<PAGE>   1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

(XX)  Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the Quarterly Period ended May 31, 1999 or

(  )  Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from _____________ to ____________

Commission file number        1-8831


                          FEDDERS CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S>                           <C>
Delaware                     22-2572390
(State of incorporation)  (I.R.S. Employer Identification No.)
</TABLE>

<TABLE>
<S>                                             <C>
505 Martinsville Road, Liberty Corner, NJ        07938 - 0813
(Address of principal executive offices)        (Zip Code)
</TABLE>

Registrant's telephone number, including area code:  908/604-8686

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                     Yes  X        No

The registrant has  outstanding  16,135,159  shares of Common Stock,  17,606,036
shares of Class A Stock (which is immediately convertible into Common Stock on a
share-for-share  basis upon  conversion  of all of Class B Stock) and  2,266,606
shares of Class B Stock (which is immediately convertible into Common Stock on a
share-for-share basis) as of June 30, 1999.


<PAGE>   2

FEDDERS CORPORATION


INDEX

<TABLE>
<CAPTION>
                                                            Page
                                                           Number
<S>                                                       <C>
PART I FINANCIAL INFORMATION

Item 1.  Financial Statements

Consolidated Statements of Operations                           3
Consolidated Balance Sheets                                   4-5
Consolidated Statements of Cash Flows                           6
Notes to Consolidated Financial Statements                    7-17

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations       18-21


Item 3.  Quantitative and Qualitative Disclosures              21
         about Market Risk


Item 6.  Exhibits and Reports on Form 8-K                      22

SIGNATURE                                                      23

</TABLE>


<PAGE>   3
PART I FINANCIAL INFORMATION
FEDDERS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)

<TABLE>
<CAPTION>
                                THIRD QUARTER          NINE MONTHS
                                ENDED MAY 31,          ENDED MAY 31,
                                1999       1998        1999       1998
<S>                             <C>        <C>         <C>        <C>

Net sales and other income      $175,632   $172,061    $260,221   $231,132
Cost of sales                    134,973    135,075     200,084    182,272
Selling, general and
 administrative expense           10,712      9,884      29,272     27,909
Restructuring charge                 -          -           -       16,750
                                  ----------------------------------------
                                 145,685    144,959     229,356    226,931

Operating income                  29,947     27,102      30,865      4,201
Partner's net interest in
 joint venture results               (71)        96         534        323
Net interest expense              (2,981)    (2,806)     (7,758)    (6,992)
                                -------------------------------------------
Income (loss) before income
 taxes                            26,895     24,392      23,641     (2,468)
Federal, state and foreign
 income taxes (benefit)            8,825      8,538       7,691       (863)
                                -------------------------------------------

Net income (loss)               $ 18,070   $ 15,854    $ 15,950   $ (1,605)
                                ===========================================



Earnings (loss) per share:

                  Basic         $   0.50   $   0.38    $   0.44   $  (0.04)
                                ===========================================
                 Diluted        $   0.48   $   0.37    $   0.42   $  (0.04)
                                ===========================================

Dividends per share declared:
 Common                         $ 0.0250   $  0.020    $ 0.0750   $  0.060
 Class A                          0.0250      0.020      0.0750      0.060
 Class B                          0.0225      0.018      0.0675      0.054



</TABLE>
See accompanying notes



<PAGE>   4
FEDDERS CORPORATION
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)

<TABLE>
<CAPTION>
                                     MAY 31,      AUGUST 31,   MAY 31,
                                      1999           1998       1998
                                  ----------------------------------
<S>                               <C>            <C>           <C>
ASSETS:
Current assets:
 Cash                             $ 51,664       $ 90,986      $ 54,027

 Accounts receivable (less
  allowance of $1,977, $2,032,
  and $1,638 at May 31, 1999,
  August 31, 1998 and
  May 31, 1998, respectively        69,172         14,520        74,449
 Inventories:
  Finished goods                    13,423         25,553        33,315
  Work in process                    4,946          4,132         4,597
  Raw materials and supplies        33,857         22,576        28,991
                                  -------------------------------------
                                    52,226         52,261        66,903
 Deferred tax benefit                5,902          5,902         4,070
 Prepaid expenses                    3,026          4,308         3,073
                                  -------------------------------------
    Total current assets           181,990        167,977       202,522

Property, plant and equipment
 at cost:
 Land and improvements               2,994          2,994         2,994
 Buildings                          22,205         22,326        22,216
 Machinery and equipment            84,758         79,454        72,019
 Machinery and equipment under
  capital lease                      8,446          8,647         8,945
                                  -------------------------------------
                                   118,403        113,421       106,174
Less accumulated depreciation       61,729         57,103        51,799
                                  -------------------------------------
                                    56,674         56,318        54,375

Deferred income taxes                8,838          8,838         6,374
Goodwill                            53,884         55,159        55,583
Other assets                        16,019         16,337        12,426
                                  -------------------------------------

                                 $ 317,405       $304,629      $331,280
                                  =====================================
</TABLE>

See accompanying notes


<PAGE>   5
FEDDERS CORPORATION
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)(unaudited)
<TABLE>
<CAPTION>
                                    May 31,      August 31,    May 31,
                                     1999           1998        1998
                                    ----------------------------------
<S>                                 <C>          <C>          <C>
LIABILITIES & STOCKHOLDERS' EQUITY:
Current liabilities:

 Current portion of long-term debt  $  3,072     $  2,065     $  2,182
 Accounts payable                     25,501       25,769       33,445
 Income taxes payable                 20,775       14,406       11,844
 Accrued expenses                     42,219       32,101       45,863
                                    ----------------------------------
   Total current liabilities          91,567       74,341       93,334
Long-term debt                       106,914      108,948      108,738
Other long-term liabilities            9,672       11,911       10,932
Minority interest in joint venture     2,625        4,637        4,717
Stockholders' equity:
 Common Stock,
   (all classes $1 par value):
   80,000 shares authorized
   16,322, 16,972 and 17,626 issued
   at May 31,1999; August 31, 1998
   and May 31, 1998, respectively     16,347       16,972       17,626
 Class A Stock,
   60,000 shares authorized,
   19,370; 19,381 and 29,527 issued
   at May 31, 1999, August 31, 1998
   and May 31, 1998, respectively     19,445       19,381       29,527
 Class B Stock,
   7,500 shares authorized,
   2,267 issued at May 31, 1999,
   August 31, 1998 and May 31, 1998,
   respectively                        2,267        2,267        2,267
 Additional paid-in capital           29,305       31,619       85,391
 Retained earnings                    49,654       36,496       32,875
 Cumulative translation adjustment      (391)        (430)        (242)
                                     ----------------------------------
                                     116,627      106,305      167,444
 Less: treasury stock, at cost,
  1,690 and 7,775 shares at
  at May 31, 1999, and May 31, 1998,
  respectively                        (8,702)         -        (53,885)
 Deferred compensation                (1,298)      (1,513)           -
                                     ---------------------------------
     Total stockholders' equity      106,627      104,792      113,559
                                     ---------------------------------
                                    $317,405     $304,629     $331,280
                                    ==================================
</TABLE>


See accompanying notes


<PAGE>   6
FEDDERS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands) (unaudited)

<TABLE>
<CAPTION>
                                                      NINE MONTHS
                                                      ENDED May 31,
                                                  1999            1998
                                                  ----------------------
<S>                                               <C>           <C>
Cash flows from operations:
 Net income (loss)                                $ 15,950      $ (1,605)
 Adjustments  to  reconcile  net  income
 (loss) to net cash  used in  operating
  activities:
   Depreciation and amortization                     6,976         6,636
         and deferred income taxes
Restructuring charge:
    Provision for facility closing                     -           9,850
    Write-off of long-lived assets                     -           6,900
 Changes in operating assets and liabilities:
   Accounts receivable                             (54,652)      (65,389)
   Inventories                                          35        (4,716)
   Other current assets                              1,475         5,844
   Other assets                                       (163)       (6,026)
   Accounts payable                                   (268)       22,854
   Accrued expenses                                  9,868         5,475
   Income tax payable                                6,369         1,817
   Other long-term liabilities                      (1,996)         (275)
   Other                                               262           (92)
                                                 ------------------------
    Net cash used in operations                    (16,144)      (18,727)
                                                 ------------------------

Cash flows from investing activities:
 Additions to property, plant and equipment         (6,257)       (6,155)
 Disposals of property, plant and equipment            -           3,701
 Partner's net interest in joint venture results    (2,012)         (323)
                                                 ------------------------
     Net cash used in investing activities          (8,269)       (2,777)
                                                 ------------------------

Cash flows from financing activities:
 Repayments of long-term debt                         (546)       (4,496)
 Proceeds from stock options exercised                 179         3,317
 Repurchase of capital stock (buy-back plan)       (11,756)      (29,301)
 Repurchase of capital stock (other)                   -          (1,838)
 Cash dividends                                     (2,786)       (2,544)
                                                  -----------------------
     Net cash used in financing
      activities                                   (14,909)      (34,862)
                                                 ------------------------

Net decrease in cash and cash equivalents          (39,322)      (56,366)
Cash and cash equivalents at beginning
 of period                                          90,986       110,393
                                                 -----------------------

Cash and cash equivalents at end of period        $ 51,664      $ 54,027
                                                  ======================

Supplemental disclosure:
 Interest paid                                    $  8,120      $  5,746
 Net income taxes paid (refunded)                    2,441        (2,872)
</TABLE>

See accompanying notes


<PAGE>   7

FEDDERS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

A. The  financial  information  included  herein is  unaudited  and  prepared in
accordance  with the  instructions  for Form  10-Q;  however,  such  information
reflects all adjustments,  which consist solely of normal recurring  adjustments
which are, in the  opinion of  management,  necessary  for a fair  statement  of
results  for the  interim  periods.  Reference  should  be  made  to the  annual
financial   statements,   including  footnotes  thereto,   included  in  Fedders
Corporation's  (the  "Company")  Annual  Report on Form 10-K for the fiscal year
ended August 31, 1998.  The Company's  business is seasonal,  and  consequently,
operating results for the three-month and nine month periods ending May 31, 1999
are not  necessarily  indicative  of the results  that may be  expected  for the
fiscal year ending August 31, 1999.

B. In July 1997, the Company announced that it had been authorized to repurchase
up to $50  million of  outstanding  stock.  Under  this plan,  in the first nine
months of fiscal 1998, the Company purchased approximately 3.4 million shares of
Common, Class A, and Preferred Stock for $19.9 million or $5.87 per share. Total
repurchases  under this plan which were  complete  by August  1998  amounted  to
approximately  8.4 million  shares of Common,  Class A and  Preferred  Stock for
$50.1 million or $5.93 per share.

In August 1998, the Company  announced that it had been authorized to repurchase
up to an additional  $30 million of outstanding  stock.  Under this plan, in the
first nine months of fiscal  1999,  the Company  repurchased  approximately  2.4
million shares of Common and Class A Stock for $11.7 million or $4.86 per share.

C. In the  third  quarter  of 1999 and 1998,  net  income  (loss)  per share was
computed  using the  weighted  average  number of shares of Common,  Class A and
Class B Stock  outstanding,  which  amounted  to  approximately  36,153,000  and
41,679,000 shares,  respectively.  Options on approximately  1,701,000 shares of
capital stock were included in computing  diluted earnings per share in the 1999
quarter. In the prior year period, options on approximately  1,665,000 shares of
capital stock were included in computing diluted earnings per share.

In the first  nine  months of 1999 and 1998,  net  income  (loss)  per share was
computed using the weighted average number of shares outstanding, which amounted
to  approximately  36,268,000 and 41,806,000  shares,  respectively.  Options on
approximately  1,666,000  shares of capital  stock were  included  in  computing
diluted earnings per share in 1999. Options on approximately 1,820,000 shares of
capital stock were not included in computing  diluted  earnings per share due to
the net loss in the 1998 period.



<PAGE>   8


D. In January 1998, the Company  announced a plan to restructure its operations,
which  resulted  in the  Company  recording a one-time  expense  totaling  $16.8
million in the second fiscal quarter of 1998. At May 31, 1999, the restructuring
reserve  balance was  approximately  $3.0 million and consisted  principally  of
amounts for terminations of various equipment and facility leases.

E. The Company adopted Statement of Financial Accounting Standards (SFAS) 130, "
Reporting   Comprehensive   Income",   on  September  1,  1998.  This  statement
established  standards for reporting and display of  comprehensive  income,  its
components and accumulated balances.  Comprehensive income is defined to include
all changes in equity  except those  resulting  from  investments  by owners and
distributions to owners. Comprehensive income of the Company is as follows:


<TABLE>
<CAPTION>

                                 Quarter Ended            Nine Months Ended
                                    May 31,                   May 31,
                                 1999      1998           1999       1998
                                 ---------------          ---------------

<S>                              <C>       <C>            <C>        <C>
Net income (loss)                $18,070   $15,854        $15,950    $ (1,605)

Other comprehensive loss,
 net of tax:
 Foreign currency translation
 adjustment                           28        23             39        (104)
                                 -------   -------        -------    ---------
Comprehensive income (loss)      $18,098   $15,877        $15,989    $ (1,709)
                                 =======   =======        =======    =========
</TABLE>



   The Company  adopted SFAS 131,  "Disclosures  about Segments of an Enterprise
and Related Information". This standard supersedes SFAS 14, "Financial Reporting
for Segments of a Business  Enterprise"  and  establishes  standards for the way
that public companies report  information about operating segments and standards
for  disclosures  regarding  products and services,  geographic  areas and major
customers.  As permitted by SFAS 131, the Company will not apply this  statement
to interim  periods in the initial year of adoption.  Results of operations  and
financial position will be unaffected by implementation of this standard.

In February 1998, the FASB issued SFAS 132 "Employers Disclosures About Pensions
and Other Post-Retirement Benefits" - an Amendment of SFAS 87, 88 and 106, which
revises  disclosure  about  pension  and  other  post-retirement  benefits.  The
statement is effective for the  Company's  financial  statements  for the fiscal
year ending August 31, 1999.  The Company does not expect this statement to have
a material impact on the Company's financial statements.


<PAGE>   9
F.  Subsequent Event:
In  July  1999,   Fedders   Corporation   entered  into an  agreement  providing
for  Fedders'  acquisition  (by  way  of  a  cash  tender offer and a subsequent
merger  of Trion into a subsidiary of Fedders) of Trion,  Inc.,  a  manufacturer
of  indoor  air  quality products,  at a price of $5.50  per  share  in cash for
all   (approximately   7.2  million)   outstanding   shares  of  Trion's  common
stock.  The  agreement  is  conditioned  upon the  tender  of  at least 80.0% of
the  shares  of  Trion  common  stock  outstanding  on  a fully  diluted  basis,
certain  regulatory  filings  and  other  customary  conditions.  Following  the
acquisition,  Trion  will  continue  as  an  indirect wholly-owned subsidiary of
Fedders.


G. In August 1997,  Fedders  North  America,  Inc.("FNA"),  a subsidiary  of the
Company issued $100 million principal amount of 9 3/8% Senior Subordinated Notes
due in 2007.  The Notes are  guaranteed by the Company on a senior  subordinated
basis.  The  following  condensed  consolidating  financial  statements  present
separate  information for FNA (including its  subsidiaries)  and the Company and
its subsidiaries, other than FNA. The subsidiaries of the Company other than FNA
(including  its  subsidiaries)  are  inconsequential,  individually  and  in the
aggregate,   to  the  consolidated   financial  statements  and  management  has
determined  that  separate  financial  statements  of the  Company  would not be
meaningful.


<PAGE>   10

G. Continued
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
                                          For the Three Months Ended
                                                   May 31, 1999

                                Fedders            Other      Fedders
                                North America      Fedders    Corporation
                                -----------------------------------------
<S>                             <C>               <C>         <C>
Net sales                       $164,894          $ 10,738    $175,632
Cost of sales                    126,629             8,344     134,973
Selling, general and
 administrative expense (1,3)      8,614             2,098      10,712
                                --------------------------------------
Operating income                  29,651               296      29,947
Partner's net interest in
 joint venture results               -                 (71)        (71)
Net interest expense (2)          (2,464)             (517)     (2,981)
                                ---------------------------------------
Income (loss) before
 income taxes                     27,187              (292)     26,895
Income taxes (benefit)             8,762               (63)      8,825
                                --------------------------------------
Net income (loss)               $ 18,425          $   (355)   $ 18,070
                                ======================================

<CAPTION>
                                          For the Three Months Ended
                                                  May 31, 1998

                                Fedders            Other      Fedders
                                North America      Fedders    Corporation
                                -----------------------------------------
<S>                             <C>               <C>         <C>
Net sales                       $161,537          $ 10,524    $172,061
Cost of sales                    126,654             8,421     135,075
Selling, general and
 administrative expense (1,3)      6,329             3,555       9,884
                                --------------------------------------
Operating income (loss)           28,554            (1,452)     27,102
Partner's net interest in
 joint venture results               -                  96          96
Net interest expense (2)          (2,605)             (201)     (2,806)
                                ---------------------------------------
Income (loss) before income
 taxes                            25,949            (1,557)     24,392
Income taxes (benefit)             9,082              (544)      8,538
                                --------------------------------------
Net income (loss)               $ 16,867          $ (1,013)   $ 15,854
                                ======================================
</TABLE>


See accompanying notes

<PAGE>   11
G. Continued
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(amounts in thousands)

<TABLE>
<CAPTION>
                                          For the Nine Months Ended
                                              May 31, 1999

                                Fedders            Other      Fedders
                                North America      Fedders    Corporation
                                -----------------------------------------
<S>                             <C>               <C>         <C>
Net sales                       $237,615          $ 22,606     $260,221
Cost of sales                    181,521            18,563      200,084
Selling, general and
 administrative expense (1,3)     20,668             8,604       29,272
                                ---------------------------------------
Operating income (loss)           35,426            (4,561)      30,865
Partner's net interest in
 joint venture results               -                 534          534
Net interest expense (2)          (7,684)              (74)      (7,758)
                              ------------------------------------------
Income (loss) before
 income taxes                     27,742            (4,101)      23,641
Income taxes (benefit)             8,956            (1,265)       7,691
                                ---------------------------------------
Net income (loss)               $ 18,786          $ (2,836)    $ 15,950
                                =======================================

<CAPTION>
                                          For the Nine Months Ended
                                                  May 31, 1998

                                Fedders            Other       Fedders
                                North America      Fedders     Corporation
                                ------------------------------------------
<S>                             <C>               <C>         <C>
Net sales                       $207,292          $ 23,840     $231,132
Cost of sales                    163,928            18,344      182,272
Selling, general and
 administrative expense (1)       18,539             9,370       27,909
Restructuring charge              14,488             2,262       16,750
                                ---------------------------------------
Operating income (loss)           10,337            (6,136)       4,201
Partner's net interest in
 joint venture results               -                 323          323
Net interest income
 (expense) (2)                    (7,849)              857       (6,992)
                                ----------------------------------------
Income (loss) before
 income taxes                      2,488            (4,956)      (2,468)
Income taxes (benefit)               871            (1,734)        (863)
                                ----------------------------------------
Net income (loss)               $  1,617          $ (3,222)    $ (1,605)
                                ========================================
</TABLE>



See accompanying notes


<PAGE>   12
G. Continued
Condensed Consolidating Balance Sheets(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
                                                 May 31, 1999

                             Fedders         Other      Eliminating    Fedders
                             North America   Fedders    Entries        Corporation
                             -----------------------------------------------------
<S>                          <C>             <C>        <C>            <C>
Assets
Current assets:
 Cash                        $ 32,528       $ 19,136                   $ 51,664
 Accounts Receivable, net      64,591          4,581                     69,172
 Inventories                   40,322         11,904                     52,226
 Other current assets           6,589          2,339                      8,928
                             --------------------------------------------------
Total current assets          144,030         37,960                    181,990

Investment in subsidiaries        -          104,306    $(104,306)         -
Property, plant and
 equipment, net                46,070         10,604                     56,674
Goodwill                       47,814          6,070                     53,884
Other long-term assets          7,020         17,837                     24,857
                             --------------------------------------------------
                             $244,934       $176,777    $(104,306)     $317,405
                             ==================================================

Liabilities and Stockholders'
Equity Current liabilities:
  Current portion of long-
  term debt                  $  1,501       $  1,571                    $ 3,072
  Accounts and income tax
   payable                     47,624         (1,348)                    46,276
  Accrued expenses             42,547           (328)                    42,219
                              -------------------------------------------------
Total current liabilities      91,672           (105)       -            91,567

Long-term debt                104,263          2,651                    106,914
Other long-term liabilities     2,457          9,840                     12,297

Stockholders' equity:
 Common, Class A and Class B
  Stock                             5         38,059           (5)       38,059
 Paid-in capital               21,292        112,315    $(173,219)      (39,612)
 Retained earnings             25,619         24,033       68,918       118,570
 Treasury stock                  -            (8,702)                    (8,702)
 Deferred compensation           -            (1,298)                    (1,298)
 Cumulative translation
  adjustment                     (374)           (16)                      (390)
                             ---------------------------------------------------
Total stockholders' equity     46,542        164,391     (104,306)      106,627
                             --------------------------------------------------
                             $244,934       $176,777    $(104,306)     $317,405
                             ==================================================
</TABLE>


See accompanying notes


<PAGE>   13
G. Continued
Condensed Consolidating Balance Sheets (unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
                                            August 31, 1998
                             Fedders         Other      Eliminating    Fedders
                             North America   Fedders    Entries        Corporation
                             -----------------------------------------------------
<S>                          <C>             <C>        <C>            <C>
Assets
Current assets:
 Cash                            -           $ 90,986                  $ 90,986
 Accounts receivable, net      11,328           3,192                    14,520
 Inventories                   39,335          12,926                    52,261
 Other current assets           6,952           3,258                    10,210
                             --------------------------------------------------
Total current assets           57,615         110,362                   167,977

Investment in subsidiaries        -           104,306    (104,306)          -
Property, plant and
 equipment, net                45,446          10,872                    56,318
Goodwill                       48,873           6,286                    55,159
Other long-term assets          7,460          17,715                    25,175
                             --------------------------------------------------
                             $159,394        $249,541   $(104,306)     $304,629
                             ==================================================

Liabilities and Stockholders' Equity
Current liabilities:
 Current portion of long-
  term debt                  $  2,060        $      5                   $ 2,065
 Accounts and income tax
  payable                      38,773           1,402                    40,175
 Accrued expenses              28,571           3,530                    32,101
                             --------------------------------------------------
Total current liabilities      69,404           4,937       -            74,341

Net due to (from) affiliates  (46,905)         46,905                      -
Long-term debt                105,334           3,614                   108,948
Other long-term liabilities     3,391          13,157                    16,548

Stockholders' equity:
 Common, Class A and Class B
  Stock                             5          38,620          (5)       38,620
 Paid-in capital               21,292         183,546   $(173,219)       31,619
 Retained earnings (deficit)    7,231         (39,653)     68,918        36,496
 Deferred compensation           -             (1,513)                   (1,513)
 Cumulative translation
   adjustment                    (358)            (72)                     (430)
                             ---------------------------------------------------
Total stockholders' equity     28,170         180,928    (104,306)      104,792
                             --------------------------------------------------
                             $159,394        $249,541   $(104,306)     $304,629
                             ==================================================
</TABLE>


See accompanying notes

<PAGE>   14

G. Continued
Condensed Consolidating Balance Sheets(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
                                                 May 31, 1998
                             Fedders         Other      Eliminating    Fedders
                             North America   Fedders    Entries        Corporation
<S>                          <C>             <C>        <C>            <C>
Assets
Current assets:
 Cash                        $ 2,944         $ 51,083                 $  54,027
 Accounts receivable, net     67,914            6,535                    74,449
 Inventories                  51,066           15,837                    66,903
 Other current assets            920            6,223                     7,143
                            ---------------------------------------------------
Total current assets         122,844           79,678       -           202,522

Investment in subsidiaries        -           104,306   $(104,306)           -
Property, plant and
 equipment, net                43,444          10,931                    54,375
Goodwill                       49,225           6,358                    55,583
Other long-term assets          3,960          14,840                    18,800
                             --------------------------------------------------
                             $219,473        $216,113   $(104,306)     $331,280
                             ==================================================

Liabilities and Stockholders'
Equity Current liabilities:
 Current portion of long-
  term debt                  $  2,166        $     16                     2,182
 Accounts and income taxes
  payable                      42,514           2,775                    45,289
 Accrued expenses              41,899           3,964                    45,863
                             --------------------------------------------------
Total current liabilities      86,579           6,755                    93,334


Net due to (from) affiliates   (1,615)          1,615                      -
Long-term debt                105,726           3,012                   108,738
Other long-term liabilities     2,772          12,877                    15,649

Stockholders' equity:
 Common, Class A and Class B
  Stock                             5          49,421          (5)       49,421
 Paid-in capital               21,292         237,317   $(173,219)       85,390
 Retained earnings (deficit)    1,617         (37,660)     68,918        32,875
 Treasury stock                  -            (53,885)                  (53,885)
 Cumulative translation
   adjustment                    (133)           (109)                     (242)
                             ---------------------------------------------------
Total stockholders' equity     22,781         195,084    (104,306)      113,559
                             --------------------------------------------------
                             $219,473        $216,113   $(104,306)     $331,280
                            ===================================================
</TABLE>
See accompanying notes



<PAGE>   15
G. Continued
Condensed Consolidating Statements of Cash Flows (unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
                                          For the Nine Months Ended
                                                   May 31, 1999

                                    Fedders         Other       Fedders
                                    North America   Fedders     Corporation
                                    ---------------------------------------
<S>                                 <C>             <C>         <C>

Net cash used in operations         $ (9,453)       $ (6,691)   $(16,144)
                                    -------------------------------------
Net additions to property, plant,
 and equipment, being cash used
 in investing activities              (3,294)         (4,975)     (8,269)
                                    -------------------------------------
Net (repayments) proceeds of
 short and long-term borrowings       (1,630)          1,084        (546)
Cash dividends                          -             (2,786)     (2,786)
Proceeds from stock options
 exercised                              -                179         179
Repurchase of capital stock             -            (11,756)    (11,756)
Change in net due to (from)
  affiliate                           40,891         (40,891)       -
                                    -------------------------------------
Net cash provided by (used in)
  financing activities                39,261         (54,170)    (14,909)
                                    -------------------------------------
Net decrease in cash and cash
 equivalents                         (26,514)        (65,836)    (39,322)
                                    -------------------------------------
Cash and cash equivalents at
  beginning of year                    6,014          84,972      90,986
                                    ------------------------------------
Cash and cash equivalents at
 end of period                      $32,528         $ 19,136    $ 51,664
                                    ====================================
</TABLE>


See accompanying notes


<PAGE>   16
G. Continued
Condensed Consolidating Statements of Cash Flows (unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
                                            For the Nine Months Ended
                                                     May 31, 1998

                                    Fedders         Other       Fedders
                                    North America   Fedders     Corporation
                                    ---------------------------------------
<S>                                 <C>             <C>         <C>

Net cash used in operations         $ (5,027)        $(13,700)    $(18,727)
                                    ---------------------------------------
Net disposals of property, plant,
 and equipment                        (2,283)            (494)      (2,777)
                                    ---------------------------------------
Net repayments of short and long-
 term borrowings                      (1,324)          (3,172)      (4,496)
Cash dividends                          -              (2,544)      (2,544)
Proceeds from stock options
 exercised                              -               3,317        3,317
Repurchase of capital stock             -             (31,139)     (31,139)
Change in net due to (from)
  affiliate                           11,578          (11,578)        -
                                    ---------------------------------------
Net cash provided by (used in)
  financing activities                10,254          (45,116)     (34,862)
                                    ---------------------------------------
Net increase (decrease) in
 cash and cash equivalents             2,944          (59,310)     (56,366)
                                    ---------------------------------------
Cash and cash equivalents at
  beginning of year                     -             110,393      110,393
                                    --------------------------------------
Cash and cash equivalents at
 end of period                       $ 2,944         $ 51,083     $ 54,027
                                     =====================================
</TABLE>
See accompanying notes


<PAGE>   17


G. Continued

Intercompany transactions

     The historical condensed consolidating financial statements presented above
include the following transactions between the Company and FNA.

1) The Company charges corporate overhead  essentially on a cost basis allocated
in  proportion  to sales.  Such  charges to FNA amounted to  approximately  $4.1
million  and $2.2  million  for the three  months  ended May 31,  1999 and 1998,
respectively.  Such charges to FNA amounted to $8.7 million and $7.2 million for
the nine months ended May 31, 1999 and 1998, respectively.

2) FNA's interest  expense reflects actual interest charges on the 9-3/8% Senior
Subordinated  Notes due 2007, a revolving line of credit,  a promissory note and
capital lease obligations.

3) FNA's  depreciation  and amortization for the three months ended May 31, 1999
and 1998 amounted to approximately $1.8 million and $1.7 million,  respectively.
For the nine  months  ended May 31, 1999 and 1998,  such costs  amounted to $5.6
million and $5.3  million,  respectively.  Capital  expenditures  of FNA for the
three-month period amounted to $2.2 million and $2.4 million,  respectively. For
the nine-month period such expenditures  amounted to approximately  $5.5 million
and $4.8 million, respectively.



<PAGE>   18


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



The following is  management's  discussion  and analysis of certain  significant
factors which affected the Company's  financial  position and operating  results
during  the  periods  included  in  the  accompanying   consolidated   financial
statements.

Results of Operations

<TABLE>
<CAPTION>
                         Operating Results as Percent of Net Sales
                         Third Fiscal Quarter         Nine Months
                           1999      1998           1999        1998
                         --------------------------------------------
<S>                        <C>       <C>            <C>         <C>
Gross profit               23.2%     21.5%          23.1%       21.1%
Selling, general
 and administrative
 expense                    6.1%      5.7%          11.3%       12.1%
Operating income before
 restructuring charge      17.1%     15.8%          11.8%        9.0%
Restructuring charge         -         -              -          7.2%
Operating income           17.1%     15.8%          11.8%        1.8%
Net interest expense        1.7%      1.6%           3.0%        3.0%
Pre-tax income (loss)      15.4%     14.2%           8.8%       (1.2%)
</TABLE>


Third Quarter

Net sales in the third quarter ended May 31, 1999,  amounted to $175.6  million,
an increase of 2% from $172.1  million in the same period a year  earlier.  This
increase is primarily attributable to air conditioning sales.

Gross profit percentage increased to 23.2% from 21.5% primarily due to change in
sales mix.

In the 1999 quarter,  selling, general and administrative expenses increased due
to higher administrative and R&D spending.

Operating  income was $29.9  million or 17.1% of net sales in the  current  year
period compared to $27.1 million or 15.8% of net sales in the prior year period,
reflecting the sales increase and higher gross profit.

Net interest expense was slightly higher in the current quarter and reflects the
seasonal short-term borrowings.


Net income  increased  $2.1 million to $18.1  million  compared to net income of
$15.9 million during the same period in the prior year. Total shares outstanding
declined by 9.3% at May 31, 1999 to 36.3  million from 40.0 million in the prior
year as a result of the Company's stock repurchase plan.


<PAGE>   19


Nine Months

For the first nine months of fiscal 1999, sales were $260.2 million, an increase
of 12.6% from $231.5 million in the comparable  1998 period.  The sales increase
during the  nine-month  period  reflects  a more  pronounced  seasonal  shift in
domestic  sales into the second half of the  Company's  fiscal  year,  primarily
because  major  retailers who continue to gain market  share,  require  delivery
closer to the air conditioning season. Further, sales to international customers
increased.

Gross profit  margin  percentage  increased  during the first nine months of the
current  year,  compared to the same  period in fiscal  1998,  due to  increased
absorption of fixed costs and expenses as a result of increased production.

Selling,  general and  administrative  expenses  increased $1.4 million from the
prior year as a result of increased administration and R&D costs, but decreased
as a percent of net sales to 11.3%  from 12.1% in  the  prior year due to higher
sales.

Operating income before restructuring was $30.9 million or 11.9% of net sales in
the current year compared to income of $21.0 million or 9.0% of net sales in the
prior year due to higher sales and gross margins.

Net  interest  expense  was  slightly  higher  in  the  current  year due to the
increase in short-term borrowings.

The  Company's net income  increased  $17.6 million to a profit of $16.0 million
from a loss of $1.6 million in fiscal 1998.  The net income was $16.0 million or
44 cents per share,  in the current  year  compared  to net  income,  before the
restructuring  charge,  of $9.3  million or 22 cents per share in the prior year
period.


Liquidity and Capital Resources

Working  capital  requirements  of the Company are seasonal,  with cash balances
peaking in the  fourth  quarter  and the  greatest  utilization  of its lines of
credit  occurring  early  in the  calendar  year.  Cash on hand at May 31,  1999
amounted to $51.6  million and there were no short-term  borrowings  compared to
cash on hand of $54.0 million and no short-term borrowings at May 31, 1998. Cash
included $3.5 million and $4.3 million at Fedders  Xinle,  the  Company's  joint
venture in China, at May 31, 1999 and 1998, respectively.





<PAGE>   20



Net cash used in operations for the nine months ended May 31, 1999,  amounted to
$16.1 million, compared to $18.7 million in the prior year period. The Company's
operations required less cash due to it's ability to match in-season  production
to the previously discussed sales shift into the second half of the fiscal year.
The principal use of cash in each period was to produce  finished  goods for the
seasonal  requirements,   which  are  heaviest  in  the  third  fiscal  quarter.
Inventories  were $52.2  million at May 31,  1999  versus  $66.9  million a year
earlier.

Net  cash  used  in  investing   activities   consisted   primarily  of  capital
expenditures of $6.2 million and $2.0 million for the Company's joint venture in
the first nine months of fiscal 1999.

Net cash used in financing  activities  during the nine-month period amounted to
$14.9 million,  primarily for stock repurchases  under the previously  announced
stock repurchase plans of up to $30 million and for payment of dividends. At May
31, 1999, the Company had no short-term borrowings.


Management believes that the Company's cash, earnings and borrowing capacity are
adequate  to  meet  the  demands  of its  operations  and its  long-term  credit
requirements.

Subsequent Event:
In July 1999,  Fedders  Corporation  entered  into  an  agreement  providing for
Fedders'  acquisition  (by  way of a  cash tender offer and a  subsequent merger
of  Trion  into  a  subsidiary  of  Fedders) of  Trion,  Inc.,  a   manufacturer
of indoor air  quality products, at  a  price  of $5.50  per  share  in cash for
all  (approximately  7.2 million)  outstanding shares  of Trion's  common stock.
The agreement is conditioned upon the  tender  of  at least  80.0% of the shares
of  Trion   common  stock   outstanding  on  a  fully  diluted   basis,  certain
regulatory   filings   and    other   customary    conditions.   Following   the
acquisition,  Trion will  continue  as an  indirect  wholly-owned  subsidiary of
Fedders.

Strategic  Business Plan - At August 31, 1996 the Company had approximately 48.4
million shares of Preferred,  Common, Class A and Class B Stock outstanding at a
weighted  average  closing  price of $5.55.  Since August 1996,  the Company has
taken  several  strategic  actions to improve its capital  structure,  operating
performance  and increase  shareholder  value. A chronology of the major actions
are listed below.

In August 1997, a subsidiary of the Company issued $100 million principle amount
of 9 3/8%  Senior  Subordinated  Notes.  A portion of the  proceeds of the Notes
($72.3  million) was received by the Company as a dividend  from the  subsidiary
and  used  to  satisfy  the  Company's  obligation  on  its 8  1/2%  Convertible
Subordinated  Debentures,  repurchases of the Company's capital stock (discussed
below) and for general operating purposes.

Three stock  repurchase  plans have been  announced  totaling  $105 million ($25
million in September 1996, $50 million in July 1997 and $30 million in August of
1998).  Under these plans,  approximately  $87 million of capital stock has been
repurchased  to-date  totaling 15.2 million  shares at an average price of $5.72
per share.

At May 31, 1999 the Company had  approximately  36.3  million  shares of Common,
Class A and Class B Stock  outstanding  at a weighted  average  closing price of
$5.50.

In January 1998,  the Company  announced a plan to  restructure  its  operations
which  resulted  in the  Company  recording a one-time  expense  totaling  $16.8
million.  The  restructuring  plan and its timing were  designed to  proactively
enhance the Company's  competitiveness in global markets and further position it
to take full  advantage  of  opportunities  in the global  room air  conditioner
market.  The restructuring did not result in factory closings.  However,  it did
involve  shifting  some  additional  production  from North America to China and
increasing component outsourcing.


<PAGE>   21



Year 2000 - The inventory and assessment  phases of the Company's Year 2000 plan
are materially complete with respect to internal  information  technology ("IT")
and non-IT systems,  such as embedded technology and micro controllers.  Testing
and  resolution  phases,  except with respect to business  partner's and service
providers,  of the plan were  scheduled to be  completed  by June 30, 1999.  One
system  within the Company's IT systems was still being tested at June 30, 1999.
The Company now expects to complete  testing and resolution of this remaining IT
system in the first week of August 1999.  The  National  Retail  Federation  has
listed the Company as being a compliant Year 2000 EDI vendor.

The Company's  principle Year 2000 uncertainty  relates to material  third-party
relationships with customers and suppliers.  Assessment of these  relationships,
in part  through  on-site  audits,  is ongoing and  contingency  plans are being
developed  to  minimize  the  effect of any such  issues.  Contingency  planning
includes the use of alternate suppliers,  which the Company has in place for all
significant components.  In addition, the Company is developing plans to protect
its  facilities  from any damage  that could occur if a utility  supplying  that
facility  were  unable to provide  service.  Because the  company's  business is
seasonal,  and most  customers in the domestic  market do not take product until
close to the summer  season,  the Company will have a period of time to react to
any adverse  consequences caused by a vendor or service provider who is not Year
2000 compliant.  The Company cannot estimate lost revenues at this time, if any,
that are reasonably likely to be a result of Year 2000 issues.

The Company has not delayed any IT projects that are material to its  operations
due  to  its  Year  2000  efforts,  nor  does  it  believe  that  any  delay  in
implementation of these projects will have any material  financial impact on the
Company.  Related  costs are being  expensed as  incurred, and in the first nine
months of fiscal 1999 amounted to $.1 million.  The Company estimates  incurring
an additional $.1 million in remediation of its Year 2000 issues.

Forward-looking  statements  are covered under the  "Safe-Harbor"  clause of the
Private Securities Litigation Reform Act of 1995. Such statements are based upon
current  expectations  and assumptions.  Actual results could differ  materially
from those  currently  anticipated  as a result of known and  unknown  risks and
uncertainties  including,  but not limited to, weather and economic,  political,
market and  industry  conditions.  Such  factors are  described  in Fedders' SEC
filings,  including  its most  recently  filed annual  report on Form 10-K.  The
Company  disclaims any  obligation to update any  forward-looking  statements to
incorporate subsequent events.


Item 3.     Quantitative and Qualitative Disclosures about
            Market Risk

            None


<PAGE>   22


Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits
    27 Financial Data Schedule (EDGAR filing only)

(b) Reports on Form 8-K
    None


<PAGE>   23



SIGNATURE


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


                               FEDDERS CORPORATION



                             By /s/ Thomas A. Kroll
                              Corporate Controller






Date: July 15, 1999               Signing both in his capacity as
                                  Corporate Controller and on behalf
                                  of the registrant.