dated as of August 3, 1998, by and
among Congoleum Corporation, Goldman, Sachs & Co., Credit
Suisse First Boston Corporation and ING Barings Furman Selz LLC          10.25

Computation of Per Share Earnings                                        11

Financial Data Schedule                                                  27