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 July 4, 1997
                                                 ------------

                         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 July 18, 1997
               -----                          ---------------------------
     Common Stock, $.01 par value                     5,832,290

<PAGE>

                                Table of Contents

Part I. - Financial Information                                         Page No.



Unaudited Consolidated Balance Sheets -
    July 4, 1997 and January 3, 1997 ....................................  3

Unaudited Consolidated Statements of Operations -
    For the Second Quarter Ended July 4, 1997 and June 28, 1996 .........  4

Unaudited Consolidated Statements of Cash Flows -
    For the Second Quarter  Ended July 4, 1997 and June 28, 1996 ........  5

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

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


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

<PAGE>


Part I.-Financial Information
Item 1. Financial Statements

<TABLE>
<CAPTION>


                     TB Wood's Corporation And Subsidiaries
                           Consolidated Balance Sheets

                                                                                                       Audited
                                                                                       July 4,      January 3,
(in thousands, except per share and share amounts)                                       1997             1997
------------------------------------------------------------------------------- -------------- ----------------
ASSETS
Current Assets:
<S>                                                                                    <C>                <C>
Cash and cash equivalents ...........................................................  $1,661             $306
Accounts receivable, less allowances for doubtful accounts, discounts, and
claims of $538 at July 4, 1997 and $437 at January 3, 1997 ..........................  17,947           15,518
Inventories .........................................................................  23,049           23,985
Other current assets ................................................................   1,144            1,053
                                                                                      -------          -------
     Total current assets ...........................................................  43,801           40,862
                                                                                      -------          -------
Property, plant, and equipment ......................................................  45,338           41,652
Less accumulated depreciation .......................................................  22,251           21,154
                                                                                      -------          -------
    Net property, plant and equipment ...............................................  23,087           20,498
                                                                                      -------          -------
Other Assets:
Deferred income taxes ...............................................................   5,400            5,249
Goodwill, net of accumulated amortization of  $1,050 at
      July 4, 1997 and $958 at January 3, 1997 ......................................   8,060            4,603
Other ...............................................................................   1,911            2,183
                                                                                      -------          -------
     Total other assets .............................................................  15,371           12,035
                                                                                      -------          -------
                                                                                      $82,259          $73,395
                                                                                      =======          =======
                                                                                      
                                                                                

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt ................................................    $360             $520
Accounts payable ....................................................................   5,052            5,210
Checks outstanding ..................................................................   1,304            1,532
Accrued expenses ....................................................................   9,442            8,384
Deferred income taxes ...............................................................     537              539
                                                                                      -------          -------
     Total current liabilities ......................................................  16,695           16,185
                                                                                      -------          -------
Long-term debt, less current maturities .............................................  26,717           21,707
                                                                                      -------          -------
Postretirement benefit obligation, less current portion .............................  18,194           18,628
                                                                                      -------          -------

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, 5,834,147 and
5,827,397 shares issued and 5,826,493 and 5,827,397 shares outstanding at
July 4, 1997 and January 3, 1997, respectively ......................................     58               58
Treasury Stock ......................................................................   (120)               --
Additional paid-in capital ..........................................................  28,226           28,158
Accumulated deficit ................................................................. (7,490)         (11,306)
Foreign currency translation adjustment .............................................    (21)             (35)
                                                                                      -------          -------
      Total shareholders' equity ....................................................  20,653           16,875
                                                                                      -------          -------
                                                                                      $82,259          $73,395
                                                                                      =======          =======
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>






                                       3
<PAGE>


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

                                                                           Second Quarter Ended              Year to Date
                                                                          July 4,       June 28,         July 4,     June 28,
 (in thousands, except per share amounts)                                    1997           1996            1997         1996
-------------------------------------------------------------------- ------------- -------------- -- ------------ ------------
<S>                                                                       <C>            <C>             <C>          <C>
Net sales ..............................................................  $31,739        $25,107         $62,228      $48,920
Cost of sales ..........................................................   20,232         15,917          39,770       30,838
                                                                          -------        -------         -------      -------
     Gross profit ......................................................   11,507          9,190          22,458       18,082
Selling, general, and administrative expenses ..........................    7,217          6,033          13,931       12,106
                                                                          -------        -------         -------      -------
     Operating income ..................................................    4,290          3,157           8,527        5,976
                                                                          -------        -------         -------      -------
Other expense:
     Interest expense and other finance charges ........................    (439)          (508)           (926)      (1,308)
     Other, net ........................................................    (276)           (69)           (464)        (575)
                                                                          -------        -------         -------      -------
          Other expense, net ...........................................    (715)          (577)         (1,390)      (1,883)
                                                                          -------        -------         -------      -------
Income before provision for income taxes and 
 extraordinary item.....................................................    3,575          2,580           7,137        4,093
Provision for income taxes .............................................    1,430          1,065           2,855        1,645
                                                                          -------        -------         -------      -------
Income before extraordinary item .......................................    2,145          1,515           4,282        2,448
Extraordinary item, early extinguishment of debt
     (less related income tax benefit of $870)..........................      - -            - -             - -      (1,305)
                                                                          -------        -------         -------      -------
Net income .............................................................   $2,145         $1,515          $4,282       $1,143
                                                                          =======        =======         =======      =======
Per share of common stock:
     Income before extraordinary item ..................................    $0.36          $0.26           $0.72        $0.46
     Extraordinary item ................................................      - -            - -             - -       (0.24)
                                                                          -------        -------         -------      -------
Net income per common share ............................................    $0.36          $0.26           $0.72        $0.21
                                                                          =======        =======         =======      =======
Weighted average shares of common stock
     and equivalents outstanding .......................................    5,915          5,850           5,912        5,327
                                                                          =======        =======         =======      =======
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>




                                                                   4
<PAGE>

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


                                                                              Year to Date
                                                                          July 4,       June 28,
(in thousands)                                                               1997           1996
------------------------------------------------------------------- -------------- --------------
Cash Flows from Operating Activities:
<S>                                                                        <C>            <C>
Net income ..............................................................  $4,282         $1,143
                                                                          -------        -------
Adjustments to reconcile net income to net cash
provided by operating activities:
     Depreciation and amortization ......................................   1,976          1,329
     Deferral of interest and management fees
     payable to affiliates ..............................................       0            576
     Change in deferred income taxes, net ...............................    (153)          (435)
     Stock option compensation expense ..................................      51             70
     Write off of non-compete agreement .................................      --            582
     Extraordinary loss on early extinguishment of debt, net.. ..........      --          1,305
     Other, net .........................................................      --            (32)
  Changes in working capital, net of effects of acquisitions:
          Accounts receivable, net ......................................  (1,284)           511
          Inventories, net ..............................................   1,590           (688)
          Prepaid expenses and other current assets .....................    (306)           (75)
          Accounts payable ..............................................      25            717
          Accrued and other liabilities .................................     345           (593)
                                                                          -------        -------
               Total adjustments ........................................   2,244          3,267
                                                                          -------        -------
               Net cash provided by operating activities ................   6,526          4,410
                                                                          -------        -------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired ......................................  (4,749)        (2,058)
Capital expenditures ....................................................  (3,532)        (1,290)
Other, net ..............................................................    (485)             5
                                                                          -------        -------
     Net cash used in investing activities ..............................  (8,766)        (3,343)
                                                                          -------        -------
Cash Flows from Financing Activities:
Change in checks outstanding ............................................    (228)          (457)
Repayments of long-term debt, net .......................................   2,344        (14,369)
Proceeds from original revolving credit facility ........................      --         49,067
Repayments of original revolving credit facility ........................      --        (54,889)
Proceeds from new revolving credit facility .............................  22,900             --
Repayments of new revolving credit facility ............................. (20,400)            --
Proceeds from public sale of common stock ...............................      --         19,986
Payment of dividends ....................................................    (932)          (460)
Proceeds from issuance of stock upon option exercise ....................      17             --
Treasury Stock ..........................................................    (120)             --
                                                                          -------        -------
     Net cash provided by (used in) financing activities ................   3,581         (1,122)
                                                                          -------        -------
Effect of changes in foreign exchange rates .............................      14            (33)
                                                                          -------        -------
Net (decrease) increase in cash and cash equivalents ....................   1,355            (88)
Cash and cash equivalents at beginning of year ..........................     306            417
                                                                          =======        =======
Cash and cash equivalents at end of period ..............................  $1,661           $329
                                                                          =======        =======

<FN>
The accompanying notes are an integral part of these consolidated statements.
</FN>
</TABLE>


                                       5

<PAGE>

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

1.   In the  opinion of  management,  the  accompanying  unaudited  consolidated
     financial  statements  contain all adjustments  necessary to present fairly
     the  financial  position of TB Wood's  Corporation  and  Subsidiaries  (the
     "Company")  as of July 4, 1997 and  January  3,  1997,  and the  results of
     operations  and cash  flows for the Second  Quarter  and Year to Date ended
     July 4, 1997 and June 28, 1996.  Operating  results for the interim periods
     presented  are  not  necessarily  indicative  of the  results  that  may be
     expected for the fiscal year ending January 2, 1998.

2.   Certain  reclassifications may have been made to the consolidated financial
     statements of prior periods to conform to the current period presentation.

3.   In 1997, the Company changed the remaining amortization period for the Post
     Retirement Benefits, unrecognized prior service cost from 14.4 years to 5.4
     years.  The change in the  amortization  rate will  provide  an  additional
     benefit of  approximately  $700 before taxes annually through 2001 and $300
     in 2002.

4.   The  major  classes  of  inventories  at July 4, 1997 and  January  3, 1997
     consisted of the following:
                                                                       Audited
                                                   July 4,          January 3,
                                                      1997                1997
                                                -----------         -----------
      Raw material and supplies                    $ 3,636             $ 3,755
      Work in process                                6,887               7,994
      Finished goods                                16,683              16,293
                                                   -------             -------
          Total at FIFO cost                        27,206              28,042
      Excess of FIFO cost over LIFO cost            (4,157)             (4,057)
                                                   -------             -------
          Total at LIFO cost                       $23,049             $23,985
                                                   =======             =======
                                                   

5.   In March 1997, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 128 ("SFAS 128"),  "Earnings Per Share,"
     which the Company is required to adopt for periods  ending  after  December
     15, 1997. While SFAS 128 prohibits early adoption,  pro forma  presentation
     is permitted. The pro forma Earnings per Share ("EPS") is as follows:

                               July 4, 1997                    June 28, 1996
                           APB 15     SFAS 128              APB 15     SFAS 128
     Net Income            $2,145      $2,145               $1,515      $1,515
     Primary EPS            $0.36                            $0.26
     Primary Shares         5,915                            5,850
     Basic EPS                          $0.37                            $0.26
     Basic Shares                       5,831                            5,750
     Diluted EPS                        $0.36                            $0.26
     Diluted Shares                     5,915                            5,850

6.   On July 8, 1997 the Board of Directors  declared a quarterly  cash dividend
     of $0.08 per share  payable on July 31, 1997 to  shareholders  of record on
     July 18, 1997.



                                                      6
<PAGE>

7.   On April 9, 1997,  the Company  issued  Variable Rate Demand Revenue Bonds,
     Series  1997,  totaling  approximately  $2,550  under the  authority of The
     Industrial  Revenue  Board  of the  City of  Chattanooga.  Interest  is due
     monthly and the bonds mature on April 1, 2022. The bonds are tax exempt and
     bear interest at the prevailing 7 day floating rate.

8.   On May 8,  1997,  the  Company  purchased  the stock of  Graseby  Controls,
     Inc.("GCI"), a subsidiary of Graseby plc, for cash of approximately $5,000.
     GCI  manufactures  and sells  industrial AC Drives,  including the Volkmann
     (TM) brand of high frequency, AC drives, electronic brakes, and SoftStarts.

9.   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  July 4,  1997  the  number  of  shares  purchased  under  this
     authorization  was 10,000.  At July 4, 1997, the number of treasury  shares
     issued to employees under option, and purchase plans was 2,346.

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 second  quarter 1997 of $31,739,  compared to $25,107 for the second quarter
1996,  an increase of 26.4%.  Year to date 1997 sales were  $62,228  compared to
year to date 1996  sales of  $48,920,  an  increase  of  $13,308  or 27.2%.  The
increases  were  primarily  due to  increased  sales  of AC  Drives,  electronic
systems,  sales  from  recent  acquisitions,  and strong  demand for  mechanical
products

     Cost of sales  ("COS") in the second  quarter 1997 was $20,232  compared to
$15,917 for the same period last year, an increase of 27.1%. COS as a percent of
sales in the  second  quarter  1997 was 63.7%  compared  to 63.4% for the second
quarter  1996.  Year to date 1997 COS was $39,770 or 63.9% of sales  compared to
year to date 1996 COS of $30,838 or 63.0% of sales The  increase  was  primarily
due to the maintenance  shutdown at the Chambersburg  facility  occurring in the
second  quarter 1997  compared to the third  quarter in 1996,  higher COS as the
recent  coupling  acquisition  is integrated  into the  business,  and shifts in
product mix.

     Selling,  general  and  administrative  ("SG&A")  expenses  for the  second
quarter 1997 were $7,217,  compared to $6,033 for the second  quarter  1996,  an
increase of $1,184 or 19.6%.  SG&A as a percent of sales  decreased  to 22.7% in
the second quarter 1997 from 24.0% in the second quarter 1996. Year to date 1997
SG&A was $13,931 or 22.4% of sales compared to year to date 1996 SG&A of $12,106
or 24.7% of sales. The Company was able to leverage additional sales in 1997, by
increasing SG&A only 15.1% while sales increased 27.2%.

     Operating  profit was $4,290 for the second quarter 1997 compared to $3,157
for the second quarter 1996, an increase of $1,133 or 35.9%. Operating profit as
a percent of sales  increased to 13.5% in the second  quarter 1997 from 12.6% in
the second quarter 1996. Year to date 1997 operating  profit was $8,527 or 13.7%
of sales  compared to year to date 1996  operating  profit of $5,976 or 12.2% of
sales, an increase of $2,551 or 42.7%.

                                 7
<PAGE>

     Other expense for the second quarter 1997 was $276, compared to $69 for the
same period last year. Year to date 1997 other expense was $464 compared to year
to date 1996 other expense of $575. 1997 other expense  included charges related
to the consolidation of the New Jersey and North Carolina  facilities,  one time
charges related to 1996 acquisitions and foreign currency adjustments.  The 1996
other  expense  included  expenses  related  to the write  off of a  non-compete
agreement.

     Net income for the second quarter 1997 was $2,145 or 6.8% of sales compared
to $1,515 or 6.0% of sales for the same period in the prior year, an increase of
$630 or  41.6%.  Year to date  1997 net  income  was  $4,282,  or 6.9% of sales,
compared  to year to date 1996 net  income,  before  one time  charges of $1,654
associated  with  the  early  extinguishment  of  debt  and  a  write-off  of  a
non-compete agreement, of $2,797 or 5.7% of net sales, an increase of 53.1%.

     Earnings per share ("EPS") for the second  quarter 1997 were $0.36 on 5,915
weighted  average  shares  outstanding  compared to second  quarter  1996 EPS of
$0.26,  an increase of 38.5%.  Year to date 1997 EPS was $0.72 on 5,912 weighted
shares outstanding  compared to year to date 1996 EPS of $0.52,  before one time
charges, on 5,327 weighted average shares outstanding.  Year to date 1996 EPS on
net income was $0.21.


LIQUIDITY AND CAPITAL RESOURCES (in thousands, except per share amounts)

     Cash  flows  from  operations  provide  the  principal  source  of  current
liquidity.  Net cash flows  provided  by  operating  activities  were $6,526 and
$4,410  for the year to date  periods  ended  July 4,  1997  and June 28,  1996,
respectively.  Working capital  increased $2,429 to $27,106 at July 4, 1997 from
$24,677 at January 3, 1997.  The increase was primarily the result of additional
accounts receivable due to record sales in the first two quarters of 1997.

     The Company used $8,766 for investment  purposes year to date 1997 compared
to $3,343 for the year to date 1996, an increase of $5,423. Capital expenditures
were  $3,532  in 1997  compared  to  $1,290 in 1996,  and  acquisitions,  net of
acquired  cash,  were $4,749 in 1997  compared to $2,058 in 1996.  1997  capital
expenditures include the purchase and renovation of a larger production facility
to  consolidate  the  electronics  systems  business.  Acquisitions  include the
purchase of Graseby  Controls,  Inc. in 1997, Grupo Blaju,  S.A. de C.V. in 1996
and the minority interest in TB Wood's Canada, LTD. in 1996.

     Cash provided by financing  activities  was $3,581 in 1997 compared to cash
used by financing  activities of ($1,122) in 1996. In 1997, the year to date net
proceeds  from the new  revolving  credit  facility  were $2,500 which  included
borrowing $5,000 to finance the purchase of Graseby  Controls,  Inc. The Company
also borrowed  $2,550 by issuing  Variable Rate Demand Revenue Bonds,  under the
authority of The Industrial Revenue Board of the City of Chattanooga, to finance
the new production facility for the electronics  systems business.  In 1996, the
Company  completed an initial public offering of common stock. The proceeds from
the offering of $19,986 were primarily used to pay down debt.

     On July 8, 1997, the Board of Directors  declared a quarterly cash dividend
of $0.08 per share payable on July 31, 1997, to  shareholders  of record on July
18, 1997.

                                       8



<PAGE>

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.


Part II - OTHER INFORMATION

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

     The 1997 annual meeting of stockholders was held on April 11, 1997.  Voting
on the election of one  director to the second class of directors  and voting on
management's proposal to adopt the TB Wood's Corporation Employee Stock Purchase
Plan was conducted.  The stockholders  voted 4,928,671 shares in the affirmative
and 3,775 shares in the negative to elect Michael L. Hurt to the second class of
directors  of the  Board of  Directors.  Michael  L.  Hurt was duly  elected  as
director of the second class at the meeting.  In addition to Mr. Hurt, Thomas C.
Foley,  Jean-Pierre L. Conte,  and Craig R. Stapleton will continue as directors
after the meeting.  The  stockholders  voted 4,503,146 shares in the affirmative
and  427,000  shares  in the  negative  to  approve  and  adopt  the  TB  Wood's
Corporation  Employee  Stock Purchase Plan. The purpose of the Plan is to assist
the Company in  attracting  and  retaining  employees by offering them a greater
stake in the Company's  success and a closer  identity with it, and to encourage
ownership of the Company's stock by employees.

Item 5.  Other Information

     On July 29, 1997,  Philip A. Garton was appointed  Vice  President-Finance/
Corporate Controller and Principal Financial Officer of the Company.  Previously
he was a Business  Controller of the Polymers  Business of AlliedSignal Inc. Mr.
Garton holds an MBA in Finance,  a BBA in Accounting and a BA in economics;  all
from Southern Methodist University.  His professional licenses include Certified
Public Accountant and Certified Cash Manager.

     On July 31,  1997 the Board of  Directors  passed a  resolution  to appoint
Robert J. Dole as a  director  of the  second  class for a term to expire on the
date of the annual meeting in the year 2000.



                                       9

<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

a)
                                 EXHIBIT INDEX

Exhibit

  11       Computation of Per Share Earning

  27       Financial Data Schedule

b)         Reports on Form 8-K - There were no reports on Form 8-K filed for the
           quarter ended July 4, 1997.








                                       10

<PAGE>

     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 August 19, 1997.

                           TB WOOD'S CORPORATION



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