<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10-Q
                                    ---------


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _________.


                         Commission File Number 1-14182


                              TB WOOD'S CORPORATION
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its charter)



                Delaware                              25-1771145
        ------------------------                 ----------------------
        (State of incorporation)                 (IRS Employer I.D. No)


                             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 checkmark 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, and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]


Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [ ] No [X]

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Securities Exchange Act of 1934). Yes [ ] No [X]


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

                Class                          Outstanding at November 8, 2005
     ----------------------------              -------------------------------
     Common Stock, $.01 par value                       3,700,647



                                       1
<PAGE>

                              TB WOOD'S CORPORATION
                                FORM 10-Q - INDEX
                               SEPTEMBER 30, 2005
<TABLE>
<CAPTION>
                                                                                                   Page No.
<S>        <C>                                                                                       <C>
Part 1. - Financial  Information
Item 1. Financial Statements (unaudited):

         Condensed Consolidated Statements of Operations - for the Third Quarter
            and Nine Months ended September 30, 2005 and October 1, 2004                               3

         Condensed Consolidated Balance Sheets -
            September 30, 2005 and December 31, 2004                                                   4

         Condensed Consolidated Statements of Cash Flows - for the Third Quarter
            and Nine Months ended September 30, 2005 and October 1, 2004                               5

         Notes to Condensed Consolidated Financial Statements                                          6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations         11

Item 3. Quantitative and Qualitative Disclosures about Market Risk                                    18

Item 4. Controls and Procedures                                                                       18

Part II - Other Information                                                                           18

Item 1    Legal Proceedings
Item 2    Changes in Securities and Use of Proceeds
Item 3    Defaults on Senior Securities
Item 4    Submission of Matters to a Vote of Security Holders
Item 5    Other Information
Item 6    Exhibits

Signatures                                                                                            20

Exhibit 31.1 Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002                  21
Exhibit 31.2 Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002                  22
Exhibit 32   Statement Pursuant to 18 U.S.C. Section 1350 as required by Section 906
               of the Sarbanes Oxley Act of 2002                                                      23
</TABLE>

                                       2
<PAGE>
PART 1. - FINANCIAL INFORMATION
-------------------------------
Item 1 Financial Statements


                     TB Wood's Corporation and Subsidiaries
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                  Third quarter ended                  Nine months ended
                                                           ----------------------------------------------------------------------
                                                            September 30,       October 1,      September 30,      October 1,
(in thousands, except per share amounts)                         2005              2004              2005             2004
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>               <C>               <C>              <C>

Net sales                                                       $ 27,673        $   25,279         $  83,228        $   76,819
Cost of goods sold                                                19,419            19,231            58,545            55,309
                                                           ----------------------------------------------------------------------

Gross profit                                                       8,254             6,048            24,683            21,510

Selling, general and administrative expense                        6,899             7,211            20,633            21,301
                                                           ----------------------------------------------------------------------

Operating income                                                   1,355            (1,163)            4,050               209

Interest expense and other finance charges                           489               460             1,629             1,207
                                                           ----------------------------------------------------------------------

Income before provision for income taxes                             866            (1,623)            2,421              (998)

Provision for income taxes                                           301              (277)              987               119
                                                           ----------------------------------------------------------------------

Net income                                                      $    565        $   (1,346)        $   1,434        $   (1,117)
                                                           ======================================================================

PER SHARE AMOUNTS - BASIC AND DILUTED:

   Basic net income per common share                            $   0.11        $    (0.26)        $    0.28        $    (0.22)
                                                           ======================================================================

   Diluted net income per common share                          $   0.11        $    (0.26)        $    0.28        $    (0.22)
                                                           ======================================================================

   Basic weighted average shares of common stock and
     equivalents outstanding                                       5,189             5,166             5,185             5,166
                                                           ======================================================================

   Diluted weighted average shares of common stock and
     equivalents outstanding                                       5,189             5,166             5,185             5,166
                                                           ======================================================================
</TABLE>

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

                                       3
<PAGE>
                     TB Wood's Corporation and Subsidiaries
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                September 30,      December 31,
(in thousands, except per share amounts)                                                             2005              2004
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                    <C>                <C>
ASSETS
Current Assets:
   Cash and cash equivalents                                                                          $ 1,651           $   556
   Accounts receivable less allowances of $792 at September 30, 2005
            and $880 at December 31, 2004                                                              14,921            13,353
   Inventories--Note 2                                                                                 15,614            20,418
   Other current assets                                                                                 3,324             3,742
                                                                                               -----------------------------------
      Total current assets                                                                             35,510            38,069

Property, plant and equipment                                                                          80,771            82,125
   Less accumulated depreciation                                                                       57,146            57,666
                                                                                               -----------------------------------
       Net property, plant and equipment                                                               23,625            24,459
Other Assets:
   Goodwill                                                                                             5,706             5,902
   Other                                                                                                1,212               940
                                                                                               -----------------------------------
      Total other assets                                                                                6,918             6,842
                                                                                               -----------------------------------

TOTAL ASSETS                                                                                          $66,053           $69,370
                                                                                               ===================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
    Current maturities of long-term debt                                                              $ 5,663           $ 7,605
    Accounts payable                                                                                    7,391             7,803
    Accrued expenses                                                                                    6,712             6,343
    Deferred income taxes                                                                                 461               134
                                                                                               -----------------------------------
        Total current liabilities                                                                      20,227            21,885

Long-term debt, less current maturities                                                                13,999            16,708
Postretirement benefit obligation, less current portion                                                    67               235
Deferred income taxes                                                                                     441               807

Shareholders' Equity:
    Preferred stock, $.01 par value, 100 shares authorized at September 30, 2005 and
      December 31, 2004, and no shares issued or outstanding                                               --                --
    Common stock, $.01 par value, 10,000,000 shares authorized; 5,639,798 issued; 5,195,826
     and 5,172,690 outstanding at September 30, 2005 and December 31, 2004                                 57                57
    Additional paid-in-capital                                                                         27,261            27,095
    Retained earnings                                                                                   8,290             6,943
    Accumulated other comprehensive income (loss)                                                           5               158
    Treasury stock at cost                                                                             (4,294)           (4,518)
                                                                                               -----------------------------------
          Total shareholders' equity                                                                   31,319            29,735
                                                                                               -----------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                            $66,053           $69,370
                                                                                               ===================================
</TABLE>

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

                                       4
<PAGE>
                     TB Wood's Corporation and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  ------------------------------------------------------------------
                                                                       Third quarter ended                Nine months ended
                                                                  ------------------------------------------------------------------
                                                                  September 30,      October 1,     September 30,      October 1,
(in thousands)                                                         2005             2004             2005             2004
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>             <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                          $    565         $  (1,346)      $   1,434        $   (1,117)
Adjustments to reconcile net income to net cash provided by
  operating activities:
     Depreciation and amortization                                     1,153             1,327           3,624             4,007
     Change in deferred income taxes, net                                 63               (55)            (39)             (165)
     Other                                                               141                92             191               228
     Changes in operating assets and liabilities:
         Accounts receivable                                             121             1,044          (1,568)           (1,314)
         Inventories                                                   2,096               631           4,804              (747)
         Other current assets                                           (208)             (218)            419              (305)
         Accounts payable                                                286               327            (412)              924
         Accrued and other liabilities                                   575               (51)            201              (373)
                                                                  ------------------------------------------------------------------
     Total adjustments                                                 4,227             3,097           7,220             2,255
                                                                  ------------------------------------------------------------------
Net cash provided by operating activities                              4,792             1,751           8,654             1,138

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                              (1,104)             (543)         (2,453)           (1,750)
    Other                                                               (414)             (369)           (347)             (354)
                                                                  ------------------------------------------------------------------
Net cash used in investing activities                                 (1,518)             (912)         (2,800)           (2,104)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from long-term debt                                          40                --          13,040                18
    Repayments of long-term debt                                        (420)               (5)         (2,118)              (46)
    Proceeds from revolving credit facilities                         24,172             9,798          81,719            30,242
    Repayments of revolving credit facilities                        (27,625)          (10,382)        (97,291)          (28,054)
    Payments of dividends                                                 --              (464)             --            (1,393)
    Issuance of treasury stock                                            15                14              44                41
                                                                  ------------------------------------------------------------------
Net cash provided by (used in) financing activities                   (3,818)           (1,039)         (4,606)              808

Effect of changes in foreign exchange rates                              187               180            (153)              138
                                                                  ------------------------------------------------------------------
Net increase in cash and cash equivalents                               (357)              (20)          1,095               (20)
Cash and cash equivalents at beginning of period                       2,008               781             556               781
                                                                  ------------------------------------------------------------------
Cash and cash equivalents at end of period                          $  1,651          $    761       $   1,651        $      761
                                                                  ==================================================================

Income taxes paid (refunded)                                        $    (38)         $    135       $     197        $     (175)
                                                                  ==================================================================

Interest paid                                                       $    443          $    416       $   1,690        $    1,190
                                                                  ==================================================================

</TABLE>

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

                                       5

<PAGE>
                     TB Wood's Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (unaudited)
                    (in thousands, except per share amounts)

1.       Basis of Presentation

         In the opinion of management, the accompanying unaudited condensed
         consolidated financial statements contain all adjustments consisting of
         normal recurring adjustments necessary to present fairly the
         consolidated financial position of TB Wood's Corporation and
         Subsidiaries (the "Company") and the results of their operations and
         cash flows for the periods presented. Certain information and footnote
         disclosures normally included in the financial statements prepared in
         accordance with accounting principles generally accepted in the United
         States have been condensed or omitted. Certain prior period amounts
         have been reclassified to conform to the current period presentation.

         These financial statements should be read together with the audited
         financial statements and notes in the Company's 2004 Annual Report on
         Form 10-K filed with the Securities and Exchange Commission. Operating
         results for the interim periods presented are not necessarily
         indicative of the results that may be expected for the full fiscal
         year.

         Effective January 1, 2005 the Company adopted a calendar year as the
         annual period for reporting its financial results. Interim periods
         consist of four quarters of 13 weeks each, except for the fourth
         quarter that ends on December 31. Previously, the Company reported on a
         52/53 week fiscal year ending on the Friday nearest December 31. Fiscal
         2004 was a 52-week year that ended on December 31, 2004, and this
         change is not expected to have any material impact on comparability
         between fiscal reporting periods.

2.       Inventories and Cost of Goods Sold

         The Company uses the last-in, first-out ("LIFO") method for a majority
         of inventories located in the United States, which represents
         approximately 70% and 74% of inventories at September 30, 2005 and
         December 31, 2004 respectively. Inventories for foreign operations are
         stated at the lower of cost or market using the first-in, first-out
         ("FIFO") method. An actual valuation of inventory under the LIFO method
         can only be made at the end of each year based upon the inventory
         levels and costs at that time. Accordingly, interim LIFO inventory
         determinations must necessarily be based on management's estimates of
         expected year-end inventory levels and costs. Because these are subject
         to many forces beyond management's control, interim results are subject
         to final year-end LIFO inventory valuation adjustments. The major
         classes of inventories consisted of the following:
<TABLE>
<CAPTION>
                                                   September 30,         December 31,
                                                       2005                  2004
                                                ---------------------------------------
            <S>                                        <C>                    <C>
          Finished goods                             $10,956                $14,296
          Work in process                              3,520                  3,714
          Raw materials                                7,327                  8,490
          LIFO reserve                                (6,189)                (6,082)
                                                ---------------------------------------
          Inventory value at LIFO                    $15,614                $20,418
                                                =======================================
</TABLE>

                                       6
<PAGE>

         During the third quarter of 2005, the LIFO reserve was increased by
         $54, while in the third quarter of 2004 the LIFO reserve decreased by
         $209. For the first nine months of 2005, the LIFO reserve was increased
         by $107, while during the similar period 2004 it was decreased by $172.
         Had the Company utilized the FIFO method of accounting for all of its
         inventories, costs of goods sold would have been lower in 2005, and
         higher in 2004, by the respective amounts of the aforementioned changes
         in LIFO reserve.

         Shipping and handling costs incurred by the Company to deliver
         manufactured goods to its customers are not included in costs of goods
         sold but are presented as an element of selling, general and
         administrative expense. The Company incurred $1,526 and $1,685 of
         shipping and handling costs in the third quarters ended September 30,
         2005 and October 1, 2004, respectively. The corresponding year to date
         amounts were $4,756 and $4,980, respectively.

3.       Shareholders' Equity

         On February 11, 2005, the Company granted options for the purchase of
         146,500 shares of the common stock to employees and directors at
         exercise prices equal to or in excess of market price on the date of
         grant. These options vest over three years following the grant date and
         expire on February 11, 2015. On July 26, 2005, the Company granted
         options for the purchase of 37,500 shares of the common stock to an
         employee at exercise prices equal to or in excess of the market price
         on the date of grant. These options vest over three years following the
         grant date and expire on July 26, 2015. The Company follows Financial
         Accounting Standards Board (FASB) Statement of Financial Accounting
         Standards (SFAS) No. 123, as amended by SFAS No. 148, to account for
         stock based compensation cost using the fair value method. Stock based
         compensation cost, recorded as an after tax cost, was $34 and $31 for
         the third quarter of 2005 and 2004 respectively, and $103 and $84 for
         the first nine months of 2005 and 2004, respectively.

         During the first nine months of 2005 the Company issued 23,136 treasury
         shares to participants in Company sponsored employee stock purchase and
         401(k) retirement plans

4.       Earnings Per Share

         Basic earnings per share is computed by dividing net income (loss) by
         the weighted average shares outstanding. Diluted earnings per share is
         computed by dividing net income (loss) by the weighted average shares
         outstanding and common equivalent shares if dilutive. The computation
         of weighted average shares outstanding is as follows:

<TABLE>
<CAPTION>
                                                                     Third quarter ended               Nine months ended
                                                                September 30,      October 1,     September 30,     October 1,
                                                                     2005             2004             2005            2004
                                                               ----------------------------------------------------------------
                 <S>                                                  <C>               <C>             <C>               <C>
          Basic weighted average number of common shares
              outstanding                                            5,189             5,166           5,185             5,166
          Shares issuable upon assumed exercise of
              outstanding stock options                                 --                --              --                --
                                                               ----------------------------------------------------------------
          Diluted weighted average number of common shares
              outstanding                                            5,189             5,166           5,185             5,166
                                                               ================================================================
</TABLE>

                                       7
<PAGE>
         Total outstanding options to purchase 665,451 and 770,001 shares of
         common stock as of September 30, 2005 and October 1, 2004,
         respectively, are not included in the above calculation as their effect
         would be anti-dilutive.

5.       Other Comprehensive Income

         Total comprehensive income (loss) was as follows:
<TABLE>
<CAPTION>
                                                                 Third quarter ended                 Nine months ended
                                                            September 30,      October 1,      September 30,      October 1,
                                                                 2005             2004              2005             2004
                                                           --------------------------------------------------------------------
            <S>                                                    <C>               <C>              <C>                <C>
          Net income                                             $ 565           $  (1,346)        $ 1,434           $ (1,117)
          Other comprehensive income (loss):
            Foreign currency translation adjustments               187                 180            (153)               138
                                                           --------------------------------------------------------------------
          Total comprehensive income                             $ 752           $  (1,166)        $ 1,281           $   (979)
                                                           ====================================================================
</TABLE>
         Accumulated other comprehensive income, net of income tax, is comprised
         of aggregate currency translation adjustments of $5 and $158 as of
         September 30, 2005 and December 31, 2004, respectively.

6.       Postretirement Benefits

         In the second quarter of 2005, the Company announced to employees that
         it was discontinuing its sponsorship of an unfunded defined benefit
         post employment group term life insurance plan that provided life
         insurance coverage for active employees and retirees. As a result the
         Company recognized a non-recurring gain of $270 in the second quarter
         of 2005 from the termination of this benefit program, which was
         recorded as a reduction of selling, general and administrative expense.

         In December 2004, the Company announced to retirees participating in
         the unfunded group medical insurance plan that the Company would only
         provide coverage through age 65, and that the retirees' share of the
         cost would effectively be 100% of the Company's cost, together with an
         administrative fee, thereby effectively terminating this plan.
         Accordingly, amounts associated with post-employment healthcare benefit
         obligations are not material in 2005. In 2004, amortization of prior
         service credits of $212 and $622 for the third quarter and nine months
         ended October 1, 2004, respectively, were recorded as a reduction of
         selling, general and administrative expenses.



                                       8

<PAGE>
7.       Business Segment Information

         The Company's reportable segments are business units that manufacture
         and market separate and distinct products and are, in part, managed
         separately because each business requires different processes,
         technologies and marketing strategies.
<TABLE>
<CAPTION>
                                                                      Third quarter ended              Nine months ended
                                                                ---------------------------------------------------------------
                                                                 September 30,     October 1,    September 30,     October 1,
                                                                      2005            2004            2005            2004
                                                                ---------------------------------------------------------------
             <S>                                                       <C>              <C>             <C>            <C>
          Sales:
             Mechanical Segment                                       $18,224         $15,619         $54,660         $48,144
             Electronics Segment                                        9,449           9,660          28,568          28,675
                                                                ---------------------------------------------------------------
                                                                      $27,673         $25,279         $83,228         $76,819
                                                                ---------------------------------------------------------------

          Operating income (loss):
             Mechanical Segment                                          $907         $  (375)        $ 3,155         $ 1,663
             Electronics Segment                                          448            (788)            895          (1,454)
                                                                ---------------------------------------------------------------
                                                                      $ 1,355         $(1,163)        $ 4,050         $   209
                                                                ---------------------------------------------------------------

          Depreciation and amortization:
             Mechanical Segment                                       $   636         $   725         $ 1,973         $ 2,171
             Electronics Segment                                          280             329             872           1,033
             Corporate                                                    237             273             779             803
                                                                ---------------------------------------------------------------
                                                                      $ 1,153         $ 1,327         $ 3,624         $ 4,007
                                                                ---------------------------------------------------------------

          Expenditures for long-lived assets:
             Mechanical Segment                                       $   299         $   469         $   640         $ 1,506
             Electronics Segment                                          481              55           1,201             173
             Corporate                                                    324              19             612              71
                                                                ---------------------------------------------------------------
                                                                      $ 1,104         $   543         $ 2,453         $ 1,750
                                                                ---------------------------------------------------------------

          Assets:                                                September 30,    December 31,
                                                                      2005            2004
                                                                -------------------------------

             Mechanical Segment                                       $40,463         $43,541
             Electronics Segment                                       21,244          22,136
             Corporate                                                  4,346           3,693
                                                                -------------------------------
                                                                      $66,053         $69,370
                                                                -------------------------------
</TABLE>

         The Company measures its business segments at the operating income
         level, and therefore does not allocate interest and other finance costs
         to determine pre-tax income on an operating segment basis.

8.       Subsequent Events

         On October 20, 2005, Company accepted for payment 1,500,000 shares of
         its Common Stock, at a price of $7.50 per share, pursuant to its "Dutch
         Auction" self-tender offer. As a result of the completion of the
         self-tender offer, the Company had 3,700,647 shares of common stock
         issued and outstanding. The shares of common stock accepted for
         purchased represent approximately 28.84% of TB Wood's 5,200,647 shares
         of common stock issued and outstanding as of October 20, 2005. In


                                       9
<PAGE>



         anticipation of this transaction, in July 2005 the Company amended its
         senior secured borrowing agreement to extend the term through April
         2009 and permit additional borrowings to fund this purchase. The total
         share purchase price was $11.3 million and was funded through the
         issuance of 12% senior subordinated notes in the amount of $15 million
         and warrants to purchase 174,000 shares of the Company's common stock,
         valued at $0.4 million. The senior subordinated notes contain customary
         financial covenants similar to, but less restrictive than the Company's
         senior secured bank indebtedness.

          The excess proceeds from the sale of the notes and warrants were used
          to repay $1.9 million of term debt under the Company's senior secured
          borrowing agreement, pay $1.0 million of transaction costs related to
          the stock purchase and related financing transaction, with the balance
          providing additional working capital.










                                       10

<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operation

The Company is a worldwide manufacturer of mechanical and electronic products
used in the process of power transmission for industrial and other commercial
applications. The following tables, derived from the Company's condensed
consolidated financial statements, presents selected elements of the Company's
operating results, and the changes thereto, for the third quarter and nine
months year to date of the current and the immediately preceding year. Amounts
presented in Item 2 are in thousands of dollars, unless otherwise indicated.
<TABLE>
<CAPTION>
                                                                                      Third quarter ended
                                                                  -----------------------------------------------------------
                                                                  September 30,     October 1,
                                                                       2005            2004       Dollar Change     % Change
                                                                  -----------------------------------------------------------
            <S>                                                          <C>              <C>              <C>          <C>
          Sales
             Mechanical Segment                                         $18,224         $15,619          $2,605       16.7%
             Electronics Segment                                          9,449           9,660            (211)      (2.2%)
                                                                  -----------------------------------------------
                 Total Sales                                            $27,673         $25,279          $2,394        9.5%
                                                                  -----------------------------------------------

          Cost of Sales
             Mechanical Segment                                         $13,510         $12,176          $1,334       11.0%
             Electronics Segment                                          5,909           7,055          (1,146)     (16.2%)
                                                                  -----------------------------------------------
                 Total Cost of Sales                                    $19,419         $19,231            $188        1.0%
                                                                  -----------------------------------------------

          Gross Profit
             Mechanical Segment                                         $ 4,714         $ 3,443          $1,271       36.9%
             Electronics Segment                                          3,540           2,605             935       35.9%
                                                                  -----------------------------------------------
                 Total Gross Profit                                     $ 8,254         $ 6,048          $2,206       36.5%
                                                                  -----------------------------------------------

          Selling, General and Administrative Expense                   $ 6,899         $ 7,211          $ (312)      (4.3%)
                                                                  -----------------------------------------------

          Sales
             Mechanical Segment                                         65.9%           61.8%
                                                                  -------------------------------
             Electronics Segment                                        34.1%           38.2%
                                                                  -------------------------------
                 Total Sales                                           100.0%          100.0%

          Cost of Sales as a Percentage of Sales
             Mechanical Segment                                         74.1%           78.0%
             Electronics Segment                                        62.5%           73.0%
                 Total Cost of Sales                                    70.2%           76.1%

          Gross Profit as a Percentage of Sales
             Mechanical Segment                                         25.9%           22.0%
             Electronics Segment                                        37.5%           27.0%
                 Total Gross Profit                                     29.8%           23.9%

          SG&A Expenses as a Percentage of Sales                        24.9%           28.5%
</TABLE>


                                       11
<PAGE>
<TABLE>
<CAPTION>
                                                                                      Nine months ended
                                                                  -----------------------------------------------------------
                                                                  September 30,     October 1,
                                                                       2005            2004       Dollar Change     % Change
                                                                  -----------------------------------------------------------
            <S>                                                           <C>             <C>              <C>          <C>
          Sales
             Mechanical Segment                                         $54,660         $48,144          $6,516       13.5%
             Electronics Segment                                         28,568          28,675            (107)      (0.4%)
                                                                  -----------------------------------------------
                 Total Sales                                            $83,228         $76,819          $6,409        8.3%
                                                                  -----------------------------------------------

          Cost of Sales
             Mechanical Segment                                         $40,101         $35,298          $4,803       13.6%
             Electronics Segment                                         18,444          20,011          (1,567)      (7.8%)
                                                                  -----------------------------------------------
                 Total Cost of Sales                                    $58,545         $55,309          $3,236        5.9%
                                                                  -----------------------------------------------

          Gross Profit
             Mechanical Segment                                         $14,559         $12,846          $1,713       13.3%
             Electronics Segment                                         10,124           8,664           1,460       16.9%
                                                                  -----------------------------------------------
                 Total Gross Profit                                     $24,683         $21,510          $3,173       14.8%
                                                                  -----------------------------------------------

          Selling, General and Administrative Expense                   $20,633         $21,301          $ (668)      (3.1%)

          Sales
             Mechanical Segment                                         65.7%           62.7%
             Electronics Segment                                        34.3%           37.3%
                                                                  -------------------------------
                 Total Sales                                           100.0%          100.0%
                                                                  -------------------------------

          Cost of Sales as a Percentage of Sales
             Mechanical Segment                                         73.4%           73.3%
             Electronics Segment                                        64.6%           69.8%
                 Total Cost of Sales                                    70.3%           72.0%

          Gross Profit as a Percentage of Sales
             Mechanical Segment                                         26.6%           26.7%
             Electronics Segment                                        35.4%           30.2%
                 Total Gross Profit                                     29.7%           28.0%

          SG&A Expenses as a Percentage of Sales                        24.8%           27.7%
</TABLE>

Third quarter 2005 revenues grew $2.4 million, or 9.5% over the similar quarter
in 2004. Most of this gain came from sales to the Company's largest distributor,
where second quarter sales increased $1.9 million or 52.3% over same period in
2004. The Company believes that inventory levels at this customer have been
reduced to near targeted levels, and that this improvement should continue
through the remainder of the year if the overall economy sustains its current
pace. 8 points of the Company's 9.5% sales gain was driven by volume increase,
with the remaining gain coming equally from favorable pricing and currency
effect. Mechanical Business sales increased $2.6 million, largely driven by a
$2.1 million increase in volumes sold, and the remaining gain coming equally
from favorable pricing and currency effect. Electronic Business sales decreased
by $0.2 million due to lower volumes sold.


                                       12
<PAGE>


Year to date revenues increased $6.4 million or 8.3%. Sales volume increased by
$3.6 million, pricing and product mix accounted for $1.8 million, and currency
gain contributed $1.0 million. As in the third quarter, this gain was largely
due to Mechanical Business whose sales increased 13.5% or $6.5 million. $4.0
million of this gain was attributable to volume and $1.9 million to pricing,
with favorable currency contributing the remaining $0.6 million. Electronic
Business revenue decreased $0.1 million, with a 1.7% drop in volume being
compensated by favorable currency effect.

Third quarter 2005 total Company gross profit rose by $2.2 million to $8.3
million. Stated as a percent of net sales, the gross profit margin rose from
23.9% to 29.8%. Mechanical Business gross profit was $4.7 million or 57.1% of
the total margin for the Company, and compared to third quarter 2004, this
segment's gross profit rose by $1.3 million. $0.4 million of this gain came as a
result of higher prices and favorable currency, with the balance of $0.9 million
coming from higher volumes sold. Lower costs of current production achieved as a
result of manufacturing efficiencies and higher 2004 costs associated with
closing of Company's Trenton, Tennessee facility, were partially offset by
depletion and sale of higher cost older inventory. Current production cost gains
were also achieved due to lower metal costs which have continued to trend
downward in the quarter from high levels at December 2004. As the Mechanical
Business sales revenue rose at a faster rate than the cost of sales compared to
2004, gross profit margin as a percent of net sales rose from 22.0% to 25.9%.
Electronics Business gross profit was $3.5 million or 42.9% of the total margin
for the Company. Compared to third quarter 2004, the gross profit for the
Electronic Business was $0.9 million higher even though sales fell by $0.2
million. Most of this gross profit gain came as a result of manufacturing
efficiencies, and other productivity gains due to a reorganization carried out
in the third quarter of 2004.

On a year-to-date basis, the Company's gross profit increased by $3.2 million to
$24.7 million, and gross margin expressed as a percent of net sales increased
from 28.0% to 29.7%. Mechanical Business contributed $1.7 million or 54.0% of
this gross profit increase, with higher pricing and currency gains contributing
$2.0 million. On the other hand lower costs of current production achieved due
to more efficient manufacturing and higher 2004 costs related to closing of
Trenton, Tennessee facility, were overshadowed by depletion of higher cost
inventory, resulting in a net gross margin loss of $0.3 million due to sales of
higher volume. Unusually high inventories were built in the third quarter of
2004 in anticipation of closing of the Trenton plant. Electronic Business
contributed $1.5 million or 46.0% of the Company's gross profit increase. $0.2
million of this gain came from favorable currency effect, with most of the
remaining gain coming from manufacturing improvements and the favorable effects
of second half 2004 workforce reductions being realized in 2005.

For the third quarter 2005, selling, general and administrative expenses
declined by $0.3 million. This, combined with the rise in sales, resulted in the
fall of these expenses as a percent of net sales from 28.5% to 24.9%. Mechanical
Business cost went down $0.1 million, mainly due to reduction in US
administrative costs. Electronic Business expenses declined $0.2 million due to
a reorganization that took place in the latter half of 2004.

Year-to-date selling, general and administrative costs also declined $0.7
million, with a reduction as a percent of net sales from 27.7% to 24.8%.
Mechanical Business costs increased $0.2 million largely due to higher employee
bonus accruals and lower gains associated with post-employment healthcare plans.
Conversely, similar increases in Electronics Business were overshadowed by
reductions in its US and European costs, resulting in $0.9 million reduction in
selling, general and administrative costs.

Interest expense and other finance charges in the third quarter were flat at
$0.5 million compared to the prior year. For the year to date, interest expense
and other finance charges were $0.4 million higher at $1.6 million. Interest
expense increase was caused by higher interest rates incurred by the Company


                                       13
<PAGE>


under the terms of its new senior secured borrowing facility, including
amortization of the related costs, together with increasing interest rates
experienced in capital markets.

The provision for income taxes increased by $0.6 million in the third quarter of
2005 compared to the same period in 2004. For the nine months year to date, this
increase was $0.9 million year over year. These increases are in line with the
improvements in the Company's overall profitability, and also reflect the
Company's improving tax position attributable to shifting more production to
Mexico.

As a result of the above, net income in the third quarter of 2005 was $0.6
million compared to a $1.4 million net loss in the same quarter in the preceding
year. Net income per share in the second quarter of 2005 was $0.11 per share,
compared to a net loss per share of $0.26 in 2004. Year to date 2005 net income
was $1.4 million, or $0.28 per share compared to net loss of $1.1 million, or
$0.22 net loss per share for the corresponding period in 2004.

Liquidity and Capital Resources:

On January 7, 2005, the Company entered into a Loan and Security Agreement (the
"Senior Credit Agreement") that provides for up to an $18.3 million revolving
line of credit and two term loans (Term Loan A and Term Loan B) totaling $13.0
million. At September 30, 2005 current and long-term debt of the Company totaled
$19.7 million, compared to $24.3 million as on December 31, 2004. Borrowings at
September 30, 2005 include $2.7 million of revolving credit and $11.0 million of
term debt under the terms of the Senior Credit Agreement. In addition, the
Company owes $5.3 million of revenue bonds and approximately $0.7 million of
other revolving and term borrowings. In October 2005, the outstanding Term Loan
B of $1.9 million was repaid in full with a portion of the proceeds obtained
from the issuance of senior subordinated notes.

The proceeds from the Senior Credit Agreement were used to retire amounts
outstanding under the Company's previous credit agreement, as well as fund
existing letters of credit that support $5.3 million of industrial revenue bonds
and certain obligations under various self-insured workers compensation
insurance policies. The term of the Senior Credit Agreement, as amended extends
to April 2009, and the loans are secured by substantially all of the Company's
domestic assets and pledges of 65% of the outstanding stock of the Company's
Canadian, German and Mexican subsidiaries. The revolving credit portion of the
Senior Credit Agreement is governed by a borrowing base formula, and the
remaining Term Loan is repayable in monthly principal installments totaling
$0.08 million. All borrowings under the Senior Credit Agreement bear variable
interest of a margin plus LIBOR or US Prime Rate. The effective interest rate
paid by the Company for these borrowings was 7.5% for the quarter ended
September 30, 2005.

The amounts owed under the revenue bonds, together with $1.6 million of
obligations for workers compensation coverage, are secured by letters of credit
backed by the Senior Credit Agreement. The Company's unused borrowing capacity
under the terms of the Facility was $6.2 million as at September 30, 2005. Had
the Senior Credit Agreement been in place at December 31, 2004, the remaining
borrowing capacity available to the Company would have been approximately $2.4
million, after taking into consideration the costs of the transaction.

The Senior Credit Agreement contains restrictive financial covenants that
require the Company to comply with certain financial tests including, among
other things, maintaining minimum tangible net worth, having a minimum earnings
before interest, taxes and depreciation and amortization ("EBITDA"), and meeting
certain specified leverage and operating ratios, all as defined in the Senior
Credit Agreement. The Senior Credit Agreement also contains other restrictive


                                       14
<PAGE>


covenants that restrict outside investments, capital expenditures, and
dividends. As a result of the amendment to the Senior Credit Agreement, the
Company will be required to attain average minimum EBITDA level, as defined, of
$3.0 million per quarter prior to being permitted to declare any dividend.

On October 20, 2005, Company accepted for payment 1,500,000 shares of its Common
Stock, at a price of $7.50 per share, pursuant to its "Dutch Auction"
self-tender offer. As a result of the completion of the self-tender offer, the
Company had 3,700,647 shares of common stock issued and outstanding. The shares
of common stock accepted for purchased represent approximately 28.84% of TB
Wood's 5,200,647 shares of common stock issued and outstanding as of October 20,
2005. The total share purchase price was $11.3 million and was funded through
the issuance of 12% senior subordinated notes in the amount of $15 million and
warrants to purchase 174,000 shares of the Company's common stock, valued at
$0.4 million. The senior subordinated notes contain customary financial
covenants similar to, but less restrictive than the Company's senior secured
bank indebtedness. The excess proceeds from the sale of the notes and warrants
were used to repay $1.9 million of term debt under the Company's senior secured
borrowing agreement, pay $1.0 million of transaction costs related to the stock
purchase and related financing transaction, with the balance providing
additional working capital.

The Company used $0.4 million of its cash balances during 2005 third quarter
versus an unchanged cash balance in the same quarter last year. Operating
activities generated $4.8 million cash during this quarter compared to $1.8
million for the same period in 2004. This $3.0 million increase largely resulted
from $1.9 million higher net income, and $1.1 million reduced investment in
inventories and receivables, net of trade credit. The $4.8 million of cash flow
from operating activities together with $0.4 million of existing cash balance
was used for $1.5 million of investing activities and to pay down $3.8 million
of debt.

Year to date, the Company generated $1.1 million cash versus zero cash
generation in the same period of 2004. Operating activities provided $8.7
million versus $1.1 million for the corresponding period of 2004. Net income of
$1.4 million and inventory reduction of $4.8 million were the principal drivers
for the 2005 year to date increase. During the first three quarters of 2004, the
Company invested in inventory to create safety stock as it transferred
production from the idled Trenton facility to other production facilities. Since
that time, considerable reductions in inventory quantities have occurred in part
to keep pace with demand, and through the implementation of lean manufacturing
processes. Capital expenditures and other investments of $2.8 million in the
first nine months of 2005 were $0.7 million higher than prior year levels.
Financing activities used $4.6 million of the Company's positive cash flow,
largely to fund $0.2 million monthly principal repayments associated with the
new Term Loans, and to repay revolving credit facilities.

The Company did not pay any dividends either in the third quarter 2005 or in the
first nine months of 2005 compared to payments of $0.5 million and $1.4 million
during the corresponding periods of 2004 respectively. As stated above, the
Company's ongoing ability to declare and pay dividends is dependent upon its
ability to continue to operate at profitable levels and demonstrate compliance
with the terms of its senior secured credit facility.

Based upon our current level of operations, the Company believes that the
combination of cash generated by operations and available borrowing capacity
under its borrowing agreements described above, is adequate to finance the
Company's operations for the foreseeable future.

Accounting Policies:

Management's discussion and analysis of the Company's financial position and
results of operations are based upon the Company's Condensed Consolidated
Financial Statements included as part of this document. The preparation of these
financial statements requires management to make estimates and judgments that



                                       15
<PAGE>

affect the reported amounts of assets, liabilities, revenues and expenses and
related disclosures of contingent assets and liabilities. On an ongoing basis,
the Company evaluates these estimates, including those related to bad debts,
inventories, intangible assets, post-retirement benefits, income taxes, and
contingencies and litigation. The Company bases these estimates on historical
experiences and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

The Company believes the following critical accounting policies affect
management's more significant judgments and estimates used in the preparation of
its Consolidated Financial Statements. For a detailed discussion on the
application of these and other accounting policies see Note 2 in the December
31, 2004 Consolidated Financial Statements included in the Company's 2004 annual
report on Form 10-K. Certain of our accounting policies require the application
of significant judgment by management in selecting the appropriate assumptions
for calculating financial estimates. By their nature, these judgments are
subject to an inherent degree of uncertainty and actual results could differ
from these estimates. These judgments are based on our historical experience,
terms of existing contracts, current economic trends in the industry,
information provided by our customers, and information available from outside
sources, as appropriate. Our critical accounting policies include:

Product Warranty: In the ordinary course of business, the Company warrants its
products against defect in design, materials, and workmanship over various time
periods. Warranty reserve and allowance for product returns is established based
upon management's best estimates of amounts necessary to settle future and
existing claims on products sold as of the balance sheet date. The warranty
reserve and allowance for product returns is not significant to the financial
position of the Company for all periods presented.

Inventory: Inventories are valued at the lower of cost or market. Cost is
determined on the last-in first-out basis for a majority of US inventories and
the first-in first-out method for all remaining inventories. The Company has
recorded a reserve for obsolescence or unmarketable inventory equal to the
difference between the cost of inventory and the estimated market value based
upon assumptions about future demand and market conditions. If actual market
conditions are less favorable than those projected by management, additional
inventory write-downs may be required.

Impairment of Goodwill and Long Lived Assets: The Company periodically evaluates
the realizable value of long-lived assets including property, plant and
equipment, relying on a number of factors including operating results, budgets,
economic projections and anticipated future cash flows. The Company's past
business acquisitions resulted in the recognition of goodwill, which may result
in future impairment expenses. The Company's other intangible assets which
primarily consist of product application software, affects the amount of future
period amortization expense. The determination of the value of such intangible
assets requires management to make estimates and assumptions that affect the
Company's Consolidated Financial Statements.

Revenue Recognition: The Company's revenue recognition policies are in
compliance with Staff Accounting Bulletin No. 104 "Revenue Recognition in
Financial Statements" issued by the Securities and Exchange Commission. Revenue
is recognized at the time product is shipped and title passes pursuant to the
terms of the agreement with the customer, the amount due from the customer is
fixed and collectibility of the related receivable is reasonably assured. The
Company establishes allowances to cover anticipated doubtful accounts, sales
discounts, product warranty, and returns based upon historical experience.
Shipping and handling costs charged to customers are included as a component of
net sales.


                                       16
<PAGE>


Income Taxes: Under the requirements of SFAS No. 109, "Accounting for Income
Taxes," we record deferred tax assets and liabilities for the future tax
consequences attributable to differences between financial statements carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The Company has not
recognized any income tax benefit related to the income tax losses incurred by
its Mexican subsidiary currently because there is uncertainty as to whether that
subsidiary will realize those benefits in the future. As the Mexican subsidiary
realizes these income tax benefits in the future, a reduction of income taxes
will be recognized. Management judgment is required in determining the Company's
provision for income taxes, including recognition of amounts related to changes
in deferred tax assets and liabilities, which, if actual experience varies,
could result in material adjustments to deferred tax assets and liabilities.

Recent Accounting Pronouncements

In December 2004, the FASB issued Statement of Accounting Standards No. 123R
(revised 2004) "Share-Based Payment" a revision of FASB Statement No. 123
"Accounting for Stock Based Compensation." The effective date of this revised
accounting standard is for the first annual reporting period that begins after
June 15, 2005. In fiscal 2003 the Company adopted FASB Statement No. 123 to
account for stock-based compensation cost using the fair value method and
therefore believes the only effects of the revised Statement No. 123 upon the
Company will be expanded disclosure related to its stock based compensation
plan. The Company intends to adopt the revised Statement No. 123 effective for
its 2006 financial statements.

In November 2004, the FASB issued Statement of Accounting Standards No. 151
"Inventory Costs, an amendment of Accounting Research Bulletin No. 43, Chapter
4" to clarify the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage). This Statement is
effective for inventory cost incurred during fiscal years beginning after June
15, 2005 with earlier application permitted for costs incurred during fiscal
years beginning after the date of the issuance of this Statement. The Statement
introduces the concept of "normal capacity" and requires the allocation of fixed
production overheads to inventory based upon the normal capacity of the
production facilities. Unallocated overheads must be recognized as an expense in
the period in which they are incurred. The Company is not yet able to determine
the effect of this Statement upon its consolidated financial statements because
the impact is dependent upon production levels attained during a given financial
reporting period compared to the normal production levels that could have been
attained if there was sufficient customer demand. The Company intends to adopt
this statement in fiscal 2006.

Safe Harbor Statement

Certain information included or incorporated by reference in this document may
be deemed to be "forward looking statements" within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. All statements other
than statements of historical facts, that address activities, events or
developments that the Company intends, expects, projects, believes or
anticipates will or may occur in the future are forward looking statements. Such
statements are characterized by terminology such as "believe," "anticipate,"
"should," "intend," "plan," "will," "expects," "estimates," "projects,"
"positioned," "strategy," and similar expressions. These statements are based on
assumptions and assessments made by the Company's management in light of its
experience and its perception of historical trends, current conditions, expected
future developments and other factors it believes to be appropriate. These



                                       17
<PAGE>


forward looking statements are subject to a number of risks and uncertainties,
including but not limited to continuation of the Company's longstanding
relationships with major customers, the Company's ability to integrate acquired
businesses into its operations and realize planned synergies, the extent to
which acquired businesses are able to meet the Company's expectations and
operate profitably, the ability to obtain third party financing, changes in
regulations that could affect demand for products and unanticipated developments
that could occur with respect to contingencies such as environmental matters and
litigation. In addition, the Company is subject to risks and uncertainties that
affect the manufacturing sector generally, including, but not limited to,
economic, competitive, governmental, and technological factors affecting the
Company's operations, markets, products, services and prices. Any such forward
looking statements are not guarantees of future performances and actual results,
developments and business decisions may differ from those envisaged by such
forward looking statements. The Company disclaims any duty to update any
forward-looking statements, all of which are expressly qualified by the
foregoing.

Item 3 Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risks since the 2004 Annual Report
to Shareholders.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures: As of September 30, 2005,
the Company carried out an evaluation, under the supervision and with the
participation of the Company's Principal Executive Officer and Principal
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. "Disclosure controls and
procedures" are defined in Exchange Act Rule 13a-15. Based upon this evaluation,
our Principal Executive Officer and Principal Financial Officer concluded that
the Company's disclosure controls and procedures are effective in timely
alerting them to material information required to be disclosed in the Company's
periodic reports filed with the SEC. It should be noted that the design of any
system of controls is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in the achieving the stated goals under all potential future conditions,
regardless of how remote.

(b) Changes in internal controls: There were no significant changes in the
Company's internal control over financial reporting that occurred during the
period covered by this report that have materially affected or are reasonably
likely to materially affect, the Company's internal control over financial
reporting subsequent to the date of their last evaluation.


PART II - OTHER INFORMATION
---------------------------

Item 1. Legal Proceedings

        None

Item 2. Changes in Securities

        None

Item 3. Defaults Upon Senior Securities

        None


                                       18
<PAGE>


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

        None

Item 5. Other Information

        None

Item 6. Exhibits

        31.1  Certification of Principal Executive Officer required by 13a-14(a)

        31.2  Certification of Principal Financial Officer required by 13a-14(a)

        32    Section 1350 Certification of Principal Executive Officer and
              Principal Financial Officer*

*  This certification will not be deemed "filed" for purposes of Section 18 of
   the Securities Exchange Act of 1934 (15 U.S.C. 78r), or otherwise subject to
   the liability of that section. Such certification will not be deemed to be
   incorporated by reference into any filing under the Securities Act or
   Securities Exchange Act, except to the extent that the Company specifically
   incorporates it by reference.



                                       19
<PAGE>


Signatures


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 Borough of
Chambersburg and Commonwealth of Pennsylvania.


Date November 8, 2005           TB WOOD'S CORPORATION

                                By: /s/Joseph C. Horvath
                                    ------------------------------------------
                                    JOSEPH C. HORVATH
                                    Vice-President and Chief Financial Officer
                                    (Principal Financial Officer and
                                    Principal Accounting Officer)


                                       20