<PAGE>   1

================================================================================

                       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 July 3, 1999

                                       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 33-67854

                              CMI INDUSTRIES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified, on its charter)


        Delaware                                             57-0836097
----------------------------                            ------------------
(State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                       Identification No.)



1301 Gervais Street, Suite 700, Columbia, South Carolina                 29201
--------------------------------------------------------------------------------
(Address of principal executive office)                               (Zip Code)

Registrant's telephone number including area code:                (803) 771-4434

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

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  [ ]

As of July 30, 1999, there were 1,589,318 shares of $1 Par Value Common Stock
outstanding.


================================================================================

<PAGE>   2


PART I            FINANCIAL INFORMATION

Item 1.           Consolidated Financial Statements

                              CMI INDUSTRIES, INC.
                                AND SUBSIDIARIES

                        Consolidated Statements of Income
                      (000's Omitted Except Per Share Data)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED               SIX MONTHS ENDED
                                                              ------------------               ----------------
                                                             JULY 4,        JULY 3,         JULY 4,        JULY 3,
                                                              1998           1999            1998            1999
                                                           ---------       --------       ---------       ---------

         <S>                                               <C>             <C>            <C>             <C>
         Net sales                                         $ 101,111       $ 91,339       $ 210,156       $ 184,460
         Cost of sales                                        88,143         84,073         180,968         168,287
                                                           ---------       --------       ---------       ---------
                  Gross profit                                12,968          7,266          29,188          16,173
         Selling, general and administrative expenses          7,861          8,017          16,705          16,213
         Provision for restructuring and other                    --          7,000              --           7,000
              nonrecurring asset write-offs                ---------       --------       ---------       ---------
                  Operating income (loss) (note 6)             5,107         (7,751)         12,483          (7,040)

         Other income (expenses):
              Interest expense                                (3,233)        (3,232)         (6,464)         (6,445)
              Other, net                                         797            290           1,234             623
                                                           ---------       --------       ---------       ---------
                                                              (2,436)        (2,942)         (5,230)         (5,822)

                  Income (loss) before income taxes            2,671        (10,693)          7,253         (12,862)
         Income tax provision                                    975         (4,258)          2,750          (5,108)
                                                           ---------       --------       ---------       ---------

                  Net income (loss)                        $   1,696       $ (6,435)      $   4,503       $  (7,754)
                                                           =========       ========       =========       =========

         Average shares outstanding during period              1,695          1,652           1,695           1,674

         Net income (loss) per share                       $    1.00       $  (3.90)      $    2.66       $   (4.63)

         Depreciation and amortization included in
              the above costs and expenses                 $   4,226       $  4,431       $   8,591       $   8,781
</TABLE>







                             See Accompanying Notes.


                                       2
<PAGE>   3


                              CMI INDUSTRIES, INC.
                                AND SUBSIDIARIES

                           Consolidated Balance Sheets
                        January 2, 1999 and July 3, 1999
                                 (000's Omitted)

<TABLE>
<CAPTION>
                                                             JANUARY 2,        JULY 3,
                                                                1999             1999
                                                             ----------       ----------
                                                                              (UNAUDITED)
<S>                                                          <C>             <C>
ASSETS
------

      Current assets:
          Cash and cash equivalents                           $   3,911       $   1,387

          Receivables, less allowance for doubtful
              accounts of $1,200 and $1,350                      50,884          48,598

          Inventories: (note 3)
              Raw materials                                       9,754          13,461
              Work-in-process                                    19,386          19,187
              Finished goods                                     20,716          19,042
              Supplies                                            4,342           3,213
                                                              ---------       ---------
                                                                 54,198          54,903

          Deferred income taxes                                      --             691
          Other current assets                                    7,431           1,567
                                                              ---------       ---------

                   Total current assets                         116,424         107,146

      Property, plant and equipment: (note 4)
          Land and land improvements                              3,326           3,317
          Buildings and leasehold improvements                   40,049          40,108
          Machinery and equipment                               207,923         212,598
          Construction in progress                                4,967           5,615
                                                              ---------       ---------
                                                                256,265         261,638
          Less accumulated depreciation and amortization       (159,247)       (171,466)
                                                              ---------       ---------
                                                                 97,018          90,172

      Other assets:
          Cash value of life insurance, intangibles,
              deferred charges, and other assets                  9,724          10,116
                                                              ---------       ---------

                                                              $ 223,166       $ 207,434
                                                              =========       =========
</TABLE>


                             See Accompanying Notes.


                                       3

<PAGE>   4



                              CMI INDUSTRIES, INC.
                                AND SUBSIDIARIES

                           Consolidated Balance Sheets
                        January 2, 1999 and July 3, 1999
                                 (000's Omitted)



<TABLE>
<CAPTION>
                                                                          JANUARY 2,     JULY 3,
                                                                             1999          1999
                                                                          ----------     --------
                                                                                        (unaudited)
<S>                                                                        <C>           <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

         Current liabilities:
             Payable - book overdraft                                      $ 12,247      $  6,284
             Current portion of long-term debt (note 2)                          --         3,795
             Accounts payable                                                13,914        15,815
             Accrued expenses, including restructuring charges               13,633        13,079
                                                                           --------      --------
                Total current liabilities                                    39,794        38,973

         Long-term debt (note 2)                                            124,536       124,584
         Deferred income taxes                                                4,506            --
         Other liabilities                                                   12,247        12,198

         Stockholders' equity:
             Common stock of $1 par value per share; 2,100,000 shares
             authorized, 1,695,318 shares issued at January 2, 1999
             and 1,589,318 shares issued at July 3, 1999                      1,695         1,589
             Paid-in capital                                                 11,358         8,814
             Retained earnings (note 2)                                      29,030        21,276
                                                                           --------      --------

                Total stockholders' equity                                   42,083        31,679
                                                                           --------      --------

                                                                           $223,166      $207,434
                                                                           ========      ========
</TABLE>


                             See Accompanying Notes.


                                       4



<PAGE>   5


                              CMI INDUSTRIES, INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
             For the Six Months Ended July 4, 1998 and July 3, 1999
                                 (000's Omitted)

<TABLE>
<CAPTION>
                                                                        JULY 4,        JULY 3,
                                                                         1998           1999
                                                                       --------       -------
                                                                     (Unaudited)    (Unaudited)
<S>                                                                  <C>            <C>
Cash flows from operating activities:
   Net income (loss)                                                   $  4,503       $(7,754)
   Adjustments to reconcile net income (loss) to
     net cash provided by operating activities:
      Depreciation and amortization                                       8,591         8,781
      Nonrecurring asset write-offs                                          --         6,000
      Changes in assets and liabilities
         Receivables                                                      1,195         2,286
         Inventories                                                    (11,014)       (2,821)
         Other current assets                                            (1,579)        5,864
         Other assets                                                      (892)         (615)
         Accounts payable                                                 1,031         1,901
         Accrued expenses                                                   153          (554)
         Deferred income taxes                                            2,538        (5,197)
         Other liabilities                                                 (149)          (49)
                                                                       --------       -------
         Net cash provided by operating activities                        4,377         7,842
                                                                       --------       -------

Cash flows from investing activities:
   Capital expenditures, net                                             (2,541)       (5,548)
                                                                       --------       -------
         Net cash used in investing activities                           (2,541)       (5,548)
                                                                       --------       -------

Cash flows from financing activities:
    Net (repayments) borrowings on revolving credit facilities           (2,292)        3,795
    Purchase of common stock                                                 --        (2,650)
    Net change in payable-book overdraft                                    943        (5,963)
                                                                       --------       -------
         Net cash used in financing activities                           (1,349)       (4,818)
                                                                       --------       -------

         Net increase (decrease) in cash                                    487        (2,524)

Cash and cash equivalents at beginning of year                            1,729         3,911
                                                                       --------       -------

Cash and cash equivalents at end of period                             $  2,216       $ 1,387
                                                                       ========       =======

Supplemental disclosures of cash flow information:
   Cash paid during the period for:
       Interest                                                        $  6,209       $ 6,254
                                                                       ========       =======
</TABLE>




                             See Accompanying Notes.


                                       5
<PAGE>   6


Notes to Consolidated Financial Statements

Note 1:

Basis of Presentation:

         The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany balances
and transactions have been eliminated. In the opinion of management, the
accompanying unaudited consolidated financial statements include all adjustments
necessary to present fairly the Consolidated Balance Sheet as of July 3, 1999,
the Consolidated Statements of Cash Flows for the six months ended July 4, 1998
and July 3, 1999, and the Consolidated Statements of Income for the three months
and six months then ended. All dollar amounts are rounded to thousands. The
Consolidated Balance Sheet as of January 2, 1999 has been audited, but the
auditors' report is not included herein. The disclosures accompanying these
interim financial statements are condensed and should be read in conjunction
with the disclosures in the annual financial statements.

Note 2:

Long-Term Debt:

         In October 1993, the Company completed a public offering ("the
Offering") of $125,000 in aggregate principal amount of 9 1/2% Senior
Subordinated Notes ("Notes") due October 1, 2003. The Notes are general
unsecured obligations of the Company. Interest on the Notes is payable
semiannually. The Notes are redeemable at the option of the Company at the
following redemption prices (expressed as a percentage of the principal amount),
plus accrued interest, if redeemed during the 12-month period beginning on
October 1 of the years indicated:

<TABLE>
<CAPTION>
                           Year                               Redemption Price
                           ----                               ----------------
                           <S>                                <C>
                           1998                                    104.750%
                           1999                                    102.375%
                           2000 and thereafter                     100.000%
</TABLE>

         The recorded balance of $124,584 at July 3, 1999 is presented net of
$416 of unamortized bond issue discount that is being amortized over the period
to maturity. The latest information available indicates the fair value of the
Notes was $107,500 at July 3, 1999. The fair value presented herein is not
necessarily indicative of the amounts that the Company would realize in a
current market exchange.

         In March 1996, the Company replaced a $92 million unsecured revolving
credit facility with a new credit agreement and renewed a Wachovia Bank of South
Carolina facility at $4 million. The Company and its lenders amended the new
credit agreement in February 1997 to reduce the borrowing limit to $65 million,
to contemplate the realignment of the Company's assets into separate operating
entities, which was completed during 1997, and to extend the maturity of the
secured revolving credit facility by two years to January 2000. The Company and
its lenders amended the secured revolving credit facility again in June 1999 to
reduce the borrowing limit to $45 million and to extend the maturity of the
secured revolving credit facility by another two years to March 2002.


                                       6
<PAGE>   7

The borrowings under the amended credit agreement are secured by all
receivables, certain inventories and certain intangibles.

         Long-term debt as of January 2, 1999 and July 3, 1999 consisted of:

<TABLE>
<CAPTION>
                                                      January 2, 1999           July 3, 1999
                                                      ---------------           ------------
<S>                                                   <C>                       <C>
Borrowings under credit agreements:
      Secured revolving credit facility                    $     --               $     --
      Unsecured Wachovia Bank of SC facility                     --                  3,795
Senior subordinated notes, net                              124,536                124,584
                                                           --------               --------
                                                            124,536                128,379
Less current portion                                             --                  3,795
                                                           --------               --------

Long-term debt                                             $124,536               $124,584
                                                           ========               ========
</TABLE>

         The amended secured revolving credit facility requires a commitment fee
of 1/4 of 1% per annum on all unused amounts and as of July 3, 1999, the Company
could have borrowed an additional $44 million under the amended secured
revolving credit facility. Interest on the secured revolving credit facility is
based on a floating prime rate or an eurodollar rate plus 1 1/4%. At July 3,
1999, there were no outstanding balances accruing interest on the secured
revolving credit facility. The Wachovia Bank of South Carolina facility is
unsecured, requires no commitment fee and may be terminated by the bank at any
time. Interest on the Wachovia Bank of South Carolina facility accrues at an
amount based on the daily federal funds rate, which was 7.28% at July 3, 1999.

         The credit agreements and indenture contain various restrictive
covenants and conditions requiring, among other things, minimum levels of net
worth, certain interest coverage ratios, prohibitions against certain borrowings
and advances, and a negative covenant limiting the Company's right to grant
security interests or other liens on its assets. In addition, the credit
agreements and the indenture pursuant to which the Notes were issued contain
restrictions on the Company's ability to pay cash dividends or purchase its
capital stock. Under the most restrictive covenant, as of July 3, 1999, the
Company was authorized to pay up to $1.3 million of cash dividends or capital
stock purchases. At July 3, 1999, the Company was in compliance with all
covenants under all credit agreements.

         As part of the Company's workers' compensation insurance agreements in
South Carolina, Alabama, Georgia and Virginia, the Company has obtained letters
of credit for $750, $200, $250 and $75, respectively. The letters of credit
expire on January 11, 2000, June 30, 2000, January 11, 2000 and April 10, 2000,
respectively. At July 3, 1999, the Company owed no amount under these letters of
credit.

Note 3:

Inventories:

         Inventories at January 2, 1999 and July 3, 1999 are stated at the lower
of cost (first-in, first-out) or market, and include the costs of raw materials,
direct labor, and manufacturing overhead.


                                       7
<PAGE>   8

Note 4:

Property, Plant and Equipment:

         All additions to property, plant and equipment are stated at cost.
Depreciation is calculated for financial reporting purposes by the straight-line
method over the estimated useful lives of the respective assets

Note 5:

Segment Information

The Company manages its businesses through three operating divisions: the Greige
Fabrics Division, the Elastic Fabrics Division, and the Chatham Division. The
Greige Fabrics Division produces greige woven fabrics, such as printcloths,
broadcloths, twills and other fabrics used in home furnishings, apparel and
industrial applications. The Elastic Fabrics division produces woven and knitted
elasticized fabrics used in the manufacturing of intimate apparel, activewear
and swimwear. The Chatham Division produces upholstery fabrics used in the
automotive and furniture industries; and consumer products used in the home
textile industry. Information about the Company's three segments and the items
necessary to reconcile this information to the Company's consolidated results
are as follows:

<TABLE>
<CAPTION>
                                                                  Six Months Ended
                                                         ---------------------------------
                                                         JULY 4, 1998         JULY 3, 1999
                                                         ------------         ------------
<S>                                                      <C>                  <C>
Net sales
        Greige                                             $  82,278            $  55,400
        Chatham                                               80,952               78,681
        Elastics                                              46,926               50,379
                                                           ---------            ---------
        Total                                              $ 210,156            $ 184,460
                                                           =========            =========

Operating income (loss) before nonrecurring items
        Greige                                             $   9,941            $  (4,402)
        Chatham                                                1,262                  353
        Elastics                                               4,959                6,356
        Corporate                                             (3,679)              (2,347)
                                                           ---------            ---------
        Total                                                 12,483                  (40)

Nonrecurring items                                                --                7,000
Interest expense                                               6,464                6,445
Other expense (income), net                                   (1,234)                (623)
                                                           ---------            ---------

Income (loss) before income taxes                          $   7,253            $ (12,862)
                                                           =========            =========

Operating margin
        Greige                                                  12.1                 (7.9)
        Chatham                                                  1.6                  0.4
        Elastics                                                10.6                 12.6
                                                           ---------            ---------
        Total                                                    5.9%                (0.0)%
                                                           =========            =========

Identifiable assets
     Greige                                                $  83,654            $  74,765
     Chatham                                                  80,548               76,812
     Elastics                                                 44,155               44,363
     Corporate                                                14,958               11,494
                                                           ---------            ---------
     Total                                                 $ 223,315            $ 207,434
                                                           =========            =========

Depreciation and amortization
     Greige                                                $   4,337            $   4,520
     Chatham                                                   2,341                2,541
     Elastics                                                  1,482                1,261
     Corporate                                                   431                  459
                                                           ---------            ---------
     Total                                                 $   8,591            $   8,781
                                                           =========            =========

Capital expenditures
     Greige                                                $   1,269            $     871
     Chatham                                                   1,843                3,027
     Elastics                                                   (340)                 992
     Corporate                                                  (231)                 658
                                                           ---------            ---------
     Total                                                 $   2,541            $   5,548
                                                           =========            =========
</TABLE>


                                       8
<PAGE>   9



Note 6:

Restructuring Charges

         In the second quarter of 1999, the Company approved a plan to pursue
restructuring initiatives in all divisions. These initiatives are focused on
discontinuing certain weaving and yarn manufacturing operations which, when
coupled with certain yarn outsourcing strategies, will reduce the Company's
operating costs, downsize its fabric formation capacity to levels more in line
with market demand, and conserve capital for other equipment modernization
projects. In conjunction with these efforts, the Company will be consolidating
certain manufacturing capacity, realigning certain management responsibilities
and disposing of idle equipment and related inventories. These initiatives are
expected to be completed by December 1999. The restructuring charges also
consist of costs for the severance and retirement of approximately 170
associates, including costs associated with insurance, vacation and other
benefit related expenses. Related to this decision, the Company reported the
following expense items in the accompanying statement of income for the three
months ended July 3, 1999:

<TABLE>
<CAPTION>
        <S>                                                             <C>
        Restructuring items:
                Severance and related benefit costs                     $1,000

        Other nonrecurring asset write-offs:
                Inventory write-offs                                     2,116
                Property, plant & equipment write-offs                   3,884
                                                                        ------
                                                                        $7,000
                                                                        ======
</TABLE>


                                       9


<PAGE>   10


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

         This report contains statements which to the extent that they are not
recitations of historical fact, may constitute "Forward looking statements"
within the meaning of applicable federal securities laws. All forward looking
statements contained in this report are intended to be subject to the safe
harbor protection provided by the Private Securities Litigation Reform Act of
1995 and Section 21E of the Securities Exchange Act of 1934, as amended. For a
discussion identifying some important factors that could cause actual results to
vary materially from those anticipated in the forward looking statements made by
the Company, see the Company's Annual Report on Form 10-K for the year ended
January 2, 1999, including, but not limited to, the "Overview" discussion to
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 17 and 18 of the Annual Report.


Results of Operations

Three Months Ended July 3, 1999
Compared with Three Months Ended July 4, 1998

Sales

         Sales for the three months ended July 3, 1999, decreased $9.8 million,
or 9.7%, from $101.1 million to $91.3 million as compared to the corresponding
period of 1998. Sales of the Greige Fabrics Division decreased $14.5 million, or
35.2%, while sales for the Elastic Fabrics Division increased $2.6 million or
11.8%, and sales of the Chatham Division increased $2.2 million or 5.7% from the
prior year. The decrease in sales for the Greige Fabrics Division consisted of
(1) a $13.8 million decrease in sales of blended or 100% cotton fabrics,
resulting from a 24.9% decrease in average selling prices and a 17.4% decrease
in volume, and (2) a $0.7 decline in sales of 100% filament fabrics produced at
the Company's Clarkesville, Georgia facility. The increase in sales in the
Elastic Fabrics Division consisted of a 14.6% increase in sales of wide elastics
and a 4.6% increase in sales of narrow elastics. The sales increase for the
Chatham Division included a $0.3 million increase in automotive upholstery sales
and a $2.8 million increase in furniture upholstery sales, while sales of
consumer products remained relatively unchanged. Sales of yarn and miscellaneous
other commission based revenues at Chatham were down $1.0 million due to
capacity restraints and reduced demand for these products. The increased sales
in the furniture business reflect improving demand for the Company's recently
introduced residential furniture and Sheneele upholstery product offerings.

Earnings

         The Company reported an operating loss of $(7.8) million for the
three-month period ended July 3, 1999 as operating income declined $12.9 million
as compared to the corresponding period of 1998. Included in the operating loss
was a $7.0 million restructuring charge associated with the Company's decision
to discontinue certain manufacturing operations and other initiatives designed
to reduce costs. Excluding this restructuring charge, operating income would
have declined $5.9 million. The decrease in profitability is due to the Greige
Fabrics Division, as the influx of lower priced imported fabrics and excess
inventory levels continue to suppress demand for domestically


                                       10
<PAGE>   11

produced greige fabrics. Consequently, the impact from both reduced selling
prices and volumes has more than offset any benefit associated with lower raw
material costs and reduced the profitability of the Greige Fabrics Division by
$8.0 million. Increased earnings in both the Elastics Division and Chatham
Division helped to partially offset the significant losses associated with the
Greige Fabrics Division.

         Interest expense for the three months ended July 3, 1999 was $3.2
million, and remained relatively unchanged as compared to the corresponding
period of 1998.

         Other income, net, for the three months ended July 3, 1999 was $0.3
million, a decrease of $0.5 million from the same period in 1998. Other income,
net, was greater in 1998 because the Company received $0.4 million in Step 2
payments under the USDA's Cotton Rebate Program. The Company has not received
any Step 2 payments in 1999 because funding for the Cotton Rebate Program has
been exhausted.

         As a result of the above mentioned items, income before income taxes
decreased $13.4 million for the three months ended July 3, 1999 over the
corresponding period in 1998, while the provision for income taxes decreased
$5.2 million. The net loss of $6.4 million for the second period of fiscal 1999
represents a decrease of $8.1 million as compared to the corresponding period of
fiscal 1998.


Six Months Ended July 3, 1999
Compared with Six Months Ended July 4, 1998

Sales

         Sales for the six months ended July 3, 1999 decreased $25.7 million, or
12.2%, from $210.2 million to $184.5 million as compared to the corresponding
period in 1998. Sales of the Greige Fabrics Division decreased $26.9 million or
32.7%, while sales of the Elastic Fabrics Division increased $3.5 million or
7.4%, and sales of the Chatham Division decreased $2.3 million or 2.8%. The
decrease in sales of the Greige Fabrics Division consisted of (1) a $25.8
million decrease in sales of blended or 100% cotton fabrics, resulting from a
22.7% decrease in average selling prices and a 16.6% decrease in volume, and (2)
a $1.1 million decline in sales of 100% filament fabrics produced at the
Company's Clarkesville, Georgia facility. The increase in sales in the Elastics
Division consisted of a 13.9% increase in wide elastic sales and a 7.4% decrease
in narrow elastic sales. The decline in sales in the Chatham Division included a
$4.1 million reduction in automotive upholstery sales associated with a lost
placement at both Ford and General Motors. Chatham's sales of yarn and other
miscellaneous commission revenues were also down due to capacity constraints and
reduced demand for these products. Sales of furniture upholstery increased $3.5
million due to improving demand for the Company's recently introduced
residential furniture and Sheneele product offerings. Sales of consumer products
remained relatively unchanged from the corresponding period in 1998.


                                       11
<PAGE>   12




Earnings

         The Company reported an operating loss of $(7.0) million for the
six-month period ended July 3, 1999. Excluding the restructuring charge reported
in the second period of 1999, the operating income for the six month period was
approximately break even and $12.5 million less than the operating income
reported in the corresponding period in 1998. The decrease in profitability is
primarily attributable to the Greige Fabrics Division as the influx of lower
priced imports and excess inventory levels have continued to suppress demand for
domestically produced greige fabrics. Consequently, the impact from reduced
selling prices and volumes has significantly reduced the operating results at
the Greige Fabrics Division as earnings in 1999 are down $14.3 million as
compared to the corresponding period in 1998. The Elastic Fabrics Division
improved its operating income by $1.4 million due to increased sales volumes and
improved operating performance at its narrow elastics facility. The Chatham
Division continues to be profitable in 1999, but earnings are down $0.9 million
due to reduced automotive sales and the lower margins associated with entering
the residential furniture upholstery market.

         Interest expense for the six months ended July 3, 1999 was $6.4
million, relatively unchanged from the corresponding period in 1998.

         Other income, net, for the six months ended July 3, 1999, was $0.6
million, down $0.6 million from the corresponding period in 1998. This decrease
is due to Step 2 payments received in 1998 associated with the USDA's Cotton
User Program which were have not been received in 1999 because funding for this
program was exhausted in December 1998.

         As a result of the above mentioned items, income before income taxes
decreased $20.1 million for the six months ended July 3, 1999 over the
corresponding period in 1998, while the provision for income taxes decreased
$7.9 million. Net loss of $7.8 million for the first six months of fiscal 1999
represents a decrease of $12.2 million over the corresponding period of fiscal
1998.


Financial Condition

         For the six months ended July 3, 1999, the Company generated $7.8
million of positive cash flow from operations, increased its net borrowings by
$3.8 million and reduced its cash balances by $2.5 million. The Company used
these borrowings and cash sources to fund $5.5 million of capital expenditures,
to reduce its payable book overdraft by $6.0 million and to repurchase $2.6
million of its outstanding common stock from a director of the Company.

         At July 3, 1999, working capital was approximately $68.2 million as
compared to approximately $76.6 million at January 2, 1999. The decrease in
working capital can be primarily attributed to a $5.9 million reduction in other
current assets associated with the Company's year-end prepayment of a portion of
1999's self-insured health claims and increased borrowings under the Company's
unsecured Wachovia facility to fund capital expenditures and stock repurchases
during 1999. Management is not aware of any present or potential impairments to
the Company's liquidity.

         At July 3, 1999, long-term debt of approximately $124.5 million
represented 79.7% of total capital, compared to 74.7% at January 2, 1999.


                                       12
<PAGE>   13

         The Company believes that funds from operations during the balance of
fiscal 1999 and amounts available under the amended credit agreement (see note 2
to consolidated financial statements) are adequate to finance capital
expenditures of approximately $5 million during the remainder of 1999, in
addition to meeting working capital requirements and scheduled debt service
payments.


Impact of Year 2000

         The Company presently expects to spend approximately $0.6 million
during the remainder of 1999 to complete the replacement and modification of its
computer information systems to ensure the proper processing of transactions
relating to Year 2000 and beyond. Included in this amount are expenditures to
implement certain new or improved systems which not only achieve Year 2000
compliance, but significantly improve and expand operational capabilities of
certain of the Company's computer systems. The Company has inventoried all
critical financial, human resource, operational and manufacturing systems and
has developed detailed plans for the necessary system modifications or
replacements. As of the date of this filing, the Company believes it has
completed approximately 92% of the new system installations or existing system
modifications, and expects to complete the balance of these system changes in
the third quarter of fiscal 1999. Testing and certification of all business
critical systems is expected to be substantially concluded by September 1999.

         Additionally, the Company is communicating with its suppliers, vendors
including machinery manufacturers, and customers to determine the status of
their Year 2000 initiatives and appropriate contingency plans are being
developed to address identified risks in these areas.

         Executive management regularly reviews the status of its Year 2000
efforts and based on analyses of its own systems and discussions with and
surveys of its key vendors and customers, management currently believes that
Company information and manufacturing systems affected by Year 2000 issues have
been or will be timely identified and that its implementation plans will render
all material systems Year 2000 compliant on a timely basis; however, should
other entities upon whose systems the Company relies fail to properly address
Year 2000 compliance issues, or should key resources required to achieve the
initiatives described herein become unavailable or prove to be unreliable, the
Company's effectiveness in achieving Year 2000 compliance could be delayed,
which could have a material adverse effect on the Company's results of
operations.



                                       13

<PAGE>   14



Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         Interest rate risk. The Company has exposure to interest rate changes
primarily relating to interest rate changes under its bank credit agreements.
The Company's bank credit agreements bear interest at rates which vary with
changes in (i) the London Interbank Offered Rate (LIBOR) or (ii) a rate of
interest announced publicly by The First National Bank of Boston. Although the
Company is not presently a party to any contract in which it speculates on the
direction of interest rates, the Company has in the past and may, in the future,
enter into contracts which have the effect of speculating on the direction of
interest rates. As of July 3, 1999, the Company had $3,795 of outstanding
indebtedness under its bank credit agreements which bore interest at variable
rates. The Company believes that the effect, if any, of reasonably possible
near-term changes in interest rates on the Company's consolidated financial
position, results of operations or cash flows would not be material.

         Commodity price risk. A portion of the Company's raw materials is
cotton which is subject to price volatility caused by weather, production
problems, delivery difficulties and other factors which are outside the control
of the Company. The Company believes that at certain times, changes in cotton
pricing may not be adjusted for by changes in its product pricing and therefore
could have a significant effect on the Company. Consequently, the Company
purchases futures contracts to hedge against fluctuations in the price of raw
material cotton. Increases or decreases in the market price of cotton may affect
the fair value of cotton commodity futures contracts. As of July 3, 1999, the
Company had contracted for 23,262 bales of cotton through commodity futures
contracts. A 10% decline in the market price of cotton would have a negative
impact of approximately $0.7 million on the fair value of the Company's
outstanding futures contracts.





                                       14

<PAGE>   15


PART II   OTHER INFORMATION

Item 1.  Legal Proceedings

         None Reportable

Item 2.  Changes in Securities

         None

Item 3.  Defaults Upon Senior Securities

         None

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

         None

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

         a)       Exhibits

<TABLE>
                   <S>     <C>
                    4.1    Amended and Restated Loan and Security Agreement
                   27.1    Financial Data Schedule. (for SEC use only)
</TABLE>

         b)       Reports on Form 8-K

                  None







                                       15

<PAGE>   16




                             SIGNATURE OF REGISTRANT



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.



                                    CMI INDUSTRIES, INC.


Date:   August 16, 1999             By  /s/ JOSEPH L. GORGA
                                        ---------------------------------------
                                        Joseph L. Gorga
                                        President and Chief Executive Officer


Date:   August 16, 1999             By  /s/ JAMES A OVENDEN
                                        ---------------------------------------
                                        James A. Ovenden
                                        Executive Vice President and Chief
                                        Financial Officer






                                       16

<PAGE>   17







                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
      Exhibit No.                     Description
      -----------                     -----------


      <S>                  <C>
         4.1               Amended and Restated Loan and Security Agreement
                           dated as of May 28, 1999 by and among CMI Industries,
                           Inc. and the Lenders named herein and BankBoston,
                           N.A., as Agent

         27.1              Financial Data Schedule. (for SEC use only)
</TABLE>



















                                       17