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             April 4, 1999
                               ------------------------------------

                                       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     MAY 7, 1999
--------------------------------------------------------------------------------
Common Stock (Voting), $.01 par value                       5,386,586         
                                                     ----------------------


<PAGE>


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


                                      Index
                                      -----

                                                                           PAGE

Part I. FINANCIAL INFORMATION
        ---------------------

               Consolidated Balance Sheets -
               April 4, 1999 and December 31, 1998                           3

               Consolidated Statements of Operations -
               Three Months Ended April 4, 1999
                 and March 29, 1998                                          4

               Consolidated Statements of Cash Flows -
               Three Months ended April 4, 1999
                 and March 29, 1998                                          5

               Notes to Consolidated Financial Statements                  6-7

               Management's Discussion and Analysis of Financial
               Condition and Results of Operations                        8-12

               Exhibit 11 - Computation of Earnings Per Share               13

Part II.  OTHER INFORMATION                                                 14
          -----------------



                                  Page 2 of 15
<PAGE>


                                 Part I - Financial Information

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

<TABLE>
<CAPTION>
                                                                     April 4,      December 31,
                                                                     --------      ------------
                                                                       1999            1998
                                                                       ----            ----
                                                                   (Unaudited)
<S>                                                                 <C>             <C>     
ASSETS
     Current Assets:                                       
       Cash and cash equivalents ............................       $  5,412        $  5,786
       Accounts receivable, net of allowance for
         doubtful accounts of $295 and $297,
         respectively .......................................         12,431          20,708
       Inventory ............................................         17,028          14,542
       Asset purchase agreement receivable ..................          4,386           5,284
       Other current assets .................................          2,003           1,953
                                                                    --------        --------
                    Total current assets ....................         41,260          48,273
       Property, plant and equipment - net
         of accumulated depreciation of $11,926 and
         $11,648, respectively ..............................         11,434          11,614
       Goodwill .............................................          2,377           1,555
       Other Assets .........................................            796           1,281
                                                                    --------        --------
Total Assets ................................................       $ 55,867        $ 62,723
                                                                    ========        ========
LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities:
         Accounts payable ...................................       $  8,743        $ 14,039
         Accrued expenses & taxes ...........................          3,549           4,284
         Advances from customers ............................          8,301           7,017
         Accrued installation & warranty costs ..............          1,571           1,683
         Short - term debt ..................................          2,146           1,328
                                                                    --------        --------
                     Total current liabilities ..............         24,310          28,351
       Long - term debt .....................................          3,849           3,983
       Postretirement benefit obligation ....................          1,168           1,171
       Long term pension obligation .........................          2,429           2,429
       Deferred income taxes ................................            469             488
       Commitments and contingencies
                                                                    --------        --------
                     Total Liabilities ......................         32,225          36,422
                                                                    --------        --------
       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, 755,520 and 202,620 shares
         at
         April 4, 1999 and December 31, 1998 ................         (2,262)           (990)
         Retained earnings ..................................          8,508           9,576
         Accumulated other comprehensive expense ............         (1,960)         (1,641)
                                                                    --------        --------
                     Total Stockholders' Equity .............         23,642          26,301
                                                                    --------        --------
Total Liabilities and Stockholders' Equity ..................       $ 55,867        $ 62,723
                                                                    ========        ========
</TABLE>


                   See Accompanying Notes to Consolidated Financial Statements



                                  Page 3 of 15
<PAGE>


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

                                                       Three Months Ended
                                                       ------------------
                                                   April 4,         March 29,
                                                     1999             1998
                                                     ----             ----
                                                  (unaudited)      (unaudited)
                                      
Net Sales ..................................     $    13,294      $    15,976

Cost of sales ..............................          10,890           11,740
                                                 -----------      -----------

Gross margin ...............................           2,404            4,236

Operating expenses:

    Selling ................................           1,710            1,732

    General & administrative ...............           2,222            1,769

    Research & development .................             383              318
                                                 -----------      -----------

Total operating expenses ...................           4,315            3,819
                                                 -----------      -----------

Operating income/(loss) ....................          (1,911)             417

Interest income ............................             235              157

Interest expense ...........................            (176)            (315)

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

Other expense, net .........................            (103)             (76)
                                                 -----------      -----------

Income(loss) before income taxes ...........             (76)             183

(Provision) for income taxes ...............             (41)             (73)
                                                 -----------      -----------

Net income (loss) ..........................     $      (117)     $       110
                                                 ===========      ===========

Per share data:

Basic and Diluted net income (loss)
    per common share .......................     $     (0.02)     $      0.02
                                                 ===========      ===========
Average shares outstanding:
   Basic ...................................       5,812,676        5,942,582
                                                 ===========      ===========
   Diluted .................................       5,812,676        5,982,985
                                                 ===========      ===========
Dividends declared .........................     $      0.16      $      0.00
                                                 ===========      ===========

        See Accompanying Notes to Consolidated Financial Statements


                                  Page 4 of 15
<PAGE>




                                         FARREL CORPORATION
                                         ------------------
                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                               -------------------------------------
                                           (In thousands)
<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                                            ------------------
                                                                         April 4,       March 29,
                                                                         --------       ---------
                                                                           1999            1998
                                                                           ----            ----
                                                                       (Unaudited)     (Unaudited)
<S>                                                                      <C>            <C>    
Cash flows from operating activities:
  Net Income/(loss) ..............................................       $  (117)       $   110
  Adjustments to reconcile net (loss)/income to net
  cash provided/(used in) by operating activities:
    Gain on disposal of fixed assets .............................        (1,884)            --
    Depreciation and amortization ................................           519            484
    Decrease in accounts receivable ..............................         8,016            956
    (Increase) in inventory ......................................        (2,743)        (4,539)
    (Decrease) increase in accounts payable ......................        (5,072)         1,884
    Increase in customer advances ................................         1,367          3,143
    (Decrease) in accrued expenses & taxes .......................          (415)          (712)
    (Decrease) in accrued installation and warranty costs ........           (77)          (195)
    (Decrease) in deferred income taxes ..........................            (5)           (38)
    Other ........................................................          (520)          (318)
                                                                         -------        -------
    Total adjustments ............................................          (814)           665
                                                                         -------        -------
    Net cash provided by operating activities ....................          (931)           775
                                                                         -------        -------
Cash flows from investing activities:
    Proceeds from disposal of fixed assets .......................         2,449             --
    Purchases of property, plant and equipment ...................          (513)          (460)
                                                                         -------        -------
    Net cash provided by/(used in) investing activities ..........         1,936           (460)

Cash flows from financing activities:
    Proceeds from short-term borrowing, net ......................           874            891
    Used for dividends paid ......................................          (951)          (951)
    Purchase of treasury stock ...................................        (1,272)            --
                                                                         -------        -------
    Net cash used by financing activities ........................        (1,349)           (60)
Effect of foreign currency exchange rate changes on cash .........           (30)            17
                                                                         -------        -------
Net (decrease) increase in cash and cash equivalents .............          (374)           272
    Cash and cash equivalents - Beginning of period ..............         5,786          1,447
                                                                         -------        -------
    Cash and cash equivalents - End of period ....................       $ 5,412        $ 1,719
                                                                         =======        =======
Income taxes paid ................................................       $ 1,057        $   106
                                                                         =======        =======
Interest paid ....................................................       $     6        $   179
                                                                         =======        =======
</TABLE>

                     See Accompanying Notes to Consolidated Financial Statements



                                  Page 5 of 15
<PAGE>



                               FARREL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

          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  April  4,  1999,  and  the
consolidated results of its operations and cash flows for the three months ended
April 4, 1999 and March 29, 1998.  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, 1998.

NOTE 2 - INVENTORY

        Inventory is comprised of the following:      April 4,      December 31,
                                                      --------      ------------
                                                        1999            1998
                                                        ----            ----
                                                            (In thousands)
        Stock and raw materials.................       $5,872          $7,279
        Work-in process.........................       11,156           7,263
                                                       ------         -------
        Total...................................      $17,028         $14,542
                                                      =======         =======

NOTE 3 -  ASSET PURCHASE AGREEMENT RECEIVABLE

          On December 19, 1997,  Farrel Shaw Limited,  a wholly owned subsidiary
of the Company,  acquired  certain assets and the operations of the Francis Shaw
Rubber  Machinery  ("Shaw")  operations from EIS Group PLC of the United Kingdom
("Seller").  The purchase and sale agreement  ("Agreement")  between the Company
and the Seller required subsequent  adjustment to the purchase price if the Shaw
operations did not produce a minimum  profit,  as defined in the  Agreement,  of
approximately  $1.7  million for the year ended  December  31, 1998 (the "Profit
Guaranty").  The operations of Shaw produced a loss (as computed under the terms
of the Agreement) of approximately  $3.6 million for the year ended December 31,
1998.

          Accordingly,  the  Company  recorded a  receivable  from the Seller at
December 31, 1998 of  approximately  $5.3 million  under the terms of the Profit
Guaranty  provisions of the Agreement and reduced the purchase  price. On May 7,
1999,  the Company  received a cash payment of $4.4 million in settlement of our
claim under the Profit Guaranty.  The difference  between the amount recorded at
December  31,  1998 and  amount  received  from the Seller  was  recorded  as an
increase in goodwill as of March 30, 1999.

          The Agreement also required the transfer of the pension  liability for
the Shaw employees  together with the pension assets related to those employees.
The assets for the Shaw employees were transferred to the Company's pension plan
on May 5, 1999. The consolidated financial statements do not include any amounts
related to the transferred Shaw employees as the actuarial amounts have not been
determined.  The net amount of the actuarially  determined excess of the pension
assets  compared with the projected  benefit  obligation  for the Shaw employees
will be recorded as an additional purchase price adjustment when determined.


                                  Page 6 of 15
<PAGE>


NOTE 4 - COMPREHENSIVE INCOME

          The components of  comprehensive  income (loss),  for the  three-month
periods ended are as follows:

                                                April 4,     March 29,
                                                  1999         1998
                                                  ----         ----
                                                    (In thousands)
      Net (loss) income                           $(117)        $110
      Foreign currency translation adjustment      (319)         222 
                                                  ------        -----
      Comprehensive (loss) income                 $(436)        $332
                                                  ======        =====

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

                                                April 4,     March 29,
                                                  1999         1998
                                                  ----         ----
                                                    (In thousands)
      Minimum pension liability                  $(1,577)    $(1,577)
      Foreign currency translation adjustment       (383)        (64)
                                                 --------    --------
      Accumulated comprehensive expense          $(1,960)    $(1,641)
                                                 ========    ========


NOTE 5 -   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 6 - 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 7 of 15
<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 in 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;  assessment of the impact of the Year 2000 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

THREE  MONTHS  ENDED APRIL 4, 1999  COMPARED TO THE THREE MONTHS ENDED MARCH 29,
1998

          Net sales for the first quarter of 1999 were $13.3 million compared to
$16.0 million during the first quarter of 1998, a decrease of $2.7 million.  The
decrease in net sales is due to lower new machine sales,  which was $4.7 million
lower for the first quarter of 1999 as compared to the same period in 1998. This
decrease was partially  offset by higher  aftermarket  sales.  The timing of the
Company's  sales,  particularly new machines sales, are highly dependent on when
an order is received,  lead time and customer requirements.  Management believes
the Company  operates in markets  which are extremely  competitive.  Many of our
customers and markets operate at less than full capacity and certain markets, in
particular,  the Far East,  remain  particularly  competitive and are subject to
local economic events.

          During the first quarter of 1999 the Company received $17.2 million in
orders compared to $30.2 million during the first quarter of 1998.  Order intake
into the second  quarter of 1999 continues to be slow. The decrease is primarily
at our European  operations.  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 be recognized in a later  accounting  period
than the one in which the order was received.  In addition,  the cyclical nature
of industry  demand  and,  therefore,  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.  Firm backlog at the end of the first  quarter of 1999 was
$37.0  million  compared to $33.0 million at December 31, 1998 and $60.8 million
at the end of the first quarter of 1998. Firm backlog as of May 8, 1999 and 1998
was $36.7 million and $59.0 million, respectively.

          Gross margin in the first quarter of 1999 was $2.4 million compared to
$4.2 million for the first quarter of 1998. The margin  percentage  decreased to
18.1% from 26.5%.  The decrease in  comparative  gross margin is  attributed  to
lower sales volume to absorb fixed manufacturing and assembly costs.

          Operating  expenses  in the first  quarter  of 1999 were $4.3  million
compared to $3.8  million  during 1998.  The increase is due to higher  employee
compensation, benefit costs and professional services.

          Interest  expense,  net of interest  income,  for the first quarter of
1999,  was $176, a decrease of $139 from the first quarter of 1998. The decrease
is due to lower borrowings.



                                  Page 8 of 15
<PAGE>



          The Company provides for income taxes in the jurisdictions in which it
pays for  income  taxes at the  statutory  rates in effect in each  jurisdiction
adjusted  for  differences  in  providing  for income  taxes  between  financial
reporting and income tax purposes. During the first quarter of 1999, the Company
recorded a  consolidated  tax  provision  due to 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  income tax rate in the first  quarter  of 1998,  as a
percentage of pre-tax results of operations, was 40.1%.

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,  1986
environmental  contamination  at the Company's  Ansonia and Derby  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, a preliminary environmental assessment of the Company's properties in
Ansonia and Derby,  Connecticut has been 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 an  additional  insured on a $5.0  million  environmental
policy  obtained by the  purchaser  and the  purchaser  is obligated to name the
Company  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,
earnings  or the  competitive  position of the  Company.  This  forward  looking
statement  could,   however,  be  influenced  by  the  results  of  any  further
investigation which the DEP might require, by DEP's conclusions and requirements
based  upon  its  review  of  complete   information  when  such  is  available,
unanticipated  discoveries,  the possibility that new or different environmental
laws might be adopted and the  possibility  that  further  regulatory  review or
litigation might become necessary or appropriate.

LIQUIDITY AND CAPITAL RESOURCES; CAPITAL EXPENDITURES

          Working  capital and the working  capital  ratio at April 4, 1999 were
$16.9 million and 1.7 to 1, respectively, compared to $19.9 million and 1.7 to 1
at  December  31,  1998,  respectively.  During the first  quarter of 1999,  the
Company  paid a  dividend  of $0.16 per  share.  In  addition,  during the first
quarter,  the  Company  repurchased  552,900  common  shares  in the  amount  of
$1,272,000.  These shares are held in  treasury.  The  Company's  ability to pay
dividends in the future is generally limited under its credit facility described
below  to the  aggregate  of (a) 25% of net  income  during  the  most  recently
completed four fiscal quarters after deducting 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.  The  Company  received a
waiver from its bank with respect to dividends paid in 1999.

          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 $0.5 million during the first quarters of
fiscal 1999 and 1998, respectively.



                                  Page 9 of 15
<PAGE>


          On May 7, 1999,  the Company  received a cash  payment of $4.4 million
representing  settlement of our claim under the Profit Guaranty provision of the
Asset Purchase  Agreement for the purchase of the Francis Shaw Rubber  Machinery
Business.

          The Company  has a worldwide  multi-currency  credit  facility  with a
major U.S.  bank in the amount of $25.0  million  consisting of an $18.5 million
revolving credit facility for direct  borrowings and letters of credit and up to
(pound)3.0  million for foreign  exchange  contracts  and a five year term note.
Interest varies based upon prevailing  market  interest.  The facility  contains
limits on direct borrowings and letters of credit combined based upon stipulated
percentages  of accounts  receivable,  inventory and backlog.  The facility also
contains  covenants  specifying  minimum and maximum  operating  thresholds  for
operating results and selected  financial ratios. The agreement contains certain
restrictions  on the making of  investments,  on  borrowings  and on the sale of
assets.  At April 4, 1999 and December 31, 1998, there was $5.1 million and $5.3
million, respectively,  outstanding under the term loan. At April 4, 1999, there
was $0.9 million in direct borrowings  outstanding.  There were $6.0 million and
$5.1 million of letters of credit  outstanding at April 4, 1999 and December 31,
1998, respectively.

YEAR 2000

          The Company has  instituted a Year 2000  readiness  project to address
the impact and risks related to the ability of the Company's  computer hardware,
computer programs, equipment with embedded computer chips and critical suppliers
to operate and function  properly  during the year change from December 31, 1999
to January 1, 2000, and to process date information correctly thereafter.

          The project is divided into three components - Business  Applications,
comprising the Company's internal  information  systems as well as the readiness
of third party  suppliers of goods and services whose Year 2000 readiness  could
potentially  have  significant  impact  on  the  Company's  operations;  Product
Applications,  relating to micro-processors within the control equipment sold by
the Company; and Equipment Applications, which relate to micro-processors within
operating equipment utilized in the Company's day to day operations.

          The  project  team is  made  up of  internal  resources  from  various
disciplines,  including  operations,  facility management,  product engineering,
management  information  systems  and  finance.  The major  objectives  for each
component  are to: (1) identify  and document  Year 2000 issues which affect the
Company;  (2) inventory  systems,  machines and  processes  affected by the Year
2000; (3) assess Year 2000 readiness for  identified  items;  and (4) design and
implement  a plan to  achieve  Year 2000  readiness  for  significant  Year 2000
issues. The identification and inventory of systems,  machines and processes has
been  completed.  The  assessment and plan to achieve Year 2000 readiness are at
various stages of completion for each of the three major components.

          The Business  Applications  component of the Company's  Year 2000 plan
relates primarily to the Company's  principal internal  information system which
consists of a mainframe  operated with third party purchased  computer software.
The  conversion to a Year 2000  compliant  version of the software was completed
during the fourth  quarter of 1998,  however,  system testing will continue into
the first-half of 1999.  This included the  replacement of hardware and software
for one of our UK  operations  to  provide  consistency  with the US  operation.
Similar  systems  for our  newly  acquired  subsidiary  in the UK have  not been
upgraded  due to the  consolidation  at our  other UK  operation  which has been
upgraded.  The  balance of the  Company's  computer  based  information  systems
consist  primarily of  individual  work  stations and personal  computers.  Work
stations in Engineering  were upgraded in 1997. All personal  computer  hardware
and software has been tested.  Modifications to the equipment are being made and
upgrades purchased for non-Year 2000 ready equipment.  The total amount expended
in the current and prior year,  related to the  Company's  internal  information
system, was approximately $0.9 million. Additional expenditures to complete this
phase is estimated to be less than $0.1 million. A significant  portion of these
expenditures  would have  occurred  without the Year 2000 issue and, in general,
these expenditures have not been accelerated.


                                 Page 10 of 15
<PAGE>



          The  identification  and assessment of critical suppliers of goods and
services is in process.  Critical suppliers include suppliers of components used
in the Company's products as well as suppliers of goods and services used in the
Company's  operations.  Critical  suppliers have been identified as suppliers of
goods or services that, if interrupted for an extended period,  might impact the
Company's  ability to  provide  goods and  services  to its  customers,  satisfy
obligations  to its  employees and vendors and which might pose a risk of injury
or damage to individuals,  property or the  environment.  Critical  suppliers of
goods and services are being  contacted to assess their  readiness  for the Year
2000.  Due to the varying degree of impact the Year 2000 might cause and general
uncertainty  inherent  in the Year  2000  problem,  the  Company  is  unable  to
determine  if  third  party  supplier  readiness  would  materially  impact  the
Company's results of operations, liquidity or financial condition.

          The Product  Applications  component of the  Company's  Year 2000 plan
relates  primarily to  microprocessors  within the control equipment sold by the
Company.  The Company has identified  auxiliary  equipment and components  which
were  supplied  with its products and which might pose a risk that the Company's
product  will  not  function   properly  in  the  Year  2000.   The  process  is
substantially  complete.  Some supplied  components may require  modification or
upgrade.  The extent of  modifications  required  are  dependent  on the use and
extent of integration of our equipment at a customer's  location.  The Company's
efforts  are   expected  to  continue  to  assist  our   customers  to  maximize
serviceability  of  Company  supplied  equipment.  The  cost  of an  upgrade  or
modification  may  result in a  warranty  obligation  and  charge to  results of
operations  of the  Company.  The Company is unable to  determine  a  reasonable
estimate at this time.  However,  the Company does not expect that these matters
will have a material  adverse  effect on the  Company's  financial  position  or
results of operations and some of the cost might be recovered from the Company's
vendors.

          Equipment  Applications  component  of the  Company's  Year  2000 plan
relates  to  microprocessors  within the  operating  equipment  utilized  in the
Company's day to day  operations.  The  identification  of equipment used in the
Company's operation has been completed.  The equipment used in our manufacturing
and other  operations are not  integrated  systems,  but consist  principally of
individual  stand alone  machine  tools and  equipment.  Failure of one piece of
equipment  would  not  materially  impact  operations.  Correspondence  with the
equipment  suppliers to determine Year 2000 readiness is in process and expected
to be complete before the end of June 1999.  Individual pieces of equipment have
been identified for replacement.  The cost of such equipment  identified to date
for  replacement is not  significant.  Replacement of all effected  equipment is
expected to be completed by the middle of 1999.

          The failure to correct a material Year 2000 problem could result in an
interruption  in,  or a  failure  of,  certain  normal  business  activities  or
operations.  Such failures could  materially and adversely  affect the Company's
results of  operations,  liquidity and financial  condition.  Due to the general
uncertainty  inherent  in the Year  2000  problem,  resulting  in part  from the
uncertainty of the Year 2000  readiness of third-party  suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000  failures  might  have a  material  impact  on  the  Company's  results  of
operations,  liquidity or financial condition. The Year 2000 Project is expected
to significantly  reduce the Company's level of uncertainty  about the Year 2000
problem and, in particular,  about the Year 2000 compliance and readiness of its
critical  suppliers of goods and  services.  The Company  believes that with the
completion  of  the  Project  as  scheduled,   the  possibility  of  significant
interruptions of normal operations should be reduced.

          The  above  contains  forward-looking  statements  including,  without
limitation, statements relating to the Company's plans, strategies,  objectives,
expectations,  intentions, and adequate resources, that are made pursuant to the
"safe harbor"  statements  of the Private  Securities  Litigation  Reform Act of
1995. Readers are cautioned that  forward-looking  statements  contained in this
Year  2000  disclosure  should  be read in  conjunction  with  the  safe  harbor
statements of the Private Securities  Litigation Reform Act of 1995 contained on
page eleven of this report.


                                 Page 11 of 15
<PAGE>


          Taking into account the  foregoing,  the following  are  identified as
some, but not all of,  important risk factors that could cause actual results to
differ materially from those expressed in any forward-looking statement made by,
or on behalf  of, the  Company:  the  availability  and cost of  personnel;  the
ability to locate and correct all items; and timely responses to and corrections
by third-parties and suppliers.  Due to the general uncertainty  inherent in the
Year  2000  problem,  resulting  in part from the  uncertainty  of the Year 2000
readiness of third-parties and the  interconnection  of global  businesses,  the
Company  cannot  ensure  its  ability  to timely  and  cost-effectively  resolve
problems  associated with the Year 2000 issue that may affect its operations and
business, or expose it to third-party liability.

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, 2000.  The  Statement  will  require  the  Company to  recognize  all
derivatives on the balance sheet at fair value.  Derivatives that are not hedges
must be adjusted  to fair value  through  income.  If a  derivative  is a hedge,
depending  on the  nature  of  the  hedge,  changes  in the  fair  value  of the
derivative  will either be offset against the change in fair value of the hedged
asset,  liability,  or firm commitment through earnings,  or recognized in other
comprehensive  income  until the hedged  item is  recognized  in  earnings.  The
ineffective  portion of a derivative's  change in fair value will be immediately
recognized  in earnings.  The Company does not  anticipate  that the adoption of
this  Statement  will have a significant  effect on its 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. 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
regularly  enters into foreign  exchange  forward and option  contracts to hedge
foreign  currency  transactions.  These  derivative  instruments  involve little
complexity  and are  generally  for short  periods of less than six months.  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 are not expected to
have a material impact on the Company's results of operations.



                                 Page 12 of 15
<PAGE>


                                                                      Exhibit 11
                               FARREL CORPORATION
                 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
                 (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

                                                         Three Months Ended
                                                         ------------------
                                                       April 4,     March 29,
                                                         1999         1998
                                                         ----         ----
Net (loss) income applicable to
   common stock ...................................   $   (117)     $     110
                                                      =========     =========
Weighted average number of common
shares outstanding -  Basic earnings per share....    5,812,676     5,942,582

Effect of dilutive stock and purchase  options....           --        40,403
                                                      ---------     ---------

Weighted average number of common
shares outstanding - Diluted earnings per share....   5,812,676     5,982,985
                                                      =========     =========

Net income/(loss) per common
  share - Basic ...................................   $  (0.02)     $    0.02
                                                      =========     =========
  share - Fully diluted ...........................   $  (0.02)     $    0.02
                                                      =========     =========




                                 Page 13 of 15
<PAGE>





PART II - OTHER INFORMATION


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

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

       SEE PAGE 13

Exhibit 27          Financial Data Schedule

Reports on Form 8-K

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




                                 Page 14 of 15
<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:  May 7, 1999                  /S/ ROLF K. LIEBERGESELL
     ------------------             -------------------------------------------
                                    ROLF K. LIEBERGESELL
                                    CHIEF EXECUTIVE OFFICER, PRESIDENT
                                    AND CHAIRMAN OF THE BOARD





DATE:  May 7, 1999                  /S/ THEODORE E. JENNY               
     ------------------             -------------------------------------------
                                    THEODORE E. JENNY
                                    VICE PRESIDENT/CHIEF FINANCIAL OFFICER
                                    (CHIEF ACCOUNTING OFFICER)