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, 1999
                                       OR

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

                          Commission file number 1-5530

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





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


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


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


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

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports),  and (2) has been subject to such filing  requirement for
the past 90 days. Yes x No

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:  11,847,046 common shares, $.01
par value, as of July 31, 1999.





<PAGE>



            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES


                                      INDEX


         PART I.   FINANCIAL INFORMATION

                   ITEM 1. FINANCIAL STATEMENTS
                           --------------------

                           INTRODUCTION

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

                           CONDENSED CONSOLIDATED  STATEMENTS OF INCOME (LOSS)-
                            Three and Six  Months  Ended  June 30,  1999 and
                            1998

                           CONDENSED  CONSOLIDATED  STATEMENTS OF CASH FLOWS-
                            Six Months Ended June 30, 1999 and 1998

                           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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


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

                   ITEM 1. LEGAL PROCEEDINGS

                   ITEM 2  NOT APPLICABLE

                   ITEM 3. NOT APPLICABLE

                   ITEM 4. NOT APPLICABLE

                   ITEM 5. OTHER INFORMATION

                   ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K

         SIGNATURES
         ----------

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


<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,  1999 and for the three and six months  ended  June 30,  1999 and 1998)
have been  prepared by the  Company,  without  audit,  pursuant to the rules and
regulations  of  the   Securities  and  Exchange   Commission  and  reflect  all
adjustments which are, in the opinion of management, necessary to present fairly
the condensed  consolidated  financial  information  required therein.  All such
adjustments are of a normal,  recurring  nature.  The information as of December
31,  1998 is derived  from the  audited  year end  balance  sheet for that year.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted pursuant to such rules and regulations,  although
the Company  believes that the  disclosures are adequate to make the information
presented not  misleading.  It is suggested that these  financial  statements be
read in conjunction with the financial statements and the notes thereto included
in the Company's latest annual report on Form 10-K.

         The results of  operations  for the three and six month  periods  ended
June 30,  1999 and 1998 are not  necessarily  indicative  of the  results  to be
expected for the full year .

<PAGE>

            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                    UNAUDITED

                                     ASSETS
<TABLE>
<CAPTION>

                                                                June 30, 1999       December 31, 1998
                                                                -------------       -----------------
<S>                                                             <C>                 <C>
Current Assets:
  Cash and cash equivalents ........................            $     684,000       $         727,000
                                                                -------------       -----------------
  Notes and accounts receivable, less allowances of
     $1,138,000 and $519,000, respectively .........            $  77,463,000       $      68,827,000
                                                                -------------       -----------------
  Inventories:
    Raw materials ..................................            $  10,985,000       $      11,529,000
    Work in process ................................               62,833,000              68,296,000
    Finished goods .................................               13,644,000              17,019,000
                                                                -------------       -----------------
                                                                $  87,462,000       $      96,844,000
                                                                -------------       -----------------
 Deferred tax asset ................................            $  15,060,000       $      15,060,000
                                                                -------------       -----------------
 Prepaid expenses ..................................            $     212,000       $         406,000
                                                                -------------       -----------------
       Total current assets ........................            $ 180,881,000       $     181,864,000
                                                                -------------       -----------------

 Plant and Equipment, at cost:
    Land ...........................................            $   2,412,000       $       2,430,000
    Building and improvements ......................               59,864,000              57,022,000
    Machinery and equipment ........................               71,252,000              69,196,000
                                                                -------------       -----------------
                                                                $ 133,528,000       $     128,648,000
   Less-Accumulated depreciation and amortization ..               52,269,000              48,181,000
                                                                -------------       -----------------
                                                                $  81,259,000       $      80,467,000
                                                                -------------       -----------------
 Other Assets:
    Deferred tax asset .............................            $   4,165,000       $       4,165,000
    Deferred charges (goodwill), net of amortization                5,931,000               6,154,000
    Other ..........................................                4,115,000               3,154,000
                                                                -------------       -----------------
                                                                $  14,211,000       $      13,473,000
                                                                -------------       -----------------

                                                                $ 276,351,000       $     275,804,000
                                                                =============       =================


</TABLE>


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

<PAGE>



            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                    UNAUDITED

                    LIABILITIES AND SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>

                                                                June 30, 1999       December 31, 1998
                                                                -------------       -----------------
<S>                                                             <C>                 <C>
Current Liabilities:
  Revolving credit agreement ................................   $ 124,900,000       $     119,300,000
  Current portion of long-term debt .........................         627,000                 627,000
  Accounts payable ..........................................      60,369,000              52,634,000
  Accrued expenses ..........................................      26,563,000              24,258,000
                                                                -------------       -----------------
         Total current liabilities ..........................   $ 212,459,000       $     196,819,000
                                                                -------------       -----------------
Long-term debt, less current portion shown above ............   $   1,924,000       $       2,298,000
                                                                -------------       -----------------
Other long-term liabilities .................................   $   5,058,000       $       4,957,000
                                                                -------------       -----------------
Commitments and Contingencies
Shareholders' Investment:
    Preferred stock:
       Undesignated-authorized 1,500,000 shares at June 30,
         1999 and  December 31, 1998; none issued ...........   $        --         $        --
   Common Stock, par value $.01 per share; authorized
      25,000,000 shares; issued 14,047,249 shares at June 30,
       1999 and December 31, 1998 ...........................         140,000                 140,000
   Additional paid-in capital ...............................      98,090,000              98,377,000
   Retained earnings ........................................       1,197,000              16,131,000
                                                                -------------       -----------------
                                                                $  99,427,000       $     114,648,000
   Less: Treasury stock, at cost:  2,200,203 and 2,228,640
     shares at June 30, 1999 and December 31, 1998,
     respectively ...........................................     (42,517,000)            (42,918,000)
                                                                -------------       -----------------
         Total shareholder's equity .........................   $  56,910,000       $      71,730,000
                                                                -------------       -----------------

                                                                $ 276,351,000       $     275,804,000
                                                                =============       =================

</TABLE>


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

<PAGE>




            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME(LOSS)

                                    UNAUDITED

<TABLE>
<CAPTION>

                                          Three Months Ended June 30,        Six Months Ended June 30,
                                        ------------------------------    ------------------------------
                                             1999            1998              1999             1998
                                        -------------    -------------    -------------    -------------

<S>                                     <C>              <C>              <C>              <C>
Net sales ...........................   $  74,624,000    $  88,985,000    $ 156,864,000    $ 151,816,000

Cost of products sold ...............      62,088,000       69,770,000      144,337,000      113,446,000
                                        -------------    -------------    -------------    -------------
  Gross profit ......................   $  12,536,000    $  19,215,000    $  12,527,000    $  38,370,000
                                        -------------    -------------    -------------    -------------

Other costs and expenses:

  Selling and administrative expenses   $  10,624,000    $   8,859,000    $  21,361,000    $  18,649,000

  Interest expense ..................       2,837,000        1,447,000        5,198,000        2,537,000

  Other (income) expense, net .......         400,000       (1,736,000)         (41,000)      (1,864,000)
                                        -------------    -------------    -------------    -------------

                                        $  13,861,000    $   8,570,000    $  26,518,000    $  19,322,000
                                        -------------    -------------    -------------    -------------

Income(loss) before taxes ...........   $  (1,325,000)   $  10,645,000    $ (13,991,000)   $  19,048,000

Provision for income taxes ..........            --          3,544,000             --          6,617,000
                                        -------------    -------------    -------------    -------------

Net income(loss) ....................   $  (1,325,000)   $   7,101,000    $ (13,991,000)   $  12,431,000
                                        =============    =============    =============    =============

Earnings (loss) per common share:
  Basic .............................   $       (0.11)   $        0.60    $       (1.18)   $        1.04
                                        =============    =============    =============    =============

  Diluted ...........................   $       (0.11)   $        0.59    $       (1.18)   $        1.03
                                        =============    =============    =============    =============

Weighted average shares outstanding:
  Basic .............................      11,838,000       11,923,000       11,828,000       11,924,000
                                        =============    =============    =============    =============

  Diluted ...........................      11,838,000       12,099,000       11,828,000       12,105,000
                                        =============    =============    =============    =============

Dividends per common share ..........   $        0.04    $        0.04    $        0.08    $        0.08
                                        =============    =============    =============    =============

</TABLE>


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


<PAGE>


            ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    UNAUDITED
<TABLE>
<CAPTION>

                                                                                  Six Months Ended June 30,
                                                                                ----------------------------
                                                                                   1999             1998
                                                                                ------------    ------------
<S>                                                                             <C>             <C>
Cash Flows from Operating Activities:
   Net income(loss) .........................................................   $(13,991,000)   $ 12,431,000
   Adjustments to reconcile net income(loss) to net cash
      provided from (used for) operating activities:
      Gains on sales of operating and nonoperating assets ...................        (93,000)     (1,972,000)
      Depreciation and amortization .........................................      4,276,000       2,743,000
      Amortization of deferred charges ......................................        223,000         132,000
      Deferred income tax provision .........................................           --         5,661,000
      Provision for inventory valualtion ....................................      7,695,000            --
      Stock option compensation .............................................           --         1,119,000
      Changes in noncash assets and liabilities, net of noncash transactions:
         (Increase) in accounts receivable ..................................     (9,342,000)    (10,448,000)
         (Increase) decrease in inventories .................................      1,687,000     (48,830,000)
         (Increase) decrease in prepaid expenses ............................        194,000        (100,000)
         Increase  in accounts payable and accrued expenses .................     10,154,000      13,070,000
      Other,net .............................................................        (59,000)     (1,455,000)
                                                                                ------------    ------------
   Net cash provided from (used for) operating activities ...................   $    744,000    $(27,649,000)
                                                                                ------------    ------------

Cash Flows from Investing Activities:
   Additions to plant and equipment .........................................   $ (5,087,000)   $(22,060,000)
   Payment for businesses acquired ..........................................           --       (11,290,000)
   Proceeds from sales of plant and equipment ...............................         17,000       3,383,000
                                                                                ------------    ------------
   Net cash used for investing activities ...................................   $ (5,070,000)   $(29,967,000)
                                                                                ------------    ------------

Cash Flows from Financing Activities:
   Borrowings under revolving credit agreement ..............................   $ 78,200,000    $ 92,400,000
   Payments under revolving credit agreement ................................    (72,600,000)    (33,600,000)
   Payments of short and long-term debt .....................................       (374,000)       (135,000)
   Purchase of treasury stock ...............................................           --          (776,000)
   Dividends paid ...........................................................       (943,000)       (478,000)
   Stock option transactions ................................................           --            85,000
                                                                                ------------    ------------
Net cash provided from financing activities .................................   $  4,283,000    $ 57,496,000
                                                                                ------------    ------------
Net (decrease) in cash and cash equivalents .................................   $    (43,000)   $   (120,000)
Cash and cash equivalents at beginning of year ..............................        727,000         609,000
                                                                                ------------    ------------
Cash and cash equivalents at end of period ..................................   $    684,000    $    489,000
                                                                                ============    ============

</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)      Restatement of Previously Issued Financial Statements
         -----------------------------------------------------
                  Operating  results for the three and six month  periods  ended
         June  30,  1998  have  been  restated  to  reflect  the  effect  of (a)
         compensation  expenses which should have been recognized in relation to
         certain stock option  exercise  transactions  and (b) the correction of
         gross profit  margins at the Verson  division.  See Note 13 of Notes to
         Consolidated  Financial  Statements in the Company's 1998 Annual Report
         for a more detailed explanation of the restatement.

                  The following table reconciles the amounts previously reported
         to the amounts  currently being reported in the Condensed  Consolidated
         Statement of Income  (Loss) for the three and six month  periods  ended
         June 30, 1998:
<TABLE>
<CAPTION>


                                                    Income               Tax
                                                    Before            Provision          Net
                                                    Taxes             (Benefit)        Income
                                                  -----------        -----------     -----------
<S>                                               <C>                <C>             <C>
         For The Three Months
         --------------------

          As previously reported                  $10,507,000        $3,497,000      $ 7,010,000
          Restatement associated with Verson
           gross profit margin                        138,000            47,000           91,000
          Restatement associated with stock
          option compensation                            -                 -                -
                                                  -----------        ----------      -----------
          As restated                             $10,645,000        $3,544,000      $ 7,101,000
                                                  ===========        ==========      ===========

         For Six Months Ended
         --------------------
          As previously reported                  $19,731,000        $6,856,000      $12,875,000
          Restatement associated with Verson
           gross profit margin                        436,000           153,000          283,000
          Restatement associated with stock
           option compensation                     (1,119,000)         (392,000)        (727,000)
                                                  -----------        ----------      -----------
          As restated                             $19,048,000        $6,617,000      $12,431,000
                                                  ===========        ==========      ===========

</TABLE>








<PAGE>



(2)      Accrued Expenses
         ----------------
         The Company's accrued expenses consist of the following:
<TABLE>
<CAPTION>
                                                    6/30/99          12/31/98
                                                 ------------      ------------
<S>                                              <C>               <C>
         Salaries and wages                      $  7,414,000      $  6,573,000
         Warranty                                   6,545,000         5,794,000
         Self insurance accruals                    2,367,000         2,905,000
         Pensions, including retiree health         4,557,000         4,644,000
         Taxes, other than income taxes               860,000           888,000
         Interest                                   1,187,000           309,000
         Environmental matters                      1,163,000         1,225,000
         Other                                      2,470,000         1,920,000
                                                 ------------      -------------
                                                 $ 26,563,000       $24,258,000
                                                 ============       ===========
</TABLE>

(3)      Earnings Per Common Share
         -------------------------
                  Basic  earnings  per common  share for the  periods in 1999 is
         based on the average  number of common shares  outstanding  (11,838,000
         and  11,828,000  for the  three and six  months  ended  June 30,  1999,
         respectively).  For the  three  and six  months  ended  June 30,  1999,
         dilutive  securities were excluded from the calculation of diluted loss
         per share as their effect would have been antidilutive.  Basic earnings
         per common  share for the same  periods in 1998 is based on the average
         number of common shares outstanding  (11,923,000 and 11,924,000 for the
         three  and six  months  ended  June 30,  1998,  respectively).  Diluted
         earnings  per common share for the same periods in 1998 is based on the
         average number of common shares outstanding,  as noted above, increased
         by the dilutive effect of outstanding  options (176,000 and 181,000 for
         the three and six months ended June 30, 1998, respectively).

(4)      Legal Proceedings
         -----------------
                  During the second quarter of 1999, the Company received notice
         asserting  that it was in default under the terms of a lease  agreement
         due to the  failure by the  assignee of the lease to pay rent when due.
         The facility associated with this notice was formerly leased by the Coz
         division of the Industrial  Products  Group.  The lease was assigned by
         the  Company in 1997 to the  purchaser  of the assets of the former Coz
         division.  The lessor  consented to the  assignment but did not release
         the Company from liabilities as lessee.  The assignee has announced its
         intent to vacate the facility and filed a lawsuit seeking a declaration
         of the rights of the respective parties under the lease.  The lease
         provides for rental  payments of approximately  $1,000,000 over the
         remaining term. The Company is in the process of evaluating its options
         under the terms of the lease.

                  In May 1999 and June 1999, the Company was served with two
         complaints purporting to be class action lawsuits on behalf of
         shareholders who purchased Allied Products' common stock between
         February 6, 1997 and March 11, 1999. The two complaints, which were

<PAGE>


         filed in the United States District Court for the Northern District of
         Illinois, appear to be virtually identical. They allege various
         violations of the federal securities laws, including misrepresentation
         or failure to disclose material information about the Company's results
         of operations, financial condition, weaknesses in its financial
         internal controls, accounting for long-term construction contracts and
         employee stock option compensation expense.


(5)      Contingent Liabilities
         ----------------------
                  In addition to the items described in Note 4, the Company is
         involved in a number of legal  proceedings as a defending party,
         including product liability and environmental matters for which
         additional liability is reasonably possible.  For all these additional
         matters excluding one recently asserted claim, after  consideration of
         relevant data,  including  insurance coverage and accruals,  management
         believes that the  eventual  outcome of these  matters  will not have a
         material adverse  effect on the  Company's  financial  position  or its
         ongoing results of  operations.  For one recently  asserted  product
         liability claim, the amount of damages claimed against all defendants
         exceeds the Company's liability  insurance limits. No estimate can
         currently be made as to whether the  ultimate  outcome of this claim
         against the Company could exceed such limits, therefore changes in the
         estimate in the near term could be material  to the financial  position
         and  results  of operations if an unfavorable outcome were to occur.

                  As  described  in Note 1 of  Notes to  Consolidated  Financial
         Statements in the Company's 1998 Annual Report on Form 10-K, the Verson
         division may not be able to meet delivery schedules for certain presses
         currently on orders in production.  Certain  customers of this division
         have advised  the Company  that they will seek to exercise remedies for
         alleged breach of contract by the Company. The remedies could include
         partial or complete cancellation of orders and recovery of damages for
         late  delivery,  which  may  include  downtime,  lost  sales and lost
         profit.  The Company  cannot at this time  determine  the amount of any
         potential  claim that may be asserted  due to late  delivery,  however,
         such  claims  could have a  material  adverse  effect on the  financial
         position and results of operations in the near term, if an  unfavorable
         outcome were to occur.

                  At June 30,  1999,  the  Company was  contingently  liable for
         approximately  $1,587,000  primarily relating to outstanding letters of
         credit.




(6)      Income Taxes
         ------------
                  The  provision  for  income  taxes in the  three and six month
         periods of 1998 is based upon the Federal  statutory  rate adjusted for
         items that are not subject to taxes. No tax benefit was recorded in the
         three  and six month  periods  ended  June 30,  1999 as a result of the
         Company's  pretax loss. See Note 4 of Notes to  Consolidated  Financial
         Statements in the


<PAGE>



         Company's  1998  Annual  Report on Form  10-K for a further  discussion
         related to income taxes.

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

<TABLE>
<CAPTION>


                                                      Agricultural      Industrial
                                                        Products         Products           Corporate         Consolidated
                                                      ------------      -----------        -----------        ------------
<S>                                                   <C>               <C>                <C>                <C>
         1999
         ----
         For the three months:
          Net sales to unaffiliated customers         $  37,133         $  37,491          $     -            $   74,624
          Income (loss) before taxes (a)                  5,075 (b)          (267) (c)       (6,133) (e)          (1,325)

         For the six months:
          Net sales to unaffiliated customers         $  74,035         $  82,829          $     -            $  156,864
          Income (loss) before taxes (a)                 10,158 (b)       (13,266) (c)      (10,883) (e)         (13,991)
          Total assets                                  115,787           142,109            18,455  (d)         276,351

         1998
         ----
         For the three months
          Net sales to unaffiliated customers         $  40,952         $  48,033          $     -            $   88,985
          Income (loss) before taxes (a)                  8,019 (b)         4,385  (c)       (1,759) (e)          10,645

         For the six months
          Net sales to unaffiliated customers         $  75,220         $  76,596         $     -             $  151,816
          Income (loss) before taxes (a)                 14,786 (b)        10,017  (c)       (5,755) (e)          19,048
          Total assets                                  104,331           161,055             21,487 (d)         286,873


</TABLE>

         -------------------
         (a) Segment income (loss) before taxes does not reflect an allocation
             or charge for general  corporate income or expenses,  or interest
             expense.
         (b) Includes interest income of $30 in the three months and $62 in six
             months of 1999 and $29 in the three months and $60 in the six
             months of 1998.
         (c) Includes  interest  income of $213 in the six months of 1999 and $0
             in 1998.
         (d) Corporate  assets consist  principally of cash,
             deferred income taxes, other assets, properties not used in
             operations and investment in a unconsolidated joint venture.
         (e) Corporate income (loss) before taxes consists of the following:
<TABLE>
<CAPTION>

                                                      Three months ended          Six months ended
                                                      6/30/99     6/30/98        6/30/99    6/30/98
                                                    ---------    --------       --------   --------
<S>                                                 <C>          <C>            <C>        <C>
         General corporate income and expense       $  (3,313)   $   (324)      $ (5,727)  $ (2,126)
         Stock option compensation (Note 1)              -             -             -       (1,119)
         Interest expense                              (2,837)     (1,447)        (5,198)    (2,537)
         Interest income                                   17          12             42         27
                                                    ---------    --------       --------   --------
            Total                                   $  (6,133)   $ (1,759)      $(10,883)  $ (5,755)
                                                    =========    ========       =========  ========

</TABLE>



<PAGE>



(8)      Summary of Other (Income) Expense
         ---------------------------------
             Other  (income)  expense  for the three and six month  periods
         ended June 30, 1999 and 1998 consists of the following:

<TABLE>
<CAPTION>


                                                For the three months ended      For the six months ended
                                                --------------------------      ------------------------
                                                  6/30/99        6/30/98         6/30/99        6/30/98
                                                ----------     -----------      ---------    -----------
<S>                                             <C>            <C>              <C>          <C>
         Interest income                        $ (260,000)    $   (41,000)     $(317,000)   $   (87,000)
         Goodwill amortization                     111,000          87,000        223,000        132,000
         Loan costs amortization                   151,000            -           199,000           -
         Net (gain) loss on sales of
          operating and non-operating
          assets                                      -         (1,957,000)       (93,000)    (1,972,000)
         Loss on investment in non
          consolidated subsidiary                  187,000          48,000        210,000         81,000
         Litigation
          settlements/insurance
            provision                                 -            569,000           -           569,000
         Legal settlement                             -               -          (389,000)          -
         Credit for recovery of
          long-term note receivable                   -           (195,000)          -          (390,000)
         Other miscellaneous                       211,000        (247,000)       126,000       (197,000)
                                                ----------      ----------      ---------    -----------
                                                $  400,000     $(1,736,000)     $ (41,000)   $(1,864,000)
                                                ==========     ===========      =========    ===========
</TABLE>



(9)      Financial Arrangements
         ----------------------
                  During the first quarter of 1999,  the Company  entered into a
         Second  Amended and  Restated  Credit  Agreement  replacing  the former
         Amended and Restated Credit  Agreement.  This new agreement was amended
         in April 1999.  Effective  July 31,  1999,  the Company  entered into a
         Second  Amendment and Waiver to the Second Amended and Restated  Credit
         Agreement  ("Second   Amendment").   Under  the  terms  of  the  Second
         Amendment,  the maximum  indebtedness under the agreement may remain at
         $135,000,000  from  July 31  through  November  29,  1999  rather  than
         decrease on specific dates to $110,000,000 as originally scheduled.
         Interest rates related to amounts outstanding under this amendment have
         also been increased. The final maturity date of the agreement was
         accelerated  from February 28, 2000 to November 30,  1999.  The Second
         Amendment  refers to the below noted letter of intent between CC
         Industries, Inc. and the Company. The Second Amendment  specifies that
         termination of or a materially adverse change in the  letter of intent
         or in any  succeeding  agreement  will constitute an event of default
         under the credit  agreement.  The Second Amendment also provides for a
         waiver of noncompliance by the Company as of June 30,  1999 with the
         minimum  consolidated  operating  cash flow provision of the agreement.
         See  Note  5 of  Notes  to  Consolidated Financial  Statements in the
         Company's 1998 Annual Report on Form 10-K for more detailed explanation
         on Financial Arrangements.



<PAGE>



(10)     Subsequent Events
         -----------------
                  On July 15,  1999,  the  Company  and CC  Industries,  Inc. of
         Chicago  signed a letter  of  intent  to form a joint  venture  for the
         ownership and operation of the Company's  Agricultural  Products Group.
         The letter of intent  contemplates  that the Company will  transfer the
         business,  assets and liabilities of the Agricultural Products Group to
         a newly formed  limited  liability  company and then will sell an 80.1%
         interest  in  the  new  entity  to  CC  Industries  for   approximately
         $120,700,000, subject to adjustment. The  transaction  is  subject  to,
         among other things, satisfactory completion of due diligence  inquiries
         by CC Industries,  the execution of definitive agreements, the approval
         of the respective boards of the two companies and the approval of
         Allied's shareholders.

                  On July 29,  1999,  the  Company  announced  that its Board of
         Directors  approved the redemption of its current Common Share Purchase
         Rights  and  adopted a new  Stockholder  Rights  Plan.  The new plan is
         designed to continue the  assurance of fair and equal  treatment of all
         stockholders in the event of any proposed  takeover.  The plan involves
         the distribution of the new rights and a redemption payment for current
         rights to all common  stockholders of record as of July 30, 1999. Those
         stockholders will receive one purchase right for a new series of junior
         preferred  stock for each  outstanding  share of the  Company's  common
         stock and a  redemption  payment on August 10,  1999 of $0.01 per share
         for the Common Share  Purchase  Rights  declared under a 10-year rights
         agreement  adopted in January 1990. Each Preferred Share Purchase Right
         entitles  the  holder  to  purchase  from  the  Company  under  certain
         circumstances one one-thousandth of a share of the new junior preferred
         stock.  The rights may be exercised if a person or group  announces its
         intention to acquire or acquires 15 percent or more of Allied Products'
         common  stock.  However,  an exception is made for certain  significant
         stockholders of the Company who are holding the Company's  common stock
         for  investment  purposes.  They may acquire up to 20 percent of Allied
         Product's  common  stock  without  triggering  the Rights  Plan.  Under
         certain  circumstances,  the  holders of the rights will be entitled to
         purchase at below market value either  shares of common stock of Allied
         Products  Corporation  or the common  stock of the  acquiring  company.
         Unless  redeemed or exchanged  earlier,  the Preferred  Share  Purchase
         Rights will expire in 10 years.



<PAGE>




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

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

First Half of 1999 Compared to First Half of 1998
-------------------------------------------------
         Consolidated  net sales for the  first  half of 1999 were  $156,864,000
compared to consolidated net sales of $151,816,000 reported in the first half of
1998.  Loss before taxes in the first half of 1999 was  $13,991,000  compared to
income before taxes (on a restated  basis) of  $19,048,000  in the first half of
the prior year.  Net loss in the first half of 1999 was  $13,991,000  ($1.18 per
common  share-diluted)   compared  to  net  income  (on  a  restated  basis)  of
$12,431,000 ($1.03 per common share-diluted) in the first half of 1998.

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

         Within  the  Agricultural   Products  Group,  net  sales  decreased  to
$74,035,000  in the first half of 1999 compared to  $75,220,000  reported in the
first half of 1998.  The  majority of the decrease was related to the cutter and
disc mower product lines. External financial conditions in the U.S. agricultural
sector  have  weakened  since the early part of 1998 and are  expected to remain
weak for the remainder of 1999 and on into 2000.  Commodity prices are lower for
most major crops and for most livestock  segments compared to twelve months ago.
Net farm income  decreased in 1998 and is  projected to decline  further in 1999
and 2000. The above noted product line sales decreases  within the  Agricultural
Products  Group were  partially  offset by the impact of the  acquisition of the
Great Bend Manufacturing Company in the second quarter of 1998 and the expansion
of sales within the turf and landscape  product  line,  including the effects of
the


<PAGE>



acquisition of the Universal  Turf assets in the second quarter of 1998.  Income
before taxes  decreased  to  $10,158,000  in the first half of 1999  compared to
$14,786,000  reported in the first half of the prior year.  Gross profit margins
decreased slightly in 1999 due to the effects of lower production levels.  Lower
production  levels  were  the  result  of  decreased  demand  by  large  farming
operations  which have been  impacted most by the overall  agricultural  economy
described above.  Additional cash discounts have been offered in 1999 to dealers
to help reduce the amount of dealer inventory  levels.  Increases in selling and
administrative  expenses  were  related  to the  acquisition  of the Great  Bend
division as noted above.  The  increase  was offset in part by lower  commission
expenses at the Bush Hog  division  due to the effects of lower sales volume and
the mix of products sold.

         Within  the  Industrial   Products   Group,   net  sales  increased  to
$82,829,000  in the first half of 1999 compared to  $76,596,000  reported in the
first  half  of  1998.  The  increase  was  related  to  increased  press  sales
(production) at the Verson division. The division is currently working on orders
for a total of eight  transfer  presses  from two of the major  U.S.  automobile
manufacturers.  The  division  also has a  greater  number of small  presses  in
production compared to the prior year.


         The  Industrial   Products  Group  reported  a  loss  before  taxes  of
$13,266,000  in the first half of 1999  compared  to income  before  taxes (on a
restated  basis)  of  $10,017,000  in the  first  half of  1998.  In  1998,  the
Industrial  Products  Group  recorded a loss of  $12,079,000  on certain jobs in
process including  reserves of $8,813,000 (none in the first half) for estimated
future losses on those jobs. The Company  indicated in its annual report that it
was reasonably possible that additional losses would occur. In the first half of
1999,  the Company  revised its cost  estimates on these jobs and  increased the
reserves for future losses by  $8,289,000.  The excess of costs over revenues in
the  first  half of 1999  (approximately  $6,300,000)  was  attributable  to the
increase in the reserve for future losses on these jobs.

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


<PAGE>



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

         Gross  profits  within the  Industrial  Products  Group were  favorably
affected in the first half of 1999 and 1998 by the Company's recovery of a claim
associated with a prior period. Selling and administrative expenses increased in
the first half of 1999.  Most  increases  were related to salary and fringe cost
increases and an additional provision for doubtful accounts.

         The Industrial  Products Group backlog as of June 30, 1999, composed of
revenues to be recorded in future years on orders received, included revenues of
approximately  $29,000,000 on orders for which estimated losses were recorded in
1998 and 1999 and on which no gross margin is expected to be  recognized in 1999
and 2000.  Uncertainties  associated  with these  contracts  make it  reasonably
possible that additional  losses could occur.  The June 30, 1999 backlog for the
Industrial  Products  Group  also  included  future  revenues  of  approximately
$73,000,000 to be recorded  principally in 1999 for which the group  anticipates
gross margins lower than levels prior to 1998.  The backlog of low margin and no
margin work in process at June 30, 1999 will have a substantial  negative effect
on the Industrial  Products  Group earnings in 1999 and, to a lesser extent,  in
2000. In addition,  the deferral of the  recognition  of gross margins until the
later  stages  of the  production  of a press  may  result  in  fluctuations  in
quarter-to-quarter results.

         Because of the difficulties the Industrial  Products Group  encountered
in 1998, the group failed to meet delivery date requirements provided in several
press orders. The group incurred  penalties of approximately  $1,200,000 in 1998
(none in the first half) as a result of delays in shipments  and expects that it
may receive additional claims for significant penalty payments or damages in the
remainder  of  1999  and  2000.  Reference  is  made  to  Note  10 of  Notes  to
Consolidated  Financial  Statements in the Company's  1998 Annual Report on Form
10-K. The Company's difficulties in completing orders during 1998 and 1999 could
adversely  affect its  relationship  with one or more of its customers and could
have a negative  impact on the Company's  ability to obtain future business from
such customers. Reference is made to Note 5 of Notes to Condensed Consolidated
Financial Statements regarding the possibility of the Verson division not being
able to meet delivery schedules for certain presses currently on orders in
production.

         Corporate  expenses consisted  primarily of administrative  charges and
other (income) expense.  Administrative  expenses increased in the first half of
1999.  The  majority  of the  increase  was related to the effects of a matching
provision now provided by the Company for its 401(k)


<PAGE>



pension plans and increased professional fees related to the extended 1998 audit
and refinancing efforts of the Company In the first half of 1998, administrative
expenses included $1,119,000 of compensation  expense (none in the first half of
1999)  related to the exercise of certain stock  options  previously  discussed.
Reference  is  made to  Note 8 of  Notes  to  Condensed  Consolidated  Financial
Statements for an analysis of other  (income)  expense in the first half of 1999
and 1998.

         Interest  expense in the first half of 1999 was $5,198,000  compared to
interest expense of $2,537,000  reported in the first half of 1998. The increase
was primarily associated with increased borrowings related to greater receivable
levels,  fixed  asset  additions  and the  acquisition  of the  Great  Bend  and
Universal  Turf  operations  in the second  quarter of 1998.  Interest  rates on
borrowings outstanding have also increased slightly in the current year.

         No current or deferred  tax  benefit was  recorded in the first half of
1999 as a result of the  Company's  pretax loss.  Reference is made to Note 5 of
Notes to Condensed Consolidated Financial Statements. No valuation allowance has
been  provided  for  the net  deferred  tax  assets  associated  with  temporary
deductible  differences  that  existed at the  beginning  of 1999 as the Company
believes it is more likely than not that such assets will be utilized.

Second Quarter of 1999 Compared to Second Quarter of 1998
---------------------------------------------------------
         Consolidated  net sales for the second quarter of 1999 were $74,624,000
compared to consolidated net sales of $88,985,000 reported in the second quarter
of 1998. Loss before taxes in the second quarter of 1999 was $1,325,000 compared
to income  before  taxes (on a  restated  basis) of  $10,645,000  in the  second
quarter  of the  prior  year.  Net  loss  for the  second  quarter  of 1999  was
$1,325,000  ($0.11  per  common  share-diluted)  compared  to net  income  (on a
restated  basis) of $7,101,000  ($0.59 per common  share-diluted)  in the second
quarter of 1998.
         Within  the   Agricultural   Products   Group,   sales   decreased   by
approximately  $3,800,000  in the second  quarter of 1999 compared to the second
quarter of the prior  year.  The  entire  decrease  was  related to the Bush Hog
division and was  primarily  associated  with lower  rotary  cutter  sales.  The
economic  conditions  affecting the agricultural  equipment  industry  described
above continued to affect the operations of the Bush Hog division. This decrease
was offset by improved turf and landscape  product sales  (primarily  associated
with new  products  developed  in the past twelve  months) and the impact of the
acquisition  of the Great Bend  division in the second  quarter of 1998.  Income
before taxes within the  Agricultural  Products Group decreased to $5,075,000 in
the second  quarter of 1999 from  $8,019,000  reported for the second quarter of
the prior year.  Gross  profits and gross profit  margins have  decreased in the
second quarter of 1999. The


<PAGE>



decrease  in gross  profit  margins  was  primarily  related to  increased  cash
discounts,  the  mix of  products  sold  during  each  respective  quarter,  and
decreased  facility  utilization  associated with lower production levels in the
second quarter of 1999. The decreases in gross profits also included the effects
of lower sales volume in the second quarter of 1999.  Selling and administrative
expenses within the  Agricultural  Products Group increased  slightly (less than
3%) in the second  quarter  of 1999  compared  to the same  quarter of the prior
year.  The  most  significant  increase  was  related  to  the  effects  of  the
acquisition  of the Great Bend  division  in the second  quarter of 1998.  Sales
commissions  decreased  in 1999 due to the impact of lower  sales  volume  noted
above.

         Within  the  Industrial   Products   Group,   net  sales  decreased  to
$37,491,000  in the second  quarter of 1999 compared to net sales of $48,033,000
reported  in the  second  quarter  of 1998.  Revenues  have  decreased  due to a
decreasing number of presses currently in production compared to the prior year.
Orders for large presses have decreased  significantly as the Verson division is
concentrating  on  completing  current  press orders in a timely manner to avoid
late  delivery  penalties.  The division is actively  bidding on numerous  press
orders from both automobile  manufacturers  and tier one and two suppliers.  The
division is not pursuing orders which would cause delays on presses currently in
production.  This  decrease  in  obtaining  production  orders has  resulted  in
decreased revenue  recognition.  Loss before taxes in the second quarter of 1999
was $267,000 compared to income before taxes (on a restated basis) of $4,385,000
reported for the second quarter of 1998. As previously noted, no gross profit on
any press manufactured  during 1999 will be recognized until the press reaches a
point in production when all manufacturing costs can be reasonably estimated. It
was also  previously  noted that the backlog of low margin and no margin work in
process  at the  beginning  of  1999  would  have a  substantial  effect  on the
operating results of the Industrial Products Group. As a result of the impact of
these items, the Industrial Products Group's gross profit margins have decreased
significantly  in the second  quarter of 1999 compared to the second  quarter of
1998. The group also recorded an additional  reserve of  approximately  $775,000
for estimated  future losses on certain  press orders  currently in  production.
These  decreases  in gross  profits  were  partially  offset by the  effect of a
recovery of a claim associated with a prior period.  Selling and  administrative
expenses  have  increased in the second  quarter of 1999  compared to the second
quarter of the prior year within the Industrial  Products Group.  Increases were
primarily  associated with the increase of the provision for doubtful  accounts,
increased costs related to improved  operating  systems  (hardware and software)
and costs related to a joint venture (Verson  Pressentechnik GmbH) formed in the
fourth quarter of 1998. Normal salary and fringe benefit cost increases also


<PAGE>



impacted selling and administrative expenses in the second quarter of 1999.

         As   noted   above,   corporate   expenses   consisted   primarily   of
administrative  charges  and  other  (income)  expense.  Administrative  expense
increases  in the  second  quarter  of 1999  were  principally  associated  with
increased  pension costs and professional  fees.  Reference is made to Note 8 of
Notes to Condensed  Consolidated  Financial  Statements for an analysis of other
(income) expense in the second quarter of 1999 and 1998.

         Interest expense in the second quarter of 1999 was $2,837,000  compared
to interest  expense of $1,447,000  reported in the second  quarter of 1998. The
increase was primarily  related to increased  borrowing  levels  associated with
fixed asset  additions and the  acquisition of the Great Bend and Universal Turf
operations in the second  quarter of 1998.  Interest  rates have also  increased
slightly in the current year.

FINANCIAL CONDITION AND LIQUIDITY
---------------------------------
         Working  capital at June 30,  1999 was  $(31,578,000)  and the  current
ratio was .85 to 1.00 compared to working capital of $(14,955,000) and a current
ratio  of .92 to 1.00  at  December  31,  1998.  Net  receivables  increased  by
$8,636,000  since the end of 1998. The entire  increase was associated  with the
Agricultural Products Group where cash collections are dependent upon the retail
sale of the  product  by the  dealer.  The  majority  of sales to the dealer 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.  Receivable  levels
within  this  group  have also been  impacted  by the  overall  downturn  in the
agricultural  economy  in the United  States  brought  about by lower  commodity
prices,   excess  grain  inventory  levels  and  decreased   exports  of  grain,
particularly to the far eastern  countries.  These economic  factors have led to
decreased agricultural equipment sales by dealers and, in turn, increased dealer
receivable  levels.  Net inventory levels have decreased by $9,382,000 since the
end of 1998. The majority of the decrease was related to the Industrial Products
Group.  Verson has recorded reserves of $7,700,000 in the first half of 1999 for
estimated  additional  costs  associated with certain press orders  currently in
production on which losses are anticipated.  In addition,  customer  payments on
presses in process have increased by approximately  $10,353,000 since the end of
1998.  Inventories  within the  Agricultural  Products Group have also decreased
since  the end of 1998.  This  decrease  was  associated  with  normal  seasonal
production and shipment schedules.



<PAGE>



         Fixed asset  additions  in the first half of 1999  totaled  $5,087,000.
Over $3,000,000 of this amount represent  building costs at the Verson division,
primarily  associated with the assembly facility  addition.  The majority of the
remaining fixed asset additions in 1999 were related to manufacturing  machinery
and  equipment  purchases  at both  the  Agricultural  Products  and  Industrial
Products Group.  There were no major fixed asset  dispositions in the first half
of 1999.

         Net increases in accounts  payables  ($7,735,000)  and accrued expenses
($2,305,000) were primarily related to increased production levels at the Verson
division. Borrowings under the Company's revolving credit agreement increased by
$5,600,000 in the first half of 1999.

         Subsequent  to June 30, 1999,  the Company and CC  Industries,  Inc. of
Chicago  signed a letter of intent to form a joint venture for the ownership and
operation of the Company's  Agricultural  Products  Group.  The letter of intent
contemplates that the Company will transfer the business, assets and liabilities
of the Agricultural  Products Group to a newly formed limited  liability company
and then will sell an 80.1%  interest  in the new  entity to CC  Industries  for
approximately $120,700,000 subject to adjustment. The transaction is subject to,
among other things,  satisfactory  completion  of due diligence  inquiries by CC
Industries,  the  execution  of  definitive  agreements,  the  approval  of  the
respective   boards  of  the  two   companies   and  the  approval  of  Allied's
shareholders.

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

         Reference  is  made  to  Note 10 of  Notes  to  Condensed  Consolidated
Financial Statements in relation to the Company's  announcement on July 29, 1999
of a New Stockholders' Right Plan


<PAGE>



and the redemption of the Common Share Purchase Rights currently outstanding.

         As of June 30,  1999,  the  Company  had cash and cash  equivalents  of
$684,000 and additional  funds of $8,263,000  available under the Second Amended
and Restated Credit Agreement and related amendments.  The Company believes that
its expected  operating cash flow and funds  available  under the Second Amended
and Restated  Credit  Agreement  and related  amendments  may not be adequate to
finance its operations and capital  expenditures in 1999. The above noted letter
of intent  regarding  the  Agricultural  Equipment  Group  should  result in the
Company  receiving  cash proceeds which would  significantly  reduce the amounts
outstanding  under this  agreement.  Additional  financing  will be necessary to
maintain  operations of the Industrial  Products Group. The Company is exploring
additional  or  alternate  sources of  financing  necessary  to  continue  these
remaining  operations  in a  normal  manufacturing  environment  and to  finance
necessary capital  expenditures.  During the second quarter of 1999, the Company
was not in compliance with certain provisions of the Second Amended and Restated
Credit Agreement. As noted above, subsequent to the end of the second quarter of
1999,  the  Company  entered  into a Second  Amendment  to the  agreement  which
provided for a waiver of this noncompliance.

         Reference  is  made  to  Note  9 of  Notes  to  Condensed  Consolidated
Financial  Statements  as it  relates  to the  Company's  involvement  in  legal
proceedings as a defending party.

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

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



<PAGE>



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

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

                  1.       Identifying items that are not year 2000 complaint.
                  2.       Assigning  priorities to identified items,  including
                           the assessment of items material to the operations of
                           the Company.
                  3.       Repairing or replacing  material items determined not
                           to be year 2000 complaint.
                  4. Testing of material items repaired or replaced.

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

         Manufacturing/engineering   process  controls  and  equipment  includes
equipment  to  manufacture  and  design  products  sold by the  Company.  Design
equipment used in the engineering of agricultural  equipment has been tested and
determined  to be  year  2000  compliant.  At the  Verson  division,  year  2000
compliance  certificates have been received on all major purchased  hardware and
software  applications for designing  equipment and programs.  The intent of the
division is to rely on these certificates (due to the quality of the information
received and the reputation of the vendors  involved)  although some testing has
been completed with no


<PAGE>



exceptions noted. The majority of internally developed design software at Verson
has been  determined not to contain date fields.  Programs which do contain date
fields have been determined to be year 2000 compliant. The Company does not have
a significant amount of manufacturing  equipment with embedded computer chips or
hardware/software  which would  present a problem at the  beginning  of the year
2000. Compliancy  certificates have been received from the majority of equipment
manufacturers and internal tests of production machinery has been completed with
no  exceptions  noted.  Outside  consultants  have also  evaluated the status of
production  equipment  at the  Verson  division  and  have  determined  that the
division  would  be  unlikely  to  experience  year  2000  problems  in the area
reviewed.

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

         The Company has identified key outside  vendors which provide  services
which, if not year 2000 compliant, could have an effect on the operations of the
Company. Sources include banking,  investment,  pension obligations,  insurance,
utilities,  etc. businesses.  During 1999, these service providers will be asked
to update the Company on the status of their year 2000  compliance.  The Company
will then need to evaluate these  responses and determine if a contingency  plan
would be necessary should the vendor not be compliant.

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


<PAGE>



deferred due to the year 2000 compliance project.

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

SAFE HARBOR STATEMENT
---------------------
         Statements  contained within the Management  Discussion and Analysis of
Financial  Conditions and Results of Operations that relate to future  operating
periods are subject to risks and  uncertainties  that could cause actual results
to differ from management's  projections.  Operations of the Company include the
manufacturing and sale of agricultural and industrial machinery.  In relation to
the  Agricultural  Products Group,  forward-looking  statements  involve certain
factors  that are  subject  to change.  These  elements  encompass  interrelated
factors that affect farmers and cattle  ranchers'  confidence,  including demand
for  agricultural  products,  grain  stock  levels,  commodity  prices,  weather
conditions,  crop and  animal  diseases,  crop  yields,  farm  land  values  and
government farm programs.  Other factors affecting all operations of the Company
include  actions  of  competitors  in the  industries  served  by  the  Company,
production


<PAGE>


difficulties  including  capacity  and  supply  constraints,   labor  relations,
interest rates and other risks and uncertainties. The Company's outlook is based
upon assumptions relating to the factors discussed above.












<PAGE>



                          PART II - OTHER INFORMATION

Item 1           Legal Proceedings
                 -----------------

                  Reference is made to Note 4 of Notes to Condensed Consolidated
                  Financial Statements.


Item 5           Other Information
                 -----------------

                  Reference is made to Note 9  of  Notes to Condensed
                  Consolidated  Financial  Statements and Exhibit 10 for
                  information related to the Amendment to the Amended and
                  Restated Credit Agreement.


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

                  (a)  Exhibits - See Exhibit Index included herein.

                  (b)  Reports on Form 8-K - there were no reports on Form 8-K
                       for the three months ended June 30, 1999.









<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 16,1999                   /s/ Robert J. Fleck
--------------                   -----------------------------------------------
                                 Robert J. Fleck
                                 Vice President- Accounting and Chief Accounting
                                    & Administrative Officer




August 16, 1999                  /s/ Mark C. Standefer
---------------                  -----------------------------------------------
                                 Mark C. Standefer
                                    Vice President, General Counsel & Secretary



























<PAGE>



                           ALLIED PRODUCTS CORPORATION

                                INDEX TO EXHIBITS




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

    10                        Material Contract - Second Amendment and Waiver
                                 Dated as of July 31, 1999 to the Credit
                                 Agreement Dated as of February 1, 1999.
    27                        Financial Data Schedules