
<PAGE>   1


                       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 June 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 1-10177

                        WINDMERE-DURABLE HOLDINGS, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


              FLORIDA                                        59-1028301
 -------------------------------                        ----------------------
 (State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                         Identification Number)

   5980 MIAMI LAKES DRIVE, MIAMI LAKES, FLORIDA                   33014
   --------------------------------------------                 ---------
     (Address of principal executive offices)                   (Zip Code)


                                 (305) 362-2611
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:


                                                NUMBER OF SHARES OUTSTANDING
              CLASS                                  On August 12, 1999
  -----------------------------                 ----------------------------
  Common Stock, $.10 Par Value                          22,479,716




<PAGE>   2

                        WINDMERE-DURABLE HOLDINGS, INC.

                                     INDEX


PART I. FINANCIAL INFORMATION

        ITEM 1.    Consolidated Statements of Operations for the
                       Three Months Ended June 30, 1999 and 1998             3

                   Consolidated Statements of Operations for the
                       Six Months Ended June 30, 1999 and 1998               4

                   Consolidated Balance Sheets as of
                       June 30, 1999, and December 31, 1998                 5-6

                   Consolidated Statements of Cash Flows
                       for the Six Months Ended June 30, 1999
                       and 1998                                              7

                   Notes to Consolidated Financial Statements              8-14

        ITEM 2. Management's Discussion and Analysis of
                       Financial Condition and Results of Operations      15-21

        ITEM 3.  Quantitative and Qualitative Disclosures About Market
                       Risk                                                 22

PART II. OTHER INFORMATION

        ITEM 1.  Legal Proceedings                                          23

        ITEM 4.  Submission of Matters to a Vote of Security Holders        23

        ITEM 6.  Exhibits and Reports on Form 8-K                           23

SIGNATURES                                                                  24







                                                                              2
<PAGE>   3



PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                        WINDMERE-DURABLE HOLDINGS, INC.
               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                  (IN THOUSANDS EXCEPT PER SHARE INFORMATION)

<TABLE>
<CAPTION>


                                                     Three Months Ended June 30,
                                    -------------------------------------------------------------
                                               1999                               1998
                                    ---------------------------       ---------------------------
<S>                                 <C>                  <C>           <C>                 <C>
Sales and Other Revenues            $149,168             100.0%        $ 62,568            100.0%
Cost of Goods Sold                   106,203              71.2           54,218             86.7
                                    --------           -------         --------            -----
  Gross Profit                        42,965              28.8            8,350             13.3

Selling, General and
 Administrative Expenses              40,284              27.0           12,826             20.5
 Repositioning charge                     --                --            9,914             15.8
                                    --------           -------         --------            -----
  Operating Profit (Loss)              2,681               1.8          (14,390)           (23.0)

Other (Income) Expense
 Interest Expense                      6,531               4.4            1,426              2.3
 Interest and Other Income              (735)              (.5)          (1,517)            (2.4)
                                    --------           -------         ---------           -----
                                       5,796               3.9              (91)             (.1)
Earnings (Loss) before Equity
 in Net Earnings (Loss) of Joint
 Ventures and Income Taxes            (3,115)             (2.1)         (14,299)           (22.9)
Equity in Net Earnings (Loss)
 of Joint Ventures                   (12,374)             (8.3)             751              1.2
                                    ---------          --------        --------            -----
Earnings (Loss) Before
 Income Taxes                        (15,489)            (10.4)         (13,548)           (21.7)
Provision (Benefit) for
 Income Taxes                         (4,924)             (3.3)          (5,684)            (9.1)
                                    --------           -------         ---------           ------
Net Earnings (Loss)                 $(10,565)             (7.1)%       $ (7,864)           (12.6)%
                                    =========          =======         =========           ======
Earnings Per Share -  basic         $   (.47)                          $   (.42)
                                    =========                           ========

Earnings Per Share - diluted        $   (.47)                          $   (.42)
                                    =========                          =========
</TABLE>




The accompanying notes are an integral part of these statements.





                                                                             3
<PAGE>   4

                        WINDMERE-DURABLE HOLDINGS, INC.
               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                  (IN THOUSANDS EXCEPT PER SHARE INFORMATION)

<TABLE>
<CAPTION>


                                                      Six Months Ended June 30,
                                    -------------------------------------------------------------
                                               1999                               1998
                                    ---------------------------        --------------------------
<S>                                 <C>                  <C>           <C>                 <C>
Sales and Other Revenues            $268,021             100.0%        $117,962            100.0%
Cost of Goods Sold                   191,356              71.4           96,729             82.0
                                    --------           -------         --------            -----
  Gross Profit                        76,665              28.6           21,233             18.0

Selling, General and
 Administrative Expenses              76,154              28.4           24,532             20.8
 Repositioning charge                     --                --            9,914              8.4
                                    --------           -------         --------            -----
  Operating Profit (Loss)                511                .2          (13,213)           (11.2)

Other (Income) Expense
 Interest Expense                     12,736               4.8            2,471              2.1
 Interest and Other Income            (1,024)              (.4)          (2,198)            (1.9)
                                    --------           -------         ---------           -----
                                      11,712               4.4              273               .2
Earnings (Loss) before Equity
 in Net Earnings (Loss) of Joint
 Ventures and Income Taxes           (11,201)             (4.2)         (13,486)           (11.4)
Equity in Net Earnings (Loss)
 of Joint Ventures                   (12,894)             (4.8)           1,196              1.0
                                    -------- -         --------        --------            -----
Earnings (Loss) Before
 Income Taxes                        (24,095)             (9.0)         (12,290)           (10.4)
Provision (Benefit) for
 Income Taxes                         (7,000)             (2.6)          (5,563)            (4.7)
                                    --------           -------         ---------           ------
Net Earnings (Loss)                 $(17,095)             (6.4)%       $ (6,727)            (5.7)%
                                    =========          =======         =========           ======
Earnings (Loss) Per Share -
 basic                              $   (.77)                          $   (.36)
                                    =========                          ========
Earnings (Loss) Per Share -
 dilutive                           $   (.77)                          $   (.36)
                                    =========                          =========
Dividends Per Common Share          $   (.00)                          $   (.00)
                                    =========                          =========


</TABLE>





The accompanying notes are an integral part of these statements.






                                                                             4
<PAGE>   5
                        WINDMERE-DURABLE HOLDINGS, INC.
                    CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                 (IN THOUSANDS)

                                                           6/30/99   12/31/98
                                                         ---------   --------
ASSETS

CURRENT ASSETS

Cash & Cash Equivalents                                  $   6,828  $  20,415

Accounts and Other Receivables,
  less allowances of $9,014 and
  $7,367, respectively                                     153,892    165,837
Receivables from Affiliates (Note 2)                         3,806      5,589
Inventories
 Raw Materials                                               9,604     12,648
 Work-in-process                                            22,578     28,727
 Finished Goods                                            132,583    124,090
                                                         ---------  ---------
  Total Inventories                                        164,765    165,465

Prepaid Expenses                                            11,446     16,709

Refundable Income Taxes                                      6,294      6,555

Future Income Tax Benefits                                  24,170     18,277
                                                         ---------  ---------

  Total Current Assets                                     371,201    398,847

INVESTMENTS IN JOINT VENTURES
 (NOTE 2)                                                    2,688     15,708

PROPERTY, PLANT & EQUIPMENT -
 AT COST, less accumulated
 depreciation of $64,462 and
 $59,524, respectively                                      78,202     76,077
Notes Receivable from Affiliate                                         7,891
OTHER ASSETS                                               255,302    244,214
                                                         ---------  ---------

TOTAL ASSETS                                             $ 707,393  $ 742,737
                                                         =========  =========





                                                                              5
<PAGE>   6
                        WINDMERE-DURABLE HOLDINGS, INC.
                    CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                 (IN THOUSANDS)




                                                         6/30/99    12/31/98
                                                         -------    --------
LIABILITIES
CURRENT LIABILITIES

Note and acceptances payable                             $   2,778        --

Current Maturities of Long-Term
 Debt                                                        7,955  $   8,630
Accounts Payable and
 Accrued Expenses                                          105,135    119,611
Income taxes payable                                            --      2,693
Deferred Income, current portion                               689        479
                                                         ---------  ---------
  Total Current Liabilities                                116,557    131,413

LONG-TERM DEBT                                             273,563    272,370

DEFERRED INCOME TAXES                                        9,049     12,132

DEFERRED INCOME, less current
 Portion                                                     1,080      2,804

SHAREHOLDERS' EQUITY (Note 3)

Special Preferred Stock -
 Authorized 40,000,000 shares of
 $.01 par value; none issued

Common Stock - authorized
 40,000,000 shares of $.10 par
 value; shares outstanding:
 22,352 and 22,091,
 respectively                                                2,235      2,209
Paid-in Capital                                            146,976    145,161
Retained Earnings                                          160,744    177,839
Accumulated Other Comprehensive Income                      (1,315)    (1,191)
Note receivable from affiliate                              (1,496)        --
                                                         ---------  ---------
 Total Shareholders' Equity                                307,144    324,018
                                                         ---------  ---------
TOTAL LIABILITIES &
 SHAREHOLDERS' EQUITY                                    $ 707,393  $ 742,737
                                                         =========  =========



The accompanying notes are an integral part of these statements.







                                                                             6
<PAGE>   7
                        WINDMERE-DURABLE HOLDINGS, INC.
               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                           Six Months Ended June 30,
                                                                         ----------------------------
                                                                           1999               1998
                                                                         --------           ---------
<S>                                                                      <C>                <C>
Cash flows from operating activities:

 Net earnings (Loss)                                                     $(17,095)          $ (6,727)

 Adjustments to reconcile net earnings (loss)
   to net cash used in operating activities:
   Depreciation of property, plant and equipment                            8,510              3,863
   Amortization of intangible assets                                        8,400                496
   Amortization of deferred income                                             --               (248)
   Repositioning charge                                                        --             17,600
   Loss on disposal of fixed assets                                         2,147                609
   Writedown of investment in joint venture                                12,574                 --
   Net change in allowance for losses
     on accounts receivable                                                 1,647                146
   Equity in net earnings (loss) of joint ventures                            446             (1,705)
   Changes in assets and liabilities
    Decrease in accounts and other receivables                             16,380              2,608
    Decrease in inventories                                                10,306              4,236
    Decrease (increase) in prepaid expenses                                 5,263             (5,613)
    Decrease (increase) in other assets                                     6,010            (29,897)
    Increase (decrease) in accounts payable
      and accrued expenses                                                (32,712)             5,022
    Current and deferred income taxes                                     (11,408)             1,394
    Decrease in deferred income                                            (1,513)                --
    Decrease in other accounts                                               (124)              (275)
                                                                         ---------          ---------
         Net cash provided by (used in)
            operating activities                                            8,831             (8,491)

 Cash flows from investing activities:
    Additions to property, plant and equipment - net                      (12,782)            (7,499)
    Purchase of net assets - Household Products Group                          --           (319,626)
    Purchase of net assets from Newtech                                   (15,059)                --
    Decrease (increase) in receivable accounts
      and notes from affiliates                                             1,782             (6,092)
                                                                         --------           --------
       Net cash used in investing activities                              (26,059)          (333,217)

Cash flows from financing activities:
  Net borrowings under lines of credit                                   $  2,778          $ (28,235)
  Long-term debt - net                                                        518            373,593
 Exercise of stock options and warrants                                       345              2,650
  Payment of withholding tax on
   Stock option exercises                                                      --             (2,346)
                                                                         --------           --------
  Net cash provided by
    financing activities                                                    3,641            345,662
                                                                         --------           --------
    Increase (decrease) in cash
      and cash equivalents                                                (13,587)             3,954

Cash and cash equivalents at
  beginning of year                                                        20,415              8,224
                                                                         --------           --------

Cash and cash equivalents at end of quarter                              $  6,828           $ 12,178
                                                                         ========           ========


                       SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for:

   Interest                                                              $ 14,035          $   2,997
   Income taxes                                                          $  4,231          $       3

Non-cash investing and financing activities:

         In April 1999, the Company sold 210,000 shares of common stock to its
         Chief Executive Officer in exchange for a promissory note totaling
         $1,496,250.

</TABLE>

The accompanying notes are an integral part of these statements.








                                                                              7
<PAGE>   8

                        WINDMERE-DURABLE HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       SUMMARY OF ACCOUNTING POLICIES

         INTERIM REPORTING

         In the opinion of the Company, the accompanying unaudited consolidated
         financial statements contain all normal recurring adjustments
         necessary to present fairly the Company's financial position as of
         June 30, 1999 and the results of its operations and changes in
         financial position for the interim periods. Results for interim
         periods should not be considered indicative of results for a full
         year. Reference should be made to the financial statements contained
         in the registrant's Annual Report on Form 10-K for the year ended
         December 31, 1998.

         RECLASSIFICATIONS

         Certain prior period amounts have been reclassified for comparability.

         RECEIVABLES FROM AFFILIATES

         Receivables from Affiliates include accounts receivable which arise in
         the ordinary course of business and are settled as trade obligations,
         as well as the current portion of notes receivable due from certain of
         the Company's joint venture partners and other affiliates
         ("Affiliates"). Notes receivable from these Affiliates bear interest
         at prevailing market interest rates.

         DERIVATIVE FINANCIAL INSTRUMENTS

         The Company uses forward exchange contracts to reduce fluctuations in
         foreign currency cash flows related to third party raw material and
         other operating purchases. The terms of the currency instruments used
         are generally consistent with the timing of the committed or
         anticipated transactions being hedged. Outstanding at June 30, 1999
         and 1998 are $38,000,000 and $25,000,000, respectively, in contracts
         to purchase Hong Kong dollars, forward. Also outstanding are option
         contracts to sell and buy $9,000,000 in Canadian dollars, forward.
         There is no significant unrealized gain or loss on these contracts.
         All contracts have terms of six months or less.

         The Company uses interest rate swaps of one to four years in duration
         to reduce the impact of changes in interest rates on its floating rate
         debt. The notional amounts of the swap agreements are used to measure
         interest to be paid or received and do not represent the amount of
         exposure to credit loss. The differential paid or received on the
         agreements is recognized as an adjustment of interest expense.

         As of June 30, 1999, the Company had purchased swaps on $130,000,000
         notional principal amount with a market value of approximately
         ($280,000). The market value represents the amount the Company would
         have to pay to exit the contracts at June 30, 1999. The Company does
         not intend to exit such contracts at this time.

2.       INVESTMENTS IN JOINT VENTURES

         Investments in Joint Ventures consist of the Company's interests in
         joint ventures, accounted for under the equity method. Included are
         the Company's 50-percent interests in Newtech Electronics Industries,
         Inc. ("Newtech"), Breakroom of Tennessee, Inc. and Anasazi Partners,
         L.P. ("Anasazi").

         On July 28, 1998, the Company consummated the sale of its equity
         interest in Salton Products, Inc. ("Salton"). Financial information
         for Salton has, therefore, been excluded from the 1999 period results.

         Arrangements between the Company and Salton pertaining to the Kmart
         contract, pursuant to which Salton provides Kmart with products under
         the White-Westinghouse brand name, are continuing with certain
         modifications.

         In June 1999, the Company entered into a definitive asset purchase
         agreement to purchase substantially all of Newtech's assets, including
         inventory, accounts receivable, certain trademarks and other
         intangibles, as well as the assumption of certain liabilities relating
         to the business. Net assets acquired totaled approximately
         $15,000,000.




                                                                              8
<PAGE>   9

         Under the terms of the agreement, the Company acquired the exclusive
         right and license to use the White-Westinghouse Trademark in North
         America for the design, manufacture, and sale of certain consumer
         electronic products and has been assigned Newtech's rights under the
         long-term supply contracts with the Kmart Corporation in the United
         States and Zellers in Canada. According to the terms of the contracts,
         the Company will supply Kmart and Zellers consumer electronics under
         the White-Westinghouse brand. The remaining term under the Kmart
         contract can be extended up to 2011 upon mutual consent. The recently
         signed Zellers contract expires in 2004. In conjunction with the
         acquisition, the Company wrote down its remaining investment in
         Newtech resulting in a one-time non-cash charge of $12,574,400
         ($8,300,000 after tax). The charge has been recorded as equity in net
         loss of joint ventures in the Company's Statement of Operations.

         Notes receivable from Affiliates at June 30, 1999 includes $15.0
         million from the sale of the Company's equity interest in Salton. The
         $15.0 million note has been recorded net of related deferred income
         for anticipated future purchases by Salton from the Company.

         All sales made by joint ventures in the three month periods ended June
         30, 1999 and 1998 were to entities other than members of the
         consolidated group. Sales made by the Company to Salton in the three
         month periods ended June 30, 1999 and 1998 totaled $7.9 million and
         $6.4 million, respectively. Fees earned under the White-Westinghouse,
         Kmart and Zellers agreements totaled $2.4 million and $2.7 million,
         respectively, in the quarter and six month periods ended June 30, 1999
         as compared to $.9 million and $1.6 million, respectively, in the 1998
         periods.

         Note: Profits earned by the Company's manufacturing subsidiary on
         sales to joint ventures are included in the consolidated earnings
         results.

3.       SHAREHOLDERS' EQUITY

         EARNINGS PER SHARE

         In 1997, the Company adopted Financial Accounting Standards No. 128
         (SFAS 128), "Earnings Per Share." Basic shares for the three month
         periods ended June 30, 1999 and 1998 were 22,302,018 and 18,765,412,
         respectively.

         All common stock equivalents have been excluded from the per share
         calculation for the 1999 and 1998 periods, as the Company incurred a
         net loss in both periods and their inclusion would have been
         anti-dilutive.

4.       COMMITMENTS AND CONTINGENCIES

         In June 1999, a settlement was reached in the litigation between White
         Consolidated Industries, Inc. and CBS Corporation pending in the
         United States District Court for the Western District of Pennsylvania,
         Civil Action No. 96-2294 relating to the use of the "White
         Westinghouse" trademark for certain consumer products. The
         consummation of the settlement, which is subject to the satisfaction
         of certain conditions, is anticipated to be completed during the third
         quarter of this year. No payment will be required by the Company in
         connection with the settlement of the litigation. As part of the
         settlement, which also involves other parties to the litigation and
         other agreements between White Consolidated Industries and CBS
         Corporation, and which confirms CBS' rights to the "Westinghouse"
         trademark, all litigation against the Company will be dismissed and
         the license agreements between the Company and White Consolidated
         Industries will remain in force.

         The Company is also a defendant in SHERLEIGH ASSOCIATES LLC AND
         SHERLEIGH ASSOCIATES INC. PROFIT SHARING PLAN, ON THEIR OWN BEHALF AND
         ON BEHALF OF ALL OTHERS SIMILARLY SITUATED V. WINDMERE-DURABLE
         HOLDINGS, INC., DAVID M. FRIEDSON, HARRY D. SCHULMAN AND NATIONSBANC
         MONTGOMERY SECURITIES LLC, 98-2273-CIV-LENARD which was filed in the
         United States District Court, Southern District of Florida on October
         8, 1998.

         This matter is a class action complaint, which is the consolidation of
         eight separate class action complaints with substantially similar
         allegations. On June 30, 1999, a consolidated amended class action
         complaint was filed. The consolidated amended class action complaint
         was purportedly filed on behalf of those security holders of the
         Company who purchased such securities during a certain period in the
         second and third quarters of 1998, alleging violations of the federal
         securities laws (including Rule 10b-5 promulgated pursuant to the
         Securities Exchange Act of 1934, as amended) in connection with the
         acquisition by the Company of certain product categories of the





                                                                              9
<PAGE>   10

         Household Products Group of the Black & Decker Corporation. Among
         other things, the plaintiffs allege that the Company and certain of
         its directors and officers, along with NationsBanc Montgomery
         Securities LLC, provided false information in connection with a public
         offering of debt and equity securities. The plaintiffs seek, among
         other relief, to be declared a class, to be awarded compensatory
         damages, rescission rights, unspecified damages and attorneys' fees
         and costs. The Court has directed the Defendants to respond to the
         consolidated amended complaint on or before August 16, 1999.

         By Order dated March 9, 1999, in addition to consolidating the
         above-referenced cases, the Court provisionally certified the class of
         plaintiffs who purchased Windmere stock between May 12, 1998 and
         September 22, 1998, and provisionally certified Sherleigh Associates
         LLC and Sherleigh Associates, Inc. Profit Sharing Plan as lead
         plaintiff. By Order dated June 3, 1999, the Court, among other things,
         appointed lead counsel and directed the filing of a joint scheduling
         order. On June 23, 1999, the parties submitted a Joint Scheduling
         Report and a proposed scheduling order, which is still under
         consideration by the Court.

         The Company is currently advancing the legal expenses of the directors
         and officers who were named as defendants. Such defendants have agreed
         to repay the Company for all or any portion of such advances to which
         they are ultimately found not to be entitled pursuant to applicable
         law. Based on the information currently available to the Company,
         management does not believe that the indemnification of the officers
         and directors named as defendants in the above-listed matters will
         have a material adverse effect on the financial condition, results of
         operations or liquidity of the Company. However, the actual effects of
         such indemnification on the Company cannot be finally determined until
         the amount of such indemnification, if any, is fixed.

         The Company is subject to other legal proceedings and claims which
         arise in the ordinary course of its business. In the opinion of
         management, the amount of ultimate liability, if any, in excess of
         applicable insurance coverage, is not likely to have a material effect
         on the financial position of the Company. However, as the outcome of
         litigation or other claims is difficult to predict, significant
         changes in the estimated exposures could occur.

5.       BUSINESS SEGMENT INFORMATION

         Summarized financial information concerning the Company's reportable
         segments is shown in the following table. Corporate related items,
         results of insignificant operations and, as it relates to segment
         profit (loss), income and expense not allocated to reportable segments
         are included in the reconciliations to consolidated results.

         Segment information for the three month periods ended June 30, are as
         follows: (In Thousands)

<TABLE>
<CAPTION>

                                                               Household
                                                Windmere       Products           Durable
                1999                              Group          Group         Manufacturing       Total
                ----                            --------       ---------       -------------      -------
                <S>                              <C>           <C>               <C>            <C>
                Net Sales                        $47,534       $  78,042         $ 34,814       $ 160,390
                Intersegment net sales                --             --            17,262          17,262
                Operating earnings (loss)         (2,121)         (2,600)           7,591           2,870

                1998
                Net Sales                         46,469             --            35,003          81,472
                Intersegment net sales                --             --            19,768          19,768
                Operating earnings (loss)           (294)            --             6,395           6,101

</TABLE>

         Reconciliation to consolidated amounts:

<TABLE>
<CAPTION>

                                                                               1999          1998
                                                                             --------     -------
                Revenues

                  <S>                                                        <C>          <C>
                  Total revenues for reportable segments                     $ 160,390    $  81,472
                  Other revenues                                                6,040           864
                  Eliminations of intersegment revenues                       (17,262)      (19,768)
                                                                             --------     ---------
                    Total consolidated revenues                              $ 149,168    $  62,568
                                                                             =========    =========


</TABLE>



                                                                             10
<PAGE>   11
<TABLE>
<CAPTION>

                  <S>                                                        <C>          <C>
                Operating earnings (loss)
                     Total earnings (loss) for reportable
                             segments                                        $   2,870    $  6,101
                      Other earnings (loss)                                      2,777      (7,295)

                     Corporate headquarters expense                             (2,231)     (1,765)

                     Interest expense                                           (6,531)     (1,426)

                     Equity in net earnings (loss) of joint ventures           (12,374)        751

                     Repositioning charge
                                                                                    --      (9,914)
                                                                             ----------   --------

                     Consolidated earnings (loss) before income taxes        $ (15,489)   $(13,548)
                                                                             =========    ========

</TABLE>


         Segment information for the six month periods ended June 30, are as
         follows: (In Thousands)

<TABLE>
<CAPTION>


                                                               Household
                                                Windmere       Products           Durable
                1999                              Group          Group         Manufacturing       Total
                ----                            --------       ---------       -------------       -----
               <S>                               <C>           <C>               <C>            <C>

                Net Sales                        $94,925       $143,192          $ 62,956       $ 301,073
                Intersegment net sales                --             --            40,780          40,780
                Operating earnings (loss)         (4,895)        (3,866)           10,319           1,558

                1998
                Net Sales                         92,359             --            59,727         152,086
                Intersegment net sales                --             --            34,444          34,444
                Operating earnings (loss)         (2,369)            --             8,194           5,825
</TABLE>


         Reconciliation to consolidated amounts:

<TABLE>
<CAPTION>

                                                                               1999          1998
                                                                             --------     -------
                  <S>                                                        <C>          <C>
                Revenues

                  Total revenues for reportable segments                     $ 301,073    $ 152,086
                  Other revenues                                                7,728           320
                  Eliminations of intersegment revenues                       (40,780)      (34,444)
                                                                             --------     ---------
                    Total consolidated revenues                              $ 268,021    $ 117,962
                                                                             =========    =========

                Operating earnings (loss)
                     Total earnings (loss) for reportable segments           $   1,558    $   5,825
                     Other earnings                                              4,420       (4,464)

                     Corporate headquarters expense                             (4,443)      (2,462)

                     Interest expense                                          (12,736)      (2,471)

                     Equity in net earnings (loss) of joint ventures           (12,894)       1,196

                     Repositioning charge                                           --       (9,914)
                                                                              --------    ---------
                     Consolidated earnings (loss) before income taxes         $(24,095)     (12,290)
                                                                              ========    =========
</TABLE>

6.       CONDENSED CONSOLIDATING FINANCIAL INFORMATION

         The following condensed consolidating financial information presents
         the results of operations, financial position and cash flows of the
         Company (on a stand alone basis), the guarantor subsidiaries of the
         Company's Senior Subordinated Notes ("Notes") (on a combined basis),
         the non-guarantor subsidiaries (on a combined basis) and the
         eliminations necessary to arrive at the consolidated results of the
         Company. The results of operations and cash flows presented below
         assume as if the guarantor subsidiaries were in place for all periods
         presented. The Company and subsidiary guarantors have accounted for
         investments in their respective subsidiaries on an unconsolidated
         basis using the equity method of accounting. The Subsidiary Guarantors
         are wholly-owned subsidiaries of the Company and have fully and
         unconditionally guaranteed the Notes on a joint and several basis. The
         guarantors include the following: Windmere Corporation, Windmere





                                                                            11
<PAGE>   12
         Holdings Corporation, Windmere Holdings Corporation II, Jerdon
         Products, Inc., Fortune Products, Inc., Bay Books & Tapes, Inc.,
         Consumer Products Americas, Inc., Windmere Innovative Pet Products,
         Inc., EDI Masters, Inc., Windmere Fan Products, Inc., Household
         Products, Inc., HP Delaware, Inc., HP Americas, Inc., HPG LLC, HP
         Intellectual Corp., WD Delaware, Inc. and WD Delaware II, Inc. The
         Notes contain certain covenants which, among other things, will
         restrict the ability of the Subsidiary Guarantors to make distributions
         to Windmere-Durable Holdings, Inc. The Company has not presented
         separate financial statements and other disclosures concerning the
         guarantors and non-guarantor subsidiaries because it has determined
         they would not be material to investors.


                         Six Months Ended June 30, 1999

<TABLE>
<CAPTION>

                                   Windmere Durable                Non
                                    Holdings, Inc.  Guarantors  Guarantors  Eliminations Consolidated
                                   ---------------- ----------  ----------  ------------ ------------
<S>                                        <C>       <C>         <C>           <C>         <C>
Statement of Operations

Net Sales                                  0         204,471     104,330       (40,780)    268,021
Cost of goods sold                         0         147,124      85,012       (40,780)    191,356
                                      ------         -------     -------      --------     -------
  Gross Profit                             0          57,347      19,318             0      76,665
Operating Expenses                      (347)         65,093      11,228           180      76,154
                                      ------         -------     -------      --------     -------
  Operating Profit (Loss)                347          (7,746)      8,090          (180)        511
Other (income) expense, net           12,024            (847)       (558)        1,093      11,712
                                      ------         -------     -------      --------     -------
  Earnings (loss) before
  income taxes and equity in
  earnings (loss) of joint
  ventures                           (11,677)         (6,899)      8,648        (1,273)    (11,201)
Provision (Benefit) for
 income taxes                              0          (2,803)      1,131        (5,328)     (7,000)
Equity in net earnings (loss)
 of joint ventures                       593         (13,487)          0             0     (12,894)
                                      ------         --------    -------      --------     --------
Net earnings (loss)                  (11,084)        (17,583)      7,517         4,055     (17,095)
                                     ========        ========    =======      ========     ========

Balance Sheet

Cash                                       9            (469)      7,288             0       6,828
Accounts and other receivables             0         105,411      48,481             0     153,892
Receivables from affiliates            9,437         (18,626)     12,993             2       3,806
Inventories                                0         101,195      65,068        (1,498)    164,765
Other current assets                       0          26,026       4,348        11,536      41,910
                                      ------         -------     -------      --------      ------
  Total current assets                 9,446         213,537     138,178        10,040     371,201

Investments in
 joint ventures                      426,376           9,254      70,542      (503,484)      2,688
Property, plant and
 equipment, net                            0          12,770      65,432             0      78,202
Other assets                           1,521         583,213      11,928      (341,360)    255,302
                                      ------         -------     -------      --------     -------
  Total assets                       437,343         818,744     286,080      (834,804)    707,393
                                     =======         =======     =======      ========     =======

LIABILITIES:
Notes payable                              0          11,350       2,778       (11,350)      2,778
Accounts payable and
 accrued expenses                          3          65,186      39,947            (1)    105,135
Current maturities
 of long term debt                     7,842               0         113             0       7,955
Deferred income, current
  portion                                  0             689           0             0         689
Income taxes payable                       0          (1,223)        948           275           0
                                      ------         --------    -------      ---------     ------
     Total current liabilities         7,845          76,002      43,786       (11,076)    116,557

Long term debt                       269,373         332,906       4,190      (332,906)    273,563

Deferred income, less
 current portion                           0             297           0           783       1,080
Deferred income taxes                      0          16,253       2,973       (10,177)      9,049
                                      ------         -------     -------      ---------    -------
   Total liabilities                 277,218         425,458      50,949      (353,376)    400,249

Shareholders' equity                 160,125         393,316     235,131      (481,428)    307,144
                                     -------         -------    --------      --------     -------

  Total liabilities
  and shareholders' equity           437,343         818,744     286,080      (834,804)    707,393
                                     =======         =======     =======      ========     =======

Cash Flow Information

Net cash provided by (used
 In) operating activities            (11,080)         56,201     (21,101)      (15,064)      8,955
Net cash provided by (used
 in) investing activities                995          15,825     (15,572)      (27,307)    (26,059)
Net cash provided by
 (used in) financing
 activities                           10,095         (75,578)     26,753        42,371       3,641

Effect of exchange rate                    0               0        (124)            0        (124)
Cash at beginning                          0           3,083      17,332             0      20,415
Cash at end                                9            (469)      7,288             0       6,828

</TABLE>







                                                                             12
<PAGE>   13

                         Six Months Ended June 30, 1998

<TABLE>
<CAPTION>
                                        Windmere Durable                           Non
                                         Holdings, Inc.       Guarantors       Guarantors      Eliminations     Consolidated
                                        ----------------      ----------       ----------      ------------     ------------
<S>                                           <C>             <C>              <C>              <C>             <C>
   Statement of Operations

   Net Sales                                        0           89,754           62,652           (34,444)        117,962
   Cost of goods sold                               0           78,716           52,757           (34,744)         96,729
                                           ----------           ------           ------          --------          ------
     Gross profit                                   0           11,038            9,895               300          21,233
   Operating expenses                            (313)          22,971            1,694               180          24,532
   Repositioning charge                             0           (9,914)               0                 0          (9,914)
                                           ----------           ------           ------          --------          ------
     Operating profit (Loss)                      313          (21,846)           8,201               120         (13,213)

   Other (income) expense,  net                   215            1,153           (1,813)              717             273
                                           ----------           ------           ------          --------          ------
   Earnings (loss) before income
    taxes and equity in earnings
    (loss) of joint ventures                       98          (23,000)          10,013              (597)        (13,486)
   Provision (Benefit) for
    Income taxes                                    0               48              156            (5,766)         (5,563)
   Equity in net earnings (loss)
    of joint ventures                             151            1,045                0                 0           1,196
                                           ----------           ------           ------          --------          ------
   Net earnings (loss)                            249          (22,003)           9,858             5,169          (6,727)
                                           ==========          ========          ======          ========          =======

   Balance Sheet

   Cash                                             0            3,529            8,649                 0          12,178
   Accounts and other receivables                   0           79,773            5,061              (622)         84,212
   Receivables from affiliates                  1,616          (16,821)          37,935            (1,652)         21,078
   Inventories                                      0          132,056           42,593               993         175,642
   Other current assets                             0           13,836            4,208            (2,647)         15,397
   Refundable income taxes                          0            2,475              191             1,465           4,131
                                           ----------           ------           ------          --------          ------
      Total current assets                      1,616          214,848           98,636            (2,462)        312,638

   Investment in joint
    ventures                                   80,731           52,028           59,477          (147,440)         44,796
   Property, plant and
    equipment, net                                  0           51,852           30,760                 0          82,612
   Notes receivable from affiliate                  0                0           19,455           (11,351)          8,104
   Other assets                                     0          224,754              585            11,872         237,211
                                           ----------          -------          -------          --------         -------
      Total assets                             82,347          543,482          208,913          (149,381)        685,361
                                           ==========          =======          =======          ========         =======

   Notes and acceptances payable                    0           16,350            9,747           (11,350)         14,747
   Accounts payable and
    accrued expenses                              218           76,734           15,428              (622)         91,758
   Current maturities of
    long term debt                                  0           44,293                0                 0          44,293
   Income taxes payable and
    other current liabilities                       0              733                1              (469)            265
                                           ----------           ------           -------         --------          ------
    Total current liabilities                     218          138,110           25,176           (12,441)        151,063
   Long term debt                              10,848          338,337                0                 0         349,185
   Deferred income                                  0              125                0               865             990
   Deferred income taxes                            0                0            2,147            (2,147)              0
                                           ----------          -------           ------          --------          ------
     Total liabilities                         11,066          476,572           27,323           (13,723)        501,238

   Shareholders' equity                        71,281           66,910          181,590          (135,658)        184,123
                                           ----------           ------          -------          ---------        -------
   Total liabilities
       and shareholders
       equity                                  82,347          543,482          208,913          (149,381)        685,361
                                           ==========          =======          =======          ========         =======

   Net cash used in operating
       activities                                   0          (24,352)          15,861                 0          (8,491)

   Net cash used in investing
       activities                                   0         (328,952)          (4,265)                0        (333,217)

</TABLE>






                                      13
<PAGE>   14

<TABLE>
<CAPTION>

<S>                                                 <C>          <C>                <C>                 <C>         <C>
   Net cash provided by financing
      activities                                    0          356,833           (9,794)                0         347,039

   Effect of exchange rate                          0                0           (1,377)                0          (1,377)

   Cash at beginning                                0                0            8,224                 0           8,224

   Cash at end                                      0            3,529            8,649                 0          12,178

</TABLE>

7.       Related Party Transactions

         On April 14, 1999, the Company sold 210,000 shares of authorized
         Common Stock at the fair market value of $7.125 per share to its Chief
         Executive Officer in exchange for a promissory note. The note is on a
         full recourse basis, with a maturity of three years from the date of
         purchase and bears interest at LIBOR plus 2.75%.








                                                                             14
<PAGE>   15



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

This document contains forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. Such statements
are indicated by words or phrases such as "anticipate," "projects," "management
believes," "the Company believes," "intends," "expects," and similar words or
phrases. Such forward-looking statements are subject to certain risks,
uncertainties or assumptions and may be affected by certain other factors.
Should one or more of these risks, uncertainties or other factors materialize,
or should underlying assumptions prove incorrect, actual results, performance,
or achievements of the Company may vary materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the cautionary statements in this paragraph. The
Company disclaims any obligation to publicly announce the results of any
revisions to any of the forward-looking statements contained herein to reflect
future events or developments.

The Company, through its subsidiaries, is a leading diversified manufacturer
and distributor of a broad range of branded and private label small household
appliances, including electric housewares (kitchen and garment care), personal
care, and other products. The Company manufactures and markets products under
the Windmere(R) and other Company-owned brand names, under private-label brand
names, under licensed brand names, such as Black & Decker(R) and, pursuant to
licenses held by affiliates such as, the White-Westinghouse(R) brand name. The
Company's customers for such products include mass merchandisers, specialty
retailers and appliance distributors primarily in North America, Latin America
and the Caribbean. In addition, the Company manufactures products on an OEM
basis for other major consumer products companies. The Company also
manufactures and markets the LitterMaid(R) self-cleaning cat litter box.

Results of Operations

The operating results of the Company expressed as a percentage of sales and
other revenues are set forth below:

<TABLE>
<CAPTION>


                                                              SIX MONTHS ENDED JUNE 30,
                                                           -------------------------------
                                                           1999                      1998
                                                           -----                     -----
<S>                                                        <C>                       <C>
Net Sales                                                  100.0%                    100.0%
Cost of goods sold                                          71.4                      82.0
                                                           -----                     -----
Gross Profit                                                28.6                      18.0
Selling, general and
 administrative expenses                                    28.4                      20.8
Other (income) expense - net                                 4.4                       8.6
Equity in net earnings (loss) of joint ventures             (4.8)                      1.0
                                                            ----                       ---
Earnings (loss) before income taxes                         (9.0)                    (10.4)

Provision (benefit) for income taxes                        (2.6)                     (4.7)
                                                           -----                     -----
Net earnings (loss)                                         (6.4)%                    (5.7)%
                                                           =====                     =====-
</TABLE>


Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998

Sales and other revenues

Sales and other revenues ("Revenues") for the Company increased by $86.6
million to $149.2 million, an increase of 138% over Revenues for the second
quarter of 1998. The increase is primarily the result of the June 26, 1998
acquisition of the Black & Decker Household Products Group (HPG) which
contributed $78.0 million in distribution sales. Sales to Walmart accounted for
16% of total sales for the 1999 period. In the 1998 period, sales to Salton
accounted for 16.7% of total sales.

Fees earned by the Company under the White-Westinghouse, Kmart and Zellers
contracts totaled $2.4 million for the 1999 period as compared to $.9 million
for 1998 and are classified as Revenues.






                                                                            15
<PAGE>   16

Gross Profit Margin

The Company's gross profit margin increased to 28.8% of Revenues from 25.6%,
excluding a $7.7 million one-time repositioning charge included in cost of
goods sold, in the 1998 period. The increase is attributable primarily to the
June 26, 1998 acquisition, as well as increased productivity at the Company's
China manufacturing plant.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the Company increased by $27.5
million to $40.3 million in the second quarter of 1999. As a percentage of
sales, costs increased to 27.0% from 20.5% in the 1998 period. The increase is
primarily due to the June 26, 1998 acquisition of HPG.

Equity in Net Earnings of Joint Ventures

The Company's equity in net earnings of joint ventures decreased to a loss of
$12.4 million in the 1999 second quarter as compared to income of $751,000 in
the 1998 period. The decrease is primarily the result of a one-time non cash
charge of $12.6 million ($8.3 million after tax) to write down the Company's
remaining investment in Newtech in conjunction with the June 1999 purchase of
Newtech's assets. Also contributing to the change is the July 1998 sale of the
Company's equity interest in Salton.

Interest Expense

Interest expense increased to $6.5 million in 1999 from $1.4 million in 1998.
The change is the result of amounts borrowed in conjunction with the
acquisition of HPG.

Taxes

The Company's tax expense is based on the earnings of each of its foreign and
domestic operations and it includes such additional U.S. taxes as are
applicable to any repatriation of foreign earnings. Foreign earnings, other
than in Canada, Mexico and certain other countries in Latin America, are
generally taxed at rates lower than in the United States.

Earnings Per Share

In 1997, the Company adopted Financial Accounting Standards No. 128 (SFAS)
128), "Earnings Per Share." Basic shares for the three month periods ended June
30, 1999 and 1998 were 22,302,018 and 18,765,412, respectively.

All common stock equivalents have been excluded from the per share calculation
for the 1999 and 1998 periods, as the Company incurred a net loss in both
periods and their inclusion would have been anti-dilutive. The increase in the
number of basic shares is primarily due to the July 1998 public offering of
3,041,000 shares of the Company's common stock.

Windmere Group

Windmere Group sales increased by $1.0 million to $47.5 million in the second
quarter of 1999. The increase in Windmere Group sales is attributable to
weakness in personal care partially offset by growth in LitterMaid and seasonal
product sales. LitterMaid distribution sales increased by $2.1 million or 49.7%
over 1998 sales.

Selling, general and administrative expenses for the Windmere Group increased
by approximately $2.1 million to 25.1% of segment sales from 21.2% in the 1998
period. Group expenses for 1999 represented 8.0% of total Company sales as
compared to 15.7% in the 1998 period. Contributing significantly to the
increase were costs directly associated with the increase in sales volume such
as LitterMaid royalties and $1.0 million in advertising related expenditures.

Household Products Group

Selling, general and administrative expenses for the Household Products Group
totaled $24.9 million or 31.9% of segment sales and 16.7% of total Company
sales. Included in selling, general and administrative expenses was
approximately $1.8 million in costs under contracts where Black & Decker was
providing services to the Company during the transition period while the
Company was putting in place its own personnel and systems and $.8 million in
costs to run back office operations at the Company's Shelton, CT. location. All





                                                                             16
<PAGE>   17

significant service contracts with Black & Decker have been exited as of May
31, 1999 and all back office operations have been relocated to the Company's
Miami headquarters as of June 30, 1999. Also included is approximately $3.3
million in amortization of intangibles recorded in conjunction with the
acquisition.

Durable Manufacturing

Sales at the Company's China based manufacturing subsidiary remained relatively
flat in the 1999 period as compared to 1998.

Operating earnings for Durable Manufacturing increased by $1.2 million to $7.6
million in the 1999 second quarter. Increased productivity contributed to the
improved results.

Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998

Sales and other revenues

Sales and other revenues ("Revenues") for the Company increased by $150.1
million to $268.0 million, an increase of 127% over Revenues for the first six
months of 1998. The increase is primarily the result of the June 26, 1998
acquisition of HPG which contributed $143.1 million in distribution sales.
Sales to Walmart accounted for 18% of total sales for the 1999 period.

Fees earned by the Company under the White-Westinghouse, Kmart and Zellers
contracts totaled $2.7 million for the 1999 period as compared to $1.6 million
for 1998 and are classified as Revenues.

Gross Profit Margin

The Company's gross profit margin increased to 28.6% of Revenues from 24.5%
excluding the $7.7 million portion of the repositioning charge recorded as cost
of goods sold in the 1998 period. The increase is attributable primarily to the
June 26, 1998 acquisition and increased productivity at Durable.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the Company increased by $51.6
million to $76.2 million in the first six months of 1999. As a percentage of
sales, costs increased to 28.4% from 20.8% in the 1998 period. The increase is
primarily due to the June 26, 1998 acquisition of HPG.

Equity in Net Earnings of Joint Ventures

The Company's equity in net earnings of joint ventures decreased to a loss of
$12.9 million in the 1999 period as compared to income of $1.2 million in the
1998 period. The decrease is primarily the result of a one-time non cash charge
of $12.6 million ($8.3 million after tax) to write down the Company's remaining
investment in Newtech in conjunction with the June 1999 purchase of Newtech's
assets. Also contributing to the change is the July 1998 sale of the Company's
equity interest in Salton.

Interest Expense

Interest expense increased to $12.7 million in 1999 from $2.5 million in 1998.
The change is the result of amounts borrowed in conjunction with the
acquisition of HPG.

Taxes

The Company's tax expense is based on the earnings of each of its foreign and
domestic operations and it includes such additional U.S. taxes as are
applicable to any repatriation of foreign earnings. Foreign earnings, other
than in Canada, Mexico and certain other countries in Latin America, are
generally taxed at rates lower than in the United States.

Earnings Per Share

In 1997, the Company adopted Financial Accounting Standards No. 128 (SFAS)
128), "Earnings Per Share." Basic shares for the six month periods ended June
30, 1999 and 1998 were 22,196,492 and 18,589,560, respectively.






                                                                             17
<PAGE>   18

All common stock equivalents have been excluded from the per share calculation
for the 1999 and 1998 periods as the Company incurred a net loss in both
periods and their inclusion would have been anti-dilutive. The increase in the
number of basic shares is primarily due to the July 1998 public offering of
3,041,000 shares of the Company's common stock.

Windmere Group

Windmere Group sales increased by $2.6 million to $94.9 million in the first
six months of 1999. The increase in Windmere Group sales is attributable to
increases in LitterMaid, kitchen and seasonal product sales partially offset by
weakness in personal care sales. LitterMaid distribution sales increased by
$5.5 million or 82.9% over 1998 sales.

Selling, general and administrative expenses for the Windmere Group increased by
approximately $2.8 million to $22.5 million or 23.7% of segment sales from $19.8
million or 21.4% of sales in the 1998 period. Group expenses for 1999
represented 8.4% of total Company sales as compared to 16.8% in the 1998 period.
Contributing significantly to the increase were employee related costs for
increased personnel, costs directly associated with the increase in LitterMaid
sales volume such as royalties, a reserve for a customer who filed for
bankruptcy in the period and approximately $500,000 related to the write-off of
product design costs in conjunction with a change in accounting regulations.

Household Products Group

Selling, general and administrative expenses for the Household Products Group
totaled $46.9 million or 32.8% of segment sales and 17.5% of total Company
sales. Included in selling, general and administrative expenses was
approximately $3.2 million in costs under contracts where Black & Decker was
providing services to the Company during a transition period while the Company
was putting in place its own personnel and systems and $2.4 million in costs to
run back office operations at the Company's Shelton, CT location. All
significant service contracts with Black & Decker have been exited as of May
31, 1999 and all back office operations have been relocated to the Company's
Miami headquarters, as of June 30, 1999. Also included is approximately $6.8
million in amortization of intangibles recorded in conjunction with the
acquisition.

Durable Manufacturing

Sales at the Company's China based manufacturing subsidiary increased by $3.2
million or 5.4% to $63.0 million in the 1999 period.

Operating earnings for Durable Manufacturing increased by $2.1 million to $10.3
million in the 1999 second quarter. Increased productivity contributed to the
improved results.

Liquidity and Capital Resources

At June 30, 1999, the Company's working capital was $254.6 million, as compared
to $161.6 million at June 30, 1998. At June 30, 1999 and 1998, the Company's
current ratio was 3.2 to 1 and 2.1 to 1, respectively, and its quick ratio was
1.6 to 1 and .9 to 1, respectively. The improvement in ratios is primarily the
result of the acquisition.

Cash balances decreased by approximately $13.6 million for the six months ended
June 30, 1999. The net cash provided by operating activities is primarily the
result of the increased growth in sales resulting from the June 26, 1998
acquisition of HPG and the resultant cash collections in the period.

Cash used in investing activities totaled approximately $26.1 million for the
period and is primarily the result of $12.8 million in capital expenditures at
the Company's manufacturing facilities and approximately $15.0 million for the
purchase of the assets of Newtech.

Funds provided by financing activities totaled approximately $3.6 million in the
period reflecting increased borrowings of $3.3 million. Without the $15.0
million acquisition of the Newtech assets, the Company would not have borrowed
the additional funds.

No provision for U.S. taxes has been made on undistributed earnings of the
Company's foreign subsidiaries and joint ventures because management plans to
reinvest such earnings in their respective operations or in other foreign
operations. Repatriating those earnings or using them in some other manner
which would give rise to a U.S. tax liability would reduce after tax earnings
and available working capital.






                                                                             18
<PAGE>   19

Certain of the Company's foreign subsidiaries have approximately $35.8 million
in trade finance lines of credit, payable on demand, which are secured by the
subsidiaries' tangible and intangible property, and in some cases, a Company
guarantee. Outstanding borrowings by the Company's Hong Kong subsidiaries are
primarily in U.S. dollars.

The Company's primary sources of liquidity are its cash flow from operations
and borrowings under the Senior Secured Credit Facilities. The Company is
currently borrowing $130.9 million under the term loan portion of its Senior
Secured Credit Facilities. The Senior Secured Revolving Credit Facility as
amended, provides for borrowings by the Company of up to $110.0 million through
December 31, 1999 and $160.0 million thereafter and through the remainder of
the term of the loan. As of August 9, 1999, the Company is borrowing $29.5
million under the Senior Secured Revolving Credit Facility and has
approximately $80.0 million available for future borrowings, under all its
credit facilities. Advances under the Senior Secured Revolving Credit Facility
are based upon percentages of outstanding eligible accounts receivable and
inventories.

The Company's aggregate capital expenditures for the six months ended June 30,
1999 were $12.8 million. The Company anticipates that the total capital
expenditures for 1999 will be approximately $20.0 million, which includes the
cost of new tooling. The Company plans to fund those capital expenditures from
cash flow from operations and, if necessary, borrowings under the Senior
Secured Revolving Credit Facility.

At June 30, 1999, debt as a percent of total capitalization was 48 percent.

The Company's ability to make scheduled payments of principal of, or to pay the
interest on, or to refinance, its indebtedness, or to fund planned capital
expenditures, product research and development expenses and marketing expenses
will depend on its future performance, which, to a certain extent, is subject
to general economic, financial, competitive, legislative, regulatory, and
international and United States domestic political factors and other factors
that are beyond the Company's control. Based upon the current level of
operations and anticipated cost savings and revenue growth, management believes
that cash flow from operations and available cash, together with available
borrowings under the Senior Credit and other facilities, will be adequate to
meet the Company's future liquidity needs for at least the next several years.
The Company may, however, need to refinance all or a portion of the principal
of the indebtedness on or prior to maturity. There can be no assurance that the
Company's business will generate sufficient cash flow from operations, that
anticipated revenue growth and operating improvements will be realized or that
future borrowings will be available under the Senior Secured Credit Facilities
in an amount sufficient to enable the Company to service its indebtedness,
including the Senior Subordinated Notes, or to fund its other liquidity needs.
In addition, there can be no assurance that the Company will be able to effect
any such refinancing on commercially reasonable terms or at all.

CURRENCY MATTERS

While the Company transacts business predominantly in U.S. dollars and most of
its revenues are collected in U.S. dollars, a portion of the Company's costs,
such as payroll, rent and indirect operations costs, are denominated in other
currencies, such as Chinese renminbi, Hong Kong dollars and Mexican pesos.
Changes in the relation of these and other currencies to the U.S. dollar will
affect the Company's cost of goods sold and operating margins and could result
in exchange losses. The impact of future exchange rate fluctuations on the
Company's results of operations cannot be accurately predicted.

The Company uses forward exchange contracts to reduce fluctuations in foreign
currency cash flows related to third party raw material and other operating
purchases as well as trade receivables. The purpose of the Company's foreign
currency management activity is to reduce the risk that eventual cash flows
from foreign currency denominated transactions may be adversely affected by
changes in exchange rates.

Durable uses the Hong Kong dollar as its functional currency. The Hong Kong
dollar has historically been "pegged" to a fixed exchange rate vis-a-vis the
U.S. dollar. If the Hong Kong dollar were to be significantly devalued against
the U.S. dollar and the exchange rate allowed to fluctuate, the Company could
experience significant changes in its currency translation account which would
impact the Company's future comprehensive income. The Company has acquired the
Queretaro property and related assets from The Black & Decker Corporation.
Because the operations of such facilities are primarily peso-denominated and
the revenues derived from products manufactured at such facilities are
primarily dollar-denominated, the Company is now subject to fluctuations in the
value of the peso. The December 1994 devaluation of the peso had a number of
effects on the Mexican economy that adversely affected the financial condition
of businesses in Mexico. The devaluation caused the peso value of dollar
denominated indebtedness associated with businesses in Mexico to increase
significantly, and also greatly increased the rate of inflation, resulting in a
sharp rise in nominal interest rates on peso-denominated financing. There can
be no assurance that the peso to dollar foreign exchange rate will not be
volatile in the future and that financial markets will not have a material
adverse effect on the Company's business, financial condition and results of
operations.






                                                                             19
<PAGE>   20

The Company uses interest rate swaps of one to four years in duration to reduce
the impact of changes in interest rates on its floating rate debt. The notional
amounts of the agreements are used to measure interest to be paid or received
and do not represent the amount of exposure to credit loss. The differential
paid or received on the agreements is recognized as an adjustment of interest
expense.

As of June 30, 1999, the Company had purchased interest rate swaps on $130
million notional principal amount with a market value of approximately
($280,000). The market value represents the amount the Company would have to
pay to exit the contracts at June 30, 1999. The Company does not intend to exit
such contracts at this time.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued Statement of Financial Accounting Standards (FAS)
No. 133, "Accounting for Derivative Instruments and Hedging Activities." FAS
No. 133 establishes standards for accounting and reporting for derivative
instruments, and conforms the requirements for treatment of different types of
hedging activities. This statement is effective for all fixed quarters of years
beginning after June 15, 2000. The Company has not completed its evaluations of
FAS No. 133.

SEASONALITY

The Company's business is highly seasonal, with operating results varying from
quarter to quarter. The Company has historically experienced higher revenues in
the third and fourth quarters of each fiscal year primarily due to increased
demand by customers for products in the late summer for "back-to-school" sales
and in the fall for holiday sales. The Company's major sales occur during
August through November. Sales are generally made on 45 to 90 day terms.
Heaviest collections on its open accounts receivable are received from November
through March, at which time the Company is in its most liquid state.

YEAR 2000 ISSUES

The Company uses a significant number of computer software programs and
operating systems across its entire organization, including applications used
in financial business systems, manufacturing and administrative functions. A
complete evaluation has been performed to identify whether any of the Company's
software applications contain source code that is unable to interpret the
upcoming year 2000 and beyond. The appropriate modifications have been made and
the Company now believes that its critical systems are Year 2000 compliant. The
Company has received communications from its major suppliers and trading
partners, some of who have filed reports with the Securities and Exchange
Commission, and believes that they are also Year 2000 Compliant. The cost of
implementing required system changes is not material to the Company's
consolidated financial statements. No assurance can be given, however, that all
of the Company's systems, the systems of acquired businesses and those of
significant customers and suppliers will not experience Year 2000 compliance
difficulties. Difficulties that arise may result in unfavorable business
consequences including disruption in product shipments, delays in receipt of
materials, delay in customer receipts and payments to suppliers.

LEGAL PROCEEDINGS

In June 1999, a settlement was reached in the litigation between White
Consolidated Industries, Inc. and CBS Corporation pending in the United States
District Court for the Western District of Pennsylvania, Civil Action No.
96-2294 relating to the use of the "White Westinghouse" trademark for certain
consumer products. The consummation of the settlement, which is subject to the
satisfaction of certain conditions, is anticipated to be completed during the
third quarter of this year. No payment will be required by the Company in
connection with the settlement of the litigation. As part of the settlement,
which also involves other parties to the litigation and other agreements
between White Consolidated Industries and CBS Corporation, and which confirms
CBS' rights to the "Westinghouse" trademark, all litigation against the Company
will be dismissed and the license agreements between the Company and White
Consolidated Industries will remain in force.

The Company is a defendant in SHERLEIGH ASSOCIATES LLC AND SHERLEIGH ASSOCIATES
INC. PROFIT SHARING PLAN, ON THEIR OWN BEHALF AND ON BEHALF OF ALL OTHERS
SIMILARLY SITUATED V. WINDMERE-DURABLE HOLDINGS, INC., DAVID M. FRIEDSON, HARRY
D. SCHULMAN AND NATIONSBANC MONTGOMERY SECURITIES LLC, 98-2273-CIV-LENARD which
was filed in the United States District Court, Southern District of Florida on
October 8, 1998.






                                                                             20
<PAGE>   21

This matter is a class action complaint, which is the consolidation of eight
separate class action complaints with substantially similar allegations. On
June 30, 1999, a consolidated amended class action complaint was filed. The
consolidated amended class action complaint was purportedly filed on behalf of
those security holders of the Company who purchased such securities during a
certain period in the second and third quarters of 1998, alleging violations of
the federal securities laws (including Rule 10b-5 promulgated pursuant to the
Securities Exchange Act of 1934, as amended) in connection with the acquisition
by the Company of certain product categories of the Household Products Group of
the Black & Decker Corporation. Among other things, the plaintiffs allege that
the Company and certain of its directors and officers, along with NationsBanc
Montgomery Securities LLC, provided false information in connection with a
public offering of debt and equity securities. The plaintiffs seek, among other
relief, to be declared a class, to be awarded compensatory damages, rescission
rights, unspecified damages and attorneys' fees and costs. The Court has
directed the Defendants to respond to the consolidated amended complaint on or
before August 16, 1999.

By Order dated March 9, 1999, in addition to consolidating the above-referenced
cases, the Court provisionally certified the class of plaintiffs who purchased
Windmere stock between May 12, 1998 and September 22, 1998, and provisionally
certified Sherleigh Associates LLC and Sherleigh Associates, Inc. Profit
Sharing Plan as lead plaintiff. By Order dated June 3, 1999, the Court, among
other things, appointed lead counsel and directed the filing of a joint
scheduling order. On June 23, 1999, the parties submitted a Joint Scheduling
Report and a proposed scheduling order, which is still under consideration by
the Court.

The Company is currently advancing the legal expenses of the directors and
officers who were named as defendants. Such defendants have agreed to repay the
Company for all or any portion of such advances to which they are ultimately
found not to be entitled pursuant to applicable law. Based on the information
currently available to the Company, management does not believe that the
indemnification of the officers and directors named as defendants in the
above-listed matters will have a material adverse effect on the financial
condition, results of operations or liquidity of the Company. However, the
actual effects of such indemnification on the Company cannot be finally
determined until the amount of such indemnification, if any, is fixed.

The Company is subject to other legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability, if any, in excess of applicable insurance coverage, is not
likely to have a material effect on the financial position of the Company.
However, as the outcome of litigation or other claims is difficult to predict,
significant changes in the estimated exposures could occur.

MANUFACTURING OPERATIONS

The Company's products are manufactured primarily at the Company's facilities
in the PRC and Mexico. The Company has ceased manufacturing at the Asheboro
facility as of March 31, 1999 and completely exited the facility as of June 30,
1999. Prior to the HPG acquisition, the majority of the Company's products were
manufactured by Durable, its wholly-owned Hong Kong subsidiary operating in Bao
An County, Guangdong Province of the People's Republic of China, which is
approximately 60 miles northwest of Central, Hong Kong. The Company has a
significant amount of its assets in the People's Republic, primarily consisting
of inventory, equipment and molds. The supply and cost of products, as well as
finished products, can be adversely affected, among other reasons, by changes
in foreign currency exchange rates, increased import duties, imposition of
tariffs, imposition of import quotas, interruptions in sea or air
transportation and political or economic changes. From time to time, the
Company explores opportunities to diversify its sourcing and/or production of
certain products to other low-cost locations or with other third parties or
joint venture partners in order to reduce its dependence on production in the
People's Republic and/or reduce Durable's dependence on the Company's existing
distribution base. However, at the present time, the Company intends to
continue its production in the People's Republic and Mexico.

The Mexican government exercises significant influence over many aspects of the
Mexican economy. Accordingly, the actions of the Mexican government concerning
the economy could have a significant effect on private sector entities in
general and the Company in particular. In addition, during the 1980s and 1990s,
Mexico experienced periods of slow or negative growth, high inflation,
significant devaluations of the peso and limited availability of foreign
exchange. As a result of the Company's reliance upon manufacturing facilities
in Mexico, economic conditions in Mexico could adversely affect the Company's
business, financial condition and results of operations.






                                                                             21
<PAGE>   22

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's major market risk exposure is to changing interest rates, debt
obligations issued at a fixed rate and fluctuations in the currency exchange
rates. The Company's policy is to manage interest rate risk through the use of
a combination of fixed and floating rate instruments, with respect to both its
liquid assets and its debt instruments.

The Senior Credit Facilities accrue interest at variable rates; however, the
company has purchased interest rate protection for such loans in the form of
interest rate swaps. Based on the current amount of variable rate, as well as
underlying swaps, the exposure to interest rate risk is not material.
Fixed-rate debt obligations issued by the Company are not callable until July
31, 2003.

The Company is subject to foreign currency exchange rate risk relating to
receipts from customers and payments to suppliers in foreign currencies. As a
general policy, the Company hedges foreign currency commitments of future
payments and receipts by purchasing foreign currency-forward and option
contracts. As of June 30, 1999, the notional value of such derivatives was
approximately $56 million, with no significant unrealized gain or loss. The
majority of the Company's receipts and expenditures are contracted in U.S.
dollars, and the Company does not consider the market risk exposure relating to
currency exchange to be material at this time.








                                                                             22
<PAGE>   23




PART II - OTHER INFORMATION

ITEM 1.           Legal Proceedings

                  See "Legal Proceedings" in Part I, Item 2 of this report.

ITEM 4.           Submission of Matters to a Vote of Security Holders

                  At the Company's Annual Meeting of Shareholders held on May
                  11, 1999, the shareholders of the Company voted to elect
                  Frederick E. Fair, David M. Friedson Desmond Lai, Jerald I.
                  Rosen, Harry D. Schulman and J. Maurice Hopkins, as Directors
                  of the Company for three year terms. Continuing members of
                  the Board of Directors of the Company, include: Barbara
                  Friedson Garrett, Susan J. Ganz, Thomas J. Kane, Felix S.
                  Sabates, Leonard Glazer, Lai Kin, Raymond So, Harold Strauss
                  and Arnold Thaler.

                  The number of votes cast for or withheld, and the number of
                  broker non-votes, with respect to each of the nominees were
                  as follows:

                  Nominee                   For                        Against
                  -------                   ---                        -------
                  Frederick E. Fair         20,895,782                 313,498
                  David M. Friedson         20,896,006                 313,274
                  Desmond Lai               20,896,082                 313,198
                  Jerald I. Rosen           20,896,116                 313,164
                  Harry D. Schulman         20,896,116                 313,164
                  J. Maurice Hopkins        20,895,816                 313,464

                  The shareholders of the Company voted to approve the
                  Company's 1998 Stock Option Plan. The shareholders cast
                  9,634,402 votes in favor of the Plan, 1,942,863 against and
                  77,591 withheld authority.

                  In addition, the shareholders of the Company voted to
                  reappoint Grant Thornton LLP, independent certified public
                  accountants, as the Company's auditors for the fiscal year
                  ending December 31, 1999. The shareholders cast 21,116,669
                  votes in favor of the reappointment of Grant Thornton LLP,
                  56,473 votes against and 36,138 shareholders withheld
                  authority.

ITEM 6.  Exhibits and Reports on Form 8-K.

(a)      Exhibits

                  10.43 - Employment agreement dated June 18, 1999 between
                          Windmere-Durable Holdings, Inc. and David M. Friedson.
                          Filed herewith.

(b)      Reports on Form 8-K:

                  Form 8K dated June 3, 1999 reporting under "Item 5. Other
                  Information," the execution by the Company of a definitive
                  agreement to purchase the assets of Newtech Electronics
                  Industries, Inc.







                                                                             23
<PAGE>   24



                                   SIGNATURES

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



                                       WINDMERE-DURABLE HOLDINGS, INC.
                                       (Registrant)



August 13, 1999                        By: /s/ Harry D. Schulman
                                           ------------------------------------
                                           Harry D. Schulman
                                           Chief Financial Officer (Duly
                                           authorized to sign on behalf of
                                           the Registrant)



August 13, 1999                        By: /s/ Terry L. Polistina
                                           ------------------------------------
                                           Terry L. Polistina
                                           Senior Vice President - Finance
                                           (Duly authorized to sign on
                                           behalf of the Registrant)






                                                                             24
