FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                  For the quarterly period ended March 31, 1998
                                       OR

              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                    For the transition period from_____to____

                          Commission file number 1-5530

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





            DELAWARE                                      38-029223
 -------------------------------              -------------------------------
 (State or other jurisdiction of              (I.R.S. Employer Identification
 incorporation or organization)                 Number)


 10 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS                         60606
--------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)


        Registrant's telephone number, including area code (312) 454-1020


                                 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 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:  11,917,355 common shares, $.01
par value, as of April 30, 1998.





<PAGE>



            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES


                                      INDEX


         PART I.   FINANCIAL INFORMATION

                  ITEM 1. FINANCIAL STATEMENTS

                          INTRODUCTION

                          CONDENSED CONSOLIDATED BALANCE SHEETS-
                            March  31, 1998 and December 31, 1997

                          CONDENSED  CONSOLIDATED  STATEMENTS OF INCOME-
                            Three Months Ended March 31, 1998 and 1997

                          CONDENSED  CONSOLIDATED  STATEMENTS OF CASH FLOWS-
                            Three Months Ended March 31, 1998 and 1997

                          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.  NOT APPLICABLE

                  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
March 31, 1998 and for the three months ended March 31, 1998 and 1997) 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, 1997 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 month periods ended March 31,
1998 and 1997 are not  necessarily  indicative of the results to be expected for
the full year.


<PAGE>


            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                          Three Months Ended March 31,
                                                        --------------------------------
                                                             1998              1997
                                                        -------------      -------------
<S>                                                     <C>                <C>            

Net sales                                                $ 62,831,000      $ 72,881,000
Cost of products sold                                      43,974,000        55,226,000
                                                         ------------      ------------
  Gross profit                                           $ 18,857,000      $ 17,655,000
                                                         ------------      ------------

Other costs and expenses:
  Selling and administrative expenses                    $  8,671,000      $  8,493,000
  Interest expense                                          1,090,000           694,000
  Other (income) expense, net                                (128,000)          429,000
                                                         ------------      ------------
                                                         $  9,633,000      $  9,616,000
                                                         ------------      ------------
Income before taxes                                      $  9,224,000      $  8,039,000
Provision for income taxes                                  3,359,000         2,868,000
                                                         ------------      ------------
Net income                                               $  5,865,000      $  5,171,000
                                                         ============      ============

Earnings per common share:
  Basic                                                  $       0.49      $       0.42
                                                         ============      ============
  Diluted                                                $       0.48      $       0.41
                                                         ============      ============

Weighted average shares outstanding:
  Basic                                                    11,925,000        12,283,000
                                                         ============      ============
  Diluted                                                  12,112,000        12,514,000
                                                         ============      ============

Dividends per common share                               $       0.04      $     0.0333
                                                         ============      ============


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


</TABLE>




<PAGE>



            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                     ASSETS
<TABLE>
<CAPTION>

                                                            March 31,1998           December 31, 1997
                                                           ---------------          -----------------
<S>                                                        <C>                      <C>    
Current Assets:
  Cash and cash equivalents                                 $   1,273,000            $       609,000
                                                           ---------------          -----------------
  Notes and accounts receivable, less allowances of
     $566,000 and $531,000, respectively                    $  74,531,000            $    54,729,000
                                                           ---------------          -----------------
  Inventories:
    Raw materials                                           $   6,654,000            $     6,193,000
    Work in process                                            81,620,000                 58,090,000
    Finished goods                                             15,185,000                 14,419,000
                                                           ---------------          -----------------
                                                            $ 103,459,000            $    78,702,000
                                                           ----------------         -----------------
 Deferred tax asset                                         $  12,773,000            $    12,773,000
                                                           ---------------          -----------------
 Prepaid expenses                                           $     457,000            $       415,000
                                                           ---------------          -----------------
       Total current assets                                 $ 192,493,000            $   147,228,000
                                                           ---------------          -----------------

 Plant and Equipment, at cost:
    Land                                                    $   2,243,000            $     2,243,000
    Building and improvements                                  45,748,000                 40,750,000
    Machinery and equipment                                    53,407,000                 51,339,000
                                                           ---------------          -----------------
                                                            $ 101,398,000            $    94,332,000
   Less-Accumulated depreciation and amortization              50,150,000                 48,811,000
                                                           ---------------          -----------------
                                                            $  51,248,000            $    45,521,000
                                                           ---------------          -----------------
 Other Assets:
    Deferred tax asset                                      $   4,071,000            $     4,071,000
    Deferred charges (goodwill), net of amortization            1,447,000                  1,491,000
    Other                                                       1,931,000                  1,472,000
                                                           ---------------          -----------------
                                                            $   7,449,000            $     7,034,000
                                                           ---------------          -----------------
                                                            $ 251,190,000            $   199,783,000
                                                           ===============          =================




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

</TABLE>

<PAGE>



            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                    LIABILITIES AND SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>

                                                                         March 31,1998           December 31, 1997
                                                                        ---------------          ------------------
<S>                                                                     <C>                      <C>    
Current Liabilities:
  Revolving credit agreement                                             $  79,600,000            $     50,400,000
  Current portion of long-term debt                                            268,000                     268,000
  Accounts payable                                                          35,962,000                  19,923,000
  Accrued expenses                                                          23,997,000                  25,145,000
                                                                        ---------------          ------------------
         Total current liabilities                                       $ 139,827,000            $     95,736,000
                                                                        ---------------          ------------------
Long-term debt, less current portion shown above                         $     602,000            $        670,000
                                                                        ---------------          ------------------
Other long-term liabilities                                              $  12,696,000            $     10,353,000
                                                                        ---------------          ------------------
Commitments and Contingencies
Shareholders' Investment:
   Preferred stock:
       Undesignated-authorized 1,500,000 shares at March 31,
         1998 and  December 31, 1997; none issued                        $      -                 $         -
   Common Stock, par value $.01 per share; authorized
      25,000,000 shares; issued 14,047,249 shares at March 31,
       1998 and December 31, 1997                                              140,000                     140,000
   Additional paid-in capital                                               94,379,000                  94,709,000
   Retained earnings                                                        45,817,000                  40,428,000
                                                                        ---------------          ------------------
                                                                         $ 140,336,000            $    135,277,000
   Less: Treasury stock, at cost:  2,130,269 and 2,144,263
     shares at March 31, 1998 and December 31, 1997,
     respectively                                                          (42,271,000)                (42,253,000)
                                                                        ---------------          ------------------
         Total shareholder's equity                                      $  98,065,000            $     93,024,000
                                                                        ---------------          ------------------

                                                                         $ 251,190,000            $    199,783,000
                                                                        ===============          ==================



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

</TABLE>

<PAGE>


            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                Three Months Ended March 31,
                                                                          ------------------------------------------
                                                                                1998                       1997
                                                                          --------------             ---------------
<S>                                                                       <C>                        <C>    
Cash Flows from Operating Activities:
   Net income                                                              $  5,865,000               $   5,171,000
   Adjustments to reconcile net income to net cash
      used for operating activities:
      Gains on sales of operating and nonoperating assets                       (15,000)                   (124,000)
      Depreciation and amortization                                           1,350,000                   1,244,000
      Amortization of deferred charges                                           44,000                      44,000
      Deferred income tax provision                                           2,888,000                   2,528,000
      Changes in noncash assets and liabilities, net of
       noncash transactions:
         (Increase) in accounts receivable                                  (19,851,000)                (26,922,000)
         (Increase) decrease in inventories                                 (24,757,000)                  1,621,000
         (Increase) decrease in prepaid expenses                                (42,000)                     21,000
         Increase in accounts payable and accrued expenses                   14,415,000                   3,120,000
      Other,net                                                                (551,000)                    (62,000)
                                                                          --------------             ---------------
   Net cash used for operating activities                                  $(20,654,000)              $ (13,359,000)
                                                                          --------------             ---------------

Cash Flows from Investing Activities:
   Additions to plant and equipment                                        $ (7,077,000)              $  (2,873,000)
   Proceeds from sales of plant and equipment                                    15,000                     385,000
                                                                          --------------             ---------------
   Net cash used for investing activities                                  $ (7,062,000)              $  (2,488,000)
                                                                          --------------             ---------------

Cash Flows from Financing Activities:
   Borrowings under revolving credit agreement                             $ 38,000,000               $  38,600,000
   Payments under revolving credit agreement                                 (8,800,000)                (10,300,000)
   Payments of short and long-term debt                                         (68,000)                    (48,000)
   Purchase of treasury stock                                                  (776,000)                (12,956,000)
   Dividends paid                                                                   -                         3,000
   Stock option transactions                                                     24,000                     856,000
                                                                          --------------             ---------------
Net cash provided from financing activities                                $ 28,380,000               $  16,155,000
                                                                          --------------             ---------------
Net increase in cash and cash equivalents                                  $    664,000               $     308,000
Cash and cash equivalents at beginning of year                                  609,000                     833,000
                                                                          --------------             ---------------
Cash and cash equivalents at end of year                                   $  1,273,000               $   1,141,000
                                                                          ==============             ===============




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



</TABLE>




<PAGE>



            Allied Products Corporation and Consolidated Subsidiaries
              Notes to Condensed Consolidated Financial Statements

(1)      Accrued Expenses
         The Company's accrued expenses consist of the following:

<TABLE>
<CAPTION>

                                                             3/31/98            12/31/97
                                                          -----------         -----------
<S>                                                       <C>                 <C>    

          Salaries and wages                              $ 7,345,000         $ 5,560,000
          Warranty                                          4,987,000           4,938,000
          Self insurance accruals                           1,310,000           2,858,000
          Pensions, including retiree health                4,719,000           6,439,000
          Taxes, other than income taxes                    1,083,000           1,158,000
          Environmental matters                             1,777,000           1,810,000
          Other                                             2,776,000           2,382,000
                                                          -----------         -----------
                                                          $23,997,000         $25,145,000
                                                          ===========         ===========
</TABLE>

(2)      Earnings Per Common Share
                  During 1997, the Financial  Accounting  Standards Board (FASB)
         issued  Statement  of  Financial  Accounting  Standards  No.  128 (SFAS
         128)--Earnings  per  Share.  Earnings  per  common  share and  weighted
         average  shares  outstanding  for the three months ended March 31, 1997
         have been restated to reflect the effect of a three-for-two stock split
         in 1997 and the effect of adopting the  provisions  of this  accounting
         standard.  Basic  earnings  per  common  share is based on the  average
         number of common shares  outstanding-11,925,000  and 12,283,000 for the
         three  months  ended  March 31,  1998 and 1997,  respectively.  Diluted
         earnings  per  common  share is based on the  average  number of common
         shares outstanding, as noted above, increased by the dilutive effect of
         outstanding  stock  options  -187,000  and 231,000 for the three months
         ended March 31, 1998 and 1997, respectively.

(3)      Contingent  Liabilities
                  The Company is involved in a number of legal  proceedings as a
         defending party,  including product liability and environmental matters
         for which additional liability is reasonably possible.  However,  after
         consideration  of relevant  data  (consultation  with legal counsel and
         review of insurance coverage, accruals, etc.), 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.

                  Reference  is  made  to  Note  10  of  Notes  to  Consolidated
         Financial  Statements in the Company's  1997 Annual Report on Form 10-K
         as it relates to a note receivable taken in connection with the sale of
         the business  and assets of the former  Littell  division.  Collections
         from this note in the first  quarter of 1998 totaled  $195,000 and were
         included in "Other


<PAGE>



         (income) expense."

                  Reference  is  made  to  Note  10  of  Notes  to  Consolidated
         Financial  Statements in the Company's  1997 Annual Report on Form 10-K
         as it relates to the sale by the Company of a site in  Coldwater,  Ohio
         that was  contingent on the issuance by the State of Ohio, Ohio 
         Environmental Protection Agency, of a covenant not to sue. On March 31,
         1998, The Ohio Environmental Protection Agency issued the covenant not 
         to sue and the Company  expects to close on the sale of this facility 
         for cash in mid May 1998

                  At March 31,  1998,  the Company was  contingently  liable for
         approximately  $1,034,000  primarily relating to outstanding letters of
         credit.

(4)      Income Taxes
                  The  provision  for income taxes in the first  quarter of 1998
         and 1997 is based upon the Federal  statutory  rates adjusted for items
         that are not  subject  to  taxes.  See Note 4 of Notes to  Consolidated
         Financial  Statements in the Company's  1997 Annual Report on Form 10-K
         for a further discussion related to income taxes.

(5)      Summary of Other (Income) Expense
                  Other (income) expense for the three month periods ended March
         31, 1998 and 1997 consists of the following:


<TABLE>
<CAPTION>

                                                      For the three months ended
                                                      --------------------------
                                                       3/31/98          3/31/97
                                                      ---------       ----------
<S>                                                   <C>             <C>   

          Interest income                             $ (46,000)      $ (17,000)
          Goodwill amortization                          44,000          44,000
          Net (gain) on sales of operating and
           non-operating assets                         (15,000)       (124,000)
          Litigation settlements/insurance provisions      -            442,000
          Credit for recovery of long-term note
           receivable                                  (195,000)           -
          Other miscellaneous                            84,000          84,000
                                                      ----------      ---------
                                                      $(128,000)      $ 429,000
                                                      ==========      =========
</TABLE>

(6)      Subsequent Event
                 On March 30, 1998, the Company announced that it had reached a
         definitive agreement to purchase substantially all of the assets and
         assume certain liabilities of Great Bend Manufacturing Company located
         in Great Bend, Kansas. Great Bend manufactures and sells tractor-
         mounted front-end loaders, which are used principally in agricultural
         applications.  Subsequent to the end of the first quarter of 1998, 
         the Company completed the purchase of this operation from Owosso 
         Corporation. The purchase price was approximately $10,000,000 cash.



<PAGE>



                  On April 23, 1998, the Company  announced that it had acquired
for cash the assets of Universal  Turf  Equipment  Corporation,  located in Opp,
Alabama.  Universal manufactures and sells turf maintenance implements including
reel mowers, verti-cut mowers, reel grinders and spraying equipment.




<PAGE>




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

OPERATING RESULTS
         Net sales for the first  quarter of 1998 were  $62,831,000  compared to
net sales of $72,881,000  reported in the first quarter of 1997. The majority of
the decrease was related to the sale of the Company's Coz division in the fourth
quarter of 1997. Income before taxes was $9,224,000 in the first quarter of 1998
compared to income  before taxes of  $8,039,000  reported in the same quarter of
the prior year. Net income was $5,865,000  ($.49 per common  share-basic) in the
first  quarter of 1998  compared  to net income of  $5,171,000  ($.42 per common
share-basic)  in the first  quarter of 1997.  "Earnings  per  common  share" and
"Weighted  average shares  outstanding"  have been restated for the three months
ended  March 31, 1997 to reflect  the effect of a  three-for-two  stock split in
1997 and the effect of adopting Statement of Financial  Accounting  Standard No.
128 - Earnings per Share.

         At the Bush Hog division,  net sales  increased 8% in the first quarter
of 1998  compared  to the same  quarter of the prior year.  The  majority of the
increase was associated  with the cutter and loader product lines.  Cutter sales
are  benefitting  from the upturn in cow/calf  prices  since the spring of 1997.
Cattle ranchers use the cutters for grazing pasture maintenance. Cutter sales in
1998 were also favorably  affected by  new/redesigned  products for the turf and
landscaping market for utilization by commercial turf (sod) growers and for golf
course maintenance.  Loader sales benefitted from the introduction of a new line
of front-end loaders offering updated mechanical and structural designs.  Retail
sales of Bush Hog  products  have also been  strong  in 1998.  During  the first
quarter of 1998,  gross profits and gross profit margins have improved  compared
to the same quarter of the prior year. These  improvements  were associated with
increased labor efficiency resulting from improved production techniques and the
addition of new  equipment.  Facility  utilization  also  increased in the first
quarter of 1998.

         Net sales at the  Verson  division  decreased  by over 14% in the first
quarter of 1998  compared  to the same  quarter of the prior  year.  Revenue and
profits are recognized on a percentage of completion  basis for press production
at this division.  The decrease in net sales relates to the mix of production in
each of the  related  quarters.  In the first  quarter of 1997,  production  was
completed on the third "A" press for Chrysler.  Current year  production did not
include any "A" size press manufacturing.  In addition, delivery date extensions
have also  resulted in lower  press  revenue in the first  quarter of 1998.  The
division was also  affected by the impact of a late winter snow storm  resulting
in  disruption  of  production  for a few days.  Gross  profits and gross profit
margins  have  improved  in the first  quarter of the  current  year.  Favorably
affecting  margins was the  settlement of a claim  against a third party,  which
negatively  impacted  periods prior to 1997.  The impact of this  settlement was
partially  offset by the effects of lower margins on jobs in process.  Generally
speaking,


<PAGE>



smaller  presses  carry lower  margins than the larger  presses which were being
produced  in the  first  quarter  of 1997.  The  division  also experienced  a
substantial  increase  in costs  associated  with  significant  new  operational
changes which were required  because of the large increase in new orders and the
related plant expansion.

         Selling and  administrative  expenses increased in the first quarter of
1998 to $8,671,000  (13.8% of net sales) from $8,493,000 (11.7% of net sales) in
the same  quarter of the prior  year.  At the Bush Hog  division,  increases  in
selling expenses were principally associated with the effects of the increase in
sales  volume as  discussed  above.  Selling  expense  increases  at the  Verson
division  were  related  to  the  establishment  of an  international  marketing
department  in the last half of 1997.  Administrative  expense  increases at the
Verson division were the result of staff expansion,  including the impact of the
new Precision  Press  Industry  division  which  started  operations in the last
quarter of 1997.  Legal fees  associated  with the  settlement of a claim at the
Verson division (as noted above) also resulted in administrative cost increases.
Corporate administrative costs decreased in 1998 due to staff retirements in the
last half of the prior year.

         Interest  expense in the first quarter of 1998 was $1,090,000  compared
to  interest  expense  of  $694,000  in the  first  quarter  of 1997.  Increased
borrowing needs were related to increased inventory and receivable levels at the
Bush Hog and Verson divisions.  Increased  borrowing needs were primarily due to
fixed  asset  additions  over the last  twelve  months as well as the  impact of
decreased  customer  deposits and progress  payments against press orders at the
Verson division.

         Reference  is  made  to  Note  5 of  Notes  to  Consolidated  Condensed
Financial  Statements  for an  analysis of Other  (income)  expense in the first
quarter   of  1998   and   1997.   It   should   be   noted   that   "Litigation
settlements/insurance  provisions" in the first quarter of 1997 included  income
of $1,550,000 from the settlement of an  environmental  claim against the former
owner of an idle facility,  and additional expenses of approximately  $1,950,000
related primarily to product liability claims of certain former divisions of the
Company.

FINANCIAL CONDITION AND LIQUIDITY
         Working  capital at March 31, 1998 was  $52,666,000  (current  ratio of
1.38 to 1.0) compared to working  capital of $51,492,000  (current ratio of 1.54
to 1.0) at December 31, 1997. Net receivables increased by $19,802,000 since the
end of 1997. The vast majority of this increase was associated with the Bush Hog
division  where cash  collections  are  dependent  upon the  retail  sale of the
product  by the  dealer.  Sales to  dealers  are  typically  strong in the first
quarter  of the year or just  prior to the use  season by the  farmer.  Extended
payment terms are offered to dealers in the form of floor plan  financing  which
is customary in the industry.  On a consolidated  basis,  inventory  levels have
increased by $24,757,000 since the end of 1997. The majority of the increase was
related to the  Verson  division.  This  increase  was the direct  result of the
number and the extent of jobs in process as well as the effects of delivery date
extensions. Inventory levels at the Bush Hog division have also


<PAGE>



increased since the end of 1997 as a result of increased  production  associated
with product demand increases.

         Fixed asset additions in the first quarter of 1998 totaled  $7,077,000.
The  majority  of  these  additions  were  represented  by  construction   costs
associated with a $28,000,000  expansion  project at the Verson  division.  This
project  will more than double the size of Verson's  assembly  facility and will
increase  the  division's  capacity  by  approximately  35%.   Expenditures  for
production  machinery  and  equipment at both the Bush Hog and Verson  divisions
were also made in the first  quarter of the year.  It is  anticipated  that this
equipment will result in reduced manufacturing costs and improvements in product
quality.

         Net  borrowings  under  the  Company's   Amended  and  Restated  Credit
Agreement  increased by  $29,200,000  since the end of 1997.  These  borrowings,
along with internally generated cash, were used to finance working capital needs
and fixed asset additions noted above.

         As of March 31, 1998,  the Company had cash balances of $1,273,000  and
additional funds of $43,463,000  available under its Amended and Restated Credit
Agreement.  Significant  capital  will be  required to  complete  the  expansion
project  at the Verson  division  as noted  above.  In  addition,  funds will be
required for the  purchase of the Great Bend  Manufacturing  Company  during the
second quarter of 1998 - see Subsequent  Event below.  The Company believes that
the  projected  positive  cash flow from the  collection  of Bush Hog and Verson
receivables in the coming months ahead and funds available under the Amended and
Restated  Credit  Agreement are adequate to finance its  operations  and capital
expenditures  in the near future.  During the first quarter of 1998, the Company
has been in compliance with all provisions of loan agreements in effect.

IMPACT FROM NOT YET EFFECTIVE RULES
         In June 1997, the FASB issued SFAS No. 131 - Disclosures about Segments
of an Enterprise and Related Information.  This statement  establishes standards
for the way that public business  enterprises report information about operating
segments in interim  financial  reports  issued to  shareholders  subsequent  to
initial annual financial statement disclosure. It also establishes standards for
related  disclosures  about  products and services,  geographic  areas and major
customers.  This  statement is effective  for financial  statements  for periods
beginning after December 15, 1997.
Comparative information for earlier years is also to be presented.

         In February 1998, the FASB issued SFAS No. 132--Employers'  Disclosures
about  Pensions  and  Other  Postretirement  Benefits.  This  Statement  revises
employers'  disclosures about pension and other postretirement benefit plans. It
does not change the  measurement or recognition of these plans.  It standardizes
the disclosure requirements for pension and other postretirement benefits to the
extent practicable,  requires  additional  information on changes in the benefit
obligations  and fair  values  of plan  assets  that will  facilitate  financial
analysis, and eliminates certain disclosures that are no longer


<PAGE>



as useful as they were when other  related SFAS were  issued.  The Company is in
the  process of  evaluating  the  impact of these  statements  on its  financial
reporting.


SUBSEQUENT EVENT
         On  March  30,  1998,  the  Company  announced  that it had  reached a
definitive  agreement to purchase  substantially all of the assets and assume
certain liabilities of Great Bend Manufacturing Company located in Great Bend, 
Kansas. Great Bend manufactures and sells  tractor-mounted   front-end loaders,
which  are  used  principally  in agricultural  applications. Subsequent to the
end of the first quarter of 1998, the Company  completed the purchases of this 
operation from Owosso  Corporation. The purchase price was approximately 
$10,000,000 cash.

         On April 23, 1998, the Company  announced that it had acquired for cash
the assets of Universal Turf  Equipment  Corporation,  located in Opp,  Alabama.
Universal  manufactures  and sells turf  maintenance  implements  including reel
mowers, verti-cut mowers, reel grinders and spraying equipment.


SAFE HARBOR STATEMENT
         Statements  contained within the Management  Discussion and Analysis of
Financial  Condition 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.  Operations of the Company include the
manufacturing and sale of agricultural and industrial machinery.  In relation to
the Bush Hog division,  forward-looking  statements involve certain factors that
are subject to change. These elements encompass interrelated factors that affect
farmers  and cattle  ranchers'  confidence,  including  demand for  agricultural
products,  grain stock levels,  commodity prices,  weather conditions,  crop and
animal  diseases,  crop yields,  farm land values and government  farm programs.
Other  factors  affecting  all  operations  of the  Company  include  actions of
competitors in the  industries  served by the Company,  production  difficulties
including capacity and supply constraints,  labor relations,  interest rates and
other risks and  uncertainties.  The Company's outlook is based upon assumptions
relating to the factors discussed above.











<PAGE>



                           PART II - OTHER INFORMATION


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 March 31, 1998.















<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)




May 13,1998                                 /s/ Robert J. Fleck
-----------                                 -------------------
                                            Robert J. Fleck
                                            Vice President- Accounting and Chief
                                             Accounting & Administrative Officer




May 13, 1998                                /s/ Mark C. Standefer
------------                                ---------------------
                                            Mark C. Standefer
                                            Vice President, General Counsel & 
                                             Secretary









<PAGE>





                           ALLIED PRODUCTS CORPORATION

                                INDEX TO EXHIBITS




EXHIBIT NO.                                          DESCRIPTION OF EXHIBITS
                                                     -----------------------
    27                                               Financial Data Schedules