<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

<TABLE>
<S>        <C>
    X        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
 -------        OF THE SECURITIES EXCHANGE ACT OF 1934
              FOR THE FISCAL YEAR ENDED DECEMBER 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
</TABLE>

                         COMMISSION FILE NUMBER 1-5530

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

<TABLE>
<S>                                               <C>
                  DELAWARE                                         38-0292230
--------------------------------------------      --------------------------------------------

      (State or other jurisdiction of                           (I.R.S. Employer
       Incorporation or Organization)                         Identification No.)

10 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS                          60606
--------------------------------------------      --------------------------------------------

  (Address of principal executive offices)                         (Zip Code)
</TABLE>

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

          Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<S>                                               <C>
            Title of Each Class                    Name of Each Exchange on Which Registered
--------------------------------------------      --------------------------------------------

        COMMON STOCK--$.01 PAR VALUE                          NEW YORK AND PACIFIC
</TABLE>

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

                                      ___

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 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 ___

As of March 31, 2000, 11,869,664 shares of common stock were outstanding, and
the aggregate market value of the shares of common stock (based upon the closing
price on the New York Stock Exchange) held by nonaffiliates of the Company was
approximately $29,255,115. Determination of common stock ownership by affiliates
was made solely for the purpose of responding to this requirement, and the
Registrant is not bound by this determination for any other purpose.

The Company's definitive Proxy Statement (which will be filed at a later date)
for the Annual Meeting of Stockholders scheduled to be held May 24, 2000 and
Annual Report to security holders for the year ended December 31, 1999 are
incorporated by reference in Part III and Part IV herein.

The Exhibit Index is located on page 55.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                                     PART I

ITEM 1.  BUSINESS

    Allied Products Corporation ("Company") was organized under Delaware law in
1967 as the successor to a Michigan corporation which was formed in 1928. Its
principal executive offices are at 10 South Riverside Plaza, Chicago, Illinois
60606 and its telephone number is (312) 454-1020.

    During 1999, the Company's operations were divided into two business
segments--the Agricultural Products Group (which consisted of the Bush Hog and
Great Bend divisions) and the Industrial Products Group.

    On March 7, 2000, the Company (i) transferred to a newly organized limited
liability company ("New Bush Hog") substantially all of the assets and certain
liabilities of the Bush Hog and Great Bend divisions constituting its
Agricultural Products Group in exchange for all of the outstanding membership
interests of New Bush Hog (ii) sold membership interests representing 80.1% of
the total outstanding membership interests of New Bush Hog to a limited
liability company owned by members of the Henry Crown family of Chicago ("Bush
Hog Investors") for a purchase price of approximately $126,500,000 subject to
post closing adjustments. On March 23, 2000, the Company agreed to sell its
remaining New Bush Hog membership interest to Bush Hog Investors on or before
June 30, 2000 for a purchase price of $31,426,134, less net balance sheet
adjustments of New Bush Hog from March 7 through the closing. The Company
anticipates that the purchase price as adjusted will be approximately
$28,000,000. The operations of the former Agricultural Products Group are
reflected in the accompanying financial statements as discontinued operations.

    Allied Products Corporation manufactures large metal stamping presses
through its Industrial Products Group which consists of the Verson, Precision
Press Industries, Verson Pressentechnik and the Verson Standard Products
Division operations. The Company's Agricultural Products Group, which
manufactured implements and machinery used in agriculture, landscaping and
ground maintenance businesses, was sold subsequent to the end of 1999--see Note
3 of Notes to Consolidated Financial Statements. The Company's Coz division,
which was part of the Industrial Products Group and supplied thermoplastic
compounds and additives, was sold in the fourth quarter of 1997. All
manufacturing operations are within the United States.

    Approximately 13%, 4% and 8% of the Company's net sales from continuing
operations in 1999, 1998 and 1997, respectively, were exported principally to
Canada and Mexico.

INDUSTRIAL PRODUCTS GROUP

    PRODUCTS.  The Verson division manufactures a broad line of both medium and
large technologically advanced mechanical and hydraulic metal forming presses.
These products are used in the manufacture of components for the automotive,
appliance, office equipment, farm equipment, ordnance, aerospace and general
metal working industries. A transfer press is a specialized mechanical press
that combines a series of operations by transferring a work piece from one
station to another inside of a single press. Each station in the press has a
separate die that is individually adjustable. This process allows all
operations, from initial draw to finished product, to take place in one press,
resulting in increased output and reduced labor expense. Prices vary by type and
size. Size categories for transfer presses range from "A" (largest) to "D"
(smallest). An "A" transfer press is generally 13 to 15 feet wide, 80 to 90 feet
long and stands four stories tall. By comparison, a "B" transfer press is
approximately 10 feet wide, 60 feet long and four stories tall. The difference
between these machines is the component part size they stamp. Investment in a
large transfer press can range from $15-$35 million.

    Approximately 10-15% of Verson's revenue was generated by customer special
services. Items included in the special services area are: repair parts,
complete remanufacturing of used presses, contract machining and manufacturing,
die consultation and training. In addition to the fabrication and machining of
components, Verson provides complete tooling and engineering services necessary
for turnkey systems.

    Complimenting the manufacturing of presses by Verson, a new division of
Allied Products, Precision Press Industries ("PPI"), began operation in November
1997. PPI is engaged in the fabrication of large components weighing up to
240,000 pounds and is located in a 40,000 square foot facility in Hobart,
Indiana. The Company believes PPI uses some of the most sophisticated welding
machinery and processes available. Supplier agreements, production scheduling
and control methods enable PPI to work in a just-in-time format. Extensive
employee training and ongoing process documentation activities are intended to
provide that PPI operates in accordance with ISO9000 guidelines. The division
currently does work exclusively for the Verson division, but retains the
capability to perform custom fabrication work for third party customers.

2
<PAGE>
    During the fourth quarter of 1998, the Company formed a joint venture with
Theodor Grabener GmbH & Co. KG of Germany and Automatic Feed Company of
Napoleon, Ohio, that will help the two American companies more effectively
penetrate the European market for large stamping presses and related systems.
The new entity, Verson Pressentechnik GmbH, is located in Netphen-Werthenbach,
Germany, and is expected to benefit from the resources of the Grabener group of
companies.

    The joint venture, in which Verson holds a 60% stake, will act as the main
commercial and technical support arm for the activities of both Verson and
Automatic Feed in Europe. Its European staff will have the responsibility of
marketing Verson and Automatic Feed products to customers throughout Europe.
Drawing on the strengths of the Grabener group of companies, the joint venture
also will assist in customizing Verson and Automatic Feed equipment to meet the
requirements of European customers, and it will provide on-going training and
service support once the equipment is up and running at a customer's plant.

    During the first quarter of 2000, the Company formed the Verson Standard
Products Division. The new division is located in Williamsville, New York and
will compete in the low tonnage press market offering standard designs.
Manufacturing activities will be primarily outsourced.

    On October 14, 1997, the Company sold its Coz division. Coz provided a
complete line of thermoplastic resins and related services to the plastic
molding and extrusion industry.

    MARKETING.  Verson's marketing group department is headed by a Vice
President of Marketing and Sales, with responsibility for all Verson products
and services. Verson sells and promotes its products by using a direct sales
force that concentrates in strategically significant markets and contract
representatives which focus on lower volume potential markets.

    Verson's major customers are the U.S. automobile manufacturers (both U.S.
and foreign owned) and first and second tier automotive parts producing
companies, which, on average, account for approximately 85-90% of Verson's
annual revenue. The other major market served by Verson is the appliance
industry where the division's customers include major brand names.

    The Company believes Verson is the technology leader, having designed the
world's first transfer press in 1939, the world's first electronic feed in 1981,
a cross bar feed in 1992 which significantly improves production, and more
recently, a Dynamic Orientation-Registered Trademark- system which further
improves production and saves space.

    COMPETITION.  There are only a few companies in the world that supply large
transfer press systems similar to those provided by Verson. Verson is now the
only American owned company competing in this upper end segment. Principal
competition comes from German and Japanese manufacturers. Press manufacturers
compete on the basis of technology, capability, reliability and price. The
barriers to entry for new competitors are high due to the large capital
expenditures required.

    INDUSTRY.  Domestic automobile manufacturers are seeking to become more
cost-effective by requiring quality parts, implementing just-in-time concepts,
obtaining price reductions from suppliers, redesigning cost out of automobiles,
and restructuring and automating their manufacturing processes.

    In response to these market factors and an unprecedented incoming order rate
in 1994, the Verson division completed a 40,000 square foot expansion of its
assembly facilities in 1995. An additional 117,000 square foot expansion of its
assembly facilities was completed at the end of 1998. These additions have
significantly expanded the division's capacity for manufacturing large transfer
presses and have increased the divisions's fixed costs.

SALES BACKLOG

    Sales backlog associated with continuing operations as of December 31, 1999
was $51,401,000 compared to $145,268,000 at December 31, 1998. Over 90% of the
backlog orders are expected to be filled prior to the end of 2000.

EMPLOYEES

    The Company's continuing operations currently employ approximately 800
individuals, including approximately 500 employees at the Verson division who
are represented by a union. While the Company considers its relations with its
Verson division employees to be satisfactory, the Company suffered a strike
during the summer of 1997 at the expiration of the last union contract. The
contract agreed to upon settlement of the strike expires in June 2000.

RAW MATERIALS AND SOURCES OF SUPPLY

    The principal raw materials used by all of the Company's manufacturing
operations include steel and other metals and purchased components. During 1999
the materials needed by Allied Products generally were available from a variety
of sources in adequate quantities and at prevailing market prices. No one
supplier is responsible for supplying more than 10% of the principal raw
materials used by Allied Products.

                                                                               3
<PAGE>
PATENTS, TRADEMARKS AND LICENSES

    Allied Products owns the federally registered trademarks "Verson," which is
used on its metal forming presses, and "ETF", "MultiMode" and "Dynamic
Orientation" which are used on the electronically controlled transfer feeds
manufactured by the Verson division. Allied Products considers each of the above
registered trademarks to be material to its business. While Allied Products
believes that the other trademarks used by each of its operations are important,
none of the patents, licenses, franchises or such other trademarks are
considered material to the operations of its business.

MAJOR CUSTOMERS

    Approximately 66%, 52% and 55% of the Company's net sales from continuing
operations in 1999, 1998 and 1997, respectively, were derived from sales by the
Industrial Products Group to the three major U.S. automobile manufacturers.
During 1999, Daimler-Chrysler and General Motors accounted for approximately 44%
and 18%, respectively, of net sales from continuing operations and Ford
accounted for less than 10% of net sales from continuing operations. In
addition, Magna Corporation accounted for approximately 13% of net sales from
continuing operations in 1999. With the exception of the customers noted above,
no material part of the Company's business is dependent upon a single customer.

SEASONALITY

    Sales and cash receipts for the Company's continuing operations are not
generally affected by seasonality.

ENVIRONMENTAL FACTORS

    Reference is made to Note 10 of Notes to Consolidated Financial Statements
regarding environmental factors and matters.

DISCONTINUED OPERATIONS--AGRICULTURAL PRODUCTS GROUP

    The Company's former Agricultural Products Group consisted principally of
two divisions, the Bush Hog division and the Great Bend division. The Bush Hog
division offered a comprehensive line of implements and machinery used by
farmers, ranchers, large estate owners, commercial turf mowing and landscape
contractors, golf courses and municipalities. Implements and machinery sold by
Bush Hog include rotary cutters, tractor mounted loaders, hay mowers, tillers,
cultivators, backhoes, zero-turn mowers, landscape tools, and turf and golf
course mowing equipment.

    Bush Hog rotary cutters are used to shred stalks after the crop has been
harvested, to mow pasture, for land maintenance and for governmental
right-of-way mowing. Front end loaders are used by farmers and ranchers for
material handling Cultivators are used for weed control after crops have been
planted.

    The Great Bend division was a manufacturer of front end loaders with
significant geographical marketing emphasis in the Midwest, Southwest and high
plains areas of the United States. Like Bush Hog, Great Bend offered a complete
line of quality front end loaders, with particular emphasis on high lift loaders
which adapt to higher horsepower tractors.

FORWARD-LOOKING STATEMENTS

    Some of the information contained in the above discussion may contain
forward-looking statements that are subject to certain risks, uncertainties and
assumptions. Such forward-looking statements are intended to be identified in
this document by the words "anticipate," "expect," "estimate," "objective,"
"possible" and similar expressions. Actual results may vary. Reference is made
to the "Safe Harbor Statement" contained under Item 7--Management's Discussion
and Analysis of Financial Condition and Results of Operations.

4
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY

    The following table sets forth the names and ages of the Company's Executive
Officers, together with all positions and offices held with the Company by such
officers as of March 17, 2000.

<TABLE>
<CAPTION>
NAME                                                 POSITION WITH ALLIED PRODUCTS                           AGE
----                                                 -----------------------------                         --------
<S>                           <C>                                                                          <C>
Richard A. Drexler..........  Chairman, President and Chief Executive and Financial Officer                   52
Robert J. Fleck.............  Vice President--Accounting, Chief Accounting and Administrative Officer         52
Mark C. Standefer...........  Vice President, General Counsel and Secretary                                   45
</TABLE>

    No family relationships exist among the executive officers, however,
Mr. Richard A. Drexler is the son of Lloyd A. Drexler, a director of the
Company. In conjunction with the sale of an 80.1% interest in the Agricultural
Products Group, Bobby Middlebrooks, formerly a Senior Vice President of the
Company, resigned from the Company on March 7, 2000.

    Each executive officer has been employed by Allied Products for over 10
years. Pursuant to Allied Products' By-laws, each officer is elected annually by
the Board of Directors.

    Mr. Drexler, who became Chairman in 1993, has been President and a Director
of Allied Products since 1982 and has been Chief Executive Officer since 1986
and Chief Financial Officer since 1998. Mr. Drexler served as Acting Chief
Financial Officer from 1991 to 1992, Chief Financial Officer from 1989 to 1990
and Chief Operating Officer from 1981 to 1986. He was also Chief Financial
Officer from 1977 to 1987. Prior to becoming President, Mr. Drexler served as
Executive Vice President, Senior Vice President of Administration, Vice
President of Administration, Staff Vice President--Development, and Director of
Planning. Mr. Drexler is also acting Chairman and Chief Executive Officer of the
Verson division of the Industrial Products Group.

    Mr. Fleck has been Vice President--Accounting since 1985, Chief Accounting
Officer since 1986 and Chief Administrative Officer since 1997. From 1983 to
1985 he was Staff Vice President--Accounting and prior to that he served as
Corporate Controller and in various other accounting positions for Allied
Products. Prior to joining Allied Products in 1974, he was an internal auditor
with Marquette Cement Company, a national cement manufacturing company.

    Mr. Standefer was elected Vice President, General Counsel and Secretary in
1997. From 1995 to 1997 he was Staff Vice President, Assistant General Counsel
and Assistant Secretary, and from 1986 to 1995 Assistant General Counsel and
Assistant Secretary. Mr. Standefer joined Allied Products in 1984 as Staff
Attorney. Prior to joining Allied Products, he was Staff Attorney for Sun
Electric Corporation.

SIGNIFICANT EMPLOYEES OF THE COMPANY

    The following table sets forth the name and age of a significant employee of
the Company, together with all positions and offices held with the Company by
such employee as of March 17, 2000.

<TABLE>
<CAPTION>
NAME                                                 POSITION WITH ALLIED PRODUCTS                           AGE
----                                                 -----------------------------                         --------
<S>                           <C>                                                                          <C>
David J. Nelson.............  Executive Vice President and Chief Operating Officer of the Verson Division     39
</TABLE>

    Mr. Nelson has been Executive Vice President and Chief Operating Officer of
the Verson Division since 1999. From 1997 to 1999 he was Vice President of
Operations. Mr. Nelson joined the Verson Division in 1984 as a Project Engineer
in Tooling, then moved to the Marketing Group in which he held various positions
including Vice President of Sales & Marketing.

                                                                               5
<PAGE>
ITEM 2.  PROPERTIES

    Manufacturing operations of the Industrial Products Group are conducted in
Chicago, Illinois and Hobart, Indiana in owned facilities containing
approximately 561,000 square feet. In addition, small offices located in
Detroit, Michigan, Williamsville, New York and Netphen-Werthenbach, Germany are
being leased by the Industrial Products Group. The Corporate Offices, located in
Chicago, Illinois, are also leased.

    Management is of the opinion that all facilities are of sound construction,
in good operating condition and are adequately equipped for carrying on the
business of the Company.

ITEM 3.  LEGAL PROCEEDINGS

    Reference is made to Note 10 of Notes to Consolidated Financial Statements
with respect to the Company's involvement in legal proceedings as a defending
party.

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

    None.

6
<PAGE>
                                    PART II

ITEM 5.  MARKET PRICE OF THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
         MATTERS

The Company's common stock is listed on the New York and Pacific Stock
Exchanges. The price range of the common stock on the New York Stock Exchange is
as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                         BEGINNING OF
                1999                         YEAR           END OF YEAR       1999 QTR.           HIGH             LOW
-----------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                 <C>              <C>              <C>              <C>
Common                                   $ 6 5/16           $3 9/16               1           $ 7 1/2         $ 2 15/16
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  2             5 7/8           2 1/2
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  3             5 5/8           3
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  4             4 7/8           3 3/16
-----------------------------------------------------------------------------------------------------------------------------

<CAPTION>
-------------------------------------  -------------------

                1999                        DIVIDEND
-------------------------------------  -------------------
<S>                                    <C>
Common                                       $.0400
-------------------------------------
                                              .0400
-------------------------------------
                                              .0400
-------------------------------------
                                              .0400
-------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                         BEGINNING OF
                1998                         YEAR           END OF YEAR       1998 QTR.           HIGH             LOW
-----------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                 <C>              <C>              <C>              <C>
Common                                   $24                $6 5/16               1           $25 3/16        $20 1/4
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  2            24 3/4          20 1/16
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  3            22 7/8           6 3/16
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  4             8 7/8           5 7/8
-----------------------------------------------------------------------------------------------------------------------------

<CAPTION>
-------------------------------------  -------------------

                1998                        DIVIDEND
-------------------------------------  -------------------
<S>                                    <C>
Common                                       $.0400
-------------------------------------
                                              .0400
-------------------------------------
                                              .0400
-------------------------------------
                                              .0400
-------------------------------------
</TABLE>

    As of March 17, 2000, the approximate number of holders of record of the
Company's common stock ($.01 par value) was 2,200.

    The Company paid no dividends from 1982 until 1995. Restrictions from paying
dividends were removed in 1995. Subsequent to the end of 1995, the Company
increased its quarterly dividend from $.0167 per share to $.0333 per share.
During the third quarter of 1997, the Company increased its quarterly dividend
to $.04 per share. Subsequent to the end of 1998, dividend payments were limited
to $2,000,000 per year under the Second Amended and Restated Credit Agreement
and the First Amendment and Waiver to the Credit Agreement. On March 16, 2000,
the Company announced that it had suspended the payment of quarterly dividends.
The payment of cash dividends is not permitted under a loan agreement entered
into effective March 29, 2000--see Note 5 of Notes to Consolidated Financial
Statements.

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                             1999            1998            1997            1996            1995
                                         -------------   -------------   -------------   -------------   -------------
<S>                                      <C>             <C>             <C>             <C>             <C>
Net sales from continuing
  operations (C).......................  $143,775,000    $137,020,000    $151,091,000    $166,060,000    $150,757,000
Income (loss) from continuing
  operations (C).......................  $(34,340,000)   $(29,786,000)   $  4,840,000    $  9,210,000    $ 27,642,000
Earnings (loss) per common share
  (diluted) from continuing
  operations (A)(B)(C).................        $(2.90)         $(2.51)           $.39            $.67           $1.89
Total assets...........................  $256,611,000    $275,804,000    $195,064,000    $172,509,000    $167,303,000
Long-term debt (including capitalized
  leases and redeemable preferred
  stock) (D)...........................  $  2,351,000    $  2,298,000    $    670,000    $    489,000    $    315,000
Cash dividend declared per common
  share (A)............................          $.16            $.16           $.147           $.133            $.05
</TABLE>

--------------------------

(A) Restated prior to 1997 to reflect the effect of a three-for-two stock split
    in 1997.

(B) Restated prior to 1997 to reflect the effect of adopting SFAS 128--Earnings
    per Share--in 1997.

(C) Restated prior to 1999 to reflect the effects of discontinued
    operations--see Note 3 of Notes to Consolidated Financial Statements.

(D) Includes debt associated with discontinued operations.

          The accompanying Notes to Consolidated Financial Statements
                     are an integral part of this summary.

                                                                               7
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION

OVERVIEW

SUBSEQUENT EVENT: SALE OF AGRICULTURAL PRODUCTS GROUP

    On March 7, 2000, the Company (i) transferred to a newly organized limited
liability company ("New Bush Hog") substantially all of the assets and certain
liabilities of the Bush Hog and Great Bend divisions constituting its
Agricultural Products Group in exchange for all of the outstanding membership
interests of New Bush Hog and (ii) sold membership interests representing 80.1%
of the total outstanding membership interests of New Bush Hog to a limited
liability company owned by members of the Henry Crown family of Chicago ("Bush
Hog Investors") for a purchase price of approximately $126,500,000 subject to
post closing adjustments. The estimated pretax gain on the sale of approximately
$39,900,000 will be recorded in the first quarter of 2000. Immediately following
the closing, New Bush Hog borrowed approximately $18,000,000 and distributed the
proceeds to its members, including approximately $3,600,000 to the Company.

    In contemplation of the transaction and to help finance the build up of
receivables and inventories in the Agricultural Products Group during
December 1999 and January and February 2000, the Company borrowed $5,000,000
from an affiliate of Bush Hog Investors. The loan was repaid on the closing of
the transaction on March 7, 2000. Simultaneously with the closing, the Company
borrowed $18,000,000 from LaSalle Bank, N.A. secured by its 19.9% membership
interest in New Bush Hog. The Company applied a portion of these new borrowings,
together with the distribution from New Bush Hog and the cash proceeds received
from Bush Hog Investors, net of fees and expenses, to repay the Company's
current outstanding bank indebtedness and amounts due to the Bush Hog Investors
affiliate. On March 23, 2000, the Company agreed to sell its remaining New Bush
Hog membership interest to Bush Hog Investors on or before June 30, 2000 for a
purchase price of $31,426,134, less net balance sheet adjustments of New Bush
Hog from March 7, 2000 through the closing. The Company anticipates that the
purchase price as adjusted will be approximately $28,000,000. This sale was
driven, in part, by the Company's need for additional liquidity and, in part, as
a pre-condition to obtaining further credit. The Company will repay its
$18,000,000 loan with a portion of the proceeds of the sale of its remaining New
Bush Hog interest. On March 29, 2000, the Company entered into a credit
agreement with Foothill Capital Corporation which provides the Company with a
line of credit of up to approximately $30,000,000 subject to borrowing base
limitations.

    With the above described disposition of the Agricultural Products Group, the
Company has included the operations of the Agricultural Products Group, an
allocation of all direct financing, administrative, other expenses and income
taxes and a pro rata allocation of interest expense (based upon the group's
proportionate share of consolidated invested capital) under the caption
"Discontinued operations, net of tax" in the accompanying Consolidated
Statements of Income (Loss). Previously issued Consolidated Statements of Income
(Loss) have been revised to reflect the effect of the discontinued operations.
The Company's remaining operations consist of the operations of the Industrial
Products Group.

VERSON'S OPERATING PROBLEMS

    In August 1996 and April 1997, the Company's Verson division received major
orders from Ford and General Motors, respectively, for the design and
manufacture of a total of six automated, multi-station stamping presses. Ford
ordered two and General Motors ordered four of the presses. All six of the
presses incorporated a new state-of-the-art "three-slide" design which was
considered superior in speed and efficiency to any transfer press previously
manufactured. Verson believes that it was the first manufacturer to design and
manufacture a stamping press incorporating this design. These orders were to be
completed over a three-year period from 1997 through 1999. The contracts for the
two presses to be manufactured for Ford specified delivery in January and April
of 1998, while the contracts for the four presses to be manufactured for General
Motors specified delivery in February, April, August, and October of 1999. By
agreement, the specified delivery dates were revised to May, August, September,
and December of 1999 shortly after the orders were accepted. In June 1997 and
May 1998, Verson received orders from Chrysler Corporation for four identical
large automated multi-station stamping presses with two slides only, but
incorporating other new design features. The orders called for completion of
these presses during 1998 and 1999. Projected revenues from these major orders
for a total of ten presses approximated $195,000,000.

    While Verson was designing and building these multi-slide presses described
above, the division also accepted orders to manufacture and deliver
approximately 15 smaller presses. Most of these presses were to be delivered
between November of 1998 and September of 1999. While these presses were of a
less complicated

8
<PAGE>
design, the combined impact on engineering and production was significant.

    In hindsight, it appears that when added to Verson's other press business,
the orders for the ten large, newly designed multi-slide presses severely
strained Verson's then existing press manufacturing capacity. During 1997 and
1998 the Company took steps to expand Verson's facility, hire more engineering
and manufacturing staff and increase its total capacity. The cost of the
physical expansion at Verson was approximately $30,000,000, and included the
addition of approximately 117,000 square feet to the Verson assembly building
plus other infrastructure improvements. The expansion was not completed early
enough to alleviate production scheduling difficulties, however. The expansion
in fixed assets together with significant increases in indirect labor increased
Verson's overhead costs.

    In addition, Verson experienced significant difficulties during 1998 in the
manufacture of the multi-slide and other presses under the above-described
orders in a timely and cost effective manner. The decline in manufacturing
efficiency was traceable in part to overcrowded conditions and in part to the
inefficiencies which can occasionally arise in the manufacture of new products.
These manufacturing delays in turn caused delays and additional costs in the
manufacture of virtually all presses in 1998 and led Verson to rely heavily on
subcontractors for the manufacture of certain components in order to meet
delivery commitments. As described in more detail below, difficulties primarily
associated with the manufacture of presses under the major orders described
above and the resulting stresses on manufacturing capacity caused Verson and the
Company to incur losses in 1998 and 1999. These difficulties, along with a
decline in new press orders during 1999 and an increased cost structure which
has adversely affected margins on new orders are expected to continue to have a
negative impact on earnings in 2000.

    Verson began work in 1997 on the two presses covered by the Ford order.
Verson revised its cost estimates on these presses by $3,700,000 in
February 1998 and at the same time increased its cost estimates on other presses
by $1,600,000.

    During the third quarter of 1998, Verson experienced difficulties in the
manufacture of the two Ford presses, and significantly revised its cost
estimates on all six of the three-slide presses (the Ford and GM orders), as
well as on other presses. As a consequence, the Company announced the
recognition of a pretax charge of approximately $16,000,000. Approximately
$5,300,000 of this charge was subsequently recorded in 1997. In the fourth
quarter of 1998, events of the third quarter continued to have a significant
negative impact on costs to complete projects. Given these ongoing circumstances
and concern over further escalation of costs, Verson undertook a comprehensive
review of the compilation of costs and revenue recognition associated with each
press in relation to revised delivery schedules, current estimated costs to
complete the presses in production and available manufacturing capacity. Verson
recorded additional changes to cost estimates of approximately $21,000,000 to
reflect the recognition of estimated losses on certain orders in process and a
revision of estimated costs on other orders.

    Verson's increased workload translated into the need for additional
manufacturing, office and hourly personnel and to increases in recruitment costs
and exempt and hourly wages along with related fringe benefits. The pressure to
meet delivery schedules resulted in increased shop overtime and the new facility
added higher depreciation costs. A prolonged computer system implementation and
the lower productivity associated with recently hired employees altered the
historical relationship between direct and indirect hours.

    The Company believes that the reduction in gross margins for the ten large
presses described above as well as its standard press business during 1998 and
1999 was attributable primarily to unanticipated subcontracting costs associated
with the overload in the Verson factory and increases in overhead costs.

    Verson's backlog as of December 31, 1999, composed of revenues totaling
$51,401,000 to be recorded in future years on orders received which had a total
sales value of approximately $211,000,000. The backlog included revenues of
approximately $26,000,000 on orders for which estimated losses were recorded in
1998 and 1999 and on which no gross margin is expected to be recognized in 2000
and 2001. The December 31, 1999 backlog for Verson also included future revenue
of approximately $3,000,000 to be recorded principally in 2000 for which Verson
anticipates gross margins lower than levels realized prior to 1998. The
remaining backlog at December 31, 1999 (approximately $22,000,000) included
future press revenues as well as orders for parts and field services with
anticipated pre-1998 historical gross margins. The total backlog of $51,401,000
compares to a backlog of $145,268,000 a year earlier. The low level of Verson's
backlog at December 31, 1999 reflects the relatively low level of new press
orders booked in 1999--approximately $24,000,000, compared to in excess of
$100,000,000 in 1998. In view of the low backlog and the portion of the backlog
representing no margin work, the Company anticipates that revenues from
continuing operations will decline significantly in

                                                                               9
<PAGE>
2000 and the Company will continue to incur operating losses.

    In view of the difficulties in estimating costs encountered by Verson in
1998 and the first half of 1999, the Company during 1999 did not recognize any
gross profit margin on press orders until the particular press in process
reached a point in production where the gross profit margin could be reasonably
estimated--see Note 1 of Notes to Consolidated Financial Statements--Revenue
Recognition. This method of accounting for gross margins on presses will be
continued until such time as Verson is satisfied that its methods of estimating
costs have been validated. 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 and year-to-year results.

    The Company's difficulties in completing orders during 1998 and 1999 could
adversely affect its relationships with one or more of its customers and
therefore could have a negative impact on the Company's ability to obtain future
business from such customers. In particular, the Company experienced delays in
completing presses for each of the three major auto manufacturers during 1998
and 1999. Together these customers accounted for approximately 52% and 66% of
the Company's sales from continuing operations in 1998 and 1999, respectively.
The Company also experienced delays in completing many of its smaller presses.
In response to General Motors' concerns that the Company's cash flow problems
would further delay or preclude the Company from completing four presses that
were in various stages of production, the Company recently entered into
amendments to purchase orders with General Motors.

    Under the terms of the amendments, the Company and General Motors agreed to
revised shipping, payment and testing schedules. Most of the components of the
first two presses were shipped in the fall of 1999 and the first quarter of
2000. Delivery dates (and related payments) for the third and fourth presses
have been extended so that the components of the last press will not be shipped
until the fourth quarter of 2000 and final payment will not be received until
the first quarter of 2002, following completion of assembly and testing at the
General Motors facility. The third press must be assembled and tested at Verson
by the end of January 2001. Upon fulfillment of certain conditions set forth in
the amendments, General Motors will waive and release the Company from all
claims arising from or attributable to the Company's alleged late delivery
defaults on all presses and will accept delivery of the last two presses covered
by this order. However, General Motors has reserved the right to cancel its
order for the last two presses, if the Company at any time fails to provide
reasonable assurances regarding its financial condition and continuing ability
to complete the presses pursuant to the revised schedule. Such cancellation
could have a material adverse effect on the Company. The Company's
work-in-process inventories at December 31, 1999 included costs of components
for the last two presses totaling $21,357,000.

    In addition, the Company also has had discussions with some of its suppliers
who have expressed concern that the Company's financial condition has caused
increasingly slower payment on invoices. To date, the Company has been able to
negotiate with its major suppliers to continue to supply the Company with the
raw materials necessary for the Company to fulfill its press orders, but there
can be no assurance that such deliveries will continue if the Company is unable
to timely pay its suppliers.

OPERATING RESULTS

    The Company's operations consist of one business segment--the Industrial
Products Group--plus the Corporate Office. Since the sale of the Company's Coz
division in 1997, the Industrial Products Group consists of the Company's
Verson, Precision Press Industries ("PPI") and Verson Pressentechnik operations.
PPI was established in the fourth quarter of 1997 and is engaged in the
fabrication of large components and the assembly of small presses for the Verson
division. In October 1998, the Company's Verson division formed a joint venture
with Theodor Grabener GmbH & Co., KG of Germany and Automatic Feed Company of
Napoleon, Ohio, that will help the two American companies more effectively
penetrate the European market for large stamping presses and related systems.
The new entity, Verson Pressentechnik GmbH, is located in Netphen-Werthenbach,
Germany.

1999 COMPARED TO 1998

CONTINUING OPERATIONS

    Net sales from continuing operations for 1999 were $143,775,000 compared to
net sales from continuing operations of $137,020,000 reported in 1998. Loss
before taxes from continuing operations was $34,340,000 in 1999 compared to the
loss before taxes from continuing operations of $35,999,000 in the prior year.
The relatively modest reduction in the loss in 1999 was primarily attributable
to an improvement in gross margins, offset in part by an increase in interest
expense. The net loss for 1999 was $26,765,000 ($2.26 per common share-diluted)
compared to a net loss of $14,113,000 ($1.19 per common share-diluted) in 1998.

    The increase in net sales was attributable to increased revenues recognized
on the production of

10
<PAGE>
larger presses (size B and higher) in the current year. During 1999 the Company
substantially completed production on orders for four large presses from
Chrysler and continued production on the General Motors order for four large
presses. Net sales of smaller presses as well as other products (parts,
rebuilding of presses, etc.) in 1999 did not change significantly from levels of
the prior year.

    In both 1999 and 1998, the Company reported a gross loss (i.e., cost of
goods sold exceeded revenues). In 1999, the cost of goods sold exceeded revenues
by $4,186,000, while in 1998 the amount was $10,094,000. Two factors which
affected the negative margins reported in 1998 continued to affect margins in
1999. First, the Industrial Products Group's sales backlog at December 31, 1998
included revenues of approximately $50,000,000 on loss jobs. Additional losses
were recorded on those jobs in 1999. The December 31, 1998 backlog also included
future revenues of approximately $95,000,000, including approximately
$92,000,000 recognized in 1999, for which anticipated gross margins were lower
than historical levels prior to 1998. The Company recorded cumulative contract
losses of $22,079,000 and $12,079,000 (including reserves of $5,142,000 and
$8,813,000 for estimated future losses expected to be incurred on jobs in
process) associated with jobs in process having a total sales value of
$103,430,000 and $104,734,000 at December 31, 1999 and 1998, respectively.

    Second, the Industrial Products Group reported no gross profit on any press
manufactured during 1999 until a point in production when all manufacturing
costs could be reasonably estimated. In 1999 that point was when the press
reached the final assembly stage. Reference is made to Note 1 of Notes to
Consolidated Financial Statements--Revenue Recognition.

    The gross losses recorded in 1999 and 1998 reflect the positive effect
($2,900,000 and $5,000,000, respectively) of payments relating to the recovery
of a claim associated with a prior period. The Company does not expect any
additional recoveries relating to this claim.

    Because of the difficulties the Verson division encountered in 1998, Verson
failed to meet delivery date requirements provided in several press orders.
Verson recorded charges for penalties of approximately $600,000 and $1,200,000
in 1998 and 1999, respectively. The division may receive additional claims for
significant penalty payments or damages in 2000 and 2001. At December 31, 1999,
the division has reserves of approximately $1,800,000 for these potential
claims.

    Selling and administrative expenses increased by $862,000 in 1999 compared
to 1998. Increases in other administrative expenses more than offset a reduction
in compensation expense related to exercises of stock options ($0 in 1999
compared to $1,119,000 in 1998), lower professional service costs related to the
installation of new systems (approximately $425,000) and decreased employment
costs following the curtailment of new hires in 1999 (approximately $275,000).
Major factors in the increase in 1999 over 1998 were increases in Verson's bad
debt provision (approximately $1,200,000), the full year effect of the Company's
matching contributions under its 401(k) retirement plans which began in the
fourth quarter of 1998 (approximately $700,000), expenses related to the Verson
Pressentechnik division formed in the last quarter of 1998 (approximately
$300,000) and increased professional, legal and bank fees related to several
loan agreement amendments and other matters (approximately $1,100,000).

    Interest expense for both continuing and discontinuing operations in 1999
was $11,383,000 compared to interest expense of $6,201,000 in 1998. Interest
expense in 1998 was partially offset by the capitalization of $979,000 of
interest costs relating to the Company's building expansion project at the
Verson division. The increase in interest expense in 1999 over 1998 was the
result of a combination of an increase in average borrowings and an increase in
average interest rates. At year end average interest rates on borrowings
outstanding under new and amended credit agreements were 10.2% in 1999 compared
to 7.2% in 1998. Reference is made to Note 12 of Notes to Consolidated Financial
Statements in relation to an analysis of other (income) expense in 1999 and
1998.

    Reference is made to Note 4 of Notes to Consolidated Financial Statements
for an analysis and explanation of the current and deferred provision (benefit)
for income taxes in 1999 and 1998.

DISCONTINUED OPERATIONS

    Discontinued operations for 1999 and 1998 include the operations of the
Agricultural Products Group, an allocation of all direct financing,
administrative, other expenses and income taxes and a pro rata allocation of
interest expense. Net sales associated with discontinued operations in 1999
totaled $143,897,000 compared to net sales of $136,814,000 in 1998. Increases in
net sales were primarily related to turf/landscape products (approximately
$5,500,000) and improved loader sales (approximately $6,000,000). In the past
few years, the Company's Bush Hog division has concentrated on its turf and
landscape product line through the development of new products and the
acquisition in April 1998 of Universal Turf. Improvements in the loader product

                                                                              11
<PAGE>
line sales were also associated with product development and the acquisition of
the Great Bend Manufacturing Company in April 1998. The increases were partially
offset by the effects of lower sales of cutter and disc mower products
(approximately $6,000,000) in 1999. Sales of these products have been impacted
by the effect of lower commodity prices for a majority of major crops and for
most livestock segments. Livestock prices improved in the last quarter of 1999.

    Gross profit margins decreased by approximately 2.0 percentage points in
1999 due primarily to the effects of increased cash discounts, unfavorable labor
variances and shipping costs. Additional cash discounts have been offered to
dealers in 1999 to help reduce the amount of dealer inventory levels and to
remain competitive in the market place. Unfavorable labor variances were the
result of increased labor rates and the mix of products produced during the
year. The increase in shipping costs was primarily associated with freight cost
concessions granted to dealers. Similar concessions were offered by competing
agricultural products manufacturers. Increases in selling and administrative
expenses in 1999 over 1998 (approximately $1,650,000) were related to the
acquisition of the Great Bend division and Universal Turf operations as noted
above and to an increased pension accrual ($400,000).

    Income net of taxes from discontinued operations was $7,575,000 in 1999, a
decrease of approximately $8,100,000 from income net of taxes from discontinued
operations of $15,673,000 in 1998. In addition to the decline in gross profits
and the increase in selling and administrative expenses noted above, allocated
interest expense was approximately $2,700,000 higher in 1999 and litigation and
product liability expenses increased by approximately $1,600,000 in 1999. There
was an income tax benefit of $1,317,000 in 1998, none in 1999.

1998 COMPARED TO 1997

CONTINUING OPERATIONS

    Net sales from continuing operations for 1998 were $137,020,000 compared to
net sales from continuing operations of $151,091,000 in 1997. The loss before
taxes from continuing operations was $35,999,000 in 1998 compared to income
before taxes from continuing operations of $7,681,000 in the prior year. The net
loss for 1998 was $14,113,000 ($1.19 per common share-diluted) compared to net
income of $15,646,000 ($1.27 per common share-diluted) in 1997.

    The decrease in net sales from continuing operations in 1998 was related to
the loss of revenue from the Coz division which was sold in the early part of
the fourth quarter of 1997. Revenue and profits are recognized on a percentage
of completion basis at the Verson division. As described above, difficulties
primarily associated with the manufacture of presses under major orders and the
resulting stresses on manufacturing capacity caused Verson to incur losses in
1998. Operating results in 1998 and 1997 were favorably affected by the
Company's recovery of a claim associated with prior periods of $5,000,000 in
1998 and $2,500,000 in1997.

    Selling and administrative expenses decreased modestly in 1998 compared to
the prior year with decreases in corporate office administrative expenses
offsetting higher selling and administrative expenses at the Verson division.
Staff expansions and the establishment of an international sales and marketing
department resulted in an increase in salaries and travel costs of approximately
$1,800,000 at the Verson division. These increases were partially offset by the
effect of the sale of the Coz division in the last quarter of 1997. Corporate
administrative expenses decreased by approximately $1,350,000 in 1998 compared
to the prior year due to the impact of reduction in staffing levels, the
subleasing of a portion of the corporate office during 1998 and decreased
compensation expenses related to stock option exercises.

    Interest expense from continuing and discontinued operations in 1998 totaled
$6,201,000 compared to interest expense of $3,306,000 in the prior year. A
portion of interest expense in 1998 ($2,469,000) and 1997 ($1,417,000) was
allocated to discontinued operations based upon the discontinued operation's
proportionate share of consolidated invested capital. The overall increase in
interest expense before allocation was associated with increased borrowing needs
related to higher consolidated receivable levels (associated with increases at
all manufacturing operations of the Company) and increased inventory levels
(primarily associated with the Verson division where orders for a total of 9
multi-station transfer presses were in production at December 31, 1998 and
shipment and production delays had occurred). Other borrowing needs included
fixed asset additions during 1998 (primarily including the Verson plant
expansion), the acquisitions of Great Bend and Universal Turf in the second
quarter of 1998 and the impact of the stock buyback program from prior years.
Interest expense in 1998 was partially offset by the capitalization of $979,000
of interest costs relating to the Company's building expansion project at the
Verson division.

    Reference is made to Note 12 of Notes to Consolidated Financial Statements
for an analysis of other (income) expense in 1998 and 1997.

12
<PAGE>
    Reference is made to Note 4 of Notes to Consolidated Financial Statements
for an analysis and explanation of the current and deferred provision (benefit)
for income taxes in 1998 and 1997.

DISCONTINUED OPERATIONS

    Discontinued operations for 1998 and 1997 include the operations of the
Agricultural Products Group, an allocation of all direct financing,
administrative, other expenses and income taxes and a pro rata allocation of
interest expense. Net sales associated with discontinued operations in 1998
totaled $136,814,000 compared to net sales of $119,471,000 in 1997.
Approximately half of the increase was related to the acquisitions of the Great
Bend and Universal Turf operations in the second quarter of 1998. The remainder
of the increase was principally associated with increased cutter sales by the
Bush Hog division to cattle ranchers, particularly in the first half of the
year. Cattle ranchers use the cutters for grazing pasture maintenance. Cutter
sales in 1998 were also favorably affected by new/redesigned products for the
turf and landscaping market for utilization by commercial turf (sod) growers and
by golf courses for maintenance. During the last half of 1998, sales were
negatively affected by lower prices for major crops (corn, wheat, soybeans) and
livestock commodities (cattle and hogs), which reduced farm income.

    Income before taxes decreased by approximately $2,800,000 in 1998 compared
to the prior year. Gross profit margins decreased in 1998. Decreases were
principally related to increased discounts offered to dealers and the impact of
the mix of products sold. These decreases were partially offset by favorable
manufacturing variances resulting from increased facility utilization and
increased labor efficiencies at the Bush Hog division in 1998 and the effect of
increased sales volume noted above from the acquisitions of Great Bend and
Universal Turf. Selling and administrative expenses increased in 1998 in the
Agricultural Products Group compared to the prior year. The majority of the
increase related to the acquired operations of Great Bend and Universal Turf.
Other increases were associated with increased commissions (due to increased
sales volume) and advertising costs in 1998.

FINANCIAL CONDITION

DECEMBER 31, 1999

    Working capital associated with a combination of continuing operations and
discontinued operations at December 31, 1999 was $(43,432,000) and the current
ratio was .79 to 1.00. Net accounts receivable from continuing operations
declined during 1999 by $5,241,000, reflecting an increase in the reserve for
doubtful accounts and the lower level of billings in the Verson division in the
last quarter of 1999 compared to the fourth quarter of the prior year. A
decrease of $20,542,000 in inventory levels of continuing operations during 1999
was attributable in part to a larger amount in 1999 ($36,580,000) compared to
1998 ($25,902,000) of customer payments accounted for as a reduction of
inventories.

    Fixed asset additions associated with continuing operations in 1999 totaled
$7,085,000 including approximately $3,600,000 relating to completion of the
assembly building addition at Verson. There were no major fixed asset
dispositions in 1999.

    The net decrease in accounts payables associated with continuing operations
in 1999 ($13,901,000) reflects the effect of reduced production levels in the
Industrial Products Group and the reduction in customer deposits accounted for
as accounts payable. Verson initially accounts for customer deposits received
against orders as accounts payable. As production continues on such orders, the
division reduces the amount classified as a liability and credits the amount as
a reduction in work in process inventory. The increase in accrued expenses
($3,298,000) was primarily associated with increased accruals for legal matters
as discussed in Note 10 of Notes to Consolidated Financial Statements and the
accrual of costs related to the sale of an 80.1% interest in the Agricultural
Products Group subsequent to the end of 1999. Net borrowing under the revolving
credit agreement increased by $11,400,000 in 1999.

    Current and noncurrent assets and current and noncurrent liabilities
associated with discontinued operations consist of assets and liabilities of the
former Agricultural Products Group. The assets and liabilities of that Group
were transferred to a new entity and the Company recorded a gain on the sale of
an 80.1% interest in the entity on March 7, 2000.

DECEMBER 31, 1998

    Working capital associated with a combination of continuing operations and
discontinued operations at December 31, 1998 was $(14,955,000) and the current
ratio was .92 to 1.00. Net accounts receivable from continuing operations
increased by $5,162,000, attributable largely to the shipment of a large press
in the last quarter of 1998. Net inventory levels increased by $16,270,000
during 1998. Increases in inventory levels reflecting the large number of
presses in production at the end of 1998 ($25,083,000) were partially offset by
inventory valuation reductions in 1998 of $8,813,000.

    Fixed asset additions ($31,459,000) included construction costs associated
with an assembly building expansion project at the Verson division. The project
approximately doubled the size of Verson's assembly

                                                                              13
<PAGE>
facility and is expected to increase the division's assembly capacity by
approximately 30%. Funds to finance these additions include borrowings under the
Amended and Restated Credit Agreement. Other than the sale of the former
White-New Idea facility in Coldwater, Ohio (which had been leased to the
purchaser of the operation since 1994), there were no major asset dispositions
in 1998.

    Accounts payable and accrued expenses increased by $29,324,000 during 1998.
The increase was consistent with the increase in accounts receivable and
inventories for the year, before taking into account an inventory valuation
reduction.

LIQUIDITY AND CAPITAL RESOURCES

    Net cash used in the operating activities related to the Company's
continuing operations totaled $12,361,000, $26,451,000, and $14,944,000 during
1999, 1998 and 1997 respectively, a total in excess of $53,000,000 over three
years. Cash used in 1999 and 1998 ($38,812,000) included losses from continuing
operations for the two years ($64,126,000). Cash used in 1997 included increased
inventory levels. Net cash used in investing activities related to continuing
operations amounted to $7,011,000 in 1999 and $27,142,000 in 1998. Net cash
provided by investing activities in 1997 was $4,638,000, reflecting proceeds
from the sale of the Company's Coz division, net of additions at Verson.
Investing activities in 1999 and 1998 primarily related to the expansion of
Verson's assembly capacity.

    Net cash provided by the operating activities related to discontinued
operations was $12,790,000, $7,862,000 and $12,929,000 in 1999, 1998 and 1997,
respectively, a total of $33,581,000 over three years. Cash flow used for
investing activities for discontinued operations related primarily to plant
additions and acquisitions. No significant cash was used in financing
activities.

    At December 31, 1999, the Company's sales backlog associated with continuing
operations was $51,401,000 compared to $145,268,000 at December 31, 1998. All of
the backlog was related to the Verson division, and consisted of revenue not yet
recorded representing the uncompleted portion of presses currently being
manufactured, press equipment, the manufacturing of which has been subcontracted
to outside sources, unearned revenue associated with the installation of presses
and unfilled orders for part sales. Approximately 90% of the production against
these orders will be completed in 2000. In general, accumulated production costs
of these press orders are not invoiced until shipment of the related press or
press component. As indicated earlier, the Company believes that its relatively
low backlog will translate into significantly lower revenues from continuing
operations in 2000.

    The Company recently reduced the manufacturing workforce at the Verson
division by approximately 50 individuals. Additional manufacturing (direct and
indirect) reductions as well as reductions in the non manufacturing areas are
likely in the near future depending on the level of new orders received. Other
cost reduction measures are being reviewed so as to reduce future cash needs and
increase profitability. The potential cost reductions could lead to a
restructuring charge in 2000.

    Reference is made to Note 4 of Notes to Consolidated Financial Statements
for a discussion of income taxes and deferred tax assets.

    Reference is made to Note 10 of Notes to Consolidated Financial Statements
for a discussion of outstanding environmental and legal issues and other
contingent liabilities. To the extent that any of these claims are not covered
by insurance or are ultimately resolved for amounts in excess of the Company's
applicable insurance coverage, they could have a significant negative impact on
the Company's cash flow and its ability to finance its operations.

    Reference is made to Note 5 of Notes to Consolidated Financial Statements
for a discussion of changes in the Company's loan agreements during 1999.

    As of December 31, 1999, the Company had cash and cash equivalents of
$1,054,000 and additional funds of $3,421,000 available under its Second Amended
and Restated Credit Agreement. In addition, the Company had the capacity to
borrow up to $5,000,000 under a loan agreement with Henry Crown and Company. See
Note 5 to Notes to Consolidated Financial Statements.

SUBSEQUENT EVENTS

    Simultaneous with the transfer of assets and liabilities to New Bush Hog and
the sale of an 80.1% membership interest in New Bush Hog to Bush Hog Investors
on March 7, 2000, the Company repaid all of its outstanding bank indebtedness
and the Company's banks released their security interests in the assets
transferred to New Bush Hog, as well as in all of the Company's other assets.
The Company funded this repayment with the net proceeds received from Bush Hog
Investors, a distribution from New Bush Hog of approximately $3,600,000 plus new
borrowings described below. See Note 5 of Notes to Consolidated Financial
Statements.

    On March 7, 2000, the Company entered in a Loan and Security Agreement with
LaSalle Bank N.A. ("LaSalle"). Under the terms of the agreement, the Company
borrowed $18,000,000 at a floating prime

14
<PAGE>
(prime less 100 basis points) rate. Amounts outstanding under the agreement are
due September 7, 2002. Prepayment is allowed without penalty. The loan is
secured by a first lien on the Company's 19.9% interest in New Bush Hog.

    The Company also entered into a new $30,000,000 credit facility with
Foothill Capital Corporation (Foothill) effective March 29, 2000. The new credit
facility has a three year term, maturing in March 2003, and consists of a term
loan sub-line of $10,600,000 and a revolving credit facility which may be drawn
upon from time to time up to the lower of $19,400,000 and an amount based upon a
percentage of eligible accounts receivable and eligible inventories relating to
presses which are within 60 days of shipment, as determined by Foothill subject
to reserves as determined by Foothill (the "Borrowing Base"). The amount
available under the term loan sub-line is reduced by $176,667 monthly commencing
in September 2000. The maximum remaining amount due at maturity in March 2003 is
$5,123,323. All amounts due under the facility become immediately due and
payable in the event of a material adverse change. Interest is payable monthly
at a floating prime rate (prime plus 200 basis points on the term loan, prime
plus 125 basis points on the revolver and prime plus 150 basis points on letter
of credit financing). In the event of a default, the interest rate increases by
300 basis points. Foothill received a closing fee of $300,000 and will also
receive a monthly fee of $50,000 for each month an advance against special
projects accounts receivable is outstanding under the revolving credit facility.
With certain exceptions, the penalty for prepayment is $900,000 (3% of the
maximum credit available) in the first year, declining to 2% and 1% in the
second and third years. Certain portions of the Borrowing Base will be
determined in June, following Foothill's review and determination of eligible
receivables.

    In connection with the Foothill loan, the Company granted a lien upon and
security interests in substantially all of its assets. The loan agreement
requires that the Company sell its remaining interest in New Bush Hog on or
before June 30, 2000. Restrictions in the Foothill loan agreement include, among
other things, limitations on capital expenditures, liens and guaranties and
restrictions on acquisitions, investments and dividends without Foothill's
consent. Financial covenants include a covenant that earnings before interest,
taxes, depreciation and amortization (EBITDA), exclusive of extraordinary gains,
exceed the amounts listed below as of the dates and for the periods indicated:

<TABLE>
<S>                        <C>                        <C>
June 30, 2000              last three months          ($1,300,000)
September 30, 2000         last six months            ($3,500,000)
December 31, 2000          last nine months           ($4,600,000)
March 31, 2001             last twelve months         ($3,900,000)
June 30, 2001              last twelve months         ($3,000,000)
September 30, 2001         last twelve months          $1,300,000
December 31, 2001          last twelve months          $7,600,000
</TABLE>

    While the Company projects that it will be able to comply with this
covenant, the Company's EBITDA for future periods cannot be predicted with a
reasonable degree of certainty. The Company's future operating results depend,
among other things, upon the receipt in the next several months and continuing
thereafter of new press orders in appropriate sequences and bearing appropriate
margins. Because the Borrowing Base is limited solely to a percentage of
eligible accounts receivable and inventories relating to presses which are
within 60 days of shipment (and not to a percentage of total inventories as
well), the credit facility is not a source of financing for the substantial
work-in-process inventories frequently required in the Company's business. This
will limit the number and magnitude of press orders without customer deposits
which the Company may accept.

    On March 23, 2000, the Company agreed to sell its New Bush Hog membership
interest to Bush Hog Investors for $31,426,134, less 19.9% of net balance sheet
adjustments of New Bush Hog through the closing date. On March 7, 2000, New Bush
Hog reduced its net worth by approximately $18,000,000 by making distributions
to its members including approximately $3,600,000 to the Company. The Company
therefore expects to receive from the sale approximately $28,000,000 plus the
Company's pro rata share of New Bush Hog's undistributed income through the
closing. The sale is scheduled to close on or before June 30, 2000.
Approximately $4,000,000 of the sale proceeds will be escrowed as security for
the Company's indemnification obligations under the Company's initial sale of an
80.1% membership interest to Bush Hog Investors. The Company will apply
$18,000,000 of the proceeds from the sale of its membership interest in New Bush
Hog to prepay its outstanding indebtedness to LaSalle under the loan agreement
described above.

    The Company is installing a horizontal boring mill acquired in an
installment sale for approximately $5,000,000 and is negotiating a five-year
financing lease to finance the acquisition. The Company believes that the
acquisition of this new equipment will permit the Company to reduce
subcontracting on future major press orders.

                                                                              15
<PAGE>
OUTLOOK

    The sale of an 80.1% membership interest in New Bush Hog and the proposed
sale of the Company's remaining membership interest in New Bush Hog will have a
positive effect on the Company's working capital, equity and debt-to-equity
ratio. At the same time, the effect of the sale is to deprive the Company of the
cash flow generated by the operating activities of its former Agricultural
Products Group ($12,790,000 and $7,862,000, respectively in 1999 and 1998).

    The principal sources of liquidity for the Company's continuing operations
will be its operating cash flows, if any, and borrowings under the new credit
facility with Foothill. The Company projects that after application of the net
proceeds of the sale of an 80.1% interest in New Bush Hog, it will require
approximately $37,000,000 in cash in 2000 to, among other things, (1) discharge
certain accrued liabilities and claims arising out of events associated with
operations of the Agricultural Products Group before March 7, 2000,
(2) extinguish the remainder of its outstanding indebtedness to banks,
(3) reduce outstanding payables, (4) finance peak working capital requirements
of the Industrial Products Group and (5) finance the acquisition of new
equipment. Verson's peak working capital requirements could vary significantly,
either higher or lower, from the projected level. The working capital needs of
Verson will depend upon the magnitude of new press orders, the timing of the
receipt of those orders, the timing of production under the orders and the
extent to which the Company receives progress payments on those orders. The
Company's working capital projections are also conditioned upon successful
negotiation of the Verson labor agreement which expires in June 2000. The
Company anticipates that its projected cash and capital requirements will be
funded in part by the proceeds (net of escrow requirements) from the sale of its
remaining New Bush Hog membership interest (approximately $24,000,000) and a
financing lease (approximately $5,000,000), with the remainder being financed by
borrowings under the Foothill credit facility.

    The key challenges faced by the Company's Industrial Products Group include:

    1.  New Profitable Business.  The Group's operating results in 2000 will be
        adversely affected by (a) the current low level of the Group's backlog
        ($51,401,000 at December 31, 1999 compared to $145,268,000 a year
        earlier) and (b) the fact that approximately 50% of the current backlog
        represents no margin work booked in 1997. Because of the fall off in new
        orders in 1999 and the first quarter of 2000, Verson is expected to have
        excess capacity during 2000, revenues are expected to decline
        substantially and the Company anticipates that it will incur an
        operating loss. The group's long term viability depends upon the
        generation of new orders with appropriate margins as well as a timely
        adjustment of the Company's cost structure consistent with the level of
        orders received.

    2.  Management of Major Projects.  The Company has been working to correct
        the operating problems of its Industrial Products Group and has taken
        several significant steps which it believes will help to correct the
        problems. These steps include changes in the group management team,
        development of a new planning system that will help the Company plan and
        track engineering, purchasing and manufacturing costs, and the
        acquisition of equipment which should enable the Company to reduce
        outsourcing work. The group in the future must demonstrate its ability
        to estimate costs of major projects accurately and to manage those
        projects so that they are completed on time and on budget.

    3.  Adequacy of Financial Resources.  The Company and one of its customers
        amended several related press orders to address the customer's concern
        that the Company may lack the necessary financial resources to complete
        orders already in production. The customer has conditionally agreed to
        permit the completion of the orders pursuant to a revised schedule,
        subject to the customer's ongoing review of the Company's financial
        status. Similarly, due to the Company's financial condition, the Company
        was slow during 1999 and the first quarter of 2000 to make payments to
        its creditors, including its suppliers. This has raised concern among
        suppliers about whether to continue to supply the Company and extend
        additional credit. Two additional challenges that the Company faces in
        its business are (1) the business must carry relatively large
        work-in-process inventories because of the significant periods of time
        necessary to plan, design and build large metal forming presses and
        (2) the business is subject to the timing, severity and duration of
        automotive customer buying cycles. The Company must have the ability to
        obtain financing, including customer deposits, in order to address these
        challenges.

16
<PAGE>
    The Company has obtained the Foothill credit lines of up to $30,000,000
secured by the assets of its Verson division and anticipates that it will enter
into a financing lease during the second quarter of 2000 to finance capital
equipment purchased during the first quarter of 2000 at a cost of approximately
$5,000,000. These financings are subject to preconditions regarding the
Company's eligible borrowing base and to on-going compliance requirements, which
if not met would permit Foothill and/or the financing lease lessor to declare an
event of default under the applicable agreements. The Company's ability to meet
these requirements is dependent on future results which cannot be predicted with
certainty.

    Although the Foothill credit lines (with the exceptions previously noted) do
not provide for loans against work-in-process and raw material inventories, the
Company believes that it has financing in place for calendar year 2000 that will
be adequate to support the initiatives necessary in 2000 to improve the
operations of Verson and secure new orders. While there can be no assurance that
additional financing will not be necessary at some point in 2000, currently the
credit line appears sufficient to address projected fluctuations in working
capital and cash requirements. If these lines of credit become inadequate or an
event of default is declared, the Company will be required to pursue alternative
financing sources at that time.

MARKET RISK

    The Company's market risk is the exposure to adverse changes in interest
rates. At December 31, 1999, the Company's total debt outstanding (revolving
credit agreement and capitalized leases) totaled $134,483,000. Capitalized lease
debt ($3,783,000) was represented by fixed rate financing and was not subject to
market rate fluctuations. The remaining portion of the Company's debt at
December 31, 1999 ($130,700,000) was subject to the terms of the Amended and
Restated Credit Agreement that provided for interest rates at either a floating
prime (prime plus 250 basis points) or fixed LIBOR rate, plus 400 basis points.
The base interest rates were periodically agreed to with the lender for fixed
periods of 30 to 90 days. The balance outstanding at December 31, 1999
approximated fair market value. A hypothetical immediate 10% increase in
interest rates would adversely affect 2000 earnings and cash flow by
approximately $1,335,000 based on the composition of debt levels at
December 31, 1999.

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. As of the date of the filing of this annual report on Form 10-K, the
Company has not experienced any Year 2000 problems, either internally or with
third party vendors or customers. Although the Company is not aware of any Year
2000 problems experienced by its third party vendors and does not expect that
its operations will be affected by any Year 2000 problems in the future, there
can be no assurance that the Company's operations will not be affected by Year
2000 problems. However, the Company believes that the possibility of significant
interruptions of normal operations is remote.

CAUTIONARY FACTORS

    This report and other documents or oral statements which have been and will
be prepared or made in the future contain or may contain forward-looking
statements by or on behalf of the Company. Such statements are based upon
management's expectations at the time they are made. Actual results may differ
materially. In addition to the assumptions and other factors referred to
specifically in connection with such statements, the following factors, among
others, could cause actual results to differ materially from those contemplated.

    The Company's principal continuing business involves designing,
manufacturing, marketing and servicing complex medium and large metal forming
presses. Significant periods of time are necessary to plan, design and build
these complex machines. With respect to new presses, there are risks of customer
acceptances and start-up or performance problems. Large amounts of capital are
required to be devoted by the Company's customers to purchase and install these
presses. The installation of the press may be an integral part of a customer's
program for the introduction and manufacture of a new model of an automobile or
appliance. The Company's success in obtaining and managing a relatively small
number of sales opportunities, including the Company's success in securing
progress payments for such sales and meeting the requirements of warranties and
guarantees associated with such sales, can affect the Company's financial
performance.

    Other factors that could cause actual results to differ materially from
those contemplated include:

    - Factors relating to the Company's ability to obtain financing and
      refinancing, to comply with covenants in its loan agreements and to
      maintain a satisfactory credit standing with its suppliers.

    - Factors affecting customers' purchases of new equipment, rebuilds, parts
      and services such as: the restructuring and automation of customer

                                                                              17
<PAGE>
      manufacturing processes, the cash flows of customers; consolidations in
      the automobile industry; work stoppages at customers; and the timing,
      severity and duration of automotive customer buying cycles.

    - Factors affecting the Company's ability to capture available sales
      opportunities, including: customers' perceptions of the quality and value
      of the Company's products as compared to competitors' products; customers'
      perceptions of the advantages of dealing with a single press manufacturer;
      whether the Company has successful reference installations demonstrate the
      speed, efficiency and reliability of new presses to customers; customers'
      perceptions of the health and stability of the Company as compared to its
      competitors; the availability of manufacturing capacity at the Company's
      factory and changes in the value of the dollar relative to German and
      Japanese currencies.

    - Factors affecting the Company's ability to successfully manage sales it
      obtains, such as: the accuracy of the Company's cost and time estimates
      for major projects; the adequacy of the Company's systems to manage major
      projects and its success in completing projects on time and within budget;
      the Company's success in recruiting and retaining managers and key
      employees; wage stability and cooperative labor relations; and plant
      capacity and utilization.

    - Factors affecting the Company's general business, such as: unforeseen
      patent, tax, product, environmental, employee health or benefit, or
      contractual liabilities; nonrecurring restructuring and other special
      charges; changes in accounting or tax rules or regulations; reassessments
      of asset valuations for such assets as receivables, inventories, fixed
      assets and intangible assets; and leverage and debt service.

SAFE HARBOR STATEMENT

    Statements contained within the description of the business of the Company
contained in Item 1, the Management's Discussion and Analysis of Financial
Conditions and Results of Operation as well as within the non 10-K portion of
the 1999 Annual Report 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. Factors affecting all
operations of the Company include actions of competitors in the industries
served by the Company, production difficulties including capacity and supply
constraints, labor relations, interest rates and other risks and uncertainties.
Additional risks and uncertainties under the sections "Outlook" and "Cautionary
Factors" within the Management's Discussion and Analysis of Financial Condition
and Results of Operation should also be noted. The Company's outlook is based
upon assumptions relating to the factors discussed above.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The information required by this item is incorporated herein by reference to
the section entitled, "Market Risk" in the Company's Management's Discussion and
Analysis of Financial Condition and Results of Operations.

18
<PAGE>
                 (This page has been left blank intentionally.)

                                                                              19
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors
  of Allied Products Corporation

    In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income (loss), shareholders' investment and cash
flows listed in the index appearing under Part IV of Form 10-K (Item 14(a)1),
present fairly, in all material respects, the consolidated financial position of
Allied Products Corporation and its subsidiaries at December 31, 1999 and 1998,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. In addition, in
our opinion, the financial statement schedule listed in the index appearing
under Part IV of Form 10-K (Item 14(a)2) presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and the
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
the financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

                                          /s/ PricewaterhouseCoopers LLP

Chicago, Illinois
April 3, 2000

20
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                  ---------------------------------------------
                                                      1999            1998            1997
                                                  -------------   -------------   -------------
<S>                                               <C>             <C>             <C>
Net sales from continuing operations............  $143,775,000    $137,020,000    $151,091,000
Cost of products sold...........................   147,961,000     147,114,000     123,099,000
                                                  ------------    ------------    ------------
  Gross profit (loss)...........................  $ (4,186,000)   $(10,094,000)   $ 27,992,000
                                                  ------------    ------------    ------------
Other costs and expenses:
  Selling and administrative expenses...........  $ 22,113,000    $ 21,251,000    $ 21,440,000
  Interest expense..............................     6,205,000       3,732,000       1,889,000
  Other (income) expense, net...................     1,836,000         922,000    $ (3,018,000)
                                                  ------------    ------------    ------------
                                                  $ 30,154,000    $ 25,905,000    $ 20,311,000
                                                  ------------    ------------    ------------
Income (loss) before taxes from continuing
  operations....................................  $(34,340,000)   $(35,999,000)   $  7,681,000
Provision (benefit) for income taxes:
  Current.......................................       --               12,000          84,000
  Deferred......................................       --           (6,225,000)      2,757,000
                                                  ------------    ------------    ------------
Income (loss) from continuing operations........  $(34,340,000)   $(29,786,000)   $  4,840,000
Discontinued operations, net of tax.............     7,575,000      15,673,000      10,806,000
                                                  ------------    ------------    ------------
Net income (loss)...............................  $(26,765,000)   $(14,113,000)   $ 15,646,000
                                                  ============    ============    ============
Earnings (loss) per common share:
  Basic:
    Continuing operations.......................    $(2.90)         $(2.51)          $0.40
                                                      0.64            1.32            0.89
                                                  ------------    ------------    ------------
    Discontinued operations.....................
                                                    $(2.26)         $(1.19)          $1.29
                                                  ============    ============    ============
    Income (loss) per common share..............
  Diluted:
                                                    $(2.90)         $(2.51)          $0.39
    Continuing operations.......................
                                                      0.64            1.32            0.88
                                                  ------------    ------------    ------------
    Discontinued operations.....................
                                                    $(2.26)         $(1.19)          $1.27
                                                  ============    ============    ============
    Income (loss) per common share..............
Weighted average shares outstanding:
  Basic.........................................    11,838,000      11,895,000      12,107,000
                                                  ============    ============    ============
  Diluted.......................................    11,838,000      11,895,000      12,353,000
                                                  ============    ============    ============
</TABLE>

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

                                                                              21
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                              -----------------------------
                                                                  1999            1998
                                                              -------------   -------------
<S>                                                           <C>             <C>
Current Assets:
  Cash and cash equivalents.................................  $  1,054,000    $    727,000
                                                              ------------    ------------
  Notes and accounts receivable, less allowances of
    $1,130,000 and $266,000, respectively...................  $ 20,460,000    $ 25,701,000
                                                              ------------    ------------
  Inventories:
    Raw materials...........................................  $  3,571,000    $  5,591,000
    Work in process.........................................    43,094,000      61,616,000
                                                              ------------    ------------
                                                              $ 46,665,000    $ 67,207,000
                                                              ------------    ------------
  Deferred tax asset........................................  $  8,995,000    $ 10,540,000
                                                              ------------    ------------
  Prepaid expenses..........................................  $    228,000    $    315,000
                                                              ------------    ------------
  Current assets associated with discontinued operations....  $ 84,073,000    $ 77,374,000
                                                              ------------    ------------
      Total current assets..................................  $161,475,000    $181,864,000
                                                              ------------    ------------
Plant and Equipment, at cost:
  Land......................................................  $  1,671,000    $  1,688,000
  Buildings and improvements................................    52,435,000      49,036,000
  Machinery and equipment...................................    36,603,000      32,863,000
                                                              ------------    ------------
                                                              $ 90,709,000    $ 83,587,000
  Less--Accumulated depreciation and amortization...........    32,023,000      26,971,000
                                                              ------------    ------------
                                                              $ 58,686,000    $ 56,616,000
                                                              ------------    ------------
Other Assets:
  Deferred tax asset........................................  $  4,165,000    $  4,165,000
  Deferred charges (goodwill), net of amortization..........     1,134,000       1,313,000
  Other.....................................................     2,853,000       2,511,000
  Noncurrent assets associated with discontinued
    operations..............................................    28,298,000      29,335,000
                                                              ------------    ------------
                                                              $ 36,450,000    $ 37,324,000
                                                              ------------    ------------
                                                              $256,611,000    $275,804,000
                                                              ============    ============
</TABLE>

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

22
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                    LIABILITIES AND SHAREHOLDERS' INVESTMENT

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                              -----------------------------
                                                                  1999            1998
                                                              -------------   -------------
<S>                                                           <C>             <C>
Current Liabilities:
  Revolving credit agreement................................  $130,700,000    $119,300,000
  Current portion of long-term debt.........................     1,023,000         223,000
  Accounts payable..........................................    32,659,000      46,560,000
  Accrued expenses..........................................    22,648,000      19,350,000
  Current liabilities associated with discontinued
    operations..............................................    17,877,000      11,386,000
                                                              ------------    ------------
      Total current liabilities.............................  $204,907,000    $196,819,000
                                                              ------------    ------------
Long-term debt, less current portion shown above............  $    378,000    $    572,000
                                                              ------------    ------------
Other long-term liabilities.................................  $  5,442,000    $  4,557,000
                                                              ------------    ------------
Noncurrent liabilities associated with discontinued
  operations................................................  $  2,814,000    $  2,126,000
                                                              ------------    ------------
Commitments and Contingencies
Shareholders' Investment:
  Preferred stock:
    Undesignated--authorized 2,000,000 shares at
      December 31, 1999 and 1998; none issued...............  $    --         $    --
  Common stock, par value $.01 per share; authorized
    25,000,000 shares; issued 14,047,249 shares at
    December 31, 1999 and 1998..............................       140,000         140,000
  Additional paid-in capital................................    97,971,000      98,377,000
  Retained earnings (deficit)...............................   (12,524,000)     16,131,000
                                                              ------------    ------------
                                                              $ 85,587,000    $114,648,000
  Treasury stock at cost: 2,200,203 and 2,228,640 shares at
    December 31, 1999 and 1998, respectively................   (42,517,000)    (42,918,000)
                                                              ------------    ------------
      Total shareholders' investment........................  $ 43,070,000    $ 71,730,000
                                                              ------------    ------------
                                                              $256,611,000    $275,804,000
                                                              ============    ============
</TABLE>

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

                                                                              23
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31,
                                                 ---------------------------------------------
                                                     1999            1998            1997
                                                 -------------   -------------   -------------
<S>                                              <C>             <C>             <C>
Cash Flows from Operating Activities:
  Income (loss) from continuing operations.....  $ (34,340,000)  $ (29,786,000)  $  4,840,000
  Income from discontinued operations..........      7,575,000      15,673,000     10,806,000
                                                 -------------   -------------   ------------
    Net income (loss)..........................  $ (26,765,000)  $ (14,113,000)  $ 15,646,000
  Adjustments to reconcile income (loss) from
    continuing operations to cash provided from
    (used for) operating activities:
    Gains on sales of operating and
      nonoperating assets......................        (75,000)     (1,829,000)    (1,628,000)
    Depreciation and amortization..............      5,288,000       3,316,000      2,867,000
    Amortization of deferred charges...........        179,000         179,000        177,000
    Deferred income tax provision (benefit)....       --            (6,225,000)     2,757,000
    Provision for doubtful accounts............      1,367,000         179,000         30,000
    Provision for inventory valuation..........     12,122,000       8,813,000        --
    Stock option compensation..................       --             1,119,000      1,375,000
    Changes in noncash assets and liabilities,
      net of effects of assets/businesses
      acquired or sold and noncash
      transactions:
      (Increase) decrease in accounts
        receivable.............................      3,874,000      (5,341,000)     1,081,000
      (Increase) decrease in inventories.......      8,420,000     (25,083,000)   (20,795,000)
      (Increase) decrease in prepaid
        expenses...............................         87,000          70,000       (297,000)
      Increase (decrease) in accounts payable
        and accrued expenses...................     (9,921,000)     29,324,000     (4,628,000)
    Other, net.................................        638,000      (1,187,000)      (723,000)
  Adjustment to reconcile income from
    discontinued operations to cash provided
    from (used for) discontinued operations....      5,215,000      (7,811,000)     2,123,000
                                                 -------------   -------------   ------------
  Net cash provided from (used for) operating
    activities.................................  $     429,000   $ (18,589,000)  $ (2,015,000)
                                                 -------------   -------------   ------------
Cash Flows from Investing Activities:
  Additions to plant and equipment.............  $  (7,085,000)  $ (30,459,000)  $(10,564,000)
  Proceeds from sales of plant and equipment...         74,000       3,317,000        465,000
  Proceeds from sales of assets/businesses.....       --              --           14,737,000
  Net cash used in discontinued operations.....     (1,708,000)    (19,222,000)    (4,731,000)
                                                 -------------   -------------   ------------
  Net cash used for investing activities.......  $  (8,719,000)  $ (46,364,000)  $    (93,000)
                                                 -------------   -------------   ------------
Cash Flows from Financing Activities:
  Borrowings under revolving credit
    agreements.................................  $ 124,000,000   $ 186,000,000   $122,000,000
  Payments under revolving credit agreements...   (112,600,000)   (117,100,000)   (98,600,000)
  Payments of short and long-term debt.........       (361,000)       (218,000)      (152,000)
  Purchases of treasury stock..................       --            (1,624,000)   (21,572,000)
  Dividends paid...............................     (1,890,000)     (1,904,000)    (1,770,000)
  Stock rights/option transactions.............       (119,000)         91,000      2,096,000
  Net cash used in discontinued operations.....       (413,000)       (174,000)      (118,000)
                                                 -------------   -------------   ------------
  Net cash provided from financing
    activities.................................  $   8,617,000   $  65,071,000   $  1,884,000
                                                 -------------   -------------   ------------
Net increase (decrease) in cash and cash
  equivalents..................................  $     327,000   $     118,000   $   (224,000)
Cash and cash equivalents at beginning of
  year.........................................        727,000         609,000        833,000
                                                 -------------   -------------   ------------
Cash and cash equivalents at end of year.......  $   1,054,000   $     727,000   $    609,000
                                                 =============   =============   ============
</TABLE>

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

24
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                       -------------------------------------
                                                          1999          1998         1997
                                                       -----------   ----------   ----------
<C>   <S>                                              <C>           <C>          <C>
Supplemental Information:
 (A)  Noncash investing and financing activities:
  1.  Assets acquired through the assumption of
        debt.........................................  $ 1,632,000   $1,559,000   $  526,000
                                                       ===========   ==========   ==========
  2.  Treasury shares issued in lieu of cash for the
        Company's Incentive Compensation Plan........  $   114,000   $   --       $   --
                                                       ===========   ==========   ==========
 (B)  Interest paid during year......................  $11,564,000   $6,033,000   $3,225,000
                                                       ===========   ==========   ==========
 (C)  Income/franchise taxes paid, net of (refunds),
        during year..................................  $  (351,000)  $1,072,000   $1,313,000
                                                       ===========   ==========   ==========
</TABLE>

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

                                                                              25
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

                           COMMON AND TREASURY STOCK

<TABLE>
<CAPTION>
                                                                  COMMON          TREASURY
                                                              ($.01 PAR VALUE      STOCK,
                                                                PER SHARE)        AT COST
                                                              ---------------   ------------
<S>                                                           <C>               <C>
Balance at December 31, 1996................................     $ 94,000       $(23,539,000)
  Issuance of 4,682,405 common shares in connection with a
    three-for-two stock split...............................       46,000            --
  Purchase of 974,930 common shares for treasury purposes...      --             (21,572,000)
  Treasury shares issued (188,273) in connection with the
    exercises of stock options..............................      --               2,858,000
                                                                 --------       ------------
Balance at December 31, 1997................................     $140,000       $(42,253,000)
  Purchase of 144,943 common shares for treasury purposes...      --              (1,624,000)
  Treasury shares issued (60,566) in connection with the
    exercises of stock options..............................      --                 959,000
                                                                 --------       ------------
Balance at December 31, 1998................................     $140,000       $(42,918,000)
  Treasury shares issued (28,437) in lieu of cash for the
    Company's Incentive Compensation Plan...................      --                 401,000
                                                                 --------       ------------
Balance at December 31, 1999................................     $140,000       $(42,517,000)
                                                                 ========       ============
</TABLE>

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

26
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

           ADDITIONAL PAID-IN CAPITAL AND RETAINED EARNINGS (DEFICIT)

<TABLE>
<CAPTION>
                                                              ADDITIONAL      RETAINED
                                                                PAID-IN       EARNINGS
                                                                CAPITAL      (DEFICIT)
                                                              -----------   ------------
<S>                                                           <C>           <C>
Balance at December 31, 1996................................  $97,586,000   $ 18,272,000
  Net income for the year...................................      --          15,646,000
  Common dividends declared and paid--$.147 per share.......      --          (1,770,000)
  Issuance of 4,682,405 common shares in connection with a
    three-for-two stock split...............................      (46,000)       --
  Treasury shares issued in connection with the exercises of
    stock options...........................................      613,000        --
  Tax benefit associated with stock option exercises........      365,000        --
                                                              -----------   ------------
Balance at December 31, 1997................................  $98,518,000   $ 32,148,000
  Net loss for the year.....................................      --         (14,113,000)
  Common dividends declared and paid--$.16 per share........      --          (1,904,000)
  Treasury shares issued in connection with the exercises of
    stock options...........................................     (141,000)       --
                                                              -----------   ------------
Balance at December 31, 1998................................  $98,377,000   $ 16,131,000
  Net loss for the year.....................................      --         (26,765,000)
  Common dividends declared and paid--$.16 per share........      --          (1,890,000)
  Treasury shares issued in lieu of cash for the Company's
    Incentive Compensation Plan.............................     (287,000)       --
  Purchase of Shareholder Rights............................     (119,000)       --
                                                              -----------   ------------
Balance at December 31, 1999................................  $97,971,000   $(12,524,000)
                                                              ===========   ============
</TABLE>

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

                                                                              27
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

  PRINCIPLES OF CONSOLIDATION--

    The consolidated financial statements include the accounts of the Company
and its majority owned subsidiaries. All significant intercompany items and
transactions have been eliminated.

  NATURE OF OPERATIONS--

    Allied Products Corporation's continuing operations manufacture large metal
stamping presses through its Industrial Products Group. The Company's
Agricultural Products Group, which manufactured implements and machinery used in
agriculture, landscaping and ground maintenance businesses, was sold subsequent
to the end of 1999--see Note 3. The Company's Coz division, which was part of
the Industrial Products Group and supplied thermoplastic compounds and
additives, was sold in the fourth quarter of 1997. All manufacturing operations
are within the United States. Implements and machinery manufactured by the
discontinued Agricultural Products Group are primarily sold through dealerships
in the United States with some limited export sales to Canada. Metal stamping
presses produced by the Industrial Products Group are sold directly to the end
users which include automobile manufacturers, first and second tier automotive
parts producing companies and the appliance industry. Automobile manufacturers
and automotive parts producing companies account for approximately 95% of
consolidated net sales from continuing operations in 1999. Press sales generally
are concentrated in the United States and Mexico.

  USE OF ESTIMATES--

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Due to the
nature of percentage of completion estimates, it is reasonably possible that
cost estimates will be revised in the near term.

  REVENUE RECOGNITION--

    Sales by the discontinued Agricultural Products Group are recorded when
products are shipped to independent dealers in accordance with industry
practices. Provisions for sales incentives and other sales related expenses are
made at the time of the sale.

    Revenue and costs related to press manufacturing within the Industrial
Products Group are recognized on the percentage of completion method. Prior to
1997, the Company's basis for measuring progress on contracts was based
primarily on internal labor hours. At the time, labor hours of Company employees
were considered a reasonable indicator of the progress on the contract. In late
1996, because of a significant increase in the Company's backlog, significantly
more subcontracting was starting to be initiated on each project. In the first
quarter of 1997, it was concluded that using Verson labor hours as a basis for
measuring progress was not consistent with how business was being done. The
Company concluded that it was more appropriate to use a production milestone
approach by individual press in the first quarter of 1997. This approach to
measuring progress focused on engineering, manufacturing and final check-out as
the key measures on individual presses manufactured under one contract. At the
beginning of each job, cost and revenue estimates were made for both engineering
and manufacturing work. Estimates were also made on the amount of time the
engineering and manufacturing work would take to complete.

    Under this contract milestone approach, the key progress measures were based
on the estimated timeframe assoiated with the engineering and production process
of each individual press. The determination of progress was based upon the
months of engineering or production incurred, compared to total engineering or
production scheduled for each individual press.

28
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    Verson personnel monitored progress on individual presses on an ongoing
basis. Such monitoring would result in changes based upon changes in the
estimated time to complete engineering and manufacturing work.

    In the fourth quarter of 1998, the Company undertook a comprehensive review
of the compilation of costs and revenue recognition associated with each press
and recorded additional changes to cost estimates of approximately $21,000,000.
The Company determined that, in an environment where there were significant
production delays, subcontract delays, internal space constraints, cost overruns
and inefficiencies, reassessment of the appropriateness of measuring progress
based on contract milestones was required. Commencing in the fourth quarter of
1998, the Company discontinued using contact milestones to measure contract
progress and began measuring progress on contracts based on the percentage that
incurred costs to date bear to the total estimated costs after giving effect to
the most recent estimates of total costs.

    The cumulative impact of revisions in total cost estimates during the
manufacturing process is reflected in the period in which the changes become
known. On press orders where margin levels cannot be reasonably estimated, the
Company does not recognize any gross profit margin until the particular press in
process reaches a point in production where the gross profit margin can be
reasonably estimated. Margins are then recognized over the remaining period of
production. Certain press orders contain penalties for late delivery. Such
penalties are considered part of the cost of the press when late delivery of the
press appears probable. Losses expected to be incurred on jobs in process are
charged to income as soon as such losses are known. The Company has recorded
cumulative contract losses of $22,079,000 and $12,079,000 (including reserves of
$5,142,000 and $8,813,000 at December 31, 1999 and 1998, respectively, for
estimated future losses expected to be incurred on jobs in process) associated
with several jobs in process having a total sales value of $103,430,000 and
$104,734,000 at December 31, 1999 and 1998, respectively. Other uncertainties
associated with these contracts make it reasonably possible that additional
losses could occur in the near term--see Note 10.

  ACCOUNTS RECEIVABLE--

    Current accounts receivables for the discontinued Agricultural Products
Group are net of provisions for sales incentive programs and returns and
allowances. Extended payment terms (up to one year) are offered to dealers in
the form of floor plan financing which is customary within the industry. Such
receivables (with the exception of receivables associated with service parts)
are generally not collected until the dealer sells the related piece of
equipment to a retail customer. The Company maintains a security interest in the
equipment related to such receivables to minimize the risk of loss.

  INVENTORIES--

    The basis of all of the Company's inventories is determined by using the
lower of FIFO cost or market method.

    Included in work in process inventory are accumulated costs ($49,105,000 at
December 31, 1999 and $70,400,000 at December 31, 1998) associated with
contracts under which the Company recognizes revenue on a percentage of
completion basis. These balances include unbilled actual production costs
incurred plus a measure of estimated profit/loss ($3,786,000 loss at December
31, 1999 and $695,000 profit at December 31, 1998) recognized in relation to the
sales recorded, less customer payments ($36,580,000 at December 31, 1999 and
$25,902,000 at December 31, 1998) associated with the work in process inventory.
A significant portion of the work in process inventory will be completed,
shipped and invoiced prior to the end of the following year.

  PLANT AND EQUIPMENT--

    Expenditures for the maintenance and repair of plant and equipment are
charged to expense as incurred. Expenditures for major replacement or betterment
are capitalized. Interest costs of $979,000 were capitalized in 1998 (none in
1999 or 1997) in relation to the construction of a building

                                                                              29
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

addition at the Verson division of the Industrial Products Group. The cost and
related accumulated depreciation of plant and equipment replaced, retired or
otherwise disposed of is removed from the accounts and any gain or loss is
reflected in earnings.

  DEPRECIATION--

    Depreciation of the original cost of plant and equipment is charged to
expense over the estimated useful lives of such assets calculated under the
straight-line method. Estimated useful lives are 20 to 40 years for buildings
and improvements and 3 to 12 years for machinery and equipment.

  DEFERRED CHARGES (GOODWILL)--

    Deferred charges (goodwill) associated with the 1986 acquisition of Verson
(cost of approximately $13,113,000) is being amortized on a straight line basis
over a period of 20 years.

  VALUATION OF LONG-LIVED ASSETS--

    Long-lived assets such as property, plant and equipment and goodwill are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. If the fair value is less than
the carrying amount of the asset, a loss is recognized for the difference.

  STOCK SPLIT--

    On July 24, 1997, the Company announced that the Board of Directors
authorized a three-for-two stock split effected by means of a stock dividend to
shareholders of record on August 15, 1997. A total of 4,682,405 additional
common shares were issued in conjunction with the stock split. The Company
distributed cash in lieu of fractional shares resulting from the stock split.
All applicable share and per share data have been adjusted for the stock split.

  EARNINGS (LOSS) PER COMMON SHARE--

    Basic earnings (loss) per common share is based on the average number of
common shares outstanding--11,838,000, 11,895,000 and 12,107,000 for the years
ended December 31, 1999, 1998 and 1997, respectively. Diluted earnings (loss)
per common share is based on the average number of common shares outstanding, as
noted above, increased by the dilutive effect of outstanding stock
options--246,000 for the year ended December 31, 1997. For the years ended
December 31, 1999 and 1998, dilutive securities were excluded from the
calculation of diluted loss per share as their effect would have been
antidilutive.

  INCOME TAXES--

    Income taxes are accounted for under the asset and liability method in
accordance with FASB SFAS 109--Accounting for Income Taxes. See Note 4.

  STATEMENT OF CASH FLOWS--

    The Company considers investments with original maturities of three months
or less to be cash equivalents.

  FINANCIAL INSTRUMENTS--

    The fair value of cash and cash equivalents approximates the carrying value
of these assets due to the short maturity of these instruments. The fair value
of the Company's debt, current and long-term, is estimated to approximate the
carrying value of these liabilities based upon borrowing rates currently
available to the Company for borrowings with similar terms.

  RECLASSIFICATIONS--

    The Consolidated Statements of Income (Loss) for the years ended
December 31, 1998 and 1997 reflect certain inmaterial adjustments between
continuing and discontinued operations made to a previous unaudited presentation
of such amounts.

30
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

2.  ACCRUED EXPENSES:

    The Company's accrued expenses related to continuing operations consist of
the following:

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                   -------------------------
                                                      1999          1998
                                                   -----------   -----------
<S>                                                <C>           <C>
Salaries and wages...............................  $ 1,943,000   $ 2,800,000
Warranty.........................................    5,563,000     4,687,000
Self insurance accruals..........................    2,871,000     2,875,000
Pensions, including retirees' health.............    5,362,000     4,644,000
Taxes, other than income taxes...................      949,000       888,000
Environmental matters............................    2,376,000     1,225,000
Other............................................    3,584,000     2,231,000
                                                   -----------   -----------
                                                   $22,648,000   $19,350,000
                                                   ===========   ===========
</TABLE>

3.  ACQUISITIONS AND DISPOSITIONS:

  ACQUISITIONS--

    In April 1998, the Company acquired for cash substantially all of the assets
and assumed certain liabilities of Great Bend Manufacturing Company ("Great
Bend") located in Great Bend, Kansas. Great Bend manufactures and sells
tractor-mounted front end loaders which are used principally in agricultural
applications. The Company also acquired for cash in April 1998 substantially all
of the assets of Universal Turf Equipment Corporation ("Universal Turf") located
in Opp, Alabama. Universal Turf manufactures and sells turf maintenance
implements including reel mowers, verti-cut mowers, reel grinders and spraying
equipment. Both operations acquired are part of the discontinued Agricultural
Products Group. Total cash purchase price for both of these operations was
$10,953,000.

    In October 1998, the Company's Verson division formed a joint venture with
Theodor Grabener GmbH & Co. KG of Germany and Automatic Feed Company of
Napoleon, Ohio, that will help the two American companies more effectively
penetrate the European market for large stamping presses and related systems.
The new entity, Verson Pressentechnik GmbH, is located in Netphen-Werthenbach,
Germany. This operation, in which Verson holds a 60% stake, is part of the
Industrial Products Group. These acquisitions, taken individually and in the
aggregate, are not material to the Company's consolidated operations.

  DISPOSITIONS--

    During the fourth quarter of 1997, the Company sold for cash (approximately
$14,700,000) substantially all of the assets of its Coz division. The purchaser
also assumed certain specified liabilities associated with this division. The
sale resulted in a pretax gain of approximately $1,530,000 and is included in
Other (income) expense under the caption "Net gain on sales of operating and
non-operating assets"--see Note 12.

    At the end of 1993, the Company sold for cash substantially all of the
assets and liabilities of the White-New Idea Farm Equipment division. In
connection with this sale, the purchaser was required to purchase the real
estate located in Coldwater, Ohio upon the issuance of a covenant not to sue and
related no further action letter by the Ohio Environmental Protection Agency.
The Company completed the necessary environmental remediation during 1997 and,
in 1998, the purchaser acquired the real estate for cash resulting in a gain of
approximately $1,947,000, which is included in Other (income) expense under the
caption "Net gain on sales of operating and non-operating assets"--see Note 12.

  DISCONTINUED OPERATIONS--

    On July 16, 1999, the Company announced that it had signed a letter of
intent with CC Industries, Inc., a privately held firm headquartered in Chicago,
to form a new joint venture that would own and

                                                                              31
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

operate the Company's divisions (Bush Hog and Great Bend) of the Agricultural
Products Group. On March 7, 2000, the Company's shareholders approved the
Limited Liability Company Interest Purchase and Asset Contribution Agreement
("Purchase Agreement") by and among the Company, Bush Hog, L.L.C., a Delaware
limited liabillity company ("New Bush Hog") and Bush Hog Investors, L.L.C., a
Delaware limited liability company ("Bush Hog Investors").

    Pursuant to the Purchase Agreement, the Company agreed (i) to transfer to
New Bush Hog substantially all of the assets and certain liabilities of the Bush
Hog and Great Bend divisions constituting the Agricultural Products Group in
exchange for all of the outstanding membership interests of New Bush Hog and
(ii) to sell to Bush Hog Investors membership interests representing 80.1% of
the total outstanding membership interests of New Bush Hog for a purchase price
of $126,494,000, subject to post-closing adjustments. This sale was consummated
on March 7, 2000. Upon consummation of the joint venture, New Bush Hog owns
substantially all of the assets of the Agricultural Products Group subject to
some of its liabilities, the Company has significantly reduced its bank
indebtedness, Bush Hog Investors became the owner of 80.1% of the outstanding
membership interests of New Bush Hog and the Company owned 19.9% of the
outstanding membership interests of New Bush Hog.

    The Company retained all liabilities and obligations for claims made with
respect to events or injuries occurring before the closing, including product
liability, workers' compensation and environmental claims and claims regarding
employment practices. The liabilities retained by the Company include
liabilities under existing product liability claims, any additional claims,
including product liability claims, arising out of events associated with
operations of the Agricultural Product Group before the closing, and workers'
compensation claims, for which the Company has provided reserves of
approximately $5,600,000. The Company also remains responsible for monetary
liabilities, if any, under a race discrimination class action suit brought by
seven former or present employees of the Company's Bush Hog division--see
Note 10. The Company also retains the obligation to make future contributions,
if any, required to fund obligations under the Bush Hog Salaried Pension Plan.
Benefits under the Plan will be frozen as of the closing. Certain of these
obligations, which are contingent, may effect future results of operations if
and when such obligations become probable and estimable. In addition, the
Company retains liabilities for taxes and other governmental charges relating to
operations before the closing and liabilities under employee benefit plans,
which plans, other than the Bush Hog Salaried Pension Plan, are to be
discontinued at closing.

    Following completion of the transaction, the Company retains a minority
interest in New Bush Hog, which will be recorded on a cost basis, and will have
no ability to control the direction and development of New Bush Hog. Under the
cost method of accounting, the investment in New Bush Hog will be reflected in
the Company's balance sheet at cost and dividends from New Bush Hog will be
taken into income as they are received to the extent distributions are not a
return of capital. New Bush Hog is obligated to pay quarterly dividends
approximately equal to quarterly income, subject to certain conditions contained
in the Limited Liability Company Agreement.

    The Company applied the net proceeds from the sale to repay existing
indebtedness. The one time gain on the sale of the Agricultural Products Group
business, which will be recognized in the first quarter of 2000 and subject to
final adjustment, is estimated at the closing of the transaction as follows:

<TABLE>
<S>                                                           <C>
Purchase price..............................................  $126,494,000
Estimated net assets of discontinued operations sold at
  closing...................................................   (82,458,000)
Estimated transaction costs.................................    (2,319,000)
Estimated pension curtailment gain..........................     2,578,000
Estimated deferred income taxes on asset sold...............    (4,403,000)
                                                              ------------
Estimated gain on sale before taxes.........................  $ 39,892,000
                                                              ============
</TABLE>

32
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    On March 7, 2000, the Company received a distribution of approximately
$3,600,000 from New Bush Hog, which the Company recorded as a return of capital.
On March 24, 2000, the Company announced that it had signed a definitive
agreement to sell its remaining 19.9% interest in New Bush Hog to Bush Hog
Investors for a purchase price of approximately $27,800,000 subject to
post-closing adjustments. The sale, which is expected to close prior to the end
of the second quarter of 2000, is expected to result in a pretax gain of
approximately $9,800,000.

    The Company has included the operations of the Agricultural Products Group,
an allocation of all direct financing, administrative, other expenses and income
taxes and a pro rata allocation of interest expense (based upon the group's
proportionate share of consolidated invested capital) under the caption
"Discontinued operations, net of tax" in the accompanying Consolidated
Statements of Income (Loss). Previously issued Consolidated Statements of Income
(Loss) have been revised to reflect the effect of the discontinued operations.
In addition, current and noncurrent assets and liabilities associated with the
above noted discontinued operations have been reclassified in the accompanying
balance sheets.

    Summarized results of discontinued operations for the years ended December
31, 1999, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
                                             YEAR ENDED DECEMBER 31,
                                  ---------------------------------------------
                                      1999            1998            1997
                                  -------------   -------------   -------------
<S>                               <C>             <C>             <C>
Net sales.......................  $143,897,000    $136,814,000    $119,471,000
                                  ============    ============    ============
Income before taxes.............  $  7,575,000    $ 14,356,000    $ 17,154,000
Provision (benefit) for income
  taxes.........................       --           (1,317,000)      6,348,000
                                  ------------    ------------    ------------
Discontinued operations, net of
  tax...........................  $  7,575,000    $ 15,673,000    $ 10,806,000
                                  ============    ============    ============
</TABLE>

    Allocated interest expense was $5,145,000, $2,464,000 and $1,417,000 for the
years ended December 31, 1999, 1998 and 1997, respectively. Provision (benefit)
for income taxes has been allocated based on amounts identified with continuing
operations with the remaining provision (benefit) being allocated to
discontinued operations.

4.  INCOME TAXES:

    Provision (benefit) for income taxes related to continuing operations in
1999, 1998 and 1997 consists of the following:

<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                        --------------------------------------
                                           1999          1998          1997
                                        -----------   -----------   ----------
<S>                                     <C>           <C>           <C>
Federal--current......................  $   --        $   --        $   35,000
Federal--deferred.....................      --         (6,225,000)   2,757,000
State--current........................      --             12,000       49,000
                                        -----------   -----------   ----------
Total provision (benefit).............  $   --        $(6,213,000)  $2,841,000
                                        ===========   ===========   ==========
</TABLE>

                                                                              33
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    The provision (benefit) for income taxes related to continuing operations in
1999, 1998 and 1997 differs from amounts computed by applying the statutory rate
to pretax income as follows:

<TABLE>
<CAPTION>
                                             YEAR ENDED DECEMBER 31,
                                     ----------------------------------------
                                         1999           1998          1997
                                     ------------   ------------   ----------
<S>                                  <C>            <C>            <C>
Income tax provision (benefit) at
  statutory rate...................  $(12,019,000)  $(10,425,000)  $2,688,000
Current net operating loss not
  benefitted.......................    12,019,000      8,414,000       --
State income tax, net of federal
  tax benefit......................       --               8,000       32,000
Permanent book over tax differences
  on acquired assets...............       --              62,000       62,000
Reversal of deferred tax
  liability........................       --          (4,225,000)      --
Other, net.........................       --             (47,000)      59,000
                                     ------------   ------------   ----------
Total provision (benefit)..........  $    --        $ (6,213,000)  $2,841,000
                                     ============   ============   ==========
</TABLE>

    The significant components of net deferred tax assets were as follows:

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                   -------------------------
                                                      1999          1998
                                                   -----------   -----------
<S>                                                <C>           <C>
Deferred tax assets:
  Net operating loss and tax credit
    carryforwards................................  $46,662,000   $52,052,000
  Self-insurance accruals........................    2,654,000     2,507,000
  Inventories....................................    4,871,000     3,942,000
  Receivables....................................      412,000        97,000
  Sale/leaseback transaction.....................    1,557,000     1,557,000
  Employee benefits, including pensions..........    3,616,000     3,788,000
  Warranty.......................................    2,029,000     1,602,000
  Environmental matters..........................      867,000       447,000
  Other..........................................    1,094,000       765,000
  Temporary differences associated with
    discontinued operations......................    5,497,000     4,520,000
                                                   -----------   -----------
  Net deferred tax asset before valuation
    allowance....................................  $69,259,000   $71,277,000
  Valuation allowance............................  (50,602,000)  (52,052,000)
                                                   -----------   -----------
  Net deferred tax asset.........................  $18,657,000   $19,225,000
                                                   ===========   ===========
</TABLE>

    Changes in the valuation allowance during 1999 were associated with the
expiration of certain net operating loss carryforwards offset by the effect of
net operating loss carryforwards associated with the current year and additional
valuation allowances related to certain timing differences at December 31, 1999.

    The prospects for future earnings of the Company makes it more likely than
not that the Company will utilize the benefits arising from a portion of the net
deferred tax asset noted above. However, no benefit was recorded in 1999 for the
increase in temporary differences as it is likely the items comprising the
increase will reverse and become net operating loss carryforwards in the near
term. Additionally, upon the sale of the discontinued operations in the first
quarter of 2000, an estimated $5,600,000 charge related to certain temporary
differences associated with continuing operations will be recorded. This charge
is for a valuation allowance for certain temporary differences that are expected
to reverse and become, in the near term, net operating loss carryforwards
subject to

34
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

expiration. The valuation allowance was based on management's belief that unless
the Industrial Products Group is able to reduce production costs and return to
profit levels experienced prior to 1997, the sale of the Agricultural Products
Group will further decrease the likelihood of the Company being able to utilize
all of its remaining tax loss carryforwards. During 1998, the Company recorded a
deferred tax benefit of $5,639,000 as a part of that year's tax benefit. This
benefit represents a reversal of a tax liability accumulated in years prior to
1998. The net operating loss carryforwards expire between 2000 and 2014, and
investment tax credit carryforwards of $635,000 expire between 2000 and 2004.

    The Company provided a valuation allowance in both 1999 and 1998 for
deferred tax assets related to net operating loss, tax credit carryforwards and
certain timing differences based upon a determination that current negative
evidence outweighs positive evidence with respect to realization being more
likely than not in the future for these components of the net deferred tax
asset. The Company projects that future Federal income tax provisions and
payments will be based upon the Alternative Minimum Tax rate as substantial tax
loss carryforwards still exist for tax reporting purposes.

    Tax returns for the years subsequent to 1995 are potentially subject to
audit by the Internal Revenue Service.

5.  FINANCIAL ARRANGEMENTS:

    The Company's debt, including $1,401,000 at December 31, 1999 ($795,000 at
December 31, 1998) related to continuing operations of which $1,023,000
($223,000 at December 31, 1998) is current, consists of the following:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 1999         1998
                                                              ----------   ----------
<S>                                                           <C>          <C>
Capitalized lease obligations, at interest rates up to 12%
  (weighted average of 8.3% and 7.8% at December 31, 1999
  and 1998, respectively), due in varying amounts through
  2005 (Note 6).............................................  $3,783,000   $2,925,000
Less current portion........................................   1,432,000      627,000
                                                              ----------   ----------
                                                              $2,351,000   $2,298,000
                                                              ==========   ==========
</TABLE>

    Scheduled maturities of the noncurrent portion of long-term debt at
December 31, 1999 are due as follows:

<TABLE>
<S>                                                           <C>
2001........................................................  $  559,000
2002........................................................     388,000
2003........................................................     348,000
2004........................................................     571,000
2005........................................................     485,000
                                                              ----------
                                                              $2,351,000
                                                              ==========
</TABLE>

    During 1996, the Company entered into an Amended and Restated Credit
Agreement with two banks. The Amended and Restated Credit Agreement was
subsequently amended during 1997 and 1998. Effective February 1, 1999, the
Company entered into a Second Amended and Restated Credit Agreement ("Credit
Agreement") with the same two banks, replacing the Amended and Restated Credit
Agreement. During 1999, the Company entered into four amendments and waivers to
the Credit Agreement. As of December 31, 1999, the amended Credit Agreement
provides for up to $135,000,000 of borrowings and/or letters of credit at either
a floating prime (prime plus 250 basis

                                                                              35
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

points) or fixed LIBOR (LIBOR plus 400 basis points) rate. The Company granted a
lien upon and security interests in all of the assets (except real estate) of
the Company and its subsidiaries to the lenders and was required to meet certain
periodic financial tests. The Company was not in compliance with certain
provisions of the Credit Agreement and related amendments at various times
throughout 1999. Amendments to the Credit Agreement provided for waivers of
compliance through December 31, 1999. In return for a waiver of non-compliance
with certain covenants, the bank required that events of default under the
Credit Agreement be expanded to include failure to complete the joint venture
involving the sale of the Agricultural Products Group.

    In contemplation of the sale of an 80.1% interest in the Agricultural
Products Group and to help finance the build up of receivables and inventories
within this group during December and the first quarter of 2000, an affiliate of
Bush Hog Investors agreed, under the Loan and Security Agreement ("Bush Hog
Investors Loan") dated as of December 16, 1999, to loan the Company up to
$5,000,000, secured by the group's real property in Selma, Alabama. Borrowings
under this agreement were to bear interest at floating prime (prime plus 400
basis points). No amounts were borrowed under this agreement during 1999.

    During 1998, the Company entered into an interest rate lock in anticipation
of a private debt placement of up to $75,000,000. The Company anticipated that
by entering into a private placement agreement, favorable fixed interest rates
could be obtained on a long-term basis and that exposure to floating interest
rates under the Amended and Restated Credit Agreement would be reduced. During
the fourth quarter of 1998, the Company suspended efforts to secure financing
through a private placement. Hedging losses of $3,005,000 were incurred in 1998
in the final settlement of the interest rate lock and are included in Other
(income) expense under the caption "Treasury lock settlement"--see Note 12.

    Also during 1998, the Company entered into an interest rate swap agreement
for a notional amount of $50,000,000, expiring May 2001. Under the terms of the
swap agreement, the Company paid the counterparty a fixed rate of interest
(5.99%) and received in return a floating rate based on LIBOR. This interest
rate swap had the effect of turning $50,000,000 of the Company's floating rate
debt under its credit agreement into a fixed rate obligation. At December 31,
1998, the fixed interest rate paid by the Company under the swap agreement
exceeded the average borrowing rate under the Credit Agreement by .64%. This
rate differential was recorded as interest expense on a monthly basis. The swap
fair market value at December 31, 1998 was a negative $1,100,000. The Company's
weighted average interest rate, independent of the interest paid on the interest
rate swap, was approximately 7% at December 31, 1998 (7.2% including the
interest paid on the interest rate swap). During the third quarter of 1999, the
interest rate swap was terminated at no cost to the Company.

    The weighted average interest rate on borrowings outstanding at
December 31, 1999 and 1998 were 10.2% and 7.2%, respectively.

  SUBSEQUENT EVENT--

    Effective February 11, 2000, the Company entered into a Fifth Amendment and
Consent to the Credit Agreement. The amended agreement provided for up to
$138,000,000 of borrowings and/or letters of credit and extended the termination
date of the agreement to March 7, 2000.

    On March 7, 2000, the Company entered into a Loan and Security Agreement
with LaSalle Bank National Association ("LaSalle"). Under the terms of the
agreement, the Company may borrow up to $18,000,000 at a floating prime (prime
less 100 basis points) rate within three months after the closing of the
agreement. Amounts outstanding under the agreement are due 30 months after
closing. Prepayment is allowed without penalty. The loan is secured by a first
lien on the Company's 19.9% interest in New Bush Hog. Subsequent to closing of
this agreement, the Company borrowed the maximum amount available under the
agreement. These proceeds, combined with the proceeds received from the sale of
an 80.1% interest in the operations of the Agricultural Products Group, were

36
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

applied to repay the Company's indebtedness outstanding under the Second Amended
and Restated Credit Agreement, the Company's indebtedness outstanding under the
Bush Hog Investors Loan and costs associated with the sale.

    The Company also entered into a new credit facility with Foothill Capital
Corporation ("Foothill") effective March 29, 2000. The new credit facility has a
three year term, maturing in March 2003, and consists of term loan of
$10,600,000 and a revolving credit facility which may be drawn upon from time to
time up to the lower of $19,400,000 or an amount based upon a percentage of
eligible accounts receivable and eligible inventories relating to presses which
are within sixty (60) days of shipment, as determined by Foothill subject to
reserves as determined by Foothill (the "Borrowing Base"). The amount available
under the term loan sub-line is reducedby $176,667 monthly commencing in
September 2000. The maximum remaining amount due at maturity in March 2003 is
$5,123,323. Interest is payable monthly at a floating prime rate (prime plus 200
basis points on the term loan and prime plus 125 basis points on the revolver).
In the event of a default, the interest rate increases by 300 basis points.
Foothill received a closing fee of $300,000 plus a monthly fee of $50,000 for
each month a balance is outstanding under the revolving credit facility. With
certain exceptions, the penalty for prepayment is $900,000 (3% of the maximum
credit available) in the first year, declining to 2% and 1% in the second and
third years. Certain portions of the Borrowing Base will be determined in June,
following Foothill's review and determination of eligible receivables.

    In connection with the Foothill loan, the Company granted a lien upon and
security interests in substantially all of its assets (except its membership
interest in New Bush Hog). The loan agreement requires that the Company sell its
remaining interest in New Bush Hog on or before June 30, 2000. Restrictions in
the Foothill loan agreement include, among other things, limitations on capital
expenditures, liens and guaranties and restrictions on acquisitions and
investments and does not permit the payment of cash dividends. Additionally,
Foothill can accelerate repayment in the event of a material adverse change in
the business, as defined in the agreement. Financial covenants include a
covenant that earnings before interest, taxes, depreciation and amortization
("EBITDA"), exclusive of extraordinary gains, exceed the amounts listed below as
of the dates and for the periods indicated:

<TABLE>
<S>                                          <C>                 <C>
June 30, 2000..............................  last three months   $(1,300,000)
September 30, 2000.........................  last six months     $(3,500,000)
December 31, 2000..........................  last nine months    $(4,600,000)
March 31, 2001.............................  last twelve months  $(3,900,000)
June 30, 2001..............................  last twelve months  $(3,000,000)
September 30, 2001.........................  last twelve months  $ 1,300,000
December 31, 2001..........................  last twelve months  $ 7,600,000
</TABLE>

    While the Company projects that it will be able to comply with this
covenant, the Company's EBITDA for future peirods cannot be predicted with a
reasonable degree of certainty. The Company's future operating results depend,
among other things, upon the receipt in the next several months and continuing
thereafter of new press orders in appropriate sequences and bearing appropriate
margins. Because the borrowing base is limited solely to a percentage of
eligible accounts receivable and eligible inventories relating to presses which
are within sixty (60) days of shipment (and not to a percentage of total
inventories as well), the credit facility is not a source of financing for the
substantial work in process inventories frequently required in the Company's
business. This will limit the Company's ability to accept press orders which do
not include customer deposits.

6.  LEASES:

  CAPITAL LEASES--

    The Company leases various types of manufacturing, office and transportation
equipment.

                                                                              37
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    Capital leases included in Machinery and equipment in the accompanying
balance sheets are as follows:

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                     -----------------------
                                                        1999         1998
                                                     ----------   ----------
<S>                                                  <C>          <C>
Capitalized cost...................................  $5,143,000   $3,622,000
Less--Accumulated amortization.....................   1,634,000    1,081,000
                                                     ----------   ----------
                                                     $3,509,000   $2,541,000
                                                     ==========   ==========
</TABLE>

    See Note 5 for information as to future debt payments relating to the above
leases. Capital leases associated with continuing operations included
capitalized cost of $1,244,000 less accumulated amortization of $485,000 at
December 31, 1999 and capitalized cost of $988,000 less accumulated amortization
of $283,000 at December 31, 1998.

  OPERATING LEASES--

    Rent expense for operating leases, which is charged against income, was as
follows:

<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                         ------------------------------------
                                            1999         1998         1997
                                         ----------   ----------   ----------
<S>                                      <C>          <C>          <C>
Minimum rentals........................  $1,184,000   $1,215,000   $1,989,000
Contingent rentals.....................     204,000       87,000       41,000
                                         ----------   ----------   ----------
                                         $1,388,000   $1,302,000   $2,030,000
                                         ==========   ==========   ==========
</TABLE>

    Contingent rentals are composed primarily of truck fleet unit charges for
actual usage. Some leases contain renewal and purchase options. The leases
generally provide that the Company pay taxes, maintenance, insurance and certain
other operating expenses. Operating lease expense associated with continuing
operations totaled $338,000, $295,000 and $925,000 for the years ended December
31, 1999, 1998 and 1997, respectively.

    At December 31, 1999, future minimum rental payment commitments under
operating leases that have initial or remaining noncancelable lease terms in
excess of one year are as follows:

<TABLE>
<CAPTION>
                                          MINIMUM
                                           ANNUAL     SUBLEASE     NET MINIMUM
                                           RENTAL      RENTAL     ANNUAL RENTAL
                                          PAYMENTS     INCOME       PAYMENTS
                                         ----------   ---------   -------------
<S>                                      <C>          <C>         <C>
Year ending December 31,
  2000.................................  $  711,000   $ (63,000)   $  648,000
  2001.................................     651,000     (65,000)      586,000
  2002.................................     519,000     (66,000)      453,000
  2003.................................     460,000     (68,000)      392,000
  2004.................................     129,000     (23,000)      106,000
                                         ----------   ---------    ----------
                                         $2,470,000   $(285,000)   $2,185,000
                                         ==========   =========    ==========
</TABLE>

    Net minimum annual rental payments associated with continuing operations
were $348,000 for 2000, $333,000 for 2001, $309,000 for 2002, $269,000 for 2003
and $87,000 for 2004.

7.  PREFERRED STOCK:

    The Company has 2,000,000 shares of authorized preferred stock of which
350,000 shares are designated as Series B Variable Rate Cumulative Preferred
Stock and 150,000 shares are designated as Series C Cumulative Preferred Stock.
All shares of the Series B and Series C Preferred Stock have

38
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

been redeemed. In conjunction with the declaration of a dividend of the
preferred share purchase right in 1999, the Company designated 13,000 shares as
Series D Junior Participation Preferred Stock--see Note 8. The remaining
1,487,000 shares of authorized preferred stock are undesignated and unissued at
December 31, 1999.

8.  COMMON STOCK AND OPTIONS:

    The Company has an incentive stock plan ("1977 plan") which authorizes stock
incentives for key employees in the form of stock awards, stock appreciation
rights and stock options. Options under the 1977 plan, which are granted at fair
market value at date of grant, are non-qualified options (not "incentive stock
options" as defined by the Internal Revenue Code). Options currently outstanding
under the 1977 plan become exercisable to the extent of 25% one year from date
of grant and 25% in each of the next three years, and expire 10 years from the
date of grant. There were no stock awards issued under this plan in 1999, 1998
or 1997. No stock appreciation rights have been granted to date under this plan.
At December 31, 1999, there are no options outstanding under this plan.
Additional stock incentives will not be issued under this plan.

    In 1990, the Company's Board of Directors approved a new incentive stock
plan, the 1990 Long Term Incentive Stock Plan ("1990 plan") which authorizes
stock incentives for key employees in the form of stock awards and stock
options. The 1990 plan, as amended, authorizes the issuance of up to 1,500,000
shares of the Company's Common Stock. Options under the 1990 plan, which are
granted at fair market value at date of grant, may be granted as either
incentive stock options or non-statutory stock options. Options granted become
exercisable to the extent of 50% one year from date of grant and the remaining
50% two years from date of grant. Since the inception of the 1990 plan, the
Company has issued options to purchase 1,398,877 shares (net of forfeitures) of
the Company's Common Stock at prices between $1.00 and $19.00 per share. There
are 309,650 options outstanding under this plan at December 31, 1999 and are
included in the following table. At December 31, 1999, the Company has the
capacity to issue an additional 101,123 stock incentives under the 1990 plan.

    In 1994, shareholders approved a new incentive plan, the 1993 Directors
Incentive Plan ("1993 plan") which authorizes the issuance of stock options to
members of the Board of Directors who are not employees of the Company. Options
under the 1993 plan, which are granted at fair market value at date of grant,
are granted as non-statutory stock options. Options granted become exercisable
to the extent of 50% one year from date of grant and the remaining 50% two years
from date of grant. Since the inception of the 1993 plan, the Company has issued
options to purchase 114,750 shares of the Company's Common Stock at prices
between $8.34 and $19.01 per share. All options issued are outstanding under
this plan at December 31, 1999 and are included in the table below.

    In 1997, shareholders approved a new incentive stock plan, the 1997
Incentive Stock Plan ("1997 plan") to replace the 1990 plan and the 1993 plan
described above. The 1997 plan permits a committee of the Company's Board of
Directors to grant incentive awards in the form of non-qualified stock options,
incentive stock options, stock awards including restricted stock, stock
appreciation rights and performance units to key employees and non-employee
directors. The 1997 plan authorizes the issuance of up to 750,000 shares of the
Company's Common Stock pursuant to the grant or exercise of stock options, stock
appreciation rights, restricted stock and performance units. Non-qualified stock
options issued under this plan were granted at fair market value at date of
grant. Options granted become exercisable over a period of up to three years
from date of grant with no option exercisable prior to one year from date of
grant. Since the inception of the 1997 plan, the Company has issued options to
purchase 709,400 shares (net of forfeitures) of the Company's Common Stock at
prices between $3.625 and $24.875. All options issued under this plan (net of
forfeitures) are outstanding at December 31, 1999 and are included in the table
below. At December 31, 1999, the Company has the capacity to issue an additional
40,600 stock incentives under the 1997 plan.

                                                                              39
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    Stock option transactions in 1999, 1998 and 1997 were as follows:

<TABLE>
<CAPTION>
                                                     YEAR ENDED DECEMBER 31,
                                -----------------------------------------------------------------
                                        1999                   1998                  1997
                                --------------------   --------------------   -------------------
                                            WEIGHTED               WEIGHTED              WEIGHTED
                                            AVERAGE                AVERAGE               AVERAGE
                                            EXERCISE               EXERCISE              EXERCISE
                                 SHARES      PRICE      SHARES      PRICE      SHARES     PRICE
                                ---------   --------   ---------   --------   --------   --------
<S>                             <C>         <C>        <C>         <C>        <C>        <C>
Outstanding at beginning of
  year........................  1,059,940    $12.11      810,360    $13.89     931,758    $12.15
    Granted...................    170,000      3.68      369,100      8.31     110,000     24.65
    Exercised.................     --         --        (111,520)    12.09    (188,273)    11.14
    Expired...................    (22,065)    15.92       --         --           (375)    16.09
    Forfeited.................    (74,075)    13.66       (8,000)    16.41     (42,750)    15.87
                                ---------    ------    ---------    ------    --------    ------
Outstanding at end of year....  1,133,800    $10.68    1,059,940    $12.11     810,360    $13.89
                                =========    ======    =========    ======    ========    ======
Options exercisable at end of
  year........................    808,600    $12.59      610,340    $13.09     523,529    $10.93
Weighted average fair value of
  options granted during the
  year........................  $    1.23              $    1.89              $   6.60
</TABLE>

    The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                                 ------------------------------------
                                                   1999          1998          1997
                                                 --------      --------      --------
<S>                                              <C>           <C>           <C>
Risk free interest rate........................     6.29%         4.29%         6.10%
Dividend yield.................................     3.56%         0.97%         0.70%
Expected lives.................................  4 years       4 years       4 years
Volatility.....................................    45.10%        22.50%        23.00%
</TABLE>

    The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
                                     OPTIONS OUTSTANDING           OPTIONS EXERCISABLE
                              ----------------------------------   -------------------
                                           WEIGHTED
                                            AVERAGE     WEIGHTED              WEIGHTED
                                           REMAINING    AVERAGE               AVERAGE
                                          CONTRACTUAL   EXERCISE              EXERCISE
 RANGES OF EXERCISE PRICES     SHARES        LIFE        PRICE      SHARES     PRICE
 -------------------------    ---------   -----------   --------   --------   --------
<S>                           <C>         <C>           <C>        <C>        <C>
        $1.75-5.875             197,150   8.79 years     $ 3.55     27,150     $ 2.70
        7.9375-12.92            578,150   6.27 years       8.32    428,450       8.45
        15.26-24.875            358,500   6.60 years      18.40    353,000      18.37
                              ---------                                        ------
        $1.75-24.875          1,133,800   6.81 years     $10.68    808,600     $12.59
                              =========                                        ======
</TABLE>

    At December 31, 1999, the Company has four stock options plans, which are
described above. The Company applied Accounting Principles Board (APB) Opinion
25 and related interpretations in accounting for these plans. Compensation costs
recognized in relation to certain stock option exercises amounted to $1,119,000
and $1,375,000 for the years ended December 31, 1998 and 1997, respectively. No
compensation costs have been recognized for the years ended December 31, 1999,
1998 and 1997 in relation to the issuances of options in each of the respective
years. Had compensation costs for the Company's stock option plans been
determined based on the fair value at the grant date for options

40
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

granted under these plans consistent with the method of SFAS 123--Accounting for
Stock-Based Compensation, the Company's net income (loss) and earnings (loss)
per share would have been revised to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                                            -----------------------------------------
                                                                1999           1998          1997
                                                            ------------   ------------   -----------
<S>                                         <C>             <C>            <C>            <C>
Net income (loss)                           As reported     $(26,765,000)  $(14,113,000)  $15,646,000
                                            Pro forma        (27,536,000)   (14,978,000)   15,135,000
Basic earnings (loss) per share             As reported     $      (2.26)  $      (1.19)  $      1.29
                                            Pro forma              (2.33)         (1.26)         1.25
Diluted earnings (loss) per share           As reported     $      (2.26)  $      (1.19)  $      1.27
                                            Pro forma              (2.33)         (1.26)         1.23
</TABLE>

    On February 15, 1991, the Company declared a dividend distribution of one
right ("1991 Right") to purchase an additional 1.5 shares of the Company's
Common Stock for $50 on each 1.5 shares of Common Stock outstanding. On
August 10, 1999, the Company's Board of Directors authorized the redemption of
these 1991 rights for the price of $.01 per right from all holders of record as
of July 30, 1999.

    On July 28, 1999, the Company's Board of Directors declared a dividend of
one preferred share purchase right ("Right") for each outstanding share of
common stock, par value $.01 per share, of the Company ("Common Shares") to the
stockholders of record on July 30, 1999 ("Record Date"). Each Right entitles the
registered holder to purchase from the Company one one-thousandth of a share of
Series D Junior Participating Preferred Stock of the Company, no par value per
share ("Preferred Shares"), at a price of $50.00 per one one-thousandth of a
Preferred Share ("Purchase Price"), subject to adjustment. In the event that any
person or group of affiliated or associated persons acquires beneficial
ownership of 15% or more of the outstanding Common Shares, or a person filing a
Schedule 13G or 13D with no intent to change the control of the Company on the
date of the agreement acquires beneficial ownership of 20% or more of the
outstanding Common Shares (each an "Acquiring Person"), each holder of a Right,
other than the Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of Common Shares having a market value of two times the exercise
price of the Right. If the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, each
holder of a Right (other than Rights beneficially owned by Acquiring Person,
which will be void) will thereafter have the right to receive that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of the
Right. The distribution date is the earlier of: (i) 10 days following a public
announcement that a person or group of affiliated or associated persons have
acquired beneficial ownership of 15% or more of the outstanding Common Shares
or, in the case of a person filing a Schedule 13G or 13D with no intent to
change the control of the Company, 10 days following a public announcement that
such person has acquired beneficial ownership of 20% or more of the outstanding
Common Shares; or (ii) 10 business days (or such later date as may be determined
by action of the Board of Directors of the Company prior to such time as any
person or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Shares.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on July 31, 2009 ("Final Expiration Date"), unless the Final Expiration
Date is extended or unless the Rights are earlier redeemed or exchanged by the
Company.

                                                                              41
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

9.  RETIREMENT, PENSION AND POSTRETIREMENT HEALTH PLANS:

    The Company sponsors several defined benefit pension plans which cover
certain union and office employees. Benefits under these plans generally are
based on the employee's years of service and compensation during the years
immediately preceding retirement. The Company's general funding policy is to
contribute amounts deductible for Federal income tax purposes.

    The following tables provide a reconciliation of the changes in the plans'
benefit obligations and fair value of assets over the two-year period ending
December 31, 1999, and a statement of the financial status as of December 31,
1999 and 1998:

<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31,
                                                   -------------------------
                                                      1999          1998
                                                   -----------   -----------
<S>                                                <C>           <C>
Change in benefit obligation:
  Benefit obligation at beginning of year........  $40,601,000   $38,606,000
  Service cost...................................      953,000       718,000
  Interest cost..................................    2,633,000     2,684,000
  Amendments.....................................      299,000        56,000
  Actuarial losses...............................      362,000     2,227,000
  Benefits paid..................................   (2,579,000)   (3,690,000)
                                                   -----------   -----------
  Benefit obligation at end of year..............  $42,269,000   $40,601,000
                                                   ===========   ===========
Change in plan assets:
  Fair value of plan assets at beginning of
    year.........................................  $36,768,000   $46,162,000
  Actual return on plan assets...................    6,276,000    (6,849,000)
  Employer contributions.........................      --          1,145,000
  Benefits paid..................................   (2,579,000)   (3,690,000)
                                                   -----------   -----------
  Fair value of plan assets at end of year.......  $40,465,000   $36,768,000
                                                   ===========   ===========

<CAPTION>
                                                         DECEMBER 31,
                                                   -------------------------
                                                      1999          1998
                                                   -----------   -----------
<S>                                                <C>           <C>
Funded status:
  Funded status at end of year...................  $(1,804,000)  $(3,833,000)
  Unrecognized transition obligation.............     (276,000)     (482,000)
  Unrecognized prior service cost................    1,555,000     1,927,000
  Unrecognized net actuarial (gain)..............   (3,765,000)     (772,000)
                                                   -----------   -----------
  Accrued pension cost at end of year............  $(4,290,000)  $(3,160,000)
                                                   ===========   ===========
</TABLE>

    The projected benefit obligation and accumulated benefit obligation for
pension plans with accumulated benefit obligations in excess of plan assets were
$1,794,000 and $1,277,000, respectively, as of December 31, 1999 and $1,484,000
and $802,000, respectively, as of December 31, 1998. There were no assets
associated with these related plans.

    The expected long-term rate of return used in determining the net periodic
pension cost in all years was 7.5%. The actuarial present value of the benefit
obligation was determined using a discount rate of 7.5% in 1999, 6.75% in 1998
and 7.5% in 1997. The rate of compensation increase used to measure the benefit
obligation in three plans was 5%. All other plans are based on current
compensation levels.

    The plans' assets include common stocks, fixed income securities, short-term
investments and cash. Common stock investments include approximately 612,710 and
281,810 shares of the Company's Common Stock at December 31, 1999 and 1998,
respectively.

42
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    The following table provides the amounts recognized in the balance sheet as
of December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                    -------------------------
                                                       1999          1998
                                                    -----------   -----------
<S>                                                 <C>           <C>
Accrued benefit liability.........................  $(4,290,000)  $(3,299,000)
Intangible asset..................................      --            139,000
                                                    -----------   -----------
Accrued pension cost at end of year...............  $(4,290,000)  $(3,160,000)
                                                    ===========   ===========
</TABLE>

    Net periodic pension costs as they relate to defined benefit plans were as
follows:

<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                       ---------------------------------------
                                          1999          1998          1997
                                       -----------   -----------   -----------
<S>                                    <C>           <C>           <C>
Service cost.........................  $   953,000   $   718,000   $   758,000
Interest cost........................    2,633,000     2,684,000     2,717,000
Expected return on plan assets.......   (2,893,000)   (2,938,000)   (2,678,000)
Amortization of transition
  obligation.........................     (206,000)     (472,000)     (473,000)
Amortization of prior service
  costs..............................      671,000       277,000       328,000
Amortization of actuarial (gain)
  loss...............................      (29,000)     (409,000)     (327,000)
                                       -----------   -----------   -----------
Net periodic pension cost (income)...  $ 1,129,000   $  (140,000)  $   325,000
Curtailment loss.....................      --            --            210,000
                                       -----------   -----------   -----------
Net periodic pension cost (income)
  after curtailment..................  $ 1,129,000   $  (140,000)  $   535,000
                                       ===========   ===========   ===========
</TABLE>

    Curtailment loss in 1997 was related to the retirement of certain Corporate
executives. Net periodic pension cost (income) after curtailment related to
continuing operations were $312,000, $(265,000) and $160,000 for the years ended
December 31, 1999, 1998 and 1997, respectively. As part of the Agricultural
Products Group sale, the Company retained liabilities under the Bush Hog
Salaried Pension Plan. The Company estimates a $2,578,000 pension curtailment
gain will arise when the Company assumes the pension plan obligations and assets
related to this plan.

    Certain employees of the Company are also eligible to become participants in
the Save Money and Reduce Taxes ("SMART") 401(k) plan. Under terms of the plan,
the trustee is directed by each employee on how to invest the employee's
deposit. As of December 31, 1999 and 1998, assets of the SMART plan include
approximately 401,000 and 434,000 shares, respectively, of the Company's Common
Stock.

    Effective October 1, 1998, the Company instituted the Allied Products
Corporation Savings Incentive 401(k) Plan for Bush Hog salaried employees.
Except for supplemental contributions that are payable under the SMART Plan,
terms of the plan are identical to those of the SMART plan. Employees eligible
under this new plan are not eligible for the SMART plan. Effective with the sale
of the Agricultural Products Group, benefits could no longer be earned under
this plan.

    Also effective October 1, 1998, the Company instituted a matching provision
for voluntary deposits by employees (up to 6% of their salaries) on the basis of
$1 for every $2 deposited. This matching feature is available to participants in
the SMART plan and the Allied Products Corporation Savings Incentive Plan. The
Company's total contribution into these plans amounted to approximately $900,000
($359,000 associated with continuing operations) in 1999 and $205,000 ($90,000
associated with continuing operations) in 1998.

                                                                              43
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    Effective January 1, 1998, the Company instituted a supplemental
contribution feature to the SMART plan described above. This discretionary
noncontributory feature replaces the Target Benefit Plan and a defined
contribution plan--see below. Currently, all employees eligible for the SMART
plan receive an allocation which is based upon a percentage of the earnings of
the employees. The Company's total supplemental contribution amounted to
approximately $1,240,000 ($759,000 associated with continuing operations) in
1999 and $680,000 ($215,000 associated with continuing operations) in 1998.

    Effective January 1, 1995, the Company instituted a noncontributory defined
contribution retirement plan called the Target Benefit Plan. All non union
employees not covered by pension plans were covered under the Target Benefit
Plan. Under the terms of the Target Benefit Plan, the Company made an
actuarially determined annual contribution based upon each eligible employee's
years of service and earnings as defined. Provisions for the contribution to
this plan in 1997, all of which were associated with continuing operations, were
$664,000. Effective January 1, 1998, this plan was terminated. On this date, all
employees previously receiving benefits under this plan now receive benefits
under the SMART plan described above. Benefits earned under the Target Benefit
Plan were transferred to the SMART plan.

    The Company also has a defined contribution retirement plan which covers
certain employees. There are no prior service costs associated with this plan.
The Company follows the policy of funding retirement contributions under this
plan as accrued. Contributions to this plan, all of which were associated with
discontinued operations, were $222,000 in 1997. Benefits under this plan were
frozen effective January 1, 1998. On this date, all employees previously
receiving benefits under this plan now receive benefits under the SMART plan
described above.

    The Company provides medical benefits for retirees and their spouses at the
Verson division and certain other former employees of several noncontinuing
operations. Accruals for such costs are recognized in the financial statements
over the service lives of these employees. Contributions are required of most
retirees for medical coverage. The current obligation was determined by
application of the terms of the related medical plans, including the effects of
established maximums on covered costs, together with relevant actuarial
assumptions and health-care cost trend rates projected at annual rates ranging
ratably from 7.2% for retirees under age 65 (and for retirees age 65 and older)
in 2000 to 5% over 7 years. The effect of a 1% annual increase (decrease) in
these assumed cost trend rates would increase the accumulated postretirement
benefit obligation by approximately $103,000 and $68,000 for the years ended
December 31, 1999 and 1998, respectively. The annual service and interest costs
would not be materially affected.

    The following table provides a reconciliation of the changes in the plans'
benefit obligations over the two year period ending December 31, 1999 and a
statement of the financial status as of December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                              -------------------------
                                                                 1999          1998
                                                              -----------   -----------
<S>                                                           <C>           <C>
Change in benefit obligation:
  Benefit obligation at beginning of year...................  $   864,000   $   799,000
  Service cost..............................................       73,000        55,000
  Interest cost.............................................       82,000        56,000
  Actuarial (gains) losses..................................      327,000        50,000
  Benefits paid.............................................     (133,000)      (96,000)
                                                              -----------   -----------
  Benefit obligation at end of year.........................  $ 1,213,000   $   864,000
                                                              ===========   ===========
</TABLE>

44
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                 1999          1998
                                                              -----------   -----------
<S>                                                           <C>           <C>
Funded status:
  Funded status at end of year..............................  $(1,213,000)  $  (864,000)
  Unrecognized prior service cost...........................        9,000        10,000
  Unrecognized net actuarial (gain) loss....................      175,000      (175,000)
                                                              -----------   -----------
  Accrued postretirement benefit cost at end of year........  $(1,029,000)  $(1,029,000)
                                                              ===========   ===========
</TABLE>

    Net periodic postretirement benefit costs include the following:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                              --------------------------------
                                                                1999        1998        1997
                                                              ---------   ---------   --------
<S>                                                           <C>         <C>         <C>
Service cost................................................  $ 73,000    $ 55,000    $ 50,000
Interest cost...............................................    82,000      56,000      56,000
Amortization of unrecognized net (gains) losses.............     7,000     (10,000)    (11,000)
Amortization of prior plan amendments.......................     1,000       1,000       1,000
                                                              --------    --------    --------
Net periodic postretirement benefit cost....................  $163,000    $102,000    $ 96,000
                                                              ========    ========    ========
</TABLE>

    Measurement of the postretirement benefit obligation was based on a discount
rate of 7.5% in 1999, 6.75% in 1998 and 7.5% in 1997.

10.  ENVIRONMENTAL, LEGAL AND CONTINGENT LIABILITIES:

  ENVIRONMENTAL MATTERS--

    The Company's manufacturing plants generate both hazardous and nonhazardous
wastes, the treatment, storage, transportation and disposal of which are subject
to federal, state and local laws and regulations. The Company believes that its
manufacturing plants are in substantial compliance with the various federal,
state and local laws and regulations, and does not anticipate any material
expenditures to remain in compliance.

    Under the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended ("CERCLA"), and other statutes, the United States
Environmental Protection Agency ("EPA") and the states have the authority to
impose liability on waste generators, site owners and operators, and others
regardless of fault or the legality of the original disposal activity.
Accordingly, the Company has been named as a potentially responsible party
("PRP"), or may otherwise face potential liability for environmental remediation
or cleanup, in connection with the sites described below that are in various
stages of investigation or remediation. Under applicable law, the Company, along
with each other PRP, could be held jointly and severally liable for the total
remediation costs of PRP sites.

    At one site, the Company is one of seven PRP's because of its apparent
absentee ownership of four parcels of land from 1967 to 1969 which may have held
part or all of one or more settling ponds operated by a tenant business. The
Company has already paid $85,000 as its share of a settlement of an EPA demand
for $415,000 in past response costs, and the EPA has sought payment from the
PRP's of an additional $572,000 in response costs. The Company is not aware of
any other parties' inability to pay. The EPA has ordered the Company and one
other PRP to undertake the design and construction of the remediation project.
All PRP's have agreed to undertake the design and construction of the
remediation project pursuant to a financial participation agreement. The EPA
estimates the present value of the cost to implement its selected cleanup method
to be approximately $1,869,000. The Company has accrued its estimated share of
the remaining cleanup cost which is not considered significant. The Company has
also filed a claim against its insurers.

                                                                              45
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    Pursuant to a consent decree entered into in November 1991 with the U.S.
Department of Justice, the Company closed and remediated a landfill leased by
the Company and formerly used for the disposal of spent foundry sands. During
1995, remedial action required by the consent decree was completed, and the EPA
approved the Remedial Action Report submitted by the Company. The Company's
remaining obligations under the consent decree include periodic inspections,
monitoring and maintenance as needed.

    The Company has also been named as a PRP, along with numerous parties, at
various hazardous waste sites undergoing cleanup or investigation for cleanup.
The Company believes that at each of these sites, it has been improperly named
or will be considered to be a "de minimus" party.

    The Company is a defendant in an action filed in July 1991 in the United
States District Court, Northern District of New York where a private party, ITT
Commercial Finance Corp., seeks recovery of costs associated with an
environmental cleanup at a site formerly owned by the Company. At this site,
which the Company or one of its subsidiaries owned from 1968 until 1976, the
plaintiff and current owner seeks to recover in excess of $4,000,000, including
attorney fees, from the Company and other defendants. The Company has denied
liability and asserted cross-claims against the co-defendants. Trial is
currently scheduled to commence in May 2000. The Company has also filed claims
against its insurers.

    The Company is in the process of investigating or has determined the need to
perform environmental remediation or clean up at certain manufacturing sites
formerly operated and still owned by the Company. At the sites where the Company
has determined that some remediation or cleanup is required, the Company has
provided for the estimated cost for such remediation or cleanup.

    One site, located in Coldwater, Ohio, was sold to the purchaser of the
White-New Idea business. That sale was contingent on the issuance of a covenant
not to sue and related no further action letter by the State of Ohio under the
Ohio Voluntary Action Program. The Company completed all necessary investigation
and remediation, and expended approximately $1,300,000 in this effort. Upon
submission of the final report, a covenant not to sue and no further action
letter was issued by the Ohio Environmental Protection Agency. While this
project was underway, the Company entered into a series of agreements for
financial contribution with both the prior owner and the purchaser of the
facility, and recovered approximately 50% of the $1,300,000 spent.

    During 1999, 1998 and 1997, the Company recorded charges (credits) of
approximately $1,245,000, $(151,000) and $(1,181,000), respectively, toward
various environmental matters discussed above, $1,000,000 of which was recorded
in the fourth quarter of 1999 based on recent developments with respect to an
environmental claim. At December 31, 1999, the Company has accruals on a
non-discounted basis, including those discussed above, of $2,376,000 for the
estimated cost to resolve its potential liability with the above and other, less
significant, matters. Additional liabilities are possible and the ultimate
outcome of these matters may have an effect on the financial position or results
of operations in a future period. However, the Company believes that the above
accruals are adequate for the resolution of known environmental matters and the
outcome of these matters is not expected to have a material adverse effect on
the Company's financial position or its ongoing results of operations.

  OTHER--

    In connection with the sale of the business and assets of the Littell
division in 1991, the Company entered into a "License Agreement" pursuant to
which the Company licensed certain technology to the purchaser for which the
purchaser agreed to pay royalties totaling $8,063,000 plus interest, in minimum
quarterly installments of $312,500 commencing in November 1992, with a final
lump sum payment of approximately $7,300,000 due May 22, 1996. The purchaser's
payment obligation was secured by the technology license and was guaranteed by
the purchaser's parent. The Company

46
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

initially recorded this agreement as a long-term note receivable. In 1995,
however, the Company established a reserve of $7,699,000 (reduced to $7,165,000
at December 31, 1996) against the receivable, due to published adverse financial
information about the purchaser and its parent which raised serious concerns
about the collectability of the receivable. During 1997, the Company entered
into a settlement agreement with the purchaser of the business. Under the terms
of the agreement, the purchaser agreed to pay the Company $3,000,000 and all
parties agreed to the dismissal/release of certain actions, claims and security
interests. All amounts due under this agreement were collected in 1998
($610,000) and 1997 ($2,390,000).

    In January 1998, an adversary proceeding was filed against the Company in
United States Bankruptcy Court, Southern District of Texas, Houston Division by
Cooper Manufacturing Corp., a debtor in a bankruptcy proceeding. The
transactions and occurrences on which the adversary proceeding was based were
the Company's sale of the assets of a former division and certain financial
transactions related thereto. Causes of action described in the adversary
proceeding included accounting, turnover, fraudulent transfers, "alter ego,"
economic duress, unjust enrichment and restitution. The case was settled during
1999 by payment of $615,000 by the Company to the plaintiffs. One case pending
against the Company in the United States District Court for the Northern
District of Alabama, Southern Division, is a race discrimination class action
lawsuit brought by seven plaintiffs who are current or former employees. The
complaint, which was filed in May 1998 but not served on the Company until
October 1998, alleges discrimination with respect to compensation, promotions,
job assignments, discipline and other terms and conditions of employment and
seeks injunctive relief, back pay, compensatory and punitive damages, attorney
fees and costs. The potential class identified by plaintiffs could include
several hundred current or former employees. No class certification hearing has
been held and no order has been entered. The Company denies the allegations of
the plaintiffs and is vigorously defending this claim. During the fourth quarter
of 1999, based on recent developments in this case, the Company established a
$1,000,000 reserve considering the range of potential loss associated with this
claim. An unfavorable outcome of this claim could have a material adverse effect
on the Company's financial position and results of operations. Changes in the
estimate in the near term are reasonably possible.

    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
the Company's common stock between February 6, 1997 and March 11, 1999. The
complaints, which were filed in the United States District Court for the
Northern District of Illinois, were virtually identical. They alleged various
violations of the federal securities laws, including misrepresentations or
failure to disclose material information about the Company's results of
operations, financial condition, weakness in its financial internal controls,
accounting for long-term construction contracts and employee stock option
compensation expense. In August 1999, the District Court ordered that the two
cases be consolidated for all purposes. A Consolidated Amended Complaint was
filed on October 12, 1999. The Company filed a Motion to Dismiss on December 13,
1999. The action was dismissed, without prejudice, by order dated March 13,
2000, with leave to amend the complaint. No estimate can currently be made as to
the claim. However, should the plaintiff further amend the complaint and survive
subsequent motions to dismiss, such claim 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.

    The Company is involved in a number of other legal proceedings as a
defending party, including product liability claims for which additional
liability is reasonably possible. It is the Company's policy to reserve on a
non-discounted basis for all known and estimated unreported product liability
claims. The products to which the claims primarily relate are products currently
manufactured by the Company's Industrial Products Group and products related to
discontinued operations for which the Company contractually retained certain
product liability claims generally arising prior to the sale of the related
business. To reasonably estimate the liability of such claims (reserves of
$6,204,000 and

                                                                              47
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

$4,674,000 at December 31, 1999 and 1998, respectively), the Company
historically uses estimates provided by legal counsel based on existing claims
experience in all years, and in 1999 and 1998 also obtained actuarial
information which was based on the Company's historical claim experience to
estimate incurred but not reported claims. Payment of these claims may take
place over the next several years. Additional liabilities are possible and the
ultimate outcome of these matters may have an effect on the financial position
or results of operations in a future period. For one product liability claim
filed in December of 1998 in the Circuit Court of Hinds County, Mississippi,
First Judicial District, the amount of damages claimed against all defendants is
$100,000,000, which exceeds the Company's liability insurance limits of
$50,000,000. Although there is no guarantee that the ultimate outcome of this
claim against the Company will not exceed such limits, the Company currently
believes that the ultimate outcome of this claim will not exceed its insurance
coverage. However, 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. For all other matters, 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.

    The Verson division may not be able to meet delivery schedules for certain
presses currently on orders in production. Certain customers of this division
may 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.

    In response to General Motors' concerns that the Company's cash flow
problems would further delay or preclude the Company from completing four
presses that were in various stages of production, the Company recently entered
into amendments to purchase orders with General Motors. The aggregate sales
price of the presses covered by these purchase orders exceeds $75,000,000. Under
the terms of the amendments, the Company and General Motors agreed to revised
shipping, payment and testing schedules that allow the Company to ship
components of, and receive payments for, the first two of the four presses
earlier than it would have been able to under the terms of the original purchase
orders. Payment terms for the third and fourth presses were largely unchanged
from the original order (i.e., 90% upon completion, testing and shipment),
however, delivery dates (and related payments) have been extended so that the
last press will not be shipped until the first quarter of 2001 and final payment
will not be received until the first quarter of 2002. Upon fulfillment of
certain conditions set forth in the amendments, General Motors will waive and
release the Company from all claims arising from or attributable to the
Company's alleged late delivery defaults on all presses and will accept delivery
of the last two (2) presses covered by this order. Until such time as to the
fulfillment of these conditions, General Motors reserves the right to cancel the
purchase orders associated with the third and fourth presses until the Company
has demonstrated that it has the financial ability to complete these presses on
a timely basis. Such cancellation could have a material adverse effect on the
financial position and results of operations in the near term.

    At December 31, 1998, the Company was contingently liable for approximately
$1,579,000 primarily relating to outstanding letters of credit.

    The Company has entered into agreements with certain executive officers of
the Company which provide that, if within one year following a defined change in
ownership or control of the Company there shall be an involuntary termination of
such executive's employment, or if there shall be defined patterns of activity
during such period by the Company causing such executive to resign, then,
subject to prevailing tax laws and regulations, the executive shall be entitled
to payments of up to approximately three years' compensation.

48
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

11.  OPERATIONS BY INDUSTRY SEGMENT:

    The Company's continuing operations involve a single industry segment as
described in Note 1.

    Approximately 13%, 4% and 8% of the Company's net sales from continuing
operations in 1999, 1998 and 1997, respectively, were exported principally to
Canada (13%, 19% and 35% of export sales in 1999, 1998 and 1997, respectively)
and Mexico (86%, 76% and 55% of export sales in 1999, 1998 and 1997,
respectively).

    Approximately 66%, 52% and 55% of the Company's total net sales in 1999,
1998 and 1997, respectively, were derived from sales by the Industrial Products
Group to the three major U.S. automobile manufacturers.

12.  SUMMARY OF OTHER (INCOME) EXPENSE:

    Other (income) expense consists of the following:

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                        --------------------------------------
                                                           1999         1998          1997
                                                        ----------   -----------   -----------
<S>                                                     <C>          <C>           <C>
Interest income.......................................  $ (360,000)  $   (86,000)  $   (50,000)
Goodwill amortization.................................     179,000       179,000       177,000
Loan cost expenses/amortization.......................     645,000       275,000       --
Environmental related expenses (credits)..............   1,245,000      (151,000)   (1,181,000)
Net gain on sales of operating and non-operating
  assets..............................................     (75,000)   (1,830,000)   (1,645,000)
Equity in net loss of nonconsolidated joint venture...     631,000       188,000        54,000
Provision (credit) for collectability (recovery) of
  long-term note receivable (Note 10).................      --          (610,000)   (2,390,000)
Idle facility income..................................    (504,000)     (183,000)     (368,000)
Litigation settlements/insurance provisions...........     615,000       --          2,125,000
Treasury lock settlement..............................      --         3,005,000       --
Other miscellaneous...................................    (540,000)      135,000       260,000
                                                        ----------   -----------   -----------
                                                        $1,836,000   $   922,000   $(3,018,000)
                                                        ==========   ===========   ===========
</TABLE>

13.  QUARTERLY FINANCIAL DATA (UNAUDITED):

    Summarized quarterly financial data for 1999 and 1998 restated for
discontinued operations are as follows (in thousands of dollars, except per
share data):

<TABLE>
<CAPTION>
                                                                   QUARTER ENDING
                                                 ---------------------------------------------------
                                                 MARCH 31    JUNE 30    SEPTEMBER 30    DECEMBER 31
                                                 ---------   --------   -------------   ------------
<S>                                              <C>         <C>        <C>             <C>
1999
  Net sales from continuing operations.........   $45,338    $37,491       $30,401        $30,545
  Gross profit (loss)..........................    (9,481)     3,191         4,529         (2,425)
  Income (loss) from continuing operations.....   (16,006)    (4,464)       (2,873)       (10,997)
  Income (loss) per common share from
    continuing operations--diluted.............     (1.35)      (.38)         (.24)          (.93)
  Net income (loss)............................   (12,666)    (1,325)          540        (13,314)
  Net income (loss) per common
    share--diluted.............................     (1.07)      (.11)          .05          (1.12)
1998
  Net sales from continuing operations.........   $28,563    $48,033       $43,116        $17,308
  Gross profit (loss)..........................     8,641      7,236        (6,731)       (19,240)
  Income (loss) from continuing operations.....     1,572      2,540        (8,812)       (25,086)
  Income (loss) per common share from
    continuing operations--diluted.............       .13        .21          (.74)         (2.12)
  Net income (loss)............................     5,330      7,101        (7,148)       (19,396)
  Net income (loss) per common
    share--diluted.............................       .44        .59          (.60)         (1.64)
</TABLE>

                                                                              49
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    Loss from continuing operations in the fourth quarter of 1999 included
charges of approximately $1,900,000 related primarily to product liability
(including incurred but not reported) claims for which developments during the
quarter required increased loss provisions. Also during the fourth quarter of
1999, the Company recorded a $1,000,000 charge for certain environmental
matters--see Note 10. An additional $1,000,000 reserve was provided for in the
quarter for a race discrimination class action lawsuit as described in Note 10.

    Subsequent to the end of 1999 and as discussed in Note 3, the Company's
shareholders approved the sale of a majority interest in the operations that had
constituted the Agricultural Products Group. The Company has included the
operations of the Agricultural Products Group, an allocation of all direct
financing, administrative, other expenses and income taxes and a pro rata
allocation of interest expense under the caption "Discontinued operations--net
of tax" in the accompanying Consolidated Statements of Income (Loss). Previously
issued Consolidated Statements of Income (Loss) have been restated to reflect
the effect of the discontinued operations. The following table reconciles the
quarterly operating results as previously reported to the restated amounts
presented above:

<TABLE>
<CAPTION>
                                                                 QUARTER ENDING
                                               ---------------------------------------------------
                                               MARCH 31    JUNE 30    SEPTEMBER 30    DECEMBER 31
                                               ---------   --------   -------------   ------------
<S>                                            <C>         <C>        <C>             <C>
1999
  Net sales from continuing operations:
    As previously reported...................  $ 82,240    $ 74,624      $ 69,332        (1)
    Net change associated with discontinued
      operations.............................   (36,902)    (37,133)      (38,931)       (1)
                                               --------    --------      --------       --------
    Restated.................................  $ 45,338    $ 37,491      $ 30,401        (1)
                                               ========    ========      ========       ========
  Gross profit (loss):
    As previously reported...................  $     (9)   $ 12,536      $ 14,037        (1)
    Net change associated with discontinued
      operations.............................    (9,472)     (9,345)       (9,508)       (1)
                                               --------    --------      --------       --------
    Restated.................................  $ (9,481)   $  3,191      $  4,529        (1)
                                               ========    ========      ========       ========
  Income (loss) from continuing operations:
    As previously reported...................  $(12,666)   $ (1,325)     $    540        (1)
    Net change associated with discontinued
      operations.............................    (3,340)     (3,139)       (3,413)       (1)
                                               --------    --------      --------       --------
    Restated.................................  $(16,006)   $ (4,464)     $ (2,873)       (1)
                                               ========    ========      ========       ========
  Income (loss) per common share from
    continuing operations--diluted:
    As previously reported...................  $  (1.07)   $   (.11)     $    .05        (1)
    Net change associated with discontinued
      operations.............................      (.28)       (.27)         (.29)       (1)
                                               --------    --------      --------       --------
    Restated.................................  $  (1.35)   $   (.38)     $   (.24)       (1)
                                               ========    ========      ========       ========
</TABLE>

50
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

<TABLE>
<CAPTION>
                                                                 QUARTER ENDING
                                               ---------------------------------------------------
                                               MARCH 31    JUNE 30    SEPTEMBER 30    DECEMBER 31
                                               ---------   --------   -------------   ------------
<S>                                            <C>         <C>        <C>             <C>
1998
  Net sales from continuing operations:
    As previously reported...................  $ 62,831    $ 88,985      $ 77,184       $ 44,834
    Net change associated with discontinued
      operations.............................   (34,268)    (40,952)      (34,068)       (27,526)
                                               --------    --------      --------       --------
    Restated.................................  $ 28,563    $ 48,033      $ 43,116       $ 17,308
                                               ========    ========      ========       ========
  Gross profit (loss):
    As previously reported...................  $ 19,155    $ 19,215      $    956       $(15,661)
    Net change associated with discontinued
      operations.............................   (10,514)    (11,979)       (7,687)        (3,579)
                                               --------    --------      --------       --------
    Restated.................................  $  8,641    $  7,236      $ (6,731)      $(19,240)
                                               ========    ========      ========       ========
  Income (loss) from continuing operations:
    As previously reported...................  $  5,330    $  7,101      $ (7,148)      $(19,396)
    Net change associated with discontinued
      operations.............................    (3,758)     (4,561)       (1,664)        (5,690)
                                               --------    --------      --------       --------
    Restated.................................  $  1,572    $  2,540      $ (8,812)      $(25,086)
                                               ========    ========      ========       ========
  Income (loss) per common share from
    continuing operations--diluted:
    As previously reported...................  $    .44    $    .59      $   (.60)      $  (1.64)
    Net change associated with discontinued
      operations.............................      (.31)       (.38)         (.14)          (.48)
                                               --------    --------      --------       --------
    Restated.................................  $    .13    $    .21      $   (.74)      $  (2.12)
                                               ========    ========      ========       ========
</TABLE>

------------------------

(1) Operations for the fourth quarter of 1999 were presented on a
    continuing/discontinued basis, resulting in no restatement of this quarter.

14.  OUTLOOK:

    The principal sources of liquidity for the Company's continuing operations
will be its operating cash flows, if any, and borrowings under the new credit
facility with Foothill. The Company projects that after application of the net
proceeds of the sale of an 80.1% interest in New Bush Hog, it will require
approximately $37,000,000 in cash in 2000 to, among other things, (1) discharge
certain accrued liabilities and claims arising out of events associated with
operations of the Agricultural Products Group before March 7, 2000, (2)
extinguish the remainder of its outstanding indebtedness to banks, (3) reduce
outstanding payables, (4) finance peak working capital requirements of the
Industrial Products Group and (5) finance the acquisition of new equipment.
Verson's peak working capital requirements could vary significantly, either
higher or lower, from the projected level. The working capital needs of Verson
will depend upon the magnitude of new press orders, the timing of the receipt of
those orders, the timing of production under the orders and the extent to which
the Company receives progress payments on those orders. The Company's working
capital projections are also conditioned upon successful negotiation of the
Verson labor agreement which expires in June 2000. The Company anticipates that
its projected cash requirements will be funded in part by the proceeds (net of
escrow requirements) from the sale of its remaining New Bush Hog membership
interest (approximately $24,000,000) and a financing lease (approximately
$5,000,000), with the remainder being financed by borrowings under the Foothill
credit facility.

                                                                              51
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)

    The key challenges faced by the Company's Industrial Products Group include:

    1.  NEW PROFITABLE BUSINESS.  The group's operating results in 2000 will be
        adversely affected by (a) the current low level of the group's backlog
        ($51,401,000 at December 31, 1999 compared to $145,268,000 a year
        earlier) and (b) the fact that approximately 50% of the current backlog
        represents no margin work booked in 1997. Because of the fall off in new
        orders in 1999 and the first quarter of 2000, Verson is expected to have
        excess capacity during 2000, revenues are expected decline substantially
        and the Company anticipates that it will incur an operating loss. The
        group's long-term viability depends upon the generation of new orders
        with appropriate margins as well as a timely adjustment of the Company's
        cost structure consistent with the level of orders received.

    2.  MANAGEMENT OF MAJOR PROJECTS.  The Company has been working to correct
        the operating problems of its Industrial Products Group and has taken
        several significant steps which it believes will help to correct the
        problems. These steps include changes in the group management team,
        development of a new planning system that will help the Company plan and
        track engineering, purchasing and manufacturing costs, and the
        acquisition of equipment which should enable the Company to reduce
        outsourcing work. The group in the future must demonstrate its ability
        to estimate costs of major projects accurately and to manage those
        projects so that they are completed on time and on budget.

    3.  ADEQUACY OF FINANCIAL RESOURCES.  The Company and one of its customers
        amended several related press orders to address the customer's concern
        that the Company may lack the necessary financial resources to complete
        orders already in production. The customer has conditionally agreed to
        permit the completion of the orders pursuant to a revised schedule,
        subject to the customer's ongoing review of the Company's financial
        status. Similarly, due to the Company's financial condition, the Company
        was slow during 1999 and the first quarter of 2000 to make payments to
        its creditors, including its suppliers. This has raised concern among
        suppliers about whether to continue to supply the Company and extend
        additional credit. Two additional challenges that the Company faces in
        its business are (1) the business must carry relatively large
        work-in-process inventories because of the significant periods of time
        necessary to plan, design and build large metal forming presses and
        (2) the business is subject to the timing, severity and duration of
        automotive customer buying cycles. The Company must have the ability to
        obtain financing, including customer deposits, in order to address these
        challenges.

    The Company has obtained the Foothill credit lines of up to $30,000,000
secured by the assets of its Verson division and anticipates that it will enter
into a financing lease during the second quarter of 2000 to finance capital
equipment purchased during the first quarter of 2000 at a cost of approximately
$5,000,000. These financings are subject to preconditions regarding the
Company's eligible borrowing base and to ongoing compliance requirements, which
if not met would permit Foothill and/ or the financing lease lessor to declare
an event of default under the applicable agreements. The Company's ability to
meet these requirements is dependent on future results which cannot be predicted
with certainty.

    Although the Foothill credit lines (with the exceptions previously noted) do
not provide for loans against work-in-process and raw material inventories, the
Company believes that it has financing in place for calendar year 2000 that will
be adequate to support the initiatives necessary in 2000 to improve the
operations of Verson and secure new orders. While there can be no assurance that
additional financing will not be necessary at some point in 2000, currently the
credit line appears sufficient to address projected fluctuations in working
capital and cash requirements. If these lines of credit become inadequate or an
event of default is declared, the Company will be required to pursue alternative
financing sources at that time.

52
<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

    None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

    See the Company's Proxy Statement incorporated by reference as part of this
Part III, under the caption "Proposal 1: Election of Directors" for information
with respect to the directors. In addition, see the information under the
caption "Executive Officers of the Company" as part of Part I, Item 1 of this
Report which is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

    See the Company's Proxy Statement incorporated by reference as part of
Part III, Item 10 of this report, under the captions "Management Compensation"
for information with respect to executive compensation.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    (a) Security Ownership of Certain Beneficial Owners.

    See the Company's Proxy Statement incorporated by reference as part of
Part III, Item 10 of this report, under the captions "Outstanding Stock and
Voting Rights", "Beneficial Owners" and "Principal Stockholders and Management
Ownership" for information with respect to the ownership of certain beneficial
owners of Common Stock of the Company.

    (b) Security Ownership of Management.

    See the Company's Proxy Statement incorporated by reference as part of
Part III, Item 10 of this report, under the caption "Principal Stockholders and
Management Ownership" for information with respect to the beneficial ownership
by management of Common Stock of the Company.

    (c) Changes in Control.

    There is no arrangement known to the Company, the operation of which may at
a subsequent date result in a change in control of the Company.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    See the Company's Proxy Statement incorporated by reference as part of
Part III, Item 10 of this report, under the captions "Proposal 1: Election of
Directors" and "Management Compensation" for information with respect to certain
relationships and related transactions with management.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1.  FINANCIAL STATEMENTS

    Included in Part II of this report:

       Report of Independent Accountants

       Consolidated statements of income (loss) for the years ended
        December 31, 1999, 1998 and 1997

       Consolidated balance sheets as of December 31, 1999 and 1998

       Consolidated statements of cash flows for the years ended December 31,
        1999, 1998 and 1997

       Consolidated statements of shareholders' investment for the years ended
        December 31, 1999, 1998 and 1997

       Notes to consolidated financial statements

                                                                              53
<PAGE>
(a) 2.  FINANCIAL STATEMENT SCHEDULES

    Included in Part IV of this report:

       Schedule II--Valuation and qualifying accounts for the years ended
        December 31, 1999, 1998 and 1997

(a) 3.  EXHIBITS

    The following exhibits are incorporated by reference as noted below:

<TABLE>
      <C>         <S>
          2(a)    The Registrant's Limited Liability Company Interest Purchase
                    and Asset Contribution Agreement by and between Allied
                    Products Corporation, Bush Hog Investors, L.L.C. and Bush
                    Hog, L.L.C. dated as of October 21, 1999 is incorporated
                    by reference to Exhibit 2 of the Company's September 30,
                    1999 Quarterly Report in Form 10-Q (File No. 1-5530).

          3(a)    The Registrant's Restated Certificate of Incorporation, as
                    amended, is incorporated by reference to Exhibit 3 of the
                    Company's 1988 Annual Report on Form 10-K (File
                    No. 1-5530).

          3(b)    The Registrant's Amendments to Restated Certificate of
                    Incorporation is incorporated by reference to Exhibit 3 of
                    the Company's 1990 Annual Report on Form 10-K (File
                    No. 1-5530).

          3(c)    The Registrant's By-Laws of the Company, as amended, are
                    incorporated by reference to Exhibit 3 of the Company's
                    1998 Annual Report on Form 10-K (File No. 1-5530).

          4(a)    The Registrant's Rights Agreement, dated as of July 28,
                    1999, between Allied Products Corporation and LaSalle Bank
                    National Association, which includes as Exhibit A the
                    Terms of Series D Preferred Stock, as Exhibit B the
                    Form of Right Certificate and as Exhibit C the Summary of
                    Rights to Purchase Preferred Stock is incorporated by
                    reference to Exhibit 4.1 of the Company's Form 8-K dated
                    July 30, 1999 (File No. 1-5530).

         10(a)    *The Registrant's 1977 Incentive Stock Plan is incorporated
                    by reference to Exhibit 10(a) of the Company's 1980 Annual
                    Report on Form 10-K (File No. 1-5530).

         10(b)    *The Registrant's SMART Plan is incorporated by reference to
                    Exhibit 10(d) of the Company's 1984 Annual Report on
                    Form 10-K (File No. 1-5530).

         10(c)    *The Registrant's 1990 Long-Term Incentive Stock Plan is
                    incorporated by reference to Exhibit 10 of the Company's
                    1991 Annual Report on Form 10-K (File No. 1-5530).

         10(d)    The Registrant's Agreement for the sale of the assets of the
                    White-New Idea Farm Equipment Division of Allied Products
                    Corporation is incorporated by reference to
                    Exhibit(c)(2)(a)(i) of the Company's report on Form 8-K
                    dated January 14, 1994 (File No. 1-5530).

         10(e)    *The Registrant's Allied Products Corporation Executive
                    Retirement Plan dated April 4, 1994 is incorporated by
                    reference to Exhibit 10(a) of the Company's 1994 Annual
                    Report on Form 10-K (File No. 1-5530).

         10(f)    *The Registrant's Executive Officer's Agreement in Event of
                    Change in Control or Ownership of Allied Products
                    Corporation dated April 1, 1994 is incorporated by
                    reference to Exhibit 10(b) of the Company's 1994 Annual
                    Report on Form 10-K (File No. 1-5530).

         10(g)    *The Registrant's Allied Products Corporation Retirement
                    Plan dated as of December 31, 1993 is incorporated by
                    reference to Exhibit 10(d) of the Company's 1994 Annual
                    Report on Form 10-K (File No. 1-5530).
</TABLE>

54
<PAGE>
<TABLE>
      <C>         <S>
         10(h)    *The Registrant's Bush Hog Segment of the Allied Products
                    Corporation Combined Retirement Plan effective
                    December 31, 1993 is incorporated by reference to
                    Exhibit 10(e) of the Company's 1994 Annual Report on
                    Form 10-K (File No. 1-5530).

         10(i)    *The Registrant's Verson Segment of the Allied Products
                    Corporation Combined Retirement Plan effective
                    December 31, 1993 is incorporated by reference to
                    Exhibit 10(f) of the Company's 1994 Annual Report on
                    Form 10-K (File No. 1-5530).

         10(j)    *The Registrant's Littell Segment of the Allied Products
                    Corporation Combined Retirement Plan effective
                    December 31, 1993 is incorporated by reference to
                    Exhibit 10(g) of the Company's 1994 Annual Report on
                    Form 10-K (File No. 1-5530).

         10(k)    The Registrant's Consent to Stock Repurchase dated as of
                    November 27, 1996 is incorporated by reference to
                    Exhibit 10B of the Company's 1996 Annual Report on
                    Form 10-K (File No. 1-5530).

         10(l)    *The Registrant's 1997 Incentive Stock Plan is incorporated
                    by reference to Exhibit 10 of the Company's June 30, 1997
                    Quarterly Report on Form 10-Q (File No. 1-5530).
</TABLE>

------------------------

*   Management contracts or compensatory plans.

    The following exhibits are attached only to the copies of this report filed
with the Securities and Exchange Commission:

<TABLE>
<CAPTION>
        EXHIBIT NO.            NAME OF EXHIBIT
      ----------------         ---------------
      <C>                      <S>
             2.1               First Amendment to Limited Liability Company Interest
                                 Purchase and Asset Contribution Agreement, dated as of
                                 December   , 1999.
             2.2               Second Amendment to Limited Liability Company Interest
                                 Purchase and Asset Contribution Agreement, dated as of
                                 February 10, 2000.
             2.3               Third Amendment to Limited Liability Company Interest
                                 Purchase and Asset Contribution Agreement, dated as of
                                 March 7, 2000.
            10.1               Material Contract-Loan and Security Agreement between Allied
                                 Products Corporation, as Borrower, and LaSalle Bank
                                 National Association, as Lender, dated as of March 7,
                                 2000.
            10.2               Material Contract-Letter of Agreement dated March 23, 2000
                                 between Allied Products Corporation, as Seller, and Bush
                                 Hog Investors, as Buyer, regarding the sale of
                                 Registrant's 19.9% interest in Bush Hog, L.L.C.
            10.3               Material Contract-Loan and Security Agreement by and between
                                 Allied Products Corporation and Foothill Capital
                                 Corporation dated as of March 29, 2000.
            21                 Subsidiaries of the Registrant.
            23                 Consent of Independent Accountants.
            24                 Power of Attorney.
            27                 Financial Data Schedule.
</TABLE>

    Other financial statements, schedules and exhibits not included above have
been omitted as inapplicable or because the required information is included in
the consolidated financial statements or notes thereto.

(b) REPORTS ON FORM 8-K

    No reports on Form 8-K were filed by the Company during the fourth quarter
of the year ended December 31, 1999.

                                                                              55
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                         ------------------------------------
                                                            1999        1998         1997
                                                         ----------   ---------   -----------
    <S>                                                  <C>          <C>         <C>
    Allowance for doubtful accounts--
      Current receivables:
        Balance at beginning of year...................  $  519,000   $ 531,000   $   629,000
        Add (deduct)--
          Provision charged to income..................   1,553,000     129,000       114,000
          Allowance applicable to receivables
            acquired...................................      --          47,000       --
          Receivables charged off as bad debts, net of
            recoveries.................................    (599,000)   (188,000)     (212,000)
                                                         ----------   ---------   -----------
        Balance at end of year.........................  $1,473,000   $ 519,000   $   531,000
                                                         ==========   =========   ===========
      Long-term receivables:
        Balance at beginning of year...................  $   --       $ 610,000   $ 7,165,000
        Add (deduct)--
          Provision charged to income..................      --          --           --
          Receivables charged off as bad debts, net of
            recoveries.................................      --        (610,000)   (6,555,000)
                                                         ----------   ---------   -----------
        Balance at end of year.........................  $   --       $  --       $   610,000
                                                         ==========   =========   ===========
</TABLE>

------------------------

Amounts in the above schedule relate to both continuing and discontinued
operations.

56
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.

<TABLE>
<S>                                               <C>  <C>
                                                  ALLIED PRODUCTS CORPORATION
                                                  (Registrant)

April 13, 2000                                    By:  /s/ RICHARD A. DREXLER
                                                       ----------------------------------------------
                                                       Richard A. Drexler, CHAIRMAN,
                                                       PRESIDENT AND CHIEF EXECUTIVE AND FINANCIAL
                                                       OFFICER
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<S>                                                  <C>   <C>  <C>
                                                     *                 /s/ [RICHARD A. DREXLER]
                                                            ----------------------------------------------
                                                             Richard A. Drexler, CHAIRMAN, PRESIDENT AND
                                                                CHIEF EXECUTIVE AND FINANCIAL OFFICER
                                                                               DIRECTOR

April 13, 2000                                       *                  /s/ [ROBERT J. FLECK]
                                                            ----------------------------------------------
                                                             Robert J. Fleck, VICE PRESIDENT--ACCOUNTING,
                                                             CHIEF ACCOUNTING AND ADMINISTRATIVE OFFICER

                                                     *                   /s/ [LLOYD DREXLER]
                                                            ----------------------------------------------
                                                                            Lloyd Drexler,
                                                                               DIRECTOR

                                                     *                /s/ [STANLEY J. GOLDRING]
                                                            ----------------------------------------------
                                                                         Stanley J. Goldring,
                                                                               DIRECTOR

                                                     *                   /s/ [JOHN E. JONES]
                                                            ----------------------------------------------
                                                                            John E. Jones,
                                                                               DIRECTOR

                                                     *                 /s/ [MITCHELL I. QUAIN]
                                                            ----------------------------------------------
                                                                          Mitchell I. Quain,
                                                                               DIRECTOR

                                                     *                   /s/ [S. S. SHERMAN]
                                                            ----------------------------------------------
                                                                            S. S. Sherman,
                                                                               DIRECTOR

                                                     *     By:            /s/ [MARK C. STANDEFER]
                                                                ------------------------------------------
                                                                            Mark C. Standefer,
                                                                             ATTORNEY-IN-FACT
</TABLE>

                                                                              57