<PAGE>
 
________________________________________________________________________________
________________________________________________________________________________


                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 June 30, 1998

                                       OR

[   ]  Transition report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934
       For the transition period from ___________ to ___________


                        Commission file number 0-27798

                       WORKGROUP TECHNOLOGY CORPORATION
            (Exact name of registrant as specified in its charter)


               Delaware                                   04-3153644
    (State or other jurisdiction            (I.R.S. Employer Identification No.)
    of incorporation or organization)


91 Hartwell Avenue, Lexington, Massachusetts                      02421
  (Address of principal executive offices)                      (Zip code)


      Registrant's telephone number, including area code:  (781) 674-2000

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


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

              Class                         Outstanding at August 7, 1998
   ____________________________             _____________________________
   Common Stock, $.01 par value                         8,388,500

________________________________________________________________________________
________________________________________________________________________________
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                                     INDEX

                                                                  Page(s)
                                                                  -------
  
Part I.  Financial Information:
 
        Item 1.
 
                 Condensed Consolidated Balance Sheets
                   at June 30, 1998 and March 31, 1998                2
 
                 Consolidated Statements of Operations for the
                   three months ended June 30, 1998 and 1997          3
 
                 Consolidated Statements of Cash Flows for the
                   three months ended June 30, 1998 and 1997          4
 
                 Notes to Consolidated Financial
                   Statements                                         5
 
        Item 2.  Management's Discussion and
                   Analysis of Financial Condition
                   and Results of Operations                         6-8


Part II.  Other Information:

        Item 1.  Legal Proceedings                                    9
 
        Item 6.  Exhibits and Reports on Form 8-K                     9
 
Signatures                                                            10
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)
 
<TABLE> 
<CAPTION> 
                                                          June 30,        March 31,
                                                           1998            1998
                                                        (unaudited)
<S>                                                   <C>               <C>  
ASSETS                                          
-----------------------------------------------------------------------------------
Current assets:                                 
   Cash and cash equivalents                             $ 28,733         $ 31,779
   Accounts receivable, net                                 1,599            1,497
   Prepaid expenses and other current assets                  276              202
                                                         --------         --------
         Total current assets                              30,608           33,478
                                                         --------         --------
Property and equipment, net                                 1,552            1,574
Other assets                                                   17               23
                                                         --------         --------
                                                         $ 32,177         $ 35,075
                                                         ========         ========
LIABILITIES AND STOCKHOLDERS' EQUITY            
-----------------------------------------------------------------------------------
Current liabilities:                            
   Accounts payable                                      $    547         $  1,031
   Accrued expenses                                         1,966            1,982
   Accrued royalties                                          183              139
   Deferred  revenue                                        1,944            1,884
                                                         --------         --------
         Total current liabilities                          4,640            5,036
                                                         --------         --------                   
                                                
Stockholders' equity:                           
   Common stock                                                84               84
   Additional paid-in capital                              44,144           44,142
   Accumulated translation adjustment                         (17)             (13)
   Accumulated deficit                                    (16,674)         (14,174)
                                                         --------         --------
         Total stockholders' equity                        27,537           30,039
                                                         --------         --------                   
                                                         $ 32,177         $ 35,075
                                                         ========         ======== 
</TABLE> 
 
The accompanying notes are an integral part of the consolidated financial
statements.

                                       2
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
 
<TABLE> 
<CAPTION>  
                                                 Three months ended June 30,
                                                  1998                1997
                                                         (unaudited)
-----------------------------------------------------------------------------
<S>                                           <C>                 <C> 
Revenue                                
  Software licenses                             $   676              $   727
  Maintenance and services                        1,188                1,072
                                                -------              -------
       Total revenue                              1,864                1,799
                                       
Cost of revenue                        
  Cost of software licenses                          56                   66
  Cost of maintenance and services                  846                  770
                                                -------              -------
       Total cost of revenue                        902                  836
                                       
Gross profit                                        962                  963
                                       
Operating expenses                     
  Selling and marketing                           1,736                1,600
  Research and development                        1,703                1,354
  General and administrative                        427                  408
                                                -------              -------
       Total operating expenses                   3,866                3,362
                                                -------              -------                                   
                                       
Loss from operations                             (2,904)              (2,399)
                                       
Interest income, net                                404                  446
                                                -------              -------
                                       
Loss before income taxes                         (2,500)              (1,953)
                                       
Provision for income taxes                            -                   30
                                                -------              -------
                                       
Net loss                                        $(2,500)             $(1,983)
                                                =======              =======
                                       
                                       
Basic and diluted net loss per share            $ (0.30)             $ (0.24)
                                                =======              =======
                                       
Basic and diluted shares outstanding              8,370                8,125
                                                =======              =======
</TABLE> 
 
 
The accompanying notes are an integral part of the consolidated financial
statements.

                                       3
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

<TABLE> 
<CAPTION>  
                                                            Three months ended June 30,  
                                                              1998            1997
                                                                   (unaudited)    
--------------------------------------------------------------------------------------
<S>                                                       <C>             <C> 
Cash flows from operating activities:                                    
   Net loss                                                 $(2,500)        $(1,983)
   Adjustments to reconcile net loss to net cash                                                          
       used in operating activities:                                         
     Depreciation and amortization                              233             167
     Provision for doubtful accounts                              -              50
     Changes in operating assets and liabilities:                                                      
       Accounts receivable                                     (102)            582
       Prepaid expenses and other current assets                (74)            (90)
       Other assets                                               6               -
       Accounts payable                                        (484)             89
       Accrued expenses                                         (16)            117
       Accrued royalties                                         44             (87)
       Deferred revenue                                          60             (35)
                                                            -------         -------
       Net cash used in operating activities                 (2,833)         (1,190)
                                                            
Cash flows from investing activities:                                    
       Purchases of property and equipment                     (211)           (140)
                                                             
Cash flows from financing activities:                                    
       Proceeds from issuance of common stock                     2              29
       Payments of capital lease obligations                      -              (5)
                                                            -------         -------
                                                                         
       Net cash provided by financing activities                  2              24
                                                             
Effect of exchange rate changes on cash                          (4)              7
                                                            -------         -------
Net decrease in cash and cash equivalents                    (3,046)         (1,299)
                                                                         
Cash and cash equivalents, beginning of period               31,779          37,951
                                                            -------         -------
Cash and cash equivalents, end of period                    $28,733         $36,652
                                                            =======         =======
</TABLE> 
 
The accompanying notes are an integral part of the consolidated financial
statements.

                                       4
<PAGE>
 
                       WORKGROUP TECHNOLOGY CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. NATURE OF BUSINESS

   Workgroup Technology Corporation (the "Company") was incorporated on May 11,
   1992.  WTC SolutionCenter(TM), the Company's line of productivity enhancing
   products and services, provides both production-proven, enterprise Product
   Data Management (through the CMS product) and real-time Knowledge-based
   Program Management solutions for product development.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Basis of Presentation

   The accompanying unaudited consolidated financial statements and notes do not
   include all of the disclosures made in the Company's Annual Report on Form
   10-K for fiscal 1998, which should be read in conjunction with these
   statements.  However, in the opinion of Management, the statements include
   all adjustments necessary for a fair presentation of the quarterly results.
   All adjustments made to these financial statements were considered to be of a
   normal and recurring nature.  The results for the three month period ended
   June 30, 1998 are not necessarily indicative of the results to be expected
   for the full fiscal year.

   Risks and Uncertainties

   The preparation of financial statements in conformity with generally accepted
   accounting principles requires Management to make estimates and assumptions
   that affect the reported amounts of assets and liabilities and disclosures of
   contingent assets and liabilities at the date of the financial statements and
   the reported amounts of revenues and expenses during the reporting period.
   Actual results could differ from those estimates and would impact future
   results of operations and cash flows.

3. NET LOSS PER SHARE

   The Company's basic net loss per share is computed by dividing net loss by
   the weighted average number of shares of common stock outstanding.  The
   Company's diluted net loss per share is based on the same computation but
   includes dilutive potential common shares.  Potential common shares include
   shares issuable upon the exercise of stock options or warrants, net of shares
   assumed to have been purchased with the proceeds.  Potential common shares
   were antidilutive for each of the periods ended June 30, 1998 and 1997 and
   therefore the basic and diluted net loss per share were the same.

   Options to purchase weighted average shares of the Company's common stock of
   2,047,745 and 1,417,600 were outstanding for the periods ended June 30, 1998
   and 1997, respectively, at weighted average prices of $3.94 and $3.60,
   respectively, but were not included in the computation of diluted earnings
   per share because they were antidilutive.

                                       5
<PAGE>
 
                        WORKGROUP TECHNOLOGY CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                        

RESULTS OF OPERATIONS
---------------------

Revenue.  The Company's revenue consists of license fees for its CMS family of
software products and fees for professional services and software maintenance.
Revenue for the three months ended June 30, 1998 increased 3.6% to $1,864,000
from $1,799,000 in the comparable period of fiscal 1998.  The maintenance and
services revenue increase of 10.8% in the first quarter of fiscal 1999 to
$1,188,000 from $1,072,000 in the first quarter of fiscal 1998 was partially
offset by a software license revenue decrease of 7.0% in the first quarter of
fiscal 1999 to $676,000 from $727,000 in the first quarter of fiscal 1998.  The
increase in maintenance and services revenue resulted primarily from higher
maintenance revenue as a result of an increase in the maintenance base.

Cost of Revenue and Gross Profit.  The Company's cost of software license
revenue consists primarily of third party royalties payable upon the license of
products for which another party is entitled to receive compensation, as well as
costs associated with media, packaging, documentation and delivery of the
Company's products.  As a result of lower software license revenue, gross profit
associated with software licenses for the first quarter of fiscal 1999 was
$620,000 versus $661,000 in the first quarter of fiscal 1998.  As a percentage
of software license revenue, gross profit increased slightly to 91.7% in the
first quarter of fiscal 1999 from 90.9% in the first quarter of fiscal 1998.

Cost of maintenance and services revenue consists primarily of personnel costs
for the Company's customer support and professional services organizations. The
Company's gross profit on maintenance and services revenue increased to $342,000
or 28.8% of maintenance and services revenue in the first quarter of fiscal 1999
versus $302,000 or 28.2% of maintenance and service revenue in the first quarter
of fiscal 1998.  This increase in gross profit is due to an increase in
maintenance revenue for the first quarter of fiscal 1999.

Total gross profit as a percentage of total revenue decreased to 51.6% in the
first quarter of fiscal 1999 from 53.5% in the first quarter of fiscal 1998 as a
result of a higher proportion of revenue from maintenance and services versus
software licenses in the current fiscal quarter.

Selling and Marketing.  Selling and marketing expenses increased $136,000 or
8.5% to $1,736,000 in the first quarter of fiscal 1999 from $1,600,000 in the
same period of fiscal 1998.  This increase resulted primarily from an increase
in the number of employees in the sales organization as well as costs associated
with implementing new equipment and information tools within the sales
organization.  As a result of this increase, selling and marketing expenses as a
percentage of revenue increased to 93.1% in the first quarter of fiscal 1999
from 88.9% in the same period of fiscal 1998.

                                       6
<PAGE>
 
                        WORKGROUP TECHNOLOGY CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                        

Research and Development.  Research and development expenses increased 25.8% in
the first quarter of fiscal 1999 to $1,703,000 or 91.4% of revenue from
$1,354,000 or 75.3% of revenue for the same period of fiscal 1998.  The increase
in fiscal 1999 resulted primarily from the employment of additional staff and
external contractors to develop and enhance the Company's products.

General and Administrative. General and administrative expenses increased 4.7%
to $427,000 or 22.9% of revenue in the first quarter of fiscal 1999 from
$408,000 or 22.7% of revenue in the same period of fiscal 1998.

Interest Income, (Net).  Interest income, net consists of interest earned on
cash and cash equivalents. As a result of a decrease in the cash and cash
equivalent balances, interest income for the first quarter decreased 9.4% to
$404,000 in fiscal 1999 from $446,000 in fiscal 1998.

Provision for Income Taxes.  For the first quarter of fiscal 1999, the provision
for income taxes was zero compared to $30,000 for the first quarter of fiscal
1998.  The provision for taxes historically has resulted from estimated state
taxes as well as taxable income in the Company's foreign subsidiaries.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Cash and cash equivalents at June 30, 1998 decreased $3,046,000 to $28,733,000
from $31,779,000 at March 31, 1998.  This decrease resulted primarily from the
Company's net loss during the quarter as well as expenditures for capital
equipment.  Working capital decreased $2,474,000 to $25,968,000 at June 30, 1998
from $28,442,000 at fiscal year end.

The Company believes its existing cash and cash equivalent balances will be
sufficient to meet its cash requirements for at least the next year.

To date, neither foreign currency exposure nor inflation has had a material
impact on the Company's financial results.

                                       7
<PAGE>
 
                        WORKGROUP TECHNOLOGY CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                        

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
----------------------------------------------

From time to time information provided by the Company, statements made by its
employees or information included in its filings with the Securities and
Exchange Commission (including this Form 10-Q) may contain statements which are
not historical facts, so-called "forward looking statements", and which involve
risks and uncertainties. The Company's actual future results may differ
significantly from those stated in or implied by any forward-looking statements.
Factors that may cause such differences include, but are not limited to, the
factors discussed below.  Each of these factors, and others, are discussed from
time to time in the Company's filings with the Securities and Exchange
Commission.

The Company's future results may be subject to substantial risks and
uncertainties.  Because the Company derives the majority of its revenue from
software license fees, the Company's quarterly and annual operating results are
sensitive to the size, timing and shipment of individual orders, customer order
deferrals in anticipation of new products or the lengthening of the sales cycle
either generally or with respect to individual customers.  In addition, the
Company's continued growth is dependent on achieving broader market acceptance
of its products and the ability of the Company to introduce enhancements and
additional integrations to its products in a timely manner to meet the evolving
needs of its customers.  In addition, the Company relies on certain intellectual
property protections to preserve its intellectual property rights.  Any
invalidation of the Company's intellectual property rights or lengthy and
expensive defense of those rights could have a material adverse effect on the
Company.  The segment of the software industry in which the Company is engaged
is extremely competitive.  Certain current and potential competitors of the
Company are more established and benefit from greater market recognition and
have substantially greater financial, development and marketing resources than
the Company.

The Company's quarterly and annual operating results are impacted by a variety
of factors that could materially adversely affect revenues and profitability,
including: the timing and shipment of individual orders and enhancements to the
Company's products, the introduction and market acceptance of new integrations
with the Company's products and changes or anticipated changes in economic
conditions.  Because the Company's operating expenses are relatively fixed, any
unanticipated shortfall in revenue in a quarter may have an adverse impact on
the Company's results of operations for that quarter.  As a result of the
foregoing and other factors, the Company may experience material fluctuations in
future operating results on a quarterly or annual basis which could materially
and adversely affect its business, financial condition, operating results and
stock price.

                                       8
<PAGE>
 
                        WORKGROUP TECHNOLOGY CORPORATION
                          PART II   OTHER INFORMATION


Item 1.  Legal Proceedings

         The Company is not a party to any litigation that it believes would
         have a material impact on its business.


Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

             None

         (b) Reports on Form 8-K

             No reports on Form 8-K were filed during the quarter ended
             June 30, 1998.

                                       9
<PAGE>
 
                                   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.


                                  WORKGROUP TECHNOLOGY CORPORATION
                                  Registrant



Date:  August 11, 1998            /s/ John P. McDonough
      ----------------            ------------------------------------
                                  John P. McDonough
                                  President, Chief Executive Officer,
                                  and Secretary


Date:  August 11, 1998            /s/ Diane M. Marcou
      ----------------            ----------------------------------
                                  Diane M. Marcou
                                  Vice President- Finance & Administration,
                                  Treasurer and Assistant Secretary

                                       10