<PAGE>
 
                                 UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549
                            ----------------------

                                   FORM 10-Q

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

For the quarterly period ended 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:  333-34061

                         CAMBRIDGE, INDUSTRIES, INC.
                       CE AUTOMOTIVE TRIM SYSTEMS, INC.
            (Exact name of registrant as specified in its charter)


Cambridge -- DELAWARE                                  Cambridge -- 38-3188000
CE-Michigan                                            CD-38-2173408
(State or other jurisdiction of                        (I.R.S Employer
incorporation or organization                          identification No.)

555 Horace Brown Drive                                 48071
Madison Heights, MI                                    (Zip Code)
(Address of principal executive offices)

(248) 616-0500                                         None
(Registrant's telephone number, including area code)   (Name of exchange on
                                                        which registered)


     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 the
filing requirements for the past 90 days.  Yes  [ ]  No  [X]

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

     Number of shares of Common Stock, $0.01 par value per share, outstanding at
June 30, 1998: 1,000
<PAGE>
 
                          CAMBRIDGE INDUSTRIES, INC.
                                   FORM 10Q
                      FOR THE QUARTER ENDED JUNE 30, 1998
                                     INDEX

<TABLE> 
<CAPTION> 

                                                                        PAGE NO.
                                                                        --------
<S>                                                                     <C> 
Part I -- Financial Information:
  Item 1 -- Financial Statements
     Condensed Consolidated Balance Sheets -- June 30, 1998 
      and December 31, 1997                                                 3
     Condensed Consolidated Statements of Operations -- Three 
      and Six Months Ended June 30, 1998 and 1997                           4
     Condensed Consolidated Statements of Cash Flows -- Six 
      Months Ended June 30, 1998 and 1997                                   4
     Notes to the Condensed Unaudited Consolidated Financial
      Statements                                                            6
  Item 2 -- Management's discussion and analysis of financial 
     condition and results of operations                                   14 
</TABLE> 

<PAGE>
 
                         Part I - Financial Information
                                        
Item 1 - Financial Statements

                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                          June 30,  December 31,
                                                           1998        1997
                                                           ----        ----
                                                        (unaudited)    
<S>                                                    <C>            <C>
Assets
Current assets:
 
  Cash ................................................ $  1,867      $  3,788
  Receivables .........................................   69,923        82,117
  Inventories (Note 3) ................................   24,774        25,111
  Reimbursable tooling costs ..........................   20,261        16,913
  Deferred income taxes and other .....................   14,192        14,663
                                                        --------      --------
Total current assets ..................................  131,017       142,592
Property, plant and equipment, net of accumulated
 depreciation of $80,848 and $66,452 respectively .....  197,975       197,635
Other assets ..........................................   27,757        29,257
                                                        --------      --------
Total assets .......................................... $356,749      $369,484
                                                        ========      ========
Liabilities and stockholder's equity (deficit)
Current liabilities:
  Current portion of long-term debt ................... $ 11,583      $  7,765
  Accounts payable ....................................   44,968        48,759
  Accrued liabilities .................................   28,305        37,691
                                                        --------       --------
Total current liabilities .............................   84,856        94,215
Noncurrent liabilities:
  Long-term debt ......................................  312,699       314,789
  Workers' compensation ...............................    1,026         1,251
  Postretirement health care benefits .................   22,096        20,669
  Deferred income taxes and other liabilities .........   11,059        11,054
                                                        --------      --------
Total liabilities .....................................  431,736       441,978
                                                        --------       --------
Commitments and contingencies (Note 5)
Stockholder's equity (deficit):
  Common stock, $.01 par value, 3,000 shares
   Authorized, 1,000 shares issued and
   outstanding ........................................        1             1
  Paid-in capital .....................................   17,538        17,538
  Accumulated other comprehensive income. .............     (306)         (225)
  Accumulated deficit .................................  (92,220)      (89,808)
                                                         -------       -------
 
Total Stockholder's deficit ...........................  (74,987)      (72,494)
                                                         -------       -------
Total liabilities and stockholder's equity (deficit)... $356,749      $369,484
                                                        ========      ========
 
</TABLE>
See accompanying Notes to Condensed Unaudited Consolidated Financial Statements

                                       3
<PAGE>
 
                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)
                            (dollars in thousands)
<TABLE> 
<CAPTION> 

                                              Three Months Ended    Six  Months Ended
                                                   June  30,            June 30,
                                              -------------------   ------------------

                                                 1998       1997      1998       1997  
                                                 ----       ----      ----       ----
  <S>                                         <C>        <C>      <C>       <C>
Sales ........................................ $119,719   $96,838  $240,860  $186,631
 
Cost of sales ................................  103,873    81,998   211,735   159,626
                                               --------   -------   -------   -------
   
Gross profit .................................   15,846    14,840    29,125    27,005
 
Selling, general and administrative expenses..    9,010     6,597    17,635    12,793
                                                -------   -------   -------   -------
 
Income from Operations........................    6,836     8,243    11,490    14,212
 
Other expense (income):
 
  Interest expense ...........................    7,696     6,114    15,676    11,781
 
  Other, net .................................     (207)       99       (96)      (24)
                                                 -------   -------   -------   -------
 
Income (loss) before income tax  .............     (653)    2,030    (4,090)    2,455
 
Income tax expense (benefit) .................     (305)      725    (1,678)      920
                                                 -------   -------   -------   -------
Net income (loss) ............................  $  (348)  $ 1,305  $ (2,412) $  1,535
                                                ========   =======  ========  ========
 </TABLE>


See accompanying Notes to Condensed Unaudited Consolidated Financial Statements

                                       4
<PAGE>


                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                  (Unaudited)
                             (dollars in thousands)
<TABLE>
<CAPTION>
                                                                        Six Months Ended
                                                                            June 30,
                                                                      ------------------------
                                                                        1998            1997
                                                                      --------        --------
<S>                                                                   <C>             <C>
Cash flows from operating activities:
    Net income (loss)..........................................         (2,412)       $  1,535
Adjustments to reconcile net income to net cash provided by
  (used in) operating activities:
    Depreciation and amortization .............................         15,139          10,956
    Postretirement benefits expenses, net of cash payments.....          1,427           1,196
    Deferred income tax provision..............................                          2,883
Changes in assets and liabilities, excluding the effect of
  acquisitions:
    Receivables................................................         13,372           1,927
    Inventories................................................            839           1,677
    Reimbursable tooling costs.................................         (3,676)         (5,393)
    Accounts payable and accrued liabilities...................        (14,367)          1,728
    Other......................................................          1,187           3,354
                                                                      --------        --------
Net cash provided by (used in) operating activities............         11,509          19,863
Cash flows from investing activities:
    Acquisitions, net of cash acquired.........................           (850)         (2,366)
    Purchase of property, plant and equipment..................        (11,546)         (8,642)
                                                                      --------        --------
Net cash used in investing activities..........................        (12,396)        (11,008)

Cash flows from financing activities:
    Net change in revolving debt...............................          4,000          (9,000)
    Repayment of long-term debt and capital lease obligations..         (4,953)         (4,540)
                                                                      --------        --------
Net cash provided by (used in) financing activities............           (953)        (13,540)
                                                                      --------        --------
Effect of foreign currency rate fluctuations on cash...........            (81)             (2)
                                                                      --------        --------
Net increase (decrease) in cash................................         (1,921)         (4,687)
Cash at beginning of period....................................          3,788          11,942
                                                                      --------        --------
Cash at end of period..........................................       $  1,867        $  7,255
                                                                      ========        ========
</TABLE>

See accompanying Notes to Condensed Unaudited Consolidated Financial Statements.

                                       5
<PAGE>
 
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)

1.   Financial Statements

     The accompanying condensed unaudited consolidated financial statements have
been prepared in accordance with Rule 10-01 of Regulation S-X and, in the
opinion of management, contain all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the financial position of
Cambridge Industries, Inc. and its subsidiaries (the "Company") as of June 30,
1998 and the results of its operations for the three and six month periods ended
June 30, 1998 and 1997, and its cash flows for the six month period ended 
June 30, 1998.

     The condensed unaudited consolidated financial statements should be read in
conjunction with the Company's consolidated financial statements as of December
31, 1997 and 1996 and for each of the three years in the period ended December
31, 1997. The results of operations for the three and six month periods ended
June 30, 1998 and 1997 are not necessarily indicative of the operating results
for the full year.

     Certain reclassifications have been made to prior year financial statements
to conform to the 1998 presentations.

2.   Changes in Accounting Principles

     Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, ("SFAS 130"), "Reporting Comprehensive Income."
SFAS 130 requires that all items recognized under accounting standards as
components of comprehensive income be reported in an annual financial statement
that is displayed with the same prominence as other annual financial statements.
This Statement also requires that an entity classify items of other
comprehensive income by their nature in an annual financial statement. For
example, other comprehensive income may include foreign currency translation
adjustments, minimum pension liability adjustments, and unrealized gains and
losses on marketable securities classified as available-for-sale. Annual
financial statements for prior periods will be reclassified, as required. The
Company's total comprehensive income were as follows:

<TABLE>
<CAPTION>
                                                                   Three Months Ended             Six Months Ended
                                                                        June 30,                      June 30,
                                                                  ----------------------      -------------------------
                                                                    1998          1997           1998            1997
                                                                  --------      --------      ---------       ---------
                                                                  (Dollars in Thousands)        (Dollars in Thousands)
<S>                                                               <C>          <C>            <C>              <C>
Net income (loss)                                                 $   (348)    $   1,305      $  (2,412)       $  1,535
Unrealized foreign currency translation                                (24)           (3)           (81)             (2)
                                                                  --------      --------      ---------       ---------
Total comprehensive income                                        $   (372)    $   1,302      $  (2,493)       $  1,533
                                                                  ========      ========      =========       =========

</TABLE>
                                       6
<PAGE>
 
3.   Inventories

     At June 30, 1998 (unaudited) and December 31, 1997, inventories consist of
the following:

<TABLE>
<CAPTION>
 
                                                        June 30,   December 31,
                                                          1998         1997
                                                       ---------- -------------
                                                         (dollars in thousands)
<S>                                                     <C>        <C>
Finished goods .......................................   $ 5,415        $ 6,773
Work-in-process ......................................     7,658          6,598
Raw materials ........................................    11,280         10,811
Supplies .............................................     1,716          2,152
                                                         -------        -------
     Total ...........................................    26,069         26,334
Less allowance for obsolescence and lower of cost or 
 market reserve.......................................    (1,295)        (1,223)
                                                         -------        -------
     Inventories .....................................   $24,774        $25,111
                                                         =======        =======
</TABLE>

4.   STOCKHOLDER'S DEFICIT

A summary of the changes in the Company's stockholder's deficit accounts 
follows (in thousands):

<TABLE>
<CAPTION>
                          Common             Accumulated     Minimum
                           Stock               other         pension
                         $.01 par  Paid-in  comprehensive   liability   Accumulated
                           Value   Capital     income      adjustments    deficit      Total
                         --------  -------  -------------  -----------  -----------    -----
<S>                       <C>      <C>       <C>           <C>          <C>         <C>
December 31 1997            $  -   $17,539     $(225)         $  -       $(89,908)   $(72,494)
Net loss                    $  -         -         -             -         (2,412)     (2,412)
Unrealized foreign
 currency translation       $  -         -       (81)            -              -         (81)
                            ----   -------     -----          ----       --------    --------
June 30, 1998               $  -   $17,539     $(306)         $  -       $(92,220)   $(74,987)
                            ====   =======    ======          ====       ========    ========
</TABLE>
                                                             
5.   Commitment and Contingencies

     The Company has letters of credit outstanding of $5,850 at June 30, 1998.

     Subsequent to June 30, 1998, the Company settled its dispute with GenCorp, 
Inc. (GenCorp) regarding the purchase price adjustment for the Company's 
purchase of GenCorp's reinforced plastics division. The settlement of this 
matter will not materially impact the Company's third quarter operating results 
or cash flows.

     The Company is also subject to other lawsuits and claims pending or 
asserted with respect to matters in the ordinary course of business. The Company
does not believe that the outcome of these uncertainties will have a material 
impact on the Company's financial position or results of operations.

6.   Acquisitions

     Effective January 1, 1998, the Company acquired substantially all of the
operating assets of Livingston, Inc. ("Livingston") for $2,400, comprised of
$600 in cash, a seller note of $1,550, and acquisition costs of $250, and the
assumption of certain liabilities of $1,130. The Company accounted for this
acquisition under the purchase method. The Company's operating results for the
three and six month periods ended June 30, 1998 include Livingston from the date
of purchase. The acquired assets and operating results of Livingston are not
considered material to the accompanying financial statements.

                                       7
<PAGE>
 
7.   Consolidating Information

     The Company's senior subordinated notes (the "Notes") are guaranteed by CE
 Automotive Trim Systems, Inc. ("CE"), a wholly owned consolidated subsidiary of
 the Company, but are not guaranteed by the Company's two other consolidated
 subsidiaries, its Brazilian subsidiary, Cambridge Industrial do Brasil, Ltd.,
 and Voplex of Canada. The following condensed consolidating financial
 information presents the financial position, results of operations and cash
 flows of (i) the Company, as parent, as if it accounted for its subsidiaries on
 the equity method; (ii) CE, the guarantor subsidiary, and (iii) Voplex of
 Canada and the Brazilian subsidiary, as non-guarantor subsidiaries. Separate
 financial statements of CE are not presented herein as management does not
 believe that such statements are material. CE had no revenues or operations
 during the periods presented. The financial position and operating results of
 the non-guarantor subsidiaries do not include any allocation of overhead or
 similar charges.


                                       8
<PAGE>
 
                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATING BALANCE SHEET
                                 June 30, 1998
                            (Dollars in Thousands)

<TABLE>  
<CAPTION> 
                                        
                                                                       Non-
                                                                     guarantor    Guarantor  Eliminations/
                                                         Parent    subsidiaries  subsidiary  adjustments     Consolidated
                                                      -----------  ------------  ----------  -------------   ------------ 
<S>                                                   <C>          <C>           <C>         <C>             <C>  
ASSETS
------
                                                                                                                  
Current Assets
  Cash .............................................     $    706       $ 1,161       $   -       $      -       $  1,867  
  Receivables ......................................       62,941         6,982           -              -         69,923  
  Inventories ......................................       22,409         2,365           -              -         24,774  
  Reimbursable tooling costs .......................       20,029           232           -              -         20,261  
  Deferred income taxes and other ..................       14,182            10           -              -         14,192  
                                                         --------       -------       -----       --------       --------  
     Total current assets ..........................      120,267        10,750           -              -        131,017  
Property, plant and equipment, net .................      193,954         4,021           -              -        197,975  
Other long-term assets .............................       27,736            21           -              -         27,757  
Investment in consolidated subsidiaries ............        7,662            --           -         (7,662)             -  
                                                         --------       -------       -----       --------       --------  
     Total assets ..................................     $349,619       $14,792       $   -       $ (7,662)      $356,749  
                                                         ========       =======       =====       ========       ========  
                                                                                                                           
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)                                                                             
                                                                                                                           
Current Liabilities                                                                                                        
  Current portion of long-term debt ................     $ 11,295       $   288       $   -       $      -       $ 11,583  
  Accounts payable .................................       43,770         1,198           -              -         44,968  
  Accrued liabilities ..............................       27,467           838           -              -         28,305  
                                                         --------       -------       -----       --------       --------  
     Total current liabilities .....................       82,532         2,324           -              -         84,856  
Noncurrent liabilities                                                                                                     
  Long-term debt ...................................      307,587         5,112           -              -        312,699  
  Workers' compensation ............................        1,026             -           -              -          1,026  
  Postretirement healthcare benefits ...............       22,096             -           -              -         22,096  
  Deferred income taxes and other long-                                                                                    
   term liabilities ................................       11,059             -           -              -         11,059  
                                                         --------       -------       -----       --------       --------  
     Total liabilities .............................      424,300         7,436           -              -        431,736  
Stockholder's equity (deficit)                                                                                             
  Common stock .....................................            1             -           -              -              1  
  Paid-in capital ..................................       17,538         5,057           -         (5,057)        17,538  
  Accumulated other comprehensive income............            -          (306)          -              -           (306) 
  Retained earnings (accumulated deficit)...........      (92,220)        2,605           -         (2,605)       (92,220) 
                                                         --------       -------       -----       --------       --------  
     Total stockholder's equity (deficit)...........      (74,681)        7,356           -         (7,662)       (74,987) 
                                                         --------       -------       -----       --------       --------  
     Total liabilities and stockholder's                                                                                   
      equity (deficit) .............................     $349,619       $14,792       $   -       $ (7,662)      $356,749  
                                                         ========       =======       =====       ========       ========   
</TABLE>

                                       9
<PAGE>


                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATING BALANCE SHEET
                               December 31, 1997
                             (Dollars in Thousands)

<TABLE>
<CAPTION>                                                             Non-
                                                                   guarantor      Guarantor     Eliminations/
                                                       Parent     subsidiaries    subsidiary    adjustments   Consolidated
                                                      ---------   ------------    ----------    -----------   ------------

<S>                                                   <C>         <C>             <C>           <C>           <C>
ASSETS
------

Current Assets
  Cash   ........................................     $   1,646         $ 2,142      $    -       $      -        $  3,788
  Receivables   .................................        79,960           5,926           -         (3,769)         82,117
  Inventories   .................................        23,081           2,030           -              -          25,111
  Reimbursable tooling costs ....................        16,727             186           -              -          16,913
  Deferred income taxes and other ...............        14,466             197           -              -          14,663
                                                      ---------         -------      ------       --------        --------
       Total current assets .....................       135,880          10,481           -         (3,769)        142,592
Property, plant and equipment, net ..............       193,328           4,307           -              -         197,635
Other long-term assets ..........................        29,257               -           -              -          29,257
Investment in consolidated subsidiaries .........         6,600               -           -         (6,600)              -
                                                      ---------         -------      ------       --------        --------
  Total assets...................................     $ 365,065         $14,788      $    -       $(10,369)       $369,484
                                                      =========         =======      ======       ========        ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

Current Liabilities
  Current portion of long-term debt .............     $   7,765         $     -      $    -       $      -        $  7,765
  Accounts payable   ............................        50,995           1,533           -         (3,769)         48,759
  Accrued liabilities   .........................        36,211           1,480           -              -          37,691
                                                      ---------         -------      ------       --------        --------
       Total current liabilities ................        94,971           3,013           -         (3,769)         94,215
Noncurrent liabilities
  Long-term debt   ..............................       309,389           5,400           -              -         314,789
  Workers' compensation .........................         1,251               -           -              -           1,251
  Postretirement healthcare benefits   ..........        20,669               -           -              -          20,669
  Deferred income taxes and other long-term
    liabilities   ...............................        11,054               -           -              -          11,054
                                                      ---------         -------      ------       --------        --------
       Total liabilities   ......................       437,334           8,413           -         (3,769)        441,978
                                                      ---------         -------      ------       --------        --------
Stockholder's equity (deficit)
  Common stock   ................................             1               -           -              -               1
  Paid-in capital   .............................        17,538           5,057           -         (5,057)         17,538
  Accumulated other comprehensive income.........             -            (225)          -              -            (225)
  Retained earnings (accumulated deficit)........       (89,808)          1,543           -         (1,543)        (89,808)
                                                      ---------         -------      ------       --------        --------
       Total stockholder's equity (deficit)......       (72,269)          6,375           -         (6,600)        (72,494)
                                                      ---------         -------      ------       --------        --------
       Total liabilities and stockholder's
        equity (deficit) ........................     $ 365,065         $14,788      $    -       $(10,369)       $369,484
                                                      =========         =======      ======       ========        ========

</TABLE>

                                       10

<PAGE>
 

                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                       Three Months Ended June 30, 1998
                            (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                                     Non-
                                                                  guarantor       Guarantor       Eliminations/
                                                  Parent        subsidiaries      subsidiary       adjustments      Consolidated
                                                ---------       ------------      ----------      -------------     ------------
<S>                                             <C>             <C>               <C>             <C>               <C>

Sales........................................   $ 115,039       $      4,680      $      --       $         --      $    119,719
Cost of sales................................      99,988              3,885             --                 --           103,873
                                                ---------       ------------      ----------      -------------     ------------
Gross profit.................................      15,051                795             --                 --            15,846
Selling, general and administrative
  expenses...................................       8,575                435             --                 --             9,010
                                                ---------       ------------      ----------      -------------     ------------
Income from operations.......................       6,476                360             --                                6,836
Other expense (income)
    Interest expense.........................       7,628                 68             --                 --             7,696
    Other, net...............................        (131)               (76)            --                 --              (207)
                                                ---------       ------------      ----------      -------------     ------------
Income (loss) before income tax..............      (1,021)               368             --                 --              (653)
Income tax expense (benefit).................        (376)                71             --                 --              (305)
                                                ---------       ------------      ----------      -------------     ------------
Income (loss) before equity in income of
  consolidated subsidiaries..................        (645)               297             --                 --              (348)
Equity in income of consolidated
  subsidiaries...............................         297                 --             --                (297)             --
                                                ---------       ------------      ----------      -------------     ------------
Net income (loss)............................   $    (348)      $        297      $      --       $        (297)    $       (348)
                                                =========       ============      ==========      =============     ============
</TABLE>

                                      11
<PAGE>
 
 
                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                       Three Months Ended June 30, 1997
                            (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                     Non-
                                                                  guarantor       Guarantor       Eliminations/
                                                  Parent        subsidiaries      subsidiary       adjustments      Consolidated
                                                ---------       ------------      ----------      -------------     ------------
<S>                                             <C>             <C>               <C>             <C>               <C>

Sales........................................   $  94,512       $      2,326      $      --       $         --      $     96,838
Cost of sales................................      80,323              1,675             --                 --            81,998
                                                ---------       ------------      ----------      -------------     ------------
Gross profit.................................      14,189                651             --                 --            14,840
Selling, general and administrative
  expenses...................................       6,511                205             --               (119)            6,597
                                                ---------       ------------      ----------      -------------     ------------
Income from operations.......................       7,678                446             --                119             8,243
Other expense (income)
    Interest expense.........................       6,114                 --             --                 --             6,114
    Other, net...............................          (4)               (16)            --                119                99 
                                                ---------       ------------      ----------      -------------     ------------
Income (loss) before income tax..............       1,568                462             --                 --             2,030 
Income tax expense (benefit).................         666                 59             --                 --               725 
                                                ---------       ------------      ----------      -------------     ------------
Income (loss) before equity in income of
  consolidated subsidiaries..................         902                403             --                 --             1,305 
Equity in income of consolidated
  subsidiaries...............................         403                 --             --                (403)             --
                                                ---------       ------------      ----------      -------------     ------------
Net income (loss)............................   $   1,305       $        403      $      --       $        (403)    $      1,305 
                                                =========       ============      ==========      =============     ============
</TABLE>

                                      12
<PAGE>
 
                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                         Six Months Ended June 30, 1998
                             (Dollars in Thousands)
                                        

<TABLE>
<CAPTION>
                                                                         Non-
                                                                      guarantor     Guarantor  Eliminations/
                                                            Parent   subsidiaries  subsidiary   adjustments   Consolidated
                                                           --------  ------------  ----------  -------------  ------------
<S>                                                        <C>       <C>           <C>         <C>            <C>
Sales....................................................  $231,272     $9,588       $    -        $   -        $240,860
Cost of sales............................................   203,671      8,064            -            -         211,735
                                                           --------     ------       ------        -----        --------
Gross profit.............................................    27,601      1,524            -            -          29,125
Selling, general and administrative
  expenses...............................................    16,742        893            -            -          17,635
                                                           --------     ------       ------        -----        --------
Income from operations ..................................    10,859        631            -            -          11,490
Other expense (income)
     Interest expense....................................    15,543        133            -            -          15,676
     Other, net..........................................       101       (197)           -            -             (96)
                                                           --------     ------       ------        -----        --------
Income (loss) before income tax..........................    (4,785)       695            -            -          (4,090)
Income tax expense (benefit).............................    (1,804)       126            -            -          (1,678)
                                                           --------     ------       ------        -----        --------
Income (loss) before equity in income of
  consolidated subsidiaries..............................    (2,981)       569            -            -          (2,412)
Equity in income of consolidated
  subsidiaries...........................................       569          -            -         (569)              -
                                                           --------     ------       ------        -----        --------
Net income (loss)........................................  $ (2,412)    $  569       $    -        $(569)       $ (2,412)
                                                           ========     ======       ======        =====        ========
</TABLE>


                                       13

<PAGE>
 
                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                         Six Months Ended June 30, 1997
                             (Dollars in Thousands)
                                        
<TABLE>
<CAPTION>
                                                                          Non-
                                                                       guarantor     Guarantor  Eliminations/
                                                             Parent   subsidiaries  subsidiary   adjustments   Consolidated
                                                            --------  ------------  ----------  -------------  ------------
<S>                                                         <C>       <C>           <C>         <C>            <C>
Sales....................................................   $182,224     $4,407       $   -         $   -        $186,631
Cost of sales............................................    156,426      3,200           -             -         159,626
                                                            --------     ------       -----         -----        --------
Gross profit.............................................     25,798      1,207           -             -          27,005
Selling, general and administrative
  expenses...............................................     12,673        343           -          (223)         12,793
                                                            --------     ------       -----         -----        --------
Income from operations...................................     13,125        864           -           223          14,212
Other expense (income)
     Interest expense....................................     11,781          -           -             -          11,781
     Other, net..........................................       (239)        (8)          -           223             (24)
                                                            --------     ------       -----         -----        --------
Income before income tax.................................      1,583        872           -             -           2,455
Income tax expense.......................................        806        114           -             -             920
                                                            --------     ------       -----         -----        --------
Income before equity in income of
  consolidated subsidiaries..............................        777        758           -             -           1,535
Equity in income of consolidated
  subsidiaries...........................................        758        -             -          (758)              -
                                                            --------     ------       -----         -----        --------
Net income...............................................   $  1,535     $  758       $   -         $(758)       $  1,535
                                                            ========     ======       =====         =====        ========
</TABLE>

                                       14
<PAGE>
 
                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                        Six Months Ended June 30, 1998
                            (Dollars in Thousands)
                                        
<TABLE> 
<CAPTION>

                                                                                        Non-                                  
                                                                                      guarantor    Guarantor                  
                                                                         Parent     subsidiaries  subsidiary   Consolidated   
                                                                      ------------  ------------  ----------   ------------   
<S>                                                                   <C>           <C>           <C>          <C>
Net cash provided by (used in) operating activities.................     $ 12,310        $ (801)        $         $ 11,509 
                                                                         --------        ------         ----      -------- 
                                                                                                                           
Cash flows from investing activities                                                                                       
Acquisitions, net of cash acquired .................................         (850)            -            -          (850)
Purchases of property, plant and equipment..........................      (11,447)          (99)           -       (11,546)
                                                                         --------        ------         ----      -------- 
     Net cash used in investing activities..........................      (12,297)          (99)           -       (12,396)
                                                                         --------        ------         ----      -------- 
                                                                                                                           
Cash flows from financing activities                                                                                       
Net borrowings from revolving debt .................................        4,000             -            -         4,000 
Repayment of long-term debt ........................................       (4,953)            -            -        (4,953)
                                                                         --------                                 -------- 
     Net cash used in financing activities..........................         (953)            -            -          (953)
                                                                         --------        ------         ----      -------- 
                                                                                                                           
Effect of foreign currency rate fluctuations on cash ...............            -           (81)           -           (81)
                                                                         --------        ------         ----      -------- 
Net decrease in cash ...............................................         (940)         (981)           -        (1,921)
Cash at beginning of period ........................................        1,646         2,142            -         3,788 
                                                                         --------        ------         ----      -------- 
Cash at end of period ..............................................     $    706        $1,161         $  -      $  1,867 
                                                                         ========        ======         ====      ========  
</TABLE>

                                      15
<PAGE>
 
                  CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                         Six Months Ended June 30, 1997
                             (Dollars in Thousands)

<TABLE>  
<CAPTION>                                         

                                                                                        Non-                                 
                                                                                      guarantor    Guarantor                  
                                                                         Parent     subsidiaries  subsidiary   Consolidated  
                                                                      ------------  ------------  ----------   ------------   
<S>                                                                   <C>           <C>           <C>          <C>   
Net cash provided by (used in) operating activities................      $ 23,056       $(3,193)        $  -      $ 19,863   
                                                                         --------       -------         ----      --------   
                                                                                                                             
Cash flows from investing activities                                                                                         
Acquisitions, net of cash acquired ................................        (2,366)            -            -        (2,366)  
Purchases of property, plant and equipment.........................        (8,642)            -            -        (8,642)  
                                                                         --------       -------         ----      --------   
  Net cash used in investing activities ...........................       (11,008)            -            -       (11,008)  
                                                                         --------       -------         ----      --------   
                                                                                                                             
Cash flows from financing activities                                                                                         
Net borrowings from revolving debt ................................        (9,000)            -            -        (9,000)  
Repayment of long-term debt .......................................        (4,540)            -            -        (4,540)  
                                                                         --------                                 --------   
  Net cash used in financing activities............................       (13,540)            -            -       (13,540)  
                                                                         --------       -------         ----      --------   
                                                                                                                             
Effect of foreign currency rate fluctuations on cash ..............             -            (2)           -            (2)  
                                                                         --------       -------         ----      --------   
Net decrease in cash ..............................................        (1,492)       (3,195)           -        (4,687)  
Cash at beginning of period .......................................         7,795         4,147            -        11,942   
                                                                         --------       -------         ----      --------   
Cash at end of period .............................................      $  6,303       $   952         $  -      $  7,255   
                                                                         ========       =======         ====      ========   
</TABLE>

                                      16
<PAGE>
 
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations

FORWARD LOOKING INFORMATION


This Quarterly Report contains, and from time to time the Company expects to
make, certain forward-looking statements regarding its business, financial
condition and results of operations. In connection with the "Safe Harbor"
provisions of the Private Securities Reform Act of 1995 (the "Reform Act"), the
Company intends to caution readers that there are several important factors that
could cause the Company's actual results to differ materially from those
projected in its forward-looking statements, whether written or oral, made
herein or that may be made from time to time by or on behalf of the Company.
Readers are cautioned that such forward-looking statements are only predictions
and that actual events or results may differ materially. The Company undertakes
no obligation to publicly release the results of any revisions to the forward-
looking statements to reflect events or circumstances or to reflect the
occurrence of unanticipated events.

The Company wishes to ensure that meaningful cautionary statements accompany any
forward-looking statements in order to comply with the terms of the safe harbor
provided by the Reform Act. Accordingly, the Company has set forth a list of
important factors that could cause the Company's actual results to differ
materially from those expressed in forward-looking statements or predictions
made herein and from time to time by the Company. Specifically, the Company's
business, financial condition and results of operations could be materially
different from such forward-looking statements and predictions as a result of
(i) customer pressures that could impact sales levels and product mix, including
customer sourcing decisions, customer evaluation of market pricing on products
produced by the Company and customer cost-cutting programs; (ii) the impact on
the Company's operations and cash flows caused by labor strikes or work
stoppages at the Company's OEM customers; (iii) operational difficulties
encountered during the launch of major new OEM programs; (iv) the ability of the
Company to integrate acquisitions into its existing operations and achieve
expected cost savings; (v) the availability of funds to the Company for
strategic acquisitions and capital investments to enhance existing production
and distribution capabilities; and (vi) the ability of the Company, as well as
its vendors and customers, to address year 2000 processing issues on a timely
basis.

<TABLE>
<CAPTION>
 
Results of Operations
                                                         Three Months Ended    Six Months Ended
                                                               June 30,            June 30,
                                                         ------------------    ----------------
                                                          1998        1997      1998      1997
                                                         ------      ------    ------    ------
                                                          % of        % of      % of      % of 
                                                          Sales       Sales     Sales     Sales 
                                                         ------      ------    ------    ------ 
<S>                                                      <C>         <C>       <C>       <C>
Sales ................................................   100.0%      100.0%    100.0%    100.0% 
Gross Profit .........................................    13.2%       15.3%     12.1%     14.5%  
Selling, general and administrative expenses..........     7.5%        6.8%      7.3%      6.9%  
Income (loss) before income tax.......................    (0.5)%       2.1%     (1.7)%     1.3%  
Net income (loss).....................................    (0.3)%       1.3%     (1.0)%     0.9%
</TABLE>

                                      17
<PAGE>
 
Three and Six Months Ended June 30, 1998 Compared to Three and Six Months Ended
June 30, 1997


     Three Months Ended June 30, 1998 vs. Three Months Ended June 30, 1997


                                   Revenues


     The Company's sales increased by $22.9 million, or 23.6%, to $119.7 million
in the three month period ended June 30, 1998, compared to $96.8 million in the
three month period ended June 30, 1997. The increase in sales was primarily the
result of the 1997 acquisitions of Goodyear-Jackson and the Plastics Division of
Eagle-Picher in July and Owens-Corning Brazil in September, along with the
Livingston acquisition in January 1998 (collectively the "Acquisitions"). These
acquisitions added sales of approximately $37.7 million in aggregate for the
three month period ended June 30, 1998.

     Sales at existing Cambridge facilities decreased $14.8 million, resulting
from: the adverse impact of the General Motors work stoppages in the United
States, Canada and Mexico, changes in product mix due to the build out of the
Honda bumper and sunshades, and lower volumes on the Viper, Jeep and Ford's
Taurus/Sable wagon load floors. These decreases were offset, in part, by the
volumes associated with the launch of GMX130 (Grand Am) and Cadillac S5S,
increased volumes (adjusted for the strike) on C-5 Corvette, Ford 4.6L Rocker
Arm Cover, PN 96 Fan Shroud, Ford Cross-Car Beam, GMT 530, Volvo, Ford Ranger
Splash, Kenworth T-2000 and Freightliner.

                                 Gross Profit

Gross profit increased by $1.0 million or 6.8%, to $15.8 million for the second
quarter of 1998, compared to $14.8 million for the second quarter of 1997. The
increase was due in part to the Acquisitions, which added aggregate gross
profits of $3.2 million. Gross margin as a percent of sales decreased from 15.3%
in 1997 to 13.2% in 1998. The decrease can be attributed to the following: the
costs associated with plant consolidations, the adverse impact of the General
Motors work stoppages in the United States, Canada and Mexico, along with
realignment of products among the Company's divisions. Certain changes in the
Company's product mix, primarily the balancing out of the Honda bumpers, and
lower volumes on the Taurus/Sable wagon load floors and Honda sunshades,
negatively impacted gross margins. Higher volumes (adjusted for the strike) on
such programs as F-series truck, Freightliner, Volvo, Ford 4.0L CAM Cover, C-5
Corvette, Cadillac S5S, and GMX 130, partially offset the negative impact on
gross margins.

                 Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") of $9.0 million increased
to 7.5% of sales for the three months ended June 30, 1998 period, compared to
$6.6 million or 6.8% of sales for the same 1997 period. The increase in SG&A of
$2.4 million was due in part to the

                                      18
<PAGE>
 
Acquisitions, which added SG&A costs of $1.4 million. The remaining increase in
SG&A expenses reflects the Company's continuing investment in such areas as
program management, business expansion efforts, sales and marketing, and
information systems. Additionally, the lower revenues associated with the GM
strike resulted in SG & A costs representing an increased percentage of
revenues.

                                  Net Income

The Company recorded a net loss of $0.3 million in the 1998 period, compared
the net income of $1.3 million in the 1997 period. This decrease was the result
of the items mentioned above and an increase in interest expense of $1.6 million
to $7.7 million for the 1998 period, compared to $6.1 million for the 1997
period. The increase in interest expense for the 1998 period was primarily
attributable to the increase in debt outstanding related to the Acquisitions.

       Six Months Ended June 30, 1998 vs. Six Months Ended June 30, 1997

                                   Revenues
                                        
Sales increased by $54.3 million, or 29.1%, to $240.9 million in the six month
period ended June 30, 1998, compared to $186.6 million in the six month period
ended June 30, 1997. The increase was primarily attributable to the
Acquisitions, as well as changes in volumes on certain programs and changes in
product mix as indicated above.

                                 Gross Profit

Gross profit increased by $2.1 million or 7.9%, to $29.1 million for 1998,
compared to $27.0 million in 1997. The increase was due in part to the
Acquisitions, which added aggregate gross profits of $4.3 million. Gross margin
as a percent of sales decreased from 14.5% in 1997 to 12.1% in 1998. The
decrease can be attributed to the following: costs associated with plant
consolidations, the adverse impact of the General Motors work stoppages in the
United States, Canada and Mexico, and costs of realignment of products among the
Company's divisions.

                 Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") of $17.6 million increased
to 7.3% of sales for the six months ended June 30, 1998, compared to $12.8
million or 6.9% of sales for the same 1997 period. The increase in SG&A of $4.8
million was due in part to the Acquisitions, which added SG&A costs of $2.8
million. The remaining increase in SG&A expenses reflects the Company's
continuing investment in such areas as program management, business expansion
efforts, sales and marketing, and information systems.

                                  Net Income

The Company recorded a net loss of $2.4 million in the 1998 period, compared the
net income of

                                      19
<PAGE>
 
$1.5 million in the 1997 period. This decrease was the result of the items
mentioned above and an increase in interest expense of $3.9 million to $15.7
million for the 1998 period, compared to $11.8 million for the 1997 period. The
increase in interest expense for the 1998 period was primarily attributable to
the increase in debt outstanding related to Acquisitions.

                        Liquidity and Capital Resources

The Company's primary cash needs historically have been for operating expenses,
working capital, and capital expenditures. Acquisitions have been financed
through debt facilities collateralized by the Company's assets and cash flows.
Management expects future cash will be required for capital expenditures, which
management expects to approximate $23.0 million for 1998, to provide working
capital to fund the Company's future growth and to fund scheduled principal 
payments under the Company's Credit Agreement.

<TABLE>
<CAPTION>

Cash Flows

                                                    Six Months Ended
                                                        June 30,
                                                    ----------------
                                                     1998      1997
                                                    ------    ------
<S>                                                 <C>       <C>
                                                     (in thousands)
     Cash flow from:
        Operating activities................        11,509    19,863
        Investing activities................       (12,396)  (11,008)
        Financing activities ...............          (953)  (13,540)
        Foreign Currency Fluctuations.......           (81)       (2)
                                                   -------   -------
     Net Cash Flow..........................        (1,921)   (4,687)
                                                   =======   =======
</TABLE>

Net cash flow from operating activities for the six month period ended June 30,
1998 was $11.5 million. Net loss for the 1998 period was $2.4 million. The non-
cash adjustments of $16.6 million primarily consisted of depreciation and
amortization of $15.1 million and a non-cash charge to income for postretirement
benefits of $1.4 million. Changes in working capital components utilized $2.6
million, primarily the result of timing of collections on trade accounts
receivable and payments of accounts payable and accrued interest, as well as an
increase in reimbursable tooling as the Company awaits customer approvals on the
Viper, Volvo L-5, Ford PN96, Kenworth T2000, Ford H215, Ford HN190, GMT800 and
GM H-Car.

Net cash flow from operating activities for the six month period ended June 30,
1997 was $19.9 million. Net income for the 1997 period was $1.5 million. The 
non-cash adjustments of $15.0 million consisted of depreciation and amortization
of $11.0 million and non-cash charges to income for postretirement benefits and
deferred income taxes of $1.2 million and $2.9 million, respectively. Changes in
working capital components provided $3.3 million, primarily the result of the
timing payments of accounts payable and accrued liabilities offset by an
increase in reimbursable tooling.

The Company spent approximately $11.6 million for the six month period ended
June 30, 1998 in comparison to approximately $8.6 million for the six month
period ended June 30, 1997 on capital items. Such capital items in the 1998
period primarily relate to the GMT 800, Ford PN96, Flax PP Line, Volvo L-5
program, and various equipment upgrades.

                                      20
<PAGE>
 
Acquisitions of $0.8 million in the six month period ended June 30, 1998 relate
to Livingston; while acquisitions of $2.3 million in the 1997 Period relate to
APX.  The $2.5 million purchase price of Livingston consisted of $0.6 million
due upon closing and a $1.6 million seller note and acquisition costs of $0.3 
million.

The Company anticipates pursuing additional strategic alliances and acquisitions
in the future. Management anticipates that acquisition activity will be funded 
by additional indebtedness.

                                   Total Debt

At June 30, 1998, the following summarizes the debt outstanding and unused
credit availability (in thousands):

<TABLE>
<CAPTION>
                                        Total       Amount       Unused
                                      Commitment  Outstanding  Availability
                                      ----------  -----------  ------------
     <S>                              <C>         <C>          <C>
     Revolving Credit                  $ 75,000    $ 15,500      $59,500
     Term Debt                          205,000     201,325            0
     Bonds                              100,000     100,000            0 
     Capital Leases and Seller notes      7,457       7,457            0
                                       --------    --------      -------
            Total                      $387,457    $324,282      $59,500
                                       ========    ========      =======
</TABLE>

The Credit Agreement provides the Company with borrowing capacity of up to
$280.0 million.  The Credit Agreement consists of $205.0 million in aggregate
principal amount of term loans and a $75.0 million revolving credit facility
available for working capital and general corporate purposes.  The A Term Loans
and B Term Loans of the Credit Agreement will mature on the fifth and eighth
anniversary of the initial borrowing, respectively, and will require annual
principal payments (payable in quarterly installments) totaling approximately
$7.4 million in 1998, $13.9 million in 1999, $16.4 million in 2000, $21.4
million in 2001, $34.0 million in 2002, $35.0 million in 2003, $40.0 million in
2004 and $37.1 million in 2005.  The revolving credit portion of the Credit
Agreement will mature on the fifth anniversary of the initial borrowing.  The
interest rate under the Credit Agreement is based on the Eurodollar rate plus
the applicable Eurodollar margin.  The Credit Agreement contains restrictive
covenants which, among other things, limit the incurrence of additional
indebtedness, dividends, transactions with affiliates, assets sales,
acquisitions, mergers and consolidations, prepayments of other indebtedness,
liens and encumbrances, capital expenditures and other matters customarily
restricted in such agreements.

The Company believes that, based on current levels of operations and anticipated
growth, its cash from operations, together with other available sources of
liquidity, including borrowings under the Credit Agreement, will be sufficient
over the next several years to make required payments of principal and interest
on its obligation due on the Notes and under the Credit Agreement, permit
anticipated capital expenditures and fund working capital requirements.

                                       21
<PAGE>
 
                      Impact of the General Motors Strike
                                        
As of the date of this filing, the strike at General Motors was reported to be
resolved. GM is a significant customer representing approximately 25% of
forecasted 1998 revenues. The strike continued through late July, and as a
result, third quarter 1998 revenues will be negatively impacted. It remains
uncertain whether these reduced revenues will be recovered as GM resumes
production. Even if these revenues are recovered, the Company anticipates a
negative impact on third quarter margins due to incremental costs that will be
incurred to resume production as well as the impact of lost productivity in
July. As a result of the strike, the potential exists that certain financial
ratio tests contained in covenants of the Credit Agreement will be violated in
the third quarter. The Company has communicated this possibility to its bank and
if necessary, intends to obtain waivers or amendments to the Credit Agreement to
cure any covenant violations. Based on discussions to date with the bank,
management believes that a waiver or amendment to the Credit Agreement will be
obtained, although the Company has not yet obtained a commitment from the bank.

                             Year 2000 Compliance

The Company is aware of the issues associated with the programming code in
existing computer and other operating systems as the millennium (year 2000)
approaches. The issue is whether the date sensitive information within the
various operating systems will properly recognize the date when the year changes
to 2000. Systems that do not properly recognize such information could generate
erroneous data or cause a system to fail.

The Company is utilizing both internal and external resources to identify,
modify and test the systems for the year 2000 compliance. The Company has
completed an inventory of its hardware and software, including that associated
with its manufacturing operations and infrastructure, and has developed plans
for remediation or replacement of non-complaint systems. The Company is
currently implementing its year 2000 plan, and anticipates that all
reprogramming and replacement efforts will be completed by early 1999. The
Company expects to test reprogrammed and replaced software and systems during
1999, and believes its current plans allow adequate time for testing.

The Company has incurred $0.1 million to date in its Year 2000 efforts and 
anticipates incurring an additional $0.9 million to fully address Year 2000 
issues. Such costs will be expensed as incurred. The Company anticipates that it
will incur $0.1 million to replace certain non-compliant hardware (such as PC's
and peripheral equipment); these amounts will be capitalized in accordance with
the Company's accounting policies for such equipment.

The Company's Year 2000 plans include assessment of issues that may arise from 
its suppliers and customers. The Company has surveyed its key suppliers to 
determine their level of readiness. Management intends to monitor the readiness 
of its key suppliers and to arrange alternative sources of supply for those that
are assessed to represent an unacceptable risk for disruption in ability to 
supply the Company's needs.

The Company is also subject to the risk that its significant customers will not 
complete Year 2000 efforts timely and will experience a disruption in 
operations, which could materially adversely impact the Company's financial 
results. Management intends to monitor the level of readiness of its customers 
however, there can be no assurance that a disruption in customer operations
will not occur.

Management intends to develop contingency plans to address risks that its own 
efforts, or those of its suppliers and customers, are not sufficient to address 
Year 2000 issues. Management anticipates that the contingency plan will be 
completed in early 1999.

                                      22
<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.


                                                   Cambridge Industries, Inc.
                                                   --------------------------



Date: August 14, 1998                              /s/ John M. Colaianne
      ---------------                              -----------------------------
                                                   John M. Colaianne
                                                   Chief Financial Officer

                                      23