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 September 30, 1999
                                       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)


 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:  11,847,046 common shares, $.01
par value, as of October 31,1999.









            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES


                                      INDEX


         PART I.   FINANCIAL INFORMATION
                   ---------------------

                   ITEM 1. FINANCIAL STATEMENTS

                           INTRODUCTION

                           CONDENSED CONSOLIDATED BALANCE SHEETS-
                            September  30, 1999 and December 31, 1998

                           CONDENSED CONSOLIDATED  STATEMENTS OF INCOME (LOSS)
                            Three and Nine Months Ended  September  30, 1999
                            and 1998

                           CONDENSED  CONSOLIDATED  STATEMENTS OF CASH FLOWS-
                            Nine Months Ended September 30, 1999 and 1998

                           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. LEGAL PROCEEDINGS

                   ITEM 2.  NOT APPLICABLE

                   ITEM 3.  NOT APPLICABLE

                   ITEM 4. NOT APPLICABLE

                   ITEM 5.  OTHER INFORMATION

                   ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         SIGNATURES
         ----------

         EXHIBIT  INDEX
         --------------






                         PART I - FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                                  INTRODUCTION

         The condensed  consolidated financial statements included herein (as of
September  30, 1999 and for the three and nine months ended  September  30, 1999
and 1998) 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, except as otherwise may be described herein, are of a normal,
recurring  nature.  The information as of December 31, 1998 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 nine month  periods ended
September 30, 1999 and 1998 are not necessarily  indicative of the results to be
expected for the full year.





           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                    UNAUDITED

                                     ASSETS
<TABLE>
<CAPTION>

                                                      September 30, 1999        December 31, 1998
                                                      ------------------        -----------------
<S>                                                   <C>                       <C>
 Cash and cash equivalents ........................   $          914,000        $         727,000
                                                      ------------------        -----------------
 Notes and accounts receivable, less allowances of
    $1,321,000 and $519,000, respectively .........   $       73,118,000        $      68,827,000
                                                      ------------------        -----------------
 Inventories:
   Raw materials ..................................   $       10,193,000        $      11,529,000
   Work in process ................................           50,201,000               68,296,000
   Finished goods .................................           12,544,000               17,019,000
                                                      ------------------        -----------------
                                                      $       72,938,000        $      96,844,000
                                                      ------------------        -----------------
Deferred tax asset ................................   $       15,060,000        $      15,060,000
                                                      ------------------        -----------------
Prepaid expenses ..................................   $          101,000        $         406,000
                                                      ------------------        -----------------
      Total current assets ........................   $      162,131,000        $     181,864,000
                                                      ------------------        -----------------

Plant and Equipment, at cost:
   Land ...........................................   $        2,412,000        $       2,430,000
   Buildings and improvements .....................           60,050,000               57,022,000
   Machinery and equipment ........................           71,881,000               69,196,000
                                                      ------------------        -----------------
                                                      $      134,343,000        $     128,648,000
  Less-Accumulated depreciation and amortization ..           54,297,000               48,181,000
                                                      ------------------        -----------------
                                                      $       80,046,000        $      80,467,000
                                                      ------------------        -----------------
Other Assets:
   Deferred tax asset .............................   $        4,165,000        $       4,165,000
   Deferred charges (goodwill), net of amortization            5,820,000                6,154,000
   Other ..........................................            5,091,000                3,154,000
                                                      ------------------        -----------------
                                                      $       15,076,000        $      13,473,000
                                                      ------------------        -----------------

                                                      $      257,253,000        $     275,804,000
                                                      ==================        =================

</TABLE>



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









            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                    UNAUDITED

                    LIABILITIES AND SHAREHOLDERS' INVESTMENT


<TABLE>
<CAPTION>


                                                      September 30, 1999        December 31, 1998
                                                      ------------------        -----------------
<S>                                                   <C>                       <C>
  Revolving credit agreement ........................ $      130,100,000        $     119,300,000
  Current portion of long-term debt .................            627,000                  627,000
  Accounts payable ..................................         36,634,000               52,634,000
  Accrued expenses ..................................         26,327,000               24,258,000
                                                      ------------------        -----------------
         Total current liabilities .................. $      193,688,000        $     196,819,000
                                                      ------------------        -----------------
Long-term debt, less current portion shown above .... $        1,797,000        $       2,298,000
                                                      ------------------        -----------------
Other long-term liabilities ......................... $        4,911,000        $       4,957,000
                                                      ------------------        -----------------
Commitments and Contingencies
Shareholders' Investment:
    Preferred stock:
       Undesignated-authorized 1,500,000 shares
       at September 30, 1999 and December 31,
       1998; none issued ............................ $          --             $        --
   Common Stock, par value $.01 per share; authorized
      25,000,000 shares; issued 14,047,249 shares at
      September 30, 1999 and December 31, 1998 ......            140,000                  140,000
   Additional paid-in capital .......................         97,971,000               98,377,000
   Retained earnings ................................          1,263,000               16,131,000
                                                      ------------------        -----------------
                                                      $       99,374,000        $     114,648,000
   Less: Treasury stock, at cost:  2,200,203 and
     2,228,640 shares at September 30, 1999 and
     December 31, 1998, respectively ................        (42,517,000)             (42,918,000)
                                                      ------------------        -----------------
         Total shareholder's equity ................. $       56,857,000        $      71,730,000
                                                      ------------------        -----------------

                                                      $      257,253,000        $     275,804,000
                                                      ==================        =================

</TABLE>

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









            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                    UNAUDITED
<TABLE>
<CAPTION>


                                        Three Months Ended September 30,        Nine Months Ended September 30,
                                        --------------------------------        -------------------------------
                                             1999             1998                    1999             1998
                                        ---------------  ---------------        ---------------  --------------

<S>                                     <C>              <C>                    <C>              <C>
Net sales ...........................   $    69,332,000  $    77,184,000        $   226,196,000  $  229,000,000
Cost of products sold ...............        55,295,000       76,228,000            199,632,000     189,674,000
                                        ---------------  ---------------        ---------------  --------------
  Gross profit ......................   $    14,037,000  $       956,000        $    26,564,000  $   39,326,000
                                        ---------------  ---------------        ---------------  --------------

Other costs and expenses:

  Selling and administrative expenses   $    10,148,000  $     9,571,000        $    31,509,000  $   28,220,000

  Interest expense ..................         3,038,000        1,802,000              8,236,000       4,339,000

  Other (income) expense, net .......           311,000          379,000                270,000      (1,485,000)
                                        ---------------  ---------------        ---------------  --------------

                                        $    13,497,000  $    11,752,000        $    40,015,000  $   31,074,000
                                        ---------------  ---------------        -------------    --------------

Income (loss) before taxes ..........   $       540,000  $   (10,796,000)       $   (13,451,000) $    8,252,000

Provision (credit) for income taxes .            --           (3,648,000)               --            2,969,000
                                        ---------------  ---------------        ---------------  --------------

Net income (loss) and comprehensive
  income (loss) .....................   $       540,000  $    (7,148,000)       $   (13,451,000) $    5,283,000
                                        ===============  ===============        ===============  ==============

Earnings (loss) per common share:
  Basic .............................   $          0.05  $         (0.60)       $         (1.14) $         0.44
                                        ===============  ===============        ===============  ==============

  Diluted ...........................   $          0.05  $         (0.60)       $         (1.14) $         0.44
                                        ===============  ===============        ===============  ==============

Weighted average shares outstanding:
  Basic .............................        11,847,000       11,914,000             11,834,000      11,920,000
                                        ===============  ===============        ===============  ==============

  Diluted ...........................        11,854,000       11,914,000             11,834,000      12,069,000
                                        ===============  ===============        ===============  ==============

Dividends per common share ..........   $          0.04  $          0.04        $          0.12  $         0.12
                                        ===============  ===============        ===============  ==============

</TABLE>


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







            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    UNAUDITED

<TABLE>
<CAPTION>


                                                                         Nine Months Ended September 30,
                                                                         -------------------------------
                                                                              1999             1998
                                                                         -------------     -------------
<S>                                                                      <C>               <C>
   Net income(loss) ..................................................   $  (13,451,000)   $   5,283,000
   Adjustments to reconcile net income (loss)  to net cash
      used for operating activities:
      Gains on sales of operating and nonoperating assets ............          (79,000)      (1,962,000)
      Depreciation and amortization ..................................        6,489,000        4,406,000
      Amortization of deferred charges ...............................          334,000          240,000
      Deferred income tax provision ..................................             -           2,414,000
      Provision for inventory valuation ..............................        8,663,000        1,906,000
      Stock option compensation ......................................            --           1,119,000
      Changes in noncash assets and liabilities, net of
        noncash transactions:
         (Increase) in accounts receivable ...........................       (5,201,000)      (7,710,000)
         (Increase) decrease  in inventories .........................       15,243,000      (59,572,000)
         (Increase) decrease in prepaid expenses .....................          305,000         (107,000)
         Increase (decrease)  in accounts payable and accrued expenses      (13,817,000)      30,143,000
      Other,net ......................................................         (978,000)        (713,000)
                                                                         --------------    -------------
   Net cash used for operating activities ............................   $   (2,492,000)   $ (24,553,000)
                                                                         --------------    -------------

Cash Flows from Investing Activities
   Additions to plant and equipment ..................................   $   (6,094,000)   $ (31,411,000)
   Payment for businesses acquired ...................................            --        (10,953,000)
   Proceeds from sales of plant and equipment ........................           10,000        3,373,000
                                                                         --------------    -------------
   Net cash used for investing activities ............................   $   (6,084,000)   $ (38,991,000)
                                                                         --------------    -------------

Cash Flows from Financing Activities:
   Borrowings under revolving credit agreement .......................   $  100,300,000    $ 131,400,000
   Payments under revolving credit agreement .........................      (89,500,000)     (65,800,000)
   Payments of short and long-term debt ..............................         (501,000)        (202,000)
   Purchase of treasury stock ........................................            --          (1,171,000)
   Dividends paid ....................................................       (1,417,000)        (955,000)
   Stock options and other transactions ..............................         (119,000)          91,000
                                                                         --------------    -------------
Net cash provided from financing activities ..........................   $    8,763,000    $  63,363,000
                                                                         --------------    -------------
Net increase (decrease) in cash and cash equivalents .................   $      187,000    $    (181,000)
Cash and cash equivalents at beginning of year .......................          727,000          609,000
                                                                         --------------    -------------
Cash and cash equivalents at end of period ...........................   $      914,000    $     428,000
                                                                         ==============    =============

</TABLE>




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











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

(1)      Restatement of Previously Issued Financial Statements
         -----------------------------------------------------
                  Operating  results for the three and nine month  periods ended
         September  30,  1998 have been  restated  to reflect  the effect of (a)
         compensation  expenses which should have been recognized in relation to
         certain stock option  exercise  transactions  and (b) the correction of
         gross profit  margins at the Verson  division.  See Note 13 of Notes to
         Consolidated  Financial  Statements in the Company's 1998 Annual Report
         for a more detailed explanation of the restatement.
                  The following table reconciles the amounts previously reported
         to the amounts  currently being reported in the Condensed  Consolidated
         Statement of Income  (Loss) for the three and nine month  periods ended
         September 30, 1998:

<TABLE>
<CAPTION>

                                                Income (Loss)        Tax
                                                   Before         Provision          Net
                                                   Taxes          (Benefit)     Income (Loss)
                                                ------------    ------------    ------------
         <S>                                    <C>             <C>             <C>
         For The Three Months
         --------------------
           As previously reported ...........   $(15,639,000)   $ (5,343,000)   $(10,296,000)
           Restatement associated with Verson
              gross profit margin ...........      4,843,000       1,695,000       3,148,000
           Restatement associated with stock
              option compensation ...........           --              --              --
                                                ------------    ------------    ------------
           As restated ......................   $(10,796,000)   $ (3,648,000)   $ (7,148,000)
                                                ============    ============    ============

         For Nine Months Ended
         ---------------------
           As previously reported ...........   $  4,092,000    $  1,513,000    $  2,579,000
           Restatement associated with Verson
              gross profit margin ...........      5,279,000       1,848,000       3,431,000
           Restatement associated with stock
              option compensation ...........     (1,119,000)       (392,000)       (727,000)
                                                ------------    ------------    ------------
           As restated ......................   $  8,252,000    $  2,969,000    $  5,283,000
                                                ============    ============    ============



</TABLE>











(2)      Accrued Expenses
         ----------------
         The Company's accrued expenses consist of the following:
<TABLE>
<CAPTION>


                                                 9/30/99       12/31/98
                                               -----------   -----------
<S>                                            <C>           <C>
          Salaries and wages ...............   $ 6,184,000   $ 6,573,000
          Warranty .........................     6,115,000     5,794,000
          Self insurance accruals ..........     2,362,000     2,905,000
          Pensions, including retiree health     4,891,000     4,644,000
          Taxes, other than income taxes ...     1,184,000       888,000
          Interest .........................     1,512,000       309,000
          Environmental matters ............     1,127,000     1,225,000
          Other ............................     2,952,000     1,920,000
                                               -----------   -----------
                                               $26,327,000   $24,258,000
                                               ===========   ===========
</TABLE>


(3)      Earnings Per Common Share
         -------------------------
                  Basic earnings (loss) per common share for the periods in 1999
         is based on the average number of common shares outstanding (11,847,000
         and 11,834,000 for the three and nine months ended  September 30, 1999,
         respectively).  Diluted  earnings per common share for the three months
         ended  September  30,  1999 is based on the  average  number  of common
         shares  outstanding  (11,847,000)  increased by the dilutive  effect of
         options  outstanding  (7,000).  For the nine months ended September 30,
         1999,  dilutive  securities  (8,000  shares)  were  excluded  from  the
         calculation of diluted loss per common share as their effect would have
         been antidilutive.  Basic earnings (loss) per common share for the same
         periods  in 1998 is  based  on the  average  number  of  common  shares
         outstanding  (11,914,000  and  11,920,000 for the three and nine months
         ended  September  30, 1998,  respectively).  For the three months ended
         September 30, 1998,  dilutive  securities  (7,000 shares) were excluded
         from the  calculation  of diluted loss per common share as their effect
         would have been antidilutive. Diluted earnings per common share for the
         nine months ended  September 30, 1998 is based on the average number of
         common shares outstanding (11,920,000) increased by the dilutive effect
         (149,000 shares) of outstanding options.

(4)      Business Purchase Option
         ------------------------
                  In August 1999, the Company  acquired a conditional  option to
         purchase  certain fixed assets and  inventories of the Niagara  Machine
         Division  (the  "Niagara  Assets") of CNB  International,  Inc.  D.I.P.
         ("CNB") for a purchase  price equal to the sum of  $8,500,000  plus the
         fair value of inventories  as determined by the parties.  The option is
         subject to the acquisition of substantially all of the assets of CNB by
         the grantor of the option,  Emprotech  Corp.,  which has entered into a
         letter of intent  with CNB  regarding  the  acquisition.  If  Emprotech
         successfully  completes  its  acquisition  of the  assets  of CNB,  the
         Company  currently  anticipates  that it will  exercise  its option and
         purchase  the  Niagara  Assets  from  Emprotech.  The  Niagara  Machine
         Division is a  manufacturer  of small and medium metal forming  presses
         and press parts under the Niagara name.  Niagara  management  estimates
         that the Niagara  spare parts  business  services an installed  base of
         over 35,000 machines. The






         Company's  management  believes  that the  acquisition  of the  Niagara
         product line and spare parts business will compliment Verson's existing
         operations.

(5)      Joint Venture
         -------------
                  On July 15,  1999,  the Company  and CC  Industries,  Inc.,  a
         privately held firm headquartered in Chicago, signed a letter of intent
         to  form a  joint  venture  for  the  ownership  and  operation  of the
         Company's  Agricultural Products Group. On October 26, 1999 the Company
         announced  that it had signed a  definitive  agreement to sell 80.1% of
         the Agricultural Products Group for approximately $120,000,000.  If the
         transaction is approved by the Company's shareholders, Bush Hog L.L.C.,
         a new  joint-venture  company,  will acquire the  business,  assets and
         certain  liabilities of the division within the  Agricultural  Products
         Group.  Under  the  final  agreement,  the  Company  will sell an 80.1%
         interest in Bush Hog L.L.C.  to an affiliate of C.C.  Industries,  Inc.
         Final  shareholder  approval  and  closing  of the  transaction  is not
         expected to occur until the first quarter of 2000.

                  If this  transaction  is completed,  the  Company's  remaining
         operations  will consist  solely of the  operations  of the  Industrial
         Products  Group and the 19.9%  interest in Bush Hog L.L.C.  To complete
         these  transactions,  the Company  must obtain the consent of its banks
         under the Second Amended and Restated Credit  Agreement and the release
         of  outstanding  security  interests held by the banks in the assets of
         the  Agricultural  Products  Group.  The banks have  consented  to such
         transaction and have agreed to release the security interests,  subject
         to the  Company's  repayment  of its entire  indebtedness  owing to the
         banks  on  the   closing.   Simultaneous   with  the  closing  of  this
         transaction, the Company expects to borrow additional funds, secured by
         its 19.9%  membership  interest in Bush Hog L.L.C.  All or a portion of
         those new borrowings, together with the cash proceeds received from the
         affiliate of CC Industries,  net of fees and expenses,  will be applied
         to repay the Company's then current bank  indebtedness.  If the Company
         terminates  the  purchase  agreement in order to accept  another  third
         party acquisition,  the Company is required to pay a termination fee of
         $5,000,000.

(6)      Stockholder Rights Plan
         -----------------------
                  During the third  quarter of 1999 the Company  announced  that
         its Board of Directors  approved the  redemption of its current  Common
         Share Purchase  Rights and adopted a new  Stockholder  Rights Plan. The
         new plan is  designed  to  continue  the  assurance  of fair and  equal
         treatment of all  stockholders  in the event of any proposed  takeover.
         The plan involves the  distribution  of the new rights and a redemption
         payment for current rights to all common  shareholders  of record as of
         July 30, 1999. The  stockholders  received one purchase right for a new
         series of junior  preferred  stock  for each  outstanding  share of the
         Company's  common stock and a redemption  payment on August 10, 1999 of
         $0.01 per share for the Common







         Share Purchase Rights declared under a 10-year rights agreement adopted
         in January 1990.  Each  Preferred  Share  Purchase  Right  entitles the
         holder to purchase  from the Company under  certain  circumstances  one
         one-thousandth of a share of the new junior preferred stock. The rights
         may be  exercised  if a person  or group  announces  its  intention  to
         acquire  or  acquires  15 percent  or more of Allied  Products'  common
         stock.   However,   an  exception  is  made  for  certain   significant
         stockholders of the Company who are holding the Company's  common stock
         for  investment  purposes.  They may acquire up to 20 percent of Allied
         Products'  common  stock  without  triggering  the Rights  Plan.  Under
         certain  circumstances,  the  holders of the rights will be entitled to
         purchase at below market value either  shares of common stock of Allied
         Products  Corporation  or the common  stock of the  acquiring  company.
         Unless  redeemed or exchanged  earlier,  the Preferred  Share  Purchase
         Rights will expire in 10 years.

(7)      Legal Proceedings
         -----------------
                  During  1997,  the  Company  sold the assets of its former Coz
         division and assigned to the purchaser  (the  "Assignee")  the lease of
         the Coz facility.  The lessor  consented to the  assignment but did not
         release the Company from liability as lessee. During 1999, the Assignee
         announced its intent to vacate the facility and filed a lawsuit against
         the Company and the lessor  seeking a declaration  of the rights of the
         respective  parties under the lease.  In  particular,  the Assignee has
         alleged that the Company breached certain  representations  made in the
         contract for the sale of the Coz assets,  and that the lessor  breached
         certain provisions of the lease. The Company has denied all allegations
         of misrepresentations asserted by Assignee, and asserted claims against
         the Assignee for breach of the terms of the  assignment and against the
         lessor  for breach of the lease.  The lessor has  asserted  claims in a
         lawsuit  that the Company  and the  Assignee  are in default  under the
         certain terms of the lease,  including  payment  terms.  Recently,  the
         lessor  placed  the  Assignee  and the  Company  on notice  that it had
         terminated  the lease for nonpayment of rent and  accelerated  the rent
         due for the remaining  term.  The lessor also filed an eviction  action
         against  Assignee.  The term of the lease runs until December 31, 2000.
         Rental payments over the remaining term approximate  $1,000,000.  While
         the risk of loss is  reasonably  possible,  the Company  believes  that
         should the litigation  result in a judgment against the Company and in
         the favor of lessor, the Company will likely be able to receive and
         collect a favorable a judgment against Assignee in the same amount.

                  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,
         appear to be virtually identical. They allege 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
         claims in the  Consolidated  Amended  Complaint  appear to be virtually
         identical to the claims in the prior  complaints  filed in May 1999 and
         June 1999. No estimate can currently be made as to the ultimate outcome
         of this claim, however, 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.

(8)      Contingent Liabilities
         ----------------------
                  In addition to the items  described  in Note 7, 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.  For all these additional
         matters except one,  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.  For
         one product  liability  claim,  however,  the amount of damages claimed
         against  all  defendants  exceeds  the  Company's  liability  insurance
         limits.  No estimate  can  currently be made as to whether the ultimate
         outcome of this claim  against the Company  could  exceed such  limits,
         therefore 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.

                  As  described  in Note 1 of  Notes to  Consolidated  Financial
         Statements in the Company's 1998 Annual Report on Form 10-K, the Verson
         division may not be able to meet delivery schedules for certain presses
         currently on orders in production.  Certain  customers of this division
         may seek to exercise  remedies  for  alleged  breach of contract by the
         Company. The remedies could include partial or complete cancellation of
         orders and  recovery  of damages for late  delivery,  which may include
         downtime,  lost sales and lost profit.  The Company cannot at this time
         determine the amount of any potential claim that may be asserted due to
         late  delivery,  however,  such  claims  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  recently  entered into an amended  purchase order
         agreement with a major  customer  regarding the production and delivery
         of orders for four (4) large presses. Under the terms of the amendment,
         the customer will advance  scheduled  payments for press  components as
         such  components are shipped.  The original  purchase orders called for
         90% payment  upon  shipment of each  completed  press.  Shipment of the
         presses (and related payments) has 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  amendment,  the customer 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 related to






         this order.  Among the  conditions  set forth in the  amendment are the
         requirements  that the Company  complete  the sale of the  Agricultural
         Products  Group  by the  earlier  of the  expiration  of the  Company's
         financing  arrangements  with its secured lenders or December 31, 1999.
         Final shareholder  approval and closing of the sale of the Agricultural
         Products  Group is not  expected  to occur  until the first  quarter of
         2000.  The Company is in the process of  requesting an amendment to the
         amended purchase order agreement to reflect the change in the projected
         closing  date  of the  sale  of the  Agricultural  Products  Group.  In
         addition,  the  Company  must  also  obtain  by  December  31,  1999  a
         commitment reasonably  satisfactory to the customer for working capital
         financing  sufficient for the  production of the last two presses.  The
         Company is in the process of  requesting   an amendment to the
         Second  Amended and  Restated  Credit  Agreement to extend the maturity
         date of this agreement beyond December 31, 1999 -- see Note 12 of Notes
         to Condensed Consolidated  Financial Statements.  Should the Company be
         unsuccessful in obtaining such  amendments,  the ultimate outcome could
         be  materially  adverse  to  the  financial  position  and  results  of
         operations in the near term.

                  Reference  is made to Note  10 of the  Notes  to  Consolidated
         Financial  Statements in the Company's  1998 Annual Report on Form 10-K
         and the  description  of an  adversary  proceeding  filed  against  the
         Company in 1998 by the debtor in a bankruptcy  proceeding.  On November
         4, 1999, the Company  entered into an agreement to settle the adversary
         proceeding.  Under the terms of the  agreement,  the  Company  will pay
         $615,000,  plus  interest  accruing  at the rate of 8% per annum on any
         amount  unpaid after  November 12,  1999.  Final  payment of the entire
         settlement amount, plus accrued interest,  is due on or before December
         1, 1999.

                  At September 30, 1999, the Company was contingently liable for
         approximately  $1,579,000  primarily relating to outstanding letters of
         credit.

(9)      Income Taxes
         ------------
                  The  provision  for  income  taxes in the three and nine month
         periods of 1998 is based upon the Federal  statutory  rate adjusted for
         items that are not subject to taxes. No tax benefit was recorded in the
         three and nine month  periods  ended  September 30, 1999 as the Company
         had no tax  benefits  available  to record  against  the  pretax  loss.
         Temporary  timing  differences have remained  relatively  constant over
         time and are of a nature  that  will  generally  reverse  over a longer
         period of time and are  currently  not subject to any  expiration  time
         frame.  However,  if the sale of an 80.1% interest in the  Agricultural
         Products   Group  (see  Note  5)  is  approved  by  the   shareholders,
         management's  belief is that the  likelihood  of utilizing the deferred
         tax asset  associated  with certain  temporary  differences  is further
         decreased in the near term as a result of the proposed transaction, and
         that tax loss carryforwards subject to expiration will






         most likely arise.  This will likely require an adjustment which will
         be recorded upon  consummation of the sale,  which is the event subject
         to  shareholder  approval that reduces the  likelihood  of the  current
         temporary  differences  being utilizable.

                  See Note 4 of Notes to  Consolidated  Financial  Statements in
         the Company's 1998 Annual Report on Form 10-K for a further  discussion
         related to income taxes.

(10)     Operations By Industry Segment
         ------------------------------
                  During 1998, the Company adopted SFAS 131--  Disclosures about
         Segments  of  a  Business  Enterprise  and  Related  Information.   The
         determination  of  business  segments  is based  upon the nature of the
         products  manufactured  and current  management and internal  financial
         reporting.  The  segment  information  for 1998 has  been  restated  to
         reflect the  business  segments  noted below.  Information  relating to
         operations by industry segment follows (in thousands of dollars):

<TABLE>
<CAPTION>

                                                   Agricultural   Industrial
                                                     Products       Products      Corporate    Consolidated
 <S>                                                <C>          <C>            <C>            <C>
         ----
         For the three months:
          Net sales to unaffiliated customers      $  38,930     $  30,402      $    --        $    69,332
          Income (loss) before taxes (a) ........      5,471(b)        912 (c)     (5,843)(e)          540

         For the nine months:
          Net sales to unaffiliated customers ...  $ 112,965     $ 113,231      $    --        $   226,196
          Income (loss) before taxes (a) ........     15,629(b)    (12,354)(c)    (16,726)(e)      (13,451)
          Total assets ..........................    108,791       132,123         16,339 (d)      257,253

         1998
         ----
         For the three months
          Net sales to unaffiliated customers .... $  34,068     $  43,116      $    --        $    77,184
          Income (loss) before taxes (a) ........      3,520(b)     (9,952)(c)     (4,364)(e)      (10,796)

         For the nine months
          Net sales to unaffiliated customers .... $ 109,288     $ 119,712      $    --        $   229,000
          Income (loss) before taxes (a) ........     18,306(b)         65 (c)    (10,119)(e)        8,252
          Total assets ..........................     96,985       181,348         21,045 (d)      299,378


</TABLE>

         ---------
         (a)   Segment income (loss) before taxes does not reflect an allocation
               or charge for general  corporate income or expenses,  or interest
               expense.
         (b)   Includes  interest  income of $19 in the three  months and $81 in
               nine  months of 1999 and $22 in the three  months  and $82 in the
               nine months of 1998.
         (c)   Includes interest income of $38 in the three months and $251 in
               the nine months of 1999 and $0 in the three and nine months of
               1998.
         (d)   Corporate  assets consist  principally of cash,  deferred income
               taxes,  other  assets,  properties  not used in  operations  and
               investment in a unconsolidated joint venture.
         (e)   Corporate income (loss) before taxes consists of the following:






<TABLE>
<CAPTION>



                                       Three months ended    Nine months ended
                                        9/30/99   9/30/98    9/30/99    9/30/98
                                        -------   -------    -------    -------
<S>                                    <C>        <C>       <C>        <C>
General corporate income and expense   $(2,818)   $(2,599)  $ (8,545)  $ (4,725)
Stock option compensation (Note 1) .      --         --         --       (1,119)
Interest expense ...................    (3,038)    (1,802)    (8,236)    (4,339)
Interest income ....................        13         37                    64
                                       -------    -------   --------   --------
     Total .........................   $(5,843)   $(4,364)  $(16,726)  $(10,119)
                                       =======    =======   ========   ========
</TABLE>


(11)     Summary of Other (Income) Expense
                  Other  (income)  expense for the three and nine month  periods
         ended September 30, 1999 and 1998 consists of the following:
<TABLE>
<CAPTION>

                                          For the three months ended    For the nine months ended
                                          --------------------------    -------------------------
                                            9/30/99        9/30/98        9/30/99        9/30/98
                                          -----------    -----------    -----------    -----------
<S>                                       <C>            <C>            <C>            <C>
         Interest income ..............   $   (70,000)   $   (59,000)   $  (387,000)   $  (146,000)
         Goodwill amortization ........       112,000        108,000        335,000        240,000
         Loan costs amortization ......       181,000          6,000        380,000          6,000
         Net (gain) loss on sales of
            operating and non-operating
            assets ....................        14,000         10,000        (79,000)    (1,962,000)
         Loss on investment in non
            consolidated subsidiary ...         2,000         16,000        208,000         97,000
         Litigation
            settlements/insurance
            provision .................       343,000        249,000        (46,000)       818,000
         Credit for recovery of
            long-term receivable ......          --         (130,000)          --         (520,000)
         Other miscellaneous ..........      (271,000)       179,000       (141,000)       (18,000)
                                          -----------    -----------    -----------    -----------
                                          $   311,000    $   379,000    $   270,000    $(1,485,000)
                                          ===========    ===========    ===========    ===========
</TABLE>



(12)     Financial Arrangements
         ----------------------
                  During the first quarter of 1999,  the Company  entered into a
         Second  Amended and  Restated  Credit  Agreement  replacing  the former
         Amended and Restated Credit  Agreement.  This new agreement was amended
         in April 1999.  Effective  July 31,  1999,  the Company  entered into a
         Second  Amendment and Waiver to the Second Amended and Restated  Credit
         Agreement  ("Second   Amendment").   Under  the  terms  of  the  Second
         Amendment,  the maximum  indebtedness under the agreement may remain at
         $135,000,000  from  July 31  through  November  29,  1999  rather  than
         decrease on specific  dates to  $110,000,000  as originally  scheduled.
         Fixed LIBOR  interest rates related to amounts  outstanding  under this
         agreement  have also been  increased from LIBOR plus 3.5% to LIBOR plus
         4.0%. The final






         maturity date of the agreement was  accelerated  from February 28, 2000
         to November 30, 1999. The Second  Amendment  specifies that termination
         of or a materially  adverse  change in the letter of intent  between CC
         Industries  and  the  Company  or  in  any  succeeding  agreement  will
         constitute an event of default under the credit  agreement.  The Second
         Amendment also provides for a waiver of noncompliance by the Company as
         of June 30,  1999 with the  minimum  consolidated  operating  cash flow
         provision  of the  agreement.  See  Note  5 of  Notes  to  Consolidated
         Financial  Statements in the Company's  1998 Annual Report on Form 10-K
         for more detailed explanation on Financial Arrangements.

                  Effective  October 15, 1999, the Company  entered into a Third
         Amendment  and  Waiver  to  the  Second  Amended  and  Restated  Credit
         Agreement ("Third  Amendment").  The Third Amendment contained a waiver
         of noncompliance with the Company's financial covenants as of September
         30,  1999 and  extended  the  maturity  date of the Second  Amended and
         Restated Credit Agreement from November 30, 1999 to December 31, 1999.













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

Agricultural Products Group Disposition
---------------------------------------
         On July 15, 1999, the Company and CC Industries, Inc., a privately held
firm headquartered in Chicago, signed a letter of intent to form a joint venture
for the ownership and operation of the Company's Agricultural Products Group. On
October 26, 1999 the Company announced that it had signed a definitive agreement
to sell 80.1% of the Agricultural Products Group for approximately $120,000,000.
If the transaction is approved by the Company's shareholders, Bush Hog L.L.C., a
new  joint-venture  company,  will  acquire  the  business,  assets and  certain
liabilities of the Agricultural  Products Group. Under the final agreement,  the
Company will sell an 80.1%  interest in Bush Hog L.L.C.  to an affiliate of C.C.
Industries,  Inc. Final shareholder  approval and closing of this transaction is
not expected to occur until the first quarter of 2000.

         If this transaction is completed,  the Company's  remaining  operations
will consist solely of the  operations of the Industrial  Products Group and the
19.9% interest in Bush Hog L.L.C.  To complete these  transactions,  the Company
must  obtain the  consent of its banks  under the Second  Amended  and  Restated
Credit Agreement and the release of outstanding  security  interests held by the
banks in the assets of the Agricultural Products Group. The banks have consented
to such transaction and have agreed to release the security  interests,  subject
to the Company's  repayment of its entire indebtedness owing to the banks on the
closing.  Simultaneous with the closing of this transaction, the Company expects
to borrow additional funds, secured by its 19.9% membership interest in Bush Hog
L.L.C. All or a portion of those new borrowings, together with the cash proceeds
received from the affiliate of CC  Industries,  Inc.,  net of fees and expenses,
will be applied to repay the Company's  then current bank  indebtedness.  If the
Company terminates the purchase agreement in order to accept another third party
acquisition, the Company is required to pay a termination fee of $5,000,000.

OPERATING RESULTS
-----------------

First Nine Months of 1999 Compared to First Nine Months of 1998
---------------------------------------------------------------
         Consolidated  net  sales  for  the  first  nine  months  of  1999  were
$226,196,000  compared to consolidated net sales of $229,000,000 reported in the
first nine months of 1998.  Loss  before  taxes in the first nine months of 1999
was  $13,451,000  compared  to  income  before  taxes (on a  restated  basis) of
$8,252,000  in the first nine months of the prior  year.  Net loss for the first
nine months of 1999 was $13,451,000 ($1.14 per common share-diluted) compared to
net income (on a restated basis) of $5,283,000 ($0.44 per common  share-diluted)
in the first nine months of 1998.

         Subsequent  to  the  end of  1998,  the  Company  determined  that  the
accounting  for certain  stock  option  exercise  transactions  during the first
quarter of 1998 was incorrect. Compensation expense






for  certain  option  exercises  in the  first  quarter  of 1998  which  was not
recognized  in the  statement of income  issued at that time is now reflected in
the  accompanying   restated  statement  of  income  (loss).  The  Company  also
determined  that gross profit  margins at the Verson  division of the Industrial
Products Group were incorrectly reported in the first, second and third quarters
of 1998.  Corrected  amounts  are now  reflected  in the  accompanying  restated
statements  of  income  (loss).  Reference  is  made  to  Note  13 of  Notes  to
Consolidated  Financial  Statements in the Company's  1998 Annual Report on Form
10-K regarding the  reconciliation of amounts  previously  reported in the first
three  quarters  of  1998  to  the  amounts  currently  being  reported  in  the
accompanying restated statement of income (loss).

         Within  the  Agricultural   Products  Group,  net  sales  increased  to
$112,965,000 in the first nine months of 1999 from $109,288,000  reported in the
first  nine  months of the prior  year.  Increases  were  primarily  related  to
turf/landscape  products and improved loader sales.  In the past few years,  the
Company's Bush Hog division has  concentrated on its turf and landscape  product
line through the  development of new products and the  acquisition in April 1998
of  Universal  Turf.  Improvements  in the loader  product  line sales were also
associated  with  product  development  and the  acquisition  of the Great  Bend
Manufacturing  Company in April 1998.  These increases were partially  offset by
the effects of lower  sales of cutter and disc mower  products in the first nine
months of 1999.  External financial  conditions in the U.S.  agricultural sector
have  weakened  since the early part of 1998 and are expected to remain weak for
the  remainder  of 1999 and on into  2000.  Commodity  prices  are  lower  for a
majority  of major  crops and for most  livestock  segments  compared  to twelve
months ago.  Net farm cash income  decreased in 1998 and is projected to decline
further in 1999 and 2000. However the U.S. Senate  recently  passed  legislation
to add $7.5 billion to the year 2000  agricultural  appropriations  bill for
emergency purposes, which is designed to alleviate some of these issues.  Income
before taxes decreased to $15,629,000 in the first nine months of 1999  compared
to income  before taxes of  $18,306,000  reported in the first
nine months of 1998.  Gross  profit  margins  decreased  by  approximately  2.25
percentage  points  in 1999 due  primarily  to the  effects  of  increased  cash
discounts and decreased  production levels in the current year.  Additional cash
discounts  have been  offered to  dealers  in 1999 to help  reduce the amount of
dealer inventory  levels.  Lower production  levels were the result of decreased
demand by large farming  operations which have been impacted most by the overall
agricultural  economy described above.  Increases in selling and  administrative
expenses in the first nine months of 1999 were related to the acquisition of the
Great Bend division and Universal Turf  operations as noted above.  The increase
was offset in part by lower commission  expenses at the Bush Hog division due to
the effects of lower sales volume and the mix of products sold.

         Within  the  Industrial   Products   Group,   net  sales  decreased  to
$113,231,000  in the  first  nine  months  of  1999  compared  to net  sales  of
$119,712,000  reported in the first nine months of the prior year.  The decrease
was related to lower small press (size C and under)  sales  (production)  at the
Verson  division.  Larger press (size B and higher)  sales  (production)  in the
first nine months of 1999






increased  slightly  (less than 2%) from  levels of the first nine months of the
prior year.  Production  continues on orders for four large presses to one major
U.S. automobile manufacturer. Production on another set of orders for four large
presses to another major U.S.  automobile  manufacturer is nearing completion at
the end of the third quarter of 1999.

         The  Industrial   Products  Group  reported  a  loss  before  taxes  of
$12,354,000 in the first nine months of 1999 compared to income before taxes (on
a restated  basis) of $65,000 in the first  nine  months of 1998.  In 1998,  the
Industrial  Products  Group  recorded a loss of  $12,079,000  on certain jobs in
process  including  reserves of  $8,813,000  (none in the first nine months) for
estimated  future  losses on those  jobs.  The Company  indicated  in its annual
report that it was reasonably  possible that  additional  losses would occur. In
the first nine months of 1999,  the Company  revised its cost estimates on these
jobs and increased the reserves for future losses by  $8,663,000.  The excess of
costs over revenues in the first nine months of 1999 (approximately  $2,100,000)
was attributable to the charges to the reserve for future losses on these jobs.

         Two factors  described  in  "Management's  Discussion  and  Analysis of
Financial  Condition and Results of  Operations"  in the  Company's  1998 Annual
Report on Form 10-K  affected the low margins  reported in the first nine months
of 1999.  First,  the Industrial  Products Group's sales backlog at December 31,
1998 included  revenues of  approximately  $50,000,000  to be recognized in 1999
through 2001 on the loss jobs described  above. No gross margins are expected to
be recognized on those  revenues.  The backlog also included  future revenues of
approximately  $95,000,000 to be recorded principally in 1999 and 2000 for which
anticipated gross margins will be lower than historical levels prior to 1998.

         Second,  the Industrial  Products Group is reporting no gross profit on
any  press  manufactured  during  1999  until a point  in  production  when  all
manufacturing costs can be reasonably estimated.  Currently,  that point is when
the press is in final  assembly.  This method of  recognition  of gross  profits
adversely affected results for the first nine months of 1999.

         Gross  profits  within the  Industrial  Products  Group were  favorably
affected in the first nine months of 1999 and 1998 by the Company's  recovery of
a claim  associated  with a prior period.  Selling and  administrative  expenses
increased  in the first nine  months of 1999.  Most  increases  were  related to
salary and fringe cost increases,  an additional provision for doubtful accounts
and selling expenses related to the joint venture (Verson Pressentechnik) formed
in the fourth quarter of 1998 in which Verson holds a 60% stake.

         The  Industrial  Products Group sales backlog at September 30, 1999 was
approximately   $73,000,000   compared  to  a  sales  backlog  of  approximately
$145,000,000  at December 31,  1998.  The sales  backlog at  September  30, 1999
includes revenues to be recorded in future periods on orders






received,  including press revenues of  approximately  $31,000,000 on orders for
which  estimated  losses  were  recorded  in 1998 and 1999 and on which no gross
margin  is  expected  to be  recognized  in  1999  through  2001.  Uncertainties
associated  with these  contracts  make it reasonably  possible that  additional
losses could occur.  The September 30, 1999 backlog for the Industrial  Products
Group also included  future press  revenues of  approximately  $16,000,000 to be
recorded principally in 1999 for which the group anticipates gross margins lower
than  levels  prior to  1998.  The  remaining  backlog  at  September  30,  1999
(approximately $26,000,000) includes future press revenues as well as orders for
parts and field services with anticipated pre-1998 historical gross margins. The
backlog of low margin and no margin work in process at  September  30, 1999 will
have a substantial  negative effect on the Industrial Products Group earnings in
1999 and, to a lesser extent, in 2000 and 2001. In addition, the deferral of the
recognition of gross margins until the later stages of the production of a press
may  result  in  fluctuations  in  quarter-to-quarter  results.  The  Industrial
Products  Group's  difficulties in completing  orders during 1998 and 1999 could
adversely  affect  its  relationship  with  one or  more  of its  customers  and
therefore  could  have a  negative  impact on the  Industrial  Products  Group's
ability to obtain future business from such customers.  In addition,  failure to
complete the sale of the Agricultural Products Group and the resulting financial
strain that it would impose on the Company  could  further  exacerbate  problems
with  existing  customers  of the  Industrial  Products  Group  and make it more
difficult to attract new  customers.  Management  believes that the  significant
improvement  in the Company's  balance sheet from the repayment of a substantial
majority of its outstanding  bank debt may help provide the Industrial  Products
Group  flexibility  to  restructure  and expand its  operations to meet changing
demands and also may help to alleviate  the concerns of customers  and suppliers
about the long term viability of the Industrial Products Group.

         Because of the difficulties the Industrial  Products Group  encountered
in 1998, the group failed to meet delivery date requirements provided in several
press orders.  The group reserved for penalties of  approximately  $1,200,000 in
the first nine months of 1998 as a result of delays in shipments and may receive
additional  claims for significant  penalty payments or damages in the remainder
of 1999  and  2000.  Reference  is made to  Note  10 of  Notes  to  Consolidated
Financial  Statements  in  the  Company's  1998  Annual  Report  on  Form  10-K.
Additional  reference  is made  to Note 8 of  Notes  to  Condensed  Consolidated
Financial Statements.

         Corporate  expenses consisted  primarily of administrative  charges and
other  (income)  expense.  Administrative  expenses  increased in the first nine
months of 1999.  The  majority of the  increase  was related to the effects of a
matching  provision now provided by the Company for its 401(k) pension plans and
increased  professional  fees related to the extended 1998 audit and refinancing
efforts  of the  Company.  In the  first  nine  months  of 1998,  administrative
expenses  included  $1,119,000 of  compensation  expense (none in the first nine
months of 1999)  related to the  exercise of certain  stock  options  previously
discussed.  Reference  is made to Note 11 of  Notes  to  Condensed  Consolidated
Financial Statements for an analysis of other (income) expense in the first nine
months of 1999 and 1998.

         Interest  expense  in the  first  nine  months  of 1999 was  $8,236,000
compared to interest expense of $4,339,000  reported in the first nine months of
1998. The increase was primarily associated with increased borrowings related to
greater  receivable  levels,  fixed asset  additions and the  acquisition of the
Great Bend and Universal Turf operations in the second quarter of 1998. Interest
rates on borrowings outstanding have also increased under new and amended credit
agreements  during the current  year.  Reference  is made to Note 12 of Notes to
Condensed  Consolidated  Financial  Statements in relation to increased interest
rates.

         No current or  deferred  tax  benefit  was  recorded  in the first nine
months of 1999 as a result of the  Company's  pretax loss.  Reference is made to
Note 9 of Notes to Condensed Consolidated Financial Statements.

Third Quarter of 1999 Compared to Third Quarter of 1998
-------------------------------------------------------
         Consolidated  net sales for the third quarter of 1999 were  $69,332,000
compared to consolidated net sales of $77,184,000  reported in the third quarter
of 1998.  Income before taxes in the third quarter of 1999 was $540,000 compared
to a loss before taxes (on a restated basis) of $10,796,000 in the third quarter
of the prior year. Net income for the third quarter of 1999 was $540,000  ($0.05
per  common  share-diluted)  compared  to a net loss (on a  restated  basis)  of
$7,148,000 ($0.60 per common share-diluted) in the third quarter of 1998.

         Within the Agricultural  Products Group, net sales in the third quarter
of 1999 were  $38,930,000  compared to net sales of $34,068,000  reported in the
third quarter of 1998. All major product lines (cutters, turf/landscape, loaders
and parts)  recorded  improved  sales in the third  quarter of the current year.
Approximately  half of the total  increase  was  related  to the  turf/landscape
product line. Much of the increase was related to new products  developed in the
last 18 months.  Improved loader sales in the third quarter of 1999 reflects the
impact of cross marketing these products under the Bush Hog and Great Bend brand
names and new products developed by both divisions.  Income before taxes for the
Agricultural Products Group increased to $5,471,000 in the third quarter of 1999
compared to income before taxes of  $3,520,000  reported in the third quarter of
the prior year.  Gross  profits and gross profit  margins  improved in the third
quarter of 1999  compared to the same  quarter of the prior year.  Approximately
half of the increase in gross profits was  associated  with the increased  sales
volume as noted above.  The  remainder of the increase in gross  profits and the
improvement  in the gross  profit  margin was  principally  related to  improved
manufacturing  variances  associated with reduced spending  levels.  Selling and
administrative  expenses  increased by  approximately 3% in the third quarter of
1999  compared  to the same  quarter  of the prior  year.  The  majority  of the
increase was related to increased commissions, the direct result of the increase
in sales noted above.






         Within  the  Industrial   Products   Group,   net  sales  decreased  to
$30,402,000  in the third quarter of 1999  compared to net sales of  $43,116,000
reported  in the  third  quarter  of  1998.  Revenues  have  decreased  due to a
decreasing number of presses currently in production compared to the prior year.
In addition, many of the presses currently in production are nearing completion.
Orders for presses, large and small, have decreased significantly in 1999 as the
Verson division is concentrating on completing  current press orders in a timely
manner to avoid late delivery penalties on certain orders. While the division is
actively  seeking press orders from both automobile  manufacturers  and tier one
and two  suppliers,  orders are not being  pursued  which would cause  delays on
presses  currently in production.  This decrease in obtaining  production orders
has resulted in decreased revenue recognition.  Income before taxes in the third
quarter of 1999 was  $912,000  compared  to a loss  before  taxes (on a restated
basis) of  $9,952,000  reported  for the third  quarter of 1998.  As  previously
noted, no gross profit on any press manufactured during 1999 would be recognized
until the press reaches a point in production when all  manufacturing  costs can
be reasonably estimated.  During the third quarter of 1999, production on orders
for four large presses neared completion and accordingly, gross profits on these
jobs were recognized. Gross profit margins in the third quarter of 1998 includes
a charge of $11,180,000  for revised cost estimates for several newly  designed,
automated, multi-station transfer presses which were in production at that time.
The need for revised cost  estimates was identified in the third quarter of 1998
and reflects the impact of  production  bottlenecks  in the assembly  process as
well as greater than anticipated increases in subcontracting costs. Increases in
selling and administrative expenses in the third quarter of 1999 compared to the
third  quarter  of the prior year  (approximately  $400,000)  resulted  from the
realignment  of the  reporting of certain  departments  to selling  expenses and
costs  associated with the joint venture (Verson  Pressentechnik)  formed in the
fourth quarter of 1998.

         As   noted   above,   corporate   expenses   consisted   primarily   of
administrative  charges  and  other  (income)  expense.  Administrative  expense
increases  in the  third  quarter  of  1999  were  principally  associated  with
increased  professional fees as previously discussed.  Reference is made to Note
11 of Notes to Condensed  Consolidated  Financial  Statements for an analysis of
other (income) expense in the third quarter of 1999 and 1998.

         Interest  expense in the third quarter of 1999 was $3,038,000  compared
to interest  expense of $1,802,000  reported in the third  quarter of 1998.  The
increase  was  related  to the effect of  increased  interest  rates  under loan
agreement  terms in effect  during  each  quarter  and the  impact of  increased
borrowing levels for reasons previously discussed.  Reference is made to Note 12
of Notes to Condensed Consolidated Financial Statements in relation to increased
interest rates.

FINANCIAL CONDITION AND LIQUIDITY
---------------------------------
         Working capital at September 30, 1999 was $(31,557,000) and the current
ratio was .84 to 1.00 compared to working capital of $(14,955,000) and a current
ratio of .92 to 1.00 at December


<PAGE>



31, 1998. Net consolidated  receivables increased by $4,291,000 since the end of
1998.   Approximately  two-thirds  of  the  increase  was  associated  with  the
Agricultural  Products  Group  where  sales in the  current  year  increased  as
previously  noted.  The  remainder  of the  increase  was  associated  with  the
Industrial  Products Group where  receivables are a function of press shipments.
Net  consolidated  inventory  levels  decreased by $23,906,000  since the end of
1998. Over 85% of the decrease was related to the Industrial  Products Group. As
noted above,  production has decreased at the Verson  division,  particularly in
the third  quarter of 1999 as  presses in  production  are  nearing  completion.
Orders  for  new  presses  have  decreased  in the  current  year  resulting  in
additional   reductions  in  production  and  decreased  inventory  levels.  The
remainder  of the  decrease  in  inventories  was  related  to the  Agricultural
Products Group and reflects normal seasonal decreases.

         Fixed  asset  additions  in the  first  nine  months  of  1999  totaled
$6,094,000.  Half  of  this  amount  represents  building  costs  at the  Verson
division,  primarily  associated with completing the assembly facility addition,
construction  of which began in 1998. The majority of the remaining  fixed asset
additions  in  1999  were  related  to  manufacturing  machinery  and  equipment
purchases at both the  Agricultural  Products and  Industrial  Products  groups.
There were no major fixed asset dispositions in the first nine months of 1999.

         The net decrease in accounts payable and accrued expenses ($13,931,000)
during the first nine months of 1999 was primarily  related to customer deposits
at the Verson division. Verson initially accounts for customer deposits received
against  orders as a liability.  As  production  continues  on such orders,  the
division reduces the amount  classified as a liability and credits the amount as
a  reduction  in work in  process  inventory.  Borrowings  under  the  Company's
revolving credit agreement  increased by $10,800,000 in the first nine months of
1999.

         On July 31,  1999,  the Company  entered  into a Second  Amendment  and
Waiver to the Second Amended and Restated Credit Agreement ("Second Amendment").
Under the terms of the Second  Amendment,  the  maximum  indebtedness  under the
agreement  may remain at  $135,000,000  from July 31 through  November  29, 1999
rather than decrease on specific dates to $110,000,000 as originally  scheduled.
Interest  rates related to amounts  outstanding  under this  amendment have also
been increased.  The final maturity date of the agreement was  accelerated  from
February 28, 2000 to November 30, 1999. The Second Amendment refers to the above
noted letter of intent between CC Industries,  Inc. and the Company.  The Second
Amendment  specifies that  termination of or a materially  adverse change in the
letter of intent or in any  succeeding  agreement  will  constitute  an event of
default under the credit  agreement.  The Second  Amendment  also provides for a
waiver of  noncompliance  by the  Company as of June 30,  1999 with the  minimum
consolidated  operating cash flow provision of the agreement.  Effective October
21, 1999,  the Company  entered into a Third  Amendment and Waiver to the Second
Amended and Restated Credit Agreement ("Third  Amendment").  The Third Amendment
contained a waiver of noncompliance with the Company's


<PAGE>



financial  covenants as of September  30, 1999 and extended the maturity date of
the Second  Amended and  Restated  Credit  Agreement  from  November 30, 1999 to
December 31, 1999.
         The principal market risk related to debt to which the Company is
exposed includes rates on the Company's debt which is subject to floating
interest rates as described in Note 12 of Notes to Condensed Financial
Statements.
         The Company  recently  entered into an amended purchase order agreement
with a major  customer  regarding the production and delivery of orders for four
(4) large presses.  Under the terms of the amendment,  the customer will advance
scheduled  payments for press  components as such  components  are shipped.  The
original  purchase orders called for 90% payment upon shipment of each completed
press.  Shipment of the presses (and related payments) has 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  amendment,  the customer 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  related to this  order.  Among the  conditions  set
forth in the amendment are the  requirements  that the Company complete the sale
of the  Agricultural  Products  Group by the  earlier of the  expiration  of the
Company's financing  arrangements with its secured lenders or December 31, 1999.
Final shareholder approval and closing of the sale of the Agricultural  Products
Group is not expected to occur until the first  quarter of 2000.  The Company is
in the  process  of  requesting  an  amendment  to the  amended  purchase  order
agreement to reflect the change in the projected closing date of the sale of the
Agricultural  Products  Group.  In  addition,  the  Company  must also obtain by
December  31, 1999 a  commitment  reasonably  satisfactory  to the  customer for
working capital financing sufficient for the production of the last two presses.
The Company is in the process of requesting  an amendment to the Second  Amended
and Restated  Credit  Agreement to extend the  maturity  date of this  agreement
beyond  December  31,  1999 -- see Note 12 of Notes  to  Condensed  Consolidated
Financial  Statements.  Should the Company be  unsuccessful  in  obtaining  such
amendments,  the ultimate  outcome could be materially  adverse to the financial
position and results of operations in the near term.

         Reference  is  made  to  Note  6 of  Notes  to  Condensed  Consolidated
Financial Statements in relation to the Company's  announcement on July 29, 1999
of a New  Stockholders'  Right  Plan  and the  redemption  of the  Common  Share
Purchase  Rights  then  outstanding.  Reference  is made to Note 4 of  Notes  to
Condensed Consolidated Financial Statements in relation to the Company acquiring
a conditional  option to purchase  certain fixed assets and  inventories  of the
Niagara Machine Division of CNB International, Inc. D.I.P.

         As of September 30, 1999, the Company had cash and cash  equivalents of
$914,000 and additional  funds of $3,321,000  available under the Second Amended
and Restated Credit Agreement and related  amendments.  Absent completion of the
joint venture  transaction or renegotiation of its credit facility,  the Company
believes that its expected  operating  cash flow and funds  available  under the
Second Amended and Restated Credit  Agreement and related  amendments may not be
adequate


<PAGE>



to finance  its  operations  and capital  expenditures  beyond  1999.  The joint
venture transaction,  if completed,  should result in the Company receiving cash
proceeds which would  significantly  reduce the amounts  outstanding  under this
agreement.  Additional financing will be necessary to maintain operations of the
Industrial  Products  Group.  The Company is exploring  additional  or alternate
sources of  financing  necessary to continue  these  remaining  operations  in a
normal manufacturing  environment and to finance necessary capital expenditures.
During the second and third  quarters of 1999, the Company was not in compliance
with certain  provisions of the Second Amended and Restated Credit Agreement.  A
waiver for noncompliance was received subsequent to September 30, 1999.

         Reference  is  made  to  Note  7 of  Notes  to  Condensed  Consolidated
Financial  Statements  as it  relates  to the  Company's  involvement  in  legal
proceedings as a defending party.

IMPACT FROM NOT YET EFFECTIVE RULES
-----------------------------------
         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement  of  Financial  Accounting  Standard  (SFAS)  No.  133-Accounting  for
Derivative  Instruments  and  Hedging  Activities.  This  statement  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts  (collectively referred to as
derivatives)  and for hedging  activities.  This  statement is effective for all
quarters of fiscal years  beginning  after June 15, 2000.  The Company is in the
process of evaluating the impact of this statement on its financial reporting.

 YEAR 2000 COMPLIANCE
 --------------------
         Many older computer  software programs refer to years in terms of their
final two digits only.  Such  programs may  interpret  the year 2000 to mean the
year 1900 instead.  If not corrected,  these  programs could cause  date-related
transaction failures. The Company's program to address this year 2000 compliance
issue is broken down into the following major categories:

                  1.       Financial related hardware/software.
                  2.       Manufacturing/engineering process controls.
                  3.       Equipment manufactured for sale.
                  4.       Outside source suppliers.

         The general phases of the year 2000 compliance program common to all of
the above categories are:

                  1.       Identifying items that are not year 2000 complaint.
                  2.       Assigning  priorities to identified items,  including
                           the assessment of items material to the operations of
                           the Company.


<PAGE>



                  3.       Repairing or replacing  material items determined not
                           to be year 2000 complaint.
                  4.       Testing of material items repaired or replaced.

         The Company has completed the identification process in relation to the
four  categories  noted above.  The Company  recently  purchased  and  installed
financial  software  which  is  year  2000  compliant.  Outside  service  bureau
financial  reporting  software currently in place has been determined and tested
to be year 2000 compliant.  Payroll services for the Company are currently being
provided  by an outside  service.  The  Company is  currently  in the process of
upgrading  this  service to year 2000  compliant  software.  All  locations  are
utilizing this new software.  Compliance certificates have been received for non
personal computer systems  owned/leased by the Company.  Compliance  testing has
also been  completed.  The  majority of all personal  computers  used within the
Company  (both  financial and non financial  applications)  have been  purchased
within  the last two years and have been  successfully  tested  for  compliancy.
Remaining  non  compliant  personal  computers  will be replaced  with year 2000
compliant units during 1999 as a part of the Company's normal upgrade program.

         Manufacturing/engineering   process  controls  and  equipment  includes
equipment  to  manufacture  and  design  products  sold by the  Company.  Design
equipment used in the engineering of agricultural  equipment has been tested and
determined  to be  year  2000  compliant.  At the  Verson  division,  year  2000
compliance  certificates have been received on all major purchased  hardware and
software  applications for designing  equipment and programs.  The intent of the
division is to rely on these certificates (due to the quality of the information
received and the reputation of the vendors  involved)  although some testing has
been completed with no exceptions  noted.  The majority of internally  developed
design  software  at Verson  has been  determined  not to contain  date  fields.
Programs  which do contain  date  fields  have been  determined  to be year 2000
compliant.  The  Company  does not have a  significant  amount of  manufacturing
equipment with embedded computer chips or hardware/software  which would present
a problem at the beginning of the year 2000.  Compliancy  certificates have been
received  from the majority of  equipment  manufacturers  and internal  tests of
production  machinery  have been  completed  with no exceptions  noted.  Outside
consultants have also evaluated the status of production equipment at the Verson
division and have  determined  that the division would be unlikely to experience
year 2000 problems in the areas reviewed.

         None of the equipment  manufactured by the Agricultural  Products Group
include   hardware/software   or  embedded  computer  chips.   Stamping  presses
manufactured  by the Verson  division  contain  software and  embedded  computer
chips.  Compliance  certificates  have been received on all software included in
the presses sold.  Some internal  testing has also been  performed.  The Company
believes that it has little, if any, exposure related to equipment  manufactured
by its divisions in relation to the year 2000 issue.


<PAGE>



         The Company has identified key outside  vendors which provide  services
which, if not year 2000 compliant, could have an effect on the operations of the
Company. Sources include banking,  investment,  pension obligations,  insurance,
utilities,  etc. businesses.  During 1999, these service providers were asked to
update the Company on the status of their year 2000 compliance.  The Company has
not received any notification  from any outside service provider  indicating non
year 2000 compliance on behalf of the vendor.

         The total cost  associated with required  modifications  to become year
2000  compliant  (both incurred to date and to be incurred in the future) is not
expected to be material to the  Company's  financial  position.  This total cost
does not include the cost of internal efforts to complete the project. The costs
associated with the replacement of computerized  systems,  substantially  all of
which  were  capitalized,  are  not  included  in the  above  estimate  as  such
replacements  or upgrades were necessary to operate  efficiently  and such costs
would have been  incurred  even if year 2000  compliance  was not an issue.  The
Company anticipates that additional amounts will be spent in completing the year
2000  compliance  project.  These costs are being funded through  operating cash
flow. The Company's year 2000  compliance  program is an ongoing process and the
estimates of costs and  completion  dates for various  components of the program
described above are subject to change. Other major system projects have not been
deferred due to the year 2000 compliance project.

         The risk to the  Company  from the  failure of  suppliers  of goods and
services  (over  which the  Company  does not have  control) to attain year 2000
compliance  is the same to other  business  enterprises  generally.  Failure  of
information systems by financial institutions (banks, service bureaus, insurance
companies,  etc.) would  disrupt the flow of funds to and from the Company until
systems can be remedied or replaced by these  providers.  Failure of delivery of
critical components by suppliers and subcontractors resulting from non year 2000
compliance could result in disruptions of manufacturing processes with delays in
the delivery of our products to our customers until non- compliant conditions or
components  can be  remedied or  replaced.  The  Company  has  identified  major
suppliers of goods and services and is in the process of  completing  their year
2000 compliance status.  Alternate  suppliers of critical components are also in
the process of being identified. Contingency plans are being developed on a case
by case  basis  and may  include  booking  orders  before  anticipated  business
disruption.  Even so,  judgments  regarding  contingency  plans,  such as how to
develop them and to what extent,  are  themselves  subject to many variables and
uncertainties.  There  can be no  assurance  that  the  Company  will  correctly
anticipate  the level,  impact or duration of  noncompliance  by suppliers  that
provide  inadequate  information.  As a result,  there is no certainty  that the
Company's  contingency  plans  will be  sufficient  to  mitigate  the  impact of
noncompliance by suppliers,  and some material adverse effect to the Company may
result from one or more third parties regardless of defensive contingency plans.
The  Company  believes  it is taking the  necessary  steps to resolve  year 2000
issues and that with the  completion of the year 2000 project as scheduled,  the
possibility of significant interruptions of normal operations should be reduced.


<PAGE>



SAFE HARBOR STATEMENT
---------------------
         Statements  contained within 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.  Operations of the Company include the
manufacturing and sale of agricultural and industrial machinery.  In relation to
the  Agricultural  Products Group,  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 1            Legal Proceedings
                  -----------------
                           Reference  is  made  to  Notes  7 and 8 of  Notes  to
                           Condensed Consolidated Financial Statements.

Item 5            Other Information
                  -----------------
                           Reference  is made to Note 12 of Notes  to  Condensed
                  Consolidated   Financial   Statements   and   Exhibit  10  for
                  information  related to the Waiver to the Amended and Restated
                  Credit Agreement

Item 6.           Exhibit and Reports on Form 8-K
                  -------------------------------

                  (a)      Exhibits - See Exhibit Index included herein.

                  (b)      Reports on Form 8-K - On July 30,  1999,  the Company
                           filed report under Item 5 - Other Events.  The report
                           was filed in connection with press release dated July
                           29,  1999  reporting  that  the  registrant  Broad of
                           Directors  approved  the  redemption  of its  current
                           common  share  Purchase  Rights  and  adopted  a  new
                           Stockholder Rights Plan.  Reference is made to Note 6
                           of  Notes   to   Condensed   Consolidated   Financial
                           Statements.




















<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)




November 12,1999                 /s/ Robert J. Fleck
                                 Robert J. Fleck
                                 Vice President- Accounting and Chief Accounting
                                 & Administrative Officer




November 12,1999                 /s/ Mark C. Standefer
                                 Vice President, General Counsel & Secretary














<PAGE>




                           ALLIED PRODUCTS CORPORATION
                                INDEX TO EXHIBITS




EXHIBIT NO.                              DESCRIPTION OF EXHIBITS
      2                    Limited Liability Company Interest Purchase and Asset
                           Contribution Agreement by and between Allied Products
                           Corporation, Bush Hog Investors, L.L.C. and Bush Hog,
                           L.L.C. dated as of October 21, 1999.

    10                     Material Contract - Third Amendment and Waiver dated
                           as of October 15, 1999 to the Credit Agreement dated
                           as of February 1, 1999.

    27                     Financial Data Schedules