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      January 31, 1998
                              ----------------------------

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

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

                         Commission file number 0-16158

                              WTD Industries, Inc.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                Oregon                                93-0832150
--------------------------------------    --------------------------------------
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                     Identification No.)

          10260 S.W. Greenburg Road, Suite 900, Portland, Oregon 97223
--------------------------------------------------------------------------------
                (Address of principal executive offices)              (Zip Code)

(Registrant's telephone number, including area code)    (503) 246-3440
                                                    ----------------------

     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
                                             ---  ---

     The number of shares  outstanding  of  Registrant's  Common  Stock,  no par
value, at February 28, 1998 was 11,154,374.


<PAGE>
                              WTD INDUSTRIES, INC.

                                      INDEX

                                                                         Page
                                                                         Number
                                                                         ------
PART I.       Financial Information (Unaudited)


     Item 1.    Financial Statements

          Consolidated Statements of Operations -
            Three Months and Nine Months Ended January 31, 1998 and 1997    3


          Consolidated Balance Sheets -
             January 31, 1998 and April 30, 1997                            4


          Consolidated Statements of Cash Flows -
             Nine Months Ended January 31, 1998 and 1997                    6


          Notes to Consolidated Financial Statements                        7


     Item 2.    Management's Discussion and Analysis
                of Financial Condition and Results of
                Operations                                                  11


PART II. Other Information


     Item 6.    Exhibits and Reports on Form 8-K                            15










                                       2

<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                      WTD INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In Thousands, Except Per-Share Amounts)
                                   (Unaudited)


                                             THREE MONTHS ENDED             NINE MONTHS ENDED
                                                 JANUARY 31,                   JANUARY 31,
                                          ------------------------      ------------------------
                                             1998          1997            1998          1997
                                          ----------    ----------      ----------    ----------
<S>                                      <C>           <C>             <C>           <C>
NET SALES                                $   55,951    $   64,469      $  192,219    $  210,648

COST OF SALES                                56,958        59,982         182,653       189,045
                                          ----------    ----------      ----------    ----------

GROSS PROFIT (LOSS)                          (1,007)        4,487           9,566        21,603

SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                  2,588         2,767           8,721         9,254
                                          ----------    ----------      ----------    ----------

OPERATING INCOME (LOSS)                      (3,595)        1,720             845        12,349

OTHER INCOME (EXPENSE)
     Interest Expense                        (1,165)       (1,250)         (3,558)       (3,828)
     Miscellaneous                             (486)          248            (350)          415
                                          ----------    ----------      ----------    ----------

                                             (1,651)       (1,002)         (3,908)       (3,413)
                                          ----------    ----------      ----------    ----------


INCOME (LOSS) BEFORE INCOME TAXES            (5,246)          718          (3,063)        8,936

PROVISION  FOR INCOME TAXES (BENEFIT)        (1,601)          269          (1,164)        3,392
                                          ----------    ----------      ----------    ----------

NET INCOME (LOSS)                            (3,645)          449          (1,899)        5,544

PREFERRED DIVIDENDS                             574           557           1,716         1,671
                                          ----------    ----------      ----------    ----------

NET INCOME (LOSS) APPLICABLE
  TO COMMON STOCKHOLDERS                 $   (4,219)   $     (108)     $   (3,615)   $    3,873
                                          ==========    ==========      ==========    ==========


NET INCOME (LOSS) PER COMMON SHARE
     BASIC                                   ($0.38)       ($0.01)         ($0.33)        $0.35
                                             =======       ======          =======        =====

     DILUTED                                 ($0.38)       ($0.01)         ($0.33)        $0.34
                                             =======       ======          =======        =====




The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>






                                        3

<PAGE>
<TABLE>
<CAPTION>
                      WTD INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS
                                 (In Thousands)

                                                       JANUARY 31,             APRIL 30,
                                                          1998                   1997
                                                      --------------         --------------
<S>                                                  <C>                    <C>
CURRENT ASSETS                                         (Unaudited)
   Cash and cash equivalents                         $        2,923         $        8,209
   Accounts receivable, net                                   8,778                 16,830
   Inventories                                               17,396                 17,760
   Prepaid expenses                                           1,430                  1,817
   Income tax refund receivable                               1,145                  1,145
   Deferred tax asset                                         3,098                  1,383
   Assets held for sale                                         188                    361
   Timber, timberlands and timber-related assets              4,002                  3,936
                                                      --------------         --------------

      Total current assets                                   38,960                 51,441


NOTES AND ACCOUNTS RECEIVABLE                                   107                    124

TIMBER AND TIMBERLANDS                                          556                    629

PROPERTY, PLANT AND EQUIPMENT, at cost
   Land                                                       3,343                  3,343
   Buildings and improvements                                13,557                 11,194
   Machinery and equipment                                   78,887                 70,391
                                                      --------------         --------------

                                                             95,787                 84,928

     Less accumulated depreciation                           60,577                 56,557
                                                      --------------         --------------

                                                             35,210                 28,371

   Construction in progress                                     771                  4,365
                                                      --------------         --------------

                                                             35,981                 32,736

DEFERRED TAX ASSET                                               --                    280

OTHER ASSETS                                                  1,261                  1,276
                                                      --------------         --------------


                                                     $       76,865         $       86,486
                                                      ==============         ==============


The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>




                                        4

<PAGE>
<TABLE>
<CAPTION>
                      WTD INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                    (In Thousands, Except Share Information)



                                                        JANUARY 31,             APRIL 30,
                                                           1998                   1997
                                                      --------------         --------------
<S>                                                  <C>                    <C>
CURRENT LIABILITIES                                     (Unaudited)
   Accounts payable                                  $        8,597         $        9,709
   Accrued expenses                                           6,988                  9,644
   Timber contracts payable                                     634                    246
   Current maturities of long-term debt                       1,860                  2,367
                                                      --------------         --------------

      Total current liabilities                              18,079                 21,966

LONG-TERM DEBT, less current maturities                      43,868                 46,086

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Preferred stock, 10,000,000 shares authorized
     Series A, 270,079 shares outstanding                    20,688                 20,688
     Series B, 6,111 shares outstanding                         333                    333
   Common stock, no par value, 40,000,000 shares
     authorized, 11,154,374 issued and outstanding
     (11,083,474 at April 30, 1997)                          28,752                 28,647
   Additional paid-in capital                                    15                     15
   Retained deficit                                         (34,870)               (31,249)
                                                      --------------         --------------

                                                             14,918                 18,434
                                                      --------------         --------------

                                                     $       76,865         $       86,486
                                                      ==============         =============



The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>




                                        5

<PAGE>
<TABLE>
<CAPTION>
                      WTD INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)


                                                                     NINE MONTHS ENDED JANUARY 31,
                                                               ----------------------------------------
                                                                    1998                      1997
                                                               --------------            --------------
<S>                                                           <C>                       <C>
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
  Net income (loss)                                           $       (1,899)           $        5,544
  Adjustments to reconcile net income (loss) to
     cash provided by operating activities:
    Depreciation, depletion and amortization                           4,426                     4,896
    Deferred income tax                                               (1,435)                    3,149
    Accounts receivable                                                8,052                    (2,681)
    Inventories                                                          364                    (5,586)
    Prepaid expenses                                                     387                        54
    Timber, timberlands and timber-related assets - current             (138)                    1,912
    Payables and accruals                                             (3,322)                    2,926
    Income taxes                                                          --                       990
                                                               --------------            --------------

     Cash provided by operating activities                             6,435                    11,204
                                                               --------------            --------------

CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
  Net reductions of timber and timberlands                                73                        50
  Acquisition of property, plant and equipment                        (7,557)                   (2,282)
  Other investing activities                                             231                       126
                                                               --------------            --------------

     Cash used for investing activities                               (7,253)                   (2,106)
                                                               --------------            --------------

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
  Principal payments on long-term debt                                (2,783)                   (2,721)
  Other assets                                                           (68)                      (52)
  Dividends paid on preferred stock                                   (1,722)                   (1,671)
  Issuance of common stock                                               105                        --
                                                               --------------            --------------

     Cash used for financing activities                               (4,468)                   (4,444)
                                                               --------------            --------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      (5,286)                    4,654
CASH BALANCE AT BEGINNING OF PERIOD                                    8,209                     4,576
                                                               --------------            --------------

CASH BALANCE AT END OF PERIOD                                 $        2,923            $        9,230
                                                               ==============            ==============

CASH PAID (REFUNDED) DURING THE PERIOD FOR:
  Interest                                                            $3,151                    $3,781
  Income taxes                                                          $270                     ($751)





The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>



                                        6

<PAGE>
                      WTD INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 1 - SUMMARY OF FINANCIAL STATEMENT PRESENTATION

     In the opinion of management,  the consolidated financial statements of WTD
Industries,  Inc. and  subsidiaries  ("WTD" or "the Company")  presented  herein
include  all  adjustments,  which  are  solely  of a  normal  recurring  nature,
necessary  for a  fair  presentation  of  the  financial  position,  results  of
operations  and  cash  flows  for  the  interim   periods   presented.   Certain
reclassifications may have been made to the prior period results and balances to
conform to the current period  classifications.  The financial statements should
be read with  reference to  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations" contained in this report, and the "Notes to
Consolidated  Financial  Statements" set forth in the Company's Annual Report on
Form 10-K for the year  ended  April 30,  1997,  filed with the  Securities  and
Exchange  Commission.  The results of operations for the current interim periods
are not  necessarily  indicative  of the results to be expected  for the current
year.


NOTE 2 - INVENTORIES

     Inventories are valued at the lower of cost or market. The amounts included
in  inventories  at  January  31,  1998 and April 30,  1997 are as  follows  (in
thousands):

                                    January 31,       April 30,
                                       1998              1997
                                   -----------       -----------       
       Logs                        $    8,020        $    9,054
       Lumber                           7,696             7,379
       Supplies and other               1,680             1,327
                                   -----------       -----------

                                   $   17,396        $   17,760
                                   ===========       ===========


NOTE 3 - LONG-TERM DEBT

     The Company's primary debt agreement includes certain covenants,  including
the maintenance of specified levels of adjusted cumulative  operating income (as
defined),  tangible net worth, working capital, collateral coverage (as defined)
and total  liabilities  ratio (as defined).  This agreement also imposes certain
restrictions  and  limitations on capital  expenditures,  investments,  dividend
payments,   new  indebtedness,   and  transactions  with  officers,   directors,
shareholders and affiliates. This debt agreement was most recently amended as of
January 1, 1998.  Such  amendments  include  modifications  with  respect to the
minimum working capital required to be maintained, the collateral coverage ratio
required  to be  maintained  and  the  required  level  of  adjusted  cumulative
operating income.

                                       7

<PAGE>
NOTE 3 - LONG-TERM DEBT (Continued)

     At January 31, 1998 the  Company's  tangible  net worth was $14.7  million,
compared to $10 million  required by the  corresponding  covenant.  At that same
date, the Company's working capital was $20.9 million, compared to $17.5 million
required by the  covenant.  Also, at January 31, 1998,  the  Company's  adjusted
cumulative  operating  income  was  $34.7  million,  compared  to $27.5  million
required.  The collateral coverage ratio at January 31, 1998 was 64.1%, compared
to a 57%  minimum  required  level.  The  total  liabilities  ratio was 80.6% at
January 31, 1998,  compared to a maximum  allowed of 87%. The required  level of
tangible net worth  increases to $12 million at May 1, 1998 and $14.5 million at
May 1, 1999. The required level of working  capital  increases to $20 million on
November 1, 1998. The required  level of adjusted  cumulative  operating  income
increases to $32.5  million at August 1, 1998,  $40 million at November 1, 1998,
$52.5  million  at May 1, 1999 and $67.5  million at May 1,  2000.  The  minimum
required collateral coverage ratio increases to 60% at August 1, 1998 and 65% at
February 1, 1999. The maximum  allowed total  liabilities  ratio drops to 85% at
May 1, 1998.  During the quarter ended January 31, 1998, the Company's  adjusted
cumulative  operating  income  decreased  by $3.3 million  while  showing a loss
before taxes of $5.25 million.  The Company  continues to be in compliance  with
all covenants contained in this agreement.

     In addition,  this debt  agreement  requires  prepayments  if the Company's
cumulative   operating  income  exceeds  certain  specified  amounts.   No  such
prepayment  was required for the year ended April 30, 1997. In  connection  with
the May 1,  1996  amendment,  the  Company  agreed to an  additional  prepayment
computed at 30% of quarterly net income.  No such prepayment is required for the
quarter ended January 31, 1998.


NOTE 4 - STOCKHOLDERS' EQUITY AND COMMON SHARES OUTSTANDING

     Stockholder's equity at January 31, 1998 consists of the following:

         Series A  preferred  stock,  $100  per  share  liquidation  preference;
         500,000  shares  authorized;  270,079  shares  issued and  outstanding;
         limited  voting  rights;  cumulative  dividends  payable  quarterly  in
         advance at the prime rate, with a minimum rate of 6% and a maximum rate
         of 9%; convertible into common stock at $7.50 per share after April 30,
         1999;  redeemable at original issue price plus accrued dividends at the
         option of the Board of  Directors,  in the form of cash or in  exchange
         for senior unsecured debt with a 12% coupon.  The holders of the Series
         A preferred stock will be granted voting control of the Company's Board
         of  Directors  in  the  event  the  Company  misses  three  consecutive
         quarterly  dividend  payments,  four quarterly dividend payments within
         twenty-four months or a total of eight quarterly dividend payments. The
         Company has not missed any dividend  payments on the Series A preferred
         stock.

         Series B  preferred  stock,  $100  per  share  liquidation  preference;
         500,000 shares authorized; 6,111 shares issued and outstanding; limited
         voting  rights;  convertible  into  212,693  shares  of  common  stock;
         dividends   payable  only  if  paid  on  the  Company's  common  stock;
         redeemable at original issue price plus accrued dividends at the option
         of the Board of Directors  after all Series A preferred  stock has been
         redeemed.

                                       8

<PAGE>
NOTE 4 - STOCKHOLDERS' EQUITY AND COMMON SHARES OUTSTANDING
             (Continued)

         Common stock, no par value;  40,000,000 shares  authorized;  11,154,374
         shares issued and outstanding.  Before giving effect to any shares that
         might be  issued  pursuant  to the  exercise  of any stock  options  or
         conversion of any Series A preferred  stock, the total number of common
         shares  would  increase  to  11,367,067  shares if  remaining  Series B
         preferred stock  outstanding at January 31, 1998 is converted to common
         stock.


NOTE 5 - NET INCOME (LOSS) PER SHARE

     The  calculations  of net income (loss) per share for the  three-month  and
nine-month  periods  ended  January 31, 1998 and 1997 are  summarized  below (in
thousands, except per-share data):
<TABLE>
<CAPTION>
                                             Three Months Ended             Nine Months Ended
                                                 January 31,                    January 31,
                                          ------------------------      ------------------------
                                             1998          1997            1998          1997
                                          ----------    ----------      ----------    ----------
<S>                                       <C>           <C>             <C>           <C>
NET INCOME (LOSS) APPLICABLE TO
   COMMON SHAREHOLDERS                    $  (4,219)    $    (108)      $  (3,615)    $   3,873
                                          ==========    ==========      ==========    ==========


WEIGHTED AVERAGE SHARES OUTSTANDING
   - BASIC                                   11,154        11,077          11,122        11,077


ADDITIONAL SHARES ASSUMED FROM:
  Conversion of Series B preferred stock         --            --              --           213

  Exercise of stock options                      --            --              --            72
                                          ----------    ----------      ----------    ----------

AVERAGE NUMBER OF SHARES AND
  EQUIVALENTS OUTSTANDING
   - DILUTED                                 11,154        11,077          11,122        11,362
                                          ==========    ==========      ==========    ==========

NET INCOME (LOSS) PER COMMON SHARE
   - BASIC                                   ($0.38)       ($0.01)         ($0.33)        $0.35
                                             =======       =======         =======       =======

   - DILUTED                                 ($0.38)       ($0.01)         ($0.33)        $0.34
                                             =======       =======         =======       =======

</TABLE>

     Earnings (loss) per share have been recomputed and restated for the effects
of implementing SFAS 128 as of December 31, 1997.





                                       9

<PAGE>
NOTE 6 - INCOME TAXES

     The income tax  provision is based on the  estimated  effective  annual tax
rate for each fiscal year.  The provision  includes  anticipated  current income
taxes payable,  the tax effect of anticipated  differences between the financial
reporting and tax basis of assets and liabilities,  and the expected utilization
of net operating loss (NOL) carryforwards.

     The federal and state income tax  provision  consists of the  following (in
thousands):
<TABLE>
<CAPTION>
                                                 Three months ended       Nine months ended
                                                     January 31,             January 31,
                                                 -------------------     -------------------
                                                   1998       1997         1998       1997
                                                 --------   --------     --------   --------
<S>                                              <C>        <C>          <C>        <C>    
           Income (loss) before income taxes     $(5,246)   $   718      $(3,063)   $ 8,936
                                                 ========   ========     ========   ========

           Income tax provision (benefit):
              Federal                            $(1,391)   $   244      $(1,041)   $ 3,038
              State                                 (210)        25         (123)       354
                                                 --------   --------     --------   --------

                                                 $(1,601)   $   269      $(1,164)   $ 3,392
                                                 ========   ========     ========   ========

              Current                            $    26    $     9      $   271    $   243
              Deferred                            (1,627)       260       (1,435)     3,149
                                                 --------   --------     --------   --------

                                                 $(1,601)   $   269      $(1,164)   $ 3,392
                                                 ========   ========     ========   ========
</TABLE>

     Deferred tax assets  increased  during the quarter  ended January 31, 1998,
principally the result of additional net operating loss  carryforwards  stemming
from pretax losses.


NOTE 7 - COMMITMENTS AND CONTINGENCIES

     The  Company is  involved in various  litigation  primarily  arising in the
normal  course of its  business.  In the opinion of  management,  the  Company's
liability,  if any,  under  such  pending  litigation  would not have a material
adverse impact upon the Company's consolidated financial condition or results of
operations.

     The  Company is subject to  various  federal,  state and local  regulations
regarding waste disposal and pollution control.  Various  governmental  agencies
have enacted, or are considering,  regulations regarding log yard management and
disposal of log yard waste that may require material expenditures in the future.
Management  believes  that the  Company  will be able to  comply  with any final
regulations in this area without a material  adverse impact on its  consolidated
financial condition or results of operations.


                                       10

<PAGE>
Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS

Results of Operations
---------------------

     On a quarter-to-quarter  basis, the Company's financial results have varied
widely,  and will  continue  to vary,  due to seasonal  fluctuations  and market
factors  affecting  the demand for logs,  lumber  and other wood  products.  The
industry is subject to fluctuations in sales and earnings due to such factors as
industry  production  in relation to product  demand and  variations in interest
rates and  housing  starts.  Currency  fluctuations  affect  the  industry  when
exchange  rates spur log exports and drive up  domestic  log prices,  and when a
relatively   strong  U.S.  dollar   encourages  lumber  imports  from  competing
countries.  Trade  policies and  agreements  between the United States and other
countries,  such as Canada, can also significantly  affect log and lumber prices
in the Company's markets.

     The industry is also  affected by weather  conditions  and changing  timber
management  policies.   Fire  danger  and  excessively  dry  or  wet  conditions
temporarily  reduce  logging  activity and may increase  open market log prices.
Timber  management  policies of governmental  agencies change from time to time,
causing actual or feared  shortages in some areas  periodically.  These policies
change because of  environmental  concerns,  public agency budget issues,  and a
variety of other reasons.  Therefore, past results for any given year or quarter
are not necessarily indicative of future results.

     It is generally the Company's  practice to curtail production at facilities
from time to time due to conditions which  temporarily  impair log flow, or when
imbalances  between log costs and product  prices cause the cost of operation to
exceed  the cost of  shutdown.  Management  believes  its  labor  practices  and
compensation  systems,  as well as a relatively  low capital cost in relation to
production  capacity,  give it the flexibility to efficiently curtail operations
and resume production as conditions warrant.

     Raw  materials  comprise the  majority of the cost of products  sold by the
Company.  The Company  depends  principally on open market log purchases for its
raw materials needs. WTD's log inventory policy is to maintain,  where possible,
a supply equal to three to four weeks of production.

     Lumber  prices were  substantially  weaker during the quarter ended January
31,  1998,  compared to the prior six  quarters.  The Company has  responded  to
certain lumber price  adjustments by altering product mix and reducing log costs
where possible.  There is currently an oversupply of lumber in the U.S.  market,
caused in part by weakness in the export lumber market,  particularly exports to
Japan, and some traditional  export producers  manufacturing for the U.S. lumber
market, adding to the oversupply.  Additionally, demand from California, a major
segment of our market, has been lower than usual due to the  extraordinarily wet
weather   which  has  delayed   construction   projects.   Chip  prices  are  up
substantially  compared  to  a  year  ago.  Log  costs  were  relatively  stable
throughout the nine month period.

     Quarterly  results were  negatively  impacted by the inability of the Union
Pacific  Railroad  to  provide  adequate  service to the  Company  and its other
customers.  Although during the third quarter there was a gradual improvement in
the shortage of rail cars, the transportation of lumber remains a problem due to
a recent worsening of the Union Pacific's rail traffic  congestion.  The Company
has


                                       11


<PAGE>
Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS (Continued)

been able to make alternative shipping arrangements in many instances, but there
have not been enough railcars to satisfy demand.

     There can be no  assurance  that the margins  recently  experienced  by the
Company will continue or improve.

     The strike which existed during the third quarter at the Company's hardwood
mill in Raymond and South Bend,  Washington  was  abandoned on January 26, 1998,
after the Union learned of  preliminary  findings by the regional  office of the
National   Labor   Relations   Board  that  the   Union's   claim  of   improper
decertification by the Company was not supported by the evidence.  The Union has
stated its intention to continue to seek  representation of the employees at the
hardwood  facility.  This union  currently does not represent any WTD employees.
During  the  strike  the  Company  operated  the  facility  at a  lower  rate of
production  and incurred  additional  security costs which  negatively  impacted
third quarter results.

     The following table sets forth the percentages  which certain  expenses and
income items bear to net sales, and the  period-to-period  percentage  change in
each item:
<TABLE>
<CAPTION>
                                              Income and Expense Items as                     Percentage
                                               a Percentage of Net Sales                  Increase (Decrease)
                                      ------------------------------------------     -----------------------------
                                                                                     Three Months      Nine Months
                                      Three Months Ended      Nine Months Ended          Ended            Ended
                                          January 31,            January 31,            1/31/98          1/31/98
                                      ------------------      ------------------          to               to
                                        1998       1997         1998       1997         1/31/97          1/31/97
                                      -------    -------      -------    -------     ------------     ------------
<S>                                    <C>        <C>          <C>         <C>           <C>              <C>   
Net sales                              100.0%     100.0%       100.0%      100.0%        (13.2)%           (8.7)%
Cost of sales                          101.8       93.0         95.0        89.7          (5.0)            (3.4)
                                      -------    -------      -------    -------
Gross profit (loss)                     (1.8)       7.0          5.0        10.3           NM             (55.7)

Selling, general and
  administrative expense                 4.6        4.3          4.5         4.4          (6.5)            (5.8)
                                      -------    -------      -------    -------

Operating income (loss)                 (6.4)       2.7          0.4         5.9           NM             (93.2)

Interest expense                        (2.1)      (1.9)        (1.9)       (1.8)         (6.8)            (7.1)
Miscellaneous                           (0.9)       0.4         (0.2)        0.2           NM               NM
                                      -------    -------      -------    -------

Income (loss) before income taxes       (9.4)       1.1         (1.6)        4.2           NM               NM

Provision for income taxes (benefit)    (2.9)       0.4         (0.6)        1.6           NM               NM
                                      -------    -------      -------    -------

Net income (loss)                       (6.5)%      0.7%        (1.0)%       2.6%          NM               NM 
                                      =======    =======      =======    =======

</TABLE>

Note:  Percentages may not add precisely due to rounding.
NM:    Not Meaningful

Comparison of Three Months Ended January 31, 1998 and 1997
----------------------------------------------------------

     Net sales for the three  months  ended  January  31,  1998  decreased  $8.5
million  (13.2%)  from  the  three  months  ended  January  31,  1997.  This was
principally caused by a 5% decrease in lumber shipments,  a 17% decrease in chip
deliveries,  an 11%  decrease  in lumber  prices,  and a 66%  decrease  in other
by-product  revenue,  partially  offset by an 8%  increase in chip  prices.  The
reduced lumber

                                       12
<PAGE>
Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS (Continued)

shipments reflect reduced production resulting from a weak market in the current
quarter  compared to a strong  market in the third  quarter of fiscal 1997.  The
reduced lumber  shipments also reflect an inadequate  supply of railcars to ship
lumber.  The reduced chip deliveries  reflect not only reduced lumber production
but also improved  lumber  recovery  resulting in fewer chips per thousand board
feet (mbf) and some trim ends now sold to the fingerjoint plant instead of being
chipped.

     Gross loss for the  quarter  ended  January 31, 1998 was 1.8% of net sales,
compared to gross profit of 7.0% of net sales for the quarter  ended January 31,
1997. Lumber prices declined by 11% from the third quarter of fiscal 1997, while
the Company's log costs  declined by only 5%.  Lumber  production  and shipments
decreased compared to levels in the prior year, when production levels reflected
the favorable market,  and some production  curtailment  occurred in the present
year in  response  to poor  lumber  prices and  inadequate  rail  service.  Unit
manufacturing costs remained relatively constant.

     Selling,  general and  administrative  expenses in the three  months  ended
January 31, 1998  decreased by $0.2  million  (6.5%) from the three months ended
January 31, 1997. This decrease reflects reduced  profit-sharing  bonus payments
stemming from lower  pretax  profits,  partially  offset by expenses  associated
with the start-up of two WTD subsidiaries in the first quarter of fiscal 1998.

     In the quarter ended January 31, 1998,  the Company  recorded a tax benefit
equal to 30.5% of its pretax loss. In the quarter  ended  January 31, 1997,  the
Company recorded a tax provision equal to 37.5% of its pretax profit. See Note 6
to Consolidated Financial Statements.

Comparison of Nine Months Ended January 31, 1998 and 1997
---------------------------------------------------------

     Net sales for the nine  months  ended  January  31,  1998  decreased  $18.4
million (8.7%) from the nine months ended January 31, 1997. This was principally
caused by a 5% decrease in lumber shipments,  a 13% decrease in chip deliveries,
a 5% decrease in lumber prices, a 5% decrease in chip prices, and a 36% decrease
in other  by-product  prices.  The  reduced  lumber  shipments  reflect  reduced
production  resulting  from a weak  market in the second and third  quarters  of
fiscal 1998  compared to a strong  market in the first three  quarters of fiscal
1997. The reduced lumber shipments also reflect an inadequate supply of railcars
to ship lumber in the second and third quarters of fiscal 1998. The reduced chip
deliveries  reflect not only reduced lumber  production but also improved lumber
recovery  resulting  in fewer  chips  per mbf and some trim ends now sold to the
fingerjoint plant instead of being chipped.

     Gross  profit for the nine  months  ended  January 31, 1998 was 5.0% of net
sales,  compared  to 10.3% of net sales for the nine  months  ended  January 31,
1997.  Lumber prices declined by 5% from the nine months ended January 31, 1997,
while the Company's log costs declined by only 2%. Production  declined compared
to levels in the prior year,  when  production  levels  reflected  the favorable
market, and some production curtailment occurred in the present year in response
to poor  lumber  prices  and  inadequate  rail  service  in the second and third
quarters.  Unit  manufacturing  costs increased by 4% from the nine months ended
January 31, 1997, partially due to a general wage increase in September 1996.


                                       13


<PAGE>
Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS (Continued)

     Selling,  general and  administrative  expenses  in the nine  months  ended
January 31, 1998  decreased  by $0.5  million  (5.8%) from the nine months ended
January 31, 1997. This decrease reflects reduced  profit-sharing  bonus payments
stemming from lower  pretax  profits,  partially  offset by expenses  associated
with the start-up of two WTD subsidiaries in the first quarter of fiscal 1998.

     In the nine months  ended  January  31,  1998,  the Company  recorded a tax
benefit  equal to 38% of its pretax loss.  In the nine months ended  January 31,
1997,  the Company  recorded a tax provision  equal to 38% of its pretax profit.
See Note 6 to Consolidated Financial Statements.

Liquidity and Capital Resources
-------------------------------

     The Company  relies on cash provided by its  operations to fund its working
capital  needs.  There can be no assurance  that such cash will be sufficient to
fund the Company's future operations.  Substantially all of the Company's assets
are pledged as security for its primary debt obligation.

     At January 31, 1998, the Company had net working  capital of $20.9 million,
$8.6  million  less than at April 30,  1997.  The working  capital  decrease was
primarily  the result of  operating  losses  and  capital  spending,  along with
principal  payments  on debt  and  dividends  paid  on the  Company's  Series  A
preferred stock.

     During the nine months ended January 31, 1998,  the Company's cash and cash
equivalents   decreased   by  $5.3  million  to  $2.9  million  at  January  31.
Approximately  $6.4  million  of cash was  provided  by  operations.  About $2.8
million  was  used to repay  various  debt  obligations  and  $7.6  million  for
acquisition of property, plant and equipment. The Company also paid $1.7 million
in dividends to holders of its Series A preferred stock.

     Capital  spending in the first nine months of fiscal 1998 was $7.6 million.
Capital spending for the balance of the fiscal year is currently  forecast to be
approximately $0.3 million.  The Company had no material commitments for capital
spending at January 31, 1998.

     The Company's  Credit and Security  Agreement dated as of November 30, 1992
contains certain  covenants,  including the maintenance of prescribed  levels of
collateral coverage (as defined),  tangible net worth, working capital, adjusted
cumulative  operating  income  (as  defined)  and  total  liabilities  ratio (as
defined).  This debt agreement was most recently  amended as of January 1, 1998.
Such  amendments  include  modifications  with  respect to the  minimum  working
capital required to be maintained,  the collateral coverage ratio required to be
maintained and the required level of adjusted  cumulative  operating income. See
Note 3 to Consolidated Financial Statements.

Forward-Looking Information
---------------------------

     Certain statements in this Form 10-Q contain "forward-looking"  information
(as  defined in Section 27A of the  Securities  Act of 1933,  as  amended)  that
involve risks and  uncertainties,  including,  but not limited to, the impact of
general economic conditions, increased interest rates, the impact of competitive
products and pricing,  availability  and cost of raw materials,  availability of
adequate  transportation  to get product to market,  inadequate  cash  reserves,
labor strikes,  changes in environmental and other  regulations,  the ability to
get  necessary  approvals  for  marketing  the  GREENWELD(R)  process in Canada,
changes in the Company's  ability to use its net operating loss carryforward and
the  risk  factors  listed  from  time  to time in the  Company's  SEC  reports,
including, but not limited to, the report on Form 10-K for the fiscal year ended
April 30,  1997 (Part II,  Item 7,  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations").

                                       14
<PAGE>
                              WTD INDUSTRIES, INC.


                           PART II. OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

       (a) Exhibits

               The Index to Exhibits is located on page 17.

       (b) Reports on Form 8-K

               No  reports  on Form 8-K were  filed  during  the  quarter  ended
January 31, 1998.




















                                       15

<PAGE>
                                   SIGNATURES

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




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



                                                       By:  /s/ Bruce L. Engel
                                                          --------------------
                                                          Bruce L. Engel
                                                          President



                                                       By: /s/ K. Stanley Martin
                                                          ----------------------
                                                          K. Stanley Martin
                                                          Vice President-Finance





March 13, 1998














                                       16

<PAGE>
                              WTD INDUSTRIES, INC.


                                INDEX TO EXHIBITS

                                                                      Sequential
                                                                          Number
                                                                          System
                                                                            Page
                                                                          Number

 3.1     Fourth Restated Articles of Incorporation of Registrant adopted
         effective November 27, 1992(1)

 3.2     Second Restated Bylaws of the Registrant adopted effective
         November 27, 1992(2)

4.2.8    Amendment  dated as of January 1, 1998 to Credit and  Security      18
         Agreement dated as of November 30, 1992, between Registrant
         and  Principal  Mutual  Life  Insurance  Company,  Aetna  Life
         Insurance  Company,  The  Northwestern  Mutual Life  Insurance
         Company,  Chemical Bank, Seattle-First National Bank, and Bank
         of America Oregon

19       Other reports furnished to securities holders with respect to the   21
         quarter ended January 31, 1998:  President's letter excerpted from
         Interim Report to Shareholders for the third quarter of fiscal 1998

 27      Financial Data Schedule(3)



----------

      (1) Incorporated  by  reference  to the  exhibit  of  like  number  to the
Registrant's  report on Form 8-K dated November 23, 1992,  previously filed with
the Commission.

      (2) Incorporated  by  reference  to the  exhibit  of  like  number  to the
Registrant's  annual  report on Form  10-K for the year  ended  April 30,  1993,
previously filed with the Commission.

      (3) This schedule has been submitted in the electronic  form prescribed by
EDGAR.

----------

         All other required  Exhibits are listed in the Company's  Annual Report
on Form 10-K for the year ended April 30, 1997.

                                       17