<PAGE>   1
===============================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark one)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999.

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO
     ___________________.

                        Commission File Number 333-42117

                           TRANSWESTERN HOLDINGS L.P.
             (Exact name of registrant as specified in its charter)

                DELAWARE                                       33-0560667
      (State or other jurisdiction of                       (I.R.S. Employer
      incorporation or organization)                     Identification Number)

                                ----------------

   8344 CLAIREMONT MESA BOULEVARD
         SAN DIEGO, CALIFORNIA                                    92111
(Address of principal executive offices)                        (Zip Code)

                                 (619) 467-2800
              (Registrant's telephone number, including area code)

       Indicate by check mark whether each 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 [ ]

==============================================================================

<PAGE>   2

                            TRANSWESTERN HOLDINGS L.P.
                                 FORM 10-Q INDEX


<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>       <C>                                                             <C>

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Consolidated Balance Sheets as of March 31, 1999 (unaudited) and 
              December 31, 1998                                              3

          Consolidated Statements of Operations for the Three Months Ended
              March 31, 1999 (unaudited) and 1998 (unaudited)                4

          Consolidated Statements of Cash Flows for the Three
              Months Ended March 31, 1999 (unaudited) and 1998 (unaudited)   5

          Notes to Unaudited Consolidated Financial Statements               6

Item 2.   Management's Discussion and Analysis of Financial Condition and 
              Results of Operations                                         10

Item 3.   Quantitative and Qualitative Disclosures About Market Risk        15

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                                 15

Item 2.   Changes in Securities and Use of Proceeds                         15

Item 3.   Defaults upon Senior Securities                                   15

Item 4.   Submission of Matters to a Vote of Security Holders               15

Item 5.   Other Information                                                 15

Item 6.   Exhibits and Reports on Form 8-K                                  16

SIGNATURES                                                                  17

</TABLE>

<PAGE>   3

                            TRANSWESTERN HOLDINGS L.P.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                          MARCH 31,    DECEMBER 31,
                                                                             1999            1998
                                                                          ---------       ---------
                                                                         (UNAUDITED)
<S>                                                                      <C>             <C>      
ASSETS

Current assets:
   Cash                                                                   $   2,590       $  14,067
   Trade receivable, (less allowance for doubtful accounts of 
     $10,256 at March 31, 1999 and $9,608 at December 31, 1998)              26,239          20,931
   Deferred directory costs                                                  10,109           8,935
   Other current assets                                                         880             625
                                                                          ---------       ---------
          Total current assets                                               39,818          44,558

Non-current assets:
   Property, equipment and leasehold improvements, net                        2,962           2,977
   Acquired intangibles, net                                                 66,460          34,486
   Other assets, primarily debt issuance costs, net                           9,532           9,746
                                                                          ---------       ---------
          Total non-current assets                                           78,954          47,209
                                                                          ---------       ---------
Total assets                                                              $ 118,772       $  91,767
                                                                          =========       =========

LIABILITIES AND PARTNERSHIP DEFICIT 

Current liabilities:
   Accounts payable                                                       $   4,961       $   4,241
   Salaries and benefits payable                                              3,559           3,980
   Accrued acquisition costs                                                  1,883             450
   Accrued interest                                                           5,183           1,470
   Other accrued liabilities                                                    948           1,068
   Customer deposits                                                         17,524          16,139
   Current portion, long-term debt                                            3,207           2,207
                                                                          ---------       ---------
          Total current liabilities                                          37,265          29,555

Long-term debt:
   Series B and C 9 5/8% Senior Subordinated Notes                          141,734         141,784
   Series B 11 7/8% Senior Discount Notes, net                               38,138          37,060
   Senior Credit Facility                                                    65,730          66,165
   Revolving loan                                                            16,000              --
   Acquisition payables                                                       7,050           2,000
                                                                          ---------       ---------
          Total long-term debt                                              268,652         247,009

Partnership deficit:
   General Partner                                                           (3,182)         (3,141)
   Limited Partner                                                         (183,963)       (181,656)
                                                                          ---------       ---------
Total Partner deficit:                                                     (187,145)       (184,797)
                                                                          ---------       ---------
Total liabilities and partner deficit                                     $ 118,772       $  91,767
                                                                          =========       =========
</TABLE>

See accompanying notes.


<PAGE>   4

                           TRANSWESTERN HOLDINGS L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                           (unaudited, in thousands)


<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED
                                                       MARCH 31
                                                ---------------------
                                                  1999         1998
                                                --------     --------
<S>                                            <C>          <C>     
Net revenue                                     $ 31,513     $ 26,761
Cost of revenues                                   6,106        4,929
                                                --------     --------
Gross profit                                      25,407       21,832

Operating expenses:
   Sales and marketing                            13,785       10,456
   General and administrative                      7,731        4,547
                                                --------     --------
Total operating expenses                          21,516       15,003
                                                --------     --------
Income from operations                             3,891        6,829
Other income, net                                    110           79
Interest expense                                  (6,432)      (5,509)
                                                --------     --------
Net income (loss)                               $ (2,431)    $  1,399
                                                ========     ========
Net income (loss) allocated
  to General Partner units                      $    (41)    $     24
                                                ========     ========
Net income (loss) allocated
  to Limited Partner units                      $ (2,390)    $  1,375
                                                ========     ========
Net income (loss) per
  General Partner unit                          $   (4.2)    $    2.5
                                                ========     ========
Net income (loss) per
  Limited Partner unit                          $   (1.0)    $    0.5
                                                ========     ========

</TABLE>

See accompanying notes.


<PAGE>   5

                          TRANSWESTERN HOLDINGS L.P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (unaudited, in thousands)

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED 
                                                                            MARCH 31,
                                                                        1999         1998
                                                                      --------     --------
<S>                                                                   <C>          <C>     
OPERATING ACTIVITIES
Net (loss) income                                                     $ (2,431)    $  1,399
Adjustments  to reconcile net (loss) income to cash provided by
operating activities:
    Depreciation and amortization                                        4,149        1,962
    Amortization of deferred debt issuance costs                           345          307
    Amortization of Senior Note discount                                 1,078          960
    Provision for doubtful accounts                                      2,805        2,403
    Changes in operating assets and liabilities, excluding the effects of
    acquisitions:
       Trade receivables                                                (4,116)      (3,324)
       Write-off of doubtful accounts                                   (2,496)      (1,752)
       Recoveries of doubtful accounts                                      93           81
       Deferred directory costs                                           (456)         (72)
       Other current assets                                               (124)        (259)
       Accounts payable                                                    723         (828)
       Accrued liabilities                                              (1,942)         239
       Accrued interest                                                  3,713        1,988
       Customer deposits                                                   153       (1,122)
                                                                      --------     --------
Cash provided by operating activities                                    1,494        1,982

INVESTING ACTIVITIES
Purchase of property, equipment and leasehold improvements                (238)        (198)
Acquisition of directories                                             (28,251)      (7,807)
Increase in other assets                                                  (131)         (36)
                                                                      --------     --------
Cash used for investing activities                                     (28,620)      (8,041)

FINANCING ACTIVITIES
Borrowings under long-term debt agreements:
    Revolving credit facility                                           20,300        7,300
Repayments of long-term debt
    Revolving credit facility                                           (4,300)      (3,900)
    Senior Term Loan                                                      (435)      (2,000)
Partnership contribution                                                    84           --
                                                                      --------     --------
Cash provided by financing activities                                   15,649        1,400
                                                                      --------     --------
Net decrease in cash                                                   (11,477)      (4,659)
Cash at beginning of period                                             14,067        6,812
                                                                      --------     --------
Cash at end of period                                                 $  2,590     $  2,153

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest                                                $  1,346     $  2,253
</TABLE>

See accompanying notes.

<PAGE>   6

                          TRANSWESTERN HOLDINGS L.P.
                NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                      (ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

1. GENERAL

     The accompanying unaudited consolidated financial statements include the 
accounts of TransWestern Holdings L.P. (Holdings) and its wholly owned 
subsidiary, TransWestern Publishing Company, LLC (TransWestern). All 
significant inter-company transactions have been eliminated. Holdings only 
assets consist of TransWestern's Member Units (as defined). Holdings has 
formed TWP Capital Corp. ("Capital") as a wholly-owned subsidiary and the 
Company has formed TWP Capital Corp. II ("Capital II") as a wholly-owned 
subsidiary. Neither Capital nor Capital II has any significant assets or 
operations.

     These financial statements have been prepared pursuant to the rules and 
regulations of the Securities and Exchange Commission ("SEC") and, in the 
opinion of management, reflect all adjustments necessary to present fairly the 
financial position, results of operations and cash flows for the periods 
presented in conformity with generally accepted accounting principles. All 
adjustments were of a normal recurring nature. All material intercompany 
balances and transactions have been eliminated. These financial statements 
should be read in conjunction with the consolidated financial statements and 
notes thereto included in the Company's Form 10-K for the fiscal year just 
ended. As of the date of filing this document the 10-K is available on the 
Internet at http://www.sec.gov.


<PAGE>   7

                            TRANSWESTERN HOLDINGS L.P.
                NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                      (ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

2.   FINANCIAL STATEMENT DETAILS

Property, Equipment and Leasehold Improvements
<TABLE>
<CAPTION>

                                                       MARCH 31,   DECEMBER 31,
                                                        1999           1998    
                                                    -----------    ----------- 
<S>                                                 <C>            <C>         
Computer and office equipment....................    $   6,301      $   6,122  
Furniture and fixtures...........................        1,674          1,636  
Leasehold improvements...........................          330            310  
                                                    -----------    ----------- 
                                                         8,305          8,068  
Less accumulated depreciation and amortization...       (5,343)        (5,091) 
                                                    -----------    ----------- 
                                                     $   2,962      $   2,977  
                                                    ===========    =========== 
</TABLE>

Acquired Intangibles
<TABLE>
<CAPTION>

                                                      MARCH 31,    DECEMBER 31,
                                                        1999           1998   
                                                    -----------    -----------
<S>                                                 <C>            <C>        
Customer Base..................................      $  95,953      $  60,031 
Less accumulated amortization..................        (29,493)       (25,545)
                                                    -----------    -----------
                                                     $  66,460      $  34,486 
                                                    ===========    ===========
</TABLE>

Other Assets
<TABLE>
<CAPTION>

                                                      MARCH 31,   DECEMBER 31,
                                                       1999          1998     
                                                    -----------   ----------- 
<S>                                                 <C>           <C>         
Debt issuance costs...............................   $  11,498     $  11,367  
Less accumulated amortization.....................      (1,966)       (1,621) 
                                                    -----------   ----------- 
                                                     $   9,532     $   9,746  
                                                    ===========   =========== 
</TABLE>
<PAGE> 8
3.   DIRECTORY ACQUISITIONS

     United. On January 5, 1999, TransWestern purchased 14 directories from 
United Directory Services, Inc. for approximately $17.0 million. The purchase 
price consisted of $12.3 million in cash, a promissory note for $2.0 million, 
due in eighteen months, subject to adjustment based upon the actual collections
of accounts receivable outstanding as of the closing during such period, and
contingent payments paid over a period of three years not to exceed an
additional $2.7 million based upon the contribution margin of a prototype
directory acquired in Austin, Texas. The acquired directories serve the 
greater Ft. Worth, San Antonio and Austin, Texas areas. 

<PAGE>   8

                             TRANSWESTERN HOLDINGS L.P.
                NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                      (ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

3.   DIRECTORY ACQUISITIONS (CONTINUED)

     Lambert. On January 8, 1999, TransWestern purchased eight directories from
Lambert Publishing for approximately $11.0 million. The purchase price 
consisted of $9.5 million in cash, a promissory note of $1.0 million due in 
eighteen months, subject to adjustment based upon the actual collections of 
accounts receivable outstanding as of the consummation of the acquisition, and 
a $0.5 million contingent payment based upon the performance of the subsequent 
years directories exceeding a specific revenue forecast. The acquired 
directories serve the central Georgia area and central eastern Alabama.
 
     Southern. On January 15, 1999, TransWestern purchased seven directories 
from Southern Directories Publishing, Inc. for approximately $5.2 million in 
cash. The acquired directories serve the central Georgia area. One area sales 
manager and approximately five account executives associated with the acquired 
directories were retained.

     Orange Line. On February 15, 1999, TransWestern purchased four directories
from Call It, Inc. (DBA) for approximately $1.1 million in cash and $0.2 
million in cash held in escrow for six months to be released upon the 
expiration of the representation and warranty period of the purchase agreement.
The acquired directories serve the northern Ohio area.

     The acquisitions have been accounted for as asset purchases and 
accordingly the purchase prices have been allocated to the tangible and 
intangible assets acquired based on their respective fair values at the date 
of acquisition, as follows (in thousands):

<TABLE>
<S>                                                             <C>
             Customer List                                        $ 34,260
             Deferred directory costs                                1,380
             Other current and non-current assets                    1,741
</TABLE>
     Assuming that the above acquisitions had occurred on the first day of
the Company's three month period ended March 31, 1998 the unaudited pro forma
results of operations would be as follows:
<TABLE>
<CAPTION>
                                                                Three months ended March 31,
                                                               -----------------------------
                                                                   1999              1998   
                                                               ------------      -----------
                                                                         (Unaudited)
<S>                                                          <C>               <C> 
           Net revenues.......................................  $31,513            $30,283
           Net income (loss)..................................   (2,431)                35
</TABLE>
     The above pro forma results give effect to pro forma adjustments for the
amortization of acquired intangibles and interest expense on borrowings that 
would have been required to fund the acquisitions.

<PAGE>   9

                             TRANSWESTERN HOLDINGS L.P.
                NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                      (ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

4.   GUARANTEE

     Target Directories of Michigan, Inc. ("Target"), which is a direct, 
wholly-owned subsidiary of TransWestern, fully and unconditionally guaranteed
TransWestern's Series B and Series C 9 5/8% Senior Subordinated Notes due 2007
that were outstanding as of March 31, 1999 on an unsecured senior subordinated 
basis. Target is TransWestern's only direct or indirect, other than an 
inconsequential subsidiary, and TransWestern has no debt senior to the Notes. 
Separate full financial statements and other disclosures concerning Target have
not been presented because, in the opinion of management, such information is 
not material to investors. Target was acquired in July, 1998. Following is 
summarized financial information concerning Target for the three months ended
and as of March 31, 1999:

Statement of Operations:
Net revenues               $    933
Gross profit                    624
Operating income                118
Net income                      (58)

Balance Sheet:
Current assets             $  1,100
Non-current assets            5,430
Current liabilities           1,071
Non-current liabilities         895

5.   SUBSEQUENT EVENTS

     On April 1, 1999, the Company completed the purchase of certain tangible 
and intangible assets of Yellow Pages of Texas, Inc. ("YPTexas") for a total of
approximately $2.2 million.   YPTexas publishes one directory near Ft Worth, 
Texas.
 
     On April 2, 1999, the Company completed the purchase of certain tangible 
and intangible assets of Golden State Directory, Corp. ("Golden State") for a 
total of approximately $5.5 million. Golden State publishes six directories 
in northern California.

<PAGE>   10

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (UNAUDITED)

Overview

     We recognize net revenues from the sale of advertising placed in
each directory when the completed directory is distributed. Costs directly
related to sales, production, printing and distribution of each directory are
capitalized as deferred directory costs and then matched against related net
revenues upon distribution. All of our other operating costs are recognized 
during the period when incurred. As TransWestern continues to acquire or 
produce more directories, we adjust the publication schedule periodically to 
accommodate new books. In addition, changes in distribution dates are affected
by market and competitive conditions and the staffing level required to achieve
the individual directory revenue goals. As a result, we may publish the 
directories in a month earlier or later than the previous year and related 
revenues may be recognized in different fiscal quarters from one year to the
next. Year to year results depend on both timing and performance factors.

    Notwithstanding significant monthly fluctuation in net revenues recognized
based on actual distribution dates of individual directories, our bookings and 
cash collection activities generally occur at a steady pace throughout the 
year. As demonstrated in the following table, our quarterly bookings, 
collection of advance payments and total cash receipts vary less than our net 
revenues or EBITDA:
<TABLE>
<CAPTION>
                            ---------------------------------------------------------------
                                1998        1998         1998         1998         1999
                            ---------------------------------------------------------------
                            1st Quarter  2nd Quarter  3rd Quarter  4th Quarter  1st Quarter
                              -------      -------      -------      -------      -------
<S>                         <C>          <C>          <C>          <C>          <C>
Net revenues ...............  $  26.8      $  28.7      $  29.0      $  24.4      $  31.5
EBITDA (a) .................  $   8.9      $   9.6      $   8.5      $   5.5      $   8.2
Bookings (b) ...............  $  25.0      $  22.8      $  26.8      $  29.3      $  30.7
Advance payments ...........  $  11.5      $  11.5      $  13.3      $  13.9      $  14.4
Total cash receipts (c) ....  $  21.7      $  25.8      $  25.9      $  26.0      $  25.4
</TABLE>

(a) "EBITDA" is defined as net income plus interest expense, discretionary
    contributions to the Company's Equity Compensation Plan (such contributions
    represent special distributions to the Company's Equity Compensation Plan
    in connection with refinancing transactions) and depreciation and
    amortization and is consistent with the definition of EBITDA in the
    indenture relating to our 9 5/8% Senior Subordinated notes and in our 
    senior credit facility. EBITDA is not a measure of performance under 
    generally accepted accounting principles (GAAP). EBITDA should not be 
    considered in isolation or as a substitute for net income, cash flows from
    operating activities and other income or cash flow statement data prepared
    in accordance with GAAP, or as a measure of profitability or liquidity. 
    However, management has included EBITDA because it may be used by certain 
    investors to analyze and compare companies on the basis of operating 
    performance, leverage and liquidity and to determine a company's ability 
    to service debt. Our definition of EBITDA may not be comparable to that of
    other companies.

(b) "Bookings" is defined as the daily advertising orders received from
    accounts during a given period and generally occur at a steady pace
    throughout the year.

(c) Includes both advance payments and collections of accounts receivable.

<PAGE>   11

RESULTS OF OPERATIONS

    The following table summarizes our results of operations as a percentage 
of revenue for the periods indicated:

<TABLE>
<CAPTION>
                                                      THREE MONTHS
                                                     ENDED MARCH 31,
                                               --------------------------
                                                  1999             1998
                                               ---------        ---------
<S>                                           <C>              <C>
          Net revenues ..................          100.0%           100.0%
          Cost of revenues ..............           19.4             18.4
                                               ---------        ---------
          Gross profit ..................           80.6             81.6
          Sales and marketing ...........           43.8             39.1
          General and administrative ....           24.5             17.0
                                               ---------        ---------
          Income from operations ........           12.3%            25.5%
                                               =========        =========
          EBITDA Margin (a), (b) ........           26.0%            33.2%
                                               =========        =========
</TABLE>

(a)  For a definition of "EBITDA" see the immediately preceding section.

(b)  "EBITDA Margin" is defined as EBITDA as a percentage of net revenues.
     Management believes that EBITDA margin also provides a valuable indication
     of the Company's ability to generate cash flows available for debt 
     service.

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE MONTHS ENDED 
     MARCH 31, 1998

     Net revenues increased $4.7 million, or 17.8%, from $26.8 million in the
three months ended March 31, 1998 to $31.5 million in the same period in
1999. We published 43 directories in the three months ended March 31, 1999
compared to 39 in the same period in 1998. The net revenue growth was due to
$5.2 million from eight new directories, $2.4 million from four directories 
for which the publication date moved into the period and; growth in the same 31
directories published during both periods of $1.4 million; offset by $4.3 
million of net revenues associated with eight directories published in the 
three months ended March 31, 1998 but not in the same period in 1999.

     As a result of a combination of factors, including the addition of new
customers, price increases, increases in the amount of advertising by current
customers and new directory features such as colorization of ads, additional 
ad sizes and additional headings, our same book revenue growth for the 31 
directories published in both periods was 6.4%.

<PAGE>   12

     Cost of revenues increased $1.2 million, or 23.9%, from $4.9 million in 
the three months ended March 31, 1998 to $6.1 million in the same period 
in 1999. The increase was the result of $1.4 million of costs associated with 
eight new directories published in the three months ended March 31, 1999, and 
$0.4 million in costs associated with four directories published in the three 
months ended March 31, 1999, but not in the same period in 1998; offset by $0.8
million of costs associated with eight directories published during the three 
months ended March 31, 1998, but not in the same period in 1999. Production 
support costs increased $0.2 million in the three months ended March 31, 1999 
due to the directories acquired since the first quarter of 1998.

     As a result of the above, gross profit increased $3.6 million, or
16.4%, from $21.8 million in the three months ended March 31, 1998 to $25.4
million in the same period in 1999. Gross margin decreased from 81.6% in the 
three months ended March 31, 1998 to 80.6% in the same period in 1999 as a 
result of higher direct costs on newly acquired directories.

     Selling and marketing expenses increased $3.3 million, or 31.8%, from 
$10.5 million in the three months ended March 31, 1998 to $13.8 million in 
the same period in 1999. The increase was attributable to increases of $1.6 
million in sales support costs, $1.3 million in direct sales costs and $0.4 
million in provision for bad debt (which was consistent with the increase in 
net revenues).

     Of the increase in sales support costs of $1.6 million, $0.9 million was 
due to sales offices acquired since the first quarter of 1998 and $0.7 million 
was due to the reorganization of the sales management structure in May
1998. The increase in direct sales costs of $1.3 million was as follows: 
$1.4 million of additional costs were for the eight new directories, $0.5 
million for four directories moving into the period, and $0.4 million of higher
costs associated with the 31 same directories; offset by $1.0 million of costs 
associated with eight directories that published in the three months ended 
March 31, 1998 but not in the same period in 1999. Direct sales costs as a 
percentage of revenue for the same 31 directories published during both periods
decreased from 15.9% to 14.8% in the three months ended March 31 1999 compared 
to the same period in 1998.

     General and administrative expense increased $3.2 million, or 70.1%, from
$4.5 million for the three months ended March 31, 1998 to $7.7 million 
for the same period in 1999. The increase is due to: amortization of acquired
customer base and other intangibles of $2.2 million and an increase in 
incentive compensation costs and increases in other professional service costs
totaling $1.0 million.

     As a result of the above factors, income from operations decreased $2.9
million, or 43.0%, from $6.8 million in the three months ended March 31,
1998 to $3.9 million in the same period in 1999. Income from operations as a
percentage of net revenues decreased from 25.5% in the three months ended
March 31, 1998 to 12.3% in the same period in 1999.

     Interest expense increased $0.9 million, or 16.8%, from $5.5 million in 
the three months ended March 31, 1998 to $6.4 million in the same period 
in 1999 due to higher levels of debt.

     As a result of the above factors, net income decreased $3.8 million, or 
273.8%, from income of $1.4 million in the three months ended March 31, 1998 to
a loss of $2.4 million in the same period in 1999.

<PAGE>   13
LIQUIDITY AND CAPITAL RESOURCES

     Net cash provided by operating activities was $1.5 million in the three 
months ended March 31, 1999 compared to $2.0 million provided in the same 
period in 1998, exclusive of the effects of acquired directories. The decrease
in cash provided resulted primarily due to lower net income, net of adjustments
to reconcile net income to cash provided by operating activities in the three
months ended March 31, 1999 compared to the same period in the prior year.

     Customer deposits (advance payments) have continued to improve over the 
past four quarters and is attributed to both higher volume of net revenues and
our efforts to collect more cash at contract closing to reduce our exposure to
uncollectable accounts.

     Net cash used by investing activities was $28.6 million in the three 
months ended March 31, 1999 as compared to $8.0 million in the same period in 
1998. Investing activities consist primarily of cash used to acquire 
directories. In the three months ended March 31, 1999 $28.3 million was spent 
compared to $7.8 million in the same period in the prior year. The prior year's
acquisition consisted of Mast Advertising and Publishing, Inc. which was 
acquired for total consideration of $8.4 million. The Mast directories serve 
Nashville, Tennessee and the surrounding area, Northern Ohio and Southern 
Michigan. Acquisitions made in the three months ended March 31, 1999 are 
discussed in note 3 of the financial statements included in this Form 10-Q.

     Net cash provided by financing activities was $15.6 million in the three 
months ended March 31, 1999 as compared to $1.4 million in the same period 
in 1998. These borrowings were undertaken to aid in the funding of acquisitions
during the quarters.

     In connection with the recapitalization of our company in October 1997,
we incurred significant debt. As of March 31, 1999 we had total 
outstanding long term indebtedness of $272 million, including TransWestern's 
$140 million of Series B and C 9 5/8% Senior Subordinated Notes due 2007, $38
million of Holding's 11 7/8% Senior Discount Notes due 2008 and $66 million of
outstanding borrowings under the senior credit facility, which ranks senior 
to the Series B and C notes. Of the $40.0 million senior credit facility, $16.0
million was borrowed and $24.0 million was available at March 31, 1999.

     In May, 1999 we will be required to make a semiannual interest payment of
$6.7 million on our Series D 9 5/8% Senior Subordinated Notes (which were 
exchanged for our Series B and Series C Notes in April 1999).

     Our principal sources of funds are cash flows from operating activities 
and $40.0 million of available funds under our revolving credit facility. 
Based upon the successful implementation of management's business and 
operating strategy, we believe that these funds will provide us with 
sufficient liquidity and capital resources to meet our current and future 
financial obligations, including the payment of principal and interest on our 
notes, as well as to provide funds for our working capital, capital 
expenditures and other needs. Our future operating performance will be
subject to future economic conditions and to financial, business and other
factors, many of which are beyond our control. There can be no assurance that
such sources of funds will be adequate and that we will not require 
additional capital from borrowings or securities offerings to satisfy such 
requirements. In addition, we may require additional capital to fund future 
acquisitions and there can be no assurance that such capital will be 
available.

     The senior credit facility and the indentures governing TransWestern's 
notes significantly restrict the distribution of funds by TransWestern and the
other subsidiaries of Holdings.  We cannot assure you that the agreements 
governing the indebtedness of Holdings' subsidiaries will permit such 
subsidiaries to distribute funds to Holdings in amounts sufficient to pay the 
accreted value or principal or interest on Holdings' Discount Notes when the 
same becomes due, whether at maturity, upon acceleration or redemption or 
otherwise. Holdings' Discount Notes will be effectively subordinated in right
of payment to all existing and future claims of creditors of subsidiaries of 
Holdings, including the lenders under the senior credit facility, the holders 
of TransWestern's notes and trade creditors.

<PAGE>   14
YEAR 2000 READINESS STATEMENT

     We have a Year 2000 ("Y2K") project team focusing on four key readiness
areas:

     - business computer systems -- addressing hardware and software used in 
       our core operations;

     - computing infrastructure -- addressing network servers, operating
       software, voice networks, and phones;

     - end user computing -- addressing hardware and software used in our
       ancillary operations; and

     - vendors/ suppliers -- addressing the preparedness of our key 
       suppliers.

     For each readiness area, we are performing risk assessment, conducting
testing, and remediation, either retirement, replacement or conversion,
developing contingency plans to mitigate known risk, and communicating with
employees, suppliers, and other third parties to raise awareness of the Y2K
problem.

     Business Computer Systems, Computing Infrastructure, and End User
Computing Readiness Programs. We, with the assistance of third parties, are
conducting an assessment of internal applications and computer hardware. Some
software applications already are or have been made year 2000 compliant and
resources have been assigned to address other applications based on their
importance and the time required to make them Y2K compliant. All software
remediation, Y2K compliance evaluation of hardware, including routers,
telecommunication equipment, workstations and other items is expected to be
completed by August 1999.

     In addition to applications and information technology hardware, we are
developing remediation/contingency plans for certain business critical systems
such as: embedded systems, facilities and other operations, such as financial 
and banking systems.

     Vendors/Suppliers Readiness Program. This program focuses on minimizing 
the risks associated with key suppliers. We have identified key suppliers and 
are in the process of contacting them to solicit information on their Y2K 
readiness. To date, we have received some responses, most of which indicate 
that the suppliers are in the process of developing remediation plans. We are
also developing supplier action lists and contingency plans for key 
suppliers.

     We estimate that total Y2K costs will be approximately $0.7 million. Y2K
costs incurred by the end of the first quarter of 1999 were approximately $0.5
million. Management intends to periodically refine these estimates over time as
it continues to assess and develop alternatives. There can be no assurance, 
however, that there will not be a delay in or increased costs associated with,
the programs described in this section.

     Since the programs described in this section are ongoing, management has
not yet identified all potential Y2K complications. Therefore, the potential
impact of these complications on our financial condition and results of
operations cannot be determined at this time. If computer systems used by us 
or our suppliers, the performance of products provided to us by our 
suppliers, or the software applications we use to produce our products fail 
or experience significant difficulties related to Y2K, our results of 
operations and financial condition could be materially adversely affected. 

<PAGE>   15
FORWARD LOOKING STATEMENTS

     This Quarterly Report on Form 10Q contains forward-looking statements 
which are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are based on 
the beliefs of our management as well as on assumptions made by and
information currently available to us at the time such statements 
were made. When used in this Quarterly Report on Form 10Q, the words 
"anticipate," "believe," "estimate," "expect," "intends" and similar 
expressions, as they relate to our company are intended to identify forward-
looking statements. Actual results could differ materially from those 
projected in the forward-looking statements. Important factors that could 
affect our results include, but are not limited to, (i) our high level
of indebtedness; (ii) the restrictions imposed by the terms of our
indebtedness; (iii) the turnover rate amongst our  account executives;
(iv) the variation in our quarterly results; (v) risks related to the fact 
that a large portion of our sales are to small, local businesses; (vi) our 
dependence on certain key personnel; (vii) risks related to the acquisition 
and start-up of directories; (viii) risks related to substantial competition 
in our markets; (ix) risks related to changing technology and new product 
developments; (x) the effect of fluctuations in paper costs;(xi) the 
sensitivity of our business to general economic conditions; and 
(xii) risks related to the success of our Year 2000 remediation efforts.

ITEM 3.   Quantitative and Qualitative Disclosures About Market Risk

          Not applicable

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     We are a party to various litigation matters incidental to the conduct of
our business. Management does not believe that the outcome of any of the 
matters in which we are currently involved will have a material adverse effect
on our financial condition or the results of our operations.

ITEM 2.   CHANGES IN SECURITIES

          None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None

ITEM 4.   SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

          Not applicable

ITEM 5.   OTHER INFORMATION

          None

<PAGE>   16
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (A)  Exhibit Index
                27.1 Consolidated Financial Data Schedule

           (B)  Reports on Form 8-k.

                (1) On January 14, 1999 Holdings filed a report on form 8-K
                    reporting to Item 2 thereof that on January 5, 1999, 
                    TransWestern acquired 14 directories (and related accounts
                    receivable) in Texas from United Directory Services, Inc.

                (2) On February 16, 1999 Holdings filed a report on form 8-K
                    reporting pursuant to:

                        Item 7. Financial Statements and Exhibits. Holdings
                        filed the required financial statements for the assets 
                        acquired by TransWestern from Universal Phone Books, 
                        Inc. as reported on our 8-K filed November 30, 1998 and
                        the required pro forma financial information.

                (3) On March 9, 1999 Holdings filed a report on form 8-K
                    reporting pursuant to:

                        Item 7. Financial Statements and Exhibits. Holdings
                        filed the required financial statements for the assets 
                        acquired by TransWestern from United Directory 
                        Services, Inc. as reported on form 8-K filed January 
                        14, 1999 and the required pro forma financial 
                        information.


<PAGE>   17
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on May 12, 1999 on
their behalf by the undersigned thereunto duly authorized.

                                          TRANSWESTERN HOLDINGS L.P.
                                                 (Registrant)

                              BY:  TransWestern Communications Company, Inc. 
                                               (General Partner)


                              BY:         /s/ Ricardo Puente
                                --------------------------------------------
                                    Name:   Ricardo Puente
                                    Title:  President, Chief Executive Officer
                                            and Director

                              BY:              /s/ Joan Fiorito             
                                -------------------------------------------- 
                                    Name:   Joan Fiorito 
                                    Title:  Vice President, Chief Financial 
                                            Officer and Assistant Secretary
                                            (Principal Financial and Accounting
                                            Officer)