<PAGE>   1


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                    FORM 10-Q


(MARK ONE)

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 

                                               OR

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

FOR THE TRANSITION PERIOD FROM            TO
                               ----------    -----------

                          Commission File Number 1-6098


                             DANIEL INDUSTRIES, INC.
                             -----------------------
             (Exact name of registrant as specified in its charter)

            DELAWARE                                    74-1547355             
  -------------------------------          ------------------------------------
  (State or other jurisdiction of          (I.R.S. Employer Identification No.)
  incorporation or organization)

                   9753 Pine Lake Drive, Houston, Texas 77055
                   ------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                  713-467-6000
                                  ------------
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X  No   .
                                              ---   ---

         On May 11, 1999, there were outstanding 19,482,588 shares of Common
Stock, $1.25 par value, of the registrant.


<PAGE>   2


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                             DANIEL INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEET
                      (in thousands except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                March 31,    December 31,
                                                                                   1999          1998
                                                                                ---------    ------------
<S>                                                                             <C>          <C>         
                                          ASSETS
  Current assets:
      Cash and cash equivalents .............................................   $  10,118    $      7,506
      Receivables, net of reserve of $1,712 and $1,756 ......................      62,339          64,867
      Costs and estimated earnings in excess of billings
             on uncompleted contracts .......................................       7,325           6,313
      Inventories ...........................................................      47,467          47,905
      Deferred taxes on income ..............................................       5,096           5,043
      Other .................................................................       4,010           2,971
                                                                                ---------    ------------
             Total current assets ...........................................     136,355         134,605
  Property, plant and equipment, net ........................................      64,872          65,592
  Intangibles and other assets ..............................................      35,233          36,227
                                                                                ---------    ------------
             Total assets ...................................................   $ 236,460    $    236,424
                                                                                =========    ============

                           LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Notes payable ...........................................................   $   6,668    $      5,857
    Current maturities of long-term debt ....................................       4,781           4,756
    Accounts payable ........................................................      15,718          16,046
    Accrued liabilities .....................................................      23,101          27,552
                                                                                ---------    ------------
           Total current liabilities ........................................      50,268          54,211
Long-term debt ..............................................................      33,304          30,639
Deferred taxes on income ....................................................       6,345           6,202
                                                                                ---------    ------------
           Total liabilities ................................................      89,917          91,052
                                                                                ---------    ------------

Stockholders' equity:
    Preferred stock, $1.00 par value, 1,000 shares authorized, 150
           shares designated as Series A junior participating
           preferred stock, no shares issued or outstanding .................          --              -- 
    Common  stock, $1.25 par value, 40,000 shares authorized,
           17,719 and 17,508 shares issued ..................................      22,083          21,885
Capital in excess of par value ..............................................      99,532          96,839
Accumulated other comprehensive income (loss) ...............................      (6,233)         (4,690)
Retained earnings ...........................................................      31,161          31,338
                                                                                ---------    ------------
           Total stockholders' equity .......................................     146,543         145,372
                                                                                ---------    ------------
           Total liabilities and stockholders' equity .......................   $ 236,460    $    236,424
                                                                                =========    ============
</TABLE>

     See accompanying Notes to Consolidated Condensed Financial Statements.


                                       2
<PAGE>   3


                             DANIEL INDUSTRIES, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      (in thousands except per share data)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                             Quarter Ended March 31,
                                                             -----------------------
                                                              1999             1998
                                                             -------         -------
<S>                                                          <C>             <C>    
Revenues .................................................   $62,013         $67,210
                                                             -------         -------
Costs, expenses and other income:
     Cost of sales .......................................    39,134          41,553
     Selling, engineering and administrative expenses ....    20,575          18,077
     Research and development expenses ...................     1,012           1,143
     Interest and other expenses .........................       321             449
                                                             -------         -------
           Total costs, expenses and other income ........    61,042          61,222
                                                             -------         -------

Income before income tax expense .........................       971           5,988

Income tax expense .......................................       359           2,246
                                                             -------         -------

Net income ...............................................   $   612         $ 3,742
                                                             =======         =======

Basic earnings per common share ..........................   $   .03         $   .22
                                                             =======         =======
Diluted earnings per common share ........................   $   .03         $   .21
                                                             =======         =======
Cash dividends per common share ..........................   $  .045         $  .045
                                                             =======         =======
Average shares outstanding ...............................    17,530          17,331
                                                             =======         =======
Average diluted shares outstanding .......................    17,678          18,053
                                                             =======         =======
</TABLE>

                             DANIEL INDUSTRIES, INC.
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                 (in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                             Quarter Ended March 31,
                                                             -----------------------
                                                              1999             1998
                                                             -------         -------
<S>                                                          <C>             <C>     
Net income................................................   $   612         $ 3,742
Other comprehensive income (loss):
      Foreign currency translation adjustments............    (1,543)            506
                                                             -------         -------
Comprehensive income (loss)...............................   $  (931)        $ 4,248
                                                             =======         =======
</TABLE>

     See accompanying Notes to Consolidated Condensed Financial Statements.


                                       3
<PAGE>   4


                             DANIEL INDUSTRIES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Condensed)
                                 (in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                          Quarter Ended March 31,
                                                                       ----------------------------
                                                                         1999                1998
                                                                       --------            --------
<S>                                                                    <C>                 <C>     
Cash flows from operating activities:
    Net income........................................................ $    612            $  3,742
       Adjustments to reconcile net income to net cash used
       in operating activities:
           Depreciation and amortization..............................    2,842               2,268
           Changes in operating assets and liabilities................   (3,428)             (3,009)
                                                                       --------            --------
 Net cash provided by operating activities............................       26               3,001
                                                                       --------            --------

Cash flows from investing activities:
    Capital expenditures..............................................   (2,325)             (3,277)
    Proceeds from sales of assets.....................................      107                 657
                                                                       --------            --------
Net cash used in investing activities.................................   (2,218)             (2,620)
                                                                       --------            --------

Cash flows from financing activities:
    Net borrowings (payments) under notes payable.....................      844              (1,168)
    Payments on long-term debt........................................   (5,210)                929
    Borrowings on long-term debt......................................    8,000                  --
    Cash dividends paid...............................................     (789)               (781)
    Activity under stock option plans.................................    2,891                 560
                                                                       --------            --------
Net cash provided by (used in) financing activities...................    5,736                (460)
                                                                       --------            --------

Effect of exchange rate changes on cash...............................     (932)                 59
                                                                       --------            --------

Increase(decrease) in cash and cash equivalents.......................    2,612                 (20)

Cash and cash equivalents, beginning of period........................    7,506               7,563
                                                                       --------            --------
Cash and cash equivalents, end of period.............................. $ 10,118            $  7,543
                                                                       ========            ========
</TABLE>


     See accompanying Notes to Consolidated Condensed Financial Statements.


                                       4
<PAGE>   5


              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Note 1 - General

         The foregoing financial statements have been prepared from the books
and records of Daniel Industries, Inc. ("Daniel" or the "Company") without
audit. In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods presented are reflected in the financial statements.

         These condensed statements should be read in conjunction with the
financial statements and the related notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998. Certain
reclassifications have been made to prior year amounts in order to conform to
the current year classifications.

         The Company intends to adopt the Statement of Financial Accounting
Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activities", in its financial statements for the year ending December
31, 2000. SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value will be recorded
each period in either current earnings or other comprehensive income, depending
on whether a derivative is designated as part of a hedge transaction, and if so,
the type of hedge transaction. Due to Daniel's limited use of derivative
instruments, management anticipates that adoption of SFAS 133 will not have a
significant effect on the Company's results of operations or its financial
position.

Note 2 - Earnings Per Share

         Basic earnings per share is calculated by dividing net income by the
weighted average number of common shares outstanding. While diluted earnings per
share is computed similarly, it also provides for the effect that securities
such as common stock options, if dilutive, would have on net income and average
common shares outstanding if exercised at the beginning of the year. For the
three months ended March 31, 1999 and 1998, average shares outstanding were
increased by 148,000 and 722,000, respectively, for stock options assumed
exercised to arrive at weighted average shares outstanding for purposes of
calculating diluted earnings per share. Net income remained the same in the
calculation of both basic and diluted earnings per share for all periods
presented.

Note 3 - Comprehensive Income

         Other comprehensive income is comprised of unrealized gains or losses
on the Company's foreign currency translation adjustments, which prior to
adoption of SFAS 130 were reported as a separate component of stockholders'
equity. Total comprehensive income (loss) for the quarters ended March 31, 1999
and 1998 amounted to approximately $(.9) million and $4.2 million, respectively.


                                       5
<PAGE>   6


Note 4 - Inventories
<TABLE>
<CAPTION>
                                                                           March 31,        December 31,
                                                                             1999               1998
                                                                          -----------      --------------
<S>                                                                       <C>              <C>  
                                                                                     (in thousands)
Raw materials........................................................       $26,621           $25,867
Work in process......................................................        10,272            10,595
Finished goods.......................................................        17,977            18,753
                                                                            -------           -------
     Inventories before LIFO reserve.................................        54,870            55,215
Less LIFO reserve....................................................         7,403             7,310
                                                                            -------           -------
     Total inventories...............................................       $47,467           $47,905
                                                                            =======           =======
</TABLE>

Note 5 - Debt

         Long-term debt includes the following:

<TABLE>
<CAPTION>
                                                                           March 31,        December 31,
                                                                             1999               1998
                                                                          -----------      --------------
<S>                                                                       <C>              <C>  
                                                                                     (in thousands)
Term loan from banks (unsecured) 6.52% interest payable monthly; 
    principal payable in quarterly installments of
    $1,071; matures April 30, 2004..................................        $23,571           $24,643
Revolving credit facility (unsecured); interest (5.44% at
    March 31, 1999 and 6.10% at December 31, 1998)
    payable monthly; matures April 30, 2000.........................         12,000             8,000
Term loan from bank (secured); interest at Canadian prime rate
    (6.75% at March 31, 1999 and December 31, 1998); principal and
    interest payable monthly; payable through August 31, 2001.......            828               898
Miscellaneous obligations...........................................          1,686             1,854
                                                                            -------           -------

         Total obligations..........................................         38,085            35,395
Less portion due within one year....................................          4,781             4,756
                                                                            -------           -------
         Long-term debt.............................................        $33,304           $30,639
                                                                            =======           =======
</TABLE>


         The terms of certain financing agreements contain, among other
provisions, requirements for maintaining defined levels of working capital, net
worth, capital expenditures and various financial ratios, including debt to
equity.

     At March 31, 1999, the Company had both committed and uncommitted
short-term lines of credit aggregating approximately $28,300,000, which are
available for short-term borrowings or issuance of letters of credit. At March
31, 1999 and December 31, 1998, borrowings under these lines were $6,700,000 and
$5,900,000, respectively, with approximately $12,400,000 available for
short-term borrowings at March 31, 1999. The Company had letters of credit
outstanding at March 31, 1999 totaling $8,200,000 under these lines and the
Company's revolving credit facility.


                                       6
<PAGE>   7


Note 6 - Industry Segments

         Daniel's reportable segments consist of the primary products and
services provided by the Company. These products and services include
measurement and control products and systems, valve actuators and valves. The
measurement and control products and systems segment includes products which
employ a method known as pressure differential orifice measurement to measure
fluids. This segment also includes electronic instruments used in conjunction
with the flow measurement products, as well as flow measurement systems. The
valve actuator segment includes valve actuators and controls used to remotely
and automatically open or close quarter-turn or linear valves. The valve segment
includes gate valves and the repair of pipeline valves.

         The accounting policies of the segments are the same as those described
in the Company's Annual Report on Form 10-K for the year ended December 31,
1998. There are no material intersegment revenues. Daniel evaluates the
performance of its segments based on revenues and operating profit.

                                INFORMATION ON INDUSTRY SEGMENTS
                                         (in thousands)

<TABLE>
<CAPTION>
                                                                  Operating
                                                                   Income
                                                      Revenues     (Loss)
                                                      --------    ---------
<S>                                                   <C>         <C>
Quarter Ended March 31, 1999
Segments:
   Measurement and control ........................   $ 34,016    $   1,596
   Valve actuators ................................     19,618        1,705
   Valves .........................................      8,379          593
                                                      --------    ---------
       Subtotal ...................................     62,013        3,894
Corporate .........................................                  (2,602)
Other income and expense ..........................                     326
Interest expense ..................................                    (647)
                                                      --------    ---------
       Total ......................................   $ 62,013    $     971
                                                      ========    =========

Quarter Ended March 31, 1998
Segments:
   Measurement and control ........................   $ 32,657    $   3,711
   Valve actuators ................................     24,019        3,074
   Valves .........................................     10,534        1,735
                                                      --------    ---------
       Subtotal ...................................     67,210        8,520
Corporate .........................................                  (2,083)
Other income and expense ..........................                     608
Interest expense ..................................                  (1,057)
                                                      --------    ---------
       Total ......................................   $ 67,210    $   5,988
                                                      ========    =========
</TABLE>


                                       7
<PAGE>   8


Note 7 - Subsequent Event

         On May 11, 1999, Daniel acquired all of the outstanding stock of Hytork
International plc, a designer, manufacturer and marketer of rack and pinion
actuators, for 1,732,710 shares of common stock of Daniel. The acquisition will
be accounted for by the purchase method and accordingly, the purchase price will
be allocated to the net assets acquired based on their fair market value with
any excess accounted for as goodwill and amortized over a 30-year period. The
operations related to this acquisition are not material to Daniel's results of
operations.


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

          Quarter Ended March 31, 1999 vs. Quarter Ended March 31, 1998

         Revenues for the quarter ended March 31, 1999 were $62,013,000 compared
to $67,210,000 for the same period in 1998. The reduction in revenues is due
principally to lower sales in the valve actuation and valve segments which more
than offset the additional revenues of $1,359,000 in the measurement and control
segment primarily due to METCO Services, Ltd. ("METCO") which was acquired in
October 1998. This decrease is attributed to a slowdown in project activity
associated with lower energy prices. The Company's backlog at March 31, 1999 was
$56,551,000, a decrease of 4% and 26% from the backlog balance at December 31,
1998 and March 31, 1998, respectively.

         The gross profit margin for the quarter ended March 31, 1999 decreased
to 37% of revenues from 38% of revenues in the quarter ended March 31, 1998. The
decreased margin is primarily attributable to the lower production levels noted
above in the valve actuator and valve segments and a change in product mix at 
the measurement and control segment.

         Selling, engineering and administrative ("SE&A") expenses increased
$2,498,000 to $20,575,000 in the current period when compared to the same
quarter of last year. The increase was primarily attributable to higher selling
expenses, the additional general and administrative costs associated with the
new Daniel Measurement Services division and METCO, and expenses of
approximately $400,000 associated with a strategic review undertaken by the
Company. Research and development expenses decreased $131,000 to $1,012,000 in
the current period reflecting decreased spending on electronic development
projects.

         The favorable variance in interest and other expense was due primarily
to the net effect of reduced interest expense resulting from lower debt
outstanding and less gains on the sale of assets.

         The effective tax rate for the three months ended March 31, 1999 was
37% as compared to 37.5% for the same period in the prior year. The decrease is
not considered significant.

                          Current Operating Conditions

         As mentioned above, the Company's backlog at March 31, 1999 decreased
approximately 26% from the year earlier amount. The decrease in backlog is due
principally to lower energy prices which have caused customers to delay or
postpone various projects. As a result of this decline in business activity, 


                                       8
<PAGE>   9


the Company anticipates that it, along with others in the industry, will
encounter difficult business conditions for the remainder of 1999 and expects
results for the second quarter of 1999, while profitable, to be below the second
quarter 1998 results of $.25 per share on a diluted basis.

                         Liquidity and Capital Resources

         The primary sources of the Company's liquidity for the three months
ended March 31, 1999 were internally generated funds, long-term borrowings, and
stock option activity. These funds were used primarily for capital expenditures
and payment of cash dividends.

         Working capital at March 31, 1999 of $86,087,000 reflects an increase
of $5,693,000 from the balance at December 31, 1998. The change is primarily due
to a decrease in accounts payable and accrued liabilities. Daniel considers its
financial position to be strong with a current ratio at March 31, 1999 of 2.7 to
1.0. Working capital at March 31, 1999 included $52,563,000 in inventory and
deferred tax assets, which are not as liquid as other current assets.

         Capital expenditures for the quarter ended March 31, 1999 were
$2,325,000. The Company continues to seek acquisitions that would build upon its
expertise in the manufacture and sale of fluid measurement, flow control,
actuation and analytical products and services.

         On May 11, 1999, Daniel acquired all of the outstanding stock of Hytork
International plc, a designer, manufacturer and marketer of rack and pinion
actuators, for 1,732,710 shares of common stock of Daniel. The acquisition will
be accounted for by the purchase method and accordingly, the purchase price will
be allocated to the net assets acquired based on their fair market value with
any excess accounted for as goodwill and amortized over a 30-year period. The
operations related to this acquisition are not material to Daniel's results of
operations.

         The Company believes that its working capital, cash generated from
operations and amounts available under its short-term lines of credit will be
adequate to meet its operating needs for the foreseeable future.

                                    Year 2000

         The "Year 2000" issue is the inability of computer systems (both
hardware and software) to recognize the change in date from 1999 to 2000. The
issue affects not only information technology ("IT") but non-IT systems as well.
Non-IT systems typically include embedded technology such as microcontrollers.
These system types are more difficult to assess and often require replacement
rather than repair. The Company has recognized the significant uncertainty
associated with the Year 2000 issue and has developed a team approach at each of
its business segments. These teams are charged with the responsibility of
eliminating or minimizing any effects Year 2000 issues may have. Each team's
remediation efforts are reported monthly to senior management of the business
segment and to the Company's Chief Financial Officer. The Audit Committee of the
Board of Directors reviews the current status of all Year 2000 issues at each
committee meeting.


                                       9
<PAGE>   10


Products

         The Company has established a phased program for testing its products
for Year 2000 compliance. Phase One of that testing program, the testing of
currently marketed products, is complete. It is Daniel's belief that
substantially all necessary modifications will be completed and tested by June
30, 1999.

         Certain of the Company's products contain customized software, either
added by the customer after delivery or, at the customer's request, added by the
Company. Testing of such customized products is usually only practical at the
customer's location and is generally undertaken only if requested, and paid for,
by the customer.

Internal Systems

         The review of Daniel's internal systems is proceeding toward a
scheduled completion date of June 30, 1999. At the present time, no "mission
critical" systems requiring significant modification or replacement have been
identified, other than the management information systems discussed below.
Substantially all mission critical internal systems have been reviewed and
remediated.

         The Company recently implemented a new management information system,
licensed from JD Edwards World Solutions Company ("JD Edwards"), which is being
utilized at two of the Company's domestic operating divisions as well as at
Corporate headquarters. This new system replaces various obsolete legacy systems
that have been developed internally over many years. The decision during 1998 to
replace the existing systems was heavily influenced by the extremely high
estimate of the costs required to make the legacy systems Year 2000 compliant.
The cost of the new JD Edwards system, which will be amortized over its expected
useful life, was approximately $4,700,000, exclusive of the internal costs of
installation and related systems modification.

         The essential management information systems of Daniel's other
operating divisions are either substantially Year 2000 compliant due to the
installation of regular upgrades to existing systems, which are primarily
packaged systems provided by major suppliers, or will be made compliant through
such upgrades prior to the end of 1999. No material expenditures, which would
not have been made absent Year 2000 considerations, have been required in
relation to the various upgrades.

         Other than the capital expended for the JD Edwards system, Daniel
absorbed approximately $130,000 through the first quarter of 1999 for expenses
related to the Year 2000 project. The additional cost estimated to bring the
project to completion is $50,000, which will be treated as a period cost and
expensed as incurred.

Vendors

         Daniel is in the process of identifying and communicating with those of
its suppliers and vendors where failure by such third parties to achieve Year
2000 compliance could reasonably be expected to have a material, lasting impact
on the Company. This process is scheduled to be substantially complete by June
30, 1999. Daniel is presently in the process of contacting vendors that did not
previously respond to the initial compliance questionnaire.


                                       10
<PAGE>   11


         Contingency plans will be developed for any suppliers or vendors who
may pose a material risk to Daniel's ability to manufacture products. With the
exception of third parties, such as banks and telephone service providers, where
business interruption would impact a large section of the economy, the Company
has not identified any significant dependency for which alternate sources are
not readily available.

"Most Likely Worst Case Scenario"

         The Company has not developed a "most likely worst case scenario" as
referred to by the Securities and Exchange Commission. If reasonably
quantifiable risks are identified, development of such a scenario will be
considered.


ITEM 3a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES REGARDING MARKET RISKS

         Market risk is considered immaterial.


                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company is subject to legal proceedings and claims which arise in
the ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position or results of operations of the Company.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

            27                Financial Data Schedule

(b) No reports on Form 8-K were filed during the quarter ended March 31, 1999.


                                       11
<PAGE>   12


                                    SIGNATURE

         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.



                                              DANIEL INDUSTRIES, INC.    
                                              -----------------------    
                                                   (Registrant)




Date:    May 12, 1999                   By:      /s/  James M. Tidwell        
         ------------                      -----------------------------------
                                                 James M. Tidwell
                                                 Executive Vice President and
                                                 Chief Financial Officer


Date:    May 12, 1999                   By:      /s/  Wilfred M. Krenek       
         ------------                      -----------------------------------
                                                 Wilfred M. Krenek
                                                 Vice President, Controller and
                                                 Chief Accounting Officer


                                       12
<PAGE>   13


                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                DESCRIPTION
-------               -----------
<S>              <C>
 27              Financial Data Schedule
</TABLE>