<PAGE>
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q


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



For the quarterly period ended: January 25, 1998 Commission file number: 0-25066



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



         Pennsylvania                                     23-2756709
-------------------------------                ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)


The Triad Building, 2200 Renaissance Boulevard
         Suite 150, King of Prussia, PA                                 19406
----------------------------------------------                        ----------
   (Address of principal executive offices)                           (Zip Code)


       Registrant's telephone number, including area code: (610) 275-4500




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 [ ]


As of March 5, 1998, 5,814,883 shares of the Registrant's Common Stock, $.01 par
value, were outstanding.


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<PAGE>

OWOSSO CORPORATION
TABLE OF CONTENTS
--------------------------------------------------------------------------------


                                                                           Page
                                                                           ----
PART I - FINANCIAL INFORMATION:


         Item 1. Financial Statements

                 Condensed Consolidated Statements of Operations            3
                 for the Three Months Ended January 25, 1998 and
                 January 26, 1997 (unaudited)

                 Condensed Consolidated Balance Sheets at                   4
                 January 25, 1998 (unaudited) and October 26, 1997

                 Condensed Consolidated Statements of Cash Flows            5
                 for the Three Months Ended January 25, 1998 and
                 January 26, 1997 (unaudited)

                 Notes to Condensed Consolidated Financial Statements       6
                 (unaudited)

         Item 2. Management's Discussion and Analysis of                    9
                 Financial Condition and Results of Operations


PART II - OTHER INFORMATION:


         Item 6. Exhibits and Reports on Form 8-K                           14


                                       2
<PAGE>

OWOSSO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                              Three Months Ended
                                                                      ----------------------------------
                                                                        January 25,         January 26,
                                                                           1998                 1997
                                                                      ------------         ------------
<S>                                                                   <C>                  <C>
Net sales                                                             $ 34,054,000         $ 30,162,000

Cost of products sold                                                   26,558,000           23,252,000
                                                                      ------------         ------------
Gross profit                                                             7,496,000            6,910,000

Expenses:
     Selling, general and administrative                                 5,006,000            4,810,000
     Corporate                                                           1,400,000            1,264,000
                                                                      ------------         ------------
Income from operations                                                   1,090,000              836,000

Interest expense                                                         1,124,000              983,000

Other income                                                                45,000               51,000
                                                                      ------------         ------------
Income (loss) before income taxes                                           11,000              (96,000)

Income tax expense (benefit)                                                 5,000              (41,000)
                                                                      ------------         ------------
Net income (loss)                                                            6,000              (55,000)

Dividends and accretion on preferred stock                                (265,000)            (260,000)
                                                                      ------------         ------------
Net income (loss) available for common stockholders                   $   (259,000)        $   (315,000)
                                                                      ============         =============
Basic and diluted earnings (loss) per common share                    $      (0.04)        $      (0.05)
                                                                      ============         =============
Weighted average number of common shares outstanding                     5,809,000            5,809,000
                                                                      ============         =============
</TABLE>



            See notes to condensed consolidated financial statements.



                                       3
<PAGE>

OWOSSO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                   January 25,         October 26,
                                                                     1998                 1997
                                                               -------------        -------------
ASSETS                                                            (Unaudited)          (See Note)
<S>                                                                <C>                  <C>
CURRENT ASSETS:
       Cash and cash equivalents                               $     625,000        $     840,000
       Receivables, net                                           21,075,000           19,868,000
       Inventories, net                                           24,641,000           23,084,000
       Prepaid expenses and other                                  1,154,000            1,153,000
       Deferred taxes                                              1,039,000            1,039,000
                                                               -------------        -------------
            Total current assets                                  48,534,000           45,984,000

PROPERTY, PLANT AND EQUIPMENT, NET                                28,711,000           27,443,000
GOODWILL, NET                                                     28,677,000           29,048,000
OTHER INTANGIBLE ASSETS, NET                                       7,860,000            8,054,000
OTHER ASSETS                                                       1,259,000            1,152,000
                                                               -------------        -------------
TOTAL ASSETS                                                   $ 115,041,000        $ 111,681,000
                                                               =============        =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
       Accounts payable - trade                                $  10,475,000        $   8,821,000
       Accrued expenses                                            5,582,000            6,323,000
       Current portion of related party debt                       3,750,000            3,750,000
       Current portion of long-term debt                           1,592,000            2,479,000
                                                               -------------        -------------
            Total current liabilities                             21,399,000           21,373,000

LONG-TERM DEBT, LESS CURRENT PORTION                              52,521,000           48,619,000
POSTRETIRMENT BENEFITS                                             1,826,000            1,812,000
DEFERRED TAXES                                                     3,269,000            3,147,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY                                              36,026,000           36,730,000
                                                               -------------        -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $ 115,041,000        $ 111,681,000
                                                               =============        =============

</TABLE>

Note: the balance sheet at October 26, 1997 has been condensed from the audited
financial statements at that date.


            See notes to condensed consolidated financial statements.


                                       4
<PAGE>

OWOSSO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                          Three Months Ended
                                                                    ------------------------------------
                                                                     January 25,            January 26,
                                                                        1998                   1997
                                                                    -----------            -----------
<S>                                                                  <C>                    <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income (loss)                                             $     6,000            $   (55,000)
       Adjustments to reconcile net income (loss) to cash
            provided by (used in) operating activities:
            Depreciation                                               1,085,000                983,000
            Amortization                                                 573,000                621,000
            Other                                                          8,000                 23,000
            Changes in operating assets and liabilities               (1,731,000)              (799,000)
                                                                     -----------            -----------
        Net cash (used in) provided by operating activities              (59,000)               773,000
                                                                     -----------            -----------
 CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases of property, plant and equipment                     (2,362,000)            (1,073,000)
       Other                                                             (99,000)              (101,000)
                                                                     -----------            -----------
       Net cash used in investing activities                          (2,461,000)            (1,174,000)
                                                                     -----------            -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Net borrowings under revolving credit agreement                 4,150,000              3,200,000
       Proceeds from long-term debt                                         --                  350,000
       Payments on long-term debt                                     (1,135,000)              (369,000)
       Payments on related party debt                                       --               (2,225,000)
       Dividends paid                                                   (710,000)              (710,000)
                                                                     -----------            -----------
       Net cash provided by financing activities                       2,305,000                246,000
                                                                     -----------            -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS                               (215,000)              (155,000)

CASH AND CASH EQUIVALENTS, BEGINNING                                     840,000                840,000
                                                                     -----------            -----------
CASH AND CASH EQUIVALENTS, ENDING                                    $   625,000            $   685,000
                                                                     ===========            ===========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       Interest paid                                                 $ 1,023,000            $   884,000
                                                                     ===========            ===========
       Taxes paid                                                    $   202,000            $      --
                                                                     ===========            ===========

</TABLE>

      See notes to condensed consolidated financial statements.

                                       5
<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

1.        NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The Company - The consolidated financial statements represent the
         consolidated financial position, results of operations and cash flows
         of Owosso Corporation and subsidiaries (the "Company"). The
         subsidiaries include: Motor Products - Owosso Corporation ("Motor
         Products"), Motor Products - Ohio Corporation ("MP-Ohio"), Stature
         Electric, Inc. ("Stature"), Owosso Motor Group, Inc. ("Motor Group")
         and Cramer Company ("Cramer"), (collectively the "Motor Companies"),
         and Snowmax, Incorporated ("Snowmax"), The Landover Company
         ("Dura-Bond"), Sooner Trailer Manufacturing Co. ("Sooner"), DewEze
         Manufacturing, Inc., including Parker Industries ("DewEze") and Great
         Bend Manufacturing, Inc. ("Great Bend"). The Company is a diversified
         manufacturer of products in narrowly defined niche markets and
         currently operates in two business segments, Engineered Component
         Products (the Motor Companies, Snowmax and Dura-Bond) and Specialized
         Equipment (Sooner, DewEze and Great Bend). In the Engineered Component
         Products segment, the Company's products, primarily motors, replacement
         cam shaft bearings and heat transfer "fin and tube" coils, are sold
         primarily to original equipment manufacturers or service providers who
         use them in their end product or service. The products sold in the
         Specialized Equipment segment, primarily all-aluminum horse trailers
         and agricultural and turf maintenance equipment, are almost exclusively
         final products sold through dealers to their users. Nearly all of the
         Company's customers are located in North America.

         Financial Statements - The condensed consolidated balance sheet as of
         January 25, 1998 and the condensed consolidated statements of
         operations and cash flows for the three-month periods ended January 25,
         1998 and January 26, 1997 have been prepared by the Company, without
         audit. In the opinion of management, all adjustments (which include
         only normal recurring adjustments) considered necessary to present
         fairly the financial position, results of operations and cash flows as
         of January 25, 1998 and for all periods presented have been made.
         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted. These financial
         statements should be read in conjunction with the consolidated
         financial statements and notes thereto included in the Company's
         October 26, 1997 Annual Report on Form 10-K.

         Reclassifications - Certain reclassifications have been made to the
         1997 consolidated financial statements to conform to the 1998
         presentation.

         Seasonality - Sales of certain of the Company's specialized equipment
         tend to be seasonal with lowest sales during the first quarter and
         higher sales during the fourth fiscal quarter, corresponding with the
         fall harvest season for farmers. Sales of the Company's engineered
         component products experience less seasonality but generally are lowest
         during the first fiscal quarter.

         Cyclicality - The Company's Engineered Component Products segment is
         subject to changes in the overall level of domestic economic activity.
         The Specialized Equipment segment is subject to changes in certain
         sectors of the agricultural economy, which may be influenced by climate
         changes and government policy. The segment's horse trailer sales, which
         have not tended to be


                                       6
<PAGE>

         affected by changes in the agricultural economy, have had a moderating
         effect on the results of the entire Specialized Equipment segment, but
         are subject to the overall domestic business cycle.

         Earnings (loss) per share - Effective for the first quarter of fiscal
         1998, the Company adopted Statement of Financial Accounting Standards
         ("SFAS") No. 128, "Earnings per Share." In accordance with the
         provisions of the Standard, all prior periods presented have been
         restated. Basic earnings per common share is computed by dividing net
         earnings (the numerator) by the weighted average number of common
         shares outstanding during each period (the denominator). The
         computation of diluted earnings per common share is similar to that of
         basic earnings per common share, except that the denominator is
         increased by the dilutive effect of stock options outstanding, computed
         using the treasury stock method.

         New Accounting Pronouncements - In June 1997, the Financial Accounting
         Standards Board (the "FASB") issued SFAS No. 130, "Reporting
         Comprehensive Income." This statement, which establishes standards for
         reporting and disclosure of comprehensive income, is effective for
         fiscal years beginning after December 15, 1997, although earlier
         adoption is permitted. Reclassification of financial information for
         earlier periods presented for comparative purposes is required under
         SFAS No. 130. As this statement only requires additional disclosures in
         the Company's consolidated financial statements, its adoption will not
         have any impact on the Company's consolidated financial position or
         results of operations. The Company expects to adopt SFAS No. 130 in the
         first quarter of fiscal 1999.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
         of an Enterprise and Related Information." This statement, which
         establishes standards for reporting information about operating
         segments and requires the reporting of selected information about
         operating segments in interim financial statements, is effective for
         fiscal years beginning after December 15, 1997, although earlier
         adoption is permitted. Reclassification of segment information for
         earlier periods presented for comparative purposes is required under
         SFAS No. 131. The Company has not yet completed its analysis of the
         effects of adopting this statement on its presentation of financial
         data by business segment. The Company expects to adopt SFAS No. 131 in
         the first quarter of fiscal 1999.

2. INVENTORIES

                                             January 25,        October 26,
                                               1998               1997
                                             ------------      -------------
Raw materials and purchased parts             $ 9,943,000        $ 9,325,000
Work in process                                 5,222,000          5,014,000
Finished goods                                  9,476,000          8,745,000
                                             ------------      -------------

Total                                        $ 24,641,000       $ 23,084,000
                                             ============      =============

3. COMMITMENTS AND CONTINGENCIES

         The Company is subject to federal, state and local environmental
         regulation with respect to its operations. The Company believes that it
         is operating in substantial compliance with applicable environmental
         regulations. Manufacturing and other operations at the Company's
         various facilities may result, and may have resulted, in the discharge
         and release of hazardous substances




                                       7
<PAGE>

         and waste from time to time. The Company routinely responds to such
         incidents as deemed appropriate pursuant to applicable federal, state
         and local environmental regulations.

         Cramer is a party to a consent decree with the State of Connecticut
         pursuant to which it has agreed to complete its environmental
         investigation of the site on which its facility is located and conduct
         any remedial measures which may be required. Cramer is also in
         negotiations with the former operator of the site concerning the
         reimbursement by the former operator of any costs the Company has
         incurred or may incur in the future in connection with this matter. The
         Company does not believe that the resolution of this matter will have a
         material adverse effect on the financial results of the Company.

         The Company has been named as a potentially responsible party with
         respect to two hazardous substance disposal sites currently under
         remediation by the U.S. Environmental Protection Agency under its
         "Superfund" program. With respect to both sites, based on the minimal
         amount of waste alleged to have been contributed to the site by the
         Company, the Company expects to resolve the matter through the payment
         of de minimis amounts.

         Sooner and DewEze have arrangements with a number of financial
         institutions to provide floor plan financing for their dealers, which
         require them to repurchase repossessed products from the financial
         institutions in the event of a default by the financed dealer. Their
         obligation is typically to repurchase the equipment at 90% of the
         purchase price for the first 180 days, 80% for the next 90 days and 70%
         for the next 90 days, after which the obligation expires. In the event
         of a default by all of the financed dealers, the Company would be
         required to repurchase approximately $7.9 million of product as of
         January 25, 1998. The Company does not believe that its obligation
         under these repurchase agreements will have a material adverse effect
         on the financial results of the Company. Neither subsidiary has taken
         possession on any equipment pursuant to the repurchase obligations in
         these contracts.

         In addition to the matters reported herein, the Company is involved in
         litigation dealing with numerous aspects of its business operations.
         The Company believes that settlement of such litigation will not have a
         material effect on its consolidated financial position or results of
         operations.




                                       8
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

The following discussion addresses the financial condition of the Company as of
January 25, 1998 and the results of operations for the three-month periods ended
January 25, 1998 and January 26, 1997. This discussion should be read in
conjunction with the financial statements included elsewhere herein and the
Management's Discussion and Analysis and Financial Statement sections of the
Company's Annual Report on Form 10-K to which the reader is directed for
additional information.

Seasonality. Sales of certain of the Company's specialized equipment tend to be
seasonal, with lowest sales during the first fiscal quarter and higher sales
during the fourth fiscal quarter, corresponding with the fall harvest season for
farmers. Sales of the Company's engineered component products experience less
seasonality but generally are lowest during the first fiscal quarter.

Results of Operations

The following table sets forth for the periods indicated the percentage
relationship that certain items in the Company's Condensed Consolidated
Statements of Operations bear to net sales.

<TABLE>
<CAPTION>

                                                                Three Months Ended
                                                              -------------------------
                                                              January 25,   January 26,
                                                                 1998            1997
                                                                -----            -----
<S>                                                             <C>              <C>
Net sales                                                       100.0%           100.0%
Cost of products sold                                            78.0%            77.1%
                                                                -----            -----
Gross profit                                                     22.0%            22.9%

Expenses:
     Selling, general and administrative                         14.7%            15.9%
     Corporate                                                    4.1%             4.2%
                                                                -----            -----
Income from operations                                            3.2%             2.8%
Interest expense                                                  3.3%             3.3%
Other income                                                     -0.1%            -0.2%
                                                                -----            -----
Income (loss) before income taxes                                 0.0%            -0.3%
Income tax expense (benefit)                                      0.0%            -0.1%
                                                                -----            -----
Net income (loss)                                                 0.0%            -0.2%
Dividends and accretion on preferred stock                        0.8%             0.8%
                                                                -----            -----
Net income (loss) available for common stockholders              -0.8%            -1.0%
                                                                -----            -----
</TABLE>




Three months ended January 25, 1998 compared to three months ended January 26,
1997

Net sales. For the first quarter of 1998, net sales increased 12.9%, to $34.1
million, as compared to net sales of $30.2 million in the first quarter of 1997.

In the Company's Engineered Component Products segment, net sales increased
8.5%, to $18.7 million in 1998 from $17.2 million in 1997, primarily as a result
of increased sales volume at the Motor Companies to existing customers and the
addition of new customers. Sales of heat transfer coils at Snowmax and
replacement camshaft bearings at Dura-Bond were generally flat as compared to
the prior year quarter.

Net sales in the Specialized Equipment segment increased 18.7%, to $15.4 million
in the first quarter of 1998, as compared to $13.0 million in the prior year
quarter. This increase reflects a 21.7%, or $1.5 million, increase in sales of
agricultural equipment, resulting from the continuing strong agricultural
market, and a 15.3%, or $925,000, increase in sales of aluminum trailers.



                                       9
<PAGE>

Gross profit. For the first quarter of 1998, gross profit increased to $7.5
million, or 22.0% of net sales, as compared to $6.9 million, or 22.9% of net
sales in the prior year quarter.

Gross profit in the Engineered Component Products segment increased 8.9%, to
$4.4 million, or 23.7% of net sales, as compared to $4.1 million, or 23.6% of
net sales in the first quarter of 1997, principally as a result of increased
sales at the Motor Companies. Gross profit at Snowmax and Dura-bond were
essentially flat when compared with the prior year quarter.

In the Specialized Equipment segment, gross profit increased 8.0%, to $3.1
million, as compared to $2.8 million, in 1997, primarily as a result of
increased sales of agricultural equipment, partially offset by a reduction in
gross profit at Sooner Trailer, attributable primarily to changes in product
mix. As a percentage of net sales, gross profit decreased to 19.9% in 1998, from
21.9% in the prior year quarter. This decrease was principally a result of
changes in product mix at Sooner Trailer. In response to this decrease, the
Company has discontinued the production of certain low-margin livestock trailers
and has instituted price increases on certain other models.

Selling, general and administrative expenses. As a percentage of net sales,
selling, general and administrative expenses decreased to 14.7%, or $5.0
million, in the first quarter of 1998, as compared to 15.9%, or $4.8 million in
the prior year quarter. In the Engineered Component Products segment, selling
general and administrative expenses were $2.4 million in both 1998 and 1997. As
a percentage of net sales, such expenses decreased to 12.8% in 1998 from 14.1%
in the prior year quarter. In the Specialized Equipment segment, selling,
general and administrative expenses were $2.6 million, or 17.0% of net sales, in
1998, as compared to $2.4 million, or 18.3% of net sales, in the prior year
quarter. The increase in selling, general and administrative expenses in this
segment was primarily the result of an increase in sales personnel and increased
advertising and promotional costs.

Corporate expenses. In the first quarter of 1998, corporate expenses were $1.4
million, or 4.1% of net sales, as compared to $1.3 million, or 4.2% of net sales
in 1997. Corporate expenses increased primarily as a result of higher personnel
and medical insurance costs.

Income from operations. For the first quarter of 1998, income from operations
increased 30.5%, to $1.1 million, or 3.2% of net sales, as compared to $836,000,
or 2.8% of net sales, in 1997.

Among other measures, the Company evaluates the operating performance of its
business segments and its individual subsidiaries based on business unit income,
which is defined as income from operations before allocation of corporate
expenses. The Company believes this measurement most closely reflects the
subsidiaries' individual contributions. On this basis, business unit income for
the Engineered Component Products segment increased 23.9%, to $2.0 million, in
the first quarter of 1998, as compared to $1.6 million, in the prior year
quarter. As a percentage of net sales, business unit income for this segment
increased to 10.9% in 1998 from 9.5% in 1997. These increases were primarily a
result of strong sales at the Motor Companies and a reduction in selling,
general and administrative expenses as a percentage of net sales.

Business unit income from the Specialized Equipment segment was $460,000 in the
first quarter of 1998, as compared to $465,000 in 1997. These results reflect a
$241,000 increase in business unit income from the agricultural equipment
companies, as a result of continuing strong sales, offset by a $246,000 decrease
in business unit income from Sooner Trailer, primarily as a result of changes in
product mix and increased selling, general and administrative expenses.



                                       10
<PAGE>

Interest expense. For the first quarter of 1998, interest expense was $1.1
million, as compared to $1.0 million in 1997. This increase was the result of
increased borrowings under the Company's revolving credit agreement.

Income tax expense (benefit). The Company's effective income tax rate was 45.5%
for 1998, while the benefit recorded in the prior year quarter was at an
effective rate of 42.7%.

Net income (loss) available for common stockholders. Net loss available for
common stockholders was $259,000, or $.04 per share, in the first quarter of
1998, as compared to a net loss of $315,000, or $.05 per share, in the prior
year quarter. Income (loss) available for common stockholders is calculated by
subtracting dividends on preferred stock of $188,000 for both 1998 and 1997 and
by deducting the non-cash accretion in book value of preferred stock of $77,000
and $72,000 for 1998 and 1997, respectively.

Liquidity and Capital Resources

Cash and cash equivalents were $625,000 at January 25, 1998, exclusive of
$407,000 of cash that was restricted under industrial revenue financings. This
compares to cash of $840,000 and restricted cash of $298,000 as of October 26,
1997. Working capital increased to $27.1 million at January 25, 1998 from $24.6
million at October 26, 1997. This increase was a result of additional
investments in accounts receivable and inventory of $1.2 million and $1.6
million, respectively, as well as a reduction in the current portion of
long-term debt of $887,000, partially offset by an increase in accounts payable
of $1.7 million. Net cash used in operating activities was $59,000, as compared
to net cash provided by operating activities of $773,000 in the prior year
quarter. The decrease in cash from operations was principally the result of
increased accounts receivable and inventories, primarily in response to
increased sales, partially offset by improved operating results.

Net cash used in investing activities included $2.4 million for capital
expenditures for equipment. Of this amount, approximately $1.4 million was
invested in the Engineered Component Products segment and $399,000 in the
Specialized Equipment segment. The remainder, $554,000, was invested in computer
equipment and software upgrades at the corporate office. The Company currently
plans to invest approximately $3.5 million during the remainder of fiscal 1998,
primarily for added capacity and production efficiencies in the Engineered
Component Products segment. Management anticipates funding capital expenditures
with cash from operations and proceeds from the Company's revolving credit
facility. The Company is also evaluating the expansion of its production
capabilities at one of the Motor Companies. Such expansion could increase
capital expenditures in fiscal 1998, and the Company intends to seek industrial
revenue financing if it proceeds with the project.

Net cash used in financing activities included net borrowings under the
Company's $55.0 million revolving credit agreement of $4.2 million, debt
repayments of $1.1 million and the payment of dividends of $710,000.

The Company maintains a $55.0 million revolving credit agreement with two banks
with a termination date of March 31, 2000. At January 25, 1998, $38.8 million
was outstanding and $16.2 million was available for additional borrowing under
the agreement. Interest is payable, at the Company's option, at either the agent
bank's prime rate or at a spread over the London Interbank Offered Rate that
varies with the Company's ratio of total debt to EBITDA. The LIBOR spread was
2.0% at January 25, 1998. The agreement contains customary financial and other
covenants, including fixed charges, cash flow and net worth ratios, restrictions
on certain asset sales, mergers and other significant transactions and a
negative pledge on assets. The fixed charges coverage ratio was amended during
the first quarter of 1998 to allow for greater flexibility in purchasing
machinery and equipment. The Company anticipates that it will remain in
compliance with these covenants for the foreseeable future.

The Company has interest rate swap agreements with its two banks with notional
amounts totaling $15.0 million. The Company entered into these agreements to
change the fixed/variable interest rate mix of its



                                       11
<PAGE>

debt portfolio, in order to reduce the Company's aggregate risk from movements
in interest rates. The agreements require the Company to make quarterly fixed
payments on the notional amount at rates of 7.0675% and 7.09% through July 2002
in exchange for receiving payments at the three-month London Interbank Offered
Rate.

The Company believes anticipated funds to be generated from future operations
and available credit facilities will be sufficient to meet anticipated operating
and capital needs. To make significant acquisitions, additional financing may be
required.

The Company is currently engaged in active discussions regarding certain
material acquisitions as well as dispositions of certain of the Company's 
operating subsidiaries. No definitive agreements or commitments currently exist 
for the potential transactions and there can be no assurance that any of the 
potential transactions will be completed.


Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995

The following information is provided pursuant to the "Safe Harbor" provisions
of the Private Securities Litigation Reform Act of 1995. Certain statements in
Management's Discussion and Analysis of this Form 10-Q, including those which
express "belief", "anticipation" or "expectation" as well as other statements
which are not historical fact, are "forward-looking statements" made pursuant to
these provisions.

The Company cautions readers that the following important factors, among others,
have in the past affected and could in the future affect the Company's actual
results of operations and cause the Company's actual results to differ
materially from the results expressed in any forward-looking statements made by
or on behalf of the Company:

          o    The Company's results have been and can be expected to continue
               to be affected by the general economic conditions in the United
               States and specific economic factors influencing the
               manufacturing and agricultural sectors of the economy. Lower
               demand for the Company's products can lower revenues as well as
               cause underutilization of the Company's plants, leading to
               reduced gross margins.

          o    Commodity prices can have a material influence on the Company's
               results. Grain prices and cattle prices can affect demand for
               certain agricultural equipment sold by the businesses in the
               Company's Specialized Equipment segment. Metal prices,
               particularly aluminum, copper and steel, can affect the Company's
               costs as well as demand for the Company's products and the value
               of inventory held at the end of a reporting period. Lack of
               availability of certain commodities could also disrupt the
               Company's production.

          o    Weather can affect the success of the grain harvest in the United
               States, which can directly affect demand for the Company's grain
               handling equipment.

          o    The Company's Sooner Trailer subsidiary has experienced
               production inefficiencies that have caused increased production
               costs and lower gross margins. Continuation of such
               inefficiencies could continue to adversely affect the Company's
               results of operations.

          o    Changes in demand that change product mix may reduce operating
               margins by shifting demand toward less profitable products.



                                       12
<PAGE>

          o    Loss of a substantial customer may affect results of operations.

          o    The Company's results can be affected by engineering difficulties
               in designing new products or applications for existing products
               to meet the requirements of its customers.

          o    Obsolescence or quality problems leading to returned goods in
               need of repair can affect the value of the Company's inventories
               and its profitability.

          o    The Company has a substantial amount of floating rate debt.
               Increases in short-term interest rates could be expected to
               increase the Company's interest expense.

          o    Acquisitions are an important part of the Company's growth
               strategy. Acquisitions may have a dilutive effect on the
               Company's earnings and could effect the Company's available
               credit and interest costs. Conversely, the Company may from time
               to time divest of product lines or business units. Any such
               divestiture may involve costs of disposition or loss on the
               disposition that could reduce the Company's results. In addition,
               acquisitions or dispositions could effect the Company's relative
               mix of operating results from engineered component products and 
               specialized equipment, thereby effecting the seasonality and 
               cyclicality of such operating results.





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<PAGE>


Part II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

Exhibit No.       Description
-----------       -----------

10.1              Eighth Amendment to Credit Agreement by and among Owosso
                  Corporation, its subsidiaries, NBD Bank, PNC Bank, N.A., and
                  ABD Bank, as Agent, dated as of December 29, 1997.

10.2              Owosso Corporation 401(k) Savings Plan

27                Financial Data Schedule

(b)  Form 8-K

                  No reports on Form 8-K were filed during the quarter ended
                  January 25, 1998.



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<PAGE>

                                   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 hereunto duly authorized.



                                      OWOSSO CORPORATION



Date: March 10, 1998                       By: /s/ George B. Lemmon, Jr.
                                           --------------------------------
                                               George B. Lemmon, Jr.
                                               President, Chief Executive
                                               Officer, and Director



                                           By: /s/ John H. Wert, Jr.
                                           --------------------------------
                                               John H. Wert, Jr.
                                               Senior Vice President - Finance,
                                               Chief Financial Officer, and
                                               Treasurer and Secretary





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