<PAGE>   1

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

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



For the twenty-eight weeks ended December 11, 1998 Commission file number 0-6566



                            Thorn Apple Valley, Inc.
    ------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)




                Michigan                            38-1964066
  ---------------------------------      -------------------------------------  
     (State of other jurisdiction of      (IRS Employer Identification No.)
     incorporation or organization)


   26999 Central Park Blvd., Suite 300, Southfield, Michigan          48076
 ------------------------------------------------------------- ----------------
          (Address of principal executive offices)                 (zip Code)



   Registrant's telephone number, including area code         (248) 213-1000
 -----------------------------------------------------       ----------------



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 and (2) has been subject to such filing requirements for
the past 90 days. Yes X No .



At December 11, 1998, there were 6,142,092  shares of Common Stock outstanding.
   -----------------              ---------




<PAGE>   2


                   THORN APPLE VALLEY, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                ASSETS
                                                                                          DECEMBER 11,             MAY 29,
                                                                                              1998                  1998
                                                                                        ------------------     ----------------
<S>                                                                                     <C>                    <C>       
Current assets:
  Cash and cash equivalents                                                                    $6,328,766           $3,072,464
  Short-term investments                                                                          500,000              500,000
  Accounts receivable, net of allowance for doubtful accounts
    (December 11, 1998, $6,665,000; May 29, 1998, $761,800) (Note 7)                           42,949,221           42,434,856
  Inventories (Note 2 & 7)                                                                     47,531,827           58,715,450
  Refundable income taxes                                                                         159,320              632,323
  Deferred income taxes (Note 6)                                                                3,592,000            3,592,000
  Prepaid expenses and other current assets                                                     6,749,309            6,277,836
                                                                                        ------------------     ----------------

         Total current assets                                                                 107,810,443          115,224,929
                                                                                        ------------------     ----------------

Property, plant and equipment:
  Land                                                                                          1,255,915            1,261,380
  Buildings and improvements                                                                   48,610,763           48,814,916
  Machinery and equipment                                                                     113,722,714          112,469,354
  Transportation equipment                                                                      5,756,127            5,820,609
  Property under capital leases                                                                 5,899,680            5,966,625
  Construction in progress                                                                      2,300,570            1,570,829
                                                                                        ------------------     ----------------

                                                                                              177,545,769          175,903,713
      Less accumulated depreciation                                                            90,545,027           84,162,032
                                                                                        ------------------     ----------------

                                                                                               87,000,742           91,741,681
                                                                                        ------------------     ----------------
Other assets:
  Intangible assets, net of accumulated amortization (December 11, 1998; $2,969,831;
  May 29, 1998; $2,517,900)                                                                    30,602,169           31,054,100
  Deferred income taxes                                                                         7,536,000            7,536,000
  Other                                                                                         3,934,674            8,356,294
                                                                                        ------------------     ----------------
     Total other assets                                                                        42,072,843           46,946,394
                                                                                        ------------------     ----------------

                                                                                             $236,884,028         $253,913,004
                                                                                        ==================     ================

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                                            $24,099,316          $31,143,268
  Accrued liabilities                                                                          32,989,391           37,135,059
  Current portion of long-term debt (Note 3)                                                  131,457,175            6,959,824
                                                                                        ------------------     ----------------
                                                                                                                               
        Total current liabilities                                                             188,545,882           75,238,151 
                                                                                        ------------------     ----------------
                                                                                                                               
                                                                                                                               
Other noncurrent liabilities                                                                    2,497,581            3,330,674
Long-term debt (Note 3)                                                                        33,920,883          148,249,545 
                                                                                        ------------------     ----------------

        Total noncurrent liabilities                                                           36,418,464          151,580,219
                                                                                        ------------------     ----------------

Shareholders' equity:
  Preferred stock:  $1 par value; authorized 200,000 shares; issued none Common
  nonvoting stock:  $.10 par value; authorized 20,000,000 shares;  issued none
   Common voting stock:  $.10 par value; authorized 20,000,000 shares; issued
   6,142,092 shares at December 11, 1998 and 6,133,198 shares at May 29, 1998                     614,209              613,320
  Capital in excess of par value                                                               10,871,337           10,800,915
  Retained earnings                                                                               434,136           15,680,399
                                                                                        ------------------     ----------------
                                                                                               11,919,682           27,094,634
                                                                                        ------------------     ----------------

                                                                                             $236,884,028         $253,913,004
                                                                                        ==================     ================
</TABLE>




                                                                               1

See notes to consolidated financial statements.
 

<PAGE>   3


                    THORN APPLE VALLEY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>


                                                                  TWELVE WEEKS ENDED               TWENTY-EIGHT WEEKS ENDED
                                                          -----------------------------------  -----------------------------------

                                                           DECEMBER 11,         DECEMBER 12,    DECEMBER 11,         DECEMBER 12,
                                                               1998               1997              1998               1997
                                                          ----------------   ----------------  ---------------    ----------------

<S>                                                          <C>                <C>              <C>                 <C>         
Net sales                                                    $119,945,606       $136,461,007     $259,154,932        $302,759,886
                                                          ----------------   ----------------  ---------------    ----------------

Operating costs and expenses:
  Cost of goods sold, including delivery costs                105,353,768        120,895,623      225,895,253         265,741,611
  Selling                                                       5,671,194          6,044,792       13,130,210          13,773,549
  General and administrative                                    4,430,943          5,082,288       10,974,302          12,152,604
  Depreciation and amortization                                 3,030,127          3,271,693        7,123,657           7,914,338
  International restructuring charge (Note 7)                   8,000,000                           8,000,000
                                                          ----------------   ----------------  ---------------    ----------------

                                                              126,486,032        135,294,396      265,123,422         299,582,102
                                                          ----------------   ----------------  ---------------    ----------------

Income (loss) from operations                                  (6,540,426)         1,166,611       (5,968,490)          3,177,784
                                                          ----------------   ----------------  ---------------    ----------------


Other expenses (income):
  Interest, net                                                 3,554,650          2,372,104        7,764,092           5,825,644
  Other, net                                                     (513,423)          (458,097)      (1,286,321)         (1,149,975)
                                                          ----------------   ----------------  ---------------    ----------------

                                                                3,041,227          1,914,007        6,477,771           4,675,669
                                                          ----------------   ----------------  ---------------    ----------------

Loss from continuing operations before income taxes            (9,581,653)          (747,396)     (12,446,261)         (1,497,885)

Benefit for income taxes (Note 6)                                                   (215,000)                            (532,000)
                                                          ----------------   ----------------  ---------------    ----------------

Loss from continuing operations                                (9,581,653)          (532,396)     (12,446,261)           (965,885)

Discontinued operations (Note 8):
  Income (Loss) from operations of discontinued
 fresh pork  division (net of tax benefit
  at December 12, 1997 of $1,301,000)                                                302,163                           (2,362,897)

  Loss on disposal of fresh pork division                      (2,800,000)                         (2,800,000)
                                                          ----------------   ----------------  ---------------    ----------------

Income (loss) from discontinued operations                     (2,800,000)           302,163       (2,800,000)         (2,362,897)
                                                          ----------------   ----------------  ---------------    ----------------


Net loss                                                     ($12,381,653)         ($230,233)    ($15,246,261)        ($3,328,782)
                                                          ================   ================  ===============    ================

Basic and Fully Diluted Income (loss) per share
 (Note 4): 
   Continuing operations                                           ($1.56)            ($0.09)          ($2.03)             ($0.16)
                                                          ================   ================  ===============    ================
   Income (loss) on discontinued operations                        ($0.46)             $0.05           ($0.46)             ($0.39)
                                                          ================   ================  ===============    ================
   Net loss                                                        ($2.02)            ($0.04)          ($2.48)             ($0.54)
                                                          ================   ================  ===============    ================


Weighted average number of shares outstanding                   6,141,425          6,121,971        6,138,502           6,118,088
                                                          ========================================================================
</TABLE>






                                                                               2

See notes to consolidated financial statements.
<PAGE>   4


                    THORN APPLE VALLEY, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>


                                                                                                     
                                                                            COMMON STOCK              CAPITAL IN              
                                                                    ------------------------------    EXCESS OF        RETAINED
                                                                       SHARES          AMOUNT         PAR VALUE        EARNINGS
                                                                    --------------  --------------  --------------  ---------------

<S>                                                                 <C>             <C>             <C>             <C>        
Balance, May 30, 1997                                                   6,110,480        $611,048     $10,500,213      $65,969,270

Net loss                                                                                                                (3,098,549)

Shares issued under employee stock purchase plan                            2,788             279          41,483

Exercise of stock options (Note 6)                                          5,000             500          50,750
                                                                    --------------  --------------  --------------  ---------------


Balance, December 12, 1997                                              6,118,268        $611,827     $10,592,446      $62,870,721
                                                                    ==============  ==============  ==============  ===============

Balance, May 29, 1998                                                   6,133,198        $613,320     $10,800,915      $15,680,399

Net loss                                                                                                               (15,246,261)

Shares issued under employee stock purchase plan                            7,394             739          55,197

Exercise of stock options, including related tax benefits (Note 6)          1,500             150          15,225
                                                                    --------------  --------------  --------------  ---------------

Balance, December 11, 1998                                              6,142,092        $614,209     $10,871,337         $434,136
                                                                    ==============  ==============  ==============  ===============


</TABLE>









                                                                               3


See notes to consolidated financial statements.
<PAGE>   5
                    THORN APPLE VALLEY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                         TWENTY-EIGHT WEEKS ENDED
                                                                                  ---------------------------------------
                                                                                    DECEMBER 11,         DECEMBER 12,
 CASH FLOWS FROM OPERATING ACTIVITIES:                                                  1998                 1997
                                                                                  ------------------   ------------------
<S>                                                                                    <C>                   <C>
   Net loss                                                                            ($15,246,261)         ($3,328,782)
                                                                                  ------------------   ------------------
   Adjustments to reconcile net loss to net cash provided by (used in) operating
    activities:
   Loss on disposal of fresh pork division (Note 8)                                       2,800,000
   Depreciation                                                                           6,671,726            9,463,185
   Amortization                                                                             451,931              451,931
   (Gain) loss on disposition of property, plant and equipment                             (193,129)            (323,850)
   Provision for losses on accounts receivable                                            5,903,200               93,700
 (INCREASE) DECREASE IN ASSETS:
   Accounts receivable                                                                   (6,417,565)         (25,663,373)
   Inventories                                                                            8,383,623            2,336,881
   Refundable income taxes                                                                  473,003             (979,836)
   Prepaid expenses and other assets                                                      3,950,147            1,591,923
   Deferred income taxes                                                                                         263,000
 INCREASE (DECREASE) IN LIABILITIES:
   Accounts payable                                                                      (7,043,952)           2,356,992
   Accrued liabilities                                                                   (4,145,668)           3,325,860
   Income taxes payable                                                                                       (1,425,403)
   Other non-current liabilities                                                           (833,093)
                                                                                  ------------------   ------------------

   Total adjustments                                                                     10,000,223           (8,508,990)
                                                                                  ------------------   ------------------

   Net cash used in operating activities                                                 (5,246,038)         (11,837,772)
                                                                                  ------------------   ------------------

 CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                                  (1,991,712)          (5,369,004)
   Proceeds from sale of property, plant and equipment                                      254,054            2,091,359
                                                                                  ------------------   ------------------

  Net cash used in investing activities                                                  (1,737,658)          (3,277,645)
                                                                                  ------------------   ------------------

 CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                                                          10,000,000
   Principal payments on long-term debt                                                  (6,487,657)          (1,792,555)
   Net borrowings (payments) under lines of credit                                         6,656,344           16,800,000
   Proceeds from employee stock purchase plan                                                55,936               41,762
   Proceeds from stock options exercised, including related tax benefits                     15,375              114,247
                                                                                  ------------------   ------------------

   Net cash provided by (used in) financing activities                                   10,239,998           15,163,454
                                                                                  ------------------   ------------------

   Net increase (decrease) in cash                                                        3,256,302               48,037

   Cash and cash equivalents, beginning of quarter                                        3,072,464            6,028,698

   Cash and cash equivalents, end of quarter                                             $6,328,766           $6,076,735
                                                                                  ==================   ==================

 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: 
   Cash paid during the year for:
      Interest, net of amounts capitalized                                               $6,050,353           $6,407,386
                                                                                  ==================   ==================
      Income taxes paid  (refunded), net                                                  ($473,003)            $308,340
                                                                                  ==================   ==================
</TABLE>













                                                                               4

See notes to consolidated financial statements.

<PAGE>   6



                    THORN APPLE VALLEY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - ACCOUNTING POLICIES:

  The condensed consolidated financial statements have been prepared in
   accordance with generally accepted accounting principles and reflect, in the
   opinion of management, all adjustments, consisting of normal recurring
   adjustments, necessary for a fair presentation of financial position as of
   December 11, 1998 and May 29, 1998, and the results of operations and cash
   flows for the periods presented. The condensed consolidated financial
   statements should be read in conjunction with the consolidated financial
   statements and notes contained in Thorn Apple Valley, Inc.'s Annual Report on
   Form 10-K for the fiscal year ended May 29, 1998. Certain amounts from prior
   years have been reclassified to conform with the current year presentation.
   The results for the twenty eight weeks ended December 11, 1998 are not
   necessarily indicative of the results to be expected for the fiscal year
   ending May 28, 1999.

NOTE 2 - INVENTORIES:

  Inventories are stated at the lower of last-in, first-out (LIFO) cost or
   market. No provision has been made during the current year for last-in,
   first-out (LIFO) reserve adjustments. The following is a breakdown of
   inventories by classifications:

<TABLE>
<CAPTION>
                                                                      December 11,                 May 29,
                                                                         1998                        1998
                                                                  -------------------       -------------------
<S>                                                                      <C>                      <C>        
          Supplies                                                      $ 9,361,666               $10,815,336
          Raw materials                                                   6,110,019                11,308,353
          Work in progress                                                1,747,313                 3,053,048
          Finished goods                                                 33,244,826                36,470,713
                                                                        -----------               -----------
                                                                         50,463,827                61,647,450

          Less LIFO reserve                                               2,932,000                 2,932,000
                                                                        -----------               -----------
                                                                                                    
          Inventory balance                                             $47,531,827               $58,715,450
                                                                        ===========               ===========

NOTE 3 - LONG-TERM DEBT:

  Long-term debt consists of the following:
                                                                      December 11,                 May 29,
                                                                           1998                      1998
                                                                  ----------------------      ------------------
          Revolving credit agreement                                    $55,000,000               $48,556,436
          Term notes                                                     70,000,000                75,000,000
          Revenue bonds                                                   7,481,628                 8,196,355
          Subordinated debentures                                        27,250,000                17,250,000
          Obligations under capital leases                                2,823,649                 3,227,211
          Other note                                                      2,822,781                 2,979,367
                                                                     ---------------            --------------
                                                                        165,378,058               155,209,369

          Less current portion                                          131,457,175                 6,959,824
                                                                     ---------------            --------------
          Long-term debt                                                $33,920,883              $148,249,545
                                                                     ===============            ==============
</TABLE>


                                       5
<PAGE>   7


NOTE 3 - LONG-TERM DEBT (CONTINUED):

On September 10,1998, the Company and its consortium of lenders amended the
terms and conditions of its revolving credit agreement and term notes ("loan
agreement"). The following is a description of the significant changes to the
loan agreement:

     1. The maximum amount available under the revolving loan was reduced by $15
million to $70 million, with an additional $10 million available to meet
seasonal demands.

     2. The Company made a principal payment of $5 million on the term loan,
reducing the principal balance outstanding to $70 million.

     3. The maturity date under the loan agreement was changed from April 15,
2001 to August 31, 1999.

     4. The interest rate on the revolving loan increased, so that the Company
may borrow either at the prime rate plus .5 percent or LIBOR plus 3 percent at
the option of the Company.

     5. The interest rate on the term loan increased, so that the Company may
borrow either at the prime plus 1 percent or the LIBOR plus 3.25 percent at the
option of the Company.

     6. The Company will make payments of certain fees to the lender group
either in cash or by delivery of warrants to purchase the Company's common stock
or a combination thereof, at the Company's option, as follows:

<TABLE>
<CAPTION>

     PAYMENT DATE                          AMOUNT          EARNED DATE
     -----------------------------------------------------------------
     <S>                                <C>                  <C>
     4/30/99                            $  500,000           6/30/99
     6/30/99                            $1,000,000           8/31/99
     8/31/99                            $1,500,000           8/31/99
</TABLE>

  If the Company elects to make any portion of the payment through issuance of
     warrants to the lending group, the number of shares of common stock of the
     Company subject to the warrants will be determined by dividing the amount
     of the payment to be paid with warrants by a $7.50 per share conversion
     price. In total, warrants for up to 400,000 shares of common stock may be
     issued by the Company to make such payments.

  On December 11, 1998, the Company was not in compliance with its Net Worth and
     Fixed Charge covenants contained in the loan agreement. As of January 29,
     1999, due to the unexpected charge related to the product recall, (see
     Subsequent Event, Note 9), the Company was not in compliance with its
     excess availability covenant contained in the loan agreement on that date.
     The Company had $1.6 million remaining availability under its borrowing
     base formula and cash on hand of $1.65 million. The Company's cash needs
     are expected to increase over the next three months as the Company builds
     inventory to meet seasonal requirements. In addition, on February 1, 1999,
     the Company's ability under its loan agreement to borrow against inventory
     is reduced to 70% of value, from the current 75% of value. The Company is
     working with its lenders to provide adequate funding for the continued
     operation of the Company and its subsidiaries, although there can be no
     assurance that this can be obtained.

  The aggregate maturities of the long-term debt, as amended, (excluding
     obligations under capital leases) during the five years subsequent to May
     29, 1998 are: 1999; $10,426,854, 2000; $118,570,243, 2001; $235,061, 2002;
     $0, and 2003; $0.

  The Company's debt is secured by substantially all of the Company's assets.
     The Company's loan and security agreements contain financial covenants with
     respect to consolidated net worth and fixed charge coverage. In addition,
     among other things, the agreement limits borrowings, capital expenditures,
     other indebtedness and investments, and does not allow the payment of cash
     dividends or repurchase of the Company's common stock.

  On September 10, 1998 the Company issued a $10 million convertible debenture.
     The debenture bears interest at a rate of 6.5 percent per year, payable
     quarterly. The principle on the debenture is due September 9, 2003. The
     debenture can be converted into shares of the Company's common stock at any
     time prior to the close of business on September 9, 2003, at a conversion
     price of $14.00 per share. The $10 million debenture is unsecured; however,
     it is senior in terms of payment priority to the Company's $17.25 million
     subordinated debentures due April 1, 2007.




                                       6


<PAGE>   8




NOTE 4 - EARNINGS PER SHARE OF COMMON STOCK:

  Basic earnings per share of common stock are based on the weighted average
     number of common shares outstanding during each quarter. Diluted earnings
     per share are based upon the weighted average number of common shares
     outstanding after giving effect to all dilutive potential common shares
     including shares issuable under employee stock option plans and convertible
     subordinated debentures (if converted, representing an aggregate of 920,000
     shares). As a result of the Company's loss from operations during the
     second quarter and fiscal year-to-date for fiscal years 1999 and 1998
     respectively, the calculation of diluted earnings per share excluded the
     potential common shares issuable under employee stock option plans and
     convertible subordinated debentures as they would have an anti-dilutive
     effect on earnings per share.

NOTE 5 - STOCK OPTION PLANS:

  The Company's 1996 Employee Stock Option Plan authorized the Company's Stock
     Option Committee to grant options for up to 600,000 shares of the Company's
     common stock to present or prospective employees. At December 11, 1998,
     there were 403,500 options granted but not exercised at prices of $5.00,
     $7.50, $10.25 and $15.81 per share and 196,500 shares remained to be
     granted under the 1996 Plan.

  At December 11, 1998, there were 631,200 options granted but not exercised at
     prices of $10.25, $17.00, $23.00 and $26.00 per share and 141,000 options
     granted but not exercised at prices of $2.56 and $19.67 per share under the
     1990 and 1982 Employee Stock Option Plans, respectively. Under the 1990
     plan, 196,500 shares remain to be granted. No shares remain to be granted
     under the 1982 plan.

  The Company's Stock Option Committee may designate any requirements regarding
     option price, waiting period or an exercise date for options granted under
     the plans, except that incentive stock options may not be exercised at less
     than the fair market value of the stock on the date of grant, and no option
     may remain outstanding for more than 10 years. Under all plans, the
     exercise price of each option equals the market price of the Company's
     common stock on the date of grant. Under all plans, the options granted are
     immediately exercisable.

NOTE 6 - INCOME TAXES:

  The Company has established a valuation allowance in accordance with the
     provision of FASB Statement No. 109, Accounting for Income Taxes. The
     valuation allowance was increased at December 11, 1998 to offset the
     estimated benefit resulting from the loss incurred during the first and
     second quarter of fiscal 1999. The Company will continue to review the
     adequacy of the valuation allowance and will recognize the future tax
     benefits only as reassessment indicates that it is more likely than not
     that the benefits will be realized.


NOTE 7 - INTERNATIONAL RESTRUCTURING:

  The Company had exported a portion of its hot dog production to Russia. As a
     result of recent economic and political instability in Russia, including
     the rapid devaluation of its currency, the Company's continued ability to
     transact business in this region is uncertain. During the second quarter
     ending December 11, 1998, the Company recorded a reserve of $8.0 million,
     of which $6.0 million is related to the uncertain collection of Russian
     accounts receivable and $2.0 million was charged against inventory
     resulting from a decline in market value. At December 11, 1998, the
     Company had remaining, net of any reserves, approximately $5.9 million of
     frozen inventory designated for Russia.


NOTE 8 - DISCONTINUED OPERATIONS:

  In May 1998, the Company formalized plans to exit its fresh pork business. The
     fresh pork facility was closed in July, 1998. The Company recorded in the
     fourth quarter of fiscal 1998, an after-tax charge of $39.3 million related
     to the disposal of its fresh pork operations. Included in the gross charge
     was an estimated pre-tax loss from operations during the phase out period
     of $5.0 million.

  During the second quarter of fiscal 1999 the Company recorded an additional
     loss on the disposal of its fresh pork division of $2.8 million related to
     the declining value of its remaining frozen pork inventory. The
     consolidated financial statements and related notes have been restated for
     all quarters presented to separately report the fresh pork discontinued
     operations.


NOTE 9 - SUBSEQUENT EVENT - PRODUCT RECALL:

  On December 30, 1998, the Company, in conjunction with the United States
     Department of Agriculture, temporarily suspended its operations at its
     Forrest City, Arkansas plant, as a result of the detection of a bacteria
     known as Listeria.

                                       7
<PAGE>   9

NOTE 9 - SUBSEQUENT EVENT - PRODUCT RECALL (CONT.):

  Subsequently, on January 22, 1999, the Company voluntarily recalled all
     production from this facility for the period of July 6, 1998, to December
     30, 1998. The production from this facility during this time period was
     approximately 31 million pounds, primarily consisting of hot dogs and lunch
     combinations. The Company estimates that about 11 million pounds of this
     production remains in its frozen inventory designated for Russia. See
     International Restructuring, Note 7, for further information with respect
     to this inventory. The Company's ability to sell this frozen
     inventory in the future is uncertain at this time.

  The Company does not know what impact this recall will have on its financial
     condition or on its relations with customers, suppliers and others.  The
     Company is not aware of any illness conclusively linked to the consumption
     of the recalled products. Management has estimated that the quantity of hot
     dogs and lunch combinations in the marketplace to be impacted by the recall
     is less than 1.0 million pounds.

  The estimated cost of this action will be recorded in the Company's third
quarter financial statements. Based upon currently known information, the charge
is expected to range from $1 million to $7 million. The largest variable with
respect to the charge will be the Company's ability to sell the frozen
inventory designated for Russia.




                                       8

<PAGE>   10



                            THORN APPLE VALLEY, INC.

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS
               ---------------------------------------------------
                OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
               ---------------------------------------------------

         Thorn Apple Valley, Inc., referred to hereinafter collectively with its
predecessors and subsidiaries as the ("Company") is a major producer of
processed meat and poultry products in the United States. The Company is engaged
in a single segment business with one principal product category: processed meat
and poultry products. The Company's processed meat products operations engages
in the production and sale of consumer-brand labeled, packaged meat and poultry
products, such as bacon, hot dogs and lunch meats, hams, smoked sausages and
turkey products. The Company markets its processed meat products under premium
and other proprietary brand labels including "Thorn Apple Valley," "Colonial",
"Corn King", "Wilson Certified" and "Cavanaugh Lakeview Farms", as well as under
customer-owned private labels with major supermarket chains and other customers.
The Company sells its products principally to wholesalers, supermarkets and
other manufacturers throughout the United States and in selected international
markets.

         The Company was originally incorporated in 1959 as a Michigan
corporation. It reincorporated in Delaware in 1971 and reincorporated in
Michigan in 1977.

         The Company's business strategy is to increase revenue and enhance
profitability by (i) increasing the sales of the Company's higher margin premium
brand processed meats products while reducing the Company's reliance on sales of
lower margin private label products, (ii) continuing to improve production
efficiencies in the Company's processed meats production facilities, (iii)
developing and marketing new processed meat products, and (iv) increasing
overall sales volume through additional marketing strategies with an emphasis on
sales to international markets, including, for example, Korea.

         The Company's principal executive offices are located at 26999 Central
Park Blvd., Suite 300, Southfield, Michigan 48076 (telephone number: (248)
213-1000.)

RESULTS OF OPERATIONS

         As consumers have become more health conscious, meat and poultry
processors have focused on providing healthier and more convenient processed
meat products to successfully compete against other protein sources,
particularly poultry and seafood. In addition, increased amounts of poultry are
being used in processed meat products which were traditionally made with only
beef and pork.

         Processed Meats manufacturers generally receive higher profit margins
on premium labeled branded items versus non-premium, or private label items. In
recent years, the Company has focused on identifying emerging trends in consumer
preferences and on developing products in response to those trends in an attempt
to be a market leader in emerging market segments that offer opportunities for
increased sales volume and higher profit margins than those associated with more
mature and competitive market segments. For example, the Company has developed
innovative packaging concepts and products that are leaner and have lower fat
contents (such as the Company's premium deli-style sliced turkey ham, turkey
breast and cooked ham products) to appeal to consumers seeking products that are
convenient to use and are a more healthier alternative than existing products.
The Company believes that opportunities exist to extend its current product
lines into related products, thereby leveraging its current premium brand names.

         The Company experiences some seasonality in its business. Specifically,
the Company's sales of smoked hams are typically at their highest levels during
the Christmas and Easter holiday seasons as a result of increased customer
demand. In order to accommodate the increased holiday sales, the Company
typically builds substantial inventories of hams in anticipation of its future
holiday business. In addition, the Company's sales of skinless smoked sausages,
hot dogs and bacon products are generally higher during the summer months.

         The first quarter of each fiscal year consists of sixteen weeks, and
each subsequent quarter consists of twelve weeks, except that the fourth quarter
consists of thirteen weeks in the case of a 53-week fiscal year. The following
discussion analyzes material changes in the financial information on a period to
period basis.

                                       9

<PAGE>   11




      TWELVE WEEKS ENDED DECEMBER 11, 1998 COMPARED TO TWELVE WEEKS ENDED
      -------------------------------------------------------------------
                               DECEMBER 12, 1997
                               -----------------

         The Company's loss from continuing operations for the second quarter
ended December 11, 1998 was approximately $9.5 million compared with a loss from
continuing operations of approximately $.5 million for the comparable prior year
period. The increase in the loss is primarily attributable to the Company's
Russian operations which incurred a $8.0 million charge related to inventory and
accounts receivable (see Note 7 of the financial statements to this Form 10-Q
for further discussion on this matter). In addition, the Company did not have
any Russian hot dog production or significant Russian hot dog sales during the
second quarter of Fiscal 1999 resulting in a decrease in income over the prior
year comparable quarter.

         Net sales in the second quarter of fiscal 1999 decreased $16.5 million
or 12.1% as compared to the second quarter of fiscal 1998. The reduction in
processed meat sales dollars is attributable to lower average selling prices and
lower unit sales of 7.2% and 5.2%, respectively. The decrease in average selling
price is primarily attributable to lower raw material prices for hams and pork
bellies. The Company's unit volume decreased primarily as a result of increased
domestic competition and the unexpected fall-off of sales to Russia in August of
fiscal 1998 as a result of the political and economic instability in that
region. The Company was selling approximately 1.5 million pounds of hot dogs per
week to Russia. It is uncertain as to whether or when these sales will resume.

         Cost of goods sold (including delivery costs) decreased by $15.5
million, or 13%, primarily as a result of the decrease in the cost of hams and
pork bellies, referred to above and a decrease in processed meat tonnage sold of
approximately 6 million pounds or 5.2%. As a percentage of net sales, cost of
goods sold decreased to 87.8% from 88.6%.

         Selling expenses decreased approximately $.4 million, or 6.2%. As a
percentage of net sales, selling expenses increased to 4.7% from 4.4%. General
and administrative expenses decreased $.7 million, or 12.8%. As a percentage of
net sales, general and administrative expenses had no change. The decrease in
Selling, General and Administration expenses is primarily the result of a cost
reduction program put in place during the third quarter of fiscal 1998.

         The Company did not recognize the future tax benefit associated with
the operating loss in the second quarter of fiscal 1999. The Company will
recognize a future tax benefit only as reassessment indicates it is more likely
than not that the benefit will be realized.

         The loss from discontinued operations for the second quarter of fiscal
year 1998 is the loss from the fresh pork operations that the Company previously
exited. In the second quarter of fiscal 1999, the Company recorded an additional
$2.8 million loss on disposal of its fresh pork division. The additional loss
was the result of declining values of its remaining frozen pork inventory.

         The loss per share of common stock from continuing operations was $1.07
per share compared to a loss per share of $.09 per share in the prior year
period. The increase in loss per share is primarily due to decreased
profitability resulting from factors discussed above.

         The results for the twelve weeks ended December 11, 1998 are not
necessarily indicative of the results to be expected for fiscal 1999.


                                       10
<PAGE>   12

   TWENTY-EIGHT WEEKS ENDED DECEMBER 11, 1998 COMPARED TO TWENTY-EIGHT WEEKS
   -------------------------------------------------------------------------
                            ENDED DECEMBER 12, 1997
                            -----------------------

         The Company's loss from continuing operations for the twenty-eight
weeks ended December 11, 1998 was approximately $12.4 million compared with a
loss from continuing operations of approximately $1 million for the comparable
prior year period. The increase in the loss is primarily attributable to the
Company's Russian operations which incurred a $8.0 million charge related to
inventory and accounts receivable (see Note 7 of the financial statements to
this Form 10-Q for further discussion on this matter). In addition, the Company
experienced a decline in its volume of unit sales when compared to the
comparable twenty-eight weeks of the prior year. This decrease was due primarily
to the increase in domestic competition.

         Net sales for the first two quarters of fiscal 1999 decreased $43.6
million or 14.4% as compared to the first two quarters of fiscal 1998. The
reduction in processed meat sales dollars is attributable to lower average
selling prices and lower unit sales of 10.4% and 4.9%, respectively. The
decrease in average selling price is primarily attributable to lower raw
material prices for hams and pork bellies. The Company's unit volume decreased
primarily as a result of increased domestic competition and the unexpected
fall-off of sales to Russia in August as a result of the political and economic
instability in that region.

         Cost of goods sold (including delivery costs) decreased by $40 million,
or 15.0%, primarily as a result of the decrease in the cost of hams and pork
bellies, referred to above and a decrease in processed meats tonnage sold of
approximately 12 million pounds or 4.9%. As a percentage of net sales, cost of
goods sold decreased to 87.2% from 87.8%.

         Selling expenses decreased approximately $.6 million, or 4.7%. As a
percentage of net sales, selling expenses increased to 5.1% from 4.5%. General
and administrative expenses decreased $1.2 million, or 9.7%. As a percentage of
net sales, general and administrative expenses increased to 4.2% from 4.0%. The
decrease in Selling, General and Administrative expenses is primarily the result
of a cost reduction program put in place during the third quarter of fiscal
1998.

         The Company did not recognize the future tax benefit associated with
the operating loss for the first two quarters of fiscal 1999. The Company will
recognize a future tax benefit only as reassessment indicates it is more likely
than not that the benefit will be realized.

         The loss from discontinued operations for the twenty-eight weeks of
fiscal year 1998 is the loss from the fresh pork operations that the Company
previously exited. In the second quarter of fiscal 1999, the Company recorded an
additional $2.8 million loss on disposal of its fresh pork division. The
additional loss was primarily the result of declining values of its remaining
frozen pork inventory.

         The loss per share of common stock from continuing operations was $1.54
per share compared to a loss per share of $.16 per share in the prior year
period. The increase in loss per share is primarily due to decreased
profitability resulting from factors discussed above.

         The results for the twenty-eight weeks ended December 11, 1998 are not
necessarily indicative of the results to be expected for fiscal 1999.

                                       11
<PAGE>   13

FINANCIAL CONDITION


         At December 11, 1998, the Company had a revolving credit agreement with
a consortium of financial institutions whereby it could borrow, subject to a
borrowing base formula, in the aggregate up to $80.0 million, of which $55.0
million was drawn upon and $9.2 million was used to support letters of credit.
Borrowings under the revolving credit agreement are used when needed to finance
increases in the levels of inventories and accounts receivable resulting from
seasonal and other market-related fluctuations in raw material costs and
quantities. The demand for seasonal borrowings usually peaks in early December
when ham inventories and accounts receivable are at their highest levels, and
these borrowings are generally repaid in January when the accounts receivable
generated by the sales of these hams are collected.

         The Company's business is characterized by high unit sales volume and
rapid turnover of inventories and accounts receivable. Because of the rapid
turnover rate, the Company considers its inventories and accounts receivable to
be highly liquid and readily convertible into cash. The Company's debt is
secured by substantially all of the Company's assets. In addition, the various
loan agreements contain financial covenants with respect to consolidated net
worth, EBITDA and interest coverage (as defined therein). In addition, the
agreements limit borrowings, capital expenditures, other indebtedness and
investments, and do not allow the payment of cash dividends or repurchase of the
Company's common stock. 

         On December 11, 1998, the Company was not in compliance with its Net
Worth and Fixed Charge covenants contained in the loan agreement. As of January
29, 1999, due to the unexpected charge related to the product recall, (see
Subsequent Event, Note 9), the Company was not in compliance with its excess
availability covenant contained in the loan agreement on that date. The Company
had $1.6 million remaining availability under its borrowing base formula and
cash on hand of $1.65 million. The Company's cash needs are expected to increase
over the next three months as the Company builds inventory to meet seasonal
requirements. In addition, on February 1, 1999, the Company's ability under its
loan agreement to borrow against inventory is reduced to 70% of value, from the
current 75% of value. The Company is working with its lenders to provide
adequate funding for the continued operation of the Company and its
subsidiaries, although there can be no assurance that this can be obtained.



         On September 10, 1998, the Company entered into a five year agreement
with a U.S. meat packer that slaughters hogs and cattle. Under the agreement,
the Company has agreed to purchase from this packer at least 80 percent of its
total raw material requirements for boneless hams, bone-in hams, pork bellies
and other selected pork and beef products. The raw material purchases will be
priced daily based upon market formulas.

         In addition, the meat packer has loaned the Company $10 million
pursuant to the terms of a convertible debenture. The debenture bears interest
at a rate of 6.5 percent per year, payable quarterly. The principal on the
debenture is due September 9, 2003. The debenture can be converted into shares
of the Company's common stock at any time prior to the close of business on
September 9, 2003, at a conversion price of $14.00 per share. The $10 million
debenture is unsecured; however, it is senior in terms of payment priority to
the Company's $17.25 million subordinated debentures due April 1, 2007.

         At December 11, 1998, the Company had approximately $6.3 million in
cash. Cash used in operations during the twenty-eight weeks ended December 11,
1998 was approximately $5.2 million. Cash available at the beginning of the
quarter, less cash used in operations, plus cash acquired from financing
activities, was used principally to pay down borrowings of other long-term debt
of approximately $6.5 million and to fund net capital expenditures of $1.7
million.


YEAR 2000

         The Company has initiated a Year 2000 compliance program. The
compliance program has established a process for evaluating and managing the
risks and costs associated with this issue. The Company has dedicated internal
resources to address the Year 2000 issue. In fiscal 1996, the Company completed
a two-year project that re-engineered some key accounting and logistics systems,
all of which are now believed to be Year 2000 compliant. The Company will be
testing to determine if the remaining critical systems are Year 2000 compliant.
As a result of the completion of the fiscal 1996 project, the Company does not
foresee any risks or costs related to the Year 2000 compliance issue that would
have a material adverse effect on the Company.




EXHIBITS AND REPORTS ON FORM 8-K

         There were no reports filed on form 8-K for the period ending December
11, 1998.

                                       12
<PAGE>   14


                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.





                                                 THORN APPLE VALLEY, INC.
                                                 ------------------------
                                                       (Registrant)




Date:  February 01, 1999                    By:  /s/Louis Glazier
                                                 ---------------------------
                                                 Louis Glazier
                                                 Executive Vice President of
                                                  Finance and Administration
                                                 Chief Financial Officer


                                       13
<PAGE>   15
                               INDEX TO EXHIBITS



EXHIBIT NO.                   DESCRIPTION
-----------                   -----------

     27                       Financial Data Schedule