SECURITIESAND EXCHANGE COMMISSIONWashington,D.C. 20549

FORM 10-Q

For the quarterly period ended April 1, 2001                                        
                                    OR
[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                                  SECURITIES EXCHANGE ACT OF 1934For the transition period from                                                to                                                Commission file number 0 -19703            
                                    FarrelCorporation                                                   (Exact name of registrant as specified in its charter)DELAWARE22-2689245(State or other jurisdiction of(I.R.S. Employerincorporation or organization)Identification No.
               25 Main Street, Ansonia, Connecticut, 06401                                    (Address of principal executive offices  (Zip Code)
                              (203) 736-5500                                   (Registrant's telephone number, including area code)
        Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements forthe past 90 days.               Yes [ X ]   No [    ]APPLICABLEONLY TO CORPORATE ISSUERS:
Indicate the number of shares  outstanding of each of the issuer's  classes of common stock,  as of the latest  practicabledate.
                          CLASS                                     OUTSTANDING AT May 9, 2001             Common Stock (Voting), $.01 par value                                 5,228,461   Farrel CorporationIndexPagePart I.  Financial Information            Consolidated Balance Sheets -            April 1, 2001 and December 31, 2000                           3            Consolidated Statements of Operations -            Three Months Ended April 1, 2001              and April 2, 2000                                           4            Consolidated Statements of Cash Flows -            Three Months Ended April 1, 2001              and April 2, 2000                                           5            Notes to Consolidated Financial Statements                6 - 7            Management's Discussion and Analysis of Financial            Condition and Results of Operations                      8 - 10Part II.  Other Information                                              11            Exhibit 11 - Computation of Earnings Per Share               12
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                         Part I - Financial Information                               FARREL CORPORATION                               ------------------                           CONSOLIDATED BALANCE SHEETS                           ---------------------------                        (In thousands, except share data)                                                       April 1,  December 31,                                                       --------  ------------                                                         2001        2000                                                       --------    --------                                                      (Unaudited)ASSETSCurrent Assets:   Cash and cash equivalents .......................   $  3,290    $  2,486   Accounts receivable, net of allowance for      doubtful accounts of $118 and $139,      respectively .................................      8,679      13,607   Inventory .......................................     14,209      12,411   Deferred income taxes ...........................        793         793   Other current assets ............................      1,398       1,284                                                       --------    --------                 Total current assets ..............     28,369      30,581   Property, plant and equipment - net      of accumulated depreciation of $14,063 and      $14,037, respectively ........................      8,771       9,538   Prepaid pension costs ...........................      3,485       3,514   Other assets ....................................        248         299                                                       --------    --------      Total assets .................................   $ 40,873    $ 43,932                                                       ========    ========LIABILITIES & STOCKHOLDERS' EQUITY   Current Liabilities:      Accounts payable .............................   $  5,698    $  6,400      Accrued expenses & taxes .....................      1,255       1,660      Advances from customers ......................      5,717       5,948      Accrued warranty costs .......................      1,012       1,075      Short - term debt ............................        850       1,194                                                       --------    --------      Total current liabilities ....................     14,532      16,277   Long - term debt ................................      1,133       1,194   Postretirement benefit obligation ...............      1,108       1,118   Deferred income taxes ...........................      1,231       1,380   Commitments and contingencies ...................       --          --                                                       --------    --------      Total liabilities ............................     18,004      19,969                                                       --------    --------   Stockholders' equity:      Preferred stock, par value $100, 1,000,000 ...       --          --           shares authorized, no shares issued      Common stock, par value $.01,           10,000,000 shares authorized,            6,142,106 shares issued ................         61          61      Paid in capital ..............................     19,295      19,295      Treasury stock, 912,045 shares at           April 1, 2001 and December 31, 2000 .....     (2,529)     (2,529)      Retained earnings ............................      7,723       8,330      Accumulated other comprehensive loss .........     (1,681)     (1,194)                                                       --------    --------           Total stockholders' equity ..............     22,869      23,963                                                       --------    --------Total liabilities and stockholders' equity .........   $ 40,873    $ 43,932                                                       ========    ========     See Accompanying Notes to Consolidated Financial Statements
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                               FARREL CORPORATION                               ------------------                      CONSOLIDATED STATEMENTS OF OPERATIONS                      -------------------------------------                      (In thousands, except per share data)                      -------------------------------------                                               Three Months Ended                                               ------------------                                           April 1,           April 2,                                             2001               2000                                             ----               ----                                          (unaudited)        (unaudited)Net sales .........................       $    11,080        $    11,555Cost of sales .....................             8,608              9,478                                          -----------        -----------Gross margin ......................             2,472              2,077Operating expenses:    Selling .......................             1,302              1,597    General & administrative ......             1,711              2,122    Research & development ........               444                437                                          -----------        -----------Total operating expenses ..........             3,457              4,156                                          -----------        -----------Operating loss ....................              (985)            (2,079)Interest income ...................                52                 85Interest expense ..................               (42)               (72)Other expense, net ................                19               (100)                                          -----------        -----------Loss before income taxes ..........              (956)            (2,166)Benefit for income taxes ..........               349                686                                          -----------        -----------Net  loss .........................      ($       607)      ($     1,480)                                          ===========        ===========Per share data:Basic and Diluted net loss    per common share ..............      ($      0.12)      ($      0.28)                                          ===========        ===========Average shares outstanding:   Basic ..........................         5,230,061          5,250,061                                          ===========        ===========   Diluted ........................         5,230,061          5,250,061                                          ===========        ===========Dividends declared ................       $      0.00        $      0.04                                          ===========        ===========           See Accompanying Notes to Consolidated Financial Statements
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                               FARREL CORPORATION                               ------------------                      CONSOLIDATED STATEMENTS OF CASH FLOWS                      -------------------------------------                                 (In thousands)                                                            Three Months Ended                                                            ------------------                                                           April 1,    April 2,                                                           --------    --------                                                             2001        2000                                                             ----        ----                                                         (Unaudited) (Unaudited)Cash flows from operating activities:  Net (loss) ...........................................   ($  607)   ($1,480)  Adjustments to reconcile net (loss) to net  cash provided by (used in) operating activities:    Gain on disposal of fixed assets ...................      (151)      --    Depreciation and amortization ......................       430        521    Decrease in accounts receivable ....................     4,694      6,477    Increase in inventory ..............................    (2,122)    (3,642)    Increase in prepaid pension costs ..................      (105)      (400)    Decrease in accounts payable .......................      (537)      (876)    Increase in customer advances ......................       (16)     2,451    Decrease in accrued expenses and taxes .............      (508)    (1,207)    Decrease in accrued warranty costs .................       (45)       (74)    Increase (decrease) in deferred income taxes .......      (108)        44    Other ..............................................       (55)         7                                                           -------    -------    Total adjustments ..................................     1,477      3,301                                                           -------    -------    Net cash provided by (used in) operating activities        870      1,821                                                           -------    -------Cash flows from investing activities:    Proceeds from disposal of fixed assets .............       374       --    Purchases of property, plant and equipment .........       (87)      (135)                                                           -------    -------    Net cash (used in) provided by investing activities        287       (135)                                                           -------    -------Cash flows from financing activities:    Payments of short-term borrowing, net ..............      (289)      --    Dividends paid .....................................      --         (210)                                                           -------    -------    Net cash used by financing activities ..............      (289)      (210)                                                           -------    -------Effect of foreign currency exchange rate changes on cash       (64)       (49)                                                           -------    -------Net increase in cash and cash equivalents ..............       804      1,427    Cash and cash equivalents - Beginning of period ....     2,486      6,069                                                           -------    -------    Cash and cash equivalents - End of period ..........   $ 3,290    $ 7,496                                                           =======    =======Income taxes paid ......................................   $    17    $    78                                                           =======    =======Interest paid ..........................................   $    42    $     1                                                           =======    =======           See Accompanying Notes to Consolidated Financial Statements
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FarrelCorporationNotes to Consolidated Financial Statements(Unaudited)Note 1 - Basisof Presentation
          In the opinion of management,  the  accompanying  unaudited  consolidated  financial  statements have beenprepared in accordance with generally  accepted  accounting  principles for interim financial  information and withthe  instructions  to Form 10-Q and  Article 10 of  regulation  S-X.  Accordingly,  they do not  include all of theinformation  and  footnotes   required  by  generally  accepted   accounting   principles  for  complete  financialstatements.  In the opinion of management,  the accompanying  unaudited  consolidated  financial statements containall adjustments,  consisting only of normal recurring  adjustments,  necessary to present fairly in accordance withgenerally accepted accounting  principles,  the consolidated  financial position of Farrel Corporation ("Farrel" or"the  Company") as of April 1, 2001,  and the  consolidated  results of its  operations  and its cash flows for thethree  month  periods  ended  April 1, 2001 and April 2, 2000.  These  results are not  necessarily  indicative  ofresults to be expected for the full fiscal year.  The statements  should be read in conjunction  with the financialstatements  and notes  thereto,  included in the Company's  Annual Report and Form 10-K for the year ended December31, 2000.
Note 2 - Inventory          Inventory is comprised of the following:                                            April 1,             December 31,                                            --------             ------------                                              2001                   2000                                              ----                   ----                                                     (In thousands)    Stock and raw materials..........        $ 8,343                $ 7,997    Work-in process..................          5,866                  4,414                                             -------                -------    Total............................        $14,209                $12,411                                             =======                =======Note 3 - ComprehensiveIncome (loss)          The components of other comprehensive income (loss) are as follows:                                                      Three Months Ended                                                      April 1,   April 2,                                                      -------    -------                                                        2001       2000                                                      -------    -------                                                        (In thousands)Net (loss) ........................................   $  (607)   $(1,480)Foreign currency translation adjustments ..........      (487)      (171)                                                      -------    -------Other comprehensive (loss) ........................   $(1,094)   $(1,651)                                                      =======    =======
          Accumulated    othercomprehensive  expense consists of foreign currency  translation  adjustments atApril 1, 2001 and December 31, 2000.
Note 4 –Segment Information
          The Company's  operations  are  considered  one operating  segment.  The  Company's  products  consist of newmachines,  aftermarket and spare parts and repair related  services.  The Company's  products and services are soldto commercial  manufacturers in the plastic and rubber  industries.  The  manufacturing,  assembly and distributionof the Company's products are essentially the same.

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Note 5 – Impactof Recently Issued Accounting Standards
          In June 1998, the FASB issued  Statement No. 133,  Accounting for Derivative  Instruments and HedgingActivities,  which the Company was  required to adopt on January 1, 2001.  The  Statement  provides a new method ofaccounting for  derivatives  and hedges.  The adoption of this  Statement did not have a significant  effect on theCompany's results of operations or financial position.

          The Company has entered into foreign  exchange  forward  contracts which are designated as fair valuehedges of accounts  receivable and future  receivables  related to customer  orders in backlog.  The Company,  fromtime to time,  enters  into  foreign  exchange  forward  contracts  to hedge  certain  firm  commitments  which aredenominated in currencies other than the Company's operating currencies.

          As of April 1, 2001, all of the Company's  foreign  exchange  forward  contracts  were  designated asfair value hedges.  There were no ineffective  portions, as defined under FAS133,  during the quarter ended April 1,2001.  As such,  there were no charges to the  statement  of  operations  during the  quarter  ended April 1, 2001,related to these contracts.
Note 6 –Restatement of Prior Year Balances
          Prioryear balances have been restated to reflect the adoption of SEC Staff AccountingBulletin 101 (“Revenue Recognition”) and EITF00-10 (“Accounting for Shipping andHandling Costs”). The Company was required to adopt these accounting  guidelinesin the fourth  quarter  of 2000.  The  adoption  required  restatement  of priorperiods.

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PART I - ITEM 2 -**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL       CONDITION & RESULTS OF OPERATIONS**Safe HarborStatements Under Private Securities Litigation Reform Act of 1995
          Certainstatements  contained in the Company's public  documents,  including this reportand in particular,  in this  "Management's  Discussion and Analysis of FinancialCondition and Results of Operations"  may be forward  looking and may be subjectto a variety of risks and  uncertainties.  Various  factors  could cause  actualresults to differ materially from these statements.  These factors include,  butare not  limited  to,  pricing  pressures  from  competitors  and/or  customers;continued  economic  and  political  uncertainty  in  certain  of the  Company'smarkets; the Company's ability to maintain and increase gross margin levels; theCompany's  ability  to  generate   positive  cash  flow;   changes  in  businessconditions,  in general, and, in particular,  in the businesses of the Company'scustomers and competitors;  and other factors which might be described from timeto  time  in  the   Company's   filings   with  the   Securities   and  ExchangeCommission.
Results ofOperationsThree MonthsEnded April 1, 2001 Compared To The Three Months Ended April 2, 2000
          Netsales for the three month period ended April 1, 2001 were $11.1 million comparedto $11.6  million for the three month  period ended April 2, 2000, a decrease of$0.5  million.  The timing of the  Company's  sales,  particularly  new machinessales, is highly dependent on when an order is received, the amount of lead timefrom  receipt of order to  delivery  and  specific  customer  requirements.  TheCompany  operates  in markets  which are  extremely  competitive  with  cyclicaldemand.  Many of the Company's  customers and markets  operate at less than fullcapacity and certain remain  particularly  competitive  and are subject to localeconomic events.

          Ordersreceived  for the three  month  period  ended  April 1,  2001 were $9.6  millioncompared to $11.0  million for the three month period  ended April 2, 2000.  Thedecline  in  incoming  orders  is due to weak  market  conditions  faced  by theCompany.

          TheCompany's products are primarily supplied to manufacturers and represent capitalcommitments  for new plants,  expansion or  modernization.  In the case of majorequipment  orders,  up to 12 months are required to complete  the  manufacturingprocess.  Accordingly,  revenues  reported in the  statement of  operations  mayrepresent  orders received in the current or previous  periods during which timeeconomic  conditions  in  various  geographic  markets  of the world  impact theCompany's level of order intake. Many of the Company's traditional customers andmarkets  are  operating  with excess  capacity  thereby  reducing  the number ofprojects for plant  expansion  and  modernization.  The Company is  experiencingincreased  pricing  pressures from competitors in an overall smaller market.  Inaddition,  since its inception,  the decline in the value of the Euro versus theU.S. dollar and British pound sterling has increased pricing pressures. Over thelonger  term,  these  conditions  are  resulting  in customer  orders with lowermargins and lost business.  Further, the cyclical nature of industry demand and,therefore, the timing of order intake may effect the Company's quarterly resultsof operations.  The Company's ability to maintain and increase net sales dependsupon a strengthening and stability in the Company's  traditional markets and itsability to control costs to effectively  compete in its current  markets.  Therecan be no assurance that the current level of orders will continue,  that marketconditions will not worsen,  or that  improvements in the Company's  traditionalmarkets will lead to increased orders for the Company's products.

          Thelevel of  backlog  considered  firm by  management  at April 1,  2001 was  $26.2million  compared to $27.7  million at December 31, 2000,  and $28.3  million atApril 2, 2000.

          Grossmargin for the three month period ended April 1, 2001 was $2.5 million  comparedto $2.1 million for the three month  period ended April 2, 2000,  an increase of$0.4 million.  The margin  percentage  for the three month period ended April 1,2001 was 22.3% compared to 17.8% for the three month period ended April 2, 2000.The increase in gross margin and gross margin as a percent of sales is primarilydue to changes in product mix.

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          Operating  expenses  for the three month  period  ended April 1, 2001 were $3.5  million  compared to $4.2million for the three month period ended April 2, 2000, a decrease of $0.7 million  primarily  due to lower payrolland related expenses.

          Interest  income for the three month period ended April 1, 2001,  was $52,000  compared to $85,000 for thethree month  period ended April 2, 2000, a decrease of $33,000.  The  decrease is  primarily  due to lower  averagecash balances available for investing.

          Interest  expense for the three month period  ended April 1, 2001 was $42,000  compared to $72,000 for thethree month period ended April 2, 2000, a decrease of $30,000.  The decrease is due to lower borrowings.

          The  Company  provides  for  income  taxes  in the  jurisdictions  in which  it pays  income  taxes at thestatutory  rates in effect in each  jurisdiction,  adjusted for permanent  differences  in  determining  income forfinancial  reporting  and income tax purposes.  The effective  income tax rate was 36.5% for the three month periodended  April 2,  2001,  compared  to 31.7% for the three  month  period  ended  April 2,  2000.  The  charge in theeffective  tax rate is a result of the change in the  proportion  of income  (loss)  generated in different  taxingjurisdictions.
MaterialContingencies
          In  February  1995,  the Company  and Black & Decker  Corporation  ("Black  and  Decker")  entered  into aSettlement  Agreement  pursuant to which Black & Decker agreed to assume full  responsibility for the investigationand  remediation  of any  pre-May  12,  1986  environmental  contamination  at the  Company's  Ansonia  and  Derby,Connecticut  facilities,  as  required  by the  Connecticut  Department  of  Environmental  Protection  ("DEP").  Apreliminary  environmental  assessment  of the  Company's  properties  in Ansonia and Derby,  Connecticut  has beenconducted  by Black & Decker.  Although  the  assessment  is still being  evaluated by the DEP, on the basis of thepreliminary  data now  available  there is no reason to believe  that any  remediation  activities  which  might berequired as a result of the findings of the assessment will have a material  effect upon the capital  expenditures,results of operations or the competitive position of the Company.
Liquidity andCapital Resources; Capital Expenditures
          Working  capital  and the  working  capital  ratio at April  1,  2001  were  $13.8  million  and 2.0 to 1,respectively,  compared to $14.3 million and 1.9 to 1 at December 31, 2000,  respectively.  During the three monthsended April 1, 2001,  the Company  paid no  dividends.  The  Company's  ability to pay  dividends  in the future isgenerally  limited under its credit  facility  described below to the aggregate of (a) 25% of net income during themost recently  completed four fiscal  quarters after deducting  distributions  previously made and (b) purchases bythe Company of its common  stock  during the same  period,  without the consent of and/or  waiver by the  Company'sbank.

          Due to the nature of the Company's business,  many sales are of a large dollar amount.  Consequently,  thetiming of  recording  such sales may cause the  balances in  accounts  receivable  and/or  inventory  to  fluctuatedramatically  between  quarters  and may  result  in  significant  fluctuations  in cash  provided  by  operations.Historically,  the  Company  has  not  experienced  significant  problems  regarding  the  collection  of  accountsreceivable.  The Company has also  generally  financed its operations  with cash generated by operations,  progresspayments from customers and  borrowings  under its bank credit  facilities.  Management  anticipates  that its cashbalances,  operating cash flows and available credit line will be adequate to fund anticipated  capital commitmentsand working  capital  requirements  for at least the next twelve months.  The Company made capital  expenditures of$87,000 and $135,000 during the three month periods ended April 1, 2001 and April 2, 2000, respectively.

          The Company has a worldwide $7.5 million  multi-currency  revolving  credit and letter of credit facility,as amended,  with a major U.S.  bank. The facility  contains  combined  limits on direct  borrowings and letters ofcredit issuance's based upon stipulated  percentages of accounts  receivable,  inventory and backlog.  The facilityalso contains  covenants  specifying  minimum and maximum  operating  thresholds for operating results and selectedfinancial  ratios.  There can be no  assurance  that the  Company  will  achieve  the  required  thresholds  in thefuture.  The agreement contains certain restrictions on the making of

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investments,  on borrowings  and on the sale of assets.  Therewere $4.8 million and $4.9 million of letters of credit  outstanding at April 1,2001 and  December  31,  2000,  respectively.  At April 2, 2000 and December 31,2000, there were $2.1 million and $2.4 million, respectively,  outstanding undera term loan.Impact ofRecently Issued Accounting Standards
          In June 1998, the FASB issued  Statement No. 133,  Accounting for Derivative  Instruments and HedgingActivities,  which the Company was  required to adopt on January 1, 2001.  The  Statement  provides a new method ofaccounting for  derivatives  and hedges.  The adoption of this  Statement did not have a significant  effect on theCompany's results of operations or financial position.
Item 2 -Quantitative and Qualitative Disclosures About Market Risk
          The  Company is exposed to market  risk from  changes in foreign  currency  and  interest  rates.  TheCompany  manufactures  many of its products and components in the United  Kingdom and purchases many  components inforeign  markets.  Approximately  50% of the  Company's  revenue is  generated  from foreign  markets.  The Companymanages its risk to foreign  currency rate changes by maintaining  foreign  currency bank accounts in currencies inwhich it regularly  transacts  business and the use of foreign  exchange  forward  contracts.  The Company does notenter into derivative contracts for trading or speculative purposes.

          The  Company's  cash  equivalents  and  short-term  investments  and its  outstanding  debt bear  variableinterest rates.  The rates are adjusted to market  conditions.  Changes in the market rate effects  interest earnedand paid by the  Company.  The Company  does not use  derivative  instruments  to offset the exposure to changes ininterest  rates.  Changes in the interest  rates related to these items are not expected to have a material  impacton the Company's results of operations.

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**PART II - OTHER INFORMATION**ITEM 1 - LEGAL PROCEEDINGSNoneITEM 2 - CHANGES IN SECURITIESN/AITEM 3 - DEFAULTS UPON SENIOR SECURITIESN/AITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY                HOLDERSN/AITEM 5 - OTHER INFORMATIONN/AITEM 6 - EXHIBITS AND REPORTS ON FORM 8-KExhibit 11         (Regulation S-K) Computation of Earnings Per Share.AttachedReports on Form 8-K          No Reports on Form 8-K were filed by the registrant during the periods covered by this report.
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                                                                      Exhibit 11                               FARREL CORPORATION                               ------------------                 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS                 ----------------------------------------------                 (In thousands, except per share and share data)                 -----------------------------------------------                                                        Three Months Ended                                                     ------------------------                                                     April 1,       April 2,                                                       2001           2000                                                       ----           ----   Net (loss) applicable to common stock ......... ($      607)   ($    1,480)                                                    ==========     ==========   Weighted average number of common   shares outstanding -  Basic earnings per share    5,230,061      5,250,061   Effect of dilutive stock and purchase  options        --             --                                                    ----------     ----------   Weighted average number of common   shares outstanding - Diluted earnings per share   5,230,061      5,250,061                                                    ==========     ==========   Net (loss) per common     share - Basic ............................... ($     0.12)   ($     0.28)                                                    ==========     ==========     share - Fully diluted ....................... ($     0.12)   ($     0.28)                                                    ==========     ==========
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SIGNATURES
PURSUANT TO THEREQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULYCAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULYAUTHORIZED. 
                                                    FARREL CORPORATION                                                    REGISTRANTDATE:              5/15/01                   /s/ Rolf K. Liebergesell                                           ROLF K. LIEBERGESELLCHIEF EXECUTIVE OFFICER,PRESIDENT AND CHAIRMAN OF THE BOARDDATE:              5/15/01                   /s/ Walter C. Lazarcheck                                        WALTER C. LAZARCHECKVICE PRESIDENT ANDCHIEF FINANCIAL OFFICER(CHIEF ACCOUNTING OFFICER)
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