UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  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, 1997

                                OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
SECURITIES EXCHANGE ACT OF 1934

 For the transition period from  ___________  to  ___________
                                
                  Commission file number 1-8782

                       GLEASON CORPORATION
   (Exact name of registrant as specified in its charter)

              DELAWARE                        16-1224655
   (State or other jurisdiction of         (I.R.S. Employer
   incorporation or organization)          Identification No.)

       1000 University Avenue, Rochester, New York  14692
   (Address of principal executive offices)       (Zip Code)


Registrant's telephone number, including area code: (716) 473-1000

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 ( ).

The number of shares outstanding of the registrant's Common
stock, par value $1 per share, at September 30, 1997 was
9,964,912 shares.

<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
  Item 1. Financial Statements
<TABLE>  
                  GLEASON CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)
<CAPTION>
                                                    (Dollars in thousands)
                                                   SEPTEMBER 30  DECEMBER 31
Assets                                                 1997          1996
<S>                                                <C>           <C> 
Current assets
   Cash and equivalents                            $   12,109    $    7,199
   Trade accounts receivable                           90,888        65,583
   Inventories                                         75,350        27,986
   Deferred tax asset                                   6,894         6,894
   Other current assets                                 6,690         4,038
     Total current assets                             191,931       111,700

Property, plant and equipment, at cost                235,667       170,084
   Less accumulated depreciation                      113,822       108,693
                                                      121,845        61,391

Deferred tax asset                                     11,713        10,013
Goodwill                                               17,804            --
Other assets                                           10,274         7,570

Total assets                                       $  353,567    $  190,674

Liabilities and Stockholders' Equity

Current liabilities
   Short-term borrowings                           $    7,337    $      329
   Current portion of long-term debt                    1,513             6
   Trade accounts payable                              29,392        16,972
   Income taxes                                        11,242        10,224
   Other current liabilities                           69,845        30,335
      Total current liabilities                       119,329        57,866

Long-term debt                                         68,292         4,506
Pension plans and other retiree benefits               59,998        38,220
Other liabilities                                      10,614         5,218

   Total liabilities                                  258,233       105,810

Stockholders' equity
   Common stock                                        11,594        11,594
   Additional paid-in capital                           5,438         5,731
   Retained earnings                                  100,091        86,187
   Cumulative foreign currency translation 
      adjustment                                       (4,555)       (2,149)
   Minimum pension liability adjustment                  (461)         (461)
                                                      112,107       100,902
   Less treasury stock, at cost                        16,773        16,038

   Total stockholders' equity                          95,334        84,864

Total liabilities and stockholders' equity         $  353,567    $  190,674

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE> 
<PAGE>
   
<TABLE>      
                    GLEASON CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)
<CAPTION> 
                                                (Dollars in thousands, except
                                                       per share amounts)
                                                      THREE MONTHS ENDED
                                                         SEPTEMBER 30
                                                        1997          1996
<S>                                                <C>           <C>
Net sales                                          $   89,713    $   53,467

Costs and expenses
  Cost of products sold                                63,084        35,722
  Selling, general and
    administrative expenses                            16,159         9,970
  Research and development expenses                     1,994         1,832
  Interest expense--net                                   403           133
  Other (income) expense--net                             146          (234)

Income before income taxes                              7,927         6,044

Provision for income taxes                              2,932         2,279

Net income                                         $    4,995    $    3,765


Primary earnings per common share                  $      .48    $      .35

Fully diluted earnings per common share            $      .48    $      .35

Weighted average number of common shares 
  outstanding:
  Primary                                          10,388,997    10,723,136
  Fully diluted                                    10,398,481    10,745,104

Cash dividends declared per common share           $    .0625    $    .0625

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                    GLEASON CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                               (Unaudited)
<CAPTION>
                                                (Dollars in thousands, except
                                                      per share amounts)
                                                       NINE  MONTHS ENDED
                                                          SEPTEMBER 30
                                                        1997          1996
<S>                                                <C>           <C>
Net sales                                          $  212,432    $  178,134

Costs and expenses
  Cost of products sold                               146,783       120,581
  Selling, general and
    administrative expenses                            35,781        31,546
  Research and development expenses                     5,628         5,618
  Interest expense--net                                   282           660
  Other (income)--net                                    (679)         (851)

Income before income taxes                             24,637        20,580

Provision for income taxes                              8,871         7,477

Net income                                         $   15,766    $   13,103


Primary earnings per common share                  $     1.53    $     1.22

Fully diluted earnings per common share            $     1.52    $     1.22

Weighted average number of common shares 
  outstanding:
  Primary                                          10,326,069    10,731,260
  Fully diluted                                    10,394,860    10,746,766

Cash dividends declared per common share           $    .1875    $    .1875

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
 
                  GLEASON CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (Unaudited)
<CAPTION>        
                                                       (Dollars in thousands)
                                                          NINE MONTHS ENDED
                                                             SEPTEMBER 30
                                                          1997          1996
<S>                                                  <C>           <C> 
Cash flows from operating activities:
  Net income                                         $   15,766    $   13,103 
  Adjustments to reconcile net income
    to net cash provided by operating activities:
     Depreciation and amortization                        9,527         8,296
     (Gain) on disposals of property, plant
       and equipment                                       (432)           (2)
    Provision for deferred income taxes                     312         1,150
    Changes in operating assets and liabilities:
      Decrease in accounts receivable                     5,417        13,346
      (Increase) in inventories                          (4,164)       (5,459)
      (Increase) decrease in other current assets          (247)          533
      Increase (decrease) in trade accounts payable       1,400        (1,883)
      Increase in all other current operating 
        liabilities                                       5,746         2,323
      Other, net                                           (679)         (824)

  Net cash provided by operating activities              32,646        30,583

Cash flows from investing activities:
  Capital expenditures                                   (8,196)       (5,123)
  Investment in subsidiary, net of cash acquired        (29,757)           --
  Proceeds from asset disposals                           1,572            41
  Proceeds from collection of notes receivable               54            54

  Net cash (used in) investing activities               (36,327)       (5,028)

Cash flows from financing activities:
  Net proceeds of short-term borrowings                     695           489
  Net borrowings (repayments) under revolving
    and term loan credit agreements                      62,513       (23,746)
  Proceeds from long-term debt                              217           106
  Repayment of long-term debt                           (51,503)         (130)
  Purchase of treasury stock                             (1,360)         (450)
  Net stock issues                                          332            --
  Dividends paid                                         (1,862)       (1,945)

  Net cash provided by (used in) financing 
    activities                                            9,032       (25,676)

Effect of exchange rate changes on cash
  and equivalents                                          (441)          (75)
Increase (decrease) in cash and equivalents               4,910          (196)
Cash and equivalents, beginning                           7,199         9,926
Cash and equivalents, ending                         $   12,109    $    9,730

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<PAGE>
     
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        SEPTEMBER 30, 1997
                           (Unaudited)
                                

1.   In the opinion of management, the accompanying unaudited
     consolidated financial statements contain all adjustments
     necessary to present fairly (a) the results of operations for the
     three and nine-month periods ended September 30, 1997 and 1996,
     (b) the financial position at September 30, 1997 and December 31,
     1996, and (c) the cash flows for the nine-month periods ended
     September 30, 1997 and 1996, of Gleason Corporation and
     subsidiaries.

2.   The results of operations for the three and nine-month
     periods ended September 30, 1997 are not necessarily indicative
     of the results that may be achieved for the full year.

3.   All significant intercompany transactions have been
     eliminated in the consolidation.

4.   On July 31, 1997, the Company purchased all of the general
     and limited partnership interests of Hermann Pfauter GmbH & Co.,
     a manufacturer of cylindrical gear production equipment, and
     Pfauter-Maag Cutting Tools L.P., a cutting tool manufacturer
     (collectively referred to as "Pfauter").  The acquisition of
     Pfauter positions the Company to be a world leader in gear
     production equipment and related technology by combining
     Pfauter's extensive line of cylindrical gear production machinery
     and cutting tools with the Company's leading position in bevel
     gear production equipment.  In addition, the Pfauter acquisition
     expands the Company's customer base to include a broad range of
     non-automotive customers, from small-gear machine users such as
     power tool and precision instrument manufacturers to producers of
     large gears utilized in off-highway equipment and heavy
     industrial applications.  Pfauter has major operations in Germany,
     Italy and the United States.
     
     The acquisition was completed for a total consideration of
     $91.8 million, including $34.8 million in cash and the
     assumption of $57.0 million in bank debt.  The acquisition
     was financed through a new multi-currency credit agreement
     dated July 31, 1997 providing for term loans, revolving
     credit and standby letters of credit totaling up to $170
     million.
     
     The Company accounted for the acquisition under the purchase
     method.  The aggregate cost of the acquisition, including
     professional fees and other related costs totaling $2.5
     million, was allocated to assets purchased and liabilities
     assumed based upon the fair values at the date of
     acquisition.  The excess of the purchase price over the fair
     values of the net assets acquired was $17.6 million, which
     has been recorded as goodwill, and is being amortized on a
     straight-line basis over 30 years.  The aggregate cost of
     the acquisition was allocated as follows:
     
<PAGE>     
<PAGE>
     
          (In thousands)

          Current assets, excluding cash            $ 77,966
          Property, plant and equipment               63,595
          Other assets                                 3,100
          Goodwill                                    17,630
          Current liabilities, including 
            short-term borrowings                    (75,776)
          Long-term debt                             (29,384)
          Pension and other retiree benefits         (21,218)
          Other liabilities                           (5,034)
          Total acquisition cost, net of cash 
            acquired                                $ 30,879
          
     In the allocation of the acquisition costs, current
     liabilities and other liabilities include $7.0 million and
     $2.0 million, respectively, of costs associated with the
     restructuring of Pfauter's operations. These costs represent
     the Company's estimate of the expenses associated with the
     consolidation of certain sales and manufacturing operations
     and elimination of redundant activities.  The Company
     expects these restructuring activities will take
     approximately two years to complete.  Any adjustments to
     these estimated costs will adjust the goodwill recorded in
     the acquisition.

     Results of operations of Pfauter for the two month period
     following the acquisition date are included in the
     Consolidated Statements of Operations for the three and nine-
     month periods ending September 30, 1997.  The following
     unaudited pro forma information has been prepared assuming
     that the Pfauter acquisition had taken place at the
     beginning of 1996:

<TABLE>
<CAPTION>     
                                                        Pro Forma
                                                    Nine Months Ended
                                                      September 30
     (In thousands, except per share amounts)      1997          1996
                                                      (Unaudited)
     <S>                                        <C>           <C>
     Net sales                                  $298,044      $295,594
     Net income                                   15,113        11,180
       Per common share                             1.46          1.04

</TABLE>
     
     The pro forma financial information is not necessarily
     indicative of the results that would have been obtained if
     the transaction had been effected on the assumed date or the
     results that may be achieved by the Company in the future.
     The pro forma net income for the periods shown does not
     include any adjustments for cost savings expected to be
     realized from the restructuring plans or synergies of the
     combined business.

5.   The components of inventories were as follows:
     (In thousands)                              9/30/97      12/31/96
     Raw materials and
       purchased parts                          $ 13,342      $  5,269
     Work in process                              49,639        18,063
     Finished goods                               12,369         4,654
                                                $ 75,350      $ 27,986
<PAGE>
<PAGE>

6.   Net cash payments for income taxes were $6,664,000 and
     $2,687,000 for the nine months ended September 30, 1997 and 1996,
     respectively.  Interest payments were $444,000 and $994,000 for
     the nine months ended September 30, 1997 and 1996, respectively.

7.   On August 28, 1997 the Company's Board of Directors declared
     a two-for-one (2-for-1) stock split on the Company's common
     stock, including shares held in treasury, effected in the form of
     a 100% common stock distribution payable on September 26, 1997 to
     holders of record on September 12, 1997.  The distribution
     increased the number of shares issued from 5,797,070 to
     11,594,140, which included an increase in treasury stock from
     814,614 to 1,629,228.  As a result of the stock split, $5,797,070
     was transferred from additional paid-in capital to common stock,
     representing the par value of the additional shares issued.
     Common stock and additional paid-in capital as of December 31,
     1996 have been restated to reflect the stock split.  In addition,
     all share and per share data have been restated to reflect the
     stock split.

8.   In February 1997, the Financial Accounting Standards Board
     issued Statement No. 128, Earnings per Share, which is effective
     for both interim and annual financial statements for periods
     ending after December 15, 1997.  At that time, the Company will
     be required to change the method currently being used to compute
     earnings per share and to restate all prior periods.  Under the
     new requirements for calculating primary earnings per share, the
     dilutive effect of stock options will be excluded.  The impact of
     this accounting pronouncement would have resulted in an increase
     in primary earnings per share of $.02 and $.01 for the three-
     month periods ended September 30, 1997 and September 30, 1996,
     respectively, and an increase in primary earnings per share of
     $.06 and $.04 for the nine-month periods ended September 30, 1997
     and September 30, 1996, respectively.  Fully diluted earnings per
     share would have increased by $.01 per share for the nine months
     ended September 30, 1997.  There would have been no impact on
     fully diluted earnings per share for the other periods presented.

9.   Certain reclassifications have been made to the prior
     period's financial statements to conform such financial
     statements to the presentation of the 1997 financial statements.

10.  In June 1997, the Financial Accounting Standards Board
     issued Statement of Financial Accounting Standards No.
     131, "Disclosures about Segments of an Enterprise and Related
     Information" (FAS No. 131).  This statement establishes standards
     for the way that public business enterprises report information
     about operating segments in annual financial statements and
     requires that those enterprises report selected information about
     operating segments in interim financial reports issued to
     shareholders.  It also establishes standards for related
     disclosures about products and services, geographic areas, and
     major customers.  FAS No. 131 is effective for financial
     statements for fiscal years beginning after December 15, 1997.

<PAGE>
<PAGE>
 
     The adoption of FAS No. 131 will have no impact on the Company's
     consolidated results of operations, financial position or cash
     flows, but may impact the disclosure of segment information.

11.  In June 1997, the Financial Accounting Standards Board
     issued Statement of Financial Accounting Standards No. 130,
     "Reporting on Comprehensive Income" (FAS No. 130).  This
     statement establishes standards for reporting and display of
     comprehensive income and its components in a full set of general-
     purpose financial statements.  The purpose of reporting
     comprehensive income is to report a measure of all changes in
     equity of an enterprise that result from recognized transactions
     and other economic events of the period other than transactions
     with owners in their capacity as owners.  FAS No. 130 is
     effective for financial statements for fiscal years beginning
     after December 15, 1997.  The adoption of FAS No. 130 will have
     no impact on the Company's consolidated results of operations,
     financial position or cash flows, but may impact the financial
     statement presentation.

<PAGE>
<PAGE>

               GLEASON CORPORATION AND SUBSIDIARIES

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

The following are management's comments relating to significant
changes in the results of operations for the three and nine-month
periods ended September 30, 1997 and 1996 and in the Company's
financial condition during the nine months ended September 30,
1997.

Results of Operations

The Company had net income for the third quarter ended September
30, 1997 of $5.0 million, or $.48 per share, compared to $3.8
million, or $.35 per share, for the 1996 third quarter.
Operating income (earnings before interest and taxes) for the
third quarter was $8.3 million, an increase of 35% compared to
the 1996 third quarter.  Third quarter results included two
months of activity from the Pfauter operations, which the Company
acquired on July 31, 1997.  The Pfauter operating results and
related effects of the acquisition slightly lowered the Company's
net income for the quarter.

Net income for the nine months ended September 30, 1997 was $15.8
million, or $1.53 per share, compared to $13.1 million, or $1.22
per share, for the 1996 nine-month period.  Operating income for
the 1997 nine-month period was $24.9 million, an increase of 17%
compared to the 1996 period.

New orders totaled $79.7 million for the third quarter compared
to $50.1 million in the 1996 third quarter.  Order levels for the
quarter, excluding Pfauter, increased slightly to $50.7 million
compared to the 1996 quarter.  Orders for the 1997 nine-month
period were $209.6 million compared to $184.6 million in 1996.
Order levels for the three and nine-month periods of 1997,
compared to the prior year periods, were negatively impacted by
foreign exchange translation effects of approximately $2.2
million and $8.0 million, respectively, primarily due to the
stronger U.S. dollar versus the German deutsche mark.

Order levels for machine products, excluding Pfauter, were 12%
higher in the 1997 third quarter compared to the 1996 third
quarter and, for the comparative nine-month periods, were
approximately equal. Excluding Pfauter, orders for cylindrical gear
production machines increased 4% and 43% in the 1997 three and nine-month
periods, respectively, versus the comparable periods in 1996.
Cylindrical gear production machine orders, excluding Pfauter, accounted
for 56% of total machine orders in the 1997 nine-month period versus 39% in
the comparable 1996 period.  Incoming orders for the nine months
of 1997 were higher primarily due to increased orders for PHOENIX
(Registered Trademark) gear hobbing machines and Gleason-Hurth gear 
honing machines.  Order levels for bevel gear production machines 
increased 26% in the third quarter of 1997 compared to 1996, but were 
30% lower in 1997 than for the comparative nine-month period in 1996,
primarily due to lower order levels from U.S. customers.  In the second
quarter of 1996, the Company received large orders totaling $24 million from
two U.S. vehicle and axle manufacturers. The Company expects that 1997
fourth quarter orders for bevel gear production machines will be
higher than in any other quarter of the current year, although orders for
bevel gear production machines are expected to be lower for the 1997
full year than the 1996 full year.

<PAGE>
<PAGE>
Orders for tooling products, including gear cutting tools and
workholding equipment, excluding Pfauter, were lower for both the
three and nine-month periods versus the comparable periods in
1996.  Order levels for these products decreased principally due
to foreign currency translation effects and lower order volumes
for gear cutting tools from Europe and the Asia-Pacific region.

Consolidated backlog was $194.9 million at September 30, 1997
compared to $122.8 million at December 31, 1996 and $131.0
million at September 30, 1996.  The Pfauter operations accounted
for $81.2 million of the September 30, 1997 backlog.

Net sales were $89.7 million and $212.4 million for the three and
nine-month periods ended September 30, 1997, compared to $53.5
million and $178.1 million in the comparable prior year periods.
Net sales, excluding Pfauter, were $67.1 million for the third
quarter, an increase of 25% compared to the 1996 third quarter.
Net sales for the three and nine-month periods of 1997 versus the
comparable periods in 1996 were negatively impacted by foreign
currency translation effects of approximately $2.2 million and
$5.0 million, respectively, due to the stronger U.S. dollar
versus the German deutsche mark.

Net sales of machine products, excluding Pfauter, increased 41%
and 12% for the three and nine-month periods ended September 30,
1997, respectively, compared to the comparable 1996 periods.
Bevel gear production machine sales increased 72% for the 1997
third quarter and 35% for the 1997 nine-month period over the
comparable 1996 periods, primarily due to higher shipments of
PHOENIX gear equipment to customers in the United States.  Bevel
gear production machine sales in the 1997 three and nine-month
periods included shipments associated with the large orders
received in the second quarter of 1996.  Cylindrical gear
production machine sales, excluding Pfauter, were 8% lower for
the 1997 nine-month period, but 15% higher for the 1997 third
quarter versus the comparable 1996 quarter. The decrease in sales
of cylindrical gear production machines in the 1997 nine-month
period was primarily due to lower shipments of Gleason-Hurth gear
shaving machines and foreign currency translation effects,
partially offset by higher shipments of PHOENIX gear hobbing
machines and cylindrical gear grinding machines.  Net sales in
the 1996 nine-month period included a large program for Gleason-
Hurth gear shaving machines associated with an order received in
the 1995 third quarter.

Net sales of tooling products, excluding Pfauter, for the 1997
third quarter approximately equaled the 1996 third quarter level.
Tooling product shipments, excluding Pfauter, for the 1997 nine-
month period were approximately 5% lower than for the comparable
1996 period primarily due to the negative foreign currency
translation effect on sales of Gleason-Hurth tooling and lower
shipments of workholding equipment during the first half of 1997.
Other products sales, including spare parts, service and
software, excluding Pfauter, in the 1997 three and nine-month
periods were slightly higher than in the comparable 1996 periods.

<PAGE>
<PAGE>

Cost of products sold as a percentage of sales was 70.3% and
69.1% for the three and nine-month periods ended September 30,
1997, compared to 66.8% and 67.7% for comparable periods in 1996.
Margins can be significantly impacted by the mix of products
sold. For example, machines generally tend to carry higher cost
of sales percentages than tooling or other products.  Margins
were lower for both the 1997 third quarter and nine-month period
because of the higher percentage of machine shipments in the
overall sales mix, lower margins on tooling sales and the effect
of Pfauter's lower margins.  Tooling margins were lower due to a
less favorable product mix and increased price discounting in
certain markets.

Selling, general and administrative expenses for the 1997 third
quarter were 18.0 percent of sales, compared to 18.6 percent of
sales in the 1996 third quarter.  For the nine months ending
September 30,  1997, these expenses were 16.8 percent of sales,
compared to 17.7 percent of sales for the comparable 1996 nine-month
period.  The lower spending as a percentage of sales for both the 1997
third quarter and nine-month period was primarily attributable to lower
commissions paid to outside dealers, partially offset by higher
selling expenses as a percentage of sales for the Pfauter
operations.  The reduction in commission expense was due to
decreased sales to South Korea and Brazil, where the Company is
represented by independent dealers.

Research and development expenses were $2.0 million and $5.6
million in the three and nine-month periods ending September 30,
1997, compared to $1.8 million and $5.6 million in the comparable
periods in 1996.  Development spending in 1997 included new
product development for both bevel and cylindrical gear
production equipment and manufacturing technology initiatives for
the Company's tooling operations.

Other expense(net) for the 1997 third quarter was $0.1 million
compared to other income(net) of $0.2 million in the 1996 third
quarter.  Included in the 1997 third quarter expense was $0.4
million of costs related to the relocation of the Company's sales
office in Stuttgart, Germany to the Pfauter offices in
Ludwigsburg, Germany. Other income(net) totaled $0.7 million in the
first nine months of 1997 compared to $0.9 million in the prior
year's nine-month period. The 1997 nine-month period included a
$0.4 million gain on the sale of property associated with one of
the Company's former Components Group businesses which had been
leased to the purchaser since the sale of that business in 1992.

Net interest expense totaled $0.4 million and $0.3 million for
the three and nine-month periods ended September 30, 1997,
respectively, compared to net interest expense of $0.1 million
and $0.7 million in the comparable 1996 periods.  Net interest
expense was higher for the 1997 third quarter due to higher
outstanding debt associated with the acquisition of Pfauter.  The
decrease in interest expense for the 1997 nine-month period was
due to lower average borrowings outstanding under the Company's
revolving credit facilities and higher balances in cash and
equivalents during the first half of 1997.

<PAGE>
<PAGE>

The Company's provision for income taxes as a percentage of
income before taxes for the three and nine-month periods ended
September 30, 1997 was 37.0% and 36.0%, respectively, compared to
37.7% and 36.3%, for the comparable 1996 periods.  These percentages
for both the 1997 and 1996 periods approximated the U.S.
statutory rate. The impact of the higher statutory rates on
foreign earnings (primarily in Germany) was offset by the
utilization of certain foreign tax credits and foreign operating
loss carryforwards in 1997 and 1996.

Liquidity and Capital Resources

Cash and equivalents increased $4.9 million in the nine months of
1997 to $12.1 million at September 30, 1997.  Borrowings under
the Company's revolving credit facilities increased to $67.3
million at September 30, 1997 from $3.9 million at December 31,
1996.  Borrowings under these facilities increased due to the
cash paid for the acquisition of Pfauter and the repayment of
most of Pfauter's outstanding bank debt.  Available unused short
and long-term credit lines with banks, including revolving and
term loan credit facilities, totaled approximately $87.5 million
at September 30, 1997.  Dividend payments to stockholders totaled
$1.9 million in the nine months ended September 30, 1997.

Operating activities provided cash of $32.6 million in the first
nine months of 1997 compared to $30.6 million in the comparable
1996 period.  Operating cash flows were higher in the 1997 period
due to higher earnings before depreciation and amortization
expense.  Cash provided from reductions in working capital during
the first nine months of 1997 was slightly lower than during the
comparable 1996 period as decreases in trade accounts receivable
were less because of substantially higher 1997 third quarter
sales.  Future uses of cash for operating activities are expected to
include approximately $9.0 million which management plans to spend
over the next two years to rationalize Pfauter's operations.
Management estimates that this investment will enable the Company to
achieve subsequent annual cost savings of a similar magnitude.

Investing activities used $36.3 million of cash in the 1997 nine-
month period versus $5.0 million in the comparable prior year
period.  Investing activities for 1997 included cash used of
$29.8 million, net of cash acquired of $6.4 million, for the
acquisition of Pfauter.  Capital expenditures during the first
nine months of 1997 totaled $8.2 million, compared to $5.1
million in the comparable 1996 period.  The Company expects that
1997 and 1998 full year capital expenditures will be greater than the
1996 level of $10.3 million, with the majority of the spending
planned for further investments to upgrade existing production
capabilities.  Cash flows from investing activities in 1997 also
included $1.5 million in cash received from the sale of the
property of one of the Company's former businesses.

During the first nine months of 1997, the Company used $1.4
million in cash to repurchase shares of its Common Stock under a
program authorized by its Board of Directors in July 1996.  As
of September 30, 1997, the Company had used approximately $7.6
million in cash to repurchase 491,600 shares under this program.

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In October 1997, the Company filed Registration Statements
on Form S-3 for the sale of 1,600,000 shares of its Common
Stock, (excluding any exercise of the over-allotment
option).  The offering consists of 770,104 shares to be sold
by The Retirement Plan of the Gleason Works ("Plan"),
429,896 shares to be sold by Gleason Foundation and 400,000
shares to be sold by the Company.  The offering enables the
Plan to sell its holdings of Company stock, which will
position it to be able to settle liabilities to the
beneficiaries of this Plan.  Accruals for future benefits
under this defined benefit plan were frozen in 1990 and all
active employees in this plan were enrolled in the Company's
defined contribution retirement plan effective January 1,
1991.  Since that time, the Company has been committed to
terminating the Plan and satisfying its obligations to Plan
participants as soon as the assets of the Plan matched or
exceeded its obligations.  The current market value of the
Plan's assets is such that termination of the Plan is being
considered at this time.  Gleason Foundation is selling a
portion of its shares to diversify its holdings; however,
even after the sale of all its shares registered in this
offering, Gleason Foundation will remain the Company's
largest shareholder. The Company intends to use the proceeds
from the sale of shares to pay down a portion of the debt
incurred in connection with the Pfauter acquisition.

Effective July 31, 1997 the Company entered into a new $170
million revolving and term loan credit facility providing for
multi-currency borrowings and standby letters of credit and bank
guarantees.  The revolving credit portion of the facility is $110
million and matures on July 1, 2002.  The term loan portion is
$60 million and requires repayment in equal quarterly
installments beginning October 1, 1999.  Up to $40 million of the
revolving credit portion of the facility is available for
issuance of letters of credit or bank guarantees.  The credit
facility is unsecured (except for pledges of 65% of the stock of
certain designated foreign subsidiaries of the Company) and there
are no prepayment penalties.  The interest rate on the credit
facility is LIBOR plus 35 basis points through March 31,1998.
Thereafter, the rate is based on a spread over LIBOR as
determined by certain financial ratios.  Facility fees are
calculated on the entire credit facility, regardless of usage,
and are 15 basis points through March 31, 1998 and adjust on the
same basis as interest rates for periods which follow. The credit
facility provides for average borrowing costs which are
approximately 25 basis points lower than the Company's former
revolving credit facility and approximately 100 basis points
lower than Pfauter's average borrowing costs on its former
secured credit facilities.  The Credit Agreement relating to the
facility contains customary financial ratio covenants and provisions
which restrict the Company's ability to pay dividends in the event
of a default.

Effective October 31, 1997, the Company reduced the total
amount of the facility from $170 million to $160 million, with
the term loan portion decreasing from $60 million to $50 million.
All other terms and conditions remain the same.

Management believes that the Company's cash balances, borrowing
capacity under its lines of credit, and anticipated funds from
operations will be sufficient to meet its near-term operating and
investing activities or that it will be able to obtain additional
long-term financing if such financing is required.

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<PAGE>

The forward-looking statement related to incoming order levels is
subject to a number of factors that could cause actual results to
differ materially from those expected.  These factors include,
but are not limited to, the impact on order levels resulting from
actions taken by competitors, the stability and timing of
customers' capital spending plans and the general economic
conditions in the world markets the Company serves.


PHOENIX is a Registered Trademark of The Gleason Works.

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PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

             None.


Item 2.  Changes in Securities

             None.

Item 3.  Defaults Upon Senior Securities

             None.


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

             None.

Item 5.  Other Information
  
             None.


Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

                 Exhibit 27:    Financial Data Schedule


         (b)   Reports on Form 8-K
              (1)  The Company's Current Report on Form 8-K dated August 14,
                   1997 for Item 2 related to the Company's acquisition of 
                   Hermann Pfauter GmbH & Co.

              (2)  Amendment No. 1 to the Current Report on Form 8-K dated
                   August 14, 1997 was filed on Form 8-K/A dated September 
                   25, 1997 for Items 7(a) and (b) related to the Company's 
                   acquisition of Hermann Pfauter GmbH & Co. including the 
                   following financial statements:
                       Hermann Pfauter GmbH & Co. Audited Financial Statements
                       Report of Ernst & Young GmbH
                       Reports of Dugan & Lopatka
                       Consolidated Balance Sheets as of December 31, 1996 
                       and 1995
                       Consolidated Income Statements for the Years Ended 
                       December 31, 1996, 1995 and 1994
                       Consolidated Statements of Cash Flows for the Years 
                       Ended December 31, 1996 and 1995
                       Notes to the Consolidated Financial Statements
                       Directors' Report - Review of 1994 through 1996

                   Pro Forma Consolidated Financial Statements of Gleason 
                   Corporation and Hermann Pfauter GmbH & Co. (Unaudited)
                       Balance Sheet at June 30, 1997
                       Statement of Operations for the Year Ended December 31,
                       1996
                       Statement of Operations for the Six Months Ended June 
                       30, 1997
                       Notes to Pro Forma Consolidated Financial Statements
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<PAGE>

              (3)  Amendment No. 2 to the Current Report on Form 8-K dated
                   August 14, 1997 was filed on Form 8-K/A dated October 2, 
                   1997 for Items 7(a) and (b) related to the Company's 
                   acquisition of Hermann Pfauter GmbH & Co. including the 
                   following financial statements:
                      Hermann Pfauter GmbH & Co. Audited Financial Statements
                      Report of Ernst & Young GmbH
                      Reports of Dugan & Lopatka
                      Consolidated Balance Sheets as of December 31, 1996 
                      and 1995
                      Consolidated Income Statements for the Years Ended 
                      December 31, 1996, 1995 and 1994
                      Consolidated Statements of Cash Flows for the Years 
                      Ended December 31, 1996 and 1995
                      Notes to the Consolidated Financial Statements
                      Directors' Report - Review of 1994 through 1996

                   Pro Forma Consolidated Financial Statements of Gleason 
                   Corporation and Hermann Pfauter GmbH & Co (Unaudited)
                      Balance Sheet at June 30, 1997
                      Statement of Operations for the Year Ended December 31,
                      1996
                      Statement of Operations for the Six Months Ended June 
                      30, 1997
                      Notes to Pro Forma Consolidated Financial Statements

              (4)  The Company's Current Report on Form 8-K dated October 2,
                   1997 for Item 5 was filed on October 3, 1997.


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                             SIGNATURES



Pursuant to the requirements 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.






                                        GLEASON CORPORATION
                                        Registrant




DATE:  November 11, 1997                    John J. Perrotti
                                            John J. Perrotti
                                        Vice President - Finance
                                        (Chief Financial Officer)