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 October 3, 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 October 17, 1997
               -----                         -------------------------------
     Common Stock, $.01 par value                      5,837,580


<PAGE>

                                Table of Contents

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


Unaudited Consolidated Balance Sheets -
         October 3, 1997 and January 3, 1997 ............................  3

Unaudited Consolidated Statements of Operations -
          For the Third Quarter and Year to Date Periods Ended
                   October 3, 1997 and September 27, 1996 ...............  4

Unaudited Consolidated Statements of Cash Flows -
         For the Year to Date Period Ended October 3, 1997
                  and September 27, 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
                                                                                   October 3,       January 3,
(in thousands, except per share and share amounts) .......................               1997            1997
--------------------------------------------------------------------------       ------------        --------
ASSETS
Current Assets:
<S> ......................................................................                <C>             <C>
Cash and cash equivalents ................................................       $        641        $    306
Accounts receivable, less allowances for doubtful accounts, discounts, and
claims of $523 at October 3, 1997 and $437 at January 3, 1997 ............             18,143          15,518
Inventories ..............................................................             22,831          23,985
Other current assets .....................................................                654           1,053
                                                                                 ------------        --------
   Total current assets ..................................................             42,269          40,862
                                                                                 ------------        --------
Property, plant, and equipment ...........................................             46,190          41,652
Less accumulated depreciation ............................................             23,095          21,154
                                                                                 ------------        --------
   Net property, plant and equipment .....................................             23,095          20,498
                                                                                 ------------        --------
Other Assets:
Deferred income taxes ....................................................              5,360           5,249
Goodwill, net of accumulated amortization of  $1,095 at
   October 3, 1997 and $958 at January 3, 1997 ...........................              8,005           4,603
Other ....................................................................              1,972           2,183
                                                                                 ------------        --------
   Total other assets ....................................................             15,337          12,035
                                                                                 ------------        --------

TOTAL ASSETS .............................................................       $     80,701        $ 73,395
                                                                                 ============        ========


LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities:
Current maturities of long-term debt .....................................       $        337        $    520
Accounts payable .........................................................              6,007           5,210
Checks outstanding .......................................................              1,811           1,532
Accrued expenses .........................................................              9,540           8,384
Deferred income taxes ....................................................                537             539
                                                                                 ------------        --------
   Total current liabilities .............................................             18,232          16,185
                                                                                 ------------        --------
Long-term debt, less current maturities ..................................             21,936          21,707
                                                                                 ------------        --------
Postretirement benefit obligation, less current portion ..................             18,017          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 5,832,263 and 5,827,397
shares outstanding at Oct. 3, 1997 and January 3, 1997, respectively .....                 58              58
Treasury Stock ...........................................................                (31)           --
Additional paid-in capital ...............................................             28,251          28,158
Accumulated deficit ......................................................             (5,742)        (11,306)
Foreign currency translation adjustment ..................................                (20)            (35)
                                                                                 ------------        --------
     Total shareholders' equity ..........................................             22,516          16,875
                                                                                 ------------        --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ...............................       $     80,701        $ 73,395
                                                                                 ============        ========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>                               
</TABLE>
     
                                        3

<PAGE>
<TABLE>


                     TB Wood's Corporation And Subsidiaries
                      Consolidated Statements of Operations

                                                                 Third Quarter Ended                 Year to Date
                                                               October 3,   September 27,      October 3,   September 27,
(in thousands, except per share amounts) .................           1997        27, 1996            1997            1996
----------------------------------------------------------       --------        --------        --------        --------
<S>                                                              <C>             <C>             <C>             <C>     
Net sales ................................................       $ 31,257        $ 25,849        $ 93,485        $ 74,769
Cost of sales ............................................         19,770          16,525          59,540          47,363
                                                                 --------        --------        --------        --------
   Gross profit ..........................................         11,487           9,324          33,945          27,406
Selling, general, and administrative expenses ............          7,259           6,162          21,190          18,268
                                                                 --------        --------        --------        --------
   Operating income ......................................          4,228           3,162          12,755           9,138
                                                                 --------        --------        --------        --------
Other expense:
   Interest expense and other finance charges ............           (371)           (333)         (1,297)         (1,641)
   Other, net ............................................           (193)            (21)           (657)           (596)
                                                                 --------        --------        --------        --------
      Other expense, net .................................           (564)           (354)         (1,954)         (2,237)
                                                                 --------        --------        --------        --------
Income before provision for income taxes and extraordinary
expense ..................................................          3,664           2,808          10,801           6,901
Provision for income taxes ...............................          1,465           1,124           4,320           2,769
                                                                 --------        --------        --------        --------
Income before extraordinary expense ......................          2,199           1,684           6,481           4,132
Extraordinary expense, early extinguishment of debt
   (less related income tax benefit of $870) .............           --              --              --            (1,305)
                                                                 --------        --------        --------        --------
Net income ...............................................       $  2,199        $  1,684        $  6,481        $  2,827
                                                                 --------        --------        --------        --------
Per share of common stock:
   Income before extraordinary expense ...................       $   0.37        $   0.29        $   1.10        $   0.75
   Extraordinary expense .................................           --              --              --             (0.24)
                                                                 --------        --------        --------        --------
Net income per common share ..............................       $   0.37        $   0.29        $   1.10        $   0.51
                                                                 ========        ========        ========        ========
Weighted average shares of common stock
   and equivalents outstanding ...........................          5,926           5,851           5,916           5,501
                                                                 ========        ========        ========        ========
<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
                                                                          -------------------------
                                                                          October 3,   September 27,
(in thousands) ......................................................           1997            1996
---------------------------------------------------------------------       --------        --------
Cash Flows from Operating Activities:
<S>                                                                         <C>             <C>     
Net income ..........................................................       $  6,481        $  2,827

Adjustments to reconcile net income to net cash provided by operating
activities:
   Depreciation and amortization ....................................          3,036           2,314
   Deferral of interest and management fees payable to affiliates ...              0             288
   Change in deferred income taxes, net .............................           (113)           (418)
   Stock option compensation expense ................................             76             104
   Write off of non-compete agreement ...............................           --               582
   Extraordinary loss on early extinguishment of debt, net ..........           --             1,305
   Other, net .......................................................           --               (57)
                                                                                            ........
   Changes in working capital, net of effects of acquisitions:
      Accounts receivable, net ......................................         (1,480)           (224)
      Inventories, net ..............................................          1,808            (283)
      Prepaid expenses and other current assets .....................             85             248
      Accounts payable ..............................................            980             210
      Accrued and other liabilities .................................            266             323
                                                                            --------        --------
         Total adjustments ..........................................          4,658           4,392
                                                                            --------        --------
    Net cash provided by operating activities .......................         11,139           7,219
                                                                            --------        --------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired ..................................         (4,749)         (2,058)
Capital expenditures ................................................         (4,375)         (2,290)
Other, net ..........................................................           (598)            (11)
                                                                            --------        --------
   Net cash used in investing activities ............................         (9,722)         (4,359)
                                                                            --------        --------
Cash Flows from Financing Activities:
Change in checks outstanding ........................................            279            (559)
Repayments of subordinated note .....................................           --           (10,677)
Proceeds (repayments) of long-term debt, net ........................          2,237         (14,459)
Proceeds from original revolving credit facility ....................           --            83,656
Repayments of original revolving credit facility ....................           --           (79,524)
Proceeds from new revolving credit facility .........................         29,600            --
Repayments of new revolving credit facility .........................        (31,800)           --
Proceeds from public sale of common stock ...........................           --            19,803
Payment of dividends ................................................         (1,399)           (920)
Proceeds from issuance of stock upon option exercise ................             17             188
Treasury Stock ......................................................            (31)           --
                                                                            --------        --------
   Net cash used in financing activities ............................         (1,097)         (2,492)
                                                                            --------        --------
Effect of changes in foreign exchange rates .........................             15             (24)
                                                                            --------        --------
Net increase in cash and cash equivalents ...........................            335             344
Cash and cash equivalents at beginning of year ......................            306             417
                                                                            ========        ========
Cash and cash equivalents at end of period ..........................       $    641        $    761
                                                                            ========        ========

<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 and share amounts in Note 7)

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 October 3, 1997 and  January 3, 1997,  and the results of
     operations  and cash  flows for the Third  Quarter  and Year to Date  ended
     October 3, 1997 and September 27, 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 October 3, 1997 and  January 3, 1997
     consisted of the following:

                                                                        Audited 
                                                        October 3,   January 3,
                                                              1997         1997
                                                        ----------   ----------
        Raw material and supplies                         $  3,427     $  3,755
        Work in process                                      6,990        7,994
        Finished goods                                      16,571       16,293
                                                            ------       ------
            Total at FIFO cost                              26,988       28,042 
        Excess of FIFO cost over LIFO cost                  (4,157)      (4,057)
                                                            ------       ------ 
                                               
           Total at LIFO cost                              $22,831       $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")  for the third
     quarters ended:

                               October 3, 1997             September 28, 1996  
                               APB 15  SFAS 128            APB 15    SFAS 128  
        Net Income             $2,199    $2,199            $1,684      $1,684
        Primary EPS             $0.37                       $0.29
        Primary Shares          5,926                       5,851             
        Basic EPS                         $0.38                         $0.29
        Basic Shares                      5,832                         5,777  
        Diluted EPS                       $0.37                         $0.29  
        Diluted Shares                    5,926                         5,851

6.   On October 9,  1997,  the Board of  Directors  declared  a  quarterly  cash
     dividend of $0.08 per share payable on October 31, 1997 to  shareholders of
     record on October 17, 1997.

                                        6
<PAGE>

7.   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  October  3, 1997 the  number of shares  purchased  under  this
     authorization was 10,000. At October 3, 1997, the number of treasury shares
     issued to employees  under  employee  option,  and stock purchase plans was
     2,319 and 401K plans was 5,797.

8.   On October 23, 1997, the Company signed a definitive  agreement to purchase
     Berges Electronics GmbH. Berges designs,  manufactures, and markets its own
     line of AC inverters for the European market and sells TB Wood's  inverters
     on a private label basis.  Berges'  annual  revenues,  at exchange rates in
     effect on the date of the agreement, were approximately $10,000.



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 third quarter 1997 of $31,257, compared to $25,849 for the third quarter
1996,  an increase of 20.9%.  Year to date 1997 sales were  $93,485  compared to
year to date 1996  sales of  $74,769,  an  increase  of  $18,716  or 25.0%.  The
increases were primarily due to strong demand for mechanical products, increased
sales of AC Drives and electronic systems, and sales from recent acquisitions.

         Cost of sales ("COS") in the third quarter 1997 was $19,770 compared to
$16,525 for the same period last year, an increase of 19.6%. COS as a percent of
sales in the  third  quarter  1997 was  63.2%  compared  to 63.9%  for the third
quarter  1996.  Year to date 1997 COS was $59,540 or 63.7% of sales  compared to
year to date  1996 COS of  $47,363  or 63.3% of  sales  The  decreased  COS as a
percent of sales in the  quarter was  primarily  due to  increased  sales in the
electronic  products  business,   the  electronic  systems  business,   and  the
mechanical  businesses,  as well as higher  production levels in the foundry and
machine shop. In addition, the Chambersburg maintenance shutdown in 1997 occured
in the second  quarter  1997 rather than the third  quarter,  as it had in 1996.
Offsetting some of the gains were higher COS associated  with the  consolidation
of the Deck Gear Couplings into our San Marcos facility.

         Selling,  general and  administrative  ("SG&A")  expenses for the third
quarter  1997 were $7,259,  compared to $6,162 for the third  quarter  1996,  an
increase of $1,097 or 17.8%.  SG&A as a percent of sales  decreased  to 23.2% in
the third quarter 1997 from 23.8% in the third  quarter 1996.  Year to date 1997
SG&A was $21,190 or 22.7% of sales compared to year to date 1996 SG&A of $18,268
or 24.4% of sales. The Company was able to leverage additional sales in 1997, by
increasing SG&A only 16.0% while sales increased 25.0%.

         Operating  profit was $4,228 for the third  quarter  1997  compared  to
$3,162 for the third  quarter  1996,  an increase of $1,066 or 33.7%.  Operating
profit as a percent of sales  increased to 13.5% in the third  quarter 1997 from
12.2% in the third quarter 1996. Year to date 1997 operating  profit was $12,755
or 13.6% of sales  compared to year to date 1996  operating  profit of $9,138 or
12.2% of sales, an increase of $3,617 or 39.6%.

         Other expense for the third quarter 1997 was $193,  compared to $21 for
the same period last year.  Year to date 1997 other expense was $657 compared to
year to date  1996  other  expense  of $596.  Year to date  1997  other  expense
included  charges  related  to  the  consolidation  of  the  Indiana  and  Texas
facilities,  consolidation of the New Jersey and North Carolina facilities,  one
time charges related to 1996 acquisitions and foreign currency adjustments. Year
to  date  1996  other  expense  included  $582  related  to the  write  off of a
non-compete agreement.
                                        7

<PAGE>

         Net  income  for the  third  quarter  1997 was  $2,199 or 7.0% of sales
compared to $1,684 or 6.5% of sales for the same  period in the prior  year,  an
increase of $515 or 30.6%.  Year to date 1997 net income was $6,481,  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 $4,481 or 6.0% of net sales, an increase of 44.6%.

         Earnings  per share  ("EPS")  for the third  quarter  1997 was $0.37 on
5,926 weighted average shares outstanding  compared to third quarter 1996 EPS of
$0.29 on 5,851 weighted average shares  outstanding,  an increase of 28.8%. Year
to date 1997 EPS was $1.10 on 5,916 weighted shares outstanding compared to year
to date 1996 EPS of $0.81,  before one time charges,  on 5,501 weighted  average
shares outstanding. Year to date 1996 EPS on net income was $0.51.


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 $11,139 and
$7,219 for the year to date  periods  ended  October 3, 1997 and  September  27,
1996, respectively. Working capital decreased $640 to $24,037 at October 3, 1997
from  $24,677 at  January 3, 1997.  The  decrease  was  primarily  the result of
increased  current  liabilities of $2,047 which were offset by increased current
assets of $1,407.  The increase in current assets is due to additional  accounts
receivable from record year to date sales in 1997.

         The  Company  used  $9,722 for  investment  purposes  year to date 1997
compared  to  $4,359  year  to  date  1996,  an  increase  of  $5,363.   Capital
expenditures  were $4,375 in 1997 compared to $2,290 in 1996, and  acquisitions,
net of acquired  cash,  were $4,749 in 1997 compared to $2,058 in 1996.  Year to
date 1997 capital expenditures include approximately $2,000 for 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 used by financing activities was $1,097 year to date 1997 compared
to cash used by financing  activities of $2,492 year to date 1996. In 1997,  the
year to date net  repayments of the new revolving  credit  facility were $2,200.
Cash flows from operations have been used for repayments of the revolving credit
facility and have offset  significant  borrowings  which included  approximately
$5,000 to finance the purchase of Graseby Controls,  Inc.,  approximately $4,722
of other  investing  activities,  and $1,399 of dividend  payments.  The Company
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 $19,803 were primarily used to pay down debt.

         On October 9, 1997,  the Board of Directors  declared a quarterly  cash
dividend of $0.08 per share  payable on October 31,  1997,  to  shareholders  of
record on October 17, 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

         None

Item 5.  Other Information

On October 23,  1997,  the Company  signed a  definitive  agreement  to purchase
Berges Electronics GmbH. Berges designs,  manufactures, and markets its own line
of AC  inverters  for the  European  market and sells TB Wood's  inverters  on a
private label basis. Berges' annual revenues, at exchange rates in effect on the
date of the agreement, were approximately $10,000.


<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 October 3, 1997.








                                        9

<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 November 5, 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)