SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

 __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

 _____          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: 0-25360




                           AG-CHEM EQUIPMENT CO., INC.
             (Exact Name of Registrant as Specified in Its Charter)

           Minnesota                                             41-0872842
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

                               5720 Smetana Drive
                        Minnetonka, Minnesota 55343-9688
                    (Address of Principal Executive Offices)

                                 (612) 933-9006
              (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 Exchange Act during
the past 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.

                                 __X__ Yes   _____ No

         As of July 31, 1999 there were outstanding, 9,599,168 shares of the
issuers' Common Stock, $.01 par value per share.


<PAGE>



                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----

                                     PART I


ITEM 1.     INTERIM CONSOLIDATED FINANCIAL
              STATEMENTS...........................................        2
            NOTES TO INTERIM CONSOLIDATED FINANCIAL
              STATEMENTS...........................................        7

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS
              OF OPERATIONS........................................         9


                                     PART II

ITEM 1.     LEGAL
            PROCEEDINGS............................................        14

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K.......................        14

SIGNATURES  .......................................................        15

EXHIBITS    .......................................................        16




<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.  INTERIM CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

CONSOLIDATED BALANCE SHEETS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in thousands)

---------------------------------------------------------------------------------
                                                        (UNAUDITED)
                                                          June 30,    September 30,
                     ASSETS                                 1999          1998
                     ------                               --------      --------
<S>                                                       <C>           <C>
CURRENT ASSETS:
     Cash                                                 $    234      $     --
     Accounts receivable, less allowance for
       doubtful accounts of $826 and $730, respectively     25,458        23,499
     Notes receivable, current portion, and
       accrued interest receivable                           4,922         4,178
     Inventories (note 2)                                  100,475       101,751
     Deferred income tax benefits                            3,900         4,000
     Prepaid expenses and other current assets                 573           617
                                                          --------      --------
        Total current assets                               135,562       134,045
                                                          --------      --------

PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED
  DEPRECIATION OF $40,567 AND $37,326, RESPECTIVELY         48,729        45,813

OTHER ASSETS:
     Notes receivable, long-term portion                     7,127         5,596
     Intangible and other assets, net of accumulated
        amortization of $3,977 and $3,404, respectively      1,984         2,740
                                                          --------      --------
        Total other assets                                   9,111         8,336
                                                          --------      --------

Total assets                                              $193,402      $188,194
                                                          ========      ========

</TABLE>


(CONTINUED ON NEXT PAGE)

================================================================================

SEE ACCOMPANYING CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.



                                       2
<PAGE>


<TABLE>
<CAPTION>

CONSOLIDATED BALANCE SHEETS, CONT.
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in thousands except per share amounts)

------------------------------------------------------------------------------------------------
                                                                     (UNAUDITED)
                                                                       June 30,      September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                                    1999              1998
------------------------------------                                 -----------       ---------
<S>                                                                  <C>               <C>
CURRENT LIABILITIES:
     Current installments of long-term debt                          $   6,167         $   6,367
     Notes payable to banks                                             28,852            11,352
     Accounts payable                                                   14,441            15,120
     Checks outstanding in excess of cash balances                          --             2,145
     Customer prepayments                                                2,615             6,934
     Accrued expenses (note 3)                                          12,619            14,566
     Deferred income                                                     1,532             1,013
     Accrued income taxes                                                1,485               374
                                                                     ---------         ---------
Total current liabilities                                               67,711            57,871
                                                                     ---------         ---------


LONG-TERM DEBT, LESS CURRENT INSTALLMENTS                               49,328            59,903
                                                                     ---------         ---------

Total liabilities                                                      117,039           117,774
                                                                     ---------         ---------

STOCKHOLDERS' EQUITY:
     Common stock, $.01 par value
         Authorized, 40,000,000 shares; issued and
         outstanding, 9,599,168 and 9,640,268 shares, respectively          96                96
     Additional paid-in capital                                          1,309             1,737
     Retained earnings                                                  75,441            68,930
     Accumulated other comprehensive loss                                 (483)             (343)
                                                                     ---------         ---------
     Total stockholders' equity                                         76,363            70,420
                                                                     ---------         ---------
Total liabilities and stockholders' equity                           $ 193,402         $ 188,194
                                                                     =========         =========



</TABLE>


================================================================================

SEE ACCOMPANYING CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.


                                       3

<PAGE>


<TABLE>
<CAPTION>


CONSOLIDATED STATEMENTS OF EARNINGS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in thousands except per share amounts)
           (UNAUDITED)
---------------------------------------------------------------------------------------------------------

                                              Three Months Ended June 30,      Nine Months Ended June 30,
                                              ---------------------------      --------------------------
                                                 1999            1998            1999            1998
                                               ---------       ---------       ---------       ---------
<S>                                            <C>             <C>             <C>             <C>
Net sales                                      $  71,504       $  71,564       $ 236,162       $ 256,825
Cost of sales                                     53,721          52,983         171,884         186,901
                                               ---------       ---------       ---------       ---------
     Gross profit                                 17,783          18,581          64,278          69,924

Selling, general and administrative
  expenses                                        17,750          18,533          52,552          56,701
                                               ---------       ---------       ---------       ---------
     Operating income                                 33              48          11,726          13,223
                                               ---------       ---------       ---------       ---------

Other income (expense):
     Other income                                    451             765           2,423           1,973
     Interest expense                             (1,480)         (1,498)         (3,976)         (4,723)
                                               ---------       ---------       ---------       ---------
        Earnings (loss)before income
            taxes                                   (996)           (685)         10,173          10,473

Income tax expense (benefit)                        (358)           (211)          3,662           4,112
                                               ---------       ---------       ---------       ---------

Net earnings (loss)                            $    (638)      $    (474)      $   6,511       $   6,361
                                               =========       =========       =========       =========

Basic and  diluted  earnings  (loss)  per
share                                          $  ( 0.06)      $   (0.05)      $    0.68       $    0.66
                                               =========       =========       =========       =========

Weighted average common shares
outstanding, basic and diluted                     9,602           9,659           9,622           9,665
                                               =========       =========       =========       =========


</TABLE>


================================================================================

SEE ACCOMPANYING CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.



                                       4
<PAGE>


<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in thousands)
           (UNAUDITED)
------------------------------------------------------------------------------------------------------
                                                                            Nine Months ended June 30,
                                                                            --------------------------
                                                                               1999           1998
                                                                             --------       --------
<S>                                                                          <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net earnings                                                            $  6,511       $  6,361

Adjustments to reconcile net earnings to net cash provided by operating
     activities:
     Depreciation and amortization                                              4,772          6,619
     Gain on sale of assets                                                      (177)           (83)
     Increase (decrease) in deferred income tax benefits                          100            (23)
     Changes in operating assets and liabilities:
          Accounts receivable                                                  (1,959)         2,416
          Notes receivable                                                     (2,275)          (249)
          Inventories                                                           1,276          9,368
          Other current assets                                                     44            215
          Accounts payable                                                       (679)           441
          Customer prepayments and deferred income                             (3,800)        (3,275)
          Accrued expenses                                                     (1,947)        (2,069)
          Income taxes                                                          1,111          1,307
                                                                             --------       --------
       Cash provided by operating activities                                    2,977         21,028
                                                                             --------       --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Retirement of short-term investments
       for industrial revenue bond                                                 23            722
     Purchases of property, plant and equipment                                (1,115)        (3,457)
     Increase in rental equipment                                              (5,827)        (8,454)
     Proceeds from sale of equipment                                              212             65
     Decrease (increase) in other assets                                          (48)           107
                                                                             --------       --------
       Cash used in investing activities                                       (6,755)       (11,017)
                                                                             --------       --------

</TABLE>

(CONTINUED ON NEXT PAGE)

================================================================================
SEE ACCOMPANYING CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.


                                       5

<PAGE>

<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT.
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in Thousands)
           (UNAUDITED)
-------------------------------------------------------------------------------------------------------------

                                                                                   Nine months ended June 30,
                                                                                   --------------------------
                                                                                      1999            1998
                                                                                   ---------       ---------
<S>                                                                                   <C>                 <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
     Decrease in checks outstanding in excess of
       cash balances                                                                  (2,145)             (7)
     Proceeds from notes payable - banks                                              95,900         135,600
     Repayments of notes payable - banks                                             (78,400)       (156,076)
     Proceeds from long-term borrowings                                              120,000          29,750
     Repayments of long-term borrowings                                             (130,775)        (16,820)
     Purchase of common stock                                                           (428)           (361)
                                                                                   ---------       ---------
       Cash provided by (used in) financing activities                                 4,152          (7,914)
                                                                                   ---------       ---------

     Foreign currency translation adjustment                                            (140)           (107)
                                                                                   ---------       ---------

     Increase in cash                                                                    234           1,990
     Cash at beginning of period                                                          --              --
                                                                                   ---------       ---------
     Cash at end of period                                                         $     234       $   1,990
                                                                                   =========       =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the period for:
       Interest                                                                    $   4,596       $   4,369
       Income taxes                                                                $   2,507       $   2,690

</TABLE>

================================================================================

SEE ACCOMPANYING CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.



                                       6

<PAGE>

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars and shares in thousands except per share amounts)
           (UNAUDITED)
--------------------------------------------------------------------------------

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions in Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information, refer to the consolidated financial statements and
footnotes thereto for the year ended September 30, 1998 included in the
Company's annual report on Form 10-K. Results of the interim periods are not
necessarily indicative of the results for an entire year.


(2) INVENTORIES

       Inventories consist of the following:

                                            June 30,         September 30,
                                              1999               1998
                                            ---------          ---------
       Finished goods                       $  36,613          $  49,317
       Resale parts                            26,009             25,029
       Work in process                          3,322              4,739
       Raw materials                           35,118             24,068
                                            ---------          ---------
         Total                                101,062            103,153
       Less LIFO reserve                      (12,664)           (12,006)
                                            ---------          ---------
         Total                                 88,398             91,147
       Used equipment                          12,077             10,604
                                            ---------          ---------
       Total inventories                    $ 100,475          $ 101,751
                                            =========          =========

       If the first in, first out (FIFO) method utilizing current costs had been
used for inventories valued using the LIFO method, net earnings would have been
higher by $659 and $793 for the nine-month periods ended June 30, 1999 and 1998,
respectively.

(3) ACCRUED EXPENSES

         Accrued expenses consist of the following:

                                          June 30,         September 30,
                                            1999                1998
                                           -------             -------
       Compensation                        $ 5,745             $ 5,966
       Warranty                              1,248               1,537
       Taxes other than income                 617               1,543
       Insurance                             1,595               1,557
       Interest                                828               1,816
       Other                                 2,586               2,147
                                           -------             -------
            Total                          $12,619             $14,566
                                           =======             =======


                                       7

<PAGE>

(4) COMPREHENSIVE INCOME

       The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 130, "Reporting Comprehensive Income," effective October 1, 1998. SFAS No.
130 establishes standards for reporting and display of comprehensive income and
its components, including all changes in equity during a period except those
resulting from investments by owners or distributions to owners. The following
table summarizes total comprehensive income for the periods presented:

<TABLE>
<CAPTION>
                                  Three Months Ended June 30,      Nine Months Ended June 30,
                                  ---------------------------      --------------------------
                                      1999        1998                 1999        1998
                                     -------     -------              -------     -------
<S>                                  <C>         <C>                  <C>         <C>
Net earnings (loss)                  $  (638)    $  (474)             $ 6,511     $ 6,361
Other comprehensive income
  (loss):
    Foreign currency translation
    adjustment                          (157)      - - -                 (140)       (107)
                                     -------     -------              -------     -------

Total comprehensive income
(loss)                               $ ( 795)    $  (474)             $ 6,371     $ 6,254
                                     =======     =======              =======     =======

</TABLE>

(5) COMPUTATION OF EARNINGS (LOSS) PER SHARE

         The per share computations are based on the weighted average number of
common shares outstanding during the periods.

<TABLE>
<CAPTION>
                                    Three Months Ended June 30,       Nine Months Ended June 30,
                                    ---------------------------       --------------------------
                                         1999          1998                  1999       1998
                                       --------     ---------              --------    ------
<S>                                    <C>          <C>                    <C>         <C>
Weighted average shares
     outstanding, basic and diluted       9,602         9,659                 9,622     9,665
                                       ========     =========              ========    ======
Net earnings (loss)                    $   (638)    $   ( 474)             $  6,511    $6,361
                                       ========     =========              ========    ======
Earnings (loss) per common share,
basic and diluted                      $  (0.06)    $   (0.05)             $   0.68    $ 0.66
                                       ========     =========              ========    ======

</TABLE>

The Company has no potentially dilutive common shares outstanding.


                                       8
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   RESULTS OF OPERATIONS
        (DOLLARS IN THOUSANDS)

RESULTS OF OPERATIONS - THREE-MONTH PERIOD ENDED JUNE 30, 1999 COMPARED TO
THREE-MONTH PERIOD ENDED JUNE 30, 1998

         Consolidated net sales decreased by $61 or .1% in the three-month
period ended June 30, 1999 from the three-month period ended June 30, 1998. Low
commodity prices continue to cause a softening in the agricultural markets. Most
customers experienced better than expected weather conditions allowing for a
longer and easier spring application season, this further reduced the demand for
the Company's products. The Company expects competition to continue to be an
issue and is uncertain about the impact on future net sales. Additionally, the
farm supply industry is experiencing consolidation which has reduced capital
purchases, with a resulting decrease in the demand for equipment in the
short-term. The Company anticipates that once the consolidation slows, customers
will resume capital purchases at a level comparable to prior periods. The
Company expects consolidated net sales during the remainder of the fiscal year
ending September 30, 1999 to continue to be less than the prior fiscal year due
to the factors described above. The changes and factors described above are
quantified as follows:

         o        Post-emergence equipment net sales decreased $4,492 or 17.6%
                  during the three months ended June 30, 1999 as compared to the
                  prior-year period. The decrease was primarily the result of
                  decreases in post-emergence equipment unit shipments. As a
                  result, net sales of post-emergence equipment represented
                  29.4% and 35.6% of net sales during the three-month periods
                  ended June 30, 1999 and 1998, respectively.

         o        Pre-emergence equipment net sales increased $206 or 1.3%
                  during the three months ended June 30, 1999 as compared to the
                  prior-year period. As a result, net sales of pre-emergence
                  equipment represented 22.1% and 21.8% of net sales during the
                  three-month periods ended June 30, 1999 and 1998,
                  respectively.

         o        Net sales of other product lines and services increased $4,225
                  or 13.9% during the three months ended June 30, 1999 as
                  compared to the prior-year period. Consequently, net sales of
                  other product lines represented 48.6% and 42.6% of net sales
                  during the three-month periods ended June 30, 1999 and 1998,
                  respectively.

         Consolidated gross profit for the three-month period ended June 30,
1999 decreased $798 or 4.3% as compared to the prior-year period. Consolidated
gross profit as a percent of net sales was 24.9% and 26.0% for the three-month
periods ended June 30, 1999 and 1998, respectively. Several factors contributed
to the reduced gross profit as a percentage of net sales in the current-year
period. The Company reduced the selling price on a number of old-style machines
such as the 1903 and 1844 to increase demand. In addition, due to the
competitive environment, the Company also discounted its current product line
more heavily in the three months ended June 30, 1999 as compared to the prior
year. The Company expects to see continued reduced margins due to competitive
pressures. The reduced product margins were partially offset by reduced warranty
expense.

         Consolidated selling, general and administrative ("S,G&A") expenses
decreased $782 or 4.2% in the three-month period ended June 30, 1999 as compared
to the prior-year period. Compensation, employee benefits and employee-related
expenses decreased 7.3% or $964. The largest single factor contributing to this
decrease was a decrease in the number of employees. During the three months
ended December 31, 1998, the Company initiated efforts to contain S,G&A expenses
through employment reductions and other cost control efforts. These efforts
reduced S,G&A expense during the three months ended June 30, 1999, and are
expected to have a similar effect during the remainder of fiscal 1999. All other
S,G&A expenses increased by 3.4% or $182. S,G&A expenses as a



                                       9
<PAGE>

percent of net sales were 24.8% and 25.9% in the three-month periods ended June
30, 1999 and 1998, respectively. The Company expects that its efforts to contain
such costs will hold annual S,G&A expenses relatively stable as a percentage of
sales compared to previous periods depending on sales during the remainder of
fiscal 1999.

         As a result of the above, operating income was $33 and $48 in the
three-month periods ended June 30, 1999 and 1998, respectively.

         Other income decreased 41.0% to $451 in the three-month period ended
June 30, 1999 as compared to the prior-year three-month period. The primary
cause of the lower other income for the three-month period ending June 30, 1999
compared to the prior year period was a reduction of interest income. This was
the result of the Company introducing special short-term financing to its
customers.

         Interest expense decreased 1.2% to $1,480 in the three-month period
ended June 30, 1999 as compared to the prior-year three-month period. The
Company does not expect interest expense to continue to decrease due to the
increase in interest rates and net borrowings.

         The effective tax rate in the three-month periods ended June 30, 1999
and 1998 was 35.9% and 30.8%, respectively. The decrease in the effective tax
rate was primarily the result of a lower effective state tax rate and net
operating loss carry-forward utilization by the Company's European subsidiary.

         Because of the above, the net loss was $638 and $474 in the three-month
periods ended June 30, 1999 and 1998, respectively. Loss per share was $.06 and
$.05 for such periods.


RESULTS OF OPERATIONS - NINE-MONTH PERIOD ENDED JUNE 30, 1999 COMPARED TO
NINE-MONTH PERIOD ENDED JUNE 30, 1998

         Consolidated net sales decreased by $20,664 or 8.0% in the nine-month
period ended June 30, 1999 from the nine-month period ended June 30, 1998. The
decrease was primarily the result of decreases in pre-emergence and
post-emergence equipment unit shipments. The conditions contributing to this
decrease are the same as those discussed for the three-month period ended June
30, 1999. The changes and factors described therein are quantified as follows:


         o        Post-emergence equipment net sales decreased $12,862 or 16.9%
                  during the nine months ended June 30, 1999 as compared to the
                  prior-year period. As a result, net sales of post-emergence
                  equipment represented 26.7% and 29.6% of net sales during the
                  nine-month periods ended June 30, 1999 and 1998, respectively.

         o        Pre-emergence equipment net sales decreased $10,027 or 10.3%
                  during the nine months ended June 30, 1999 as compared to the
                  prior-year period. As a result, net sales of pre-emergence
                  equipment represented 37.1% and 38.0% of net sales during the
                  nine-month periods ended June 30, 1999 and 1998, respectively.

         o        Net sales of other product lines increased $2,225 or 2.7%
                  during the nine months ended June 30, 1999 as compared to the
                  prior-year period. Consequently, net sales of other product
                  lines represented 36.2% and 32.4% of net sales during the
                  nine-month periods ended June 30, 1999 and 1998, respectively.

         Consolidated gross profit for the nine-month period ended June 30, 1999
decreased $5,646 or 8.1% as compared to the prior-year period. Consolidated
gross profit as a percent of net sales was 27.2% for the nine-month periods
ended June 30, 1999 and 1998, respectively. Gross profit as a percent of net
sales was reduced during the nine-months ending June 30, 1999 due to price
reductions on old-style machines and increased discounts on the current product
line. The Company expects continued reduced margins due to competitive
pressures. Additionally, gross profit as a percentage of net sales was
negatively impacted in the prior-year period


                                       10

<PAGE>

by warranty expense related to older model equipment. The Company has made
efforts to reduce warranty expense through improved designs on newer models.
Warranty expense for the nine-month period ended June 30, 1999 was significantly
lower as compared to the prior-year period. The Company expects this trend to
continue for the remainder of the fiscal year.

         Consolidated selling, general and administrative ("S,G&A") expenses
decreased $4,149 or 7.3% in the nine-month period ended June 30, 1999 as
compared to the prior-year period. Compensation, employee benefits and
employee-related expenses decreased 8.5% or $3,416. The largest single factor
contributing to this decrease was a decrease in commission expense, which is
directly related to net sales. Moreover, during the three months ended December
31, 1998, the Company initiated efforts to contain S,G&A expenses through
employment reductions and other cost control efforts. These efforts reduced
S,G&A expense during the nine months ended June 30, 1999, and are expected to
have a similar effect during the remainder of fiscal 1999. All other S,G&A
expenses decreased by 4.4% or $733. S,G&A expenses as a percent of net sales
were 22.3% and 22.1% in the nine-month periods ended June 30, 1999 and 1998,
respectively. The Company expects that its efforts to contain such costs will
hold annual S,G&A expenses relatively stable as a percentage of net sales
compared to previous periods depending on sales during the remainder of fiscal
1999.

         Because of the above, operating income was $11,726 and $13,224 in the
nine-month periods ended June 30, 1999 and 1998, respectively.

         Other income increased 22.8% to $2,423 in the nine-month period ended
June 30, 1999 as compared to the prior-year nine-month period. The primary cause
of the increased other income for the nine-month period ending June 30, 1999
compared to the prior year period was a gain on the sale of fixed assets and the
receipt of sales tax refunds from prior periods.

         Interest expense decreased 15.8% to $3,976 in the nine-month period
ended June 30, 1999 as compared to the prior-year nine-month period. The Company
does not expect interest expense to continue to decrease due increases in
interest rates and net borrowings.

         The effective tax rate in the nine-month periods ended June 30, 1999
and 1998 was 36.0% and 39.3%, respectively. The decrease in the effective tax
rate was primarily the result of a lower effective state tax rate and net
operating loss carry-forward utilization by the Company's European subsidiary.

         Because of the above, net earnings were $6,511 and $6,361 in the
nine-month periods ended June 30, 1999 and 1998, respectively. Earnings per
share were $.68 and $.66 for such periods.


LIQUIDITY AND FINANCIAL POSITION - NINE-MONTH PERIOD ENDED JUNE 30, 1999
COMPARED TO NINE-MONTH PERIOD ENDED JUNE 30, 1998

         Net cash provided by operating activities decreased to $2,977 in the
nine-month period ended June 30, 1999, compared to $21,028 in the nine-month
period ended June 30, 1998. The major reason for this change was a increase in
cash used for operating assets and liabilities to $8,229 in the nine-month
period ended June 30, 1999 compared to cash provided of $8,154 in the prior-year
period. Inventories, offset with decreased accounts payable balances, provided
cash of $597 compared to $9,809 during the nine months ended June 30, 1999 and
1998, respectively. Inventories decreased $1,276 from September 30, 1998 to
$100,475 at June 30, 1999. The decrease in inventories during the nine-month
period ended June 30, 1999 was less than the prior year due to the decrease in
sales. The Company is monitoring its inventory levels and will continue to make
appropriate adjustments to its production schedule as required. The Company
expects cash will continue to be provided by operating activities through net
earnings, and this cash will be used to satisfy the current portion of long-term
debt. Accounts



                                       11
<PAGE>

receivable and inventory turnover have remained relatively stable in recent
periods, and have not significantly affected liquidity.

         Cash used in investing activities in the nine-month period ended June
30, 1999 was $6,755 compared to $11,017 in the prior-year period. This decrease
was primarily the result of less investment in equipment rented to customers in
the nine-months ended June 30, 1999 than the prior-year period. Additionally,
the Company invested less in property, plant and equipment in the period ended
June 30, 1999 than the prior-year period.

         Cash provided by financing activities was $4,152 in the nine-month
period ended June 30, 1999, compared to cash used of $7,914 in the prior-year
period. The increase in cash provided by financing activities was primarily the
result of the net proceeds of notes payable and long-term borrowings of $6,725
during the nine-month period ended June 30, 1999, compared to net repayments of
$7,546 during the nine-month period ended June 30, 1998. This decrease in net
repayments was primarily due to increased working capital requirements as
compared to the prior year, when working capital was generated through the
reduction of higher inventory levels.

         Working capital at June 30, 1999 was $67,851 compared to $71,355 at
June 30, 1998. As of June 30, 1999 the Company had $31,029 of unused credit line
available. The Company periodically receives prepayments from customers to
secure either more favorable pricing or a desired delivery date. If the Company
did not receive customer prepayments, it believes its line of credit would
provide sufficient liquidity to meet working capital requirements.

         The terms of the Company's credit line agreement include covenants that
the Company must maintain. There are a number of standard affirmative covenants,
as well as restrictive negative covenants as to additional borrowings and
requirements for the Company to maintain certain financial ratios. These
restrictive covenants include a minimum tangible net worth of $57,500 plus 50%
of each fiscal year's net earnings, a ratio of total liabilities to tangible net
worth, and an interest coverage ratio. There are additional limitations on
mergers, acquisitions, disposal of assets, and capital expenditures. The Company
currently does not anticipate any difficulty in meeting these covenants,
however, any failure to comply with these covenants could have a material
adverse effect on the Company's financial condition.

         MARKET RISK MANAGEMENT

         The Company is exposed to market risk from changes in interest rates
and foreign currency exchange rates. Changes in these factors could cause
fluctuations in the Company's earnings and cash flows. The Company's risk to
interest rate and foreign currency exchange rate fluctuations has not materially
changed since September 30, 1998.

         IMPACT OF YEAR 2000

         During the third quarter of fiscal 1999, Ag-Chem continued its
company-wide program to prepare the Company's computer systems for Year 2000
compliance. The year 2000 issue relates to computer systems that use the last
two digits rather than all four to define a year and whether such systems will
properly and accurately process information when the year changes to 2000.
Incomplete or untimely resolution of Year 2000 issues by the Company, by its
critical suppliers and customers, by public utility providers, or by government
entities could have a material adverse impact on the Company's business,
operations, or financial condition.

         STATE OF READINESS - The Company has retained an independent consultant
to assess the adequacy of the Company's Year 2000 initiatives and remediation
plans. All of the Company's essential information technology ("IT") systems have
been inventoried and remediation plans for any Year 2000 issues have been
implemented. The Company has developed Year 2000-compliant applications for the
Company's order entry and customer service systems. The Company has upgraded its
information system used in manufacturing operations, material planning,
inventory management, order processing, financial management and human resources
applications, which the Company currently believes is now Year 2000-compliant.
The Company purchased Year 2000-compliant upgrades



                                       12
<PAGE>

to the Company's payroll application and telephone system. The Company purchased
Year 2000-compliant upgrades for its software applications for customer
inquiries and for processing and tracking warranty claims and returns. These
upgrades have been fully implemented. To serve as an additional check for code
non-compliance, the Company has purchased Year 2000 scanning tools that are
being used on its computer software. With the implementation of these
applications and upgrades, the Company believes that all of its core
applications and IT systems are Year 2000 compliant and testing is currently
under way to ensure compliance. Currently, 60% of system testing has been
completed and the Company expects the remaining testing to be completed by the
fourth quarter.

         The Company is also engaged in discussions with its largest suppliers
regarding their plans to remediate Year 2000 issues. The Company sent each of
its significant suppliers a questionnaire inquiring as to the magnitude of their
Year 2000 issues and the status of their readiness. The Company has received
assurances from a significant portion of its suppliers that such third parties
will become Year 2000 compliant in a timely manner. The Company is following up
with these third parties and is searching for alternative sources, should they
be unable to continue business in the Year 2000.

         RISKS - The Company is continuing to test its critical operating and
financial systems and remains uncertain of the risks the Year 2000 will have on
its business operations and on its financial condition.

         As the process of inventorying non-IT systems proceeds, the Company may
identify systems that present a Year 2000 risk. In addition, if any third
parties who provide goods or services essential to the Company's business
activities, including vendors from whom the Company has purchased Year 2000
compliant upgrades, fail to appropriately address their Year 2000 issues, such
failure could have a material adverse effect on the Company's business,
financial condition and operating results.

         CONTINGENCY PLANS - The Company's Year 2000 Project Team's initiatives
include the development of contingency plans in the event the Company has not
completed all of its remediation plans in a timely manner. In addition, the Year
2000 Project Team is in the process of developing contingency plans in the event
that any third parties who provide goods or services essential to the Company's
business fail to appropriately address their Year 2000 issues. The Year 2000
Project Team expects to conclude the development of these contingency plans by
the end of the fourth quarter of fiscal 1999.

         COSTS - The Company estimates that the expenses incurred to-date in
fiscal 1999 to address Year 2000 issues were approximately $145. The Company
estimates that it will incur approximately $171 of additional expense to
complete its remediation plans required for its Information Technology systems,
which includes systems software costs and consulting fees.

         Refer to the Company's annual report on Form 10-K for additional
discussion related to Year 2000 issues.




FORWARD-LOOKING STATEMENTS

         Certain information included in this Report is "forward looking" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements can be identified by the use of words such as "will,"
"intends," "expects," "should," and similar language. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. This includes factors that affect all businesses, as well as matters
specific to the Company and markets it serves. A more complete discussion of
such factors is included in the Company's Form 10-K for the year ended September
30, 1998.



                                       13
<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Reference is made to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1998 on file with the Securities and Exchange
Commission. During the quarter ended June 30, 1999, the Company was not a party
to any newly initiated material legal proceedings and there have been no
material developments during such period to existing legal proceedings.


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

     (a)  Exhibits

         27.1 Financial Data Schedule
         10.1 Third Amended and Restated Long Term Revolving Credit Agreement
         10.2 Short Term Revolving Credit Agreement

     (b)  Reports on Form 8-K

            No reports on Form 8-K have been filed during the quarter for which
this report was filed.


<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.




                                    AG-CHEM EQUIPMENT CO., INC.



Date:    August 13, 1999            By:      /s/ Alvin E. McQuinn
                                             -----------------------------------
                                             Alvin E. McQuinn
                                             Its:  Chief Executive Officer





Date:    August 13, 1999            By:      /s/ John C. Retherford
                                             -----------------------------------
                                             John C. Retherford
                                             Its:  Chief Financial Officer




                                       15
<PAGE>

                                INDEX TO EXHIBITS

Exhibit No.    Title

10.1           $45,000,000 Third Amended and Restated Long Term Revolving Credit
               Agreement among Ag-Chem Equipment Co., Inc., certain subsidiaries
               of Ag-Chem Equipment Co., Inc., as Multicurrency Subsidiary
               Borrowers, The Institutions From Time to Time Hereto, as Lenders,
               and The First National Bank of Chicago, as Agent

10.2           $45,000,000 Short Term Revolving Credit Agreement among Ag-Chem
               Equipment Co., Inc., The Institutions From Time to Time Hereto,
               as Lenders, and The First National Bank of Chicago, as Agent