<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: April 26, 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 June 5, 1998, 5,814,883 shares of the Registrant's Common Stock, $.01 par
value, were outstanding.

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


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


                                                                            Page
PART I - FINANCIAL INFORMATION:


         Item 1.    Financial Statements

                    Condensed Consolidated Statements of Operations           3
                    for the Three and Six Months Ended April 26, 1998 and
                    April 27, 1997 (unaudited)

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

                    Condensed Consolidated Statements of Cash Flows           5
                    for the Six Months Ended April 26, 1998 and
                    April 27, 1997 (unaudited)

                    Notes to Condensed Consolidated Financial Statements      6
                    (unaudited)

         Item 2.    Management's Discussion and Analysis of                  10
                    Financial Condition and Results of Operations


PART II - OTHER INFORMATION:


         Item 6.    Exhibits and Reports on Form 8-K                         18

                                       2

<PAGE>
OWOSSO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                   Three Months Ended                     Six Months Ended
                                                           --------------------------------        -------------------------------
                                                              April 26,           April 27,          April 26,           April 27,
                                                                1998                1997               1998                 1997
                                                           ------------        ------------        ------------        ------------
<S>                                                        <C>                 <C>                 <C>                 <C>
Net sales                                                  $ 41,868,000        $ 37,567,000        $ 75,922,000        $ 67,729,000

Cost of products sold                                        31,644,000          28,846,000          58,202,000          52,098,000
                                                           ------------        ------------        ------------        ------------

Gross profit                                                 10,224,000           8,721,000          17,720,000          15,631,000

Expenses:

          Selling, general and administrative                 5,499,000           5,009,000          10,505,000           9,819,000
          Corporate                                           1,624,000           1,289,000           3,024,000           2,553,000
                                                           ------------        ------------        ------------        ------------

Income from operations                                        3,101,000           2,423,000           4,191,000           3,259,000

Interest expense                                              1,272,000             992,000           2,396,000           1,975,000

Gain on sale of business                                      2,775,000                --             2,775,000                --

Other income                                                     26,000              40,000              71,000              91,000
                                                           ------------        ------------        ------------        ------------

Income before income taxes                                    4,630,000           1,471,000           4,641,000           1,375,000

Income tax expense                                            2,693,000             652,000           2,698,000             611,000
                                                           ------------        ------------        ------------        ------------

Net income                                                    1,937,000             819,000           1,943,000             764,000

Dividends and accretion on preferred stock                     (267,000)           (261,000)           (532,000)           (521,000)
                                                           ------------        ------------        ------------        ------------

Net income available
          for common stockholders                          $  1,670,000        $    558,000        $  1,411,000        $    243,000
                                                           ============        ============        ============        ============

Earnings per common share:
          Basic                                            $       0.29        $       0.10        $       0.24        $       0.04
                                                           ============        ============        ============        ============
          Diluted                                          $       0.29        $       0.10        $       0.24        $       0.04
                                                           ============        ============        ============        ============
Weighted  average number of common shares outstanding:
          Basic                                               5,814,000           5,809,000           5,811,000           5,809,000
                                                           ============        ============        ============        ============
          Diluted                                             5,838,000           5,829,000           5,835,000           5,824,000
                                                           ============        ============        ============        ============
</TABLE>

           See notes to condensed consolidated financial statements.

                                       3
<PAGE>
OWOSSO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                          April 26,            October 26,
                                                            1998                  1997
ASSETS                                                  (Unaudited)            (See Note)

<S>                                                    <C>                    <C>
CURRENT ASSETS:
       Cash and cash equivalents                       $  1,527,000           $    840,000
       Receivables, net                                  25,209,000             19,868,000
       Inventories, net                                  26,293,000             23,084,000
       Prepaid expenses and other                           950,000              1,153,000
       Deferred taxes                                       741,000              1,039,000
                                                       ------------           ------------
            Total current assets                         54,720,000             45,984,000

PROPERTY, PLANT AND EQUIPMENT, NET                       32,742,000             27,443,000

GOODWILL, NET                                            27,441,000             29,048,000

OTHER INTANGIBLE ASSETS, NET                              9,641,000              8,054,000

OTHER ASSETS                                                746,000              1,152,000
                                                       ------------           ------------
TOTAL ASSETS                                           $125,290,000           $111,681,000
                                                       ============           ============
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
       Accounts payable - trade                        $ 10,725,000           $  8,821,000
       Accrued expenses                                   7,653,000              6,323,000
       Current portion of related party debt              2,843,000              3,750,000
       Current portion of long-term debt                  1,416,000              2,479,000
                                                       ------------           ------------
            Total current liabilities                    22,637,000             21,373,000

LONG-TERM DEBT, LESS CURRENT PORTION                     60,162,000             48,619,000

POSTRETIREMENT BENEFITS                                   1,845,000              1,812,000

DEFERRED TAXES                                            3,346,000              3,147,000

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY                                     37,300,000             36,730,000
                                                       ------------           ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $125,290,000           $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>

                                                                               Six Months Ended
                                                                     -------------------------------------
                                                                        April 26,               April 27,
                                                                          1998                    1997
<S>                                                                  <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income                                                    $  1,943,000            $    764,000
       Adjustments to reconcile net income to cash
            provided by (used in) operating activities:
            Depreciation                                                2,155,000               1,986,000
            Amortization                                                1,154,000               1,027,000
            Gain on sale of business                                   (2,775,000)                   --
            Other                                                         276,000                  84,000
            Changes in operating assets and liabilities                (6,699,000)             (1,033,000)
                                                                     ------------            ------------

       Net cash (used in) provided by operating activities             (3,946,000)              2,828,000
                                                                     ------------            ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Proceeds from the sale of business                               9,886,000                    --
       Acquisition of business, net of cash acquired                   (7,784,000)                   --
       Purchases of property, plant and equipment                      (3,850,000)             (2,542,000)
       Other                                                               99,000                 (41,000)
                                                                     ------------            ------------

       Net cash used in investing activities                           (1,649,000)             (2,583,000)
                                                                     ------------            ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Net borrowings under revolving credit agreement                 10,200,000               3,650,000
       Proceeds from long-term debt                                          --                   350,000
       Payments on long-term debt                                      (1,590,000)               (866,000)
       Payments on related party debt                                    (907,000)             (2,225,000)
       Dividends paid                                                  (1,421,000)             (1,421,000)
                                                                     ------------            ------------

       Net cash provided by (used in) financing activities              6,282,000                (512,000)
                                                                     ------------            ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      687,000                (267,000)

CASH AND CASH EQUIVALENTS, BEGINNING                                      840,000                 840,000
                                                                     ------------            ------------

CASH AND CASH EQUIVALENTS, ENDING                                    $  1,527,000            $    573,000
                                                                     ============            ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       Interest paid                                                 $  1,199,000            $  1,783,000
                                                                     ============            ============
       Taxes paid                                                    $  1,377,000            $       --
                                                                     ============            ============
</TABLE>


           See notes to condensed consolidated financial statements.

                                       5
<PAGE>
OWOSSO CORPORATION
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"), and DewEze
         Manufacturing, Inc., including Parker Industries ("DewEze"). The
         Company's Great Bend Manufacturing subsidiary ("Great Bend") was sold
         effective April 26, 1998. Accordingly, the effects of the sale of Great
         Bend are included in the Company's consolidated financial statements of
         April 26, 1998. The Consolidated Balance Sheet as of April 26, 1998
         includes the accounts of Astro Air, Inc. ("Astro Air"), which was
         acquired effective April 26, 1998. The results of operations of Astro
         Air will be included in the Company's consolidated results of
         operations from the effective date of the acquisition.

         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, Dura-Bond,
         and Astro Air) and Specialized Equipment (Sooner, DewEze and Great
         Bend prior to its disposition). In the Engineered Component Products
         segment, the Company's products, primarily motors, heat transfer "fin
         and tube" coils and replacement cam shaft bearings, are sold primarily
         to original equipment manufacturers or service providers who use them
         in their end products or services. 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
         April 26, 1998 and the condensed consolidated statements of operations
         and cash flows for the three- and six-month periods ended April 26,
         1998 and April 27, 1997 have been prepared by the Company, without
         audit. In the opinion of management, all adjustments (which include
         only normal recurring adjustments) considered necessary for a fair
         presentation 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.

                                       6
<PAGE>

         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 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 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 this statement, 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.       ACQUISITIONS AND DISPOSITIONS OF BUSINESSES

         Sale of Great Bend - Effective April 26, 1998, the Company sold
         substantially all of the assets of Great Bend to Allied Products
         Corporation, of Chicago, Illinois for cash proceeds of approximately
         $9,900,000, plus the assumption of approximately $2,100,000 in
         liabilities. The Company recorded a pre-tax gain on the sale of Great
         Bend of $2,775,000 ($924,000, net of tax). The Company's results of
         operations for the six months ended April 26, 1998 include net sales
         and income from operations, before allocation of corporate expenses,
         from Great Bend of $7,251,000 and $670,000, respectively.

         Acquisition of Astro Air - Effective April 26, 1998, the Company
         acquired substantially all of the assets of Astro Air, Inc. ("Astro
         Air"), a Jacksonville, Texas manufacturer of "fin and tube" heat
         transfer coils, for $8,000,000 in cash, plus the repayment, shortly


                                       7
<PAGE>

         after closing, of approximately $2,700,000 of debt. In connection with
         the acquisition, the Company has entered into a five-year consulting
         agreement with Dacus Properties, Inc. ("DPI"), the former owner of
         Astro Air, under which DPI will receive 3.4% of the net revenues
         generated by certain specified customers. The acquisition has been
         accounted for by the purchase method of accounting. The Company's
         Consolidated Balance Sheet as of April 26, 1998 includes the accounts
         of Astro Air, while the results of operations of Astro Air will be
         included in the Company's Consolidated Statement of Operations from the
         effective date of the acquisition. The purchase price was allocated to
         the net assets acquired based on estimated fair values at the date of
         acquisition. This resulted in excess of purchase price over assets
         acquired of approximately $950,000, which is being amortized on a
         straight-line basis over 20 years.

         The following unaudited pro forma financial information presents the
         consolidated results of operations of the Company as if the acquisition
         of Astro Air and the disposition of Great Bend had occurred at the
         beginning of fiscal year 1997 after giving effect to certain
         adjustments, including depreciation expense related to the fair market
         write-up of machinery and equipment, amortization of intangible assets,
         including goodwill, and the elimination of the gain on the disposition
         of Great Bend. The unaudited pro forma information is presented for
         comparative purposes only and does not purport to be indicative of the
         results of operations of the Company had these transactions been made
         at the beginning of fiscal year 1997.
<PAGE>

                                                        Six Months Ended
                                                --------------------------------
                                                    April 26,        April 27,
                                                      1998             1997

Net sales                                        $ 80,773,000       $ 72,241,000
Net income                                          1,200,000            659,000
Net income available for common stockholders          668,000            138,000
Basic earnings per common share                  $       0.11       $       0.02


3. INVENTORIES
                                                    April 26,        October 26,
                                                      1998              1997

Raw materials and purchased parts                $ 10,529,000        $ 9,325,000
Work in process                                     5,869,000          5,014,000
Finished goods                                      9,895,000          8,745,000
                                                 ------------        -----------

Total                                            $ 26,293,000       $ 23,084,000
                                                 ============       ============

                                       8
<PAGE>

4.        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 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 $10.3 million of product as of
         April 26, 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 significant amount of 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, results of
         operations or cash flows.



                                       9
<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
April 26, 1998 and the results of operations for the three and six-month periods
ended April 26, 1998 and April 27, 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.

General

On March 30, 1998, the Company announced that it intends to exit the three
agricultural equipment businesses included in its Specialized Equipment segment
in order to focus its resources on expanding the Company's Engineered Component
Products businesses and improving the performance of its trailer business.

As the first step in this process, the Company completed the sale of
substantially all of the assets of its Great Bend Manufacturing subsidiary to
Allied Products Corporation, effective as of April 26, 1998. Proceeds from the
sale were approximately $9.9 million, plus the assumption of approximately $2.1
million in liabilities. The Company recorded a gain on the sale of $2.8 million
($924,000, net of tax).

The Company has signed a non-binding letter of intent to sell the assets of its
DewEze Manufacturing ("DewEze") business to a company formed by the president of
the subsidiary for a premium of $200,000 over the book value of the assets to be
acquired, net of assumed liabilities. The Company expects to receive
approximately $4 million in consideration from the sale, and expects any gain or
loss to be negligible. The sale is expected to be completed in the Company's
third fiscal quarter.

The Company's previously announced non-binding letter of intent to sell the
assets of its Parker Industries ("Parker") grain handling equipment business has
expired, with no definitive agreement being reached. The Company is continuing
its efforts to sell Parker and has been in contact with a number of parties
in this regard. However, there can be no assurances as to whether or when such a
sale will be consummated.

Effective April 26, 1998, the Company acquired substantially all of the assets
of Astro Air, Inc. ("Astro Air"), a Jacksonville, Texas manufacturer of "fin and
tube" heat transfer coils, for $8.0 million in cash, plus the repayment, shortly
after closing, of approximately $2.7 million of debt. In connection with the
acquisition, the Company has entered into a five-year consulting agreement with
Dacus Properties, Inc. ("DPI"), the former owner of Astro Air, under which DPI
will receive 3.4% of the net revenues generated by certain specified customers.

On April 6, 1998, the Company announced that it had signed a definitive
agreement to acquire all of the outstanding stock of M.H. Rhodes, Inc.
("Rhodes"), for $14.51 per Rhodes share, aggregating $2.9 million, plus the
assumption or repayment of debt of approximately $1.2 million. Rhodes is a
publicly held manufacturer of mechanical timers and photoelectric controls,
located in Avon, Connecticut. The transaction, expected to be completed in the
fiscal third quarter, is subject to certain conditions, including approval by
the shareholders of Rhodes.



                                       10
<PAGE>

In connection with the acquisition of Rhodes, the Company announced that it
intends to consolidate the operations of its Cramer subsidiary, located in Old
Saybrook, Connecticut, into Rhodes' manufacturing facility. Cramer will be
merged into and operate as a division of Rhodes. Owosso expects to incur
merger-related costs associated with the integration of the separate companies
and the institution of efficiencies anticipated as a result of the merger. Based
on information currently available, the total amount of merger-related charges
to be recognized is estimated to be between $1.5 and $2.0 million, before tax,
and include costs related to closing Cramer's Old Saybrook facility, moving
Cramer's operations to Avon, and severance costs. Certain of these
merger-related costs will be charged to expense in the period in which the
merger is consummated, expected to be the third fiscal quarter of 1998, with the
remainder of such costs recorded in subsequent periods, when incurred. Since the
acquisition has not yet been consummated, the merger expenses can only be
estimated at this time, and are subject to revision, as further information
becomes available.


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           Six Months Ended
                                                         -----------------------      ----------------------
                                                          April 26,    April 27,      April 26,    April 27,
                                                            1998         1997           1998         1997

<S>                                                        <C>          <C>            <C>          <C>   
Net sales                                                  100.0%       100.0%         100.0%       100.0%
Cost of products sold                                       75.6%        76.8%          76.7%        76.9%
                                                           -----        -----          -----        ----- 
Gross profit                                                24.4%        23.2%          23.3%        23.1%
Expenses:
     Selling, general and administrative                    13.1%        13.3%          13.8%        14.5%
     Corporate                                               3.9%         3.4%           4.0%         3.8%
                                                           -----        -----          -----        ----- 
Income from operations                                       7.4%         6.5%           5.5%         4.8%
Interest expense                                             3.0%         2.6%           3.2%         2.9%
Gain on sale of business                                    -6.6%         0.0%          -3.7%         0.0%
Other income                                                -0.1%         0.0%          -0.1%        -0.1%
                                                           -----        -----          -----        ----- 
Income before income taxes                                  11.1%         3.9%           6.1%         2.0%
Income tax expense                                           6.5%         1.7%           3.5%         0.9%
                                                           -----        -----          -----        ----- 
Net income                                                   4.6%         2.2%           2.6%         1.1%
Dividends and accretion on preferred stock                   0.6%         0.7%           0.7%         0.7%
                                                           -----        -----          -----        ----- 
Net income available for common stockholders                 4.0%         1.5%           1.9%         0.4%
                                                           =====        =====          =====        ===== 
</TABLE>



Three months ended April 26, 1998 compared to three months ended April 27, 1997

Net sales. For the second quarter of 1998, net sales increased 11.4%, to $41.9
million, as compared to net sales of $37.6 million in the second quarter of
1997.

In the Company's Engineered Component Products segment, net sales increased
9.7%, to $23.2 million in 1998 from $21.1 million in 1997, primarily as a result
of an 11.4% increase in sales at the Motor Companies to existing customers and
the addition of new customers. Sales of heat transfer coils at Snowmax increased
10.9% over the prior year quarter, primarily as a result of increased unit
volume, while sales of replacement camshaft bearings at Dura-Bond declined 1.9%
as compared to the prior year quarter.


                                       11
<PAGE>

Net sales in the Specialized Equipment segment increased 13.7%, to $18.7 million
in the second quarter of 1998, as compared to $16.4 million in the prior year
quarter. This increase reflects a 16.2%, or $1.3 million, increase in sales of
aluminum trailers, attributable to both a price increase effective beginning in
the second quarter of 1998 and increased volume. The increase in net sales in 
this segment was also a result of an 11.3%, or $943,000, increase in sales of
agricultural equipment. Net sales attributable to Great Bend were $3.6 million
and $3.8 million in the second quarter of 1998 and 1997, respectively.

Gross profit. For the second quarter of 1998, gross profit increased to $10.2
million, or 24.4% of net sales, as compared to $8.7 million, or 23.2% of net
sales in the prior year quarter.

Gross profit in the Engineered Component Products segment increased 20.9%, to
$6.2 million, or 26.5% of net sales, as compared to $5.1 million, or 24.1% of
net sales in the second quarter of 1997. These increases reflect a 16.7%
increase in gross profit at the Motor Companies and a 44.1% increase in gross
profit at Snowmax, both resulting from increased sales volume and changes in
product mix, and a 16.0% increase at Dura-Bond as a result of changes in
customer mix.

In the Specialized Equipment segment, gross profit increased 12.1%, to $4.1
million, or 21.8% of net sales, as compared to $3.6 million, or 22.1% of net
sales, in 1997, primarily as a result of improved operations at Sooner Trailer.
In response to disappointing operating results in the first quarter of 1998, the
Company discontinued the production of certain low-margin livestock trailers and
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 13.1%, or $5.5
million, in the second quarter of 1998, as compared to 13.3%, or $5.0 million in
the prior year quarter. In the Engineered Component Products segment, selling
general and administrative expenses were $2.7 million, or 11.6% of net sales, as
compared to $2.5 million or 11.8% of net sales in the second quarter of 1997.
The increase in selling, general and administrative expenses in this segment was
primarily the result of an increase in engineering costs in response to
increased sales and increased sales and administrative personnel costs. In the
Specialized Equipment segment, selling, general and administrative expenses were
$2.8 million, or 15.1% of net sales, in 1998, as compared to $2.5 million, or
15.3% 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 second quarter of 1998, corporate expenses were $1.6
million, or 3.9% of net sales, as compared to $1.3 million, or 3.4% of net sales
in 1997. Corporate expenses increased primarily as a result of higher medical
insurance costs and consulting costs.

Income from operations. For the second quarter of 1998, income from operations
increased 28.0%, to $3.1 million, or 7.4% of net sales, as compared to $2.4
million, or 6.5% 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 33.3%, to $3.5 million, in
the second quarter of 1998, as compared to $2.6 million, in the prior year
quarter. As a percentage of net sales, business unit income for this segment
increased to 15.0% in 1998 from 12.3% in 1997. These increases were primarily a
result of strong sales and improved margins at Snowmax, increased sales at the
Motor Companies and improved results at Dura-Bond. Business unit income from the
Motor Companies was adversely affected by a reduction in income from operations


                                       12
<PAGE>

from the Company's Cramer subsidiary, the operations of which are planned to be
consolidated into Rhodes' manufacturing facility in connection with the merger
of the two companies.

Business unit income from the Specialized Equipment segment increased 12.7%, to
$1.3 million in the second quarter of 1998, from $1.1 million in the prior year
quarter, as a result of improved operations at Sooner Trailers. Business unit
income attributable to Great Bend was $295,000 and $440,000 for the second
quarter of 1998 and 1997, respectively.

Interest expense. For the second quarter of 1998, interest expense was $1.3
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. The Company's effective income tax rate was 58.2% for the
second quarter of 1998, as compared to 44.4% in the prior year quarter. This
increase was primarily a result of non-deductible goodwill associated with the
sale of Great Bend. The Company expects its effective tax rate to decrease for
the remainder of the year.

Net income available for common stockholders. Net income available for common
stockholders was $1.7 million, or $.29 per share, in the second quarter of 1998,
as compared to $558,000, or $.10 per share, in the prior year quarter. Income
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 $79,000 and $73,000 for 1998 and
1997, respectively. The current quarter results include the gain on the sale of
Great Bend of $2.8 million ($924,000 net of taxes, or $0.16 per share).

Six months ended April 26, 1998 compared to six months ended April 27, 1997

Net sales. Net sales for the six months ended April 26, 1998 increased 12.1%, to
$75.9 million, as compared to net sales of $67.7 million in the first six months
of 1997.

In the Company's Engineered Component Products segment, net sales increased
9.2%, to $41.9 million in 1998 from $38.4 million in 1997, primarily as a result
of increased sales volume at the Motor Companies to existing customers and the
addition of new customers. This increase also reflects a 7.2% increase in sales
of heat transfer coils at Snowmax, primarily as a result of increased unit
volume, while sales of replacement camshaft bearings at Dura-Bond decreased 2.2%
as compared to the prior year period.

Net sales in the Specialized Equipment segment increased 15.9%, to $34.1 million
in 1998, as compared to $29.4 million in the prior year period. This increase
reflects a 16.0%, or $2.4 million, increase in sales of agricultural equipment,
resulting from the strong agricultural market, and a 15.8%, or $2.2 million,
increase in sales of aluminum trailers. Sales attributable to Great Bend were
$7.3 million in the first six months of 1998 and $6.7 million in 1997.

Gross profit. For the first six months of 1998, gross profit increased to $17.7
million, or 23.3% of net sales, as compared to $15.6 million, or 23.1% of net
sales in the prior year period.

Gross profit in the Engineered Component Products segment increased 15.6%, to
$10.6 million, or 25.3% of net sales, as compared to $9.2 million, or 23.9% of
net sales in 1997. These increases were attributable to a 15.5% increase in
gross profit at the Motor Companies and a 30.5% increase in gross profit at
Snowmax, both resulting from increased sales volume and changes in product mix.



                                       13
<PAGE>

In the Specialized Equipment segment, gross profit increased 10.3%, to $7.1
million, as compared to $6.5 million, in 1997, reflecting increased sales of
agricultural equipment and improved operating results at Sooner during the
second quarter of 1998 as a result of changes in product mix.

Selling, general and administrative expenses. As a percentage of net sales,
selling, general and administrative expenses decreased to 13.8%, or $10.5
million, in 1998, as compared to 14.5%, or $9.8 million in the prior year
period. In the Engineered Component Products segment, selling general and
administrative expenses were $5.1 million, or 12.1% of net sales, in 1998, as
compared to $4.9 million, or 12.8% of net sales, in 1997. The increase in
selling, general and administrative expenses in this segment was primarily the
result of increased engineering costs in response to increased sales and
increased sales and administrative personnel costs. In the Specialized Equipment
segment, selling, general and administrative expenses were $5.4 million, or
15.9% of net sales, in 1998, as compared to $4.9 million, or 16.7% of net sales,
in the prior year period. 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. For the current six-month period, corporate expenses were
$3.0 million, or 4.0% of net sales, as compared to $2.6 million, or 3.8% of net
sales in the prior year period. Corporate expenses increased primarily as a
result of higher medical insurance, consulting and personnel costs.

Income from operations. For the first six months of 1998, income from operations
increased 28.6%, to $4.2 million, or 5.5% of net sales, as compared to $3.3
million, or 4.8% of net sales, in 1997.

Business unit income, defined as income from operations before allocation of
corporate expenses, for the Engineered Component Products segment increased
29.6%, to $5.5 million, in the current period, as compared to $4.2 million, in
1997. As a percentage of net sales, business unit income for this segment
increased to 13.1% in 1998 from 11.1% in 1997. These increases were primarily a
result of increased sales at the Motor Companies, as a whole, and strong sales
and improved margins at Snowmax.

Business unit income from the Specialized Equipment segment was $1.7 million in
1998, as compared to $1.6 million, in 1997, an increase of 8.6%. These results
reflect a $213,000 increase in business unit income from the agricultural
equipment companies, as a result of continued strong sales, offset by a $77,000
decrease in business unit income from Sooner Trailer, primarily as a result of
changes in product mix and increased selling, general and administrative
expenses in the first quarter of 1998. Business unit income attributable to
Great Bend was $670,000 and $657,000 for the 1998 and 1997 six-month periods,
respectively.

Interest expense. For the current six-month period, interest expense was $2.4
million, as compared to $2.0 million in 1997. This increase was the result of
increased borrowings under the Company's revolving credit agreement.

Income tax expense. The Company's effective income tax rate was 58.1% for the
first six months of 1998, as compared to 44.5% in the prior year period. This
increase was primarily a result of non-deductible goodwill associated with the
sale of Great Bend.

Net income available for common stockholders. Net income available for common
stockholders was $1.4 million, or $.24 per share, in the first six months of
1998, as compared to $243,000, or $.04 per share, in the prior year period.
Income available for common stockholders is calculated by subtracting dividends
on preferred stock of $375,000 for both 1998 and 1997 and by deducting the
non-cash accretion in book value of preferred stock of $157,000 and $146,000 for


                                       14
<PAGE>

1998 and 1997, respectively. The current period results include the gain on the
sale of Great Bend of $2.8 million ($924,000 net of taxes, or $0.16 per share).

Liquidity and Capital Resources

Cash and cash equivalents were $1.5 million at April 26, 1998, exclusive of
$225,000 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 $32.1 million at April 26, 1998 from $24.6
million at October 26, 1997. This increase was principally a result of
additional investments in accounts receivable and inventory of $5.3 million and
$3.2 million, respectively, as well as a reduction in the current portion of
long-term debt of $2.0 million, partially offset by an increase in accounts
payable of $1.9 million. The increase in working capital also reflects the
effects of the acquisition of Astro Air and the disposition of Great Bend. Net
cash used in operating activities was $3.9 million, as compared to net cash
provided by operating activities of $2.8 million in the prior year period. The
decrease in cash from operations was principally the result of increased
accounts receivable and inventories, primarily in response to increased sales
and the effects of seasonality, partially offset by improved operating results.

Investing activities included proceeds from the sale of Great Bend, effective
April 26, 1998, of $9.9 million. Also effective April 26, 1998, the Company
acquired the assets of Astro Air for $7.8 million, net of cash acquired.
Investing activities also included $3.9 million for capital expenditures for
equipment. Of this amount, approximately $2.5 million was invested in the
Engineered Component Products segment and $747,000 in the Specialized Equipment
segment. The remainder, $562,000, was invested in computer equipment and
software upgrades at the corporate office. The Company currently plans to invest
approximately $4.5 million during the remainder of fiscal 1998, including
approximately $2.5 million for the expansion of the Stature manufacturing
facility and related machinery and equipment, expected to be substantially
completed in the fourth quarter of 1998. Funding for the Stature expansion is
expected to be through the use of industrial revenue financing. Management
anticipates funding the other capital expenditures with cash from operations and
proceeds from the Company's revolving credit facility.

Financing activities included net borrowings under the Company's $55.0 million
revolving credit agreement of $10.2 million, related to increased working
capital needs, debt repayments of $2.5 million and the payment of dividends of
$1.4 million.

The Company maintains a $55.0 million revolving credit agreement with two banks
with a termination date of March 31, 2000. At April 26, 1998, $47.8 million was
outstanding and $7.2 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 April 26, 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. Certain covenants, including the fixed charges
coverage ratio, the total debt to EBITDA ratio, and the tangible net worth
covenant, were amended during the second quarter of 1998 to allow for the
acquisitions of Astro Air and Rhodes and the divestitures of Great Bend, DewEze
and Parker. 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 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


                                       15
<PAGE>

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,
available credit facilities and dispositions will be sufficient to meet
anticipated operating and capital needs, including the acquisition of Rhodes.


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 sale of DewEze is subject to a non-binding letter of intent,
              with a definitive sale agreement currently under negotiation. Such
              sale will be subject to customary conditions, some of which will
              be outside the Company's control. Accordingly, there can be no
              assurance that the sale will be completed.

          o   No definitive agreement or commitment exists with regard to the
              sale of Parker. Accordingly, there can be no assurance as to
              whether or when the sale will be completed. The results of
              operations of Parker may be adversely affected as a result of the
              announced sale.

          o   The acquisition of Rhodes is subject to approval by Rhodes'
              shareholders, as well as other customary conditions, some of
              which are outside the Company's control. Accordingly, there can be
              no assurance that the acquisition will be completed. Since the
              acquisition of Rhodes is not yet completed, the ultimate cost and
              timing of such acquisition and the related consolidation of the
              Cramer operations can only be estimated.

          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.



                                       16
<PAGE>

          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.

          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 affect 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.



                                       17
<PAGE>


Part II.          OTHER INFORMATION

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

At the Company's Annual Meeting of Shareholders held on March 18, 1998, the
shareholders elected six directors, the holders of the Class A Convertible
Preferred Stock elected one director and the shareholders ratified the
appointment of independent auditors for the year ending October 25, 1998 and
approved the adoption of the 1998 Long-Term Incentive Plan. In the election of
directors, 5,520,709 shares were voted in favor of the election of George B.
Lemmon, Jr. and 11,252 were withheld, 5,498,409 shares were voted in favor of
the election of John B. Reese and 11,252 were withheld, 5,497,819 shares were
voted in favor of the election of Eugene P. Lynch and 11,842 were withheld,
5,520,709 shares were voted in favor of the election of Ellen D. Harvey and
11,252 were withheld, 5,520,709 shares were voted in favor of the election of
Harry E. Hill and 11,252 were withheld, 5,497,819 shares were voted in favor of
the election of James A. Ounsworth and 11,842 were withheld. There were 812,212
shares of the Class A Convertible Preferred Stock voted in favor of Lowell P.
Huntsinger. In the vote for ratification of the appointment of Deloitte & Touche
LLP as independent auditors for the year ending October 25, 1998, 5,501,979
shares were voted in favor, 2,350 shares were voted against and 5,332 shares
abstained. In the vote to adopt the 1998 Long-Term Incentive Plan, 4,498,437
shares were voted in favor, 65,124 shares voted against, 271,079 shares
abstained and 697,321 were broker non-votes.


Item 6.           Exhibits and Reports on Form 8-K

(a)       Exhibits


Exhibit No.       Description

 10.1             Ninth Amendment to Credit Agreement by and among Owosso 
                  Corporation, its subsidiaries, NBD Bank, PNC Bank, N.A., and 
                  NBD Bank, as Agent, dated as of March 27, 1998.

*10.2             1998 Long-Term Incentive Plan (Exhibit 4.1 to the Company's
                  Registration Statement on Form S-8 filed June 2, 1998,
                  Registration No. 333-55835).

 11               Computation of per share earnings
 
 27               Financial Data Schedule

-------------
* Incorporated by reference.

(b)       Reports on Form 8-K

                  A Current Report on Form 8-K, dated March 30, 1998 was filed
                  to announce that the Company had signed an agreement to sell
                  substantially of the assets of Great Bend Manufacturing
                  Company, Inc. and that it had signed non-binding letters of
                  intent to sell the assets of two other businesses in its
                  specialized equipment segment.

                  A Current Report on Form 8-K, dated April 3, 1998 was filed 
                  to announce that the Company had signed two definitive 
                  agreements, one to acquires substantially all of the assets 
                  of Astro Air, Inc. and one to acquire all of the outstanding 
                  stock of M.H. Rhodes, Inc.

                  A Current Report on Form 8-K, dated April 26, 1998 was filed
                  to announce that the Company had completed both the sale of 
                  Great Bend Manufacturing Company, Inc. and the acquisition of 
                  Astro Air, Inc.


                                       18
<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:    June 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




                                       19