SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

For the quarterly period ended  July 2, 2000
                               ---------------------

                                       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   0-19703
                       -----------

                               Farrel Corporation
                   ------------------------------------------
             (Exact name of registrant as specified in its charter)

               Delaware                                        22-2689245
-------------------------------------                  ------------------------
   (State or other jurisdiction of                         (I.R.S. Employer
    incorporation 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)


   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
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes  X     No
   -----     -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
                      -------------------------------------

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

              CLASS                             OUTSTANDING AT AUGUST 10, 2000
--------------------------------------------------------------------------------

Common Stock (Voting), $.01 par value                              5,250,061
                                                               -----------------


<PAGE>


                               Farrel Corporation
                               ------------------

                                      Index
                                      -----

                                                                         Page
                                                                         ----

Part I.     Financial Information
            ---------------------

            Consolidated Balance Sheets -
            July 2, 2000 and December 31, 1999                       3

            Consolidated Statements of Operations -
            Three and Six Months Ended July 2, 2000
            and July 4, 1999                                         4

            Consolidated Statements of Cash Flows -
            Six Months ended July 2, 2000
            and July 4, 1999                                         5

            Notes to Consolidated Financial Statements               6

            Management's Discussion and Analysis of Financial
            Condition and Results of Operations                      7

Part II.    Other Information                                       11
            -----------------

            Exhibit 11 - Computation of Earnings Per Share          12





                                  Page 2 of 13
<PAGE>






                         Part I - Financial Information

                               FARREL CORPORATION
                               ------------------
                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                        (In thousands, except share data)

<TABLE>
<CAPTION>

                                                                         July 2,       December 31,
                                                                         -------       ------------
                                                                           2000            1999
                                                                           ----            ----
ASSETS .........................................................       (Unaudited)
Current Assets:
   <S>                                                                  <C>              <C>
   Cash and cash equivalents ...................................        $  3,283         $  6,069
   Accounts receivable, net of allowance for
      doubtful accounts of $198 and $185
      respectively .............................................          11,274           15,027
   Inventory ...................................................          17,555           11,975
   Other current assets ........................................           1,179            1,374
                                                                        --------         --------
                 Total current assets ..........................          33,291           34,445
   Property, plant and equipment - net
      of accumulated depreciation of $13,571 and
      $13,186, respectively ....................................           9,875           10,995
   Prepaid pension costs .......................................           3,288            2,881
   Other assets ................................................             436              541
                                                                        --------         --------
      Total assets .............................................        $ 46,890         $ 48,862
                                                                        ========         ========
LIABILITIES & STOCKHOLDERS' EQUITY
   Current Liabilities:
      Accounts payable .........................................        $  6,687         $  7,837
      Accrued expenses & taxes .................................           1,168            2,157
      Advances from customers ..................................           7,690            4,015
      Accrued installation & warranty costs ....................           1,605            1,629
      Short - term debt ........................................           1,214            1,292
                                                                        --------         --------
      Total current liabilities ................................          18,364           16,930
   Long - term debt ............................................           1,821            2,584
   Postretirement benefit obligation ...........................           1,129            1,138
   Long-term pension obligation ................................           1,011            1,030
   Deferred income taxes .......................................           1,258            1,316
   Commitments and contingencies ...............................            --               --
                                                                        --------         --------
      Total liabilities ........................................          23,583           22,998
                                                                        --------         --------
   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, 892,045 shares at
           July 2, 2000 and December 31, 1999 ..................          (2,513)          (2,513)
      Retained earnings ........................................           8,095            9,943
      Accumulated other comprehensive expense ..................          (1,631)            (922)
                                                                        --------         --------
           Total stockholders' equity ..........................          23,307           25,864
                                                                        --------         --------
Total liabilities and stockholders' equity .....................        $ 46,890         $ 48,862
                                                                        ========         ========
</TABLE>

           See Accompanying Notes to Consolidated Financial Statements




                                  Page 3 of 13
<PAGE>





                               FARREL CORPORATION
                               ------------------
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------
                 (In thousands, except per share and share data)

<TABLE>
<CAPTION>

                                                      Three Months Ended              Six Months Ended
                                                      ------------------              ----------------
                                                   July 2,         July 4,         July 2,         July 4,
                                                    2000            1999            2000            1999
                                                    ----            ----            ----            ----
                                                         (unaudited)                     (unaudited)
<S>                                             <C>             <C>             <C>             <C>
Net Sales ...................................   $    15,676     $    17,282     $    27,113     $    30,576

Cost of sales ...............................        11,372          12,744          20,732          23,634
                                                -----------     -----------     -----------     -----------
Gross margin ................................         4,304           4,538           6,381           6,942

Operating expenses:

    Selling .................................         1,912           1,673           3,499           3,383

    General & administrative ................         1,909           2,197           4,031           4,419

    Research & development ..................           412             385             849             768
                                                -----------     -----------     -----------     -----------
Total operating expenses ....................         4,233           4,255           8,379           8,570
                                                -----------     -----------     -----------     -----------

Operating income (loss) .....................            71             283          (1,998)         (1,628)

Interest income .............................            63              72             148             307

Interest expense ............................           (72)            (96)           (144)           (272)

Gain from sale of real estate ...............             0               0               0           1,879

Other income (expense), net .................            14              97             (96)             (6)
                                                -----------     -----------     -----------     -----------

Income (loss) before income taxes ...........            76             356          (2,090)            280

Provision (benefit) for income taxes ........            24              74            (662)            115
                                                -----------     -----------     -----------     -----------
Net income (loss) ...........................   $        52     $       282     ($    1,428)    $       165
                                                ===========     ===========     ===========     ===========
Per share data:
Basic and Diluted income (loss) per
  common share ..............................   $      0.01     $      0.05     ($     0.27)    $      0.03
                                                ===========     ===========     ===========     ===========
Average shares outstanding:
  Basic .....................................     5,250,061       5,386,586       5,250,061       5,603,086
                                                ===========     ===========     ===========     ===========
  Diluted ...................................     5,250,061       5,392,262       5,250,061       5,609,286
                                                ===========     ===========     ===========     ===========
Dividends declared per share ................   $      0.04            --       $      0.08     $      0.16
                                                ===========     ===========     ===========     ===========
</TABLE>

           See Accompanying Notes to Consolidated Financial Statements




                                  Page 4 of 13
<PAGE>








                               FARREL CORPORATION
                               ------------------
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                                 Six Months Ended
                                                                                 ----------------
                                                                             July 2,          July 4,
                                                                             -------          -------
                                                                               2000             1999
                                                                               ----             ----
                                                                            (Unaudited)      (Unaudited)
Cash flows from operating activities:
  <S>                                                                         <C>             <C>
  Net Income (loss) ..................................................        ($1,428)        $   165
  Adjustments to reconcile net income (loss) to
  net cash provided by (used in) operating activities:
    Gain on disposal of fixed assets .................................              0          (1,944)
    Depreciation and amortization ....................................          1,037           1,135
    Decrease in accounts receivable ..................................          3,464           9,547
    (Increase) in inventory ..........................................         (5,846)         (3,730)
    (Increase) in prepaid pension costs ..............................           (621)              0
    (Decrease) in accounts payable ...................................           (934)         (7,060)
    (Decrease) increase in customer advances .........................          3,793          (1,674)
    (Decrease) in accrued expenses & taxes ...........................           (913)         (1,917)
    (Decrease) increase in accrued installation and warranty costs ...             20              (4)
    Increase (decrease) in deferred income taxes .....................            (49)            213
    Other ............................................................            245            (571)
                                                                              -------         -------
    Total adjustments ................................................            196          (6,005)
                                                                              -------         -------
    Net cash (used in) provided by operating activities ..............         (1,232)         (5,840)
                                                                              -------         -------
Cash flows from investing activities:

    Refund of Shaw asset purchase price ..............................              0           4,401
    Proceeds from disposal of fixed assets ...........................              0           2,610
    Purchases of property, plant and equipment .......................           (306)           (580)
                                                                              -------         -------
    Net cash (used in) provided by investing activities ..............           (306)          6,431
                                                                              -------         -------
Cash flows from financing activities:

    Repayment of long-term borrowings ................................           (629)           (644)
    Purchase of treasury stock .......................................              0          (1,272)
    Dividends paid ...................................................           (420)           (951)
                                                                              -------         -------
    Net cash (used in) by financing activities .......................         (1,049)         (2,867)
                                                                              -------         -------
Effect of foreign currency exchange rate changes on cash .............           (199)           (205)
                                                                              -------         -------
Net (decrease) in cash and cash equivalents ..........................         (2,786)         (2,481)
    Cash and cash equivalents - Beginning of period ..................          6,069           5,786
                                                                              -------         -------
    Cash and cash equivalents - End of period ........................        $ 3,283         $ 3,305
                                                                              =======         =======
Income taxes paid ....................................................        $    82         $ 1,082
                                                                              =======         =======
Interest paid ........................................................        $   139         $   192
                                                                              =======         =======
</TABLE>

           See Accompanying Notes to Consolidated Financial Statements




                                  Page 5 of 13
<PAGE>



                               Farrel Corporation
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

Note 1 - Basis of Presentation

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  the accompanying unaudited
consolidated  financial  statements contain all adjustments,  consisting only of
normal  recurring  adjustments,  necessary to present fairly in accordance  with
generally accepted accounting principles, the consolidated financial position of
Farrel  Corporation  ("Farrel"  or "the  Company")  as of July 2, 2000,  and the
consolidated  results  of its  operations  and  cash  flows  for the  three  and
six-month  periods  ended July 2, 2000 and July 4, 1999.  These  results are not
necessarily indicative of results to be expected for the full fiscal year. These
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report and Form 10-K for the year ended
December 31, 1999.

Note 2 - Inventory

         Inventory is comprised of the following:       July 2,     December 31,
                                                         2000           1999
                                                         ----           ----
                                                            (In thousands)
         Stock and raw materials.................       $ 9,540       $ 7,934
         Work-in process.........................         8,015         4,041
                                                        -------       -------
         Total...................................       $17,555       $11,975
                                                        =======       =======

Note 3 - Comprehensive Income (Loss)

         The components of other comprehensive income (loss) are as follows:
<TABLE>
<CAPTION>

                                                              Three Months                   Six Months
                                                              ------------                   ----------
                                                          July 2,        July 4,        July 2,        July 4,
                                                           2000           1999           2000           1999
                                                           ----           ----           ----           ----
                                                             (In thousands)                (In thousands)
      <S>                                                 <C>           <C>             <C>            <C>
      Net income (loss)..........................         $  52         $ 282           $(1,428)       $ 165
      Foreign currency translation adjustments...          (538)         (294)             (709)        (613)
                                                           -----         -----           -------        -----
      Other comprehensive (loss).................         $(486)        $ (12)          $(2,137)       $(448)
                                                           =====         =====           =======        =====
</TABLE>

      The components of accumulated other comprehensive  expense, net of related
tax, are as follows:

                                                        July 2,     December 31,
                                                         2000          1999
                                                         ----          ----
                                                           (In thousands)
      Minimum pension liability..................       $  (613)      $(613)
      Foreign currency translation adjustments...        (1,018)       (309)
                                                         -------       -----
      Accumulated other comprehensive expense....       $(1,631)      $(922)
                                                         =======       =====

Note 4 - Segment Information

         The Company's  operations  are considered  one operating  segment.  The
Company's products consist of new machines,  spares and repair related services.
The Company's products and services are sold to commercial  manufacturers in the
plastic and rubber industries.  The manufacturing,  assembly and distribution of
the Company's products are essentially the same.

Note 5 - Gain From Sale of Real Estate

         During  January  1999,  the Company  completed  the sale of excess real
estate  held for sale for $2.4  million.  The  Company  recorded  a gain of $1.9
million from the sale.




                                  Page 6 of 13
<PAGE>




PART I - ITEM 2 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION & RESULTS OF OPERATIONS

Safe Harbor Statements under Private Securities Litigation Reform Act of 1995

         Certain  statements   contained  in  the  Company's  public  documents,
including this report and in particular,  in this  "Management's  Discussion and
Analysis  of  Financial  Condition  and  Results of  Operations"  may be forward
looking  and may be  subject to a variety  of risks and  uncertainties.  Various
factors could cause actual results to differ  materially from these  statements.
These factors include, but are not limited to pricing pressures from competitors
and/or customers; continued economic and political uncertainty in certain of the
Company's  markets;  the Company's ability to maintain and increase gross margin
levels;  the Company's  ability to generate  positive cash;  changes in business
conditions,  in general, and, in particular,  in the businesses of the Company's
customers and  competitors  and other factors which might be described from time
to time in the Company's filings with the Securities and Exchange Commission.

Results of Operations

Six Months Ended July  2, 2000 Compared To The Six Months Ended July 4, 1999

         Net sales for the six month  period  ended  July 2,  2000,  were  $27.1
million compared to $30.6 million for the six month period ended July 4, 1999, a
decrease  of $3.5  million.  The  decrease in net sales is a result of lower new
machine  sales.  The timing of the Company's  sales,  particularly  new machines
sales, is highly dependent on when an order is received, the amount of lead-time
from  receipt of order to  delivery  and  specific  customer  requirements.  The
Company  operates  in markets  which are  extremely  competitive  with  cyclical
demand.  Many of the Company's  customers and markets  operate at less than full
capacity and the European and Far East markets are particularly  competitive and
are subject to local economic events.

         Orders received for the six month period ended July 2, 2000, were $33.7
million compared to $32.2 million for the six month period ended July 4, 1999.

         The Company's  products are  primarily  supplied to  manufacturers  and
represent capital commitments for new plants, expansion or modernization. In the
case of major  equipment  orders,  up to 12 months are  required to complete the
manufacturing  process.  Accordingly,  revenues  reported  in the  statement  of
operations  may  represent  orders  received in the current or previous  periods
during which  economic  conditions  in various  geographic  markets of the world
impact the Company's  level of order intake.  Many of the Company's  traditional
customers and markets are operating with excess  capacity  thereby  reducing the
number of  projects  for plant  expansion  and  modernization.  The  Company  is
experiencing  increased pricing pressures from competitors in an overall smaller
market.  These  conditions are resulting in customer  orders with lower margins.
Further,  the cyclical nature of industry demand and,  therefore,  the timing of
order  intake may effect the  Company's  quarterly  results of  operations.  The
Company's   ability  to  maintain  and   increase  net  sales   depends  upon  a
strengthening and stability in the Company's traditional markets and its ability
to control costs to effectively compete in the current markets.  There can be no
assurance that the current level of orders will continue, that market conditions
will not worsen, or that improvements in the Company's  traditional markets will
lead to increased orders for the Company's products.

         The level of backlog considered firm by management at July 2, 2000, was
$35.1 million  compared to $28.9 million at December 31, 1999, and $34.4 million
at July 4, 1999. Firm backlog as of August 7, 2000, was $35.0 million.

         Gross  margin for the  six-month  period  ended July 2, 2000,  was $6.4
million  compared to $6.9 million for the six month period ended July 4, 1999, a
decrease of $0.5  million.  The  decrease  in gross  margin is a result of lower
sales.  The margin  percentage for the six-month  period ended July 2, 2000, was




                                  Page 7 of 13
<PAGE>




23.5%,  compared  to 22.7% for the  six-month  period  ended July 4,  1999.  The
difference in margin  percentage  between periods is primarily due to changes in
product mix sold.

         Operating  expenses for the six month  period ended July 2, 2000,  were
$8.4  million  compared to $8.6  million for the six month  period ended July 4,
1999,  a  decrease  of $0.2  million.  The  decrease  is due to  lower  employee
compensation and benefit costs.

         Interest  expense for the six month period ended July 2, 2000, was $0.1
million  compared to $0.3 million for the six month period ended July 4, 1999, a
decrease of $0.2 million. The decrease is due to lower average borrowings.

         The Company  provides for income taxes at the statutory rates in effect
in each tax  jurisdiction  in which  income is earned or losses  are  generated,
adjusted for permanent differences in determining income for financial reporting
and income tax purposes.  The effective income tax rate for the six month period
ended July 2, 2000, was 31.7%.  For the six month period ended July 4, 1999, the
Company  recorded a  consolidated  tax provision as a result of earning  taxable
income in the United States,  at a higher tax rate, and incurring  losses in the
United  Kingdom at a lower tax rate. The effective tax rate varies among periods
due to the change in the amount of income and losses  generated in different tax
jurisdictions.

Results of Operations

Three Months Ended July 2, 2000 Compared To The Three Months Ended July 4, 1999

         Net sales for the three months ended July 2, 2000,  were $15.7  million
compared  to $17.3  million  for the three month  period  ended July 4, 1999,  a
decrease  of $1.6  million.  The  decrease in net sales is a result of lower new
machine sales.

         Orders  received for the three month  period  ended July 2, 2000,  were
$22.7 million compared to $15.0 million for the three month period ended July 4,
1999.

         The Company's  sales,  orders and backlog  levels varied when comparing
the two  quarters  due to market  conditions  and the nature of the  industry in
which the Company operates, as more fully discussed in the results of operations
for the six month period on page 7.

         Gross margin for the three month  period  ended July 2, 2000,  was $4.3
million  compared to $4.5 million for the three month period ended July 4, 1999,
a decrease of $0.2  million.  The  decrease in gross margin is a result of lower
sales. The margin  percentage for the three month period ended July 2, 2000, was
27.5%  compared  to 26.3% for the three  month  period  ended July 4, 1999.  The
difference in margin  percentage  between periods is primarily due to changes in
product mix sold.

         Operating  expenses for the three month period ended July 2, 2000, were
$4.2  million  compared to $4.3 million for the three month period ended July 4,
1999.  Selling  expenses  were  approximately  $0.2 million  higher in the three
months ended July 2, 2000,  compared to the three months ended July 4, 1999, due
to tradeshow costs. General and administrative  expenses were approximately $0.3
million  lower in the three  months  ended July 2, 2000,  compared  to the three
months ended July 4, 1999, due to lower employee compensation and benefit costs.

         Interest  expense for the three month periods  ended July 2, 2000,  and
July 4, 1999, was $0.1 million.

         The Company  provides for income taxes at the statutory rates in effect
in each tax  jurisdiction  in which  income is earned or losses  are  generated,
adjusted for permanent differences in determining income for financial reporting
and income  tax  purposes.  The  effective  income tax rate for the three  month
period ended July 2, 2000,  was 31.6%.  For the three month period ended July 4,
1999, the Company  recorded a consolidated  tax provision as a result of earning
taxable income




                                  Page 8 of 13
<PAGE>








in the United States,  at a higher tax rate, and incurring  losses in the United
Kingdom at a lower tax rate.  The effective tax rate varies among periods due to
the  change in the  amount of income  and  losses  generated  in  different  tax
jurisdictions.

Material Contingencies

         In  February  1995,  the  Company  and  Black & Decker  entered  into a
Settlement  Agreement  pursuant  to which  Black & Decker  agreed to assume full
responsibility  for the  investigation  and  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").  As part of the settlement,  the Company transferred by quit
claim deed a vacant surfaced parking lot to the City of Ansonia.  As required by
the  Settlement  Agreement,  environmental  assessments of the Ansonia and Derby
properties are being conducted by Black & Decker.

         On January 19, 1999,  the Company  sold all of its Derby,  Connecticut,
real estate and facilities.  By the terms of that sale, the purchaser  committed
to cooperate  with Black & Decker in any additional  investigation  of the Derby
property and any remediation of that property that might be required by the DEP.
In  addition,  the  Company  has been named as an  additional  insured on a $5.0
million  environmental  policy  obtained by the  purchaser  and the purchaser is
obligated  to name the  Company  as an  additional  insured on any and all other
environmental  insurance policies obtained by the purchaser related to the Derby
property.

         On the basis of the  preliminary  data now available there is no reason
to believe that any remediation  activities  which might be required as a result
of the findings of the assessment  will have a material  effect upon the capital
expenditures,  results of  operations,  financial  position  or the  competitive
position of the Company.  This forward  looking  statement  could,  however,  be
influenced  by any  findings  of  environmental  contamination  attributable  to
post-May 12, 1986 activities.

Liquidity and Capital Resources; Capital Expenditures

         Working  capital and the working  capital  ratio at July 2, 2000,  were
$14.9 million and 1.8 to 1, respectively, compared to $17.5 million and 2.0 to 1
at December 31,  1999,  respectively.  During the first six months of 2000,  the
Company  paid  dividends  of $0.08  per  share.  The  Company's  ability  to pay
dividends in the future is generally limited under its credit facility described
below to the aggregate of 25% of net income  during the most recently  completed
four fiscal quarters after deducting (a)  distributions  previously made and (b)
purchases by the Company of its common stock during the same period, without the
consent of and/or waiver by the Company's bank.

         Due to the nature of the Company's business,  many sales are of a large
dollar  amount.  Consequently,  the timing of recording such sales may cause the
balances in accounts  receivable  and/or  inventory  to  fluctuate  dramatically
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 accounts receivable.  The Company has also generally
financed  its  operations  with cash  generated  by  operations,  with  progress
payments from customers and with  borrowings  under its bank credit  facilities.
Management  anticipates  that  its  cash  balances,  operating  cash  flows  and
available credit line will be adequate to fund anticipated  capital  commitments
and  working  capital  requirements  for at least the next  twelve  months.  The
Company made capital  expenditures  of $0.3 million and $0.6 million  during the
first six months of fiscal 2000 and 1999, respectively.

         The Company has a worldwide multi-currency credit facility with a major
U.S. bank.  Interest varies based upon prevailing market interest.  The facility
contains  combined limits on direct  borrowings and letters of credit based upon
stipulated  percentages  of accounts  receivable,  inventory  and  backlog.  The
facility also contains covenants specifying minimum and maximum operating




                                  Page 9 of 13
<PAGE>




thresholds for operating results and selected financial ratios.  There can be no
assurance  that the Company will achieve the required  thresholds in the future.
The agreement  contains  certain  restrictions on the making of investments,  on
borrowings  and on the sale of assets.  At July 2, 2000,  the  maximum  revolver
borrowing  and/or letter of credit issuance  available under the facility to the
Company  and  subsidiaries  based  upon the  borrowing  base  formula  was $14.1
million.  There  were  $3.4  million  and $3.8  million  of  letters  of  credit
outstanding at July 2, 2000 and December 31, 1999, respectively. At July 2, 2000
and December 31, 1999,  there were $3.0 million and $3.9 million,  respectively,
outstanding under the term loan portion of the facility.

         In fiscal 2000, new legal minimum funding  guidelines for U.K.  pension
plans became effective in the U.K. These guidelines are significantly  different
than prior  guidelines.  As a result,  the Company  expects it will need to make
approximately $950,000 of contributions to its U.K. pension plan in Fiscal 2000.
Approximately  $536,000 of contributions were made in the six-month period ended
July  2,  2000,  with  the  remaining  amount  to be made  in  monthly  payments
throughout  the remainder of the year. In recent years prior to fiscal 2000, the
Company was not required to and did not make  contributions  to its U.K. pension
plans.

Impact of Recently Issued Accounting Standards

         In June  1998,  the FASB  issued  Statement  No.  133,  Accounting  for
Derivative  Instruments and Hedging Activities,  which must be adopted effective
January  1,  2001.  The  Statement  provides  a new  method  of  accounting  for
derivatives  and hedges.  The Company does not  anticipate  that the adoption of
this  Statement  will have a significant  effect on its results of operations or
financial position.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, Revenue  Recognition in Financial  Statements
("SAB  101").  SAB 101  contains  the SEC staff's  views in  applying  generally
accepted  accounting  principles  related to revenue  recognition  in  financial
statements.  SAB 101 includes requirements for when shipments may be recorded as
revenue when the terms of the sale include customer acceptance  provisions or an
obligation of the seller to install the product. The provisions of this bulletin
are  effective  in the fourth  quarter of 2000.  The  Company is  reviewing  the
requirements  of SAB 101  which  could  create a timing  difference  in when the
Company recognizes revenue and has not yet determined the full impact of SAB 101
on  its  consolidated  financial  statements.  The  impact,  however,  could  be
material,  on both a quarterly and annual basis,  on the Company's  statement of
operations  should the Company  determine it needs to change its  accounting for
revenue  recognition.  Such a change could result in significant portions of its
revenue  being  recognized  in accounting  periods  significantly  later than it
historically would have been recognized.

Item 2 - Quantitative and Qualitative Disclosures About Market Risk

         The Company is exposed to market risk from changes in foreign  currency
and interest rates. The Company manufactures many of its products and components
in the  United  Kingdom  and  purchases  many  components  in  foreign  markets.
Approximately  50% of the Company's  revenue is generated from foreign  markets.
The Company  manages its risk to foreign  currency  rate changes by  maintaining
foreign  currency bank  accounts in  currencies in which it regularly  transacts
business and the use of foreign exchange forward contracts. The Company does not
enter into derivative contracts for trading or speculative purposes.  The amount
of  foreign  exchange  forward  contracts  are not  considered  material  to the
Company's financial position or its operations.

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




                                 Page 10 of 13
<PAGE>





PART II - OTHER INFORMATION

ITEM 1 - Legal Proceedings                                            N/A

ITEM 2 - Changes in Securities and Use of Proceeds                    N/A

ITEM 3 - Defaults Upon Senior Securities                              N/A

ITEM 4 - Submission of Matters to a Vote of Security Holders

               a)     Election of Directors

                      Howard J. Aibel
                            Votes for               4,619,003
                            Votes withheld            163,424

                      Rolf K. Liebergesell
                            Votes for               4,617,003
                            Votes withheld            165,424

                      James A. Purdy
                            Votes for               4,615,457
                            Votes withheld            166,970

               b)     Ratification  of the  selection  of  Ernst & Young  LLP as
                      independent  accountants  for the  Company  for the fiscal
                      year ending December 31, 2000.

                            Votes for               4,739,499
                            Votes against              41,528
                            Votes abstained             1,400

ITEM 5 - Other Information                                            N/A

ITEM 6 - Exhibits and Reports on Form 8-K

Exhibit 11   (Regulation S-K) Computation of Earnings Per Share       Attached

Exhibit 27   Financial Data Schedule                                  Attached

Reports on Form 8-K

     No  Reports  on Form 8-K were filed by the  registrant  during the  periods
covered by this report.




                                 Page 11 of 13
<PAGE>






                                                                      Exhibit 11
                               FARREL CORPORATION
                               ------------------
                 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
                 -----------------------------------------------
                 (In thousands, except per share and share data)
                 -----------------------------------------------
<TABLE>
<CAPTION>

                                                                    Three Months Ended                 Six Months Ended
                                                            --------------------------------------------------------------------
                                                               July 2,           July 4,           July 2,           July 4,
                                                                 2000              1999             2000              1999
                                                                 ----              ----             ----              ----



<S>                                                                    <C>              <C>           <C>                  <C>
Net income (loss) applicable to common stock...........                $52              $282          ($1,428)             $165
                                                            ===============   ===============   ==============    ==============
Weighted average number of common
shares outstanding -  Basic earnings per share.........          5,250,061         5,386,586        5,250,061         5,603,086

Effect of dilutive stock and purchase  options.........                  -             5,676                -             6,200
                                                            ---------------   ---------------   --------------    --------------

Weighted average number of common
shares outstanding - Diluted earnings per share........          5,250,061         5,392,262        5,250,061         5,609,286
                                                            ===============   ===============   ==============    ==============

Net income (loss) per common share
  Basic................................................              $0.01             $0.05           ($0.27)            $0.03
                                                            ===============   ===============   ==============    ==============
  Fully diluted........................................              $0.01             $0.05           ($0.27)            $0.03
                                                            ===============   ===============   ==============    ==============
</TABLE>





                                 Page 12 of 13
<PAGE>







                                   SIGNATURES

PURSUANT  TO THE  REQUIREMENTS  OF THE  SECURITIES  EXCHANGE  ACT OF  1934,  THE
REGISTRANT  HAS DULY  CAUSED  THIS  REPORT  TO BE  SIGNED  ON ITS  BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.

                                            FARREL CORPORATION
                                            ------------------

                                            REGISTRANT


DATE:     8/9/00                            /s/ Rolf K. Liebergesell
       ------------                         ------------------------
                                            ROLF K. LIEBERGESELL
                                            CHIEF EXECUTIVE OFFICER, PRESIDENT
                                            AND CHAIRMAN OF THE BOARD





DATE:     8/9/00                            /s/ Walter C. Lazarcheck
       ------------                         ------------------------
                                            WALTER C. LAZARCHECK
                                            VICE PRESIDENT
                                            CHIEF FINANCIAL OFFICER
                                            (CHIEF ACCOUNTING OFFICER)




                                 Page 13 of 13