<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 September 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 000-23341


                          MOTOR CARGO INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)




          Utah                                                 87-0406479
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)



                             845 West Center Street
                           North Salt Lake, Utah 84054
                                 (801) 292-1111

          (Address of principal executive offices and telephone number)


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  [ ]



                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. On October 31, 1998, there were
6,990,000 outstanding shares of the Registrant's Common Stock, no par value.

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

<PAGE>   2



                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                  MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS




                                     ASSETS


<TABLE>
<CAPTION>
                                                                  September 30,  December 31,
                                                                      1998           1997
                                                                 --------------  -------------
<S>                                                              <C>             <C>
                                                                   (unaudited)
Receivables

CURRENT ASSETS
   Cash and cash equivalents                                     $ 6,717,715     $ 8,616,702
   Receivables                                                    14,267,021      13,171,720
   Prepaid expenses                                                1,717,006       2,409,524
   Supplies inventory                                                390,760         503,498
   Deferred income taxes                                           1,649,000       1,581,000
   Income taxes receivable                                                 -         683,033
                                                                 -----------    ------------

         Total current assets                                     24,741,502      26,965,477

PROPERTY AND EQUIPMENT, AT COST                                   83,001,839      75,901,875

   Less accumulated depreciation
     and amortization                                            (39,638,792)    (35,242,661)
                                                                 -----------    ------------

                                                                  43,363,047      40,659,214


OTHER ASSETS
   Deferred charges                                                  454,227         378,761
   Unrecognized net pension obligation                                65,307          65,307
                                                                 -----------    ------------

                                                                     519,534         444,068
                                                                 -----------    ------------

                                                                 $68,624,083    $ 68,068,759
                                                                 ===========    ============

</TABLE>





        The accompanying notes are an integral part of these statements.



                                       2
<PAGE>   3



                  MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS - CONTINUED





                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                   September 30,    December 31,
                                                                         1998           1997
                                                                   -------------    ------------
                                                                    (unaudited)
<S>                                                                <C>              <C>
CURRENT LIABILITIES
   Current maturities of long-term obligations                        $    96,320   $    89,557
   Accounts payable                                                     2,696,013     4,123,703
   Accrued liabilities                                                  7,385,992     4,426,519
   Accrued claims                                                       2,224,837     2,956,911
                                                                      ----------    -----------
         Total current liabilities                                     12,403,162    11,596,690

LONG-TERM OBLIGATIONS, less current
  maturities                                                            1,417,179     6,491,882

DEFERRED INCOME TAXES                                                   6,852,098     6,529,000

COMMITMENTS AND CONTINGENCIES                                                   -             -

STOCKHOLDERS' EQUITY
   Preferred stock, no par value; Authorized -
     25,000,000 shares - none issued                                            -             -
   Common stock, no par value; Authorized -
     100,000,000 shares - issued 6,990,000 shares as
     of September 30, 1998 and December 31, 1997                       12,101,298    12,101,298
   Retained earnings                                                   35,850,346    31,349,889
                                                                      -----------   -----------
                                                                       47,951,644    43,451,187
                                                                      -----------   -----------
                                                                      $68,624,083   $68,068,759
                                                                      ===========   ===========
</TABLE>







        The accompanying notes are an integral part of these statements.




                                       3
<PAGE>   4



                  MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS


<TABLE>
<CAPTION>


                                                Three months ended               Nine months ended
                                                   September 30,                   September 30,
                                            ---------------------------    -----------------------------
                                                1998           1997             1998           1997
                                            ------------   ------------    --------------  -------------
                                                    (unaudited)              (unaudited)

<S>                                       <C>            <C>            <C>              <C>
Operating revenues                          $30,721,691    $28,161,498     $ 84,637,011    $77,445,561
                                            -----------    -----------     ------------    -----------
Operating expenses
   Salaries, wages and benefits              13,356,649     11,898,226       37,990,660     33,004,480
   Operating supplies and expenses            4,079,255      4,263,479       11,502,372     11,539,799
   Purchased transportation                   4,942,967      4,042,463       13,281,088     11,132,355
   Operating taxes and licenses                 985,181        860,093        2,820,282      2,681,422
   Insurance and claims                         868,379      1,268,878        2,787,597      3,400,093
   Depreciation and amortization              2,054,451      1,726,447        5,875,611      5,155,815
   Communications and utilities                 505,255        529,453        1,417,207      1,474,323
   Building rents                               626,313        449,751        1,692,672      1,265,745
                                            -----------    -----------     ------------    -----------
         Total operating expenses            27,418,450     25,038,790       77,367,489     69,654,032
                                            -----------    -----------     ------------    -----------
         Operating income                     3,303,241      3,122,708        7,269,522      7,791,529
Other income (expense)
   Interest expense                             (35,406)      (211,131)        (142,425)      (772,232)
   Other, net                                    57,931         94,839          238,699        112,688
                                            -----------    -----------     ------------   ------------
                                                 22,525       (116,292)          96,274       (659,544)
                                            -----------    -----------      -----------    ------------
         Earnings before income taxes         3,325,766      3,006,416        7,365,796      7,131,985
Income taxes                                  1,302,369      1,291,000        2,865,339      2,824,000
                                            -----------    -----------      -----------    ------------
         NET EARNINGS                       $ 2,023,397    $ 1,715,416     $  4,500,457    $ 4,307,985
                                            ===========    ===========     ============    ===========

   Earnings per common share - basic        $      0.29                    $       0.64
                                            ===========                    ============
   Weighted-average shares
       outstanding - basic                    6,990,000                       6,990,000
                                            ===========                    ============
   Earnings per common share - diluted      $      0.29                    $       0.64
                                            ===========                    ============
   Weighted-average shares
       outstanding - diluted                  6,990,000                       6,990,000
                                            ===========                    ============
Pro forma (Note 3)
   Earnings before income taxes                            $ 3,006,416                     $ 7,131,985
   Income taxes                                              1,198,000                       2,878,000
                                                           -----------                     ===========
   Net earnings                                            $ 1,808,416                     $ 4,253,985
                                                           ===========                     ===========
   Earnings per common share - basic                       $      0.31                     $      0.73
                                                           ===========                     ===========
   Weighted-average shares
       outstanding - basic                                   5,820,000                       5,820,000
                                                           ===========                     ===========
   Earnings per common share - diluted                     $      0.31                     $      0.73
                                                           ===========                     ===========
   Weighted-average shares
       outstanding - diluted                                 5,820,000                       5,820,000
                                                           ===========                     ===========

</TABLE>


        The accompanying notes are an integral part of these statements.


                                       4
<PAGE>   5



                  MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                          Nine months ended
                                                                            September 30,
                                                                       -------------------------
                                                                         1998           1997
                                                                       -----------   -----------
                                                                       (unaudited)
<S>                                                                   <C>            <C> 

Increase (decrease) in cash and cash equivalents
   Cash flows from operating activities
      Net earnings                                                     $ 4,500,457   $ 4,307,985
                                                                       -----------   -----------
      Adjustments to reconcile net earnings to net
        cash provided by operating activities
         Depreciation and amortization                                  5,875,611      5,155,815
         Provision for losses on trade
            and other receivables                                         158,013        157,500
         Loss (gain) on disposition of
           property and equipment                                         (76,377)       (82,288)
         Pension cost                                                           -          4,343
         Deferred income taxes                                            255,098        170,971
         Changes in assets and liabilities
           Receivables                                                 (1,253,314)    (2,695,025)
           Prepaid expenses                                               692,518        497,298
           Supplies inventory                                             112,738       (104,734)
           Income taxes receivable                                        683,033        166,983
           Other assets                                                   (75,466)       (50,396)
           Accounts payable                                            (1,427,690)       359,594
           Accrued liabilities and claims                               2,227,399      2,097,807
                                                                       ----------     ----------

               Total adjustments                                        7,171,563      5,677,868
                                                                       ----------     ----------

               Net cash provided by operating                          11,672,020      9,985,853
                 activities
                                                                       ----------     ----------

Cash flows from investing activities
   Purchase of property and equipment                                  (8,847,108)    (4,930,521)
   Proceeds from disposition of property
     and equipment                                                        344,041        215,184
                                                                       -----------    ----------

               Net cash used in
                 investing activities                                  (8,503,067)    (4,715,337)
                                                                       -----------    ----------

</TABLE>





                                   (Continued)



                                       5
<PAGE>   6



                  MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED


<TABLE>
<CAPTION>

                                                                           Nine months ended
                                                                             September 30,
                                                                       --------------------------
                                                                         1998            1997
                                                                       -----------    -----------
                                                                       (unaudited)
<S>                                                                     <C>           <C>
Cash flows from financing activities
   Distributions to LLC members                                                -         (458,001)
   Proceeds from issuance of long-term
     obligations                                                               -       24,915,000
   Principal payments on long-term
     obligations                                                      (5,067,940)     (32,733,425)
                                                                      ----------     ------------

               Net cash used in financing activities                  (5,067,940)      (8,276,426)
                                                                      ----------     -------------
               Net decrease in
                 cash and cash equivalents                            (1,898,987)      (3,005,910)

Cash and cash equivalents at beginning of period                       8,616,702        8,771,887
                                                                      ----------     ------------
Cash and cash equivalents at end of period                            $6,717,715     $  5,765,977
                                                                      ==========     ============



Supplemental cash flow information

Cash paid during the period for
   Interest                                                           $  145,010     $    734,837
   Income taxes                                                          801,864        1,695,100


</TABLE>


The accompanying notes are an integral part of these statements.





                                       6
<PAGE>   7


                  MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS


1.      UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

        The interim consolidated financial information included herein for the
        nine month period ended September 30, 1997 is audited. The interim
        consolidated financial information for all other periods included herein
        is unaudited; however, the information reflects all adjustments
        (consisting of normal recurring adjustments) that are, in the opinion of
        management, necessary to the fair presentation of the consolidated
        financial position, results of operations, and cash flows for the
        interim periods. The consolidated financial statements should be read in
        conjunction with the Notes to consolidated financial statements included
        in the audited consolidated financial statements for Motor Cargo
        Industries, Inc. (the "Company") for the year ended December 31, 1997
        which are included in the Company's Annual Report on Form 10-K for such
        year (the "1997 10-K"). Results of operations for interim periods are
        not necessarily indicative of annual results of operations. The
        consolidated balance sheet at December 31, 1997, was extracted from the
        Company's audited consolidated financial statements contained in the
        1997 10-K, and does not include all disclosures required by generally
        accepted accounting principles for annual consolidated financial
        statements.

2.      RECLASSIFICATION

        Certain prior period amounts have been reclassified to conform with the
        current period's presentation.

3.      PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

        Effective August 28, 1997, the Company acquired the membership interests
        of Ute Trucking and Leasing LLC, a Utah limited liability company
        ("Ute"). A limited liability company passes through to its members
        essentially all taxable earnings and losses and pays no tax at the
        company level. Accordingly, for comparative purposes, a pro forma
        provision for income taxes using an effective income tax rate of 38% has
        been determined assuming Ute had been taxed as a C Corporation during
        the three and nine month periods ended September 30, 1997.

4.      EARNINGS PER SHARE

        Basic earnings per common share ("EPS") are based on the weighted
        average number of common shares outstanding during each such period.
        Diluted earnings per common share are based on shares outstanding
        (computed under basic EPS) and potentially dilutive common shares.
        Potential common shares included in dilutive earnings per share
        calculations include stock options granted but not exercised.

<TABLE>
<CAPTION>

                                   FOR THE QUARTER ENDED SEPTEMBER 30, 1998
                                    EARNINGS       SHARES         EARNINGS
                                  (NUMERATOR)   (DENOMINATOR)    PER-SHARE
                                  -----------   -------------    ---------
         <S>                      <C>           <C>              <C>
         BASIC EPS
         Net earnings              $2,023,397     6,990,000       $0.29
                                                                  =====
         EFFECT OF DILUTIVE
         SECURITIES
         Stock options                      -             -
                                   ----------     ---------
         DILUTED EPS
         Net earnings              $2,023,397     6,990,000       $0.29
                                   ==========     =========       =====
</TABLE>



                                       7
<PAGE>   8



<TABLE>
<CAPTION>

                                   FOR THE QUARTER ENDED SEPTEMBER 30, 1997
                                    EARNINGS       SHARES        EARNINGS
                                  (NUMERATOR)   (DENOMINATOR)    PER-SHARE
                                  -----------   -------------    ----------
         <S>                     <C>            <C>              <C>
         PRO FORMA
         BASIC EPS
         Net earnings              $1,808,416     5,820,000       $0.31
                                                                  =====
         EFFECT OF DILUTIVE
         SECURITIES
         Stock options
                                            -             -
                                   ----------     ---------
         DILUTED EPS
         Net earnings              $1,808,416     5,820,000       $0.31
                                   ==========     =========       =====

</TABLE>



<TABLE>
<CAPTION>

                                   FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                     1998
                                    EARNINGS       SHARES        EARNINGS
                                  (NUMERATOR)   (DENOMINATOR)    PER-SHARE
                                  -----------   -------------    ---------
         <S>                      <C>           <C>              <C>
         BASIC EPS
         Net earnings              $4,500,457     6,990,000       $0.64
                                                                  =====
         EFFECT OF DILUTIVE
         SECURITIES
         Stock options
                                            -             -
                                   ----------     ---------
         DILUTED EPS
         Net earnings              $4,500,457     6,990,000       $0.64
                                   ==========     =========       =====

</TABLE>




<TABLE>
<CAPTION>


                                   FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                     1997
                                    EARNINGS       SHARES        EARNINGS
                                  (NUMERATOR)   (DENOMINATOR)    PER-SHARE
                                  -----------   -------------    ---------
         <S>                      <C>           <C>              <C>
         PRO FORMA
         BASIC EPS
         Net earnings              $4,253,985     5,820,000       $0.73
                                                                  =====
         EFFECT OF DILUTIVE
         SECURITIES
         Stock options
                                            -             -
                                   ----------     ---------
         DILUTED EPS
         Net earnings              $4,253,985     5,820,000       $0.73
                                   ==========     =========       =====

</TABLE>





                                       8
<PAGE>   9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

        The purpose of this section is to discuss and analyze the Company's
consolidated financial condition, liquidity and capital resources and results of
operations. This analysis should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "1997 10-K").

OVERVIEW

        Motor Cargo Industries, Inc. (the "Company") is a regional
less-than-truckload ("LTL") carrier which provides transportation and logistics
services to shippers within the Company's core service region. The Company's
core service region is the western United States, including Arizona, California,
Colorado, Idaho, New Mexico, Oregon, western Texas, Utah and Washington. The
Company transports general commodities, including consumer goods, packaged
foodstuffs, electronics, computer equipment, apparel, hardware, industrial goods
and auto parts for a diversified customer base. The Company offers a broad range
of services, including expedited scheduling and full temperature-controlled
service. Through its wholly-owned subsidiary, MC Distribution Services, Inc.
("MCDS"), the Company also provides customized logistics, warehousing and
distribution management services.

        In 1997, the Company initiated a program to establish market and
operations presence in several major business economic areas ("BEAs") outside of
the Company's core service region. Unlike more traditional inter-regional
expansion models, the Company intends only to solicit tonnage from these markets
moving west into its core service region. The Company intends to utilize
third-party truckload carriers to transport freight from these markets to its
core service region. The Company anticipates that this strategy of selling into
the region will improve lane, route and service center densities in its core
service region without requiring the Company to incur the costs associated with
building an inter-regional terminal network. The Company commenced operations at
its first BEA expansion facility in Dallas in October 1997. In April 1998, the
Company commenced operations at its second BEA expansion facility in Chicago.
The Company has identified Cincinnati, Ohio for its next BEA expansion facility
and has targeted the first quarter of 1999 for startup. Additional BEAs are also
being considered for 1999.

RESULTS OF OPERATIONS

     The following table sets forth for the periods indicated the percentage of
operating revenues represented by certain items in the Company's statements of
earnings:

<TABLE>
<CAPTION>



                                              THREE MONTHS ENDED       NINE MONTHS ENDED
                                                 SEPTEMBER 30,           SEPTEMBER 30,
                                              --------------------    --------------------
                                                1998       1997         1998       1997
                                                ----       ----         ----       ----
          <S>                                  <C>        <C>           <C>       <C>
          Operating revenues                    100.0%    100.0%        100.0%    100.0%
          Operating expenses
              Salaries, wages and benefits       43.5      42.2          44.9      42.6
              Operating supplies and expenses    13.4      15.1          13.6      14.9
              Purchased transportation           16.1      14.4          15.7      14.4
              Operating taxes and licenses        3.2       3.1           3.3       3.5
              Insurance and claims                2.8       4.5           3.3       4.3
              Depreciation and amortization       6.7       6.1           6.9       6.7
              Communications and utilities        1.6       1.9           1.7       1.9
              Building rents                      2.0       1.6           2.0       1.6
                                                -----     -----         -----     -----
                    Total operating expenses     89.3      88.9          91.4      89.9
                                                -----     -----         -----     -----
                    Operating income             10.7      11.1           8.6      10.1
          Other income (expense)                                 
              Interest expense                   (0.1)     (0.7)         (0.2)     (1.0)
              Other, net                          0.2       0.3           0.3       0.1
                                                -----     -----         -----     -----
          Earnings before income taxes           10.8      10.7           8.7       9.2
          Income taxes                            4.2       4.6           3.4       3.6
                                                -----     -----         -----     -----
          Net earnings                            6.6       6.1           5.3       5.6
                                                =====     =====         =====     =====
</TABLE>


                                       9
<PAGE>   10




Three Months Ended September 30, 1998 Compared to Three Months Ended September
30, 1997

        Operating revenues increased 9.1% to $30.7 million for the three months
ended September 30, 1998, compared to $28.2 million for the same period in
1997. The increase was attributable to an increased volume of freight within
the Company's core service region, as well as new freight from the Company's
BEA expansion facilities in Dallas, Texas and Chicago, Illinois. The number of
shipments during the third quarter of 1998 increased by 4.2% to 236,500
compared to 227,200 for the third quarter of 1997. The number of shipments and
operating revenues for the third quarter of 1997 reflect increased freight
volumes resulting from a UPS labor strike. Excluding the effects of the strike,
the number of shipments increased approximately 10.9% and operating revenues
increased approximately 11.6% compared to the third quarters of 1997.
        

        Revenues contributed by MCDS increased to $968,000 for the third quarter
of 1998, compared to $950,000 for the third quarter of 1997. The increase was
due primarily to the expanding of service to an existing customer during the
third quarter of 1998.

        As a percentage of operating revenues, salaries, wages and benefits
increased to 43.5% for the third quarter of 1998 from 42.2% for the third
quarter of 1997. This increase was due primarily to a wage increase in the
latter part of 1997 and increased staffing to enhance capacity and service
capabilities.

        Insurance and claims expense decreased to 2.8% of operating revenues for
the three months ended September 30, 1998 from 4.5% for the same period in 1997.
Insurance reserves were increased in 1997 to cover two claims, resulting in
higher insurance and claims expense for the third quarter of 1997.

        As a percentage of operating revenues, interest expense decreased to
0.1% for the third quarter of 1998 from 0.7% for the third quarter of 1997. This
decrease resulted from the pay down of debt with proceeds from the Company's
initial public offering in the fourth quarter of 1997.

        Purchased transportation increased to 16.1% of revenues for the three
months ended September 30, 1998 as compared to 14.4% for the same period in
1997. This increase was primarily attributable to the use of purchased
transportation providing one-way hauling of freight from the Company's new BEA
expansion facilities in Dallas and Chicago into the Company's core service
region for delivery.

        Total operating expenses increased to 89.3% of operating revenues for
the three months ended September 30, 1998 from 88.9% for the same period in
1997. This increase was primarily due to increased salaries, wages and benefits.

        Net earnings increased 11.9% to $2,023,000 for the three months ended
September 30, 1998, compared to pro forma net earnings of $1,808,000 for the
same period in 1997. Net earnings per share decreased $.02 to $.29 for the third
quarter of 1998, compared to pro forma net earnings per share of $.31 for the
third quarter of 1997, based on weighted average diluted shares outstanding of
6,990,000 and 5,820,000, respectively.

Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30,
1997

        Operating revenues increased 9.3% to $84.6 million for the nine months
ended September 30, 1998, compared to $77.4 million for the same period in 1997.
The increase was attributable to an increased volume of freight within the
Company's core service region, as well as new freight from the Company's BEA
expansion facilities in Dallas and Chicago. The number of shipments during the
nine months ended September 30, 1998 increased by 8.3% to 656,600, compared to
606,400 for the same period in 1997.

        Revenues contributed by MCDS decreased to $2,036,000 for the nine months
ended September 30, 1998 from $2,324,000 for the same period in 1997. The
decrease was due primarily to the termination of a contract with one customer in
the first quarter of 1998, which resulted in lower revenues for the first and
second quarters of 1998. Revenues from MCDS increased during the third quarter
of 1998 due to the expanding of service to an existing customer.

        As a percentage of operating revenues, salaries, wages and benefits
increased to 44.9% for the nine months ended September 30, 1998 from 42.6% for
the same period of 1997. This increase was due primarily to a wage increase in
the latter part of 1997 and increased staffing to enhance capacity and service
capabilities.





                                       10
<PAGE>   11

        Insurance and claims expense decreased to 3.3% of operating revenue for
the nine months ended September 30, 1998 from 4.4% for the same period in 1997.
Insurance reserves were increased in 1997 to cover two claims resulting in
higher insurance and claim expense in 1997.

        As a percentage of operating revenues, interest expense decreased to .2%
for the nine months ended September 30, 1998 from 1.0% for the same period in
1997. The decrease resulted from the pay down of debt with proceeds from the
Company's initial public offering in the fourth quarter of 1997.

        Purchased transportation increased to 15.7% of revenues for the nine
months ended September 30, 1998 as compared to 14.4% for the same period in
1997. This increase was primarily attributable to the use of purchased
transportation providing one-way hauling of freight from the Company's new BEA
expansion facilities in Dallas and Chicago into the Company's core service
region for delivery.

        Total operating expenses increased to 91.4% of operating revenues for
the nine months ended September 30, 1998 from 89.9% for the same period in 1997.
This increase was primarily due to increased salaries, wages and benefits.

     Net earnings increased 5.8% to $4,500,000 for the nine months ended
September 30, 1998, compared to pro forma net earnings of $4,254,000 for the
same period in 1997. Net earnings per share decreased $.09 to $.64 for the nine
months ended September 30, 1998 compared to pro forma net earnings per share of
$.73 for the same period in 1997, based on weighted average diluted shares
outstanding of 6,990,000 and 5,820,000, respectively.

Liquidity and Capital Resources

        The Company's primary sources of liquidity are funds provided by
operations and bank borrowings. Net cash provided by operating activities was
approximately $11.7 million for the first nine months of 1998 compared to $10.0
million for the corresponding period in 1997. Net cash provided by operating
activities is primarily attributable to the Company's earnings before
depreciation and amortization expense.

        Capital expenditures totaled approximately $8.5 million during the first
nine months of 1998 compared to $4.7 million in the comparable period of 1997.
The increase in capital expenditures was primarily due to the timing of the
delivery of revenue equipment. During 1997, a larger percentage of the Company's
capital expenditures for revenue equipment related to equipment delivered in the
fourth quarter of 1997. For the nine months ended September 30, 1998, $.9
million of the $8.5 million of capital expenditures was comprised of computer
equipment.

        Net cash used in financing activities was $5.1 million for the nine
months ended September 30, 1998 compared to $8.3 million for the comparable
period of 1997. At September 30, 1998, total borrowings under long-term
obligations totaled approximately $1.5 million.

        The Company is a party to a credit agreement with Sanwa Bank California
("Sanwa Bank"). The credit agreement provides for a $5 million revolving line of
credit. Any outstanding amounts under the revolving line of credit accrue
interest at a variable rate established from time to time by Sanwa Bank;
however, the Company may elect to have an advance accrue interest at a fixed
rate quoted by Sanwa Bank subject to certain prepayment restrictions. The credit
agreement is collateralized by the Company's cash and cash equivalents,
receivables, supplies inventory, and all documents, instruments, and chattel
paper now owned or hereafter acquired by the Company. At September 30, 1998
there was no outstanding balance under the revolving loan agreement. The Company
has not drawn on the revolving line of credit since 1989.

        The Sanwa Bank credit agreement also provides for term loans
collateralized by equipment. As of September 30, 1998, the amount available for
term loans under the credit agreement was $9.1 million. This amount is reduced
by 1/20th each quarter until the year 2002. As of September 30, 1998, the
Company had no term loans outstanding pursuant to the credit agreement.


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Inflation

        Inflation has had a minimal effect upon the Company's profitability in
recent years. Most of the Company's operating expenses are inflation-sensitive,
with inflation generally producing increased costs of operation. Although the
Company historically has been able to pass through most increases in fuel prices
and taxes to customers in the form of fuel surcharges or higher rates, the
Company generally must wait for larger carriers to implement fuel surcharges
before the Company can effectively implement fuel surcharges. See Item 1
"Business-Fuel Availability and Cost" in the 1997 10-K. The Company expects that
inflation will affect its costs no more than it affects those of other regional
LTL carriers.

Seasonality

        The Company experiences some seasonal fluctuations in freight volume.
Historically, the Company's shipments decrease during the winter months. In
addition, the Company's operating expenses historically have been higher in the
winter months due to decreased fuel efficiency and increased maintenance costs
for revenue equipment in colder weather.

The Year 2000 Issue

        The Company utilizes computer hardware and software in its operations.
Certain computer applications could fail or create erroneous results due to the
upcoming change in the century (the "Year 2000 Issue"). The Company has
performed an analysis and has implemented procedures to address the Year 2000
Issue. The Company regularly upgrades its computer hardware and believes that it
will not incur any additional expenses to modify computer hardware due to the
Year 2000 Issue. In addition, the Company has received commitments from software
vendors that will allow the Company to upgrade third-party software programs
with minimal expense to the Company. The Company anticipates, however, that it
will incur expenses of approximately $100,000 to upgrade and test certain
proprietary software developed for the Company. The Company expects to complete
the modification of its proprietary software by the end of 1998 and to begin
testing such software in early 1999. The Company is also contacting vendors and
customers to determine the extent to which the Company may be vulnerable to
third party year 2000 issues. Based upon current information, the Company
believes that all hardware and software modifications necessary to operate and
effectively manage the Company will be performed by the year 2000 and that
related costs will not have a material impact on the results of operations, cash
flow, or financial condition of the Company.

Cautionary Statement for Forward Looking Information

        Certain information set forth in this report contains "forward-looking
statements" within the meaning of federal securities laws. Such statements are
based upon the Company's current expectations and may include information with
respect to future revenues, income or loss, capital expenditures, construction
or expansion of regional facilities, plans for growth and future operations,
financing needs or plans or intentions relating to acquisitions by the Company,
as well as assumptions relating to the foregoing. There are a number of risks
and uncertainties that could cause actual results to differ materially from
those set forth in, contemplated by or underlying the forward-looking statements
contained in this report. These risks include, but are not limited to, general
economic factors, changes in market or customer demand, availability of employee
drivers and independent contractors, capital requirements, competition, labor
relations, fuel price fluctuations, environmental hazards, seasonality, claims
exposure and insurance costs, risks associated with geographic expansion,
government regulation, dependence upon key personnel, and other factors
identified from time to time in the Company's press releases and periodic
reports filed with the Securities and Exchange Commission. When used in this
report, the words "estimates," "expects," "anticipates," "forecasts," "plans,"
"intends," "believes," and variations of such words or similar expressions are
intended to identify forward-looking statements that involve risks and
uncertainties. Future events and actual results could differ materially from
those set forth in, contemplated by or underlying the forward-looking
statements. The Company's forward-looking statements apply only as of the date
made. The Company undertakes no obligation to publicly release the results of
any revisions to forward-looking statements which may be made to reflect events
or circumstances after the date made or to reflect the occurrence of
unanticipated events.


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                           PART II. OTHER INFORMATION




ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


      (a) The following exhibits are filed with this report.

      27     Financial Data Schedule


      (b)    No report on Form 8-K was filed during the quarter for which this
             report is filed.



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                                   SIGNATURES


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

                                 MOTOR CARGO INDUSTRIES, INC.



                                 By /s/ LYNN H. WHEELER
                                 -----------------------------------------------
                                 LYNN H. WHEELER
                                 Vice President of Finance and Chief
                                 Financial Officer
                                 (Authorized Signatory and
                                 Principal Financial and Accounting Officer)




Date:  November 12 1998




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<PAGE>   15



                                INDEX TO EXHIBITS


Exhibits

27             Financial Data Schedule.

                                            15