<PAGE>
 
                                   FORM 10-Q
                                        
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

       [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 1-13574


                   JOHNS MANVILLE INTERNATIONAL GROUP, INC.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


                Delaware                                   84-1196355
     -------------------------------             ---------------------------
     (State or other jurisdiction of                   (I.R.S. Employer
      incorporation or organization)                  Identification No.)


                                717 17th Street
                            Denver, Colorado  80202
--------------------------------------------------------------------------------
                   (Address of principal executive offices)
                                  (Zip Code)


                                (303) 978-2000
                                --------------
             (Registrant's telephone number, including area code)

  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes  [X]   No  [_]

  Johns Manville International Group, Inc. is a wholly owned subsidiary of Johns
Manville Corporation and there is no market for the registrant's common stock.
As of August 4, 1998, there were 100 shares of the registrant's sole class of
common stock outstanding.


<PAGE>
 
                        *PART I.  FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS.
         -------------------- 





     *  "Company" when used in this report refers to Johns Manville
        International Group, Inc., incorporated in the State of Delaware in
        1992, and includes, where applicable, its consolidated subsidiaries.

                                      I-1
<PAGE>
 
                   JOHNS MANVILLE INTERNATIONAL GROUP, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEET
                            (Thousands of dollars)
                                  (Unaudited)
<TABLE>
<CAPTION>
 
                                                        June 30,  December 31,
ASSETS                                                     1998          1997   
-----------------------------------------------------------------------------
<S>                                                  <C>           <C>       
Current Assets                                                               
 Cash and equivalents                                $   16,011    $  107,682
 Marketable securities, at cost, which                                       
  approximates market                                     3,645        14,699
 Receivables                                            286,917       221,747
 Inventories                                            140,378       127,061
 Receivable from parent                                   6,408         6,408
 Prepaid expenses                                        11,428         7,407
 Deferred tax assets                                     25,410        33,632
                                                     ----------    ----------
  Total Current Assets                                  490,197       518,636
                                                                             
Property, Plant and Equipment,                                               
 net of accumulated depreciation of                                          
 $667,584 and $639,711, respectively                    848,303       797,759
Receivable from Parent                                    9,691        10,686
Goodwill                                                227,636       202,844
Other Assets                                            204,976       203,596
                                                     ----------    ----------
                                                     $1,780,803    $1,733,521
=============================================================================
                                                                             
LIABILITIES                                                                  
-----------------------------------------------------------------------------
Current Liabilities                                                          
 Short-term debt                                     $    3,251    $    1,767
 Accounts payable                                       127,762       116,262
 Compensation and employee benefits                      84,082        82,881
 Income taxes                                            10,214         4,102
 Other accrued liabilities                               64,559        72,730
                                                     ----------    ----------
  Total Current Liabilities                             289,868       277,742
                                                                             
Long-Term Debt, less current portion                    425,788       436,474
Notes Payable to Parent                                 107,453       107,453
Postretirement Benefits Other Than Pensions             196,855       197,336
Deferred Income Taxes and Other                                              
 Noncurrent Liabilities                                 300,774       308,017
                                                     ----------    ----------
                                                      1,320,738     1,327,022
                                                     ----------    ----------
Commitments and Contingencies                                                
                                                                             
STOCKHOLDER'S EQUITY                                                         
-----------------------------------------------------------------------------
Common Stock, $1 par value; 100 shares                                       
 authorized, issued and outstanding                                          
Capital in Excess of Par Value                           80,869        80,869
Retained Earnings                                       369,409       316,343
Accumulated Other Comprehensive Income (Note 4)           9,787         9,287
                                                     ----------    ----------
                                                        460,065       406,499
                                                     ----------    ----------
                                                     $1,780,803    $1,733,521
============================================================================= 
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                      I-2
<PAGE>
 
                   JOHNS MANVILLE INTERNATIONAL GROUP, INC.
                  CONDENSED CONSOLIDATED STATEMENT OF INCOME
                            (Thousands of dollars)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                              Three Months            Six Months
                                            Ended June 30,        Ended June 30,
                                 -------------------------   -------------------
                                         1998         1997       1998       1997
                                 ------------   ----------   --------   --------
<S>                              <C>            <C>          <C>        <C>
Net Sales                            $445,224     $428,036   $834,560   $807,046
Cost of Sales                         325,376      310,097    618,964    588,451
Selling, General and
 Administrative                        41,741       40,541     82,321     78,878
Research, Development and
 Engineering                            8,282        7,611     15,897     14,888
Other Expense, net                     (2,213)      (3,569)    (3,030)    (6,662)
                                     --------     --------   --------   --------
Income from Operations                 67,612       66,218    114,348    118,167
Interest Income                         1,336        1,057      2,663      3,269
Interest Expense                        9,130       12,271     20,603     24,881
Interest Expense - Parent               1,523        1,370      3,400      2,704
                                     --------     --------   --------   --------
Income before Income Taxes,
 Extraordinary Item and
 Cumulative Effect of
 Accounting Change                     58,295       53,634     93,008     93,851
Income Tax Expense                     23,075       22,594     37,203     39,891
                                     --------     --------   --------   --------
Income before Extraordinary
 Item and Cumulative Effect
 of Accounting Change                  35,220       31,040     55,805     53,960
Extraordinary Loss on Early
 Extinguishment of Debt,
 net of tax (Note 2)                  (30,148)                (30,148)
Cumulative Effect of a
 Change in Accounting
 for Furnace Rebuilds, net
 of tax (Note 3)                                               27,409
                                     --------     --------   --------   --------
Net Income                           $  5,072     $ 31,040   $ 53,066   $ 53,960
===================================  ========     ========   ========   ========
 
Comprehensive Income (Note 4)        $  7,277     $ 27,622   $ 53,566   $ 44,503
                                     ========     ========   ========   ========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                      I-3
<PAGE>
 
                   JOHNS MANVILLE INTERNATIONAL GROUP, INC.
                CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                            (Thousands of dollars)
                                  (Unaudited)


                                                                   Six Months
                                                               Ended June 30,
                                                   --------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:                   1998             1997
-------------------------------------------------  ---------        ---------
Net income                                         $  53,066        $  53,960
Adjustments to reconcile net income to net cash
 provided by operating activities:   
  Depreciation and amortization                       46,376           38,676
  Deferred taxes                                       4,910            4,474
  Cumulative effect of accounting change             (27,409)
  Other, net                                           4,191           14,771
(Increase) decrease in current assets:
 Receivables                                         (55,952)         (45,590)
 Inventories                                          (2,555)         (11,017)
 Prepaid expenses                                     (2,159)             599
 Receivable from Parent                                  995              146
Increase (decrease) in current liabilities:
 Accounts payable                                      5,198           (6,780)
 Compensation and employee benefits                     (904)          (8,597)
 Income taxes                                          4,340           (4,390)
 Other accrued liabilities                            (5,303)           3,401
Change in other noncurrent liabilities               (15,056)         (19,506)
                                                   ---------        ---------
Net cash provided by operating activities              9,738           20,147
                                                   ---------        ---------
 
CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------------------
Purchases of property, plant and equipment           (52,417)         (47,099)
Acquisitions                                         (55,037)         (92,995)
Proceeds from sales of assets                          3,191            9,293
Purchases of held-to-maturity securities                                 (501)
Purchases of available-for-sale securities              (100)
Proceeds from maturities of held-to-maturity
 securities                                           13,553            1,516
Decrease in other assets                                 947           25,410
                                                   ---------        ---------
Net cash used in investing activities                (89,863)        (104,376)
                                                   ---------        ---------
 
CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------------------
Issuance of debt - external                          411,234           56,000
Issuance of debt - Parent                                              30,000
Payments on debt - external                         (422,796)         (40,138)
Payments on debt - Parent                                              (2,547)
                                                   ---------        ---------
Net cash provided by (used in) financing
 activities                                          (11,562)          43,315
                                                   ---------        ---------
Effect of Exchange Rate Changes on Cash                   16           (1,032)
                                                   ---------        ---------
Net Decrease in Cash and Equivalents                 (91,671)         (41,946)
Cash and Equivalents at Beginning of Period          107,682          138,216
                                                   ---------        ---------
Cash and Equivalents at End of Period              $  16,011        $  96,270
=================================================  =========        =========


See Notes to Condensed Consolidated Financial Statements.

                                      I-4
<PAGE>
 
                   JOHNS MANVILLE INTERNATIONAL GROUP, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


Johns Manville International Group, Inc. (the "Company"), is a wholly owned
subsidiary of Johns Manville Corporation. The condensed consolidated financial
statements as of June 30, 1998 and December 31, 1997 and for the three and six
months ended June 30, 1998 and 1997 reflect all normal, recurring adjustments
which are, in the opinion of management, necessary for a fair presentation of
the financial condition and the results of operations for the periods presented.
The year-end condensed consolidated balance sheet was derived from audited
financial statements, and as presented does not include all disclosures required
by generally accepted accounting principles. The Company has reclassified the
presentation of certain prior period information to conform with the current
presentation format. Additional information regarding the Company's accounting
policies, operations and financial position is contained or incorporated in the
Company's Form 10-K for the year ended December 31, 1997 filed with the
Securities and Exchange Commission.

Note 1 - Inventories

The major classes of inventories were as follows:


                                                 (Thousands of dollars) 
                                                 June 30,  December 31, 
                                                     1998          1997     
                                                 --------  ------------ 
Finished goods                                   $ 92,742      $ 82,082 
Raw materials and supplies                         35,252        34,110 
Work-in-process                                    12,384        10,869 
                                                 --------      -------- 
                                                 $140,378      $127,061 
                                                 ========      ========  


Note 2 - Debt

In May 1998, the Company consummated a cash tender offer for substantially all
of its $400 million of 10 7/8% Senior Notes due 2004 (the "Senior Notes").  This
transaction resulted in an extraordinary loss on the early extinguishment of
debt of $30.1 million, net of taxes of $19.8 million, in the second quarter of
1998.  In conjunction with the tender offer, the Company arranged unsecured
multicurrency revolving credit facilities (the "credit facilities") totaling
approximately $750 million at a floating interest rate of LIBOR plus an
additional margin, with an initial termination date of May 15, 2003.  The
Company used $450 million of the credit facilities to repurchase the Senior
Notes. At June 30, 1998, $411 million of borrowings under the credit facilities
were outstanding. The remaining credit facilities are available for funding
acquisitions and capital expenditures, and other corporate purposes. The Company
also canceled its $100 million receivables sale facility and its $75 million
revolving line of credit available to international subsidiaries.

In order to fix a portion of the Company's variable interest rate debt and
reduce the aggregate risk to movements in interest rates, the Company entered
into interest rate swap transactions with notional values totaling approximately
$178 million. In addition to reducing risk, the interest rate swaps have a
correlation to the 

                                      I-5
<PAGE>
 
underlying debt obligation, and therefore, qualify for hedge accounting. Related
amounts payable or receivable are accrued on a current basis as adjustments to
interest expense. Any gains (losses) on the termination of the interest rate
swaps are deferred and recognized over periods corresponding to the related 
obligation being hedged. The Company does not use derivative instruments for
trading purposes. As of June 30, 1998, there were no material impacts on the
Company's financial condition, liquidity or results of operations due to the
interest rate swap transactions.

Note 3 - Cumulative Effect of Accounting Change

Effective January 1, 1998, the Company changed its method of accounting for
glass furnace rebuild costs to the capitalization method from the allowance
method.  Under the capitalization method, costs to periodically rebuild the
refractory components of the glass furnaces are capitalized when incurred and
depreciated on a straight-line basis over the estimated useful life of the
rebuild.  The capitalization method provides an improved measure of the
Company's capital investment and is consistent with industry practice.
Previously, estimated costs to rebuild furnaces were credited to an allowance
and charged to operations over the estimated period to the next rebuild date.
The cumulative effect of this change in accounting principle increases 1998
earnings by $27.4 million, net of taxes of $17.9 million.  This change resulted
in an increase in depreciation expense but eliminated the provision for furnace
rebuilds.  The pro forma effect of this change on net income was not material.

Note 4 - Comprehensive Income

Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income."  Comprehensive income
generally includes changes in separately reported components of equity along
with net income. The Company's comprehensive income for 1998 and 1997 includes
net income as reported and foreign currency translation adjustments.

Note 5 - Acquisitions

In January 1998, the Company acquired the assets of a U.S. manufacturer of
reinforced thermoplastic roofing systems and also acquired a plant associated
with the Insulation segment, which manufactures calcium silicate pipe and block
insulation, and fireproof board. In May 1998, the Company acquired Exeltherm, a
Canadian producer of polyisocyanurate foam products for commercial/industrial
roofing and residential construction.  Also in May 1998, the Company acquired
Skandinaviska Jute, which owns Tasso AB, a European manufacturer of fiber glass
wall coverings.  This acquisition is associated with businesses of the
Engineered Products segment.

The combined purchase price for these acquisitions, accounted for under the
purchase method, was $55 million which was financed from existing cash balances.
The excess of the combined purchase prices over the estimated fair value of net
assets acquired, or goodwill, amounted to approximately $30 million.

                                      I-6
<PAGE>
 
Note 6 - New Accounting Pronouncements

In February 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions
and Other Postretirement Benefits."  This statement, effective for periods
beginning after December 15, 1997, revises the required disclosures for employee
benefit plans, but does not change the measurement or recognition of such plans.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities."  This statement, effective for all fiscal quarters of
fiscal years beginning after June 15, 1999, establishes accounting and reporting
standards for derivative instruments and for hedging activities.  It requires
that the Company recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at fair value.
At this time, the Company cannot determine the effects, if any, adopting this
statement will have on its financial condition, liquidity or results of
operations.

Note 7 - Business Segment Information

The Company reports separately the results of the Insulation, Roofing Systems
and Engineered Products segments.  The Insulation segment consists of the
Company's building, commercial/industrial and original equipment manufacturers
("OEM") insulation businesses.  The Roofing Systems segment consists of the
Company's commercial/industrial roofing systems business.  The Engineered
Products segment consists of the Company's mats and fibers and filtration
businesses.  Effective January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information." Consistent with the Company's internal
reporting, business segments now include allocated corporate expenses.  The 1997
results were reclassified to conform with the current presentation format.

 
                                                    (Thousands of dollars) 
                                                            Three Months   
                                                           Ended June 30,  
                                                ------------------------- 
NET SALES                                           1998             1997       
------------------------------------------------------------------------- 
Insulation                                      $173,226         $177,246  
Roofing Systems                                  147,346          136,553  
Engineered Products                              131,348          122,231  
Eliminations                                      (6,696)          (7,994) 
-------------------------------------------------------------------------  
Net Sales                                       $445,224         $428,036  
=========================================================================   
 
INCOME FROM OPERATIONS
-------------------------------------------------------------------------
Insulation                                      $ 24,166         $ 26,777
Roofing Systems                                   16,254           16,030
Engineered Products                               27,192           23,411
-------------------------------------------------------------------------
Income from Operations                          $ 67,612         $ 66,218
========================================================================= 

                                      I-7
<PAGE>
                                                   (Thousands of dollars)
                                                              Six Months 
                                                          Ended June 30, 
                                               ------------------------- 
NET SALES                                          1998             1997 
------------------------------------------------------------------------ 
Insulation                                     $337,605         $351,403 
Roofing Systems                                 252,769          235,605 
Engineered Products                             257,200          238,341 
Eliminations                                    (13,014)         (18,303)
------------------------------------------------------------------------ 
Net Sales                                      $834,560         $807,046 
======================================================================== 
                                                                         
INCOME FROM OPERATIONS                                                   
------------------------------------------------------------------------ 
Insulation                                     $ 43,328         $ 51,085 
Roofing Systems                                  21,064           21,790 
Engineered Products                              49,956           45,292 
------------------------------------------------------------------------ 
Income from Operations                         $114,348         $118,167 
======================================================================== 

Net sales included in Eliminations relate principally to the elimination of
intersegment sales from the Engineered Products segment to the Roofing Systems
segment (at prices approximating market).

                                      I-8
<PAGE>
 
ITEM 2.

                    JOHNS MANVILLE INTERNATIONAL GROUP, INC.
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The Company's net sales in the second quarter of 1998 increased $17.2 million,
or 4 percent, to $445.2 million compared with $428 million for the same period
of 1997. Gross profit increased $1.9 million to $119.8 million from $117.9
million. The lower gross profit margin for the second quarter of 1998 of 26.9
percent compared with 27.6 percent for 1997 was due principally to lower selling
prices in several businesses, partially offset by volume increases. During the
second quarter of 1998, efficiencies reflecting the integration of acquisitions
resulted in lower selling, general and administrative expenses as a percent of
sales compared with the same period of 1997. Meanwhile, research, development
and engineering was higher for 1998 when compared with the second quarter of
1997 due to increased manufacturing process development costs. Other expense,
net, was $2.2 million for the second quarter of 1998 compared with $3.6 million
for the same period of 1997. Income from operations for the second quarter of
1998 was $67.6 million, up 2.1 percent, compared with $66.2 million for the
second quarter of 1997.

The Company's net sales for the first six months of 1998 increased $27.6
million, or 3.4 percent, to $834.6 million compared with $807 million for the
same period of 1997. Gross profit decreased $3 million to $215.6 million from
$218.6 million.  The lower gross profit margin for the first half of 1998 of
25.8 percent compared with 27.1 percent for 1997 was due principally to lower
selling prices in several businesses, partially offset by volume increases.
Selling, general, administrative and research, development and engineering
expenses, combined, increased $4.5 million, or 4.7 percent, to $98.2 million.
These expenses were slightly higher as a percentage of sales, due in part to
acquisition-related costs and the impact of lower selling prices. Other expense,
net, was $3 million for the first six months of 1998 compared with $6.7 million
for the same period of 1997. Other income for 1998 included the proceeds from
the settlement of previously escrowed funds. Income from operations for the
first six months of 1998 was $114.3 million, down 3.2 percent, compared with
$118.2 million for the first six months of 1997.

Consistent with the Company's internal reporting, business segments discussed
below include allocated corporate expenses.

Insulation Segment

The Insulation segment's net sales decreased $4 million, or 2.3 percent, and
$13.8 million, or 3.9 percent, for the second quarter and first six months of
1998 compared with the same periods of 1997.  Income from operations decreased
$2.6 million, or 9.8 percent, and $7.8 million, or 15.2 percent, for the second
quarter and first six months of 1998 compared with the same periods of 1997.
Despite volume gains due to strong U.S. construction markets, the building
insulation business experienced continued pricing pressures during the first
quarter and the early part of the second quarter of 1998 compared with 1997.
These lower selling prices, which have recently 

                                      I-9

<PAGE>
 
improved, led to lower margins and an overall decrease in operating income
during the second quarter and first six months of 1998. During the second
quarter of 1998, competition from alternate materials resulted in lower sales of
automotive products, while other commercial/industrial businesses were
negatively impacted by downtime for equipment upgrades. For the first six months
of 1998, however, these declines were partially offset by higher selling prices
in mechanical insulations.

Roofing Systems Segment

Net sales for the Roofing Systems segment increased $10.8 million, or 7.9
percent, and $17.2 million, or 7.3 percent, for the second quarter and first six
months of 1998 compared with the same periods of 1997 due to incremental volume
increases from the recent thermoplastic membranes acquisitions. Excluding the
impacts of acquisitions, net sales moderately declined for the second quarter
and first six months of 1998 compared with 1997, reflecting decreased roofing
activity caused by adverse weather conditions in early 1998.  Income from
operations for the second quarter of 1998 increased slightly to $16.3 million
from $16 million for the second quarter of 1997 due to acquisitions and
favorable construction markets in the U.S. and Canada. However, operating income
decreased slightly for the first six months to $21.1 million from $21.8 million
as a result of acquisition costs and the impact of weather-related construction
delays.

Engineered Products Segment

The Engineered Products segment's net sales increased $9.1 million, or 7.5
percent, and $18.9 million, or 7.9 percent, for the second quarter and first six
months of 1998 compared with the same periods of 1997. Income from operations
increased $3.8 million, or 16.2 percent, and $4.7 million, or 10.3 percent, for
the same periods. These increases are primarily due to volume increases from the
Company's European operations which include the May 1997 acquisition of Mitex
and the May 1998 acquisition of Tasso AB, both manufacturers of fiber glass wall
covering fabrics. Volume increases in the U.S. mats and fibers business were
partially offset by weather-related declines in roofing mat shipments and lower
selling prices. Results in filtration decreased for the second quarter and first
six months of 1998 due to lower selling prices.

Interest Expense

The Company's interest expense decreased $3 million and $3.6 million for the
second quarter and the first six months of 1998 compared with the same periods
of 1997 primarily due to the purchase of substantially all of the Company's $400
million of 10 7/8% Senior Notes in May 1998 using revolving credit facilities
with significantly lower interest rates.

Debt

In May 1998, the Company consummated a cash tender offer for substantially all
of its $400 million of 10 7/8% Senior Notes due 2004 (the "Senior Notes").  This
transaction resulted in an extraordinary loss on the early extinguishment of
debt of $30.1 million, net of taxes of $19.8 million, in the second quarter of
1998.  In conjunction with the tender offer, the Company arranged unsecured
multicurrency revolving credit facilities (the "credit facilities") totaling
approximately $750 million at a floating interest rate of LIBOR plus an
additional margin, with an initial termination date of May 15, 2003.  The
Company used $450 million 

                                      I-10
<PAGE>
 
of the credit facilities to repurchase the Senior Notes. At June 30, 1998, $411
million of borrowings under the credit facilities were outstanding. The
remaining credit facilities are available for funding acquisitions and capital
expenditures, and other corporate purposes. The Company also canceled its $100
million receivables sale facility and its $75 million revolving line of credit
available to international subsidiaries.

Cumulative Effect of Accounting Change

Effective January 1, 1998, the Company changed its method of accounting for
glass furnace rebuild costs to the capitalization method from the allowance
method.  The cumulative effect of this change in accounting principle increases
1998 earnings by $27.4 million, net of taxes of $17.9 million.  This change
resulted in an increase in depreciation expense but eliminated the provision for
furnace rebuilds.  The pro forma effect of this change on net income was not
material.

Due to the factors discussed above, the Company's net income for the second
quarter of 1998 was $5.1 million compared with net income of $31 million for the
second quarter of 1997.  Year-to-date net income for 1998 was $53.1 million
compared with $54 million for the same period of 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company's agreements with its lenders contain financial and general
covenants. These include, among other things, limitations on borrowings,
investments and asset dispositions, and maintenance of various financial ratios.
Noncompliance with these or other covenants, or the occurrence of any other
event of default, could result in the termination of existing credit agreements
and the acceleration of debt owed by the Company and its subsidiaries.  At June
30, 1998, the Company was in compliance with these covenants.

At June 30, 1998, the Company had net working capital of $200.3 million,
including cash and marketable securities totaling $19.7 million.  Total cash and
marketable securities located outside the U.S. and Canada were approximately
$15.3 million.  At December 31, 1997, the Company's cash and marketable
securities totaled $122.4 million.  The Company had approximately $330 million
available for use at June 30, 1998 from its unsecured multicurrency revolving
credit facilities.  In addition, the Company's international subsidiaries had
borrowing and working capital facilities totaling approximately $10 million, of
which $7.3 million was available at June 30, 1998.

The Company's net operating activities provided $9.7 million of cash during the
first half of 1998.  Net operating activities for the same period of 1997
provided $20.1 million.  Operating activities for 1998 included the impact of
the premium on the prepayment of the Senior Notes.  The Company's cash flows
from operating activities are primarily influenced by sales volume and selling
prices.  As discussed in "Results of Operations," the effects of increased sales
volumes were partially offset by lower selling prices during 1998.  Operating
activities for 1998 also included cash usages to build net working capital for
the construction season, which typically peaks during the third quarter.  The
Company expects 1998 operating results to continue to benefit from the
integration of acquisitions.  A moderately higher level of U.S. housing 

                                     I-11
<PAGE>
 
starts during 1998 compared with 1997, in addition to recent price improvements,
should continue to benefit the building insulation business. Capacity-related
competitive pricing pressures are expected to stabilize for the building
insulation, mats and fibers and filtration businesses during the year.

The Company's investing activities for the six months ended June 30, 1998
included $55 million for acquisitions and capital expenditures of $52.4 million.
The Company estimates 1998 capital expenditures of approximately $128 million,
of which approximately $55 million relate to capacity expansion projects.  As of
June 30, 1998, outstanding purchase commitments for capital projects totaled $19
million.  Investing activities for the first half of 1997 included the combined
purchase prices for acquisitions of $93 million, net of cash acquired, and
capital expenditures of $47.1 million.

The Company's financing activities for the first half of 1998 consisted of
repayments of debt totaling $422.8 million and issuances of debt totaling $411.2
million, net, relating primarily to the May 1998 Senior Note purchase.  During
1997, the Company borrowed $55 million from international credit facilities to
partially finance 1997 acquisitions, of which $10 million was repaid by June 30,
1997.  The remainder was repaid by April 1998.  Also during 1997, the Company
repaid debt totaling $30 million assumed in connection with 1996 acquisitions.
This debt was refinanced with $30 million of notes payable to Johns Manville
Corporation at prevailing market terms, of which $2.5 million was repaid.

Contingent Product Liability

Between 1988 and 1992, the Company manufactured phenolic roofing insulation
which may, under certain circumstances, contribute to the corrosion of metal
decks on which it is installed.  Subsequently, the Company began a voluntary
program to inspect such metal decks and remediate where appropriate.  The
Company has accrued for costs relating to future inspections, remediation and
anticipated claims.  These accruals are based on the Company's historical
experience regarding the incidence of corrosion and the cost of remediation and
include a number of assumptions related to the types of roofs on which phenolic
insulation has been installed as well as the assumption that the Company's past
remediation experience will continue over the remaining lives of roofs insulated
with the Company's phenolic roofing insulation.

Pursuant to reimbursement agreements with the Company's liability carriers and
former owner of the phenolic roofing insulation business, the Company has been
reimbursed for a portion of historical costs incurred and is entitled to receive
reimbursement for a substantial portion of future costs to be incurred by the
Company for inspection and remediation.

In 1996, the Company and a third party were named as defendants in two class
action cases, now consolidated, filed in U.S. District Court in Boston,
Massachusetts.  The plaintiffs purport to represent all building owners in the
U.S. with phenolic insulation installed on their roof decks and seek damages and
injunctive relief, including an order requiring the removal and replacement of
the phenolic insulation and remediation of any deck corrosion.  The Company
intends to defend these allegations vigorously.

                                     I-12
<PAGE>
 
The Company has reviewed its historical inspection and remediation experience
and the terms and collectibility of amounts payable under the reimbursement
agreements in light of the contingencies described above.  Based on the
information available to date and subject to the assumptions described above, if
additional costs are incurred in excess of the accrued amounts, such costs are
not expected to have a material adverse effect on the Company's financial
condition, liquidity or results of operations.

Environmental Contingencies

At June 30, 1998, the Company had remediation activities in progress at nine
sites, out of a total of 19 such sites for which the Company has identified
environmental conditions requiring remediation.  In addition, the Company has
been identified as a potentially responsible party at 25 non-Company owned or
operated sites under the federal Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") or similar state legislation.  Of
these 25 sites, the Company's potential liability for 19 sites will be
determined pursuant to the settlement agreement described in the following
paragraph.  The remaining six sites are not subject to the agreement and,
accordingly, the Company could be jointly and severally liable for costs of
remediating these sites.

In 1994, the U.S. government and the Company settled certain litigation
concerning the Company's disposal activities prior to consummation of its plan
of reorganization. The settlement agreement, which was made an order of the
court, limits the Company's future liability under both CERCLA and the Resource
Conservation and Recovery Act ("RCRA") to 55 percent of its share of site-wide
response costs and natural resources damages without regard to joint and several
liability for disposals made by the Company prior to consummation of the
Company's plan of reorganization.  The agreement resolved the Company's
liability at certain historical sites and also covers CERCLA and RCRA liability
for other disposal sites at which the Environmental Protection Agency ("EPA")
has incurred or may incur response costs and which were used by the Company
prior to the consummation of the plan of reorganization.  The agreement provides
that the amount the Company will be obligated to pay, in the aggregate, for such
sites shall never exceed $850,000 during any given year.  The EPA and others
from time to time commence cleanup activities at such sites, and in the future,
the EPA and others may assert claims against the Company with respect to such
sites.  The Company believes that all such activities and claims, if any, will
be subject to the agreement.

As a result of factors such as changes in federal and state regulations, the
application and effectiveness of remedial actions, the difficulty in assessing
the extent of environmental contamination, and the allocation of costs among
potentially responsible parties, actual costs to be incurred for environmental
cleanup may vary from previous estimates.  Subject to the uncertainties inherent
in evaluating environmental exposures, and based on information presently
available, including the Company's historical remediation experience, currently
enacted environmental laws and regulations, and existing remediation technology,
the Company believes that if additional costs are incurred in excess of the
accrued amounts, such costs are not expected to have a material adverse effect
on the Company's financial condition, liquidity or results of operations.

                                     I-13
<PAGE>
 
Year 2000 Compliance

The Company is engaged in a comprehensive project, including the development of
appropriate contingency plans, to modify its computer software for year 2000
compliance. Based on current estimates, spending to upgrade or replace the
Company's embedded technology, software and systems related to year 2000
compliance is not expected to exceed $5 million through the completion of the
project in 1999. The majority of these costs relate to embedded technology. The
Company is currently working with third parties to address year 2000 readiness.
Although the impacts cannot currently be quantified, third party noncompliance
is not expected to have material adverse effects on the Company's financial
condition, liquidity or results of operations.

Pending Acquisitions

In May 1998, the Company announced an agreement in principle to acquire the
Spunbond/Monofilament operations of the Hoechst Group's polyester business
subject to regulatory approvals.  The acquisition, with 1997 sales totaling
approximately $250 million, will be part of the Engineered Products segment.
Also in May 1998, the Company announced it had signed a letter of intent to
acquire Manson Insulation, a Canadian producer of fiber glass pipe insulation,
duct insulation, OEM products and metal building insulation.


The Company believes that its current cash position, funds available under
credit facilities, and cash generated from operations will enable it to satisfy
its debt service requirements, its ongoing capital expansion program and its
other ongoing operating costs.  However, the Company may need to access capital
markets to pay the principal of its credit facilities, or in connection with
possible significant future acquisitions.

FORWARD-LOOKING STATEMENTS

This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.  Statements of the Company
contained in this report concerning matters that are not historical facts,
including, without limitation, statements concerning the (i) expected benefits
from the continuing integration of acquisitions and capacity expansions, (ii)
effect on the building insulation business resulting from 1998 U.S. housing
starts, (iii) possible price stabilization in the current year in the building
insulation, mats and fibers and filtration businesses, (iv) Company's
expectations concerning levels of capital spending and funding of current
operations, debt service and future acquisitions, (v) Company's expectations as
to contingencies related to phenolic roofing insulation and environmental
liabilities, and (vi) Company's estimates concerning year 2000 compliance
issues, constitute such forward-looking statements.  See "Liquidity and Capital
Resources."

Forward-looking statements of the Company are subject to risks and uncertainties
that could cause actual results to differ materially from those expressed in
such statements.  Important factors relating to such risks and uncertainties are
set forth below.

                                     I-14
<PAGE>
 
Factors that could affect the forward-looking statements generally are related
to demand for the Company's products, overall capacity levels in the industry
and the overall competitive environment in which the Company operates. These
factors are discussed in detail in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" incorporated in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.

Factors that could affect the Company's refinancing intentions and expected
levels of capital spending and funding of current operations and debt service,
include, without limitation, the general factors noted above, the level of cash
flow  generated by the Company and the ability of the Company to otherwise fund
such commitments, which in turn could be affected by general U.S. and
international economic conditions as well as financial market conditions.

The Company's ability to realize expected benefits from acquisitions depends on
a number of factors including, without limitation, successful integration of
newly acquired operations, technology, products, employees and the overall
economic factors referred to above.

For a discussion of factors concerning contingencies related to phenolic roofing
insulation, environmental matters and year 2000 compliance, see "Liquidity and
Capital Resources - Contingent Product Liability, Environmental Contingencies,
and Year 2000 Compliance."

                                     I-15

<PAGE>
 
                          PART II.  OTHER INFORMATION
                                        

ITEM 1.  LEGAL PROCEEDINGS.
         ----------------- 

Not applicable.

ITEM 2.  CHANGES IN SECURITIES.
         --------------------- 

Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.
         ------------------------------- 

Not applicable.

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

Not applicable.

ITEM 5.  OTHER INFORMATION.
         ------------------

Not applicable.

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

    (a)  Exhibits.
         -------- 

         Exhibit 10.1, $725,000,000 Revolving Multicurrency Credit Agreement
         dated May 15, 1998 among Johns Manville Corporation and Johns Manville
         International, Inc., as Borrowers; Bank of America National Trust and
         Savings Association, as Agent; Bancamerica Robertson Stephens and The
         Bank of New York, as Syndication Agents; and other financial
         institutions party thereto.

         Exhibit 10.2, $40,000,000 (CDN) Revolving Credit Agreement dated as of
         June 17, 1998 among Johns Manville Canada Inc., as Borrower; and Johns
         Manville Corporation and Johns Manville International, Inc., as
         Guarantors; Bank of Montreal, as Agent and Arranger; and other
         financial institutions party thereto.

         Exhibit 27.1, Financial Data Schedules.

    (b)  Form 8-K.
         -------- 

         None.

                                      II-1
<PAGE>
 
                                   SIGNATURE
                                   ---------
                                        

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                           JOHNS MANVILLE INTERNATIONAL
                                                   GROUP, INC.
                                        ---------------------------------
                                                  (Registrant)



Date:  August 14, 1998                 By:    D. D. Persson
                                            -----------------------------
                                               D. D. Persson
                                            Vice President, Assistant
                                            General Counsel and Secretary



Date:  August 14, 1998                 By:    J. P. Murphy
                                            -----------------------------
                                               J. P. Murphy
                                            Senior Vice President and
                                            Chief Financial Officer

                                      II-2