<PAGE>

                                    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 June 30, 2000
                                       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 1-5530

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

            DELAWARE                                    38-0292230
--------------------------------              -------------------------------
 (State or other jurisdiction of              (I.R.S. Employer Identification
 incorporation or organization)                           Number)

 1355 EAST 93RD STREET, CHICAGO, ILLINOIS                         60619
----------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)

        Registrant's telephone number, including area code (773) 933-8200

                                 Not Applicable
                 ----------------------------------------------
                 (former name, former address and former fiscal
                       year, if changed since last report)

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 requirement for the past 90 days. Yes  X   No
                                                  ---     ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 11,891,664 common shares, $.01
par value, as of July 31,2000 .

<PAGE>

            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                                      INDEX

        PART I.   FINANCIAL INFORMATION

                 ITEM 1. FINANCIAL STATEMENTS

                         INTRODUCTION

                         CONDENSED CONSOLIDATED BALANCE SHEETS-
                           June 30, 2000 and December 31, 1999

                        CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                           Three and Six Months Ended June 30, 2000 and 1999

                        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-
                           Six Months Ended June 30, 2000 and 1999

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

        PART II.  OTHER INFORMATION

                 ITEM 1.  NOT APPLICABLE

                 ITEM 2.  NOT APPLICABLE

                 ITEM 3.  NOT APPLICABLE

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

                 ITEM 5.  NOT APPLICABLE

                 ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        SIGNATURES

        EXHIBIT  INDEX

<PAGE>

                                PART I - FINANCIAL INFORMATION

ITEM 1.        FINANCIAL STATEMENTS

                  ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                                         INTRODUCTION

        The condensed consolidated financial statements included herein (as of
June 30, 2000 and for the three and six months ended June 30, 2000 and 1999)
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and reflect all
adjustments which are, in the opinion of management, necessary to present fairly
the condensed consolidated financial information required therein. All such
adjustments are of a normal, recurring nature. The information as of December
31, 1999 is derived from the audited year end balance sheet for that year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Company's latest annual report on Form 10-K.

        The results of operations for the three and six month periods ended June
30, 2000 and 1999 are not necessarily indicative of the results to be expected
for the full year.

<PAGE>

           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                   (UNAUDITED)

                                     ASSETS
<TABLE>
<CAPTION>
                                                               JUNE 30, 2000     DECEMBER 31, 1999
                                                            ------------------   ------------------
<S>                                                         <C>                  <C>
Current Assets:
  Cash and cash equivalents                                 $        2,590,000   $        1,054,000
                                                            ------------------   ------------------
  Restricted Cash                                           $        5,576,000   $             --
                                                            ------------------   ------------------
  Notes and accounts receivable, less allowances of
    $875,000 and $1,130,000, respectively                   $       18,723,000   $       20,460,000
                                                            ------------------   ------------------
Inventories:
  Raw materials                                             $        3,419,000   $        3,571,000
  Work in process                                                   33,701,000           43,094,000
                                                            ------------------   ------------------
                                                            $       37,120,000   $       46,665,000
                                                            ------------------   ------------------
Deferred tax asset                                          $        3,400,000   $        8,995,000
                                                            ------------------   ------------------
Prepaid expenses                                            $        1,371,000   $          228,000
                                                            ------------------   ------------------
Current assets associated with discontinued operations      $             --     $       84,073,000
                                                            ------------------   ------------------
  Total current assets                                      $       68,780,000   $      161,475,000
                                                            ------------------   ------------------

Plant and Equipment, at cost:
  Land                                                      $        1,691,000   $        1,671,000
  Building and improvements                                         53,719,000           52,435,000
  Machinery and equipment                                           39,394,000           36,603,000
                                                            ------------------   ------------------
                                                            $       94,804,000   $       90,709,000
  Less-Accumulated depreciation and amortization                    34,749,000           32,023,000
                                                            ------------------   ------------------
                                                            $       60,055,000   $       58,686,000
                                                            ------------------   ------------------
Other Assets:
  Deferred tax asset                                        $        4,256,000   $        4,165,000
  Deferred charges (goodwill), net of amortization                   1,045,000            1,134,000
  Other                                                              3,349,000            2,853,000
  Noncurrent assets associated with discontinued
    operations                                                            --             28,298,000
                                                            ------------------   ------------------
                                                            $        8,650,000   $       36,450,000
                                                            ------------------   ------------------
                                                            $      137,485,000   $      256,611,000
                                                            ==================   ==================
</TABLE>

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

<PAGE>

            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                   (UNAUDITED)

                    LIABILITIES AND SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
                                                                   JUNE 30, 2000      DECEMBER 31, 1999
                                                                 -----------------    -----------------
<S>                                                              <C>                  <C>
Current Liabilities:
  Revolving credit agreements                                    $       9,012,000    $     130,700,000
  Current portion of long-term debt                                        860,000            1,023,000
  Accounts payable                                                      22,423,000           32,659,000
  Accrued expenses                                                      20,881,000           22,648,000
  Current liabilities associated with discontinued operations                   --           17,877,000
                                                                 -----------------    -----------------
    Total current liabilities                                    $      53,176,000    $     204,907,000
                                                                 -----------------    -----------------
Long-term debt, less current portion shown above                 $       2,900,000    $         378,000
                                                                 -----------------    -----------------
Other long-term liabilities                                      $       5,347,000    $       5,442,000
                                                                 -----------------    -----------------
Noncurrent liabilities associated with discontinued operations   $            --      $       2,814,000
                                                                 -----------------    -----------------
Commitments and Contingencies
Shareholders' Investment:
  Preferred stock:
    Undesignated-authorized 2,000,000 shares at June 30,
      2000 and  December 31, 1999; none issued                   $            --      $            --
  Common Stock, par value $.01 per share; authorized
    25,000,000 shares; issued 14,047,249 shares at
    June 30, 2000 and December 31, 1999                                    140,000              140,000
Additional paid-in capital                                              97,281,000           97,971,000
Retained earnings (deficit)                                             20,336,000          (12,524,000)
                                                                 -----------------    -----------------
                                                                 $     117,757,000    $      85,587,000
Less: Treasury stock, at cost:  2,155,585 and 2,200,203
  shares at June 30, 2000 and December 31, 1999,
  respectively                                                         (41,695,000)         (42,517,000)
                                                                 -----------------    -----------------
    Total shareholder's equity                                   $      76,062,000    $      43,070,000
                                                                 -----------------    -----------------

                                                                 $     137,485,000    $     256,611,000
                                                                 =================    =================
</TABLE>

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

<PAGE>

            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

               CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED JUNE 30,         SIX MONTHS JUNE 30,
                                                   ----------------------------    ----------------------------
                                                       2000            1999            2000            1999
                                                   ------------    ------------    ------------    ------------
<S>                                                <C>             <C>             <C>             <C>
Net sales from continuing operations               $ 13,740,000    $ 37,491,000    $ 32,757,000    $ 82,829,000
Cost of products sold                                10,280,000      34,300,000      29,231,000      89,119,000
                                                   ------------    ------------    ------------    ------------
  Gross profit (loss)                              $  3,460,000    $  3,191,000    $  3,526,000    $ (6,290,000)
                                                   ------------    ------------    ------------    ------------
Other costs and expenses:
  Selling and administrative expense               $  5,423,000    $  5,875,000    $ 10,689,000    $ 11,742,000
  Interest expense                                      689,000       1,429,000       2,369,000       2,592,000
  Other (income) expense, net                            35,000         351,000         482,000        (154,000)
                                                   ------------    ------------    ------------    ------------
                                                   $  6,147,000    $  7,655,000    $ 13,540,000    $ 14,180,000
                                                   ------------    ------------    ------------    ------------
(Loss) before taxes from continuing operations     $ (2,687,000)   $ (4,464,000)   $(10,014,000)   $(20,470,000)
Provision for income taxes:
  Current                                                  --              --              --              --
  Deferred                                                 --              --         5,650,000            --
                                                   ------------    ------------    ------------    ------------
(Loss) from continuing operations                  $ (2,687,000)   $ (4,464,000)   $(15,664,000)   $(20,470,000)
                                                   ------------    ------------    ------------    ------------
Discontinued operations (net of tax):
   Income (loss) from operations                   $       --      $  3,139,000    $  1,687,000    $  6,479,000
   Gain on disposition of discontinued operations     8,739,000            --        46,837,000            --
                                                   ------------    ------------    ------------    ------------
   Income from discontinued operations             $  8,739,000    $  3,139,000    $ 48,524,000    $  6,479,000
                                                   ------------    ------------    ------------    ------------
Net income (loss)                                  $  6,052,000    $ (1,325,000)   $ 32,860,000    $(13,991,000)
                                                   ============    ============    ============    ============
Earning (loss) per common share:
  Basic:
    Continuing operations                          $      (0.23)   $      (0.38)   $      (1.32)   $      (1.73)
    Discontinued operations                                0.74            0.27            4.09            0.55
                                                   ------------    ------------    ------------    ------------
    Income (loss) per common share                 $       0.51    $      (0.11)   $       2.77    $      (1.18)
                                                   ============    ============    ============    ============
  Diluted:
    Continuing operations                          $      (0.23)   $      (0.38)   $      (1.32)   $      (1.73)
    Discontinued operations                                0.74            0.27            4.09            0.55
                                                   ------------    ------------    ------------    ------------
    Income (loss) per common share                 $       0.51    $      (0.11)   $       2.77    $      (1.18)
                                                   ============    ============    ============    ============
Weighted average shares outstanding:
  Basic                                              11,870,000      11,838,000      11,861,000      11,828,000
                                                   ============    ============    ============    ============
  Diluted                                            11,870,000      11,838,000      11,861,000      11,828,000
                                                   ============    ============    ============    ============
Dividends per common share                         $       --      $       0.04    $       --      $       0.04
                                                   ============    ============    ============    ============
</TABLE>

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

<PAGE>

            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                           SIX MONTHS ENDED JUNE 30,
                                                                       --------------------------------
                                                                            2000              1999
                                                                       --------------    --------------
<S>                                                                    <C>               <C>
Cash Flows from Operating Activities:
  (Loss) from continuing operations                                    $  (15,664,000)   $  (20,470,000)
  Income from discontinued operations                                      48,524,000         6,479,000
                                                                       --------------    --------------
    Net income (loss)                                                  $   32,860,000    $  (13,991,000)
    Adjustments to reconcile (loss) from continuing operations
      to cash provided from (used for) operating activities:
      Gains on sales of assets/business                                   (47,945,000)          (93,000)
      Depreciation and amortization                                         2,729,000         2,395,000
      Amortization of deferred charges                                         89,000            89,000
      Deferred income tax provision                                         5,650,000              --
      Provision for inventory valuation                                          --           7,695,000
    Changes in noncash assets and liabilities, net of
      businesses sold and noncash transactions:
      Decrease in accounts receivable                                       1,442,000         1,905,000
      (Increase) decrease in inventories                                    9,545,000          (839,000)
      Decrease in prepaid expenses                                            698,000           176,000
      Increase (decrease)  in accounts payable and accrued expenses       (12,575,000)        8,560,000
  Other, net                                                                 (311,000)         (297,000)
  Adjustment to reconcile income from discontinued  operations
    to cash used for discontinued operations                              (16,326,000)       (4,856,000)
                                                                       --------------    --------------
Net cash provided from (used for) operating activities                 $  (24,144,000)   $      744,000
                                                                       --------------    --------------
Cash Flows from Investing Activities:
  Additions to plant and equipment                                     $     (881,000)   $   (4,284,000)
  Proceeds from sale of business                                          154,945,000              --
  Proceeds from sales of plant and equipment                                   12,000            17,000
  Restricted Cash                                                          (5,576,000)             --
  Net cash used in discontinued operations                                   (270,000)         (803,000)
                                                                       --------------    --------------
  Net cash provided from (used for) investing activities               $  148,230,000    $   (5,070,000)
                                                                       --------------    --------------
Cash Flows from Financing Activities:
  Borrowings under revolving credit agreements                         $   18,100,000    $   78,200,000
  Proceeds from issuance of debt                                           51,145,000              --
  Payments under revolving credit agreements                             (148,800,000)      (72,600,000)
  Payments of short and long-term debt                                    (42,995,000)         (112,000)
  Dividends paid                                                                 --            (943,000)
  Net cash used in discontinued operations                                       --            (262,000)
                                                                       --------------    --------------
Net cash provided from (used for)  financing activities                $ (122,550,000)   $    4,283,000
                                                                       --------------    --------------
Net increase (decrease) in cash and cash equivalents                   $    1,536,000    $      (43,000)
Cash and cash equivalents at beginning of year                              1,054,000           727,000
                                                                       --------------    --------------
Cash and cash equivalents at end of period                             $    2,590,000    $      684,000
                                                                       ==============    ==============
</TABLE>

The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
<PAGE>

            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)     DISCONTINUED OPERATIONS

               On March 7, 2000, the Company transferred substantially all of
        the assets and certain liabilities of the Bush Hog and Great Bend
        divisions constituting the Agricultural Products Group to Bush Hog,
        L.L.C., a Delaware limited liability company ("New Bush Hog") in
        exchange for all of the outstanding membership interests of New Bush
        Hog. The Company then sold the membership interests of New Bush Hog to
        Bush Hog Investors, L.L.C., a Delaware limited liability company ("Bush
        Hog Investors"), in two transactions: 80.1% on March 7 and 19.9% on June
        24. See Note 1 of Notes to Consolidated Financial Statements in the
        Company's report on Form 10-Q for the quarter ended March 31, 2000.

               Following the completion of the sale of the 80.1% membership
        interest the Company received a distribution of $3,582,000 from New
        Bush Hog, which the Company recorded as a return of capital reducing
        the cost basis of its 19.9% interest in New Bush Hog to $17,532,000.
        On March 24, 2000, the Company signed a definitive agreement to sell
        its remaining 19.9% interest in New Bush Hog to Bush Hog Investors.
        On June 26, 2000 the Company consummated the sale of the remaining
        19.9% interest in its former Agricultural Products Group for an
        estimated sale price of $28,451,000. The sale proceeds were than
        reduced by an estimated adjustment to the 80.1% interest Selling
        Price of $1,550,000 and payments to be held in escrow until
        resolution of certain contingencies associated with the sale totaling
        $5,576,000. After repaying the $18,000,000 LaSalle Bank loan, the net
        cash proceeds to the Company were approximately $3,000,000. The
        Company recorded a gain net of taxes on the sale of $8,739,000 for
        the second quarter of 2000, as described in Note 4 of Notes to
        Condensed Consolidated Financial Statements. This amount is reduced
        for costs associated with the sale and net of an additional provision
        of $1,318,000 related to liabilities assumed in connection with the
        sales.

               The Company has included in the operations of the Agricultural
        Products Group through March 7, 2000 an allocation of all direct
        financing, administrative, other expenses and income taxes and a pro
        rata allocation of interest expense (based upon the group's
        proportionate share of consolidated invested capital) under the caption
        "Discontinued operations, income from operations" in the accompanying
        Condensed Consolidated Statements of Income (Loss). Previously issued
        Condensed Consolidated Statements of Income (Loss) have been revised to
        reflect the effect of the discontinued operations. In addition, current
        and noncurrent assets and liabilities associated with the above noted
        discontinued operations have been reclassified in the accompanying
        balance sheets.

<PAGE>

               Summarized operating results of discontinued operations for the
        three and six months ended June 30, 2000 and 1999, are as follows:

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED JUNE 30,       SIX MONTHS ENDED JUNE 30,
                                           ----------------------------    ----------------------------
                                               2000            1999            2000            1999
                                           ------------    ------------    ------------    ------------
<S>                                        <C>             <C>             <C>             <C>
         Net sales ....................    $       --      $ 37,133,000    $ 28,608,000    $ 74,035,000
                                           ============    ============    ============    ============
         Income before taxes ..........    $       --      $  3,139,000    $  1,687,000    $  6,479,000
         Provision (benefit) for
           income taxes ...............            --              --              --              --
                                           ------------    ------------    ------------    ------------
         Discontinued
           operations income
           from operations ............    $       --      $  3,139,000    $  1,687,000    $  6,479,000
                                           ============    ============    ============    ============
</TABLE>

               Allocated interest expense was $1,078,000 (none in the second
        quarter of 2000) and $2,529,000 ($1,369,000 in the second quarter of
        1999) for the six months ended June 30, 2000 and 1999, respectively.

(2)     ACCRUED EXPENSES

        The Company's accrued expenses consist of the following:
<TABLE>
<CAPTION>
                                                         6/30/00        12/31/99
                                                      ------------    ------------
<S>                                                   <C>             <C>
        Salaries and wages                            $  2,201,000    $  1,943,000
        Warranty                                         4,362,000       5,563,000
        Self insurance accruals                          1,797,000       2,871,000
        Pensions, including retiree health               2,956,000       5,362,000
        Taxes, other than income taxes                   1,119,000         949,000
        Environmental matters                            2,376,000       2,376,000
        Other                                            6,070,000       3,584,000
                                                      ------------    ------------
                                                      $ 20,881,000    $ 22,648,000
                                                      ============    ============
</TABLE>

(3)     EARNINGS PER COMMON SHARE

               Basic and diluted earnings per common share is based on the
        average number of common shares outstanding (11,870,000 and 11,861,000
        for the three and six months ended June 30, 2000 and 1999,
        respectively). For the three and six months ended June 30, 2000 and
        1999, dilutive securities were excluded from the calculation of diluted
        loss per share as their effect would have been antidilutive.

(4)     FINANCIAL ARRANGEMENTS

               As of December 31, 1999, the Second Amended and Restated Credit
        Agreement ("Credit Agreement"), as amended, provided for up to
        $135,000,000 of borrowings and/or letters of credit at either a floating
        prime (prime plus 250 basis points) or fixed LIBOR (LIBOR plus 400 basis
        points) rate. The Company granted a lien upon and security interests in
        all of the assets (except real estate) of the Company and its
        subsidiaries to the lenders and was required to meet certain periodic
        financial tests. Effective February 11, 2000, the Company entered into a
        Fifth Amendment and Consent to the Credit Agreement. The

<PAGE>

        amended agreement provided for up to $138,000,000 of borrowings and/or
        letters of credit and extended the termination date of the agreement to
        March 7, 2000.

               In contemplation of the sale of an 80.1% interest in the
        Agricultural Products Group and to help finance the build up of
        receivables and inventories within this group during December and the
        first quarter of 2000, an affiliate of Bush Hog Investors agreed, under
        the Loan and Security Agreement ("Bush Hog Investors Loan") dated as of
        December 16, 1999, to loan the Company up to $5,000,000, secured by the
        group's real property in Selma, Alabama. During the first quarter of
        2000, the Company borrowed the maximum amount available under this
        agreement at an interest rate of prime plus 400 basis points.

               On March 7, 2000, the Company entered into a Loan and Security
        Agreement with LaSalle Bank National Association ("LaSalle"). Under the
        terms of the agreement, the Company was permitted to borrow $18,000,000
        at a floating rate (prime less 100 basis points) within three months
        after the closing of the agreement. The loan was secured by a first lien
        on the Company's then remaining 19.9% interest in New Bush Hog. These
        proceeds, combined with the proceeds received from the sale of the 80.1%
        interest in New Bush Hog, were applied to repay the Company's
        indebtedness outstanding under the Second Amended and Restated Credit
        Agreement and the Bush Hog Investors Loan, and to costs associated with
        the sale.

               The Company also entered into a new credit facility with Foothill
        Capital Corporation ("Foothill") effective March 29, 2000. The Foothill
        credit facility has a three year term, maturing in March 2003, and
        consists of a term loan of $10,600,000 and a revolving credit facility
        which may be drawn upon from time to time up to the lower of $19,400,000
        or an amount based upon a percentage of eligible accounts receivable and
        eligible inventories relating to presses which are within sixty (60)
        days of shipment, as determined by Foothill, subject to reserves as
        determined by Foothill (the "Borrowing Base"). The amount available
        under the term loan sub-line is to be reduced by $176,667 monthly
        commencing in September 2000. The maximum remaining amount due at
        maturity in March 2003 is $5,123,323. Interest is payable monthly at a
        floating prime rate (prime plus 200 basis points on the term loan and
        prime plus 125 basis points on the revolver). In the event of a default,
        the interest rate increases by 300 basis points. Foothill received a
        closing fee of $300,000 and will receive a monthly fee of $50,000 for
        each month a balance is outstanding under the revolving credit facility.
        With certain exceptions, the penalty for prepayment is $900,000 (3% of
        the maximum credit available) in the first year, declining to 2% and 1%
        in the second and third years. Certain portions of the Borrowing Base
        are to be determined, following Foothill's review and determination of
        eligible receivables.

<PAGE>

               In connection with the Foothill loan, the Company granted a lien
        upon and security interests in substantially all of its assets (except
        its membership interest in New Bush Hog). The loan agreement requires
        that the Company sell its remaining interest in New Bush Hog on or
        before June 30, 2000, with the Company receiving net proceeds of not
        less than $6,000,000. On June 26, 2000 the Company satisfied this
        obligation and closed on the sale of its remaining 19.9% interest in New
        Bush Hog. Net proceeds of the sale were approximately $3,000,000. The
        Company received a waiver from Foothill of the requirement that it
        receive not less than $6,000,000 in net proceeds from the sale. The
        proceeds from the sale were used to pay off the entire balance of the
        LaSalle Loan and Security Agreement, provide for existing indemnity
        obligations to New Bush Hog, and for working capital.

               Restrictions in the Foothill loan agreement include, among other
        things, limitations on capital expenditures, restrictions on liens and
        the making of guarantees, and restrictions on acquisitions and
        investments. The loan agreement also prohibits the payment of cash
        dividends. Additionally, Foothill can accelerate repayment in the event
        of a material adverse change in the business, as defined in the
        agreement. Financial covenants include a covenant that earnings before
        interest, taxes, depreciation and amortization ("EBITDA"), exclusive of
        extraordinary gains, exceed the amounts listed below as of the dates and
        for the periods indicated:

<TABLE>
<S>                                          <C>                 <C>
             June 30, 2000 ................  last three months   $ (1,300,000)
             September 30, 2000 ...........  last six months     $ (3,500,000)
             December 31, 2000 ............  last nine months    $ (4,600,000)
             March 31, 2001 ...............  last twelve months  $ (3,900,000)
             June 30, 2001 ................  last twelve months  $ (3,000,000)
             September 30, 2001 ...........  last twelve months  $  1,300,000
             December 31, 2001 ............  last twelve months  $  7,600,000
</TABLE>

                Because the borrowing base is limited solely to a percentage of
        eligible accounts receivable and eligible inventories relating to
        presses which are within sixty (60) days of shipment (and not to a
        percentage of total inventories as well), the credit facility is not a
        source of financing for the substantial work in process inventories
        frequently required in the Company's business. This will limit the
        Company's ability to accept press orders which do not include customer
        deposits.

               Since the Company's estimated EBITDA for future periods is
        predicated, among other things, upon projections of the receipt of new
        press orders in appropriate sequences and bearing appropriate margins,
        the Company cannot predict EBITDA with a reasonable degree of certainty.
        The rate of new orders is currently lagging behind the projections on
        which the EBITDA covenants were based. The Company has advised Foothill
        that it is likely that it will ultimately be unable to comply with the
        EBITDA covenants and has requested a modification of the EBITDA
        covenants. If the Company is unable to negotiate

<PAGE>

        a modification of the credit facility and is not in compliance with the
        covenants, the rate of interest on the Company's indebtedness could
        increase by 3% per annum and the Company will be required either to
        attempt to negotiate a waiver or amendment of its agreement with
        Foothill or to pursue alternative financing sources. A failure to
        obtain a revised agreement with Foothill or alternative financing
        could result in a cancellation of the last two presses on the General
        Motors order - see Note 5.

               Reference is made to Note 14 of Notes to Consolidated Financial
        Statements in the Company's 1999 Annual Report on Form 10-K for a
        discussion of the challenges facing the Company.

(5)     CONTINGENT LIABILITY

               In May 1999 and June 1999, the Company was served with two
        complaints purporting to be class action lawsuits on behalf of
        shareholders who purchased the Company's common stock between February
        6, 1997 and March 11, 1999. The complaints, which were filed in the
        United States District Court for the Northern District of Illinois, were
        virtually identical. They alleged various violations of the federal
        securities laws, including misrepresentations or failure to disclose
        material information about the Company's results of operations,
        financial condition, weakness in its financial internal controls,
        accounting for long-term construction contracts and employee stock
        option compensation expense. In August 1999, the District Court ordered
        that the two cases be consolidated for all purposes. A Consolidated
        Amended Complaint was filed on October 12, 1999. The Company filed a
        Motion to Dismiss on December 13, 1999. The action was dismissed,
        without prejudice, by order dated March 13, 2000, with leave to amend
        the complaint. On April 27, 2000, a Second Consolidated Amended
        Complaint was filed. The Company filed a motion to dismiss the second
        consolidated amended complaint on June 14, 2000. No estimate can
        currently be made as to the claim. However, should the Second
        Consolidated Amended Complaint survive the Company's motion to dismiss,
        such claim could have a material adverse effect on the financial
        position and results of operations in the near term if an unfavorable
        outcome were to occur.

               The Company is involved in a number of other legal proceedings
        as a defending party, including product liability claims for which
        additional liability is reasonably possible. It is the Company's
        policy to reserve on a non-discounted basis for all known and
        estimated unreported product liability claims. The products to which
        the claims primarily relate are products currently manufactured by
        the Company's Industrial Products Group and products related to
        discontinued operations for which the Company contractually retained
        liability for certain claims generally arising prior to the sale of the
        related business. For one product liability claim the amount of
        damages claimed against all defendants exceeds the Company's
        liability insurance limits. Although there is no guarantee that the
        ultimate

<PAGE>

        outcome of this claim against the Company will not exceed such limits,
        the Company currently believes that the ultimate outcome of this claim
        will not exceed its insurance coverage. However, changes in the estimate
        in the near term could be material to the financial position and results
        of operations if an unfavorable outcome were to occur. For all other
        matters, after consideration of relevant data, including insurance
        coverage and accruals, management believes that the eventual outcome of
        these matters will not have a material adverse effect on the Company's
        financial position or its ongoing results of operations.

               In response to General Motors' concerns that the Company's cash
        flow problems would further delay or preclude the Company from
        completing four presses that were in various stages of production, the
        Company entered into amendments to purchase orders with General Motors
        during the fourth quarter of 1999 and first quarter of 2000. The
        aggregate sales price of the presses covered by these purchase orders
        exceeds $75,000,000. Under the terms of the amendments, the Company and
        General Motors agreed to revised shipping, payment and testing schedules
        that allowed the Company to ship components of, and receive payments
        for, the first two of the four presses earlier than it would have been
        able to under the terms of the original purchase orders. Payment terms
        for the third and fourth presses were largely unchanged from the
        original order (i.e., 90% upon completion, testing and shipment),
        however, delivery dates (and related payments) have been extended so
        that the last press will not be shipped until the first quarter of 2001
        and final payment will not be received until the first quarter of 2002.
        Upon fulfillment of certain conditions set forth in the amendments,
        General Motors will waive and release the Company from all claims
        arising from or attributable to the Company's alleged late delivery
        defaults on all presses and will accept delivery of the last two (2)
        presses covered by this order. Until such time as these conditions are
        satisfied, General Motors reserves the right to cancel the purchase
        orders associated with the third and fourth presses until the Company
        has demonstrated that it has the financial ability to complete these
        presses on a timely basis. Such cancellation, should it occur, could
        have a material adverse effect on the financial position and results of
        operations in the near term.

                At June 30, 2000, the Company was contingently liable for
        approximately $1,358,000 primarily relating to outstanding letters of
        credit.

(6)     INCOME TAXES

               No tax benefit was recorded with respect to operating losses
        associated with continuing operations in the three and six month periods
        ended June 30, 2000 and 1999 as a 100% valuation allowance has been
        provided on the related benefit. The provision for deferred income taxes
        ($5,650,000) in the first half of 2000 related to certain temporary
        differences associated with continuing operations. This charge is for a
        valuation allowance

<PAGE>

        for certain temporary differences that are expected to reverse and
        become, in the near term, net operating loss carryforwards subject to
        expiration. The valuation allowance was based on management's belief
        that unless the Industrial Products Group is able to reduce production
        costs and return to profit levels experienced prior to 1997, the sale of
        the Agricultural Products Group will further decrease the likelihood of
        the Company being able to utilize all of its remaining tax loss
        carryforwards.

               The provision for income taxes of $1,405,000 and $6,459,000
        related to the gain on the disposition of discontinued operations in the
        three and six months ended June 30 2000 was based on the application of
        the Alternative Minimum Tax rate for the current tax provision
        ($1,108,000) and the reversal of deferred tax assets ($5,351,000)
        specifically associated with the sale of the Agricultural Products
        Group-see Note 1. There was no current tax associated with the income
        from discontinued operations of $1,687,000 (none in the second
        quarter of 2000) and $6,479,000 ($3,139,000 in the second quarter of
        1999) in the three and six month periods ended June 30, 2000 and
        1999, respectively. See Note 4 of Notes to Consolidated Financial
        Statements in the Company's 1999 Annual Report on Form 10-K for a
        further discussion related to income taxes.

(7)     SUMMARY OF OTHER (INCOME) EXPENSES

               Other (income) expense for the three and six month periods ended
        June 30, 2000 and 1999 consists of the following:

<TABLE>
<CAPTION>
                                                   FOR THE THREE MONTHS ENDED           FOR THE SIX MONTHS ENDED
                                                   --------------------------           ------------------------
                                                    6/30/00           6/30/99           6/30/00           6/30/99
                                                    -------           -------           -------           -------
<S>                                            <C>               <C>               <C>               <C>
          Interest income                      $    (62,000)     $   (229,000)     $   (107,000)     $   (255,000)
          Goodwill amortization                      45,000            45,000            90,000            90,000
          Loan costs amortization                    72,000           141,000           396,000           189,000
          Net gain on sales of
             operating and non-operating
             assets                                  (9,000)             --              (9,000)          (81,000)
          Loss on investment in non-
             consolidated subsidiary               (211,000)          187,000          (164,000)          210,000
          Legal settlement                             --                --                --            (389,000)
          Idle Facility  expense                    264,000           225,000           400,000           116,000
          Other miscellaneous                       (64,000)          211,000          (124,000)          (34,000)
                                               ------------      ------------      ------------      ------------
                                               $     35,000      $    351,000      $   (482,000)     $   (154,000)
                                               ============      ============      ============      ============
</TABLE>

<PAGE>

(8)     SUBSEQUENT EVENT

        On July 20, 2000 the Company entered into an Equipment Lease
Agreement ("Agreement") with MDFC Equipment Leasing Corporation ("MDFC"). The
purpose of the Agreement was to finance the purchase of a horizontal boring
mill (the "Boring Mill") installed at the Company's Verson facility in
Chicago, Illinois. Prior to the execution of the Agreement, the Company had
made payments totaling $2,287,500 to purchase the Boring Mill under the terms
of an installment purchase agreement with the manufacturer of the Boring
Mill which have been treated as a non-cash financing activity as a result of
the subsequent lease. Following execution of Agreement, MDFC paid $2,287,500
to the Company and the balance of the purchase price of $934,111 to the
manufacturer of the Boring Mill. Under the terms of the Agreement the Company
will make 60 payments of $68,620 to MDFC. As additional security for its
obligations the Company was required to establish a letter of credit in favor
of MDFC in the amount of 20% of the outstanding balance under the Agreement.
The Company is required to purchase the Boring Mill for $1.00 at the end of
the 60 month Agreement term.

(9)     OUTLOOK

        See Note 14 of Notes to Consolidated Financial Statements in the
Company's report on Form 10-K for the year ended December 31, 1999.

        Currently, the Company is carrying work-in-process inventories of
$21,572,000 (58% of total inventories net of contract losses) representing
the remaining two presses under construction for the four-press General
Motors order and anticipates that it will be required to incur costs of an
additional $13,550,000 to complete the two presses. Upon completion and
testing of these presses, a total of approximately $35,000,000 will become
payable to the Company. The first two presses of the order have been
completed and are in the process of assembly and customer acceptance at
General Motors. Upon final acceptance of the first two presses, scheduled for
late this year, final payments of approximately $12 million will be due.
Consequently, the Company anticipates receiving payments under the General
Motors order through February, 2001 totaling approximately $47,000,000, which
would be applied to reduce accounts payable, other indebtedness and fund
operations as needed.

        In the interim, pursuant to the terms of the General Motors order the
Company is not entitled to receive progress payments from General Motors and
may not ship the next press to be completed until General Motors' "final"
acceptance, as defined, of the press currently going through the customer
acceptance process at General Motors, which is scheduled to occur in December
2000 or January 2001. Pursuant to the terms of the Foothill credit facility,
the Company may not obtain advances against the General Motors
work-in-process inventories until sixty days prior to the estimated shipment
dates of completed presses or press components to General Motors. As a
result, the Company projects that it will suffer a cash flow short fall of
approximately $10,000,000 commencing in September, 2000 and continuing
through February, 2001 unless it is able to obtain additional financing or
arrange for earlier payment by General Motors. If the Company does not have
sufficient cash resources to complete the General Motors presses, the terms
of the General Motors order provide that General Motors may elect to cancel
its order for the two presses under construction. In addition, Foothill could
elect to terminate its loan pursuant to the terms of the Foothill credit
facility.

        To address its near term liquidity difficulties, the Company is
discussing with General Motors the possibility of receiving payments upon
early shipment of certain parts and components, and is also seeking
additional debt financing.

<PAGE>

        The continued availability of borrowing under the Foothill credit
facility is conditioned upon the Company's compliance with other financial
covenants including a covenant that cumulative earnings before interest,
taxes, depreciation and amortization (EBITDA), exclusive of extraordinary
gains, exceed specified amounts as of the end of each seven calendar quarters
commencing with the quarter ended June 30, 2000. The Company was in
compliance with the EBITDA covenant for the quarter ended June 30, 2000
currently anticipates that it will not be in compliance with the cumulative
EBITDA covenant for the quarter ended September 30, 2000. Moreover, since the
Company's estimated EBITDA for future periods is predicated, among other
things, upon projections of the receipt of new press orders in appropriate
sequences and bearing appropriate margins, the Company cannot predict EBITDA
with a reasonable degree of certainty. The rate of new orders is currently
lagging behind the projections on which the original EBITDA covenants were
based. The Company has advised Foothill that it is likely that it will
ultimately be unable to comply with the EBITDA covenants and has requested a
modification of the EBITDA covenants. If the Company is unable to negotiate a
modification of the credit facility and is not in compliance with the
covenants, the rate of interest on the Company's indebtedness could increase
by 3% per annum. Foothill could also terminate its loan in which event the
Company could be required to pursue alternative financing sources and General
Motors could elect to cancel its order for the remaining two presses under
discussion.

        The New York Stock Exchange has advised the Company that it is
assessing whether the Company's common stock will continue to satisfy the
requirements for listing on the Exchange. The Company has submitted
information requested by the Exchage to assist it inits assessment. However,
unless the market price of the Company's shares improves, the Company
beleives that it is likely that the Exchange will delist its common stock. In
such event the Company's common stock would be traded in the over-the-counter
market.

<PAGE>

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

FIRST HALF OF 2000 COMPARED TO FIRST HALF OF 1999

OPERATING RESULTS

           Net sales from continuing operations decreased to $32,757,000 in
the first half of 2000 compared to net sales of $82,829,000 in the first half
of 1999. The loss from continuing operations in the first half of 2000 was
$15,664,000 (including a provision for deferred taxes of $5,650,000) compared
to a loss from continuing operations of $20,470,000 for the first half of
1999. Income from discontinued operations for the first half of 2000 was
$48,524,000 compared to $6,479,000 for the first half of 1999. Income from
discontinued operations includes estimated aggregate gains of $46,837,000
from the sales on March 7 of an 80.1% interest and then the remaining 19.9%
interest of Bush Hog, L.L.C. (the transferee owner of the former Agricultural
Products Group) on June 26. Net income for the first half of 2000 was
$32,860,000 ($2.77 per common share-diluted) compared to a net loss of
$13,991,000 ($1.18 per common share-diluted) in the first half of 1999.

CONTINUING OPERATIONS

           The decrease in net sales from continuing operations in the first
half of 2000 reflected a significant decline in presses in production. In the
first half of 2000, the Company continued work on three large transfer presses.
The Company was working on orders for eight large transfer presses and a
substantial number of other smaller presses during the first half of 1999.
Revenues from parts sales, press rebuilds and field service increased by 11% in
the first half of 2000, and represented a much higher percentage of the reduced
level of total sales: 21.3% in the first half of 2000 compared to 7.5% in the
first half of 1999.

           Gross profits were $3,526,000 in the first half of 2000 (10.8% of
sales). In the first half of 1999, costs exceeded sales by $6,290,000 (7.6% of
sales). The improvement in gross margins reflects the lessening impact of the
backlog of loss jobs and low margin jobs booked in 1998 and prior years.
Approximately 25% of the Company's press production during the first half of
2000 represented work on jobs on which the Company had previously established
reserves for losses. The Company recorded additional losses of $596,000 and no
gross margins during the first half of 2000 on these jobs. In the first half of
1999, the Company's press production involved relatively more work on loss jobs
and low margin jobs. The Company revised its cost estimates on certain loss jobs
during the first half of 1999 and the increase in the reserves for future losses
on those jobs ($7,515,000) was a major factor in the half's negative gross
margins. Negative gross margins in the first half of 1999 were partially offset
by the Company's recovery of a claim associated with a prior period. The Company
had no such recoveries in the first half of 2000.

           Three other factors significantly affected margins in the first half
of 2000. The Company continued to report no gross profits with respect to
production on any press which had not reached a point in production when all
manufacturing costs could be reasonably estimated.

<PAGE>

Consequently gross profits on each press are not reported proportionately
over the term of its production, but instead are skewed toward the later
stages of production. Gross profits may vary significantly from period to
period both in absolute amounts and as a percentage of sales, depending upon
whether a relatively smaller or larger portion of production represents work
on presses which have reached the stage when manufacturing costs can be
reasonably estimated and gross profits are recorded. A relatively larger
portion of production in the first half of 2000 represented work on presses
in the latter stages of production during which gross profits are recorded.
Gross margins were also positively affected by the higher portion of total
work (21.3% compared to 7.5%) devoted to part sales, press rebuilds and field
service, which generally carry higher margins. The positive impact of these
two factors was partially offset by the effects of the allocation of fixed
costs (i.e., manufacturing overhead) over a smaller production level. Because
of the lower level of production in the first half of 2000, gross profit
margins were adversely affected by the underabsorption of manufacturing
overhead ($2,859,000). The Company anticipates that underabsorption will
continue to affect gross profit margins adversely as long as production
remains at current levels.

           Interest expense in the first half of 2000 related to continuing
operations was $2,369,000 compared to interest expense of $2,592,000 related to
continuing operations reported in the first half of 1999. The decrease was
attributable to decreased borrowings during the second quarter of 2000, offset
in part by an increase in average interest rates.

           Selling and administrative expense in the first half of 2000 declined
by $1,053,000, but represented a significantly higher percentage of the reduced
level of total sales: 32.6% compared to 14.2%. The reduction in these costs was
primarily associated with lower employment levels and a reduction of bank
charges. Professional fees also decreased in the first half of 2000.

           Other expense was $482,000 in the first half of 2000 compared to
other income of $154,000 in the first half of 1999. Reference is made to Note 7
of Notes to Condensed Consolidated Financial Statements for an analysis of other
(income) expense.

           No tax benefit was recorded with respect to operating losses
associated with continuing operations in the first half of 2000 and 1999 as a
100% valuation allowance has been provided on the related benefit. The provision
for deferred income taxes ($5,650,000) in the first half of 2000 is the result
of a valuation allowance for certain temporary differences that are expected to
reverse and become, in the near term, net operating loss carryforwards subject
to expiration. The valuation allowance was based on management's belief that
unless the Company is able to reduce production costs and return to profit
levels experienced prior to 1997, the sale of the Agricultural Products Group
will further decrease the likelihood of the Company being able to utilize all of
its remaining tax loss carryforwards.

           The provision for income taxes ($6,459,000) related to the gain on
the disposition of discontinued operations in the first half of 2000 was based
on the application of the Alternative Minimum Tax rate for the current tax
provision ($1,108,000), and the reversal of deferred tax assets ($5,351,000)
specifically associated with the sale of the Agricultural Products Group - see
Note 1 of Notes to Condensed Consolidated Financial Statements. There was no
current tax
<PAGE>

associated with the income from discontinued operations of $1,687,000 and
$6,479,000 in the six month period ended June 30, 2000 and 1999, respectively.

           The sales backlog at June 30, 2000 was approximately $30,000,000,
which compares to $102,000,000 a year earlier. The Company recognizes that
the delays in press shipments and installations during 1998 and 1999 have
caused its relations with major customers to become strained. The Company is
working to regain the confidence of its customers. In addition, the global
demand for large metal forming presses appears to be in a down cycle. The
Company is competing with foreign manufacturers for the reduced number of
purchase orders currently available and suffers from unfavorable currency
exchange rates in such competition. The Company has reduced employment levels
from approximately 800 on January 1, 2000 to approximately 600 on July 31,
2000. The Company anticipates that additional reductions in other costs as
well as employment levels will be required. The Company successfully
negotiated a new three-year labor agreement during the second quarter of 2000.

DISCONTINUED OPERATIONS

           Discontinued operations for the first half of 2000 and 1999
include the operations of the Agricultural Products Group, an allocation of
all direct financing, administrative and other expenses, income taxes and a
pro rata allocation of interest expense. Income net of taxes associated with
discontinued operations for the first half of 2000 ($48,524,000) includes an
estimated aggregate gain of $46,837,000 net of tax, subject to post-closing
adjustments on the sales of its interest in New Bush Hog and income net of
tax of the former Agricultural Products Group through March 7, 2000 of
$1,687,000.

SECOND QUARTER OF 2000 COMPARED TO SECOND QUARTER OF 1999

           Net sales from continuing operations decreased to $13,740,000 in
the second quarter of 2000 compared to net sales from continuing operations
of $37,491,000 in the second quarter of 1999. The loss from continuing
operations in the second quarter of 2000 was $2,687,000 compared to a loss
from continuing operations of $4,464,000 for the second quarter of 1999.
Income from discontinued operations for the second quarter of 2000,
reflecting a gain from the sale of the Company's remaining 19.9% interest in
New Bush Hog was $8,739,000 compared to $3,139,000 for the second quarter of
1999. Net income for the second quarter of 2000 was $6,052,000 ($.51 per
common share-diluted) compared to a net loss of $1,325,000 ($.11 per common
share-diluted) in the second quarter of 1999.

CONTINUING OPERATIONS

           The decrease in net sales from continuing operations in the second
quarter of 2000 reflected a significant decline in presses in production. In the
second quarter of 2000, the Company continued work on three large transfer
presses. The Company was working on orders for eight large transfer presses and
a substantial number of other smaller presses during the second quarter of 1999.
Revenues from parts sales, press rebuilds and field service increased by 21% in
the second quarter of 2000, and represented a much higher percentage of the
reduced
<PAGE>

level of total sales: 23% in the second quarter of 2000 compared to 7% in the
second quarter of 1999.

           Gross profits were $3,460,000 in the second quarter of 2000 (25.2% of
sales), compared to $3,191,000 (8.5% of sales) in the second quarter of 1999.
The improvement in gross margins reflects the lessening impact of the backlog of
loss jobs and low margin jobs on which work began in 1998 and prior years.
Approximately 45% of the Company's press production during the second quarter of
2000 represented work on jobs on which the Company had previously established
reserves for losses. In the second quarter of 1999, the Company's press
production involved relatively more work on loss jobs and low margin jobs. The
Company's recovery of a claim from a prior period increased gross profits in the
second quarter of 1999. The Company had no such recoveries in the second quarter
of 2000.

           Gross margins in the second quarter of 2000 were positively affected
because a relatively larger portion of production in the second quarter of 2000
represented work on presses in the later stages of production during which gross
profits were recorded and because a higher portion of total work in the quarter
(23.1% compared to 6.9%) was devoted to part sales, press rebuilds and field
service, which generally carry higher margins. These positive factors were
partially offset by the underabsorption of manufacturing overhead ($1,806,000)
caused by the lower level of production in the quarter. The Company anticipates
that underabsorption will continue to affect gross profit margins adversely as
long as production remains at current levels.

           Interest expense in the second quarter of 2000 related to continuing
operations was $689,000 compared to interest expense of $1,429,000 related to
continuing operations reported in the second quarter of 1999. The decrease was
attributable to a combination of decreased borrowings following the sale of an
80.1% interest in the Agricultural Products Group on March 7, 2000, offset in
part by an increase in average interest rates.

           Selling and administrative expense in the second quarter of 2000
declined by $452,000, but represented a significantly higher percentage of the
reduced level of total sales: 39.5% compared to 15.7%. The decrease of $452,000
represented a decrease in administrative expenses reflecting lower employee
benefit costs attributable to the decline in employment levels and lower outside
service costs.

           Other expense was $35,000 in the second quarter of 2000 compared to
other expense of $351,000 in the second quarter of 1999. Reference is made to
Note 7 of Notes to Condensed Consolidated Financial Statements for an analysis
of other (income) expense.

DISCONTINUED OPERATIONS

           Income from discontinued operations for the second quarter of 2000
of $8,739,000 consists of the estimated profit net of tax from the sale of
the Company's remaining 19.9% interest in New Bush Hog on June 26, 2000
reduced for costs associated with the sale and net of an additional provision
of $1,318,000 related to liabilities assumed in connection with the sales.
Income from discontinued operations for the second quarter 1999 of $3,139,000
includes the operations of the Agricultural Products

<PAGE>

Group, an allocation of all direct financing, administrative and other expenses,
income taxes and a pro rata allocation of interest expense.

FINANCIAL CONDITION AND LIQUIDITY

           Working capital at June 30, 2000 was $15,604,000 and the current
ratio was 1.29 to 1.00 compared to working capital of ($43,432,000) and a
current ratio of .79 to 1.00 at December 31, 1999. The improvement in working
capital of $59,000,000 is attributable to the application of the net proceeds of
the sale of the Agricultural Products Group to reduce short term indebtedness.
The decrease of $1,737,000 in net accounts receivable is attributable largely to
the decline in press production. A decrease of $9,545,000 in inventory levels
during the first half of 2000 is attributable in part to the shipment of six
presses during the half and in part to an increase of $5,126,000 in customer
progress payments accounted for as a reduction of inventories.

           Fixed asset additions attributable to continuing operations
totaled $881,000 including approximately $587,000 associated with a
horizontal boring mill which is in the process of being installed.
Additionally, the Company had a non-cash financing activity related to a
capital lease of the same horizontal boring mill totaling $3,222,000. There
were no major fixed asset dispositions in the first quarter of 2000.

           The net decrease in accounts payable and accrued expenses
($12,575,000) is attributable primarily to a reduction in customer deposits
or progress payments which are initially accounted for as accounts payable.
As production continues on an order the customer deposit is eliminated as an
account payable and is accounted for as a credit against inventories. The
decrease in customer deposits accounted for as accounts payable reflects the
slow down in new orders accompanied by customer down payments. Accounts
payable exclusive of customer deposits declined by $955,000 during the first
half of 2000 to $18,700,000. A substantial majority of the payables were more
than ninety days old.

           Net cash used by the operating activities related to the Company's
continuing operations totaled $8,397,000 in the first half of 2000, compared
to net cash used of $879,000 in the first half of 1999. Cash used in
operating activities in the first half of 2000 consisted primarily of the
loss from continuing operations ($15,664,000) offset by depreciation and
amortization ($2,729,000) and a deferred tax provision ($5,650,000). Changes
in non-cash assets and liabilities substantially offset each other in the
first half of 2000. The relatively small negative cash flow in the first half
of 1999 occurred because depreciation and amortization changes plus changes
in non-cash assets and liabilities nearly equaled the loss from continuing
operations.

           As of June 30, 2000, the Company had cash and cash equivalents of
$2,590,000. During the first half of 2000 the Company repaid all of its then
outstanding bank indebtedness, borrowed and subsequently repaid $18,000,000 from
LaSalle and entered into a new credit facility with Foothill Capital Corporation
("Foothill") effective March 29, 2000. Reference is made to Note 4 of Notes to
Condensed Consolidated Financial Statements and to "Management's Discussion and
<PAGE>

Analysis of Financial Condition and Results of Operation" in the Company's
Annual Report for 1999 on Form 10-K for a description of the terms of the
Foothill credit facility.

           The Company is carrying work-in-process inventories of $21,572,000
(58% of total inventories net of contract losses) representing the remaining
two presses under construction for the four-press General Motors order and
anticipates that it will be required to incur costs of an additional
$13,550,000 to complete the two presses. Upon completion and testing of these
presses, a total of approximately $35,000,000 will become payable to the
Company. The first two presses of the order have been completed and are in
the process of assembly and customer acceptance at General Motors. Upon final
acceptance of the first two presses, scheduled for late this year, final
payments of approximately $12 million will be due. Consequently, the Company
anticipates receiving payments through the completion of the General Motors
order of approximately $47,000,000, which would be applied to reduce accounts
payable and other indebtedness and fund operations as needed.

           In the interim, pursuant to the terms of the General Motors order,
the Company is not entitled to receive progress payments from General Motors
and may not ship the next press to be completed until General Motors' "final"
acceptance, as defined, of the press currently going through the customer
acceptance process at General Motors, which is scheduled to occur in December
2000 or January 2001. Pursuant to the terms of the Foothill credit facility,
the Company may not obtain advances against the General Motors
work-in-process inventories until sixty days prior to the estimated shipment
dates of completed presses or press components to General Motors. As a
result, the Company projects that it will suffer a cash flow short fall of
approximately $10,000,000 commencing in September, 2000 and continuing
through the completion of the General Motors order, unless it is able to
obtain additional financing or arrange for earlier payment by General Motors.
If the Company does not have sufficient cash resources to complete the
General Motors presses, the terms of the General Motors order provide that
General Motors may elect to cancel its order for the two presses under
construction. In addition, Foothill could elect to terminate its loan
pursuant to the terms of the Foothill credit facility.

           To address its near term liquidity difficulties, the Company is
discussing with General Motors the possibility of receiving payments upon early
shipment of certain parts and components, and is also seeking additional debt
financing.

           The Company covenanted in the Foothill credit facility that it
would sell its remaining 19.9% interest in the New Bush Hog and apply a part
of the proceeds to repay the LaSalle loan. The Company also covenanted that
the net cash proceeds to the Company of the sale of the 19.9% interest, after
repayment of the LaSalle loan and after a $4,000,000 hold back by the
purchaser, would be not less than $6,000,000. On June 26, 2000, the Company
sold its remaining 19.9% interest in


<PAGE>

New Bush Hog for an estimated sales price of $28,451,000. The sales proceeds
were then reduced by an estimated adjustment to the 80.1% interest sales
price of $1,550,000 and payments to be held in escrow until the resolution of
certain contingencies associated with the sales totaling $5,576,000 After
repaying the $18,000,000 LaSalle loan, the net cash proceeds to the Company
were approximately  $3,000,000, an amount less than the amount covenanted in
the Foothill credit facility. On June 22, 2000, the Company received a waiver
of compliance with that covenant from Foothill.

           The continued availability of borrowing under the Foothill credit
facility is conditioned upon the Company's compliance with other financial
covenants including a covenant that cumulative earnings before interest,
taxes, depreciation and amortization (EBITDA), exclusive of extraordinary
gains, exceed specified amounts as of the end of each seven calendar quarters
commencing with the quarter ended June 30, 2000. The Company was in
compliance with the EBITDA covenant for the quarter ended June 30, 2000, but
currently anticipates that it will not be in compliance with the cumulative
EBITDA convenant for the quarter ended September 30, 2000. Moreover, since
the Company's estimated EBITDA for future periods is predicated, among other
things, upon projections of the receipt of new press orders in appropriate
sequences and bearing appropriate margins, the Company cannot predict EBITDA
with a reasonable degree of certainty. The rate of new orders is currently
lagging behind the projections on which the original EBITDA covenants were
based. The Company has advised Foothill that it is likely that it will
ultimately be unable to comply with the EBITDA covenants and has requested a
modification of the EBITDA covenants. If the Company is unable to negotiate a
modification of the credit facility and is not in compliance with the
covenants, the rate of interest on the Company's indebtedness could increase
by 3% per annum. Foothill could also terminate its loan in which event the
Company could be required to pursue alternative financing sources and General
Motors could elect to cancel its order for the remaining two presses under
discussion.

           The New York Stock Exchange has advised the Company that it is
assessing whether the Company's common stock will continue to satisfy the
requirements for listing on the Exchange. The Company has submitted
information requested by the Exchange to assist it in its assessments .
However, unless the market price of the Company's shares improve, the Company
believes that it is likely that the Exchange will delist its common stock. In
such event the Company's common stock would be traded in the over-the-counter
market.

           Reference is made to "Management's Discussion and Analysis of
Financial Condition and Results of Operation: Outlook" in the Company's
Annual Report and Note 14 of Notes to Consolidated Financial Statements for
1999 on Form 10-K also see Note 9, of Notes to Condensed Consolidated
Financial Statements for a discussion of the challenges facing the Company.

MARKET RISK

           The Company's market risk is the exposure to adverse changes in
interest rates. At June 30, 2000, the Company's total debt outstanding
(including capitalized leases) totaled $12,772,000. Capitalized lease debt
($3,760,000) was represented by fixed rate financing and was not subject to
market rate fluctuations. The remaining portion of the Company's debt at June
30, 2000 ($9,012,000) was subject to interest rates determined by reference to a
floating prime rate (prime plus 200 basis points on the term loan portion of the
Foothill credit facility.) The balance outstanding at June 30, 2000 approximated
fair market value. A hypothetical immediate 1% increase in interest rates would
adversely affect 2000 earnings and cash flow by approximately $45,000 based on
the composition of debt levels at June 30, 2000.


<PAGE>

SAFE HARBOR STATEMENT

           Statements contained in the Management Discussion and Analysis of
Financial Conditions and Results of Operations that relate to future operating
periods are subject to risks and uncertainties that could cause actual results
to differ from management's projections. The Company's outlook is based upon
assumptions relating to the factors discussed below.

           The Company's principal continuing business involves designing,
manufacturing, marketing and servicing complex medium and large metal forming
presses. Significant periods of time are necessary to plan, design and build
these complex machines. With respect to new presses, there are risks of customer
acceptances and start-up or performance problems. Large amounts of capital are
required to be devoted by the Company's customers to purchase and install these
presses. The installation of the press may be an integral part of a customer's
program for the introduction and manufacture of a new model of an automobile or
appliance. The Company's success in obtaining and managing a relatively small
number of sales opportunities, including the Company's success in securing
progress payments for such sales and meeting the requirements of warranties and
guarantees associated with such sales, can affect the Company's financial
performance.

           Other factors that could cause actual results to differ materially
from those contemplated include:

-          Factors relating to the Company's ability to obtain financing and
           refinancing, to comply with covenants in its loan agreements and to
           maintain a satisfactory credit standing with its suppliers.

-          Factors affecting customers' purchases of new equipment, rebuilds,
           parts and services such as: the restructuring and automation of
           customer manufacturing processes, the cash flows of customers;
           consolidations in the automobile industry; work stoppages at
           customers; and the timing, severity and duration of automotive
           customer buying cycles.

-          Factors affecting the Company's ability to capture available sales
           opportunities, including: customers' perceptions of the quality and
           value of the Company's products as compared to competitors' products;
           customers' perceptions of the advantages of dealing with a single
           press manufacturer; whether the Company has successful reference
           installations to demonstrate the speed, efficiency and reliability of
           new presses to customers; customers' perceptions of the health and
           stability of the Company as compared to its competitors; the
           availability of manufacturing capacity at the Company's factory and
           changes in the value of the dollar relative to German, Japanese and
           Canadian currencies.

-          Factors affecting the Company's ability to successfully manage sales
           it obtains, such as: the accuracy of the Company's cost and time
           estimates for major projects; the adequacy of the Company's systems
           to manage major projects and its success in completing projects on
           time and within budget; the Company's success in recruiting and
           retaining
<PAGE>

           managers and key employees; wage stability and cooperative labor
           relations; maintenance of a satisfactory collective bargaining
           agreement and plant capacity and utilization.

-          Factors affecting the Company's general business, such as: unforeseen
           patent, tax, product, environmental, employee health or benefit, or
           contractual liabilities; nonrecurring restructuring and other special
           charges; changes in accounting or tax rules or regulations;
           reassessments of asset valuations for such assets as receivables ,
           inventories, fixed assets and intangible assets; and leverage and
           debt service.

           Reference is made to Note 14 of Notes to Consolidated Financial
           Statements in the Company's 1999 Annual Report on Form 10-K.
<PAGE>

                                 PART II - OTHER INFORMATION

Item 4         SUBMISSION OF MATTERS TO A VOTES OF SECURITY HOLDERS

               On May 24, 2000 the Registrant held its annual meeting of
        shareholders. Copies of the related proxy statement have been
        previously filed with the Securities and Exchange Commission.
        The following item was voted on by the Company's shareholders:

               ELECTION OF TWO DIRECTORS - Proxies for the meeting were
        solicited pursuant to Regulation 14A. The nominees received the number
        of votes:

        CLASS A DIRECTORS-TERM EXPIRES IN 2003-MR. RICHARD A. DREXLER AND
               MITCHELL A. QUAIN

               For Mr. Drexler- 10,289,966; withheld from Mr. Drexler - 216,169
               For Mr. Quain -  10,341,359; withheld from Mr. Quain - 164,776

        The terms of the following directors continued after the meeting:

               CLASS B DIRECTORS - TERMS EXPIRE IN 2001
                      Mr. John E. Jones and Mr. Lloyd A. Drexler

               CLASS C DIRECTORS - TERMS EXPIRE IN 2002
                      Mr. S.Sherman and Mr. Stanley J. Goldring

               Approximately 980,000 shares held by brokers and nominees were
        not voted to approve the transaction.

               2001 ANNUAL MEETING.  After January 2, 2001, notice to the
        Company of a Shareholder proposal submitted for consideration at the
        2001 Annual Meeting of Shareholders which is not submitted for
        inclusion in the Company's proxy statement and form of proxy, will
        be considered untimely and the persons named in the proxies solicited
        by the Company may exercise discretionary voting power with respect to
        any such proposal.

Item 6.        EXHIBIT AND REPORTS ON FORM 8-K

        (a)    Exhibits - See Exhibit Index included herein.

        (b)    Reports on Form 8-K - there were no reports on Form 8-K for the
               three months ended June 30, 2000.

<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 thereunto duly authorized.

                                    ALLIED PRODUCTS CORPORATION
                                    --------------------------------------------
                                          (REGISTRANT)

August 14, 2000                     /s/ Richard A. Drexler
                                    --------------------------------------------
                                    Chairman, President and Chief
                                    Executive & Financial Officer

August 14, 2000                     /s/ John J. Hinnendael Jr.
---------------                     --------------------------------------------
                                    John J. Hinnendael
                                     Vice President and Chief Accounting Officer

August  14, 2000                    /s/ Mark C. Standefer
----------------                    --------------------------------------------
                                    Mark C. Standefer
                                     Senior Vice President and Chief
                                     Administrative Officer

<PAGE>

                                 ALLIED PRODUCTS CORPORATION

                                      INDEX TO EXHIBITS

        The following exhibit is attached to the copies of this report filed
with the Securities and Exchange Commission:

<TABLE>
<CAPTION>
EXHIBIT NO.           DESCRIPTION OF EXHIBITS
-----------           -----------------------
<S>                   <C>
    27.1              Financial Data Schedule
    27.2              1999 Restated Financial Data Schedule

    3                 The registrant's By-Laws of the Company, as
                      amended.

    10                Material Contract: Agreement dated June 24, 2000 between
                      Allied Products Corporation, as Seller, and Bush Hog
                      Investors, as buyer, regarding the sale of Registrant's
                      19.9% interest in Bush Hog, L.L.C.

</TABLE>