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, 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:  11,989,296 common shares, $.01
par value, as of October 31, 1997.





<PAGE>



            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES


                                      INDEX


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

                   ITEM 1. FINANCIAL STATEMENTS

                           INTRODUCTION

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

                           CONDENSED  CONSOLIDATED  STATEMENTS OF INCOME Three
                             and Nine  Months  Ended  September  30, 1997 and
                                1996

                           CONDENSED  CONSOLIDATED  STATEMENTS  OF CASH FLOWS-
                             Nine Months Ended September 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.  LEGAL PROCEEDINGS

                    ITEM 2.  NOT APPLICABLE

                    ITEM 3.  NOT APPLICABLE

                    ITEM 4.  NOT APPLICABLE

                    ITEM 5.  NOT APPLICABLE

                    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         SIGNATURES
         ----------

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


<PAGE>






                         PART I - FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                                  INTRODUCTION

         The condensed  consolidated financial statements included herein (as of
September  30, 1997 and for the nine months ended  September  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 which are, in the opinion of management, necessary to present fairly
the condensed  consolidated  financial  information  required therein.  All such
adjustments are of a normal,  recurring  nature.  The information as of December
31,  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 nine month  periods ended
September 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>

                                                       September 30,1997     December 31,1996
                                                       -----------------     ----------------
                                     
<S>                                                    <C>                   <C>             
Current Assets: 
  Cash and cash equivalents                            $         503,000     $        833,000
                                                       -----------------     ---------------- 
  Notes and accounts receivable, less allowances of
    $685,000 and $629,000, respectively                $      62,380,000     $     52,914,000
                                                       -----------------     ---------------- 
  Inventories:
     Raw materials                                     $       8,674,000     $      9,524,000
     Work in process                                          44,986,000           28,269,000
      Finished goods                                          15,209,000           18,997,000
                                                       -----------------     ---------------- 
                                                       $      68,869,000     $     56,790,000
                                                       -----------------     ---------------- 
  Deferred tax asset                                   $      14,532,000     $     14,532,000
                                                       -----------------     ---------------- 
  Prepaid expenses                                     $         175,000     $        191,000
                                                       -----------------     ---------------- 
               Total current assets                    $     146,459,000     $    125,260,000
                                                       -----------------     ---------------- 
 Plant and Equipment, at cost:
    Land                                               $       2,243,000     $      2,155,000
    Buildings and improvements                                38,879,000           37,196,000
    Machinery and equipment                                   56,103,000           50,083,000
                                                       -----------------     ---------------- 
                                                       $      97,225,000     $     89,434,000
   Less- Accumulated depreciation and amortization            52,777,000           51,048,000
                                                       -----------------     ---------------- 
                                                       $      44,448,000     $     38,386,000
                                                       -----------------     ---------------- 
 Other Assets:
    Notes receivable, due after one year, 
       less allowances of $805,000
       and $7,165,000 , respectively                   $             -       $            -
    Deferred tax asset                                         5,282,000            5,282,000
    Deferred charges (goodwill), net of amortization           1,535,000            1,668,000
    Other                                                      1,293,000            1,353,000
                                                       -----------------     ---------------- 
                                                       $       8,110,000     $      8,303,000
                                                       -----------------     ---------------- 
                                                       $     199,017,000     $    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>

                                                           September 30, 1997    December 31,1996
                                                           ------------------    ----------------


<S>                                                        <C>                   <C>             
Current Liabilities:
  Revolving credit agreement                               $       43,100,000    $     27,000,000
  Current portion of long-term debt                                   193,000             193,000
  Accounts payable                                                 20,797,000          16,692,000
  Accrued expenses                                                 29,017,000          30,575,000
                                                           ------------------    ----------------
                   Total current liabilities               $       93,107,000    $     74,460,000
                                                           ------------------    ---------------- 
Long-term debt, less current portion shown above           $          344,000    $        489,000
                                                           ------------------    ---------------- 
Other long-term liabilities                                $       11,511,000    $      3,547,000
                                                           ------------------    ---------------- 
Commitments and Contingencies
Shareholders'  Investment:
  Preferred stock:
   Undesignated-authorized 1,500,000 shares at
   September 30,1997 and December 31, 1996: none issued    $             -       $            -
                                                                                        
  Common stock, par value $.01 per share;  authorized
    25,000,000 shares; issued 14,047,249 and 
    9,364.844 shares at September 30,1997 and 
    December 31, 1996,  respectively                                  140,000              94,000
  Additional paid-in capital                                       94,635,000          94,671,000
  Retained earnings                                                37,324,000          22,227,000
                                                           ------------------    ---------------- 
                                                           $      132,099,000    $    116,992,000
  Less: Treasury stock, at cost 2,018,122 and
    1,357,606 shares at September 30, 1997 and
    December 31, 1996, respectively                               (38,044,000)        (23,539,000)
                                                           ------------------    ----------------- 
         Total shareholders' equity                        $       94,055,000    $     93,453,000
                                                            -----------------    ---------------- 
                                                           $      199,017,000    $    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 September 30,
                                               --------------------------------
                                                    1997              1996
                                                   ------            ------
 Net sales                                    $  63,714,000     $  72,273,000
 Cost of products sold                           47,515,000        56,151,000
                                              -------------     ------------- 
         Gross profit                         $  16,199,000     $  16,122,000
                                              -------------     ------------- 
 Other costs and expenses:
     Selling and administrative expenses      $   9,217,000     $   8,293,000
     Interest expense                               847,000           374,000
     Other (income) expense, net                 (1,623,000)         (291,000)
                                              -------------     ------------- 
                                              $   8,441,000     $   8,376,000
                                              -------------     ------------- 
 Income before taxes                          $   7,758,000     $   7,746,000
 Provision for income taxes                       2,745,000         2,940,000
                                              -------------     ------------- 
 Net income                                   $   5,013,000     $   4,806,000
                                              =============     =============
 Earnings per common share:
   Primary                                    $         .40     $         .35
                                              =============     ============= 
   Fully diluted                              $         .40     $         .35
                                              =============     ============= 
 Weighted average shares outstanding:
   Primary                                       12,501,000        13,570,000
                                              =============     ============= 
   Fully diluted                                 12,515,000        13,570,000
                                              =============     ============= 
 Dividends per common share                   $         .04     $         .03
                                              =============     =============























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






                                                 Nine Months Ended September,
                                                 ----------------------------
                                                   1997               1996
                                                  ------             ------
 Net sales                                    $  213,497,000    $  216,714,000
 Cost of products sold                           160,064,000       165,890,000
                                              --------------    --------------
         Gross profit                         $   53,433,000    $   50,824,000
                                              --------------    --------------
 Other costs and expenses:
     Selling and administrative expenses      $   26,485,000    $   25,967,000
     Interest expense                              2,499,000         1,294,000
     Other (income) expense, net                  (1,082,000)         (458,000)
                                              --------------    --------------
                                              $   27,902,000    $   26,803,000
                                              --------------    --------------
 Income before taxes                          $   25,531,000    $   24,021,000
 Provision for income taxes                        9,141,000         8,555,000
                                              --------------    --------------
 Net income                                   $   16,390,000    $   15,466,000
                                              ==============    ==============
 Earnings per common share:
   Primary                                    $         1.32    $         1.13
                                               =============    ==============
   Fully diluted                              $         1.32    $         1.13
                                              ==============    ==============
 Weighted average shares outstanding:
   Primary                                        12,388,000        13,638,000
                                              ==============    ==============
   Fully diluted                                  12,435,000        13,638,000
                                              ==============    ==============
 Dividends per common share                   $          .11    $          .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 nine months ended September 30,
                                                                  ---------------------------------------
                                                                          1997                   1996
                                                                         ------                 ------
<S>                                                               <C>                    <C>             
Cash Flows from Operating Activities:
    Net income                                                    $     16,390,000       $     15,466,000
    Adjustments to reconcile net income to net cash used 
      for operating activities:
       Gains on sales of operating and non-operating assets               (151,000)              (117,000)
       Depreciation and amortization                                     3,840,000              3,866,000
       Amortization of deferred charges                                    133,000                133,000
       Deferred income tax provision                                     8,065,000              7,609,000
       Changes in noncash assets and liabilities, 
       net of noncash transactions:      
          (Increase) in accounts receivable                             (9,572,000)            (9,412,000)
          (Increase) in inventories                                    (12,079,000)              (935,000)
          Decrease in prepaid expenses                                      16,000                  7,000
          Decrease in notes receivable, due after one year                     -                   33,000
          Increase (decrease) in accounts payable and 
          accrued expenses                                               2,418,000             (2,948,000)
       Other, net                                                           65,000                315,000
                                                                  ----------------        --------------- 
    Net cash provided from operating activities                   $      9,125,000        $    14,017,000
                                                                  ----------------        ---------------
Cash Flows from Investing Activities:
    Additions to plant and equipment                              $    (10,165,000)       $    (2,806,000)
    Proceeds from sales of plant and equipment                             414,000                123,000
                                                                  ----------------        ---------------
    Net cash used for investing activities                        $     (9,751,000)       $    (2,683,000)
                                                                  ----------------        ---------------
Cash Flows from Financing Activities:
    Borrowings under revolving credit agreement                   $     83,100,000        $    81,150,000
    Payments under revolving credit agreement                          (67,000,000)           (84,350,000)
    Payments of short and long-term debt                                  (145,000)              (560,000)
    Common stock issued                                                           -             1,501,000
    Purchase of treasury stock                                         (15,995,000)            (9,638,000)
    Dividends paid                                                        (811,000)              (911,000)
    Stock option transactions                                            1,147,000              1,044,000
                                                                  ----------------        ---------------  
Net cash provided from (used for) financing activities            $        296,000        $   (11,764,000)
                                                                  ----------------        --------------- 
Net decrease in cash and cash equivalents                         $       (330,000)       $      (430,000)
Cash and cash equivalents at beginning of year                             833,000                744,000
                                                                 -----------------        --------------- 
Cash and cash equivalents at end of period                        $        503,000        $       314,000
                                                                 =================        =============== 


</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:


                                               9/30/97               12/31/96
                                               -------               --------
      Salaries and wages                   $  6,786,000            $ 6,026,000
      Warranty                                7,446,000              9,559,000
      Self insurance accruals                 3,121,000              4,046,000
      Pensions, including retiree health      6,577,000              6,417,000
      Taxes, other than income taxes            464,000                811,000
      Environmental matters                   1,701,000              2,020,000
      Other                                   2,922,000              1,696,000
                                            -----------            ----------- 
                                            $29,017,000            $30,575,000
                                            ===========            ===========


(2)       Stock Split
          -----------
                  During the third quarter of 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  Company's
         common stock,  at the rate of one share for each two shares owned.  The
         dividend  was paid on September  5, 1997 to  stockholders  of record on
         August 15, 1997. In addition,  on September 30, 1997 the Company paid a
         cash  dividend  of four cents  ($.04) per share on its common  stock to
         stockholders  of record on August 15, 1997,  including the shares to be
         issued as a result of the stock  split.  Earning  per common  share and
         weighted average shares  outstanding have been adjusted for the periods
         presented to reflect the three-for-two stock split.

(3)      Treasury Stock
         --------------
                  The  Company's  Board  of  Directors  in 1996  authorized  the
         purchase of up to 2,250,000  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 nine  months  ended  September  30,
         1997, the Company has purchased approximately 1,960,000 shares (336,000
         in the third quarter and 758,000 in the nine months ended September 30,
         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.  Treasury stock repurchased has been adjusted
         for the periods  presented  to reflect the  three-for-two  stock split,
         which occurred in the third quarter of 1997.

(4)      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


<PAGE>



         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.  During the nine
         months ended  September  30,  1997,  the Company  received  payments of
         $2,195,000 ($1,695,000  in the third  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 September 30, 1997.

                  At September 30, 1997, the Company was contingently liable for
         approximately  $1,627,000  primarily relating to outstanding letters of
         credit.

(5)      Income Taxes
         ------------
                  The  provision  for  income  taxes  in the nine  months  ended
         September  30, 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.

(6)      Summary of Other (Income) Expense
         ---------------------------------
                  Other  (income)  expense for the three and nine month  periods
         ended September 30, 1997 and 1996 consists of the following:
<TABLE>
<CAPTION>

                                      For the three months ended        For the nine months ended
                                      --------------------------        -------------------------
                                         9/30/97         9/30/96           9/30/97        9/30/96
                                         -------         -------           -------        -------
<S>                                   <C>              <C>              <C>            <C>        
Interest income                       $    (46,000)    $ (19,000)       $   ( 86,000)  $  (95,000)
Goodwill amortization                       44,000        45,000             133,000      133,000
Loan cost expenses                             -          65,000                -         218,000
Net (gain) loss on sales
   of operating and non-
   operating assets                         (8,000)      (68,000)           (151,000)    (117,000)
Litigation settlements/insurance
   provision                                81,000            -              638,000      (96,000)
Payment received on long-term
   notes receivable reserved for 
   as uncollectible                     (1,695,000)     (376,000)         (2,195,000)    (534,000)
Other miscellaneous                          1,000        62,000             579,000       33,000
                                       -----------      ---------       ------------   ----------
                                      $ (1,623,000)    $(291,000)       $ (1,082,000)  $ (458,000)
                                      ============     ==========       ============   ==========      

</TABLE>



(7)      Subsequent Event
         ----------------
                  On October 15, 1997,  the Company  announced it had  completed
the sale of its Coz division to a  wholly-owned  subsidiary  of PMC, Inc. of Sun
Valley,  California.  The all cash  proceeds  of this  sale  were used to reduce
borrowings under the Amended and Restated Credit Agreement.

















<PAGE>





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

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

         On  August  26,  1997 the  Company  entered  into an  agreement  with a
subsidiary of PMC, Inc. of Sun Valley, California, pursuant to which the Company
would  sell  for  cash  the  business  assets  of its Coz  division  located  in
Northbridge,  MA. The  agreement  was  amended  on  September  9, 1997.  The Coz
division  provided a complete line of thermoplastic  resins and related services
to the plastic molding and extrusion industry.  On October 14, 1997, the sale of
the  business was  completed.  The  purchaser  also  assumed  certain  specified
liabilities,  including  accounts payable,  of the Coz division.  As part of the
Asset Purchase  agreement,  the Company  agreed to enter into a  non-competition
agreement for a term of five (5) years. The agreement, as amended, provides that
the purchase price is subject to adjustment for changes in the book value of the
business between August 23, 1997 and October 14, 1997.

First Nine Months of 1997 Compared to First Nine Months of 1996
---------------------------------------------------------------

         Net  sales  for  the  nine  months  ended   September   30,  1997  were
$213,497,000  compared  to net sales of  $216,714,000  for the same  nine  month
period  of 1996.  Income  before  taxes for the  first  nine  months of 1997 was
$25,531,000 compared to income before taxes of $24,021,000 reported in the first
nine months of the prior year.  Net income for the first nine months of 1997 was
$16,390,000 ($1.32 per common share) based on 12,388,000 weighted average shares
outstanding compared to net income of $15,466,000 ($1.13 per common share) based
on 13,638,000 weighted average shares outstanding for the same nine month period
of 1996.  Earnings per share and weighted  average shares  outstanding have been
adjusted to reflect the  three-for-two  stock  split which  occurred  during the
third quarter of 1997. The decrease in weighted  average shares  outstanding was
the result of the Company's program to purchase its common stock.

         At the Bush Hog division,  net sales  increased by over 7% in the first
nine months of 1997  compared to the first nine months of 1996.  The majority of
the increase was related to the rotary  cutter and loader  product lines as well
as improved  service parts sales. The increase in rotary cutter and loader sales
was  primarily  associated  with a slight  increase  in  cattle  prices.  Cattle
ranchers  use  the  cutters  and  loaders  for  grazing  pasture  and  feed  lot
maintenance,  respectively.  Prior to 1997,  cattle prices  decreased due to the
liquidation of cattle herds.  Cattle prices,  which stabilized in the early part
of the current year, have now increased slightly, leading to increased equipment
purchases.  The  division  also  benefitted  from the  effect  of new  products,
including turf and landscape  equipment.  Overall,  the  agricultural  equipment
industry has improved in the current year compared to 1996. The


<PAGE>



fall  harvest is well  underway  and crop yields are good in most  areas.  Gross
profits and gross profit  margins have  improved at the Bush Hog division in the
first  nine  months of 1997  compared  to the  first  nine  months of 1996.  The
improvement  in the gross  profit  margin was related to improved  manufacturing
efficiencies,  increased  facility  utilization  and the mix of  products  sold.
Increased  sales volume also  attributed to improved  gross  profits  during the
first nine months of 1997.

         At the Verson  division,  net sales  decreased  by over 5% in the first
nine months of 1997  compared  to the same nine month  period of the prior year.
Revenue and profits are recognized on a percentage of completion basis for press
production at this division.  Production  workers at the Verson division went on
strike on June 23, 1997. Production continued on a limited basis through the use
of supervisory  employees.  On July 22, 1997, the Company  announced that it had
reached an agreement  with the members of the United Auto Workers' local and the
production  workers returned to work. The decrease in net sales reflects the mix
of jobs in production.  Gross profits have decreased in the first nine months of
1997 compared to the same nine month period of 1996.  Gross profit  margins have
remained  relatively  constant.  During the 1996 nine-month period,  significant
production continued on an order for three "A" presses for Chrysler.  Production
on this order was completed in early 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.  Margin decreases were
offset by the effects of lower warranty  provisions  related to the mix of sales
(production)  in the current year.  Also impacting  gross profits were increased
overtime costs necessary to meet delivery  schedules and costs associated with a
program undertaken to identify improvements in the manufacturing  process. These
cost  increases were offset in part by the recovery of a claim  associated  with
prior periods.

         At the Company's  former Coz division,  net sales decreased by over 15%
in the first nine months of 1997  compared to the first nine months of the prior
year. Net sales decreased throughout all product lines and generally reflect the
thermoplastic  compounding industry in general.  Sales were also impacted by the
August announcement of the sale of this division. Gross profits and gross profit
margins  also  decreased  at the Coz  division  in the first nine months of 1997
compared to the same nine month  period of the prior year.  The majority of this
decrease in gross profits was related to the effects of lower sales volume noted
above.  The  decrease in gross  profit  margins  was  related to both  decreased
facility  utilization  in 1997 and  pressures  on margins  related to  increased
competition.

         Selling and administrative  expenses increased to $26,485,000 (12.4% of
net  sales) in the first  nine  months  of 1997 from  $25,967,000  (12.0% of net
sales) in the first nine  months of 1996.  In  general,  the  increase  in these
expenses related to normal cost increases  (salaries,  fringe benefits,  travel,
etc.)  associated  with the  operations  of the Company.  These  increases  were
partially  offset by decreased  commissions  at the Bush Hog division  where the
commission  rates  structure  have been  changed  resulting in a decrease in the
current year. Administrative expenses also decreased at the


<PAGE>



Bush Hog division  where costs were incurred  during 1996 in  connection  with a
program to identify  improvements in the manufacturing  process. The program was
completed in 1996 and no such costs were incurred at this division in 1997.

         Interest  expense  in the  first  nine  months  of 1997 was  $2,499,000
compared to interest expense of $1,294,000 in the first nine months of the prior
year.  Increased  borrowing needs were associated with 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 $16,000,000 of treasury stock during the first nine months of 1997
as part of a program to purchase up to 2,250,000  shares of the Company's common
stock. See Note 2 of Notes to Condensed Consolidated Financial Statements.

         Reference  is  made  to  Note  6 of  Notes  to  Condensed  Consolidated
Financial Statements for an analysis of Other (income) expense in the first nine
months   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 $2,195,000 from the recovery of a note receivable  previously  written
off and additional  expenses of approximately  $2,100,000  related  primarily to
product liability claims of certain former divisions of the Company.

Third Quarter of 1997 Compared to Third Quarter of 1996
-------------------------------------------------------

         Net sales in the third quarter of 1997 were $63,714,000 compared to net
sales of $72,273,000  reported in the third quarter of 1996. Income before taxes
in the third quarter of 1997 was  $7,758,000  compared to income before taxes of
$7,746,000  in the third  quarter  of the prior  year.  Net  income in the third
quarter  of 1997 was  $5,013,000  ($.40 per  common  share  based on  12,501,000
weighted average shares outstanding)  compared to net income of $4,806,000 ($.35
per common share based on 13,570,000  weighted  average shares  outstanding) for
the same  quarter  of 1996.  Earnings  per share  and  weighted  average  shares
outstanding  have been adjusted to reflect the  three-for-two  stock split which
occurred during the third quarter of 1997.

         At the Bush Hog division,  net sales increased by over 13% in the third
quarter of 1997 compared to the third  quarter of 1996.  While all major product
lines sales increased in the third quarter of 1997, the majority of the increase
was  related  to  the  rotary  cutter  products,   reflecting  the  improvements
associated  with the cattle  industry  previously  discussed.  The division also
benefitted  from the  effects  of new  products,  including  turf and  landscape
equipment.  Gross  profits  and gross  profit  margins  improved at the Bush Hog
division in the third  quarter of 1997  compared  to the third  quarter of 1996.
Approximately  60% of the  improvement  in gross profits was related to improved
margins resulting from greater facility utilization and increased  manufacturing
efficiencies. The


<PAGE>



remainder of the  improvement  in gross profits was  associated  with  increased
sales volume in the current year's third quarter.

         At the Verson division, net sales decreased by 28% in the third quarter
of 1997 compared to the same quarter of the prior year.  This decrease  reflects
the mix of jobs in production. Gross profits decreased at the Verson division in
the third quarter of 1997. Lower sales  (production) as discussed above resulted
in this  decrease.  Gross profit margins did improve in the current year's third
quarter.  This  increase  was  associated  with  the mix of  production  and the
recovery in the third quarter of 1997 of a claim associated with prior periods.

         At the Coz  division,  net  sales  decreased  by over 25% in the  third
quarter of 1997 compared to the third quarter of 1996. As previously  noted, the
Company  announced  the sale of this  division  during the current  year's third
quarter.  The  industry in general has also been  impacted by a slowdown.  Gross
profits and gross  profit  margins  decreased  at the Coz  division in the third
quarter of 1997. The majority of the decrease in gross profits reflect the lower
sales  volume as noted  above.  Margins  were  affected  by  decreased  facility
utilization and more competitive pricing.

         Selling and  administrative  expenses increased to $9,217,000 (14.5% of
net sales) in the third quarter of 1997 from $8,293,000  (11.5% of net sales) in
the third quarter of 1996.  Selling  expense  increases at the Bush Hog division
were associated with the expansion of the dealer network related to the turf and
landscape  products.  Commission  expenses also increased due to the increase in
sales  volume.  Increased  legal fees were incurred in the third quarter of 1997
due to the sale of the Coz division and expenses associated with the recovery of
a claim related to prior periods at the Verson division.

         Interest  expense in the third  quarter of 1997  increased  to $847,000
compared to interest expenses of $374,000 reported in the third quarter of 1996.
The majority of the increase was related to the  Company's  purchase of treasury
stock  since the end of the third  quarter of 1996.  Increased  working  capital
needs at the Verson  division  (increased  number of press in process  and final
payments due on installed presses) have also resulted in increased borrowings in
the third quarter of 1997 under the Amended and Restated Credit Agreement.

         Reference  is  made  to  Note  6 of  Notes  to  Condensed  Consolidated
Financial  Statements  for an  analysis of Other  (income)  expense in the third
quarter of 1997 and 1996.







<PAGE>



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

         Working capital at September 30, 1997 was $53,352,000 (current ratio of
1.57 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 $9,466,000 since
the end of 1996.  Approximately half 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.  The remainder of the increase in net  receivables  was related to the
Verson division.  Press installations in 1997 have been delayed resulting in the
delayed  collection  of  the  final  amounts  due  for  these  presses.  As  the
installation   backlog   decreases,   receivables  will  also  decrease.   On  a
consolidated  basis,  inventories  increased by approximately  $12,000,000.  The
entire  increase  was related to the Verson  division  and was  associated  with
several  factors  including  manufacturing/delivery  delays  attributable  to  a
four-week  strike  (as  discussed  above)  and the  mix of  press  jobs  then in
production  compared to the mix of presses in process at the end of 1996.  Fixed
asset  additions  in the first nine  months of 1997  ($10,165,000)  include  the
purchase of a 40,000 square foot facility for the Verson  division which will be
used for expanded manufacturing capabilities and provides for the opportunity to
expand the Verson business into the  manufacturing  of other related  equipment.
The increase in accounts  payable  relates to increased  production  at both the
Bush Hog and Verson operations during 1997.

         Net  borrowings   under  the  Amended  and  Restated  Credit  Agreement
increased by $16,100,000  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 758,000  treasury  shares
during the first nine months of 1997.  Through  the end of the third  quarter of
1997,  the Company has purchased  approximately  1,960,000  shares of its common
stock since the  inception  of the plan in 1996 to  repurchase  up to  2,250,000
shares of its common stock.

         As of September 30, 1997, the Company had cash balances of $503,000 and
additional funds of $54,453,000  available under its Amended and Restated Credit
Agreement of which  $29,453,000 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 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 nine months of
1997, the Company has been in compliance  with all provisions of loan agreements
in effect. Proceeds received subseequent to the end of the third quarter of 1997
related to the  previously  discussed  sale of Coz division  were used to reduce
borrowings under the Amended


<PAGE>



and Restated Credit Agreement.

         During the third  quarter of 1997,  the  Company's  Board of  Directors
authorized a three-for-two  stock split for stockholders of record on August 15,
1997 and a four  cent  ($.04)  per  share  quarterly  dividend  (which  is a 20%
increase over the prior quarter dividend).

         Reference  is  made  to  Note  4 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.

         Subsequent  to the  end of the  third  quarter  of  1997,  the  Company
announced a dividend of $.04 per share on its Common Stock which will be paid on
December 30, 1997 to stockholders of record on December 12, 1997.

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 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


<PAGE>



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 1.           Legal Proceedings
                  -----------------

                  Reference  is made to Part I, Item  3-Legal  Proceedings-  and
         Note 10 of Notes to Consolidated  Financial Statements in the Company's
         latest  annual  report  on Form  10-K  with  respect  to the  Company's
         involvement in legal proceedings as a defending party. There are no new
         significant cases to report and there have been no significant  changes
         in the previously reported proceedings.

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 September 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)




November 10,1997                     Kenneth B. Light
----------------                     ----------------
                                     Kenneth B. Light,
                                      Executive Vice President, Chief Financial
                                      & Administrative Officer; Director




November 10,1997                     Robert J. Fleck
----------------                     ---------------
                                     Robert J. Fleck,
                                       Vice President - Accounting &
                                       Chief Accounting Officer






































<PAGE>








                           ALLIED PRODUCTS CORPORATION

                                INDEX TO EXHIBITS




EXHIBIT NO.                                  DESCRIPTION OF EXHIBITS
-----------                                  -----------------------

    11                                        Computation of Earning per Share

    27                                        Financial Data Schedule