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 March 31, 1998

                                       or

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

      For the transition period from ________ to _________

                         Commission File 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 April 30, 1998
    ----------------------------              --------------------------------

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


                                 Page 1 of 16
<PAGE>

                              CONGOLEUM CORPORATION

                                      Index

                                                                        Page
                                                                        ----
PART I.     FINANCIAL INFORMATION

Item 1.     Financial Statements:

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

            Statements of Operations for the three months
            ended March 31, 1998 and 1997 (unaudited)......................4

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

            Statements of Cash Flows for the three months
            ended March 31, 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.............................................12

Item 2.     Changes in Securities.........................................12

Item 3.     Defaults Upon Senior Securities...............................12

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

Item 5.     Other Information.............................................12

Item 6.     Exhibits and Reports on Form 8-K..............................12

Signatures ...............................................................13

Exhibit Index.............................................................14


                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1. Financial Statements

                              CONGOLEUM CORPORATION
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        March 31,     December 31,
                                                                          1998            1997
                                                                      (Unaudited)
                                                                         (Dollars in thousands)
ASSETS
<S>                                                                     <C>             <C>     
Current assets:
    Cash and cash equivalents...................................          $3,675         $11,069
    Short-term investments......................................           9,200           7,900
    Accounts and notes receivable, net..........................          25,110          14,512
    Inventories.................................................          47,137          44,434
    Prepaid expenses and other current assets...................           1,469           2,965
    Deferred income taxes.......................................           3,041           3,041
                                                                        --------      ----------
       Total current assets.....................................          89,632          83,921
Property, plant and equipment, net..............................          87,814          88,401
Goodwill, net...................................................          12,143          12,251
Deferred income taxes...........................................           2,636           2,636
Other noncurrent assets.........................................           9,243           9,372
                                                                        --------      ----------
       Total assets.............................................        $201,468        $196,581
                                                                        ========        ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable............................................          15,864          13,440
    Accrued expenses............................................          30,574          28,793
    Accrued income taxes........................................           1,155             918
    Deferred income taxes.......................................           1,752           1,752
                                                                        --------        --------
       Total current liabilities................................          49,345          44,903
Long-term debt..................................................          76,594          76,594
Other liabilities...............................................          22,520          22,305
Noncurrent pension liability....................................          10,873          11,038
Accrued postretirement benefit obligation.......................           9,926           9,958
                                                                        --------       ---------
       Total liabilities........................................         169,258         164,798
                                                                         -------         -------

STOCKHOLDERS' EQUITY
Class  A  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 March 31, 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 March 31, 
    1998 and December 31, 1997, respectively....................              47              47
Additional paid-in capital......................................          49,574          49,574
Retained deficit................................................         (12,393)        (12,820)
Minimum pension liability adjustment............................          (1,122)         (1,122)
Common stock held in Treasury,  at cost; 375,200 shares at 
    March 31, 1998 and December 31, 1997, respectively..........          (3,943)         (3,943)
                                                                       ---------      ----------
       Total stockholders' equity...............................          32,210          31,783
                                                                        --------       ---------
       Total liabilities and stockholders' equity...............        $201,468        $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
                                                                                     March 31,
                                                                              -----------------------
                                                                              1998             1997
                                                                              (In thousands, except
                                                                                per share amounts)
<S>                                                                          <C>              <C>     
Net sales...........................................................         $63,875          $61,083
Cost of sales.......................................................          46,518           42,842
Selling, general and administrative expenses........................          15,224           15,217
                                                                            --------         --------
       Income from operations.......................................           2,133            3,024
Other income (expense):
    Interest income.................................................             178              505
    Interest expense................................................          (1,675)          (1,983)
    Other income....................................................              95              141
    Other expense...................................................             (59)             (67)
                                                                            --------         --------
       Income before income taxes...................................             672            1,620
    Provision (benefit) for income taxes............................             245              607
                                                                            --------         --------
       Net income...................................................         $   427          $ 1,013
                                                                            ========         ========

       Net income per common share, basic and diluted...............         $  0.05          $  0.10
                                                                            ========         ========

       Weighted average number of common and
            equivalent shares outstanding...........................           9,039           10,035
                                                                            ========         ========
</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 
                                                                                   Other         
                                   Common Stock       Additional               Comprehensive
                                 par value $0.01       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, 1996....$      47   $      53   $  55,172    $(19,561)     $    (1,995)      $     (49)     $33,667  
                              =========   =========   =========    ========      ===========       =========      =======  

Purchase of treasury stock....                                                                        (3,894)      (3,894)

Purchase and retirement of
    Class B Common Stock......                   (6)     (5,624)                                                   (5,630)

Exercise of stock options.....                               26                                                        26

Minimum pension liability                                                                873                          873
    Adjustment, net of tax

Net income....................                                        6,741                                         6,741
                              ---------   ---------   ---------    --------      -----------       ---------      -------

Balance, December 31, 1997....       47          47      49,574     (12,820)          (1,122)         (3,943)      31,783
                              ---------   ---------   ---------    --------      -----------       ---------      -------

Purchase of treasury stock....     

Purchase and retirement of
    Class B Common Stock......     

Exercise of stock options.....     

Minimum pension liability
    Adjustment, net of tax

Net income....................                                          427                                           427
                              ---------   ---------   ---------    --------      -----------       ---------      -------
Balance, March 31, 1998.......      $47         $47     $49,574    $(12,393)         $(1,122)        $(3,943)     $32,210
                              =========   =========   =========    ========      ===========       =========      =======
</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>
                                                                                                Three Months Ended
                                                                                                     March 31,
                                                                                          -----------------------------
                                                                                              1998              1997
                                                                                                  (In thousands)
<S>                                                                                        <C>               <C>     
Cash flows from operating activities:
     Net income....................................................................          $  427            $1,013
     Adjustments to reconcile net income to net cash (used)
        by operating activities:
         Depreciation..............................................................           2,419             2,337
         Amortization and write-off of deferred refinancing fees...................             237               266
         Changes in certain assets and liabilities:
              Accounts and notes receivable........................................         (10,598)           (6,224)
              Inventories..........................................................          (2,703)           (8,037)
              Prepaid expenses and other current assets............................           1,496             1,118
              Accounts payable.....................................................           2,424            (2,165)
              Accrued expenses.....................................................           2,018             2,463
              Other liabilities....................................................              18               470
                                                                                          ---------         ---------
                   Net cash used by operating activities...........................          (4,262)           (8,759)
                                                                                          ---------         ---------
     Cash flows from investing activities:
         Capital expenditures......................................................          (1,832)           (2,822)
         Purchase of short-term investments........................................          (9,200)          (18,100)
         Maturities of short-term investments......................................           7,900             8,900
                                                                                          ---------         ---------
                   Net cash used by investing activities...........................          (3,132)          (12,022)
                                                                                          ---------         ---------
     Cash flows from financing activities:
         Payments to reduce long-term debt.........................................              --              (550)
         Exercise of stock options.................................................              --                26
         Purchase of treasury stock................................................              --                (9)
                                                                                          ---------         ---------
                   Net cash used by financing activities...........................              --              (533)
                                                                                          ---------         ---------
Net decrease in cash and cash equivalents..........................................          (7,394)          (21,314)
Cash and cash equivalents:
     Beginning of period...........................................................          11,069            30,629
                                                                                          ---------         ---------
     End of period ................................................................        $  3,675          $  9,315
                                                                                          =========         =========
</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 annual 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 months ended March 31, 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:

                                                    March 31,      December 31,
                                                      1998             1997
                                                    ---------      -----------

            Finished goods.....................      $36,190         $34,914
            Work-in-process....................        4,458           3,160
            Raw materials and supplies.........        6,489           6,360
                                                     -------         -------
                                                     $47,137         $44,434
                                                     =======         =======

      If the FIFO (first-in, first-out) method of inventory accounting (which
approximates current cost) had been used, inventories would have been
approximately $1,322 and $340 lower than reported at March 31, 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
fully diluted net income per common share for the three month periods ending
March 31, 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 months ended March 31, 1998 as compared to three months ended March 31,
1997.

      Net sales for the first quarter of 1998 were $63.9 million as compared to
$61.1 million for the first quarter of 1997, an increase of 2.8 million or 4.6%.
This increase was due to greater shipments to mass merchandise retailers and to
the Company's manufactured housing industry distributor, which was reducing its
inventory in the first quarter of 1997.

      Gross profit for the first quarter of 1998 was $17.3 million compared to
$18.2 million for the first quarter of 1997, a decrease of $0.9 million. As a
percent of sales, gross profit was 27.2% in the first quarter of 1998, as
compared to 29.9% in the first quarter of 1997. The decrease in gross profits
and gross profit margins was due to a less profitable sales mix, declines in
selling prices of certain products, and lower production volumes, which offset
improvements in manufacturing efficiency.

      Selling, general, and administrative expenses were $15.2 million in both
the first quarter of 1998 and the first quarter of 1997. As a percentage of
sales, selling, general, and administrative expenses were 23.8% for the first
quarter of 1998, down from 24.9% for the first quarter of 1997. Increase in
sales-related expenses were offset by reductions in other expenses, primarily as
a result of lower headcount.

      Income from operations for the first quarter of 1998 was $2.1 million
(3.3% of net sales), compared to $3.0 million for the first quarter of 1997, a
decrease of $0.9 million. The decrease resulted from the decline in gross profit
margins, which offset the increased sales volume.

      Net income for the first quarter of 1998 was $0.4 million, compared to
$1.0 million for the first quarter of 1997, a decrease of $0.6 million.

Liquidity and Capital Resources

      Cash and cash equivalents, including short-term investments, declined $6.1
million for the three months ended March 31, 1998, to $12.9 million. Working
capital at March 31, 1998 was $40.3 million, up from 39.0 million at December
31, 1997. The ratio of current assets to current liabilities at March 31, 1998
was 1.8 compared to 1.9 at December 31, 1997. The ratio of debt to total capital
at March 31, 1998 was .38 compared to .39 at December 31, 1997. Cash used by
operations was $4.2 million for the first quarter of 1998, compared to $8.8
million in the first quarter of 1997.

      Capital expenditures were $1.8 million for the first quarter of 1998, but
are expected to increase during the balance of the year. Total 1998 capital
spending is projected to be approximately $18.0 to $20.0 million.


                                       10
<PAGE>

      In 1996, the Company's Board of Directors approved a plan to repurchase up
to $5.0 million (increased to $10.0 million in 1997) of the Company's common
stock (Class A and Class B shares) and up to $10.0 million of its 9% Senior
Notes (increased to $20.0 million in 1997). At March 31, 1998, $9.6 million had
been expended on stock purchases and $13.4 million had been expended on note
repurchases pursuant to these authorizations.

      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 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 plans 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 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.
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 and note 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 Registrant
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 Registrant, (iii) unfavorable
developments in the national economy or in the housing industry in general, (iv)
shipment delays, depletion of inventory and increased 


                                       11
<PAGE>

production costs resulting from unforeseen disruptions of operations at any of
the Registrant'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:
                        None

            Item 5.     Other Information:  None

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

                        (a)  Exhibits:  11.  Computation of Per Share Earnings

                        (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: May 15, 1998                  By: /s/
                                           ------------------------------
                                             (signature)

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


                                       14
<PAGE>

                                  EXHIBIT INDEX

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

Computation of Per Share Earnings                                   11

Financial Data Schedule                                             27


                                       15