<PAGE>   1
                                                                          Page 1
                                  FORM 10-Q
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

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

               For the quarterly period ended October 31, 1997
                                       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:               0-22798
                              ------------------------------------------------- 

                     SPECIALTY EQUIPMENT COMPANIES, INC.
-------------------------------------------------------------------------------
           (Exact name of registrant as specified in its charter)

     Delaware                                        36-3337593
-------------------------------------------------------------------------------
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                 Identification No.)

     1245 Corporate Blvd., Suite 401,  Aurora, IL               60504
-------------------------------------------------------------------------------
         (Address of principal executive offices)            (Zip Code)

                               (630) 585-5111
-------------------------------------------------------------------------------
            (Registrant's telephone number, including area code)



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



           Class                        Outstanding at December 11 , 1997 
-----------------------------       ----------------------------------------
Common Stock, $0.01 par value                   18,106,673 shares



                                          The exhibit index is on page 15.
       

<PAGE>   2
                            
      
                                                                          Page 2

PART I.  FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS


                     SPECIALTY EQUIPMENT COMPANIES, INC.
               UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                   (in thousands except per share amounts)

<TABLE>                       
<CAPTION>                                      
                                                                Three Months Ended           Nine Months Ended 
                                                                    October 31,                 October 31,    
                                                                  1996       1997             1996         1997
                                                               --------    --------         --------    --------
<S>                                                            <C>         <C>              <C>         <C>
Revenue .................................................      $102,775    $107,694         $313,110    $330,082
Cost of sales ...........................................        71,951      74,532          217,036     229,307
                                                               --------    --------         --------    --------
Gross margin ............................................        30,824      33,162           96,074     100,775
Selling, general and administrative expenses ............        15,435      17,798           47,405      51,685
Amortization ............................................           489         287            1,369         664
Other expense (income) net...............................           (21)       (100)            (352)       (103)
                                                               --------    --------         ---------   --------
Earnings from operations before interest and 
     income taxes .......................................        14,921      15,177           47,652      48,529
Interest expense, net ...................................         4,515       3,965           14,407      11,974
                                                               --------    --------         --------    --------
Earnings from operations before income taxes ............        10,406      11,212           33,245      36,555
Income taxes ............................................         4,049       4,037           12,932      13,094
                                                               --------    --------         --------    --------
Net earnings before extraordinary item ..................         6,357       7,175           20,313      23,461
Extraordinary item (net of taxes) .......................        (1,784)        -             (1,784)       -
                                                               --------    --------         --------    --------
Net earnings ............................................      $  4,573    $  7,175         $ 18,529     $23,461        
                                                               ========    ========         ========     =======
Net earnings per common and dilutive common                    
     equivalent share before extraordinary item..........     $    0.29    $   0.33         $   0.95     $  1.09
Extraordinary item (net of taxes) .......................         (0.08)      (0.00)           (0.08)      (0.00)
                                                               --------    --------         --------     -------
Net earnings per common and dilutive
     common equivalent share............................      $    0.21    $   0.33         $   0.87     $  1.09
                                                               ========    ========         ========     =======
Average number of common and dilutive common                                                   
      equivalent shares outstanding......................        21,311      21,432           21,371      21,478

</TABLE>

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

<PAGE>   3

                                                                          Page 3


                     SPECIALTY EQUIPMENT COMPANIES, INC.
                         CONSOLIDATED BALANCE SHEETS
                                (in thousands)

                                    ASSETS

<TABLE>
<CAPTION>
                                                                                  January 31,           October 31,
                                                                                     1997                  1997
                                                                                  -----------           -----------
                                                                                                        (unaudited)
<S>                                                                               <C>                   <C> 
Current assets:
  Cash and equivalents .................................................          $   7,787              $ 48,479
  Accounts receivable, net .............................................             53,486                62,541
  Inventories ..........................................................             55,311                54,522
  Other current assets .................................................             15,847                13,730
                                                                                  ---------              --------
     Total current assets ..............................................            132,431               179,272
Net property, plant and equipment ......................................             34,217                37,838
Restricted cash equivalents ............................................              3,059                 2,986
Goodwill and intangible assets, net ....................................              5,861                23,046
Other assets ...........................................................              1,348                   956
     Total assets ......................................................          ---------              --------
                                                                                  $ 176,916              $244,098
                                                                                  =========              ========

                                          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:  
  Current installments of long-term debt ...............................          $     141             $  18,421
  Accounts payable .....................................................             25,371                25,425
  Accrued expenses .....................................................             59,852                78,489
  Accrued income taxes .................................................              4,939                10,181
                                                                                  ---------             ---------
        Total current liabilities ......................................             90,303               132,516
Long-term debt, excluding current installments .........................            155,440               159,811
Other non-current liabilities ..........................................              2,404                 1,799
Stockholders' equity (deficit):                                                            
     Common stock ......................................................                180                   183
     Additional paid-in capital ........................................             54,501                54,074
     Accumulated deficit ...............................................           (125,583)             (102,122)
     Other .............................................................               (329)               (2,163)
                                                                                   --------             ---------
        Total stockholders' deficit ....................................            (71,231)              (50,028)
Commitments and contingent liabilities (note 7) ........................                     
Total liabilities and stockholders' equity (deficit)....................           $176,916             $ 244,098
                                                                                   ========             =========
</TABLE>


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

<PAGE>   4


                                                                          Page 4

                     SPECIALTY EQUIPMENT COMPANIES, INC.
               UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

<TABLE>
<CAPTION>
                    

                                                                                        Nine Months Ended
                                                                                           October 31, 
                                                                                   1996                  1997
                                                                                ----------            -----------
<S>                                                                             <C>                   <C>
Cash flows from operating activities:                                 
  Net earnings ........................................................         $ 18,529              $  23,461  
  Items not affecting cash:                                                                                      
     Depreciation and amortization ....................................            3,404                  3,592  
     Armortization ....................................................            2,019                    664  
     Utilization of NOL carry forward..................................              819                    819        
     (Gain) loss from asset sales .....................................              (25)                   -
                                                                                --------              ---------
       Total ..........................................................           24,746                 28,536
                                                                                --------              ---------
Changes in current assets and liabilities:                                      
  Accounts receivable, net ............................................          (21,191)                (4,285)
  Inventories .........................................................           (1,165)                 3,843
  Other current assets ................................................            3,147                  2,764
  Accounts payable and other current                                  
     liabilities, excluding current installments of long-term debt.....           14,209                 18,552
                                                                                --------              ---------
       Total ..........................................................           (5,000)                20,874 
                                                                                --------              --------- 
Net cash flows from operations ........................................           19,746                 49,410 
Cash flows from investing activities:                                                                              
  Additions to property, plant and equipment ..........................           (5,903)                (2,508)
  Disposals of property, plant and equipment ..........................               31                     13 
  Cash equivalents restricted for capital additions ...................            2,839                     73 
  Net assets of businesses acquired ...................................           (1,321)               (21,492)
                                                                                --------              ---------
       Net cash used in investing activities ..........................           (4,354)               (23,914)
                                                                                --------              --------- 
Cash flows from financing activities:                                                                           
  Repayments of long-term debt ........................................          (37,591)                   (43)
  Proceeds from long-term debt ........................................             -                    18,000
  Proceeds from stock options exercised ...............................              323                    592
  Cancellation of stock options .......................................             (780)                (1,836)
  Treasury stock acquired..............................................             -                    (1,958)
                                                                                --------              ---------
       Net cash provided by (used in) financing activities ............          (38,048)                14,755
                                                                                --------              ---------
Other .................................................................              625                    441
                                                                                --------              ---------         
Net increase (decrease) in cash and cash equivalents...................          (22,031)                40,692
  Cash and cash equivalents:                                          
  Beginning of period.................................................            28,447                  7,787
                                                                                --------              ---------
  End of period.......................................................          $  6,416              $  48,479
                                                                                ========              =========

</TABLE>



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

<PAGE>   5


                                                                          Page 5

                      SPECIALTY EQUIPMENT COMPANIES, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  General

These financial statements should be read with the financial statements and the
notes thereto for the fiscal year ended January 31, 1997 included in the
Company's  Annual Report on Form 10-K filed with the Securities and Exchange
Commission ("Commission") on March 27, 1997.

In the opinion of management, all adjustments, consisting only of normal
recurring adjustments necessary for a fair statement of (a) the results of
operations for the three and nine month periods ended October 31, 1996 and
1997, (b) the financial position at January 31, 1997 and October 31, 1997 and
(c) the statements of cash flows for the nine month periods ended October 31,
1996 and 1997, have been made.  The financial results for the three and nine
months ended October 31, 1997 are not necessarily indicative of the financial
results for the entire 1998 fiscal year.  Certain reclassifications have been
made to the prior period financial statements to conform with the current
period presentation.

Net earnings per common and dilutive common equivalent share is computed based
on the weighted average number of common and dilutive common equivalent shares
outstanding during the period.

2.  Accounts Receivable

Accounts receivable at the following dates consisted of the following:
<TABLE>
<CAPTION>
                                                                                  January 31,            October 31,
                        Description                                                  1997                   1997
                                                                                 ------------           -------------
                                                                                           (in thousands)
      <S>                                                                          <C>                    <C>
      Accounts receivable ..............................................           $ 58,145               $  66,870
      Less: allowance for doubtful accounts ............................              4,659                   4,329
                                                                                   --------               ---------
            Total ......................................................           $ 53,486               $  62,541
                                                                                   ========               =========
</TABLE>

3.  Inventories
    
Inventories at the following dates consisted of the following:
<TABLE>
<CAPTION>

                                                                                  January 31,            October 31,
                                                                                     1997                   1997
                                                                                 ------------           -------------
                                                                                           (in thousands)
      <S>                                                                          <C>                     <C>
      Raw materials....................................................            $ 27,082                $ 28,429
      Work in progress.................................................               8,005                   8,167      
      Fnished goods....................................................              20,224                  17,926
                                                                                   --------                --------
                                                                                     55,311                  54,522
      Less: excess of FIFO cost over LIFO cost                                          -                       -
                                                                                   --------                --------
            Total .....................................................            $ 55,311                $ 54,522
                                                                                   ========                ========

</TABLE>    
The Company uses the LIFO method of valuing inventories.   LIFO had a 
de minimis effect on the cost of sales for the three and nine month periods 
ended October 31, 1996 and 1997.


<PAGE>   6

      
                                                                          Page 6

                     SPECIALTY EQUIPMENT COMPANIES, INC.
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



4. Intangibles and Goodwill:
<TABLE>
<CAPTION>

                                                                                        January 31,             October 31,
                                                                                           1997                    1997 
                                                                                     ----------------        --------------
                                                                                                   (in thousands)
Intangibles consisted of the following:
           <S>                                                                         <C>                   <C>
           Patents ...............................................................     $     991             $       991
           Other intangibles .....................................................        49,571                  51,625
           Deferred pension costs ................................................         1,603                   1,603
           Less: accumulated amortization ........................................        46,304                  46,868
                                                                                       ---------             -----------
           Net intangibles .......................................................     $   5,861             $     7,351
                                                                                       =========             ===========
Goodwill consisted of the following:

           Goodwill ..............................................................     $     -               $    15,796
           Less: accumulated amortization ........................................           -                       101
                                                                                       ---------             -----------
                                                                                       $     -               $    15,695
                                                                                       ==========            ===========
</TABLE>

Other intangibles primarily include deferred financing fees, engineering
drawings, distribution networks and skilled workforce.

5.  Income Taxes

The Company follows the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes"("Statement 109").  At January 31, 1997, the Company had a net deferred
tax asset of $32.3 million less a valuation allowance of $22.1 million.  The
Company  has approximately $16.1 million in NOL carry forwards.  However, a
number of issues regarding the treatment of certain changes in ownership of the
Company pursuant to certain provisions of the Internal Revenue Code of 1986, as
amended ("IRC"), may arise which, if determined adversely, could limit the
amount and/or use of the NOL carry forwards.  The NOL carry forwards are
available through fiscal 2008.

6.  Long-Term Debt

Long-term debt at the following dates consisted of the following:
<TABLE>                     
<CAPTION>

                                                                                        January 31,             October 31,
                                                                                           1997                    1997 
                                                                                     ----------------        --------------
                   Description                                                                     (in thousands)
           <S>                                                                         <C>                   <C>
           11-3/8% senior subordinated notes due 2003 .............................    $ 149,040             $   149,040
           Industrial project revenue bonds due 2008 ..............................        6,400                   6,400
           Capitalized leases .....................................................          141                   4,051
           Other ..................................................................          -                    18,741
                                                                                       ---------             -----------
                                                                                         155,581                 178,232
           Less:  current installments............................................           141                  18,421
                                                                                       ---------             ----------- 
            Total long-term debt, less current installments........................     $155,440             $   159,811  
                                                                                       =========            ============  
                                                                                                                          
 </TABLE>


<PAGE>   7



                                                                          Page 7


                     SPECIALTY EQUIPMENT COMPANIES, INC.
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7. Commitments and Contingent Liabilities

The Company is involved in litigation and claims incidental to its business.
The ultimate outcome of these matters cannot presently be determined because of
the uncertainties inherent in litigation. However, such claims are being
vigorously contested and management does not believe that it is probable that
the ultimate outcome of the loss contingencies relating to such litigation and
claims will have, individually or in the aggregate, a material adverse impact
upon the financial condition or results of operations of the Company.

The following is a summary of the more significant litigation and claims.

Litigation

     The Company was a defendant along with other defendants in an action filed
on July 20, 1995 entitled "Thermodyne Food Service Products, Inc. and AFTEC,
Inc. v. McDonald's Corporation, et al." in the United States District Court,
Northern District of Illinois, Eastern Division.  Plaintiffs alleged that the
Company and other defendants misappropriated trade secrets in connection with
the Company's development of an oven for McDonald's and OSI.  As a result of a
ruling on a motion to dismiss, all the claims against the Company other than
the trade secret claim were dismissed.  The case was settled by the terms of a
confidential settlement agreement dated May 28, 1997 pursuant to which one of
the defendants agreed to make a settlement payment in a confidential amount.
Although the Company is not required under the terms of this settlement
agreement to pay any damages or make any settlement payments, it is possible
that the codefendant who did make a settlement payment will seek contribution
from the Company.  The Company has not established a reserve in its financial
statements relating to this matter.

     The Company and certain of its current and former directors are named as
defendants in an action filed by Virginia A. Noerr, who claims to own shares
of the Company's common stock.  The action "Noerr v. Greenwood et al.," C.A.
No. 14320, is pending in the Court of Chancery for the State of Delaware in and
for New Castle County, Delaware.  Plaintiff purports to bring this action both
as a class action on behalf of all stockholders of record on April 2, 1993 and
derivatively for the benefit of the Company.  Plaintiff's complaint, which has
twice been amended, asserts that (i) the defendants breached their fiduciary
duties to the Company by soliciting stockholder approval of the Company's
Executive Long-Term Incentive Plan and Non-Employee Directors Long-Term
Incentive Plan (see footnote 8 to these financial statements) by means of a
misleading proxy statement and (ii) the Board breached its fiduciary duty in
approving such option plans.  The complaint seeks an order declaring the
stockholder approval of those option plans void, canceling the options granted
thereunder, enjoining the directors exercising any such options, imposing a
constructive trust for the benefit of the Company upon any profits the
individual named defendants may have made through exercise of their options,
requiring an accounting in connection therewith, and awarding unspecified
damages plus plaintiff's attorneys' fees and expenses also in an unspecified
amount.  The most recent amended complaint was filed after the court granted in
part the defendants' joint motion to dismiss the complaint, striking certain
nondisclosure claims; the court's order, however, denied the remainder of
defendants' motion to dismiss.  The Company and the individual defendants
believe that the allegations made in the complaint as amended are without merit
and are factually incorrect and the Company intends to contest these
allegations vigorously.  The individual defendants have each made demand upon
the Company for indemnification with respect to this action.  The Company
believes that is the Company were liable to the individual defendants for
indemnification, the uninsured portion of such liability would not be material
to the Company.





<PAGE>   8



                                                                          Page 8

                     SPECIALTY EQUIPMENT COMPANIES, INC.
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Environmental and Related Matters

On May 5, 1994, the Company (doing business as Taylor Freezer Company) was
among more than 80 parties notified as potential third-party defendants in an
action involving the clean up of the MIG/Dewane Landfill near Belvidere,
Illinois.  A third-party complaint has been filed by the principal owners and
operators of the landfill.  Those owners and operators were sued by the
principal users of the landfill who in turn had been sued by the Environmental
Protection Agency ("EPA") in April, 1992.  The complaint seeks contribution for
the proposed clean up of the site.  The Company has not received  settlement
offers from the EPA, but it settled its alleged liability with the private
plaintiffs for $54,000 for the costs associated with the remedial investigation
of the site.  The Company has not settled its alleged liability for clean up
costs at the site.  Beatrice Company (ConAgra) has assumed defense of the
matter and has agreed to defend and indemnify the Company for claims related to
the MIG/Dewane site to the extent they are related to Taylor and the events
giving rise to the claims occurring during the Beatrice Company (ConAgra)
period of ownership.  Based upon presently available information, management
does not believe this matter will have a material effect on the Company's
results of operation or financial condition.

The Company has also received notice of potential environmental actions from
(i) the South Carolina Department of Health and Environmental Control
("SCDHEC") and the EPA with respect to drums of hazardous waste materials
disposed of in South Carolina, (ii) the SCDHEC with respect to the clean up of
the Unisphere Hazardous Waste Site in Spartanburg County, South Carolina, and
(iii) the Nevada Department of Conservation and Natural Resources, Division of
Environmental Protection ("NDEP"), which issued a finding of alleged violation
and order relating to alleged soil and ground water contamination.  With
respect to the SCDHEC matter discussed in (i) above, management is unable to
determine the existence or amount of its potential liabilities because no
formal proceedings have been commenced and no notifications have been received
regarding this matter since December, 1992.  The Company has reason to believe
that this site will be the subject of no further action by the EPA.  With
respect to the SCDHEC matter discussed in (ii) above, management is unable to
determine the existence or amount of its potential liability, if any, because
the use of the site by  Beverage-Air occurred prior to the purchase of the
Beverage-Air assets by the Company from Gerlach Industries in November, 1986.
With respect to the NDEP matter discussed in (iii) above, the Company has spent
approximately $318,000 to conduct tests and to implement a remediation program,
but given the pendency of the Company's appeal and its uncertain outcome,
management cannot estimate what, if any, additional expenditures might be
required.


Letters of Credit

As of October 31, 1997, the Company had letters of credit outstanding totaling
$10.3 million, which guarantee various business activities, including $6.5
million of letters of credit which guarantee the Industrial Project Revenue
Bonds (see note 6 above).

8.  Stock Option Plan and Stock Warrants

On May 6, 1993 the stockholders approved long-term incentive plans for both
non-employee directors and employees.  Pursuant to the Non-Employee Directors
Long-Term Incentive Plan ("Director Plan") each non-employee director was
granted an option to purchase 175,241 shares of the Company's common stock at a
price of $1.00 per share (which was not less than management's determination of
the fair market value of the underlying shares on the date of grant).  The
aggregate grants under the Director Plan totaled 876,205 shares.



<PAGE>   9

                                                                          Page 9
                      SPECIALTY EQUIPMENT COMPANIES, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Executive Long-Term Incentive Plan, as amended, ("Employee Plan") allows
for the issue of a total of 4,004,814 shares of the Company's common stock. All
of the options granted are at an exercise price which was not less than
management's determination of the fair market value of the underlying shares at
the respective dates of grant.

The options under the Director Plan all vested and became exercisable on May 6,
1995, as on such date all of the conditions to vesting were satisfied.  All
options awarded pursuant to the Director Plan expire on May 6, 2000.

The following sets forth information with respect to options issued and
outstanding:

<TABLE>
<CAPTION>

                                                               Average option
                                                   Shares      price per share

<S>                                               <C>             <C>
Options outstanding at January 31, 1997           2,995,537       $  2.42
Options exercised                                  (105,700)        (1.00)
Options canceled                                    (33,400)        (1.00)
                                                  ---------       -------
Options outstanding at April 30, 1997
   (2,806,437 exercisable)                        2,856,437          2.48
Options issued                                       50,000         13.44
Options exercised                                  (190,782)        (1.00)
Options canceled                                    (75,268)        (1.00)
                                                   --------       ------- 
Options outstanding at July 31, 1997
   (2,540,387 exercisable)                        2,640,387       $  2.84
Options exercised                                   (91,100)        (1.35)
Options canceled                                    (13,900)        (1.76)
                                                  ---------       -------
Options outstanding at October 31, 1997           2,535,387       $  2.90
                                                  =========       =======
</TABLE>


Options so canceled represent options which are withheld by the Company, upon
exercise by the grantee, to satisfy the grantee's withholding tax liability.
The options canceled cannot be reissued.

A non-employee director has stock warrants currently exercisable to purchase
1,133,296 shares of Common Stock at approximately $2.01 per share.


<PAGE>   10




                                                                         Page 10

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

Results of Operations

The following table sets forth selected operating data as a percentage of
Company net revenue:

<TABLE>
<CAPTION>

                                                                 Three Months Ended              Nine Months Ended 
                                                                    October 31,                      October 31,
                                                                 1996          1997               1996        1997
                                                                 ----          ----               ----        ----
<S>                                                             <C>           <C>                <C>         <C>
Net revenue:                                           
Beverage-Air...........................................          44.4%         40.2%              39.7%       43.3%
Gamko .................................................             -           5.8                  -         1.9
Taylor Company.........................................          38.3          36.7               43.8        38.7
Wells Manufacturing/Bloomfield ........................          14.1          14.0               13.6        13.1
World Dryer............................................           3.2           3.3                2.9         3.0
                                                                -----         -----              -----       -----
Net revenue ...........................................         100.0         100.0              100.0       100.0
Gross margin ..........................................          30.0          30.8               30.7        30.5
Selling, general and administrative expenses...........          15.0          16.5               15.1        15.7
Amortization ..........................................           0.5           0.2                0.5         0.2
Other expense (income), net ...........................             -             -               (0.1)       (0.1)
                                                                -----         -----              -----       -----
Earnings from operations before                        
 interest expense and income taxes ....................          14.5          14.1               15.2        14.7
Interest expense ......................................           4.4           3.7                4.6         3.6
                                                                -----         -----              -----       -----
Earnings from operations                               
 before income taxes ..................................          10.1          10.4               10.6        11.1
Income taxes ..........................................           3.9           3.7                4.1         4.3
                                                                -----         -----              -----       -----
Net earnings before extraordinary item.................           6.2%          6.7%               6.5%        6.8%
                                                                =====         =====              =====       =====
</TABLE>


Three and Nine Month Periods Ended October 31, 1997 (Fiscal 1998) Compared to
Three and Nine Month Periods Ended October 31, 1996 (Fiscal 1997).

Revenue.  Revenue for the three months ended October 31, 1997 increased
4.8% to $107.7 million compared with $102.8 million for the comparable period
in fiscal 1997.  Revenue for the nine months ended October 31, 1997 increased
5.4% to $330.1 million compared with $313.1 million for the comparable period
in fiscal 1997. The revenue increase for the three months was primarily
attributable to sales from Gamko which was acquired in August partially offset
due to a decline in sales of refrigeration and glass door merchandising
equipment.  In the nine month period increased sales of refrigeration and glass
door merchandising equipment to the soft drink bottler industry and sales of
Gamko products were offset somewhat by lower sales of ice cream freezer
equipment and cooking grills.  The timing of two large international
beverage-equipment orders has somewhat distorted quarterly comparisons between
fiscal year 1997 and fiscal year 1998.  Fiscal year 1997 included a one-time
order which was shipped during the third and fourth quarters of that year and
fiscal 1998's sales include a large equipment order which was shipped primarily
during the first and second quarter of this year.  For the first nine months of
fiscal 1998, revenue from sales of products for use outside the United States
was 30.5% of revenue as compared with 31.5% for the same period in fiscal 1997.





<PAGE>   11



                                                                         Page 11

Gross Margin.  Gross margin for the three months ended October 31, 1997
increased 0.8% to $33.2 million, compared with $30.8 million for the comparable
period in fiscal 1997. Gross margin for the nine months ended October 31, 1997
increased 4.9% to $100.8 million, compared with $96.1 million for the
comparable period in fiscal 1997. As a percent of revenue, gross margin
increased from 30.0% of revenue for the three month period ended October 31,
1996 to 30.8% of revenue in the three  month period ended October 31, 1997. The
increase in gross margin for the three month period ended October 31, 1997 was
due to more favorable sales mix in part due to the effect of Gamko.  The decline
in gross margin as a percent of revenue for the nine month periods ended
October 31, 1997 compared to the prior year periods was primarily due to a
higher percentage of sales to the soft drink bottler market which carries lower
gross margins, costs associated with the new Beverage-Air plant in South
Carolina and increased price competition in the soft drink bottler market.

Selling, General and Administrative Expenses.  Selling, general and
administrative ("SG&A") expense for the three months ended October 31, 1997
increased 15.3% to $17.8 million.  SG&A expense for the nine months ended
October 31, 1997 increased 9.0% to $51.7 million compared with $47.4 million
for the comparable period in fiscal 1997.  As a percent of revenue, SG&A
increased from 15.0% to 16.5% in the three months ended October 31, 1997 and
from 15.1% to 15.7%, in the nine months ended October 31, 1997, compared to the
comparable periods in fiscal 1997.  The higher expenses reflect the Gamko
acquisition as well as increased sales promotion activity primarily for the
three months ended October 31, 1997, partially offset by favorable medical and
casualty insurance experience of $0.7 million.

Amortization.  Amortization for the three months ended October 31, 1997
decreased to $287,000 compared with $489,000 for the comparable period in
fiscal 1997. Amortization for the nine months ended October 31, 1997 decreased
to $664,000 compared with $1.4 million for the comparable period in fiscal
1997.

Other Expense (Income).  Other income for the nine month periods ended October
31, 1997 decreased by $246,000 versus the comparable prior year periods,
reflecting a net recovery of $0.3 million of Canadian federal sales taxes
recorded in the prior year, partially offset by a favorable currency exchange
variance of $0.1 million in the current year.

Interest Expense.  Interest expense for the three months ended October 31, 1997
decreased 12.2% to $4.0 million compared with $4.5 million for the comparable
period in fiscal 1996. Interest expense for the nine months ended October 31,
1997 decreased 16.9% to $12.0 million compared with $14.4 million for the
comparable period in fiscal 1997. The decrease is principally due to a decrease
in average amounts borrowed due to the acquisition by the Company of $31.0
million of its 11-3/8% senior subordinated notes in August 1996 and an increase
in interest income earned from short-term cash investments.

Liquidity and Capital Resources

Net cash flows from operations were $49.4 million for the nine months ended
October 31, 1997 compared with $19.7 million for the nine months ended October
31, 1996.  The increase is primarily the result of a decrease in accounts
receivable, primarily foreign receivables, compared to the prior year.  See --
"Results of Operations -- Revenue."

Net cash used in investing activities amounted to $23.9 million for the nine
months ended October 31, 1997 compared with $4.4 million for the nine months
ended October 31, 1996. The increase is attributable to net assets of
businesses acquired, primarily Gamko, of $21.5 million.  Through the first nine
months of fiscal 1997, total capital expenditures have been $2.5 million.  The
Company anticipates that capital expenditures for fiscal 1998 will be
approximately $5.0 million.  The Company's capital spending for the balance of
fiscal 1998 is expected to be related to the acquisition, installation,
improvement and equipping of its Beverage-Air and Taylor production facilities.


<PAGE>   12


                                                                         Page 12

On September 16, 1997 the Company announced a plan to purchase $10 million of
its common stock (up to  600,000 shares) in the open market and in private
transactions.  For the three months ended October 31, 1997 the Company
purchased 116,115 shares of its common stock at an average price of $16.86 per
share.  Through December 11, 1997 the Company has purchased a total of 267,327
shares at an average price of $16.31 per share.

In August 1997 the Company acquired Gamko Holding, B.V. ("Gamko"), a
manufacturer of refrigeration equipment based in The Netherlands.  The
acquisition was initially funded through current cash and cash equivalent
balances.  Subsequently the Company borrowed $18 million as a part of the
financing for the transaction.  The Company believes that the acquisition will
be important in serving the global expansion of its major bottling and
foodservice/catering equipment customers in both western and eastern European
markets.  In calendar 1996 Gamko's sales were approximately $25 million U.S.

As of October 31, 1997, the Company had net working capital of $46.8 million.
The Company's average operating working capital (defined as average monthly
gross accounts receivable and net inventory less accounts payable) as a
percentage of sales declined from 22% during fiscal year 1996 to 21% for the
nine months ended October 31, 1997.  The Company's earnings from operations
were sufficient to cover fixed charges for the nine months ended October 31,
1997.

As of October 31, 1997, the Company had no borrowings under the Revolving
Credit Facility of its Bank Credit Agreement.  However, it had outstanding
letters of credit in the amount of $10.3 million, including $6.5 million of
letters of credit  which guarantee the Industrial Project Revenue Bonds
(referenced in note 6 to the financial statements included as item 1 hereto).
Under the Revolving Credit Facility, the Company had $45.0 million available
for additional borrowings.  In addition, the Company had cash and cash
equivalents of $48.5 million as of October 31, 1997.

The Company had four financial covenants to meet at October 31, 1997 under the
Bank Credit Agreement -- a liquidity ratio covenant at October 31, 1997 of at
least 1.25:1.00; a senior funded debt to cash flow covenant for the twelve
months ended October 31, 1997 of not greater than 2.00:1.00; a total funded
debt to cash flow covenant ratio for the twelve months ended October 31, 1997
not greater than 3.50:1.00 and an interest coverage covenant ratio of at least
2.0:1.00.  The Company met each of these covenants as it had a liquidity ratio
of 26.33:1.00 at October 31, 1997; a senior funded debt to cash flow ratio of
0.09:1.00 for the twelve months ended October 31, 1997; total funded debt to
cash flow ratio for the twelve months ended October 31, 1997 of 2.53:1.00 and
an interest coverage ratio for the twelve months ended October 31, 1997 of
4.01:1.00.

Management believes that the Bank Credit Agreement and the other sources of
capital described above, with internally generated funds, will be adequate to
meet the Company's anticipated capital and cash requirements for at least the
next twelve months, including debt service and corporate income taxes.

Impact of Inflation

Management does not believe that inflation has had a material impact on the
Company's operations during the first nine months of fiscal 1997. Management    
believes that the Company may face increasing costs during the balance of the
fiscal year as a result of inflation which the Company may not fully be able to
offset with increased productivity or pass on to its customers due to
competitive factors within the industry.


Safe Harbor for Forward-Looking Statements Under the Securities Litigation
Reform Act of 1995

Except for historical information contained herein, this Quarterly Report to
Stockholders contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.  These statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those anticipated and discussed herein.  These factors include:
general economic conditions and their impact on the growth of the quick service
restaurant and soft drink bottler industries, the Company's dependence on its
major customer and key management personnel, the effects of competition, the
demands relating to further overseas expansion, the significance of the
Company's outstanding indebtedness and other factors detailed elsewhere from
time to time in the Company's filings with the Securities and Exchange
Commission.



<PAGE>   13


                                                                         Page 13

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

See note 7 of "Notes to Unaudited Consolidated Financial Statements" included
in Part I.  Item 1. of this Form 10-Q.

Item 4. Submissions of Matters to a Vote of Security Holders

There were no matters submitted to a vote of stockholders for the quarter ended
October 31, 1997.

Item 6. Exhibits and Reports on Form 8-K

     1. Exhibits

        10.1 Stock Purchase Agreement between Specialty Equipment Companies, 
             Inc. and Quaboes B.V. and Shareholders of Gamko Holdings B.V. and 
             of Coolpart B.V., dated August 11, 1997.
        27.1 Financial Data Schedule

     2. Reports on Form 8-K.

        Report on Form 8-K filed September 16, 1997.





<PAGE>   14



                                                                         Page 14


SIGNATURE

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

                                 Specialty Equipment Companies, Inc.
                                             (Registrant)





Date:  December 12, 1997         /s/ Jeffrey P. Rhodenbaugh
       ------------------       ----------------------------------------------
                                   Jeffrey P. Rhodenbaugh, Chief Executive 
                                   Officer (Principal Executive Officer)



Date:  December 12, 1997         /s/ Donald K. McKay
       ------------------       -----------------------------------------------
                                   Donald K. McKay, Chief Financial Officer
                                   (Principal Financial and Accounting Officer)




<PAGE>   15


                                                                         Page 15

Exhibit Index


  Exhibit
     No.                     Description
  -------                    -----------
   10.1        Stock Purchase Agreement Between Specialty Equipment Companies,
               Inc. and Quaboes B.V. and Shareholders of Gamko Holdings B.V. 
               and of Coolpart B.V. dated August 11, 1997.

   27.1        Financial data schedule.