FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                  For the quarterly period ended June 30, 1997
                                       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:8,085,272  common shares,  $.01
par value, as of July 31, 1997.





<PAGE>



            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES


                                      INDEX


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

                    ITEM 1. FINANCIAL STATEMENTS

                            INTRODUCTION

                            CONDENSED CONSOLIDATED BALANCE SHEETS-
                               June  30, 1997 and December 31, 1996

                            CONDENSED  CONSOLIDATED  STATEMENTS OF INCOME-
                               Three and Six Months Ended June 30, 1997 and 1996

                            CONDENSED CONSOLIDATED  STATEMENTS OF CASH FLOWS-
                               Six Months Ended June 30, 1997 and 1996

                            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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


         PART II.  OTHER INFORMATION
                   -----------------

                    ITEM 1.  NOT APPLICABLE

                    ITEM 2.  NOT APPLICABLE

                    ITEM 3.  NOT APPLICABLE

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

                    ITEM 5.  NOT APPLICABLE

                    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         SIGNATURES
         ----------

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

<PAGE>






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

ITEM 1.           FINANCIAL STATEMENTS

            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                                  INTRODUCTION

         The condensed  consolidated financial statements included herein (as of
June 30,  1997 and for the six months  ended  June 30,  1997 and 1996) have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the  Securities  and  Exchange  Commission  and  reflect  all  adjustments  of a
recurring  nature which are, in the opinion of management,  necessary to present
fairly the condensed  consolidated  financial  information required therein. The
information as of December 31, 1996 is derived from the audited year end balance
sheet for that year.  Certain  information  and  footnote  disclosures  normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations,  although the Company believes that the disclosures are adequate to
make the  information  presented  not  misleading.  It is  suggested  that these
financial  statements be read in conjunction  with the financial  statements and
the notes thereto included in the Company's latest annual report on Form 10-K.

         The results of  operations  for the three and six month  periods  ended
June 30,  1997 and 1996 are not  necessarily  indicative  of the  results  to be
expected for the full year.












<PAGE>





            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                           June 30,1997         December 31,1996                                
                                                          --------------         -------------- 
                                                    
<S>                                                       <C>                    <C>           
Current Assets: 
  Cash and cash equivalents                               $    1,168,000         $      833,000
                                                          --------------         --------------
  Notes and accounts receivable, less allowances of
    $680,000 and $629,000, respectively                   $   74,989,000         $   52,914,000
                                                          --------------         -------------- 
  Inventories:
     Raw materials                                        $    8,673,000         $    9,524,000
     Work in process                                          36,195,000             28,269,000
     Finished goods                                           16,439,000             18,997,000
                                                          --------------         -------------- 
                                                          $   61,307,000         $   56,790,000
                                                          --------------         -------------- 
  Deferred tax asset                                      $   14,532,000         $   14,532,000
                                                          --------------         -------------- 
  Prepaid expenses                                        $      176,000         $      191,000
                                                          --------------         -------------- 
               Total current assets                       $  152,172,000         $  125,260,000
                                                          --------------         -------------- 
 Plant and Equipment, at cost:
    Land                                                  $    2,192,000         $    2,155,000
    Buildings and improvements                                38,327,000             37,196,000
    Machinery and equipment                                   54,179,000             50,083,000
                                                           -------------         -------------- 
                                                          $   94,698,000         $   89,434,000
   Less- Accumulated depreciation and amortization            51,865,000             51,048,000
                                                           -------------         -------------- 
                                                          $   42,833,000         $   38,386,000
                                                          --------------         --------------  
 Other Assets:
    Notes  receivable,  due after one year,
       less allowance of  $2,500,000  and
       $7,165,000 at June 30, 1997 and 
       December 31, 1996,respectively                     $         -            $         -
    Deferred tax asset                                         5,282,000              5,282,000
    Deferred charges (goodwill), net of amortization           1,579,000              1,668,000
    Other                                                      1,185,000              1,353,000
                                                          --------------         -------------- 
                                                          $    8,046,000         $    8,303,000
                                                          --------------         -------------- 
                                                          $  203,051,000         $  171,949,000
                                                          ==============         ============== 

</TABLE>




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




<PAGE>



            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                    LIABILITIES AND SHAREHOLDERS' INVESTMENT

<TABLE>
<CAPTION>
                                                           June 30, 1997        December 31,1996
                                                           -------------        ----------------

<S>                                                       <C>                    <C>           
Current Liabilities:
  Revolving credit agreement                              $   53,800,000         $   27,000,000
  Current portion of long-term debt                              193,000                193,000
  Accounts payable                                            16,418,000             16,692,000
  Accrued expenses                                            31,057,000             30,575,000
                                                          --------------         --------------
                   Total current liabilities              $  101,468,000         $   74,460,000
                                                          --------------         --------------
Long-term debt, less current portion shown above          $      393,000         $      489,000
                                                          --------------         --------------
Other long-term liabilities                               $    9,064,000         $    3,547,000
                                                          --------------         --------------
Commitments and Contingencies
Shareholders'  Investment:
   Preferred stock:
     Undesignated-authorized 1,500,000 shares at 
     June 30,1997 and December 31, 1996: none issued      $         -            $         -
                                                                                   
   Common stock, par value $.01 per share; authorized 
    25,000,000 shares; issued 9,364,844 shares at 
    June 30,1997 and December 31, 1996,  respectively             94,000                 94,000
   Additional paid-in capital                                 94,737,000             94,671,000
   Retained earnings                                          32,796,000             22,227,000
                                                          --------------         --------------
                                                          $  127,627,000         $  116,992,000
   Less: Treasury stock, at cost 1,286,572
    and 905,071 shares at June 30, 1997 and 
    December 31, 1996, respectively                       $  (35,501,000)        $  (23,539,000)
                                                          --------------         --------------
         Total shareholders' equity                           92,126,000         $   93,453,000
                                                          --------------         --------------
                                                          $  203,051,000         $  171,949,000
                                                          ==============         ==============



</TABLE>



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






















<PAGE>








            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME






                                                 Three Months Ended June 30,
                                                 ---------------------------
                                                    1997              1996
                                               ------------      ------------   
 Net sales                                     $ 76,902,000      $ 69,198,000
 Cost of products sold                           57,323,000        51,392,000
                                               ------------      ------------
         Gross profit                          $ 19,579,000      $ 17,806,000
                                               ------------      ------------
 Other costs and expenses:
     Selling and administrative expenses       $  8,775,000      $  8,641,000
     Interest expense                               958,000           478,000
     Other (income) expense, net                    112,000           (61,000)
                                               ------------      ------------
                                               $  9,845,000      $  9,058,000
                                               ------------      ------------
 Income before taxes                           $  9,734,000      $  8,748,000
 Provision for income taxes                       3,528,000         3,206,000
                                               ------------      ------------
 Net income                                    $  6,206,000      $  5,542,000
                                               ============      ============
 Earnings per common share:
   Primary                                     $        .75      $        .61
                                               ============      ============
   Fully diluted                               $        .74      $        .61
                                               ============      ============
 Weighted average of shares outstanding:
   Primary                                        8,253,000         9,096,000
                                               ============      ============
   Fully diluted                                  8,338,000         9,096,000
                                               ============      ============
 Dividends per common share                    $        .05      $        .05
                                               ============      ============















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



<PAGE>






            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME






                                                   Six Months Ended June 30,
                                                   -------------------------

                                                     1997             1996
                                               -------------     -------------
 Net sales                                     $ 149,783,000     $ 144,441,000
 Cost of products sold                           112,549,000       109,739,000
                                               -------------     -------------
         Gross profit                          $  37,234,000     $  34,702,000
                                               -------------     -------------
 Other costs and expenses:
     Selling and administrative expenses          17,268,000     $  17,674,000
     Interest expense                              1,652,000           920,000
     Other (income) expense, net                     541,000          (167,000)
                                               -------------     -------------
                                               $  19,461,000     $  18,427,000
                                               -------------     -------------
 Income before taxes                           $  17,773,000     $  16,275,000
 Provision for income taxes                        6,396,000         5,615,000
                                               -------------     -------------
 Net income                                    $  11,377,000     $  10,660,000
                                               =============     =============
 Earnings per common share:
   Primary                                     $        1.38     $        1.17
                                               =============     =============
   Fully diluted                               $        1.38     $        1.17
                                               =============     ============= 
 Weighted average of shares outstanding:
   Primary                                         8,221,000         9,115,000
                                               =============     =============
   Fully diluted                                   8,263,000         9,115,000
                                               =============     =============
 Dividends per common share                    $         .10     $         .10
                                               =============     =============


















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





<PAGE>



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

<TABLE>
<CAPTION>

                                                                 For the six months ended June 30,
                                                                 ---------------------------------
                                                                       1997              1996
                                                                  -------------     ------------- 
 
<S>                                                              <C>               <C>          
Cash Flows from Operating Activities: 
   Net income                                                    $   11,377,000    $   10,660,000
    Adjustments to reconcile net income to net cash 
       used for operating activities:
       Gains on sales of operating and non-operating assets            (143,000)          (38,000)
       Depreciation and amortization                                  2,525,000         2,750,000
       Amortization of deferred charges                                  89,000            88,000
       Deferred income tax provision                                  5,648,000         5,053,000
       Changes in noncash assets and liabilities,
           net of noncash transactions:
          (Increase) in accounts receivable                         (22,151,000)       (6,213,000)
          (Increase) in inventories                                  (4,517,000)      (12,624,000)
          (Increase) decrease in prepaid expenses                        15,000           (86,000)
          Decrease in notes receivable, due after one year                 -               29,000
          Decrease in accounts payable and accrued expenses             (27,000)         (393,000)
       Other, net                                                       113,000           243,000
                                                                  -------------     -------------
    Net cash used for operating activities                        $  (7,071,000)    $    (531,000)
                                                                  -------------     -------------
Cash Flows from Investing Activities:
    Additions to plant and equipment                              $  (7,233,000)    $  (1,809,000)
    Proceeds from sales of plant and equipment                          404,000            44,000
                                                                 --------------     -------------
    Net cash used for investing activities                        $  (6,829,000)    $  (1,765,000)
                                                                  -------------     -------------
Cash Flows from Financing Activities:
    Borrowings under revolving loan and  credit agreements        $  63,700,000     $  64,350,000
    Payments under revolving loan and credit agreements             (36,900,000)      (47,250,000)
    Payments of short and long-term debt                                (96,000)         (310,000)
    Common stock issued                                                     -           1,501,000
    Purchase of treasury stock                                      (12,956,000)       (8,125,000)
    Dividends paid                                                     (407,000)         (912,000)
    Stock option transactions                                           894,000           997,000
                                                                  -------------     -------------
Net cash provided from financing activities                       $  14,235,000     $  10,251,000
                                                                  -------------     -------------
Net increase in cash and cash equivalents                         $     335,000     $   7,955,000
Cash and cash equivalents at beginning of year                          833,000           744,000
                                                                 --------------     -------------
Cash and cash equivalents at end of period                        $   1,168,000     $   8,699,000
                                                                  =============     ============= 

</TABLE>




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


<PAGE>




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


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


                                                 6/30/97            12/31/96 
                                              ------------        ------------ 
         Salaries and wages                   $  6,966,000        $  6,026,000
         Warranty                                7,539,000           9,559,000
         Self insurance accruals                 5,284,000           4,046,000
         Pensions, including retiree health      6,164,000           6,417,000
         Taxes, other than income taxes            516,000             811,000
         Environmental matters                   1,860,000           2,020,000
         Other                                   2,728,000           1,696,000
                                              ------------        ------------
                                              $ 31,057,000        $ 30,575,000
                                              ============        ============


(2)      Treasury Stock
         --------------
                  The  Company's  Board  of  Directors  in 1996  authorized  the
         purchase of up to 1,500,000  shares of the Company's  common stock from
         time  to  time  on  the  open  market,  subject  to  prevailing  market
         conditions.  Through the end of the first half of 1997, the Company has
         purchased  approximately  1,225,000  shares (none in the second quarter
         and  422,000 in the first half of 1997 ) of its common  stock  since
         the inception of the repurchase  plan. Some treasury  shares  purchased
         have been reissued in satisfaction of stock options exercised.

(3)      Contingent Liabilities
         ----------------------
                  The Company is involved in a number of legal  proceedings as a
         defending party,  including product liability and environmental matters
         for which additional liability is reasonably possible.  However,  after
         consideration  of relevant  data  (consultation  with legal counsel and
         review of insurance coverage, accruals, etc.), management believes that
         the eventual  outcome of these matters will not have a material adverse
         effect on the Company's  financial  position or its ongoing  results of
         operations.

                  Reference is made to Note 9 of Notes to Consolidated Financial
         Statements  in the  Company's  1996  Annual  Report  on Form 10-K as it
         relates to a note  receivable  taken in connection with the sale of the
         business and assets of the former Littell  division.  Subsequent to the
         end of the second  quarter of 1997,  the Company  received a payment of
         $1,500,000  (in addition to a receipt of $500,000 in the second quarter
         of 1997) to be  applied to this note.  All  litigation  related to this
         disposition  has now been  settled and all  amounts not  expected to be
         collected have been written off at June 30, 1997.


<PAGE>




                  At June 30, 1997, the Company was contingently liable for 
         approximately $1,511,000 primarily relating to outstanding letters of 
         credit.


(4)      Income Taxes
         ------------
                  The  provision  for income taxes in the first half of 1997 and
         1996 is based upon the Federal  statutory  rate adjusted for items that
         are not subject to taxes. See Note 4 of Notes to Consolidated Financial
         Statements  in the  Company's  1996  Annual  Report  on Form 10-K for a
         further discussion related to income taxes.

(5)      Summary of Other (Income) Expense
         ---------------------------------

                  Other (income) expense for the three and six month periods
         ended June  30, 1997 and 1996 consists of the following:

<TABLE>
<CAPTION>

                                                 For the three months ended      For the six months ended
                                                 --------------------------      ------------------------
                                                   6/30/97        6/30/96       6/30/97         6/30/96
                                                 ----------      ---------     ----------      ----------                   
         <S>                                     <C>             <C>           <C>             <C>        
         Interest income                         $  (23,000)     $ (13,000)    $  (40,000)     $  (76,000)
         Goodwill amortization                       45,000         44,000         89,000          88,000
         Loan cost expenses                             -           75,000            -           153,000
         Net (gain) loss on sales
            of operating and non-
            operating assets                        (18,000)         1,000       (143,000)        (38,000)
         Litigation settlements/insurance                                        .
            provision                               115,000            -          557,000         (96,000)
         Payment received on long-term
            notes receivable reserved for as
            uncollectible                          (500,000)                     (500,000)       (158,000)
         Other miscellaneous                        493,000       (168,000)       578,000         (40,000)
                                                 ----------      ----------     ---------       --------- 
                                                 $  112,000      $ (61,000)    $  541,000      $ (167,000)
                                                 ==========      ==========      ========        ========= 

</TABLE>

(6)      Subsequent Event
         ----------------

                  On July 24,  1997,  the  Company  announced  that the Board of
         Directors had authorized a three-for-two  stock split to be effected by
         means of a dividend  payable in shares of the common stock, at the rate
         of one share for each two shares  owned.  The dividend  will be paid on
         September  5, 1997 to  stockholders  of record on August 15,  1997.  In
         addition, a cash dividend of four cents ($.04) on its common stock will
         be paid on September 30, 1997 to  stockholders  of record on August 15,
         1997, including the shares to be issued as a result of the stock split.


<PAGE>





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

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

First Half of 1997 Compared to First Half of 1996
-------------------------------------------------

         Net sales in the first half of 1997 were  $149,783,000  compared to net
sales of $144,441,000 reported in the first half of 1996. Income before taxes in
the  first  half of 1997 was  $17,773,000  compared  to income  before  taxes of
$16,275,000 in the first half of the prior year. Net income in the first half of
1997 was $11,377,000 ($1.38 per common share based on 8,221,000 weighted average
shares  outstanding)  compared  to net income of  $10,660,000  ($1.17 per common
share based on 9,115,000 weighted average shares outstanding) for the first half
of 1996. The decrease in the weighted average shares outstanding was the result
of the Company's program to purchase its common stock.

         At the Bush Hog division, net sales in the first half of 1997 increased
by 5% over net sales in the first half of the prior  year.  The  majority of the
sales increase was related to increased  loader and service parts sales in 1997.
Cutter/mower  sales in the first half of the  current  year  approximated  those
reported in the first half of 1996. Overall, the agricultural equipment industry
has improved in the current year compared to 1996. Cattle prices have stabilized
during the first half of 1997 and have  improved in recent  months.  Beef cattle
producers are optimistic as feed costs have  decreased and adequate  moisture is
providing  a good hay crop.  Grain crop  yields in 1997 are  expected  to exceed
yields of the prior year assuming favorable weather continues during the growing
season.  Certain commodity prices have decreased  significantly from 1996 levels
while others have remained  relatively stable.  Excessive rainfall in some areas
is expected to result in lower  cotton  yields.  Gross  profits and gross profit
margins  have  improved  at the  Bush Hog  division  in the  first  half of 1997
compared  to the first  half of the prior  year.  The  improvement  in the gross
profit  margin  was  related to the mix of  products  sold,  increased  facility
utilization  and improved  manufacturing  efficiencies  during the first half of
1997.  Increased  sales volume also resulted in improved gross profits during
the first half of 1997.

         At the Verson division,  net sales increased by 7% in the first half of
1997 compared to the first half of 1996. The increase in net sales was reflected
in all product lines except parts, where sales remained constant with part sales
during  the  first  half of  1996.  Revenue  and  profits  are  recognized  on a
percentage of completion  basis for press  production  at this  division.  While
gross  profits have  increased in the first half of the current year  (primarily
the result of increased sales volume), margins


<PAGE>



have decreased. This decrease was associated with the mix of jobs in production.
In the first  half of 1996,  significant  production  continued  on an order for
three "A" presses for  Chrysler.  Production  was completed on this order in the
first quarter of 1997.  Current year  production  reflects a smaller  portion of
production  against  this order and a larger  portion of  production  related to
smaller  presses  with lower  margins.  The  division  also  incurred  increased
overtime costs necessary to meet delivery  schedules and costs associated with a
program   undertaken  to  identify   areas  and  means  of  improvement  in  the
manufacturing  process.  These  increased  costs were partially  offset by lower
warranty provisions related to the mix of sales during the first half of 1997.

         Production  workers at the Verson  division  went on strike on June 23,
1997, one week after the expiration of the prior union agreement. The strike had
no material  impact on the operations of the Verson  division or the Company for
the three and six month periods ended June 30, 1997. Production continued at the
Verson  division  through the use of  supervisory  employees,  which enabled the
division to continue to meet customer obligations. On July 22, 1997, the Company
announced  that it had reached an agreement  with the members of the United Auto
Workers'  local.  It is too early to  determine  the full impact that the strike
will  have on the third and  fourth  quarter  operating  results  of the  Verson
division.

         At the Coz division,  net sales decreased 13% in the first half of 1997
compared to the first half of the prior year.  Net sales have  decreased in most
product  lines during 1997.  The decrease in sales is reflected  throughout  the
industry. Customers of the Coz division have also experienced sales decreases of
10 - 15% in the first half of 1997.  A smaller  portion of the  decrease  in net
sales at the Coz division was related to the division's effort to extract itself
from lower margin products.  Gross profits have decreased  slightly in the first
half of the current year due to lower sales  volume  noted  above.  Gross profit
margins have remained constant in the first half of 1997. Savings resulting from
the reduction of lower margin sales were offset by lower margins  resulting from
the effects of decreased facility utilization and increased  competition and its
effect on selling prices.

         Selling and administrative  expenses decreased to $17,268,000 (11.5% of
net sales) in the first half of 1997 compared to expenses of $17,674,000  (12.2%
of net sales)  reported in the first half of 1996.  The majority of the decrease
in selling  expenses  was  associated  with the Bush Hog  division  where  sales
commission  rates  have been  decreased  in 1997.  Decreases  in  administrative
expenses were also  primarily  related to the Bush Hog division where costs were
incurred  during the first half of 1996 in connection with a program to identify
areas and means of improvement in the  manufacturing  process.  This program was
completed at the end of the first half of 1996.  No such costs were  incurred at
this division in the first half of the current year.

         Interest  expense in the first half of 1997 was $1,652,000  compared to
interest  expense of  $920,000  reported  in the first  half of the prior  year.
Increased borrowing needs were associated with


<PAGE>



the Verson division where the number of presses in process has increased and the
division is awaiting final payment on presses  currently  being  installed.  The
Company also  purchased  approximately  $13,000,000 of treasury stock during the
first half of 1997 as part of a program to  purchase up to  1,500,000  shares of
the  Company's  common  stock.  See Note 2 of Notes  to  Condensed  Consolidated
Financial Statements.

         Reference  is  made  to  Note  5 of  Notes  to  Condensed  Consolidated
Financial Statements for an analysis of Other (income) expense in the first half
of 1997 and  1996.  It should be noted  that  "Litigation  settlements/insurance
provisions"  in 1997  included  income of $1,550,000  from the  settlement of an
environmental  claim  against  a former  owner of an idle  facility,  income  of
$500,000  from the  recovery  of a note  receivable  previously  written off and
additional  expenses of approximately  $2,050,000  related  primarily to product
liability claims of certain former divisions of the Company.

Second Quarter of 1997 Compared to Second Quarter of 1996
---------------------------------------------------------

         Net sales in the second  quarter of 1997 were  $76,902,000  compared to
net sales of $69,198,000  reported in the second quarter of 1996.  Income before
taxes in the second  quarter of the  current  year was  $9,734,000  compared  to
income before taxes of $8,748,000 in the second  quarter of the prior year.  Net
income in the second quarter of 1997 was $6,206,000 ($.75 per common share based
on 8,253,000  weighted  average  shares  outstanding)  compared to net income of
$5,542,000  ($.61 per common share based on 9,096,000  weighted  average  shares
outstanding) for the same quarter of the prior year.

         At the Bush Hog division, net sales increased 17% in the second quarter
of 1997  compared  to the second  quarter of 1996.  Increases  in net sales were
reported  primarily  within the rotary cutter and loader product lines.  Much of
this increase was the direct result of  improvements  in the cattle  industry as
previously  discussed.  The effects of favorable weather conditions and moisture
levels in many parts of the country have also resulted in increased sales. Gross
profits and gross  profit  margins have  improved in the second  quarter of 1997
compared  to the same  quarter  of the  prior  year.  Approximately  half of the
increase in gross profits was related to the increased sales volume noted above.
The  remainder of the  increase in gross  profits and the  improvement  in gross
profit margins were related to the improved mix of products sold and the effects
of favorable  manufacturing  efficiencies  obtained during the second quarter of
1997.

         At the  Verson  division,  net  sales  in the  second  quarter  of 1997
increased 15% over levels  reported in the second  quarter of 1996. The majority
of the  increase was related to press  sales.  Production  (sales) in the second
quarter of 1997 was  concentrated  on smaller  presses as production  orders for
larger  presses were  completed  prior to the current  quarter.  No  significant
production has


<PAGE>



taken place on recent large press orders as design and engineering functions are
now being  performed  prior to  production.  Production in the second quarter of
1996  included  work on the  Chrysler  order  for three  "A"  presses  which was
previously  discussed.  The gross profit margin in the second quarter of 1997 at
the Verson  division  decreased  compared  to the second  quarter of 1996.  This
decrease was primarily  associated with the mix of production during each of the
quarters  as noted  above.  In  addition,  a  significant  amount of  production
overtime was incurred in the second  quarter of 1997 which was necessary to meet
delivery schedules.  Costs related to a program undertaken to identify areas and
means of improvement in the  manufacturing  process  continued to be incurred in
the current year's second  quarter.  Lower warranty  provisions were recorded in
the current  year's second  quarter as the mix of production  has  significantly
changed as noted above.

         At the Coz division,  net sales in the second quarter of 1997 decreased
21% compared to the second  quarter of the prior year.  Current  second  quarter
sales were affected by an industry wide slowdown in demand.  As noted above, the
Coz division is extracting itself from certain lower margin products and selling
prices have been  impacted by  increased  competition.  Gross  profits and gross
profit  margins  have  decreased in the second  quarter of 1997  compared to the
second  quarter  of  1996.  This  is the  direct  result  of  increased  pricing
competition, decreased facility utilization and lower sales volume.

         Selling and  administrative  expenses  increased slightly in the second
quarter  of 1997  ($8,775,000)  compared  to these same  expenses  in the second
quarter  of  1996  ($8,641,000).  As a  percent  of net  sales,  these  expenses
decreased in the current  year's  second  quarter  (11.4%)  compared to the same
quarter of the prior year (12.5%).  Selling expense indicated little change on a
quarter to quarter  comparison.  Commission  expenses  at the Bush Hog  division
remained  constant  in  terms of  actual  amounts  expensed  even  though  sales
increased. As noted earlier, commission rates have been decreased in the current
year.

         Interest  expense in the second  quarter of 1997  increased to $958,000
compared to interest expense of $478,000 reported in the second quarter of 1996.
Cash  requirements  at the Verson division  increased in 1997,  primarily in the
area  of  receivables.  Balances  remain  outstanding  on  invoiced  presses  as
installation  of these  presses  has been  delayed  due to the  large  number of
installations that need to be completed.  Final payments on receivables  related
to these  presses are generally not due until  installation  is completed.  Also
affecting the need for  additional  borrowings  was the effect of treasury stock
purchases in the first quarter of 1997 as previously discussed.

         Reference  is  made  to  Note  5 of  Notes  to  Condensed  Consolidated
Financial  Statements  for an analysis of Other  (income)  expense in the second
quarter of 1997 and 1996.




<PAGE>



FINANCIAL CONDITION AND LIQUIDITY
---------------------------------

         Working capital at June 30, 1997 was $50,704,000 (current ratio of 1.50
to 1.0) compared to working  capital of  $50,800,000  (current  ratio of 1.68 to
1.0) at December 31,  1996.  Net  receivables  have  increased by  approximately
$22,000,000  since  the end of  1996.  Approximately  65% of this  increase  was
associated with the Verson division.  As noted above,  press  installations have
been delayed in 1997  resulting in the delayed  collection  of the final amounts
due for these presses. As the installation  backlog decreases,  receivables will
also  decrease.  The  remainder  of the  increase  was  related  to the Bush Hog
division  where  cash  collections  associated  with  the  sale of  agricultural
equipment  to dealers  are  dependent  on the retail  sale of the product by the
dealer.  Sales to dealers are typically  strong in the first quarter of the year
or just  prior to the use  season  by the  farmer.  Extended  payment  terms are
offered to dealers in the form of floor plan financing which is customary in the
industry.  On a  consolidated  basis,  inventories  increased  by  approximately
$4,500,000  since the end of 1996. The entire increase was related to the Verson
division and was  associated  with the mix of press jobs currently in production
compared to the mix of presses in process at the end of 1996.  Down payments and
progress  payments  are recorded as a reduction in inventory on jobs in process.
Inventories at the Bush Hog and Coz divisions  decreased  since the end of 1996.
Fixed asset  additions  during the first half of 1997 included the purchase of a
40,000 square foot facility for the Verson  division.  The facility will be used
for  expanded  manufacturing  capabilities.   The  facility  also  provides  the
opportunity  to expand  the  Verson  business  into the  manufacturing  of other
related equipment.

         Net  borrowings   under  the  Amended  and  Restated  Credit  Agreement
increased by $26,800,000  since the end of 1996.  These  borrowings,  along with
internally  generated cash, were used to finance working capital needs and fixed
asset  additions  described above and the purchase of 422,000  treasury  shares.
Through  the  end  of  the  first  half  of  1997,  the  Company  has  purchased
approximately  1,225,000  shares of its common stock since the  inception of the
repurchase plan in 1996.

         As of June 30, 1997,  the Company had cash balances of  $1,168,000  and
additional funds of $43,753,000  available under its Amended and Restated Credit
Agreement of which  $18,753,000 is available for general corporate and operating
purposes (including costs incurred by the Verson division in connection with new
press orders from the major U. S.  automotive  manufacturers)  and an additional
$25,000,000  which is  available  for new Verson  business as noted  above.  The
Company anticipates positive cash flow in the third quarter of 1997, principally
from the  collection of Bush Hog and Verson  receivables.  The Company  believes
that its expected  operating cash flow and funds available under the Amended and
Restated  Credit  Agreement  are adequate to finance its  operating  and capital
expenditures in the near future.  During the first half of 1997, the Company has
been in compliance with all provisions of loan agreements in effect.

         

<PAGE>


         Subsequent to the end of the second quarter of 1997, the Company 
announced that the Board of Directors had  authorized a  three-for-two  stock
split and a 20% increase in the  quarterly  dividend.  Reference  is made to 
Note 6 of  Notes to  Condensed Consolidated  Financial  Statements  for 
additional  information regarding this announcement.

         Reference  is  made  to  Note  3 of  Notes  to  Condensed  Consolidated
Financial  Statements  relating  to the  collection  of amounts due under a note
receivable, the collection of which was fully reserved for in 1995.

IMPACT FROM NOT YET EFFECTIVE RULES
-----------------------------------

         In February  1997,  the  Financial  Accounting  Standards  Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128 - Earnings per
Share.  This  statement  establishes  standards  for  computing  and  presenting
earnings per share. It replaces the  presentation of primary  earnings per share
with a  presentation  of  basic  earnings  per  share.  It  also  requires  dual
presentation  of basic and diluted  earnings per share on the face of the income
statement  for all  entities  with a complex  capital  structure  and requires a
reconciliation  of the numerator and denominator of the basic earnings per share
computation to the numerator and  denominator of the diluted  earnings per share
computation.  The  statement is effective for  financial  statements  issued for
periods  ending after  December 15, 1997,  including  interim  periods.  Earlier
application  is not  permitted.  The Company  anticipates  that any earnings per
share  adjustment from the application of this statement will not be material to
the current method of computing earnings per share.

         Also in  February  1997,  the FASB issued  SFAS No.  129-Disclosure  of
Information  about Capital  Structure.  This  statement  establishes  disclosure
requirements  relating to an entity's  capital  structure  and is effective  for
financial  statements  for periods ending after December 15, 1997. In June 1997,
the FASB issued SFAS No. 130  -Reporting  Comprehensive  Income.  This statement
establishes  standards for the reporting and display of comprehensive income and
its  components in a full set of general  purpose  financial  statements  and is
effective for fiscal years beginning  after December 15, 1997.  Reclassification
of financial  statements  for earlier  periods for  comparative  purpose is also
required.  Also in June  1997,  the FASB  issued  SFAS 131 -  Disclosures  about
Segments of an Enterprise and related  Information.  This statement  establishes
standards for the way that public business  enterprises report information about
operating  segments  in annual  financial  statements  and  requires  that those
enterprises  report selected  information  about  operating  segments in interim
financial  reports  issued to  shareholders. It also  establishes  standards for
related  disclosures  about  products and services,  geographic  areas and major
customers.  This  statement is effective  for financial  statements  for periods
beginning after December 15, 1997. Comparative  information for earlier years is
also to be presented.

In relation to SFAS Nos. 129,130, and 131, the Company is in the process of 
evaluating the impact of these statements on its financial reporting.





<PAGE>







                           PART II - OTHER INFORMATION


Item 4.           Submission of Matters to a Vote of Security Holders
                  ---------------------------------------------------

            On  May  28,  1997  the  Registrant   held  its  annual  meeting  of
shareholders.  Copies of the related proxy statement have been previously  filed
with the Securities and Exchange Commission.
The following items were voted on by the Company's shareholders:

         The first item voted on was the  election of three  Directors.  Proxies
for the  meeting  were  solicited  pursuant  to  Regulation  14A.  There  was no
solicitation in opposition to the  management's  nominees as listed in the proxy
statement. The nominees received the following number of votes:

         Class A Directors - Term expires in 2000 - Mr. R.A. Drexler,
         ------------------------------------------------------------
         Mr. John W. Puth and Mr. Mitchell I. Quain
         -------------------------------------------
               For Mr. Drexler - 6,864,795; withheld from Mr. Drexler - 12,576.
               For Mr. Puth - 6,869,272; withheld from Mr. Puth - 8,099.
               For Mr. Quain - 6,869,280; withheld from Mr. Quain - 8,091

         The terms of the following directors continued after the meeting:

         Class B Directors - Terms expire in 1998
         ----------------------------------------
               Mr.Lloyd A.Drexler, Mr.John E. Jones and Mr.Stanley J. Goldring

         Class C  Directors - Terms expire in 1999
         -----------------------------------------
               Mr. William D. Fischer, Mr. Kenneth B. Light and Mr. S.S Sherman
       .
         Approximately  677,000 shares held by brokers and  nominees  were not
voted in the election of directors.

         The second item voted on was a proposed  adoption of the 1997 Incentive
Stock Plan. The plan was adopted to replace the Company's  1990 Incentive  Stock
Plan and 1993 Directors Incentive


<PAGE>



Stock Plan.  The proposition received the following number of votes:
         For - 4,487,937; Against - 1,747,681; Abstain - 79,843

         Approximately  1,356,000  shares held by brokers and nominees  were not
voted on the proposal to adopt the new plan.




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

(a)      Exhibits - See Exhibit Index included herein.

(b)      Reports on Form 8-K - there were no reports on Form 8-K for the three 
         months ended June 30, 1997.


























<PAGE>



SIGNATURES
----------

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




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




August 12,1997                 Kenneth B. Light
--------------                 ----------------
                               Kenneth B. Light,
                                Executive Vice President, Chief Financial &
                                 Administrative Officer; Director



August 12,1997                 Robert J. Fleck
--------------                 ---------------
                               Robert J. Fleck,
                                 Vice President - Accounting & Chief Accounting
                                  Officer






















<PAGE>



                           ALLIED PRODUCTS CORPORATION

                                INDEX TO EXHIBITS




EXHIBIT NO.                                DESCRIPTION OF EXHIBITS
-----------                                -----------------------
    10                                         1997 Incentive Stock Plan
    11                                         Computation of Earning per Share
    27                                         Financial Data Schedule