<PAGE>
 
                       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 March 29, 1997
                               --------------
                                       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 March 29, 1997: 9,434,008
shares of Class A Common Stock and 3,855,365 shares of Class B Common Stock.
<PAGE>
 
                     BUSH INDUSTRIES, INC. AND SUBSIDIARIES
                                        
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     -------------------------------------
<TABLE>
<CAPTION>
 
                                                              MARCH 29,  DECEMBER 28,
                                                                1997         1996
                                                             ---------   -----------
<S>                                                         <C>          <C>
                                                            (Unaudited)
                                                                 (In thousands)
ASSETS
------
Current Assets:
   Cash                                                       $  2,403      $  2,810
   Accounts receivable                                          27,980        24,863
   Inventories                                                  28,776        26,300
   Prepaid expenses and other current assets                     3,716         4,141
                                                              --------      --------
        Total Current Assets                                    62,875        58,114
 
Property, Plant and Equipment, Net                              90,151        84,355
 
Other Assets                                                     9,968         9,995
                                                              --------      --------
TOTAL ASSETS                                                  $162,994      $152,464
                                                              ========      ========
 
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
   Accounts payable                                              9,496         9,377
   Income taxes                                                  3,940         1,017
   Other accrued liabilities                                    18,587        18,844
   Current portion of long-term debt                               776           663
                                                              --------      --------
        Total Current Liabilities                               32,799        29,901
 
Deferred Income Taxes                                            2,023         1,907
Long-term Debt                                                  38,934        36,339
 
Stockholders' Equity:
   Common Stock:
        Class A, $.10 par, 20,000,000 shares authorized,
        9,658,973 and 9,650,721 shares issued                      966           965
 
        Class B, $.10 par, 6,000,000 shares authorized,
        3,855,365 shares issued                                    386           386
 
   Paid-in capital                                              12,418        12,311
   Retained earnings                                            78,289        73,476
                                                              --------      --------
                                                                92,059        87,138
 
Less treasury stock, 224,965 Class A shares                      2,821         2,821
                                                              --------      --------
        Total Stockholders' Equity                              89,238        84,317
                                                              --------      --------
 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                     $162,994      $152,464
                                                              ========      ========
</TABLE>
See notes to condensed consolidated financial statements.

                                       2
<PAGE>
 
                    BUSH INDUSTRIES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                 ---------------------------------------------
                                  (Unaudited)
<TABLE>
<CAPTION>
 
 
                                              THIRTEEN WEEKS ENDED
                                          ----------------------------
                                            MARCH 29,       MARCH 30,
                                              1997            1996
                                          -------------  -------------
<S>                                       <C>            <C>
                                          (In thousands, except shares
                                              and per share data)
 
Net Sales                                   $    70,867   $    65,033
 
Costs and Expenses:
 
   Cost of sales                                 48,346        44,725
   Selling, general and administrative           13,124        12,149
   Interest                                         735           353
                                            -----------   -----------
                                                 62,205        57,227
 
Earnings Before Income Taxes                      8,662         7,806
 
Income Taxes                                      3,384         3,005
                                            -----------   -----------
Net Earnings                                $     5,278   $     4,801
                                            ===========   ===========
 
Earnings per Share
   Primary                                  $      0.37   $      0.35
   Fully diluted                            $      0.37   $      0.35

Weighted Average Shares Outstanding
   Primary                                   14,342,723    13,610,600
   Fully diluted                             14,365,596    13,829,250
 
</TABLE>

The March 30, 1996 earnings per share and the number of weighted average Class A
and Class B shares of Common Stock outstanding have been adjusted to reflect the
3-for-2 stock split effectuated in the form of a fifty percent dividend paid on 
June 28, 1996 to stockholders of record as of June 14, 1996.

See notes to condensed consolidated financial statements.

                                       3
<PAGE>
 
                     BUSH INDUSTRIES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                 ----------------------------------------------
                                  (Unaudited)
<TABLE>
<CAPTION>
 
                                                             THIRTEEN WEEKS ENDED
                                                           ------------------------
                                                            MARCH 29,     MARCH 30,
                                                              1997          1996
                                                           ----------    ----------
<S>                                                        <C>           <C>
                                                                (In thousands)
 
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------
   Net earnings                                              $ 5,278      $ 4,801
   Adjustment to reconcile:
      Depreciation and amortization                            1,780        1,452
      Deferred income taxes                                      102          (60)
   Change in assets and liabilities affecting cash flows:
      Accounts receivable                                     (3,117)      (2,261)
      Inventories                                             (2,476)        (770)
      Prepaid expenses and other current assets                  439         (125)
      Accounts payable                                           119         (221)
      Income taxes                                             2,958        1,853
      Other accrued liabilities                                 (257)         469
                                                             -------      -------
         Net cash provided by operating activities             4,826        5,138
 
CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
   Capital expenditures                                       (7,369)      (5,292)
   Increase in other assets                                     (181)        (228)
                                                             -------      -------
      Net cash used in investing activities                   (7,550)      (5,520)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
   Repayment of long-term debt                                  (161)        (118)
   Proceeds from long-term debt                                2,869          480
   Exercise of stock options by employees                         74            6
   Dividends paid                                               (465)        (213)
                                                             -------      -------
      Net cash provided by financing activities                2,317          155
                                                             -------      -------

NET DECREASE IN CASH                                            (407)        (227)
 
CASH AT BEGINNING OF PERIOD                                    2,810        2,929
                                                             -------      ------- 
CASH AT END OF PERIOD                                        $ 2,403      $ 2,702
                                                             =======      =======
</TABLE>
See notes to condensed consolidated financial statements.

                                       4
<PAGE>
 
                    BUSH INDUSTRIES, INC. AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------
                      Thirteen weeks ended March 29, 1997


     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 December 28, 1996. 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 year ended December 28,
        1996.

        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. In March 1997 the Financial Accounting Standards Board issued Statement
        of Financial Accounting Standards No. 128 "Earnings Per Share". This new
        standard requires dual presentation of basic and diluted earnings per
        share (EPS) on the face of the earnings statement and requires a
        reconciliation of the numerators and denominators of basic and diluted
        EPS calculations. The statement will be effective for the Company's 1997
        fiscal year. The Company does not believe that the difference between
        basic EPS and currently presented primary EPS will be materially
        different.

     3. Inventories consist of the following:
<TABLE>
<CAPTION>
 
 
                                             MARCH 29,     DECEMBER 28,
                                               1997           1996
                                            ----------     ------------
<S>                                         <C>            <C>
                                                (In thousands)
 
Raw material                                 $ 7,525          $ 6,313
                                                           
Work in progress                               3,267            2,745
                                                           
Finished goods                                17,984           17,242
                                             -------          -------
                                             $28,776          $26,300
 
 
</TABLE>

                                       5
<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:
----------------------

     The Company achieved record first quarter sales for the 13 week period
ended March 29, 1997 of $70,867,000.  This represented an increase  of
$5,834,000, or approximately 9.0%, compared to net sales of $65,033,000 for the
13 week period ended March 30, 1996. The increase in net sales was attributable
to continued good sell-through at retail and the continued placement of new
product with key customers.

     Cost of sales increased $3,621,000 for the 13 week period ended March 29,
1997, compared to the 13 week period ended March 30, 1996.   The increase in
cost of sales was primarily due to higher sales volumes.  Cost of sales as an
approximate percentage of net sales decreased by 0.6% from 68.8% in the first
quarter of 1996 to 68.2% in the first quarter of 1997.  The decrease in cost of
sales as a percentage of net sales resulted from improved operational
performance, but was offset to a degree by start-up costs associated with the
launch of new manufacturing technology at our Erie, Pennsylvania facility.

     Selling, general and administrative expenses increased $975,000 for the 13
week period ended March 29, 1997, compared to the 13 week period ended March 30,
1996.  The increase in selling, general and administrative expenses was
primarily a result of increases in selling expenses and other administrative
costs associated with the Company's higher sales volumes.  Selling, general and
administrative expenses as an approximate percentage of net sales decreased from
18.7% in the first quarter of 1996 to 18.5% in the first quarter of 1997.

     Interest expense for the 13 week period ended March 29, 1997 increased to
$735,000 (or approximately 1.0% of net sales) from $353,000 (or approximately
0.5% of net sales) for the 13 week period ended March 30, 1996.  The increase in
interest expense was due to an increase in average debt primarily related to the
Company's capital expenditures in fiscal year 1996 and the first quarter of
1997.


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

     Working capital at first quarter-end 1997 increased by $1,863,000, as
compared to working capital at year-end 1996.  Such increased working capital
was due, in part, to an increase in accounts receivable and inventories
associated with the Company's continuing sales growth. Partially offsetting
these factors was an increase in income taxes, which is due primarily to the

                                       6
<PAGE>
 
timing of required tax payments.  Total assets at first quarter-end 1997
increased $10,530,000 over year-end 1996 primarily as a result of an increase in
net property, plant and equipment associated with the Company's capital
expenditures, and current assets, including inventory and accounts receivable
(as described above).  In addition, total liabilities increased $5,609,000 at
first quarter-end 1997, due mostly to an increase in income taxes (as described
above) and long-term debt, primarily related to the Company's capital
expenditures in the first quarter of 1997.

     The Company spent $7,369,000 on capital expenditures during the first
quarter of 1997, which were financed primarily with net cash flow from operating
activities and increased debt. Capital expenditures for fiscal year 1997 are
currently forecasted to be approximately $25 million, exclusive of the
anticipated Rohr Gruppe acquisition discussed below.

     In the first quarter of 1997, the Company signed a letter agreement to
acquire a 51% interest in the Rohr Gruppe, a German furniture manufacturer with
annual sales of approximately $120 million.  The purchase price consists of $3.0
million in Bush Industries, Inc. Class A Common Stock and debt financing.  The
consummation of the transaction, which is subject to numerous conditions,
including the execution of a definitive agreement, is expected to occur on or
about June 30, 1997.

     Also in the first quarter of 1997, the Company formed a wholly-owned German
subsidiary, Bush-Viotechnik GmbH.  The objective of this business venture is to
service the European market for advanced surface technologies in diverse
applications, including the furniture, automotive, electronics, building and
construction industries.  Bush-Viotechnik GmbH has under development two
advanced surface technology manufacturing lines which are scheduled for
completion in early 1998.  One line is planned to be installed in Germany and
the other line is planned to be located in our new Erie, Pennsylvania facility.
The formation of Bush-Viotechnik GmbH complements the Company's acquisition last
year of The ColorWorks, Inc.

     In 1996, the Company obtained low interest rate financing from the
Commonwealth of Pennsylvania in the aggregate principal amount of $4,500,000.
Such loans bear interest at the annual rate of 3%, and were used to partially
finance the first phase of the new Erie facility and to partially finance the
purchase of equipment.  In addition, during the first quarter of 1997, the
Company secured low interest rate financing from the Commonwealth of
Pennsylvania in the aggregate principal amount of $2,000,000, which loan bears
interest at the annual rate of 3.75%, and which loan was used to partially
finance the second phase of the new Erie facility.

     The Company has an unsecured $85,000,000 credit facility, as amended, with
Mellon Bank, N.A. and another lending institution.  This loan is due July 31,
2000 with a balloon payment of the then remaining principal and accrued
interest.  The Company has classified all of this 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 base rate or euro-rate option.  Base rate loans bear interest
at the prime rate as announced by Mellon Bank, N.A. from time to time, and euro-
rate loans bear interest at the then current LIBOR rate, plus an applicable
margin.  The applicable margin which pertains only to LIBOR rate loans varies
from .50% to .95%, depending upon the Company's ability to satisfy certain
quarterly financial tests.  In addition, the credit agreement permits the
Company to request the issuance of up to a

                                       7
<PAGE>
 
maximum of $15,000,000 in letters of credit, which issuance will be deemed part
of the $85,000,000 maximum amount of borrowing permitted under the unsecured
credit facility.

     The line of credit agreement provides for achieving total funded debt (net
of cash) to capital and total funded debt (net of cash) to earnings before
interest and tax ratios, prescribes minimum tangible 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.

     The Company has a signed commitment letter from the Chase Manhattan Bank to
syndicate an unsecured $145,000,000 revolving credit facility.  The proposed
credit facility will replace the current facility with Mellon Bank, N.A. and
another institution and will provide additional flexibility to the Company as it
continues to expand.  The consummation of such proposed credit facility is
subject to numerous conditions, including the execution of a definitive loan
agreement.

     The Company has in the past maintained "key man" life insurance in the
amount of approximately $11.4 million on the life of Mr. Paul S. Bush, the
Chairman of the Board, President and Chief Executive Officer of the Company.
Recently the Company increased the amount of this insurance to approximately
$21.4 million by purchasing an additional $10 million life insurance policy.
The Company is currently contemplating entering into a stock redemption
agreement with Mr. Paul S. Bush, which would provide that upon Mr. Paul S.
Bush's demise, the proceeds of such policies would be used to redeem a portion
of the Company's capital stock owned by Mr. Paul S. Bush's estate, at a price to
be specified in such agreement.  The Company believes that such agreement would
enhance stockholder valuation, by providing a mechanism for the orderly
liquidation of a portion of the estate's equity holdings in the Company, if the
estate is then required to sell such stock, for among other reasons, to satisfy
then current estate tax obligations.

                                       8
<PAGE>
 
                          Part II. OTHER INFORMATION
                          --------------------------



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

          (a)  Exhibits: None.

          (b)  Reports on Form 8-K:

               No reports on Form 8-K have been filed during the quarter
               (13 weeks) ended March 29, 1997.

                                       9
<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: May 9, 1997                       By:       /s/Robert L. Ayres         
                                              ----------------------------    
                                                      (Signature)             
                                              Robert L. Ayres                 
                                              Executive Vice President,       
                                              Chief Operating Officer         
                                              and Chief Financial Officer     
 

                                       10