<PAGE>   1
                   U.S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                      
                                  FORM 10-Q
                                      
                     QUARTERLY REPORT PURSUANT TO SECTION
                        13 OR 15 (D) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

FOR 26-WEEK PERIOD ENDED JUNE 28, 1997              COMMISSION FILE NO. 0-26228

                           MARTIN INDUSTRIES, INC.
           ------------------------------------------------------
           (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 DELAWARE                                      63-0133054
       ------------------------------                     -------------------
      (STATE OR OTHER JURISDICTION OF                      (I.R.S. EMPLOYER
       INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NO.)


       301 EAST TENNESSEE STREET
            FLORENCE, ALABAMA                                     35630
----------------------------------------                       ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                       (ZIP CODE)


                               (205) 767-0330
            ----------------------------------------------------
            (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 SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

                               YES  X       NO
                                  -----       -----

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

                   8,643,895 SHARES OF COMMON STOCK, $.01
                       PAR VALUE, AS OF AUGUST 4, 1997



<PAGE>   2


                           MARTIN INDUSTRIES, INC.

                                    INDEX


<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----


<S>       <C>      <C>                                                                                  <C>
PART I                  FINANCIAL INFORMATION

          ITEM 1.  FINANCIAL STATEMENTS:

                        CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
                           JUNE 28, 1997 (UNAUDITED)  AND DECEMBER 31, 1996                              2

                        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
                           OPERATIONS FOR THE 26-WEEK PERIODS ENDED
                           JUNE 28, 1997 AND JUNE 29, 1996                                               4

                        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
                           CASH FLOWS FOR THE 26-WEEK PERIODS ENDED
                           JUNE 28, 1997 AND JUNE 29, 1996                                               5

                        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                             6

          ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                   AND RESULTS OF OPERATIONS                                                            10

PART II                 OTHER INFORMATION

          ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS                                  18

          ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                                     19
</TABLE>



                                      1

<PAGE>   3

                         PART I FINANCIAL INFORMATION
                         ITEM 1. FINANCIAL STATEMENTS

                           MARTIN INDUSTRIES, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                    ASSETS

<TABLE>
<CAPTION>

                                                      JUNE 28,    DECEMBER 31,
                                                        1997         1996
                                                    ===========   ===========
                                                           (UNAUDITED)

<S>                                                 <C>           <C>        
CURRENT ASSETS:
          CASH AND SHORT-TERM INVESTMENTS           $11,375,000   $19,326,000
          ACCOUNTS AND NOTES RECEIVABLE, LESS
              ALLOWANCE FOR DOUBTFUL ACCOUNTS OF
              $426,000 AND $419,000, RESPECTIVELY    26,967,000    17,788,000
          INVENTORIES                                23,977,000    18,346,000
          REFUNDABLE INCOME TAXES                       919,000             0
          DEFERRED TAX BENEFITS                       2,721,000     3,401,000
          PREPAID EXPENSES AND OTHER ASSETS           1,584,000     1,786,000
                                                    -----------   -----------

                    TOTAL CURRENT ASSETS             67,543,000    60,647,000
                                                    -----------   -----------


PROPERTY, PLANT AND EQUIPMENT, NET                   10,934,000    10,775,000
DEFERRED TAX BENEFITS                                   600,000       653,000
OTHER NONCURRENT ASSETS                               4,456,000     4,269,000
                                                    -----------   -----------

                                                     15,990,000    15,697,000
                                                    -----------   -----------

                    TOTAL ASSETS                    $83,533,000   $76,344,000
                                                    ===========   ===========
</TABLE>



THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED 
STATEMENTS.



                                      2
<PAGE>   4

                           MARTIN INDUSTRIES, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                     LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>

                                                                       JUNE 28,      DECEMBER 31,
                                                                         1997            1996
                                                                     ============    ============
                                                                              (UNAUDITED)

<S>                                                                  <C>             <C>         
LIABILITIES
     CURRENT LIABILITIES:
              NOTES PAYABLE                                          $ 10,093,000    $    742,000
              CURRENT PORTION OF LONG-TERM DEBT                         1,752,000       1,792,000
              ACCOUNTS PAYABLE                                          5,342,000       4,467,000
              ACCRUED INCOME TAXES PAYABLE                                      0         602,000
              ACCRUED LIABILITIES:
                  PAYROLL RELATED                                       3,192,000       3,068,000
                  PRODUCT LIABILITY                                       556,000         560,000
                  WARRANTY                                              1,236,000       1,299,000
                  WORKERS' COMPENSATION                                   603,000         602,000
                  OTHER                                                 1,437,000       2,609,000
                                                                     ------------    ------------

                        TOTAL CURRENT LIABILITIES                      24,211,000      15,741,000
                                                                     ------------    ------------

     LONG-TERM DEBT                                                     9,452,000      10,263,000
     DEFERRED COMPENSATION                                              2,157,000       2,183,000
     OTHER NONCURRENT LIABILITIES                                          71,000         125,000
                                                                     ------------    ------------

                                                                       11,680,000      12,571,000
                                                                     ------------    ------------

                        TOTAL LIABILITIES                              35,891,000      28,312,000
                                                                     ------------    ------------


STOCKHOLDERS' EQUITY
     PREFERRED STOCK $.01 PAR VALUE, 1,000,000
         SHARES AUTHORIZED; NO SHARES ISSUED AND
         OUTSTANDING                                                            0               0
     COMMON STOCK, $.01 PAR VALUE, 20,000,000
         SHARES AUTHORIZED; 9,748,000 SHARES ISSUED                        97,000          97,000
     PAID-IN CAPITAL                                                   26,326,000      25,866,000
     RETAINED EARNINGS                                                 30,340,000      31,035,000
     UNREALIZED GAIN (LOSS) ON FOREIGN CURRENCY TRANSLATION               (47,000)         25,000
                                                                     ------------    ------------

                                                                       56,716,000      57,023,000
     LESS:
         TREASURY STOCK AT COST (1,104,105 AND 1,021,925
            SHARES, RESPECTIVELY)                                       2,590,000       1,911,000
         UNEARNED COMPENSATION - ESOP                                   6,484,000       7,080,000
                                                                     ------------    ------------

                        TOTAL STOCKHOLDERS' EQUITY                     47,642,000      48,032,000
                                                                     ------------    ------------


                        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 83,533,000    $ 76,344,000
                                                                     ============    ============

</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED 
STATEMENTS.






                                      3
<PAGE>   5


                           MARTIN INDUSTRIES, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (UNAUDITED)



<TABLE>
<CAPTION>

                                                                               13-WEEK                         26-WEEK
                                                                            PERIOD ENDED                    PERIOD ENDED
                                                                    ============================    ============================
                                                                       JUNE 28,        JUNE 29,       JUNE 28,        JUNE 29, 
                                                                         1997           1996           1997              1996 
                                                                    ============    ============    ============    ============

<S>                                                                 <C>             <C>             <C>             <C>         
NET SALES                                                           $ 23,503,000    $ 24,099,000    $ 39,408,000    $ 39,494,000

COST OF SALES                                                         17,285,000      17,263,000      30,292,000      29,275,000
                                                                    ------------    ------------    ------------    ------------

         GROSS PROFIT                                                  6,218,000       6,836,000       9,116,000      10,219,000
                                                                    ------------    ------------    ------------    ------------

OPERATING EXPENSES:
     SELLING                                                           2,756,000       2,100,000       5,078,000       4,196,000
     GENERAL AND ADMINISTRATIVE                                        1,634,000       1,747,000       3,161,000       3,422,000
     NON-CASH ESOP COMPENSATION EXPENSE                                  433,000         809,000         962,000       1,567,000
                                                                    ------------    ------------    ------------    ------------
                                                                       4,823,000       4,656,000       9,201,000       9,185,000
                                                                    ------------    ------------    ------------    ------------


     OPERATING INCOME (LOSS)                                           1,395,000       2,180,000         (85,000)      1,034,000

INTEREST EXPENSE                                                         377,000         400,000         643,000         646,000

INTEREST INCOME                                                         (216,000)       (242,000)       (454,000)       (472,000)
                                                                    ------------    ------------    ------------    ------------

     INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES      1,234,000       2,022,000        (274,000)        860,000

PROVISION (CREDIT) FOR INCOME TAXES                                      557,000         918,000         (83,000)        561,000
                                                                    ------------    ------------    ------------    ------------

     INCOME (LOSS) FROM CONTINUING OPERATIONS                            677,000       1,104,000        (191,000)        299,000

     INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX                    0        (132,000)              0         163,000
                                                                    ------------    ------------    ------------    ------------

         NET INCOME (LOSS)                                          $    677,000    $    972,000    $   (191,000)   $    462,000
                                                                    ============    ============    ============    ============

INCOME (LOSS) FROM CONTINUING OPERATIONS PER SHARE                  $       0.10    $       0.16    $      (0.03)   $       0.05
INCOME (LOSS) FROM DISCONTINUED OPERATIONS PER SHARE                        0.00           (0.02)           0.00            0.02
                                                                    ------------    ------------    ------------    ------------

NET INCOME (LOSS) PER SHARE                                         $       0.10    $       0.14    $      (0.03)   $       0.07
                                                                    ============    ============    ============    ============


WEIGHTED AVERAGE NUMBER OF COMMON AND
     COMMON EQUIVALENT SHARES OUTSTANDING                              7,034,389       6,753,029       6,732,806       6,644,273
                                                                    ============    ============    ============    ============

DIVIDENDS DECLARED PER SHARE                                        $      0.038    $      0.036    $      0.076    $      0.072
                                                                    ============    ============    ============    ============
</TABLE>



THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED 
STATEMENTS.




                                      4

<PAGE>   6


                           MARTIN INDUSTRIES, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)


<TABLE>
<CAPTION>

                                                                                26-WEEK
                                                                             PERIOD ENDED
                                                                     ============================
                                                                       JUNE 28,        JUNE 29,
                                                                         1997            1996
                                                                     ============    ============
<S>                                                                  <C>             <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
     NET INCOME (LOSS)                                               $   (191,000)   $    462,000
     ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH
         USED IN OPERATING ACTIVITIES:
              DEPRECIATION AND AMORTIZATION                               884,000         670,000
              GAIN ON SALE OF ASSETS                                      (12,000)              0
              PROVISION FOR DOUBTFUL ACCOUNTS AND NOTES RECEIVABLE          7,000          15,000
              NON-CASH ESOP COMPENSATION EXPENSE                          962,000       1,567,000
              OTHER CHANGES IN OPERATING ASSETS AND LIABILITIES       (16,512,000)     (9,218,000)
                                                                     ------------    ------------

                  NET CASH USED IN OPERATING ACTIVITIES               (14,862,000)     (6,504,000)
                                                                     ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     CAPITAL EXPENDITURES                                              (1,486,000)     (1,192,000)
     PROCEEDS FROM SALE OF ASSETS                                       1,023,000           1,000
     PURCHASE OF SUBSIDIARY, NET OF CASH ACQUIRED                               0      (1,374,000)
                                                                     ------------    ------------

                  NET CASH USED IN INVESTING ACTIVITIES                  (463,000)     (2,565,000)
                                                                     ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     NET BORROWINGS ON NOTES PAYABLE                                    9,308,000       5,644,000
     NET REPAYMENTS OF LONG-TERM DEBT                                    (801,000)     (1,444,000)
     PURCHASE OF TREASURY STOCK                                          (775,000)              0
     EXERCISE OF STOCK OPTIONS                                             44,000         180,000
     CASH DIVIDENDS PAID                                                 (402,000)       (364,000)
                                                                     ------------    ------------

                  NET CASH PROVIDED BY FINANCING ACTIVITIES             7,374,000       4,016,000
                                                                     ------------    ------------

NET DECREASE IN CASH AND SHORT-TERM
     INVESTMENTS                                                       (7,951,000)     (5,053,000)

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                         0               0

CASH AND SHORT-TERM INVESTMENTS AT THE
     BEGINNING OF THE PERIOD                                           19,326,000      20,439,000
                                                                     ------------    ------------

CASH AND SHORT-TERM INVESTMENTS AT THE
     END OF THE PERIOD                                               $ 11,375,000    $ 15,386,000
                                                                     ============    ============

</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED 
STATEMENTS.




                                      5
<PAGE>   7



                           MARTIN INDUSTRIES, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)


1.  BASIS OF PRESENTATION

Unaudited Interim Condensed Consolidated Financial Statements

         The accompanying unaudited interim condensed consolidated financial
statements of Martin Industries, Inc. (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and are presented in accordance with the requirements of Form 10-Q
and Article 10 of Regulation S-X. The financial statements should be read in
conjunction with the audited financial statements and notes thereto for the year
ended December 31, 1996 included on Form 10-K, as filed with the Securities and
Exchange Commission on March 31, 1997.

         In the opinion of management, the unaudited condensed consolidated
financial statements included herein reflect all adjustments (which include only
normal recurring adjustments) necessary to present fairly the information set
forth therein. The consolidated results of operations for the periods presented
are not necessarily indicative of results for the full year. The Company's
business is seasonal and cyclical with the potential for significant
fluctuations in quarterly earnings.

Principles of Consolidation and Fiscal Periods

         The unaudited interim condensed consolidated financial statements
include the accounts and transactions of the Company and its wholly owned
Canadian subsidiary, 1166081 Ontario Inc. All significant intercompany accounts
and transactions have been eliminated in consolidation. See Note 2 for
discussion of the business combination.

         The Company's fiscal quarters end on the Saturday nearest each calendar
quarter-end. The Company utilizes a December 31 fiscal year-end.

2.  BUSINESS COMBINATION

         On February 1, 1996, the Company's newly formed, wholly owned Canadian
subsidiary, 1166081 Ontario Inc. ("Martin Canada"), acquired all of the capital
stock of Hunter Energy and Technologies Inc. and 1061099 Ontario Inc.
("1061099"), a sister company which owned the land and building leased by Hunter
Energy and Technologies Inc. for its manufacturing operation. The transaction
was accounted for under the purchase method of accounting. The aggregate
purchase price of approximately $1,943,000 included $850,000 in cash, $729,000
in promissory notes, and $364,000 paid into escrow. Transaction expenses of
$160,000 were incurred. The promissory notes bear interest at a rate of 9% per
annum and matured during the first quarter of 1997. The Company has withheld
payment on certain of the promissory notes pending resolution of certain issues
with the holders of the notes arising out of the purchase transaction. The
purpose of the escrow is to make funds available to meet the sellers'
indemnification obligations to the Company. The total purchase price exceeded
the fair value of the net assets acquired by $2,250,000, which amount is
reflected as goodwill (included in other 



                                      6
<PAGE>   8

noncurrent assets) to be amortized over 40 years. The consolidated results of
operations for the 1996 period reflect the operations of the acquisition for the
period from the purchase date, February 1, 1996, through June 29, 1996.
Effective January 1, 1997, Hunter Energy and Technologies Inc. and 1061099 were
amalgamated to form Hunter Technology Inc. ("HEAT").

3.  ESOP ACCOUNTING

         In 1992 the Company established the Employee Stock Ownership Plan
("ESOP") and in January 1993 the Company borrowed $11.9 million from its primary
lender (the "bank loan"), which funds were then loaned by the Company to the
ESOP (the "ESOP loan") on terms substantially similar to those of the bank loan.
The ESOP utilized the ESOP loan proceeds, together with a $54,000 initial cash
contribution from the Company, to purchase 3,489,115 shares of the Company's
common stock from existing stockholders. The bank loan and ESOP loan are payable
in equal semi-annual principal installments over a 10-year period.

         At the time of the origination of the bank loan and the ESOP loan and
subsequent purchase by the ESOP of Company shares, the Company recorded the
principal amount of the bank loan as long-term debt and recorded unearned
compensation for the principal amount of the ESOP loan, which is reflected as a
reduction to stockholders' equity on the balance sheet. Pending repayment of the
ESOP loan, shares owned by the ESOP are held in a suspense account and are
unallocated to participants. Shares of common stock are committed to be released
from the suspense account and subsequently allocated to participants' accounts
based on the ratio that the annual principal debt repayment of the ESOP loan
bears to the original principal balance (347,340 shares of common stock per
year). The Company recognizes non-cash compensation expense and credits equity
each month in an amount equal to one-twelfth of the number of shares of common
stock committed to be released each year, net of shares committed to be released
in lieu of cash dividends declared on allocated shares, multiplied by the
average fair value of such shares during the period. The average fair value of
shares is based on the average market price at which the shares of common stock 
are traded in the open market during the applicable period.

         Accordingly, if the average market price of the common stock increases,
the Company's non-cash ESOP compensation expense will also increase, thereby
having a negative impact on the Company's net income (loss) and net income
(loss) per share. Because the Company cannot predict the price at which its
shares will trade in the future, it cannot predict the amount of non-cash ESOP
compensation expense or the resulting effect on net income (loss) or net income
(loss) per share for future periods.

4.  NET INCOME (LOSS) PER SHARE

         Net income (loss) per share has been computed based on the weighted
average number of common shares outstanding in each respective period. Shares of
stock owned by the ESOP that have been committed to be released to participants
have been considered outstanding on a weighted average basis for the purpose of
computing net income (loss) per share. Shares of stock owned by the ESOP that 
have not been committed to be released have not been considered outstanding for
such purpose. The computation of the weighted average number of common and 
common equivalent shares outstanding for the interim periods reported herein is
summarized as follows:



                                      7
<PAGE>   9

<TABLE>
<CAPTION>
                                                               13-Week                                         26-Week
                                                            Period Ended                                     Period Ended
                                                   -----------------------------                     ---------------------------
                                                    June 28,            June 29,                      June 28,          June 29,
                                                      1997                1996                          1997              1996
                                                   ----------          ---------                     ---------         ---------
     <S>                                            <C>                <C>                           <C>               <C>      
     Weighted average shares,
        excluding ESOP and
        stock option effects                        5,252,829          5,169,269                     5,277,070         5,103,931

     Weighted average effect
        of ESOP shares committed
        to be released                              1,499,154          1,195,916                     1,455,736         1,152,498

     Dilutive effect of stock options                 282,406            387,844                           -0-           387,844
                                                   ----------          ---------                     ---------         ---------

     Weighted average number
        of common and common
        equivalent shares outstanding               7,034,389          6,753,029                     6,732,806         6,644,273
                                                   ==========          =========                     =========         =========
</TABLE>

         In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings
per Share. This Statement establishes standards for computing and presenting
earnings per share ("EPS"). This Statement will simplify the standards for
computing EPS previously found in Accounting Principles Board Opinion No. 15, 
Earnings per Share, and will make them comparable to international EPS 
standards. It will replace the presentation of primary EPS with a presentation 
of basic EPS and will require dual presentation of basic and diluted EPS on the
face of the income statement and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of 
the diluted EPS computation.

         This Statement is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods and requires
restatement of all prior-period EPS data presented. The Company will adopt the
Statement at fiscal year-end 1997. Had the Company implemented SFAS 128 on
January 1, 1996, the pro forma EPS results would have been as follows:



<TABLE>
<CAPTION>
                                                   13-Week Period Ended                    13-Week Period Ended
                                                       June 28, 1997                           June 29, 1996
                                               -----------------------------           -------------------------------
                                                          Diluted                                 Diluted
                                                         Effect of                               Effect of
                                                          Options                                 Options
                                               Basic      Issued     Diluted           Basic       Issued      Diluted
                                               -----      ------     -------           -----       ------      -------

       <S>                                 <C>           <C>       <C>              <C>          <C>         <C>       
       Income from continuing
           operations                      $  677,000    $677,000  $  677,000       $1,104,000   $1,104,000  $1,104,000
       Shares available to common
           shareholders                     6,751,983     282,406   7,034,389        6,365,185      387,844   6,753,029
       Income from continuing
           operations per share            $     0.10    $      -  $     0.10       $     0.17   $    (0.01) $     0.16
</TABLE>



                                      8
<PAGE>   10


<TABLE>
<CAPTION>
                                                  26-Week Period Ended                       26-Week Period Ended
                                                     June 28, 1997                              June 29, 1996
                                              ------------------------------           ---------------------------------
                                                         Diluted                                   Diluted
                                                        Effect of                                 Effect of
                                                         Options                                   Options
                                              Basic      Issued      Diluted           Basic        Issued       Diluted
                                              -----     ---------    -------           -----      ---------      -------

       <S>                                 <C>             <S>    <C>               <C>            <C>        <C>       
       Income (loss) from continuing
           operations                      $ (191,000)     --     $ (191,000)       $  299,000     $299,000   $  299,000
       Shares available to common
           shareholders                     6,732,806      --      6,732,806         6,256,429      387,844    6,644,273
       Income (loss) from continuing
           operations per share            $    (0.03)     --     $    (0.03)       $     0.05     $      -   $     0.05        
</TABLE>

         Options of 380,159 and 201,406 for the 13 - week periods ended June 
28, 1997 and June 29, 1996, respectively, were not included in the table above 
as they were anti-dilutive.  Options of 662,565 and 201,406 for the 26-week 
periods ended June 28, 1997 and June 29, 1996, respectively, were not included 
in the table above as they were anti-dilutive.

5.  INVENTORIES

         Substantially all of the Company's inventories are valued at last-in,
first-out ("LIFO") cost, which is not in excess of market. An analysis of
inventories at June 28, 1997 and December 31, 1996 follows:

<TABLE>
<CAPTION>

                                                                               June 28,            December 31,
                                                                                 1997                  1996
                                                                               -------             -----------
                                                                                         (Unaudited)

    <S>                                                                      <C>                   <C>        
    Inventories valued at first-in, first-out ("FIFO") cost:
     Raw materials and purchased parts                                       $11,073,000           $10,570,000
      Work-in-process                                                          4,841,000             4,281,000
      Finished goods                                                          13,887,000             9,066,000
                                                                             -----------           -----------
                                                                              29,801,000            23,917,000
    Less excess of FIFO over LIFO cost                                         5,824,000             5,571,000
                                                                             -----------           -----------
                                                                             $23,977,000           $18,346,000
                                                                             ===========           ===========
</TABLE>


6.  DISCONTINUED OPERATIONS

         On February 24, 1997, the Company announced that it had elected to
discontinue its operations in the metal office furniture segment. For 1996, the
segment's operations, net of tax, have been treated as a discontinued operation
for accounting purposes. The Company established a reserve at December 31, 1996
of $1,430,000, net of taxes of $861,000. The loss from discontinued operations
charged to the reserve during the 26-week period ended June 28, 1997 was
$1,006,000.

         During the second quarter, the Company sold the specialty equipment and
trade name as well as disposed of certain obsolete inventory associated with its
discontinued metal office furniture division. The disposition of the above
assets was reflected in the second quarter as an adjustment to the reserve for
discontinued operations.



                                      9
<PAGE>   11

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


         The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the unaudited
interim condensed consolidated financial statements of the Company and notes
thereto appearing elsewhere in this Form 10-Q. All references to the second
quarter of 1997 and the second quarter of 1996 are referring to the 13-week
periods ended June 28, 1997 and June 29, 1996, respectively. All references to
the 1997 year-to-date period and the 1996 year-to-date period are referring to
the 26-week periods ended June 28, 1997 and June 29, 1996, respectively.

         The Company manufactures products in two industry segments: home
heating products and leisure and other products such as do-it-yourself utility
trailer kits and gas barbecue grills. Each of the industry segments in which the
Company operates is cyclical in nature, with sales being affected by general
economic cycles, consumer confidence levels, inflation, employment and income
levels and the availability of credit generally. The Company's fireplace
business is also influenced by factors affecting the housing industry, such as
housing demand, the availability of financing and the level and stability of
interest rates.

         Prior to 1997, the Company manufactured products in the metal office
furniture segment through its Filex line acquired in 1989. In February of 1997,
the Company elected to discontinue its metal office furniture operations. The
recent consolidation in the office furniture industry increased competition and
margin pressures in the segment to the point of an unacceptable return to the
Company. The metal office furniture segment's operations are treated as
discontinued in the accompanying condensed consolidated financial statements.
See "--Results of Discontinued Metal Office Furniture Operations."

         On February 1, 1996, the Company's wholly owned Canadian subsidiary,
1166081 Ontario Inc. ("Martin Canada"), acquired all of the capital stock of
Hunter Energy and Technologies Inc. ("HEAT") and 1061099 Ontario Inc. 
("1061099"), a sister company which owned the land and building leased by HEAT
for its manufacturing operation. This transaction was accounted for under the
purchase method of accounting. The aggregate purchase price of approximately
$1,943,000 included $850,000 in cash, $729,000 in promissory notes payable and
$364,000 paid into escrow. Transaction expenses of $160,000 were incurred. The
condensed consolidated results of operations for the 1996 period reflect the
operations of the acquired entities for the period from the purchase date,
February 1, 1996, through June 29, 1996.

         Sales of home heating products and, in particular, gas and solid fuel
heaters (other than fireplaces), historically have been seasonal in nature, with
sales being directly affected by weather conditions. In an effort to better
control its production schedule and inventory of finished products in light of
this seasonality, the Company utilizes early booking programs, which allow the
Company to project sales early in the year and plan production accordingly. In
general, the Company takes early booking orders for its heating products in the
first and second quarters and fills the majority of these orders in the second
and third quarters, with fill-in orders being shipped in the fourth quarter and
to a lesser degree in the ensuing first quarter.




                                      10
<PAGE>   12

RESULTS OF CONTINUING OPERATIONS

         The following tables set forth, for the periods indicated, information
derived from the Company's financial statements expressed as a percentage of net
sales together with industry segment information.

<TABLE>
<CAPTION>
                                                                13-Week Period Ended                26-Week Period Ended
                                                               -----------------------             -----------------------
                                                               June 28,       June 29,             June 28,       June 29,
                                                                 1997           1996                 1997           1996
                                                               --------       --------             --------       --------

     <S>                                                        <C>            <C>                  <C>            <C>   
     Net sales                                                  100.0%         100.0%               100.0%         100.0%
     Cost of sales                                               73.5           71.6                 76.9           74.1
                                                                -----          -----                -----          -----
     Gross profit                                                26.5           28.4                 23.1           25.9

     Operating expenses:
        Selling                                                  11.7            8.7                 12.9           10.6
        General and administrative                                7.0            7.2                  8.0            8.7
        Non-cash ESOP compensation expense                        1.8            3.4                  2.4            4.0
                                                                -----          -----                -----          -----

     Operating income (loss)                                      6.0            9.1                  (.2)           2.6
     Interest expense, net                                         .7             .7                   .5             .4
                                                                -----          -----                -----          -----

     Income (loss) before income taxes                            5.3            8.4                  (.7)           2.2
     Provision (credit) for income taxes                          2.4            3.8                  (.2)           1.4
                                                                -----          -----                -----          -----

        Net income (loss)                                         2.9%           4.6%                 (.5)%           .8%
                                                                =====          =====                =====          =====
</TABLE>


<TABLE>
<CAPTION>

                                                                                  Segment Information
                                                              -----------------------------------------------------------
                                                                13-Week Period Ended                26-Week Period Ended
                                                              -----------------------              ----------------------
                                                              June 28,       June 29,              June 28,       June 29,
                                                                1997           1996                  1997           1996
                                                              -------        -------               -------        -------
                                                                                      (In Thousands)
     <S>                                                      <C>            <C>                   <C>            <C>    
     Net sales:
        Home heating products                                 $17,087        $19,352               $27,093        $29,926
        Leisure and other products                              6,416          4,747                12,315          9,568
                                                              -------        -------               -------        -------
                                                              $23,503        $24,099               $39,408        $39,494
                                                              =======         ======               =======        =======

     Gross profit:
        Home heating products                                 $ 4,632        $ 6,051               $ 6,205          8,562
        Leisure and other products                              1,586            785                 2,911          1,657
                                                              -------        -------               -------        -------
                                                              $ 6,218        $ 6,836               $ 9,116        $10,219
                                                              =======        =======               =======        =======

     Segment contribution(1):
        Home heating products                                 $ 2,814        $ 4,327               $ 2,655        $ 5,168
        Leisure and other products                                648            409                 1,383            855
                                                              -------        -------               -------        -------
                                                              $ 3,462        $ 4,736               $ 4,038        $ 6,023
                                                              =======        =======               =======        =======
</TABLE>

(1)  Segment contribution consists of gross profit less selling expenses.



                                      11
<PAGE>   13

13-WEEK PERIOD ENDED JUNE 28, 1997 COMPARED TO 13-WEEK PERIOD ENDED JUNE 29,
1996

Net Sales

         Net sales in the 13-week period ended June 28, 1997 decreased to $23.5
million from $24.1 million in the 13-week period ended June 29, 1996, a decrease
of $596,000, or 2.5%.

Home Heating Products. Net sales of home heating products decreased to $17.1
million in the second quarter of 1997 from $19.4 million in the second quarter
of 1996, a decrease of $2.3 million, or 11.7%. The decrease in net sales of home
heating products was primarily the result of a delay in the release of the
Company's early booking program for gas heating products.

Leisure and Other Products. Net sales of leisure and other products increased
$1.7 million, or 35.2%, in the second quarter of 1997 to $6.4 million as
compared to $4.7 million in the second quarter of 1996. Net sales of barbecue
gas grills increased $1.5 million in the second quarter of 1997 as compared to 
the second quarter of 1996 primarily as a result of new model introductions and
publicity from a Broilmaster grill being awarded a "Best Buy" designation by
Consumer Digest magazine.

Gross Profit

         Gross profit in the second quarter of 1997 was $6.2 million as compared
to $6.8 million in the second quarter of 1996, a decrease of $618,000, or 9.0%.
Gross margin, defined as gross profit as a percentage of net sales, was 26.5% in
the second quarter of 1997 as compared to 28.4% in the second quarter of 1996.

Home Heating Products. Gross profit on net sales of home heating products in the
second quarter of 1997 was $4.6 million as compared to $6.1 million in the
second quarter of 1996, a decrease of $1.5 million, or 23.5%. The decrease in
net sales for the quarter of 11.7% was the primary contributor to the decrease.
Gross margin was 27.1% in the second quarter of 1997 as compared to 31.3% in the
second quarter of 1996 primarily as the result of a higher mix of lower margin
fireplace sales.

Leisure and Other Products. Gross profit on net sales of leisure and other
products in the second quarter of 1997 was $1.6 million as compared to $785,000
in the second quarter of 1996, an increase of $801,000, or 102.0%. The increase
was primarily the result of the 35.2% increase in net sales discussed above.
Gross margin was 24.7% in the second quarter of 1997 as compared to 16.5% in the
second quarter of 1996 primarily as the result of a higher mix of higher margin
barbecue gas grill sales.

Selling Expenses

         Selling expenses in the second quarter of 1997 increased to $2.8
million from $2.1 million in the second quarter of 1996, an increase of
$656,000, or 31.2%. The increase in selling expenses was mainly attributable to
a $253,000 increase in advertising and promotion expenses in the home heating
segment and a $308,000 increase in advertising and promotion expenses in the
leisure and other segment. Selling expenses as a percentage of net sales
increased to 11.7% in the second quarter of 1997 from 8.7% in the second quarter
of 1996 primarily as a result of the 2.5% decrease in net sales together with
the increases discussed herein.



                                      12
<PAGE>   14

Segment Contribution

         Total segment contribution, defined as gross profit less selling
expenses, decreased from $4.7 million in the second quarter of 1996 to $3.5
million in the second quarter of 1997, a decrease of $1.2 million, or 26.9%. The
decrease was primarily the result of the 9.0% decrease in gross profit, the
31.2% increase in selling expenses and other factors discussed above.

General and Administrative Expenses

         General and administrative expenses decreased $113,000, or 6.5%, in the
second quarter of 1997 as compared to the second quarter of 1996. General and
administrative expenses as a percentage of net sales were 7.0% in the second
quarter of 1997 as compared to 7.2% in the second quarter of 1996.

Non-cash ESOP Compensation Expense

         Non-cash ESOP compensation expense was $433,000 in the second quarter
of 1997 as compared to $809,000 in the second quarter of 1996, a decrease of
$376,000, or 46.5%. In the second quarter of 1997, 76,860 shares of unallocated
ESOP stock were committed to be released as compensation at an average fair
value of $5.63 per share, as compared to 82,833 shares committed to be released
as compensation at an average fair value of $9.77 per share in the second
quarter of 1996. See discussion of ESOP accounting in Note 3 to Notes to
Condensed Consolidated Financial Statements.

Interest Expense

         Interest expense in the second quarter of 1997 was $377,000 as compared
to $400,000 in the second quarter of 1996, a decrease of $23,000, or 5.8%. The
decrease was attributable to the decrease of $1.3 million in average outstanding
debt during the second quarter.

Interest Income

         Interest income in the second quarter of 1997 was $216,000 as compared
to $242,000 in the second quarter of 1996, a decrease of $26,000, or 10.7%.

Provision for Income Taxes

         The provision for income taxes decreased to $557,000 in the second
quarter of 1997 from $918,000 in the second quarter of 1996, a decrease of
$361,000, or 39.3%. The decrease was the result of a $788,000 decrease in income
before taxes to $1.2 million in the second quarter of 1997 from $2.0 million in
the second quarter of 1996, a decrease of 39.0%. The effective tax rate
decreased to 45.1% in the second quarter of 1997 from 45.4% in the second
quarter of 1996 primarily as a result of the non-recognition of a tax benefit on
the $173,000 net loss of HEAT during the second quarter of 1996.

Income from Continuing Operations and Income from Continuing Operations Per
Share

         The income from continuing operations in the second quarter of 1997 was
$677,000 as compared to $1,104,000 in the second quarter of 1996. The decrease
in income from continuing operations was primarily the result of the factors
discussed above.



                                      13
<PAGE>   15

         Income from continuing operations per share was $0.10 in the second
quarter of 1997 as compared to $0.16 in the second quarter of 1996. The decrease
of 37.5% was due to the decrease in income from continuing operations of 38.7%
combined with the increase in the weighted average number of common and common
equivalent shares outstanding of 4.2%. The increase in weighted average shares
outstanding was primarily the result of stock options exercised and ESOP shares
committed to be released to participants less treasury shares purchased.


26-WEEK PERIOD ENDED JUNE 28, 1997 COMPARED TO 26-WEEK PERIOD ENDED JUNE 29,
1996

Net Sales

         Net sales in the 26-week period ended June 28, 1997 decreased to $39.4
million as compared to $39.5 million in the 26-week period ended June 29, 1996,
a decrease of $86,000, or 0.2%.

Home Heating Products. Net sales of home heating products decreased to $27.1
million in the 1997 year-to-date period as compared to $29.9 million in the 1996
year-to-date period, a decrease of $2.8 million, or 9.5%. The decrease in net
sales of home heating products was primarily the result of a delay in the
release of the Company's early booking program for gas heating products.

Leisure and Other Products. Net sales of leisure and other products increased
$2.7 million, or 28.7%, in the 1997 year-to-date period to $12.3 million as
compared to $9.6 million in the 1996 year-to-date period. The increase was
primarily the result of a $2.4 million, or 44.1%, increase in net sales of
barbecue gas grills. Net sales of utility trailer kits increased $368,000, or
9.7%, in the 1997 year-to-date period to $4.2 million as compared to $3.8
million in the 1996 year-to-date period.

Gross Profit

         Gross profit in the 1997 year-to-date period was $9.1 million as
compared to $10.2 million in the 1996 year-to-date period, a decrease of $1.1
million, or 10.8%. Gross margin decreased to 23.1% in the 1997 year-to-date
period from 25.9% in the 1996 year-to-date period.

Home Heating Products. Gross profit on net sales of home heating products was
$6.2 million in the 1997 year-to-date period as compared to $8.6 million in the
1996 year-to-date period, a decrease of $2.4 million, or 27.5%. Gross margin
decreased to 22.9% in the 1997 year-to-date period from 28.6% in the 1996
year-to-date period. The decrease in gross margin was caused by the shift in
sales mix from higher margin gas heating products to Martin fireplace products.
Gas heating product sales, excluding HEAT, were 46.0% of home heating product
sales in the 1997 year-to-date period as compared to 52.4% in the 1996
year-to-date period.

Leisure and Other Products. Gross profit on net sales of leisure and other
products increased $1.2 million, or 75.7%, in the 1997 year-to-date period to
$2.9 million as compared to $1.7 million in the 1996 year-to-date period. The
increase was primarily the result of the 28.7% increase in net sales as
discussed above. Gross margin increased to 23.6% in the 1997 year-to-date period
from 17.3% in the 1996 year-to-date period. The increase was primarily the
result of a shift in sales mix from utility trailer kits to 



                                      14
<PAGE>   16

higher margin, barbecue gas grills. Barbecue gas grill sales were 64.5% of
leisure and other product sales in the 1997 year-to-date period as compared to
57.9% in the 1996 year-to-date period.

Selling Expenses

         Selling expenses in the 1997 year-to-date period were $5.1 million as
compared to $4.2 million in the 1996 year-to-date period, an increase of
$882,000, or 21.0%. Cooperative advertising expenses and commissions increased
$147,000 primarily as a result of the increase in sales within the leisure and
other products segment. Advertising and promotion expenses increased $677,000.
This increase is spread among both segments. Selling expenses as a percentage of
net sales increased to 12.9% in the 1997 year-to-date period from 10.6% in the
1996 year-to-date period.

Segment Contribution

         Total segment contribution decreased to $4.0 million in the 1997
year-to-date period from $6.0 million in the 1996 year-to-date period, a
decrease of $2.0 million, or 33.0%. The decrease was primarily the result of the
decrease in gross profit together with the increased selling expense discussed
above.

General and Administrative Expense

         General and administrative expenses decreased $261,000, or 7.6%, in the
1997 year-to-date period as compared to the 1996 year-to-date period. The
decrease was primarily the result of a $93,000 business interruption insurance 
claim filed by HEAT and a $142,000 decrease in the Company's Supplemental 
Executive Retirement Plan ("SERP") expense. The claim was filed as a result of 
a fire at the Company's plant in Canada during 1996. The decrease in SERP 
expense in the 1997 year-to-date period was the result of a decrease in the 
fair value of the Company's common stock to $6.00 per share at June 28, 1997 
as compared to $9.00 at June 29, 1996.

Non-cash ESOP Compensation Expense

         Non-cash ESOP compensation expense decreased $605,000, or 38.6%, in the
1997 year-to-date period to $962,000, as compared to $1.6 million in the 1996
year-to-date period. In the 1997 year-to-date period, 155,432 shares of
unallocated ESOP stock were committed to be released as compensation at an
average fair value of $6.19 per share, as compared to 165,405 shares committed
to be released as compensation at an average fair value of $9.47 per share in
the 1996 year-to-date period.

Interest Expense

         Interest expense decreased $3,000, or 0.5%, in the 1997 year-to-date
period to $643,000, as compared to $646,000 in the 1996 year-to-date period.

Interest Income

         Interest income decreased $18,000, or 3.8%, in the 1997 year-to-date
period to $454,000, as compared to $472,000 in the 1996 year-to-date period.




                                      15
<PAGE>   17

Provision (Credit) for Income Taxes

         The provision for income taxes decreased from $561,000 in the 1996
year-to-date period to a credit of $83,000 in the 1997 year-to-date period, a
decrease of $644,000, or 114.8%. The decrease was primarily the result of a
decrease in income from continuing operations before tax in the 1996 
year-to-date period of $860,000 to a loss from continuing operations in the 
1997  year-to-date period of $274,000, a decrease of 131.9%. The effective tax
rate decreased from 65.2% in the 1996 year-to-date period to 30.3% in the 1997
year-to-date period. The decrease in the effective tax rate was primarily the
result of the non-recognition of a tax benefit on the $438,000 net loss of
HEAT during the 1996 year-to-date period.

Income (Loss) from Continuing Operations and Income (Loss) from Continuing
Operations Per Share

         Loss from continuing operations in the 1997 year-to-date period was
$191,000 as compared to income from continuing operations of $299,000 in the
1996 year-to-date period, a decrease of $490,000, or 163.9%. The decrease was
primarily the result of the factors discussed above.

         Loss from continuing operations per share was $0.03 in the 1997
year-to-date period as compared to income from continuing operations per share
of $0.05 in the 1996 year-to-date period, a decrease of 160.0%.

RESULTS OF DISCONTINUED METAL OFFICE FURNITURE OPERATIONS

         As a result of the Company's decision to discontinue and dispose of the
metal office furniture operation, an estimated net loss on disposal of $1.4
million was charged to discontinued operations in the fourth quarter of 1996.
The loss included management's estimate of the operating losses through final 
disposal, the write-downs of inventory and property, plant and equipment to net 
realizable value, and the costs to close the plant. The results of operations 
of the metal office furniture segment have been charged against the reserve 
during the 1997 year-to-date period. The loss charged to the reserve in the 
1997  year-to-date period was $1,006,000.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has historically financed its operations in the first half
of the year from internally generated funds and seasonal borrowings under its
bank line of credit. The Company's primary capital requirements are for working
capital, debt service, capital expenditures and dividends.

         The Company's operations in the 26-week period ended June 28, 1997 used
$14.9 million in cash primarily to finance increases in extended term ("dating")
receivables and inventories required to supply the Company's peak shipping
season which occurs primarily in the third and fourth quarters of each year.
The Company's operating cash and bank line of credit were utilized to provide
the funds needed for working capital requirements, capital expenditures,
long-term debt repayments and dividends for the period. Historically, the
Company's operations for the remainder of the year have provided the funds
required to repay the bank line of credit.

         As discussed above, the Company finances temporary working capital
requirements under an unsecured bank line of credit with its principal lender.
The credit agreement provides a line of $20.0 



                                      16
<PAGE>   18

million.  The current line expired July 31, 1997.  The Company, operating under
the terms of the current line, is in the process of negotiating the renewal of 
the line and anticipates no significant change in terms.  Interest on the line 
of credit is payable monthly at a variable rate equivalent to 30-day LIBOR plus
1.25%, which at August 1, 1997 was 6.875%.

FINANCIAL POSITION

         Cash and short-term investments in the 1997 year-to-date period
decreased $8.0 million as a result of the factors discussed above. Accounts 
receivable and inventories in the 1997 year-to-date period increased $9.2 
million and $5.6 million, respectively. The increase in accounts receivable was
primarily the result of the $10.2 million increase in dating receivables. In 
an effort to better control its production schedule in light of the seasonal 
nature of its home heating and barbecue gas grill business, the Company 
utilizes early booking programs under which customers receive favorable dating 
terms for placing their orders early and permitting the Company to ship the 
products at "factory convenience."

         The increase in inventories was the result of the Company's general
practice of producing gas and solid fuel heaters in the late winter, spring and
summer to supply the typical peak shipping season in the last two quarters of
the year.

         During the 1997 year-to-date period, net property, plant and equipment
increased $159,000, or 1.5%. The increase was the net result of $1.5 million in
capital expenditures during the 1997 year-to-date period primarily offset by 
the disposal of property, plant and equipment with a net book value of $427,000
and depreciation expense of $875,000.

         As previously discussed, the Company utilizes its bank line of credit
during the peak production period in the second and third quarters to finance
working capital requirements. During the 1997 year-to-date period, the Company
utilized $9.3 million of its bank line of credit for this purpose as reflected
by the increase in short-term borrowings for the period.

         During the 1997 year-to-date period, other accrued liabilities
decreased $1.2 million. The decrease was primarily the result of the loss from
discontinued operations of $1.0 million charged to the reserve.



                                      17
<PAGE>   19

                         PART II - OTHER INFORMATION


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

         The Annual Meeting of Stockholders of Martin Industries, Inc. was held
on May 16, 1997. At the Annual Meeting, the stockholders elected two members to
the board of directors of the Company to serve as a class until the Annual
Meeting of Stockholders to be held in 2000. The nominees to the board of
directors to serve until the Annual Meeting of Stockholders to be held in 2000
received the following number of votes:

<TABLE>
<CAPTION>
                                   Shares Voted             Shares Voted       Abstentions
                                       FOR                    AGAINST         and Non-Votes
                                   ------------             ------------      -------------

         <S>                        <C>                       <C>               <C>    
         Bill G. Hughey             7,570,798                 189,552           396,988

         Charles R. Martin          7,559,169                 201,181           396,988
</TABLE>


         The stockholders considered a proposal to approve the Martin
Industries, Inc. 1996 Non-Employee Directors' Stock Option and Deferred
Compensation Plan. The stockholders approved the proposal by the following 
number of votes:

<TABLE>
<CAPTION> 
                                   Shares Voted             Shares Voted       Abstentions
                                       FOR                    AGAINST         and Non-Votes
                                   ------------             ------------      -------------

                                    <S>                       <C>               <C>    
                                    7,438,305                 159,460           559,573
</TABLE>


         At the Annual Meeting, the stockholders also considered the selection
of the Company's independent auditors for the fiscal year ending December 31,
1997. The stockholders approved the selection by the board of directors of the
accounting firm of Arthur Andersen LLP as independent auditors for the Company
for said fiscal year by the following number of votes:

<TABLE>
<CAPTION>
                                   Shares Voted             Shares Voted             Abstentions
                                       FOR                     AGAINST              and Non-Votes
                                   -----------              ------------            -------------
                                   
                                    <S>                        <C>                      <C>   
                                    8,104,473                  31,735                   21,130
</TABLE>


         No other matters were considered or voted upon at the Annual Meeting.




                                      18
<PAGE>   20

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  *3(a) Form of Restated Certificate of Incorporation of Martin
                        Industries, Inc. which was filed as Exhibit 3(a) to the
                        Registrant's Registration Statement on Form S-1 filed
                        with the Commission on July 10, 1995 (Registration No.
                        33-90432).

                   3(b) By-laws of Martin Industries, Inc. as amended and 
                        restated on May 16, 1997.

                  *4    Article 4 of the Restated Certificate of Incorporation 
                        of Martin Industries, Inc. which was included in Exhibit
                        3(a) to the Registrant's Registration Statement on Form
                        S-1 filed with the Commission on July 10, 1995
                        (Registration No. 33-90432).

                **27    Financial Data Schedule.


         (b)      Reports on Form 8-K

                  No reports on Form 8-K were filed during the period.

-----------------------------------
 *Incorporated by reference
**Filed with electronic filing only



                                      19
<PAGE>   21



"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:

         With the exception of historical information, the matters and
statements discussed, made or incorporated by reference in this Quarterly Report
on Form 10-Q constitute forward-looking statements and are discussed, made or
incorporated by reference, as the case may be, pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve certain assumptions, risks and uncertainties
that could cause actual results to differ materially from those included in or
contemplated by the statements. These assumptions, risks and uncertainties
include, but are not limited to, those associated with general economic cycles;
the cyclical nature of the industries in which the Company operates and the
factors related thereto, including consumer confidence levels, inflation,
employment and income levels, the availability of credit, and factors affecting
the housing industry; the potential in the Company's business to experience
significant fluctuations in quarterly earnings; the Company's business strategy,
including its strategy of pursuing acquisitions and new product development;
potential losses from product liability and personal injury lawsuits; the
effects of seasonality and weather conditions on the Company's home heating
product sales and other sales; fluctuations in quarterly earnings due to ESOP
accounting; the effect of existing and new governmental and environmental
regulations applicable to the Company; the dependence of the Company on key
personnel; the highly competitive nature of each of the industries in which the
Company operates; the volatility of the stock price at which outstanding shares
of the Company may trade from time to time; and the other risks and
uncertainties discussed or indicated in all documents filed by the Company with
the Commission. The Company expressly disclaims any obligation to update any
forward-looking statements as a result of developments occurring after the
filing of this report.

                                  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.

                                                MARTIN INDUSTRIES, INC.      
                                                                             
                                                                             
         Date:  August 12, 1997                 By  /s/ Roderick V. Schlosser
                                                    -------------------------
                                                    Roderick V. Schlosser    
                                                    Vice President of Finance
                                                       and Treasurer            
                                                       (Executed on behalf      
                                                       of Registrant and        
                                                       as Principal             
                                                       Financial Officer)       



                                      20
<PAGE>   22

                              INDEX TO EXHIBITS

<TABLE>
<CAPTION>
      Exhibit
       Number               Description of Exhibits                                  Page No.
       ------               -----------------------                                  --------

       <S>                  <C>                                                      <C>
         *3(a)              Form of Restated Certificate of Incorporation of 
                            Martin Industries, Inc. which was filed as Exhibit
                            3(a) to the Registrant's Registration Statement on
                            Form S-1 filed with the Commission on July 10, 1995
                            (Registration No. 33-90432).

          3(b)              By-laws of Martin Industries, Inc. as amended and 
                            restated on May 16, 1997.

         *4                 Article 4 of the Restated Certificate of  
                            Incorporation of Martin Industries, Inc. which was
                            included in Exhibit 3(a) to the Registrant's
                            Registration Statement on Form S-1 filed with the
                            Commission on July 10, 1995 (Registration No.
                            33-90432).

       **27                 Financial Data Schedule.
</TABLE>


       -----------------------------------
        *Incorporated by reference
       **Filed with electronic filing only