<PAGE>
 
                                 UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 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 28, 1996

                                      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 #0-18018   

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

             Delaware                                         76-0254329
             --------                                         ----------
   (State or other jurisdiction of                         (I.R.S. Employer
    incorporation or organization)                        Identification No.)


  370 Faunce Corner Road, North Dartmouth, Massachusetts               02747
  --------------------------------------------------------------------------
          (Address of principal executive offices)                (Zip Code)


                                (508) 995-8000
                                --------------
                         Registrant's telephone number

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

                                                          Yes  X  No
                                                              ---    ---

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

At September 28, 1996, 5,312,695 shares of registrant's common stock (par value,
$1.00) were outstanding.
<PAGE>
 
                             AEROVOX INCORPORATED
                 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                 (Amounts in Thousands, Except Per Share Data)

<TABLE> 
<CAPTION> 

                                                    Three Months Ended            Nine Months Ended
                                                    ------------------            -----------------
                                                   Sept 28,    Sept 30,         Sept 28,    Sept 30,  
                                                     1996       1995              1996       1995
                                                  ----------  ----------       ----------  ---------- 
<S>                                              <C>                            <C> 
Net sales                                        $  29,285   $  27,678        $  94,479   $  98,556                
Cost of sales                                       24,698      24,604           82,532      83,505
                                                  ----------  ----------       ----------  ---------- 
Gross margin                                         4,587       3,074           11,947      15,051
Selling, general and administrative expenses         3,830       3,355           12,833      11,507
                                                  ----------  ----------       ----------  ----------  
Income (loss) from operations                          757        (281)            (886)      3,544

Other income (expense):
  Interest expense                                    (525)       (615)          (1,818)     (1,697)
  Other income (expense)                               160         134               54         524
                                                  ----------  ----------       ----------  ----------     
Income (loss) before income taxes                      392        (762)          (2,650)      2,371
Provision (benefit) for income taxes                   169        (356)            (855)        852
                                                  ----------  ----------       ----------  ----------     
Net income (loss)                                $     223   $    (406)       $  (1,795)  $   1,519
                                                  ==========  ==========       ==========  ==========            
Net income (loss) per share                      $    0.04   $   (0.08)       $   (0.34)  $    0.28
                                                  ==========  ==========       ==========  ==========            
</TABLE> 

    The accompanying notes are an integral part of the financial statements.
<PAGE>
 
                             AEROVOX INCORPORATED
                    CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                            (Amounts in Thousands)

<TABLE> 
<CAPTION> 
                                                                Sept. 28,                       Dec. 30,
                                                                   1996                           1995
                                                        ----------------------------------------------------
<S>                                                     <C>                            <C>       
ASSETS
Current assets:
    Cash and cash equivalents                           $          517                  $          573
    Accounts receivable, net                                    19,315                          19,588
    Inventories                                                 22,011                          22,630
    Prepaid expenses and other current assets                    1,149                           1,073
    Deferred income taxes                                        1,792                             885
                                                        --------------                  --------------            
        Total current assets                                    44,784                          44,749

Property, plant and equipment,
  net of accumulated depreciation                               40,447                          41,251
Deferred income taxes                                            2,683                           2,290
Other assets                                                       281                             401
                                                        --------------                  --------------            
                Total assets                            $       88,195                  $       88,691
                                                        ==============                  ==============            

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                    $        9,703                  $       11,270
    Accrued expenses                                             7,029                           3,339       
    Current maturities of long-term debt                         3,654                           3,205
    Income taxes                                                   873                             508
                                                        --------------                  --------------            
        Total current liabilities                               21,259                          18,322       

Deferred income taxes                                            6,731                           6,727
Industrial revenue bond                                          2,278                           2,573
Long-term debt less current maturities                          23,083                          25,132
Other liabilities                                                1,337                           1,072

Stockholders' equity
    Common stock                                                 5,313                           5,299
    Additional paid-in capital                                     831                             769
    Retained earnings                                           27,693                          29,488
    Foreign currency translation adjustment                       (330)                           (691)
                                                        --------------                  --------------            
        Total stockholders' equity                              33,507                          34,865
                                                        --------------                  --------------            
           Total liabilities and stockholders' equity   $       88,195                  $       88,691
                                                        ==============                  ==============            
</TABLE> 

  The accompanying notes are an integral part of the financial statements.


<PAGE>
 
                             AEROVOX INCORPORATED
               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                            (Amounts in Thousands)

<TABLE> 
<CAPTION>
                                                              Nine Months Ended
                                                             -------------------
                                                             Sept. 28, Sept. 30,
                                                                1996      1995
                                                             --------- ---------
<S>                                                          <C>       <C>
Cash flows from operating activities:
    Net income (loss)                                        $ (1,795) $  1,519
    Adjustments to reconcile to cash provided by (used for)
     operating activities:
       Depreciation and amortization                            3,484     3,165
       Deferred income taxes                                   (1,296)        3
    Changes in operating assets and liabilities:
       Accounts receivable                                        273    (3,451)
       Inventories                                                619    (2,236)
       Prepaid expenses and other current assets                  (76)     (465)
       Accounts payable                                        (1,567)      178
       Accrued expenses                                         3,690       476
       Income taxes payable                                       365       364
                                                             --------- --------
Net cash provided by (used for) operating activities            3,697      (447)
                                                             --------- --------
Cash flows from investing activities:
    Acquisition of property, plant and equipment               (2,680)   (6,323)
    Other                                                         746        23
                                                             --------- --------
Net cash used in investing activities                          (1,934)   (6,300)
                                                             --------- --------
Cash flows from financing activities:
    Net borrowings (repayments) under line of credit             (810)    5,296
    Long-term debt borrowings                                   1,500     3,500
    Long-term debt repayment                                   (2,585)   (1,957)
    Common stock issued                                            76       230
                                                             --------- --------
Net cash provided by (used for) financing activities           (1,819)    7,069
                                                             --------- --------
Increase (decrease) in cash and cash equivalents                  (56)      322
Cash and cash equivalents at beginning of period                  573       102
                                                             --------- --------
Cash and cash equivalents at end of period                   $    517  $    424
                                                             ========= ========
Supplemental disclosure of cash flow information:
    Cash paid during the period for interest                 $  1,729  $  1,763
                                                             ========= ========
    Cash paid during the period for income taxes             $    310  $    562
                                                             ========= ========
</TABLE>

   The accompanying notes are an integral part of the financial statements.

<PAGE>
 
                             AEROVOX INCORPORATED
                         NOTES TO FINANCIAL STATEMENTS

(1)  The consolidated financial statements are unaudited, and in the opinion of 
     management, reflect all adjustments necessary for a fair presentation of 
     the financial statements for the interim periods.

     The financial statements are presented as permitted by Form 10Q and do not
     contain certain information included in the Company's annual statements and
     notes.
<PAGE>
 
PART I.  FINANCIAL INFORMATION
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

Results of Operations

Three Months Ended September 28, 1996 as compared to Three Months Ended 
September 30, 1995.

     Net sales for the third quarter of 1996 totaled $29,285,000 compared to 
$27,678,000 for the third quarter of 1995, an increase of $1,607,000 (5.8%). A 
rebound in demand for aluminum electrolytic capacitors, strong orders from 
manufacturers of lighting products and appliances, particularly microwave ovens,
and shipment of a large order of energy discharge capacitors to Korea for use in
rock crushing equipment contributed to the quarterly sales increase.

     Gross margins for the third quarter of 1996 totaled $4,587,000 (15.7% of 
net sales) compared to $3,074,000 (11.1% of net sales) for the corresponding 
quarter in 1995. Selling, general and administrative (SG&A) expenses for the 
quarter totaled $3,830,000 (13.1% of net sales) versus $3,355,000 in the third 
quarter of 1995 (12.1% of net sales). Certain expenses in SG&A incurred during 
the quarter were attributable to the addition of two new officers to the Company
to replace officers retiring at year end.

     Interest expense for the third quarter was $525,000 compared to $615,000 in
the third quarter of 1995. Other income totaled $160,000 compared to $134,000 
for the corresponding quarter of 1995.

     Income (loss) before income taxes was $392,000 (1.3% of net sales) compared
to a loss of a $762,000 (a negative 2.8% of net sales) for the third quarter of 
1995. The provision for income taxes for the third quarter of 1996 was $169,000 
versus a tax benefit of $356,000 in the third quarter of 1995. Net income of 
$223,000 ($0.04 per common share) compared to a net loss reported in the third 
quarter of 1995 of $406,000 ($0.08 per share per common share).

Results of Operations

Nine Months Ended September 28, 1996 as compared to Nine Months Ended September 
30, 1995.

     Net sales for the first nine months of 1996 totaled $94,479,000 compared to
$98,556,000 for the corresponding nine months of 1995, a $4,077,000 (4.1%) 
decrease. General softness in the lighting marketplace earlier in the year, 
slowness in the buildup of demand for electrolytic capacitors produced in the 
Company's Mexican facility, a non-repeated government program (produced in 
1995), and price compression (primarily affecting day-to-day bid business) all 
contributed to a shortfall in net sales between the corresponding periods.

     Cumulative nine months results were impacted by the special provision 
established by the Company during the second quarter of 1996 to cover warranty 
claims, unusable inventories primarily

<PAGE>
 
related to operations in Mexico, severance costs, elimination of certain benefit
programs, and an increase in doubtful accounts receivable. The after-tax impact 
to operations of the Company totaled $3,465,000 (or $.65 per common share) and 
was accounted for, as follows:


<TABLE> 
<CAPTION> 

                                    Nine Months, 1996
                                    -----------------

                                      Before Special
(In $000's)                             Provision         Provision      As Reported
                                        ---------         ---------      -----------
<S>                                   <C>                 <C>            <C> 
Net Sales                                $94,479                --         $94,479
Cost of sales                             78,283           $ 4,249          82,532
                                          ------            ------          ------ 
Gross margin                              16,196  /17.1%/   (4,249)         11,947  /12.6%/
Selling, general and           
 administrative expenses                  12,035  /12.7%/      798          12,833  /(13.6%)/
                                          ------            ------          ------                 
Income (loss) from operations              4,161  /4.4%/    (5,047)           (886) /(.9%)/
Other income (expense):        
    Interest expense                      (1,818)               --          (1,818)
    Other income (expense)                   343              (289)            (54) 
                                          ------            ------          ------                  
Income (loss) before income taxes          2,686  /2.8%/    (5,336)         (2,650) /(2.8%)/
Provision (benefit) for income taxes       1,016            (1,871)           (855)
                                          ------            ------          ------                        
Net income (loss)                        $ 1,670  /1.8%/   $(3,465)        $(1,795) /(1.9%)/
                                          ======            ======          ======                         
Net income (loss) per share              $  0.31           $ (0.65)        $ (0.34)
                                          ======            ======          ======                          
</TABLE> 

     Year-to-date gross margins before the special provision totaled $16,196,000
(17.1% of net sales) and $11,947,000 (12.6% of net sales) after special 
provision adjustments compared to $15,051,000 (15.3% of net sales) for the 
corresponding period of 1995. Selling, general and administrative expenses for 
the first nine months of 1996 totaled $12,035,000 before the special provision 
(12.7% of net sales) and $12,833,000 after provision adjustments (13.6%) 
compared to $11,507,000 for the first nine months of 1995 (11.7% of net sales).

     Interest expenses totaled $1,818,000 for the first nine months compared to 
$1,697,000 for the first nine months of 1995. Other income was $342,000 prior to
special provision adjustments and $54,000 after the provision compared to 
$524,000 for the first nine months of 1995.

     Income (loss) before taxes and the special provision was $2,685,000 (2.8% 
of net sales) and ($2,650,000) after adjustments for the special provision (a 
negative 2.8% of net sales) compared to income before taxes of $2,371,000 for 
the first nine months of 1995 (2.4% of net sales).  Year-to-date income tax 
benefits totaled $855,000 in comparison to a tax provision of $852,000 for the 
first nine months of 1995.  A net loss of $1,795,000 (a negative $0.34 per 
common share) compares to a net income of $1,519,000 ($0.28 per common share) 
for the corresponding period in 1995.

<PAGE>
 
Liquidity and Capital Resources

        Cash at the end of the third quarter, 1996, totaled $517,000 compared to
$424,000 at the end of the third quarter of 1995. Working capital totaled
$23,525,000 on September 28, 1996, versus $27,061,000 at the end of the third
quarter of 1995; a reduction of $3,536,000, primarily a result of the reserve
adjustments taken by the Company during the second quarter of 1996. Current
ratio of 2.1:1 compares to a ratio of 2.5:1 at end of the third quarter in
1995. Approximately $2,680,000 of expenditures were made during the first nine
months of 1996 for property, plant and equipment compared to $6,323,000
expended during the first nine months of 1995. The ratio of total liabilities to
net worth was 1.63:1 at the end of the first nine months of 1996 compared to
1.50:1 at the end of the corresponding period in 1995.

        At the end of the third quarter of 1996, the Company had borrowings of 
$29,015,000 versus $30,779,000 for the comparable period in 1995, a reduction of
$1,764,000.

        On November 1, 1996, a Forth Amendment to the Revolving Credit Agreement
was entered into between the Bank of Boston and the Company which amended
financial covenants. At the end of the third quarter of 1996, the Bank of Boston
covenant for an interest coverage ratio of no less than 2.50:1 (earnings before
interest and income taxes divided by interest expense) was not met. The bank was
advised and amended the related covenant for the period as reflected in the
amended Agreement. All other covenants required by the Agreement between the
bank and the Company have been met. At September 28,1996, total borrowings
outstanding under this Agreement were approximately $19,480,700 compared to
approximately $19,417,000 on September 30, 1995.

        The Company also has a term line of credit with the CIT Group, an 
equipment financing company.  This line of $10,000,000, collateralized by 
certain equipment, has annual interest rates ranging from 7.4% to 8.2% and 
maturing at various dates to January 10, 2001.  At September 28, 1996, 
borrowings outstanding under this agreement were $6,866,000 compared to 
$8,361,000 outstanding at the end of the third quarter of 1995.

        A ten-year Industrial Revenue Bond was issued by the Massachusetts 
Industrial Finance Agency in July 1982 to finance the acquisition of equipment. 
The bond was transferred to another purchaser in June, 1992.  Principal and 
interest, at an annual rate of 7.42%, are payable monthly to July 1, 2002.  At 
September 28, 1996, the bond balance outstanding under this agreement was 
$2,669,000 compared to $3,002,000 at September 30, 1995.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

6(a).   Exhibits:

        4.4.5  Fourth Amendment, dated November 1, 1996, to Amended and Restated
Revolving Credit Agreement, dated July 8, 1993, between the Company and the 
First National Bank of Boston.  

<PAGE>
 
     Note: Registrant agrees to furnish to the Securities and Exchange 
commission, upon request, a copy of any other instrument with respect to 
long-term debt of the registrant and its subsidiaries. Such other instruments 
are not filed herewith because no such instrument relates to outstanding debt in
an amount greater than 10% of the total consolidated assets of the registrant 
and its subsidiaries.

6(b).  Reports on Form 8-K: None filed.


SIGNATURES

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

                                          AEROVOX INCORPORATED

DATE  November 8, 1996                    BY /s/JEFFREY A. TEMPLER
     ------------------                   Jeffrey A. Templer
                                          Senior Vice President/Finance