<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   -----------


                                    FORM 10-Q

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

                For the quarterly period ended    September 30, 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 000-23483
                                               ---------

                            ------------------------

                           COLOR SPOT NURSERIES, INC.
             (Exact Name of Registrant as Specified in Its Charter)


<TABLE>
<S>                                                                            <C>
                         DELAWARE                                                           68-0363266
(State or Other Jurisdiction of Incorporation or Organization)                 (I.R.S. Employer Identification No.)

         3478 BUSKIRK AVENUE, PLEASANT HILL, CA                                               94523
        (Address of Principal Executive Offices)                                            (Zip Code)
</TABLE>

      Registrant's Telephone Number, Including Area Code      (925) 934-4443
                                                         -----------------------


         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
                                              ---    ---

         As of November 1, 1999, the Registrant had outstanding 6,954,807 shares
of Common Stock, par value $0.001 per share.


<PAGE>   2




                           COLOR SPOT NURSERIES, INC.



FORWARD-LOOKING STATEMENTS

     Certain statements under the captions "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Item 3.
Quantitative and Qualitative Disclosures About Market Risk," and elsewhere
throughout this Quarterly Report on Form 10-Q ("Quarterly Report") of Color Spot
Nurseries, Inc. (the "Company") which are not historical in nature are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements deal with the current intentions, beliefs and
expectations of management with respect to the Company's business and are
typically identified by phrases such as "The Company plans," "Management
believes" and other phrases of similar meaning. These statements involve known
and unknown risks and other factors which may cause actual results, levels of
activity, performance or achievements of the Company or the industry in which
the Company competes to differ, perhaps materially, from anticipated results.
These risks and uncertainties include, among others: the Company's substantial
leverage and debt service; restrictions imposed by debt covenants; the effect of
growth on the Company's resources; the availability of suitable new markets and
suitable locations within such markets; changes in the Company's operating or
expansion strategy and the dependence on acquisitions for future growth; failure
to consummate or successfully integrate proposed developments or acquisitions;
the uncertainty of additional financing to fund desired growth and other future
capital needs; weather and general agricultural risks; seasonality and the
variability of quarterly results; the Company's dependence on major customers
such as Home Depot; regulatory constraints and changes in laws or regulations
concerning the gardening industry; labor laws and changes in the minimum wage;
the Company's short operating history under current management; sensitivity to
price increases of certain raw materials; the Company's dependence on leased
facilities; competition; lack of a market for the Company's securities; payment
or nonpayment of dividends and cash outlays for income taxes; risks associated
with Year 2000 compliance and estimated costs associated with the Company's and
its major customers' and suppliers' compliance efforts; trends in the gardening
industry, the specific markets in which the Company's production facilities are
located or are proposed to be located, and the general economy of the United
States; and other factors as may be identified from time to time in the
Company's filings with the Securities and Exchange Commission or in the
Company's press releases.

         For a discussion of these factors and others, please see the
"Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Certain Business Factors" of the Company's Annual Report on Form
10-K for the Fiscal Year Ended June 30, 1999 (as filed with the Securities and
Exchange Commission on September 28, 1999). Readers are cautioned not to place
undue reliance on forward-looking statements made in, or incorporated by
reference into, this Quarterly Report or other filings with the Securities and
Exchange Commission, any document or statement referring to this Quarterly
Report or the Company's press releases.


<PAGE>   3




                           COLOR SPOT NURSERIES, INC.


                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                PAGE
<S>                                                                                                             <C>
PART I - FINANCIAL INFORMATION

         Item 1.           Financial Statements

                           Consolidated Balance Sheets as of September 30, 1999 and
                           June 30, 1999..........................................................................1

                           Consolidated Statements of Operations for the Three Months
                           Ended September 30, 1999 and September 24, 1998........................................2

                           Consolidated Statement of Changes in Stockholders' Equity (Deficit) and
                           Comprehensive Loss for the Three Months Ended September 30, 1999.......................3

                           Consolidated Statements of Cash Flow for the Three Months
                           Ended September 30, 1999 and September 24, 1998........................................4

                           Condensed Notes to Consolidated Financial Statements as of
                           September 30, 1999 ....................................................................5

         Item 2.           Management's Discussion and Analysis
                           of Financial Condition and Results of Operations......................................10

         Item 3.           Quantitative and Qualitative Disclosure About
                           Market Risk...........................................................................13



PART II - OTHER INFORMATION

         Item 1.           Legal Proceedings.....................................................................14

         Item 2.           Changes in Securities and Use of Proceeds.............................................14

         Item 3.           Defaults Upon Senior Securities.......................................................14

         Item 4.           Submission of Matters to a Vote of Security Holders...................................14

         Item 5.           Other Information.....................................................................14

         Item 6.           Exhibits and Reports on Form 8-K......................................................14

Signatures.......................................................................................................15
</TABLE>


<PAGE>   4
                  COLOR SPOT NURSERIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                       (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                                    September 30,     June 30,
                                                                                                         1999           1999
                                                                                                    -------------    ----------
                                                                                                     (Unaudited)
<S>                                                                                                 <C>              <C>
                                                             ASSETS
CURRENT ASSETS:
     Cash                                                                                            $      261      $    1,420
     Accounts receivable, net of allowances of $939 and $1,854, respectively                              9,432          19,956
     Inventories, net                                                                                    39,725          33,075
     Prepaid expenses and other                                                                             817             723
                                                                                                     ----------      ----------

         Total current assets                                                                            50,235          55,174

CHRISTMAS TREE INVENTORIES                                                                                5,781           4,749
PROPERTY, PLANT AND EQUIPMENT, net                                                                       48,852          50,199
ASSETS HELD FOR SALE                                                                                        696             696
INTANGIBLE ASSETS, net                                                                                   49,935          50,898
DEFERRED INCOME TAXES                                                                                    21,714          18,788
NOTES RECEIVABLE AND  OTHER ASSETS                                                                        1,191           1,250
                                                                                                     ----------      ----------

         Total assets                                                                                $  178,404      $  181,754
                                                                                                     ==========      ==========


                                          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
     Accounts payable                                                                                $    8,558      $    5,188
     Accrued liabilities                                                                                 13,516          16,176
     Dividends payable to stockholders                                                                      271             257
     Deferred income taxes                                                                               12,541          12,541
     Current maturities of long-term debt                                                                   806             828
                                                                                                     ----------      ----------

         Total current liabilities                                                                       35,692          34,990

LONG-TERM DEBT                                                                                          123,745         123,413
                                                                                                     ----------      ----------

         Total liabilities                                                                              159,437         158,403
                                                                                                     ----------      ----------

SERIES A PREFERRED STOCK, REDEEMABLE, $0.01 par value, 100,000 shares
     authorized, 49,866 and 48,298 shares issued and outstanding, respectively                           40,930          39,151
REDEEMABLE COMMON STOCK, $0.001 par value, 1,143,339 shares issued
     and outstanding                                                                                      2,804           2,689
STOCKHOLDERS' EQUITY (DEFICIT):
     Common stock, $0.001 par value, 50,000,000 shares authorized,
         5,811,468 shares issued and outstanding                                                             12              12
     Additional paid-in capital                                                                          51,436          51,358
     Treasury stock, 6,220,439 shares                                                                   (45,637)        (45,633)
     Warrants, 825,000 exercisable at $0.01 per share                                                     8,250           8,250
     Accumulated deficit                                                                                (38,828)        (32,476)
                                                                                                     ----------      ----------

         Total stockholders' deficit                                                                    (24,767)        (18,489)
                                                                                                     ----------      ----------

         Total liabilities and stockholders' deficit                                                 $  178,404      $  181,754
                                                                                                     ==========      ==========
</TABLE>


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

                                        1
<PAGE>   5

                   COLOR SPOT NURSERIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>

                                                                                      Quarter Ended
                                                                             September 30,     September 24,
                                                                                 1999              1998
                                                                             -------------     -------------
                                                                              (Unaudited)       (Unaudited)
<S>                                                                          <C>               <C>
NET SALES                                                                    $     26,723      $     27,706
COST OF SALES                                                                      16,326            19,386
                                                                             ------------      ------------

         Gross profit                                                              10,397             8,320

SALES, MARKETING AND DELIVERY EXPENSES                                              7,737             9,893
GENERAL AND ADMINISTRATIVE EXPENSES                                                 5,838             7,131
AMORTIZATION OF INTANGIBLE ASSETS                                                     432               429
                                                                             ------------      ------------

         Loss from operations                                                      (3,610)           (9,133)

INTEREST EXPENSE                                                                    3,694             4,017
OTHER (INCOME) EXPENSE, NET                                                            38               375
                                                                             ------------      ------------

         Loss before income taxes and cumulative effect of change
            in accounting principle                                                (7,342)          (13,525)

INCOME TAX BENEFIT                                                                  2,900             4,791
                                                                             ------------      ------------

         Loss before cumulative effect of change in accounting                     (4,442)           (8,734)
            principle

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
     PRINCIPLE, net of tax benefit                                                     --             1,687
                                                                             ------------      ------------

         Net loss                                                                  (4,442)          (10,421)

SERIES A PREFERRED STOCK DIVIDENDS/ACCRETION                                        1,910             1,499
                                                                             ------------      ------------

         Net loss applicable to common stock                                 $     (6,352)     $    (11,920)
                                                                             ============      ============


Basic and diluted loss per common share:
     Loss before cumulative effect of change in accounting                   $      (0.91)     $      (1.48)
         principle
     Cumulative effect of change in accounting principle                     $         --      $      (0.24)
                                                                             ------------      ------------

         Total                                                               $      (0.91)     $      (1.72)
                                                                             ============      ============

Shares used in per share calculation                                            6,954,807         6,937,068
                                                                             ============      ============
</TABLE>

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

                                        2
<PAGE>   6

                   COLOR SPOT NURSERIES, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                        (DEFICIT) AND COMPREHENSIVE LOSS

                      (IN THOUSANDS, EXCEPT COMMON SHARES)


<TABLE>
<CAPTION>

                                                                                                        Retained
                                                                  Additional                            Earnings
                                             Common      Common    Paid-In    Treasury               (Accumulated
                                             Shares      Stock     Capital     Stock       Warrants     Deficit)
                                            ---------   -------   ---------  ----------   ---------- ------------
<S>                                         <C>         <C>       <C>        <C>          <C>        <C>
Balance, June 30, 1999                      5,811,468        12      51,358     (45,633)       8,250      (32,476)

Accretion of Series A preferred stock              --        --          --          --           --         (211)
Accretion of redeemable common stock               --        --          --          --           --         (115)
Exercise of stock options                          --        --          --          --           --           --
Series A preferred stock dividends                 --        --          --          --           --       (1,584)
Other                                              --        --          78          (4)          --           --
Net loss                                           --        --          --          --           --       (4,442)
                                            ---------   -------   ---------  ----------   ----------   ----------

Balance, September 30, 1999 (unaudited)     5,811,468   $    12   $  51,436  $  (45,637)  $    8,250   $  (38,828)
                                            =========   =======   =========  ==========   ==========   ==========

<CAPTION>


                                               Total
                                            Stockholders'
                                               Equity      Comprehensive
                                              (Deficit)    Income/(Loss)
                                            -------------  -------------
<S>                                         <C>            <C>
Balance, June 30, 1999                          (18,489)   $   (4,134)

Accretion of Series A preferred stock              (211)           --
Accretion of redeemable common stock               (115)           --
Exercise of stock options                            --            --
Series A preferred stock dividends               (1,584)           --
Other                                                74            --
Net loss                                         (4,442)       (4,442)
                                             ----------    ----------

Balance, September 30, 1999 (unaudited)      $  (24,767)   $   (4,442)
                                             ==========    ==========

</TABLE>

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




                                        3
<PAGE>   7

                   COLOR SPOT NURSERIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOW

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                              Quarter Ended
                                                                                                      September 30,    September 24,
                                                                                                          1999              1998
                                                                                                      -------------    -------------
                                                                                                       (Unaudited)      (Unaudited)
<S>                                                                                                   <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                                          $   (4,442)     $  (10,421)
     Adjustments to reconcile net loss to net cash provided by operating
         activities:
         Depreciation and amortization                                                                      1,948           1,764
         Interest paid in kind                                                                                170             161
         Deferred income taxes                                                                             (2,926)         (5,716)
         Cumulative effect of change in accounting principle                                                   --           2,612
         Changes in operating assets and liabilities, net of effect of acquired
            businesses:
            Decrease in accounts receivable                                                                10,524          14,393
            Increase in inventories                                                                        (6,650)         (8,300)
            Decrease (increase) in prepaid expenses and other current assets                                  (94)            890
            Increase in Christmas tree inventory                                                           (1,032)           (781)
            Decrease in notes receivable and other assets                                                      59              37
            Increase (decrease) in accounts payable                                                         3,370          (2,867)
            Increase in accrued liabilities                                                                   330           3,603
                                                                                                       ----------      ----------
                Net cash provided by (used in) operating activities                                         1,257          (4,625)

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of fixed assets                                                                               (172)         (1,448)
                                                                                                       ----------      ----------
                Net cash used in investing activities                                                        (172)         (1,448)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net proceeds (payments) on cash overdraft                                                             (2,380)           (674)
     Purchase of treasury stock                                                                                (4)             --
     Net borrowings under revolving line of credit                                                            367           5,400
     Repayments of long-term debt                                                                            (227)           (187)
                                                                                                       ----------      ----------
                Net cash provided by (used in) financing activities                                        (2,244)          4,539

NET DECREASE IN CASH AND CASH EQUIVALENTS                                                                  (1,159)         (1,534)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                            1,420           2,244
                                                                                                       ----------      ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                             $      261      $      710
                                                                                                       ==========      ==========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the period for:
         Interest                                                                                      $    1,079      $      564
                                                                                                       ==========      ==========
         Income taxes                                                                                  $       26      $       --
                                                                                                       ==========      ==========
</TABLE>

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

                                        4
<PAGE>   8

                           COLOR SPOT NURSERIES, INC.
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



NOTE 1 - BASIS OF PRESENTATION AND OPERATIONS

         The information contained in the following notes to the consolidated
financial statements of Color Spot Nurseries, Inc. (the "Company") is condensed
from that which would appear in the annual consolidated financial statements.
Accordingly, these financial statements should be read in conjunction with the
Company's annual financial statements for its fiscal year ended June 30, 1999,
contained in its Annual Report on Form 10-K filed with the Securities and
Exchange Commission. For purposes of this quarterly report on Form 10-Q, the
term "three months or quarter ended September 30, 1999," relates to the period
from July 1, 1999, through September 30, 1999, and the term "three months or
quarter ended September 24, 1998," relates to the period from July 1, 1998,
through September 24, 1998.

         The Company is a producer and distributor of packaged bedding plants
and flowers, groundcover, ornamental plants and shrubs, and commencing in 1997,
Christmas trees. As of September 30, 1999, the Company operates 17 production
facilities located in 5 states. In addition, the Company owns or leases growing
fields for Christmas trees in Oregon, Michigan, North Carolina, and Tennessee.
The Company sells primarily to general merchandise stores, home improvement
stores, premium independent garden centers and commercial landscapers, located
predominantly in California, Texas and other western states.

         During the quarter ended September 24, 1998, the Company hired several
new executives with significant operating experience to bolster its current
management team. The new management team redesigned the Company's organizational
structure and quickly implemented measures designed to improve production,
distribution and selling efficiencies and reduce product returns and inventory
write-offs. One of the tactical initiatives implemented by management has been
to adjust the production planning process to better match supply and demand and
limit excess inventory while maintaining high quality customer service. This
production change has resulted in reduced overproduction and consequently, less
inventory shrinkage (i.e. write-off of unsaleable excess inventory). The Company
recorded a $3.7 million non-recurring special charge during the three months
ended September 24, 1998 related to closure or modification to certain
facilities, employee severance and relocation and other consulting costs. This
charge was recorded in general and administrative expenses.

         As of September 30, 1999, the Company had $123.7 million of long-term
indebtedness and an accumulated deficit of $38.8 million. The Company is highly
leveraged and has significant debt service obligations. The Company's debt
service obligations will have important consequences to holders of its debt,
preferred stock, warrants and common stock including the following: (i) a
substantial portion of the Company's cash flow from operations will be dedicated
to the payment of principal and interest on its indebtedness, thereby reducing
the funds available to the Company for operations, acquisitions, future business
opportunities and other purposes and increasing the Company's vulnerability to
adverse general economic and industry conditions; (ii) the Company's leveraged
position may increase its vulnerability to competitive pressures; (iii) the
financial covenants and other restrictions contained in the new loan agreement,
the indenture for its outstanding senior subordinated notes and the certificate
of designation for the Series A Preferred Stock will require the Company to meet
certain financial tests and will restrict its ability to borrow additional
funds, to dispose of assets or to pay cash dividends on, or repurchase,
preferred or common stock; and (iv) funds available for working capital, capital
expenditures, acquisitions and general corporate purposes may be limited.



                                       5
<PAGE>   9


         The accompanying financial statements have been prepared contemplating
the realization of all recorded assets, including intangible assets and deferred
tax assets and the satisfaction of liabilities in the normal course of business.
The Company must generate sufficient cash flow to meet its obligations as they
come due, comply with the terms of its new credit facility, and maintain
profitability or there will be a material adverse impact on the Company's
business, financial position and results of operations.

         The consolidated financial statements as of September 30, 1999, and for
the three months ended September 30, 1999, and September 24, 1998, are
unaudited. However, in the opinion of management, these financial statements
reflect all adjustments (of a normal and recurring nature) which are necessary
for a fair presentation of the Company's financial position, results of
operations and cash flows for the interim periods. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. Accounting measurements at interim dates
inherently involve greater reliance on estimates than at year-end. The Company's
operations are highly seasonal and the results of operations for the interim
periods are not necessarily indicative of the results to be expected for the
entire year.

NOTE 2 - INVENTORIES

         Inventories at September 30, 1999 and June 30, 1999, consisted of the
following (in thousands):

<TABLE>
<CAPTION>
                                     SEPTEMBER 30,      JUNE 30,
                                         1999             1999
                                     -------------     ----------
                                      (UNAUDITED)
<S>                                  <C>               <C>
Current:
   Plants, shrubs and ground cover     $   39,515      $   33,159
   Raw materials and supplies               3,119           2,471
   Inventory reserves                      (2,909)         (2,555)
                                       ----------      ----------
      Total current inventories            39,725          33,075
Non-current:
   Christmas trees                          5,781           4,749
                                       ----------      ----------
      Total inventories                $   45,506          37,824
                                       ==========      ==========
</TABLE>


                                       6
<PAGE>   10




NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment at September 30, 1999 and June 30, 1999,
consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                          SEPTEMBER 30,      JUNE 30,
                                              1999            1999
                                          -------------    ----------
                                           (UNAUDITED)
<S>                                       <C>              <C>
Land                                       $    9,377      $    9,377
Greenhouses and buildings                      24,836          24,817
Furniture and fixtures                          5,074           5,045
Machinery and equipment                        17,208          17,150
Leasehold improvements                          5,779           5,713
Assets under capital leases                     1,018           1,018
                                           ----------      ----------
                                               63,292          63,120
Less: Accumulated depreciation                (14,440)        (12,921)
                                           ----------      ----------
   Total property, plant and equipment     $   48,852      $   50,199
                                           ==========      ==========
</TABLE>


NOTE 4 - INTANGIBLE ASSETS

         Intangible assets at September 30, 1999, and June 30, 1999, consisted
of the following (in thousands):

<TABLE>
<CAPTION>
                                  SEPTEMBER 30,      JUNE 30,
                                      1999            1999
                                  -------------    ----------
                                   (UNAUDITED)
<S>                               <C>              <C>
Goodwill                           $   47,517      $   47,517
Financing costs                         6,277           6,302
Non-compete agreements                  1,694           1,694
Other                                     916             916
                                   ----------      ----------
                                       56,404          56,429
Less: Accumulated amortization         (6,469)         (5,531)
                                   ----------      ----------
   Total intangible assets         $   49,935      $   50,898
                                   ==========      ==========
</TABLE>

         In April 1998, the AICPA issued Statement of Position 98-5 "Reporting
on Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 requires
non-governmental entities to expense start-up costs, including organization
costs, as incurred. The Company adopted SOP 98-5 on July 1, 1998 and recognized
a $2.5 million pre-tax charge ($1.7 million after tax benefit), which was
accounted for as a change in accounting principle.


                                       7
<PAGE>   11



NOTE 5 - DEBT

         Debt at September 30, 1999, and June 30, 1999, consisted of the
following (in thousands):


<TABLE>
<CAPTION>
                              SEPTEMBER 30,        JUNE 30,
                                  1999              1999
                              -------------     ------------
                              (UNAUDITED)
<S>                           <C>               <C>
Revolving line of credit      $     12,850      $     12,483
Senior subordinated notes          100,000           100,000
Convertible note                     8,811             8,637
Non-compete agreements                 652               721
Other                                2,238             2,400
                              ------------      ------------
                                   124,551           124,241
Less: Current maturities              (806)             (828)
                              ------------      ------------
     Long-term portion             123,745           123,413
                              ============      ============
</TABLE>

                  As of September 30, 1999, a total of $12.9 million was
outstanding on the Company's revolving line of credit and an additional $12.0
million was available under this line of credit. As of September 30, 1999, the
Company was in compliance with its loan covenants.

NOTE 6 -- EARNINGS PER SHARE

         Basic and diluted earnings per share is as follows:

<TABLE>
<CAPTION>
                                            Three Months Ended
                                            September 30, 1999
                                            ------------------
                                     Income/                  Per Share
                                      (loss)      Shares       Amount
                                   -----------   ---------   ----------
                                       (in
                                    thousands)
<S>                                <C>           <C>         <C>

      Basic and diluted earnings
      per share:
      Net Loss                     $    (4,442)

      Preferred stock
         dividends/accretion            (1,910)
                                   -----------

      Net loss applicable to
         common stock              $    (6,352)  6,954,807   $    (0.91)
                                   ===========   =========   ==========
</TABLE>




                                       8
<PAGE>   12
                           COLOR SPOT NURSERIES, INC.
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999




<TABLE>
<CAPTION>
                                            Three Months Ended
                                            September 30, 1999
                                            ------------------
                                     Income/                  Per Share
                                      (loss)      Shares       Amount
                                    ----------   ---------   ----------
                                       (in
                                    thousands)
<S>                                 <C>          <C>         <C>

Basic and diluted earnings
per share:

Loss before cumulative
   effect of change in
   accounting principle         $  (8,734)

Preferred stock
   dividends/accretion             (1,499)
                                ---------

Loss before cumulative
effect of change in
accounting
   principle (including
   preferred stock
   dividends/accretion)           (10,233)                     $   (1.48)


Cumulative effect of change
   in accounting principle         (1,687)                         (0.24)
                                ---------                      ---------

Net loss applicable to
   Common Stock                 $ (11,920)      6,937,068      $  (1.72)
                                ---------      ----------      ---------
</TABLE>


         For the three months ended September 30, 1999 and the three months
ended September 24, 1998, the effect of options, warrants and convertible
securities was antidilutive and is therefore excluded from the computation of
earnings per share.


                                       9
<PAGE>   13






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

GENERAL

         The Company is one of the largest wholesale nurseries in the United
States, based on annual revenue and greenhouse square footage. The Company sells
a wide assortment of high-quality bedding plants, shrubs, potted flowering
plants, ground cover and Christmas trees as well as provides extensive
merchandising services primarily to leading home centers and mass merchants. The
Company's business is highly seasonal with a peak selling season in the spring
generally from March through June (during the Company's third and fourth fiscal
quarters). Consequently, the Company has historically reported losses and lower
revenues during its first and second fiscal quarters.

         During the quarter ended September 24, 1998, the Company hired several
new executives with significant operating experience to bolster its current
management team. The new management team quickly implemented measures designed
to improve production and distribution efficiencies and reduce product returns
and excess inventory. One of the tactical initiatives implemented by management
has been to adjust the production planning process to better match supply and
demand and limit excess inventory while maintaining high quality customer
service. This production change has resulted in reduced strategic overproduction
and reduced inventory shrink (i.e., write-off of unsaleable excess inventory).
The Company recorded a $3.7 million pre-tax, non-recurring special charge during
the three months ended September 24, 1998 relating to closure or modification to
certain facilities, employee severance and relocation and other non-recurring
consulting costs associated with actions taken by the new management team.

THREE MONTHS ENDED SEPTEMBER 30, 1999, AS COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 24, 1998

         Net Sales. Net sales decreased $1.0 million, or 3.5%, to $26.7 million
for the three months ended September 30, 1999, from $27.7 million during the
three months ended September 24, 1998. This decrease is primarily the result of
the strategic reduction of unconditional sales programs, less participation in
seasonal programs and the impact of more conservative store level inventory
management.

         Gross Profit. Gross profit increased $2.1 million to $10.4 million for
the three months ended September 30, 1999, from $8.3 million during the three
months ended September 24, 1998. Gross profit as a percentage of net sales
increased to 38.9% for the three months ended September 30, 1999, from 30.0% for
the three months ended September 24, 1998. The increase in gross profit
percentage was primarily the result of a decrease in the write off of excess
inventory of $2.4 million, or 66.2%. These decreases were accomplished through
improved production planning and control combined with management's initiatives
to better match supply with demand.

         Operating Expenses. Operating expenses include sales, marketing and
delivery expenses, general and administrative expenses, and amortization of
intangible assets. Sales, marketing and delivery expenses decreased $2.2 million
to $7.7 million for the three months ended September 30, 1999, from $9.9 million
in the three months ended September 24, 1998. As a percentage of net sales,
sales, marketing and delivery expenses decreased to 29.0% for the three months
ended September 30, 1999, from 35.7% for the three months ended September 24,
1998. This decrease as a percentage of net sales was primarily due to a $2.0
million reduction in distribution expenses as the result of significantly
improved delivery efficiencies. As a percentage of net sales, delivery expense
decreased to 13.9% for the three months ended September 30, 1999, from 20.7% for
the three months ended September 24, 1998. These efficiencies were generated by
reducing the movement of inventory between facilities, increasing the minimum
order size, optimizing cubing, better of truck maintenance, and a change in the
fleet structure whereby more trucks are rented rather than leased long-term,
resulting in reduced trucks and employees.

         General and administrative expenses decreased $1.3 million, to $5.8
million for the three months ended September 30, 1999, from $7.1 million in the
three months ended September 24, 1998. As a percentage of net sales, general and
administrative expenses decreased to 21.8% for the three months ended September
30, 1999, from 25.7% for the three months ended September 24, 1998. This
decrease as a percentage of net



                                       10
<PAGE>   14

sales is primarily the result of a $3.7 million pre-tax, non-recurring charge
during the three months ended September 24, 1998, related to closure or
modification to certain facilities, employee severance and relocation and other
consulting costs offset by increased hiring and a revised compensation structure
for key management and other employees to support the company's operations.

         Amortization of intangible assets was unchanged at $0.4 million for the
three months ended September 30, 1999, and the three months ended September
24,1998.

         Interest Expense. Interest expense decreased $0.3 million to $3.7
million for the three months ended September 30, 1999, from $4.0 million in the
three months ended September 24, 1998, as a result of lower levels of borrowings
required to fund the Company's working capital requirements.

         Taxes. The Company has historically not paid income taxes. Agricultural
companies are permitted to calculate taxable income on a cash basis. As a result
of the Company's growth, this treatment has enabled the Company to generate
significant net operating losses since its inception and accumulate a large net
operating loss carryforward. In addition, the Company's effective tax rate has
been different than the U.S. statutory rate of 34%. The difference between the
Company's effective tax rate and the U.S. statutory rate is due to state tax
provisions and other California tax limitations on the use of net operating loss
carryforwards. The Company's effective tax rate increased to 39.5% for the three
months ended September 30, 1999, from 35.4% for the three months ended September
24, 1998. This increase is primarily the result of the effect that the Company's
permanent items have on income, which is projected for the current year,
compared to the loss reported in the prior year.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's cash needs are primarily to fund seasonal working capital
requirements and capital expenditures. During the three months ended September
30, 1999, the Company's primary source of capital was a revolving line of
credit.

         On October 15, 1998, the Company entered into a Loan and Security
Agreement with Fleet Capital Corporation (the "Fleet Loan Agreement"), and
repaid in full its prior credit facility. The Fleet Loan Agreement provides a
$70.0 million revolving credit facility, $55.0 of which is subject to certain
borrowing base limitations based on a percentage of eligible inventory and
eligible accounts receivable and $15.0 million of which is available without
limitation from November 1 through April 30 each year. As of September 30, 1999,
a total of $12.0 million was available under this line of credit.

         During the three months ended September 30, 1999, net cash provided by
operating activities was $1.3 million, primarily a result of improved collection
efforts offset by increases in inventory. Net cash used in investing activities
during the three months ended September 30, 1999, and September 24, 1998, was
$0.2 million and $1.4 million, respectively, related to capital expenditures.

The Company is highly leveraged. As of September 30, 1999, the Company has
$123.7 million of long-term indebtedness and an accumulated deficit of $38.8
million. Although the Company believes that the cash available from the Fleet
Loan Agreement and operations will be sufficient to finance working capital
requirements and capital expenditures for the next 12 months, there is no
assurance that the Company will be able to generate sufficient cash flows or
meet its financial goals and comply with its debt covenants in the future. The
Company may incur additional indebtedness in the future, subject to certain
limitations contained in the instruments governing its indebtedness and capital
stock. The Company's debt service obligations have important consequences to
holders of its debt, preferred stock, warrants and common stock including the
following: (i) a substantial portion of the Company's cash flow from operations
will be dedicated to the payment of principal and interest on its indebtedness,
thereby reducing the funds available to the Company for operations,
acquisitions, future business opportunities and other purposes and increasing
the Company's vulnerability to adverse general economic and industry conditions;
(ii) the Company's leveraged position may increase its vulnerability to
competitive pressures; (iii) the financial covenants and other restrictions
contained in the Fleet Loan Agreement, the indenture for the outstanding senior
subordinated notes and the certificate of designation for the Series A Preferred
Stock will require the Company to meet certain financial tests and will restrict
its ability to borrow additional funds, to dispose of assets or to pay cash
dividends on, or



                                       11
<PAGE>   15

repurchase, preferred or common stock; and (iv) funds available for working
capital, capital expenditures, acquisitions and general corporate purposes may
be limited.

YEAR 2000 COMPLIANCE PROGRAM

         Year 2000 Problem

         The Year 2000 problem is the result of computer programs being written
using two digits (rather than four) to define the applicable year. Any of the
Company's programs that have time-sensitive software or equipment that has
time-sensitive embedded components may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a major system failure or
miscalculations. The Company also may be vulnerable to other companies' Year
2000 issues. The Company's current estimates of the impact of the Year 2000
problem on its operations and financial results do not include costs and time
that may be incurred as a result of any vendors' or customers' failure to become
Year 2000 compliant on a timely basis.

         State of Readiness

         During fiscal 1998, Color Spot developed and began to implement a Year
2000 compliance plan to ensure that its business is not interrupted by the year
2000 problem. In its compliance plan, the Company identified seven basic
operational areas that have been and will continue to be examined:

         --       financial systems, such as general ledger, accounts receivable
                  and payable, inventory, order entry, sales force automation
                  and purchasing

         --       computer hardware, including major hardware to operate the
                  financial systems and related operating software

         --       operational and support systems, such as telephone equipment,
                  greenhouse automation and watering systems

         --       secondary computer systems, including custom built software

         --       customers' compliance efforts, including identifying whether
                  the Company's high-volume customers are Year 2000 compliant

         --       suppliers' compliance efforts, including whether significant
                  suppliers are Year 2000 compliant

         --       service vendors' compliance efforts, including identifying
                  significant service venders and whether they are Year 2000
                  compliant.


         The Company has tested its primary financial systems and hardware and
determined that they are Year 2000 compliant. The Company has also completed
program changes related to the Year 2000 on its divisional financial systems and
certain of its operational and support systems and secondary systems and will
continue testing these systems through the end of the year. With respect to its
customers, the Company has contacted, or has been contacted by, its major
customers and vendors and determined that such customers are Year 2000
compliant.

         Cost of Compliance and Risks of Non-Compliance

         Color Spot believes that the cost of ensuring Year 2000 compliance for
its own financial systems, computer hardware, operational and support systems
and secondary computer systems was approximately $50,000. Such costs were
expensed as incurred. The Company continues to bear some risk, however, related
to the Year 2000 issue and could be adversely affected if other entities
affiliated with the Company do not appropriately address their own Year 2000
compliance issues. The Company has reviewed the compliance programs of suppliers
and service vendors and believes that its major customers are Year 2000
compliant. The



                                       12
<PAGE>   16

Company's current estimates of the impact of the Year 2000 problem on its
operations and financial results do not include costs and time that may be
incurred as a result of other companies' failure to become Year 2000 compliant
on a timely basis. There can be no assurance that such other companies will
achieve Year 2000 compliance or that any conversions by such companies to become
Year 2000 compliant will be compatible with the Company's computer system. The
inability of the Company or any of its principal vendors or customers to become
Year 2000 compliant could have a material adverse effect on the Company's
financial condition or results of operation.

         Contingency Plan

         The Company has instructed the management of its production facilities
to ensure that adequate levels of raw materials are on hand at December 31, 1999
to cover the production plan for the month of January 2000. Because most of the
Company's raw material purchases are typically made prior to year-end, the
Company does not expect that its contingency plan will have a material effect on
cash flows.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         The Company's liabilities consist primarily of a revolving line of
credit, senior subordinated notes, other notes and accounts payable. The Company
has also issued Series A Preferred Stock and Redeemable Common Stock. Such
liabilities and stockholders' equity have varying levels of sensitivity to
changes in market interest rates. Interest rate risk results when, due to
different maturity dates and repricing intervals, interest rate indices for
interest-bearing liabilities increase relative to income earning assets, thereby
creating a risk of decreased net earnings and cash flow.

         The following table provides information about the Company's market
sensitive liabilities, categorized by maturity, and constitutes a
"forward-looking statement." For more information, please refer to Item 1.
"Financial Statements and Notes to Consolidated Financial Statements."


<TABLE>
<CAPTION>
                                                                  Expected Maturities
                                                                                                There-
Long-term Liabilities:             2000          2001        2002        2003        2004       after       Total
                                  ------        ------      ------      ------      ------      ------      ------
                                                                 (dollars in millions)
<S>                               <C>           <C>         <C>         <C>         <C>         <C>         <C>
Fixed Rate:

    Series A Preferred Stock          --            --          --      $  2.6      $  5.2      $ 89.4      $ 97.2
    Average Interest Rate             13%          13%          13%         13%         13%         13%

    Senior Subordinated Notes     $ 10.5        $ 10.5      $ 10.5      $ 10.5      $ 10.5      $131.5      $184.0
    Average Interest Rate           10.5%         10.5%       10.5%       10.5%       10.5%       10.5%

     Convertible Note                 --            --          --          --          --      $ 12.2      $ 12.2
     Average Interest Rate           8.0%          8.0%        8.0%        8.0%        8.0%        8.0%

     Non-compete Agreements       $  0.1        $  0.1      $  0.1      $  0.1      $  0.1      $  1.0      $  1.5
     Average Interest Rate           9.0%          9.0%        9.0%        9.0%        9.0%        9.0%

Variable Rate:
     Fleet Loan Agreement                                   $ 70.0(1)                                       $ 70.0
</TABLE>



(1) On October 15, 1998, the Company entered into the Fleet Loan Agreement,
borrowed approximately $32 million, and repaid in full amounts due under its
existing credit facility. The Fleet Loan Agreement terminates in October 2001
(fiscal 2002). See Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation --Liquidity and Capital Resources" and Note 5
to the Notes to Consolidated Financial Statements. The average interest rate is
the Base Rate plus 1.0% or LIBOR plus 3.0%, as defined in the Fleet Loan
Agreement.




                                       13
<PAGE>   17





                          PART II. - OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS

      The Company and its subsidiaries are from time to time subject to various
legal proceedings incidental to its business. Management believes that the
ultimate resolution of these proceedings will not have a material adverse effect
on the Company's financial position or results of operations, taken as a whole.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

      None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

      None.


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

      None.

ITEM 5.  OTHER INFORMATION

      None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   EXHIBITS

 EXHIBIT
 NUMBER                           DESCRIPTION OF DOCUMENT
 ------                           -----------------------

  11.1      Computations of Earnings Per Share -- See Note 6 to the Notes to
            Consolidated Financial Statements.

  27.1      Financial Data Schedule.

(b)   REPORTS ON FORM 8-K.

      None.


                                       14
<PAGE>   18






                                    SIGNATURES

         Pursuant to the requirements of Section 13 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.

         Date: November 15, 1999.


                                             COLOR SPOT NURSERIES, INC.
                                             a Delaware corporation


                                             By: /s/ Richard E. Parker
                                                --------------------------------
                                             Name:  Richard E. Parker
                                             Title: Chief Executive Officer and
                                                    Director (Principal
                                                    Executive Officer)


                                             By: /s/ Joseph P. O'Neill
                                                --------------------------------
                                             Name:  Joseph P. O'Neill
                                             Title: Executive Vice President and
                                                    Chief Financial Officer
                                                    (Principal Financial Officer
                                                    and Principal Accounting
                                                    Officer)


                                       15
<PAGE>   19




                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                             DESCRIPTION
 -------                            -----------
<S>         <C>
  11.1      Computations of Earnings Per Share -- See Note 6 to the Notes to
            Consolidated Financial Statements.

  27.1      Financial Data Schedule.
</TABLE>