<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q
(Mark One)
     [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934

     FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 25, 1998   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 0-16059

                               JASON INCORPORATED
             (Exact name of registrant as specified in its charter)


               WISCONSIN                             39-1756840
    (State or other jurisdiction of        (IRS Employer Identification No.)
    incorporation or organization)


           411 EAST WISCONSIN AVENUE, SUITE 2500, MILWAUKEE, WI 53202
                        (Address of principal executive offices)


                                 (414) 277-9300
              (Registrant's telephone number, including area code)


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

                               Yes  __X__                 No  _____


On September 25, 1998 there were outstanding 20,353,133 shares of the
Registrant's $.10 par value common stock.


                                  Page 1 of 15


<PAGE>   2

                               JASON INCORPORATED

                                    FORM 10-Q

                               SEPTEMBER 25, 1998

                                      INDEX
                                      -----


PART I.  FINANCIAL INFORMATION                                        PAGE NO.
                                                                      --------
Statements of Income for the Three Months
     Ended September 25, 1998 and September 26, 1997.............         3

Statements of Income for the Nine Months
     Ended September 25, 1998 and September 26, 1997.............         4

Balance Sheets as at September 25, 1998 and
     December 26, 1997 ..........................................         5

Statements of Cash Flows for the Nine Months
     Ended September 25, 1998 and September 26, 1997 ............         6

Notes to Financial Statements ...................................      7 - 10

Management's Discussion and Analysis of
     Results of Operations and Financial Condition ..............     10 - 14


PART II.  OTHER INFORMATION

Item 1        Legal Proceedings .................................        15

Item 2        Changes in Securities and Use of Proceeds .........        15

Item 3        Defaults Upon Senior Securities ...................        15

Item 4        Submission of Matters to a Vote of
                  Security Holders ..............................        15

Item 5        Other Information .................................        15

Item 6        (a)  Exhibits .....................................        15

              (b)  Reports on Form 8-K ..........................        15

Signatures ......................................................        15


                                  Page 2 of 15


<PAGE>   3
                               JASON INCORPORATED
                              STATEMENTS OF INCOME

               (DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
               -------------------------------------------------



<TABLE>
<CAPTION>
                                                                                 FOR THE THREE MONTHS ENDED
                                                                   ----------------------------------------------------
                                                              
                                                                     SEPTEMBER 25,                        SEPTEMBER 26,
                                                                          1998                                 1997
                                                                   ---------------                      ---------------
                                                              
                                                                                          (Unaudited)

<S>                                                                <C>                                  <C>
NET SALES                                                          $        98,141                      $        80,070

COST OF SALES                                                               76,890                               63,160
                                                                   ---------------                      ---------------

  Gross Profit                                                              21,251                               16,910

SELLING AND ADMINISTRATIVE EXPENSES                                         15,744                               11,978
                                                                   ---------------                      ---------------

  Operating Income                                                           5,507                                4,932

INTEREST EXPENSE                                                             1,544                                1,873

OTHER (INCOME) EXPENSE                                                         (94)                                (364)
                                                                   ---------------                      ---------------
 
  Income Before Income Taxes                                                 4,057                                3,423

PROVISION FOR INCOME TAXES                                                   1,582                                1,335
                                                                   ---------------                      ---------------

  Income From Continuing Operations                                          2,475                                2,088

  Income (Loss) From Discontinued Operations
  - Net Of Applicable Income Taxes                                              --                                  158

                                                                   ---------------                      ---------------
NET INCOME                                                        $          2,475                      $         2,246
                                                                   ===============                      ===============


EARNINGS PER SHARE - BASIC

INCOME FROM CONTINUING OPERATIONS                                  $          0.12                      $          0.10

INCOME (LOSS) FROM DISCONTINUED OPERATIONS                                      --                                 0.01

                                                                   ---------------                      ---------------
NET INCOME                                                         $          0.12                      $          0.11
                                                                   ===============                      ===============


EARNINGS PER SHARE - DILUTED

INCOME FROM CONTINUING OPERATIONS                                  $          0.12                      $          0.10

INCOME (LOSS) FROM DISCONTINUED OPERATIONS                                      --                                 0.01

                                                                   ---------------                      ---------------
NET INCOME                                                         $          0.12                      $          0.11
                                                                   ===============                      ===============
</TABLE>




                                  Page 3 of 15
<PAGE>   4
                               JASON INCORPORATED
                              STATEMENTS OF INCOME

               (DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
               -------------------------------------------------



<TABLE>
<CAPTION>
                                                                                    FOR THE NINE MONTHS ENDED
                                                                      -------------------------------------------------
                                                                      SEPTEMBER 25,                       SEPTEMBER 26,
                                                                         1998                                 1997
                                                                      -------------                       -------------
                                                                                           (Unaudited)

<S>                                                                 <C>                                  <C>
NET SALES                                                            $      288,208                      $      252,411

COST OF SALES                                                               224,523                             197,404
                                                                     --------------                      --------------

  Gross Profit                                                               63,685                              55,007

SELLING AND ADMINISTRATIVE EXPENSES                                          44,621                              37,437
                                                                     --------------                      --------------

  Operating Income                                                           19,064                              17,570

INTEREST EXPENSE                                                              5,099                               6,203

OTHER (INCOME) EXPENSE                                                       (1,019)                             (1,121)
                                                                     --------------                      --------------

  Income Before Income Taxes                                                 14,984                              12,488

PROVISION FOR INCOME TAXES                                                    5,845                               4,870
                                                                     --------------                      --------------

  Income From Continuing Operations                                           9,139                               7,618
     
  Income (Loss) From Discontinued Operations
  - Net Of Applicable Income Taxes                                            1,278                                 114

                                                                     --------------                      --------------
NET INCOME                                                           $       10,417                      $        7,732
                                                                     ==============                      ==============


EARNINGS PER SHARE - BASIC

INCOME FROM CONTINUING OPERATIONS                                    $         0.45                      $         0.37

INCOME (LOSS) FROM DISCONTINUED OPERATIONS                                     0.06                                0.01

                                                                     --------------                      --------------
NET INCOME                                                           $         0.51                      $         0.38
                                                                     ==============                      ==============


EARNINGS PER SHARE - DILUTED

INCOME FROM CONTINUING OPERATIONS                                    $         0.44                      $         0.37

INCOME (LOSS) FROM DISCONTINUED OPERATIONS                                     0.05                                0.01

                                                                
                                                                     --------------                      --------------
NET INCOME                                                         
                                                                     $         0.49                      $         0.38
                                                                     ==============                      ==============
</TABLE>




                                  Page 4 of 15
<PAGE>   5
                               JASON INCORPORATED
                                 BALANCE SHEETS
                                        
                             (Dollars in Thousands)
                             ----------------------

<TABLE>
<CAPTION>


                                                                       SEPTEMBER 25,                DECEMBER 26,
                                                                           1998                         1997
                                                                      ---------------               ------------
                                                                        (Unaudited)
                                                                        -----------
<S>                                                                       <C>                         <C>   
ASSETS
------

Current Assets

  Cash And Cash Equivalents                                               $ 28,956                    $  3,835 
  Accounts Receivable - Net                                                 52,800                      40,347 
  Inventories                                                               45,717                      35,543 
  Deferred Income Taxes                                                      9,142                       9,142 
  Other Current Assets                                                       5,998                       4,149 
  Net Assets of Discontinued Operations                                       --                        30,685 
                                                                          --------                    -------- 
    Total Current Assets                                                   142,613                     123,701 
                                                                          --------                    -------- 
                                                                                                               
Property, Plant and Equipment                                                                                  
  Cost                                                                     168,512                     145,210 
  Less - Accumulated Depreciation                                          (78,295)                    (69,419)
                                                                          --------                    -------- 
    Net Property, Plant and Equipment                                       90,217                      75,791 
                                                                          --------                    -------- 
                                                                                                               
Intangible Assets - Net                                                     71,618                      64,445 
Other Assets                                                                 1,228                       1,487 
                                                                          --------                    -------- 
                                                                          $305,676                    $265,424 
                                                                          ========                    ======== 
                                                                                                               
                                                                                                               
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Current Liabilities                                                                                            
  Current Portion of Long-Term Debt                                       $ 31,343                    $  7,764 
  Accounts Payable                                                          25,798                      22,679 
  Accrued Compensation & Employee Benefits                                  16,229                      12,209 
  Accrued Warranty                                                             174                         150 
  Accrued Interest                                                           1,794                       1,183 
  Accrued Income Taxes                                                       1,347                         101 
  Other Current Liabilities                                                 16,755                       9,422 
                                                                          --------                    -------- 
                                                                                                               
    Total Current Liabilities                                               93,440                      53,508 
                                                                                                               
Revolving Loan                                                                --                         2,320 
Other Long-Term Debt                                                        68,500                      83,311 
Deferred Income Taxes                                                       15,873                       8,804 
Other Long-Term Liabilities                                                  2,658                       3,927 
Postemployment & Postretirement Health                                                                         
 And Other Benefits                                                          6,455                       6,290 
                                                                          --------                    -------- 
    Total Liabilities                                                      186,926                     158,160 
                                                                          --------                    -------- 
                                                                                                               
Commitments and Contingencies                                                 --                          --   
                                                                                                               
SHAREHOLDERS' EQUITY
--------------------

Common Stock & Additional                                                                                      
  Contributed Capital                                                       35,544                      35,014 
Retained Earnings                                                           83,267                      72,850 
Accumulated Other Comprehensive Income (Loss)                                  (61)                       (600)
                                                                          --------                    -------- 
                                                                                                               
    Total Shareholders' Equity                                             118,750                     107,264 
                                                                          --------                    -------- 
                                                                          $305,676                    $265,424 
                                                                          ========                    ======== 
                                                                                                              
</TABLE>




                                  Page 5 of 15
<PAGE>   6
                               JASON INCORPORATED
                            STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                                                                                                    
                                                                                                                                    
                                                                                             For The Nine Months Ended              
                                                                            -------------------------------------------------------
                                                                              September 25,                          September 26,  
                                                                                  1998                                   1997       
                                                                            ----------------                         -------------- 
                                                                                                (UNAUDITED)
                                                                                                -----------
  <S>                                                                        <C>                                      <C>        
CASH FLOWS FROM OPERATING ACTIVITIES                                                                                    
                                                                                                 
  Income From Continuing Operations                                            $  9,139                               $  7,618   
  Adjustments To Reconcile Income From Continuing Operations To Net Cash                                                       
   Provided By Operating Activities Of Continuing Operations:                                                                  
      Depreciation                                                               10,364                                  9,340 
      Amortization                                                                2,421                                  2,428 
      Deferred Income Taxes                                                      (3,815)                                  (527)
    Increase (Decrease) In Cash, Excluding Effects Of                                                                          
    Acquisitions, Due To Changes In:                                                                                           
      Accounts Receivable                                                        (3,875)                                (5,083)
      Inventories                                                                (3,561)                                (1,292)
      Other Current Assets                                                       (1,742)                                   906 
      Other Assets                                                                 (959)                                (1,485)
      Accounts Payable                                                           (1,069)                                   506 
      Accrued Compensation & Employee Benefits                                    1,267                                  1,653 
      Accrued Warranty                                                               24                                   --   
      Accrued Interest                                                              611                                    496 
      Accrued Income Taxes                                                          246                                     40 
      Other Liabilities                                                           3,210                                    465 
                                                                               --------                               -------- 
        Total Adjustments                                                         3,122                                  7,447 
                                                                               --------                               -------- 
                                                                                                                               
Net Cash Provided By Operating Activities Of Continuing Operations               12,261                                 15,065 
                                                                                                                               
Net Cash Provided By Operating Activities Of Discontinued Operations             12,239                                 20,930 
                                                                               --------                               --------
                                                                                                                               
Net Cash Provided By Operations                                                  24,500                                 35,995 
                                                                               --------                               --------
                                                                                                                               
CASH FLOWS FROM INVESTING ACTIVITIES                                                                                           
                                                                                                                               
      Acquisition Of Net Assets                                                 (16,513)                                  --   
      Net Proceeds From Sale Of Discontinued Operations                          31,799                                   --   
      Acquisition Of Property, Plant And Equipment                              (12,799)                                (8,416)
      Disposal Of Property, Plant And Equipment - Net                             1,476                                  3,654 
      Other, Net                                                                     89                                     17 
                                                                               --------                               --------
Net Cash (Used) Provided For Investing Activities                                 4,052                                 (4,745)
                                                                               --------                               --------
                                                                                                                               
Net Cash (Used) Provided Before Financing Activities                             28,552                                 31,250 
                                                                               --------                               --------
                                                                                                                               
CASH FLOWS FROM FINANCING ACTIVITIES                                                                                           
                                                                                                                               
      Proceeds From Revolving Loan                                               59,762                                 56,610 
      Repayments Of Revolving Loan                                              (62,082)                               (88,800)
      Proceeds From (Repayments Of) Other Long-Term Debt                         (1,641)                                   625 
      Issuance Of Common Stock - Net                                                530                                    270 
                                                                               --------                               --------
Net Cash Provided By (Used For) Financing Activities                             (3,431)                               (31,295)
                                                                               --------                               --------
                                                                                                                               
Net Increase (Decrease) In Cash And Cash Equivalents                             25,121                                    (45)
      Cash And Cash Equivalents, Beginning of Period                              3,835                                  1,068 
                                                                               --------                               --------
                                                                                                                               
      Cash And Cash Equivalents, End of Period                                 $ 28,956                               $  1,023 
                                                                               ========                               ======== 
                                                                                                                               
      Cash Paid For:                                                                                                           
                                                                                                                               
      Interest                                                                    4,962                                  6,902 
      Income Taxes                                                                8,727                                  3,297 
</TABLE>



                                  Page 6 of 15
<PAGE>   7

                               JASON INCORPORATED
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - BASIS OF FINANCIAL STATEMENTS

The Company operates in two primary business segments: motor vehicle products
and industrial products. Motor vehicle products include the manufacture and
marketing of nonwoven needled fiber insulation, dielectric padding and other
interior trim products primarily for the automotive industry but also for
furniture and industrial uses, plus seating products for motorcycles,
construction, agricultural and lawn/turf care equipment. Industrial products
include the manufacture and marketing of industrial brushes, buffing wheels and
compounds used by manufacturers to finish a wide variety of manufactured
products, plus the manufacture and marketing of precision components such as
precision stampings, wire form components and expanded metal products.

The financial statements at September 25, 1998 and September 26, 1997 and for
the three and nine month periods then ended are unaudited. However, in the
opinion of management, these statements include all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of the financial
position at these dates and the results of operations and cash flows for these
periods. The results for the three and nine month periods ended September 25,
1998 are not necessarily indicative of the results that may be expected for the
full year or any other interim period.


NOTE 2 - ACQUISITIONS / DIVESTITURES

On June 6, 1998 the Company completed the sale of its power generation business
to a management led group backed by Saw Mill Capital L.L.C. As such, the
accompanying financial statements have been reclassified to reflect the power
generation business as a discontinued operation. Net cash proceeds from the sale
approximated $31 million; there was no gain or loss on the sale. Sales and
operating profit of the power generation business for the period ended June 6,
1998 were $61 million and $2.6 million, respectively. Sales and operating profit
of the power generation business for the nine months ended September 26, 1997
were $107.2 million and $1.4 million, respectively.

On March 13, 1998, the Company completed the acquisition of Power Brushes Ltd.
for approximately $16 million, plus the assumption of $8.7 million of debt of
Power Brushes Ltd. Brushes International Ltd., a wholly-owned subsidiary of
Power Brushes Ltd., is one of the largest producers of industrial power brushes
in Europe. This business has been combined with the Company's industrial brush
business, Osborn Manufacturing, to form Osborn International, the largest
producer of industrial power brushes in the world.



                                  Page 7 of 15


<PAGE>   8

NOTE 3 - INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out) or market and
consisted of the following (in thousands of dollars):

<TABLE>
<CAPTION>

                                      SEPTEMBER 25,             DECEMBER 26,
                                           1998                      1997
                                      -------------             ------------
                                       (Unaudited)
<S>                                      <C>                       <C>    
Raw materials                            $21,439                   $16,441
Work in process                            6,140                     5,544
Finished goods                            18,138                    13,558
                                         -------                   -------
                                         $45,717                   $35,543
                                         =======                   =======
</TABLE>


NOTE 4 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common
shareholders by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share is computed by giving effect to all
dilutive potential common shares. A reconciliation of the income (numerator) and
shares (denominator) used in the computations of basic and diluted earnings per
common share from continuing operations, respectively, is as follows:

<TABLE>
<CAPTION>

                                                                   FOR THE THREE MONTHS ENDED
                                                                          SEPTEMBER 25, 1998
                                                       -------------------------------------------------
                                                        Income             Shares              Per Share
                                                      (Numerator)       (Denominator)           Amount
                                                      -----------       -------------          ---------
<S>                                                   <C>                 <C>                 <C> 
BASIC EARNINGS PER COMMON SHARE
   Income from continuing operations                  $2,475,000          20,328,214             $.12
                                                                                              ----------
EFFECT OF DILUTIVE SECURITIES
   Options                                                --                 327,699
   Convertible notes                                     184,220           1,516,182
                                                      ----------          ----------
DILUTED EARNINGS PER COMMON SHARE
   Income from continuing operations
     plus assumed conversions                         $2,659,220          22,172,095             $.12
                                                      ----------          ----------          ----------

<CAPTION>

                                                                   FOR THE THREE MONTHS ENDED
                                                                          SEPTEMBER 26, 1997
                                                       -------------------------------------------------
                                                        Income             Shares              Per Share
                                                      (Numerator)       (Denominator)           Amount
                                                      -----------       -------------          ---------
<S>                                                   <C>                 <C>                 <C> 
BASIC EARNINGS PER COMMON SHARE
   Income from continuing operations                  $2,088,000          20,204,418             $.10
                                                                                              ----------
EFFECT OF DILUTIVE SECURITIES
   Options                                                --                 351,905
   Convertible notes                                      --                  --
                                                      ----------          ----------
DILUTED EARNINGS PER COMMON SHARE
   Income from continuing operations
     plus assumed conversions                         $2,088,000          20,556,323             $.10
                                                      ----------          ----------          ----------
</TABLE>


                                  Page 8 of 15


<PAGE>   9

<TABLE>
<CAPTION>
                                                                     FOR THE NINE MONTHS ENDED
                                                                          SEPTEMBER 25, 1998
                                                       -------------------------------------------------
                                                        Income             Shares              Per Share
                                                      (Numerator)       (Denominator)           Amount
                                                      -----------       -------------          ---------
<S>                                                   <C>                 <C>                 <C> 
BASIC EARNINGS PER COMMON SHARE
   Income from continuing operations                  $9,139,000          20,275,168             $.45
                                                                                              ----------
EFFECT OF DILUTIVE SECURITIES
   Options                                                --                 470,171
   Convertible notes                                     552,660           1,516,182
                                                      ----------          ----------
DILUTED EARNINGS PER COMMON SHARE
   Income from continuing operations
     plus assumed conversions                         $9,691,660          22,261,521             $.44
                                                      ----------          ----------          ----------

<CAPTION>

                                                                       FOR THE NINE MONTHS ENDED
                                                                          SEPTEMBER 26, 1997
                                                       -------------------------------------------------
                                                        Income             Shares              Per Share
                                                      (Numerator)       (Denominator)           Amount
                                                      -----------       -------------          ---------
<S>                                                   <C>                 <C>                 <C> 
BASIC EARNINGS PER COMMON SHARE
   Income from continuing operations                  $7,618,000          20,174,521             $.37
                                                                                              ----------
EFFECT OF DILUTIVE SECURITIES
   Options                                                --                 351,815
   Convertible notes                                     184,220             505,394
                                                      ----------          ----------
DILUTED EARNINGS PER COMMON SHARE
   Income from continuing operations
     plus assumed conversions                         $7,802,220          21,031,730             $.37
                                                      ----------          ----------          ----------
</TABLE>

The impact of the assumed conversion of the $17,057,000 convertible notes, which
bear interest at 7%, was included within the earnings per share calculations for
the periods in which such conversion had a dilutive effect.


NOTE 5 - COMPREHENSIVE INCOME

In June, 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." The standard requires that certain items recognized under
accounting principles as components of comprehensive income be reported in an
annual financial statement that is displayed with the same prominence as other
financial statements.

Total Comprehensive Income totaled $3,036,000 and $2,210,000 for the three
months ended September 25, 1998 and September 26, 1997, respectively. Total
Comprehensive Income for the three months ended September 25, 1998 is comprised
of net income of $2,475,000 and Other Comprehensive Income (Loss) of $561,000.
Total Comprehensive Income for the three months ended September 26, 1997 is
comprised of net income of $2,246,000 and Other Comprehensive Income (Loss) of
$(36,000). Other Comprehensive Income (Loss) is comprised entirely of foreign
currency translation adjustments.



                                  Page 9 of 15


<PAGE>   10

Total Comprehensive Income totaled $10,956,000 and $7,184,000 for the nine
months ended September 25, 1998 and September 26, 1997, respectively. Total
Comprehensive Income for the nine months ended September 25, 1998 is comprised
of net income of $10,417,000 and Other Comprehensive Income (Loss) of $539,000.
Total Comprehensive Income for the nine months ended September 26, 1997 is
comprised of net income of $7,732,000 and Other Comprehensive Income (Loss) of
$(548,000). Other Comprehensive Income (Loss) is comprised entirely of foreign
currency translation adjustments.


                               JASON INCORPORATED
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION


On June 6, 1998, the Company completed the sale of its power generation business
to a management led group backed by Saw Mill Capital L.L.C. As such, the
accompanying financial statements have been reclassified to reflect the power
generation business as a discontinued operation. Net cash proceeds from the sale
approximated $31 million; there was no gain or loss on the sale. Sales and
operating profit of the power generation business for the period ended June 6,
1998 were $61 million and $2.6 million, respectively. Sales and operating profit
of the power generation business for the nine months ended September 26, 1997
were $107.2 million and $1.4 million, respectively.


RESULTS OF OPERATIONS

Three months ended September 25, 1998 compared to the three months ended
September 26, 1997:

Sales from continuing operations for the three months ended September 25, 1998
increased by 23% from $80,070,000 for the three months ended September 26, 1997
to $98,141,000. Sales of motor vehicle products increased by 10% from
$45,697,000 to $50,166,000. Sales of industrial products increased by 40% from
$34,373,000 to $47,975,000.

The higher motor vehicle products sales were the result of an increase in both
the automotive products business and the seating business. The Company's
automotive products sales were up 5% in the third quarter of 1998 compared to
the prior year. The increase in automotive products sales was due to an increase
in the Company's content per vehicle resulting from improved sales of the
Company's Marabond(R) moldable insulation product, plus increased sales of door
insert products which more than offset a decrease in North American automobile
industry production of 2.4% in the third quarter compared to last year. The
strike at General Motors had only a minor negative impact on third quarter sales
and operating income. The Company's seating products sales were up 13% in the
third quarter of 1998 compared to the prior year. This was primarily the result
of an increase in Harley-Davidson original equipment and parts and accessories
business.

Industrial products sales in the third quarter of 1998 were up due to an
increase in sales of finishing products of 71% offset by a decrease in component
sales of 4%. The Osborn International brush business showed the most significant
increase due primarily to the acquisition of Brushes International in March
1998, but increases were also achieved for the JacksonLea buff and compound
businesses. Sales for the components business were down due to lower expanded
metal and stamping volume.


                                  Page 10 of 15


<PAGE>   11



Operating income increased in the third quarter of 1998 from $4,932,000 from
continuing operations in the third quarter of 1997 to $5,507,000.

Operating income for the motor vehicle products segment improved slightly from
$3,403,000 in the third quarter of 1997 to $3,429,000 due primarily to higher
volume and margins in the automotive businesses, as mentioned above, including
improved volume and operating income from the Company's German subsidiary,
Suroflex. These results more than offset reduced profitability in the seating
business due to one time costs incurred in the conversion to cellular
manufacturing. Management believes this conversion was necessary to enable the
Company to meet an expected increase in customer volume levels in the future.

Operating income for the industrial products segment improved from $2,131,000 in
the third quarter of 1997 to $2,791,000. This increase in operating income was a
result of an increase in operating income at Osborn International due to the
acquisition of Brushes International in March 1998, partially offset by lower
operating earnings for the components operations.

Corporate expenses increased from $602,000 in the third quarter of 1997 to
$713,000. This increase is primarily due to personnel additions and an increase
in management incentive compensation.

Interest expense from continuing operations decreased from $1,873,000 in the
third quarter of 1997 to $1,544,000 due to lower average domestic debt levels
which is a result of cash flow from operations. The decrease in other income in
the third quarter of 1998 represents a decrease in the minority interest in
third quarter 1997 losses at Suroflex due to improved results.

Nine months ended September 25, 1998 compared to the nine months ended
September 26, 1997:

Sales from continuing operations for the nine months ended September 25, 1998
increased by 14% from $252,411,000 for the nine months ended September 26, 1997
to $288,208,000. Sales of motor vehicle products increased by 7% from
$145,979,000 to $156,438,000. Sales of industrial products increased by 24% from
$106,432,000 to $131,770,000.

The higher motor vehicle products sales were the result of an increase in both
the automotive products business and the seating business. Automotive products
sales increased by 5%. This increase in sales was due to an increase in the
Company's content per vehicle resulting from improved sales of the Company's
Marabond(R) moldable insulation product, plus increased sales of door insert
products which more than offset the effect of a 1.4% decrease in North American
automobile industry production for the first nine months of 1998 compared to
last year. The strike at General Motors had only a minor negative impact on 1998
sales and operating income. The Company's seating products business was up 13%
in the first nine months of 1998 compared to the prior year. This was primarily
the result of an increase in Harley-Davidson original equipment and parts and
accessories business.

Industrial products sales in the first nine months of 1998 were up due to an
increase in sales of finishing products of 40% and an increase in component
sales of 2%. The Osborn International brush business showed the most significant
increase due primarily to the acquisition of Brushes International in March
1998, but increases were also 


                                 Page 11 of 15

<PAGE>   12

achieved for the JacksonLea buff and compound businesses. Sales for the
components business were up due to higher sales of assembled products and wire
forms.

Operating income from continuing operations increased in the first nine months
of 1998 from $17,570,000 in the first nine months of 1997 to $19,064,000.

Operating income for the motor vehicle products segment improved from
$13,096,000 in the first nine months of 1997 to $13,845,000 due primarily to
higher volume and margins in the automotive businesses, as mentioned above,
including improved volume and operating income from the Company's German
subsidiary, Suroflex. These results more than offset reduced profitability in
the seating business due to one time costs incurred in the conversion to
cellular manufacturing. Management believes this conversion was necessary to
enable the Company to meet an expected increase in customer volume levels in the
future.

Operating income for the industrial products segment increased from $6,424,000
in the first nine months of 1997 to $7,591,000. This increase in operating
income was a result of an increase in operating income at Osborn International
due to the acquisition of Brushes International in March 1998 partially offset
by lower operating earnings for the components operations.

Corporate expenses increased from $1,950,000 in the first nine months of 1997 to
$2,372,000. This increase is primarily due to personnel additions and an
increase in management incentive compensation.

Interest expense from continuing operations decreased from $6,203,000 in the
first nine months of 1997 to $5,099,000 due to lower average domestic debt
levels which is a result of cash flow from operations. The decrease in other
income in the first nine months of 1998 represents an increase in royalty
income, more than offset by a decrease in the minority interest in first nine
month 1997 losses at Suroflex due to improved results.

The Company's effective income tax rate for the third quarter and first nine
months of 1998 was 39% which is the same as the rate for the third quarter and
first nine months of 1997.

In June, 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information", which establishes annual and interim
reporting standards for an enterprise's business segments and related
disclosures about its products, services, geographic areas and major customers.
Adoption of this statement will not impact the Company's consolidated financial
position, results of operations or cash flows. The Company will adopt this
statement in its financial statements for the year ending December 25, 1998.

In June, 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. Management of
the Company anticipates that, due to its limited use of derivative instruments,
the adoption of SFAS No. 133 will not have a significant effect on the Company's
results of operations or its financial position. This Statement is effective for
fiscal years beginning after June 15, 1999.


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<PAGE>   13



LIQUIDITY AND CAPITAL RESOURCES

During the first nine months of 1998, the Company satisfied the capital
requirements of its operations with internally generated funds. In addition, the
net proceeds from the sale of the power generation business enabled the Company
to pay off its revolving loan with its banks and end the third quarter with $29
million of cash on its balance sheet. The Company expects to use this cash to
finance future acquisitions or pay down additional debt. For the foreseeable
future, the Company believes it will generate funds from operations to meet the
capital requirements of its existing operations. As of September 25, 1998, the
Company had available unused borrowing capacity of $36,773,000 under its bank
revolving loan facility. The Company is in the process of revising its bank loan
agreement to reflect the requirements of its continuing operations. During the
first half of 1997, the Company also satisfied the capital requirements of its
operations with internally generated funds.

During the first nine months of 1998, working capital decreased by $21,020,000
from $70,193,000 at December 26, 1997 to $49,173,000 at September 25, 1998. This
decrease was primarily the result of a reclassification of $17.1 million of
convertible notes due in January 1999 to current portion of long-term debt.
During the first nine months of 1998, the Company generated $12,261,000 in cash
from continuing operations. The Company anticipates generating additional cash
flow from operations during the balance of the year.

During the first nine months of 1998 and 1997, the Company made capital
expenditures of $12,799,000 and $8,416,000, respectively. The major 1998
expenditures were in the motor vehicle products segment for equipment at Milsco
to support the conversion to cellular manufacturing, at Janesville Products to
support new programs and to improve efficiency, and in the industrial products
segment for equipment at JacksonLea, Osborn and the components business to
support new programs at those locations. The major 1997 expenditures were in the
motor vehicle products segment for equipment at Milsco, Janesville Products and
Sackner to support new programs and to improve efficiency and in the industrial
products segment for equipment at the components businesses, Osborn and
JacksonLea to support new programs at those locations. Capital expenditures for
1998 are anticipated to approximate $18.0 million. No significant commitments
are outstanding as of September 25, 1998.


SEASONALITY

U.S. auto makers traditionally shut down for the annual model changeover in the
third quarter. In addition, adjustments to production schedules are made
throughout the year based on retail auto sales and the level of dealer
inventories. These seasonal patterns affect the Company's motor vehicle products
operations most significantly but also have somewhat of an impact on industrial
products due to the effect on automotive suppliers which use the Company's
precision components and finishing products.


YEAR 2000 ISSUES

The Company's State of Readiness - The Company's main financial and
manufacturing hardware and software systems have been tested and are either now
year 2000 compliant or are expected to be by December 31, 1998. This was
accomplished primarily through systems upgrades and maintenance performed over
the last few years to enhance functionality of the systems, not solely to
achieve year 2000 compliance. The only 


                                 Page 13 of 15
<PAGE>   14


systems that remain to be upgraded for year 2000 are certain ancillary, mostly
PC based, interface systems used for shop floor control and report writing
functions. Year 2000 compliance for these systems is ongoing and is expected to
be completed by early to mid 1999. Major customers and suppliers have been
surveyed and to date the Company has not been made aware of significant year
2000 issues that would materially affect its business.

Costs to Address the Company's Year 2000 Issues - The majority of the Company's
year 2000 issues were corrected either through systems upgrades required for
other business purposes or normal maintenance contracts. Therefore, these
improvements have not resulted in costs significantly incremental to non-year
2000 planned information systems activities. The estimated costs to correct the
remaining ancillary systems still not compliant is not expected to exceed
$350,000. 

Risks to the Company for Year 2000 Issues - With regard to systems under the
Company's control, management does not believe that the Company has significant
exposure to the year 2000 issue since, if necessary, systems are capable of
accepting manually entered data. The believed worst case scenario is that the
Company would have to revert back to certain manual systems for a small portion
of its systems, for example, shop floor labor collection and certain internal
reporting functions. Our customers and vendors are at various stages of
compliance, but management is not aware of significant year 2000 issues that
would materially affect the Company's business with them. The Company will
continue to monitor year 2000 compliance with its customers and vendors
throughout 1999, but will be unable to achieve the same degree of certainty that
is achieved with internal systems.

The Company's Contingency Plans - By the middle of 1999, the Company expects to
be fully year 2000 compliant. To the extent that it has minor internal systems
that are not year 2000 compliant by mid-year, the Company will have time to
implement manual systems by year end 1999 which management believes will
significantly reduce the financial risk to the Company.

MARKET RISK

Jason does not utilize financial instruments for hedging purposes and holds no
derivative financial instruments which could expose the Company to significant
market risk. Jason's exposure to market risk for changes in interest rates
relates primarily to the its revolving loan with the banks which at
September 25, 1998 had no amount borrowed.

FORWARD-LOOKING STATEMENTS

This report contains certain statements as to the Company's belief, expectation
or anticipation regarding future developments. Such statements constitute
forward-looking statements and are subject to certain risks and uncertainties
that could cause actual future results and developments to differ materially
from those currently projected. Such risks and uncertainties include, but are
not limited to, changes in auto maker production schedules and general economic
conditions in the Company's market segments.


                                 Page 14 of 15


<PAGE>   15


                                     PART II

                                OTHER INFORMATION

ITEM 1        Legal Proceedings - None

ITEM 2        Changes in Securities and Use of Proceeds - None

ITEM 3        Defaults Upon Senior Securities - None

ITEM 4        Submission of Matters to a Vote of Security Holders - None

ITEM 5        Other information - None

ITEM 6        (a)    Financial Data Schedule

              (b)    Reports on Form 8-K - None



                                   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.

                                   JASON INCORPORATED (Registrant)


                                   by ________________________
                                   Mark Train
                                   President
                                   (Chief Financial Officer)



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