<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: July 29, 2001    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 August 17, 2001, 5,874,345 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 nine months ended July 29, 2001 and
               July 30, 2000 (unaudited)

               Condensed Consolidated Balance Sheets at                       4
               July 29, 2001 (unaudited) and October 29, 2000

               Condensed Consolidated Statements of Cash Flows                5
               for the nine months ended July 29, 2001 and
               July 30, 2000 (unaudited)

               Notes to Condensed Consolidated Financial Statements           6
               (unaudited)

    Item 2.    Management's Discussion and Analysis of                        14
               Financial Condition and Results of Operations

    Item 3.    Quantitative and Qualitative Disclosures about Market Risks    22


PART II - OTHER INFORMATION:

    Item 2.    Changes in Securities and Use of Proceeds                      23

    Item 6.    Exhibits and Reports on Form 8-K                               23



                                       2
<PAGE>
OWOSSO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                       Three Months Ended             Nine Months Ended
                                                                  ----------------------------- -----------------------------
                                                                      July 29,      July 30,       July 29,       July 30,
                                                                        2001          2000           2001           2000
<S>                                                                      <C>           <C>            <C>            <C>
Net sales                                                           $ 21,636,000  $ 29,608,000   $ 64,541,000   $ 90,793,000

Cost of products sold                                                 18,118,000    24,407,000     54,786,000     75,384,000
                                                                  --------------- ------------- -------------- --------------

Gross profit                                                           3,518,000     5,201,000      9,755,000     15,409,000

Selling, general and administrative expenses                           3,037,000     3,752,000      9,250,000     11,967,000

Write-down of net assets held for sale                                 1,100,000             -      1,800,000              -
                                                                  --------------- ------------- -------------- --------------

Income (loss) from operations                                           (619,000)    1,449,000     (1,295,000)     3,442,000

Interest expense                                                         992,000     1,268,000      3,426,000      3,814,000

Other (income) expense                                                  (149,000)      (22,000)      (260,000)      (116,000)
                                                                  --------------- ------------- -------------- --------------

Income (loss) from continuing operations
     before income taxes                                              (1,462,000)      203,000     (4,461,000)      (256,000)

Income tax expense (benefit)                                            (497,000)       85,000     (1,278,000)      (165,000)
                                                                  --------------- ------------- -------------- --------------

Income (loss) from continuing operations                                (965,000)      118,000     (3,183,000)       (91,000)

Income (loss) from discontinued operations, net of
     income taxes                                                              -        79,000       (434,000)       579,000
                                                                  --------------- ------------- -------------- --------------

Income (loss) before cumulative effect
     of accounting change                                               (965,000)      197,000     (3,617,000)       488,000

Cumulative effect of accounting change
     (net of tax of $34,000)                                                   -             -        (67,000)             -
                                                                  --------------- ------------- -------------- --------------

Net income (loss)                                                       (965,000)      197,000     (3,684,000)       488,000

Dividends and accretion on preferred stock                              (330,000)     (282,000)      (984,000)      (839,000)
                                                                  --------------- ------------- -------------- --------------

Net loss available for common shareholders                          $ (1,295,000) $    (85,000)  $ (4,668,000)  $   (351,000)
                                                                  =============== ============= ============== ==============

Basic and diluted income (loss) per common share:
     Loss from continuing operations                                $      (0.22) $      (0.02)  $      (0.71)  $      (0.16)
     Income (loss) from discontinued operations                                -          0.01          (0.08)          0.10
     Cumulative effect of account change, net                                  -             -          (0.01)             -
                                                                  --------------- ------------- -------------- --------------

Net income (loss) per share                                         $      (0.22) $      (0.01)  $      (0.80)  $      (0.06)
                                                                  =============== ============= ============== ==============

Weighted average number of
     common shares outstanding
          Basic                                                        5,874,000     5,850,000      5,863,000      5,842,000
                                                                  =============== ============= ============== ==============

          Diluted                                                      5,874,000     5,850,000      5,863,000      5,842,000
                                                                  =============== ============= ============== ==============
</TABLE>

See notes to condensed consolidated financial statements.


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

                                                                                                    July 29,       October 29,
                                                                                                      2001            2000
ASSETS                                                                                             (Unaudited)      (See Note)
<S>                                                                                                    <C>              <C>
CURRENT ASSETS:
       Cash and cash equivalents                                                                 $    307,000     $    491,000
       Receivables, net                                                                            12,264,000       11,973,000
       Inventories, net                                                                             9,156,000        9,026,000
       Net assets held for sale                                                                     1,073,000        8,664,000
       Net assets of discontinued operations held for sale                                                  -        9,449,000
       Prepaid expenses and other                                                                   1,871,000        1,243,000
       Deferred taxes                                                                               1,990,000        1,900,000
                                                                                               ---------------  ---------------

            Total current assets                                                                   26,661,000       42,746,000

PROPERTY, PLANT AND EQUIPMENT, NET                                                                 19,525,000       22,058,000

GOODWILL, NET                                                                                      12,469,000       12,796,000

OTHER INTANGIBLE ASSETS, NET                                                                        6,365,000        6,982,000

OTHER ASSETS                                                                                          691,000        1,172,000
                                                                                               ---------------  ---------------

TOTAL ASSETS                                                                                     $ 65,711,000     $ 85,754,000
                                                                                               ===============  ===============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
       Accounts payable - trade                                                                  $  6,393,000     $  7,386,000
       Accrued expenses                                                                             5,099,000        5,397,000
       Related party debt                                                                             625,000        1,000,000
       Current portion of long-term debt                                                           28,520,000       26,816,000
                                                                                               ---------------  ---------------

            Total current liabilities                                                              40,637,000       40,599,000

LONG-TERM DEBT, LESS CURRENT PORTION                                                                6,026,000       22,463,000

POSTRETIREMENT BENEFITS AND OTHER LIABILITIES                                                       3,117,000        2,323,000

DEFERRED TAXES                                                                                      2,026,000        1,937,000

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY                                                                               13,905,000       18,432,000
                                                                                               ---------------  ---------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                       $ 65,711,000     $ 85,754,000
                                                                                               ===============  ===============
</TABLE>

Note: the balance sheet at October 29, 2000 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>

                                                                                                      Nine Months Ended
                                                                                             -----------------------------------
                                                                                                  July 29,          July 30,
                                                                                                    2001              2000
<S>                                                                                                  <C>               <C>
OPERATING ACTIVITIES:
       Net income (loss)                                                                       $(3,684,000)       $   488,000
       (Income) loss from discontinued operations                                                  434,000           (579,000)
       Adjustments to reconcile net income (loss) to cash
            provided by (used in) operating activities:
            Depreciation                                                                         3,338,000          3,861,000
            Amortization                                                                         1,244,000          1,368,000
            Write-down of net assets held for sale                                               1,800,000                  -
            Other                                                                                  216,000                  -
            Changes in operating assets and liabilities                                         (2,983,000)          (102,000)
                                                                                             --------------     --------------

       Net cash provided by continuing operations                                                  365,000          5,036,000
       Net cash used in discontinued operations                                                 (4,507,000)          (715,000)
                                                                                             --------------     --------------
       Net cash provided by (used in) operating activities                                      (4,142,000)         4,321,000
                                                                                             --------------     --------------

INVESTING ACTIVITIES:
       Proceeds from the sale of businesses                                                      6,566,000                  -
       Purchases of property, plant and equipment                                               (1,741,000)        (1,730,000)
       Contingent consideration on acquisition                                                    (298,000)          (628,000)
       Other                                                                                       989,000          1,345,000
                                                                                             --------------     --------------

       Net cash provided by (used in) continuing operations                                      5,516,000         (1,013,000)
       Net cash provided by (used in) discontinued operations                                   13,565,000           (706,000)
                                                                                             --------------     --------------
       Net cash provided by (used in) investing activities                                      19,081,000         (1,719,000)
                                                                                             --------------     --------------

FINANCING ACTIVITIES:
       Net borrowings from (payments on) revolving credit agreement                            (14,150,000)         1,450,000
       Payments on long-term debt                                                                 (574,000)        (2,096,000)
       Payments on related party debt                                                             (375,000)                 -
       Dividends paid                                                                             (142,000)        (1,613,000)
       Other                                                                                       133,000            (11,000)
                                                                                             --------------     --------------

       Net cash used in continuing operations                                                  (15,108,000)        (2,270,000)
       Net cash used in discontinued operations                                                    (15,000)           (43,000)
                                                                                             --------------     --------------
       Net cash used in financing activities                                                   (15,123,000)        (2,313,000)
                                                                                             --------------     --------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                              (184,000)           289,000

CASH AND CASH EQUIVALENTS, BEGINNING                                                               491,000            161,000
                                                                                             --------------     --------------

CASH AND CASH EQUIVALENTS, ENDING                                                              $   307,000        $   450,000
                                                                                             ==============     ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       Interest paid                                                                           $ 2,718,000        $ 3,286,000
                                                                                             ==============     ==============
       Taxes paid                                                                              $   226,000        $ 1,951,000
                                                                                             ==============     ==============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
     FINANCING ACTIVITIES:
       Dividends payable                                                                       $   984,000        $   493,000
                                                                                             ==============     ==============
</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 condensed consolidated financial statements represent
         the consolidated financial position, results of operations and cash
         flows of Owosso Corporation and its subsidiaries (the "Company"). The
         Company currently operates in three business segments: Motors, Coils,
         and Other.

         The Motors segment, which includes Stature Electric, Inc. ("Stature"),
         Motor Products - Owosso Corporation ("Motor Products"), and Motor
         Products Ohio Corporation ("MP-Ohio"), manufactures fractional and
         integral horsepower motors. Significant markets for the Motors segment
         include commercial products and equipment, healthcare, recreation and
         non-automotive transportation. The Company sells its motors primarily
         throughout North America and also in Europe.

         The Coils segment manufactures heat exchange coils, primarily for
         non-automotive transportation, refrigeration and commercial and
         residential HVAC markets. The businesses included in this segment
         include Astro Air Coils, Inc. ("Astro Air") and Snowmax, Inc.
         ("Snowmax"). Also included in this segment through the date of its sale
         in May 2001, is Astro Air UK, Ltd. ("Astro UK"). The Company sells its
         coils primarily throughout North America and also in Europe.

         The Company's Other segment includes Dura-Bond Bearing Company
         ("Dura-Bond") and Cramer Company (formerly known as M.H. Rhodes, Inc.,
         and hereinafter referred to as "Cramer"). Dura-Bond, which manufactures
         replacement camshaft bearings, valve seats and shims for the automotive
         after-market, was sold November 2, 2000. Cramer manufactures timers and
         subfractional horsepower motors for use in commercial applications. The
         Company completed the sale of the assets associated with the timer and
         switch line of Cramer on December 4, 2000, and in connection with the
         sale, changed the name of the company from M.H. Rhodes, Inc. to Cramer
         Company. The Company intends to dispose of the remaining Cramer assets
         by the end of the year. Accordingly, the net assets of Dura-Bond and
         Cramer have been included in "Net Assets Held For Sale" in the
         condensed consolidated balance sheets.

         During the fourth quarter of fiscal 2000, the Company adopted a plan to
         dispose of Sooner Trailer Manufacturing Company ("Sooner Trailer"),
         which manufactures all-aluminum trailers, primarily horse and livestock
         trailers. Sooner Trailer had previously been included in the
         Agricultural Equipment segment (formerly known as the Trailers and
         Agricultural Equipment segment). The Company completed the sale of
         Sooner Trailer on January 24, 2001. Accordingly, for financial
         statement purposes, the assets, liabilities, results of operations and
         cash flows of Sooner Trailer have been segregated from those of
         continuing operations and are presented in the Company's financial
         statements as discontinued operations. The net assets of Sooner Trailer
         have been included in "Net Assets of Discontinued Operations Held for
         Sale" in the October 29, 2000 condensed consolidated balance sheet.

         Financial Statements - The condensed consolidated balance sheet as of
         July 29, 2001 and the condensed consolidated statements of operations
         and cash flows for the three and nine months ended July 29, 2001 and
         July 30, 2000 have been prepared by the Company, without audit. In the



                                       6
<PAGE>


         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 July 29,
         2001 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 29, 2000 Annual Report
         on Form 10-K.

         Reclassifications - Certain reclassifications were made to the 2000
         condensed consolidated financial statements to conform to the 2001
         classifications.

         Earnings (loss) per share - 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.

         Comprehensive income - The Company presents comprehensive income (loss)
         as a component of shareholders' equity. The components of comprehensive
         income are as follows:
<TABLE>
<CAPTION>
                                                          Three Months Ended        Nine Months Ended
                                                   --------------------------- --------------------------
                                                      July 29,      July 30,      July 29,      July 30,
                                                        2001          2000          2001          2000
<S>                                                  <C>            <C>         <C>            <C>
Net income (loss)                                    $ (965,000)    $ 197,000   $(3,684,000)   $ 488,000

Foreign currency translation                            194,000       (17,000)      143,000      (70,000)
                                                   ------------- ------------- ------------- ------------

Total comprehensive income (loss)                    $ (771,000)    $ 180,000   $(3,541,000)   $ 418,000
                                                   ============= ============= ============= ============
</TABLE>

         New Accounting Pronouncements - In June 1998, the Financial Accounting
         Standards Board issued SFAS No. 133, "Accounting for Derivative
         Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 was amended
         in June 2000 by SFAS No. 138, "Accounting for Certain Derivative
         Instruments and Certain Hedging Activities" ("SFAS No. 138"), which
         addressed a limited number of issues causing implementation
         difficulties. SFAS 133, as amended, establishes accounting and
         reporting standards for derivative instruments and for hedging
         activities. It requires that an entity recognize all derivative
         instruments as either assets or liabilities and measure them at fair
         value. The accounting for changes in fair value depends upon the
         purpose of the derivative instrument and whether it is designated and
         qualifies for hedge accounting. To the extent derivative instruments
         qualify and are designated as hedges of the variability in cash flows
         associated with forecasted transactions, the effective portion of the
         gain or loss on such derivative instruments will generally be reported
         in other comprehensive income and the ineffective portion, if any, will
         be reported in net income. Such amounts recorded in accumulated other
         comprehensive income will be reclassified into net income when the
         forecasted transaction affects earnings. To the extent derivative
         instruments qualify and are designated as hedges of changes in the fair
         value of an existing asset, liability or firm commitment, the gain or
         loss on the hedging instrument will be recognized currently in earnings
         along with changes in the fair value of the hedged asset, liability or
         firm commitment attributable to the hedged risk.


                                       7
<PAGE>


         The Company was required to adopt the provisions of SFAS 133 effective
         October 30, 2000. The Company's derivative instruments outstanding,
         variable-to-fixed interest rate swaps, do not qualify for hedge
         accounting under SFAS 133. The adoption of SFAS 133 required the
         Company to mark its interest rate swaps to market. The result was to
         record a net liability of $101,000 with an offsetting charge to
         cumulative effect of accounting change. This amount, net of tax of
         $34,000, is reflected in the condensed consolidated statement of
         operations as "Cumulative effect of accounting change".

         In that the Company's derivative instruments outstanding do not meet
         the stringent requirements for hedge accounting under SFAS 133, future
         earnings could reflect greater volatility.

         In July 2001, the Financial Accounting Standards Board issued SFAS No.
         141 "Business Combinations" ("SFAS 141") and SFAS No. 142 "Goodwill and
         Other Intangible Assets" ("SFAS 142"). SFAS 141 requires business
         combinations initiated after June 30, 2001 to be accounted for using
         the purchase method of accounting, and broadens the criteria for
         recording intangible assets separate from goodwill. Recorded goodwill
         and intangibles will be evaluated against this new criteria and may
         result in certain intangibles being subsumed into goodwill, or
         alternatively, amounts initially recorded as goodwill may be separately
         identified and recognized apart from goodwill. SFAS 142 requires the
         use of a nonamortization approach to account for purchased goodwill and
         certain intangibles. Under a nonamortization approach, goodwill and
         certain intangibles will not be amortized into results of operations,
         but instead would be reviewed for impairment and written down and
         charged to results of operations only in the periods in which the
         recorded value of goodwill and certain intangibles is more than its
         fair value. The provisions of each statement which apply to goodwill
         and intangible assets acquired prior to June 30, 2001 are required to
         be adopted for fiscal years beginning after December 15, 2001. The
         Company has not yet completed its analysis of the effects of adopting
         these statements on its consolidated financial position or results of
         operations.

2.       LIQUIDITY AND FINANCING

         The accompanying condensed consolidated financial statements have been
         prepared on a going concern basis of accounting and do not reflect any
         adjustments that might result if the Company is unable to continue as a
         going concern. The Company's results of operations have declined
         significantly over the past two years. The Company reported a net loss
         for the year ended October 29, 2000, and has continued to incur losses
         through the third quarter of fiscal 2001. In addition, the Company was
         not in compliance with covenants under its revolving credit facility at
         October 29, 2000. As a result, in February 2001, the Company entered
         into an amendment to its revolving credit facility, wherein the lenders
         agreed to forbear from exercising their rights and remedies under the
         facility in connection with such non-compliance until February 15,
         2002, at which time the facility matures. As further disclosed under
         Note 6 "Long-term Debt", the amendment to the revolving credit
         facility, which has been further amended since February 2001, also
         modified the interest rates charged, calls for reductions in the
         outstanding balance during calendar 2001, adds additional reporting
         requirements, prohibits the payment of preferred or common dividends
         and adds a covenant requiring the maintenance of minimum operating
         profit. While the Company is currently in compliance with such
         covenant, management does not expect the Company to be in compliance
         with its debt covenant requirements during the fourth quarter of fiscal
         2001. Accordingly, management is negotiating with its banks for further
         modifications to the revolving credit facility. The Company's ability
         to continue as a going concern is dependent upon its ability to achieve
         levels of revenue necessary to support the Company's cost structure,
         its ability to maintain adequate financing, and its ability to generate
         sufficient cash flows to meet its obligations on a timely basis.
         Management's plans in regard to these matters are described in the
         following paragraph.


                                       8
<PAGE>


         Since the second half of fiscal 2000, management of the Company has
         taken a series of steps intended to stabilize and improve the operating
         results of the Company, including completion of the sale of its
         Dura-Bond and Sooner Trailer subsidiaries and the sale of the timer and
         switch line at its Cramer subsidiary. The Company also completed the
         sale of the assets of its joint venture, Astro Air UK, Ltd. In
         addition, management of the Company's Coils segment was replaced, cost
         reductions at the corporate office were implemented and reductions in
         fixed costs at the operating units were initiated, commensurate with
         reductions in sales volumes. The Company is currently taking actions to
         further reduce fixed costs both at the corporate and operating unit
         levels and is considering further sales of assets and/or business
         units. Management believes that available cash and cash equivalents
         together with cash flow from operations, available borrowings under the
         Company's revolving credit facility and other sources of liquidity
         (including asset sales) will be sufficient to fund the Company's
         operating activities, investing activities and debt maturities for
         fiscal 2001. However, as noted above, management does not expect the
         Company to be in compliance with its debt covenant requirements during
         the fourth quarter of fiscal 2001 and has initiated negotiations with
         its banks for further modifications to the revolving credit facility.
         In addition, a substantial portion of its indebtedness will mature in
         February 2002, requiring the Company to refinance the indebtedness at
         that time.


3.       DISCONTINUED OPERATIONS

         On January 24, 2001, the Company completed the sale of the stock of
         Sooner Trailer to the McCasland Investment Group and certain members of
         Sooner Trailer's management for cash of $11,500,000, subject to certain
         post-closing adjustments based on changes in working capital, plus the
         assumption of debt of approximately $670,000. In May 2001, the Company
         received approximately $2,000,000 related to such post-closing
         adjustments. In connection with the anticipated sale, the Company
         recognized a loss of $8,600,000 in the fourth quarter of 2000 to adjust
         the carrying value of Sooner Trailer's assets to their estimated fair
         value based on an expected sales price. No additional gain or loss was
         recorded upon completion of the sale.

         The Company has reported the results of Sooner Trailer as "Discontinued
         Operations" for all periods presented in the condensed consolidated
         financial statements. Revenues from Sooner Trailer were $6,118,000 for
         2001 and $12,215,000 and $34,147,000 for the three and nine-months
         ended July 30, 2000, respectively. For financial reporting purposes,
         the net assets attributable to Sooner have been classified in the
         October 29, 2000 condensed consolidated balance sheet as "Net Assets of
         Discontinued Operations Held for Sale" and consist of the following:

                                                               October 29,
                                                                  2000

         Current assets                                       $ 9,812,000
         Current liabilities                                   (4,905,000)
                                                             ------------

         Net current assets                                     4,907,000
         Net fixed assets                                       3,965,000
         Other non-current assets                               1,180,000
         Non-current liabilities                                 (603,000)
                                                             ------------

         Total net assets held for sale                       $ 9,449,000
                                                             ============






                                       9
<PAGE>
4.       NET ASSETS HELD FOR SALE

         Dura-Bond - On November 2, 2000, the Company completed the sale of the
         stock of Dura-Bond to a joint venture formed by Melling Tool Company of
         Jackson, Michigan and Engine Power Components, Inc. of Grand Haven,
         Michigan (the "Joint Venture"). The Joint Venture acquired the stock of
         Dura-Bond for approximately $5,000,000, the net assets of which
         included debt of approximately $5,000,000. Based upon the terms of the
         sale, the Company recorded, in the fourth quarter of fiscal 2000, a
         pre-tax charge of $1,200,000 to adjust the carrying value of
         Dura-Bond's assets to their estimated fair value, reflecting a
         reduction in goodwill. No additional gain or loss is expected to be
         recorded on the sale. Net sales attributable to Dura-Bond were
         $6,399,000 and income from operations before the allocation of
         corporate expenses was $1,215,000 for the nine months ended July 30,
         2000.

         Cramer - On December 4, 2000, the Company completed the sale of the
         assets associated with the timer and switch line of Cramer to Capewell
         Components, LLC of South Windsor, Connecticut for cash of approximately
         $2,000,000, plus the assumption of approximately $400,000 in
         liabilities. In connection with the sale, the name of the company was
         changed from M.H. Rhodes, Inc. to Cramer Company. The Company
         anticipates the disposition of the remaining Cramer assets within the
         next twelve months. In connection with the sale of the timer and switch
         line and the anticipated sale of the remainder of the assets of Cramer,
         the Company recorded, in the fourth quarter of fiscal 2000, a pre-tax
         charge of $1,600,000 to adjust the carrying value of Cramer's assets to
         their estimated fair value, based upon an estimated sales price of the
         assets. As a result of ongoing negotiations to sell the remaining
         Cramer assets, the Company recorded a further adjustment to the
         carrying value of the Cramer assets resulting in a pre-tax charge of
         $1,100,000, recorded in the third fiscal quarter of 2001.

         Astro UK - On May 9, 2001, the Company completed the sale of
         substantially all of the assets of Astro UK to ACR Heat Transfer
         Limited of Norfolk, England for cash of (pound)450,000 (approximately
         $643,000). Based upon the terms of the sale, the Company recorded, in
         the second quarter of 2001, a pretax charge of $700,000 to adjust the
         carrying value of Astro UK's assets to their estimated realizable
         value. No additional gain or loss is expected to be recorded upon
         completion of the sale. Proceeds from the sale were utilized to reduce
         the Company's revolving credit facility.

         For financial reporting purposes, the assets and liabilities
         attributable to Dura-Bond and Cramer have been classified in the
         condensed consolidated balance sheets as Net Assets Held for Sale and
         consist of the following:
         <TABLE>
         <CAPTION>
                                                                        July 29,          October 29,
                                                                          2001                2000

        <S>                                                               <C>                 <C>
        Current assets                                               $   504,000         $ 7,571,000
        Current liabilities                                             (527,000)         (1,423,000)
                                                                     -----------        ------------

        Net current assets (liabilities)                                 (23,000)          6,148,000
        Net fixed assets                                               1,400,000           5,923,000
        Other noncurrent assets                                               --           2,449,000
        Non-current liabilities                                         (304,000)         (5,856,000)
                                                                     -----------        ------------

       Total net assets held for sale                                $ 1,073,000         $ 8,664,000
                                                                     ===========        ============

</TABLE>

                                       10
<PAGE>


5.       INVENTORIES
<TABLE>
<CAPTION>

                                                                       July 29,          October 29,
                                                                         2001                2000

          <S>                                                             <C>                 <C>
         Raw materials and purchased parts                           $ 3,296,000         $ 3,711,000
         Work in process                                               3,658,000           3,773,000
         Finished goods                                                2,202,000           1,542,000
                                                                     -----------        ------------

         Total                                                       $ 9,156,000         $ 9,026,000
                                                                     ===========        ============
</TABLE>

6.       LONG-TERM DEBT

         On January 22, 1999, the Company entered into a new revolving credit
         facility with the Company's two primary banks, originally expiring in
         December 2002. At July 29, 2001, $26,950,000 was outstanding under this
         facility. The revolving credit facility included financial and other
         covenants, including fixed charge, cash flow and net worth ratios and
         restrictions on certain asset sales, mergers and other significant
         transactions. The Company was not in compliance with such covenants at
         October 29, 2000. As a result, in February 2001, the Company entered
         into an amendment to its revolving credit facility, wherein the lenders
         agreed to forbear from exercising their rights and remedies under the
         facility in connection with such non-compliance until February 15,
         2002, at which time the facility matures. In addition to changing the
         maturity date from December 2002 to February 15, 2002, the amendment
         reduced the total amount available for borrowings to $32.0 million.
         Borrowings under the facility that are In-Formula (as defined) are
         charged interest at the Prime Rate plus 1.5% (8.25% at July 29, 2001).
         Borrowings under the facility that are Out-of-Formula (as defined) are
         charged interest at the Prime Rate plus 2.0% (8.75% at July 29, 2001).
         Borrowings and letters of credit are limited to a Borrowing Base,
         consisting of eligible accounts receivable and inventory. Borrowings
         that equal an amount up to and including the Borrowing Base, are
         defined as In-Formula borrowings. Total borrowings less In-Formula
         borrowings, are defined as Out-of-Formula borrowings. The available
         commitment was reduced by $1,000,000 in June 2001. The amendment calls
         for further reductions in the available commitment of $2,000,000, of
         which $1,400,000 is mandatory, at September 30, 2001, and $3,000,000 at
         December 31, 2001. If the Company is unable to reduce its outstanding
         commitment on either of these dates, then for each missed reduction the
         otherwise-applicable interest rates for outstanding loans will increase
         by 1% per annum, but failure to make the reductions will not constitute
         a default. As amended, the facility is secured by substantially all of
         the assets of the Company. The amendment also requires additional
         reporting requirements as well as the addition of a covenant requiring
         minimum operating profits. The amendment also requires the suspension
         of principal and interest payments on subordinated debt, with an
         aggregate outstanding balance of $2,046,000. Furthermore, the amendment
         to the facility prohibits the payment of preferred or common stock
         dividends.

                                       11

<PAGE>


         Derivative Interest Rate Contracts - The Company has two interest rate
         swap agreements, each with a $7,500,000 notional amount, maturing in
         July 2002. The Company receives floating interest rate payments at the
         three month London Interbank Offered Rate (3.8% at July 29, 2001) in
         exchange for the payment of quarterly fixed interest rate payments of
         7.0675% and 7.09% over the life of the agreements. In addition, the
         Company has an interest rate swap agreement with one of its banks with
         a notional amount of $5,150,000. The agreement requires the Company to
         make quarterly fixed payments on the notional amount at 4.22% through
         October 2003 in exchange for receiving payments at the BMA Municipal
         Swap Index (2.5% at July 29, 2001). The Company entered into these
         interest rate swap agreements to change the fixed/variable interest
         rate mix of its debt portfolio to reduce the Company's aggregate risk
         to movements in interest rates. Such swap agreements do not meet the
         stringent requirements for hedge accounting under SFAS 133.
         Accordingly, changes in the fair value of such agreements are recorded
         in the Condensed Consolidated Financial Statements as a component of
         interest expense. The fair market value of the swap agreement liability
         increased for the nine months ended July 29, 2001, resulting in a
         charge of $533,000.

     7.  COMMITMENTS AND CONTINGENCIES

         The Company is subject to federal, state and local environmental
         regulations 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.

         The Company 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 Cramer facility
         was previously located and conduct any remedial measures which may be
         required. Based upon the amounts recorded as liabilities, the Company
         does not believe that the ultimate resolution of this matter will have
         a material adverse effect on the consolidated financial results of the
         Company.

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

                                       12
<PAGE>


8.       SEGMENT INFORMATION
<TABLE>
<CAPTION>
                                                               Three Months Ended            Nine Months Ended
                                                         ---------------------------- ---------------------------
                                                             July 29,      July 30,      July 29,      July 30,
                                                               2001          2000          2001          2000
         <S>                                                    <C>            <C>          <C>           <C>
         Net sales:
         Motors                                            $13,104,000   $14,821,000   $39,831,000   $43,523,000
         Coils                                               7,823,000    10,473,000    22,167,000    33,685,000
         Other                                                 709,000     4,314,000     2,543,000    13,585,000
                                                         -------------- ------------- ------------- -------------

            Total net sales                                $21,636,000   $29,608,000   $64,541,000   $90,793,000
                                                         ============== ============= ============= =============

         Income (loss) from operations:
         Motors                                            $ 1,690,000   $ 1,897,000   $ 4,365,000   $ 4,090,000
         Coils                                                  68,000      (154,000)   (1,066,000)      574,000
         Other                                              (1,179,000)      713,000    (1,452,000)    1,866,000
         Corporate (1)                                      (1,198,000)   (1,007,000)   (3,142,000)   (3,088,000)
                                                         -------------- ------------- ------------- -------------

            Total income (loss) from operations             $ (619,000)  $ 1,449,000   $(1,295,000)  $ 3,442,000
                                                         ============== ============= ============= =============
</TABLE>

         (1)  Includes unallocated corporate expenses, primarily salaries and
              benefits, information technology and other administrative
              expenses.


         The Company derives substantially all of its revenues from within the
         United States. Identifiable assets of the segments are not materially
         different from amounts disclosed in the Company's 2000 Annual Report on
         Form 10-K. Information about interest expense, other income and income
         taxes is not provided on a segment level. The accounting policies of
         the segments are the same as those described in the summary of
         significant accounting policies and in the Company's 2000 Annual Report
         on Form 10-K.




                                       13

<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 July 29, 2001 and the results of operations for the three
         and nine months ended July 29, 2001 and July 30, 2000. 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.

         General

         Owosso Corporation designs, manufactures and distributes engineered
         component products, specifically motors and heat exchange coils. The
         accompanying financial statements have been prepared on a going concern
         basis of accounting and do not reflect any adjustments that might
         result if the Company is unable to continue as a going concern. The
         Company's results of operations have declined significantly over the
         past two years. The Company reported a net loss for the year ended
         October 29, 2000 and has continued to incur losses through the third
         quarter of fiscal 2001. In addition, the Company was not in compliance
         with covenants under its revolving credit facility at October 29, 2000.
         As a result, in February 2001, the Company entered into an amendment to
         its revolving credit facility, wherein the lenders agreed to forbear
         from exercising their rights and remedies under the facility in
         connection with such non-compliance until February 15, 2002, at which
         time the facility matures. As further disclosed under Note 6 "Long-term
         Debt", the amendment to the revolving credit facility, which has been
         further amended since February 2001, also modified the interest rates
         charged, calls for reductions in the outstanding balance during
         calendar 2001, adds additional reporting requirements, prohibits the
         payment of preferred or common dividends and adds a covenant requiring
         the maintenance of minimum operating profit. While the Company is
         currently in compliance with such covenant, management does not expect
         the Company to be in compliance with its debt covenant requirements
         during the fourth quarter of fiscal 2001. Accordingly, management is
         negotiating with its banks for further modifications to the revolving
         credit facility. The Company's ability to continue as a going concern
         is dependent upon its ability to achieve levels of revenue necessary to
         support the Company's cost structure, its ability to maintain adequate
         financing, and its ability to generate sufficient cash flows to meet
         its obligations on a timely basis. Management's plans in regard to
         these matters are described in the following paragraph.

         Since the second half of fiscal 2000, management of the Company has
         taken a series of steps intended to stabilize and improve the operating
         results of the Company, including the completion of the sales of its
         Dura-Bond and Sooner Trailer subsidiaries and the sale of the timer and
         switch line at its Cramer subsidiary (formerly known as M.H. Rhodes,
         Inc.). The Company also completed the sale of the assets of its joint
         venture, Astro Air UK, Ltd. In addition, management of the Company's
         Coils segment was replaced, cost reductions at the corporate office
         were implemented and reductions in fixed costs at the operating units
         were initiated, commensurate with reductions in sales volumes. The
         Company is currently taking actions to further reduce fixed costs both
         at the corporate and operating unit levels and is considering further
         sales of assets and/or business units. Management believes that
         available cash and cash equivalents together with cash flows from
         operations, available borrowings under the Company's revolving credit
         facility and other sources of liquidity (including asset sales) will be
         sufficient to fund the Company's operating activities, investing
         activities and debt maturities for fiscal 2001. However, as noted
         above, management does not expect the Company to be in compliance with
         its debt covenant requirements during the fourth quarter of fiscal 2001
         and has initiated negotiations with its banks for further modifications
         to the revolving credit facility. In addition, a substantial portion of



                                       14
<PAGE>

         its indebtedness will mature in February 2002, requiring the Company to
         refinance the indebtedness at that time.

         Sale of Businesses

         Dura-Bond - On November 2, 2000, the Company sold the stock of
         Dura-Bond to a joint venture formed by Melling Tool Company of Jackson,
         Michigan and Engine Power Components, Inc. of Grand Haven, Michigan
         (the "Joint Venture"). The Joint Venture acquired the stock of
         Dura-Bond for approximately $5.0 million, the net assets of which
         included debt of approximately $5.0 million. Based upon the terms of
         the sale, the Company recorded, in the fourth quarter of fiscal 2000, a
         pre-tax charge of $1.2 million to adjust the carrying value of
         Dura-Bond's assets to their estimated realizable value. No additional
         gain or loss is expected to be recorded on the sale. Proceeds from the
         sale, net of transaction fees, were used to reduce the Company's
         revolving credit facility.

         Cramer - On December 4, 2000, the Company completed the sale of the
         assets associated with the timer and switch line of Cramer to Capewell
         Components, LLC of South Windsor, Connecticut for cash of $2.0 million,
         plus the assumption of approximately $400,000 in liabilities. In
         connection with the sale of the assets, the name of the company was
         changed from M.H. Rhodes, Inc. to Cramer Company ("Cramer"). Proceeds
         from the sale were used to reduce the Company's revolving credit
         facility and other long-term indebtedness. The Company anticipates the
         disposition of the remaining assets of Cramer within the next twelve
         months. In connection with the sale of the timer and switch line and
         the anticipated sale of the remaining assets of Cramer, the Company
         recorded, in the fourth quarter of fiscal 2000, a pre-tax charge of
         $1.6 million to adjust the carrying value of Cramer's assets to their
         estimated realizable value, based on an estimated sales price of the
         assets. As a result of ongoing negotiations to sell the remaining
         Cramer assets, the Company recorded a further adjustment to the
         carrying value of the Cramer assets resulting in a pre-tax charge of
         $1.1 million, recorded in the third quarter of fiscal 2001.

         Sooner Trailer - On January 24, 2001, the Company completed the sale of
         the stock of Sooner Trailer to the McCasland Investment Group and
         certain members of Sooner Trailer's management for cash of $11.5
         million, subject to certain post-closing adjustments based on changes
         in working capital, plus the assumption of debt of approximately
         $670,000. In May 2001, the Company received approximately $2.0 million
         related to such post-closing adjustments. Based upon the terms of the
         sale, the Company recorded, in the fourth quarter of 2000, a pretax
         charge of $8.6 million to adjust the carrying value of Sooner Trailer's
         assets to their estimated fair value, representing the write-down of
         goodwill. No additional gain or loss was recorded upon completion of
         the sale. Proceeds from the sale were utilized to reduce the Company's
         revolving credit facility.

         Astro UK - On May 9, 2001, the Company completed the sale of
         substantially all of the assets of Astro UK to ACR Heat Transfer
         Limited of Norfolk, England for cash of (pound)450,000 (approximately
         $643,000). Based upon the terms of the sale, the Company recorded, in
         the second quarter of 2001, a pretax charge of $700,000 to adjust the
         carrying value of Astro UK's assets to their estimated fair value. No
         additional gain or loss is expected to be recorded upon completion of
         the sale. Proceeds from the sale were utilized to reduce the Company's
         revolving credit facility.

                                       15
<PAGE>


         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          Nine Months Ended
                                                       -----------------------   --------------------------
                                                         July 29,     July 30,       July 29,      July 30,
                                                          2001          2000           2001          2000
         <S>                                              <C>           <C>            <C>           <C>
         Net sales                                       100.0%        100.0%         100.0%        100.0%
         Cost of products sold                            83.7%         82.4%          84.9%         83.0%
                                                       --------- -------------   ------------ -------------
         Gross profit                                     16.3%         17.6%          15.1%         17.0%
         Selling, general and administrative expenses     14.0%         12.7%          14.3%         13.2%
         Write-down of net assets held for sale            5.1%          0.0%           2.8%          0.0%
                                                       --------- -------------   ------------ -------------
         Income (loss) from operations                    -2.8%          4.9%          -2.0%          3.8%
         Interest expense                                  4.6%          4.3%           5.3%          4.2%
         Other (income) expense                           -0.6%         -0.1%          -0.4%         -0.1%
                                                       --------- -------------   ------------ -------------
         Income (loss) before income taxes                -6.8%          0.7%          -6.9%         -0.3%
</TABLE>

         Three months ended July 29, 2001 compared to three months ended July
         30, 2000

         Net sales. Net sales for the third quarter of 2001 were $21.6 million,
         as compared to $29.6 million in the prior year quarter, a decrease of
         $8.0 million, or 26.9%. These results include the effect of disposing
         of Dura-Bond in November 2000. Sales attributable to Dura-Bond were
         $2.1 million in the third quarter of 2000. Sales volume at all business
         units has been adversely effected by the general economic slowdown
         effecting the Company's primary markets, particularly the heavy truck
         and recreation vehicle markets.

         Net sales from Motors decreased 11.6% to $13.1 million in 2001, from
         $14.8 million in 2000, as a result of lower demand from the
         recreational vehicle, healthcare and heavy truck markets.

         Net sales from Coils were $7.8 million in 2001, as compared to $10.5
         million in 2000, a decrease of 25.3%. This decrease reflects continuing
         weak demand from the heavy truck market which, according to industry
         sources, is down approximately 45% compared to last year.

         Net sales from the Company's Other segment were $709,000 in 2001, as
         compared to $4.3 million in 2000. Sales attributable to Dura-Bond,
         which was sold November 2, 2000, were $2.1 million in the third quarter
         of 2000. Sales at Cramer, the only remaining business in this segment,
         decreased $1.5 million, primarily reflecting the sale of the timer and
         switch line on December 4, 2000.

         Income (loss) from operations. For the third quarter of 2001, the
         Company recorded a loss from operations of $619,000, as compared to
         income from operations of $1.4 million in the prior year quarter. The
         current quarter loss includes a charge of $1.1 million for the
         write-down of net assets held for sale related to the anticipated sale
         of Cramer.

         Income from operations for the Motors segment was $1.7 million, or
         12.9% of net sales, in the third quarter of 2001, as compared to $1.9
         million, or 12.8% of net sales, in the prior year quarter. These
         results reflect an 11.6% decrease in net sales as well as increased
         selling, general and administrative expenses resulting from increased
         medical costs.

                                       16
<PAGE>
         The Coils segment reported income from operations of $68,000 for 2001,
         as compared to a loss from operations of $154,000 in the prior year
         quarter. Despite a 25.3% decrease in net sales, as compared to the
         prior year quarter, income from operations improved primarily as a
         result of lower personnel costs.

         The Company's Other segment reported a loss from operations of $1.2
         million in the third quarter of 2001, as compared to income from
         operations of $713,000 in the prior year quarter. The current quarter
         loss includes a charge of $1.1 million for the write-down of net assets
         held for sale related to the anticipated sale of the remaining Cramer
         assets. These results also include the effect of the sale of Dura-Bond,
         which had income from operations of $433,000 in the third quarter of
         2000. Operating results from Cramer, the only remaining business in
         this segment, decreased as a result of the sale of the timer and switch
         line in December 2000.

         Unallocated corporate expenses included in selling, general and
         administrative expenses were $1.2 million in the third quarter of 2001,
         as compared to $1.0 million in the prior year quarter. This increase
         primarily reflects increased incentive compensation.

         Interest expense. Interest expense decreased to $992,000 for the third
         quarter of 2001 from $1.3 million in the prior year quarter primarily
         as a result of lower debt levels. The current quarter includes a charge
         of $81,000 resulting from a decrease in the fair market value of the
         Company's interest rate swap agreements as a result of decreases in
         interest rates. This charge was recorded in accordance with SFAS 133.

         Income tax expense (benefit). The Company recorded an income tax
         benefit at an effective rate of 34.0% for 2001, as compared to an
         effective tax rate of 41.9% in the prior year quarter. The effective
         tax rate for 2000 was adversely effected as a result of a higher
         proportion of non-deductible taxable losses.

         Income (loss) from discontinued operations. Discontinued operations
         represents the operations of Sooner Trailer, which was sold in January
         2001. For the prior year quarter, income from discontinued operations
         was $79,000 (net of tax of $152,000). Revenues from discontinued
         operations were $12.2 million for the third quarter of 2000.

         Net income (loss) available for common shareholders. Net loss available
         for common shareholders was $1.3 million, or $.22 per share, in the
         third quarter of 2001, as compared to a net loss available for common
         shareholders of $85,000, or $.01 per share, in the prior year quarter.
         Income (loss) available for common shareholders is calculated by
         subtracting dividends on preferred stock of $225,000 and $188,000 for
         2001 and 2000, respectively, and by deducting the non-cash accretion in
         book value of preferred stock of $105,000 and $94,000 for 2001 and
         2000, respectively.

         Nine months ended July 29, 2001 compared to nine months ended July 30,
         2000

         Net sales. Net sales for the nine months ended July 29, 2001 were $64.5
         million, as compared to $90.8 million in the prior year period, a
         decrease of $26.3 million, or 28.9%. These results include the effect
         of disposing of Dura-Bond in November 2000. Sales attributable to
         Dura-Bond were $6.4 million in the nine-month fiscal 2000 period.

         Net sales from Motors decreased 8.5% to $39.8 million in 2001, from
         $43.5 million in 2000, as a result of lower demand from the
         recreational vehicle, healthcare and heavy truck markets.

                                       17
<PAGE>

         Net sales from Coils were $22.2 million in 2001, as compared to $33.7
         million in 2000, a decrease of 34.2%. This decrease reflects the loss
         of a customer that represented 17% of sales to the Coils segment in
         fiscal 2000. However, during the second quarter of fiscal 2001, the
         Company began to again supply this customer and has since regained most
         of the former business of this customer. The decrease in net sales as
         compared to the prior year is also a result of continuing weak demand
         from the heavy truck market.

         Net sales from the Company's Other segment were $2.5 million in 2001,
         as compared to $13.6 million in 2000. Sales attributable to Dura-Bond,
         which was sold November 2, 2000, were $6.4 million for the nine-month
         period of 2000. Sales at Cramer, the only remaining business in this
         segment, decreased $4.6 million, primarily reflecting the sale of the
         timer and switch line in December 2000.

         Income (loss) from operations. For the nine-month period of 2001, the
         Company recorded a loss from operations of $1.3 million, as compared to
         income from operations of $3.4 million in the prior year period. The
         current period loss includes a charge of $1.8 million for the
         write-down of net assets held for sale related to the sale of Astro UK
         and the anticipated sale of the remaining Cramer assets, and income of
         $400,000 recorded in connection with the settlement of a vendor
         dispute.

         Income from operations for the Motors segment increased to $4.4
         million, or 11.0% of net sales, in 2001, as compared to $4.1 million,
         or 9.4% of net sales, in the prior year period. Despite decreased
         sales, income from operations improved as a result of improved
         productivity and decreased selling, general and administrative
         expenses.

         The Coils segment reported a loss from operations of $1.1 million in
         2001, as compared to income from operations of $574,000 in the prior
         year period. The current year loss includes a charge of $700,000 to
         write-down the carrying value of Astro UK's assets, recorded in
         connection with the sale of Astro UK, completed in May 2001. The
         decrease in operating results also reflects lower sales volume
         partially offset by decreased selling, general and administrative
         costs.

         The Company's Other segment reported a loss from operations of $1.5
         million in 2001, as compared to income from operations of $1.9 million
         in the prior year period. The current period loss includes a charge of
         $1.1 million for the write-down of net assets held for sale related to
         the anticipated sale of the remaining Cramer assets. These results also
         include the effect of the sale of Dura-Bond, which had income from
         operations of $1.2 million in 2000. Operating results from Cramer, the
         only remaining business in this segment, decreased primarily as a
         result of the sale of the timer and switch line.

         Unallocated corporate expenses included in selling, general and
         administrative expenses were $3.1 million in both 2001 and 2000. The
         current year results reflect higher incentive compensation, offset by
         income from a vendor dispute. Prior year results reflect reduced
         environmental costs.

         Interest expense. Interest expense decreased to $3.4 million for the
         current nine-month period from $3.8 million in the prior year period
         primarily as a result of lower debt levels. The current period includes
         a charge of $533,000 resulting from a decrease in the fair market value
         of the Company's interest rate swap agreements as a result of decreases
         in interest rates. This charge was recorded in accordance with SFAS
         133.


                                       18
<PAGE>

         Income tax expense (benefit). The Company recorded an income tax
         benefit at an effective rate of 28.6% for 2001, as compared to an
         effective tax rate of 64.4% in the prior year. The Company's effective
         tax rate was adversely effected as a result of a higher proportion of
         non-deductible taxable losses.

         Income (loss) from discontinued operations. For 2001, the Company
         recorded a loss from discontinued operations, representing the
         operations of Sooner Trailer, sold in January 2001, of $434,000 (net of
         a tax benefit of $144,000) on revenues of $6.1 million. For the
         nine-month period of 2000, income from discontinued operations was
         $579,000 (net of tax of $656,000) on revenues of $34.1 million.

         Net income (loss) available for common shareholders. Net loss available
         for common shareholders was $4.7 million, or $.80 per share, in 2001,
         as compared to a net loss of $351,000, or $.06 per share, in the prior
         year period. Income (loss) available for common shareholders is
         calculated by subtracting dividends on preferred stock of $675,000 and
         $563,000 for 2001 and 2000, respectively, and by deducting the non-cash
         accretion in book value of preferred stock of $309,000 and $276,000 for
         2001 and 2000, respectively.

         Liquidity and Capital Resources

         Cash and cash equivalents were $307,000 at July 29, 2001. The Company
         had negative working capital of $14.0 million at July 29, 2001, as
         compared to positive working capital of $2.1 million at October 30,
         2000. The decrease in working capital reflects the classification of
         the Company's revolving credit facility, which expires in February
         2002, as current. Net cash used in operating activities was $4.1
         million, as compared to net cash provided by operating activities of
         $4.3 million in prior year period. The decrease in cash from operations
         was principally the result of lower operating results consistent with
         decreased sales volume.

         Cash flows from investing activities included $6.6 million from the
         sales of Dura-Bond, the Cramer timer and switch line, and Astro UK.
         Investing activities also included $1.7 million for capital
         expenditures for equipment and $298,000 of contingent consideration
         paid to the former owner of Astro Air and recorded as goodwill. Net
         cash provided by investing activities of discontinued operations
         includes $13.6 million received from the sale of Sooner Trailer. The
         Company currently plans to invest approximately $900,000 in capital
         expenditures during the remainder of fiscal 2001, primarily for new
         technologies and production efficiencies. Management anticipates
         funding capital expenditures with cash from operations and proceeds
         from the Company's revolving credit facility.

         Net cash used in financing activities included net repayments of $14.2
         million under the Company's revolving credit agreement, debt repayments
         of $949,000, and the payment of dividends of $142,000.

         At July 29, 2001, $27.0 million was outstanding under the Company's
         revolving credit facility. As a result of noncompliance with covenants
         contained in its revolving credit facility at October 29, 2000, the
         Company, in February 2001, entered into an amendment to its revolving
         credit facility, wherein the lenders agreed to forbear from exercising
         their rights and remedies under the facility in connection with such
         non-compliance until February 15, 2002, at which time the facility
         matures. In addition to changing the maturity date from December 2002
         to February 15, 2002, the amendment reduced the total amount available
         for borrowings to $32.0 million. Borrowings under the facility that are
         In-Formula (as defined) are charged interest at the Prime Rate plus
         1.5%. Borrowings under the facility that are Out-of-Formula (as


                                       19
<PAGE>


         defined) are charged interest at the Prime Rate plus 2.0%. Borrowings
         and letters of credit are limited to a Borrowing Base, consisting of
         eligible accounts receivable and inventory. Borrowings that equal an
         amount up to and including the Borrowing Base, are defined as
         In-Formula borrowings. Total borrowings less In-Formula borrowings, are
         defined as Out-of-Formula borrowings. The available commitment was
         reduced by $1.0 million in June 2001. The agreement calls for further
         reductions in the available commitment of $2.0 million, of which $1.4
         million is mandatory, at September 30, 2001, and $3.0 million at
         December 31, 2001. If the Company is unable to reduce its outstanding
         commitment on either of these dates, then for each missed reduction the
         otherwise-applicable interest rates for outstanding loans will increase
         by 1% per annum, but failure to make the reductions will not constitute
         a default. The facility, as amended, is secured by substantially all of
         the assets of the Company. The amendment requires additional reporting
         requirements as well as the addition of a covenant requiring minimum
         operating profits. While the Company is currently in compliance with
         such covenant, management does not expect the Company to be in
         compliance with its debt covenant requirements during the fourth
         quarter of fiscal 2001. Accordingly, management is negotiating with its
         banks for further modifications to the revolving credit facility. The
         amendment also requires the suspension of principal and interest
         payments on subordinated debt, with an aggregate outstanding balance of
         $2.0 million as of July 29, 2001. Furthermore, the amendment to the
         facility prohibits the payment of preferred or common stock dividends.
         See discussion under the section titled "General".

         The Company has interest rate swap agreements with its two banks with
         notional amounts totaling $20.2 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. In that the Company's interest rate swap
         agreements do not meet the stringent requirements for hedge accounting
         under SFAS 133, future earnings could reflect greater volatility.

         As discussed above under the section titled "General", the Company's
         ability to continue as a going concern is dependent on its ability to
         achieve levels of revenue necessary to support the Company's cost
         structure, its ability to maintain adequate financing, and its ability
         to generate sufficient cash flows to meet its obligations on a timely
         basis.

         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. Such statements are subject to certain risks and
         uncertainties which could cause actual results to differ materially
         from those projected. Readers are cautioned not to place undue reliance
         on these forward-looking statements which speak only as of the date
         hereof. The Company undertakes no obligation to republish revised
         forward-looking statements to reflect events or circumstances after the
         date hereof or to reflect the occurrence of unanticipated events.

         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:

                                       20
<PAGE>


         o  The Company's continued liquidity is dependent upon its ability to
            achieve levels of revenue necessary to support the Company's cost
            structure, its ability to maintain adequate financing, and its
            ability to generate sufficient cash flows to meet its obligations on
            a timely basis.

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

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

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

         o  The Company's results can be affected by changes in manufacturing
            processes and techniques.

         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  In that the Company's outstanding derivative instruments do not meet
            the stringent requirements for hedge accounting under SFAS 133,
            future earnings could reflect greater volatility.

         o  The Company may, in the future, divest of product lines or business
            units. Any such divestiture may involve costs of disposition or loss
            on the disposition that could adversely affect the Company's
            operating results or financial condition.

                                       21


<PAGE>
         Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company uses a revolving credit facility, industrial revenue bonds
         and term loans to finance a significant portion of its operations.
         These on-balance sheet financial instruments, to the extent they
         provide for variable rates of interest, expose the Company to interest
         rate risk resulting from changes in London Interbank Offered Rate or
         the prime rate. The Company uses interest rate swap agreements to
         partially hedge interest rate exposure associated with on-balance sheet
         financial instruments. All of the Company's derivative financial
         instrument transactions are entered into for non-trading purposes.

         To the extent that the Company's financial instruments expose the
         Company to interest rate risk and market risk, they are presented in
         the table below. The table presents principal cash flows and related
         interest rates by year of maturity for the Company's revolving credit
         facility, industrial revenue bonds and term loans in effect at July 29,
         2001. For interest rate swaps, the table presents notional amounts and
         the related reference interest rates by year of maturity. Fair values
         included herein have been determined based upon (1) rates currently
         available to the Company for debt with similar terms and remaining
         maturities, and (2) estimates obtained from dealers to settle interest
         rate swap agreements. Note 6 to the condensed consolidated financial
         statements should be read in conjunction with the table below (dollar
         amounts in thousands).
<TABLE>
<CAPTION>
                                                    Year of Maturity                                        Fair Value
                                     ---------------------------------------------------------   Total Due       at
                                     2002      2003       2004     2005     2006    Thereafter  at Maturity   07/29/01
                                     ----      ----       ----     ----     ----    ----------  -----------   --------
<S>                                   <C>       <C>        <C>      <C>      <C>        <C>          <C>        <C>
Debt:
   Fixed rate                     $ 1,895     $   352    $ 277    $ 256    $ 161    $   130      $  3,071     $  3,071
   Average interest rate             8.0%        8.0%     8.0%     8.0%     8.0%       8.0%
   Variable rate                  $27,250     $   300    $ 300    $ 600    $ 600    $ 3,050      $ 32,100     $ 32,100
   Average interest rate             8.5%        4.4%     4.4%     4.4%     4.4%       4.4%

Interest rate swap agreements:
   Variable to fixed swaps        $    -      $15,000  $ 5,150      $ -      $ -        $ -      $ 20,150    $   (635)
   Average pay rate                  7.1%        4.2%
   Average receive rate              3.8%        2.5%
</TABLE>


                                       22
<PAGE>


         Part II.     OTHER INFORMATION

         Item 2.      Changes in Securities and Use of Proceeds

         Effective for the second quarter of 2000, the Company modified certain
         covenants included in its revolving credit facility. In accordance with
         such modifications, the Company was, and continues to be, prohibited
         from making common stock dividend payments. Further modifications to
         the Company's revolving credit facility in February 2001 resulted in
         the Company also being prohibited from making future preferred stock
         dividend payments.


         Item 6.      Exhibits and Reports on Form 8-K

        (a)      Exhibits
<TABLE>
<CAPTION>
                 Exhibit No.           Description
                 ----------            -----------
                     <S>                 <C>
                    10.1               Seventh Amendment to Amended and Restated Credit
                                       Agreement by and among Owosso Corporation, its subsidiaries,
                                       Bank One and PNC Bank, N.A., effective May 9, 2001

                    11                 Computation of Per Share Earnings
</TABLE>

        (b)      Form 8-K

                 No reports on Form 8-K were filed during the quarter ended
                 July 29, 2001.

                                       23
<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: August 27, 2001              By: /s/ George B. Lemmon, Jr.
                                            -------------------------
                                            George B. Lemmon, Jr.
                                            President, Chief Executive
                                            Officer, and Director



                                        By: /s/ John M. Morrash
                                            -------------------
                                            John M. Morrash
                                            Executive Vice President - Finance,
                                            Chief Financial Officer, and
                                            Treasurer and Secretary


                                       24