SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

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

                  For The Quarterly Period Ended April 3, 1998

                         Commission File Number 1-14182






                             TB WOOD'S CORPORATION
             (Exact Name of registrant as specified in its charter)






           DELAWARE                             25-1771145
(State or other Jurisdiction of    (IRS Employer Identification Number)
 Incorporation of Organization)






 440 North Fifth Avenue, Chambersburg, PA                        17201
 (Address of principal executive offices)                      (Zip Code)







                                 (717) 264-7161
              (Registrant's telephone number, including area code)


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

                                               Yes _X___         No ____

Number of shares outstanding of the issuer's Common Stock:

           Class                               Outstanding at May 8, 1998
 Common Stock, $.01 par value                          5,859,286


                                       1
<PAGE>


                                Table of Contents


Part I. - Financial Information                                         Page No.
-------------------------------                                         --------

Consolidated Balance Sheets 
  April 3, 1998 and January 2, 1998 ...........................................3

Consolidated Statements of Operations -
  For the First Quarter  Ended
    April 3, 1998 and April 4, 1997 ...........................................4

Consolidated Statements of Cash Flows -
  For the First Quarter  Ended
    April 3, 1998 and April 4, 1997 ...........................................5

Notes to Consolidated Financial Statements ....................................6

Management's Discussion and Analysis of
  Financial Condition and Results of Operations ...............................7


Part II. - Other information ..................................................9
----------------------------


                                       2
<PAGE>


Part I.-Financial Information

Item 1.  Financial Statements

                     TB Wood's Corporation And Subsidiaries
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                                                  Unaudited       
                                                                                   April 3,         January 2,
(in thousands, except per share and share amounts)                                   1998             1998
------------------------------------------------------------------------------- -------------- ----------------
ASSETS
Current Assets:
<S>                                                                                   <C>              <C>   
Cash and cash equivalents ..........................................................  $1,481           $2,552
Accounts receivable, less allowances for doubtful accounts, discounts, 
and claims of $489 at April 3, 1998 and $476 at January 2, 1998 ....................  21,587           20,174
Inventories ........................................................................  27,497           26,138
Other current assets ...............................................................   1,455              967
                                                                                      ------           ------
  Total current assets .............................................................  52,020           49,831
                                                                                      ------           ------
Property, plant, and equipment .....................................................  49,949           47,882
Less accumulated depreciation ......................................................  26,170           23,794
                                                                                      ------           ------
  Net property, plant and equipment ................................................  23,779           24,088
                                                                                      ------           ------
Other Assets:
Deferred income taxes ..............................................................   4,574            4,602
                                                                                      ------           ------
Goodwill, net of accumulated amortization of $1,171 at
  April 3, 1998 and $1,123 at January 2, 1998 ......................................   9,050            9,122
Other...............................................................................   2,365            1,974
                                                                                      ------           ------
  Total other assets ...............................................................  15,989           15,698
                                                                                      ------           ------
TOTAL ASSETS ....................................................................... $91,788          $89,617
                                                                                     =======          =======
                                                                                    
LIABILITIES AND SHAREHOLDERS' EQUITY 
Current Liabilities:
Current maturities of long-term debt ...............................................    $277             $611
Accounts payable ...................................................................   9,348            8,610
Checks outstanding .................................................................   1,058            1,615
Accrued expenses ...................................................................  10,061           10,987
Deferred income taxes ..............................................................     729              729
                                                                                      ------           ------
  Total current liabilities ........................................................  21,473           22,552
                                                                                      ------           ------
Long-term debt, less current maturities ............................................  27,921           25,928
                                                                                      ------           ------
Postretirement benefit obligation, less current portion ............................  17,247           17,531
                                                                                      ------           ------
Minority Interest ..................................................................      22               --
                                                                                      ------           ------

Shareholders' Equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized,
  no shares issued or outstanding ..................................................      --               --
Common  stock,  $.01 par value;  40,000,000  shares  authorized,  
5,859,286  and 5,859,286 shares issued and 5,848,130 and 5,849,772 
shares outstanding at April 3, 1998 and January 2, 1998, respectively ..............      58               58
Treasury Stock .....................................................................    (238)            (181)
Additional paid-in capital .........................................................  28,361           28,340
Accumulated deficit ................................................................  (2,737)          (4,408)
Foreign currency translation adjustment ............................................    (319)            (203)
                                                                                      ------           ------
  Total shareholders' equity .......................................................  25,125           23,606
                                                                                      ======           ======

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                           $91,788          $89,617
                                                                                     =======          =======
</TABLE>

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



                                       3
<PAGE>



                     TB Wood's Corporation And Subsidiaries
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>

                                                                      Unaudited
                                                                 First Quarter Ended
                                                             ----------------------------
                                                                April 3,       April 4,
 (in thousands, except per share amounts)                         1998           1997
------------------------------------------------------------ ------------- --------------

<S>                                                              <C>            <C>    
Net sales .....................................................  $36,051        $30,489

Cost of sales .................................................   22,675         19,538
                                                                  ------         ------

  Gross profit ................................................   13,376         10,951

Selling, general, and administrative expenses .................    8,714          6,714
                                                                  ------         ------

  Operating income ............................................    4,662          4,237
                                                                  ------         ------

Other expense:
  Interest expense and other finance charges ..................     (570)          (487)
  Other, net ..................................................     (121)          (188)
                                                                  ------         ------

    Other expense, net ........................................     (691)          (675)
                                                                  ------         ------

Income before provision for income taxes ......................    3,971          3,562

Provision for income taxes ....................................    1,588          1,425
                                                                  ------         ------

Net income ....................................................   $2,383         $2,137
                                                                  ======         ======

Per share of common stock:

Basic net income per common share .............................    $0.41          $0.37
                                                                  ======         ======

Weighted average shares of common stock .......................    5,859          5,828
                                                                  ======         ======

Diluted net income per common share ...........................    $0.40          $0.36
                                                                  ======         ======

Weighted average shares of common stock
  and equivalents outstanding .................................    5,945          5,908
                                                                  ======         ======
</TABLE>

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



                                       4
<PAGE>


                     TB Wood's Corporation And Subsidiaries
                      Consolidated Statements Of Cash Flows
<TABLE>
<CAPTION>


                                                                             Unaudited
                                                                        First Quarter Ended
                                                                    -----------------------------
                                                                       April 3,       April 4,
(in thousands)                                                           1998           1997
------------------------------------------------------------------- -------------- --------------
Cash Flows from Operating Activities:
<S>                                                                      <C>             <C>   
Net income ...........................................................   $2,383          $2,137
                                                                         ------          ------
Adjustments to reconcile net income to net cash provided 
by operating activities:
  Depreciation and amortization ......................................   $1,211          $1,017
  Change in deferred income taxes, net ...............................       28             (26)
  Stock option compensation expense ..................................       21              26
  Minority Interest ..................................................       22              --
  Net gain on sales of assets ........................................      (17)             --
Changes in working capital:
  Accounts receivable, net ...........................................   (1,413)         (2,080)
  Inventories, net ...................................................   (1,359)            228
  Prepaid expenses and other current assets ..........................     (575)           (249)
  Accounts payable ...................................................      738            (230)
  Accrued and other liabilities ......................................   (1,210)            857
                                                                         ------          ------
    Total adjustments ................................................   (2,554)           (457)
                                                                         ------          ------
    Net cash (used in) provided by operating 
    activities .......................................................     (171)          1,680
                                                                         ------          ------
Cash Flows from Investing Activities:
Capital expenditures .................................................     (923)           (554)
Proceeds from sales of fixed assets ..................................      246              --
Other, net ...........................................................     (443)           (500)
                                                                         ------          ------
  Net cash used in investing activities ..............................   (1,120)         (1,054)
                                                                         ------          ------
Cash Flows from Financing Activities:
Change in checks outstanding .........................................     (557)           (254)
Repayments of long-term debt, net ....................................     (352)            (95)
Proceeds from new revolving credit facility ..........................    5,000          10,100
Repayments of new revolving credit facility ..........................   (3,000)         (9,700)
Payment of dividends .................................................     (469)           (466)
Proceeds from issuance of stock upon option exercise                         --              17
Treasury Stock .......................................................      (73)             --
                                                                         ------          ------
  Net cash provided by (used in) financing
    activities .......................................................      549            (398)
                                                                         ------          ------
Effect of changes in foreign exchange rates ..........................     (329)            (27)
                                                                         ------          ------
Net (decrease) increase in cash and cash equivalents .................   (1,071)            201
Cash and cash equivalents at beginning of year .......................    2,552             306
                                                                         ------          ------
Cash and cash equivalents at end of period ...........................   $1,481            $507
                                                                         ======            ====
</TABLE>

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


                                       5
<PAGE>


                     TB Wood's Corporation And Subsidiaries
                   Notes To Consolidated Financial Statements
               (in thousands, except per share amounts in Note 6)



1.        In the opinion of management,  the accompanying unaudited consolidated
          financial  statements  contain  all normal and  recurring  adjustments
          necessary  to  present  fairly  the  financial  position  of TB Wood's
          Corporation and  Subsidiaries  (the "Company") as of April 3, 1998 and
          the results of  operations  and cash flows for the three  months ended
          April 3,  1998 and  April 4,  1997.  Operating  results  for the three
          months  ended April 3, 1998,  are not  necessarily  indicative  of the
          results  that may be expected  for the fiscal  year ending  January 1,
          1999.

       

2.        The major classes of  inventories at April 3, 1998 and January 2, 1998
          consisted of the following:

                                                   Unaudited
                                                    April  3,       January 2,
                                                      1998              1998   

          Raw material and supplies ...............   $5,014            $6,073 
          Work in process .........................    8,410             8,467 
          Finished goods ..........................   17,892            15,417
                                                     -------           -------
          Total at FIFO cost ......................   31,316            29,957
          Excess of FIFO cost over LIFO cost ......   (3,819)           (3,819) 
                                                     -------           -------
          Total at LIFO cost ......................  $27,497           $26,138
                                                     =======           =======

3.        On April 9, 1998,  the Board of  Directors  declared a quarterly  cash
          dividend of $0.09 per share payable on April 30, 1998 to  shareholders
          of record on April 17, 1998.

4.        In 1996,  the  Board  of  Directors  authorized,  subject  to  certain
          business and market  conditions,  the purchase of up to 200,000 of the
          Company's  common  shares.  At April  3,  1998 the  number  of  shares
          purchased  under  this  authorization  was  46,969.  During  the first
          quarter  the  number of  treasury  shares  issued to  employees  under
          employee option,  and stock purchase plans was 2,059 and the number of
          shares  issued for the  Retirement  Savings  and  Investment  plan was
          5,665.

5.        Effective  January 3, 1998, the Company adopted Statement of Financial
          Accounting Standards No. 130, "Reporting  Comprehensive Income," which
          requires  companies to disclose  components of  comprehensive  income,
          defined as the total of net income and all other  nonowner  changes in
          equity.

          Total  comprehensive  income for the first quarter ended April 3, 1998
          and April 4, 1997 was as follows:
                                                   Unaudited         Unaudited 
                                                 April 3, 1998     April 4, 1997
          ---------------------------------- ----------------- -----------------

          Net Income ................................   $2,383           $2,137
          Other comprehensive income, net of tax:
            Foreign currency translation adjustments      (116)             (92)
                                                        ------           ------
          Total comprehensive income ................   $2,267           $2,045
                                                        ======           ======


                                       6
<PAGE>

6.        Basic net EPS is computed by dividing reported  earnings  available to
          common  shareholders  by  weighted  average  shares  outstanding.   No
          dilution for any potentially  dilutive securities is included in basic
          EPS. Diluted EPS is computed by dividing reported  earnings  available
          to  common   shareholders  by  weighted   average  shares  and  common
          equivalent  shares  outstanding.  All prior year EPS amounts have been
          restated to conform to the provisions of SFAS 128. The  computation of
          weighted  average shares  outstanding  and net income per share are as
          follows:

<TABLE>
<CAPTION>


                                                                   Unaudited                Unaudited
       (in thousands, except per share amounts)                  April 3, 1998            April 4, 1997
       ------------------------------------------------- ---------------------- ------------------------

       Weighted average number of common shares
<S>                                                                      <C>                      <C>  
       outstanding                                                       5,859                    5,828

       Shares issued upon assumed exercise of
       outstanding stock options                                            86                       80
                                                                         ------                   ------
       Weighted average number of common and common
       equivalent shares outstanding                                     5,945                    5,908

       Net income                                                       $2,383                   $2,137
                                                                        ======                   ======

       Basic net income per common share                                 $0.41                    $0.37
                                                                        ======                   ======

       Diluted net income per common share                               $0.40                    $0.36
                                                                        ======                   ======

</TABLE>

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

RESULTS OF OPERATIONS (in thousands, except per share amounts)

         TB Wood's Corporation and Subsidiaries (the "Company") posted net sales
for the first quarter 1998 of $36.1  million,  compared to $30.5 million for the
first  quarter  1997,  an increase of $5.6 million or 18.2%.  This  increase was
primarily  due to the  additional  sales  of  Berges  Electronics  and  Volkmann
Controls,  both acquired in the past twelve  months.  The new AC drive  products
introduced in 1997 also contributed to the increased sales.

         Gross profit  increased to $13.4 million from $11.0 million in 1997, an
increase  of $2.4  million  or 22.1%.  Gross  profit  as a percent  of net sales
increased to 37.1% from 35.9%. Contributing to the increase in gross profit is a
combination of the continuing efforts to improve manufacturing  productivity and
higher gross profits from recently acquired companies.

         Selling,  general,  and  administrative  ("SG&A") expense for the first
quarter of 1998 increased to $8.7 million from $6.7 million in 1997, an increase
of $2.0 million or 29.8%.  SG&A  expense as a percent of net sales  increased to
24.2% from 22.0%. This increase was primarily the result of the consolidation of
acquisitions  with  higher  SG&A  expenses  as a percent  of sales than the base
business.

                                       8
<PAGE>

         Other expense for the first quarter of 1998 was $0.7 million,  the same
as the first quarter of the prior year.  Interest expense,  a component of total
other  expense,  increased  to $0.6  million  from $0.5  million  in 1997.  This
increase  was due  primarily  to increased  borrowings  to fund working  capital
needs.  The  effective tax rate for the first quarter of 1998 was 40.0% the same
as the prior year.

         Net income for the first quarter of 1998 increased to $2.4 million from
$2.1 million in 1997, an increase of $0.2 million, or 11.5%.


Liquidity and Capital Resources

         The Company's principal sources of funds are cash flows from operations
and borrowings  under the Company's  revolving  credit  agreement.  Cash used in
operations during the first quarter of 1998 was $0.2 million, a decrease of $1.9
million  compared to cash provided by  operations of $1.7 million in 1997.  This
decrease was  primarily  due to a $1.4 million  increase in accounts  receivable
resulting from increased sales, a $1.4 million increase in inventory to maintain
customer  service  levels and a $1.2 million  reduction  in accrued  liabilities
reflecting payments for 1997 expenses made during the first quarter of 1998.

         Net cash used in investing  activities during the first quarter of 1998
and 1997 was $1.1 million.  Capital  expenditures  for the first quarter of 1998
were $0.9 million  compared to $0.6  million for the first  quarter of the prior
year. This increase was primarily due to increased capital expenditures that was
approved in the annual budget to meet growth objectives.

         Net cash provided by financing activities for the first quarter of 1998
was $0.5 million, an increase of $0.9 million compared to cash used in financing
activities of $0.4 million in the first  quarter of 1997.  The net proceeds from
the revolving  credit  facility  were $2.0 million,  which were used to fund the
operating activities and the capital expenditures in the first quarter. This was
offset by the payment of dividends of $0.5 million, payment of a note payable of
$0.3 million and a decrease in bank overdrafts of $0.6 million.

         The  Company  believes  that it will  have  sufficient  cash  flow from
operations and available  borrowings to meet its future cash needs for interest,
operating expenses, and capital expenditures.

SAFE HARBOR STATEMENT

         This quarterly report contains various  forward-looking  statements and
includes  assumptions  concerning the Company's  operations,  future results and
prospects.  These  forward-looking  statements are based on current expectations
and are subject to risk and uncertainties.  In connection with the "safe harbor"
provisions of the Private Securities  Litigation Reform Act of 1995, the Company
provides the following  cautionary  statement  identifying  important  economic,
political and  technology  factors which,  among others,  could cause the actual
results or events to differ materially from those set forth in or implied by the
forward-looking statements and related assumptions.

         Such  factors  include  the  following:  (i) changes in the current and
future business  environment,  including interest rates and capital and consumer
spending;  (ii)  competitive  factors and competitor  responses to the Company's
initiatives;   (iii)   successful   development  and  market   introductions  of
anticipated  new  products;  (iv) changes in  government  laws and  regulations,
including taxes; and (v) favorable  environment to make  acquisitions,  domestic
and foreign, including regulatory requirements and market value of candidates.


                                       9
<PAGE>

Part II - OTHER INFORMATION

Item 1.  Legal Proceeding

         None

Item 2.  Changes in Securities
         
         Not Applicable

Item 3.  Defaults upon Senior Securities

         None

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

         None

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

a)   Exhibit 27 Financial Data Schedule

b)   Reports  on Form 8-K - There  were no  reports  on Form 8-K  filed  for the
     quarter ended April 3, 1998.


Pursuant to the  requirements of Section 13 or 15(d) 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,   in  the  City  of
Chambersburg and Commonwealth of Pennsylvania, on May 14, 1998.

                           TB WOOD'S CORPORATION



                           By:      /s/Philip A Garton____________
                                    PHILIP A. GARTON
                                    Vice President-Finance/Corporate
                                    Controller (Principal Financial Officer
                                    and Principal Accounting Officer)