<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 25, 1999 OR

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

    COMMISSION FILE NUMBER 0-19557

                                  SALTON, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                                              36-3777824
(State of other jurisdiction of                              (I.R.S. Employer
Incorporation or organization)                            Identification Number)

    550 BUSINESS CENTER DRIVE
    MOUNT PROSPECT, ILLINOIS                                      60056
(Address of principal executive offices)                       (Zip Code)

                                (847) 803-4600
              (Registrant's telephone number, including area code)

                         Salton/Maxim Housewares, Inc.

 Former name, former address and former fiscal year, if changed since last year

Indicate by check mark whether this 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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of November 5, 1999 -
10,331,949 shares of its $.01 par value Common Stock.


<PAGE>   2



                                  SALTON, INC.
                                    FORM 10-Q
                        QUARTER ENDED SEPTEMBER 25, 1999

                                      INDEX
<TABLE>
<CAPTION>
                                                                       PAGE NO.
                                                                       --------

PART I         FINANCIAL INFORMATION
<S>                                                                    <C>
      Item 1:  Consolidated Financial Statements

               Consolidated Balance Sheets-September 25, 1999
               (Unaudited) and June 26, 1999                              3

               Consolidated Statements of Earnings (Unaudited)
               Thirteen weeks ended
               September 25, 1999 and
               September 26, 1998                                         4

               Consolidated Statements of Cash Flows (Unaudited)
               Thirteen weeks ended
               September 25, 1999 and
               September 26, 1998                                         5

               Notes to Consolidated Financial
               Statements (Unaudited)                                     6

      Item 2:  Management's Discussion and
               Analysis of Financial Condition
               and Results of Operations                                  9

PART II        OTHER INFORMATION

      Item 1:  Legal Proceedings                                         13

      Item 6:  Exhibits and Reports on Form 8-K                          14

               Signature                                                 15
</TABLE>




                                       2
<PAGE>   3

                                  SALTON, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT SHARE DATA)
                                                                   (Unaudited)
                                                                  SEPTEMBER 25,          JUNE 26,
ASSETS                                                                1999                1999
                                                                -----------------    ----------------
<S>                                                             <C>                  <C>
CURRENT ASSETS:
   Cash  ..................................................     $           8,336    $         11,240
   Accounts receivable, net of allowances..................               159,525              96,179
   Inventories.............................................               155,965             144,124
   Prepaid expenses and other current assets...............                 8,521               6,350
   Deferred income taxes...................................                 3,134               3,134
                                                                -----------------    ----------------
         Total current assets..............................               335,481             261,027
Property Plant and Equipment:
   Land  ..................................................                   928                 928
   Buildings...............................................                 4,696               4,696
   Molds and tooling.......................................                28,117              26,364
   Warehouse equipment.....................................                 6,361               6,142
   Office furniture and equipment..........................                 6,418               6,097
                                                                -----------------    ----------------
         ..................................................                46,520              44,227
   Less accumulated depreciation...........................               (21,513)            (19,576)
                                                                -----------------    ----------------
         ..................................................                25,007              24,651
Intangibles, net of accumulated amortization, and
       other non-current assets............................                42,500              42,638
                                                                -----------------    ----------------
TOTAL ASSETS...............................................     $         402,988    $        328,316
                                                                =================    ================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Revolving line of credit and other current debt.........     $          67,196    $         32,229
   Accounts payable........................................                53,732              40,997
   Accrued expenses........................................                28,264              21,865
   Income taxes payable....................................                 6,144
                                                                -----------------    ----------------
         Total current liabilities.........................               155,336              95,091
Non-current deferred income taxes..........................                   157                 157
Long-term debt.............................................               182,013             182,329
                                                                -----------------    ----------------
         Total liabilities.................................               337,506             277,577
STOCKHOLDERS' EQUITY:
   Preferred stock, $.01 par value; authorized,
       2,000,000 shares, 40,000 shares issued..............
   Common stock, $.01 par value; authorized,
       20,000,000 shares; shares issued and outstanding:
       2000--10,289,640; 1999--10,251,828..................                   134                 201
   Treasury stock - at cost................................               (43,308)            (90,804)
   Additional paid-in capital..............................                45,317              91,900
   Accumulated other comprehensive income..................                   (49)                (48)
   Retained earnings ......................................                63,388              49,490
                                                                -----------------    ----------------
         Total stockholders' equity........................                65,482              50,739
                                                                -----------------    ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................     $         402,988    $        328,316
                                                                =================    ================
</TABLE>

                 See Notes to Consolidated Financial Statements.




                                       3
<PAGE>   4

                                  SALTON, INC.
                      CONSOLIDATED STATEMENTS OF EARNINGS
                                  (Unaudited)
<TABLE>
<CAPTION>

(IN THOUSANDS EXCEPT PER SHARE DATA)                                                                13 WEEKS ENDED
                                                                                                    --------------
                                                                                           SEPTEMBER 25,       SEPTEMBER 26,
                                                                                               1999                1998
                                                                                               ----                ----

<S>                                                                                  <C>                 <C>
Net sales....................................................                        $        196,340    $       104,388
Cost of goods sold...........................................                                 110,401             55,004
Distribution expenses........................................                                   7,120              3,609
                                                                                     ----------------    ---------------
Gross profit.................................................                                  78,819             45,775
Selling, general and administrative expenses.................                                  50,490             27,780
                                                                                     ----------------    ---------------
Operating income.............................................                                  28,329             17,995
Interest expense, net........................................                                   5,477              2,399
                                                                                     ----------------    ---------------
Income before income taxes...................................                                  22,852             15,596
Income tax expense ..........................................                                   8,954              4,777
                                                                                     ----------------    ---------------
Net income...................................................                        $         13,898    $        10,819
                                                                                     ================    ===============

Weighted average common shares outstanding...................                                  10,290             13,191

Weighted average common and common
    equivalent shares outstanding............................                                  14,574             16,020

Net income per common share: Basic...........................                        $           1.35    $          0.82
                                                                                     ================    ===============

Net income per common share: Diluted.........................                        $           0.95    $          0.68
                                                                                     ================    ===============
</TABLE>


                 See Notes to Consolidated Financial Statements.




                                       4
<PAGE>   5

                                  SALTON, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                                      13 WEEKS ENDED
                                                                             -------------------------------
                                                                             SEPTEMBER 25,     SEPTEMBER 26,
                                                                                 1999              1998
                                                                             -------------     -------------
<S>                                                                          <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income:                                                                  $  13,898      $   10,819
   Adjustments to reconcile net income
    to net cash used in operating activities:
      Changes in deferred taxes                                                                       442
      Depreciation and amortization                                                 2,280           1,244
      Purchase reduction of note payable and other noncash items                     (187)           (251)
        Changes in assets and liabilities:
           Accounts receivable                                                    (63,346)        (22,483)
           Inventories                                                            (11,841)        (16,646)
           Prepaid expenses and other current assets                               (2,171)            273
           Accounts payable                                                        12,547           2,827
           Taxes payable                                                            6,144           2,861
           Accrued expenses                                                         6,399              95
                                                                                ---------      ----------
               Net cash from operating activities:                                (36,277)        (20,819)
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                            (2,311)           (589)
                                                                                ---------      ----------
               Net cash from investing activities:                                 (2,311)           (589)
CASH FLOWS FROM FINANCING ACTIVITIES:
   (Repayment)proceeds from revolving line of credit                               34,967         (30,475)
   (Repayment)proceeds from long-term debt                                           (130)         90,000
   Costs associated with refinancing                                                               (3,966)
   Common stock issuance                                                              848               2
   Preferred stock issuance                                                                        40,000
   Purchase of treasury stock                                                                     (70,799)
   Costs associated with preferred stock issuance                                                  (2,998)
                                                                                ---------      ----------
               Net cash from financing activities:                                 35,685          21,764
The effect of exchange rate changes on cash                                            (1)
                                                                                ---------      ----------
Net change in cash                                                                 (2,904)            356
Cash, beginning of period                                                          11,240             661
                                                                                ---------      ----------
Cash, end of period                                                             $   8,336      $    1,017
                                                                                =========      ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:

   Interest                                                                     $   1,834      $      610
   Income taxes                                                                 $   2,959      $    1,474
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   In the quarter ended September 26,1998, Salton repurchased 6,535,072 shares
of Salton's common stock from Windmere-Durable Holdings Inc. ("Windmere") for a
total purchase price of $90,804,024. The purchase price included the issuance of
a six and one-half year $15,000,000 subordinated promissory note which bears
interest at 4% per annum recorded at its fair value of $9,095,715 and the
effective repayment of Windmere's promissory note to Salton for the principal
amount of $10,847,620.


                See Notes to Consolidated Financial Statements.


                                       5
<PAGE>   6

                                  SALTON, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       CONSOLIDATED FINANCIAL STATEMENTS.

         The consolidated financial statements have been prepared from Salton's
records without audit and are subject to year end adjustments. The interim
consolidated financial statements reflect all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of financial information. The interim consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Salton, Inc. 1999 Annual
Report to Shareholders and the Annual Report on Form 10-K. The results of
operations for the interim periods should not be considered indicative of
results to be expected for the full year.

2. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE.

        On June 28, 1999, Salton's Board of Directors authorized a 3-for-2 split
of its common stock effective July 28, 1999, for stockholders of record at the
close of business on July 14, 1999. The stock split was effected through the
issuance of treasury shares, and accordingly, the cost attributable to those
shares of $47.5 million was transferred from treasury stock to additional
paid-in capital. Such treasury shares were not subject to the stock split. The
June 26, 1999 share and per-share amounts in the accompanying financial
statements give effect to the split.

        Basic net income per common share is computed based upon the weighted
average number of common shares outstanding. Diluted net income per common share
is computed based upon the weighted average number of common shares outstanding,
adjusted for dilutive common stock equivalents applying the treasury stock
method for options and warrants and the if-converted method for convertible
securities.

3.       EFFECT OF NEW ACCOUNTING STANDARDS AND STATEMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities", which was
amended in June 1999 with the issuance of SFAS No. 137. SFAS No. 137 delayed the
effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000.
SFAS No. 133 will change accounting and disclosure requirements for derivative
instruments and hedging activities. Salton is in the process of determining the
effect that this new standard will have on its consolidated financial statements
and/or disclosures.

4.       COMPREHENSIVE INCOME

         For the 13 weeks ended September 25, 1999 components of other
comprehensive income include foreign currency translation charges, net of tax.

<TABLE>
<CAPTION>

                                                           13 WEEKS ENDED
                                                ---------------------------------
       (DOLLARS IN THOUSANDS)                   SEPTEMBER 25,       SEPTEMBER 26,
                                                    1999                1998
                                                ------------        -------------
<S>                                             <C>                  <C>
          Net income                               $ 13,898           $ 10,819

          Other comprehensive income (loss)              (1)
                                                   --------           --------
                                                   $ 13,897           $ 10,819
                                                   ========           ========
</TABLE>

         Accumulated other comprehensive income(loss) is comprised of foreign
currency translation charges of $1 and $2 as of September 25, 1999 and June 26,
1999, respectively, and Salton's minimum pension liability of $50 and $50 as of
September 25, 1999 and June 26, 1999, respectively.




                                       6
<PAGE>   7

5.       OPERATING SEGMENTS

         Salton consists of a single operating segment that designs, markets and
distributes housewares, including small appliances, tabletop products and
personal care/time products. This segmentation is appropriate because Salton
makes operating decisions and assesses performance based upon brand management,
and such brand management encompasses a wide variety of products and types of
customers. Most of Salton's products are procured through independent
manufacturers, primarily in the Far East, and are distributed through similar
distribution channels.

Product Information - Net Sales

<TABLE>
<CAPTION>
                                                                           SEPTEMBER 25,  SEPTEMBER 26,
                                                                               1999           1998
                                                                           -------------  -------------
                                                                                   (IN THOUSANDS)
<S>                                                                        <C>             <C>
Small appliances.......................................................     $  168,945       $   96,619
Tabletop products......................................................          5,456            6,145
Personal care/time products............................................         21,939            1,624
                                                                            ----------       ----------
Total .................................................................     $  196,340       $  104,388
                                                                            ==========       ==========
</TABLE>



6.       ACQUISITION

         On January 7, 1999, Salton acquired the stock of Toastmaster Inc.
("Toastmaster"), a Columbia, Missouri based manufacturer and marketer of kitchen
and small household electrical appliances and time products (the "Toastmaster
Acquisition"). Salton paid Toastmaster shareholders $7.00 per share in cash, for
a total purchase price of approximately $53.2 million. In addition,
Toastmaster's outstanding debt of $57.8 million was paid by Salton in connection
with the acquisition. The acquisition was accounted for as a purchase. The
purchase price has been preliminarily allocated based upon estimated fair market
values of the acquired assets and liabilities at the date of acquisition,
pending final determination of certain acquired assets and liabilities.
Accordingly, the purchase price allocation may change in subsequent periods.
The excess of the purchase price over the fair values of the net assets acquired
has been recorded as goodwill and is being preliminarily amortized on a
straight-line basis over forty years.

         The operating results of Toastmaster have been included in the
consolidated statements of earnings from the date of acquisition. The following
unaudited pro forma results of operations assume the transaction occurred at the
beginning of the period presented:


<TABLE>
<CAPTION>
                                                                                         13 WEEKS ENDED
                                                                                       SEPTEMBER 26, 1998
                                                                                         (IN THOUSANDS)

<S>                                                                                     <C>

Net sales........................................................................       $     143,263
Operating income.................................................................              16,766
Net income.......................................................................               7,904
Net income per share:
     Basic.......................................................................       $        0.60
     Diluted.....................................................................       $        0.49
</TABLE>

         The pro forma results are for informational purposes only and do not
purport to represent what Salton's results of operations would have actually
been had the transaction been consummated for the periods indicated.





                                       7
<PAGE>   8

7.       SUBSEQUENT EVENTS

      On October 6, 1999, Salton purchased approximately 21% of the outstanding
shares of Amalgamated Appliance Holdings Limited ("Amalgamated"), a leading
manufacturer and distributor of a wide range of branded consumer electronics and
appliances in South Africa, for approximately $6 million. Based in South Africa,
Amalgamated is a publicly held company, listed on the Johannesburg Stock
Exchange, which owns the rights to the Salton brand name in South Africa. In
conjunction with this transaction, the Chief Executive Officer of Salton, Inc.,
was added to Amalgamated's Board of Directors.




                                       8
<PAGE>   9

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

RESULTS OF OPERATIONS

         THIRTEEN WEEKS ENDED SEPTEMBER 25, 1999 COMPARED WITH THIRTEEN WEEKS
ENDED SEPTEMBER 26, 1998.

         Net Sales. Net sales in the quarter ended September 25, 1999 ("first
quarter of fiscal 2000") were $196.3 million, an increase of approximately $92.0
million or 88.1%, compared to net sales of $104.4 million in the quarter ended
September 26, 1998("first quarter of fiscal 1999"). This increase is primarily
attributable to increased sales of products within the George Foreman(R) product
line, sales by our newly acquired wholly-owned subsidiary Toastmaster, sales of
Rejuvenique(R) and Juiceman(R) products. Net sales of White-Westinghouse(R)
products to Kmart and Zellers approximated 8% of net sales in the first quarter
of fiscal 2000 compared to 14% of net sales in the first quarter of fiscal 1999.

         Gross Profit. Gross profit in the first quarter of fiscal 2000 was
$78.8 million or 40.1% of net sales as compared to $45.8 million or 43.9% in the
same period in fiscal 1999. Cost of goods sold during the first quarter of
fiscal 2000 increased to 56.2% of net sales compared to 52.7% in the same period
in fiscal 1999. Distribution expenses were $7.1 million or 3.6% of net sales in
the first quarter of fiscal 2000 compared to $3.6 million or 3.5% of net sales
in the same period in fiscal 1999. Gross profit in the first quarter of fiscal
2000 as a percentage of net sales decreased primarily due to higher costs of
Toastmaster products. Excluding the cost of Toastmaster products, Salton had a
more favorable mix of sales with lower costs in their respective channels of
distribution when compared to the same period in fiscal 1999.

          Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to 25.7% of net sales or $50.5 million in the
first quarter of fiscal 2000 compared to 26.6% of net sales or $27.8 million for
the same period in fiscal 1999. Expenditures for television, royalty expenses,
certain other media and cooperative advertising and trade show expenses were
18.0% of net sales or $35.4 million in the first quarter of fiscal 2000 when
compared to 18.2% of net sales or $19.0 million in the same period in fiscal
1999. Through increased leverage of fixed costs, the remaining selling, general
and administrative costs decreased to 7.6% of net sales or $15.0 million in the
first quarter of fiscal 2000 compared to 8.4% of net sales or $8.8 million in
the first quarter of fiscal 1999.

         Operating Income. As a result of the foregoing, operating income
increased by $10.3 million or 57.4%, to $28.3 million in the first quarter of
fiscal 2000 from $18.0 million in the same period in fiscal 1999. Operating
income as a percentage of net sales decreased to 14.4% in the first quarter of
fiscal 2000 from 17.2% in the same period of fiscal 1999. Excluding the effects
of Toastmaster operating income increased to 17.7% compared to the prior quarter
of 17.2%.

         Net Interest Expense. Net interest expense was approximately $5.5
million for the first quarter of fiscal 2000 compared to $2.4 million in the
first quarter of fiscal 1999. Salton's rate of interest on amounts outstanding
was a weighted average annual rate of 9.2% in fiscal 2000 compared to 7.8% in
fiscal 1999. The average amount of all debt outstanding was $209.0 million for
the first quarter of fiscal 2000 compared to $70.5 million for the same period
in fiscal 1999. This increase was used to complete Salton's recapitalization,
complete the acquisition of Toastmaster and to finance the working capital
needed to support growth in sales.

          Income Tax Expense. Salton had tax expense of $9.0 million in fiscal
2000 as compared to tax expense of $4.8 million in fiscal 1999.

          Net income. Net income increased 28.5% to $13.9 million in the first
quarter of fiscal 2000, compared to $10.8 million in the first quarter of fiscal
1999.

         Earnings per Share. Basic earnings per common share were $1.35 per
share on weighted average common shares outstanding of 10,289,640 in the first
quarter of fiscal 2000 compared to earnings of $0.82 per share on weighted
average common shares outstanding of 13,191,021 in the same period in fiscal
1999. Diluted earnings per common share were $0.95 per share on weighted average
common shares outstanding, including dilutive common stock equivalents, of
14,573,612 in the first quarter of fiscal 2000 compared to earnings of $0.68 per
share on weighted average common shares outstanding, including dilutive common
stock equivalents, of 16,020,403 in the same period in fiscal 1999. All share
counts reflect a 3-for-2 split of Salton's common stock effective July 28, 1999,
for stockholders of record at the close of business on July 14, 1999.



                                       9
<PAGE>   10

LIQUIDITY AND CAPITAL RESOURCES

         During the first quarter of fiscal 2000, Salton used net cash of $36.3
million in operating activities and $2.3 million in investing activities. This
resulted primarily from the growth in sales in the period and higher levels of
receivables and inventory, as well as increased investment in capital assets,
primarily tooling. Financing activities provided cash of $35.7 million. This
resulted primarily from draws of $35.0 million under the revolving line of
credit.

         At September 25, 1999, Salton had debt outstanding of $249.2 million
and had the ability to borrow up to an additional $15.0 million under the
revolving credit facility. Typically, given the seasonal nature of Salton's
business, Salton's borrowings tend to be the highest in mid-fall and early
winter.

         Salton's credit agreement and senior subordinated notes contain a
number of significant covenants that, among other things, restrict the ability
of Salton to dispose of assets, incur additional indebtedness, prepay other
indebtedness, pay dividends, repurchase or redeem capital stock, enter into
certain investments, enter into sale and lease-back transactions, make certain
acquisitions, engage in mergers and consolidations, create liens, or engage in
certain transactions with affiliates, and that will otherwise restrict corporate
and business activities. In addition, under the credit agreement, Salton is
required to comply with specified financial ratios and tests, including a
minimum net worth test, a fixed charge coverage ratio, an interest coverage
ratio and a leverage ratio.

         Salton's ability to make scheduled payments of principal of, or to pay
the interest on, or to refinance, its indebtedness, or to fund planned capital
expenditures will depend upon its future performance, which is subject to
general economic, financial, competitive and other factors that are beyond its
control. Salton's ability to fund its operating activities is also dependent
upon its rate of growth, ability to effectively manage its inventory, the terms
under which it extends credit to customers and its ability to collect under such
terms and its ability to access external sources of financing. Based upon the
current level of operations and anticipated growth, management believes that
future cash flow from operations, together with available borrowings under the
New Credit Agreement and funds anticipated to be available from the issuance of
additional debt and/or equity securities, will be adequate to meet Salton's
anticipated requirements for capital expenditures, working capital, interest
payments and scheduled principal payments over the next 12 months. There can be
no assurance, however, that Salton's business will continue to generate
sufficient cash flow from operations in the future to service its debt and make
necessary capital expenditures after satisfying certain liabilities arising in
the ordinary course of business. If unable to do so, Salton may be required to
refinance all or a portion of its existing debt, to sell assets or to obtain
additional financing. There can be no assurance that any such refinancing would
be available or that any such sales of assets or additional financing could be
obtained.

SEASONALITY

         Salton's business is highly seasonal, with operating results varying
from quarter to quarter. Salton has historically experienced higher sales during
the months of August through November primarily due to increased demand by
customers for Salton's products attributable to holiday sales. This seasonality
has also resulted in additional interest expense to Salton during this period
due to an increased need to borrow funds to maintain sufficient working capital
to finance product purchases and customer receivables for the seasonal period.

FORWARD LOOKING STATEMENTS

         Certain statements in this Quarterly Report on Form 10-Q constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Salton, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: Salton's degree of leverage; economic conditions
and retail environment; the timely development, introduction and customer
acceptance of Salton's products; competitive products and pricing; dependence on
foreign suppliers and supply and manufacturing constraints; Salton's
relationship and contractual arrangements with key customers, suppliers and
licensors; cancellation or reduction of orders; the integration of Toastmaster,
including the failure to realize anticipated revenue enhancements and cost
savings; the risks relating to pending legal



                                       10
<PAGE>   11

proceedings and other factors both referenced and not referenced in Salton's
filings with the Securities and Exchange Commission. When used in this Quarterly
Report on Form 10-Q, the words "estimate," "project," "anticipated," "expect,"
"intend," "believe," and similar expressions are intended to identify
forward-looking statements.

EFFECTS OF INFLATION AND FOREIGN CURRENCY EXCHANGE

         The results of operations for the periods discussed have not been
significantly affected by inflation or foreign currency fluctuation. Salton
generally negotiates its purchase orders with its foreign manufacturers in
United States dollars. Thus, Salton's cost under any purchase order is not
subject to change after the time the order is placed due to exchange rate
fluctuations. However, the weakening of the United States dollar against local
currencies could result in certain manufacturers increasing the United States
dollar prices for future product purchases.

YEAR 2000 ISSUES

         The Year 2000 issue is the result of computer programs being written to
use two digits to define year dates. Computer programs running date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in systems failure or miscalculations causing
disruptions of operations. Salton currently uses information technology
throughout its operations.

         Management believes that Salton's systems are Year 2000 compliant.
Salton has upgraded and substantially completed the internal testing of its
information technology systems and will continue to monitor such systems
throughout the remainder of 1999. Salton has also specifically addressed its
non-information technology related systems and believes that there will be no
significant operational problems relating to the Year 2000 issue. Salton has not
obtained, and does not intend to obtain, an independent verification and
validation of its Year 2000 compliance status.

         Although Salton believes it has substantially completed its Year 2000
project by upgrading its systems, Salton cannot make any assurances that the
upgraded systems will be free of defects. If any such risks materialize, Salton
could experience material adverse consequences to its business, financial
condition and results of operations.

         Year 2000 compliance may also adversely affect Salton's business,
financial condition and results of operations indirectly by causing
complications of, or otherwise affecting, the operations of any one or more of
its suppliers and customers. Salton has contacted its significant suppliers and
certain of its customers in an attempt to identify any potential Year 2000
compliance issues with them. Salton currently believes that its major suppliers
have made significant progress with respect to Year 2000 compliance issues.
Salton is currently unable to anticipate the magnitude of the operational or
financial impact on it of Year 2000 compliance issues with its customers even
though Salton believes that these customers have implemented significant
programs with respect to Year 2000 compliance issues.

         Notwithstanding Salton's progress to date, there are several ways in
which its systems could still be affected by the Year 2000 problem. First, the
software code Salton uses in its information systems may not in fact be Year
2000 compliant in all instances. Second, Salton may be unable to fully test and
monitor the upgrades, making it difficult for Salton to identify and remedy any
problems that might exist. Third, Salton's customers, suppliers and shippers may
be unable to achieve Year 2000 compliance in time.

         The most reasonably likely worst-case scenario resulting from Salton's
inability, or the inability of its suppliers, customers or shippers, to become
Year 2000 compliant, includes the following adverse effects:

-        Salton would be unable to receive products due to Year 2000-related
         failure on the part of its suppliers causing Salton to be unable to
         fulfill the orders of many of its customers for Salton's products.
-        Salton's customers would be unable to place their orders with Salton
         because of Salton's own system failure or those of its customers
         resulting in delayed or potentially lost orders for Salton's products.
-        Salton would be unable to deliver ordered products to its customers on
         a timely basis due to a system failure at Salton or at one of its
         product shippers leading to delays in arrival of Salton's products and
         possibly dissatisfied customers.
-        Salton's customers would be unable to receive and/or pay for Salton
         products on a timely basis.




                                       11
<PAGE>   12

         Salton is currently reviewing the implementation of contingency plans
relating to the Year 2000 compliance problems in its own systems or those of its
suppliers, customers or shippers.

         Salton has incurred approximately $900,000 to date to resolve and test
Salton's Year 2000 compliance issues. All expenses incurred in connection with
Year 2000 compliance are expensed as incurred, other than acquisitions of new
software or hardware, which are capitalized. Salton currently estimates that the
remaining cost of its Year 2000 compliance efforts will not exceed $250,000.

         Salton's assessment of its Year 2000 compliance is based on numerous
assumptions about future events, including third party modification plans and
other factors. However, there can be no guarantee that this assessment is
correct and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes and similar
uncertainties.







                                       12
<PAGE>   13


                           PART II: OTHER INFORMATION

         ITEM 1: LEGAL PROCEEDINGS

         Trademark Litigation

         In November 1996, White Consolidated Industries, Inc. ("White
Consolidated"), filed suit for injunctive relief and damages against CBS in the
United States District Court for the Northern District of Ohio alleging that
CBS's grant of licenses to the Westinghouse(R) name for use on lighting
products, fans and electrical accessories for use in the home violates White
Consolidated's rights to the Westinghouse(R) name and constitutes a breach of
the agreements under which CBS's predecessor sold White Consolidated its
appliance business and licensed certain trademark rights in 1975. In response to
that suit, CBS filed a related action in December 1996 in the United States
District Court for the Western District of Pennsylvania, naming White
Consolidated, Windmere, Salton and certain other parties as defendants. The two
actions were consolidated in the Pennsylvania court. CBS sought an injunction
prohibiting Salton, Windmere and White Consolidated from using the
White-Westinghouse(R) name on products not specifically enumerated in the sale
documents between CBS's predecessor and White Consolidated, and unspecified
damages and attorneys' fees.

         On September 22, 1999, CBS and White Consolidated finalized a
settlement agreement relating to the ownership of the White-Westinghouse(R) name
for certain consumer products. Under the settlement, we retain our existing
rights under the license from White Consolidated for the use of the
White-Westinghouse(R) name.

         In September, 1999, Linda Evans Fitness Centers, Inc. (the "Fitness
Centers"), Mark Golub and Thomas Gergley filed suit against Salton and its
principal executive officers alleging that Salton tortiously interfered with a
contract between the Fitness Centers and Ms. Evans by hiring Ms. Evans to act as
a spokesperson for the Rejuvenique(TM) facial toning system. Before Ms. Evans
was hired by Salton, Ms. Evans had brought suit against the Fitness Centers
seeking a determination that her contract with the Fitness Centers had been
terminated on the basis of fraud and the failure of the Fitness Centers to make
certain payments. Salton believes that it has valid defenses against the claims
made against it by the Fitness Centers. Ms. Evans has agreed to indemnify Salton
against matters relating to her services to Salton.

 Environmental

         Salton is participating in environmental remediation activities at four
sites which it owns or operates. As of September 25, 1999, Salton has accrued
approximately $300,000 for the anticipated costs of investigation, remediation
and/or operation and maintenance costs at these sites. Although such costs could
exceed that amount, Salton believes that any such excess will not have a
material adverse effect on the financial condition or annual results of
operations of Salton.

 Arbitration

         On April 20, 1999, an individual filed a notice of arbitration
asserting a breach of contract claim against Salton due to Salton's alleged
failure to pay royalties to this individual for the sale of certain juice
extractors and related health products. This individual also asserts various
other causes of action for an accounting, breach of covenant of good faith and
fair dealing, forgery, trademark infringement, unfair competition, permanent
injunction, fraud, negligent misrepresentation, age discrimination, Lanham Act
violations, breach of fiduciary duty and rescission of contract, and is seeking
compensatory and punitive damages of $15 million. An arbitration hearing solely
with respect the forgery claim was been scheduled for October 21, 1999 and a
decision is pending.

         Salton believes that these claims are without merit, and Salton intends
to vigorously defend itself in the arbitration proceeding.

 Other

         Salton is a party to various other actions and proceedings incident to
its normal business operations. Salton believes that the outcome of such
litigation will not have a material adverse effect on the financial condition or
annual results of operations of Salton. Salton also has product liability and
general liability insurance policies in amounts it believes to be reasonable
given its current level of business.




                                       13
<PAGE>   14

         ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

         None



                                       14
<PAGE>   15

                                   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.


                                                     SALTON, INC.

Date: November 4, 1999                         /s/   JOHN E. THOMPSON
                                              ----------------------------------
                                                     John E. Thompson
                                                     Chief Financial Officer and
                                                     Senior Vice-President
                                                     (Duly Authorized Officer
                                                     of the Registrant)





                                       15
<PAGE>   16

<TABLE>
<CAPTION>

                                  EXHIBIT INDEX
<S>                                        <C>
EXHIBIT NUMBER                              DESCRIPTION OF DOCUMENT

         12                                 Computation of ratio of earnings to fixed charges
         27                                 Financial Data Schedule
</TABLE>