<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
                        COMMISSION FILE NUMBERS: 333-44473
                                                 333-77905

                              HOLMES PRODUCTS CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MASSACHUSETTS                                                04-2768914
(STATE OR OTHER JURISDICTION                                 (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)

233 FORTUNE BOULEVARD, MILFORD MASSACHUSETTS                 01757
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                     (ZIP CODE)

                                 (508) 634-8050
                         (REGISTRANT'S TELEPHONE NUMBER)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DURING THE PRECEEDING 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

                              HOLMES PRODUCTS CORP.

                                    FORM 10-Q

                          QUARTER ENDED MARCH 31, 1999

                                TABLE OF CONTENTS

                                                                     PAGE

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS:

             CONSOLIDATED BALANCE SHEET AT
             DECEMBER 31, 1998 AND MARCH 31, 1999 (UNAUDITED)          3

             CONSOLIDATED STATEMENT OF INCOME FOR THE THREE 
             MONTHS ENDED MARCH 31, 1998 AND 
             MARCH 31, 1999 (UNAUDITED)                                4

             CONSOLIDATED STATEMENT OF
             CASH FLOWS FOR THE THREE MONTHS ENDED
             MARCH 31, 1998 AND MARCH 31, 1999 (UNAUDITED)             5

             NOTES TO CONSOLIDATED
             FINANCIAL STATEMENTS                                      6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS                17

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
         ABOUT MARKET RISK                                            21

PART II. OTHER INFORMATION                                            21

         SIGNATURES                                                   23



                                       2
<PAGE>   3

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                              HOLMES PRODUCTS CORP.
                           CONSOLIDATED BALANCE SHEET
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,        MARCH 31,
                                                                                     1998         1999 (UNAUDITED)

<S>                                                                                <C>                <C>     
ASSETS
Current assets:
    Cash and cash equivalents ..................................................   $  5,379           $  3,070
    Accounts receivable, net ...................................................     36,967             92,209
    Inventories ................................................................     53,340            151,831
    Prepaid expenses and other current assets ..................................      2,027              3,876
    Deferred income taxes ......................................................      4,983             11,500
    Income taxes receivable ....................................................         --              3,544
                                                                                   --------           --------
      Total current assets .....................................................    102,696            266,030

    Assets held for sale .......................................................         --              5,031
    Property and equipment, net ................................................     15,752             50,283
    Goodwill ...................................................................         --             85,597
    Deferred income taxes ......................................................        563                563
    Deposits and other assets ..................................................      3,174              7,796
    Debt issuance costs, net ...................................................      9,172             22,011
                                                                                   --------           --------
                                                                                   $131,357           $437,311
                                                                                   ========           ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
    Current portion of capital lease obligations and other debt ................   $    604           $    439
    Current portion of credit facility .........................................         --              4,838
    Accounts payable ...........................................................     15,004             30,001
    Accrued expenses ...........................................................     12,292             35,197
    Accrued income taxes .......................................................      3,707              3,485
                                                                                   --------           --------
      Total current liabilities ................................................     31,607             73,960

Capital lease obligations ......................................................        139                139
Credit facility ................................................................     10,000            190,162
Long-term debt .................................................................    105,000            135,000
Deferred income taxes ..........................................................         --              4,051
Commitments and contingencies
Stockholders' equity (deficit):
  Common stock, $.001 par value.  Authorized 12,500,000 shares as of 
      December 31, 1998 and 25,000,000 as of March 31, 1999; issued and
      outstanding 10,200,815 shares at December 31, 1998 and
      20,296,877 shares at March 31, 1999 ......................................         10                 20
  Additional paid in capital ...................................................     16,985             67,715
  Accumulated other comprehensive income .......................................        (40)               (53)
  Treasury stock, at cost (18,620,450 shares) ..................................    (62,058)           (62,058)
  Retained earnings ............................................................     29,714             28,375
                                                                                   --------           --------
      Total stockholders' equity (deficit) .....................................    (15,389)            33,999
                                                                                   --------           --------
                                                                                   $131,357           $437,311
                                                                                   ========           ========
</TABLE>

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



                                       3
<PAGE>   4

                              HOLMES PRODUCTS CORP.
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED
                                                                   MARCH 31, 1998     MARCH 31, 1999

<S>                                                                    <C>                <C>    
Net sales .....................................................        $44,895            $91,669
Cost of goods sold ............................................         30,830             64,748
                                                                       -------            -------
  Gross profit ................................................         14,065             26,921
                                                                       -------            -------

Operating expenses:                                                 
  Selling .....................................................          4,847             13,172
  General and administrative ..................................          3,712              5,685
  Product development .........................................          1,691              2,219
  Plant closing costs .........................................             --              1,149
  Amortization of goodwill and other intangible assets ........             --                446
                                                                       -------            -------
    Total operating expenses ..................................         10,250             22,671
                                                                       -------            -------

    Operating profit ..........................................          3,815              4,250
                                                                       -------            -------

Other income and expense:                                           
  Interest and other expense, net .............................          3,433              6,049
                                                                       -------            -------

Income (loss) before income taxes and equity in earnings 
  from joint venture ..........................................            382             (1,799)
Income tax expense (benefit) ..................................             96               (338)
Equity in earnings from joint venture .........................             --                108
                                                                       -------            -------
    Net income (loss) .........................................        $   286            $(1,353)
                                                                       =======            =======
</TABLE>

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



                                       4
<PAGE>   5

                              HOLMES PRODUCTS CORP.
                CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          THREE MONTHS ENDED
                                                                                   MARCH 31, 1998      MARCH 31, 1999

<S>                                                                                    <C>               <C>       
Cash flows from operating activities:
  Net income (loss) ............................................................       $   286           $  (1,353)
  Adjustments to reconcile net income (loss) to net cash provided by (used
  for) operating activities:
    Depreciation and amortization ..............................................         1,563               3,890
    Amortization of debt issuance costs ........................................           294                 629
    Change in allowance for doubtful accounts ..................................           133                 171
    Loss on disposal of assets .................................................            --                   6
    Deferred income taxes ......................................................          (484)                  7
    Changes in operating assets and liabilities:

      Accounts receivable ......................................................         8,269              21,854
      Inventories ..............................................................        (2,233)              6,056
      Prepaid expenses and other current assets ................................           265                (223)
      Income taxes receivable ..................................................          (152)                 --
      Deposits and other assets ................................................          (284)                674
      Accounts payable .........................................................         4,890              (3,802)
      Accrued expenses .........................................................         1,913               1,744
      Accrued income taxes .....................................................           315              (1,482)
                                                                                       -------           ---------
    Net cash provided by operating activities ..................................        14,775              28,171
                                                                                       -------           ---------

Cash flows from investing activities:
  Acquisition of business, net of cash acquired ................................            --            (279,546)
  Contribution in joint venture ................................................            --                 (25)
  Distribution of earnings from joint venture ..................................            --                 108
  Purchases of property and equipment ..........................................        (1,564)             (2,795)
                                                                                       -------           ---------
    Net cash used for investing activities .....................................        (1,564)           (282,258)
                                                                                       -------           ---------

Cash flows from financing activities:
  Net repayment of line of credit ..............................................        (8,502)            (10,000)
  Issuance of common stock .....................................................            --              50,400
  Borrowings of long- term debt, net of issuance costs .........................            --              27,724
  Borrowings on credit facility, net of issuance costs .........................            --             183,808
  Debt issuance costs ..........................................................          (194)                 --
  Principal payments on capital lease obligations ..............................          (172)               (165)
                                                                                       -------           ---------
    Net cash provided by (used for) financing activities .......................        (8,868)            251,767
                                                                                       -------           ---------

Effect of exchange rate changes on cash ........................................            --                  11
                                                                                       -------           ---------

Net increase (decrease) in cash and cash equivalents ...........................         4,343              (2,309)
Cash and cash equivalents, beginning of period .................................         5,141               5,379
                                                                                       -------           ---------
Cash and cash equivalents, end of period .......................................       $ 9,484           $   3,070
                                                                                       =======           =========
Supplemental disclosure of cash flow information:
   Cash paid for interest ......................................................       $   583           $   1,631
   Cash paid for income taxes ..................................................       $   344           $   1,623
</TABLE>

Non cash transactions:
     The Company issued 59,524 shares of common stock for the fair value of 
     services received from a vendor totaling $300,000.

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



                                       5
<PAGE>   6

                              HOLMES PRODUCTS CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999

1.   NATURE OF BUSINESS

     Holmes Products Corp. ("Holmes" or "HPC") designs, develops, imports and
     sells consumer durable goods, including fans, heaters, humidifiers, air
     purifiers, filters, accessories and lighting products, to retailers
     throughout the United States and Canada, and to a lesser extent, Europe.
        
     The Rival Company ("Rival") and its subsidiaries design, manufacture and
     market small kitchen, home environment and personal care appliances,
     commercial and industrial fans, and ventilation equipment as well as sump,
     well and utility pumps. Rival sells its products to retail and industrial
     customers, primarily in the U.S. and Canada and, to a larger degree than
     HPC, internationally. Rival is a wholly-owned subsidiary of HPC.
        
     Holmes Products (Far East) Limited ("HPFEL") and its subsidiaries
     manufacture and sell consumer durable goods, including fans, heaters and
     humidifiers, mainly to HPC. HPFEL operates facilities in Hong Kong and The
     People's Republic of China.

     HPFEL is a wholly-owned subsidiary of HPC. Prior to the recapitalization
     transaction described in Note 4, HPC and HPFEL were both directly or
     indirectly an 80% owned subsidiary of Asco Investments Ltd., a subsidiary
     of Pentland Group plc ("Pentland").
        
2.   BASIS OF CONSOLIDATION

     The accompanying unaudited financial statements include the accounts of
     HPC and its wholly-owned subsidiaries, Rival, HPFEL, Holmes Manufacturing
     Corp., Holmes Air (Taiwan) Corp., Holmes Motor Corp. and Holmes Air
     (Canada) Corp. The accompanying unaudited financial statements also
     include the accounts of Rival's direct and indirect wholly-owned
     subsidiaries, Bionaire International B.V., Patton Building Products, Inc.,
     Patton Electric Company, Inc., Patton Electric (Hong Kong) Limited, Rival
     Consumer Sales Corporation, The Rival Company of Canada, Ltd., Rival de
     Mexico S.A. de C.V. and Waverly Products Company, Ltd. and HPFEL's
     wholly-owned subsidiaries, Esteem Industries Ltd., Raider Motor Corp.,
     Dongguan Huixin Electrical Products Company, Ltd., Holmes Products
     (Europe) Ltd. and Dongguan Raider Motor Corp. Ltd. All significant
     inter-company balances and transactions have been eliminated.
        
     HPC and its consolidated subsidiaries, including Rival, HPFEL and their
     respective subsidiaries, are referred to herein as the "Company."
        
3.   ACQUISITION

     On February 5, 1999, the Company completed its acquisition of Rival for an
     aggregate of $279.5 million, including $129.4 million cash paid in
     connection with a tender offer for all of the outstanding shares of Common
     Stock of The Rival Company (including payments to optionees), $142.9
     million to refinance Rival's outstanding debt and $7.2 million in
     acquisition costs. The acquisition was made utilizing cash on hand,
     borrowings under an amended and restated Credit Facility entered into in
     connection with the acquisition, the issuance of $31.3 million of senior
     subordinated notes and proceeds of $50.0 million from the sale of Holmes'
     common stock to investment funds affiliated with Holmes' majority
     shareholder, certain members of Holmes' management and to certain other
     co-investors. This acquisition has been accounted for as a purchase, and
     the results of operations of Rival have been included in consolidated
     financial statements since the date of acquisition. The excess of purchase
     price over the fair value of net assets acquired was approximately $86.0
     million and is being amortized on a straight-line basis over 35 years. The
     allocation of the purchase price to the net assets of Rival is 
     preliminary. Management intends to complete its assessment of the fair
     value of assets acquired by December 31, 1999.
     
     Prior to the acquisition by Holmes, Rival recorded an $8.4 million
     restructuring charge relating to the closing of three facilities. Each of
     these facilities has been closed or is scheduled to be closed during fiscal
     1999 and the Company plans to sell these properties. The estimated fair
     value of these properties has been reflected in the March 31, 1999 balance
     sheet as assets held for sale. Additionally, non-recurring wind down costs
     and fixed asset writedowns relating to these facilities has been included
     as plant closing costs in the consolidated statement of income for the
     three months ended March 31, 1999.

                                       6
<PAGE>   7

                              HOLMES PRODUCTS CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

     The following unaudited pro forma data summarizes the Company's results of
     operations for the periods indicated as if the acquisition had been
     completed as of the beginning of the periods presented. These unaudited pro
     forma results have been prepared for comparative purposes only and include
     certain adjustments, such as increased interest expense on acquisition debt
     and additional amortization expense as a result of the goodwill. They do
     not purport to be indicative of the results of operations that actually
     would have resulted had the acquisitions been in effect on January 1, 1998,
     or of future results of operations.

                                               Quarter ended     Quarter ended
     (in thousands)                            March 31, 1998    March 31, 1999
                                               --------------    --------------
                                                          (unaudited)

     Net revenues............................     $115,746           $114,014
     Net earnings (loss).....................       (1,341)            (9,675)



4.   RECAPITALIZATION

     On November 26, 1997, the Company and its stockholders consummated an
     agreement to perform the following: (i) the stockholders of HPFEL
     contributed their shares of common stock to HPC in exchange for 2,750,741
     shares of HPC's common stock (ii) HPC issued 4,718,579 shares of its
     common stock to outside investors and certain executive officers of the
     Company for approximately $15.5 million, net of related issuance costs,
     (iii) the Company repaid all amounts outstanding to Pentland affiliates
     and repaid all amounts outstanding on the Company's trade acceptances,
     including accrued interest, and (iv) HPC redeemed 18,620,450 shares of HPC
     common stock held by Pentland for approximately $62.1 million. In
     connection with these transactions, HPC issued $105.0 million of 9 7/8%
     Senior Subordinated Notes due in November 2007 and borrowed $27.5 million
     under a new line of credit facility.
        
     The transactions described above have been accounted for as a leveraged
     recapitalization of the Company. The Company has retained its historical
     cost basis of accounting, due to the significant minority shareholders
     which remained. The shares redeemed from Pentland have been recorded as
     treasury stock, at cost.

5.   UNAUDITED INTERIM FINANCIAL STATEMENTS

     In the opinion of management, the accompanying unaudited condensed
     consolidated financial statements contain all adjustments, consisting of
     normal recurring accruals, considered necessary for a fair presentation of
     the Company's financial position as of March 31, 1999 and the Company's
     results of operations and cash flows for the three months ended March 31,
     1998 and 1999. This interim financial information and notes thereto should
     be read in conjunction with the Company's Annual Report on Form 10-K and
     its Registration Statement on Form S-4 (file number 333-77905), which
     include or incorporate by reference HPC's audited financial statements
     for the year ended December 31, 1998, as well as certain financial
     statements of Rival. Due to the seasonality of the Company's business, the
     Company's consolidated results of operations for the three month period
     ended March 31, 1999 are not necessarily indicative of the results to be
     expected for any other interim period or the entire fiscal year.
        


                                       7
<PAGE>   8

                              HOLMES PRODUCTS CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

6.   INVENTORIES

     All inventories are stated at the lower of cost or market. Cost is
     determined using the first-in, first-out (FIFO) method on approximately
     75% of the inventories and the last-in, first-out method (LIFO) for the
     remaining 25% of the inventory. Inventories are as follows:
        
                                         December 31, 1998       March 31, 1999
                                         -----------------       --------------

     Finished goods                         $34,620,000           $ 98,944,000
     Raw materials and Work-in-process       18,720,000             52,962,000
                                            -----------           ------------
                                             53,340,000            151,906,000
     Less LIFO allowance                             --                (75,000)
                                            -----------           ------------
                                            $53,340,000           $151,831,000
                                            ===========           ============

7.   LONG-TERM DEBT

     Senior Subordinated Notes

     In connection with the recapitalization transactions described in Note 4
     and the Rival acquisition described in Note 3, HPC issued $105.0 million
     and $31.3 million, respectively, in senior subordinated notes, maturing on
     November 15, 2007 (the "Notes"). The Notes bear interest at 9 7/8%,
     payable semi-annually on May 15 and November 15. No principal is due until
     the maturity date.
        
     The Notes are subordinated to the Company's other debt, including the 
     Credit Facility (as described below) and capital leases. The Notes are
     guaranteed by HPC's current and future domestic subsidiaries (see Note 12)
     on a full, unconditional and joint and several basis, but are otherwise
     unsecured.
        
     HPC can, at its option, redeem the Notes at any time after November 15,
     2002, subject to a fixed schedule of redemption prices which declines from
     104.9% to 100% of the face value. However, HPC may redeem up to $43.3
     million of the Notes prior to such date at a price of 109.875% of face
     value upon issuance of equity securities. Additionally, upon certain sales
     of stock or assets or a change of control of HPC, HPC must offer to
     repurchase all or a portion of the Notes at a redemption price of 101% of
     face value.
        
     The Notes contain certain restrictions and covenants, including
     limitations (based on certain financial ratios) on HPC's ability to pay
     dividends, repurchase stock or incur additional debt (other than
     borrowings under the Credit Facility). The Notes and Credit Facility
     contain cross-default provisions.
        
     Credit Facility

     The Company entered into an amended and restated Credit Facility agreement
     in February, 1999 in connection with the Rival acquisition. The Credit
     Facility consists of a six-year tranche A term loan of $40.0 million, an
     eight-year tranche B term loan of $85.0 million and a $200.0 million,
     six-year revolving credit facility. The Credit Facility bears interest at
     variable rates based on either the prime rate or LIBOR, at the Company's
     option, plus a margin which, in the case of the tranche A term loan and
     the revolving credit facility, varies depending upon certain financial
     ratios of the Company. The Credit Facility, and the guarantees thereof by
     the Company's domestic subsidiaries, are secured by substantially all of
     the Company's domestic and certain foreign assets. The Credit Facility and
     the Notes Indentures include
        

                                       8
<PAGE>   9

                              HOLMES PRODUCTS CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

     certain financial and operating covenants, which, among other things,
     restrict the ability of the Company to incur additional indebtedness, grant
     liens, make investments and take certain other actions. The ability of the
     Company to meet its debt service obligations will be dependent upon the
     future performance of the Company, which will be impacted by general
     economic conditions and other factors. See "Forward-Looking Statements."

     Long term debt consists of the following:
<TABLE>
<CAPTION>
     (in thousands)                                             March 31, 1998     March 31,1999
                                                                --------------     -------------
     <S>                                                            <C>               <C>     
     Credit Facility.........................................       $ 10,000          $195,000
     9 7/8% Senior Subordinated Notes, net of unamortized 
       discount of $1.3 million at 
       March 31, 1999 ($0 in 1998)...........................        105,000           135,000
                                                                    --------          --------
     Total debt..............................................        115,000           330,000
      Less current maturities................................             --             4,838
                                                                    --------          --------
      Long-term debt.........................................       $115,000          $325,162
</TABLE>

8.   COMPREHENSIVE INCOME

     The Company adopted Statement of Financial Accounting Standards No. 130,
     "Reporting Comprehensive Income." This Statement establishes standards for
     reporting comprehensive income and its components in financial statements.
     Comprehensive income consists of net earnings and foreign currency
     translation adjustments as presented in the following table. 

<TABLE>
<CAPTION>
                                                                        Three months ended
     (in thousands)                                               March 31, 1998     March 31,1999
                                                                  --------------     -------------
     <S>                                                                <C>             <C>     

     Net Earnings (loss)..........................................      $286            $(1,353)
     Foreign currency translation adjustments................            (20)               (13)
                                                                        ----            -------

       Comprehensive income....................................         $266            $(1,366)
</TABLE>


9.   BUSINESS SEGMENTS

     The Company manages its operations through four business segments: consumer
     durables, industrial and building supply (industrial), international and
     Far East. The consumer durables segment sells products including fans,
     heaters, humidifiers, air purifiers, Crock-Pot (R) slow cookers, toasters,
     ice cream freezers, can openers, showerheads, massagers, electric space
     heaters and lighting products to retailers throughout the U.S. The consumer
     durables segment is made up of home environment products and kitchen
     electric products and are considered one business segment due to the
     similar customer base and distribution channels. The industrial segment
     sells products including industrial fans and drum blowers, household
     ventilation, ceiling fans, door chimes and electric heaters to electrical
     and industrial wholesale distributors throughout the U.S. The international
     segment sells the Company's products outside the U.S. The Far East segment
     is the manufacturing and sourcing operation located primarily at HPFEL. For
     disclosure purposes, the industrial segment and international segment are
     shown as "Other" as neither segment comprises greater than 10% separately
     or in the aggregate.

     The Company evaluates performance in part based upon operating income, 
     which it defines as gross profit less selling, general and administrative, 
     product development expenses and amortization of goodwill and other 
     intangible assets.



                                       9
<PAGE>   10

                              HOLMES PRODUCTS CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

     Prior to the Rival acquisition as described in Note 3 above, Holmes had two
     business segments: manufacturing and distribution. The information for the
     quarter ended March 31, 1998 has been reclassified to conform to the new 
     presentation.

     Summary financial information for each reportable segment for the
     three-month periods ended March 31, 1999 and 1998 is as follows (in
     thousands):

<TABLE>
<CAPTION>
                                     Consumer                                                     Consolidated
                                     Durables       Far East         Other        Eliminations        Total
                                     --------       --------        -------       ------------    ------------
<S>                                  <C>             <C>            <C>            <C>            <C>           
March 1999
----------
Net sales .......................    $80,333         $32,530        $9,158         $(30,352)        $91,669
Operating income(loss) ..........        270           4,673          (493)            (200)          4,250

March 1998
----------
Net sales .......................    $42,383         $30,809        $  286         $(28,583)        $44,895
Operating income(loss) ..........       (247)          4,626          (119)            (445)          3,815
</TABLE>

     The following information is summarized by geographic area (in thousands):

<TABLE>
<CAPTION>
                                                                                                    Other       Consolidated
                                                                United States    Far East       International      Total
                                                                -------------    --------       -------------   ------------
<S>                                                                <C>            <C>              <C>            <C>
Net sales:
  Three months ended March 31, 1999 ........................       $ 83,767       $ 2,178          $ 5,724        $ 91,669
  Three months ended March 31, 1998 ........................         42,383         2,226              286          44,895

Identifiable assets:
  March 31, 1999 ...........................................        343,277        54,302           17,721         415,300
    Corporate assets at March 31, 1999 .....................                                                        22,011
                                                                                                                  --------
      Total assets at March 31, 1999 .......................                                                       437,311

  December 31, 1998 ........................................         83,384        33,980            4,821         122,185
    Corporate assets at December 31, 1998 ..................                                                         9,172
                                                                                                                  --------
      Total assets at December 31, 1998 ....................                                                      $131,357
</TABLE>

     Net sales are grouped based on the geographic origin of the transaction.
     The "Other International" area is comprised of sales of products that
     originated in Europe, Mexico, Latin America and Canada.

     The Company's manufacturing entities in the Far East sell completed
     products to HPC in the United States at intercompany transfer prices which
     reflect management's estimate of amounts which would be charged by an
     unrelated third party. These sales are eliminated in consolidation. The
     remaining Far East sales are to unrelated third parties.

     Corporate assets at March 31, 1999 and December 31, 1998 represent debt
     issuance costs associated with the Company's senior subordinated notes and
     credit facility. As these borrowings support operations on a worldwide
     basis, these deferred costs have been excluded from the individual
     geographic areas. All of the Company's other assets are used in the
     operations of individual entities in the different geographic areas.
        


                                       10
<PAGE>   11

                              HOLMES PRODUCTS CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

10.  CONTINGENCIES

     The Company is involved in litigation and is the subject of claims arising
     in the normal course of its business. In the opinion of management, based
     upon discussions with legal counsel, no existing litigation or claims will
     have a materially adverse effect on the Company's financial position or
     results of operations and cash flows.

11.  RECLASSIFICATIONS

     Certain amounts in the prior period financial statements have been
     reclassified to conform to the current period presentation.

12.  CONDENSED CONSOLIDATING INFORMATION

     The senior subordinated notes described in Note 7 were issued by HPC and
     are guaranteed by Rival and its three domestic subsidiaries and Holmes
     Manufacturing Corp. ("Manufacturing"), Holmes Motor Corp. ("Motor") and
     Holmes Air (Taiwan) Corp. ("Taiwan"), but are not guaranteed by HPC's other
     subsidiaries, HPFEL and Holmes Air (Canada) Corp. ("Canada"), or Rival's
     five foreign subsidiaries. The guarantor subsidiaries are directly or
     indirectly wholly-owned by HPC, and the guarantees are full, unconditional
     and joint and several. The following condensed consolidating financial
     information presents the financial position, results of operations and cash
     flows of (i) HPC, as parent, as if it accounted for its subsidiaries on the
     equity method, (ii) Rival (on a consolidated basis following its
     acquisition by HPC, including its non-guarantor foreign subsidiaries),
     Manufacturing, Motor and Taiwan, the guarantor subsidiaries, and (iii)
     HPFEL and Canada, the non-guarantor subsidiaries. There were no
     transactions between Rival, Manufacturing, Motor and Taiwan, or between
     HPFEL and Canada, during any of the periods presented. Taiwan had no
     revenues or operations during the periods presented, and Manufacturing
     ceased operations in March 1997. As further described in Note 14 of the
     Company's audited financial statements for the year ended December 31,
     1998, included in the Company's Form 10-K as filed with the Securities and
     Exchange Commission, certain of HPFEL's subsidiaries in China have
     restrictions on distributions to their parent companies.
        


                                       11
<PAGE>   12

          CONSOLIDATING BALANCE SHEET DECEMBER 31, 1998 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                          GUARANTOR    NON-GUARANTOR
                                                             PARENT     SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS  CONSOLIDATED
                                                            --------    ------------   -------------    ------------  ------------

<S>                                                         <C>             <C>            <C>            <C>           <C>     
ASSETS
Current assets:
  Cash and cash equivalents ..............................  $  1,545        $ --           $ 3,834        $     --      $  5,379
  Accounts receivable, net ...............................    35,558          --             1,409              --        36,967
  Inventories ............................................    44,748          --            13,142          (4,550)       53,340
  Prepaid expenses and other current assets ..............       869          --             1,158              --         2,027
  Deferred income taxes ..................................     4,983          --                --              --         4,983
  Income taxes receivable ................................        --          --                --              --            --
  Due from affiliates ....................................       (89)         89            14,066         (14,066)           --
                                                            --------        ----           -------        --------      --------
    Total current assets .................................    87,614          89            33,609         (18,616)      102,696
                                                            --------        ----           -------        --------      --------
Property and equipment,net ...............................     3,132          --            12,520             100        15,752
Deferred income taxes ....................................       563          --                --              --           563
Deposits and other assets ................................    12,020           1               425            (100)       12,346
Investments in consolidated subsidiaries .................    19,677          --                --         (19,677)           --
                                                            --------        ----           -------        --------      --------
                                                            $123,006        $ 90           $46,554        $(38,293)     $131,357
                                                            ========        ====           =======        ========      ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                           
Current liabilities:                                                                                     
  Current portion of capital lease obligations                                                           
   and other debt ........................................  $     --        $ --           $   604        $     --      $    604
  Accounts payable .......................................     2,400          --            12,604              --        15,004
  Accrued expenses .......................................     8,960          --             3,332              --        12,292
  Accrued income taxes ...................................     1,922          --             1,785              --         3,707
  Due to affiliates ......................................    10,113          --             3,953         (14,066)           --
                                                            --------        ----           -------        --------      --------
    Total current liabilities ............................    23,395          --            22,278         (14,066)       31,607
                                                            --------        ----           -------        --------      --------
Capital lease obligations ................................        --          --               139              --           139
                                                            --------        ----           -------        --------      --------
Line of credit ...........................................    10,000          --                --              --        10,000
                                                            --------        ----           -------        --------      --------
Long-term debt ...........................................   105,000          --                --              --       105,000
                                                            --------        ----           -------        --------      --------
Stockholders' equity (deficit):                                                                          
  Common stock,  $.001 par value .........................        10           1                --              (1)           10
  Common stock, $1 par value .............................        --          --               100            (100)           --
  Additional paid in capital .............................    16,985          --                --              --        16,985
  Accumulated other comprehensive income .................       (40)         --                --              --           (40)
  Treasury stock .........................................   (62,058)         --                --              --       (62,058)
  Retained earnings ......................................    29,714          89            24,037         (24,126)       29,714
                                                            --------        ----           -------        --------      --------
    Total stockholders' equity (deficit) .................   (15,389)         90            24,137         (24,227)      (15,389)
                                                            --------        ----           -------        --------      --------
                                                            $123,006        $ 90           $46,554        $(38,293)     $131,357
                                                            ========        ====           =======        ========      ========
</TABLE>



                                       12
<PAGE>   13




            CONSOLIDATING BALANCE SHEET MARCH 31, 1999 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          GUARANTOR    NON-GUARANTOR
                                                             PARENT     SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS  CONSOLIDATED
                                                            --------    ------------   -------------    ------------  ------------

<S>                                                         <C>           <C>              <C>            <C>           <C>     
ASSETS
Current assets:
  Cash and cash equivalents ..............................  $  1,158      $      --        $ 1,912        $      --     $   3,070
  Accounts receivable, net ...............................    28,336         62,412          1,461               --        92,209
  Inventories ............................................    44,621         99,056         12,704           (4,550)      151,831
  Prepaid expenses and other current assets ..............       512            826          2,538               --         3,876
  Deferred income taxes ..................................     4,983          6,517             --               --        11,500
  Income taxes receivable ................................        --          3,544             --               --         3,544
  Due from affiliates ....................................   264,040             89         20,668         (284,797)           --
                                                            --------      ---------        -------        ---------     ---------
    Total current assets .................................   343,650        172,444         39,283         (289,347)      266,030
                                                            --------      ---------        -------        ---------     ---------

Assets held for sale .....................................        --          5,031             --               --         5,031
Property and equipment,net ...............................     2,888         34,754         12,741             (100)       50,283
Goodwill .................................................        --         85,597             --               --        85,597
Deferred income taxes ....................................       563             --             --               --           563
Deposits and other assets ................................    25,903          4,360            444             (900)       29,807
Investments in consolidated subsidiaries .................    26,283             --             --          (26,283)           --
                                                            --------      ---------        -------        ---------     ---------
                                                            $399,287      $ 302,186        $52,468        $(316,630)    $ 437,311
                                                            ========      =========        =======        =========     =========
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                     
Current liabilities:                                                                                     
  Current portion of capital lease obligations                                                           
   and other debt ........................................  $     --      $      --        $   439        $      --     $     439
  Current portion of credit facility .....................     4,838             --             --               --         4,838
  Accounts payable .......................................     3,191         13,717         13,993             (900)    $  30,001
  Accrued expenses .......................................    14,116         18,547          2,534               --        35,197
  Accrued income taxes ...................................      (448)         1,544          2,389               --         3,485
  Due to affiliates ......................................    18,429        264,160          2,208         (284,797)           --
                                                            --------      ---------        -------        ---------     ---------
    Total current liabilities ............................    40,126        297,968         21,563         (285,697)       73,960
                                                            --------      ---------        -------        ---------     ---------
Capital lease obligations ................................        --             --            139               --           139
                                                            --------      ---------        -------        ---------     ---------
Credit facility ..........................................   190,162             --             --               --       190,162
                                                            --------      ---------        -------        ---------     ---------
Long-term debt ...........................................   135,000             --             --               --       135,000
                                                            --------      ---------        -------        ---------     ---------
Deferred income taxes ....................................        --          4,051             --               --         4,051
                                                            --------      ---------        -------        ---------     ---------
Stockholders' equity:                                                                                    
  Common stock, $.001 par value ..........................        20              2             --               (2)           20
  Common stock, $1 par value .............................        --             --            100             (100)           --
  Additional paid in capital..............................    67,715             --             --               --        67,715
  Accumulated other comprehensive income..................       (53)            ---            --               --           (53)
  Treasury stock .........................................   (62,058)            --             --               --       (62,058)
  Retained earnings ......................................    28,375            165         30,666          (30,831)       28,375
                                                            --------      ---------        -------        ---------     ---------
    Total stockholders' equity ...........................    33,999            167         30,766          (30,933)       33,999
                                                            --------      ---------        -------        ---------     ---------
                                                            $399,287      $ 302,186        $52,468        $(316,630)    $ 437,311
                                                            ========      =========        =======        =========     =========
</TABLE>



                                       13
<PAGE>   14

                         CONSOLIDATING INCOME STATEMENT
                THREE MONTHS ENDED MARCH 31, 1998 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         GUARANTOR    NON-GUARANTOR
                                                             PARENT    SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS  CONSOLIDATED
                                                            --------   ------------   -------------    ------------  ------------

<S>                                                         <C>            <C>           <C>             <C>           <C>     
Net sales ..............................................    $42,383        $ --          $31,095         $(28,583)     $ 44,895
Cost of goods sold .....................................     34,747          --           24,221          (28,138)       30,830
                                                            -------        ----          -------         --------      --------
  Gross profit .........................................      7,636          --            6,874             (445)       14,065
                                                            -------        ----          -------         --------      --------
Operating expenses:                                                                                    
  Selling ..............................................      4,658          --              189               --         4,847
  General and administrative ...........................      1,540          --            2,172               --         3,712
  Product development ..................................      1,685          --                6               --         1,691
                                                            -------        ----          -------         --------      --------
    Total operating expenses ...........................      7,883          --            2,367               --        10,250
                                                            -------        ----          -------         --------      --------
    Operating profit (loss) ............................       (247)         --            4,507             (445)        3,815
                                                            -------        ----          -------         --------      --------
Other income (expense):                                                                                
  Interest and other income (expense), net .............     (3,502)         --               69               --        (3,433)
                                                            -------        ----          -------         --------      --------

Income (loss) before income taxes and equity                                                           
 in income of consolidated subsidiaries ................     (3,749)         --            4,576             (445)          382
Income tax expense (benefit) ...........................       (386)         --              459               23            96
                                                            -------        ----          -------         --------      --------
Income (loss) before equity in income of                                                               
 Consolidated subsidiaries .............................     (3,363)         --            4,117             (468)          286
Equity in income of consolidated subsidiaries ..........      3,649          --               --           (3,649)           --
                                                            -------        ----          -------         --------      --------
                                                                                                       
Net income .............................................    $   286        $ --          $ 4,117         $ (4,117)     $    286
                                                            =======        ====          =======         ========      ========
</TABLE>







                                       14
<PAGE>   15



                         CONSOLIDATING INCOME STATEMENT
                THREE MONTHS ENDED MARCH 31, 1999 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         GUARANTOR    NON-GUARANTOR
                                                             PARENT    SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS  CONSOLIDATED
                                                            --------   ------------   -------------    ------------  ------------

<S>                                                          <C>         <C>             <C>             <C>            <C>     
Net sales ...............................................    $48,063     $40,233         $33,725         $(30,352)      $91,669
Cost of goods sold ......................................     38,274      29,881          26,745          (30,152)       64,748
                                                             -------     -------         -------         --------       -------
  Gross profit ..........................................      9,789      10,352           6,980             (200)       26,921
                                                             -------     -------         -------         --------       -------
Operating expenses:                                                                                   
  Selling ...............................................      6,498       6,252             422               --        13,172
  General and administrative ............................      1,936       1,737           2,012               --         5,685
  Product development ...................................      1,639         562              18               --         2,219
  Plant closing costs ...................................         --       1,149              --               --         1,149
  Amortization of goodwill and other                                                                  
    intangible assets ...................................         --         446              --               --           446
                                                             -------     -------         -------         --------       -------
    Total operating expenses ............................     10,073      10,146           2,452               --        22,671
                                                             -------     -------         -------         --------       -------
    Operating profit (loss) .............................       (284)        206           4,528             (200)        4,250
                                                             -------     -------         -------         --------       -------
Other (income) and expense:                                                                           
  Interest and other (income) expense, net ..............      6,596         (86)           (461)              --         6,049
                                                             -------     -------         -------         --------       -------
Income (loss) before income taxes, equity in                                                          
  income of consolidated subsidiaries and                                                             
  equity in earnings from joint venture .................     (6,880)        292           4,989             (200)       (1,799)
Equity in earnings from  joint venture ..................        108          --              --               --           108
Income tax expense (benefit) ............................       (747)        216             193               --          (338)
                                                             -------     -------         -------         --------       -------
                                                                                                      
Income (loss) before equity in income of                                                              
  consolidated subsidiaries .............................     (6,025)         76           4,796             (200)       (1,353)
Equity in income of consolidated subsidiaries ...........      4,672          --              --           (4,672)           --
                                                             -------     -------         -------         --------       -------
                                                                                                      
Net income (loss) .......................................    $(1,353)    $    76         $ 4,796         $ (4,872)      $(1,353)
                                                             =======     =======         =======         ========       =======
</TABLE>






                                       15
<PAGE>   16

                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
            THREE MONTHS ENDED MARCH 31, 1998 AND 1999 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                        GUARANTOR    NON-GUARANTOR
                                                                         PARENT       SUBSIDIARIES    SUBSIDIARIES     CONSOLIDATED
                                                                       ---------      ------------   -------------     ------------
<S>                                                                    <C>              <C>              <C>            <C>      
THREE MONTHS ENDED MARCH 31, 1998
Net cash provided by operating activities ......................       $   8,990        $      --        $ 5,785        $  14,775
                                                                       ---------        ---------        -------        ---------
Cash flows from investing activities:
  Purchases of property and equipment ..........................          (1,356)              --           (208)          (1,564)
                                                                       ---------        ---------        -------        ---------

Cash flows from financing activities:
  Debt issuance costs ..........................................            (194)              --             --             (194)
  Net repayment of line of credit ..............................          (7,500)              --         (1,002)          (8,502)
  Principal payments on capital lease obligations ..............              --               --           (172)            (172)
  Other net activity with Parent ...............................             527               --           (527)              --
                                                                       ---------        ---------        -------        ---------
    Net cash used for financing activities .....................          (7,167)              --         (1,701)          (8,868)
                                                                       ---------        ---------        -------        ---------

Net increase in cash and cash equivalents ......................             467               --          3,876            4,343
Cash and cash equivalents, beginning of period .................           3,741               --          1,400            5,141
                                                                       ---------        ---------        -------        ---------
Cash and cash equivalents, end of period .......................       $   4,208        $      --        $ 5,276        $   9,484
                                                                       =========        =========        =======        =========
THREE MONTHS ENDED MARCH 31, 1999

Net cash provided by operating activities ......................       $  13,469        $  20,017        $(5,315)       $  28,171
                                                                       ---------        ---------        -------        ---------
Cash flows from investing activities:
  Acquisition of business, net of cash acquired ................        (279,546)              --             --         (279,546)
  Contribution in joint venture ................................             (25)              --             --              (25)
  Distribution of earnings from joint venture ..................             108               --             --              108
  Purchases of property and equipment ..........................            (323)          (1,204)        (1,268)          (2,795)
                                                                       ---------        ---------        -------        ---------
                                                                        (279,786)          (1,204)        (1,268)        (282,258)
                                                                       ---------        ---------        -------        ---------
Cash flows from financing activities:
  Net repayment of line of credit ..............................         (10,000)              --             --          (10,000)
  Issuance of common stock .....................................          50,400               --             --           50,400
  Borrowings of long-term debt, net of issuance costs ..........          27,724               --             --           27,724
  Borrowings on credit facility, net of issuance costs .........         183,808               --             --          183,808
  Principal payments on capital lease obligations ..............              --               --           (165)            (165)
  Other net activity with Parent ...............................          13,987          (18,813)         4,826               --
                                                                       ---------        ---------        -------        ---------
    Net cash used for financing activities .....................         265,919          (18,813)         4,661          251,767
                                                                       ---------        ---------        -------        ---------

Effect of exchange rate changes on cash ........................              11               --             --               11 
                                                                       ---------        ---------        -------        ---------

Net increase in cash and cash equivalents ......................            (387)              --         (1,922)          (2,309)
Cash and cash equivalents, beginning of period .................           1,545               --          3,834            5,379
                                                                       ---------        ---------        -------        ---------
Cash and cash equivalents, end of period .......................       $   1,158        $      --        $ 1,912        $   3,070
                                                                       =========        =========        =======        =========
</TABLE>






                                       16
<PAGE>   17

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

OVERVIEW

Holmes is a leading developer, manufacturer and marketer of quality, branded
home comfort products, including fans, heaters, humidifiers and air purifiers.
Holmes believes it has the leading U.S. market share in each of these product
categories.

On February 5, 1999 Holmes completed its acquisition of Rival, a leading
developer, manufacturer and marketer of a variety of products including small
kitchen, home environment and personal care appliances. In connection with the
acquisition, as described in Note 3 of the Company's Notes to Consolidated
Financial Statements included herein, the Company issued $31.3 million of senior
subordinated noted due in November 2007, bearing interest at 9 7/8%, and amended
and restated its existing $100 million credit facility to have a total
availability of $325 million. The Company also sold $50 million of common stock
in a private placement to investment funds affiliated with Berkshire Partners
LLC (Holmes' majority shareholder), and to members of Holmes' management and
certain other co-investors. The initial borrowings of the credit facility,
together with the net proceeds of the equity investment and the offering of the
Notes, were used to consummate the Rival acquisition, refinance Rival's then
existing indebtedness, and pay the fees and expenses of the transaction.

The Company had completed a recapitalization transaction in November 1997, in
which the Company issued $105.0 million of senior subordinated notes due in
November 2007, bearing interest at 9 7/8%, and entered into a $100.0 million
line of credit facility, of which approximately $27.5 million was initially
drawn. The proceeds of these borrowings were used to repay all existing
indebtedness (primarily a line of credit and other current debt facilities) and
redeem a significant portion of the previous majority shareholder's common
stock.

Accordingly, commencing in November 1997, the Company had a significantly higher
level of borrowing and a corresponding higher level of interest expense than in
the past. The Rival acquisition and the related financing transactions
consummated on February 5, 1999 further increased the Company's indebtedness and
will further increase interest expense substantially.

Sales of most of the Company's products follow seasonal patterns that affect the
Company's results of operations. In general, the Company's sales of fans occur
predominantly from January through June, and the Company's sales of heaters and
humidifiers occur predominantly from July through December. Although air
purifiers, lighting products and accessories generally are used year-round,
these products tend to draw increased sales during the winter months when people
are indoors and, as a result, the Company's sales of these products tend to be
greatest in advance of the winter months from July through December. A
significant percentage of the products sold by Rival are given as gifts and, as
such, sales volumes are higher in anticipation of the holiday season. In
addition to the seasonal fluctuations in sales, the Company experiences
seasonality in gross profit, as margins realized on fan products tend to be
lower than those realized on heater, humidifier and air purifier products.  

The Company's results of operations and balance sheet reflect the acquisition of
Rival, in accordance with purchase accounting, from the consumation of the
acquisition on February 5, 1999. Rival's size relative to Holmes signficantly
influences comparisons between periods before and after the Rival acquisition.

COMPARISON OF THREE MONTH PERIODS ENDED MARCH 31, 1999 AND MARCH 31, 1998

Net Sales. Net sales for the first quarter of fiscal 1999, which ended March 31,
1999, were $91.7 million compared to $44.9 million for the first quarter of
fiscal 1998, which ended March 31, 1998, an increase of $46.8 million or 104.2%.
Approximately $40.2 million, or 85.9%, of the increase in net sales can be
attributed to the Rival acquisition. In addition, an increase in sales of
Holmes' products of approximately $6.6 million is attributable to several larger
customers taking their fan shipments earlier than in the previous year, as well
as increases in heater and humidifier sales and accessory sales. As the increase
in fan sales is largely due to the timing of customer orders, management
anticipates fan sales in the second quarter of 1999 to remain flat or decline
slightly from the comparable 1998 period. The increase in heater, humidifier and
accessory sales can be attributed to the more seasonable winter weather
experienced throughout the United States in the first quarter of 1999 versus the
same period in 1998. 



                                       17
<PAGE>   18
 Gross Profit. Gross profit for the first quarter of 1999 was $26.9 million
compared to $14.1 million for the first quarter of 1998, an increase of $12.8
million or 90.8%. As a percentage of net sales, gross profit decreased to 29.3%
for the first quarter of 1999 from 31.4% for the first quarter of 1998. The
overall decrease in gross profit as a percentage of net sales is due to the
Rival acquisition, as certain of Rival's products have historically had slightly
lower margins than Holmes' product categories. On a stand alone basis, Holmes'
gross profit increased from 31.4% to 32.3% in the first quarter of 1999 versus
1998 primarily due to the above-mentioned increases in net sales of heaters,
humidifiers and accessories, which are the higher margin products. 

Selling Expenses. Selling expenses for the first quarter of 1999 were $13.2
million compared to $4.8 million for the first quarter of 1998, an increase of
$8.4 million or 175.0%, primarily as a result of the Rival acquisition, which
accounted for approximately $6.1 million of the increase. As a percentage of net
sales, selling expenses increased to 14.4% for the first quarter of 1999 from
10.7% for the first quarter of 1998. In addition to the Rival impact, the
increase in selling expenses is due to an increase in the warranty reserve for
potential heater returns and potential product recalls, as well as increased
expenditures in the customer service department related to the increase in
accessory sales. To a lesser extent, shipping costs increased as a result of the
higher sales level. In addition, salaries and related benefits and travel costs
were higher as the Company continues to build an infrastructure to support the
integration of Rival. 

General and Administrative Expenses. General and administrative expenses for the
first quarter of 1999 were $5.7 million compared to $3.8 million for the first
quarter of 1998, an increase of $1.9 million or 50.0%. As a percentage of net
sales, general and administrative expenses decreased to 6.2% for the first
quarter of 1999 from 8.3% for the first quarter of 1998. The increase in dollars
and the decrease as a percentage of net sales is primarily attributable to the
Rival acquisition. Additionally, the increase in dollars was due to Holmes
incurring general and administrative expenses for integration consulting
services in connection with the Rival acquisition.

Product Development Expenses. Product development expenses for the first quarter
of 1999 were $2.2 million compared to $1.7 million for the first quarter of
1998, an increase of $0.5 million or 29.4%. As a percentage of net sales,
product development expenses decreased to 2.4% for the first quarter of 1999
from 3.8% for the first quarter of 1998. The increased expenditures and the
related decrease as a percentage of net sales was primarily due to the Rival
acquisition.

Plant Closing Costs. The Company recorded $1.1 million in plant closing costs
associated with Rival's previously announced closing of its New Haven, Indiana
and Fayetteville, North Carolina plants. Approximately $0.6 million related to
the expenses associated with the wind down of these two facilities and $0.5
million related to the write down of fixed assets at these facilities.

Interest and Other Expense, Net. Interest and other expense, net for the first
quarter of 1999 was $6.0 million compared to $3.8 million for the first quarter
of 1998, an increase of $2.2 million or 57.9%. The increase in interest expense
is primarily due to the additional borrowings resulting from the new debt
associated with the Rival acquisition.

Income Tax Expense (Benefit). Income tax expense (benefit) changed from an
expense of $0.1 million in the first quarter of 1998 to a benefit of $0.3
million in the first quarter of 1999, as a result of the Company reporting a
loss in the first quarter of 1999 as compared to income in the first quarter of
1998. The Company provides for taxes using a projected worldwide effective tax
rate of 20% for the entire year.

Net Income. As a result of the foregoing factors, net loss for the first quarter
of 1999 was $1.4 million, compared to net income of $0.3 million in the first
quarter of 1998.



                                       18
<PAGE>   19

LIQUIDITY AND CAPITAL RESOURCES

Following the recapitalization transaction in November, 1997 and the Rival
acquisition in February, 1999, the Company is funding its liquidity requirements
with cash flows from operations and borrowings under its Credit Facility. The
primary liquidity requirements are for working capital and to service the
Company's indebtedness. The Company believes that existing cash resources, cash
flows from operations and borrowings under the Credit Facility will be
sufficient to meet the Company's liquidity needs for the foreseeable future.

Cash provided by operations for the three months ended March 31, 1998 and 1999
was $14.8 million and $28.0 million, respectively. Cash provided by operations
in the first quarter of 1999 primarily reflected a $21.9 million decrease in
accounts receivable. Accounts receivable levels decreased significantly in the
first quarter of 1999 as heavy cash collection activity typically follows the
seasonally higher sales activity during the September to December time period.
To a lesser extent, the decrease was due to an increase in shipments to
customers from the Company's manufacturing facilities in the Far East, which are
paid on faster terms than shipments from the Company's U.S. warehouses.
Additionally, the Company has continued to increase its focus and administrative
support in the credit and collections area, which has positively impacted
accounts receivable balances. The increase in accrued expenses is attributable
to the interest on the additional long-term debt issued (which is payable
semi-annually in May and November) and the amended and restated Credit Facility
entered into as part of the Rival acquisition. 

Cash provided by (used for) financing activities for the three months ended
March 31, 1998 and 1999 was $(8.9) million and $251.8 million, respectively.
Cash used for financing in the first quarter of 1998 reflected repayments of the
line of credit using cash flows from operations. The cash provided by financing
activities in the first quarter of 1999 reflected the borrowings on the amended
and restated credit facility and the issuance of common stock associated with
the Rival acquisition.

The Company's capital expenditures, including assets acquired under capital
leases, for the three months ended March 31, 1998 and 1999 were $1.6 million and
$2.8 million, respectively, primarily for molds and tooling.

The Company issued $105.0 million of 9 7/8% Senior Subordinated Notes due
November, 2007 (the "Notes") in November, 1997, and an additional $31.3 million
of Notes in February, 1999. The Notes are not redeemable at the Company's option
prior to November 15, 2002. Thereafter, the Notes are subject to redemption at
any time at the option of the Company, in whole or in part, at stated redemption
prices. Annual interest payments on the Notes are approximately $13.5 million.
The payment of principal and interest on the Notes is subordinated to the prior
payment in full of all senior debt of the Company, including borrowings under
the Credit Facility.

The Company entered into the Credit Facility in February, 1999. The Credit
Facility amended and restated the Company's prior $100.0 million credit
facility. The Credit Facility consists of a six-year tranche A term loan of
$40.0 million, an eight-year tranche B term loan of $85.0 million and $200.0
million, six-year revolving credit facility. The Credit Facility bears interest
at variable rates based on either the prime rate or LIBOR, at the Company's
option, plus a margin which, in the case of the tranche A term loan and the
revolving credit facility, varies depending upon certain financial ratios of the
Company. The Credit Facility, and the guarantees thereof by the Company's
domestic subsidiaries, are secured by substantially all of the Company's
domestic and certain foreign assets. The Credit Facility and the Notes
Indentures include certain financial and operating convenants, which, among
other things, restrict the ability of the Company to incur additional
indebtedness, grant liens, make investments and take certain other actions. The
ability of the Company to meet its debt service obligations will be dependent
upon the future performance of the Company, which will be impacted by general
economic conditions and other factors. See "Forward-Looking Statements."


                                       19
<PAGE>   20

YEAR 2000

The Year 2000 problem relates to computer systems that have time and
date-sensitive programs that were designed to read years beginning with "19",
but may not properly read the Year 2000. If a system used by the Company or by
a third party fails because of the inability to properly read the Year 2000
date, the results could have a material adverse effect on the Company. As
described below, Holmes and Rival have developed plans to address the possible
exposures related to their computer systems from the Year 2000. However, there
can be no assurance that such measures will be sufficient to avoid Year 2000-
related problems.

The Company has identified its Year 2000 risk to be in two general categories:
Information Technology Systems, including Electronic Data Interchange Systems
(EDI), and General Business Systems.

Information Technology Systems Including EDI. Holmes is currently in the
process of transitioning to Rival's computer software system. The system is
fully Year 2000 compliant, according to the vendor, and the Company anticipates
that it will be operational by the end of the third quarter of 1999. In
addition, all of Holmes' computer hardware has been or is in the process of
being tested for Year 2000 compliance. Those systems that fail will be upgraded
or replaced during the second quarter of 1999. As part of its transition to the
Rival system, Holmes is implementing a new EDI system that will be fully Year
2000 compliant to prevent any interruption of data interchange from the many
customers using this platform. Holmes anticipates that this system will be
completed during the second quarter of 1999. Holmes intends to use both
internal and external resources to test, reprogram or replace the software and
hardware for Year 2000 modifications. The total specific project costs are
difficult to determine as many of the upgrades and new implementations would
have been made regardless of the Year 2000 issue. The majority of project
costs, related to the purchase of hardware and software to meet both Year 2000
and company specific requirements, will be capitalized. All other remaining
project costs will be expensed during 1999 and 2000.

Rival implemented its current corporate computer system in 1995. The system is
Year 2000 compliant, according to the vendor as confirmed by full systems 
testing performed on August 8, 1998. The testing included rolling the date
forward to January 15, 2000 and testing all function programs. The EDI system
installation was completed by September 30, 1998. Rival has used both internal
and external resources for testing. EDI transactions sets have been verified
and registered with the National Retailers Foundation. Rival believes that any
additional issues with computers are limited to stand alone personal computers.
The upgrade of these computers is expected to be completed by June 30, 1999.

General Business Systems. Holmes' general business systems encompass the
following: telecommunications systems, departmental specific application
systems, machinery and equipment, building and utility systems and, finally,
third party vendors and service providers. Holmes has created a Year 2000
committee consisting of one member from each department. The committee is in
the final stages of reviewing all aspects of Holmes' business systems to
determine if they are Year 2000 compliant, and testing systems as necessary.
This process will continue through the second quarter of 1999.

Holmes has sent out a comprehensive questionnaire to all significant customers
and suppliers regarding their Year 2000 compliance. The questionnaires that
Holmes has received back to date have tended to provide only vague assurances
regarding Year 2000 matters, however. While Holmes intends to carefully monitor
its supplier risks, Holmes cannot fully control each supplier, and there can be
no guarantee that a Year 2000 problem that may originate with a supplier will
not materially adversely affect Holmes. Holmes has not designed a specific
contingency plan in the event of a Year 2000 failure caused by a supplier or
other third party, but is working to identify issues as soon as possible.
Finally, Holmes has determined that products that the Company manufactures and
sells have no exposure related to the Year 2000 issue.

Rival's business systems encompass the following: telecommunications systems,
machinery and equipment, building and utility systems and third party vendors
and service providers. Rival created a cross-departmental Year 2000 committee
in 1997. The committee reviewed all aspects of Rival's business systems to
determine if they are Year 2000 compliant. Any vendor supplying goods and/or
services to Rival was required to submit a letter stating their Year 2000
status. Rival has determined that products that it manufactures and sells have
no exposure to the Year 2000 issue.



                                       20
<PAGE>   21

FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical fact, included in this
quarterly report, are or may be forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects," and similar expressions are
intended to identify forward-looking statements. Various economic and
competitive factors could cause actual results or events to differ materially
from those discussed in such forward-looking statements, including without
limitation, the integration of the Rival acquisition, recent declines in the
sales of many of Rival's products, the Company's degree of leverage, its
dependence on major customers and key personnel, competition, risks associated
with foreign and domestic sourcing and manufacturing, risks of the retail
industry, potential product liability claims or recalls, the cost of labor and
raw materials and the other factors discussed in the Company's filings with the
Commission, such as its Registration Statement on Form S-4 (file number
333-77905). Accordingly, such forward-looking statements do not purport to be
predictions of future events or circumstances and may not be realized.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         At March 31, 1999, the carrying value of the Company's debt totaled
         $330.6 million, which approximated its fair value. This debt includes
         amounts at both fixed and variable interest rates. For fixed rate
         debt, interest rate changes affect the fair market value but do not
         impact earnings or cash flows. Conversely, for variable rate debt,
         interest rate changes generally do not affect the fair maket value but
         do impact earnings and cash flows, assuming other factors are held
         constant.
        
         At March 31, 1999, the Company had fixed rate debt of $135.6 million
         (including capital leases) and variable rate debt of $195.0 million.
         Holding other variables constant (such as foreign exchange rates and
         debt levels), a one percentage point decrease in interest rates would
         increase the unrealized fair market value of fixed rate debt by
         approximately $7.5 million. Based on the amount of variable rate debt
         outstanding at March 31, 1999, the earnings and cash flow impact for
         the next twelve months resulting from a one percentage point increase
         in interest rates would be approximately $1.4 million, net of tax,
         holding other variables constant.
        
PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company is involved in various legal and similar proceedings 
         arising in the ordinary course of the Company's business, including
         product liability and patent and trademark litigation and product
         recalls. Management believes that the resolution of these matters will
         not materially affect the Company's financial position or results of
         operations.
        
ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         On February 5, 1999, in connection with and to help finance its
         acquisition of Rival, the Company issued and sold 9,922,243 shares of
         its Common Stock, $0.001 par value, at a price of $5.03918 per share,
         for an aggregate consideration of $50.0 million. The shares were sold
         in a private placement to the Company's existing shareholders, certain
         of their affiliates, and certain members of management, pursuant to the
         exemption afforded by Section 4(2) of the Securities Act of 1933, as
         amended.
        
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.

ITEM 5.  OTHER INFORMATION

         The Company has filed a Registration Statement with the Commission
         relating to the exchange of $31.3 million aggregate principal amount
         of its Series D Senior Subordinated Notes due 2007 for an equal amount
         of Series C Senior Subordinated Notes due 2007 issued in connection
         with the Rival acquisition. The Series D Notes will be issued on the
         same terms as the Series C Notes. There will be no proceeds to the
         Company resulting from the exchange.
        


                                       21
<PAGE>   22

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a.       Exhibits:  27.1 Financial Data Schedule

         b.       Reports on Form 8-K:

                  1.       Current Report on Form 8-K dated January 25, 1999
                           reporting under Item 5, Other Events, certain 
                           information disclosed in connection with the
                           Company's private placement of Series C Notes.

                  2.       Current Report on Form 8-K dated February 5, 1999
                           reporting under Item 2, Acquisition or Disposition of
                           Assets, the closing of the Company's acquisition of
                           Rival.






                                       22
<PAGE>   23

                                   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.

                                            HOLMES PRODUCTS CORP.
                                            ------------------------------------
                                            Registrant


May 14, 1999                                By: /s/ Jordan A. Kahn
                                                --------------------------------
                                                Jordan A. Kahn, President,
                                                Chief Executive Officer
                                                (Principal Executive Officer)

May 14, 1999                                By: /s/ Ira B. Morgenstern
                                                --------------------------------
                                                Ira B. Morgenstern,
                                                Senior Vice President of Finance
                                                (Principal Financial and 
                                                Accounting Officer)








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