UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2001

Commission file number 1-7807

Champion Parts, Inc.

(Exact name of registrant as specified in its charter)

Illinois                                                       36-2088911

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

**2005 West Avenue B, Hope, Arkansas  71801**
(Address of principal executive offices)**870-777-8821**
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]    No [  ]

 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

                           Class                                               Outstanding as of April 1, 2001
           Common Shares - $0.10 Par Value                                    3,655,266

**PART I.    *FINANCIAL INFORMATION***Item 1.    *Financial Statements***CHAMPION PARTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS**  **April 1, 2001 **December 31, 2000   
(Unaudited) 
(Audited) **ASSETS           **CURRENT ASSETS:     
   Cash
  

$   777,000 
$ 691,000       
 Accounts receivable
, less allowance for uncollectibles                             of $261,000 and $207,000 in 2001 and 2000, respectively
  

5,403,000 
4,338,000 
   Other receivables 
 

248,000 
1,053,000       
   Inventories, net of reserves
 

8,504,000 
8,587,000       
   Prepaid expenses and other assets
 

548,000 
290,000       
   Deferred income tax asset
 

42,000 
42,000       **Total current assets 

15,522,000 
15,001,000       **PROPERTY, PLANT AND EQUIPMENT:     
   Land
 

197,000 
197,000 
   Buildings
 

7,837,000 
7,837,000 
   Machinery and equipment
 

12,995,000 
12,995,000 
      Gross property, plant & equipment 

21,029,000 
21,029,000       
  Less:  Accumulated depreciation
 

17,297,000 
17,190,000       **Net property, plant & equipment 

3,732,000 
3,839,000             **Total assets 
$19,254,000 
$18,840,000 
The accompanying notes are an integral part of these statements.
**CHAMPION PARTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS****LIABILITIES AND                                                         STOCKHOLDERS' EQUITY (DEFICIT) **April 1, 2001 **December 31, 2000   
(Unaudited) 
(Audited) **CURRENT LIABILITIES:     
   Accounts payable
 

$5,944,000 
$6,433,000 
  Accrued expenses:
 
    
      Salaries, wages and employee benefits 

547,000 
612,000 
     Other accrued expenses 

3,617,000 
3,699,000 
    Taxes other than income 

137,000 
95,000       
  Current maturities of long-term debt:
 
    
    Current maturities -  term notes 

462,000 
601,000 
    Current maturities -  vendor debt 

192,000 
192,000 
     Current maturities -  IRB Loan 

700,000 
700,000 
    Total current maturities of long-term debt
 

1,354,000 
1,493,000       **Total current liabilities 

11,599,000 
12,332,000             **DEFERRED INCOME TAXES 
42,000 
42,000             **LONG-TERM DEBT:      
   Long-term notes payable  - revolver
 

2,031,000 
2,313,000 
   Long-term notes payable -  term notes
 

2,412,000 
1,002,000 
  Long-term notes payable -  vendor settlements
 

2,350,000 
2,398,000 
   Industrial revenue bond (IRB) 
 

-0- 
-0- **Total long-term debt 

6,793,000 
5,713,000             **STOCKHOLDERS' EQUITY/(DEFICIT):     
    Preferred stock - 
No par value; authorized 10,000,000
 
    
  shares; issued and outstanding, none 

0 
0 
   Common stock - 
$.10 par value; auth. 50,000,000 shs;
 
    
issued and outstanding, 3,655,266shs 

366,000 
366,000 
   Additional paid-in capital
 

15,578,000 
15,578,000 
   (Accumulated deficit)
 

(15,124,000) 
(15,191,000) **Total stockholders' equity/(deficit) 

820,000 
753,000       **Total liabilities and stockholders' equity/(deficit) 
$19,254,000 
$18,840,000 
The accompanying notes are an integral part of these statements.
**CHAMPION PARTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (CONDENSED)

FOR THE PERIODS ENDED**  **Three Months

April 1, 2001 **Three Months

April 2, 2000 
(Unaudited)     
Net Sales 
$6,096,000 
$7,429,000 
  Costs and Expenses:
 
    
    Cost of products sold 

5,179,000 
5,992,000 
   Selling, distribution & administrative 

613,000 
699,000 
 Total costs and expenses 
 

5,792,000 
6,691,000       
Operating income  
304,000 
738,000 
  Non-operating (income)/expense:
 
    
    Interest expense 

132,000 
151,000 
    Other non-operating (income) 

(19,000) 
(39,000) 
 Total non-operating expense
 

113,000 
112,000    
Earnings before income taxes and extraordinary loss 
191,000 
626,000       
 Income taxes
 

-0- 
24,000       
Earnings before extraordinary loss 
191,000 
602,000       
 Extraordinary loss
 

124,000 
-0-       
Net Income 
$   67,000 
$ 602,000    
 Weighted Average Common Shares                                                       Outstanding at April 1, 2001:     
     Basic 

3,655,266 
3,655,266 
    Diluted 

3,685,073 
3,709,063    
Earnings Per Common Share - Basic:     
  Earnings before extraordinary loss per common sh.
 

$ 0.05 
$ 0.16    
     Extraordinary loss per common share 

0.03 
0.00    
  Net income per common share
 

$ 0.02 
$ 0.16    
Earnings Per Common Share - Diluted:     
  Earnings before extraordinary loss per common sh.
 

$ 0.05 
$ 0.16    
    Extraordinary loss per common share 

0.03 
0.00    
  Net income per common share
 

$ 0.02 
$ 0.16 
The accompanying notes are an integral part of these statements
**CHAMPION PARTS, INC.  AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT)**
(Unaudited)
  **  **Common **Additional   **Accumulated   **Common **Stock **Paid-in **Accumulated **Comprehensive   **Shares **Amount **Capital **(Deficit) **In /(Loss)             **BALANCE -- January 1, 2001 
3,655,266 
$ 366,000 
$ 15,578,000 
($15,191,000) 
$-0-             
Net Income 
-0- 
-0- 
-0- 
67,000 
-0-             
Foreign currency trans. adj. 
-0- 
-0- 
-0- 
-0- 
-0-             **BALANCE -- April 1, 2001 
3,655,266 
$ 366,000 
$ 15,578,000 
($15,124,000) 
$ -0- 
The accompanying notes are an integral part of these statements.
**CHAMPION PARTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME**
(Unaudited)
** 
 **Three Months

April 1, 2001 **Three Months

April 2, 2000       
Net Income 
$ 67,000 
$ 602,000       
Other comprehensive income:     
   Foreign currency translation adj.
 

-0- 
(4,000)       
Comprehensive income 
$ 67,000 
$ 598,000 
Components of accumulated other comprehensive income; included in the Company's consolidated balance sheet, consist of the foreign currency translation adjustment.

The accompanying notes are an integral part of these statements.
**CHAMPION PARTS, INC.  AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS**
(Unaudited)
  **Three Months

April 1, 2001 **Three Months

April 2, 2000 **CASH FLOWS FROM OPERATING ACTIVITIES:           
Net Income 
$ 67,000 
$ 602,000    
Adjustments to reconcile net income to net cash                                            provided by operating activities: 
 
 
  Extraordinary write-off
 

124,000 
-0- 
  Depreciation and amortization
 

107,000 
162,000 
 Provision for inventory write-offs (Net)
 

234,000 
77,000 
Changes in assets and liabilities:     
  Accounts receivable (net trade)
 

(1,065,000) 
(1,561,000) 
 Other accounts receivable
 

805,000 
445,000 
  Inventories (gross)
 

(151,000) 
240,000 
 Accounts payable
 

(489,000) 
(104,000) 
  Accrued liabilities and other
 

(487,000) 
(134,000) **NET CASH PROVIDED BY/(USED IN) OPERATIONS **(855,000) **(273,000)       **CASH FLOW FROM INVESTING ACTIVITIES:     
  Capital expenditures
 

-0- 
(29,000) 
 Proceeds from the sale of assets
 

-0- 
           -0- **NET CASH (USED) IN INVESTING ACTIVITIES **-0- **(29,000)       **CASH FLOWS FROM FINANCING ACTIVITIES:     
  Net borrowings/(payments) under revolving loan agreement
 

(282,000) 
194,000 
  Net borrowings/(payments) on term note obligations
 

   1,271,000 
   (150,000) 
  Payments under long-term vendor debt obligations
 

(48,000) 
(50,000) **NET CASH PROVIDED BY FINANCING ACTIVITIES **941,000 **(6,000)       **EFFECTS OF EXCHANGE RATE CHANGES ON CASH **-0- **(4,000)   **NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS **86,000 **(312,000)       **CASH AND CASH EQUIVALENTS - Beginning of period **691,000 **1,330,000       **CASH AND CASH EQUIVALENTS - End of period **$ 777,000 **$1,018,000 
The accompanying notes are an integral part of these statements.
**CHAMPION PARTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
(Unaudited)
**_________________________________________________________________**
Note 1    The accompanying financial statements for the three months ended April 1, 2001 and April 2, 2000 have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certaininformation and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes thatthe disclosures are more than adequate to make the information presented not misleading.  The condensed consolidated financial statements and these notes should be read in conjunction with the consolidated financial statements of the Company included inthe Company's Annual Report submitted on Form 10-K for the year ended December 31, 2000.

The consolidated balance sheet at December 31, 2000 has been derived from the audited financial statements at that date.

Note 2.  The information furnished herein reflects all adjustments (consisting only of normal recurring accruals), which are in the opinion of management, necessary for a fair presentation of the results of operations for theinterim period.  Results of operations for the three months ending April 1, 2001 are not necessarily indicative of results to be expected for the entire year.

Note 3.   Inventories are valued at the lower of cost (first-in, first-out method) or market.  A summary of the net inventories follows:

  
April 1, 2001 
December 31, 2000 
   
Raw materials 

$ 3,981,000 
$ 3,970,000 
Work-in-process 

   2,622,000 
   2,746,000 
Finished goods 

   1,901,000 
   1,871,000 
  Total Inventories
 

$ 8,504,000 
$ 8,587,000 

Included in inventory above were net cores of $5.0 million (April 1, 2001) and $4.9 million (December 31, 2000).

Note 4.    For reporting purposes, product and core returns are offset against gross sales in arriving at net sales. Total returns for the three months ended April 1, 2001 were $2,140,000 compared to $2,785,000 during the sameperiod last year.

Note 5.   The income tax expense attributable to operations for the three months ended April 1, 2001 and April 2, 2000, differed from the amounts computed by applying the federal income tax rate of 34% principally as a result oftax benefits recognized related to the carryforward of net operating losses.

Note 6.  Business Segments - The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information."  Following the provisions of SFAS No.131, the Company is reporting two operating business segments in the same format as reviewed by the Company's senior management.  Segment one, Fuel Systems & C.V. Assemblies, remanufactures and sells replacement fuel system components (carburetors anddiesel fuel injection components) and constant velocity drive assemblies for substantially all makes and models of 

Note 6.  (Continued)

domestic and foreign automobiles and trucks. Segment two, Electrical & Mechanical Products, remanufactures and sells replacement electrical and mechanical products for passenger car; agricultural and heavy-duty truck originalequipment applications.  Management uses operating income as the measure of profit or loss by business segment.  Segment assets include amounts specifically identified with each operation.  Corporate assets consist primarily of property and equipment.

**     Business segment information is as follows:**
  **Three Months

April 1, 2001 **Three Months

April 2, 2000 **Revenues:     
Fuel Systems & C.V. Assemblies 
$ 4,242,000 
$  5,394,000 
Electrical & Mechanical Products 
1,854,000 
2,035,000 
  Total Revenues
 

6,096,000 
7,429,000       **Depreciation & Amortization Expense:     
Fuel Systems & C.V. Assemblies 
58,000 
55,000 
Electrical & Mechanical Products 
42,000 
84,000 
Corporate 
7,000 
23,000 
  Total depreciation & amortization
 

107,000 
162,000       **Interest Expense:     
Fuel Systems & C.V. Assemblies 
81,000 
92,000 
Electrical & Mechanical Products 
53,000 
54,000 
Corporate 
(2,000) 
4,000 
  Total interest expense
 

132,000 
150,000       **Net Income/(Loss):     
Fuel Systems & C.V. Assemblies 
423,000 
1,109,000 
Electrical & Mechanical Products 
140,000 
(126,000) 
Corporate 
(372,000) 
(381,000) 
         Earnings before extraordinary (loss) 
$ 191,000 
$ 602,000 
Extraordinary (loss) 
(124,000) 
-0- 
  Net Income
 

$   67,000 
$ 602,000       **Capital Additions:     
Fuel Systems & C.V. Assemblies 
-0- 
-0- 
Electrical & Mechanical Products 
-0- 
-0- 
Corporate 
-0- 
29,000 
  Total capital additions
 

-0- 
29,000    **Total Assets:     
Fuel Systems & C.V. Assemblies 
10,410,000 
9,657,000 
Electrical & Mechanical Products 
7,780,000 
8,209,000 
Corporate 
1,734,000 
711,000 
  Total assets
 

$ 19,924,000 
$ 19,978,000  
Note 7.   Long Term Debt - February 8, 2001, the Company entered into a new credit facility with Congress Financial Corporation (Southern), a subsidiary of First Union Bank.  Maximum credit available under the new facility is$14,000,000, with letter of credit accommodations of $1,750,000, and term loans totaling $2,913,000 on fixed assets and real properties.  Interest rates on the new facility are for revolving debt, prime plus 3/4 %, for term debt, prime plus 1%, and forletters of credit 2% per annum on the daily outstanding balance.

The carrying amount of long-term debt (excluding the restructured vendor debt) approximates fair market value because the interest rates on substantially all the debt fluctuate based on changes in market rates.

A $124,000 extraordinary write-off was required when the Company entered into a new, three-year, loan facility with Congress Financial Corporation.  The extraordinary write-off was for loan acquisition costs associated withsecuring the Bank of America loan facility in 1998.  These costs were being amortized over the four-year life of that loan facility.

At the closing for the Congress Financial Corporation loan facility, $719,000 was left on deposit as a requirement to support the Hope Industrial Revenue Bonds until the Letter of Credit documentation could be issued.  A Letter ofCredit was issued in April and the cash was wired to Congress Financial to pay down the revolver loan where it was reflected.

******ITEM 2.     *MANAGEMENT'S DISCUSSION AND ANALYSIS OF*
                  *FINANCIAL CONDITION AND RESULTS OF OPERATIONS***RESULTS OF OPERATIONS
**Three months ended April 1, 2001 compared to three months ended April 2, 2000**
Net sales for the first quarter ending April 1, 2001 were $6.1 million, down $1.3 million, or 18.0%, versus net sales of $7.4 million for the same period in 2000.  Compared to first quarter 2000, the decline in net sales principallyreflects a 31% drop in carburetor net sales, which were down $1.5 million.  This first quarter 2001 carburetor sales decline replicates a continuation of the decline exhibited throughout 2000 by both of the Company's major retail customers.  In addition,agricultural equipment and heavy-duty customers sales were also below 2000 by 22% due to soft orders of heavy-duty water pumps and starter product lines. Offsetting the heavy-duty/agricultural decline were substantially higher net sales of automotiveproducts, which had a gain of 31%, over 2000 on strong orders for starters, diesel pumps and constant velocity axles.  Total product and core returns, which are reflected as reductions to gross sales, were 25.4% and 27.4% of gross sales in the firstquarter of 2001 and 2000, respectively.  Warranty returns and stock adjustment credits decreased at a greater rate than gross sales declined in the first quarter 2001 accounting for the percentage point decrease over 2000.

Carburetor net sales were 57.1% and 67.7% of total net sales in the first quarter of 2001 and 2000, respectively. The substantial percentage point drop versus 2000 reflects a 31% decrease in carburetor net sales for the quarter.Although new vehicles sold in the United States and Canada are no longer equipped with carburetors, the Company continues to sell replacement units for older vehicles, many of which use carburetors. The Company expects that carburetor sales will continueto exhibit a steady decline in future periods.  In addition, carburetor margins may be negatively impacted in the future as customers accelerate product returns during periods of declining demand.

Cost of products sold in the first quarter were $5.2 million, or 85.0% of net sales as compared to $6.0 million, or 80.5%, for the first quarter of 2000.  On a dollar basis, the cost of products sold were lower than 2000 by $813,000,or 13.6%, primarily reflecting the lower standard cost of sales and a cutback of production spending at both manufacturing facilities in an attempt to balance production levels with the orders decline.

For the first quarter 2001, selling, distribution and administrative expenses were $613,000, compared to $699,000 in the first quarter of 2000.  The 12.3% spending decrease can be attributed to reduced distribution costs due to thelower sales volume, lower selling expense, and lower administrative spending at both manufacturing facilities.  Corporate administrative overhead spending was up from first quarter 2000 reflecting the inclusion of loan acquisition cost amortization forthe new Congress Financial Corporation loan facility.

Interest expense was $132,000 for the first quarter of 2001, versus $150,000 in the same period of 2000.  The interest expense reduction is due to lower borrowing balances and rates for the revolver loan,  Letters of Credit andIndustrial Revenue Bonds, partially offset by an increase in Term Debt interest expense.
**RESULTS OF OPERATIONS (CONTINUED)

For the first quarter of 2001, earnings before extraordinary loss was $191,000 compared to $602,000 for the same period in 2000, a decline of $411,000, or 68.3%.  Accounting for the substantial decline in earnings is the significantdrop in net sales revenue, which translates into approximately a $240,000 loss of earnings, based on applying the actual gross margin percentage times the net sales decline. The balance of the decline can be attributed to fixed expenses not droppingproportionately with the net sales decline.

The Company incurred an extraordinary write-off of $124,000 during the first quarter for loan acquisition costs associated with securing the Bank of America loan facility in 1998.  These costs were being amortized over the four-yearlife of that loan facility.  The write-off was required because the Company entered into a new, three-year, loan facility with Congress Financial Corporation (see Note 7 and debt section).

Net income for the first quarter was $67,000 compared to $602,000 for the same period in 2000, a decline of $535,000, or 88.9%.  The significant decline is explained in the preceding paragraphs.
**LIQUIDITY AND CAPITAL RESOURCES
**Working Capital

Net working capital at April 1, 2001 was $3.9 million, compared to $2.7 million at the end of 2000, and  $1.6 million for April 2, 2000.  The $1.3 million increase in working capital over the 2000 year-end is principally   a result ofa increase in current assets of $0.5 million, combined with a decrease in current liabilities of $0.7 million.  Current assets increased reflecting higher trade receivables and prepaid expenses.  The reduction of current liabilities reflects decreases intrade accounts payable and accrued expenses combined with lower current maturities of term notes.  Compared with April 2, 2000, the increase in working capital primarily resulted from substantially higher receivables, lower payables and substantialreductions in accrued expenses.

Net trade accounts receivable at April 1, 2001 were $5,403,000, or $1,065,000 higher versus the year-end 2000 balance of $4,338,000 primarily as a result from slow payments from large customers that were collected the week followingthe quarter end.   Net trade receivables increased $422,000 compared to the April 2, 2000 balance of $4,981,000 also due to the slower payments.  Other receivables decreased $805,000 from year-end 2000 reflecting the receipt of the proceeds from the saleof a 50% owned joint venture.

Net inventories of $8,504,000 at April 1, 2001, were lower by $83,000 compared to year-end fiscal 2000 balance.  Reductions in the work-in-process inventories more than offset small increases in raw materials and finished goodsinventories.  Net inventories decreased $419,000 versus April 2, 2000 reflecting lower parts, work-in-process and finished goods inventories at both the Pennsylvania and Arkansas facilities.

Trade accounts payable at the end of the first quarter of 2001 were $543,000 lower than year-end 2000, and they were $1.1 million lower than April 2, 2000.  The decline from year-end and last year is a result of the aggressive pay-downof trade payable account balances in the first quarter.
**Working Capital (Continued)**
Accrued expenses at the end of first quarter were $82,000 lower than fiscal year-end 2000 balances because   of the reduction of excess accruals relating to workers compensation reserves reflecting favorable claims settlements.Compared to April 2, 2000, accrued expenses were lower by $1.6 million reflecting reduction of excess accruals relating to workers compensation reserves together with reversal of reserves relating to the 50% owned joint venture sold at year-end 2000.
**Debt**
On February 8, 2001, the Company entered into a new credit facility with Congress Financial Corporation (Southern), a subsidiary of First Union Bank.  Maximum credit available under the new facility is $14,000,000, including letter ofcredit accommodations of $1,750,000, and term loans totaling $2,913,000 on fixed assets and real properties. Interest rates on the new facility are for revolving debt, bank prime plus 3/4%, for term debt, bank prime plus 1%, and for letters of credit 2%per annum on the daily outstanding balance.

At April 1, 2001 the balance outstanding on the Company's new loan facility was $4,905,000 plus letter of credit accommodations of $1,355,000.  This compares to a loan balance on the previous loan facility at December 31, 2000 of$3,916,000 and accommodations of $1,370,000.  Loan balances on the previous loan facility at April 2, 2000 were $2,867,000 and accommodations of $1,693,000.
**SEASONALITY**
The Company's business is slightly seasonal in nature, primarily as a result of the impact of weather conditions on the demand for certain automotive replacement parts.  Historically, the Company's sales and profits have beensubstantially higher in the first and fourth quarters of each year than in the second and first quarters.
**FUTURE OUTLOOK**
The Company announced in March that it is considering the consolidation of its manufacturing facilities.  While a final decision has not been made, management is evaluating alternatives and is soliciting input from employees.Regardless of the outcome, management will continue its aggressive cost-cutting measures.

The Company has decided to close its distribution center in Fresno, California.  The operation was shut down effective March 30, 2001.

In addition to consolidating and improving existing operations, the Company's management is aggressively pursuing new products and markets that will replace declining sales of carburetors in traditional market segments.  This includesinternal product development as well as acquisition of new product line opportunities. The Company's new $14 million credit facility with Congress Financial Corporation will help to provide the capital to accommodate growth and acquisitions.
**FACTORS WHICH MAY AFFECT FUTURE RESULTS**
This quarterly report contains forward-looking statements that are subject to risks and uncertainties, including but not limited to the following:

The Company expects the existing over-capacity in the automotive parts aftermarket and consolidation within its distribution channels to cause continued selling price pressure for the foreseeable future.  The present competitiveenvironment is causing change in traditional aftermarket distribution channels resulting in the volume retailers gaining additional market presence at the expense of traditional wholesalers.  In response, the Company has attempted to diversify itscustomer base and currently serves all major segments, including automotive warehouse distributors and jobbers, original equipment manufacturers of automotive equipment and large volume automotive retailers.  The anticipated decline in sales from theprofitable carburetor product line over the longer term will impact future results.  The Company intends to offset these impacts through acquisitions, development of niche product markets, new product development, improvements in its manufacturingprocesses and cost containment with a strong focus on capacity utilization. There is no assurance that the Company's efforts will be successful.

The Company's three largest customers accounted for an aggregate of 83.1% of the Company's total sales through first quarter of 2000.  Given the Company's current financial condition and its manufacturing cost structure, the loss of alarge customer would have a materially adverse impact on the Company's financial condition and results of operations.

While the Company has established reserves for potential environmental liabilities that it believes to be adequate, there can be no assurance that the reserves will be adequate to cover actual costs incurred or that the Company willnot incur additional environmental liabilities in the future.

Accordingly, actual results may differ materially from those set forth in the forward-looking statements.
**PART II.     *OTHER INFORMATION***ITEM 1.        *Legal Proceedings***Lawson Street, City of Industry, California Cleanup Proceedings, and Puente Valley, California Superfund Proceeding 
See Registrant's Annual Report on Form 10-K, December 31, 2000, Environmental Section, page 8, for background of these proceedings.

Arvin Industries, Inc. et. al. versus Champion Parts, Inc. et. al. 
On April 25, 2001, Arvin Industries, Inc., a co-defendant in the City of Industry case, filed a complaint, in the United States District Court, Central District of California, against the Company and other parties alleging breachof contract. Arvin alleges that the Company and other party are each responsible for one-third of the proposed cash-out settlement for the Puente Valley Operable Unit of the San Gabriel Valley Superfund Site (the "Puente Valley Site").  Arvin previouslynotified the Company that it intended to accept the proposal, however, the Company's position is that it did not agree to pay a one-third share of the cash-out that Arvin is pursuing in the Complaint.  The Company believes that the Arvin complaint iswithout merit and plans to vigorously pursue its defense.

 The Company has demanded defense and indemnity from its insurance carriers for any liability at the Puente Valley Site.  The Company has established reserves for potential environmental and other legal liabilities that it believesto be adequate.   However, there can be no assurance that the reserves will be adequate to cover actual costs incurred or that the Company will not incur additional environmental or other legal liabilities in the future.

ITEM 6.    *Exhibits and Reports on Form 8-K*
 No Form 8-K reports were filed by the Company during the most recently completed fiscal quarter.

**SIGNATURES

 **
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
**CHAMPION PARTS, INC.**
(Registrant)

 

Date:   May 15, 2001                                            By:  /s/  Jerry A. Bragiel    
                                                                                 Jerry A. Bragiel

                                                                                 President, Chief Executive Officer

 

                                                                                   By: /s/  Richard W. Simmons    
                                                                                 Richard W. Simmons

                                                                                 Vice President Finance, ChiefFinancial Officer

                                                                                 and Secretary****************************************************************************************************************************************************************************