SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    Form 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 1-2199


                           ALLIS-CHALMERS CORPORATION
            --------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                 Delaware                              39-0126090
      -------------------------------              -------------------
      (State or other jurisdiction of              (I.R.S. Employer
       incorporation or organization)              Identification No.)


      4180 Cherokee Drive, Brookfield Wisconsin            53045 
      -----------------------------------------         ----------
       (Address of principal executive offices)         (Zip code)


                                  (414)781-7155
               -------------------------------------------------
               Registrant's telephone number, including area code



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the 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
requirements for the past 90 days. Yes X No

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes X No

At May 12, 1999 there were 1,003,028 shares of Common Stock outstanding.


<PAGE>


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

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

ALLIS-CHALMERS CORPORATION AND CONSOLIDATED SUBSIDIARIES
--------------------------------------------------------

STATEMENT OF OPERATIONS
-----------------------

                                                  Three Months Ended
                                                        March 31       
                                                  ------------------
                                                1999               1998 
                                                ----               ----
                                              (thousands, except per share)

Sales                                        $     1,052       $     1,503
Cost of sales                                        713             1,017
                                             -----------       -----------

    Gross Margin                                     339               486

Marketing and administrative expense                 390               359
                                             -----------       -----------


    Income/(Loss) from Operations                    (51)              127
                                             -----------       -----------

Other income (expense)
   Interest income                                     1                 6
   Interest expense                                   (8)               (9)
  Other                                                1                13
                                             -----------       -----------


    Net Income/(Loss)                        $       (57)      $       137
                                             ===========       ===========


    Net Income/(Loss) per Common Share       $      (.06)      $       .14
                                             ===========       ===========


                        STATEMENT OF ACCUMULATED DEFICIT

    Three Months Ended March 31                 1999              1998 
    ---------------------------                 ----              ----
                                                      (thousands)

Accumulated deficit - beginning of year      $   (75,673)      $   (76,291)
Net income/(loss)                                    (57)              137
                                             -----------       -----------
Accumulated deficit - March 31               $   (75,730)      $   (76,154)
                                             ===========       ===========


This interim statement is unaudited.

The accompanying Notes are an integral part of the Financial Statements.


                                       2
<PAGE>


ALLIS-CHALMERS CORPORATION AND CONSOLIDATED SUBSIDIARIES
--------------------------------------------------------
STATEMENT OF FINANCIAL CONDITION
--------------------------------
                                                    March 31,      December 31,
                                                      1999           1998   
                                                           (thousands)
Assets

Cash and short-term investments                   $       222     $       223
Trade receivables, net                                    604             796
Inventories, net                                          272             127
Other current assets                                       72             112
                                                  -----------     -----------

       Total Current Assets                             1,170           1,258

Net property, plant and equipment                       1,305           1,308
                                                  -----------     -----------

       Total Assets                               $     2,475     $     2,566
                                                  ===========     ===========


Liabilities and Shareholders' Deficit

Current maturities of long-term debt              $        72     $        60
Trade accounts payable                                    225             291
Accrued employee benefits                                 120             155
Accrued pension liability                              67,901          67,901
Other current liabilities                                 385             312
                                                  -----------     -----------

       Total Current Liabilities                       68,703          68,719

Accrued postretirement benefit obligations                963             981
Long-term debt                                            232             232

Shareholders' deficit
  Common stock, ($.15 par value, authorized
   2,000,000 shares, outstanding 1,003,028
   at March 31, 1999 and December 31, 1998)               152             152
  Capital in excess of par value                        8,155           8,155
  Accumulated deficit (accumulated deficit of
   $424,208 eliminated on December 2, 1988)           (75,730)        (75,673)
                                                  -----------     -----------

       Total Shareholders' Deficit                    (67,423)        (67,366)

Commitments and contingent liabilities         

       Total Liabilities and Shareholders'
        Deficit                                   $     2,475     $     2,566
                                                  ===========     ===========


This interim statement is unaudited.

The accompanying Notes are an integral part of the Financial Statements.


                                       3
<PAGE>


ALLIS-CHALMERS CORPORATION AND CONSOLIDATED SUBSIDIARIES
--------------------------------------------------------

STATEMENT OF CASH FLOWS
-----------------------
                                                            Three Months Ended
                                                                 March 31   
                                                            ------------------
                                                           1999         1998 
                                                           ----         ----
                                                                (thousands)

Cash flows from operating activities:
  Net income/(loss)                                       $   (57)     $   137
  Adjustments to reconcile net income/(loss) to net cash
    provided (used) by operating activities:
      Depreciation and amortization                            42           46
      Change in working capital:
        Decrease (increase) in receivables, net               192         (512)
        Increase in inventories                              (145)         (55)
        (Decrease) increase in trade accounts payable         (66)          55
        Increase in other current items                        78          141
        Increase in accrued pension liability, net              0            0
      Other                                                   (18)         (13)
                                                          -------      -------

        Net cash provided (used) by operating activities       26         (201)

Cash flows from investing activities:
  Capital expenditures                                        (39)        (101)

Cash flows from financing activities:
  Net proceeds from issuance of long-term debt                 29           71
  Payment of long-term debt                                   (17)         (14)
                                                          -------      -------

        Net cash provided by financing activities              12           57
                                                          -------      -------

Net (decrease) in cash and short-term investments              (1)        (245)

Cash and short-term investments at
 beginning of period                                          223          699
                                                          -------      -------

Cash and short-term investments at
 end of period                                            $   222      $   454
                                                          =======      =======

Supplemental information - interest paid                  $     8      $     9
                                                          =======      =======


This interim statement is unaudited.

The accompanying Notes are an integral part of the Financial Statements.


                                       4
<PAGE>


NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ACCOUNTING POLICIES

This interim  financial data should be read in conjunction with the consolidated
financial statements and related notes, management's discussion and analysis and
other information included in the Company's 1998 Annual Report.

All adjustments  considered  necessary for a fair presentation of the results of
operations have been included in the unaudited financial statements. The results
of  operations  for  any  interim  period  are  not  necessarily  indicative  of
Allis-Chalmers operating results for a full year.

NOTE 2 - POSTRETIREMENT OBLIGATIONS--PENSION PLAN

In 1994, the Company's independent pension actuaries changed the assumptions for
mortality and  administrative  expenses used to determine the liabilities of the
Allis-Chalmers  Consolidated  Pension Plan (Consolidated  Plan).  Primarily as a
result of the changes in mortality  assumptions to reflect  decreased  mortality
rates of the Company's  retirees,  the  Consolidated  Plan was  underfunded on a
present value basis.  In the first quarter of 1996,  the Company made a required
cash  contribution  to the  Consolidated  Plan in the  amount of  $205,000.  The
Company  did  not,  however,  have the  financial  resources  to make the  other
required  payments  during 1996 and 1997.  Given the inability of the Company to
fund such obligations with its current  financial  resources,  in February 1997,
Allis-Chalmers  applied to the Pension Benefit Guaranty Corporation (PBGC) for a
"distress"  termination of the  Consolidated  Plan under section  4041(c) of the
Employee  Retirement  Income Security Act of 1974, as amended (ERISA).  The PBGC
approved the distress termination  application in September 1997 and agreed to a
plan  termination  date of April  14,  1997.  The  PBGC  became  trustee  of the
terminated Consolidated Plan on September 30, 1997.

Upon termination of the Consolidated  Plan,  Allis-Chalmers and its subsidiaries
incurred a liability to the PBGC for an amount equal to the Consolidated  Plan's
unfunded benefit  liabilities.  Allis-Chalmers  and its  subsidiaries  also have
liability to the PBGC, as trustee of the terminated  Consolidated  Plan, for the
outstanding balance of the Consolidated Plan's accumulated funding deficiencies.
The PBGC has estimated that the unfunded benefit liabilities and the accumulated
funding  deficiencies  (together,  the PBGC Liability) total approximately $67.9
million.

In  September  1997,  Allis-Chalmers  and the PBGC  entered into an agreement in
principle for the  settlement of the PBGC Liability  (the PBGC  Agreement).  The
PBGC Agreement calls for the PBGC to release Allis-Chalmers and its subsidiaries
from the PBGC  Liability in return for that number of shares of  Allis-Chalmers'
common  stock  that  represents  35% of the total  number of shares  issued  and
outstanding on a fully-diluted basis.

The PBGC  Agreement is subject to negotiation  of definitive  documentation  and
discussions regarding definitive documentation continue with the PBGC on certain
issues contained in a proposed  agreement  between the Company and the PBGC. The
Company  is close  to  resolving  these  issues  with the PBGC and an  agreement
between the Company and the PBGC should be signed in the near  future.  However,
if a satisfactory  agreement  cannot be finalized with the PBGC,  Allis-Chalmers
will evaluate other alternatives, including a bankruptcy filing. .

The PBGC Agreement is also subject to  satisfactory  resolution of the Company's
tax obligations with respect to the Consolidated  Plan under section 4971 of the
Internal  Revenue Code of 1986, as amended  (Code).  Section 4971(a) of the Code
imposes, for each taxable year, a first-tier tax


                                       5

<PAGE>


of 10 percent on the amount of the accumulated  funding  deficiency under a plan
like the Consolidated  Plan.  Section 4971(b) of the Code imposes an additional,
second-tier tax equal to 100 percent of such accumulated  funding  deficiency if
the deficiency is not "corrected"  within a specified period.  Liability for the
taxes  imposed  under  section  4971   extends,   jointly  and   severally,   to
Allis-Chalmers and to its commonly-controlled subsidiary corporations.

Prior to its  termination,  the  Consolidated  Plan had an  accumulated  funding
deficiency  in the  taxable  years  1995,  1996,  and 1997.  Those  deficiencies
resulted  in  estimated   first-tier   taxes  under  Code  section   4971(a)  of
approximately $900,000.

On March 2, 1998,  Allis-Chalmers  sent the  Internal  Revenue  Service  (IRS) a
formal Offer in Compromise  of the  Company's  tax liability  under Code section
4971. On July 16, 1998, the parties reached a settlement  agreement in principle
in the amount of $75,000.  Following final IRS approval,  payment of this amount
was made on August 11, 1998.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

Operations of the Company consist of Houston Dynamic  Service,  Inc. (HDS),  the
Company's machinery repair and service subsidiary.

Sales in the first quarter of 1999 totaled $1,052,000 a decrease from $1,503,000
in the first quarter of 1998. This decrease was due to extremely soft conditions
as a backlash  to the very low oil prices  during the second  half of 1998 which
resulted in lower  shipments  compared to the same period in 1998. HDS continues
to be affected by volatile  market  conditions  that  prevail in the oil related
fields  of  refining,   processing,   chemical,  and  petrochemical   operations
throughout the Gulf Coast. 

Gross margin,  as a percentage of sales, was 32% in the first quarter of 1999 no
change from 32% in 1998.

Marketing and  administrative  expense was $390,000 in the first quarter of 1999
compared with $359,000 in the prior year. A significant portion of the Company's
administrative   expenses  relates  to  expenses  for  Securities  and  Exchange
Commission  and other  governmental  reporting as well as legal,  accounting and
audit, insurance and other corporate requirements of a publicly held company.

The Company  incurred a net loss of $57,000,  or $.06 per common  share,  in the
first quarter of 1999  compared with net income of $137,000,  or $.14 per common
share, in the same period of 1998.


Financial Condition and Liquidity

Cash and short term  investments  totaled  $222,000 at March 31, 1999, no change
from $223,000 at December 31, 1998.

Net trade  receivables,  at March 31, 1999 were $604,000,  reflecting a decrease
from the December 31, 1998 level of $796,000,  due primarily to the reduction in
sales.

                                       6

<PAGE>


Inventory at March 31, 1999 was $272,000,  a significant  increase from $127,000
at year end 1998 due to one particular  order for $110,000 that remained in work
in process at March 31,  1999 and was  subsequently  shipped and billed in April
1999.

The A-C Reorganization Trust, pursuant to the Plan of Reorganization,  funds all
costs incurred by  Allis-Chalmers  which relate to implementation of the Plan of
Reorganization,  thus  avoiding  additional  demands  on  the  liquidity  of the
Company.  Such costs include an allocated share of certain  expenses for Company
employees, professional fees and certain other administrative expenses.

In 1994, the Company's independent pension actuaries changed the assumptions for
mortality and  administrative  expenses used to determine the liabilities of the
Allis-Chalmers  Consolidated  Pension Plan (Consolidated  Plan).  Primarily as a
result of the changes in mortality  assumptions to reflect  decreased  mortality
rates of the Company's  retirees,  the  Consolidated  Plan was  underfunded on a
present value basis.  In the first quarter of 1996,  the Company made a required
cash  contribution  to the  Consolidated  Plan in the  amount of  $205,000.  The
Company  did  not,  however,  have the  financial  resources  to make the  other
required  payments  during 1996 and 1997.  Given the inability of the Company to
fund such obligations with its current  financial  resources,  in February 1997,
Allis-Chalmers  applied to the Pension Benefit Guaranty Corporation (PBGC) for a
"distress"  termination of the  Consolidated  Plan under section  4041(c) of the
Employee  Retirement  Income Security Act of 1974, as amended (ERISA).  The PBGC
approved the distress termination  application in September 1997 and agreed to a
plan  termination  date of April  14,  1997.  The  PBGC  became  trustee  of the
terminated Consolidated Plan on September 30, 1997.

Upon termination of the Consolidated  Plan,  Allis-Chalmers and its subsidiaries
incurred a liability to the PBGC for an amount equal to the Consolidated  Plan's
unfunded benefit  liabilities.  Allis-Chalmers  and its  subsidiaries  also have
liability to the PBGC, as trustee of the terminated  Consolidated  Plan, for the
outstanding balance of the Consolidated Plan's accumulated funding deficiencies.
The PBGC has estimated that the unfunded benefit liabilities and the accumulated
funding  deficiencies  (together,  the PBGC Liability) total approximately $67.9
million.

In  September  1997,  Allis-Chalmers  and the PBGC  entered into an agreement in
principle for the  settlement of the PBGC Liability  (the PBGC  Agreement).  The
PBGC Agreement calls for the PBGC to release Allis-Chalmers and its subsidiaries
from the PBGC  Liability in return for that number of shares of  Allis-Chalmers'
common  stock  that  represents  35% of the total  number of shares  issued  and
outstanding on a fully-diluted basis.

The PBGC  Agreement is subject to negotiation  of definitive  documentation  and
discussions regarding definitive documentation continue with the PBGC on certain
issues contained in a proposed  agreement  between the Company and the PBGC. The
Company  is close  to  resolving  these  issues  with the PBGC and an  agreement
between the Company and the PBGC should be signed in the near  future.  However,
if a satisfactory  agreement  cannot be finalized with the PBGC,  Allis-Chalmers
will evaluate other alternatives, including a bankruptcy filing.


                                       7

<PAGE>


The PBGC Agreement is also subject to  satisfactory  resolution of the Company's
tax obligations with respect to the Consolidated  Plan under section 4971 of the
Internal  Revenue Code of 1986, as amended  (Code).  Section 4971(a) of the Code
imposes,  for each taxable year, a first-tier tax of 10 percent on the amount of
the accumulated  funding  deficiency  under a plan like the  Consolidated  Plan.
Section 4971(b) of the Code imposes an additional,  second-tier tax equal to 100
percent  of  such  accumulated  funding  deficiency  if  the  deficiency  is not
"corrected"  within a specified  period.  Liability  for the taxes imposed under
section  4971  extends,  jointly and  severally,  to  Allis-Chalmers  and to its
commonly-controlled subsidiary corporations.

Prior to its  termination,  the  Consolidated  Plan had an  accumulated  funding
deficiency  in the  taxable  years  1995,  1996,  and 1997.  Those  deficiencies
resulted  in  estimated   first-tier   taxes  under  Code  section   4971(a)  of
approximately $900,000.

On March 2, 1998,  Allis-Chalmers  sent the  Internal  Revenue  Service  (IRS) a
formal Offer in Compromise  of the  Company's  tax liability  under Code section
4971. On July 16, 1998, the parties reached a settlement  agreement in principle
in the amount of $75,000.  Following final IRS approval,  payment of this amount
was made on August 11, 1998.

The  Environmental  Protection  Agency  (EPA) and  certain  state  environmental
protection  agencies  have  requested  information  in  connection  with  eleven
potential  hazardous  waste  disposal sites in which  products  manufactured  by
Allis-Chalmers  before consummation of the Plan of Reorganization were disposed.
The EPA has claimed that  Allis-Chalmers  is liable for cleanup costs associated
with several  additional  sites. The EPA's claims with respect to one other site
were  withdrawn  in 1994  based  upon  settlements  reached  with the EPA in the
bankruptcy  proceeding.  In addition,  certain  third parties have asserted that
Allis-Chalmers is liable for cleanup costs or associated EPA fines in connection
with  additional  sites.  In one of these  instances a former site  operator has
joined  Allis-Chalmers  and  47  other  potentially  responsible  parties  as  a
third-party  defendant in a lawsuit  involving  cleanup of one of the sites.  In
each instance the environmental  claims asserted against the Company involve its
prebankruptcy  operations.  Accordingly,  Allis-Chalmers  has taken the position
that all  cleanup  costs or  other  liabilities  related  to  these  sites  were
discharged in the bankruptcy.  In one particular  site, the EPA's Region III has
concurred with the Company's position that claims for environmental cleanup were
discharged pursuant to the bankruptcy.  While each site is unique with different
circumstances,  the Company has notified  other  Regional  offices of the EPA of
this  determination  associated  with the Region III site.  The  Company has not
received responses from the other Regional offices. No environmental claims have
been asserted against the Company involving its postbankruptcy operations.

Management  considers the Company's only  significant  application  that is year
2000 sensitive to be its  accounting  system.  The Company has received  written
assurances  from its software  provider that the accounting  system is year 2000
compliant.

The Company's  principal sources of cash include earnings from the operations of
HDS and interest income on marketable  securities.  The cash requirements needed
for the  administrative  expenses  associated with being a publicly held company
are  significant,  and the  Company  will  continue  to use  cash  generated  by
operations to fund such expenses.

The  necessity  to  assure  liquidity  emphasizes  the need for the  Company  to
continue in a prudent manner its search for appropriate  acquisition  candidates
in order to increase the  Company's  operating  base and generate  positive cash
flow.


                                       8

<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
------------------------------------------------------------------

None


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

ITEM 1. LEGAL PROCEEDINGS
-------------------------

See PART I. Item 2, "Management's Discussion and Analysis."

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
----------------------------------------

(a)  Exhibits:  (27) - Financial Data Schedule

(b)  Reports  on Form 8-K - No  report on Form 8-K was  filed  during  the first
     quarter of 1999.

                                       9

<PAGE>


                                    SIGNATURE


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.

                                         Allis-Chalmers Corporation
                                         --------------------------
                                             (Registrant)


                                         /s/ John T. Grigsby, Jr.
                                         ------------------------
                                         John T. Grigsby, Jr.
                                         Vice Chairman, Executive Vice
                                         President and Chief Financial
                                         Officer

May 15, 1999

                                       10
<PAGE>

                                 EXHIBIT INDEX

Exhibit No.              Description
-----------              -----------

  27                     Financial Data Schedule



                                       11