<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, 1995
                                        OR
 
                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
-------               OF THE SECURITIES EXCHANGE ACT OF 1934
                       FOR THE TRANSITION PERIOD FROM     TO
                           COMMISSION FILE NUMBER 1-5530
</TABLE>
 
                          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.
                                      _X_
 
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 February 29, 1996, 9,364,844 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   $195,807,000.  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 23, 1996  and
Annual  Report to  security holders  for the  year ended  December 31,  1995 are
incorporated by reference in Part III and Part IV herein.
 
The Exhibit Index is located on page 40.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<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.
 
    The  Company's   operations  involve   a   single  industry   segment,   the
manufacturing  and  sale  of  agricultural and  industrial  machinery  and other
products.
 
    The operations of the  Company were realigned into  one business segment  in
1993  reflecting  the  sale  or closure  of  several  operating  divisions. This
restructuring of the Company,  which began in 1991,  was completed in 1994  with
the  sale  of the  Cooper division.  Reference is  made  to Note  3 of  Notes to
Consolidated Financial  Statements  for a  more  complete description  of  these
closures and dispositions.
 
    Approximately  11%, 2%  and 8%  of the  Company's net  sales from continuing
operations in 1995, 1994 and 1993, respectively, were exported.
 
PRODUCT LINES
FARM IMPLEMENTS
 
    PRODUCTS.   The  Bush Hog  division  offers  a comprehensive  line  of  farm
implements including rotary cutters, tractor mounted loaders, hay mowers, peanut
combines,  tillers and cultivators.  These products are  marketed under two well
established brand names, Bush Hog and Lilliston.
 
    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. The use season for rotary cutters extends from early spring
to late fall, and even  longer in warmer climates. Bush  Hog has a major  market
share (38%) of rotary cutters sold in North America.
 
    Front  end loaders are  used by farmers and  ranchers for material handling,
and cultivators  are  used for  weed  control  after crops  have  been  planted.
Lilliston   peanut  combines  are  used   in  harvesting  peanuts,  and  command
approximately 32% of the market. The use season for peanut combines is from late
summer to late fall.
 
    Several other implements are  sold under the Bush  Hog name, including  disc
mowers, rotary tillers, post hole diggers, flail mowers and rear mounted tractor
blades.  These tools offer a  variety of applications, and  are sold to farmers,
ranchers, landscape contractors, large estate owners and municipalities.
 
    Implements tend  to have  a shorter  life than  tractors and  self-propelled
grain  combines, and purchases of  implements are less likely  to be deferred in
times of economic  uncertainty, somewhat  dampening cyclical  swings in  demand.
Parts accounted for almost one sixth of Bush Hog's total revenue in 1995.
 
    In  order to maintain  and expand its market  position, Bush Hog continually
updates and improves its product offerings.  This is done through a  combination
of internal development and external acquisition of technology.
 
    MARKETING.   Bush  Hog implements  are marketed  through approximately 2,650
farm equipment dealers which play the  primary role in sales of farm  equipment.
In  general, they  are independent,  local businessmen  who have  an established
local clientele developed  over the  years and represent  more than  35% of  the
total  farm equipment dealerships in the United  States and Canada. The Bush Hog
and Lilliston  brand  names are  particularly  strong in  the  southeastern  and
southwestern states.
 
    Marketing  and sales activities in Canada  and the United States are carried
out  by  58  commissioned   manufacturers'  representatives  or   representative
organizations.  They operate as independent contractors  and, for the most part,
are exclusive. Commissions  are payable  when receivables  are collected  rather
than when sales are made.
 
    To  even  out the  seasonal variations  in its  production cycles,  Bush Hog
provides incentives for off-season  purchases, including extended payment  terms
to  dealers in  the form of  floor plan  financing. Bush Hog  retains a security
interest in  this  floor plan  equipment.  Under certain  state  and  provincial
statutes,  a  dealer may  return  floor plan  equipment  to a  manufacturer upon
termination of the dealership.
 
    Bush  Hog  services  its  network  of  dealers  through  two   manufacturing
facilities and eight service parts distribution centers strategically located in
the United States and Canada.
 
    COMPETITION.    Competition  for  farm  equipment  includes  the  major line
manufacturers of tractors and  several hundred companies  producing one or  more
models of shortline implements. Price, quality, service and availability are all
factors in brand selection. Bush Hog's objective is to be a low cost producer of
high  quality products. To do this it  must continue to modernize its facilities
to improve efficiency.
 
2
<PAGE>
    INDUSTRY.  The agricultural equipment industry in North America is a  mature
industry  engaged in producing  replacement equipment for  a declining number of
farmers. It is dominated  by a small number  of major line manufacturers,  which
market  a full range  of farm machinery, including  tractors, grain combines and
various implements  through  their  own dealer  organizations  and  account  for
approximately  60% of the dollar volume of industry shipments. The remaining 40%
of  the  market  is  shared  by  approximately  700  companies  that   generally
concentrate  their production  on shortline  implements such  as plows, harrows,
cultivators, livestock equipment, grain handling equipment or hay equipment.
 
    During the  1980's, the  farm  economy was  in decline  and  this led  to  a
deterioration  in farmers' financial condition.  Capital expenditures by farmers
reached a  low in  1986. Since  then,  commodity exports  have improved  due  to
changes  in governmental programs and foreign exchange rates. Individual farmers
have reduced their debt load and are much less leveraged after several years  of
good earnings.
 
    Higher  worldwide demand  for agricultural  commodities, coupled  with lower
than expected  1995  harvest  yields,  have  resulted  in  substantially  higher
commodity  prices. According to recent estimates by the United States Department
of Agriculture,  world grain  inventories are  at historically  low levels,  and
exports are projected to increase again in 1996.
 
    Net  farm income in  1995 was less  than in 1994  due to lower  yields and a
decline in  beef  cattle prices.  Beef  cattle prices  will  remain low  due  to
excessive  inventories, and little improvement is expected in 1996. Overall, net
farm income  is projected  to increase  in  1996, as  additional acres  will  be
planted due to changes in government programs.
 
METAL FORMING PRESSES
 
    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  blank  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 can  stamp.  An "A"
transfer press may sell for in excess of $25 million.
 
    Approximately 15%  of  Verson's revenue  is  generated by  customer  special
services.  Items  included  in  the special  services  area  are:  repair parts,
complete remanufacturing capability for used presses, and contract machining and
manufacturing. In  addition  to the  fabrication  and machining  of  components,
Verson  provides complete tooling and engineering services necessary for turnkey
systems. Verson also  designs and  supplies tools for  metal forming,  including
metal stamping and cold extrusion.
 
    MARKETING.    Verson's Marketing  Group  is headed  by  a Vice  President of
Marketing and Sales, with responsibility  for all Verson products and  services.
Three Sales Managers, reporting to the Vice President, are responsible for press
sales, tooling sales, and press rebuilding and contract services, respectively.
 
    Verson's  major customers are  the U.S. automobile  manufacturers (both U.S.
and Japanese  owned)  and  first  and second  tier  automotive  parts  producing
companies,  which, on average,  account for the largest  part of Verson's annual
revenue. Verson's  other  major market  served  is the  appliance  industry  and
customers include all major brand names.
 
    Verson  is the technology leader, having designed the world's first transfer
press in 1939, the world's first electronic  feed in 1981 and, most recently,  a
cross bar feed which significantly improves production.
 
    COMPETITION.   There are  only a few companies  world-wide 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
larger presses are  huge pieces of  machinery standing more  than three  stories
tall  and weighing up to 2,000 tons. Consequently, the barriers to entry for new
competitors are very difficult to overcome due to required capital.
 
    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, as well as  redesigning cost out  of
automobiles,  and  restructuring and  automating their  manufacturing processes.
Demand
 
                                                                               3
<PAGE>
from the appliance industry  remains strong as the  major manufacturers seek  to
increase  capacity, reduce costs and gear up to produce water conserving clothes
washers.
 
    The Verson division of Allied Products is in a strong position to capitalize
on major retooling and modernization programs as they come on stream. The second
wave of this demand  is being felt  now with major  suppliers to the  automakers
converting  to new technology.  Demand from the  appliance industry continues to
grow, more than offsetting  declines in aerospace and  ordnance. 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. This addition has significantly expanded the division's capacity for
manufacturing large transfer presses.
 
THERMOPLASTIC RESINS
 
    PRODUCTS  AND  SERVICES.   The  Coz  division  provides a  complete  line of
thermoplastic resins and related services  to the plastic molding and  extrusion
industry.  Coz  offers  a full  line  of materials  supply,  including specialty
thermoplastic  compounds   and   compounding  services,   color   and   additive
concentrates,  the reprocessing of scrap thermoplastic resins, and the brokering
of prime and secondary materials.
 
    Coz  purchases  unmodified  thermoplastic  resins  from  major  basic  resin
suppliers  and combines or alloys these resins with various additives to achieve
certain desired properties such as color, heat resistance, fire retardancy, etc.
The resins Coz purchases are generally in  the form of small plastic pellets  as
are the finished products supplied by Coz to its customers.
 
    Coz's   brokerage   operation  provides   its   customers  with   prime  and
off-specification materials at competitive prices  in large or small  quantities
as  required.  On-site  inventories  facilitate  short  delivery  cycles.  As an
additional service to  its customers,  Coz also reprocesses  scrap generated  in
molding  or extrusion activities, thereby economically turning scrap into useful
materials.
 
    MARKETING.  All sales  are handled on a  direct basis by salaried  employees
who receive a significant part of their compensation from commissions. The sales
staff  is strongly supported by technical personnel, both in product development
and in customer start-ups, applications, or training. Plant-to-plant visits  and
technical  conferences are commonplace.  The bulk of Coz's  sales activity is in
the northeastern United States.
 
    COMPETITION.  Coz's competition comes  from several different levels in  the
plastics  industry,  including  basic  resin  producers,  plastic  distributors,
brokers, concentrate suppliers and independent thermoplastic compounders.
 
    Coz differentiates itself from  its competition by  covering all aspects  of
plastics   material   supply,  including   compounding,  color   and  additives,
concentrates,  toll   processing   customers'  materials,   reprocessing   scrap
materials, and brokering both prime and off-spec materials.
 
    Over  its  35-year business  life, Coz  has developed  significant technical
capabilities supported by  excellent laboratory and  production equipment. As  a
result,  Coz  is  positioned as  a  high-end co-developer  for  special customer
applications.
 
    INDUSTRY.   The  thermoplastic  compounding industry  sales  approximate  $5
billion and are experiencing real growth at a rate of about 5 per cent annually.
Independent  compounders  such as  Coz  are numerous  and  generally focus  on a
relatively small geographic  area. Industry consolidation  is occurring as  some
larger   companies  have   been  attracted   to  the   growth  opportunities  in
thermoplastic compounding.
 
SALES BACKLOG
 
    Sales  backlog  as  of  December  31,  1995  was  $173,361,000  compared  to
$176,403,000 at December 31, 1994. Over 90% of the backlog orders will be filled
prior to the end of 1996.
 
EMPLOYEES
 
    Allied   Products   currently  employs   approximately   1,600  individuals.
Approximately 29% of Allied Products' employees are represented by unions.
 
RAW MATERIALS AND SOURCES OF SUPPLY
 
    The principal  raw material  used  by the  farm  implement and  metal  press
operations  include  steel  and  other  metals  and  purchased  components.  The
thermoplastic division uses  thermoplastics resins and  other chemicals.  During
1995, the materials needed by Allied Products generally have been 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.
 
PATENTS, TRADEMARKS AND LICENSES
 
    Allied  Products  owns the  federally registered  trademarks "Bush  Hog" and
"Lilliston" used  on its  agricultural equipment  products and  "Verson" on  its
metal forming presses, all of which it considers material to its business. While
Allied Products believes that the other
 
4
<PAGE>
trademarks  used by each of  its operations are important,  none of the patents,
licenses, franchises or  such other  trademarks are considered  material to  the
operation of its business.
 
MAJOR CUSTOMERS
 
    Net  sales from  continuing operations  to the  three major  U.S. automobile
manufacturers accounted for approximately 29%  of total consolidated sales  from
continuing  operations in  1995. Approximately 14%  and 25%  of Allied Products'
consolidated  net  sales   from  continuing   operations  in   1994  and   1993,
respectively,   were   derived  from   sales  to   the  major   U.S.  automobile
manufacturers. With the exception of  the three major automobile  manufacturers,
no  material  part  of Allied  Products'  business  is dependent  upon  a single
customer.
 
SEASONALITY
 
    Retail sales of and cash collected  for farm equipment tend to occur  during
or  just preceding the use seasons previously described. Sales and cash receipts
for the other divisions are not affected by seasonality.
 
ENVIRONMENTAL FACTORS
 
    Reference is made to Note 10  of Notes to Consolidated Financial  Statements
regarding environmental factors and matters.
 
                                                                               5
<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 February 29, 1996.
 
<TABLE>
<CAPTION>
                    NAME                                         POSITION WITH ALLIED PRODUCTS                    AGE
---------------------------------------------  -----------------------------------------------------------------  ---
<S>                                            <C>                                                                <C>
Richard A. Drexler...........................  Chairman, President and Chief Executive Officer                    48
Kenneth B. Light.............................  Executive Vice President, Chief Financial and Administrative
                                                 Officer                                                          63
Martin A. German.............................  Senior Vice President                                              59
Bobby M. Middlebrooks........................  Senior Vice President                                              60
David B. Corwine.............................  Vice President, General Counsel and Secretary                      58
Robert J. Fleck..............................  Vice President-Accounting and Chief Accounting Officer             48
Patrick J. Riley.............................  Vice President and Treasurer                                       60
</TABLE>
 
    No family relationships exist among the executive officers.
 
    Each executive  officer, except  Mr.  German, 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, has been  Chief Executive Officer since 1986 and
was 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. Light, who became  Chief Financial Officer in  1995, has been  Executive
Vice  President and Chief Administrative Officer  since 1982 and has also served
as Secretary  from  1972  to  1995.  From 1980  to  1982,  he  was  Senior  Vice
President-Administration,  from  1976  to  1980  he  was  Vice President-General
Counsel and prior to that he was  General Counsel and Director of the  Corporate
Law Department. He became a Director of Allied Products in 1993.
 
    Mr.  German was elected Senior Vice President in 1991 and was Vice President
from 1989 to 1991. Since joining Allied Products in 1986, he has been  President
of  the Verson Allsteel Press division. Prior to joining Allied Products, he was
Vice President and General  Manager of the Turning  Division of Warner &  Swasey
Company.
 
    Mr.  Middlebrooks has  been Senior  Vice President  since 1985  and was Vice
President of  Allied  Products  from  1984  to 1985  in  charge  of  the  former
Agricultural   Equipment  Group.  Prior  to  that,  he  was  President-Bush  Hog
Implements Division. He joined Bush Hog in 1955.
 
    Mr. Corwine was  elected Vice  President, General Counsel  and Secretary  in
1995.  From 1980 to  1995, he was  General Counsel and  Assistant Secretary, and
prior to that  he was  Director of the  Corporate Law  Department and  Assistant
Secretary. Prior to joining Allied Products in 1979, he was General Attorney for
Santa Fe Industries, Inc.
 
    Mr. Fleck has been Vice President-Accounting since 1985 and Chief Accounting
Officer since 1986. 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. Riley has been Vice President &  Treasurer since 1993. Prior to that  he
has been Treasurer of Allied Products since 1976. Prior to that he was Assistant
Treasurer and Director of Cash Management of Allied Products since 1969.
 
6
<PAGE>
ITEM 2.  PROPERTIES
 
    Allied Products owns or leases four manufacturing facilities in three states
for the production of its various products and maintains warehouse facilities in
various locations throughout the United States and Canada.
 
    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.
 
    Operations  at the Bush Hog division are  conducted in Selma, Alabama in two
owned (one of  which is mortgaged)  facilities containing approximately  700,000
square  feet in total. The division  also maintains several leased facilities in
various states  and  Canada which  are  used  as warehouses  and  parts  depots.
Operations at the Verson division are conducted in Chicago, Illinois in an owned
facility  containing approximately  400,000 square  feet. Operations  at the Coz
division are  conducted  in  Northbridge, Massachusetts  in  a  leased  facility
containing approximately 231,000 square feet.
 
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.
 
                                                                               7
<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  END OF
            1995                OF YEAR     YEAR      1995 QTR    HIGH        LOW        DIVIDEND
-----------------------------------------------------------------------------------------------------
<S>                             <C>        <C>        <C>        <C>        <C>       <C>
Common                          $14 3/8    $24           1       $17 1/8    $13 3/8         $--
-----------------------------------------------------------------------------------------------------
                                                         2        19 7/8     16 3/4        .025
-----------------------------------------------------------------------------------------------------
                                                         3        23 1/4     18 3/4        .025
-----------------------------------------------------------------------------------------------------
                                                         4        24 1/8     20 1/8        .025
-----------------------------------------------------------------------------------------------------
 
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                BEGINNING  END OF
            1994                OF YEAR     YEAR      1994 QTR    HIGH        LOW        DIVIDEND
-----------------------------------------------------------------------------------------------------
<S>                             <C>        <C>        <C>        <C>        <C>       <C>
Common                          $12 1/2    $14 3/8       1       $17 3/8    $12 5/8         $--
-----------------------------------------------------------------------------------------------------
                                                         2        15         12 1/4         --
-----------------------------------------------------------------------------------------------------
                                                         3        14 7/8     12 1/2         --
-----------------------------------------------------------------------------------------------------
                                                         4        15 1/8     12             --
-----------------------------------------------------------------------------------------------------
</TABLE>
 
    As of February 12, 1996, the approximate number of holders of record of  the
Company's common stock ($.01 par value) was 2,400.
 
    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 $.025 per share to $.05 per share.
 
ITEM 6.  SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                        1995          1994          1993            1992             1991
                                                    ------------  ------------  ------------  ----------------   ------------
<S>                                                 <C>           <C>           <C>           <C>                <C>
Net sales from continuing operations (A)..........  $260,861,000  $215,529,000  $217,988,000  $195,341,000       $159,023,000
Income (loss) from continuing operations (A)......  $ 33,989,000  $ 19,687,000  $  5,951,000  $  1,774,000(B)    $ (4,500,000)
Earnings (loss) per common share from continuing
  operations (A)..................................     $3.48         $1.96          $.43            $(.08)(B)      $(1.12)
Total assets......................................  $166,743,000  $150,555,000  $192,040,000  $284,612,000       $326,702,000
Long-term debt (including capitalized leases and
  redeemable preferred stock).....................  $    315,000  $ 12,130,000  $ 23,522,000  $117,833,000       $ 37,799,000
Cash dividend declared per common share...........     $.075          $--           $--           $--                $--
</TABLE>
 
<TABLE>
<S>  <C>
<FN>
------------------------
(A)  Restated prior to 1993 to reflect the effects of discontinued operations.
 
(B)  Excludes a charge  of $1,739,000 ($.21  per common share)  relating to  the
     transition  effect  of  adopting SFAS  No.  106--Employers'  Accounting for
     Postretirement Benefits  Other Than  Pensions on  an immediate  recognition
     basis.
</TABLE>
 
8
<PAGE>
ITEM 7:  MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
OPERATING RESULTS
    Reference  is made to  Note 3 of Notes  to Consolidated Financial Statements
regarding the sale/shutdown and restructuring of operations prior to the end  of
1994.
 
    During  1993, the Company sold the  Smith Energy Services and White-New Idea
Farm Equipment divisions for cash. The  Company also closed down and  liquidated
the  R/B Die & Prototype, International Agro, Kewanee Farm Equipment and Charles
City Foundry and Machining operations during 1993. During 1994, the Company sold
the business and certain assets of the Cooper division. The Company has included
the results of these operations and, in  the years prior to 1994, an  allocation
of   financing  costs,   administrative  and   interest  expenses   and  related
restructuring cost provisions under the caption "Discontinued operations (net of
tax)--Income from  operations" in  the accompanying  Consolidated Statements  of
Income.
 
1995 COMPARED TO 1994
 
    Net  sales from continuing operations in  1995 increased 21% to $260,861,000
compared to net sales from continuing operations of $215,529,000 in 1994. Income
before taxes  from continuing  operations was  $18,330,000 in  1995 compared  to
$20,564,000  in 1994. Excluding the effects of  a $7,699,000 reserve for a long-
term receivable  in  1995  (see  Note 10  of  Notes  to  Consolidated  Financial
Statements),  income  before taxes  from continuing  operations would  have been
$26,029,000, an increase of over 26% from the prior year. Net income in 1995 was
$33,989,000 compared to net  income of $14,333,000  reported in 1994.  Excluding
the  effects of the above mentioned reserve and the income statement effect from
a reduction  in  the  valuation  allowance associated  with  the  Company's  net
deferred  tax asset (see Note 4  of Notes to Consolidated Financial Statements),
net income would have been $25,040,000 in 1995.
 
    Net sales at  the Bush Hog  division decreased by  approximately 2% in  1995
compared  to 1994.  The majority  of the decrease  was associated  with the disc
mower and peanut  combine product lines.  During 1995, portions  of the  Midwest
were  affected  by spring  floods,  resulting in  lower  crop plantings.  In the
southern portion of the country, extreme drought and insect infestation affected
the cotton, corn and  peanut crop. Cattle prices  dropped during 1995  affecting
the  sales of larger cutters at the Bush Hog division. Cattle ranchers use these
large cutters for grazing  pasture maintenance. Decreases  in sales noted  above
were  partially offset by the effects of  new products introduced in the current
year. Gross profits and gross profit margins decreased in 1995 compared to 1994.
The  decreases  were  primarily  related  to  the  effects  of  decreased  labor
efficiencies and the mix of products sold. New product sales in the current year
were generally not manufactured by the Bush Hog division but were purchased from
outside   sources  under  OEM  (original  equipment  manufacturing)  agreements,
resulting in lower  gross profit margins.  Lower sales volume  noted above  also
resulted in lower gross profits.
 
    At  the Verson division, net sales increased  by almost 60% in 1995 compared
to the net sales level  of 1994. During 1995, production  began on an order  for
three  "A" size transfer presses. The total value  of the order was in excess of
$85,000,000. Production and shipment of these presses will be completed in 1996.
Revenues and profits  are recognized  on a  percentage of  completion basis  for
press  production at  the Verson division.  Production on other  press orders as
well as parts sales also increased in 1995. Although profit margins decreased in
1995, gross profits  increased, principally the  result of increased  production
(sales)  volume noted above. Gross profit margins decreased slightly in relation
to press sales due to  a mix of presses manufactured  in 1995 compared to  1994.
Margins  on  parts  sales  also  decreased  in  1995.  Some  parts  business was
subcontracted out in 1995 due to manufacturing requirements associated with  the
"A"  presses. Warranty provisions increased in 1995 due to the increase in sales
volume. Provisions  for  warranty  in  1994  included  the  reversal  of  excess
provisions in the prior year.
 
    Net sales at the Coz division increased 11% in 1995 compared to net sales of
the  prior year. The majority of the increase was associated with increased sale
prices in the current year. During 1994 and the first half of 1995, the price of
basic raw  materials  increased significantly.  Sales  prices were  adjusted  to
partially  offset the effect of these cost  increases. In the last half of 1995,
raw material prices decreased. Gross profits increased slightly in 1995 compared
to 1994, principally from the effects  of increased sales as noted above.  Gross
profit margins decreased slightly in the current year due to the mix of products
sold  and the  difficulty in  passing on  material cost  increases to customers.
Manufacturing costs increased  in 1995 due  to a slight  increase in  employment
levels and normal cost increases in labor, rent and supplies.
 
    Selling  and administrative  expenses were  $34,452,000 (13.2%  of net sales
from continuing operations) in 1995 compared to $31,072,000 (14.4% of net  sales
from  continuing  operations)  in  1994. In  terms  of  actual  dollars, selling
expenses increased  slightly in  1995. Increased  costs at  the Verson  division
associated
 
                                                                               9
<PAGE>
with  increased sales  efforts were partially  offset by decreased  costs at the
Bush Hog division  related to changes  within the commission  structure at  this
operation.   The  increases  in  administrative  expenses  relate  primarily  to
provisions ($932,000) for the new Target Benefit pension plan (effective January
1,  1995)  and  expenses  totaling  approximately  $1,500,000  related  to   the
termination/retirement  of certain individuals. Normal cost increases (salaries,
rent, utilities, insurance, etc.) also impacted both selling and  administrative
costs in 1995.
 
    The  decrease in interest expense ($1,052,000 in 1995 compared to $1,859,000
in 1994) was directly related to  reduced borrowing levels in the current  year.
In  March  1994,  the  Company  terminated  certain  financing  arrangements and
replaced them with a Revolving Credit  Agreement. This agreement was amended  in
the first quarter of 1995 providing for reduced interest rates. Borrowing levels
have been reduced due to the improved internal cash flow of the Company from its
continuing operations.
 
    Other expense was $7,483,000 in 1995 compared to other expense of $1,198,000
in  1994.  Reference is  made  to Note  12  of Notes  to  Consolidated Financial
Statements for an analysis of other (income) expense in 1995 and 1994.
 
    Reference is made to  Note 4 of Notes  to Consolidated Financial  Statements
for  an explanation  of the current  and deferred provision  (credit) for income
taxes in 1995 and 1994.
 
1994 COMPARED TO 1993
 
    Net sales from continuing operations  in 1994 were $215,529,000 compared  to
net  sales from continuing operations of $217,988,000 for the prior year. Income
from continuing  operations in  1994  was $19,687,000  compared to  income  from
continuing  operations of  $5,951,000 reported in  1993. Net income  in 1994 was
$14,333,000 compared to net income of $15,284,000 reported in 1993.
 
    Net sales at the Bush Hog division increased by over 11% in 1994 compared to
1993. The most significant increases in net sales occurred within the loader and
disc mower  product  lines  in  1994. In  general,  the  agricultural  equipment
industry experienced improvement over the prior year due to a number of factors.
The  year of  1994 was a  record year  for corn, soybean  and cotton production.
Planted acreage also increased  in 1994 over 1993  levels. The most  significant
increase  in net sales  at the Bush  Hog division was  within the loader product
line. The overall market for the front end loaders increased this past year. The
division manufactures adaptor kits so that  loaders can be mounted on more  than
1200  different tractor  models. Disc  mower and  parts sales  also increased in
1994. These increases were  partially offset by  decreased rotary cutter  sales.
This decrease was primarily related to the effects of lower cattle prices. Gross
profits  and gross  profit margins  improved in 1994  at the  Bush Hog division.
Approximately 60% of the increase in  gross profits was directly related to  the
increased  sales volume as discussed above. The effects of sales price increases
during 1994 resulted  in improved  margins and  increased gross  profits. On  an
overall  basis, manufacturing variances increased slightly in 1994. Increases in
direct  manufacturing   inefficiencies   (resulting  from   increased   facility
utilization  and late receipt of purchased components) were mostly offset by the
effects of manufacturing cost reductions and decreased warranty claims in 1994.
 
    At the Verson  division, net sales  decreased by approximately  17% in  1994
compared  to 1993. In late 1991, the  division had received a large press order.
During 1993, production was  completed on this order.  Orders for production  in
1994  to replace the  work completed did not  materialize in sufficient amounts.
During the last half of 1994 and the early part of 1995, the division received a
significant number of  new press  orders, including  orders for  three "A"  size
transfer  presses with  a sales value  of over $85,000,000.  While gross profits
remained approximately equal to  those of the prior  year, gross profit  margins
improved  in 1994.  The increase  was the  result of  several factors, including
improved margins on  parts sales  (prices were increased  in the  early part  of
1994), improved mix of products sold and lower warranty expenses.
 
    Net sales at the Coz division increased by approximately 6% in 1994 compared
to  1993. Processed compounds represent the largest product line increase due to
expansion of the customer  base and increased selling  prices. Gross profits  at
the  Coz division  increased, due primarily  to the effect  of increased selling
prices and, to a lesser extent,  the mix of products sold. Partially  offsetting
this  increase was  the effect  of increased material  costs in  1994. Prices of
certain raw  materials increased  significantly during  the past  year.  Selling
prices  were  increased  to offset  these  cost increases.  Prices  continued to
escalate in the early part of 1995. Shipping costs also increased in 1994 due to
the effects of increased  sales volume and  increased shipping container  costs.
Utility  expenses increased  in 1994  due to  additional space  being leased for
offices with the old office space now being utilized for manufacturing purposes.
Gross profit margins of the Coz  division remained constant in 1994 compared  to
1993.
 
10
<PAGE>
    Selling  and administrative expenses decreased  to $31,072,000 (14.4% of net
sales from continuing operations) from $31,427,000 (also 14.4% of net sales from
continuing operations) in 1993. On an overall basis, selling expenses  increased
in  1994  compared  to  1993.  The  most  significant  increase  was  related to
commissions, primarily at the Bush Hog  division where sales increased in  1994.
The  Coz division  increased the  employment level  of its  sales force  in 1994
resulting in increased costs.  These increases were  offset by lower  commission
expenses  at the  Verson division as  this operation  is phasing out  the use of
commissioned brokers in the  sale of presses. The  increase in selling  expenses
was more than offset by lower administrative expenses, primarily in the areas of
professional  fees and insurance  costs. Office related  costs were also reduced
with the relocation of  the Corporate Office during  1994. Staffing levels  were
reduced  from 1993 levels. These decreases  were partially offset by a provision
of $450,000 as a supplemental contribution to the SMART pension plan, a $400,000
provision for  the new  Executive  Retirement Plan  and other  normal  increases
experienced in operations throughout the Company.
 
    The   decrease  in  interest  expenses  ($1,859,000  for  1994  compared  to
$6,376,000 in 1993 after an allocation to discontinued operations) was  directly
related  to a  significantly reduced  borrowing level  and the  effects of lower
average interest rates associated with outstanding debt in 1994.
 
    Other expense  in  1994  was  $1,198,000 compared  to  $4,614,000  in  1993.
Reference  is made to Note 12 of  Notes to Consolidated Financial Statements for
an analysis of other (income) expense in 1994 and 1993.
 
    Loss from discontinued operations totaled $5,354,000 in 1994.  Approximately
half  of the loss  was related to  the operating results  of the Cooper division
which was sold at the end of  the second quarter following the termination of  a
proposed   sale  earlier   in  the   year.  Other   significant  items  included
environmental related issues  (see Note  10 of Notes  to Consolidated  Financial
Statements) and insurance costs associated with discontinued operations, and the
final  settlement of the disposition of the White-New Idea operation (see Note 3
of Notes to Consolidated Financial Statements).
 
FINANCIAL CONDITION
 
1995
 
    Working capital at December 31, 1995  was $54,947,000 and the current  ratio
was  1.84 to 1.0. Net accounts  receivable decreased by approximately $2,000,000
in 1995.  The majority  of the  decrease  was related  to the  Verson  division.
Receivables at this division are a function of shipments (revenues recognized on
a  percentage of completion basis are accumulated in inventory). Press shipments
in the last few months of 1995 decreased compared to the end of the prior  year.
This  decrease was partially  offset by the effects  of increased receivables at
the Bush Hog  division. The increase  reflects decreased retail  sales of  large
cutters  and peanut  combines due to  market conditions described  earlier. On a
consolidated basis, inventory  levels increased by  approximately $4,000,000  in
1995.  The entire increase  was related to the  Verson division where production
continues on an order for three  "A" size transfer presses discussed earlier.  A
portion  of the increase  in accumulated costs  of presses in  progress has been
offset by  increased customer  deposits  and progress  payments related  to  the
contracts in process. Inventories at the Bush Hog and Coz divisions decreased in
1995.
 
    Major fixed asset additions in 1995 include building additions at the Verson
division (primarily to expand the press assembly area) and a new paint system at
the  Bush Hog division.  Other fixed asset  additions at all  divisions were for
equipment to  improve productivity  and quality  in the  products  manufactured.
Funds  to  finance  these  additions include  current  operating  cash  flow and
borrowings (subsequently repaid)  under the Revolving  Credit Agreement.  During
1995,  the Company sold for cash certain idle facilities and other operating and
nonoperating assets which resulted in gains of approximately $2,000,000.
 
    The decrease in notes receivable due after one year was related to a reserve
of $7,699,000 established in  1995 for the remaining  unreserved amount due  the
Company  from  the  sale of  an  operation in  1991.  See  Note 10  of  Notes to
Consolidated Financial Statements.
 
    The deferred tax asset results from the reversal of the valuation  allowance
associated with certain net operating loss carryforwards, tax credits and timing
differences  in 1995. The  recent earnings history of  the Company and prospects
for the future makes it more likely  than not that the Company will utilize  the
benefits arising from the items noted above. See Note 4 of Notes to Consolidated
Financial Statements.
 
    Borrowings  under the  Revolving Credit  Agreement at  the end  of 1995 were
primarily related to the "A" size  transfer presses in production at the  Verson
division  and the normal seasonal needs at the Bush Hog division associated with
inventory build schedules prior to the spring selling season.
 
    During 1995, the Company  retired all outstanding Series  B and C  preferred
shares through the use of internally generated funds.
 
                                                                              11
<PAGE>
1994
 
    Working  capital at December 31, 1994  was $33,531,000 and the current ratio
was 1.53 to 1.0. Net accounts receivable increased by almost $2,000,000 in 1994.
The majority of the increase  was related to the  Bush Hog division where  sales
increased in 1994 as noted above. Coz division receivables also increased at the
end  of 1994. This  increase was associated  primarily with strong  sales in the
fourth quarter  of  1994.  Receivables  at  the end  of  1994  also  included  a
short-term  secured note taken by  the Company as part  of the proceeds from the
sale of the Cooper division. This note was paid in full subsequent to the end of
1994. These  increases were  partially  offset by  the  effects of  lower  press
shipments  at the Verson division in 1994  and the effects of the disposition of
the Cooper division.
 
    On a consolidated basis,  inventories increased by approximately  $3,700,000
at the end of 1994 compared to the end of 1993. The majority of the increase was
related to the Bush Hog division. Production was increased in the fourth quarter
of  1994 to avoid capacity limitations in  the first half of 1995. Coz inventory
levels also  increased due  to increased  orders and  the effects  of  increased
material  prices. These  increases were offset  partially by the  effects of the
sale of  the  Cooper division  and  lower net  inventory  levels at  the  Verson
division due to the effects of increased customer deposits for jobs in progress.
 
    Fixed   asset  additions  of  $7,072,000  were  financed  primarily  through
internally generated funds.
 
    The increase in payables and borrowings under the Revolving Credit Agreement
at the end of 1994 reflects the effects of increased production at all operating
divisions of the Company. Reference is made  to Note 2 of Notes to  Consolidated
Financial Statements for an analysis of accrued expenses.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    At  the  end  of  1995,  the  Company's  sales  backlog  was  in  excess  of
$173,000,000. The majority of the amount  is related to the Verson division  and
is  represented principally  by orders  for new  presses. Accumulated production
costs are not invoiced until shipment. In order to fund the cost of  production,
the Verson division receives deposits from customers at the time the press order
is  accepted. Many press orders also require periodic progress payments from the
customer during  the  production process,  which  minimizes the  Company's  cash
requirements during the manufacturing cycle.
 
    At  the Bush  Hog division, cash  collections associated  with machine sales
generally are  dependant upon  the retail  sale of  the product  by the  dealer.
Extended  payment terms are offered in the form of floor plan financing which is
customary within the agricultural equipment industry. With the exception of  the
cattle  industry, the overall farm economy is sound. It is anticipated that farm
cash income will be up slightly in 1995 and will increase in 1996 due to  higher
crop prices, increased demand and more acres being planted. Debate on a new farm
bill continues in Congress.
 
    As  discussed  earlier, the  Company completed  major fixed  asset additions
during 1995.  These  additions  were  financed through  the  use  of  internally
generated funds and borrowings under the Revolving Credit Agreement. The Company
currently has no major commitments for fixed asset additions.
 
    As  noted  above,  the  Company reversed  its  previous  valuation allowance
associated with certain net operating loss carryforwards, tax credits and timing
differences. In years subsequent  to 1995, the Company  will be recording a  tax
provision  based  principally  upon the  Federal  statutory rate  in  effect and
anticipates no reductions in future  tax provisions from additional tax  credits
at  this  time. However,  the Company  projects that  future Federal  income tax
payments will be  based upon  the Alternative Minimum  Tax rate  as the  Company
continues  to utilize its  substantial tax loss  carryforwards for tax reporting
purposes.
 
    Reference is made to Note 10  of Notes to Consolidated Financial  Statements
for a current discussion on outstanding environmental and legal issues and other
contingent liabilities.
 
    As  of  December 31,  1995, the  Company  had cash  and cash  equivalents of
$744,000 and  additional  funds of  $23,800,000  available under  its  Revolving
Credit Agreement. The Company believes that its expected operating cash flow and
funds available under its Revolving Credit Agreement are adequate to finance its
operations  and capital expenditures in the near future. During 1995 the Company
has been in compliance with all provisions of loan agreements in effect.
 
    Subsequent to the end of 1995, the Company issued 211,500 new common  shares
to  certain officers of the Company for the exercise of stock options previously
issued. The  Company repurchased  these shares  from the  officers for  treasury
stock purposes. The Company's Board of Directors also authorized the purchase by
the  Company of up to an additional 250,000 shares of the Company's common stock
from time to time on the open market, subject to prevailing market conditions.
 
    On February 2,  1996, the  Company announced  an increase  in the  quarterly
dividend from $.025 per share
 
12
<PAGE>
to  $.05 per share, effective  with the first quarter  dividend payable on March
31, 1996 to shareholders of record on February 23, 1996.
 
IMPACT FROM NOT YET EFFECTIVE RULES
 
    In October  1995, the  Financial Accounting  Standards Board  (FASB)  issued
Statement  of Financial Accounting Standard (SFAS) No. 123--Accounting for Stock
Based Compensation. Under the  provisions of this statement,  the fair value  of
stock  options issued  may be determined  by using an  option-pricing model that
takes into account the stock  price at the grant  date, the exercise price,  the
expected  life of  the option,  the volatility of  the underlying  stock and the
expected dividends on it, and the risk-free interest rate over the expected life
of the option.  The statement  also provides  for valuation  of nonvested  stock
(usually  referred to  as restricted stock)  and employee  stock purchase plans.
Valuation for stock issued under these various plans using the fair value  based
method  described above may  result in compensation  costs to the  issuer at the
grant date  and is  recognized over  the service  period, which  is usually  the
vesting  period. Reporting compensation for these  plans under this statement is
optional. Companies  choosing  not to  value  stock options  or  similar  equity
instruments  under the fair value based method must provide pro forma disclosure
amounts that reflect the  difference between compensation  cost included in  net
income  and the related cost measured by  the fair value based method defined in
SFAS No. 123, including tax effects, if any, that would have been recognized  in
the  income statement if the fair value  based method had been used. Adoption of
this statement is  required for transactions  entered into in  years that  begin
after December 15, 1995.
 
    The Company is in the process of reviewing the effects of this statement and
has  not decided whether or not to  adopt the preferable fair value based method
of accounting for  stock-based compensation  as it  relates to  the issuance  of
stock options.
 
                                                                              13
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                         REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Shareholders and Board of Directors
  of Allied Products Corporation
 
    We   have  audited  the  consolidated  balance  sheets  of  Allied  Products
Corporation and consolidated subsidiaries as of December 31, 1995 and 1994,  and
the related consolidated statements of income, shareholders' investment and cash
flows for each of the three years in the period ended December 31, 1995. We have
also  audited the financial statement  schedule listed in Part  IV of Form 10-K,
Item 14(a)2 for each of the three  years in the period ended December 31,  1995.
These   financial   statements  and   financial   statement  schedule   are  the
responsibility of the Company's management. Our responsibility is to express  an
opinion  on these financial statements and financial statement schedule based on
our audits.
 
    We conducted  our  audits in  accordance  with generally  accepted  auditing
standards.  Those standards 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. An audit also includes
assessing the  accounting  principles used  and  significant estimates  made  by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, the financial  statements referred to above present  fairly,
in all material respects, the consolidated financial position of Allied Products
Corporation  and consolidated subsidiaries as of December 31, 1995 and 1994, and
the consolidated results of  their operations and their  cash flows for each  of
the  three  years in  the  period ended  December  31, 1995  in  conformity with
generally accepted  accounting  principles. In  addition,  in our  opinion,  the
financial  statement schedule referred to above,  when considered in relation to
the financial statements  taken as  a whole,  presents fairly,  in all  material
respects, the information required to be included therein.
 
                                          COOPERS & LYBRAND L. L. P.
 
Chicago, Illinois
February 2, 1996
 
14
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                                                            YEAR ENDED DECEMBER 31,
                                                              ----------------------------------------------------
                                                                    1995              1994              1993
                                                              ----------------  ----------------  ----------------
<S>                                                           <C>               <C>               <C>
Net sales from continuing operations........................  $    260,861,000  $    215,529,000  $    217,988,000
Cost of products sold.......................................       199,544,000       160,836,000       169,184,000
                                                              ----------------  ----------------  ----------------
  Gross profit..............................................  $     61,317,000  $     54,693,000  $     48,804,000
                                                              ----------------  ----------------  ----------------
Other costs and expenses:
  Selling and administrative expenses.......................  $     34,452,000  $     31,072,000  $     31,427,000
  Interest expense..........................................         1,052,000         1,859,000         6,376,000
  Other (income) expense, net...............................         7,483,000         1,198,000         4,614,000
                                                              ----------------  ----------------  ----------------
                                                              $     42,987,000  $     34,129,000  $     42,417,000
                                                              ----------------  ----------------  ----------------
Income before taxes from continuing operations before
 extraordinary charge.......................................  $     18,330,000  $     20,564,000  $      6,387,000
Provision (credit) for income taxes:
  Current...................................................           989,000           877,000           436,000
  Deferred..................................................       (16,648,000)        --                --
                                                              ----------------  ----------------  ----------------
Income from continuing operations before extraordinary
 charge.....................................................  $     33,989,000  $     19,687,000  $      5,951,000
                                                              ----------------  ----------------  ----------------
Discontinued operations (net of tax):
  Income from operations....................................  $      --         $      --         $      5,847,000
  Gain (loss) on disposition of discontinued operations and
   other costs..............................................         --               (5,354,000)        5,538,000
                                                              ----------------  ----------------  ----------------
  Income (loss) from discontinued operations................  $      --         $     (5,354,000) $     11,385,000
                                                              ----------------  ----------------  ----------------
Income before extraordinary charge..........................  $     33,989,000  $     14,333,000  $     17,336,000
Extraordinary loss on early extinguishment of debt, less
 applicable income tax benefit..............................         --                --               (2,052,000)
                                                              ----------------  ----------------  ----------------
Net income..................................................  $     33,989,000  $     14,333,000  $     15,284,000
                                                              ----------------  ----------------  ----------------
                                                              ----------------  ----------------  ----------------
Net income applicable to common stock.......................  $     32,789,000  $     12,440,000  $     13,211,000
                                                              ----------------  ----------------  ----------------
                                                              ----------------  ----------------  ----------------
Earnings (loss) per common share:
 Primary --
  Continuing operations.....................................       $3.48             $1.96             $0.43
  Discontinued operations...................................         --              (0.59)             1.27
  Extraordinary loss........................................         --                --              (0.23)
                                                                   -----             -----             -----
  Income per common share...................................       $3.48             $1.37             $1.47
                                                                   -----             -----             -----
                                                                   -----             -----             -----
 Fully diluted --
  Continuing operations.....................................       $3.45             $1.96             $0.43
  Discontinued operations...................................         --              (0.59)             1.27
  Extraordinary loss........................................         --                --              (0.23)
                                                                   -----             -----             -----
  Income per common share...................................       $3.45             $1.37             $1.47
                                                                   -----             -----             -----
                                                                   -----             -----             -----
Weighted average shares outstanding:
  Primary...................................................     9,414,000         9,102,000         8,999,000
                                                                 ---------         ---------         ---------
                                                                 ---------         ---------         ---------
  Full diluted..............................................     9,494,000         9,102,000         8,999,000
                                                                 ---------         ---------         ---------
                                                                 ---------         ---------         ---------
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
                                                                              15
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                                                             ----------------------------------
                                                                                   1995              1994
                                                                             ----------------  ----------------
<S>                                                                          <C>               <C>
Current Assets:
  Cash and cash equivalents................................................  $        744,000  $      1,654,000
                                                                             ----------------  ----------------
  Notes and accounts receivable, less allowances of $948,000 and
   $1,521,000, respectively................................................  $     44,293,000  $     46,267,000
                                                                             ----------------  ----------------
  Inventories:
    Raw materials..........................................................  $     12,037,000  $     11,556,000
    Work in process........................................................        20,438,000        16,437,000
    Finished goods.........................................................        19,931,000        20,462,000
                                                                             ----------------  ----------------
                                                                             $     52,406,000  $     48,455,000
                                                                             ----------------  ----------------
  Deferred tax asset.......................................................  $     22,538,000  $      --
                                                                             ----------------  ----------------
  Prepaid expenses.........................................................  $        323,000  $        456,000
                                                                             ----------------  ----------------
      Total current assets.................................................  $    120,304,000  $     96,832,000
                                                                             ----------------  ----------------
Plant and Equipment, at cost:
  Land.....................................................................  $      2,172,000  $      2,311,000
  Buildings and improvements...............................................        36,269,000        34,252,000
  Machinery and equipment..................................................        47,078,000        40,126,000
                                                                             ----------------  ----------------
                                                                             $     85,519,000  $     76,689,000
  Less--Accumulated depreciation and amortization..........................        47,083,000        46,128,000
                                                                             ----------------  ----------------
                                                                             $     38,436,000  $     30,561,000
                                                                             ----------------  ----------------
Other Assets:
  Notes receivable, due after one year, less allowance of $7,699,000 at
   December 31, 1995.......................................................  $         40,000  $      7,658,000
  Deferred tax asset.......................................................         4,823,000         --
  Deferred charges (goodwill), net of amortization.........................         1,845,000        14,626,000
  Other....................................................................         1,295,000           878,000
                                                                             ----------------  ----------------
                                                                             $      8,003,000  $     23,162,000
                                                                             ----------------  ----------------
                                                                             $    166,743,000  $    150,555,000
                                                                             ----------------  ----------------
                                                                             ----------------  ----------------
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
16
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                    LIABILITIES AND SHAREHOLDERS' INVESTMENT
 
<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                                                             ----------------------------------
                                                                                   1995              1994
                                                                             ----------------  ----------------
<S>                                                                          <C>               <C>
Current Liabilities:
  Revolving credit agreement...............................................  $     11,200,000  $     10,300,000
  Current portion of long-term debt........................................           621,000           689,000
  Accounts payable.........................................................        21,152,000        20,475,000
  Accrued expenses.........................................................        32,384,000        31,837,000
                                                                             ----------------  ----------------
      Total current liabilities............................................  $     65,357,000  $     63,301,000
                                                                             ----------------  ----------------
Long-term debt, less current portion shown above...........................  $        315,000  $        630,000
                                                                             ----------------  ----------------
Other long-term liabilities................................................  $      2,806,000  $      2,622,000
                                                                             ----------------  ----------------
Redeemable  preferred stock:  $10.81 Series  C Cumulative  Preferred Stock;
 stated value  $100  per  share,  authorized  150,000  shares;  issued  and
 outstanding,  none  and  115,000 shares  at  December 31,  1995  and 1994,
 respectively..............................................................  $      --         $     11,500,000
                                                                             ----------------  ----------------
Commitments and Contingencies
Shareholders' Investment:
  Preferred stock:
    Series B Variable Rate Cumulative Preferred Stock, stated value $50 per
     share; authorized  350,000 shares;  issued and  outstanding, none  and
     146,800 shares at December 31, 1995 and 1994, respectively............  $      --         $      7,340,000
    Undesignated--authorized  1,500,000  shares  at December  31,  1995 and
     1994; none issued.....................................................         --                --
  Common stock, par  value $.01  per share;  authorized 25,000,000  shares;
   issued  9,138,344 and  9,103,344 shares at  December 31,  1995 and 1994,
   respectively............................................................            91,000            91,000
  Additional paid-in capital...............................................        93,143,000        92,146,000
  Retained earnings (deficit)..............................................         5,031,000       (27,075,000)
                                                                             ----------------  ----------------
                                                                             $     98,265,000  $     72,502,000
                                                                             ----------------  ----------------
                                                                             $    166,743,000  $    150,555,000
                                                                             ----------------  ----------------
                                                                             ----------------  ----------------
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
                                                                              17
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                        YEAR ENDED DECEMBER 31,
                                                                           --------------------------------------------------
                                                                                 1995             1994             1993
                                                                           ----------------  --------------  ----------------
<S>                                                                        <C>               <C>             <C>
Cash Flows from Operating Activities:
  Net income.............................................................  $     33,989,000  $   14,333,000  $     15,284,000
  Adjustments to reconcile net income to net cash provided from operating
   activities:
    Income on disposition of discontinued operations.....................         --                (50,000)       (5,538,000)
    Gains on sales of operating and non-operating assets.................        (2,000,000)       (214,000)         (497,000)
    Extraordinary loss on early extinguishment of debt...................         --               --               2,052,000
    Effect of provision for restructuring costs..........................         --               --                 700,000
    Depreciation and amortization........................................         5,033,000       5,159,000         7,402,000
    Amortization of deferred charges and (credits), net..................         2,068,000       2,067,000          (216,000)
    Deferred tax credit..................................................       (16,648,000)       --               --
    Provision for collectability of long-term receivable.................         7,699,000        --               --
    Changes in noncash assets and liabilities, net of effects of
     assets/businesses sold and noncash transactions:
      (Increase) decrease in accounts receivable.........................            99,000        (100,000)       29,581,000
      (Increase) decrease in inventories.................................        (3,951,000)     (5,596,000)       22,034,000
      Decrease in prepaid expenses.......................................           133,000       1,459,000           784,000
      Decrease in notes receivable, due after one year...................           423,000         807,000           997,000
      Increase (decrease) in accounts payable and accrued expenses.......         1,349,000      (8,490,000)       (5,219,000)
    Other, net...........................................................           802,000        (431,000)          390,000
                                                                           ----------------  --------------  ----------------
  Net cash provided from operating activities............................  $     28,996,000  $    8,944,000  $     67,754,000
                                                                           ----------------  --------------  ----------------
Cash Flows from Investing Activities:
  Additions to plant and equipment.......................................  $    (14,378,000) $   (6,957,000) $     (7,741,000)
  Proceeds from sales of plant and equipment.............................         3,611,000       2,452,000         8,311,000
  Proceeds from sales of assets/businesses...............................         --                343,000        62,834,000
                                                                           ----------------  --------------  ----------------
  Net cash provided from (used for) investing activities.................  $    (10,767,000) $   (4,162,000) $     63,404,000
                                                                           ----------------  --------------  ----------------
Cash Flows from Financing Activities:
  Proceeds from issuances of long-term debt..............................  $      --         $     --        $     33,348,000
  Borrowings under the revolving loan agreements.........................         --             29,246,000       145,081,000
  Payments under the revolving loan agreements...........................         --            (48,508,000)     (129,777,000)
  Borrowings under revolving credit agreement............................       110,300,000      52,100,000         --
  Payments under revolving credit agreement..............................      (109,400,000)    (41,800,000)        --
  Payments of short and long-term debt...................................          (827,000)    (33,881,000)     (139,769,000)
  Payments of preferred stock redemptions................................       (17,997,000)     (3,100,000)          (66,000)
  Dividends paid.........................................................        (1,883,000)     (1,893,000)       (1,716,000)
  Stock option transactions..............................................           668,000         292,000           711,000
                                                                           ----------------  --------------  ----------------
  Net cash used for financing activities.................................  $    (19,139,000) $  (47,544,000) $    (92,188,000)
                                                                           ----------------  --------------  ----------------
Net increase (decrease) in cash and cash equivalents.....................  $       (910,000) $  (42,762,000) $     38,970,000
Cash and cash equivalents at beginning of year...........................         1,654,000      44,416,000         5,446,000
                                                                           ----------------  --------------  ----------------
Cash and cash equivalents at end of year.................................  $        744,000  $    1,654,000  $     44,416,000
                                                                           ----------------  --------------  ----------------
                                                                           ----------------  --------------  ----------------
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
18
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                       ------------------------------------------
                                                                          1995          1994            1993
                                                                       -----------  -------------  --------------
<C>        <S>                                                         <C>          <C>            <C>
Supplemental Information:
      (A)  Noncash investing and financing activities:
       1.  Assets acquired through the assumption of debt............  $   444,000  $     115,000  $      387,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
       2.  Series B  Preferred stock  dividends paid/payable  through
             the issuance of common stock............................  $   --       $    --        $      398,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
       3.  Series  B  Preferred  stock  redemptions  ($3,200,000) and
             dividends  ($666,000)  paid  through  the  issuance   of
             subordinated debt, net of $722,000 cash paid............  $   --       $    --        $    3,144,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
       4.  Series  C Preferred  stock dividends  paid/payable through
             the issuance of common stock............................  $   --       $    --        $      405,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
       5.  Series C  Preferred  stock  redemptions  ($2,100,000)  and
             dividends  ($1,527,000)  paid  through  the  issuance of
             subordinated debt, net of $1,060,000 cash paid..........  $   --       $    --        $    2,567,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
       6.  Interest  expense  paid  through  the  issuance  of   sub-
             ordinated debt..........................................  $   --       $    --        $      161,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
       7.  Debt assumed by purchasers of businesses sold.............  $   --       $    --        $      760,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
       8.  Proceeds  (primarily notes  receivable) received  from the
             sales of discontinued operations........................  $   --       $   2,011,000  $      100,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
      (B)  Interest paid during year.................................  $   939,000  $   2,657,000  $   10,311,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
      (C)  Income/franchise  taxes   paid   during   year,   net   of
             refunds.................................................  $   471,000  $     522,000  $      812,000
                                                                       -----------  -------------  --------------
                                                                       -----------  -------------  --------------
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
                                                                              19
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
 
                           PREFERRED AND COMMON STOCK
 
<TABLE>
<CAPTION>
                                                                                  SERIES B
                                                                               PREFERRED ($50    COMMON ($.01
                                                                                STATED VALUE       PAR VALUE
                                                                                 PER SHARE)       PER SHARE)
                                                                               ---------------  ---------------
<S>                                                                            <C>              <C>
Balance at December 31, 1992.................................................   $  12,240,000     $    86,000
  Redemption  of 64,000  Series B  preferred shares  through the  issuance of
   subordinated notes and cash...............................................      (3,200,000)        --
  Issuance of  127,296  common  shares  for payment  of  Series  B  preferred
   dividends.................................................................        --                 1,000
  Issuance  of  202,688  common  shares for  payment  of  Series  C preferred
   dividends.................................................................        --                 2,000
  Issuance of 133,515 common shares in connection with the exercises of stock
   options...................................................................        --                 2,000
                                                                               ---------------  ---------------
Balance at December 31, 1993.................................................   $   9,040,000     $    91,000
  Redemption of 34,000 Series B preferred shares.............................      (1,700,000)        --
  Issuance of 14,734 common shares in connection with the exercises of  stock
   options...................................................................        --               --
                                                                               ---------------  ---------------
Balance at December 31, 1994.................................................   $   7,340,000     $    91,000
  Redemption of 146,800 Series B preferred shares............................      (7,340,000)        --
  Issuance  of 35,000 common shares in connection with the exercises of stock
   options...................................................................        --               --
                                                                               ---------------  ---------------
Balance at December 31, 1995.................................................   $    --           $    91,000
                                                                               ---------------  ---------------
                                                                               ---------------  ---------------
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
20
<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, 1992..................................................................  $   90,930,000  $   (52,121,000)
  Net income for the year.....................................................................        --             15,284,000
  Preferred dividends paid/declared:
    Series B paid  through the  issuance of  127,296 common  shares (variable  based on  prime
     rate--$1.625 per share)..................................................................         397,000        --
    Series B paid through the issuance of subordinated notes and cash (variable based on prime
     rate--$3.00 per share)...................................................................        --               (666,000)
    Series B declared payable in January 1994--$.75 per share.................................        --               (136,000)
    Series C paid through the issuance of 202,688 common shares--$2.7025 per share............         403,000        --
    Series C paid through the issuance of subordinated notes and cash--$10.81 per share.......        --             (1,527,000)
    Series C declared payable in January 1994--$2.7025 per share..............................        --               (349,000)
  Excess  of proceeds received over cost of common shares purchased and reissued in connection
   with the exercise of stock options to purchase 17,710 common shares........................          22,000        --
  Issuance of 133,515 common shares in connection with exercises of stock options.............         643,000        --
                                                                                                --------------  ---------------
Balance at December 31, 1993..................................................................  $   92,395,000  $   (39,515,000)
  Net income for the year.....................................................................        --             14,333,000
  Preferred dividends declared and paid:
    Series B (variable based on prime rate--$3.375 per share).................................        --               (574,000)
    Series C--$10.81 per share................................................................        --             (1,319,000)
  Excess of cost  ($843,000) over  fair market  value of  59,979 common  shares purchased  and
   reissued in connection with the Company's incentive stock plan.............................        (375,000)       --
  Issuance of 14,734 common shares in connection with the exercises of stock options..........         126,000        --
                                                                                                --------------  ---------------
Balance at December 31, 1994..................................................................  $   92,146,000  $   (27,075,000)
  Net income for the year.....................................................................        --             33,989,000
  Preferred dividends declared and paid:
    Series B (variable based on prime rate--$1.825 per share).................................        --               (268,000)
    Series C--$8.1075 per share...............................................................        --               (932,000)
  Common dividends declared and paid--$.075 per share.........................................        --               (683,000)
  Issuance of 35,000 common shares in connection with the exercise of stock options...........         205,000        --
  Excess  of cost  ($589,000) over  fair market  value of  41,961 common  shares purchased and
   reissued in connection with the Company's contribution to the Employee Stock Plan..........         (30,000)       --
  Excess of cost  ($614,000) over  fair market  value of  42,500 common  shares purchased  and
   reissued in connection with the Company's incentive stock plan.............................        (151,000)       --
  Excess of stated value over cost ($5,516,000) in connection with the early retirement of the
   Series B preferred stock...................................................................         973,000        --
                                                                                                --------------  ---------------
Balance at December 31, 1995..................................................................  $   93,143,000  $     5,031,000
                                                                                                --------------  ---------------
                                                                                                --------------  ---------------
</TABLE>
 
          The accompanying notes to consolidated financial statements
                    are an integral part of these statements
 
                                                                              21
<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  manufactures agricultural  equipment and large
metal stamping presses, and supplies thermoplastic compounds and additives.  All
manufacturing  operations are  within the United  States. Agricultural equipment
manufactured by the Bush Hog division  is primarily sold through dealerships  in
the  United  States with  some limited  export sales  to Canada.  Metal stamping
presses produced by the Verson division 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 80% of the Verson
division's revenues. Press sales generally are concentrated in the United States
and Mexico. The Coz  division provides a complete  line of thermoplastic  resins
and  related services to  the plastic molding and  extrusion industry. Sales are
concentrated in the northeastern portion of the United States.
 
  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.
 
  REVENUE RECOGNITION--
 
    Sales  of agricultural equipment and service  parts at the Bush Hog division
are recorded when  they 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. Revenues and profits are  recognized
on a percentage of completion basis for major contracts at the Verson division.
 
  ACCOUNTS RECEIVABLE--
 
    Agricultural  equipment current  accounts receivables 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. Agricultural equipment receivables (with
the  exception  of  receivables  associated  with  service  parts  and  original
equipment  manufacturing-OEM-arrangements) 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 ($15,983,000 at
December 31,  1995  and  $11,055,000  at  December  31,  1994)  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 profit recognized in relation to the sales recorded,
less customer  payments ($55,381,000  at December  31, 1995  and $11,672,000  at
December  31, 1994) 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.
 
22
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  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. 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
(approximately $13,113,000) are amortized on a straight line basis over a period
of  20 years. The Company assesses at  each balance sheet date whether there has
been a permanent impairment in the  value of goodwill. Such assessment  includes
obsolescence,  demand, new technology, competition  and other pertinent economic
factors and trends that may have an impact on the value of remaining useful life
of goodwill.
 
  EARNINGS (LOSS) PER COMMON SHARE--
 
    Earnings per common share  is based on the  average number of common  shares
outstanding (9,126,000, 9,102,000 and 8,999,000 for the years ended December 31,
1995,  1994 and  1993, respectively) after  decreasing net  income for preferred
dividend requirements ($1,200,000, $1,893,000 and $2,073,000 for the years ended
December 31, 1995, 1994 and 1993, respectively). For 1995, the average number of
common shares outstanding was  increased by the  dilutive effect of  outstanding
stock  options  (288,000  shares  as  it  relates  to  weighted  average  shares
outstanding--primary and 368,000 shares as it relates to weighted average shares
outstanding--fully diluted). The  assumed exercise  of stock  options would  not
result in a material dilution for the years ended December 31, 1994 and 1993.
 
  INCOME TAXES--
 
    Income  taxes  are accounted  for under  the asset  and liability  method in
accordance  with  Financial  Accounting  Standards  Board  (FASB)  Statement  of
Financial  Accounting Standards No. 109 (SFAS 109)--Accounting for Income Taxes.
See Note 4.
 
  STATEMENT OF CASH FLOWS--
 
    For purposes  of the  Consolidated  Statements 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  is assumed to approximate  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. The  fair
value  of the Series B and C Preferred  Stocks at December 31, 1994 is estimated
to approximate the carrying value of these securities based upon the  redemption
features  within  the Certificate  of Designation  on  each series  of preferred
stock.
 
  RECENTLY ISSUED ACCOUNTING STANDARD--
 
    In October  1995, the  Financial Accounting  Standards Board  (FASB)  issued
Statement  of Financial Accounting Standard (SFAS) No. 123--Accounting for Stock
Based Compensation. Under the  provisions of this statement,  the fair value  of
stock  options issued  may be determined  by using an  option-pricing model that
takes into account the stock  price at the grant  date, the exercise price,  the
expected  life of  the option,  the volatility of  the underlying  stock and the
expected dividends on it, and the risk-free interest rate over the expected life
of the option. The statement also provides for
 
                                                                              23
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
valuation of  nonvested stock  (usually  referred to  as restricted  stock)  and
employee  stock purchase plans.  Valuation for stock  issued under these various
plans  using  the  fair  value  based  method  described  above  may  result  in
compensation  costs to the issuer  at the grant date  and is recognized over the
service period, which is usually the vesting period. Reporting compensation  for
these  plans under this  statement is optional. Companies  choosing not to value
stock options or similar  equity instruments under the  fair value based  method
must  provide pro forma  disclosure amounts that  reflect the difference between
compensation cost included in  net income and the  related cost measured by  the
fair  value based method defined in SFAS No. 123, including tax effects, if any,
that would have been recognized in the income statement if the fair value  based
method  had been used.  Adoption of this statement  is required for transactions
entered into in years that begin after December 15, 1995.
 
    The Company is in the process of reviewing the effects of this statement and
has not decided whether or not to  adopt the preferable fair value based  method
of  accounting for  stock-based compensation  as it  relates to  the issuance of
stock options.
 
  RECLASSIFICATIONS--
 
    Certain amounts in the 1994  and 1993 consolidated financial statements  and
related notes have been reclassified to conform with the 1995 presentation.
 
2.  ACCRUED EXPENSES:
 
    The Company's accrued expenses consist of the following:
 
<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                              ------------------------------
                                                                                   1995            1994
                                                                              --------------  --------------
<S>                                                                           <C>             <C>
Salaries and wages..........................................................  $    5,542,000  $    4,678,000
Warranty....................................................................       9,077,000       5,817,000
Self insurance accruals.....................................................       4,411,000       6,522,000
Restructuring and other costs, primarily related to discontinued
 operations.................................................................       1,494,000       3,373,000
Pensions, including retirees' health........................................       5,901,000       4,985,000
Taxes, other than income taxes..............................................         738,000       1,288,000
Environmental matters.......................................................       3,019,000       3,045,000
Other.......................................................................       2,202,000       2,129,000
                                                                              --------------  --------------
                                                                              $   32,384,000  $   31,837,000
                                                                              --------------  --------------
                                                                              --------------  --------------
</TABLE>
 
3.  DISCONTINUED OPERATIONS:
 
    During  1992, the Company announced  the closing of manufacturing operations
at the  Kewanee Farm  Equipment  division and  the  Charles City  machining  and
foundry  division. Production was discontinued  at these operations during 1993.
During 1993, the Company  discontinued manufacturing operations  at the R/B  Die
and  Prototype  division.  All  machinery and  equipment  associated  with these
operations were sold for  cash during 1993. Also  during 1993, the Company  sold
for  cash the majority of the assets  of the Smith Energy Services division. The
resulting gains (approximately  $1,400,000) from these  asset dispositions  were
credited  to  the  restructuring  reserve  as  discussed  below.  The  Company's
International Agro division also was closed during 1993. 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  the sale  of the
White-New Idea division, the purchaser is  required to purchase the real  estate
located  in Coldwater, Ohio pending a favorable review of environmental matters.
The Company is  in the  process of  completing an  evaluation of  the status  of
environmental conditions at this location--see Note 10. During 1995, the Company
and  the purchaser of the White-New Idea division agreed to a five-year lease of
the Coldwater, Ohio facility while the Company completes the evaluation. Sale of
the facility to the  purchaser of the White-New  Idea division will occur  after
completion  of the evaluation and  after resolution of any  issues raised by the
evaluation.
 
24
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
During 1995 and  1994, the Company  provided additional amounts  (based upon  an
independent review) for the environmental clean up of this facility. The Company
also  sold in 1994  the business and  certain assets of  the Cooper division for
cash and  a collateralized  short-term note.  In 1994,  discontinued  operations
include  operating losses at the Cooper division  related to the delayed sale of
this business  and  additional  provisions primarily  related  to  environmental
issues and a dispute resolution on a business sold in 1993, net of an income tax
benefit  allocation  of  $211,000. During  1993,  the Company  also  included an
allocation of  financing  costs and  administrative  and interest  expense  (the
latter based upon these operations' proportionate share of consolidated invested
capital)  and related restructuring  cost provisions (as  discussed below) under
this same caption.
 
    Summarized operating results of discontinued  operations for the year  ended
December 31, 1993 are as follows:
 
<TABLE>
<S>                                                                    <C>
Net sales............................................................  $ 152,592,000
                                                                       -------------
                                                                       -------------
Operating income.....................................................  $  11,851,000
Provision for restructuring costs....................................       (700,000)
Finance costs, administrative and interest expense allocation........     (5,304,000)
                                                                       -------------
Income from operations...............................................  $   5,847,000
                                                                       -------------
                                                                       -------------
</TABLE>
 
  RESTRUCTURING COSTS--
 
    Prior  to  1993,  the Company  provided  $14,000,000  for the  impact  of an
operational restructuring plan designed to  reduce operating losses by  closing,
consolidating  or scaling  back certain  operations. During  1993, an additional
$700,000 was provided for restructuring  costs. The restructuring of  operations
called for several significant changes within various operations of the Company.
 
    The  changes included the closing of manufacturing operations at the Kewanee
Farm Equipment division,  the phase out  of the operation  at the Charles  City,
Iowa  machining  and foundry  division (production  was  completed in  the third
quarter of 1993), the phase out of  the manufacturing operations at the R/B  Die
and  Prototype division (production was completed in the second quarter of 1993)
and  the  sale  of  the  Smith  Energy  Services  division.  The  provision  for
restructuring  these  operations  included  non-recurring,  non-operating  costs
subsequent to  the  completion  of production,  including  severance  and  other
employee  benefits,  costs  associated  with  the  relocation  of  machinery and
equipment  from  Charles  City  to  other  facilities,  costs  associated   with
preparation for the auctions and other facility related costs.
 
    In  addition, the Company phased  out its centralized Management Information
Services  operation  at  the   Corporate  Office  in   1993.  The  reserve   for
restructuring  included  a provision  for severance  and other  employee related
expenses and the estimated costs of the termination of lease agreements for  the
MIS facility and hardware/software.
 
    Net  charges  to  the restructuring  reserve  in  1995, 1994  and  1993 were
$1,879,000, $3,931,000 and $9,515,000, respectively.
 
    As of  December  31,  1995,  the  accompanying  consolidated  balance  sheet
includes  real estate  with a net  book value  of $2,833,000, which  is held for
sale, including $1,979,000 related to real  estate under lease to the  purchaser
of the White-New Idea division as discussed above.
 
                                                                              25
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
4.  INCOME TAXES:
 
    Provision  (credit) for income taxes in 1995,  1994 and 1993 consists of the
following:
 
<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31,
                                                                  -----------------------------------------
                                                                       1995           1994         1993
                                                                  ---------------  -----------  -----------
<S>                                                               <C>              <C>          <C>
Federal--current................................................  $       756,000  $   422,000  $   514,000
Federal--deferred...............................................      (16,648,000)     --           --
State--current..................................................          233,000      244,000      232,000
                                                                  ---------------  -----------  -----------
  Total provision (credit)......................................  $   (15,659,000) $   666,000  $   746,000
                                                                  ---------------  -----------  -----------
                                                                  ---------------  -----------  -----------
</TABLE>
 
    Allocation of the provision (credit) for income taxes in the 1995, 1994  and
1993 Consolidated Statements of Income include the following:
 
<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31,
                                                                  ------------------------------------------
                                                                       1995            1994         1993
                                                                  ---------------  ------------  -----------
<S>                                                               <C>              <C>           <C>
Continuing operations...........................................  $   (15,659,000) $    877,000  $   436,000
Discontinued operations--income from operations.................        --              --           182,000
Discontinued operations--gain (loss) on disposition of
 discontinued operations and other costs........................        --             (211,000)     200,000
Extraordinary loss on early extinguishment of debt..............        --              --           (72,000)
                                                                  ---------------  ------------  -----------
  Total provision (credit)......................................  $   (15,659,000) $    666,000  $   746,000
                                                                  ---------------  ------------  -----------
                                                                  ---------------  ------------  -----------
</TABLE>
 
    The  provision (credit) for income taxes in 1995, 1994 and 1993 differs from
amounts computed by applying the statutory rate to pre-tax income as follows:
 
<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31,
                                                              -----------------------------------------------
                                                                   1995             1994            1993
                                                              ---------------  --------------  --------------
<S>                                                           <C>              <C>             <C>
Income tax at statutory rate................................  $     6,416,000  $    5,250,000  $    5,450,000
Utilization of net operating loss carryforwards.............       (5,997,000)     (5,547,000)     (4,972,000)
State income tax, net of federal tax benefit................          151,000         159,000         153,000
Permanent book over tax, net of tax over book, differences
 on acquired assets.........................................          910,000         910,000         108,000
Stock option transactions...................................         (296,000)       (137,000)       --
Adjustment to deferred tax asset valuation allowance........      (16,648,000)       --              --
Other, net..................................................         (195,000)         31,000           7,000
                                                              ---------------  --------------  --------------
  Total provision (credit)..................................  $   (15,659,000) $      666,000  $      746,000
                                                              ---------------  --------------  --------------
                                                              ---------------  --------------  --------------
</TABLE>
 
26
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
    The significant components of  deferred tax assets  and liabilities were  as
follows:
 
<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,
                                                                             -------------------------------
                                                                                  1995            1994
                                                                             --------------  ---------------
<S>                                                                          <C>             <C>
Deferred tax assets:
  Net operating loss and tax credits carryforwards.........................  $    6,887,000  $    40,742,000
  Self-insurance accruals..................................................       1,894,000        2,941,000
  Inventories..............................................................       1,899,000        2,636,000
  Receivables..............................................................       3,026,000          593,000
  Sale/leaseback transaction...............................................       1,493,000        3,730,000
  Restructuring reserve....................................................         523,000        1,316,000
  Employee benefits, including pensions....................................       4,239,000        4,150,000
  Warranty.................................................................       3,177,000        2,269,000
  Sales allowances.........................................................       2,079,000        2,000,000
  Environmental matters....................................................       1,056,000        1,120,000
  Other....................................................................       1,456,000          307,000
                                                                             --------------  ---------------
    Total deferred tax asset...............................................  $   27,729,000  $    61,804,000
                                                                             --------------  ---------------
Deferred tax liabilities:
  Depreciation.............................................................  $      327,000  $     3,510,000
  Other....................................................................          41,000        --
                                                                             --------------  ---------------
    Total deferred tax liabilities.........................................  $      368,000  $     3,510,000
                                                                             --------------  ---------------
    Net deferred tax asset before valuation allowance......................  $   27,361,000  $    58,294,000
    Valuation allowance....................................................        --            (58,294,000)
                                                                             --------------  ---------------
    Net deferred tax asset.................................................  $   27,361,000  $     --
                                                                             --------------  ---------------
                                                                             --------------  ---------------
</TABLE>
 
    During  1995, the Company evaluated its net operating loss carryforwards and
other deferred tax assets in relation to its earnings history over the past  few
years  and the estimated projected future earnings over the next few years. As a
result of this review, the Company  recorded a deferred tax asset  ($27,361,000)
which  represents a reversal of the valuation allowance noted above. The related
credit to income taxes was  reduced by $10,713,000 representing the  elimination
of  goodwill associated with  certain acquisitions which  included net operating
loss carryforwards. In addition  to the above noted  tax asset, the Company  has
available  net  operating loss  carryforwards of  up  to $166,019,000  (of which
$85,304,000 results from  various acquisitions)  which expire  between 1997  and
2008,  and  investment  tax  credit carryforwards  of  $2,258,000  (which expire
between 1996 and 2004) including up to $329,000 resulting from acquisitions.
 
    In years subsequent to 1995, the  Company will be recording a tax  provision
based upon the Federal statutory rate in effect and anticipates no reductions in
future  tax provisions  from additional tax  credits at this  time. However, the
Company projects that future Federal income tax 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  1991 are  potentially subject  to
audit by the Internal Revenue Service.
 
                                                                              27
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
5.  FINANCIAL ARRANGEMENTS:
 
    The Company's debt consists of the following:
 
<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,
                                                                                  --------------------------
                                                                                     1995          1994
                                                                                  -----------  -------------
<S>                                                                               <C>          <C>
Capitalized lease obligations, at interest rates from 7.5% to 12% (weighted
 average of 10.1%), due in varying amounts through 2002 (Note 6)................  $   882,000  $   1,215,000
Notes/mortgages payable.........................................................       54,000        104,000
                                                                                  -----------  -------------
                                                                                  $   936,000  $   1,319,000
Less current portion............................................................      621,000        689,000
                                                                                  -----------  -------------
                                                                                  $   315,000  $     630,000
                                                                                  -----------  -------------
                                                                                  -----------  -------------
</TABLE>
 
    Scheduled maturities of the noncurrent portion of long-term debt at December
31, 1995 are due as follows:
 
<TABLE>
<S>                                                   <C>
1997................................................  $ 139,000
1998................................................     80,000
1999................................................     51,000
2000................................................     24,000
2001-2005...........................................     21,000
                                                      ---------
                                                      $ 315,000
                                                      ---------
                                                      ---------
</TABLE>
 
    In  March 1994, the Company terminated previous financing agreements through
the completion of  a new Revolving  Credit Agreement. The  termination of  these
agreements  resulted in  the payment  of termination  fees and  the write-off of
unamortized loan costs related to these agreements. These amounts, net of a  tax
benefit  of  $72,000,  have  been  included  in  the  accompanying  Consolidated
Statement of Income  for 1993  under the  caption "Extraordinary  loss on  early
extinguishment of debt, less applicable income tax benefit."
 
    The new three-year Revolving Credit Agreement with two banks provides for up
to  $35,000,000  in  working capital  related  loans (of  which  $11,200,000 and
$10,300,000 has been borrowed at December  31, 1995 and 1994, respectively)  and
up  to  $15,000,000 in  standby  letters of  credit  required for  the Company's
self-insurance  programs   and  for   other   commercial  purposes,   of   which
approximately $13,000,000 is outstanding at December 31, 1995 and 1994. Interest
is  at prime rate  or at other  alternate variable rates  as provided within the
agreement.  This  facility  was  collateralized  principally  by  the  Company's
receivables and inventories; however, all collateral was released as the Company
attained  certain  financial results  for  the first  nine  months of  1994. The
weighted average interest rate  on borrowings outstanding  at December 31,  1995
and  1994 was 7.8% and 8.5%, respectively. Under the Revolving Credit Agreement,
the Company must meet  certain periodic financial  tests, including minimum  net
worth,  minimum operating income, ratio of  funded debt to operating income, and
ratio of operating income to interest expense.
 
    During 1995, the Company entered into  an amendment of the Revolving  Credit
Agreement.  Under the terms of the  amendment, interest rates have been reduced.
In addition,  the  amendment  provided  for an  increase  in  permitted  capital
expenditures  for 1995  and allowed  the Company  to accelerate  preferred stock
redemptions, pay dividends on Common  Stock, repurchase Common Stock and  permit
limited acquisitions.
 
28
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
6.  LEASES:
 
  CAPITAL LEASES--
 
    The  Company conducts a portion of its business in leased facilities, one of
which is  leased  from a  municipal  agency  under an  Industrial  Revenue  Bond
arrangement.  The Company also leases various types of manufacturing, office and
transportation equipment.
 
    Capital leases included in Plant  and Equipment in the accompanying  balance
sheets are as follows:
 
<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                     ----------------------------
                                                         1995           1994
                                                     -------------  -------------
<S>                                                  <C>            <C>
Land...............................................  $     396,000  $     396,000
Buildings and improvements.........................      1,111,000      2,013,000
Machinery and equipment............................      4,233,000      4,533,000
                                                     -------------  -------------
                                                     $   5,740,000  $   6,942,000
Less--Accumulated amortization.....................      3,378,000      4,353,000
                                                     -------------  -------------
                                                     $   2,362,000  $   2,589,000
                                                     -------------  -------------
                                                     -------------  -------------
</TABLE>
 
    See  Note 5 for information as to future debt payments relating to the above
leases.
 
  OPERATING LEASES--
 
    Rent expense for operating leases, which  is charged against income, was  as
follows:
 
<TABLE>
<CAPTION>
                                             YEAR ENDED DECEMBER 31,
                                   -------------------------------------------
                                       1995           1994           1993
                                   -------------  -------------  -------------
<S>                                <C>            <C>            <C>
Minimum rentals..................  $   1,922,000  $   2,165,000  $   4,062,000
Contingent rentals...............         89,000        657,000      1,084,000
                                   -------------  -------------  -------------
                                   $   2,011,000  $   2,822,000  $   5,146,000
                                   -------------  -------------  -------------
                                   -------------  -------------  -------------
</TABLE>
 
    Contingent rentals are composed primarily of truck fleet mileage 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.
 
    At December  31,  1995,  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       SUBLEASE     NET MINIMUM
                                          ANNUAL RENTAL     RENTAL     ANNUAL RENTAL
                                            PAYMENTS        INCOME       PAYMENTS
                                          -------------  ------------  -------------
<S>                                       <C>            <C>           <C>
Year ending December 31,
  1996..................................  $   1,692,000  $   (147,000) $   1,545,000
  1997..................................      1,736,000      (147,000)     1,589,000
  1998..................................      1,624,000      (122,000)     1,502,000
  1999..................................      1,286,000       --           1,286,000
  2000..................................      1,111,000       --           1,111,000
  Later.................................      1,209,000       --           1,209,000
                                          -------------  ------------  -------------
                                          $   8,658,000  $   (416,000) $   8,242,000
                                          -------------  ------------  -------------
                                          -------------  ------------  -------------
</TABLE>
 
                                                                              29
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
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.
The  remaining 1,500,000 shares  of authorized preferred  stock are undesignated
and unissued at December 31, 1995.
 
  SERIES B--
 
    The holder  of  the  Series  B  Preferred  Stock  was  entitled  to  receive
cumulative  quarterly dividends at  variable rates, computed  by multiplying $50
times 1/4 of the prime rate in effect on the first day of the quarter  preceding
the dividend date. At December 31, 1994, there were 146,800 shares of the Series
B Preferred Stock outstanding. In addition to the scheduled redemption of 17,000
shares,  the  Company redeemed  the remaining  129,800 shares  at a  discount of
$973,000 during 1995. The discount was credited to Additional Paid-in Capital.
 
  SERIES C--
 
    Holders of the Series C Cumulative Preferred Stock were entitled to  receive
cumulative  quarterly  dividends at  the  annual rate  of  $10.81 per  share. At
December 31,  1994,  there  were  115,000 shares  of  the  Series  C  Cumulative
Preferred  Stock outstanding. In addition to  the permitted redemption of 50,000
shares, the  Company  redeemed the  remaining  65,000  shares at  a  premium  of
$130,000 during 1995.
 
8.  COMMON STOCK AND OPTIONS:
 
    The  Company has  an incentive stock  plan (the 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 1995, 1994 or 1993. No stock appreciation rights have been granted
to date under this plan. There  are 145,799 options outstanding under this  plan
at  December 31,  1995 and  are included  in the  table below.  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 (the 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 1,000,000
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 876,251 shares  of the Company's Common
Stock at prices between  $1.50 and $14.25 per  share. There are 546,551  options
outstanding  under this plan at December 31,  1995 and are included in the table
below. At December 31, 1995, the Company has the capacity to issue an additional
215,749 stock incentives under the 1990 plan.
 
    In 1994,  shareholders approved  a new  incentive plan,  the 1993  Directors
Incentive Plan (the 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 73,000  shares  of the  Company's  Common Stock  at  prices
between    $12.50   and   $19.375   per    share.   All   options   issued   are
 
30
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
outstanding under this plan at December 31,  1995 and are included in the  table
below. At December 31, 1995, the Company has the capacity to issue an additional
47,000 stock options under the 1993 plan.
 
    Stock option transactions for 1994 and 1995 were as follows:
 
<TABLE>
<CAPTION>
                                                             OPTIONS OUTSTANDING (SHARES)
                                                       ----------------------------------------   AVERAGE OPTION
                                                           NOT                                   PRICE AT DATE OF
                                                       EXERCISABLE   EXERCISABLE      TOTAL           GRANT
                                                       ------------  ------------  ------------  ----------------
<S>                                                    <C>           <C>           <C>           <C>
Outstanding, December 31, 1993.......................      174,250       345,387       519,637      $     9.45
  Granted............................................      318,500        --           318,500           12.50
  Became exercisable.................................     (124,750)      124,750        --                3.61
  Exercised..........................................       --           (74,713)      (74,713)           7.96
  Expired............................................       --              (375)         (375)          12.25
  Terminated.........................................       (7,000)      (11,700)      (18,700)          11.81
                                                       ------------  ------------  ------------        -------
Outstanding, December 31, 1994.......................      361,000       383,349       744,349      $    10.85
  Granted............................................      127,001        --           127,001           14.48
  Became exercisable.................................     (203,750)      203,750        --               10.86
  Exercised..........................................       --           (77,500)      (77,500)           8.62
  Expired............................................       --            --            --              --
  Terminated.........................................      (23,500)       (5,000)      (28,500)          13.84
                                                       ------------  ------------  ------------        -------
Outstanding, December 31, 1995.......................      260,751       504,599       765,350      $    11.56
                                                       ------------  ------------  ------------        -------
                                                       ------------  ------------  ------------        -------
</TABLE>
 
                                                                              31
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
    On  February 15, 1991,  the Company declared a  dividend distribution of one
right ("Right") to purchase  an additional share of  the Company's Common  Stock
for $50 on each share of Common Stock outstanding. The Rights become exercisable
10  days after a  person or group acquires,  or tenders for, 20%  or more of the
Company's Common Stock. The Company is entitled to redeem the Rights at $.01 per
Right at any time until  10 days after any person  or group has acquired 20%  of
the  Common Shares. If a  person or group acquires 20%  or more of the Company's
Common Stock (other than pursuant to an acquisition from the Company or pursuant
to a tender offer deemed fair by the Board of Directors), then each Right, other
than Rights  held by  the acquiring  person  or group,  entitles the  holder  to
purchase  for $50 that number  of shares of the  Company's Common Stock having a
current market value of $100. If a person  or group acquires 20% or more of  the
Company's  Common Stock and prior  to the person or  group acquiring 50% of such
outstanding stock, the Company  may convert each  outstanding Right, other  than
the  Rights held  by the acquiring  person or group,  into one new  share of the
Company's Common Stock.  If a person  or group  acquiring more than  20% of  the
Company's  Common  Stock merges  with the  Company or  engages in  certain other
transactions with  the  Company, each  Right,  other  than Rights  held  by  the
acquiring  person or  group, entitles  the holder  to purchase  shares of common
stock of the acquiring person or group having a current market value of $100 for
$50. The Rights attach to  all of the Company's  Common Stock outstanding as  of
February  15, 1991,  or subsequently issued,  and have  a term of  10 years. The
Rights also expire upon a merger  or acquisition of the Company undertaken  with
the consent of the Company's Board of Directors.
 
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.
 
    Effective  January  1, 1994,  the  Company instituted  an  unfunded deferred
compensation defined benefit pension plan called the Executive Retirement  Plan.
The noncontributory plan is designed to provide supplemental retirement benefits
to  certain executive  officers of  the Company  as determined  by the  Board of
Directors. Retirement benefits will  be reduced by  benefits received under  the
Target Benefit Plan described below.
 
    Net  periodic  pension costs  as they  relate to  defined benefit  plans for
continuing operations were as follows:
 
<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                                          ----------------------------------------------
                                                               1995            1994            1993
                                                          --------------  --------------  --------------
<S>                                                       <C>             <C>             <C>
Service cost............................................  $      673,000  $      652,000  $      411,000
Interest cost...........................................       2,284,000       2,260,000       2,152,000
Actual loss (gain) on plan assets.......................      (7,989,000)        327,000      (7,903,000)
Net amortization and deferral...........................       6,038,000      (2,422,000)      6,090,000
Curtailment (income)....................................         (64,000)       --              --
                                                          --------------  --------------  --------------
Net periodic pension cost...............................  $      942,000  $      817,000  $      750,000
                                                          --------------  --------------  --------------
                                                          --------------  --------------  --------------
</TABLE>
 
    Although the actual return on plan  assets is shown, the expected  long-term
rate  of return used in  determining the net periodic  pension cost in all years
was approximately  7.5%.  The  difference  between the  actual  return  and  the
expected  return is included in the "Net amortization and deferral" in the above
table. The actuarial present value of  benefits was determined using a  discount
rate  of  approximately 7%  in 1995  and 7.25%  in  1994 and  1993. The  rate of
compensation increase used to  measure the projected  benefit obligation in  two
plans  was approximately 5%.  All other plans are  based on current compensation
levels.
 
32
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
    The following table sets  forth the funded status  of the Company's  defined
benefit pension plans:
 
<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                  --------------------------------------------------------------
                                                               1995                            1994
                                                  ------------------------------  ------------------------------
                                                  ASSETS EXCEED    ACCUMULATED    ASSETS EXCEED    ACCUMULATED
                                                   ACCUMULATED       BENEFITS      ACCUMULATED       BENEFITS
                                                     BENEFITS     EXCEED ASSETS      BENEFITS     EXCEED ASSETS
                                                  --------------  --------------  --------------  --------------
<S>                                               <C>             <C>             <C>             <C>
Plan assets at fair value.......................  $   36,455,000  $     --        $   19,724,000  $   10,971,000
                                                  --------------  --------------  --------------  --------------
Actuarial present value of benefit obligations:
  Vested benefits...............................  $   28,970,000  $      604,000  $   16,730,000  $   12,522,000
  Nonvested benefits............................       1,555,000          51,000         819,000         776,000
                                                  --------------  --------------  --------------  --------------
Accumulated benefit obligation..................  $   30,525,000  $      655,000  $   17,549,000  $   13,298,000
Effect of projected future compensation
 increases......................................       2,326,000         481,000       1,933,000        --
                                                  --------------  --------------  --------------  --------------
Projected benefit obligation....................  $   32,851,000  $    1,136,000  $   19,482,000  $   13,298,000
                                                  --------------  --------------  --------------  --------------
Plan assets in excess of (less than) projected
 benefit obligation.............................  $    3,604,000  $   (1,136,000) $      242,000  $   (2,327,000)
Unrecorded net (gain) loss from past experience
 different from that assumed and effect of
 changes in assumptions.........................      (4,651,000)        (52,000)      1,568,000        (300,000)
Unrecorded prior service cost...................         249,000         538,000           1,000         700,000
Unrecognized net (asset) at date of initial
 application....................................      (1,900,000)       --            (1,405,000)       (968,000)
                                                  --------------  --------------  --------------  --------------
Prepaid (accrued) pension costs.................  $   (2,698,000) $     (650,000) $      406,000  $   (2,895,000)
                                                  --------------  --------------  --------------  --------------
                                                  --------------  --------------  --------------  --------------
</TABLE>
 
    The plans' assets include common stocks, fixed income securities, short-term
investments  and cash.  Common stock investments  at December 31,  1995 and 1994
include approximately 314,000 shares of the Company's Common Stock.
 
    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  for continuing  operations were
$206,000 in 1995, $255,000 in 1994 and $252,000 in 1993.
 
    The Company employees are also eligible  to become participants in the  Save
Money  and Reduce Taxes  (SMART) plan. Under  terms of the  plan, the trustee is
directed by each employee  on how to invest  the employee's deposit.  Investment
alternatives  include a money market  fund, two mutual funds  and a fixed income
fund.  Effective  January   1,  1993,  the   Company  terminated  its   matching
contribution  to the SMART plan. As of December 31, 1995 and 1994, assets of the
SMART plan include  approximately 524,000 and  532,000 shares, respectively,  of
the Company's Common Stock.
 
    The  Company has a  noncontributory defined contribution  plan (the Employee
Stock Plan). All non-union  employees not covered by  pension plans are  covered
under  the Employee Stock Plan. Company  contributions were $450,000 in 1994. No
contribution was made in 1995 and 1993.
 
    Effective January 1, 1995, the Company instituted a noncontributory  defined
contribution  retirement  plan called  the  Target Benefit  Plan.  All employees
covered by the Employee  Stock Plan are covered  under the Target Benefit  Plan.
Under the terms of the Target Benefit Plan, the Company will make an actuarially
determined  annual  contribution based  upon each  eligible employee's  years of
 
                                                                              33
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
service and  earnings as  defined. Employee  investment alternatives  include  a
money  market fund, two mutual  funds and a fixed  income fund. Employees become
vested in the Company contribution after  five years of service. Provisions  for
the contribution to this plan in 1995 were $932,000.
 
    The  Company provides medical benefits for retirees and their spouses at one
operating division and certain other individuals related to several discontinued
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 8.6% for retirees under age 65 (7.6% for retirees age 65 and older)
in 1996 to  5.5% over  26 years. The  effect of  a 1% annual  increase in  these
assumed  cost trend rates would  increase the accumulated postretirement benefit
obligation by  approximately $68,000.  The  annual service  costs would  not  be
materially affected.
 
    The following table provides information on the status of these plans:
 
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                  --------------------------
                                                                      1995          1994
                                                                  ------------  ------------
<S>                                                               <C>           <C>
Accumulated postretirement benefit obligation:
  Retirees and their dependents.................................  $   (287,000) $   (266,000)
  Fully eligible active plan participants.......................       (43,000)      (26,000)
  Active employees not fully eligible...........................      (464,000)     (395,000)
                                                                  ------------  ------------
Accumulated postretirement benefit obligation...................  $   (794,000) $   (687,000)
Plan assets.....................................................       --            --
Unrecognized prior service costs................................        13,000        15,000
Unamortized net (gain) loss.....................................      (139,000)     (236,000)
                                                                  ------------  ------------
Accrued postretirement benefit costs............................  $   (920,000) $   (908,000)
                                                                  ------------  ------------
                                                                  ------------  ------------
</TABLE>
 
    Net periodic postretirement benefit costs include the following:
 
<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                        -------------------------------------
                                                           1995       1994          1993
                                                        ----------  ---------  --------------
<S>                                                     <C>         <C>        <C>
Service cost..........................................  $   33,000  $  31,000  $       58,000
Interest cost.........................................      56,000     53,000         154,000
Amortization of unrecognized net (gain) loss..........     (18,000)    (3,000)         11,000
Amortization of prior plan amendment..................       1,000      1,000        --
Curtailment (gain)....................................      --         --          (1,000,000)
Settlement (gain).....................................      --         --              (5,000)
                                                        ----------  ---------  --------------
Net periodic postretirement benefit cost (benefit)....  $   72,000  $  82,000  $     (782,000)
                                                        ----------  ---------  --------------
                                                        ----------  ---------  --------------
</TABLE>
 
    Measurement  of the accumulated postretirement  benefit obligation was based
on a discount rate of 7.0% in 1995, 8.0% in 1994 and 7.5% in 1993.
 
    During 1995,  the  Company  made  provisions  totaling  $1,543,000  for  the
termination/retirement of certain individuals. During 1993, the Company provided
$1,261,000 (included in "Other (income) expense, net"--see Note 12) for deferred
compensation  related to  the retirement  of certain  executive officers  of the
Company.
 
34
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
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.
 
    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 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.
 
    Pursuant to a consent decree entered into in November 1991 with the EPA, the
Company  has agreed to close and remediate  a landfill leased by the Company and
formerly used  for the  disposal of  spent  foundry sands.  Prior to  1993,  the
Company  provided for  remediation costs  associated with  this landfill. 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 minimis" party.
 
    The Company is a defendant in an action where a private party 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 $1,500,000 from the Company and other defendants. The estimated present value
of  a  remediation  plan   proposed  by  the   state  environmental  agency   is
approximately  $1,900,000.  The  Company  has denied  liability  and  asserted a
counter-claim against plaintiff and cross-claims against the co-defendants.
 
    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 will  be required, the Company
has provided for the estimated cost for such remediation or cleanup.
 
    One site, located in Coldwater,  Ohio, is under contract  to be sold to  the
purchaser  of the White-New Idea business. That sale is contingent on completion
of an environmental study (now in progress), remediation, if any, determined  by
the Company's independent consultant to be necessary, and
 
                                                                              35
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the  issuance of a covenant not to sue  and related no further action letters by
the State  of  Ohio under  the  Ohio  Voluntary Action  Program.  Following  the
completion  of the sale of  the White-New Idea business  in 1993, an independent
consultant retained by  the Company indicated  cleanup costs at  the site  could
range  from $500,000 to  $5,300,000. The Company  provided in 1994  and 1993 for
amounts equal  to the  lower value  of  this range.  The Company  is  discussing
financial  contribution with  the prior  owner of  the facility  for any cleanup
costs as  a significant  portion of  the environmental  conditions under  review
existed prior to the Company's ownership of the facility.
 
    During  1995, 1994  and 1993, the  Company made  provisions of approximately
$921,000, $1,383,000 and $3,136,000, respectively, toward various  environmental
matters  discussed  above.  At  December 31,  1995,  the  Company  has accruals,
including those discussed above, of  $3,079,000 (including amounts provided  for
within  the  restructuring  reserve)  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  ($7,342,000)  due  May  22,  1996.  The  purchaser's  payment
obligation  is  secured by  the  technology licensed  and  is guaranteed  by the
purchaser's parent. The Company initially recorded this agreement as a long-term
note receivable.  In  1995,  however,  the  Company  established  a  reserve  of
$7,699,000  against the receivable, due  to recently published adverse financial
information about the  purchaser and  its parent which  raises serious  concerns
about the collectability of the receivable.
 
    The license agreement contains a non-compete covenant by the Company as well
as  a  covenant  to refer  to  the  purchaser relevant  customer  inquiries. The
agreement provides that  in the  event of  a violation  of the  covenant not  to
compete,   the  purchaser's  royalty  payments   are  reduced  by  approximately
$8,000,000 and the purchaser is also entitled to actual damages. Through the end
of the third  quarter of  1994, the Company  had received  the required  minimum
quarterly  payments,  usually 30  days  after the  due  date. During  the fourth
quarter of 1994, the purchaser withheld payment of the minimum quarterly payment
beyond 30 days and  asserted that the Company  had violated the non-compete  and
non-referral  covenants noted above. On  March 10, 1995, an  action was filed by
the purchaser in  the Circuit Court  of Cook County,  Illinois. At December  31,
1995,  the amounts due  the Company under this  agreement, including accrued and
unaccrued interest, is approximately $8,240,000. During 1995 as noted above, the
Company has made provisions against the collectability of this receivable. After
taking into consideration counsel's evaluation  of the above facts, the  Company
is  of the opinion that the outcome of  this action would not have a significant
adverse effect on the Company's consolidated financial statements.
 
    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 product  liability claims,  with necessary
reserves ($2,342,000 and $2,790,000 at December 31, 1995 and 1994, respectively)
determined in  consultation  with  independent  insurance  companies  and  legal
counsel.  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.
 
36
<PAGE>
           ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
However, 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.
 
    At  December 31, 1995, the Company was contingently liable for approximately
$1,849,000 primarily relating to outstanding letters of credit.
 
    During 1994,  the Company  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  equal to  approximately three  years'
compensation.
 
11.  OPERATIONS BY INDUSTRY SEGMENT:
 
    The  Company's operations involve a single  industry segment as described in
Note 1.
 
    Approximately 11%, 2%  and 8%  of the  Company's net  sales from  continuing
operations  in 1995, 1994  and 1993, respectively,  were exported principally to
Canada and Mexico.
 
    Approximately 29%, 14% and  25% of the Company's  net sales from  continuing
operations  in 1995, 1994 and 1993, respectively, were derived from sales 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,
                                                                    ----------------------------------------------
                                                                         1995            1994            1993
                                                                    --------------  --------------  --------------
<S>                                                                 <C>             <C>             <C>
Interest income...................................................  $     (437,000) $   (1,293,000) $   (1,832,000)
Goodwill amortization.............................................       2,068,000       2,067,000       2,067,000
Loan cost expenses/amortization...................................         440,000         563,000         988,000
Environmental related expenses....................................       1,110,000         410,000       1,486,000
Net gain on sales of operating and non-operating assets...........      (2,000,000)       (222,000)       (462,000)
Provision for collectability of long-term note receivable (Note
 10)..............................................................       7,699,000        --              --
Deferred compensation (Note 9)....................................        --              --             1,261,000
Litigation settlements............................................      (1,125,000)       --               650,000
Other miscellaneous...............................................        (272,000)       (327,000)        456,000
                                                                    --------------  --------------  --------------
                                                                    $    7,483,000  $    1,198,000  $    4,614,000
                                                                    --------------  --------------  --------------
                                                                    --------------  --------------  --------------
</TABLE>
 
13.  SIGNIFICANT FOURTH QUARTER ADJUSTMENTS:
 
    Operating results in the fourth quarter  of 1995 include the effects of  the
following adjustments:
 
    A.  A credit of $16,648,000 to the provision for income taxes resulting from
       a  reduction in the valuation allowance associated with the Company's net
       deferred tax asset--see Note 4.
 
    B.  A charge of $7,699,000 related  to a reserve for a long-term  receivable
       due the Company from the 1991 sale of an operation--see Note 10.
 
                                                                              37
<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 capital 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 for the years ended December 31, 1995,
       1994 and 1993
       Consolidated balance sheets as of December 31, 1995 and 1994
       Consolidated statements of cash  flows for the  years ended December  31,
       1995, 1994 and 1993
       Consolidated  statements of shareholders' investment  for the years ended
       December 31, 1995,
         1994 and 1993
       Notes to consolidated financial statements
 
(a) 2.  FINANCIAL STATEMENT SCHEDULES
 
    Included in Part IV of this report:
 
      Schedule  II--Valuation  and  qualifying  accounts  for  the  years  ended
      December 31, 1995, 1994 and 1993
 
38
<PAGE>
(a) 3.  EXHIBITS
 
    The following exhibits are incorporated by reference as noted below:
 
<TABLE>
<S>        <C>
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 1989 Annual  Report on Form  10-K
            (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)(w)(I) of the Company's report on Form 8-K dated
            January 14, 1994 (File No. 1-5530).
10(e)      The Registrant's Credit Agreement  dated as of March  17, 1994 among  Allied
            Products  Corporation, the  Banks Named  Herein and  Continental Bank N.A.,
            individually and as agent is incorporated by reference to Exhibit 10(I)  of
            the Company's report on Form 8-K dated April 8, 1994 (File No. 1-5530).
10(f)      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(g)      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(h)      The Registrant's Second  Amendment to  Credit Agreement  dated February  15,
            1995  is incorporated by  reference to Exhibit 10(c)  of the Company's 1994
            Annual Report on Form 10-K (File No. 1-5530).
10(i)      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).
10(j)      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(k)      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(l)      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).
</TABLE>
 
                                                                              39
<PAGE>
    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>
      10         Material Contract--Allied Products Corporation Target Benefit Plan.
      11         Computation of Earnings per Share.
      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, 1995.
 
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
 
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
 
<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                            ---------------------------------------------
                                                 1995           1994            1993
<S>                                         <C>             <C>            <C>
-----------------------------------------------------------------------------------------
Allowance for doubtful accounts--
  Current receivables:
    Balance at beginning of year..........  $    1,521,000  $   1,996,000  $    2,914,000
    Add (deduct)--
      Provision charged to income.........         451,000        256,000         229,000
      Receivables   charged  off   as  bad
       debts, net of recoveries...........      (1,024,000)      (731,000)     (1,147,000)
                                            --------------  -------------  --------------
    Balance at end of year................  $      948,000  $   1,521,000  $    1,996,000
                                            --------------  -------------  --------------
                                            --------------  -------------  --------------
  Long-term receivables:
    Balance at beginning of year..........  $     --        $    --        $     --
    Add (deduct)--
      Provision charged to income.........       7,699,000       --              --
      Receivables  charged   off  as   bad
       debts, net of recoveries...........        --             --              --
                                            --------------  -------------  --------------
    Balance at end of year................  $    7,699,000  $    --        $     --
                                            --------------  -------------  --------------
                                            --------------  -------------  --------------
</TABLE>
 
40
<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.
 
                                      ALLIED PRODUCTS CORPORATION
                                      (Registrant)
 
                                      By:                 /s/ RICHARD A. DREXLER
 
                                         ---------------------------------------
                                                Richard A. Drexler, CHAIRMAN,
                                                PRESIDENT AND CHIEF EXECUTIVE
                                                         OFFICER
March 11, 1996
 
    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>
                                           *                     /s/ [RICHARD A. DREXLER]
                                                      ----------------------------------------------
                                                        Richard A. Drexler, CHAIRMAN, PRESIDENT AND
                                                             CHIEF EXECUTIVE OFFICER; DIRECTOR
 
                                           *                      /s/ [KENNETH B. LIGHT]
                                                      ----------------------------------------------
                                                        Kenneth B. Light, EXECUTIVE VICE PRESIDENT,
                                                                           CHIEF
                                                      FINANCIAL AND ADMINISTRATIVE OFFICER; DIRECTOR
 
                                           *                       /s/ [ROBERT J. FLECK]
                                                      ----------------------------------------------
                                                      Robert J. Fleck, VICE PRESIDENT--ACCOUNTING AND
                                                                 CHIEF ACCOUNTING OFFICER
March 11, 1996
 
                                           *                        /s/ [LLOYD DREXLER]
                                                      ----------------------------------------------
                                                                      Lloyd Drexler,
                                                                         DIRECTOR
 
                                           *                     /s/ [WILLIAM D. FISCHER]
                                                      ----------------------------------------------
                                                                    William D. Fischer,
                                                                         DIRECTOR
 
                                           *                     /s/ [STANLEY J. GOLDRING]
                                                      ----------------------------------------------
                                                                   Stanley J. Goldring,
                                                                         DIRECTOR
 
                                           *                        /s/ [JOHN E. JONES]
                                                      ----------------------------------------------
                                                                      John E. Jones,
                                                                         DIRECTOR
 
                                           *                        /s/ [JOHN W. PUTH]
                                                      ----------------------------------------------
                                                                       John W. Puth,
                                                                         DIRECTOR
 
                                           *                      /s/ [MITCHELL I. QUAIN]
                                                      ----------------------------------------------
                                                                    Mitchell I. Quain,
                                                                         DIRECTOR
</TABLE>
 
                                                                              41
<PAGE>
<TABLE>
<S>                                        <C>        <C>
                                           *                        /s/ [S. S. SHERMAN]
                                                      ----------------------------------------------
                                                                      S. S. Sherman,
                                                                         DIRECTOR
 
                                           *          By:                      /s/ [DAVID B. CORWINE]
                                                        -------------------------------------------
                                                                     David B. Corwine,
                                                                     ATTORNEY-IN-FACT
</TABLE>
 
42