<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   Form 10-Q

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

For the quarterly period ended July 3, 1999
                               ------------

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to
                               ----------  ----------

Commission file number      1-8884
                        ------------

                             BUSH INDUSTRIES, INC.
             ----------------------------------------------------
            (Exact name of registrant as specified in its charter)

                 Delaware                                      16-0837346
      ------------------------------                       -------------------
     (State or other jurisdiction of                         (I.R.S. Employer
      incorporation of organization)                       Identification No.)

                                One Mason Drive
                                 P.O. Box 460
                        Jamestown, New York 14702-0460
             ----------------------------------------------------
                   (Address of principal executive offices)
                                  (Zip Code)

                                (716) 665-2000
             ----------------------------------------------------
             (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
    ----        ----

Number of shares of Common Stock outstanding as of July 3, 1999: 10,481,359
shares of Class A Common Stock and 3,395,365 shares of Class B Common Stock.
<PAGE>

                    BUSH INDUSTRIES, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     -------------------------------------
<TABLE>
<CAPTION>
                                                                    JULY 3,       JANUARY 2,
                                                                       1999             1999
                                                                    -------       ----------
                                                                  (Unaudited)
                                                                         (In thousands)
<S>                                                                <C>              <C>
ASSETS
------
Current Assets:
   Cash                                                              $2,931           $2,236
   Accounts receivable                                               32,883           39,714
   Inventories                                                       64,142           61,629
   Prepaid expenses and other current assets                          6,843            6,182
                                                                    -------          -------
        Total Current Assets                                        106,799          109,761

Property, Plant and Equipment, Net                                  191,325          191,218
Other Assets                                                         27,589           28,151
                                                                    -------          -------

TOTAL ASSETS                                                       $325,713         $329,130
                                                                   ========         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
   Accounts payable                                                 $29,339          $36,198
   Income taxes                                                       1,721              107
   Other accrued liabilities                                         39,979           32,703
   Current portion of long-term debt                                    563              707
                                                                    -------          -------
        Total Current Liabilities                                    71,602           69,715

Deferred Income Taxes                                                 2,437            5,998
Other Long-term Liabilities                                           7,886            8,744
Long-term Debt                                                      123,137          121,054
                                                                    -------          -------
         Total Liabilities                                          205,062          205,511
                                                                    -------          -------
Stockholders' Equity:
   Common Stock:
        Class A, $.10 par, 20,000,000 shares authorized,
        10,544,838 shares issued                                      1,054            1,054

        Class B, $.10 par, 6,000,000 shares authorized,
        3,395,365 shares issued                                         340              340

   Paid-in capital                                                   20,656           20,656
   Retained earnings                                                 98,102          102,629
   Accumulated other comprehensive income (loss)                      1,295            (264)
                                                                    -------          -------
                                                                    121,447          124,415
Less treasury stock, 63,479 Class A shares                            (796)            (796)
                                                                    -------          -------
        Total Stockholders' Equity                                  120,651          123,619
                                                                    -------          -------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                           $325,713         $329,130
                                                                   ========         ========
</TABLE>

See notes to condensed consolidated financial statements.

                                       2
<PAGE>

                    BUSH INDUSTRIES, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                -----------------------------------------------
                                  (Unaudited)


                                                    THIRTEEN WEEKS ENDED
                                                ----------------------------
                                                   JULY 3,           JULY 4,
                                                      1999              1998
                                                   -------           -------
                                                 (In thousands, except shares
                                                      and per share data)


Net Sales                                          $98,873           $97,089

Costs and Expenses:

   Cost of sales                                    68,206            70,365
   Selling, general and administrative              24,289            19,706
   Interest                                          2,228             1,253
                                                    ------            ------
                                                    94,723            91,324

Earnings Before Income Taxes                         4,150             5,765

Income Taxes                                         1,849             1,872
                                                    ------            ------

Net Earnings                                        $2,301            $3,893
                                                    ======            ======

Earnings per Share
   Basic                                             $0.17             $0.28
   Diluted                                           $0.16             $0.26

Weighted Average Shares Outstanding
   Basic                                        13,876,860        13,823,886
   Diluted                                      14,468,594        14,866,668


See notes to condensed consolidated financial statements.

                                       3
<PAGE>

                     BUSH INDUSTRIES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 -----------------------------------------------
                                  (Unaudited)


                                                      TWENTY-SIX WEEKS ENDED
                                                   ----------------------------
                                                      JULY 3,           JULY 4,
                                                         1999              1998
                                                      -------           -------
                                                    (In thousands, except shares
                                                         and per share data)

Net Sales                                            $210,458          $205,902

Costs and Expenses:

   Cost of sales                                      149,538           148,686
   Selling, general and administrative                 50,247            40,308
   Restructuring                                        9,672                 0
   Interest                                             4,262             2,265
                                                      -------           -------
                                                      213,719           191,259

(Loss) Earnings Before Income Taxes                   (3,261)            14,643

Income Tax (Benefit) Expense                            (122)             5,286
                                                     --------            ------

Net (Loss) Earnings                                  ($3,139)            $9,357
                                                     ========            ======


(Loss) Earnings per Share
   Basic                                              ($0.23)             $0.68
   Diluted                                            ($0.23)             $0.63

Weighted Average Shares Outstanding
   Basic                                           13,876,860        13,772,693
   Diluted                                         13,876,860        14,841,473


See notes to condensed consolidated financial statements.

                                       4
<PAGE>

                    BUSH INDUSTRIES, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                ----------------------------------------------
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                   TWENTY-SIX WEEKS ENDED
                                                                 ---------------------------
                                                                    JULY 3,          JULY 4,
                                                                       1999             1998
                                                                    -------          -------
                                                                         (In thousands)
<S>                                                                <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
------------------------------------
   Net (loss) earnings                                             ($3,139)           $9,357
   Adjustment to reconcile:
      Depreciation and amortization                                   7,716            6,691
      Deferred income taxes                                         (3,670)            (354)
   Change in assets and liabilities affecting cash flows:
      Accounts receivable                                             9,138            3,549
      Inventories                                                   (4,153)         (19,923)
      Prepaid expenses and other current assets                       (803)              128
      Accounts payable                                              (5,227)          (1,877)
      Income taxes                                                    1,615               17
      Other accrued liabilities                                       8,684          (9,778)
                                                                   --------         --------
         Net cash provided by (used in) operating activities         10,161         (12,190)
                                                                   --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES:
------------------------------------
   Capital expenditures                                            (15,661)         (20,694)
   Investment in subsidiary                                               0          (7,000)
   Increase in other assets                                           (754)          (1,070)
                                                                   --------         --------
      Net cash used in investing activities                        (16,415)         (28,764)
                                                                   --------         --------

CASH FLOWS FROM FINANCING ACTIVITIES:
------------------------------------
   Repayment of long-term debt                                        (427)         (11,091)
   Proceeds from long-term debt                                       8,161           51,660
   Exercise of stock options by employees                                 0            1,373
   Dividends paid                                                   (1,388)          (1,173)
                                                                   --------         --------
      Net cash provided by financing activities                       6,346           40,769
                                                                   --------         --------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                 603            (118)
                                                                   --------         --------
NET INCREASE (DECREASE) IN CASH                                         695            (303)

CASH AT BEGINNING OF PERIOD                                           2,236            3,399
                                                                   --------         --------

CASH AT END OF PERIOD                                                $2,931           $3,096
                                                                   ========         ========
</TABLE>

See notes to condensed consolidated financial statements.

                                       5
<PAGE>

                    BUSH INDUSTRIES, INC. AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------
                      Twenty-six weeks ended July 3, 1999


1.   The accounting policies used in preparing these statements are the same as
     those used in preparing the Company's consolidated financial statements for
     the year ended January 2, 1999. These condensed consolidated financial
     statements should be read in conjunction with the consolidated financial
     statements and notes thereto included in the Company's annual report to
     stockholders for the fiscal year ended January 2, 1999.

     The Company operates and manages its business in one reportable industry
     segment - the design, manufacture and sale of both RTA (ready to assemble)
     and set-up furniture for the home and office.

     The foregoing financial information reflects all adjustments which are, in
     the opinion of management, of a normal recurring nature and necessary for a
     fair presentation. The interim results are not necessarily indicative of
     the results which may be expected for a full year.

2.   During the first quarter of 1999, the Company finalized plans to
     restructure certain of its operations. Non-recurring restructuring costs
     amounting to $9,672,000 have been charged to expense in the first quarter
     ended on April 3, 1999. A restructure liability amounting to $7.3 million
     is included in other accrued liabilities as of July 3, 1999. Restructuring
     costs include employee termination costs of approximately $6.1 million
     related to cost reduction programs implemented on a worldwide basis. The
     remaining components of significant restructuring costs include
     approximately $1.2 million of costs to transition the assembly and delivery
     service portion of the TASC operation to third party subcontractors,
     approximately $0.8 million to cancel contractual variable costs, and
     approximately $1.6 million related to other manufacturing charges. Although
     all components of the restructuring are expected to be substantially
     completed by the end of 1999, payments to terminated employees in Germany
     and payments to cancel certain contractual variable costs will extend into
     the year 2000.

3.   The following tables set forth total comprehensive income for the 13 week
     and 26 week periods indicated below.

                                                         THIRTEEN WEEKS ENDED
                                                       ------------------------
                                                         JULY 3,        JULY 4,
                                                            1999           1998
                                                         -------        -------
                                                             (In thousands)
     Net income                                           $2,301         $3,893
     Accumulated other comprehensive income (loss)           768           (71)
                                                          ------         ------
     Total comprehensive income                           $3,069         $3,822
                                                          ======         ======

                                       6
<PAGE>

                                                       TWENTY-SIX  WEEKS ENDED
                                                     ---------------------------
                                                          JULY 3,        JULY 4,
                                                             1999           1998
                                                          -------        -------
                                                              (In thousands)

     Net (loss) income                                   $(3,139)         $9,357
     Accumulated other comprehensive income (loss)          1,559          (198)
                                                          -------         ------
     Total comprehensive (loss) income                   ($1,580)         $9,159
                                                          =======         ======


4.   Inventories consist of the following:

                                                          JULY 3,     JANUARY 2,
                                                             1999           1999
                                                          -------     ----------
                                                              (In thousands)

     Raw material                                         $16,861        $17,663
     Work in progress                                       8,447          9,754
     Finished goods                                        38,834         34,212
                                                          -------        -------
                                                          $64,142        $61,629
                                                          =======        =======


                                       7
<PAGE>

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

     Except for the historical information contained herein, the matters
discussed in this 10-Q are forward-looking statements which involve risks and
uncertainties, including, but not limited to, economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices, and other factors discussed in the
Company's filings with the Securities and Exchange Commission.


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

     Second quarter sales for the 13 week period ended July 3, 1999 were
$98,873,000 and first half sales for the 26 week period ended July 3, 1999 were
$210,458,000. This represents an increase of $1,784,000, or approximately 1.8%,
compared to net sales of $97,089,000 for the 13 week period ended July 4, 1998
and a first half increase of $4,556,000, or approximately 2.2%, compared to net
sales of $205,902,000 for the 26 week period ended July 4, 1998. The sales
increase for the 13 and 26 week period ended July 3, 1999 resulted from new
product placements at several key major retail customers in the U.S., and was
partially offset by the planned downsizing which occurred in the European
operation, as well as inventory level adjustments made by some of the Company's
U.S. customers.

     Cost of sales decreased $2,159,000 for the 13 week period ended July 3,
1999, compared to the 13 week period ended July 4, 1998. Cost of sales as an
approximate percentage of net sales decreased by 3.5% from 72.5% in the second
quarter of 1998 to 69.0% in the second quarter of 1999. Cost of sales increased
by $852,000 for the 26 week period ended July 3, 1999, compared to the 26 week
period ended July 4, 1998. Cost of sales as an approximate percentage of net
sales decreased by 1.1% from 72.2% in the first half of 1998 to 71.1% in the
second half of 1999. The decrease in cost of sales as a percentage of net sales
for both the 13 and 26 week period ended July 3, 1999 was primarily a result of
improved purchasing and manufacturing performance.

     Selling, general and administrative expenses increased $4,583,000 for the
13 week period ended July 3, 1999, compared to the 13 week period ended July 4,
1998. For the 26 week period ended July 3, 1999, selling, general and
administrative expenses increased by $9,939,000 as compared to the 26 week
period ended July 4, 1998. The second quarter of 1999 and first half of 1999
increases in selling, general and administrative expenses were primarily a
result of higher variable selling expenses, both in general and as result of a
mix of sales into certain customers and by expenses related to increased overall
sales volumes. Selling, general and administrative expenses as an approximate
percentage of net sales increased by 4.3% from 20.3% in the second quarter of
1998 to 24.6% in the second quarter of 1999 and increased by 4.3% from 19.6% in
the first half of 1998 to 23.9% in the first half of 1999.

     Interest expense for the 13 week period ended July 3, 1999 increased to
$2,228,000 (or approximately 2.3% of net sales) from $1,253,000 (or
approximately 1.3% of net sales) for the 13 week period ended July 4, 1998.
Interest expense for the 26 week period ended July 3, 1999

                                       8
<PAGE>

increased to $4,262,000 (or approximately 2.0% of net sales) from $2,265,000 (or
approximately 1.1% of net sales). The increase in interest expense was due to an
increase in average debt primarily related to the Company's capital expenditures
and an increase in average inventory levels.

     The consolidated effective income tax rate for the 13 and 26 week periods
ended July 3, 1999 was 44.6% and 3.7%, respectively. The tax rates for the same
periods in 1998 were 32.5% and 36.1%, respectively. The variance in rates is
primarily related to the impact of the lower deferred tax rates attributable to
the 51% owned Rohr-Bush subsidiary. Additionally, the first half rate was
impacted by the mix between the quarters caused by the effective tax rate on
second quarter 1999 earnings being different from the effective tax rate on the
first quarter 1999 loss.

     During the first quarter of 1999, the Company finalized plans to
restructure certain of its operations. Non-recurring restructuring costs
amounting to $9,672,000 have been charged to expense in the first quarter ended
on April 3, 1999. A restructure liability amounting to $7.3 million is included
in other accrued liabilities as of July 3, 1999. Restructuring costs include
employee termination costs of approximately $6.1 million related to cost
reduction programs implemented on a worldwide basis. The remaining components of
significant restructuring costs include approximately $1.2 million of costs to
transition the assembly and delivery service portion of the TASC operation to
third party subcontractors, approximately $0.8 million to cancel contractual
variable costs, and approximately $1.6 million related to other manufacturing
charges. Although all components of the restructuring are expected to be
substantially completed by the end of 1999, payments to terminated employees in
Germany and payments to cancel certain contractual variable costs will extend
into the year 2000.

     As described below, the Company is actively addressing its ability to
resolve any potential Year 2000 issues. The Year 2000 issue is the result of
computer software programs being written using two digits rather than four to
define the applicable year. Any of the Company's software programs, computer
hardware or equipment that have date-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000,
resulting in system failures or miscalculation.

     The Company has appointed a Year 2000 Corporate Compliance Team, which has
prepared an international compliance program and work plan for the Company and
is responsible for coordinating and inspecting compliance activities. The
Company's plan to resolve the Year 2000 issue includes five major phases. First,
in the inventory phase, all resources are inventoried to identify those that
have any type of software or hardware Year 2000 issues. Second, in the
assessment phase, all inventoried items are assessed to confirm that a Year 2000
related issue is present and the extent of remediation required. Third, in the
strategy phase, a remediation strategy is created to ensure substantial
completion of upgrades for critical systems. Fourth, in the conversion / upgrade
phase, upgrades are performed on all items identified in the inventory and
assessment phases. Finally, in the testing phase, all upgraded items are tested
to verify Year 2000 readiness.

     The Company has completed the inventory, assessment and strategy phases for
both information technology ("IT") and non-IT systems. For non-IT systems, the
Company is

                                       9
<PAGE>

dependent on equipment manufacturers to supply the upgrades required to
remediate Year 2000 issues. As of July 1, 1999, the conversion/upgrade and
testing phases of IT and non-IT systems was approximately 95% complete and is
targeted to be completed by September 1999.

     Part of the Company's initial assessment phase included a detailed Year
2000 questionnaire sent to all active vendors and customers. This questionnaire
included questions on products, services, IT and non-IT systems. As of July 1,
1999, the Company had received responses from approximately 94% of those
questioned. The Company is following up the questionnaires, where necessary, to
ensure Year 2000 compliance and uninterrupted services and supplies to the
Company.

     The Company utilizes both internal and external resources to address the
Year 2000 issue. The Company does not separately track the internal costs
incurred on the Year 2000 project. Such costs are principally payroll and
related costs for its internal IT personnel. Certain mainframe computer software
upgrades necessary to become Year 2000 compliant will not be an incremental
expense, as the software upgrade is provided as part of the Company's software
maintenance agreement. The total cost of the Year 2000 project, excluding the
above items, is estimated to be less than $500,000.

     The Company presently believes it has an effective plan in place to
anticipate and resolve any material potential Year 2000 issues in a timely
manner. In the event, however, that the Company does not properly identify Year
2000 issues or complete the conversion / upgrade phase and testing phase of its
systems on a timely basis with respect to the Year 2000 issues that are
identified, there can be no assurance that Year 2000 issues will not materially
and adversely affect the Company's results of operations or relationships with
third parties. In addition, disruptions in the economy generally resulting from
Year 2000 issues also could materially and adversely affect the Company. The
amount of potential liability and lost revenue that would be reasonably likely
to result from the failure by the Company and certain key third parties to
achieve Year 2000 compliance on a timely basis cannot be reasonably estimated at
this time.

     The Company is developing a contingency plan for Year 2000 issues and
expects to have it in place by October 31, 1999. In addition, the Company is
forming a rapid response team as part of its IT group that will respond to any
operational problems during the Year 2000 date change period.


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

     Working capital at first half-end 1999 decreased by $4,849,000, as compared
to working capital at year-end 1998. Such decreased working capital was due, in
part, to a decrease in accounts receivable, an increase in other accrued
liabilities, primarily due to the restructuring charge incurred in the first
quarter of 1999, and an increase in income taxes, which is due primarily to the
timing of required tax payments. Partially offsetting these factors was a
decrease in accounts payable and increases in inventory, cash and prepaid
expenses. Total assets at first half-end 1999 decreased $3,417,000 over year-end
1998 primarily as a result of a decrease in accounts receivable, partially
offset by increases in inventory, cash and prepaid assets. In

                                       10
<PAGE>

addition, total liabilities decreased $449,000 at first half-end 1999, due
mostly to decreases in accounts payable, deferred income taxes and other
long-term liabilities, partially offset by increases in other accrued
liabilities, long-term debt and income taxes.

     The Company spent $15,661,000 on capital expenditures during the first half
of 1999, which were financed primarily with net cash flow from operating
activities and increased debt. Capital expenditures for fiscal year 1999 with
respect to the Company's existing facilities are currently forecasted to be
approximately $30 million.

     The Company entered into a first amendment, dated as of August 17, 1998, to
its existing credit facility with The Chase Manhattan Bank, Mellon Bank, N.A.
and other lending institutions. The amendment modified the amount of money the
Company can borrow from an aggregate $155,000,000 to an aggregate $175,000,000.
In addition, the term of the credit facility was extended until June 30, 2003,
certain covenants were amended, and borrowings were permitted under the
anticipated single currency of participating member states of the European Union
(the Euro). The Company entered into a second amendment, dated as of December
31, 1998, to its existing credit facility with The Chase Manhattan Bank, Mellon
Bank, N.A. and other lending institutions. This amendment modifies both the
allowable consolidated leverage ratio and the allowable consolidated cash flow
coverage ratio. In addition, the pricing grid was modified primarily to reflect
the newly permitted ratios. The Company entered into a third amendment, dated as
of March 31, 1999, to its existing credit facility with the Chase Manhattan
Bank, Mellon Bank, N.A. and other lending institutions. This amendment modified
certain covenants of the Company under the credit facility, and evidenced the
lenders' consent to certain transactions, including the restructuring
effectuated by the Company.

     The credit facility provides for revolving credit loans, swing line loans
and multi-currency loans, within the parameters described below. A balloon
payment of the then remaining principal and accrued interest is due on the
termination date of the loan. The Company has classified all of the line of
credit as long-term debt, as there are no required principal payments due within
the next 12 months. At the Company's option, borrowings may be effectuated,
subject to certain conditions, on a NYBOR rate, an eurocurrency rate for
dollars, an applicable eurocurrency rate for certain foreign currencies, a money
market rate, or an alternative base rate. Eurocurrency loans bear interest at
the then current applicable LIBOR rate, plus an applicable margin. The
applicable margin, which pertains only to LIBOR and NYBOR rate loans, varies
from 0.5% to 2.00%, depending upon the Company's ability to satisfy certain
quarterly financial tests, but is fixed at 2.00% until delivery of financial
statements for the fiscal period ending January 1, 2000. In addition, the credit
agreement permits the Company to request the issuance of up to a maximum of
$20,000,000 in letters of credit, which issuance will be deemed part of the
$175,000,000 maximum amount of borrowing permitted under the credit facility.

     The line of credit agreement, as amended, provides for achieving certain
consolidated cash flow coverage and leverage ratios, prescribes minimum
consolidated net worth requirements, limits capital expenditures and new leases
and provides for certain other affirmative and restrictive covenants. The
Company is in compliance with all of these requirements. In addition, the credit
agreement limits the amount of cash dividends that the Company can declare, and
also imposes certain conditions with respect thereto.

                                       11
<PAGE>

                           Part II. OTHER INFORMATION
                           --------------------------



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

          (a)  Exhibits: (27) Financial Data Schedule

          (b)  Reports on Form 8-K:

               During the second quarter of 1999, an 8-K was filed on June 15,
               1999 regarding the third amendment dated March 31, 1999 to the
               Company's existing credit facility with The Chase Manhattan Bank,
               N.A. and other lending institutions.

                                       12
<PAGE>

                                   SIGNATURES
                                   ----------



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



                                                 BUSH INDUSTRIES, INC.
                                             ----------------------------
                                                  (Registrant)



Date:     August 4, 1999                By:  /s/ Robert L. Ayres
      --------------------                   ----------------------------
                                                       (Signature)
                                             Robert L. Ayres
                                             Executive Vice President,
                                             Chief Operating Officer
                                             and Chief Financial Officer

                                       13