<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    FORM 10-Q

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

                      FOR THE QUARTER ENDED AUGUST 1, 1998


                                       OR

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

                         Commission file number 000-8088

                                  FURON COMPANY
             (Exact name of registrant as specified in its charter)


California                                                            95-1947155
----------------------------                                    ----------------
(State or other jurisdiction                                    (I.R.S. Employer
of incorporation or                                          Identification No.)
organization)

29982 Ivy Glenn Drive
Laguna Niguel, CA                                                          92677
----------------------------------------                              ----------
(Address of principal executive offices)                              (Zip Code)


       Registrant's telephone number, including area code: (949) 831-5350

        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 [ ]

Number of shares of common stock outstanding as of September 4, 1998: 18,297,619

<PAGE>   2

                                  FURON COMPANY

                                      INDEX

PART I - FINANCIAL INFORMATION
------------------------------

                                                                        PAGE NO.
                                                                        --------

     Item 1.  Financial Statements

              Condensed Consolidated Balance Sheets
                 August 1, 1998  and January 31, 1998                       3

              Condensed Consolidated Statements of Income
                 Three and six months ended August 1, 1998  and
                 August 2, 1997                                             5

              Condensed Consolidated Statements of Cash Flows
                 Three and six months ended August 1, 1998 and
                 August 2, 1997                                             6

              Notes to Condensed Consolidated Financial Statements          7

     Item 2.  Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                       14


PART II - OTHER INFORMATION                                                21
---------------------------

                                       2
<PAGE>   3

ITEM 1.  FINANCIAL STATEMENTS

                                  FURON COMPANY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                August 1,      January 31,
In thousands                                                      1998            1998
-------------------------------------------------------------------------------------------
<S>                                                            <C>              <C>
ASSETS

Current assets:

        Cash and cash equivalents                              $   3,877        $      --
        Accounts receivable, less allowance for
           doubtful accounts of $1,813 at August 1, 1998
           and $1,741 at January 31, 1998                         75,252           75,661
        Inventories, net                                          58,299           54,704
        Deferred income taxes                                     11,356           11,052
        Prepaid expenses and other current assets                  5,840            4,959
                                                               ---------        ---------

Total current assets                                             154,624          146,376

Property, plant & equipment, at cost:

        Land                                                       6,780            6,976
        Buildings and leasehold improvements                      31,108           31,493
        Machinery and equipment                                  167,555          158,999
                                                               ---------        ---------
                                                                 205,443          197,468
        Less accumulated depreciation and amortization           (95,487)         (87,832)
                                                               ---------        ---------

Net property, plant and equipment                                109,956          109,636

Intangible assets, at cost less accumulated
   amortization of $36,015 at August 1, 1998
   and $35,354 at January 31, 1998                                93,227           83,129

Other assets                                                      10,891            7,208
                                                               ---------        ---------

TOTAL ASSETS                                                   $ 368,698        $ 346,349
                                                               =========        =========
</TABLE>


See accompanying notes.

                                       3
<PAGE>   4

                                  FURON COMPANY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 August 1,       January 31,
In thousands, except share data                                     1998            1998
-------------------------------------------------------------------------------------------
<S>                                                              <C>              <C>      
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
       Cash, less checks outstanding                             $      --        $   1,025
       Accounts payable                                             24,595           25,384
       Salaries, wages and related benefits payable                 13,722           18,203
       Income taxes payable                                          4,780            4,228
       Current portion of long-term debt                             1,419              966
       Facility rationalization and severance                        7,374           10,091
       Other current liabilities                                    21,997           14,035
                                                                 ---------        ---------

Total current liabilities                                           73,887           73,932
Long-term debt                                                     158,798          148,657
Other long-term liabilities                                         26,088           23,883
Deferred income taxes                                               18,739           18,738
Commitments and contingencies                                           --               --

Shareholders' equity:

       Preferred stock without par value, 2,000,000 shares
           authorized, none issued or outstanding                       --               --
       Common stock without par value, 30,000,000 shares
           authorized, 18,297,619 shares issued and
           outstanding at August 1, 1998 and 18,227,898
           at January 31, 1998                                      41,084           40,864

       Employee Benefit Trust shares                                (1,345)              --
       Accumulated other comprehensive income                       (3,660)          (4,236)
       Unearned ESOP shares                                         (2,630)          (3,229)
       Unearned compensation                                          (174)            (232)
       Retained earnings                                            57,911           47,972
                                                                 ---------        ---------

Total shareholders' equity                                          91,186           81,139
                                                                 ---------        ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $ 368,698        $ 346,349
                                                                 =========        =========
</TABLE>

See accompanying notes.

                                       4

<PAGE>   5

                                  FURON COMPANY
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                              Three months ended                 Six months ended
                                          --------------------------        --------------------------
                                          August 1,        August 2,        August 1,        August 2,
In thousands, except per share amounts      1998             1997             1998             1997
------------------------------------------------------------------------------------------------------------
<S>                                       <C>              <C>              <C>              <C>      
Net sales                                 $ 125,046        $ 118,696        $ 244,851        $ 238,345
Cost of sales                                84,849           80,214          167,388          161,544
                                          ---------        ---------        ---------        ---------
Gross profit                                 40,197           38,482           77,463           76,801

Selling, general and administrative
   expenses                                  29,271           28,625           56,832           56,764
Nonrecurring charges and facilities
   rationalization                               --               --             (417)              --
Other (income), expense                        (971)            (175)          (1,692)            (422)
Interest expense, net                         3,262            2,681            6,194            5,567
                                          ---------        ---------        ---------        ---------

Income before income taxes                    8,635            7,351           16,546           14,892
Provision for income taxes                    2,720            2,127            5,212            4,691
                                          ---------        ---------        ---------        ---------

Net income                                $   5,915        $   5,224        $  11,334        $  10,201
                                          =========        =========        =========        =========

Basic income per share                    $    0.33        $    0.29        $    0.63        $    0.57
                                          =========        =========        =========        =========

Diluted income per share                  $    0.32        $    0.28        $    0.61        $    0.55
                                          =========        =========        =========        =========

Cash dividends per share                  $    0.03        $    0.03        $    0.06        $    0.06
                                          =========        =========        =========        =========
</TABLE>


See accompanying notes.

                                       5

<PAGE>   6

                                  FURON COMPANY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         Three months ended                Six months ended
                                                      -------------------------       --------------------------
                                                      August 1,       August 2,       August 1,        August 2,
In thousands                                            1998            1997            1998             1997
----------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>             <C>              <C>     
OPERATING ACTIVITIES
    Net income                                        $  5,915        $  5,224        $  11,334        $ 10,201
    Adjustments to reconcile net income to
     cash provided by operating activities:
       Depreciation                                      4,331           4,070            8,604           8,301
       Amortization                                      1,633           1,379            3,161           2,785
       Provision for losses on accounts                     
          receivable                                        70              (6)             140             149
       Deferred income taxes                                (5)              2             (374)            (27)
       Nonrecurring charges and facilities
          rationalization                                   --              --             (417)             --
       (Gain) loss on sale of assets                        40             (11)             102               8
    Working capital changes, net of
     acquisitions and disposals:
       Accounts receivable                                (267)             83            1,523           2,146
       Inventories                                       1,386           3,420           (1,678)          4,060
       Accounts payable and accrued liabilities           (431)          2,643           (4,844)         (1,267)
       Income taxes payable                                412            (762)            (152)          2,787
       Other current assets and liabilities,
          net                                            3,907           1,494            3,047            (247)
    Changes in other long-term operating
       assets and liabilities                             (412)            (37)            (324)            732
                                                      --------        --------        ---------        --------

           Net cash provided by operating
              activities                                16,579          17,499           20,122          29,628

INVESTING ACTIVITIES
    Acquisition of businesses, net of cash
       acquired                                        (14,339)             --          (11,417)             --
    Purchases of property, plant and equipment          (4,744)         (2,625)          (9,910)         (5,477)
    Proceeds from sale of businesses                       276             170              281             419
    Proceeds from sale of equipment                         70              16              110              33
    Decrease in notes receivable                           776              --              170              --
                                                      --------        --------        ---------        --------

           Net cash used in investing
              activities                               (17,961)         (2,439)         (20,766)         (5,025)

FINANCING ACTIVITIES
    Proceeds from long-term debt                        14,000              --          148,194           4,081
    Principal payments on long-term debt               (13,672)        (19,736)        (138,013)        (26,805)
    Deferred debt costs                                   (246)             --           (4,164)             --
    Employee benefit trust funding                        (342)             --           (1,642)             --
    Proceeds, net of cancellations, from
      issuance of common stock                              16             672              153             647
    Loan to ESOP                                            --            (266)              --            (266)
    Principal payments received from loan to
      ESOP                                                 599             529              599             529
    Dividends paid on common stock                        (549)           (544)          (1,098)         (1,084)
                                                      --------        --------        ---------        --------

           Net cash provided by (used in)
             financing activities                         (194)        (19,345)           4,029         (22,898)

EFFECT OF EXCHANGE RATE CHANGES ON CASH                     48            (811)             492          (1,541)
                                                      --------        --------        ---------        --------

(DECREASE) INCREASE IN CASH AND CASH
  EQUIVALENTS                                           (1,528)         (5,096)           3,877             164

CASH AND CASH EQUIVALENTS AT BEGINNING OF
  PERIOD                                                 5,405           5,260               --              --
                                                      --------        --------        ---------        --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD            $  3,877        $    164        $   3,877        $    164
                                                      ========        ========        =========        ========
</TABLE>

See accompanying notes.

                                       6
<PAGE>   7

                                  FURON COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 August 1, 1998
                                   (Unaudited)

1.      GENERAL

        The accompanying unaudited consolidated financial statements have been
        condensed in certain respects and should, therefore, be read in
        conjunction with the consolidated financial statements and related notes
        thereto, contained in the Company's Annual Report on Form 10-K for the
        fiscal year ended January 31, 1998. Certain reclassifications have been
        made to prior year amounts in order to be consistent with the current
        year presentation.

        In the opinion of the Company, the accompanying unaudited condensed
        consolidated financial statements contain all adjustments necessary
        (consisting only of normal recurring adjustments) to present fairly the
        financial position of the Company as of August 1, 1998, and the results
        of operations and cash flows for the three and six months ended August
        1, 1998 and August 2, 1997. Results of the Company's operations for the
        three and six months ended August 1, 1998 are not necessarily indicative
        of the results to be expected for the full year.

2.      INVENTORIES

        Inventories, stated at the lower of cost (first-in, first-out) or
        market, are summarized as follows:

<TABLE>
<CAPTION>
                                                        August 1,     January 31,
                 In thousands                             1998           1998
                 ----------------------------------------------------------------
<S>                                                      <C>           <C>    
                 Raw materials and purchased parts       $25,523       $24,781
                 Work-in-process                          11,064        11,538
                 Finished goods                           21,712        18,385
                                                         -------       -------
                                                         $58,299       $54,704
                                                         =======       =======
</TABLE>


3.      INTANGIBLES

        Intangible assets, primarily acquired in business combinations, net of
        accumulated amortization, are summarized as follows:

<TABLE>
<CAPTION>
                                              August 1,     January 31,
                 In thousands                   1998           1998
                 ------------------------------------------------------
<S>                                            <C>           <C>    
                 Goodwill                      $65,917       $54,476
                 Other intangible assets        27,310        28,653
                                               -------       -------
                                               $93,227       $83,129
                                               =======       =======
</TABLE>

                                       7

<PAGE>   8

                                  FURON COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 August 1, 1998
                                   (Unaudited)


4.      LONG-TERM DEBT

        Long-term debt is summarized as follows:

<TABLE>
<CAPTION>
                                                 August 1,     January 31,
        In thousands                               1998           1998
        ------------------------------------------------------------------
<S>                                              <C>            <C>     
        Senior Subordinated Notes                $125,000       $     --
        Loans under bank credit agreements
           due through fiscal year 2002            30,000        142,000
        Industrial Revenue Bonds                    3,600          6,175
        Other                                       1,617          1,448
                                                 --------       --------
        Total long-term debt                      160,217        149,623
        Less current portion                        1,419            966
                                                 --------       --------

        Due after one year                       $158,798       $148,657
                                                 ========       ========
</TABLE>

        Effective February 3, 1998, the Company amended and restated its credit
        facility agreement to decrease the aggregate credit facility from $250.0
        million to $200.0 million.

        On March 4, 1998 the Company issued $125.0 million of 8.125% Senior
        Subordinated Notes (the "Notes") due March 1, 2008 (the "Offering"). The
        Company used the net proceeds of the Offering to repay a portion of
        existing indebtedness under the Company's amended credit facility
        agreement. Interest on the Notes is payable semi-annually on March 1 and
        September 1 of each year.

        During the three months ended August 1, 1998, the Company retired
        approximately $2.6 million of the Industrial Revenue Bonds.

        For the three and six months ended August 1, 1998, the weighted average
        interest rate on the loans under the credit facility agreement was 6.2%
        and 6.3%, respectively.

        Interest paid for the three and six months ended August 1, 1998 was $0.6
        million and $2.6 million, respectively. Interest paid for the three and
        six months ended August 2, 1997 was $2.7 million and $5.0 million,
        respectively.

5.      INCOME TAXES

        The Company's effective tax rate for the three and six months ended
        August 1, 1998 was 31.5% as compared with 28.9% and 31.5% for the same
        periods in the prior year. The lower effective tax rate was primarily
        due to increases in research and experimental credits and foreign tax
        credits.

                                       8
<PAGE>   9

                                  FURON COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 August 1, 1998
                                   (Unaudited)


5.      INCOME TAXES (CONTINUED)

        Income taxes paid for the three and six months ended August 1, 1998 were
        $2.8 million and $4.9 million, respectively. Income taxes paid for the
        three and six months ended August 2, 1997 were $2.7 million and $2.2
        million, respectively.

6.      CONTINGENCIES

        At August 1, 1998, the Company had approximately $1.0 million of foreign
        currency hedge contracts outstanding consisting of over-the-counter
        forward contracts. Net unrealized losses from hedging activities were
        not material as of August 1, 1998.

        At August 1, 1998, the Company is obligated under irrevocable letters of
        credit totaling $4.9 million.

        The Company is currently involved in various litigation. While no
        assurance can be given, management of the Company is of the opinion that
        the ultimate resolution of such litigation should not have a material
        adverse effect on the Company's consolidated financial position or
        results of operations.

        Compliance with environmental laws and regulations designed to regulate
        the discharge of materials into the environment or otherwise protect the
        environment requires continuing management effort and expenditures by
        the Company. While no assurance can be given, the Company does not
        believe that the operating costs incurred in the ordinary course of
        business to satisfy air and other permit requirements, properly dispose
        of hazardous wastes and otherwise comply with these laws and regulations
        form or are reasonably likely to form a material component of its
        operating costs or have or are reasonably likely to have a material
        adverse effect on its competitive or consolidated financial positions.

                                       9

<PAGE>   10

                                  FURON COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 August 1, 1998
                                   (Unaudited)


6.      CONTINGENCIES (CONTINUED)

        As of August 1, 1998 the Company's reserves for environmental matters
        totaled approximately $1.6 million. The Company or one or more of its
        subsidiaries is currently involved in environmental investigation or
        remediation directly or as an EPA-named potentially responsible party or
        private cost recovery/contribution action defendant at various sites,
        including certain "superfund" waste disposal sites. While neither the
        timing nor the amount of the ultimate costs associated with these
        matters can be determined with certainty, based on information currently
        available to the Company, including investigations to determine the
        nature of the potential liability, the estimated amount of investigation
        and remedial costs expected to be incurred and other factors, the
        Company presently believes that its environmental reserves should be
        sufficient to cover the Company's aggregate liability for these matters
        and, while no assurance can be given, it does not expect them to have a
        material adverse effect on its consolidated financial position or
        results of operations. The actual costs to be incurred by the Company at
        each site will depend on a number of factors, including one or more of
        the following: the final delineation of contamination; the final
        determination of the remedial action required; negotiations with
        governmental agencies with respect to cleanup levels; changes in
        regulatory requirements; innovations in investigatory and remedial
        technology; effectiveness of remedial technologies employed; and the
        ultimate ability to pay of any other responsible parties.

                                       10

<PAGE>   11

                                  FURON COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 August 1, 1998
                                   (Unaudited)


7.      SHAREHOLDERS' EQUITY

        Earnings Per Share

        On November 20, 1997, the Company's Board of Directors approved a
        two-for-one stock split. One share of the Company's common stock for
        each full share of common stock outstanding to holders of record on
        December 2, 1997 was distributed on December 16, 1997. Accordingly, all
        numbers of Common Shares, and all per share data have been restated to
        reflect this stock split.

        The calculation of earnings per share is presented below:

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED                 SIX MONTHS ENDED
                                               ----------------------------      ----------------------------
        IN THOUSANDS, EXCEPT SHARE AND PER      AUGUST 1,        AUGUST 2,        AUGUST 1,        AUGUST 2,
          SHARE AMOUNTS                           1998             1997             1998             1997
        -----------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>              <C>              <C>        
        Net income                             $     5,915      $     5,224      $    11,334      $    10,201
                                               ===========      ===========      ===========      ===========
        Weighted average shares
          outstanding for basic income
          per share                             18,013,968       17,839,938       18,023,521       17,804,048
                                               -----------      -----------      -----------      -----------
        Effect of dilutive securities:
        Employee stock options and awards          545,999          788,048          603,771          681,152
                                               -----------      -----------      -----------      -----------
        Weighted average shares
          outstanding for diluted
          income per share                      18,559,967       18,627,986       18,627,292       18,485,200
                                               -----------      -----------      -----------      -----------
        Basic income per share                 $      0.33      $      0.29      $      0.63      $      0.57
                                               ===========      ===========      ===========      ===========
        Diluted income per share               $      0.32      $      0.28      $      0.61      $      0.55
                                               ===========      ===========      ===========      ===========
</TABLE>


        Employee Benefits Trust

        On March 24, 1998, the Company entered into an Employee Benefits Trust
        (the "Trust") with Wachovia Bank, N.A., Trustee. The Trust was
        established to provide a source of funds to assist the Company in
        meeting obligations under various employee benefit plans. During the six
        months ended August 1, 1998, the Company contributed approximately $1.6
        million to the Trust to purchase shares of the Company's common stock on
        the open market. During the first six months of fiscal year 1999, the
        Trust purchased 75,779 shares of common stock at an average cost of
        $21.73 per share (75,779 shares held at August 1, 1998).

                                       11

<PAGE>   12

                                  FURON COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 August 1, 1998
                                   (Unaudited)


7.      SHAREHOLDERS' EQUITY (CONTINUED)

        For financial reporting purposes, the Trust is consolidated with the
        Company. The shares are accounted for by the treasury stock method. The
        fair market value of the shares held by the Trust is shown as a
        reduction to shareholders' equity in the Company's consolidated balance
        sheet. Any dividend transactions between the Company and the Trust are
        eliminated. Shares will be released from the Trust as granted to
        participants in connection with various benefit plans. Common stock held
        in the Trust is not considered outstanding for earnings per share
        calculations until they are granted to participants. The Trustee is
        responsible for voting the shares of common stock held in the Trust.


8.      COMPREHENSIVE INCOME

        As of February 1, 1998, the Company adopted Statement of Financial
        Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income".
        SFAS No. 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 or shareholders'
        equity. SFAS No. 130 requires the change in the minimum pension
        liability and the foreign currency translation adjustments, which prior
        to adoption were reported separately in shareholders' equity, to be
        included in other comprehensive income. Prior years' financial
        statements have been reclassified to conform to these requirements.

        The components of comprehensive income, net of related tax, are as
        follows:

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED             SIX MONTHS ENDED
                                          ------------------------      -----------------------
                                          AUGUST 1,      AUGUST 2,      AUGUST 1,     AUGUST 2,
        IN THOUSANDS                        1998           1997           1998          1997
        --------------------------------------------------------------------------------------
<S>                                       <C>            <C>            <C>           <C>     
        Net income                        $  5,915       $  5,224       $ 11,334      $ 10,201
        Foreign currency translation
          adjustments                         (190)          (951)           576        (1,797)
                                          --------       --------       --------      --------
        Comprehensive income              $  5,725       $  4,273       $ 11,910      $  8,404
                                          ========       ========       ========      ========
</TABLE>


                                       12
<PAGE>   13

                                  FURON COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 August 1, 1998
                                   (Unaudited)


9.      SEGMENT INFORMATION

        The Company operates in two business segments: Industrial Products,
        including highly engineered seals and bearings, fluid handling,
        components, tapes, films and coated fabrics, hose and tubing, wire and
        cable, and plastic formed components; and Medical Device Products,
        including critical care products and infusion systems for medical and
        surgical applications.

        The factors impacting the Company's basis for reportable segments
        include separate management teams, infrastructures, and discrete
        financial information about each. Additionally, the long-term financial
        performance of the Medical Device Products segment is affected by an
        environment governed by regulatory standards.

        Sales, operating profit, interest expense, net and identifiable assets
        are set forth in the following table:

<TABLE>
<CAPTION>
                                         INDUSTRIAL       MEDICAL
IN THOUSANDS                              PRODUCTS     DEVICE PRODUCTS   ADJUSTMENT    CONSOLIDATED
---------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>             <C>             <C>     
Three months ended August 1, 1998:
----------------------------------
   Sales to unaffiliated customers        $ 96,544        $ 28,502                        $125,046
   Operating profit                          8,731           2,195                          10,926
   Interest expense, net                        --              --        $  3,262           3,262
   Identifiable assets                     216,710         151,988                         368,698

Six months ended August 1, 1998:
--------------------------------
   Sales to unaffiliated customers        $194,518        $ 50,333                        $244,851
   Operating profit                         18,740           2,308                          21,048
   Interest expense, net                        --              --        $  6,194           6,194
   Identifiable assets                     216,710         151,988                         368,698


Three months ended August 2, 1997:
----------------------------------
   Sales to unaffiliated customers        $ 91,852        $ 26,844                        $118,696
   Operating profit                          5,849           4,008                           9,857
   Interest expense, net                        --              --        $  2,681           2,681
   Identifiable assets                     204,791         126,014                         330,805

Six months ended August 2, 1997:
--------------------------------
   Sales to unaffiliated customers        $184,298        $ 54,047                        $238,345
   Operating profit                         12,352           7,685                          20,037
   Interest expense, net                        --              --        $  5,567           5,567
   Identifiable assets                     204,791         126,014                         330,805
</TABLE>

                                       13

<PAGE>   14

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

RESULTS OF OPERATIONS

The following discussion and analysis is based upon and should be read in
conjunction with the historical consolidated financial statements of the Company
and related notes thereto. The Company's fiscal 1999 second quarter ended August
1, 1998 and fiscal 1998 second quarter ended August 2, 1997. The fiscal 1999 and
1998 quarters each consisted of 13 weeks.


RESULTS OF OPERATIONS

THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 1998 COMPARED WITH THREE MONTHS AND
SIX MONTHS ENDED AUGUST 2, 1997

Net Sales. Net sales of $125.0 million for the three months ended August 1, 1998
("Q2 1999 Period") increased $6.3 million, or 5.3%, from $118.7 million for the
three months ended August 2, 1997 ("Q2 1998 Period"). Net sales of $244.9
million for the six months ended August 1, 1998 ("YTD Q2 1999 Period") increased
$6.6 million, or 2.7%, from $238.3 million for the six months ended August 2,
1997 ("YTD Q2 1998 Period"). The increase in net sales was the result of
increased demand for both industrial and medical device products. Net of
acquisitions and divestitures, sales for the Q2 1999 Period and YTD Q2 1999
Period increased 2.9% and 2.0%, respectively, over the same periods of the prior
year.

Gross Profit. Gross Profit of $40.2 million for the Q2 1999 Period increased
$1.7 million, or 4.5%, from $38.5 million in the Q2 1998 Period. Gross Profit of
$77.5 million for the YTD Q2 1999 Period increased $0.7 million, or 0.9% from
$76.8 million for the YTD Q2 1998 Period. The gross profit margin decreased to
32.1% for the Q2 1999 Period and to 31.6% for the YTD Q2 1999 Period from 32.4%
and 32.2% in the same periods of the prior year. The decrease in gross profit
margin was due to lower margins achieved by the Medical Device Products Segment
caused by lower volume and changes in product mix, which more than offset the
higher volumes and continued productivity improvements and cost containment
achieved by the Industrial Products Segment.

Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses of $29.3 million in the Q2 1999 Period
increased $0.7 million, or 2.3%, from $28.6 million in the Q2 1998 Period. This
increase was primarily due to SG&A expenses incurred as a result of
acquisitions. SG&A expenses of $56.8 million in the YTD Q2 1999 Period remained
flat compared to $56.8 million in the YTD Q2 1998 Period. SG&A expenses as a
percentage of sales decreased to 23.4% in the Q2 1999 Period and 23.2% in the
YTD Q2 1999 Period from 24.1% and 23.8%, respectively, in the same periods of
the prior year. The decline in SG&A expenses as a percentage of sales was
primarily due to an increase in sales volume and a relatively small increase in
expenses. Research and development expenses of $3.5 million for the Q2 1999
Period and $7.2 million for the YTD Q2 1999 Period increased $0.1 million and
$0.5 million, or 1.6% and 7.2%, respectively, from the same periods of the prior
year. This increase reflects the Company's continued commitment to new products
and materials development.

Other Income. Other income of $1.0 million for the Q2 1999 Period increased $0.8
million from $0.2 million for the Q2 1998 Period. Other income of $1.7 million
for the YTD Q2 1999 Period increased $1.3 million from $0.4 million for the YTD
Q2 1998 Period. The increase resulted primarily from the settlement of a lawsuit
in the Q2 1999 Period and a reduction in losses from foreign exchange
transactions compared to the prior periods.

                                       14
<PAGE>   15

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS (CONTINUED)

Interest Expense, Net. Interest expense, net of $3.3 million for the Q2 1999
Period and $6.2 million for the YTD Q2 1999 Period both increased $0.6 million
from the same periods of the prior year. The increase in the Company's interest
expense was primarily the result of the higher interest rates attributable to
the Company's subordinated debt, as compared to its previous financing vehicle.

Income Before Income Taxes. Income before income taxes of $8.6 million in the Q2
1999 Period increased $1.2 million, or 17.5%, from $7.4 million in the Q2 1998
Period. Income before incomes taxes of $16.5 million in the YTD Q2 1999 Period
increased $1.6 million, or 11.1%, from $14.9 million in the YTD Q2 1998 Period.
Net of acquisitions and divestitures, pretax results of operations were up 20.0%
from the Q2 1998 Period and 16.0% from the YTD Q2 1998 Period. This improvement
was generally the result of increased volume and continued productivity
improvements and cost containment in the Industrial Products Segment, offset
partially by lower margins in the Medical Device Products Segment caused by
changes in product mix and lower volume. Additionally, small increases in
operating and interest expense were offset by an increase in other income.

Provision for Income Taxes. The Company's effective tax rate for the Q2 and YTD
Q2 1999 Periods was 31.5%, compared with 28.9% and 31.5% for the same respective
periods of the prior year. The lower effective tax rate was primarily due to
increases in research and experimental credits and foreign tax credits.

SEGMENT RESULTS

A discussion of the operations of the business segments follows. The Company
operates in two business segments: Industrial Products, including highly
engineered seals and bearings, fluid handling components, tapes, films and
coated fabrics, hose and tubing, wire and cable, and plastic formed components;
and Medical Device Products, including critical care products, infusion systems
for medical and surgical applications. For additional financial information
about industry segments, see Note 9 of the "Notes to Condensed Consolidated
Financial Statements."

INDUSTRIAL PRODUCTS

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED               SIX MONTHS ENDED
                                             -------------------------       -------------------------
                                             AUGUST 1,       AUGUST 2,       AUGUST 1,       AUGUST 2,
        IN THOUSANDS                           1998            1997            1998            1997
        ----------------------------------------------------------------------------------------------
<S>                                          <C>             <C>             <C>             <C>     
        Sales                                $ 96,544        $ 91,852        $194,518        $184,298
        Operating profit                        8,731           5,849          18,740          12,352
        Operating profit before
          nonrecurring charges and 
          facilities rationalization            8,731           5,849          18,323          12,352
</TABLE>


                                       15
<PAGE>   16

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS (CONTINUED)

Net Sales. Industrial net sales for the Q2 1999 Period and YTD Q2 1999 Period
increased $4.7 million, or 5% and $10.2 million or 6% over the same periods of
the prior year. Net of acquisitions and divestitures, Industrial Products Q2
1999 Period net sales increased 7% compared to the Q2 1998 Period. Domestically,
the Company benefited from continued strength in certain markets. Sales to
commercial aircraft, truck, off-shore oil exploration, food and beverage and
business equipment markets were particularly strong compared to the same period
of the prior year. Continued softness in the electronics and semiconductor
markets contributed to lower sales for the Q2 1999 Period and YTD Q2 1999 Period
over the same periods of the prior year. Sustained demand in Europe across most
product lines during the Q2 1999 Period and an acquisition resulted in increased
net sales over the same period of the prior year of 36% (a 36.5% increase after
removing the effect of foreign currency exchange rate changes and 17% after
excluding the acquisition).

Gross Profit. The gross profit margin for the Q2 1999 Period and YTD Q2 1999
Period was 29.8%, an increase from 29.2% and 28.9%, respectively, over the same
periods of the prior year. This increase was the net result of spending controls
in variable and fixed overhead plus increased sales volume, partially offset by
additional sales with higher material content, as a percentage of net sales.

Selling, General and Administrative Expenses. SG&A expenses as a percentage of
net sales decreased 2.1% to 20.8% and 1.8% to 20.4% for the Q2 1999 Period and
YTD Q2 1999 Period from the same periods of the prior year. Lower general and
administrative expenses in several categories, including lower insurance, legal,
recruiting, and travel expenses, were partially offset by higher performance
based incentive compensation and rental expense.

Operating Profit, before Nonrecurring Charges and Facilities Rationalization.
Operating profit, before nonrecurring charges and facilities rationalization,
increased 49% to $8.7 million and 48% to $18.3 million for the Q2 1999 Period
and YTD Q2 1999 Period from the same periods of the prior year. The improvement
in profitability reflects higher net sales volumes, improved margins, and
reduced operating expenses.


MEDICAL DEVICE PRODUCTS

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED             SIX MONTHS ENDED
                                             ------------------------      ------------------------
                                             AUGUST 1,      AUGUST 2,      AUGUST 1,      AUGUST 2,
        IN THOUSANDS                           1998           1997           1998           1997
        -------------------------------------------------------------------------------------------
<S>                                          <C>            <C>            <C>            <C>    
        Sales                                $28,502        $26,844        $50,333        $54,047
        Operating profit                       2,195          4,008          2,308          7,685
        Operating profit before
          nonrecurring charges and 
          facilities rationalization           2,195          4,008          2,308          7,685
</TABLE>


Net Sales. Net sales for the Q2 1999 Period and YTD Q2 1999 Period increased
$1.7 million, or 6.2% and decreased $3.7 million or 6.9% over the same periods
of the prior year. The sales increase in the Q2 1999 Period was the net result
of a 41% increase in European sales, partially offset by a decline in domestic
sales. Contributing factors to the lower domestic sales in the Q2 1999 Period
included lower volume in the fluid and drug and infusion systems product lines.
The YTD Q2 1998 Period included unusually strong sales of infusion systems. Q2
1999 Period sales in Europe increased 41%, primarily due to an acquisition. The
impact on sales of unfavorable foreign exchange fluctuation was 0.8% and 1.8%
for the Q2 1999 Period and YTD Q2 1999 Period, respectively.

                                       16

<PAGE>   17

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS (CONTINUED)

Gross Profit. The gross profit as a percentage of sales for the Q2 1999 Period
was 40.0% compared to 43.3% for the Q2 1998 Period. The lower margin was the
result of lower domestic volume impact on overhead expense and unfavorable
product mix. In addition, gross margins were negatively impacted by costs
associated with the relocation of two manufacturing facilities in California to
Dublin, Ohio. Gross margins were also negatively impacted by an acquisition of a
business during the quarter with lower gross margins. Gross profit margin for
the YTD Q2 1999 Period was 38.8% as compared to 43.7% for the same period of the
prior year.

Selling, General and Administrative Expenses. SG&A expenses as a percentage of
net sales for the Q2 1999 Period and YTD Q2 1999 Period, were 32.3% and 34.2%,
compared to 28.4% and 29.4% in the same periods of the prior year. This is the
result of lower domestic sales, increased product development expenses and costs
associated with the integration of a European acquisition.

Operating Profit, before Nonrecurring Charges and Facilities Rationalization.
Operating profit, before nonrecurring charges and facilities rationalization,
decreased 45% to $2.2 million and 70% to $2.3 million for the Q2 1999 Period and
YTD Q2 1999 Period, from the same periods of the prior year. This reflects the
impact of lower domestic volumes on fixed overhead, unfavorable product mix and
increased operating expenses.


LIQUIDITY AND CAPITAL RESOURCES

On March 4, 1998, the Company completed the Offering of its 8.125% Senior
Subordinated Notes (see Note 4 of the "Notes to Condensed Consolidated Financial
Statements"). The net proceeds from the Offering were approximately $121.0
million. In conjunction with the Offering, the Company amended the credit
facility agreement to, among other things, reduce the maximum principal amount
available from $250.0 million to $200.0 million (the "Credit Facility"). The
Company used the net proceeds of the Offering to repay a portion of existing
indebtedness under the Credit Facility. Amounts borrowed under the Credit
Facility mature November 12, 2001. The Notes mature March 1, 2008.

Cash provided by operating activities. Cash provided by operating activities for
the Q2 FY 1999 Period decreased $0.9 million from $17.5 million in the same
period last year to $16.6 million. This decrease is primarily due to working
capital changes in inventory, accounts payable and accrued liabilities, income
taxes payable and other current assets and other current liabilities, net from a
$6.8 million source, to a $5.3 million source of cash for the Q2 FY 1998 Period
and Q2 FY 1999 Period, respectively.

Cash used in investing activities. During the Q2 FY 1999 Period, the Company
completed the acquisition of Corotec GmbH, a medical device supplier based in
Mainz, Germany. Purchase price payments were made during the Q2 FY 1999 Period.
During the Q2 FY 1999 Period, the Company invested $4.7 million in renovation of
existing facilities, leasehold improvements and the replacement of existing
equipment, an increase of $2.1 million from the same period of the prior year.

The Company believes that it generates sufficient cash flow from its operations
to finance near and long-term internal growth, capital expenditures and
principal and interest payments on its loans payable to banks and the Notes. The
Company continually evaluates its employment of capital resources, including
asset management and other sources of financing.

                                       17

<PAGE>   18

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

CONTINGENCIES

For information regarding environmental matters and other contingencies, see the
sections entitled "Business - Governmental Regulation" and "Legal Proceedings"
in Part I of the Company's 1998 Annual Report on Form 10-K and Note 6 of the
"Notes to Condensed Consolidated Financial Statements" in this 10-Q.

Year 2000 Problem and the Company's Readiness Program

The Year 2000 ("Y2K") Problem in computers arises from the common industry
practice of using two digits to represent a date in computer software code and
databases to enhance both processing time and save storage space. Therefore,
when dates in the year 2000 and beyond are indicated and computer programs read
date "00," the computer may default to the year "1900" rather than the correct
"2000." This could result in incorrect calculations, faulty data and computer
shutdowns, potentially impairing the conduct of business.

The Company has instituted a Y2K readiness program (the "Program") to address
these issues as they relate to the Company. The Company's Program is divided
into two phases and is being conducted in three areas. The two phases of the
Program are: (i) identifying potentially non-complaint areas and (ii) addressing
those areas to make them Y2K ready. This two phase process is being conducted
across three areas. The three areas include: (i) Information Technology Systems
and Equipment; (ii) Non-Information Technology Systems and Equipment, and (iii)
compliance of third party vendors and suppliers with which the Company has
material relationships.

The Company believes it has made a great deal of progress in Phase I of the
Program. With respect to Information Technology Systems and Equipment, the
Company has identified applications systems, hardware/networks, personal
computers and telecommunications equipment that is potentially Y2K sensitive.
With respect to Non-Information Technology Systems and Equipment, the Company is
in the process of identifying manufacturing equipment that is potentially Y2K
sensitive. The Company has already completed a survey of its complete product
line across both the Industrial Products and Medical Device Products Segments
and believes its product offering addresses material Y2K issues.

Phase II of the Company's Program is in process. The majority of application
systems and personal computers were replaced with Y2K ready systems, and the
Company expects the remaining systems to be Y2K ready by the end of 1998. The
Company believes a majority of its hardware/networks and telecommunications
systems are Y2K ready. With respect to Non-Information Technology Systems and
Equipment, the Company is currently in the process of identifying manufacturing
equipment that potentially has Y2K issues. The Company is contacting the
suppliers of its manufacturing equipment to determine whether the equipment is
Y2K ready. Large scale testing to verify that the Company's Y2K ready
Information Technology and Non-Information Technology Systems and Equipment are
operational is expected to begin the first quarter of 1999 and is expected to
be completed by mid-year 1999.

                                       18

<PAGE>   19

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Year 2000 Problem and the Company's Readiness Program (continued)

The Company has identified its key third party vendors and suppliers and has
asked them to disclose their state of Y2K readiness. The Company expects to
identify and audit selected "critical" suppliers, and develop strategies for
working with them through Y2K issues and develop contingency plans in the event
of a problem with obtaining materials from these "critical" suppliers. The
Company intends to survey its key customers to determine their state of Y2K
readiness. For the six months ended August 1, 1998, no single customer accounted
for more than 4% of the Company's net sales of Industrial Products or more than
7% of the Company's net sales of Medical Device Products.

The Company expended approximately $9 million between 1994 and 1997 replacing
Information Technology Systems and Equipment with systems and equipment that is
Y2K ready. The Company has expended approximately $1 million and expects to have
recurring operating costs of approximately $1.2 million per year to lease
upgraded personal computers. The system and equipment replacements that have
been made were scheduled to occur without regard for the Program and the Program
is being conducted by the Company's employees. While no assurance can be given,
at this time the Company does not anticipate that the Y2K Problem will have a
material adverse impact on the Company's business, financial condition or
results of operation.

Euro Conversion

The Euro is scheduled to be introduced on January 1, 1999, at which time the
conversion rates between legacy currencies and the Euro will be set for the
eleven participating EMU member countries. However, the legacy currencies in
those countries 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 eleven participating countries.

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. The increased price transparency
resulting from the use of a single currency may affect the ability of the
Company to price its products differently in the various European markets.
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 has not yet determined
what the effect of the transition to the Euro will have on the results of
operations, financial position or cash flows of the Company.

                                       19

<PAGE>   20

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

STATEMENT REGARDING FORWARD LOOKING DISCLOSURE

This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended and Section
21E of the Securities Exchange Act of 1934, as amended, including, without
limitation, statements that include the words "believes," "expects,"
"anticipates," or similar expressions and statements relating to anticipated
cost savings, the Company's Year 2000 readiness effort and progress toward that
goal, Euro conversion, the Company's strategic plans, capital expenditures,
industry trends and prospects and the Company's financial position. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements of the
Company to differ materially from those expressed or implied by such
forward-looking statements. Although the Company believes that its plans,
intentions and expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such plans, intentions or expectations
will be achieved. For a more complete discussion of risk factors, please refer
to the "Risk Factors" section of the Company's 1998 Annual Report on Form 10-K.
All written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by the
Cautionary Statements contained in this Form 10-Q and Cautionary Statements and
the "Risk Factors" section in the Company's 1998 Annual Report on Form 10-K.

                                       20

<PAGE>   21

                           PART II - OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS.

           Not applicable.

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS.

           Not applicable.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES.

           Not applicable.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

           The Annual Meeting of the Shareholders of the registrant was held on
           June 2, 1998. The following matters were voted upon and approved at
           the meeting:

<TABLE>
<CAPTION>
                                            VOTES CAST
                            -----------------------------------------                   BROKER
          MATTER                 FOR          AGAINST      WITHHELD     ABSTENTIONS    NONVOTES
 -------------------------- ------------- -------------- ------------ -------------- -----------
<S>                            <C>           <C>            <C>           <C>          <C>
  1. Election of Class II
     Directors:

     Cochrane Chase            15,423,167         -          60,182           -            -
     William C. Shepherd       15,416,984         -          66,365           -            -
     

  2. Approval of an
     Amendment to the
     Company's 1994
     Employees' Stock
     Purchase Plan to
     Increase the Number of
     Shares Authorized to
     be Issued under the
     Plan From 400,000 to
     800,000 Shares            15,082,045      317,406          -           83,898         -

  3. Ratification of the
     Appointment of Ernst &
     Young LLP as the
     Company's Independent
     Auditors for the
     Fiscal Year Ending
     January 30, 1999          14,573,595       27,113          -          882,641         -
</TABLE>

                                       21
<PAGE>   22

                           PART II - OTHER INFORMATION


ITEM 5. OTHER INFORMATION.

The Company's Bylaws, as amended through the date of this Report, provide that
shareholder nominations of directors may be made and other business may be
brought by shareholders before an annual or special meeting only in compliance
with certain advance notice and informational requirements. In order to be
timely with respect to the Company's 1999 Annual Meeting of Shareholders (which
is presently expected to be held in June 1999), a shareholder's notice of
director nominations or of business to be brought before such Annual Meeting
must be delivered to the Secretary of the Company no earlier than February 2,
1999 and no later than March 4, 1999. Such notice must also contain certain
additional information required by the Bylaws and otherwise comply with
applicable legal requirements. The advance notice and informational requirements
set forth in the Company's Bylaws do not alter the requirements or conditions
established by the Securities and Exchange Commission for shareholder proposals
to be included in the Company's proxy materials for the 1999 Annual Meeting.

The advance notice requirements are set forth in the amendments to the Company's
Bylaws filed as Exhibit 3.1A to this Report and are incorporated herein by this
reference. Shareholders may obtain a complete copy of the Company's Bylaws, as
amended, by submitting a request to the Secretary of the Company at the
Company's principal executive office, 29982 Ivy Glenn Drive, Laguna Niguel,
California 92677-2044, telephone number (949) 831-5350.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

           (a)    Exhibits:

           3.1A      Bylaw Amendments effective August 25, 1998.

           27        Financial Data Schedule.

           (b) Reports on Form 8-K:

                 None

                                       22

<PAGE>   23

                               PART II (CONTINUED)


                                   SIGNATURES

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.



                                  FURON COMPANY

                                   REGISTRANT

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


/S/MONTY A. HOUDESHELL                      /S/DAVID L. MASCARIN
---------------------------------------     ------------------------------------
Monty A. Houdeshell                         David L. Mascarin
Vice President, Chief Financial Officer     Controller


September 9, 1998

                                       23

<PAGE>   24

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number              Description
------              -----------
<C>                 <S>
  3.1A              Bylaw Amendments effective August 25, 1998.

 27                 Financial Data Schedule.
</TABLE>