<PAGE>   1


                                   FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

      For the quarterly period ended March 29, 1998

                                       OR

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

      For the transition period from _______________ to ______________


                            -------------------------

                         Commission File Number 0-17297

                             BTU INTERNATIONAL, INC.
             (Exact name of Registrant as specified in its charter)


                  DELAWARE                                  04-2781248
      (State or Other Jurisdiction of                    (I.R.S. Employer
      Incorporation or Organization)                   Identification Number)


 23 Esquire Road, North Billerica, Massachusetts           01862-2596
     (Address of principal executive offices)              (Zip Code)


       Registrant's telephone number, including area code: (978) 667-4111


     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 ( )

     Indicate the number of shares outstanding of the Registrant's Common Stock,
par value $.01 per share, as of the latest practicable date: As of May 7, 1998:
7,175,162 shares.


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<TABLE>
<CAPTION>

                             BTU INTERNATIONAL, INC.

                                TABLE OF CONTENTS

<S>                                                                     <C>
PART I. FINANCIAL INFORMATION

Condensed Consolidated Balance Sheets                                   1-2
Condensed Consolidated Statements of Operations                           3
Condensed Consolidated Statement of Stockholders' Investment              4
Condensed Consolidated Statements of Cash Flows                           5
Notes to Condensed Consolidated Financial Statements                    6-7
Management's Discussion and Analysis of Financial Condition
   and Results of Operations                                            8-9

PART II. OTHER INFORMATION

Signatures                                                               10
Exhibits and Reports on Form 8-K                                         11
Calculation of Net Income per Common and Common
   Equivalent Share                                                      12
</TABLE>




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<TABLE>
<CAPTION>

                                BTU INTERNATIONAL, INC.
                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                    (in thousands)

                                       ASSETS
                                                                 (Unaudited)
                                                                   March 29,          December 31,
                                                                      1998                1997
--------------------------------------------------------------------------------------------------
<S>                                                                  <C>                 <C>    
Current assets
     Cash and cash equivalents                                       $10,512             $11,873
     Accounts receivable, less reserves of
         $160 in 1998 and $160 in 1997                                10,333              12,334
     Inventories (Note 2)                                             10,652              10,028
     Other current assets                                              1,052               1,124
--------------------------------------------------------------------------------------------------
         Total current assets                                         32,549              35,359
--------------------------------------------------------------------------------------------------

Property, plant and equipment, at cost
     Land                                                                210                 210
     Buildings and improvements                                        5,951               5,949
     Machinery and equipment                                           6,190               5,783
     Furniture and fixtures                                              795                 749
--------------------------------------------------------------------------------------------------
                                                                      13,146              12,691
     Less-Accumulated depreciation                                     8,326               8,077
--------------------------------------------------------------------------------------------------
         Net property, plant and equipment                             4,820               4,614

Other assets, net of accumulated amortization of $442
     in 1998 and $437 in 1997                                            431                 406
--------------------------------------------------------------------------------------------------

                                                                     $37,800             $40,379
==================================================================================================
</TABLE>






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


                                        1


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<TABLE>
<CAPTION>

                                  BTU INTERNATIONAL, INC.
                           CONDENSED CONSOLIDATED BALANCE SHEETS
                             (in thousands except share data)

                         LIABILITIES AND STOCKHOLDERS' INVESTMENT

                                                                   (Unaudited)
                                                                     March 29,         December 31,
                                                                      1998                1997
----------------------------------------------------------------------------------------------------
<S>                                      <C>                         <C>                 <C>    
Current liabilities
     Current maturities of long-term debt and
         capital lease obligations (Note 3)                          $   224             $   224
     Accounts payable                                                  4,408               6,013
     Other current liabilities                                         2,624               3,024
----------------------------------------------------------------------------------------------------
         Total current liabilities                                     7,256               9,261
----------------------------------------------------------------------------------------------------

Long-term debt and capital lease obligations, less
     current maturities (Note 3)                                       5,304               5,313
Deferred income taxes                                                  2,247               2,247
----------------------------------------------------------------------------------------------------

                                                                      14,807              16,821
----------------------------------------------------------------------------------------------------

Stockholders' investment (Note 4)
     Series preferred stock, $1 par value-
         Authorized - 5,000,000 shares;
         Issued and outstanding - none                                     -                   -
     Common stock, $.01 par value-
         Authorized - 25,000,000 shares;
         Issued - 7,675,443 and 7,674,923 shares
         at March 29, 1998 and
         December 31, 1997, respectively                                  77                  77
     Additional paid-in capital                                       20,250              20,250
     Accumulated earnings                                              4,187               4,061
     Treasury stock- 497,781 and 355,281 shares
     at cost, at March 29, 1998 and
     December 31, 1997, respectively                                  (1,871)             (1,183)
----------------------------------------------------------------------------------------------------
                                                                      22,643              23,205
     Accumulated other Comprehensive Income                              350                 353
----------------------------------------------------------------------------------------------------

         Total stockholders' investment                               22,993              23,558
----------------------------------------------------------------------------------------------------

                                                                     $37,800             $40,379
====================================================================================================
</TABLE>


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


                                        2


<PAGE>   5

<TABLE>
<CAPTION>


                                  BTU INTERNATIONAL, INC.
                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 29, 1998 AND MARCH 30, 1997
                      (in thousands, except share and per share data)
                                        (Unaudited)

                                                                           THREE MONTHS ENDED  
                                                                      ----------------------------
                                                                      March 29,          March 30,
                                                                        1998               1997
-----------------------------------------------------------------------------------------------------
<S>                                                                <C>                  <C>      
Net sales                                                            $12,101              $11,026
Cost of goods sold                                                     7,162                6,235
-----------------------------------------------------------------------------------------------------

         Gross profit                                                  4,939                4,791

Operating expenses:
     Selling, general and administrative                               3,673                3,637
     Research, development and engineering                             1,172                1,029
     Restructuring charge                                                  -                  530
-----------------------------------------------------------------------------------------------------

         Income from operations                                           94                 (405)
-----------------------------------------------------------------------------------------------------

     Interest income                                                     118                  105
     Interest expense                                                   (112)                (127)
     Other income, net                                                     4                    9
-----------------------------------------------------------------------------------------------------

         Income (loss) before provision for income taxes                 104                 (418)
         Income tax provision                                            (22)                (142)
-----------------------------------------------------------------------------------------------------

         Net income(loss)                                               $126                $(276)
=====================================================================================================
     Earnings Per Share:
         Basic                                                         $0.02               $(0.04)
         Diluted                                                       $0.02               $(0.04)
=====================================================================================================
     Weighted average number of Shares Outstanding:
         Basic Shares                                              7,277,299            7,279,924
         Effect of Dilutive Options                                   82,816               24,563
-----------------------------------------------------------------------------------------------------
         Diluted Shares                                            7,360,115            7,304,487
=====================================================================================================
</TABLE>




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


                                        3


<PAGE>   6

<TABLE>
<CAPTION>

                                       BTU INTERNATIONAL, INC.
                    CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
                              FOR THE THREE MONTHS ENDED MARCH 29, 1998
                                           (in thousands)
                                             (Unaudited)

                                                                            ACCUMULATED
                              ADDITIONAL                                       OTHER            TOTAL
                 COMMON        PAID-IN       ACCUMULATED     TREASURY      COMPREHENSIVE    STOCKHOLDERS'
                  STOCK        CAPITAL         EARNINGS       STOCK           INCOME          INVESTMENT
---------------------------------------------------------------------------------------------------------
<S>                <C>         <C>              <C>           <C>               <C>           <C>    
Balance,
 beginning of
 the period        $77         $20,250          $4,061        $(1,183)          $353          $23,558

Net income           -               -             126              -              -              126

Purchase of
Treasury Stock       -               -               -           (688)             -             (688)

Translation
Adjustment           -               -               -              -             (3)              (3)

---------------------------------------------------------------------------------------------------------

Balance,
end of
the period         $77         $20,250          $4,187        $(1,871)          $350          $22,993
=========================================================================================================
</TABLE>





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



                                        4


<PAGE>   7


<TABLE>
<CAPTION>

                                       BTU INTERNATIONAL, INC.
                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE THREE MONTHS ENDED MARCH 29, 1998 AND MARCH 30, 1997
                                           (in thousands)
                                             (Unaudited)

                                                                          MARCH 29,         MARCH 30,
                                                                            1998              1997
-------------------------------------------------------------------------------------------------------
<S>                                                                        <C>             <C>     
Cash flows from operating activities:
         Net income (loss)                                                 $   126         $  (276)
         Adjustments to reconcile net income to net cash
           provided by(used in) operating activities -
           Depreciation and amortization                                       254             215
           Net changes in operating assets and liabilities-
              Accounts receivable                                            2,001            (499)
              Inventories                                                     (624)           (274)
              Other current assets                                              72             149
              Accounts payable                                              (1,605)            (28)
              Other current liabilities                                       (400)            158
              Other assets                                                     (30)              3
--------------------------------------------------------------------------------------------------------
         Net cash used in  operating activities                               (206)           (552)
--------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
         Purchases of property, plant and equipment, net                      (455)           (139)
--------------------------------------------------------------------------------------------------------

         Net cash used in investing activities                                (455)           (139)
--------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
         Principal payments under long-term debt and capital lease
           obligations                                                          (9)            (88)
         Proceeds from issuance of common stock                                  -               1
         Purchase of treasury stock                                           (688)              -
--------------------------------------------------------------------------------------------------------

         Net cash used in financing activities                                (697)            (87)
--------------------------------------------------------------------------------------------------------
Effect of exchange rates on cash                                                (3)            (24)
--------------------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents                                   (1,361)           (802)
Cash and cash equivalents, at beginning of the period                       11,873          10,218
--------------------------------------------------------------------------------------------------------

Cash and cash equivalents, at end of the period                            $10,512          $9,416
========================================================================================================

Supplemental disclosures of cash flow information
         Cash paid during the periods for -
         Interest                                                             $112            $127
         Income taxes                                                           12               5
</TABLE>




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



                                        5

<PAGE>   8


                             BTU INTERNATIONAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1)  Basis for presentation

     The condensed consolidated balance sheet as of March 29, 1998, the
condensed consolidated statement of stockholders' investment for the three
months ended March 29, 1998, the condensed consolidated statement of cash flows
for the three months ended March 29, 1998 and March 30, 1997, and the related
condensed consolidated statements of operations for the quarters ended March 29,
1998 and March 30, 1997 are unaudited. In the opinion of management, all
adjustments necessary for the fair presentation of such financial statements
have been included. Such adjustments consisted only of normal recurring items.
Interim results are not necessarily indicative of results for the full year.
These financial statements do not include all disclosures associated with annual
financial statements, and accordingly, should be read in conjunction with the
footnotes contained in the Company's consolidated financial statements for the
period ended December 31, 1997, together with the auditors' report, included in
the Company's "1997 Annual Report," and filed in conjunction with Form 10K.


(2)  Inventories

     Inventories at March 29, 1998 and December 31, 1997 consisted of:

<TABLE>
<CAPTION>

                                                             ($000)             
                                                 -------------------------------
                                                 March 29,         December 31,
                                                   1998              1997
--------------------------------------------------------------------------------
<S>                                               <C>               <C>    
Raw materials and manufactured components         $ 5,567           $ 4,883
Work-in-process                                     3,514             3,723
Finished goods                                      1,571             1,422
================================================================================
                                                  $10,652           $10,028
================================================================================
</TABLE>


(3)  Debt

     Debt at March 29, 1998 and December 31,1997 consisted of:

<TABLE>
<CAPTION>

                                                                                     ($000)         
                                                                          -----------------------------
                                                                          March 29,        December 31,
                                                                            1998              1997
-------------------------------------------------------------------------------------------------------
<S>                                                                         <C>              <C>   
Mortgage note payable                                                       $5,469           $5,519
Capital lease obligations, interest rates ranging from 6.9% to 11.0%,
  net of interest of $19,000 and $ 2,000 in 1998 and 1997, respectively         59               18
-------------------------------------------------------------------------------------------------------
                                                                             5,528            5,537
Less-current maturities                                                        224              224
-------------------------------------------------------------------------------------------------------
                                                                            $5,304           $5,313
=======================================================================================================
</TABLE>


     The mortgage note payable is secured by the Company's land and building and
required monthly payments of $53,922, including interest at 8.125%. This
mortgage note payable has a balloon payment of $3,825,000 due and payable at
maturity on July 1, 2004.


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<PAGE>   9

                             BTU INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)


(4)  Earnings Per Share

     Earnings per share is presented in compliance with the Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings Per Share." Under SFAS
No. 128, Earnings Per Share (EPS) is presented under two calculations, Basic and
Diluted. Basic EPS is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding during
the period. Diluted EPS is computed using the weighted average number of common
and dilutive potential common shares outstanding during the period, using the
treasury stock method. Options outstanding which were not included in the
determination of diluted EPS because they were antidilutive, were 23,500 and
42,500 as of March 29, 1998 and December 31, 1997 respectively.


(5)  Reporting Comprehensive Income

     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This Statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. The Statement is effective for fiscal years beginning
after December 31, 1997. As of March 29, 1998 the Company's only disclosure
requirement under this SFAS is Foreign currency translation adjustment, which is
currently reported in the equity section of the Balance Sheet. For the Three
Months Ended March 29, 1998 and March 30, 1997, Comprehensive income was as
follows:

<TABLE>
<CAPTION>
                                                              1998       1997
                                                              ----       ----
<S>                                                           <C>        <C>   
Net income (loss)                                             $126       $(276)

Change in cumulative translation adjustment                     (3)        (24)
                                                              ----       -----

Comprehensive income (loss)                                   $123       $(300)
                                                              ====       =====
</TABLE>



                                        7


<PAGE>   10


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

     Net Sales - In the first quarter of 1998, net sales increased by $1,075,000
to $12.1 million an increase of 9.7% when compared to the first quarter of 1997.
The increase in sales between the two periods reflected an increase in demand
for surface mount technology products primarily used by our large multinational
customers. Sales of the Company's high temperature equipment was flat when
comparing the first quarter of 1998 to the same period in 1997.

     During the first quarter of 1998, as compared to the first quarter of 1997,
sales as a percentage of total sales decreased in both Asia Pacific and Europe,
with an increase in North and South America.     

     Gross Profit - Gross profit increased by $148,000, or 3.1%, in the first
quarter of 1998, compared to the first quarter of 1997. Gross profit as a
percent of sales decreased 2.7 %, from 43.5% to 40.8%, for the first quarter of
1998 versus the same quarter in 1997. The increase in gross profit dollars was
due to the increase in revenues. The decrease in gross margin percent was due to
product mix as the revenue increase in the first quarter of 1998 was in new
surface mount technology products which have a lower gross margin percentage
versus existing products for this market and the high temperature products.

     Selling, General and Administrative - In the first quarter of 1998,
selling, general and administrative (SG&A) expense increased by $36,000, or
1.0%, to $3,673,000, as compared to the same period in 1997. SG&A as a
percentage of sales decreased by 2.6%, this 2.6% decrease was attained primarily
due to the lowering of the overall commission percentage in the first quarter
1998 versus the same period in 1997 as the Company has increased its direct
sales activity in certain areas of the world.

     Research, Development and Engineering - Expenses for the first quarter of
1998 increased by $ 143,000, or 13.9%, as compared to the first quarter of 1997.
The increase in spending during the first quarter of 1998 versus the same period
in 1997 was a continued investment in new technologies and new product
development to support growing customer requirements.

     Restructuring Charge - During the first quarter of 1997 the Company
incurred a restructuring charge of $530,000 related primarily to severance costs
incurred as a result of certain changes in the manner the Company conducts its
business. This charge represented one-time costs regarding actions taken in
response to a shift in the amount of out-sourced material and a change to a
direct approach to sales and service support in certain Far East territories. 

     Interest Income - In the first quarter of 1998 interest income increased by
$13,000, or 12.4%, as compared to the first quarter of 1997. The increase in
interest income is due to the higher average investment balance in 1998 versus
1997.

     Interest Expense - Interest expense decreased by $15,000, or 11.8%, for the
first quarter of 1998, as compared to the first quarter of 1997. The decrease is
primarily due to the lower interest rate on the mortgage note payable in 1998 as
compared to 1997.

     Income Taxes - In the first quarter of 1998 and 1997 the Company recorded a
tax benefit of $22,000 and $142,000 respectively. The 1998 benefit reflects the
use of certain NOL carryforwards available to the Company's U.K. subsidiary,
which was profitable in the first quarter of 1998. During the first quarter of
1997 the Company recorded a tax benefit due to the pretax loss incurred during
that period. The Company's statutory USA Federal rate is 34%.




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<PAGE>   11


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (continued)



LIQUIDITY AND CAPITAL RESOURCES

     The Company has an unsecured revolving line of credit with a bank which
allows for the aggregate of borrowings and/or letters of credit of up to
$14,000,000. Borrowings are available to the Company at either the Bank's base
rate or a Eurodollar rate, as elected by the Company. This loan agreement is
available to the Company until April 30, 2002, and is subject to certain
financial covenants. No amounts were outstanding under this loan agreement as of
March 29, 1998.

     The Company has a mortgage note, which is secured by its land and building.
The Mortgage note payable had an outstanding balance at March 29, 1998 of
$5,469,000. The mortgage requires monthly payments of $53,922, including
interest at 8.125%. A final balloon payment of $3,825,000 is due at maturity on
July 1, 2004.


     The Company expects its current cash position, ability to borrow necessary
funds, as well as cash flows from operations will be sufficient to meet its
corporate, operating and capital requirements into 1999.

Other matters

     The impact of inflation and the effect of foreign exchange rate changes
during 1998 has had an immaterial impact on the Company's business and financial
results.

     The Company has assessed and continues to assess the impact of the Year
2000 issue on its operations from both a product and operational basis.
Additionally, the Company has begun an assessment of its suppliers compliance
with Year 2000 issues. Although final costs have yet to be determined, it is
anticipated that these Year 2000 costs will not materially impact the financial
results of the Company.


FORWARD LOOKING STATEMENTS

     This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
the Company's current plans and expectations and involve risks and uncertainties
that could cause actual future activities and results of operations to be
materially different from those set forth in the forward-looking statements.
Important factors that could cause actual results to differ include, among
others, general market conditions governing supply and demand, the timely
availability and acceptance of new products, and the impact of competitive
products and pricing and other risks detailed in the Company's SEC reports.




                                        9


<PAGE>   12


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                      BTU INTERNATIONAL, INC.

DATE: May 11, 1998                    BY: /s/ Paul J. Van der Wansem
                                          -------------------------------------
                                      Paul J. van der Wansem
                                      President, Chief Executive Officer
                                      (principal executive officer) and Director


DATE: May 11, 1998                    BY: /s/ Thomas P. Kealy
                                          -------------------------------------
                                      Thomas P. Kealy
                                      Vice President, Corporate Controller and
                                      Chief Accounting Officer (principal
                                      financial and accounting officer)







                                       10


<PAGE>   13


PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

          (a) Exhibits

              Exhibit 11.0 - Calculation of net income per common and common
              equivalent share.

          (b) Reports on Form 8-K

              No reports on Form 8-K were filed by the Company during the
              period covered by this report.







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