<PAGE>

                       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          March 30, 2003
                               -------------------------------------------------

                                       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
    ----       ----

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes       No  X
                                                ----     ----

                      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 1, 2003
---------------------------------------------------------------------------

Common Stock (Voting), $.01 par value                          5,235,128
                                                               ---------

<PAGE>

<TABLE>
<CAPTION>
                                            Farrel Corporation

                                                   Index
                                                   -----

                                                                                            Page
                                                                                            ----
<S>                                                                                         <C>
Part I.  Financial Information
         ---------------------

         Item 1. Financial Statements

                  Consolidated Balance Sheets -
                  March 30, 2003 and December 31, 2002                                       3

                  Consolidated Statements of Operations -
                  Three months ended March 30, 2003
                  and March 31, 2002                                                         4

                  Consolidated Statements of Cash Flows -
                  Three months ended March 30, 2003
                  and March 31, 2002                                                         5

                  Notes to Consolidated Financial Statements                                 6

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                       10

         Item 3 - Quantitative and Qualitative Disclosures About Market Risk                14

         Item 4 - Controls and Procedures                                                   14

Part II. Other Information                                                                  15
         -----------------

         Signatures                                                                         16

         Exhibits -

                  Exhibit 11 - Statement re computation of per share earnings

                  Exhibit 99.1 - Certification pursuant to 18 U.S.C. Section 1350, as
                                 adopted pursuant to section 906 of the Sarbanes-Oxley
                                 Act of 2002

                  Exhibit 99.2 - Certification pursuant to 18 U.S.C. Section 1350, as
                                 adopted pursuant to section 906 of the Sarbanes-Oxley
                                 Act of 2002
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                   Part I - Financial Information
                                         FARREL CORPORATION
                                     CONSOLIDATED BALANCE SHEETS
                                  (In thousands, except share data)

                                                                          March 30,            December 31,
                                                                          ---------            ------------
                                                                            2003                   2002
                                                                            ----                   ----
ASSETS                                                                  (Unaudited)
<S>                                                                           <C>                    <C>
    Current Assets:
       Cash and cash equivalents                                               $8,072                 $5,863
       Accounts receivable, net of allowance for
          doubtful accounts of  $88 and $96, respectively                       6,212                 10,848
       Inventory                                                               11,732                 10,631
       Deferred income taxes                                                      538                    538
       Other current assets                                                     1,308                  1,170
                                                                       ---------------        ---------------
              Total current assets                                             27,862                 29,050
       Property, plant and equipment - net of accumulated
          depreciation of  $17,193  and $17,034, respectively                   6,771                  7,166
       Deferred income taxes                                                    1,339                  1,339
       Other assets                                                               353                    373
                                                                       ---------------        ---------------
       Total Assets                                                           $36,325                $37,928
                                                                       ===============        ===============
LIABILITIES & STOCKHOLDERS' EQUITY
    Current Liabilities:
       Accounts payable                                                        $4,354                 $4,009
       Accrued expenses & taxes payable                                           830                  2,309
       Dividend payable                                                           261                    ---
       Advances from customers                                                  5,050                  4,102
       Accrued warranty costs                                                     794                    842
       Current portion of long - term debt                                        735                    752
                                                                       ---------------        ---------------
              Total current liabilities                                        12,024                 12,014
    Long-term debt                                                                184                    375
    Post-retirement benefit obligation                                          1,050                  1,055
    Minimum pension liability                                                  10,031                  9,961
    Commitments and contingencies                                                 ---                    ---
                                                                       ---------------        ---------------
              Total Liabilities                                                23,289                 23,405
                                                                       ---------------        ---------------
    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, 913,645 shares at
          March 30, 2003 and December 31, 2002                                 (2,530)                (2,530)
       Retained earnings                                                        8,369                  9,879
       Accumulated other comprehensive loss                                   (12,159)               (12,182)
                                                                       ---------------        ---------------
              Total Stockholders' Equity                                       13,036                 14,523
                                                                       ---------------        ---------------
    Total Liabilities and Stockholders' Equity                                $36,325                $37,928
                                                                       ===============        ===============

                             See Accompanying Notes to Consolidated Financial Statements

                                                                                                            3
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                    FARREL CORPORATION
                           CONSOLIDATED STATEMENTS OF OPERATIONS
                           (In thousands, except per share data)

                                                                     Three Months Ended
                                                                     ------------------
                                                               March 30,             March 31,
                                                                 2003                  2002
                                                                 ----                  ----
                                                              (unaudited)           (unaudited)
<S>                                                             <C>                    <C>
Net sales                                                          $9,699                 $7,845

Cost of sales                                                       7,909                  5,993
                                                            --------------         --------------

Gross margin                                                        1,790                  1,852

Operating expenses:

    Selling                                                         1,158                    968

    General & administrative                                        1,972                  1,892

    Research & development                                            247                    249
                                                            --------------         --------------

Total operating expenses                                            3,377                  3,109
                                                            --------------         --------------

Operating loss                                                     (1,587)                (1,257)

Interest income                                                        15                     26

Interest expense, including amortization of
deferred credit facility costs                                        (33)                   (36)


Other income (expense), net                                           (85)                    181
                                                            --------------         --------------

Loss before income taxes                                           (1,690)                (1,086)

Benefit for income taxes                                              441                    326
                                                            --------------         --------------

Net loss                                                          $(1,249)                 $(760)
                                                            ==============         ==============

Per share data:

Basic and Diluted net loss
    per common share                                               $(0.24)                $(0.15)
                                                            ==============         ==============
Average shares outstanding:
   Basic                                                        5,228,461              5,228,461
                                                            ==============         ==============
   Diluted                                                      5,228,461              5,228,461
                                                            ==============         ==============
Dividends declared                                                  $0.05                  $0.00
                                                            ==============         ==============

                See Accompanying Notes to Consolidated Financial Statements

                                                                                                4
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                          FARREL CORPORATION
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (In thousands)
                                                                                       Three Months Ended
                                                                                       ------------------
                                                                                 March 30,            March 31,
                                                                                 ---------            ---------
                                                                                   2003                  2002
                                                                                   ----                  ----
                                                                               (Unaudited)           (Unaudited)
<S>                                                                                   <C>                 <C>
Cash flows from operating activities:
  Net loss                                                                            $(1,249)              $(760)
  Adjustments to reconcile net loss to
  net cash provided by (used in) operating activities:
    Depreciation                                                                          331                 368
    Amortization                                                                           20                  30
    Decrease in accounts receivable                                                     4,579               3,618
    (Increase) in other current assets                                                   (153)               (260)
    (Increase) in inventory                                                              (805)               (710)
    Decrease in prepaid pension costs                                                     271                  67
    Increase (decrease) in accounts payable                                               401              (1,107)
    Increase in customer advances                                                         591                 596
    (Decrease) in accrued expenses & taxes                                             (1,498)               (472)
    (Decrease)  in accrued warranty costs                                                 (41)                (42)
    (Decrease) in post retirement benefit obligation                                       (5)                 (9)
    Other                                                                                  (4)                  4
                                                                              ----------------      --------------
    Total adjustments                                                                   3,687               2,083
                                                                              ----------------      --------------
    Net cash provided by operating activities                                           2,438               1,323
                                                                              ----------------      --------------
Cash flows from investing activities:
    Purchases of property, plant and equipment                                             (9)                (14)
                                                                              ----------------      --------------
    Net cash (used in) investing activities                                                (9)                (14)
                                                                              ----------------      --------------
Cash flows from financing activities:
    Repayment of long-term borrowings                                                    (186)               (167)
                                                                              ----------------      --------------
    Net cash (used in) financing activities                                              (186)               (167)
                                                                              ----------------      --------------
Effect of foreign currency exchange rate changes on cash                                  (34)                (29)
                                                                              ----------------      --------------
Net increase in cash and cash equivalents                                               2,209               1,113
    Cash and cash equivalents - Beginning of period                                     5,863               5,579
                                                                              ----------------      --------------
    Cash and cash equivalents - End of period                                          $8,072              $6,692
                                                                              ================      ==============
Income taxes paid                                                                        $786                 $27
                                                                              ================      ==============
Interest paid                                                                             $17                 $27
                                                                              ================      ==============

                             See Accompanying Notes to Consolidated Financial Statements

                                                                                                                 5
</TABLE>

<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 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 accounting
principles generally accepted in the U.S. 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 accounting
principles generally accepted in the U.S., the consolidated financial position
of Farrel Corporation ("Farrel" or "the Company") as of March 30, 2003, and the
consolidated results of its operations and its cash flows for the three month
periods ended March 30, 2003 and March 31, 2002. These results are not
necessarily indicative of results to be expected for the full fiscal year. The
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, 2002.

NOTE 2 - STOCK OPTIONS

     The Company accounts for stock options under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and not
the fair value method as provided by Statement of Financial Accounting Standard
No. 123, Accounting and Disclosure of Stock-Based Compensation. The Company's
Stock Option Plan requires options to be granted at the market price of the
Company's common stock on the date the options are granted, and as a result,
under APB 25 no compensation expense is recognized. Pro forma information
regarding net income (loss) and earnings (loss) per share is required by
statement No. 123, and has been determined as if the Company had accounted for
its employee stock options under the fair value method of statement No. 123. The
fair value for these options was estimated at the date of grant using the
Black-Scholes option pricing model, one of the allowable valuation models under
statement No. 123. For purposes of pro forma disclosures, the estimated fair
value of the options is amortized to expense over the options vesting period.
The current pro forma net loss will not necessarily be representative of pro
forma net income (loss) in future years.

<TABLE>
<CAPTION>
     The Company's pro forma information is as follows:
                                                                  Three Months Ended
                                                              March 30,         March 31,
                                                                2003               2002
                                                                ----               ----
                                                          (In thousands, except per share data)
<S>                                                            <C>                 <C>
     Net loss....................................              $(1,249)            $(760)
     Effect of stock options, net of taxes.......                   (4)               (4)
                                                                    ---               ---
     Pro forma net loss..........................              $(1,253)            $(764)
                                                               ========           =======
     Pro forma loss per share - basic & diluted..               $(0.24)            $(0.15)
                                                               ========           =======

NOTE 3 - INVENTORY
<CAPTION>
     Inventory is comprised of the following:
                                                               March 30,       December 31,
                                                                 2003              2002
                                                                 ----              ----
                                                                     (In thousands)
<S>                                                            <C>               <C>
     Stock and raw materials.....................               $6,615            $6,733
     Work-in process.............................                5,117             3,898
                                                               -------           -------
     Total.......................................              $11,732           $10,631
                                                               =======           =======
</TABLE>

                                                                               6
<PAGE>

<TABLE>
<CAPTION>
NOTE 4 - COMPREHENSIVE INCOME (LOSS)

     The components of other comprehensive income (loss) are as follows:

                                                                  Three Months Ended
                                                              March 30,          March 31,
                                                                2003               2002
                                                                ----               ----
                                                                     (In thousands)
<S>                                                           <C>                 <C>
     Net loss....................................             $(1,249)            $(760)
     Foreign currency translation adjustments....                (212)             (203)
                                                              --------            ------
     Other comprehensive loss....................             $(1,461)            $(963)
                                                              ========            ======

     Accumulated other comprehensive income (loss) consists of the
following:
<CAPTION>

                                                              March 30,       December 31,
                                                                2003              2002
                                                                ----              ----
                                                                    (In thousands)
<S>                                                          <C>               <C>
     Foreign currency translation adjustments....               $(679)            $(467)
     Minimum pension liability...................             (11,480)          (11,715)
                                                             ---------         ---------
     Accumulated other comprehensive loss........            $(12,159)         $(12,182)
                                                             =========         =========
</TABLE>

NOTE 5 - SEGMENT INFORMATION

     The Company's operations are considered one operating segment. The
Company's products consist of new machines, aftermarket and spare parts 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 each of the Company's products are
essentially the same.

NOTE 6 - IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board issued statements
No. 142 (Goodwill and Other Intangible Assets) and No. 143 (Accounting for Asset
Retirement Obligations). Statement No. 142 was adopted by the Company in January
2002 and statement No. 143 was adopted by the Company in January 2003. Statement
No. 142 changes the accounting for other intangible assets, such that those
assets whose life is determined to be indefinite are not subject to
amortization. These assets and goodwill shall be tested for impairment at least
annually, and the value will need to be written down if the fair value is less
than the carrying value. Statement No. 143 requires that a liability must be
recognized for an asset retirement obligation related to long lived tangible
assets. The liability shall be recorded at fair value. The adoption of
statements No. 142 and 143 did not have a significant effect on the Company's
financial position or results of operations.

     In August 2001, the Financial Accounting Standards Board issued statement
No. 144 (Accounting for the Impairment or Disposals of Long-lived Assets).
Statement No. 144 was adopted by the Company in January 2002. This statement
requires an impairment loss to be recognized if the carrying value of a
long-lived asset (asset group) is not recoverable and exceeds its fair value.
Long-lived assets (asset group) shall be tested for impairment whenever events
or changes in circumstances indicate that its carrying amount may not be
recoverable. The adoption of this statement did not have a significant effect on
the Company's financial position or results of operations.

     In December 2002, the Financial Accounting Standards Board issued statement
No. 148 (Accounting for Stock-Based Compensation - Transition and Disclosures).
Statement No. 148 amends the accounting for stock-based compensation by
providing alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, statement No. 148 amends the disclosure requirements to require
prominent disclosures in both annual and interim financial statements of the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. The Company adopted statement

                                                                               7

<PAGE>

148 in December 2002. The Company does not anticipate changing to the fair value
based method of accounting for stock-based compensation; therefore, the adoption
only impacted disclosures.

NOTE 7 - FOREIGN CURRENCY CONTRACTS

     The Company, from time to time, enters into foreign exchange contracts for
non-trading purposes, exclusively to minimize its exposure to currency
fluctuations on trade receivables, firm commitments and payables. As a result,
changes in the values of foreign currency contracts offset changes in the values
of the underlying assets and liabilities due to changes in foreign exchange
rates, effectively deferring cash gains and losses on trade receivables, firm
commitments and payables and the related hedges until the date the transactions
are settled in cash. The Company is exposed to loss in the event of
nonperformance by the Company's bank, the other party to the foreign exchange
contracts. The Company does not anticipate nonperformance by its bank.

     As of March 30, 2003, all of the Company's then existing foreign exchange
forward contracts were designated as fair value hedges. As such, there were no
charges to the statement of operations related to these contracts. At March 30,
2003, the net difference between the spot rate and the contract rate for the
foreign exchange forwards was an unrealized loss of approximately $31,000. At
March 30, 2003 the Company is committed to provide 1,211,000 EURO's in exchange
for British Pound Sterling under forward contracts expiring thru November 2003.

NOTE 8 - BANK CREDIT ARRANGEMENTS

     The Company has a worldwide multi-currency credit facility, as amended,
with a major U.S. bank, which includes a $10 million revolving credit facility
for direct borrowings and letters of credit. The facility contains a sub-limit
that caps the amount of direct borrowings the Company can make at $5 million.
The facility contains limits on direct borrowings and issuances of letters of
credit based upon stipulated percentages of accounts receivable and inventory.
The revolving credit facility expires on June 15, 2004. Interest varies based
upon prevailing market interest rates. The revolving credit facility requires
payment to the bank of a fee equal to 0.375% per annum of the average daily
unused principal under the facility. The Company has approximately $2.8 million
of letters of credit posted under its credit facility on March 30, 2003.

     This credit facility also includes a term loan which the Company borrowed
in June 2001. The term loan is repayable in monthly installments of
(pound)38,888 (approximately $61,000) through June 2004. The term loan has an
interest rate of LIBOR plus 2.7%. The proceeds of this term loan were used to
repay an existing term loan. At March 30, 2003, there was $919,000 outstanding
under the term loan.

     The credit facility, as amended on March 25, 2003, contains covenants
specifying minimum and/or maximum thresholds for operating results, selected
financial ratios and backlog. The backlog covenant requires that end of month
backlog will not be less than $20 million for more than two consecutive months.
The Company did not achieve the backlog covenant as of the end of January and
February 2002; however, the bank waived the non-compliance. There can be no
assurance that the Company will achieve the required thresholds in the future.
The agreement contains certain restrictions on investments, borrowings and sale
of assets. Dividend declarations or payments are allowed under this credit
facility as long as there exists under the credit facility no Event of Default
(as defined in the credit facility) or no condition which upon given notice or
lapse of time or both, would become an Event of Default.

NOTE 9 - WARRANTY OBLIGATIONS AND CONTINGENCIES

(a) Warranty Obligations:

     Equipment sold is generally covered by a warranty of one to three years.
The Company's estimate of costs to service its warranty obligations is based on
historical experience and expectations of future conditions. To the extent the
Company experiences increased warranty claim activity, or increased costs in
servicing those claims, its warranty accrual will increase, resulting in
decreased gross profit.

                                                                               8

<PAGE>

<TABLE>
<CAPTION>
     The change in the warranty reserve was as follows:

                                                              Three Months Ended
                                                           March 30,        March 31,
                                                             2003             2002
                                                             ----             ----
                                                                 (In thousands)
<S>                                                           <C>           <C>
     Warranty reserve, beginning of period.......             $842          $1,004
     Charges to costs & expenses.................              133             104
     Foreign currency translation adjustment.....               (7)             (7)
     Deductions for actual expenditures..........             (174)           (145)
                                                            ------          ------
     Warranty reserve, end of period.............             $794            $956
                                                            ======          ======
</TABLE>

(b) Contingencies:

     The Company is a defendant in certain lawsuits arising in the ordinary
course of business, primarily related to product liability claims involving
machinery manufactured by the Company or its predecessors. While the outcome of
lawsuits or other proceedings against the Company cannot be predicted with
certainty, the Company does not expect that these matters will have a material
adverse effect on the Company's financial position or results of operations.

NOTE 10 - INCOME TAXES

     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 benefit rate was 26% for the
three month period ended March 30, 2003, compared to 30% for the three month
period ended March 31, 2002. The effective tax rate varies among periods due to
the change in the proportion and amount of income and losses generated in
different tax jurisdictions. In addition, $44,000 of tax benefits in the period
ending March 30, 2003 related to the Company's U.K. operations have not been
recognized since these tax benefits have been deemed not to meet the accounting
requirements for realization as an asset.

NOTE 11 - RECLASSIFICATIONS

     Certain amounts in prior year financial statements have been reclassified
to conform with the current year presentation.











                                                                               9
<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, 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 flow; changes in
business conditions, in general, and, in particular, in the businesses of the
Company's customers and competitors; the Company's access to adequate financing
at competitive rates 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 MARCH 30, 2003 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2002

     Net sales for the three month period ended March 30, 2003, were $9.7
million compared to $7.8 million for the three month period ended March 31,
2002, an increase of $1.8 million. The increase is primarily a result of higher
sales in Europe. 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 that are extremely competitive with cyclical demand.
Many of the Company's customers and markets operate at less than full capacity
and certain remain particularly competitive and are subject to local economic
events.

     Orders received for the three month period ended March 30, 2003, were $12.6
million compared to $14.1 million for the three month period ended March 31,
2002.

     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 time 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. 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 its 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 March 30, 2003, was
$24.1 million compared to $21.3 million at December 31, 2002, and $24.3 million
at March 31, 2002. Substantially all the backlog as of March 30, 2003, is
scheduled to be shipped within the next 12 months. Such shipments are subject to
various factors, such as customer requests for changes or manufacturing delays,
which could result in shipments being delayed.

                                                                              10

<PAGE>

     Gross margin for the three month period ended March 30, 2003, was $1.8
million compared to $1.9 million for the three month period ended March 31,
2002, a decrease of $0.1 million. The gross margin as a percent of sales for the
three month period ended March 30, 2003, was 18.4% compared to 23.6% for the
three month period ended March 31, 2002. Of this decline, approximately 3
percentage points are due directly to lower margins generated on sales of new
machines. The Company has a varied portfolio of products that tend to have
different ranges of profit margins. As a result, sales mix can make the gross
margin as a percent of sales vary between periods. In addition, competitive
conditions that exist at the time a customer order is received impacts the
margin earned by the Company. Other major costs resulting in the additional
decline in the gross margin as a percent of sales are lower absorption of fixed
overhead costs due to lower factory utilization and higher engineering costs.

     Operating expenses for the three month period ended March 30, 2003, were
$3.4 million compared to $3.1 million for the three month period ended March 31,
2002, an increase of $0.3 million. This amount includes increased selling
expenses of approximately $0.2 million primarily due to higher employee
compensation and related expenses and trade show expenses.

     Interest income for the three month period ended March 30, 2003, was
$15,000 compared to $26,000 for the three month period ended March 31, 2002.

     Interest expense for the three month period ended March 30, 2003, was
$33,000 compared to $36,000 for the three months ended March 31, 2002.

     Other income (expense), net for the three month period ended March 30,
2003, was expense of $85,000 compared to income of $181,000 for the three month
period ended March 31, 2002. Other income for the period ended March 31, 2002
includes approximately $167,000 received by the Company as a result of the
demutualization of an insurance provider used by the Company.

     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 benefit rate was 26% for the
three month period ended March 30, 2003, compared to 30% for the three month
period ended March 31, 2002. The effective tax rate varies among periods due to
the change in the proportion and amount of income and losses generated in
different tax jurisdictions. In addition, $44,000 of tax benefits in the period
ending March 30, 2003 related to the Company's U.K. operations have not been
recognized since these tax benefits have been deemed not to meet the accounting
requirements for realization as an asset.

MATERIAL CONTINGENCIES

     Pursuant to a settlement agreement entered into in 1995 between the Company
and Black & Decker Corporation ("Black & Decker"), 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 former Derby,
Connecticut facilities, as required by the Connecticut Department of
Environmental Protection ("DEP"). Black & Decker has conducted a preliminary
environmental assessment of the facilities and has proposed certain remedial
actions. On the basis of the preliminary data now available there is no reason
to believe that any 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.

LIQUIDITY AND CAPITAL RESOURCES; CAPITAL EXPENDITURES

     Working capital and the working capital ratio at March 30, 2003 were $15.8
million and 2.3 to 1, respectively, compared to $17.0 million and 2.4 to 1 at
December 31, 2002, respectively. During the three months ended March 30, 2003,
the Company declared a dividend of $0.05 per share that is payable on April 25,
2003 to shareholders of record as of April 11, 2003.

     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

                                                                              11

<PAGE>

the collection of accounts receivable. The Company also generally has financed
its operations with cash generated by operations, progress payments from
customers and 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 $9,000 and $14,000 during the three month periods ended
March 30, 2003 and March 31, 2002, respectively.

     The Company has a worldwide multi-currency credit facility, as amended,
with a major U.S. bank, which includes a $10 million revolving credit facility
for direct borrowings and letters of credit. The facility contains a sub-limit
that caps the amount of direct borrowings the Company can make at $5 million.
The facility contains limits on direct borrowings and issuances of letters of
credit based upon stipulated percentages of accounts receivable and inventory.
The revolving credit facility expires on June 15, 2004. Interest varies based
upon prevailing market interest rates. The revolving credit facility requires
payment to the bank of a fee equal to 0.375% per annum of the average daily
unused principal under the facility. The Company has approximately $2.8 million
of letters of credit posted under its credit facility on March 30, 2003.

     This credit facility also includes a term loan which the Company borrowed
in June 2001. The term loan is repayable in monthly installments of
(pound)38,888 (approximately $61,000) through June 2004. The term loan has an
interest rate of LIBOR plus 2.7%. The proceeds of this term loan were used to
repay an existing term loan. At March 30, 2003, there was $919,000 outstanding
under the term loan.

     The credit facility, as amended on March 25, 2003, contains covenants
specifying minimum and/or maximum thresholds for operating results, selected
financial ratios and backlog. The backlog covenant requires that end of month
backlog will not be less than $20 million for more than two consecutive months.
The Company did not achieve the backlog covenant as of the end of January and
February 2002; however, the bank waived the non-compliance. There can be no
assurance that the Company will achieve the required thresholds in the future.
The agreement contains certain restrictions on investments, borrowings and sale
of assets. Dividend declarations or payments are allowed under this credit
facility as long as there exists under the credit facility no Event of Default
(as defined in the credit facility) or no condition which upon given notice or
lapse of time or both, would become an Event of Default.

     In fiscal 2000, new minimum funding guidelines for pension plans became
effective in the U.K. which are significantly different than the prior
guidelines. Based upon the new guidelines the Company is required to make
significant cash contributions to the Company's U.K. pension plan. Prior to
2000, the Company was not required to make substantial contributions to the U.K.
pension plans. In fiscal 2002, 2001 and 2000, the Company contributed
approximately $723,000, $799,000 and $946,000 respectively to the U.K. pension
plan.

     For the years ended December 31, 2002, 2001 and 2000, the assets of the
plan generated a negative return (lost value) of $2.2 million, $2.4 million and
$0.6 million, respectively. The majority of 2002 loss was incurred in June 2002
as a result of the decline in the stock market. As described in the Financial
Position section that follows, these losses have contributed to a substantial
reduction in the Company's stockholders' equity. At March 30, 2003, total assets
in the plan were approximately $21 million, which significantly exceed the
historical benefits paid for the past few years. The trustees of the plan moved
the plan assets out of equities in July 2002 and are reviewing the long-term
investment strategy of the plan. As of March 30, 2003, the assets of the plan
consisted of corporate and government bonds and cash. In addition, in January
2002, the U.K. subsidiary officially informed the plan trustees that effective
the end of the first quarter of 2002, the U.K. employees would no longer accrue
additional benefits under this pension plan for future service. Beginning in
2002, the U.K. subsidiary, as required under U.K. law, offered a defined
contribution plan to its employees.

     In July 2002, the Company, the plan trustees and the plan's actuary began
discussing the appropriate means of ensuring the long term funding of the plan,
including among other things an assessment of the U.K. subsidiary's business
prospects and cash position, the securitization of the U.K. subsidiary's assets,
a parent company guarantee, increasing contributions to the plan, or other
assurances, in order to avoid a determination by the actuary that the trustees
should wind up the plan. Under the rules of the plan, the trustees are to wind
up the plan if they receive actuarial advice that the

                                                                              12

<PAGE>

actual and expected Company contributions are so low as to prejudice seriously
the long-term financial position of the plan. On a wind up basis the amount of
underfunding of the plan is computed differently than, and would be
substantially greater than, the amount reflected in the financial statements.
Additionally, on a wind up basis, the underfunding must be paid down within a
short time period. In February 2003, the Company, the plan trustees and the
plan's actuary agreed upon an increased contribution schedule which provides for
the Company to contribute (pound)50,600 (approximately $81,000) a month to the
plan plus the costs of administering the plan, which are estimated to be
$100,000 annually. The contribution schedule was based on an April 2002
actuarial computation and must be reviewed for adequacy by the actuary at least
annually or, if deemed necessary by the actuary, on a more periodic basis.

FINANCIAL POSITION

     The Accumulated Other Comprehensive Loss section of stockholders' equity
reflects a cumulative charge of $11.5 million related to the Company's pension
plans. This cumulative charge was required in order to reflect a minimum pension
liability on the balance sheet for the pension plans. Of this amount, $10.5
million relates to the Company's U.K. pension plan. The U.K. plan experienced a
significant decline in the value of its assets during 2002 and 2001. In
addition, in December 2002, revised mortality tables were used in the
determination of the pension liability for accounting in order to reflect
updated mortality data. The change in the mortality tables along with the
declines in the value of the pension assets, were the primary reasons for the
cumulative charge to stockholders' equity for the U.K. plan.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 2001, the Financial Accounting Standards Board issued statements
No. 142 (Goodwill and Other Intangible Assets) and No. 143 (Accounting for Asset
Retirement Obligations). Statement No. 142 was adopted by the Company in January
2002 and statement No. 143 was adopted by the Company in January 2003. Statement
No. 142 changes the accounting for other intangible assets, such that those
assets whose life is determined to be indefinite are not subject to
amortization. These assets and goodwill shall be tested for impairment at least
annually, and the value will need to be written down if the fair value is less
than the carrying value. Statement No. 143 requires that a liability must be
recognized for an asset retirement obligation related to long lived tangible
assets. The liability shall be recorded at fair value. The adoption of
statements No. 142 and 143 did not have a significant effect on the Company's
financial position or results of operations.

     In August 2001, the Financial Accounting Standards Board issued statement
No. 144 (Accounting for the Impairment or Disposals of Long-lived Assets).
Statement No. 144 was adopted by the Company in January 2002. This statement
requires an impairment loss to be recognized if the carrying value of a
long-lived asset (asset group) is not recoverable and exceeds its fair value.
Long-lived assets (asset group) shall be tested for impairment whenever events
or changes in circumstances indicate that its carrying amount may not be
recoverable. The adoption of this statement did not have a significant effect on
the Company's financial position or results of operations.

     In December 2002, the Financial Accounting Standards Board issued statement
No. 148 (Accounting for Stock-Based Compensation - Transition and Disclosures).
Statement No. 148 amends the accounting for stock-based compensation by
providing alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, statement No. 148 amends the disclosure requirements to require
prominent disclosures in both annual and interim financial statements of the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. The Company adopted statement No. 148 in
December 2002. The Company does not anticipate changing to the fair value based
method of accounting for stock-based compensation; therefore, the adoption only
impacted disclosures.



                                                                              13

<PAGE>

PART 1 - ITEM 3 - 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 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.

PART 1 - ITEM 4 - CONTROLS AND PROCEDURES

     Within 90 days prior to the filing of this quarterly report, an evaluation
was performed under the supervision and with the participation of the Company's
management, including the CEO and CFO, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. Based on that
evaluation, the Company's management, including the CEO and CFO, concluded that
the Company's disclosure controls and procedures were effective as of March 30,
2003. There have been no changes in the Company's internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of our most recent evaluation.












                                                                              14

<PAGE>

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS                                                  None

ITEM 2 - CHANGES IN SECURITIES                                              N/A

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES                                    N/A

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                N/A

ITEM 5 - OTHER INFORMATION                                                  N/A

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     a)   Exhibits:


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

          Exhibit 99.1 Certification pursuant to 18 U.S.C.
                       Section 1350, as adopted pursuant to section
                       906 of the Sarbanes-Oxley Act of 2002            Attached

          Exhibit 99.2 Certification pursuant to 18 U.S.C. Section
                       1350, as adopted pursuant to section 906 of
                       the Sarbanes-Oxley Act of 2002                   Attached

     b)   Reports on Form 8-K:

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









                                                                              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:          5/13/03              /s/ Rolf K. Liebergesell
     --------------------------     --------------------------------------------
                                    ROLF K. LIEBERGESELL
                                    CHIEF EXECUTIVE OFFICER,
                                    PRESIDENT AND CHAIRMAN OF THE BOARD



DATE:          5/13/03              /s/ Walter C. Lazarcheck
     --------------------------     --------------------------------------------
                                    WALTER C. LAZARCHECK
                                    VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
                                    (CHIEF ACCOUNTING OFFICER)






                                                                              16

<PAGE>

CERTIFICATION PURSUANT TO SECTION 10A OF THE SECURITIES AND EXCHANGE ACT OF
1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Rolf K Liebergesell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Farrel Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


/s/ Rolf K Liebergesell
--------------------------------------
Rolf K Liebergesell
Chairman of the Board of Directors
and Chief Executive Officer
May 13, 2003

                                                                              17

<PAGE>

CERTIFICATION PURSUANT TO SECTION 10A OF THE SECURITIES AND EXCHANGE ACT OF
1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Walter C Lazarcheck, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Farrel Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


/s/ Walter C Lazarcheck
-------------------------------
Walter C Lazarcheck
Vice President
and Chief Financial Officer
May 13, 2003

                                                                              18