<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 MARCH 25, 2000 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 May 4, 2000 11,341,347
shares of its $.01 par value Common Stock.




<PAGE>   2



                                  SALTON, INC.
                                    FORM 10-Q
                          QUARTER ENDED MARCH 25, 2000

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                 PAGE NO.
                                                                                                                 -------
<S>                        <C>                                                                                   <C>
PART I                     FINANCIAL INFORMATION

            Item 1:        Consolidated Financial Statements

                           Consolidated Balance Sheets-March 25, 2000
                           (Unaudited) and June 26, 1999                                                               3

                           Consolidated Statements of Earnings (Unaudited)
                           Thirteen weeks ended March 25, 2000 and March 27, 1999
                           And Thirty-nine weeks ended March 25, 2000 and March 27, 1999                               4

                           Consolidated Statements of Cash Flows (Unaudited)
                           Thirty-nine weeks ended March 25, 2000 and March 27, 1999                                   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


(IN THOUSANDS EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                  (UNAUDITED)
                                                                                   MARCH 25,     JUNE 26,
ASSETS                                                                               2000          1999
                                                                                   ---------    ---------
<S>                                                                                <C>          <C>
Current Assets:
   Cash ........................................................................   $   1,764    $  11,240
   Accounts receivable, net of allowances ......................................     123,372       96,179
   Inventories .................................................................     170,213      144,124
   Prepaid expenses and other current assets ...................................       9,380        6,350
   Deferred income taxes .......................................................       2,602        3,134
                                                                                   ---------    ---------
         Total current assets ..................................................     307,331      261,027
Property Plant and Equipment:
   Land ........................................................................         928          928
   Buildings ...................................................................       4,696        4,696
   Molds and tooling ...........................................................      29,488       26,364
   Warehouse equipment .........................................................       6,382        6,142
   Office furniture and equipment ..............................................       8,215        6,097
                                                                                   ---------    ---------
                                                                                      49,709       44,227
   Less accumulated depreciation ...............................................     (25,311)     (19,576)
                                                                                   ---------    ---------
         Property plant and equipment, net .....................................      24,398       24,651
Non-current deferred tax asset .................................................         125
Intangibles, net of accumulated amortization, and other non-current assets......     164,143       42,638
                                                                                   ---------    ---------
TOTAL ASSETS ...................................................................   $ 495,997    $ 328,316
                                                                                   =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Revolving line of credit and other current debt .............................   $  15,544    $  32,229
   Accounts payable ............................................................      33,364       40,997
   Accrued expenses ............................................................      23,495       21,865
   Income taxes payable ........................................................       9,592
                                                                                   ---------    ---------
         Total current liabilities .............................................      81,995       95,091
Non-current deferred income taxes ..............................................                      157
Long-term debt .................................................................     256,912      182,329
                                                                                   ---------    ---------
         Total liabilities .....................................................     338,907      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--11,325,092; 1999--10,251,828 ......................................         134          201
   Treasury stock - at cost ....................................................     (30,210)     (90,804)
   Additional paid-in capital ..................................................      61,170       91,900
   Accumulated other comprehensive income (loss) ...............................           1          (48)
   Retained earnings ...........................................................     125,995       49,490
                                                                                   ---------    ---------
         Total stockholders' equity ............................................     157,090       50,739
                                                                                   ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .....................................   $ 495,997    $ 328,316
                                                                                   =========    =========
</TABLE>


                 See Notes to Consolidated Financial Statements.



                                      -3-
<PAGE>   4

                                  SALTON, INC.
                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)



<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT SHARE DATA)                     13 WEEKS ENDED             39 WEEKS ENDED
                                                     --------------             --------------
                                                 3/25/00        3/27/99      3/25/00       3/27/99
                                               -----------   -----------   -----------   -----------
<S>                                            <C>           <C>           <C>           <C>
Net sales                                      $   172,100   $   124,340   $   661,207   $   371,412
Cost of goods sold                                  94,970        75,032       372,215       214,374
Distribution expenses                                9,299         5,956        26,330        14,521
                                               -----------   -----------   -----------   -----------
Gross profit                                        67,831        43,352       262,662       142,517
Selling, general and administrative expenses        36,110        31,083       117,284        90,832
                                               -----------   -----------   -----------   -----------
Operating income                                    31,721        12,269       145,378        51,685
Interest expense                                     7,644         5,089        22,365         9,899
                                               -----------   -----------   -----------   -----------
Income before income taxes                          24,077         7,180       123,013        41,786
Income taxes                                         9,030         2,026        46,509        14,131
                                               -----------   -----------   -----------   -----------

Net income                                     $    15,047   $     5,154   $    76,504   $    27,655
                                               ===========   ===========   ===========   ===========


Weighted average common shares outstanding      11,310,811     9,900,450    11,176,805    10,982,207


Weighted average common and common
   equivalent shares outstanding                15,783,321    14,331,474    15,524,447    14,866,644


Net income per common share: Basic             $      1.33   $      0.52   $      6.84   $      2.52


Net income per common share: Diluted           $      0.95   $      0.36   $      4.93   $      1.86

</TABLE>





                 See Notes to Consolidated Financial Statements.


                                      -4-
<PAGE>   5

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


<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT SHARE DATA)                                                     39 WEEKS ENDED
                                                                                     --------------
                                                                               MARCH 25, 2000     MARCH 27, 1999
                                                                              ---------------     --------------
<S>                                                                            <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                   $  76,504             $  27,655
   Adjustments to reconcile net income to net cash from operating activities:
      Changes in deferred taxes                                                       250                  (158)
      Depreciation and amortization                                                13,660                 4,550
      Imputed interest on note payable                                              4,751
      Purchase reduction of note payable and other non-cash items                    (343)                 (136)
        Changes in assets and liabilities:
           Accounts receivable                                                    (27,193)               (5,731)
           Inventories                                                            (26,089)               (5,497)
           Income tax receivable                                                                           (539)
           Prepaid expenses and other current assets                               (3,030)                 (368)
           Accounts payable                                                        (7,633)                 (165)
           Taxes payable                                                            9,592                   403
           Accrued expenses                                                         3,410                (1,236)
                                                                                ---------             ---------
               Net cash from operating activities:                                 43,879                18,778
CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of George Foreman Trademark                                        (22,750)
   Additions to intangibles for patents/trademarks                                   (686)
   Acquisition of business                                                                             (107,992)
   Equity investments                                                              (8,168)
   Capital expenditures                                                            (5,480)               (1,436)
                                                                                ---------             ---------
               Net cash from investing activities:                                (37,084)             (109,428)
CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of revolving line of credit and other debt                           (16,685)              (18,475)
   Repayment of long-term debt                                                       (346)              (90,000)
   Proceeds from long-term debt                                                                         260,000
   Costs associated with refinancing                                                 (556)               (8,103)
   Common stock issuance                                                            1,267                   248
   Preferred stock issuance                                                                              40,000
   Purchase of treasury stock                                                                           (70,799)
   Costs associated with preferred stock issuance                                                        (2,999)
   Repayment of other debt                                                                                  (67)
                                                                                ---------             ---------
               Net cash from financing activities:                                (16,320)              109,805
The effect of exchange rate changes on cash                                            49                     7
                                                                                ---------             ---------
Net change in cash                                                                 (9,476)               19,162
Cash, beginning of period                                                          11,240                   661
                                                                                ---------             ---------
Cash, end of period                                                             $   1,764             $  19,823
                                                                                =========             =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
   Interest                                                                     $  13,885             $   4,306
   Income taxes                                                                 $  36,917             $   4,128

</TABLE>


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
      In the quarter ended December 25,1999, Salton acquired, effective July 1,
1999, the right to use in perpetuity and worldwide the name "George Foreman" in
connection with the marketing and sale of food preparation and non-alcoholic
drink preparation and serving appliances. The aggregate purchase price payable
to George Foreman and other participants was $137,500, of which $113,750 is
payable in five annual cash installments, and the remaining $23,750 was paid
through the issuance of 779,191 shares of Salton, Inc. common stock issued out
of treasury. The first cash installment of $22,750 was previously paid during
the first half of fiscal 2000. In connection with the transaction Salton issued
a five-year $91,000 non-interest bearing subordinated promissory note initially
recorded at its present value of $74,520 which accreted to a present value of
$79,272 as of March 25, 2000.

      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. The purchase price included the issuance
of a six and one-half year $15,000 subordinated promissory note which bears
interest at 4% per annum recorded at its fair value of $9,096 and the effective
repayment of Windmere's promissory note to Salton for the principal amount of
$10,848.


                 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, the Company'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
March 25, 2000 share and per-share amounts in the accompanying financial
statements give effect to the split.

         During the second quarter of fiscal 2000, the acquisition of the George
Foreman Trademark was completed. All share and per-share amounts have been
updated to give effect to this transaction as of July 1, 1999.

         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.       EVENTS OF THE THIRTY-NINE WEEKS ENDED MARCH 25, 2000

ePods

         On January 14, 2000, Salton entered into a strategic alliance with
ePods, Inc., ("ePods") an Internet company. Salton will become the exclusive
distributor of ePods products in the U.S., Canada and Mexico. As part of this
alliance, Salton has invested approximately $2 million in convertible preferred
stock of ePods.

George Foreman Trademark

         In the quarter ended December 25,1999, Salton acquired, effective July
1, 1999, the right to use in perpetuity and worldwide the name "George Foreman"
in connection with the marketing and sale of food preparation and non-alcoholic
drink preparation and serving appliances. The aggregate purchase price payable
to George Foreman and other participants was $137.5 million, of which $113.75
million is payable in five annual cash installments, and the remaining $23.75
million was paid through the issuance of 779,191 shares of Salton, Inc. common
stock issued out of treasury. The first cash installment of $22.75 million was
previously paid during the first half of fiscal 2000. In connection with the
transaction Salton issued a five-year $91.0 million non-interest bearing
subordinated promissory note recorded at its present value initially of $74.5
million accreted to the present value of $79.2 million as of March 25, 2000. The
effect of the George Foreman transaction was an elimination of $16.6 million in
royalty expense, partially offset by the recording of amortization of $4.0
million and imputed interest of $3.2 million as of December 25, 1999.



                                      -6-
<PAGE>   7

         The results of the transactions have been included in the consolidated
statements of earnings as of July 1, 1999. The following unaudited pro forma
results of operations assume the transaction occurred at the beginning of the
earliest period presented:


                          13 WEEKS ENDED    39 WEEKS ENDED
                          MARCH 27, 1999    MARCH 27, 1999
                          --------------    --------------
                                    (IN THOUSANDS)

Net sales ................    $124,340         $371,412
Operating income .........      18,416           72,979
Net income ...............       7,937           37,745
Net income per share:
     Basic ...............    $   0.73         $   3.22
     Diluted .............    $   0.53         $   2.41

         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.

TMI Acquisition Note Payable

         On October 29, 1999, Salton retired the $4.0 million note payable
recorded associated with the acquisition of Toastmaster Inc. by issuing 109,090
shares of common stock out of treasury.

Amalgamated Appliance Holdings Limited

         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.

Amended Credit Facility

         Salton amended and restated the New Credit Agreement (the "Amended
Credit Agreement") during the quarter ended December 25, 1999. Salton increased
its existing revolving credit facility from $80.0 million to $115.0 million. The
Amended Credit Agreement, among Salton, Lehman Brothers Inc., as arranger,
Lehman Commercial Paper Inc., as syndication agent and administration agent, and
a syndicate of banks, provides for $160.0 million in a senior secured credit
facility consisting of a $45.0 million Term Loan (the "Term Loan") at an
established base rate (equivalent to the prime rate of interest) plus an
applicable margin of 225 basis points or, at the Company's election, a
eurodollar rate (equivalent to the LIBOR rate) plus an applicable margin of 325
basis points maturing in twenty-four consecutive quarterly installments
commencing on March 26, 1999; and a $115.0 million revolving credit facility
(the "Revolving Credit Facility") at an established base rate (equivalent to the
prime rate of interest) plus an applicable margin or, at the Company's election,
a eurodollar rate (equivalent to the LIBOR rate) based on a range of ratios of
total debt to earnings before interest, taxes, depreciation and amortization
maturing on March 26, 2003. The Amended Credit Facility is secured by a first
lien on substantially all the Company's assets. Credit availability is based on
a formula related to trade accounts receivable, inventories and outstanding
letters of credit.

5.       COMPREHENSIVE INCOME

         For the 13 weeks and the 39 weeks ended March 25, 2000 and March 27,
1999 components of other comprehensive income include foreign currency
translation adjustments, net of tax.


<TABLE>
<CAPTION>
                                                13 WEEKS ENDED                       39 WEEKS ENDED
                                                ---------------                      --------------
         (DOLLARS IN THOUSANDS)             3/25/00             3/27/99        3/25/00           3/27/99
                                            -------             -------        -------           -------
<S>                                         <C>                  <C>           <C>               <C>
         Net income                         $ 15,047             $5,154        $ 76,504          $ 27,655
         Other comprehensive income                1                  7               1                 7
                                            $ 15,048            $ 5,161        $ 76,505          $ 27,662
                                            =========           =======        ========          ========
</TABLE>

         Accumulated other comprehensive income is comprised of foreign currency
translation adjustments of $1 and $7 as of March 25, 2000 and March 27, 1999
respectively and foreign currency translation adjustments of $2 and a minimum
pension liability charge of $50 (net of tax) as of June 26, 1999.




                                      -7-
<PAGE>   8

6.       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>
                                           13 WEEKS ENDED                39 WEEKS ENDED
                                          ----------------               --------------
(DOLLARS IN THOUSANDS)                 3/25/00        3/27/99         3/25/00       3/27/99
                                       -------        -------         -------       -------
<S>                                   <C>            <C>             <C>           <C>
Small kitchen appliances              $ 156,636      $ 111,487       $ 584,626     $ 342,183
Personal care & time products            10,691          8,043          58,569        10,828
Tabletop products                         4,773          4,810          18,012        18,401
                                      ---------      ---------       ---------     ---------
Total                                 $ 172,100      $ 124,340       $ 661,207     $ 371,412
                                      =========      =========       ==========    =========
</TABLE>


                                      -8-
<PAGE>   9
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

THIRTEEN WEEKS ENDED MARCH 25, 2000 COMPARED WITH THIRTEEN WEEKS ENDED MARCH 27,
1999.

         Net Sales. Net sales in the quarter ended March 25, 2000 ("third
quarter of fiscal 2000") were $172.1 million, an increase of approximately $47.8
million or 38.4%, compared to net sales of $124.3 million in the quarter ended
March 27, 1999 ("third quarter of fiscal 1999"). This increase is primarily
attributable to increased sales of products within the George Foreman(R) product
line, sales by our wholly-owned subsidiary Toastmaster acquired in January 1999,
and sales of White-Westinghouse(R), Farberware(R), Rejuvenique(R) and
Juiceman(R) products. Net sales of White-Westinghouse(R) products to Kmart and
Zellers approximated 10.1% of net sales in the third quarter of fiscal 2000
compared to 14% of net sales in the third quarter of fiscal 1999.

         Gross Profit. Gross profit in the third quarter of fiscal 2000 was
$67.8 million or 39.4% of net sales as compared to $43.3 million or 34.9% of net
sales in the same period in fiscal 1999. Cost of goods sold during the third
quarter of fiscal 2000 decreased to 55.2% of net sales compared to 60.3% in the
same period in fiscal 1999. Distribution expenses were $9.3 million or 5.4% of
net sales in the third quarter of fiscal 2000 compared to $6.0 million or 4.8%
of net sales in the same period in fiscal 1999. Gross profit in the third
quarter of fiscal 2000 as a percentage of net sales increased primarily due to a
more favorable mix of sales with lower costs in their respective channels of
distribution when compared to the same period in fiscal 1999. A portion of the
increase in distribution expenses occurred from distribution costs associated
with fulfillment costs of products introduced on new infomercials.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to 21.0% of net sales or $36.1 million in the
third quarter of fiscal 2000 compared to 25.0% of net sales or $31.1 million for
the same period in fiscal 1999 which is primarily attributable to the reduction
in royalty expenses related to the George Foreman transaction. Expenditures for
television, royalty expenses, certain other media and cooperative advertising
and trade show expenses were 11.9% of net sales or $20.5 million in the third
quarter of fiscal 2000 when compared to 15.7% of net sales or $19.5 million in
the same period in fiscal 1999. The remaining selling, general and
administrative costs increased to $15.6 million or 9.1% of net sales in the
third quarter of fiscal 2000 compared to $11.6 million or 9.3% of net sales in
the third quarter of fiscal 1999, primarily attributable to higher costs related
to the higher level of sales and increases due to the acquisition of
Toastmaster.

         Operating Income. As a result of the foregoing, operating income
increased by $19.4 million or 158.5%, to $31.7 million in the third quarter of
fiscal 2000 from $12.3 million in the same period in fiscal 1999. Operating
income as a percentage of net sales increased to 18.4% in the third quarter of
fiscal 2000 from 9.9% in the same period of fiscal 1999.

         Net Interest Expense. Net interest expense was approximately $7.6
million for the third quarter of fiscal 2000 compared to $5.1 million in the
third quarter of fiscal 1999. The increase is primarily attributable to imputed
interest of $1.6 million on the George Foreman note payable. Salton's rate of
interest on amounts outstanding was a weighted average annual rate of 9.5% in
fiscal 2000 compared to 9.3% in fiscal 1999. The average amount of all debt
outstanding was $216.5 million for the third quarter of fiscal 2000 compared to
$117.9 million for the same period in fiscal 1999. These increases are primarily
attributable higher interest rates and increased borrowings to provide working
capital necessary to support the growth in sales.

         Income Tax Expense. Salton had tax expense of $9.0 million in the third
quarter of fiscal 2000 as compared to tax expense of $2.0 million in the third
quarter of fiscal 1999.

         Net income. Net income increased 191.9% to $15.0 million in the third
quarter of fiscal 2000, compared to $5.2 million in the third quarter of fiscal
1999.

         Earnings per Share. Basic earnings per common share were $1.33 per
share on weighted average common shares outstanding of 11,310,811 in the third
quarter of fiscal 2000 compared to earnings of $0.52 per share on weighted
average common shares outstanding of 9,900,450 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
15,783,321 in the third quarter of fiscal 2000 compared to earnings of $0.36 per
share on weighted average common shares outstanding, including dilutive common
stock equivalents, of 14,331,474 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

THIRTY-NINE WEEKS ENDED MARCH 25, 2000 COMPARED WITH THIRTY-NINE WEEKS ENDED
MARCH 27, 1999.

         Net Sales. Net sales in the Thirty-nine weeks ended March 25, 2000
("first nine months of fiscal 2000") were $661.2 million, an increase of
approximately $289.8 million or 78.0%, compared to net sales of $371.4 million
in the Thirty-nine weeks ended March 27, 1999 ("first nine months of fiscal
1999"). This increase is primarily attributable to increased sales of products
within the George Foreman(R) product line, sales by our wholly-owned subsidiary
ToastmasteR acquired in January 1999, and sales of White-Westinghouse(R) and
Juiceman(R) products. Net sales of White-Westinghouse(R) products to Kmart and
Zellers approximated 8% of net sales in the first nine months of fiscal 2000
compared to 14% of net sales in the first nine months of fiscal 1999.

         Gross Profit. Gross profit in the first nine months of fiscal 2000 was
$262.6 million or 39.7% of net sales as compared to $142.5 million or 38.4% of
net sales in the same period in fiscal 1999. Cost of goods sold during the first
nine months of fiscal 2000 decreased to 56.3% of net sales compared to 57.7% in
the same period in fiscal 1999. Distribution expenses were $26.3 million or 4.0%
of net sales in the first nine months of fiscal 2000 compared to $14.5 million
or 3.9% of net sales in the same period in fiscal 1999. Gross profit in the
first nine months of fiscal 2000 as a percentage of net sales increased
primarily due to 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 17.7% of net sales or $117.3 million in the
first nine months of fiscal 2000 compared to 24.5% of net sales or $90.8 million
for the same period in fiscal 1999. Expenditures for television, royalty
expenses, certain other media and cooperative advertising and trade show
expenses were 10.5% of net sales or $69.6 million in the first nine months of
fiscal 2000 when compared to 16.7% of net sales or $62.0 million in the same
period in fiscal 1999. The effect of the George Foreman transaction related to
the first nine months was an elimination of $16.6 million in royalties in the
first six months of fiscal 2000 partially offset by amortization of $4.0
million, compared to payments of royalties of $19.2 million in the first six
months of fiscal 1999. The remaining selling, general and administrative costs
increased to $47.8 million or 7.2% of net sales in the first nine months of
fiscal 2000 compared to $28.3 million or 7.6% of net sales in the first nine
months of fiscal 1999, primarily attributable to higher costs related to the
higher level of sales.

         Operating Income. As a result of the foregoing, operating income
increased by $93.7 million or 181.3%, to $145.4 million in the first nine months
of fiscal 2000 from $51.7 million in the same period in fiscal 1999. Operating
income as a percentage of net sales increased to 22.0% in the first nine months
of fiscal 2000 from 13.9% in the same period of fiscal 1999.

         Net Interest Expense. Net interest expense was approximately $22.4
million for the first nine months of fiscal 2000 compared to $9.9 million in the
first nine months of fiscal 1999. The increase is attributable to imputed
interest of $4.8 million on the George Foreman note payable. Salton's rate of
interest on amounts outstanding was a weighted average annual rate of 9.5% in
fiscal 2000 compared to 8.8% in fiscal 1999. The average amount of all debt
outstanding was $222.2 million for the first nine months of fiscal 2000 compared
to $143.0 million for the same period in fiscal 1999. These increases are
primarily attributable to higher interest rates and increased borrowings used to
provide working capital necessary to support the growth in sales.

         Income Tax Expense. Salton had tax expense of $46.5 million in the
first nine months of fiscal 2000 as compared to tax expense of $14.1 million in
the first nine months of fiscal 1999.

         Net income. Net income increased 176.6% to $76.5 million in the first
nine months of fiscal 2000, compared to $27.7 million in the first nine months
of fiscal 1999.

         Earnings per Share. Basic earnings per common share were $6.84 per
share on weighted average common shares outstanding of 11,176,805 in the first
nine months of fiscal 2000 compared to earnings of $2.52 per share on weighted
average common shares outstanding of 10,982,207 in the same period in fiscal
1999. Diluted earnings per common share were $4.93 per share on weighted average
common shares outstanding, including dilutive common stock equivalents, of
15,524,447 in the first nine months of fiscal 2000 compared to earnings of $1.86
per share on weighted average common shares outstanding, including dilutive
common stock equivalents, of 14,866,644 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.



                                      -10-
<PAGE>   11
LIQUIDITY AND CAPITAL RESOURCES

         During the first nine months of fiscal 2000, operating activities
provided cash of $43.9 million and used cash of $37.1 million in investing
activities. This resulted primarily from the growth in sales in the period and
higher levels of receivables and inventory when compared to year-end June 26,
1999, the George Foreman transaction, an equity investments in Amalgamated and
ePods, as well as, increased investment in capital assets, primarily tooling.
Salton used net cash in financing activities of $16.3 million primarily to
paydown draws under the revolving line of credit of $16.7 million.

         In the quarter ended December 25,1999, Salton acquired, effective July
1, 1999, the right to use in perpetuity and worldwide the name "George Foreman"
in connection with the marketing and sale of food preparation and non-alcoholic
drink preparation and serving appliances. The aggregate purchase price payable
to George Foreman and other participants was $137.5 million, of which $113.75
million is payable in five annual cash installments and the remaining $23.75
million was paid through the issuance of 779,191 shares of Salton, Inc. common
stock issued out of treasury. The first cash installment of $22,750 million was
previously paid during the first nine months of fiscal 2000. In connection with
the transaction Salton issued a five-year $91.0 million non-interest bearing
subordinated promissory note recorded at its present value of $74,520 million
accreted to the present value of $79.3 million as of March 25, 2000. The effect
of the George Foreman transaction was an elimination of $16.6 million in royalty
expense, partially offset by the recording of amortization of $4.0 million and
imputed interest of $3.2 million.

         At March 25, 2000, Salton had debt outstanding of $272.5 million and
had the ability to borrow up to an additional $ 100.0 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 amended and restated the New Credit Agreement (the "Amended
Credit Agreement") during the quarter ended December 25, 1999. Salton increased
its existing revolving credit facility from $80.0 million to $115.0 million. The
Amended Credit Agreement, among Salton, Lehman Brothers Inc., as arranger,
Lehman Commercial Paper Inc., as syndication agent and administration agent, and
a syndicate of banks, provides for $160.0 million in a senior secured credit
facility consisting of a $45.0 million Term Loan (the "Term Loan") at an
established base rate (equivalent to the prime rate of interest) plus an
applicable margin of 225 basis points or, at the Company's election, a
eurodollar rate (equivalent to the LIBOR rate) plus an applicable margin of 325
basis points maturing in twenty-four consecutive quarterly installments
commencing on March 26, 1999; and a $115.0 million revolving credit facility
(the "Revolving Credit Facility") at an established base rate (equivalent to the
prime rate of interest) plus an applicable margin or, at the Company's election,
a eurodollar rate (equivalent to the LIBOR rate) based on a range of ratios of
total debt to earnings before interest, taxes, depreciation and amortization
maturing on March 26, 2003. The Amended Credit Facility is secured by a first
lien on substantially all the Company's assets. Credit availability is based on
a formula related to trade accounts receivable, inventories and outstanding
letters of credit.

         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.





                                      -11-
<PAGE>   12
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 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.

         Salton has completed the implementation of our Year 2000 remediation
plan on a timely basis, and such remediation plan as implemented addresses all
mission critical systems. Although Salton believes it has 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. As of March 25, 2000 Salton has not
experienced any consequences to its business, financial condition and results of
operations.

                           PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

Trademark Litigation

         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.



                                      -12-
<PAGE>   13

Environmental

         Salton is participating in environmental remediation activities at four
sites which it owns or operates. As of March 25, 2000, Salton has accrued
approximately $225,000 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 held in October 1999 and the arbitrator ruled
in favor of Salton.

         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.

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

10.25    Agreement effective January 12, 2000, between Salton, Inc. and William
         B. Rue
10.26    Agreement effective January 12, 2000, between Salton, Inc. and Leonhard
         Dreimann
10.27    Agreement effective January 12, 2000, between Salton, Inc. and David
         Sabin
10.28    Agreement effective January 12, 2000, between Salton, Inc. and John E.
         Thompson


(b)      Reports on Form 8-K

         None





                                      -13-
<PAGE>   14

                                   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: May 4, 2000                            /s/  JOHN E. THOMPSON
                                                  John E. Thompson
                                                  Chief Financial Officer and
                                                  Senior Vice-President
                                                  (Duly Authorized Officer
                                                  of the Registrant)




                                      -14-
<PAGE>   15




                                  EXHIBIT INDEX

EXHIBIT
NUMBER                       DESCRIPTION OF DOCUMENT

10.25    Agreement effective January 12, 2000, between Salton, Inc. and William
         B. Rue
10.26    Agreement effective January 12, 2000, between Salton, Inc. and Leonhard
         Dreimann
10.27    Agreement effective January 12, 2000, between Salton, Inc. and David
         Sabin
10.28    Agreement effective January 12, 2000, between Salton, Inc. and John E.
         Thompson
12       Computation of Ratio of Earnings to Fixed Charges
27       Financial Data Schedule


                                -15-