<PAGE>   1


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

                                    FORM 10-Q

(Mark One)

[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the quarterly period ended October 2, 1999

[ ] 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:    N/A

                             Simonds Industries Inc.

             (Exact name of registrant as specified in its charter)


--------------------------------------------------------------------------------
Delaware                                                05-0484518
--------------------------------------------------------------------------------
(State or other jurisdiction of                         (I.R.S. Employer
--------------------------------------------------------------------------------
Incorporation or organization)                          Identification No.)
--------------------------------------------------------------------------------


                               135 Intervale Road
                               Fitchburg, MA 01420
                    (Address of principal executive offices)

                                 (978) 343-3731
              (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 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 outstanding of the registrant's voting and non-voting common
stock, as of October 30, 1999: 68,391.48 and 7,897.45, respectively.


                                       1


<PAGE>   2


                             Simonds Industries Inc.
                                 Form 10-Q Index

                                                                       Page No.
         PART I.  FINANCIAL INFORMATION
         ------------------------------

Item 1.  Financial Statements (Unaudited)
         Consolidated Balance Sheets - January 2, 1999 and
         October 2, 1999                                                  3

         Consolidated Statements of Operations - three and nine
         months ended October 3, 1998 and October 2, 1999                 4

         Consolidated Statements of Cash Flows - nine months ended
         October 3, 1998 and October 2, 1999                              5

         Consolidated Statements of Shareholders' Equity (Deficit)-
         for the nine months ended October 3, 1998 and October 2, 1999    6

         Notes to Consolidated Financial Statements - October 2, 1999     7


Item 2.  Management's Discussion and Analysis of Financial               15
         Condition and Results of Operations

         PART II.  OTHER INFORMATION
         ---------------------------

Item 6.  Exhibits and Reports on Form 8-K                                20

         Signatures                                                      21

         Exhibit No. 27 - Financial Data Schedule                        22



                                       2
<PAGE>   3

Part 1.  Financial Information

Item 1.  Financial Statements (Unaudited)


                             SIMONDS INDUSTRIES INC.
                           CONSOLIDATED BALANCE SHEETS
                      (In Thousands, except share amounts)

<TABLE>
<CAPTION>
                                  ASSETS                                          January 2,    October 2,
                                                                                     1999          1999
                                                                                  ----------    ----------
                                                                                                (unaudited)
<S>                                                                                <C>           <C>
CURRENT ASSETS:
     Cash                                                                          $   9,298     $   3,353
     Accounts receivable, net of reserves of $992 and $930                            16,250        18,459
     Inventories (Note 3)                                                             27,226        28,368
     Other current assets                                                              3,208         3,019
     Refundable income taxes                                                           1,157            --
                                                                                   ---------     ---------
             Total current assets                                                     57,139        53,199

PROPERTY, PLANT AND EQUIPMENT:
     Land                                                                              2,332         2,314
     Buildings and improvements                                                       12,118        10,763
     Machinery and equipment                                                          27,009        29,737
     Construction-in-progress                                                          1,296         1,932
                                                                                   ---------     ---------
                                                                                      42,755        44,746

     Less- Accumulated depreciation                                                    8,370        10,812
                                                                                   ---------     ---------
             Net property, plant and equipment                                        34,385        33,934

OTHER ASSETS:
     Goodwill, net of accumulated amortization of $1,581 and $2,059                   21,765        22,099
     Deferred financing costs, net of accumulated amortization of $252 and $638        4,389         4,029
     Other                                                                               561         1,666
                                                                                   ---------     ---------
             Total other assets                                                       26,715        27,794
                                                                                   ---------     ---------
             Total assets                                                          $ 118,239     $ 114,927
                                                                                   =========     =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
     Overdraft facilities                                                          $     149     $     192
     Revolving credit loans and notes payable                                          1,613           408
     Current portion of long-term debt                                                    35            20
     Accounts payable                                                                  6,783         6,038
     Accrued payroll and employee benefits                                             3,953         3,830
     Accrued interest                                                                  5,011         2,618
     Other accrued liabilities                                                         1,351         1,517
     Currently deferred income taxes                                                   2,448         2,448
                                                                                   ---------     ---------
         Total current liabilities                                                    21,343        17,071

LONG-TERM DEBT, net of current portion (Note 4)                                      102,362       102,964

DEFERRED INCOME TAXES                                                                  4,939         4,315

OTHER NONCURRENT LIABILITIES                                                           2,275         2,191

COMMITMENTS AND CONTINGENCIES                                                             --            --

SHAREHOLDERS' EQUITY (DEFICIT):
     Common stock, $.01 par value-
         Authorized - 200,000 shares
         Issued and outstanding - 76,333 and 76,289                                        1             1
     Capital in excess of par value                                                  (24,405)      (24,405)
     Retained earnings                                                                12,696        14,203
     Cumulative translation adjustment                                                  (907)       (1,292)
     Treasury stock, at cost                                                             (65)         (121)
                                                                                   ---------     ---------
             Total shareholders' equity (deficit)                                    (12,680)      (11,614)
                                                                                   ---------     ---------
             Total liabilities and shareholders' equity                            $ 118,239     $ 114,927
                                                                                   =========     =========
</TABLE>


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


                                       3
<PAGE>   4


                             SIMONDS INDUSTRIES INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  ------------------------------------------------
                                                         Three Months            Nine Months
                                                    Ended        Ended        Ended       Ended
                                                  October 3,   October 2,   October 3,   October 2,
                                                     1998         1999        1998         1999
                                                  ---------    ----------   ----------   ---------

<S>                                                <C>          <C>          <C>          <C>
Net sales                                          $ 33,170     $ 32,072     $ 95,811     $ 95,076
Cost of goods sold                                   22,566       22,071       64,847       65,403
                                                   --------     --------     --------     --------

           Gross profit                              10,604       10,001       30,964       29,673

Selling, general and administrative expense          11,046        6,156       23,007       18,970
                                                   --------     --------     --------     --------

           Operating income (loss)                     (442)       3,845        7,957       10,703

Other expenses:
  Interest expense                                    2,840        2,764        5,317        8,266
  Other, net                                            191         (280)         358         (381)
                                                   --------     --------     --------     --------

           Income (loss) before income taxes         (3,473)       1,361        2,282        2,818

Provision (benefit) for income taxes                 (1,475)         581          966        1,311
                                                   --------     --------     --------     --------

           Income (loss) before extraordinary
           item                                      (1,998)         780        1,316        1,507

Extraordinary item-
   Write-off of deferred financing cost related
   to refinanced indebtedness, net of tax
   benefit of $374                                     (529)           0         (529)           0
                                                   --------     --------     --------     --------

           Net income (loss)                       ($ 2,527)    $    780     $    787     $  1,507
                                                   ========     ========     ========     ========
</TABLE>


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


                                       4
<PAGE>   5

                             SIMONDS INDUSTRIES INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                   -------------------------
                                                                          NINE MONTHS
                                                                     ENDED          ENDED
                                                                   OCTOBER 3,     OCTOBER 2,
                                                                     1998            1999
                                                                   -------------------------
<S>                                                                 <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                                        $    787       $ 1,507
  Adjustment to reconcile net income to
    net cash provided by operating activities:
      Depreciation and amortization                                    4,084         3,635
      Gain on asset sales                                                (35)          (11)
      (Benefit) from deferred income taxes                              (969)          (38)
      Changes in assets and liabilities, net of acquisitions:
        Accounts receivable                                              650        (2,209)
        Inventories                                                   (1,515)       (1,142)
        Other current and noncurrent assets                             (101)         (120)
        Accounts payable                                                (468)         (745)
        Accrued expenses                                                 584        (2,265)
        Other non-current liabilities                                     93           (84)
                                                                   -------------------------
      Net cash provided by (used in) operating activities              3,110        (1,472)
                                                                   -------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sale of property and equipment                           59            34
   Purchases of equipment                                             (2,984)       (3,631)
   Acquisition of W. Notting Ltd., net of cash acquired of $51        (5,471)           --
                                                                   -------------------------
      Net cash (used in) investing activities                         (8,396)       (3,597)
                                                                   -------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net change in overdrafts                                             (249)           43
   Net (uses)/proceeds under revolving credit                          3,972        (1,205)
   Proceeds from issuance of long-
      term debt-net of issuance costs                                 98,413           602
   Principal payments of long-term debt                              (57,404)          (15)
   Issuance of common stock                                           18,833            --
   Stock redemption                                                  (53,791)           --
   Purchase of treasury stock                                            (65)          (56)
   Other                                                                  --           (38)
                                                                   -------------------------
     Net cash provided by (used in) financing activities               9,709          (669)
                                                                   -------------------------
EFFECT OF EXCHANGE RATE ON CASH                                         (259)         (207)
                                                                   -------------------------
NET INCREASE (DECREASE) IN CASH                                        4,164        (5,945)

CASH AT BEGINNING OF PERIOD                                            1,255         9,298
                                                                   -------------------------
CASH AT END OF PERIOD                                               $  5,419       $ 3,353
                                                                   =========================
</TABLE>



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


                                       5
<PAGE>   6

                             SIMONDS INDUSTRIES INC.
            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
          For the nine months ended October 3, 1998 and October 2, 1999
                      (In thousands, except share amounts)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                               ACCUMULATED
                                                       CAPITAL                    OTHER                   TOTAL
                                   COMMON    COMMON   IN EXCESS     RETAINED  COMPREHENSIVE  TREASURY   SHAREHOLDERS'  COMPREHENSIVE
                                   SHARES     STOCK    OF PAR       EARNINGS      LOSS         STOCK  EQUITY (DEFICIT)    INCOME
                                   ------    ------   ---------     --------  -------------  -------- ---------------- -------------
<S>                                <C>          <C>    <C>           <C>         <C>          <C>          <C>
Balance at December 27, 1997       148,371      $1     $ 10,553      $11,859     $  (798)     $   0        $ 21,615           --
   Issuance of Common Stock         41,073       -       18,833           --          --         --          18,833           --
   Net Income                           --       -           --          787          --         --             787      $   787
   Foreign Currency
    Translation Adjustment              --       -           --           --          57         --              57           57
   Stock Redemption               (112,777)      -      (53,791)          --          --         --         (53,791)          --
   Acquisition of Treasury Stock      (334)      -           --           --          --        (65)            (65)          --
                                  --------      --     --------      -------     -------      -----        --------      -------
Balance at October 3, 1998          76,333      $1     $(24,405)     $12,646     $  (741)     $ (65)       $(12,564)     $   844
                                  ========      ==     ========      =======     =======      =====        ========      =======


Balance at January 2, 1999          76,333      $1     ($24,405)     $12,696     $  (907)     $ (65)       $(12,680)          --
   Net Income                           --       -           --        1,507          --         --           1,507      $ 1,507
   Foreign Currency
    Translation Adjustment              --       -           --           --        (385)        --            (385)        (385)
   Acquisition of Treasury Stock       (44)      -           --           --          --        (56)            (56)          --
                                  --------      --     --------      -------     -------      -----        --------      -------
Balance at October 2, 1999          76,289      $1     $(24,405)     $14,203     $(1,292)     $(121)       $(11,614)     $ 1,122
                                  ========      ==     ========      =======     =======      =====        ========      =======
</TABLE>

Comprehensive income (loss) for the three month periods ended October 3, 1998
and October 2, 1999 was ($2,292) and $915.

<TABLE>
<CAPTION>
                                    Net     Translation   Comprehensive
                              Income (Loss)  Adjustment   Income (Loss)
                              ------------  -----------   -------------
<S>                              <C>            <C>        <C>
Period Ended October 3, 1998     $(2,527)       $235       $(2,292)


Period Ended October 2, 1999        $780        $135          $915
</TABLE>


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



                                       6
<PAGE>   7

                   Notes to Consolidated Financial Statements
                (In thousands except share and per share amounts)
                                   (unaudited)


1.   Basis of Presentation

The unaudited interim consolidated financial statements presented herein have
been prepared by Simonds Industries Inc. ("Simonds" or the "Company") and, in
the opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair presentation. Interim results are not necessarily
indicative of results for a full year.

The consolidated balance sheet presented as of January 2, 1999 has been derived
from the consolidated financial statements that have been audited by the
Company's independent public accountants. The unaudited consolidated financial
statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in the annual financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to those
rules and regulations, but the Company believes that the disclosures are
adequate to make the information presented not misleading. Operating results for
the nine months ended October 2, 1999 are not necessarily indicative of the
results that may be expected for the year ending January 1, 2000. For further
information, refer to the financial statements and footnotes included in the
Company's annual report on Form 10-K for the year ended January 2, 1999.

2.   Acquisitions

On May 8, 1998, the Company acquired 100% of the outstanding stock of W. Notting
Limited. The acquisition was accounted for as a purchase and the purchase price
has been allocated based on the fair market value of the underlying assets and
liabilities. Buildings are stated at fair market value. The consolidated
financial statements include the results of operations of W. Notting Limited
subsequent to the date of acquisition.

3.   Inventories at January 2, 1999 and October 2, 1999 were as follows (in
     thousands).

<TABLE>
<CAPTION>
                                        January 2,       October 2,
                                           1999             1999
                                        ----------       ----------
<S>                                      <C>              <C>
      Raw Materials                      $ 5,323          $ 6,015
      Work in progress                     7,341            7,473
      Finished goods                      14,562           14,880
                                         -------          -------
      Total                              $27,226          $28,368
                                         =======          =======
</TABLE>


                                       7

<PAGE>   8

4.   Debt

Debt consists of the following at January 2, 1999 and October 2, 1999 (in
thousands):

<TABLE>
<CAPTION>
                                                                       January 2,  October 2,
                                                                         1999         1999
                                                                       ----------   ---------
<S>                                                                    <C>          <C>
Line of credit facility for German Subsidiary with First Union         $  2,362     $  2,964
National Bank up to approximately $3,015, interest payable
quarterly at EURIBOR (3.126% at October 2, 1999) plus 1.25%
terminating on October 1, 2003

Line of credit facilities for Notting with Banco Sabadell and                62          139
Banco Popular of Spain,  bearing  interest at 5.07% and 5.75%, and
terminating on April 1, 2001 and May 17, 2000, respectively

Two term loans payable by Notting to National Westminster Bank on           390          289
June 30, 2000 and September 30, 2000, bearing interest at 8.75%
and 9.5%

Notes payable to Notting shareholders, issued May 8, 1998,                1,196            0
interest payable semi-annually at 8.5%, maturing April 30, 1999,
secured by a guarantee of the Company

Senior Subordinated Notes issued July 8, 1998, maturing July 1,         100,000      100,000
2008, interest payable semi-annually at 10.25%
                                                                       --------     --------
                                                                        104,010      103,392
Less-current maturities                                                   1,648          428
                                                                       --------     --------
                                                                       $102,362     $102,964
                                                                       ========     ========
</TABLE>


5.   Operating and Geographic Segment Information and Concentration of Credit
     Risk

On January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which establishes standards for reporting operating segments of a
business enterprise. The new rules establish revised standards for public
companies relating to the reporting of financial and descriptive information
about their operating segments in financial statements. Operating segments are
components of an enterprise which are evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company's chief operating decision maker is the


                                       8
<PAGE>   9


President, Chief Executive Officer of the Company. The Company has identified
its reportable operating business segment as industrial cutting tools and
related machinery, based on how the business is strategically managed.

The Company's cutting tool business segment consists of metal (48% of 1999 net
sales), wood (42%), and paper (10%) cutting products. The cutting tool business
segment is managed as a single strategic unit which derives its revenues
primarily from sales to privately owned distributors throughout the world.

No single customer accounts for 10% or more of consolidated net sales. Foreign
net sales are attributed based on the location of the Company's subsidiary
responsible for the sale.

6.   Subsequent Events

On October 19, 1999, the Company acquired certain business assets of the
Anderson Products Division of Wilton Corporation. The assets included machinery,
equipment, inventory, technical drawings and information, customer lists and all
other assets used by Anderson Products in its holesaw business in Worcester,
Massachusetts. The Company assumed certain scheduled liabilities for current
purchase orders and customer orders. The purchase price was approximately $1,583
plus assumed liabilities in the amount of $96.

7.   Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133, as amended by SFAS No. 137 "Accounting for Derivative Instruments and
Hedging Activities Deferral of the Effective Date of FASB Statement No. 133"
shall be effective for all fiscal quarters of all fiscal years beginning after
June 15, 2000. The Company has not yet quantified the impact of adopting SFAS
No. 133 on its consolidated financial statements and has not determined the
timing nor method of its adoption of the statement.

8.   Selected consolidating financial statements of parent, guarantors, and
     non-guarantors

The Company's wholly owned domestic subsidiaries fully and unconditionally
guarantee, on a senior subordinated basis, the 10.25% Senior Subordinated Notes,
jointly and severally. The guarantor subsidiary data below includes financial
statements of Armstrong Manufacturing Company. The non-guarantor subsidiaries
data below includes combining financial statements of Wespa, Simonds UK, UK
Holding Co., and Simonds Canada. Separate financial statements of the guarantor
subsidiary have not been presented because management believes that such
financial statements are not material to



                                       9

<PAGE>   10


investors. In addition, the Senior Credit Facility is guaranteed on a full and
unconditional basis by the guarantor subsidiary. The following data summarizes
the consolidating results of the Company on the equity method of accounting for
the following periods presented:




                                       10
<PAGE>   11



                             SIMONDS INDUSTRIES INC.
                                  BALANCE SHEET
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                            As of January 2, 1999
                                                   -------------------------------------------------------------------------
                                                       Parent     Guarantor   Non-Guarantors   Eliminations   Consolidated
                                                   -------------------------------------------------------------------------
<S>                                                  <C>           <C>            <C>                           <C>
         ASSETS
CURRENT ASSETS:
    Cash                                             $   8,602     $   209        $   487              --       $   9,298
    Accounts receivable                                  7,705         714          7,831              --          16,250
    Intercompany accounts receivable                     2,015         626            383          (3,024)             --
    Inventories:
      Raw materials                                      2,930         372          2,021              --           5,323
      Work in progress                                   5,614         289          1,438              --           7,341
      Finished goods                                     5,316         758          8,835            (347)         14,562
    Other current assets                                 3,464          78            823              --           4,365
                                                     ---------     -------        -------        --------       ---------
         Total current assets                           35,646       3,046         21,818          (3,371)         57,139
                                                     ---------     -------        -------        --------       ---------
Net property, plant and equipment                       23,896       2,527          7,962              --          34,385

OTHER ASSETS:
    Investment in subsidiaries                          40,817       7,555             --         (48,372)             --
    Intercompany loan receivable                            --      23,163             --         (23,163)             --
    Other assets                                        19,903       4,108          2,704              --          26,715
                                                     ---------     -------        -------        --------       ---------
         Total assets                                $ 120,262     $40,399        $32,484        $(74,906)      $ 118,239
                                                     =========     =======        =======        ========       =========

         LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES                                  $  14,301     $   464        $ 9,600        $ (3,022)      $  21,343
LONG-TERM DEBT, net of current
    portion                                            100,000          --          2,362              --         102,362
INTERDIVISION LONG-TERM DEBT                            15,145          --          8,018         (23,163)             --
OTHER NONCURRENT LIABILITIES                             3,496         638          3,080              --           7,214
SHAREHOLDERS' EQUITY (DEFICIT)                         (12,680)     39,297          9,424         (48,721)        (12,680)
                                                     ---------     -------        -------        --------       ---------
    Total liabilities and shareholders' equity       $ 120,262     $40,399        $32,484        $(74,906)      $ 118,239
                                                     =========     =======        =======        ========       =========
</TABLE>

                             SIMONDS INDUSTRIES INC.
                                  BALANCE SHEET
                                 (In Thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                              As of October 2, 1999
                                                     --------------------------------------------------------------------------
                                                       Parent       Guarantor    Non-Guarantors    Eliminations   Consolidated
                                                     --------------------------------------------------------------------------
<S>                                                  <C>             <C>             <C>                            <C>
         ASSETS
CURRENT ASSETS:
    Cash                                             $   2,569       $   271         $   513               --       $   3,353
    Accounts receivable                                  8,688         1,146           8,625               --          18,459
    Intercompany accounts receivable                     1,561         1,032             802           (3,395)             --
    Inventories:
      Raw materials                                      3,726           357           1,932               --           6,015
      Work in progress                                   6,235           340             898               --           7,473
      Finished goods                                     5,721           510           8,938             (289)         14,880
    Other current assets                                 2,519            41             459               --           3,019
                                                     ---------       -------         -------         --------       ---------
         Total current assets                           31,019         3,697          22,167           (3,684)         53,199
                                                     ---------       -------         -------         --------       ---------
Net property, plant and equipment                       24,435         3,107           6,392               --          33,934
OTHER ASSETS:
    Investment in subsidiaries                          43,626         6,133              --          (49,759)             --
    Intercompany loan receivable                            --        25,259              --          (25,259)             --
    Other assets                                        19,230         3,912           4,652               --          27,794
                                                     ---------       -------         -------         --------       ---------
         Total assets                                $ 118,310       $42,108         $33,211         $(78,702)      $ 114,927
                                                     =========       =======         =======         ========       =========

         LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES                                  $  11,283       $ 1,082         $ 8,101         $ (3,395)      $  17,071
LONG-TERM DEBT, net of current
    portion                                            100,000            --           2,964               --         102,964
INTERDIVISION LONG-TERM DEBT                            15,145            --          10,114          (25,259)             --
OTHER NONCURRENT LIABILITIES                             3,496           638           2,372               --           6,506
SHAREHOLDERS' EQUITY (DEFICIT)                         (11,614)       40,388           9,660          (50,048)        (11,614)
                                                     ---------       -------         -------         --------       ---------
    Total liabilities and shareholders' equity       $ 118,310       $42,108         $33,211         $(78,702)      $ 114,927
                                                     =========       =======         =======         ========       =========
</TABLE>


                                       11

<PAGE>   12


                             SIMONDS INDUSTRIES INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                           Three months ended October 3, 1998
                                                       ---------------------------------------------------------------------------
                                                          Parent       Guarantor   Non-guarantors   Eliminations    Consolidated

<S>                                                     <C>             <C>            <C>             <C>            <C>
Net sales                                               $ 22,918        $ 2,750        $ 11,402        $(3,900)       $ 33,170
Cost of goods sold                                        15,841          1,826           8,799         (3,900)         22,566
                                                        --------        -------        --------        -------        --------

           Gross profit                                    7,077            924           2,603              0          10,604

Selling, general and administrative expense                8,341            640           2,065              0          11,046
                                                        --------        -------        --------        -------        --------

           Operating income (loss)                        (1,264)           284             538              0            (442)

Other expenses (income):
  Interest expense                                         3,139            125             405           (773)          2,896
  Interest income                                            (50)          (702)            (77)           773             (56)
  Other, net                                                 201             26             (36)             0             191
  Equity in earnings of subsidiaries                        (583)           (61)              0            644               0
                                                        --------        -------        --------        -------        --------

           Income (loss) before income taxes              (3,971)           896             246           (644)         (3,473)

Provision (benefit) for income taxes                      (1,973)           313             185              0          (1,475)
                                                        --------        -------        --------        -------        --------

           Income (loss) before
                extraordinary item                        (1,998)           583              61           (644)         (1,998)

Extraordinary item-
   Write-off of deferred financing cost related
   to refinanced indebtedness, net of tax
   benefit of $374                                          (529)             0               0              0            (529)
                                                        --------        -------        --------        -------        --------

           Net income (loss)                            $ (2,527)       $   583        $     61        $  (644)       $ (2,527)
                                                        ========        =======        ========        =======        ========
</TABLE>


                             SIMONDS INDUSTRIES INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three months ended October 2, 1999
                                                --------------------------------------------------------------------------
                                                   Parent       Guarantor   Non-guarantors   Eliminations    Consolidated

<S>                                              <C>             <C>            <C>             <C>            <C>
Net sales                                        $ 21,092        $ 2,863        $ 10,854        $(2,737)       $ 32,072
Cost of goods sold                                 14,686          1,779           8,401         (2,795)         22,071
                                                 --------        -------        --------        -------        --------

           Gross profit                             6,406          1,084           2,453             58          10,001

Selling, general and administrative expense         3,639            661           1,856              0           6,156
                                                 --------        -------        --------        -------        --------

           Operating income                         2,767            423             597             58           3,845

Other expenses (income):
  Interest expense                                  3,089            108             344           (753)          2,788
  Interest income                                     (20)          (689)            (68)           753             (24)
  Other, net                                           89           (348)            (21)             0            (280)
  Equity in earnings of subsidiaries               (1,071)          (166)              0          1,237               0
                                                 --------        -------        --------        -------        --------

           Income before income taxes                 680          1,518             342         (1,179)          1,361

Provision (benefit) for income taxes                 (100)           505             176              0             581
                                                 --------        -------        --------        -------        --------

           Net income                            $    780        $ 1,013        $    166        $(1,179)       $    780
                                                 ========        =======        ========        =======        ========
</TABLE>



                                       12

<PAGE>   13

                             SIMONDS INDUSTRIES INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                         Nine Months ended October 3, 1998
                                                      ----------------------------------------------------------------------
                                                        Parent      Guarantor   Non-guarantors   Eliminations  Consolidated

<S>                                                   <C>            <C>           <C>            <C>            <C>
Net sales                                             $ 66,878       $ 7,849       $ 32,674       $(11,590)      $ 95,811
Cost of goods sold                                      46,185         5,170         25,082        (11,590)        64,847
                                                      --------       -------       --------       --------       --------

           Gross profit                                 20,693         2,679          7,592              0         30,964

Selling, general and administrative expense             15,715         1,950          5,342              0         23,007
                                                      --------       -------       --------       --------       --------

           Operating income                              4,978           729          2,250              0          7,957

Other expenses (income):
  Interest expense                                       6,183           363            857         (2,022)         5,381
  Interest income                                          (50)       (1,808)          (228)         2,022            (64)
  Other, net                                               441            52           (135)             0            358
  Equity in earnings of subsidiaries                    (2,237)         (914)             0          3,151              0
                                                      --------       -------       --------       --------       --------

           Income before income taxes                      641         3,036          1,756         (3,151)         2,282

Provision (benefit) for income taxes                      (675)          799            842              0            966
                                                      --------       -------       --------       --------       --------

           Income before
                extraordinary item                       1,316         2,237            914         (3,151)         1,316

Extraordinary item-
   Write-off of deferred financing cost related
   to refinanced indebtedness, net of tax
   benefit of $374                                        (529)            0              0              0           (529)
                                                      --------       -------       --------       --------       --------

           Net income                                 $    787       $ 2,237       $    914       $ (3,151)      $    787
                                                      ========       =======       ========       ========       ========
</TABLE>


                             SIMONDS INDUSTRIES INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   Nine Months ended October 2, 1999
                                                ------------------------------------------------------------------------
                                                  Parent       Guarantor    Non-guarantors  Eliminations    Consolidated

<S>                                             <C>             <C>            <C>             <C>            <C>
Net sales                                       $ 62,618        $ 8,060        $ 33,703        $(9,305)       $ 95,076
Cost of goods sold                                43,803          5,094          25,869         (9,363)         65,403
                                                --------        -------        --------        -------        --------

           Gross profit                           18,815          2,966           7,834             58          29,673

Selling, general and administrative expense       11,040          1,991           5,939              0          18,970
                                                --------        -------        --------        -------        --------

           Operating income                        7,775            975           1,895             58          10,703

Other expenses (income):
  Interest expense                                 9,213            328             998         (2,172)          8,367
  Interest income                                    (90)        (1,984)           (199)         2,172            (101)
  Other, net                                        (296)           (29)            (56)             0            (381)
  Equity in earnings of subsidiaries              (2,310)          (623)              0          2,933               0
                                                --------        -------        --------        -------        --------

           Income before income taxes              1,258          3,283           1,152         (2,875)          2,818

Provision (benefit) for income taxes                (249)         1,031             529              0           1,311
                                                --------        -------        --------        -------        --------

           Net income                           $  1,507        $ 2,252        $    623        $(2,875)       $  1,507
                                                ========        =======        ========        =======        ========
</TABLE>


                                       13
<PAGE>   14

                             SIMONDS INDUSTRIES INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          Nine months ended October 3, 1998
                                                         ----------------------------------------------------------------------
                                                           Parent       Guarantor  Non-Guarantors  Eliminations  Consolidated
<S>                                                       <C>            <C>           <C>           <C>           <C>
Net cash (used in)/provided by operating
  activities:                                             $ (5,128)      $ 1,142       $   429       $ 6,667       $  3,110

Cash flows from investing activities:
  Proceeds from asset sales                                      3            --            56            --             59
  Purchase of equipment                                     (2,641)         (125)         (218)           --         (2,984)
  Acquisitions                                                  --            --        (5,471)           --         (5,471)
                                                          --------       -------       -------       -------       --------
      Net cash (used in) investing activities               (2,638)         (125)       (5,633)       (8,396)
Cash flows from financing activities:
  Change in overdraft                                         (246)           --            (3)           --           (249)
  Net  proceeds (uses) from revolving credit facility        7,065            --        (3,093)           --          3,972
  Proceeds from issuance of long-term debt-
       net of issuance cost                                 95,710            --         2,703            --         98,413
  Principal payments of long-term debt                     (56,684)           --          (720)           --        (57,404)
  Intercompany loans                                            --        (6,330)        6,399           (69)            --
  Issuance of common stock                                  18,833         6,722            (1)       (6,721)        18,833
  Purchase of treasury stock                                   (65)           --            --            --            (65)
  Stock Redemption                                         (53,791)           --            --            --        (53,791)
  Dividends (paid) received                                  1,319        (1,319)           --            --             --
                                                          --------       -------       -------       -------       --------

  Net cash (used in)/provided by financing activities       12,141          (927)        5,285        (6,790)         9,709

  Effect of Foreign Exchange                                    --            --          (382)          123           (259)
                                                          --------       -------       -------       -------       --------

Increase (decrease) in cash                                  4,375            90          (301)           --          4,164

Cash at beginning of the period                                 25           188         1,042            --          1,255
                                                          --------       -------       -------       -------       --------

Cash at end of the period                                 $  4,400       $   278       $   741            --       $  5,419
                                                          ========       =======       =======       =======       ========
</TABLE>


                             SIMONDS INDUSTRIES INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                              Nine months ended October 2, 1999
                                                          ---------------------------------------------------------------------
                                                            Parent      Guarantor  Non-Guarantors  Eliminations  Consolidated
<S>                                                        <C>           <C>             <C>             <C>             <C>
Net cash (used in)/provided by operating
  activities:                                              $(4,829)      $ 2,049       $  (809)      $ 2,117       $(1,472)
Cash flows from investing activities:
  Proceeds from asset sales                                     12            --            22            --            34
  Purchase of equipment                                     (2,323)         (774)         (534)           --        (3,631)
                                                           -------       -------       -------       -------       -------
      Net cash (used in) investing                          (2,311)         (774)         (512)       (3,597)
        activities

Cash flows from financing activities:
  Change in overdraft                                           --            --            43            --            43
  Net  (uses) from revolving credit facility                    --            --        (1,205)           --        (1,205)
  Proceeds from issuance of long-term debt-
       net of issuance cost                                     --            --           602            --           602
  Principal payments of long-term debt                          --            --           (15)           --           (15)
  Intercompany loans                                            --        (2,097)        2,088             9            --
  Issuance of common stock                                      --         2,085             1        (2,086)           --
  Purchase of treasury stock                                   (56)           --            --            --           (56)
  Dividends (paid) received                                  1,201        (1,201)           --            --            --
  Other                                                        (38)           --            --            --           (38)
                                                           -------       -------       -------       -------       -------

  Net cash (used in)/provided by financing activities        1,107        (1,213)        1,514        (2,077)         (669)

  Effect of Foreign Exchange                                    --            --          (167)          (40)         (207)
                                                           -------       -------       -------       -------       -------

Increase (decrease) in cash                                 (6,033)           62            26            --        (5,945)

Cash at beginning of the period                              8,602           209           487            --         9,298
                                                           -------       -------       -------       -------       -------

Cash at end of the period                                  $ 2,569       $   271       $   513            --       $ 3,353
                                                           =======       =======       =======       =======       =======
</TABLE>

                                       14
<PAGE>   15

Item 2.

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                             (Dollars in Thousands)

The following discussion of the Company's financial condition and results of
operations should be read in conjunction with the Company's consolidated
financial statements and notes thereto.

Results of Operations

Three Months Ended October 2, 1999 Compared to Three Months Ended October 3,
1998

Net Sales: Net Sales for the third quarter of 1999 were 3.3% or $1,098 lower
than third quarter 1998 net sales. The primary reason for lower 1999 quarterly
results was a sales shortfall of metal products in domestic, German and UK
markets due to sluggish U.S. activity and weak economies in Germany and the UK.
Sales from our domestic, German and U.K. operations were lower in the 1999
quarter by $610, $536 and $297, respectively. Sales were also unfavorably
impacted by exchange rate changes on the German Mark and British Pound by
approximately $335.

Gross Profit Margin: Gross Profit was $10,001 for the third quarter of 1999, a
decrease of $603 from $10,604 for the corresponding period in 1998. Gross Profit
as a percentage of net sales was 31.2 % and 32.0% for the three months ended
October 2, 1999 and October 3, 1998, respectively. Domestic operations continue
to experience spending and volume variances as production levels remain low in
response to a shortfall in planned shipments.

Selling, General and Administrative Expenses: Selling, general and
administrative expenses as a percent of net sales were 19.2% or $6,156 and 33.3%
or $11,046 for the third quarter of 1999 and 1998, respectively. In July 1998
there was a one-time compensation charge of $4,541 resulting from the repurchase
of stock options relating to a recapitalization of the Company. Excluding the
1998 one time charge, 1999 expenses, as compared to 1998, were .4% lower as a
percent of sales or $349.

Operating Income: As a result of the foregoing, operating income increased
$4,287 in the third quarter of 1999 when compared to the comparable period in
1998.

Interest Expense: Interest expense was lower by $76 in the third quarter of 1999
compared to the corresponding period in 1998. This is primarily due to lower
interest rates in 1999 on external debt other than on our 10.25% Senior
Subordinated Notes.

Income Taxes: The provision for income taxes before extraordinary items was
approximately $581 for the third quarter of 1999, as compared to a benefit of


                                       15

<PAGE>   16


approximately $1,475 for the third quarter of 1998. The large disparity is the
direct result of the one time compensation charge in 1998 mentioned above.

Net Income: As a result of the foregoing, net income increased $3,307 in the
third quarter of 1999 when compared to the comparable period of 1998.

Nine Months Ended October 2, 1999 Compared to Nine Months Ended October 3, 1998

Net Sales: Net sales of $95,076 for the nine months ended October 2, 1999 were
lower by $735 or .8%, as compared to the nine months ended October 2, 1998. This
was primarily due to a $375 decline in domestic export sales, a $1,218 decline
in UK sales, and a $1,467 decline in sales from German operations all of which
were mostly offset by the inclusion of W. Notting Ltd. for the full nine months
in 1999 as opposed to only 5 months in 1998. Additionally, sales in 1999 were
lower $667 due to the unfavorable impact of exchange rate changes when compared
to 1998.

Gross Profit Margin: Gross Profit was $29,673 or $1,291 less than the October 3,
1998 level. This is primarily the result of manufacturing variances incurred
during the first nine months of 1999. Standard margins decreased only slightly
to 31.2% from 32.3% for the nine month periods ended October 2, 1999 and October
3, 1998, respectively.

Selling, General and Administrative Expenses: Selling, general and
administrative expenses as a percent of net sales were 20.0% or $18,970 for the
nine months ended October 2, 1999 and 24.0% or $23,007 for the nine months ended
October 3, 1998. A comparison of the two periods is skewed by the $4,541 one
time compensation charge to operations in July of 1998 and the inclusion of W.
Notting Ltd. for nine months of 1999 and only five months in 1998. Excluding
these two factors, SG & A in the 1999 period would have been lower by $263.

Operating Income: As a result of the foregoing, operating income increased
$2,746 in the first nine months of 1999 over the comparable period in 1998.

Interest Expense: Interest expense was higher in the first nine months of 1999
compared to the corresponding period in 1998 due to the recapitalization of the
Company in July 1998. The recapitalization constituted refinancing most of the
Company's debt with $100 million of notes bearing an annual interest rate of
10.25%.

Income Taxes: The provision for income taxes was $1,311 for the first nine
months of 1999, as compared to $966 for the corresponding period of 1998. The
income tax rates were higher than the statutory rate principally as a result of
state income tax provisions, nondeductible amortization expense (for tax
purposes) and the effect of foreign income tax on foreign source income.


                                       16

<PAGE>   17


Extraordinary Item: As part of the debt retirement in July 1998, deferred
financing costs of $903 were written off with a related tax benefit of $374,
which resulted in an extraordinary loss of $529.

Net Income: As a result of the aforementioned factors, net income increased $720
in the third quarter of 1999 when compared to the comparable period of 1998.

Liquidity and Capital Resources

In July 1998, the Company issued $100,000 of Senior Subordinated Notes. Interest
on the Notes accrued from date of issuance at 10.25% and is payable
semi-annually on January 1 and July 1. The Notes are due in 2008 but may be
redeemed on or after July 1, 2003 at specified premium prices. Proceeds from the
Notes were primarily used for repayment of indebtedness, acquisition of treasury
stock, and buyout of all outstanding stock options and warrants. The buyout of
stock options resulted in a pretax compensation charge of approximately $4.5
million recorded in July 1998. The repayment of indebtedness resulted in an
extraordinary charge of approximately $0.5 million, net of tax benefit, recorded
in July 1998 to write off unamortized debt discount and deferred financing
costs.

The Company concurrently entered into a Senior Credit Facility with a commercial
lender that provides $30,000 availability, undrawn as of October 2, 1999.
Borrowings under the Senior Credit Facility are available for permitted
acquisitions and working capital, including letters of credit. The Senior Credit
Facility is secured by first priority liens on all tangible and intangible
personal property and real property assets of the Company and its subsidiaries.

The Senior Credit Facility will expire in 2003, unless extended. The interest
rate per annum applicable to the Senior Credit Facility is, at the Company's
option, either LIBOR or the greater of the prime rate or the overnight federal
funds rate plus 0.50%, in each case plus 0.125% to 2.375% depending on the
Company's financial leverage (the "Applicable Margin"). The Company is required
to pay certain fees in connection with the Senior Credit Facility, including an
initial commitment fee of 0.50% and thereafter a per annum rate equal to the
Applicable Margin on the unutilized portion of the revolver.

The Company's principal capital requirements are to fund working capital needs,
meet required debt payments, and to complete planned maintenance and
manufacturing improvements.

The Company believes that future cash flows from operations, together with the
borrowings available under the Senior Credit Facility will provide the Company
with sufficient liquidity and financial resources to finance its growth and
satisfy its working capital requirements for the foreseeable future. The Company
may not be able to generate sufficient cash flows from operations to pay the
entire principal amount of the Notes when due in 2008. In such event, the
Company would be required to refinance the


                                       17

<PAGE>   18


Notes. However, there can be no assurance that the Company will be able to
obtain acceptable financing terms.

Net Cash Flow: The business used cash flow of $5,945 for the nine month period
ended October 2, 1999 compared to providing cash flow of $4,164 for the
comparable period a year ago. This results primarily from paying interest on the
Senior Subordinated Notes in 1999 which is payable semi-annually on July 1 and
January 1.

Seasonality

Historically, the Company's business has not been subject to seasonality in any
material respect. The Company's third quarter, which includes July through
September, is typically lower due to customers' and plant vacation shutdowns.

Inflation

Certain of the Company's expenses, such as wages and benefits, occupancy costs
and equipment repair and replacement, are subject to normal inflationary
pressures. Although the Company to date has been able to offset inflationary
cost increases through operating efficiencies, there can be no assurance that
the Company will be able to offset any future inflationary cost increases
through similar efficiencies.

Year 2000

The Company has a formal Year 2000 Compliance Plan which it began to implement
in 1996 to ensure that its hardware, operating systems and software will
function properly with respect to dates in the year 2000 and thereafter.

The cost to modify its information technology infrastructure to be Year 2000
compliant was not material to the Company's financial condition or results of
operations. The Company does not anticipate any material disruption in its
operations as a result of any failure by the Company to be in compliance. The
Company has initiated formal communication with all of its significant suppliers
and large customers to determine the extent to which the Company's interface
systems are vulnerable to their third parties' failure to remediate their own
Year 2000 issues. In the event that any of the Company's significant suppliers
or customers does not successfully and timely achieve Year 2000 compliance, the
Company's business or operations could be adversely affected. The Company has
prepared appropriate contingency plans in the event that a significant internal
or external exposure is identified including managing inventories and adjusting
staffing strategies.

As of the end of the third quarter of 1999, all Simonds Industries Inc.
locations and acquisitions have nearly completed becoming fully year 2000
compliant. The Corporation, as a whole, is about 95% complete now on all tasks.
The only location that is still in process is Wespa, due to the selection of an
entire new system. The new system


                                       18
<PAGE>   19


implementation is expected to be completed in November 1999 and is year 2000
compliant.

Forward Looking Statements

Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. In addition, words "believes,"
"expects," "anticipates" and similar expressions are used to identify forward
looking statements. The Company cautions that a number of important factors
could cause actual results for fiscal 1999 and beyond to differ materially from
those expressed in any forward looking statements made by or on behalf of the
Company. All of these forward looking statements are based on estimates and
assumptions made by management of the Company, which although believed to be
reasonable, are inherently uncertain. Therefore, undue reliance should not be
placed on such estimates and statements. No assurance can be given that any of
such estimates or statements will be realized and it is likely that actual
results will differ materially from those contemplated by such forward looking
statements. Factors that may cause such differences include: (1) increased
competition; (2) increased costs; (3) loss or disruption of supply sources of
specialty steels; (4) loss or retirement of key members of management; (5)
increases in the Company's cost of borrowings or unavailability of additional
debt or equity capital on terms considered reasonable by management; (6) adverse
state, federal or foreign legislation or regulation or adverse determinations by
regulators; and (7) changes in general economic conditions in the markets in
which the Company may compete and fluctuations in demand in the metal processing
and primary wood industries. Many of such factors are beyond the control of the
Company and its management.

                                       19

<PAGE>   20


                           Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K

EXHIBITS
--------

Exhibit No. 27 - Financial Data Schedule

REPORTS ON FORM 8-K
-------------------

No reports on Form 8-K were filed during the quarter ended October 2, 1999.



                                       20
<PAGE>   21


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.

SIMONDS INDUSTRIES INC.

         By:      _______________________________
                  Joseph L. Sylvia
                  Executive Vice President, CFO
                  November 8, 1999



                                       21