<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              450 Fifth Street, NW
                             Washington, D.C. 20549

                                   FORM 10-QSB



(Mark One)

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

                 For the quarterly period ended October 4, 1998

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

            For the transition period from __________ to __________

                         Commission file number 2-69336


                                  CRAMER, INC.

A Kansas Corporation                            IRS Employment I.D. #48-0638707
625 Adams Street
Kansas City, Kansas  66105                         Telephone No. (913) 621-6700

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,051,400 shares of common stock, no
par value as of November 5, 1998.



<PAGE>   2

                          PART I. FINANCIAL INFORMATION



ITEM 1.  FINANCIAL STATEMENTS

                                  CRAMER, INC.
                                  BALANCE SHEET
                                    UNAUDITED
                    (Amounts in Thousands, Except Share Data)

<TABLE>
<CAPTION>
              ASSETS                                                     10/4/98   12/31/97         
                                                                        --------   --------
<S>                                                                     <C>        <C>    
CURRENT ASSETS:
     Cash                                                               $    33    $    52
     Accounts receivable, net of allowance of $21                         1,117        990
     Inventories                                                          1,462      1,242
     Prepaid expenses                                                       223        302
                                                                        -------    -------
              Total current assets                                        2,835      2,586

PROPERTY, PLANT AND EQUIPMENT
     At cost                                                              5,731      5,614
     Accumulated depreciation                                             5,030      4,881
                                                                        -------    -------
                                                                            701        733
OTHER ASSETS:
     Intangible pension asset                                               212        212
     Goodwill                                                               195        198
     Other non current assets                                               197        219
                                                                        -------    -------

              Total Assets                                              $ 4,140    $ 3,948
                                                                        =======    =======

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Note payable                                                       $ 1,263    $ 1,188
     Accounts payable                                                       614        498
     Accrued liabilities                                                    608        549
                                                                        -------    -------
              Total current liabilities                                   2,485      2,235

NONCURRENT LIABILITIES:
     Pension benefits payable                                               501        581
     Other                                                                  280        234
                                                                        -------    -------
              Total noncurrent liabilities                                  781        815

STOCKHOLDERS' EQUITY:
     Common stock, no par value; authorized, 6,000,000 shares;
         issued and outstanding 4,051,400 shares at October 4, 1998,
         and December 31, 1997                                            3,824      3,824
     Accumulated deficit                                                 (2,736)    (2,712)
                                                                        -------    -------
                                                                          1,088      1,112
     Minimum pension liability adjustment                                  (214)      (214)
                                                                        -------    -------
              Net stockholders' equity                                      874        898
                                                                        -------    -------

              Total Liabilities and Stockholders' Equity                $ 4,140    $ 3,948
                                                                        =======    =======
</TABLE>


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                                  CRAMER, INC.
                              STATEMENTS OF INCOME
                                    UNAUDITED
                  (Amounts in Thousands, Except Per Share Data)


<TABLE>
<CAPTION>
                                                             QUARTER ENDED             NINE MONTHS ENDED
                                                        10/4/98        9/28/97       10/4/98         9/28/97    
                                                     -----------    -----------    -----------    -----------
<S>                                                  <C>            <C>            <C>            <C>
NET SALES                                            $     3,301    $     3,092    $     9,757    $     9,195
COST OF SALES                                              2,397          2,276          7,013          6,771
                                                     -----------    -----------    -----------    -----------
              Gross profit                                   904            816          2,744          2,424

OPERATING EXPENSES:
     Selling expenses                                        596            462          1,780          1,416
     General and administrative                              312            259            900            785
                                                     -----------    -----------    -----------    -----------
              Total operating expenses                       908            721          2,680          2,201
                                                     -----------    -----------    -----------    -----------

              Income (loss) from operations                   (4)            95             64            223

OTHER EXPENSE:
     Interest expense, net                                   (16)           (17)           (63)           (64)
     Other, net                                              (20)           (24)           (25)           (19)
                                                     -----------    -----------    -----------    -----------
              Total other expense                            (36)           (41)           (88)           (83)
                                                     -----------    -----------    -----------    -----------

INCOME (LOSS) BEFORE INCOME TAXES                            (40)            54            (24)           140
INCOME TAX EXPENSE (BENEFIT)                                   0              0              0              0
                                                     -----------    -----------    -----------    -----------

NET INCOME (LOSS)                                    $       (40)   $        54    $       (24)   $       140
                                                     ===========    ===========    ===========    ===========
     Net income (loss) per share based on weighted
         average number of common equivalent
         shares outstanding - basic and diluted      $     (0.01)   $      0.01          (0.01)   $      0.04
                                   
     Weighted Average Common Equivalent
         Shares Outstanding:   Basic                   4,051,400      3,840,650      4,051,400      3,840,650
                               Diluted                 4,051,400      3,855,317      4,051,400      3,855,317
</TABLE>



There is no difference between Net Income and Total Comprehensive Income for the
quarter or nine-month periods ending October 4, 1998 and September 28, 1997.


These interim financial statements include all adjustments required for them not
to be misleading.



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<PAGE>   4

                                  CRAMER, INC.
                            STATEMENTS OF CASH FLOWS
                                    UNAUDITED
                             (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                  Nine Months Ended
                                                                  10/4/98    9/28/97
                                                                  -------    -------
<S>                                                               <C>        <C>    
Cash flows from operating activities:
Net income (loss)                                                 $   (24)   $   140
Adjustments to reconcile net income to net cash
         provided by (used in) operating activities:
         Depreciation and amortization                                174        164
         Changes in operating assets and liabilities:
              Accounts receivable                                    (127)       (31)
              Inventories                                            (220)      (133)
              Prepaid expenses                                         79         48
              Accounts payable and accrued expenses                   175        (46)
              Other noncurrent liabilities                            (34)       (62)
                                                                  -------    -------

                      Net cash provided by operating activities        23         80
                                                                  -------    -------

Cash flows from investing activities:
     Capital expenditures                                            (117)      (124)
     Acquisitions of other noncurrent assets                            0        (27)
                                                                  -------    -------

                      Net cash used by investing activities          (117)      (151)
                                                                  -------    -------

Cash flows from financing activities:
     Principal payments on notes payable                           (3,627)    (3,088)
     Proceeds from issuance of notes payable                        3,702      3,163
                                                                  -------    -------

                      Net cash provided by financing activities        75         75
                                                                  -------    -------

Net increase (decrease) in cash                                       (19)         4
Cash at beginning of year                                              52        117
                                                                  -------    -------

Cash at end of quarter                                            $    33    $   121
                                                                  =======    =======

Supplemental disclosures:
     Cash paid during the period for:
         Interest                                                 $    63    $    64
                                                                  =======    =======
         Income tax                                               $     0    $     1
                                                                  =======    =======
</TABLE>




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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

A.       FORWARD LOOKING STATEMENTS

         Except for the historical information contained herein, this report on
         Form 10-QSB contains forward-looking statements that involve risk and
         uncertainties. The Company's actual results could differ materially. In
         connection with the "safe harbor" provisions of the Private Securities
         Litigation Reform Act of 1995, Cramer, Inc. reminds readers that there
         are many important factors that could cause the Company's actual
         results to differ materially from those projected in forward-looking
         statements of the Company made by, or on behalf of, the Company. When
         used in this Form 10-QSB and in other filings by the Company with the
         Securities and Exchange Commission, in the Company's press releases and
         in oral statements made with the approval of an authorized executive
         officer, words or phrases such as "will likely result", "expects", "are
         expected to", "will continue", "is anticipated", "estimate", "project"
         or similar expressions are intended to identify forward-looking
         statements. The Company wishes to caution readers not to place undue
         reliance on such forward-looking statements.

         There are a number of reasons why investors should not place undue
         reliance on forward-looking statements. Among the risks and
         uncertainties that could cause the Company's actual results for future
         periods to differ materially from any forward-looking statements made
         are the following:

           -  Fluctuations or reductions in product demand and market acceptance
           -  The level of product development by the Company
           -  Capacity and supply constraints or difficulties
           -  The results of financing efforts
           -  The effect of new laws and regulations
           -  Unexpected additional expenses or operating losses
           -  Competition
           -  The Company's reliance on certain vendors for key components.
           -  The possible effect of the year 2000 on computer systems

         The foregoing list of risks and uncertainties is not meant to be
         complete.

B.       POSSIBLE EFFECT OF THE YEAR 2000

         As with many other concerns, the Company may be impacted by the "year
         2000 problem". The "year 2000 problem" arose because many existing
         computer programs use only the last two digits to refer to a year.
         Therefore, these computer programs do not properly recognize a year
         that begins with "20" instead of the familiar "19". If not corrected,
         many computer applications could fail or create erroneous results.

         In developing a response to the year 2000 issue, the Company has
         considered its core enterprise resource planning system (ERP system)
         and other systems where computer controls may exist. The Company has
         also 


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         considered the readiness of its key vendors and customers.

         The Company ERP system resides on an IBM advanced 36/AS 400. The
         advanced 36/AS400's operating system and the core ERP system, will be
         converted to allow recognition of years beginning with a "20" using the
         "fixed window" methodology. This methodology converts all dates entered
         into the system in a prescribed manner that will allow the ERP system
         to consistently handle dates both before and after the turn of the
         century. The implementation of the fixed window methodology is
         scheduled to be completed during the third quarter of 1999. The
         Company's in-house EDP department is developing and installing the
         fixed window subroutines that will be used in the ERP system. While
         non-essential enhancements to the company's computer systems have been
         delayed at times, there are only minimal direct costs associated with
         this project.

         The Company has appointed an internal task force to review year 2000
         compliance issues for other computer systems. At October 1998, the task
         force is approximately three-quarters finished with its assessment. The
         Company has a minimal number of computer controlled systems not related
         to its core ERP system, and, to date, no significant issues have been
         identified. The task force is anticipated to complete its review in the
         first quarter of 1999.

         The Company has developed a questionnaire to assess its vendors
         readiness to handle the year 2000 issue. These questionnaires were
         distributed to vendors in the 3rd quarter of 1998. The responses to
         these questionnaires will be reviewed in the fourth quarter of this
         year. Special attention will be given to significant vendors and in
         these cases, we will supplement their answers with verbal discussions
         with appropriate management and information system professionals.

         Through discussions with appropriate parties, the Company is aware that
         its 8 largest wholesale and catalog customers are aware of the year
         2000 issue and are currently determining how to convert their systems
         to handle the problem. Since the remainder of the Company's sales is to
         a wide variety of other furniture re-sellers, which change from year to
         year, there are no efforts currently underway to assess the status of
         these customers year 2000 readiness.

         The Company's senior management is continuing to monitor efforts to
         prepare for the year 2000. Contingency plans in case the Company, its
         vendors, or major customers prove not to be ready for the year 2000 has
         not yet been developed. The Company's senior management intends to
         prepare appropriate contingency plans in the summer of 1999 based on
         their assessment of the Company's, its vendors, and major customers
         current progress preparing for the year 2000.

         There can be no assurance that year 2000 remediation by the Company or
         third parties will be properly and timely completed and failure to do
         so could have a material adverse effect on the Company's financial
         condition. The 



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         Company can not predict the actual effects to it of the year 2000
         issue, which depends on numerous uncertainties such as (1) whether
         major third parties address this issue properly and timely and (2)
         whether broad-based or systemic economic failures may occur. The
         Company is currently unaware of any events, trends, or condition
         regarding this issue that may have a material effect on the Company's
         results of operations, liquidity, and financial position. If the year
         2000 issue is not resolved by January 1, 2000, the Company's results of
         operations or financial condition could be materially adversely
         affected.


C.       SUMMARY OF OPERATIONS

         Intake of new orders was $10,279,000 in the first three-quarters of
         1998, an increase of $1,043,000 or 11% as compared to the same period
         in the prior year. The company's orders are growing at a faster rate
         than the contract furniture industry as a whole. The Business and
         Institutional Furniture Manufactures Association (BIFMA) anticipates
         growth of 8% in the contract furniture industry during 1998. The
         Company attributes its improved performance to the successful launch of
         several new seating products in late 1997 and early 1998 and its
         success in increasing utility product volume by having sales management
         place more emphasis on the major catalog wholesalers who distribute
         these products.

         At $9,757,000, net sales for the first three-quarters of 1998 were 6%
         higher than for the same period in 1997. At October 4, 1998, the
         Company's backlog was $1,117,000, an increase of $311,000 from the
         level at December 31, 1997. Approximately $165,000 of these orders are
         scheduled to ship in 1999; the remainder of the Company's October 4,
         1998 backlog is scheduled to ship within the next three months.

         The Company's gross margin in the first three-quarters of 1998
         increased by $320,000 from the level in the same period last year. As a
         percentage of net sales, gross margins in the first three-quarters of
         1998 were 28% as compared to 26% in the first three-quarters of 1997.
         The improvements in margins reflects (a) sales price increases
         instituted in the summer of 1997, (b) improved manufacturing efficiency
         achieved as a result of the increased sales volume, and (c) lower
         expenses for anticipated product liability defense costs due to the
         Company's success in reducing settlements during the past few years.

         Selling expenses in the first three-quarters of 1998 increased by
         $364,000 as compared to the same period in 1997. Approximately $250,000
         of the increase relates to the ongoing introduction costs for the
         Company's new articulating keyboard product. Of the remaining $114,000
         increase, $80,000 can be attributed to commissions, catalog allowances
         and similar costs that vary directly with sales volume.

         General and administrative expenses during the first three-quarters of
         1998 


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<PAGE>   8


         increased by $115,000 as compared to the same period in 1997. The
         increase consists primarily of additional salaries associated with an
         expansion of personnel in the Company's engineering department. The
         Company has enhanced its research and development efforts in order to
         expand its product offering and to shorten the new product development
         cycle.

         While sales volumes and margins improved significantly in the first
         three-quarters of 1998 as compared to the same period in 1997; as a
         result of the increase in operating expenses, income from operations
         decreased by $159,000.

         The Company's core seating and utility product business remains strong
         and management anticipates that the increase in new order intake, net
         sales and gross margins realized in the first three-quarters of 1998
         will continue through out the remainder of 1998. However, sales of the
         Company's new articulating keyboard product have risen slower than
         anticipated. The introduction cost for the product line continues to
         exceed the gross margin generated from its sales. This situation is
         anticipated to continue throughout the remainder of the current year as
         distribution of the product is established and as technical
         enhancements are completed. As a result, the Company anticipates that
         its income from operations and net income for all of 1998 will be less
         than the corresponding figures in 1997.

         The Company anticipates that for the next 12 months the costs of
         developing the articulating keyboard product and its distribution
         channels will continue to exceed the gross margin realized from product
         sales. However, the Company believes that the product line will be a
         successful addition to the Company's product offering providing a net
         positive return on amounts invested.

D.       FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

         The Company's trade accounts receivable increased by $127,000 from
         December 31, 1997 to October 4, 1998. The increase is in line with the
         increase in order income and sales rates.

         Inventories increased by $220,000 during the first three quarters of
         1998. The increase is primarily in raw materials and work in progress.
         The Company is maintaining a larger stock of materials in order to
         support both the increases in sales volume and its new seating and
         computer accessory products.

         Capital expenditures aggregated $117,000 during the first three
         quarters of 1998 and consisted primarily of factory tooling related to
         new product introductions.

         The Company's accounts payable increased by $116,000 from the December
         31, 1997 balance. The increase is a result of increased purchases of
         material to support the increased business activity and a slight
         increase in the aging of vendor balances prior to payment.



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         The Company continues to participate in a consolidated cash management
         and credit facility with its parent, Rotherwood. (See discussion in
         Note 3 to the Financial Statements in the Company's 1997 Form 10KSB.)
         Management believes that the Company's access to this facility, along
         with existing cash balances and cash generated from future operations,
         will be adequate to meet future operating requirements and liquidity
         needs.


                           PART II. OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

             The Company is a defendant in several lawsuits relating to product
             liability claims arising from accidents allegedly occurring in
             connection with the use of its products. The claims are covered by
             insurance and are being defended by the Company's independent
             counsel, or by counsel assigned by the insurance carriers, but are
             subject to deductibles ranging from $0 to $100,000. A number of the
             claimants allege substantial damages. While management believes the
             Company has substantial defenses with respect to the claims, the
             ultimate outcome of such litigation cannot be predicted with
             certainty. The Company has reasonably estimated and accrued in its
             financial statements its portion of the deductible as a product
             liability contingency. Such claims are an ordinary aspect of the
             Company's business.



ITEM 2.     CHANGES IN SECURITIES

            None.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

            None.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

            None

ITEM 5.     OTHER INFORMATION

            None.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            None.


   
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<PAGE>   10



                                   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.



                                                 CRAMER, INC.
                                                 (Registrant)



Date: November 10, 1998                          /s/ Gary A. Rubin            
                                                 ----------------------------- 
                                                 Gary A. Rubin
                                                 Vice President, Finance & CFO












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