<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                       ----------------------------------

                                    FORM 10-K


     [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934 
           For the fiscal year ended September 30, 2001

                                       OR

     [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934
           For the transition period            to
                                     ----------    

                         Commission file number: 1-10596

                             ESCO Technologies Inc.
           (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           Missouri                                        43-1554045
           (STATE OR OTHER JURISDICTION                    (I.R.S. EMPLOYER
           OF INCORPORATION OR ORGANIZATION)               IDENTIFICATION NO.)

           8888 Ladue Road, Ste. 200
           St. Louis, Missouri                              63124-2056
           (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)         (ZIP CODE)

           REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:

                                 (314) 213-7200


     SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                              Name of Each
                                                              Exchange on
     Title of Each Class                                      Which Registered
     -------------------                                      ----------------


     Common Stock, par value $0.01 per                        New York Stock
     share                                                    Exchange, Inc.

     Preferred Stock Purchase Rights                          New York Stock
                                                              Exchange, Inc.




                            (Cover page 1 of 2 pages)



<PAGE>


           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                      None


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 filing requirements
for the past 90 days. Yes X No
                         ---   ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Aggregate market value of the Common Stock held by non-affiliates of the
registrant as of close of business on December 17, 2001: $387,536,021.*


           * For purpose of this calculation only, without determining whether
           the following are affiliates of the registrant, the registrant has
           assumed that (i) its directors and executive officers are affiliates,
           and (ii) no party who has filed a Schedule 13D or 13G is an
           affiliate.


Number of shares of Common Stock outstanding at December 17, 2001: 12,421,785


                      DOCUMENTS INCORPORATED BY REFERENCE:

1.       Portions of the registrant's Annual Report to Stockholders for fiscal
         year ended September 30, 2001 (the "2001 Annual Report") (Parts I and
         II).

2.       Portions of the registrant's Proxy Statement dated December 11, 2001
         (Part III).








                            (Cover page 2 of 2 pages)




<PAGE>


                             ESCO TECHNOLOGIES INC.
                      INDEX TO ANNUAL REPORT ON FORM 10-K



<TABLE>
<CAPTION>
Item       Description                                                                      Page
----       -----------                                                                      ----
<S>        <C>                                                                              <C>

Part I

  1.       Business.......................................................................      1

                  The Company.............................................................      1
                  Products................................................................      1
                  Marketing and Sales.....................................................      3
                  Intellectual Property...................................................      4
                  Backlog.................................................................      4
                  Purchased Components and Raw Materials..................................      4
                  Competition.............................................................      5
                  Research and Development................................................      5
                  Environmental Matters...................................................      5
                  Government Contracts....................................................      6
                  Employees...............................................................      6
                  Financing...............................................................      6
                  History of the Business.................................................      6
                  Forward-Looking Information.............................................      6

  2.       Properties.....................................................................      7

  3.       Legal Proceedings..............................................................      8

  4.       Submission of Matters to a Vote of Security Holders............................      8

Executive Officers of the Registrant......................................................      9


Part II

  5.       Market for the Registrant's Common Equity and Related
           Stockholder Matters............................................................      9

  6.       Selected Financial Data........................................................      9

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

 7A.       Quantitative and Qualitative Disclosures About Market Risk.....................     10

  8.       Financial Statements and Supplementary Data....................................     10

  9.       Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure...........................................................     10
</TABLE>




                                        I

<PAGE>


<TABLE>
<CAPTION>
Item       Description                                                                       Page
----       -----------                                                                       ----
<S>        <C>                                                                               <C>
Part III

10.        Directors and Executive Officers of the Registrant.............................     10

11.        Executive Compensation.........................................................     10

12.        Security Ownership of Certain Beneficial Owners and Management.................     10

13.        Certain Relationships and Related Transactions.................................     10


Part IV

14.        Exhibits, Financial Statement Schedules, and Reports on Form 8-K...............     11

SIGNATURES ...............................................................................     15

INDEX TO EXHIBITS ........................................................................     16
</TABLE>





                                       II

<PAGE>



                                     PART I


ITEM 1. BUSINESS

THE COMPANY

       ESCO Technologies Inc. ("ESCO") is a producer of engineered products and
systems for industrial and commercial applications sold to customers world-wide.
ESCO operates in four industry segments which, together with the operating
subsidiaries within each segment, are as follows:

       Filtration/Fluid Flow:
       PTI Technologies Inc.
       PTI Advanced Filtration Inc.
       PTI Technologies Limited
       Bea Filtri S.p.A. ("Bea")
       Filtertek Inc.
       Filtertek BV
       Filtertek de Puerto Rico, Inc.
       Filtertek do Brazil Industria E Commerico Limitada
       Filtertek SA
       VACCO Industries ("VACCO")
       ESCO Electronica De Mexico, S.A. de C.V.

       Test:
       EMC Test Systems, L.P. ("ETS")
       Lindgren R.F. Enclosures, Inc. ("Lindgren")
       Rayproof Ltd.
       Euroshield OY
       Holaday Industries, Inc. ("Holaday")

       Communications:
       Distribution Control Systems, Inc. ("DCSI")
       Distribution Control Systems Caribe, Inc. ("DCSI-Caribe")
       Comtrak Technologies, L.L.C. ("Comtrak")

       Other:
       Rantec Power Systems Inc. ("Rantec")

       The above operating subsidiaries are engaged primarily in the research,
development, manufacture, sale and support of the products and systems described
below, and are subsidiaries of ESCO Technologies Holding Inc., a wholly-owned
direct subsidiary of ESCO. ESCO and its direct and indirect subsidiaries are
hereinafter referred to collectively as the "Company". The Company's businesses
are subject to a number of risks and uncertainties, including without limitation
those discussed below. See "Management's Discussion and Analysis" appearing in
the 2001 Annual Report.


PRODUCTS

       The Company's products are described below. See Note 11 of the Notes to
Consolidated Financial Statements in the 2001 Annual Report, which Note is
herein incorporated by reference.


                              FILTRATION/FLUID FLOW

       The Company's Filtration/Fluid Flow segment accounted for approximately
55% of the Company's total revenue in fiscal year 2001.

       PTI Technologies Inc., PTI Advanced Filtration Inc., PTI Technologies
Limited and Bea develop and




                                        1

<PAGE>

manufacture a wide range of filtration products. PTI Technologies Inc. is a
leading supplier of filters to the commercial aerospace and industrial markets.
The industrial business includes the supply of filtration products for process
and mobile fluid power applications. PTI Advanced Filtration Inc. produces
microfiltration products for applications in microelectronic, food and beverage,
and pharmaceutical markets. Membrane separation products and systems are also
produced by PTI Advanced Filtration Inc. for use in the dairy industry and
industrial coatings applications. PTI Technologies Limited manufactures and
distributes filter products primarily in the European industrial marketplace.
Bea, acquired in June 2001, is a manufacturer and supplier of filtration
products to the pharmaceutical, food and beverage, healthcare and petro-chemical
markets, primarily in Europe. VACCO and PTI Technologies Inc. develop and
manufacture industrial filtration elements and systems primarily used within the
petrochemical and nuclear industries, where a premium is placed on superior
performance in very harsh environments. VACCO supplies flow control products to
the aerospace industry for use in aircraft, satellite propulsion systems,
satellite launch vehicles and the space shuttle. VACCO also uses its etched disc
technology to produce quiet valves and manifolds for U.S. Navy and severe
service industrial applications.


       All of the Filtertek entities listed above under "THE COMPANY" are
hereinafter collectively referred to as "Filtertek". Filtertek develops and
manufactures a broad range of high-volume filtration products at its facilities
in North America, South America and Europe. Filtertek's products, which are
centered around its insert injection-molding technology wherein a filter medium
is inserted into the tooling prior to injection-molding of the filter housing,
have widespread applications in the medical and health care markets, automotive
fluid system market, and other commercial and industrial markets. Typical
Filtertek customers may require daily production of many thousands of units, at
very high levels of quality, that are generally produced in highly-automated
manufacturing cells. Many of Filtertek's products are produced utilizing
patented technology or incorporate proprietary product or process design, or
both. Filtertek's products are typically supplied to original equipment
manufacturers under long-term contracts. In fiscal year 2001, Filtertek
introduced a number of new products including automotive fuel injection and fuel
pump filters, newly patented transmission sump filters, blood filtration devices
and industrial products such as spray paint system filters.


                                      TEST

       The Company's Test segment accounted for approximately 25% of the
Company's total revenue in fiscal year 2001.

       ETS designs and manufactures electromagnetic compatibility ("EMC") test
equipment. It also supplies controlled radio frequency ("RF") testing
environments (anechoic chambers) and electromagnetic absorption materials. ETS's
products include antennas, antenna masts, turntables, current probes, field
probes, TEM (transverse electromagnetic) cells, GTEM (gigahertz transverse
electromagnetic) cells, calibration equipment and other test accessories
required to perform a variety of RF tests. ETS also provides all the design,
program management and integration services required to supply customers with
turnkey EMC solutions. In fiscal year 1999, ETS was awarded a contract by
General Motors, valued at more than $20 million, to design and equip an EMC test
facility. Revenue from this contract, which was substantially completed during
fiscal year 2001, amounted to approximately 5% of total revenue for the Test
segment in fiscal year 2001.

       Lindgren designs, manufactures, installs and services electromagnetic
("EM") shielding systems used in medical equipment, wireless communication
product testing and electronics products. Lindgren's products include RF and
magnetic shielding for magnetic resonance imaging ("MRI") rooms, shielded test
enclosures, RF filters, fiber optic interface components, active magnetic field
compensation systems, and a line of proprietary doors designed specifically for
EM isolation, containment and measurement applications. Lindgren also supplies
special high performance RF and acoustic shielded rooms for secure data
processing and communications for government security applications.

       Euroshield OY designs and manufactures a broad range of modular shielding
systems and shielded doors, some of which are proprietary, for the world market.
It also provides the design, program management and integration services to
supply the European market with turnkey solutions.

       Holaday designs and manufactures specialty measurement probes for use in
broadband and EMC test, health and safety, and microwave detection products.
Holaday's products include probes, meters, analysis



                                        2


<PAGE>

software, personal protection equipment and components used by original
equipment manufacturers and service professionals. Holaday also performs
calibration certification services for its probes and meters.


                                 COMMUNICATIONS

       In fiscal year 2001, approximately 17% of the Company's total revenue was
derived from its Communications segment.

       DCSI is a leading manufacturer of two-way power line communication
systems for the utility industry. These systems provide electric utilities with
a patented communication technology for automatic meter reading, demand-side
management and distribution automation (the TWACS(R) system). Revenue from the
TWACS systems accounted for approximately 16%, 14% and 6% of the Company's
consolidated revenue in fiscal years 2001, 2000 and 1999, respectively. During
fiscal year 2001, DCSI (through its subsidiary, DCSI-Caribe) received
substantial revenue from shipments of an automatic meter reading ("AMR") system
to the Puerto Rico Electric Power Authority ("PREPA") under a multi-year
contract signed in fiscal year 1998. Revenue from this contract amounted to
approximately 34% of total Communications segment revenue in fiscal year 2001,
when deliveries were completed. PREPA has awarded DCSI-Caribe a follow-on
contract running from fiscal 2001 to fiscal 2006 which has a value of
approximately $50 million. Revenue from this contract is expected to constitute
approximately 15% of total Communications segment revenue in fiscal year 2002.
During 1999, DCSI was chosen to supply the first phase of an AMR project to
Wisconsin Public Service Co. ("WPS"). The first phase was completed during
fiscal 2001. WPS has awarded DCSI a follow-on contract in the amount of $9.3
million, which is expected to be completed during fiscal 2002. In addition, in
October 2001 DCSI received in excess of $30 million in new orders from a total
of six customers, including Lee County (Florida) Electric Co-op, Inc. and
Perdenales (Texas) Electric Co-op, Inc.

       Comtrak has developed an advanced video security monitoring system, which
has applications in commercial and industrial security systems. Currently,
Comtrak is working jointly with ADT Security Services, Inc., who is selling this
system under its SecurVision(R) trademark to a variety of markets.


                                      OTHER

       The Company's Other products segment represented approximately 3% of the
Company's total revenue in fiscal year 2001.

       Rantec designs and manufactures high voltage and low voltage power
supplies, DC to DC converters and power systems, which are marketed to a broad
range of customers worldwide. Applications include medical and avionics CRT
displays, as well as ground-based, shipboard and airborne power systems. Rantec
has continued its development of state-of-the art, patented, miniature high
voltage technology, which provides the same basic functions of today's high
voltage power supplies and reduces package size by 80%.


MARKETING AND SALES

       The Company's Filtration/Fluid Flow and Test segments' products generally
are distributed to customers through a domestic and foreign network of
distributors, sales representatives and factory salespersons. The Communications
and Other segments' systems are primarily sold directly to the respective end
users; however, the Communications segment utilizes distributors to sell its
systems to the electric co-op market.

       The Company's international sales (excluding sales of ESCO's former
Systems & Electronics Inc. ("SEI") subsidiary which was sold on September 30,
1999) accounted for approximately 22%, 23% and 13% of the Company's total sales
in the fiscal years ended September 30, 2001, 2000 and 1999, respectively. The
increases since fiscal year 1999 were primarily due to increased sales at ETS
and Filtertek and the acquisition of Lindgren. See Note 11 of the Notes to
Consolidated Financial Statements in the 2001 Annual Report. Since the
divestiture of SEI, international sales have been derived primarily from
industrial and commercial products rather than defense products.

       The Company's international sales are subject to risks inherent in
foreign commerce, including currency



                                        3


<PAGE>

fluctuations and devaluations, the risk of war, changes in foreign governments
and their policies, differences in foreign laws, uncertainties as to enforcement
of contract rights, and difficulties in negotiating and litigating with foreign
customers.

       Some of the Company's products are sold directly or indirectly to the
U.S. Government under contracts with the Army, Navy and Air Force and
subcontracts with prime contractors of such entities. Excluding SEI results,
direct and indirect sales to the U.S. Government accounted for approximately
12%, 8% and 10% of the Company's total sales in the fiscal years ended September
30, 2001, 2000 and 1999, respectively.


INTELLECTUAL PROPERTY

         The Company owns or has other rights in various forms of intellectual
property (i.e., patents, trademarks, service marks, copyrights, mask works,
trade secrets and other items). As a major supplier of engineered products to
growing industrial and commercial markets, the Company emphasizes developing
intellectual property and protecting its rights therein. However, the scope of
protection afforded by intellectual property rights, including those of the
Company, is often uncertain and involves complex legal and factual issues. Some
intellectual property rights, such as patents, have only a limited term. With
respect to patents, there can be no assurance that issued patents will not be
infringed or designed around by others. In addition, the Company may not elect
to pursue an infringer due to the high costs and uncertainties associated with
litigation. Further, there can be no assurance that courts will ultimately hold
issued patents valid and enforceable.

         With respect to the Filtration/Fluid Flow segment, an increasing number
of products are based on patented or otherwise proprietary technology that sets
them apart from the competition. In the Test and Other segments, patent
protection is sought for significant inventions. In the Communications segment,
many of the products are based on patented or otherwise proprietary technology.

         The Company considers its patent and other intellectual property to be
of significant value in each of its segments. The Communications segment owns
intellectual property which it deems necessary or desirable for the manufacture,
use or sale of its products. No other segment is materially dependent on any
single patent, group of patents or other intellectual property.

BACKLOG

       The backlog of firm orders at September 30, 2001 and September 30, 2000,
respectively, was: $70.8 million and $73.5 million for Filtration/Fluid Flow;
$27.4 million and $33.9 million for Test; $72.8 million and $27.9 million for
Communications; and $9.1 million and $10.1 million for Other. As of September
30, 2001, it is estimated that domestic customers accounted for approximately
77% of the Company's total firm orders, and international customers accounted
for approximately 23%. Of the Company's total backlog of orders at September 30,
2001, approximately 86% is expected to be completed in the fiscal year ending
September 30, 2002.

PURCHASED COMPONENTS AND RAW MATERIALS

       The Company's products require a wide variety of components and
materials. Although the Company has multiple sources of supply for most of its
material requirements, certain components and raw materials are supplied by
sole-source vendors, and the Company's ability to perform certain contracts
depends on their performance. In the past, these required raw materials and
various purchased components generally have been available in sufficient
quantities. The Test segment is a vertically integrated supplier of EM shielding
products, producing most of its critical RF components. This capability enables
the Test segment to control the level of quality, RF performance and delivery
response time for its customers. In the Communications segment, DCSI utilizes a
single source or a limited number of sources to produce substantially all of
DCSI's end-products. Although the Company believes alternative suppliers of
components and end-products are available, the inability of DCSI to develop
alternative sources quickly or cost-effectively could have a material adverse
effect on the Communications segment.




                                        4

<PAGE>

COMPETITION

       Competition in the Company's major markets is broadly based and global in
scope. The Company faces intense competition from a large number of firms for
nearly all of its products. Competition can be particularly intense during
periods of economic slowdown, and this has been experienced in the past in some
of the Filtration/Fluid Flow markets. Although the Company is a leading supplier
in several of the markets it serves, it maintains a relatively small share of
the business in many of the markets in which it participates. Individual
competitors range in size from annual revenues of less than $1 million to
billion dollar enterprises. Because of the specialized nature of the Company's
products, it is impossible to state precisely its competitive position with
respect to its products. Substantial efforts are required in order to maintain
existing business levels. In the Company's major served markets, competition is
driven primarily by quality, technology, price and delivery performance. The
following information concerns the Company's primary segments.

       Pall Corporation is a major competitor in the Filtration/Fluid Flow
market. Other significant competitors in this market include Millipore Corp.,
Osmonics Inc. and Cuno Inc.

       The Test segment is the global leader in the EM shielding market.
Significant competitors in this served market include Braden Shielding Systems
and TDK RF Solutions Inc.

       Primary competitors of the Communications segment in the utility
communications market include Itron, Inc. and Schlumberger Limited.


RESEARCH AND DEVELOPMENT

       Research and development and the Company's technological expertise are
important factors in the Company's business. Research and development programs
are designed to develop technology for new products or to extend or upgrade the
capability of existing products, and to enhance their commercial potential.

       The following information excludes expenses attributable to SEI. The
Company performs research and development at its own expense, and also engages
in research and development funded by customers. For the fiscal years ended
September 30, 2001, 2000 and 1999, total Company-sponsored research and
development expenses were approximately $9.4 million, $6.2 million and $6.3
million, respectively. The increase in fiscal 2001 for Company-sponsored
research and development expenses was due to additional investments made within
the Filtration/Fluid Flow and Communications segments. Total customer-sponsored
research and development expenses were approximately $5.2 million, $4.0 million
and $8.3 million for the fiscal years ended September 30, 2001, 2000 and 1999,
respectively. The decreases since fiscal year 1999 for customer-sponsored
research and development expenses were due primarily to lower activity at
Rantec, as well as the sale of the Rantec microwave antenna business. All of the
foregoing expense amounts exclude certain engineering costs primarily associated
with product line extensions, modifications and maintenance, which amounted to
approximately $10.8 million and $8.4 million for the fiscal years ended
September 30, 2001 and 2000, respectively.


ENVIRONMENTAL MATTERS

       The Company is involved in various stages of investigation and cleanup
relating to environmental matters. It is very difficult to estimate the
potential costs of such matters and the possible impact of these costs on the
Company at this time due in part to: the uncertainty regarding the extent of
pollution; the complexity of Government laws and regulations and their
interpretations; the varying costs and effectiveness of alternative cleanup
technologies and methods; the uncertain level of insurance or other types of
cost recovery; and in the case of off-site waste disposal facilities, the
uncertain level of the Company's relative involvement and the possibility of
joint and several liability with other contributors under applicable law. Based
on information currently available, the Company does not believe that the
aggregate costs involved in the resolution of any of its environmental matters
will have a material adverse effect on the Company's financial statements.



                                        5

<PAGE>

GOVERNMENT CONTRACTS

       The Company's contracts with the U.S. Government and subcontracts with
prime contractors of the U.S. Government are primarily firm fixed price
contracts under which work is performed and paid for at a fixed amount without
adjustment for the actual costs experienced in connection with the contracts.
Therefore, unless the customer actually or constructively alters or impedes the
work performed, all risk of loss due to cost overruns is borne by the Company.
All Government prime contracts and virtually all of the Company's subcontracts
provide that they may be terminated at the convenience of the Government. Upon
such termination, the Company is normally entitled to receive equitable
compensation for same. See "Marketing And Sales" in this Item 1.


EMPLOYEES

       As of November 30, 2001, the Company employed approximately 2,400
persons. Approximately 230 of these employees are covered by a collective
bargaining agreement, which will expire in fiscal year 2005.


FINANCING

       On April 11, 2000, the Company entered into a $75 million revolving
credit facility replacing its previous $40 million credit facility. The $75
million credit facility has the following scheduled reductions: $9,750,000 on
April 11, 2002, $10,500,000 on April 11, 2003, $9,750,000 on April 11, 2004, and
the remaining balance is due upon maturity and expiration, April 11, 2005. The
credit facility was amended on February 28, 2001 to allow for borrowings in
foreign currencies. The Company maintains the option to increase the credit
facility by $25 million through April 11, 2002. The credit facility is available
for direct borrowings and/or the issuance of letters of credit. The credit
facility contains customary events of default, including change in control of
the Company. The credit facility is provided by a group of five banks, led by
Bank of America. Substantially all of the assets of the Company are pledged
under the credit facility. See "Management's Discussion and Analysis--Capital
Resources & Liquidity" in the 2001 Annual Report, and Note 7 of the Notes to
Consolidated Financial Statements in the 2001 Annual Report, which Note is
herein incorporated by reference.


HISTORY OF THE BUSINESS

       ESCO was incorporated in Missouri in August 1990 as a wholly-owned
subsidiary of Emerson Electric Co. ("Emerson") to be the indirect holding
company for several Emerson subsidiaries, which were primarily in the defense
business. Ownership of ESCO and its subsidiaries was distributed on October 19,
1990 by Emerson to its shareholders through a special distribution. Effective
July 10, 2000, ESCO changed its name from ESCO Electronics Corporation to ESCO
Technologies Inc.

       On June 8, 2001, the Company acquired the stock of Bea Filtri, S.p.A.,
and integrated this business into the Filtration/Fluid Flow segment.

       In fiscal year 2001, the Company completed the consolidation of the Eaton
fluid flow components business into VACCO's facility at South El Monte,
California; closed redundant facilities of the Test segment in Riviera Beach,
Florida and of the Filtration/Fluid Flow segment in Stockton, California; and
made significant progress in consolidating operations in the Test segment.

FORWARD-LOOKING INFORMATION

       The statements contained in this Item 1. "Business" and in Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" concerning the Company's future revenues, profitability, financial
resources, utilization of net deferred tax assets, product mix, production and
deliveries, market demand, product development, competitive position, impact of
environmental matters and statements containing phrases such as "believes",
"anticipates", "may", "could", "should", and "is expected to" are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The Company's actual results
in the future may differ materially from those projected in




                                        6


<PAGE>

the forward-looking statements due to risks and uncertainties that exist in the
Company's operations and business environment including, but not limited to:
further weakening of economic conditions in served markets; changes in customer
demands or customer insolvencies; electricity shortages; competition;
intellectual property matters; consolidation of internal operations; integration
of recently acquired businesses; delivery delays or defaults by customers;
performance issues with key suppliers and subcontractors; collective bargaining
labor disputes; and the Company's successful execution of internal operating
plans.



I
TEM 2. PROPERTIES

       The Company's principal buildings contain approximately 1,313,050 square
feet of floor space. Approximately 672,400 square feet are owned by the Company
and approximately 640,650 square feet are leased. Substantially all of the
Company's owned properties are encumbered in connection with the Company's
credit facility. See Item 1. "Business--Financing" and Note 7 of the Notes to
Consolidated Financial Statements in the 2001 Annual Report. The principal
plants and offices are as follows:

<TABLE>
<CAPTION>
                                             SQ. FT.             LEASE
                              SIZE          OWNED/            EXPIRATION               PRINCIPAL USE
LOCATION                    (SQ. FT.)       LEASED                DATE              (INDUSTRY SEGMENT)
--------                    ---------       ------            -------------         ------------------
<S>                         <C>            <C>                <C>               <C>
Oxnard, CA                  127,400        Leased             12-29-05          Management, Engineering and
                                                                                Manufacturing (Filtration/Fluid
                                                                                Flow)

Oxnard, CA                  125,000        Leased             12-29-05          Management, Engineering and
                                                                                Manufacturing (Filtration/Fluid
                                                                                Flow)

Patillas, PR                110,000        Owned                                Manufacturing (Filtration/Fluid
                                                                                Flow)

Durant, OK                  100,000        Owned                                Manufacturing (Test)

Hebron, IL                   99,800        Owned                                Management, Engineering and
                                                                                Manufacturing (Filtration/Fluid
                                                                                Flow)

Milan, Italy                 85,700        Leased             6-7-13            Management, Engineering and
                                                              (w/one 6-year     Manufacturing (Filtration/Fluid
                                                              renewal option)   Flow)

South El Monte, CA           80,800        Owned                                Management, Engineering and
                                                                                Manufacturing (Filtration/Fluid
                                                                                Flow)

Huntley, IL                  74,000        Owned                                Manufacturing (Filtration/Fluid
                                                                                Flow)

Cedar Park, TX               70,400        Leased             12-29-05          Management, Engineering and
                                                                                Manufacturing (Test)

Glendale Heights, IL         59,400        Leased             3-31-05           Management, Engineering and
                                                              (w/one 5-year     Manufacturing (Test)
                                                              and three 3-year
                                                              renewal options)

Los Osos, CA                 40,000        Owned                                Management, Engineering and
                                                                                Manufacturing
                                                                                (Other Products)
</TABLE>



                                        7

<PAGE>

<TABLE>
<S>                          <C>           <C>                <C>               <C>
Newcastle West,              37,000        Owned                                Manufacturing (Filtration/Fluid
Ireland                                                                         Flow)

St. Louis, MO                35,000        Owned                                Management, Engineering and
                                                                                Manufacturing (Communications)

Juarez, Mexico               34,400        Leased             12-31-04          Engineering and Manufacturing
                                                                                (Filtration/Fluid Flow)

Sheffield, England           33,500        Owned                                Management, Engineering and
                                                                                Manufacturing (Filtration/Fluid
                                                                                Flow)

Plailly, France              33,000        Owned                                Engineering and Manufacturing
                                                                                (Filtration/Fluid Flow)

Sao Paulo, Brazil            31,000        Leased             12-14-02          Manufacturing (Filtration/Fluid
                                                                                Flow)

Minocqua, WI                 30,200        Leased             3-31-05           Engineering and Manufacturing
                                                              (w/one 5-year,    (Test)
                                                              and three 3-
                                                              year renewal
                                                              options)

Eden Prairie, MN             29,700        Leased             5-31-08           Engineering and Manufacturing
                                                              (option to        (Test)
                                                              terminate after
                                                              5-31-98)

Eura, Finland                29,300        Owned                                Management, Engineering and
                                                                                Manufacturing (Test)

Stevenage, England           25,650        Leased             8-11-17           Management, Engineering and
                                                              (w/option to      Manufacturing (Test)
                                                              terminate on
                                                              8-12-07)

St. Louis, MO                21,800        Leased             8-31-05           ESCO Headquarters
                                                              (w/two 5-year
                                                              renewal options)
</TABLE>



     The Company believes its buildings, machinery and equipment have been
generally well maintained, are in good operating condition and are adequate for
the Company's current production requirements.



ITEM 3. LEGAL PROCEEDINGS

     None



ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.





                                        8

<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

     The following sets forth certain information as of December 13, 2001 with
respect to ESCO's executive officers. These officers have been elected to terms
which expire at the first meeting of the Board of Directors after the next
annual meeting of stockholders.

<TABLE>
<CAPTION>
     Name                 Age                 Position(s)
     ----                 ---                 -----------
<S>                       <C>       <C>
Dennis J. Moore *          63       Chairman and Chief Executive Officer

Victor L. Richey, Jr.      44       President and Chief Operating Officer

Charles J. Kretschmer      45       Executive Vice President and Chief Financial Officer

Alyson S. Barclay          42       Vice President, Secretary and General Counsel
</TABLE>


------------

* Also a director and Chairman of the Executive Committee of the Board of
Directors.

     There are no family relationships among any of the executive officers and
directors.

     Mr. Moore was Chairman, President and Chief Executive Officer of ESCO from
October 1992 until August 2001, and has been Chairman and Chief Executive
Officer since the latter date.

     Mr. Richey was Vice President, Administration of ESCO from May 1998 until
October 2000, Senior Vice President and Group Executive from October 2000 until
August 2001, and President and Chief Operating Officer since the latter date.

     Mr. Kretschmer was Vice President of ESCO from February 1999 until October
1999, Vice President and Chief Financial Officer from October 1999 until October
2000, Senior Vice President and Chief Financial Officer from October 2000 until
October 2001, and Executive Vice President and Chief Financial Officer since the
latter date.

     Ms. Barclay has been Vice President, Secretary and General Counsel of ESCO
since October 1999.



                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The information required by this item is incorporated herein by reference
to Note 8 of the Notes to Consolidated Financial Statements, "Common Stock
Market Prices" and "Shareholders' Summary--Capital Stock Information" appearing
in the 2001 Annual Report. ESCO does not anticipate, currently or in the
foreseeable future, paying cash dividends on the Common Stock, although it
reserves the right to do so to the extent permitted by applicable law and
agreements. ESCO's dividend policy will be reviewed by the Board of Directors at
such future time as may be appropriate in light of relevant factors at that
time, based on ESCO's earnings and financial position and such other business
considerations as the Board deems relevant.



ITEM 6.  SELECTED FINANCIAL DATA

     The information required by this item, with respect to selected financial
data, is incorporated herein by reference to "Five-Year Financial Summary" and
Note 2 of the Notes to Consolidated Financial Statements appearing in the 2001
Annual Report.




                                        9


<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


     The information required by this item is incorporated herein by reference
to "Management's Discussion and Analysis" appearing in the 2001 Annual Report.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information required by this item is incorporated herein by reference
to "Management's Discussion and Analysis - Market Risk Analysis" appearing in
the 2001 Annual Report.



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item is incorporated herein by reference
to the Consolidated Financial Statements of the Company on pages 23 through 44
and the report thereon of KPMG LLP, independent certified public accountants,
appearing on page 46 of the 2001 Annual Report.



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE


     None.



                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information regarding nominees and directors appearing under "Nominees and
Continuing Directors" in ESCO's Notice of the Annual Meeting of the Stockholders
and Proxy Statement dated December 11, 2001 (the "2002 Proxy Statement") is
hereby incorporated by reference. Information regarding executive officers is
set forth in Part I of this Form 10-K.

     Information appearing under "Section 16(a) Beneficial Ownership Reporting
Compliance" in the 2002 Proxy Statement is hereby incorporated by reference.



ITEM 11. EXECUTIVE COMPENSATION

     Information appearing under "Board of Directors and Committees" and
"Executive Compensation" (except for the "Report of the Human Resources And
Ethics Committee On Executive Compensation" and the "Performance Graph") in the
2002 Proxy Statement is hereby incorporated by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information regarding beneficial ownership of shares of common stock by
nominees and directors, by executive officers, by directors and executive
officers as a group and by any known five percent stockholders appearing under
"Security Ownership of Management" and "Security Ownership of Certain Beneficial
Owners" in the 2002 Proxy Statement is hereby incorporated by reference.



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.



                                       10


<PAGE>

                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a)   Documents filed as a part of this report:

                1. The Consolidated Financial Statements of the Company on pages
                23 through 44 and the Independent Auditors' Report thereon of
                KPMG LLP appearing on page 46 of the 2001 Annual Report.

                2. Financial statement schedules have been omitted because the
                subject matter is disclosed elsewhere in the financial
                statements and notes thereto, not required or not applicable, or
                the amounts are not sufficient to require submission.

                3.  Exhibits


<TABLE>
<CAPTION>
                                                                           Filed Herewith or Incorporated by
     Exhibit                                                               Reference to Document Indicated By
      Number                     Description                                            Footnote
      ------                     -----------                                            --------
<S>                 <C>                                                  <C>
        2           Stock Purchase Agreement dated as of August 23,      Incorporated by Reference, Exhibit 2 [1]
                    1999, as amended September 23, 1999 and September
                    30, 1999, among Engineered Systems and
                    Electronics, Inc., ESCO and Defense Holding Corp.

       3.1          Restated Articles of Incorporation                   Incorporated by Reference, Exhibit 3(a)[2]

       3.2          Amended Certificate of Designation, Preferences      Incorporated by Reference, Exhibit 4(e)[3]
                    and Rights of Series A Participating Cumulative
                    Preferred Stock of the Registrant

       3.3          Articles of Merger effective July 10, 2000           Incorporated by Reference, Exhibit
                                                                         3(c)[4]

       3.4          Bylaws, as amended                                   Incorporated by Reference, Exhibit 3(d)[4]

       4.1          Specimen Common Stock Certificate                    Incorporated by reference,  Exhibit
                                                                         4(a)[4]

       4.2          Specimen Rights Certificate                          Incorporated by Reference, Exhibit
                                                                         B to Exhibit 4.1[5]

       4.3          Rights Agreement dated as of September 24, 1990      Incorporated by Reference, Exhibit 4.1[5]
                    (as amended and restated as of February 3, 2000)
                    between the Registrant and Registrar and Transfer
                    Company, as successor Rights Agent

       4.4          Amended and Restated Credit Agreement dated as of   Incorporated by Reference, Exhibit 4(d)[6]
                    February 28, 2001, among the Registrant, Bank of 
                    America, N.A., as agent, and the lenders listed 
                    therein
</TABLE>




                                       11

<PAGE>

<TABLE>
<S>                 <C>                                                  <C>
       10.1         Form of Split Dollar Agreement*                      Incorporated by Reference, Exhibit 10(j)[7]

       10.2         Form of Indemnification Agreement with each of       Incorporated by Reference, Exhibit
                    ESCO's directors.                                    10(k)[7]

       10.3         Supplemental Executive Retirement Plan as            Incorporated by Reference, Exhibit 10(n)
                    amended and restated as of August 2, 1993*           [8]

       10.4         Second Amendment to Supplemental Executive
                    Retirement Plan effective May 1, 2001*    

       10.5         Directors' Extended Compensation Plan*               Incorporated by Reference, Exhibit 10(o)
                                                                         [8]

       10.6         First Amendment to Directors' Extended               Incorporated by Reference, Exhibit 10.11
                    Compensation Plan*                                   [9]

       10.7         Second Amendment to Directors' Extended              
                    Compensation Plan effective April 1, 2001*

       10.8         1994 Stock Option Plan (as amended and               Incorporated by Reference, Exhibit 10.1 
                    restated effective October 16, 2000)*                [10]

       10.9         Form of Incentive Stock Option Agreement*            Incorporated by Reference, Exhibit 10.15
                                                                         [9]

      10.10         Severance Plan*                                      Incorporated by Reference, Exhibit 10(p)
                                                                         [11]

      10.11         Performance Compensation Plan dated as of            Incorporated by reference, Exhibit 10(q)
                    August 2, 1993 (as amended and restated as           [12]
                    of October 1, 1995)*

      10.12         Amendment to Performance Compensation Plan
                    effective January 1, 2000*

      10.13         Notice Of Award--Stock award to executive            Incorporated by Reference, Exhibit
                    officer*                                             10(s)[13]

      10.14         1999 Stock Option Plan (as amended and restated      Incorporated by Reference, Exhibit
                    effective October 16, 2000)*                         10.2[10]

      10.15         Form of Incentive Stock Option Agreement*            Incorporated by Reference, Exhibit
                                                                         10.3[10]

      10.16         Employment Agreement with Executive                  Incorporated by Reference, Exhibit
                    Officer*                                             10(aa)[2]

      10.17         Employment Agreement with Executive Officer*         Incorporated by Reference, Exhibit 
                    [14]                                                 10(bb)[2]

      10.18         Amendment to Employment Agreement with               
                    Executive Officer*[15]

</TABLE>


                                       12

<PAGE>



<TABLE>
<S>                 <C>                                                  <C>
      10.19         Executive Stock Purchase Plan*                       Incorporated by Reference, Exhibit
                                                                         10.24[9]

      10.20         Notice of Award - stock award to executive           Incorporated by Reference, Exhibit
                    officer*                                             10.25[9]
                    

      10.21         2001 Stock Incentive Plan*                           Incorporated by Reference, Exhibit
                                                                         B[16]
                      
      10.22         Compensation Plan For Non-Employee
                    Directors*



        13          The following-listed sections of the Annual Report
                    to Stockholders for the year ended September 30,
                    2001:
                         Five-Year Financial Summary (p.47)

                         Management's Discussion and Analysis
                         (pgs.13-22) 
                         Consolidated Financial Statements
                         (pgs.23-44) and Independent 
                         Auditors' Report (p.46)
                         Shareholders' Summary--Capital Stock
                         Information (p.48)
                         Common Stock Market Prices (p.47)

        21          Subsidiaries of ESCO

        23          Independent Auditors' Consent
</TABLE>

---------------

       [1] Incorporated by reference to Current Report on Form 8-K--date of
       earliest event reported: September 30, 1999, at the Exhibit indicated.

       [2] Incorporated by reference to Form 10-K for the fiscal year ended
       September 30, 1999, at the Exhibit indicated.

       [3] Incorporated by reference to Form 10-Q for the fiscal quarter ended
       March 31, 2000, at the Exhibit indicated.

       [4] Incorporated by reference to Form 10-Q for the fiscal quarter ended
       June 30, 2000, at the Exhibit indicated.

       [5] Incorporated by reference to Current Report on Form 8-K dated
       February 3, 2000, at the Exhibit indicated.

       [6] Incorporated by reference to Form 10-Q for the fiscal quarter ended 
       March 31, 2001, at the Exhibit indicated.

       [7] Incorporated by reference to Form 10-K for the fiscal year ended
       September 30, 1991, at the Exhibit indicated.

       [8] Incorporated by reference to Form 10-K for the fiscal year ended
       September 30, 1993, at the Exhibit indicated.

                                       13



<PAGE>
       [9] Incorporated by reference to Form 10-K for the fiscal year ended
       September 30, 2000, at the Exhibit indicated.

       [10] Incorporated by reference to Form 10-Q for the fiscal quarter ended
       December 31, 2000, at the Exhibit indicated.

       [11] Incorporated by reference to Form 10-K for the fiscal year ended
       September 30, 1995, at the Exhibit indicated.

       [12] Incorporated by reference to Form 10-K for the fiscal year ended
       September 30, 1996, at the Exhibit indicated.

       [13] Incorporated by reference to Form 10-K for the fiscal year ended
       September 30, 1997, at the Exhibit indicated.

       [14] Identical Employment Agreements between ESCO and executive officers
       Alyson S. Barclay and Victor L. Richey, Jr., except that in the case of
       Ms. Barclay the minimum annual salary is $94,000.

       [15] Identical Amendments to Employment Agreements between ESCO and
       executive officers Alyson S. Barclay and Victor L. Richey, Jr.

       [16] Incorporated by reference to Notice of Annual Meeting of the
       Stockholders and Proxy Statement dated December 11, 2000, at the Exhibit
       indicated.

       
       * Represents a management contract or compensatory plan or arrangement
       required to be filed as an exhibit to this Form 10-K pursuant to Item
       14(c) of this Part IV.


       (b)    No report on Form 8-K was filed during the quarter ended September
              30, 2001.

       (c)    Exhibits: Reference is made to the list of exhibits in this Part
              IV, Item 14(a)3 above.

       (d)    Financial Statement Schedules: Reference is made to Part IV, Item
              14(a)2 above.

                                       14

<PAGE>
                                                                  

 
                                  SIGNATURES

         Pursuant to the requirements of Section 13 or 15(D) 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.

                                                 ESCO TECHNOLOGIES INC.


                                                 By (s) D.J. Moore              
                                                    ----------------------------
                                                        D.J. Moore
                                                        Chairman and
                                                        Chief Executive Officer


Dated: December 20, 2001


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below effective December 20, 2001, by the
following persons on behalf of the registrant and in the capacities indicated.

                  SIGNATURE                              TITLE


 (s) D.J. Moore                               Chairman, Chief Executive Officer
 -------------------------------------        and Director
 D.J. Moore                           


 (s) V.L. Richey, Jr.                         President and
 -------------------------------------        Chief Operating Officer
 V.L. Richey, Jr.                                    


 (s) C.J. Kretschmer                          Exec. Vice President and
 -------------------------------------        Chief Financial Officer  
 C.J. Kretschmer


 (s) G.E. Muenster                            Vice President and Controller
 -------------------------------------        (Principal Accounting Officer) 
 G.E. Muenster                                 


 (s) W.S. Antle III                           Director
 -------------------------------------
 W.S. Antle III


 (s) J.M. McConnell                           Director
 -------------------------------------    
 J.M. McConnell


 (s) L.W. Solley                              Director
 -------------------------------------
 L.W. Solley


 (s) J.M. Stolze                              Director
 -------------------------------------
 J.M. Stolze


 (s) D.C. Trauscht                            Director
--------------------------------------
 D.C. Trauscht


 (s) J.D. Woods                               Director
 -------------------------------------
 J.D. Woods


                                       15

<PAGE>


                                INDEX TO EXHIBITS


Exhibits are listed by numbers corresponding to the Exhibit Table of Item 601 in
Regulation S-K.

Exhibit No.       Exhibit

10.4     Second Amendment to Supplemental Executive Retirement Plan effective 
         May 1, 2001.

10.7     Second Amendment to Directors' Extended Compensation Plan effective 
         April 1, 2001.

10.12    Amendment to Performance Compensation Plan effective January 1, 2000

10.18    Amendment to Employment Agreement with Executive Officer

10.22    Compensation Plan For Non-Employee Directors


13       The following-listed sections of the Annual Report to Stockholders for
         the year ended September 30, 2001:

                Five-year Financial Summary (p. 47)
                Management's Discussion and Analysis (pgs. 13-22)
                Consolidated Financial Statements (pgs. 23-44) and Independent
                  Auditors' Report (p. 46)
                Shareholders' Summary--Capital Stock Information (p. 48)
                Common Stock Market Prices (p. 47)

21       Subsidiaries of ESCO

23       Independent Auditors' Consent

See Item 14(a)3 for a list of exhibits incorporated by reference

                                       16





<PAGE>
                                                                    EXHIBIT 10.4

              SECOND AMENDMENT TO THE ESCO ELECTRONICS CORPORATION
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                  WHEREAS, ESCO Technologies Inc. ("Company") previously adopted
the ESCO Electronics Corporation Supplemental Executive Retirement Plan ("Plan")
for the benefit of selected executives effective as of August 2, 1993; and

                  WHEREAS, the Company retained the right to amend the Plan
pursuant to Section IX-G thereof; and

                  WHEREAS, the Company desires to amend the Plan effective May
1, 2001 ("Effective Date");

                  NOW, THEREFORE, effective as of the Effective Date, the Plan
is amended as follows:

         1. Section IV-B is deleted in its entirety and replaced with the
         following:

         B. Notwithstanding Section IV-A, the benefit payable under Section III
         may, at the election of the Participant or Beneficiary, as applicable,
         be payable as a benefit of equivalent actuarial value to the benefit
         described in Section III in accordance with any distribution form
         permitted under the Retirement Plan, except that, a lump sum
         distribution form shall not be available at the Participant's or
         Beneficiary's election.

            Notwithstanding Section IV-A, the Committee may, in its discretion,
         direct that a benefit, of equivalent actuarial value to the benefit

         described in Section III, shall be payable to any Participant in such
         form and payable at such times as the Committee shall determine,
         including, without limitation, a lump sum distribution form. All
         equivalent actuarial values shall be determined using the same
         actuarial assumptions as are used in computing equivalent actuarial
         values under the Retirement Plan.

         2. Section IX-G is deleted and replaced with the following:

         G. Amendment and Termination. The Committee may and reserves the right
         to amend or terminate the Plan. Each Employer may terminate its
         participation in the Plan at any time with approval of the Committee.

                                        1


<PAGE>




                  IN WITNESS WHEREOF, ESCO Technologies Inc. has caused this
Amendment to be executed by one of its duly authorized officers this 10th day of
May, 2001.

                                     ESCO TECHNOLOGIES INC.




                                     By
                                       -------------------------------

                                       -------------------------------

                                        2


<PAGE>
                                                                    EXHIBIT 10.7


                      SECOND AMENDMENT TO ESCO ELECTRONICS
               CORPORATION DIRECTORS' EXTENDED COMPENSATION PLAN

         WHEREAS, ESCO Technologies Inc. (formerly ESCO Electronics Corporation)
("Company") adopted the ESCO Electronics Corporation Director's Extended
Compensation Plan ("Plan"); and

         WHEREAS, the Company retained the right to amend the Plan; and

         WHEREAS, the Company desires to amend the Plan effective as of April 1,
2001;

         NOW, THEREFORE, effective as of April 1, 2001, the Plan is amended as
follows:

         1. The following is added at the end of Section II:

                  No director joining the Board as an outside director for the
                  first time on or after April 1, 2001 shall be eligible to
                  participate in the Plan.

         2. The first sentence of Section III is revised to read as follows:

                  The annual benefit under the Plan shall be a percentage of the
                  annual cash retainer of $20,000 being paid to directors as of
                  April 1, 2001, based upon the number of the director's
                  complete years of service at the time of retirement in
                  accordance with the following table:

         3. The following is added at the end of Paragraph 3 of Section III:

                  Notwithstanding the foregoing the director may elect, upon
                  such terms and conditions as the Human Resources and Ethics
                  Committee of the Board
 may determine, to receive the actuarial
                  equivalent of the entire benefit in a single lump cash sum.

         IN WITNESS WHEREOF, the foregoing Amendment was adopted on the 10th day
of May, 2001.




<PAGE>
                                                                   EXHIBIT 10.12

                   RESOLUTIONS ADOPTED BY THE HUMAN RESOURCES
                 AND ETHICS COMMITTEE OF THE BOARD OF DIRECTORS
                            OF ESCO TECHNOLOGIES INC.

                                   ----------


                  WHEREAS, ESCO Technologies Inc. ("Company") adopted the ESCO
Electronics Corporation Performance Compensation Plan for Corporate, Subsidiary
and Division Officers and Key Managers ("Plan"); and

                  WHEREAS, the Human Resources and Ethics Committee of the Board
of Directors of the Company ("Committee") has been authorized to amend the Plan;
and

                  WHEREAS, the Committee desires to amend the Plan effective as
of January 1, 2000:

                  NOW, THEREFORE, BE IT

                  RESOLVED, that the Plan is amended as follows:

                  1. The fifth sentence of Section V is amended to read as
                     follows:

                          "Performance Compensation Awards for some Participants
                  may be based upon predetermined Subsidiary, Division or
                  individual performance targets whereas Performance
                  Compensation Awards for other Participants may be totally
                  discretionary as determined by the Committee." and BE IT
                  FURTHER

                  RESOLVED, that the proper officers of the Company be, and they
                  hereby are, authorized and directed to take such further
                  action and execute such documents as they, with the advice of
                  counsel, deem necessary or desirable to carry out the intent
                  of
 the foregoing.

                  The foregoing Resolutions were adopted by the Committee this 
9th day of November, 2000.


<PAGE>
                                                                   EXHIBIT 10.18

                        AMENDMENT TO EMPLOYMENT AGREEMENT


         THIS AGREEMENT entered into as of August 9, 2001 between ESCO
Technologies Inc. ("Company") and Charles J. Kretschmer ("Executive).

                                   WITNESSETH:

         WHEREAS, the Company and the Executive entered into an Employment
Agreement as of November 3, 1999 ("Agreement"); and

         WHEREAS, the parties retained the right to amend the Agreement pursuant
to Article 15 thereof; and

         WHEREAS, the parties desire to amend the Agreement effective as of
August 9, 2001;

         NOW, THEREFORE, effective as of August 9, 2001, the Agreement is
amended as follows:

         1. The following is added at the end of Paragraph 1:

         This Agreement shall be extended until November 2, 2004.

         IN WITNESS WHEREOF, the foregoing Agreement was executed effective as
of August 9, 2001.


ESCO TECHNOLOGIES INC.


By:                                                                           
   ------------------------------               ------------------------------
                                                Charles J. Kretschmer



<PAGE>



                        AMENDMENT TO EMPLOYMENT AGREEMENT


         THIS AGREEMENT entered into as of August 9, 2001 between ESCO
Technologies Inc. ("Company") and Alyson S. Barclay ("Executive).

                                   WITNESSETH:

         WHEREAS, the Company and the Executive entered into an Employment
Agreement as of November 3, 1999 ("Agreement"); and

         WHEREAS, the parties retained the right to amend the Agreement pursuant
to Article 15 thereof; and

         WHEREAS, the parties desire to
 amend the Agreement effective as of
August 9, 2001;

         NOW, THEREFORE, effective as of August 9, 2001, the Agreement is
amended as follows:

         2. The following is added at the end of Paragraph 1:

         This Agreement shall be extended until November 2, 2004.

         IN WITNESS WHEREOF, the foregoing Agreement was executed effective as
of August 9, 2001.


ESCO TECHNOLOGIES INC.


By:                                                                           
   ------------------------------               ------------------------------
                                                Alyson S. Barclay



<PAGE>



                        AMENDMENT TO EMPLOYMENT AGREEMENT


         THIS AGREEMENT entered into as of August 9, 2001 between ESCO
Technologies Inc. ("Company") and Victor L. Richey, Jr. ("Executive).

                                   WITNESSETH:

         WHEREAS, the Company and the Executive entered into an Employment
Agreement as of November 3, 1999 ("Agreement"); and

         WHEREAS, the parties retained the right to amend the Agreement pursuant
to Article 15 thereof; and

         WHEREAS, the parties desire to amend the Agreement effective as of
August 9, 2001;

         NOW, THEREFORE, effective as of August 9, 2001, the Agreement is
amended as follows:

         3. The following is added at the end of Paragraph 1:

         This Agreement shall be extended until November 2, 2004.

         IN WITNESS WHEREOF, the foregoing Agreement was executed effective as
of August 9, 2001.


ESCO TECHNOLOGIES INC.


By:                                                                           
   ------------------------------               ------------------------------
                                                Victor L. Richey, Jr.



<PAGE>
                                                                   Exhibit 10.22


                             ESCO TECHNOLOGIES INC.

                  COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

                              ADOPTED MAY 10, 2001

          1. Purpose. The purpose of the Plan is to enable ESCO Technologies
Inc. (the "Company") to compensate each non-employee member of the board of
directors of the Company (such board of directors hereinafter referred to as the
"Board" and each such non-employee member of the Board hereinafter referred to
as the "Director") who contributes to the Company's success by his or her
ability, ingenuity and knowledge, and to better ensure that the interests of
such Director are more closely aligned with the interests of the Company's
shareholders by paying a significant portion of his or her compensation in
shares of the Company's common stock ("Common Stock").

          2. Payment of Annual Retainer in Common Stock. Each Director shall be
paid an annual retainer fee (the "Retainer Fee") payable partially in cash ( the
"Cash Portion of the Retainer Fee") and partially in shares of Common Stock (the
"Stock Portion of the Retainer Fee"). From time to time, the Human Resources and
Ethics Committee of the Board ("HREC") shall determine the total amount of the
Retainer Fee, the Cash Portion of the Retainer Fee and the Stock Portion of the
Retainer Fee. The
 Cash Portion of the Retainer Fee and the Stock Portion of the
Retainer Fee shall be payable or distributable, as applicable, in quarterly
installments no later than the 15th business day of each quarter of the
Company's fiscal year and shall represent consideration for services to be
performed for the quarter then beginning; provided, that the HREC reserves the
right to change the frequency of payment of the Retainer Fee.

          3. Other Compensation. In addition to payment of the Retainer Fee
provided for in Section 2, each Director shall be paid such additional cash fees
for attendance at Board and Board Committee meetings as approved by the HREC
from time to time.

          4. Deferral of Compensation. Directors may elect to defer the receipt
of all (but not less than all) of the quarterly installment of the Cash Portion
of the Retainer Fee in stock equivalents and/or to defer the receipt of all (but
not less than all) of the quarterly installment of the Stock Portion of the
Retainer Fee in stock equivalents by executing and delivering an election form
to the Company at such time and subject to such other conditions as the Company
shall determine; provided, that any such election shall be applicable only to
future Retainer Fees with respect to which the Director, at the time of
election, has no current right to receive. Any newly elected Director may elect
to defer Retainer Fees prior to the effective date of his or her election to the
Board. Except as otherwise provided herein, the election to defer Retainer Fees
shall be irrevocable as to amounts earned following such election and shall
remain in effect until a new election form is delivered to the Company. Any such
new election form shall apply only to future Retainer Fees.

              (a) Deferred Compensation Account.

                  (i) The Company shall establish a deferred compensation
bookkeeping 

<PAGE>
account (the "Account") for each Director electing to
defer Retainer Fees. As of the date a Retainer Fee would otherwise be paid to
the Director (absent the deferral election), the Company shall credit to the
Account the amount of Retainer Fees which the Director has elected to defer. The
credit shall be in stock equivalents ("Stock Equivalents") only, determined as
follows:

                           (a) For each share of Common Stock otherwise payable
as the quarterly installment of the Stock Portion of the Retainer Fee which the
Director elects to defer, the Company shall credit the Account with one Stock
Equivalent.

                           (b) For the portion of the quarterly installment of
the Cash Portion of the Retainer Fee which the Director elects to defer, the
Company shall credit the Account with that number of Stock Equivalents equal to
the dollar amount of such portion, divided by the Fair Market Value per share of
the Common Stock (as hereinafter defined) on the first day of the corresponding
quarter.

                  "Fair Market Value" as of any date shall mean the average of
the high and low prices of the Common Stock on the New York Stock Exchange on
such date (or on the most recent date on which Common Stock is traded).

                  (ii) The Account shall be credited, as of the payment date of
any cash dividends paid on Common Stock, with additional Stock Equivalents equal
to the product of the per share dividend and the number of Stock Equivalents
credited to the Account and dividing such product by the Fair Market Value per
share of the Common Stock as of the dividend payment date. The Account shall be
credited, as of the payment date of any stock dividends paid on Common Stock
with additional Stock Equivalents equal to the product of the per share dividend
and the number of Stock Equivalents credited to the Account

         (b) Distribution.

                  (i) Except as otherwise provided in the Plan, the balance in
the Account shall be distributed to the Director commencing on the date which
the Director has specified on the election form; provided, however, that such
distribution must begin no later than the Director's 65th birthday or upon
termination of the Director's service as a Director, whichever is later
("Commencement Date"). Distribution shall be made in cash (the "Cash
Distribution") or in shares of Common Stock (the "Common Stock Distribution") as
the Director shall elect in the election form; provided, that the portion of the
Account representing the Stock Portion of the Retainer Fee which has been
deferred may only be distributed in the form of a Common Stock Distribution. The
Cash Distribution shall equal the number of Stock Equivalents then credited to
the Account as of the Commencement Date multiplied by the Fair Market Value per
share of Common Stock as of such date. If Cash Distribution is to be made in
installments, the amount of such distribution shall be based upon the number of
Stock Equivalents credited to the Account as of the date each installment is to
be made, multiplied by the Fair Market Value per share of Common Stock as of
each such date. The Common Stock Distribution shall equal the number of shares
of Common Stock equal to the number of Stock Equivalents credited to the Account
as of the Commencement Date; provided that Distribution of Common Stock shall be
rounded down to the nearest whole share of Common Stock and any fractional share
shall be paid in cash in an amount equal to the fractional share multiplied by
the Fair Market Value per share as of the 


                                       2

<PAGE>
Commencement Date.

                  (ii) Distribution shall be made either in a lump sum or, as
specified on the Director's election form, in quarterly or annual installments,
over a period not to exceed 5 years from the Commencement Date; provided, that
Common Stock Distributions may not be made more frequently than semi-annually.
An election to change the method (cash or stock) and/or frequency
(semi-annually, annually, etc.) of distribution with respect to the Account must
be received by the Company prior to January 1 of the calendar year in which
distributions are to be made pursuant to such election and must be approved in
advance by the HREC. The lump sum or first periodic installment shall be made by
the Company as promptly as practicable, but not more than 60 days following the
initial date of distribution as determined above.

                  (iii) Notwithstanding any other provisions hereof, in the
event the Director is removed from the Board or terminates service on the Board
on account of death, the balance in the Account shall be distributed in a lump
sum within 60 days after January 1 of the following calendar year or at such
earlier time as may be determined by the HREC (the "Distribution Date").
Otherwise, such distribution shall be made in accordance with the Director's
election form in effect at his death or at the time of removal from the Board. A
Cash Distribution shall equal the number of Stock Equivalents then credited to
the Account as of the Distribution Date multiplied by the Fair Market Value per
share of Common Stock as of the Distribution Date. A Common Stock Distribution
shall equal the number of shares of Common Stock equal to the number of Stock
Equivalents credited to the Account as of the Distribution Date.

                  (iv) In the event the Director becomes disabled (as determined
by the HREC), the Commencement Date and/or payment schedule with respect to the
balance in the Account may be accelerated by the HREC in its sole discretion.

                  (v) The Company shall deduct from all distributions hereunder
any taxes required to be withheld by the federal or any state or local
government.

         5. Change in Control.

         (a) Notwithstanding any other provision of the Plan, if a Change in
Control occurs and within one year subsequent to such Change in Control the
Director ceases to serve as a member of the Board for any reason, the balance in
the Account shall be paid in a lump sum to the Director, in the manner
determined in paragraph 5(b) below, within 60 days after January 1 of the
calendar year following the year in which such termination occurs, unless such
Director has completed a new election form after the Change in Control but prior
to his or her termination of service, in which case the provisions of paragraph
(b) below will not apply.

         (b) The payment determined under this paragraph 5(b) shall be a Cash
Distribution in an amount equal to the greater of the following:

                  (i) the number of Stock Equivalents then credited to the
Account multiplied by the Fair Market Value per share of Common Stock as of
either (i) the date of termination of the Director's service on the Board (if
such Common Stock is still in existence), or 


                                       3

<PAGE>
(ii) the date of the Change in Control, whichever is greater; or

                  (ii) the number of Stock Equivalents then credited to the
Account multiplied by the fair market value per share of the consideration
received by holders of Common Stock in the Change in Control as of either (i)
the date of termination of the Director's service on the Board, or (ii) the date
of the Change in Control, whichever is greater.

         A "Change in Control" shall be defined to mean (i) a merger,
consolidation or reorganization of the Company in which, as a consequence of the
transaction, the incumbent Directors immediately prior to such transaction do
not constitute a majority of the directors of the continuing or surviving
corporation; (ii) the acquisition, directly or indirectly, of the power to vote
50% or more of the outstanding Common Stock of the Company by any person, entity
or "group" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934); or (iii) any sale or other transfer, in one or a series
of transactions, of all or substantially all of the assets of the Company;
unless, in any case, a majority of then-current Directors determines prior to
such transaction or event that it shall not, for purposes of the Plan, be deemed
a Change in Control.

                  (c) The Company shall promptly reimburse the Director for all
legal fees and expenses reasonably incurred in successfully obtaining or
enforcing any right or benefit provided under this Section.

         6. Distribution of Common Stock. The maximum number of shares of Common
Stock available for distribution pursuant to the Plan shall be 200,000 shares,
subject to adjustment as set forth in Section 7. The shares of Common Stock
issuable to Directors under the Plan shall be issued from shares held in the
Company's treasury or other source as may be determined by the Company.

         7. Adjustment to Shares of Stock Issuable Pursuant to Plan. In the
event of any change in the outstanding shares of Common Stock of the Company by
reason of any stock split, stock dividend or recapitalization of the Company, an
equitable adjustment shall be made to the number of shares of Common Stock
issuable under the Plan, the amount of the Stock Portion of the Retainer Fee set
forth in Section 2 and the number of Stock Equivalents credited to the Account
for any Director, as the HREC determines is necessary or appropriate, in its
discretion, to give proper effect to such corporate action. Any such adjustment
determined in good faith by the HREC shall be conclusive and binding for all
purposes of the Plan.

         8. Amendments. Section 5 of the Plan may not be amended or modified or
terminated after the occurrence of a Change in Control with respect to benefits
accrued as of such occurrence. The Plan may otherwise be amended, modified or
terminated by the HREC at any time, provided that no such action shall reduce
the amounts credited to the Account of any Director immediately prior to such
action or change the time, method or manner of distribution of such Account.

         9. Miscellaneous.

         (a) The provisions of the Plan shall be binding upon and enforceable
against 


                                       4

<PAGE>
the Company and/or the continuing or surviving corporation in a Change of
Control.

         (b) Neither the Director nor any other person shall have any interest
in any fund or in any specific asset of the Company by reason of amounts
credited to the Account of a Director hereunder, or the right to exercise any of
the rights or privileges of a shareholder (including the right to vote) with
respect to any Stock Equivalents credited to the Account or to receive any
distribution under the Plan except as expressly provided for in the Plan.
Distributions hereunder shall be made from the general assets of the Company,
and the rights of the Director shall be those of an unsecured general creditor
of the Company.

         (c) The Company may require that the Directors shall agree to acquire
shares of Common Stock under the Plan for investment and not for resale or
distribution except pursuant to a registration statement under the Securities
Act of 1933 or an exemption from such registration, and may require that
certificates representing such shares shall bear a customary restrictive legend
to this effect.

         (d) The interest of the Director under the Plan shall not be assignable
by the Director or the Director's beneficiary or legal representative, either by
voluntary assignment or by operation of law, and any such attempted assignment
shall be ineffective to transfer the Director's interest; provided, however,
that (i) the Director may designate beneficiaries to receive any benefit payable
under the Plan upon death, and (ii) the legal representative of the Director's
estate may assign his or her interest under the Plan to the persons entitled to
any such benefit.

         (e) Nothing contained herein shall impose any obligation on the Company
to continue the tenure of the Director beyond the term for which such Director
has been elected or prevent his or her removal.

         (f) The Plan shall be interpreted by and all questions arising in
connection therewith shall be determined by the HREC, whose interpretation or
determination shall be conclusive and binding.

         (g) If any amounts deferred pursuant to the Plan are found in a final
judgment or other order to have been includible in gross income by a Director
prior to payment of such amounts from his or her Account, such amounts shall be
immediately paid to such Director, notwithstanding any election pursuant to
Section 4.

         (h) The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of Missouri, without regard to the
principles of conflicts of law which might otherwise apply.

      10. Effective Date. The Plan shall become effective July 1, 2001.



                                       5

<PAGE>
                             ESCO TECHNOLOGIES INC.
                  COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

                                  ELECTION FORM

Pursuant to the ESCO Technologies Inc. Compensation Plan For Non-Employee
Directors:


1.       COMPENSATION TO BE DEFERRED:

         / /   I hereby elect to defer payment of my Cash Portion of the
               Retainer Fee.

         / /   I hereby elect to defer distribution of my Stock Portion of the
               Retainer Fee.

         I understand that all deferrals will be credited as Stock Equivalents
to my Deferred Compensation Account.

2.       TYPE OF DISTRIBUTION:

               Stock Portion of the Retainer Fee:

               / /   Lump Sum - in shares

               / /   Installments over ____years (may not exceed 5 years) in
                     shares

                     / /   Semi-Annually in shares

                     / /   Annually in shares



               Cash Portion of the Retainer Fee:

               / /   Lump Sum - in cash

               / /   Lump Sum - in shares

               / /   Installments over ____years (may not exceed 5 years)

                     / /   Semi-Annually ______% in cash; ____% in shares

                     / /   Annually ______% in cash; ____% in shares

                     / /   Quarterly in cash


                                       6

<PAGE>
3.       TIME OF DISTRIBUTION:

                     / /   Lump sum distribution to be made
                           on __________________________.

                     / /   Installment distributions to commence
                           on _______________________.

                     / /   Distribution to be made or commence on the effective
                           date of my retirement as a Director of the Company.

4.       DESIGNATION OF BENEFICIARY: In the absence of such designation, payment
         will be paid to your estate. (Please include social security number and
         address.)


<TABLE>
<CAPTION>
     Name                    Address                 Social Security Number
<S>                          <C>                     <C>    


--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
</TABLE>




5.       This deferment will remain in effect with respect to each such
         subsequent quarter until such time as I may revoke the deferment or
         elect by later filings of this election form to extend the dates or
         alter the manner of payment that was specified in my most recent
         election. Such later filings shall apply only to Retainer Fees to be
         earned in the future.


Director: ________________________________     Date: ___________________________


                                       7


<PAGE>
                                                                  EXHIBIT NO. 13

2001 ESCO TECHNOLOGIES ANNUAL REPORT
FIVE-YEAR FINANCIAL SUMMARY


<Table>
<Caption>

  (Dollars in millions, except per share amounts)     2001(1)   2000(2)   1999(3)   1998(4)   1997(5)
                                                      -------   -------   -------   -------   -------
<S>                                                   <C>       <C>       <C>       <C>       <C>  
  For years ended September 30:
      Net sales                                       $ 344.9     300.2     416.1     365.1     378.5
      Interest expense                                     .1        .4       6.5       7.7       5.2
      Earnings before income taxes                       27.3      24.7      63.5      16.3      17.9
      Net earnings before accounting change              30.1      16.8      50.5      11.3      11.8
      Net earnings                                       30.1      16.8      25.5      11.3      11.8

  Earnings per share:
      Earnings before accounting change
          Basic                                          2.43      1.37      4.09       .94      1.00
          Diluted                                        2.35      1.33      4.00       .90       .96
      Net earnings
          Basic                                          2.43      1.37      2.06       .94      1.00
          Diluted                                        2.35      1.33      2.02       .90       .96
  As of September 30:
      Working capital                                    87.4      62.8      95.3      60.3      62.3
      Total assets                                      375.6     331.1     378.4     409.3     378.2
      Long-term debt                                      8.3        .6      41.9      50.1      50.0
      Shareholders' equity                              287.3     259.4     248.7     224.1     205.0
                                                      =======   =======   =======   =======   =======
</Table>


 (1) Includes the acquisition of Bea. (see Footnote 2 of Notes to Consolidated
     Financial Statements). Also, includes the elimination of the net deferred
     tax valuation allowance of approximately $12.7 million or $0.99 per share.

 (2) Includes the acquisitions of Lindgren, Holaday, and Eaton Space Products
     and the sale of the Rantec microwave antenna business (see Footnote 2 of
     Notes to Consolidated Financial Statements). Also, includes the after-tax

     gain on the sale of the Riverhead,
 NY property of approximately $2.2
     million or $0.18 per share and the after-tax gain on the sale of the
     Calabasas, CA property of approximately $0.5 million or $0.04 per share.

 (3) Includes the gain on sale of SEI, accounting change, $5.1 million of
     restructuring charges, and $3.9 million of other charges related to cost of
     sales. (see Footnotes 1 and 2 of Notes to Consolidated Financial
     Statements)

 (4) Includes the acquisitions of Euroshield and AMT.

 (5) Includes the acquisition of Filtertek in February 1997.


                                                                              47

<PAGE>


2001 ESCO TECHNOLOGIES ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS

                The following discussion should be read in conjunction with the
            consolidated financial statements and notes thereto. The years 2001,
            2000 and 1999 represent the fiscal years ended September 30, 2001,
            2000 and 1999, respectively, and are used throughout the document.

Introduction

                ESCO Technologies Inc. (ESCO, the Company) operates principally
            in four business segments: Filtration/Fluid Flow, Test,
            Communications and Other. ESCO develops, manufactures and markets a
            broad range of filtration products used in the separation,
            purification and processing of liquids and gases. The Company's
            engineered filtration products utilize membrane, precision screen
            and other technologies to protect critical processes and equipment
            from contaminants. Major applications include oil production and
            removal of contaminants in fuel, lube and hydraulic systems, various
            health care applications, including blood collection, food and
            beverage processing, potable water, and semiconductor production
            processes. ESCO is a leading supplier of radio frequency (RF)
            shielding and EMC test products. ESCO also supplies shielding to the
            growing Magnetic Resonance Imaging (MRI) market. The Company's
            Communications segment provides a well-proven communications system
            called TWACS(R) to the electric utility industry. The TWACS(R)
            system is currently used primarily for automatic meter reading (AMR)
            and its load management capabilities, and also provides a ready
            conduit into the home for future applications.

                The Company's business segments are comprised of the following
            primary operating entities:

                --Filtration/Fluid Flow: PTI Technologies Inc. (PTI) and
                  Filtertek Inc. (Filtertek),

                --Test: EMC Group consisting of EMC Test Systems, L.P. (ETS) and
                  Lindgren RF Enclosures, Inc. (Lindgren),

                --Communications: Distribution Control Systems, Inc. (DCSI) and
                  Comtrak Technologies, L.L.C. (Comtrak),

                --Other: Rantec Power Systems Inc. (Rantec),

                --Systems & Electronics Inc. (SEI) is included as a divested
                  business in 1999.

                ESCO continues to operate with meaningful growth prospects in
            its primary served markets, and with considerable financial
            flexibility. The Company continues to focus on new products that
            incorporate proprietary design and process technologies. Management
            is committed to delivering shareholder value through internal
            growth, selective acquisitions and share repurchase when warranted.


Highlights of 2001 Operations

                Sales for the year ended September 30, 2001 increased $44.7
           million, or 15% to $344.9 million compared to sales of $300.2 million
           in 2000. Sales growth from acquisitions accounted for approximately
           $28.6 million of the sales increase in 2001. New products introduced
           within the last three years accounted for $70.1 million of 2001
           sales. The Company's Communications segment continued to show strong
           year over year growth as sales increased 38% and approximately $104
           million of new orders were received in 2001.

                Gross profit margin increased to 31.4% in 2001 compared to 30.6%
           in the prior year, reflecting positive results from the Company's
           ongoing cost reduction programs and product mix changes. Operating
           profit margin (defined as net sales, less cost of sales, less SG&A
           expenses) increased to 10.7% of net sales in 2001, compared to 10.0%
           of net sales in 2000. The Company's EBIT margin from operations
           improved by 0.5% in 2001 compared to 2000. EBIT is defined as
           earnings before interest and taxes.

                 In June 2001, the Company acquired Bea Filitri S.p.A. (Bea),
           headquartered in Milan, Italy. Bea is a supplier of filtration
           products to the pharmaceutical, food and beverage, health care, and
           petrochemical markets. Bea's operating results are included within
           the Filtration/Fluid Flow segment, since the date of acquisition.


                                                                              13

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS


                Fiscal 2001 net earnings as reported, were $30.1 million, or
            $2.35 per share, compared to $16.8 million, or $1.33 per share, in
            2000. During 2001, the Company's results were favorably impacted by
            an income tax adjustment of $12.7 million, or $0.99 per share,
            related primarily to the elimination of the Company's net deferred
            tax valuation allowance. Excluding this favorable income tax
            adjustment, 2001 net earnings from operations were $17.4 million, or
            $1.36 per share, compared to 2000 net earnings from operations of
            $14.1 million, or $1.11 per share. 2000 net earnings from operations
            exclude the after-tax gains from the sale of the Riverhead, NY and
            Calabasas, CA properties in 2000, which were approximately $2.7
            million, or $0.22 per share.


Recap of 2000 Performance

                The Company successfully completed three acquisitions during
            2000: Lindgren, Holaday Industries, Inc. (Holaday), and the Eaton
            space products business (Eaton), formerly located in El Segundo, CA.
            The Lindgren and Holaday operating results are included within the
            Test segment and the Eaton results are included within the
            Filtration/Fluid Flow segment since the date of the respective
            acquisitions.

                Fiscal 2000 sales increased $56.9 million, or 23% to $300.2
            million over 1999 "adjusted" sales of $243.3 million, mainly due to
            new product introductions and contributions from the 2000
            acquisitions. Fiscal 2000 acquisitions contributed $25.7 million to
            sales in 2000. Operating profit, as defined above, increased $16.5
            million to $30.1 million in 2000 over 1999 "adjusted" operating
            profit of $13.6 million.

                Fiscal 2000's net earnings, as reported, were $1.33 per share.
            In 2000, the Company sold properties in Riverhead, NY and Calabasas,
            CA, thereby, converting into cash properties retained after
            divestitures. Excluding the gains on the sale of these properties,
            2000 net earnings from operations were $1.11 per share compared to
            1999 "adjusted" net earnings of $0.61 per share. Refer to the table
            on page 21 of Management's Discussion and Analysis for the
            definition and reconciliation of "adjusted" net income in 1999.


1999 Strategic Actions

                In conjunction with the divestiture of SEI, the Company took a
            number of actions at September 30, 1999 to further sharpen its focus
            on its primary served markets. Other actions included abandoning the
            active pursuit of certain business areas, exiting non-core,
            underperforming businesses, and restructuring the corporate overhead
            of the Company.


Results of Operations

            NET SALES

                Net sales of $344.9 million in 2001 increased $44.7 million
            (14.9%) from net sales of $300.2 million in 2000. Filtration/Fluid
            Flow, Test and Communications segments all had increased sales in
            2001. Sales growth from acquisitions accounted for approximately
            $28.6 million of the sales increase, with the balance coming from
            organic growth. New products introduced within the last three years
            accounted for $70.1 million of 2001 sales.

                Net sales of $300.2 million in 2000 decreased $115.9 million
            (27.9%) from reported net sales of $416.1 million in 1999 due to the
            divestiture of SEI. The 1999 amount included SEI sales of $172.8
            million. Excluding SEI sales from the 1999 results, 2000 net sales
            increased $56.9 million (23.4%) over 1999 "adjusted" net sales of
            $243.3 million. Acquisitions contributed $25.7 million to sales in
            2000.



14

<PAGE>
2001 ESCO TECHNOLOGIES ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS

            Filtration/Fluid Flow

                Net sales of $188.2 million in 2001 were $6.5 million (3.6%)
            higher than net sales of $181.7 million in 2000. Net sales increased
            in the health care and aerospace markets, offset by declines in the
            automotive and semiconductor markets. The current year acquisition
            of Bea contributed approximately $2.0 million to the increase in
            sales. The incremental sales contribution from the fiscal 2000
            acquisition of the Eaton space products business was approximately
            $3.3 million in 2001.

                Net sales of $181.7 million in 2000 increased $12.8 million
            (7.6%) from net sales of $168.9 million in 1999, primarily due to
            new product introductions and increases in microfiltration sales.
            The acquisition of the Eaton space products business in fiscal 2000
            contributed approximately $3.4 million of the increase in sales.
            Test

                Net sales increased $22.5 million (35.6%) to $85.5 million in
            2001 compared to net sales of $63.0 million in 2000. Fiscal 2001
            reflected the full year contributions from Lindgren and Holaday.
            Sales of the Company's Magnetic Resonance Imaging (MRI) products
            increased in 2001 by more than 15%, attributable to the growing
            health care market. This was partially offset by a decrease in the
            sale of large EMC test chambers to electronics and
            telecommunications customers as a result of the softening of these
            markets. The General Motors contract contributed approximately $4.6
            million, $13.2 million and $3.1 million to sales in 2001, 2000 and
            1999, respectively.

                Net sales of $63.0 million in 2000 increased $28.1 million
            (80.5%) over the $34.9 million in net sales recorded in 1999. The
            increase in 2000 over 1999 is primarily due to acquisitions, which
            contributed $22.1 million. The remaining increase in 2000 over 1999
            is primarily the result of additional EMC test chamber sales.

            Communications

                Net sales of $59.1 million in 2001 were $16.4 million (38.3%)
            higher than net sales of $42.7 million in 2000. The increase in 2001
            over 2000 is primarily the result of increased shipments to electric
            utility Cooperatives (Co-ops), together with continued shipments to
            other existing customers, such as Puerto Rico Electric Power
            Authority (PREPA), Wisconsin Public Service Corporation (WPS), and
            Florida Power & Light (FPL). The Company recorded approximately $104
            million in new orders for its two-way automatic communications
            systems and load control transponders during 2001.

                The 2000 net sales increased $16.9 million over the $25.8
            million in net sales recorded in 1999. The increase in 2000 over
            1999, primarily is the result of increased shipments to PREPA, WPS
            and the Co-ops.

            Other

                Net sales were $12.2 million in 2001, $12.8 million in 2000 and
            $13.7 million in 1999. The decrease in net sales is due to the sale
            of the Rantec microwave antenna business in February 2000, which
            contributed approximately $2.1 million to sales in fiscal 2000 prior
            to its divestiture and contributed $3.5 million to sales in 1999.
            Excluding the microwave antenna business from the 2000 results, net
            sales increased $1.5 million or 14% in 2001.

            ORDERS AND BACKLOG

                Firm order backlog was $180.1 million at September 30, 2001,
            compared to $145.4 million at September 30, 2000. New orders
            totaling $379.6 million were received in 2001, compared with $288.7
            million in 2000, reflecting a 31.5% increase. Approximately $186
            million of new orders in 2001 related to Filtration/Fluid Flow
            products, approximately $79 million related to Test products, and
            approximately $104 million related to Communications products
            (automatic meter reading and load control products).

            GROSS PROFIT

                 The Company computes gross profit as: net sales less cost of
            sales. The gross profit margin is the gross profit divided by net
            sales, expressed as a percentage.

                 The gross profit margin was 31.4%, 30.6% and 22.7% in 2001,
            2000 and 1999, respectively. The "adjusted" gross profit margin for
            1999 was 27.6%. The increase in 2001 compared to 2000 is due
            primarily to a favorable sales mix and the results of the Company's
            ongoing cost improvement initiatives. The increase in 2000 compared
            to the reported 1999 results is due primarily to the lower margins
            in 1999 related to the defense businesses. Gross profit margin
            increased in 2000 compared to "adjusted" 1999 results due to
            operational improvements in all four operating segments, including
            favorable changes in sales mix and product pricing as well as
            successful cost containment programs.


                                                                              15

<PAGE>


2001 ESCO TECHNOLOGIES ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS


            SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

                Selling, general and administrative expenses (SG&A) for 2001
            were $71.5 million, or 20.7% of net sales, compared with $61.8
            million, or 20.6% of net sales for 2000. The increase in SG&A
            spending in 2001 is mainly due to the 2000 acquisitions being
            included for the entire fiscal year 2001, as well as additional
            investments in research and development, engineering, and marketing
            within the Filtration/Fluid Flow and Communications segments.

                SG&A expenses in 2000 were $61.8 million, or 20.6% of net sales,
            compared with $74.4 million, or 17.9% of net sales for 1999.
            "Adjusted" SG&A expenses were $53.6 million, or 22.0% of net sales
            in 1999. The 2000 SG&A expenses included $4.9 million of additional
            expenses related to the 2000 acquisitions. The percentage decrease
            from "adjusted" 1999 SG&A expenses is the result of favorable
            leverage achieved on the higher sales volume.

            OPERATING PROFIT

                The Company evaluates the performance of its operating segments
            based on operating profit, which the Company defines as net sales,
            less cost of sales, and less SG&A expenses. Operating profit, as
            defined by the Company, excludes certain costs which are included in
            Other costs and expenses, net, in the Consolidated Statements of
            Operations, and which would be included in the determination of
            operating income as defined within generally accepted accounting
            principles. These items are discussed in the respective segment
            information below.

                Operating profit of $36.8 million (10.7% of net sales) in 2001
            increased $6.7 million (22.5%) from $30.1 million (10% of net sales)
            in 2000. In 2001, operating profit dollars increased in all
            segments.

                Operating profit of $30.1 million (10% of net sales) in 2000
            increased $15.2 million (102%) from $14.9 million in 1999. The 1999
            operating profit amount included $10.4 million related to SEI.
            Fiscal 2000 operating profit increased $16.5 million over prior year
            "adjusted" operating profit of $13.6 million.
            Filtration/Fluid Flow

                Operating profit of $16.8 million (8.9% of net sales) in 2001
            increased slightly over operating profit of $16.6 million (9.1% of
            net sales) in 2000. The current year was impacted by non-recurring
            costs related to the consolidation of the Eaton space products
            business into existing Company owned facilities and increases in
            other facility operating costs. In addition, during 2001, the
            Company made significant investments in new product development and
            market expansion opportunities, primarily in microfiltration.

                Operating profit of $16.6 million (9.1% of net sales) in 2000
            was $4.7 million (39.5%) higher than operating profit of $11.9
            million (7.0% of net sales) in 1999. The increase was primarily the
            result of new product introductions and increases in microfiltration
            profitability. Increased shipments of disposable water filter
            cartridges also contributed to the growth in profitability in 2000.
            Test

                Operating profit increased approximately $2.4 million to $9.3
            million (10.9% of net sales) in 2001 compared to $6.9 million (11.0%
            of net sales) in 2000. The increase in 2001 is mainly due to the
            full year contributions from the Lindgren and Holaday acquisitions,
            which occurred in the second half of fiscal 2000, offset by a
            smaller revenue contribution from the General Motors contract which
            is nearing completion. Operating profit of $6.9 million (11.0% of
            net sales) in 2000 was $2.9 million (72.5%) higher than operating
            profit of $4.0 million (11.5% of net sales) in 1999. The increase in
            2000 over 1999, was primarily the result of contributions from the
            General Motors contract. Fiscal 2000 was also favorably impacted by
            the mid-year acquisitions mentioned above.

            Communications

                Operating profit of $12.6 million (21.4% of net sales) in 2001
            was $3.7 million, or 41.6% higher than operating profit of $8.9
            million (20.8% of net sales) in 2000. Operating profit of $8.9
            million (20.8% of net sales) in 2000 was $9.3 million higher than
            operating profit of ($0.4) million in 1999. The increase in
            operating profit in 2001 versus 2000, as well as 2000 versus 1999,
            in both dollars and as a percentage of net sales is due to increased
            shipments of automatic meter reading (AMR) equipment at DCSI. The
            Company is increasing its engineering and new product development
            expenditures in the Communications segment in order to continue its
            growth in the


16

<PAGE>
2001 ESCO TECHNOLOGIES ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS


            AMR markets. The 1999 operating profit was impacted by certain
            nonrecurring charges at Comtrak, discussed on page 22 of
            Management's Discussion and Analysis. Other

                Operating profit was $1.4 million, ($0.3) million and ($8.8)
            million in 2001, 2000 and 1999, respectively. The increase in
            operating profit in 2001 over 2000, and in 2000 over 1999, is mainly
            related to the improved operations of Rantec's Power Systems
            business and the February 2000 sale of the microwave antenna
            business. The 1999 results were impacted by the nonrecurring charges
            related to the microwave antenna business, discussed on page 22.

            INTEREST EXPENSE

                Interest expense decreased to $0.1 million in 2001 from $0.4
            million in 2000, primarily as a result of lower outstanding average
            borrowings throughout 2001. The timing of operating cash flows
            throughout 2001 also decreased the average outstanding borrowings.

                Interest expense decreased to $0.4 million in 2000 from $6.5
            million in 1999, primarily as a result of lower outstanding average
            borrowings throughout 2000. With the exception of $1 million of
            foreign debt, all outstanding debt from fiscal 1999 was repaid in
            October 1999 from the proceeds of the sale of SEI.

            OTHER COSTS AND EXPENSES, NET

                Other costs and expenses, net, were $9.4 million, $8.0 million
            and $4.9 million in 2001, 2000 and 1999, respectively. The 2001 net
            amount includes: Goodwill amortization of $3.4 million; patent and
            other intangible amortization of $1.4 million; approximately $2.1
            million of net costs related to the consolidation of PTI's
            filtration businesses into new facilities in Oxnard, CA and the
            consolidation of the Stockton, CA manufacturing facility into the
            Huntley, IL facility; and other miscellaneous costs.

                Other costs and expenses, net, in 2000, of $8.0 million
            consisted of the following items: Goodwill amortization of $2.6
            million; patent and other intangible amortization of $1.3 million;
            approximately $2.0 million of net costs related to the
            Filtration/Fluid Flow segment, including the consolidation of PTI's
            filtration businesses into new facilities in Oxnard, CA, expenses
            related to the planned upgrade of production equipment to improve
            manufacturing efficiency at Filtertek, and costs related to the
            microfiltration business; approximately $1.0 million of net costs
            related to the Test segment primarily related to the write-off of an
            investment in a third party EMC related start-up company which filed
            bankruptcy in 2000; and other miscellaneous costs. 

            GAIN ON SALE OF PROPERTIES

                The gain on the sale of properties in fiscal 2000 represents
            $2.2 million from the sale of the Riverhead, NY property and $0.8
            million from the sale of the Calabasas, CA property. These
            properties were related to previously divested companies.

            INCOME TAX (BENEFIT) EXPENSE

                Income tax benefit of ($2.8) million for 2001 reflects current
            tax expense of $0.4 million, deferred tax benefit of ($5.7) million,
            and foreign, state and local tax expense of $2.4 million. Income tax
            expense of $7.9 million for 2000 reflects current tax expense of
            $0.3 million, deferred tax expense of $6.3 million, and foreign,
            state and local tax expense of $1.4 million.

                 Based on the Company's historical pretax income, together with
            the projection of future taxable income, Management believes it is
            more likely than not that the Company will realize the benefits of
            the net deferred tax asset existing at September 30, 2001. In order
            to realize the aforementioned net deferred tax asset, the Company
            will need to generate future taxable income of approximately $154
            million, of which $130 million is required to be realized prior to
            the expiration of the net operating loss (NOL) carryforward, of
            which $8 million will expire in 2006; $6 million will expire in
            2007; $23 million will expire in 2009; $38 million will expire in
            2010; $4 million will expire in 2011; $11 million will expire in
            2018; and $40 million will expire in 2019. The net operating loss
            carryforward will be available to reduce future Federal income tax
            cash payments.

                In 2001, as the result of certain residual tax effects related
            to the 2000 sale of the property in Calabasas, CA, the Company
            utilized approximately $2 million of the remaining $33 million
            capital loss carryforward available from the sale of its Hazeltine
            subsidiary in 1996. The remaining capital loss carryforward of
            approximately $31 million expired on September 30, 2001.


                                                                              17

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS


                The valuation reserve in the amount of $10.8 million maintained
           for the deferred tax asset related to the capital loss carryforward
           was eliminated due to the expiration of the capital loss
           carryforward. Additionally, in 2001 the Company eliminated its
           remaining net deferred tax valuation allowance of $12.7 million,
           which was the allowance representing the amount of the deferred tax
           asset associated with temporary differences and NOLs which Management
           believed would likely not be realized due to limitations on future
           use.

                The effective tax rate in 2001 was (10.4%), compared with 32.0%
            in 2000 primarily due to the favorable impact of the elimination of
            the net deferred tax valuation allowance. On an operational basis,
            Management estimates the 2001 effective tax rate would have been
            36.1%, excluding the net favorable income tax adjustment of $12.7
            million, previously described. An analysis of the effective tax
            rates for 2001, 2000 and 1999 is included in the notes to the
            consolidated financial statements.

            CHANGE IN ACCOUNTING PRINCIPLE - 1999

                The Company adopted the provisions of Statement of Position
            (SOP) 98-5, "Reporting on the Costs of Start-up Activities" in the
            first quarter of 1999 which resulted in a non-cash, after-tax charge
            of approximately $25 million, which was recognized as a cumulative
            effect of an accounting change. The charge related to precontract,
            start-up and organization costs incurred in anticipation of specific
            future contract awards which were based on specific customer
            identified requirements.


Capital Resources & Liquidity

                Working capital increased to $87.4 million at September 30, 2001
            from $62.8 million at September 30, 2000. During 2001, cash and cash
            equivalents increased by $8.9 million. Inventories increased $3.7
            million primarily due to the 2001 acquisition of Bea. Other current
            assets increased by $10.7 million primarily due to an increase in
            the current portion of deferred tax assets.

                Net cash provided by operating activities was $33.0 million in
            2001 compared to $20.0 million in 2000. The increase in 2001 is
            primarily due to the Company's additional earnings and improved
            working capital resulting from ongoing asset management initiatives.

                Net cash provided by operating activities was $20.0 million in
            2000 compared to $25.9 million in 1999. Net cash provided by
            operating activities in 2000 increased $5.4 million from the 1999
            adjusted amount of $14.6 million, which excludes $11.3 million
            related to SEI.

                Capital expenditures of $11.9 million, $10.4 million and $8.3
            million, in 2001, 2000 and 1999, respectively, primarily included
            manufacturing equipment. Capital expenditures related to SEI were
            $1.1 million in 1999. There were no commitments outstanding that
            were considered material for capital expenditures at September 30,
            2001.

                At September 30, 2001, the Company had available a net operating
            loss (NOL) carryforward for tax purposes of approximately $130
            million. This NOL will expire beginning in year 2006 and ending in
            year 2019, and will be available to reduce future Federal income tax
            cash payments.

            ACQUISITIONS/DIVESTITURES

                On June 8, 2001, the Company acquired all of the outstanding
            common stock of Bea Filtri S.p.A. (Bea) for approximately $13.5
            million in cash and debt. Bea, headquartered in Milan, Italy, is a
            supplier of filtration products to the pharmaceutical, food and
            beverage, healthcare, and petrochemical markets. Bea's assets and
            liabilities, and related operating results, since the date of
            acquisition, are included within the Company's Filtration/Fluid Flow
            segment.

                On June 2, 2000, the Company purchased Holaday Industries, Inc.
            (Holaday) for approximately $4 million in cash. Holaday,
            headquartered in Eden Prairie, MN, is a leading supplier of
            specialty measurement probes to the EMC test, health and safety, and
            microwave markets. The operating results for Holaday, since the date
            of acquisition, are included within the Company's Test segment.

                On April 9, 2000, the Company acquired all of the outstanding
            common stock of Lindgren RF Enclosures, Inc. (formerly known as The
            Curran Company) and Lindgren, Inc. (doing business through its
            subsidiary, Rayproof Ltd.) (collectively Lindgren) for approximately
            $22 million in cash plus additional consideration based upon the
            future operating performance of Lindgren. Lindgren is a leading
            supplier of radio frequency (RF) shielding products and


18

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS


            components used by manufacturers of medical equipment,
            communications systems and electronic products. The operating
            results for Lindgren, since the date of acquisition, are included
            within the Company's Test segment.

                On March 31, 2000, the Company acquired the Eaton space products
            business (Eaton), formerly located in El Segundo, CA, for
            approximately $6 million in cash. Eaton manufactures specialty
            valves and other fluid flow components for satellite launch vehicles
            and aircraft applications and has been integrated into the Company's
            Filtration/Fluid Flow segment, since the date of acquisition.

                All of the Company's acquisitions have been accounted for using
            the purchase method of accounting. The goodwill recorded as a result
            of the above transactions is being amortized over 20 years, until
            the adoption of SFAS 142.

                In February 2000, the Company completed the sale of its
            microwave antenna product line, which had historically operated as
            part of Rantec Microwave & Electronics, Inc. The Company transferred
            the contract order backlog and operating assets of the microwave
            antenna business for $2.1 million in cash, and in September 2000,
            sold the related land and buildings in Calabasas, CA for
            approximately $6 million.

                In December 1999, the Company sold the Riverhead, NY property,
            used by the Company's former Hazeltine subsidiary for approximately
            $2.6 million.

                On September 30, 1999, the Company sold SEI to Engineered
            Support Systems, Inc. for $85 million in cash, less working capital
            adjustments.

            BANK CREDIT FACILITY

                On April 11, 2000, the Company entered into a $75 million
            revolving credit facility, with the option to increase it to $100
            million through April 11, 2002. The credit facility was amended on
            February 28, 2001 to allow for borrowings in foreign currencies. The
            credit facility is available for direct borrowings and/or the
            issuance of letters of credit. The maturity of the credit facility
            is April 11, 2005, and is provided by a group of five banks, led by
            Bank of America. At September 30, 2001, the Company had
            approximately $61.7 million available to borrow under the credit
            facility as well as $14.5 million of cash on hand.

                The credit facility requires, as determined by certain financial
            ratios, a commitment fee ranging from 20-30 basis points per annum
            on the unused portion. The terms of the facility provide that
            interest on borrowings may be calculated at a spread over the London
            Interbank Offered Rate (LIBOR) or based on the prime rate, at the
            Company's election. Substantially all of the assets of the Company
            are pledged under the credit facility. The financial covenants of
            the credit facility include limitations on leverage and minimum
            consolidated EBITDA. As of September 30, 2001, the Company is in
            compliance with all bank covenants.

                Cash flow from operations and borrowings under the bank credit
            facility are expected to provide adequate resources to meet the
            Company's capital requirements and operational needs for the
            foreseeable future.

            SHARE REPURCHASE

                In February 2001, the Company authorized an open market
            repurchase program of up to 1.3 million shares, which is subject to
            market conditions and other factors and covers the period ending
            September 29, 2003. Approximately 77,000, 516,000 and 177,000 shares
            were repurchased in 2001, 2000 and 1999, respectively. In June 2000,
            the Company initiated an odd lot share repurchase program which
            extended through September 2000 whereby the Company repurchased
            approximately 25,000 shares, which are included in the 516,000 of
            shares repurchased in 2000, above. 

            OTHER

                Management believes that, for the periods presented, inflation
            has not had a material effect on the Company's results of
            operations.

                The Company is currently involved in various stages of
            investigation and remediation relating to environmental matters.
            Based on current information available, Management does not believe
            the aggregate costs involved in the resolution of these matters will
            have a material adverse effect on the Company's operating results,
            capital expenditures or competitive position.


                                                                              19

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS


Market Risk Analysis

            MARKET RISK EXPOSURE

                Market risks relating to the Company's operations result
            primarily from changes in interest rates and changes in foreign
            currency exchange rates. The Company has interest rate exposure
            relating to floating rate lease obligations and, accordingly, during
            2001, entered into interest rate swaps totaling approximately $23
            million to mitigate this exposure. In addition, the Company has
            interest rate exposure relating to floating rate obligations
            denominated in EURO dollars, therefore, in September 2001, the
            Company entered into an interest rate swap of approximately $4
            million to mitigate this exposure. These swaps are accounted for as
            cash flow hedges under the provisions of SFAS 133, "Accounting for
            Derivative Instruments and Hedging Activities" as of and for the
            year ended September 30, 2001.

                The Company is subject to foreign currency exchange rate risk
            relating to receipts from customers and payments to suppliers in
            foreign currencies. The Company hedges certain foreign currency
            commitments by purchasing foreign currency forward contracts.

New Accounting Pronouncements

                In July 2001, the Financial Accounting Standards Board issued
            SFAS 141, "Business Combinations", and SFAS 142, "Goodwill and Other
            Intangible Assets". SFAS 141 requires that the purchase method of
            accounting be used for all business combinations initiated or
            completed after June 30, 2001. SFAS 141 also specifies criteria
            intangible assets acquired in a purchase method business combination
            must meet to be recognized and reported apart from goodwill. SFAS
            142 requires that goodwill and intangible assets with indefinite
            useful lives no longer be amortized, but instead tested for
            impairment at least annually in accordance with the provisions of
            SFAS 142. SFAS 142 also requires that intangible assets with
            definite useful lives be amortized over their respective estimated
            useful lives to their estimated residual values, and reviewed for
            impairment in accordance with SFAS 121, "Accounting for the
            Impairment of Long-Lived Assets and for Long-Lived Assets to Be
            Disposed Of".

                The Company is required to adopt the provisions of SFAS 141
            immediately. Management expects to adopt the provisions of SFAS 142
            effective October 1, 2001, the beginning of the Company's fiscal
            year 2002.

                SFAS 141 will require that upon adoption of SFAS 142, the
            Company evaluate its existing intangible assets and goodwill, and
            make any necessary reclassifications in order to conform with the
            new criteria in SFAS 141. Upon adoption of SFAS 142, the Company
            plans to reassess the useful lives and residual values of all
            recorded intangible assets, other than goodwill, and make any
            necessary amortization period adjustments by December 31, 2001. In
            addition, to the extent an intangible asset is identified as having
            an indefinite useful life, the Company will be required to test the
            intangible asset for impairment in accordance with the provisions of
            SFAS 142 by December 31, 2001. Any impairment loss will be measured
            as of the date of adoption and recognized as the cumulative effect
            of a change in accounting principle. Upon adoption of SFAS 141 and
            SFAS 142, the Company does not anticipate a significant impact to
            the carrying value of the Company's goodwill.


20

<PAGE>
2001 ESCO TECHNOLOGIES ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS

1999 Strategic Actions

            RECONCILIATION OF ADJUSTED NET INCOME - 1999

                  In conjunction with the divestiture of SEI, the Company took a
            number of actions at September 30, 1999 to further sharpen its focus
            on its primary served markets. Other actions included abandoning the
            active pursuit of certain business areas, exiting non-core,
            underperforming businesses, and restructuring the corporate overhead
            of the Company.

                  The following table is not intended to present 1999 net
            earnings as defined within generally accepted accounting principles
            (GAAP), and is presented for informational purposes only.

                  The table provides a reconciliation between the 1999 reported
            results of operations and what Management believes the 1999
            operating results may have been after removing certain nonrecurring
            items and assuming that all of the actions taken during 1999 to
            reorient the business were complete at the beginning of the period.
            Management believes the estimated 1999 adjusted operating results
            provide a meaningful presentation for purposes of comparing ESCO's
            subsequent financial performance.


<Table>
<Caption>
                                                                 1999   Elimination   Adjusting             1999
            (Dollars in millions, rounded)                As Reported     of SEI(a)       Items      As Adjusted
                                                          -----------   -----------   ---------      -----------
<S>                                                       <C>           <C>           <C>            <C>        
            Net sales                                     $     416.1         172.8          --      $     243.3
                                                          -----------   -----------   ---------      -----------
              Cost of sales                                     317.7         139.6        (2.0)(b)        176.1
              Other charges related to cost of sales              3.9            --        (3.9)(c)           --
              SG&A expenses                                      74.4          21.6          .8 (d)         53.6
              Interest expense (income)                           6.5            .6        (8.2)(e)         (2.3)
              Other, net                                          4.9            .3         (.3)(c)          4.3
              Restructuring charges                               5.1            --        (5.1)(c)           --
              Gain on sale of SEI                               (59.9)           --        59.9 (c)           --
                                                          -----------   -----------   ---------      -----------
                   Total costs and expenses                     352.6         162.1        41.2            231.7
                                                          -----------   -----------   ---------      -----------
            Earnings before tax                                  63.5          10.7       (41.2)            11.6

            Income tax expense                                   13.0           3.7        (5.4)(f)          3.9
                                                          -----------   -----------   ---------      -----------
            Net earnings before accounting change                50.5           7.0       (35.8)             7.7
                                                          -----------   -----------   ---------      -----------
            Cumulative effect of accounting change,
                net of tax                                      (25.0)           --        25.0 (c)           --
                                                          -----------   -----------   ---------      -----------
                     Net earnings                         $      25.5           7.0       (10.8)     $       7.7
                                                          ===========   ===========   =========      ===========
            Diluted EPS                                   $      2.02                                $       .61
</Table>


--------------------------------------------------------------------------------

(a) Represents the operations of SEI which were included in the 1999 GAAP
reported results of operations.

(b) Represents the 1999 operating results of Rantec's microwave antenna business
which was being offered for sale in 1999 and was sold in February 2000. Fiscal
1999 net sales included $4.9 million related to Rantec's microwave antenna
business.

(c) Represents the elimination of the nonrecurring items: includes the gain
related to the divestiture of SEI, other charges related to the strategic
initiatives described on the following page, and the accounting change (SOP
98-5) adopted in the 1999 first quarter.

(d) Represents the net amount of the remaining corporate office operating
expenses after the divestiture of SEI. This amount reflects a $4.2 million cost
reduction from the $5 million amount recorded in 1999 and previously absorbed by
the operations of SEI.

(e) Represents the estimated net interest impact of the SEI transaction proceeds
and the cash impact of the other cost saving actions noted above, assuming that
they occurred at the beginning of the period. The amount noted assumes all
outstanding debt was repaid and the excess cash proceeds were invested with a 6%
yield, representing the yields in effect in 1999.

(f) Represents the amount necessary to reflect the adjusted effective tax rate
at 33%, which represents the Company's estimated 1999 effective tax rate
excluding the nonrecurring items.


                                                                              21

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS


            OTHER CHARGES RELATED TO COST OF SALES, RESTRUCTURING CHARGES AND
            GAIN ON SALE OF SEI - 1999 

                The Company recognized certain nonrecurring items in the 1999
            fourth quarter results of operations which resulted in $3.9 million
            of other charges related to cost of sales and $5.1 million of
            restructuring charges. In addition, in 1999, the Company recorded a
            gain on the sale of SEI of $59.9 million.

                The 1999 other charges related to cost of sales represent the
            write-off of inventory related to the abandonment of High Pressure
            Air Reducing Quiet Manifolds for surface ships ($2.2 million) and
            the Vehicle Location Systems ($.6 million) business. Additionally,
            the Company wrote down the Rantec microwave antenna product line
            inventory ($1.1 million) to net realizable value. The Rantec
            microwave business was sold in February 2000.

                The 1999 restructuring charges were comprised of the following:
            costs related to exiting the microwave antenna business area ($1.1
            million); a write-off of the license agreement ($1.8 million)
            related to the abandonment of the Vehicle Location System business;
            and certain personnel separation costs ($2.2 million).

                The gain on the sale of SEI of $59.9 million is calculated as:
            the gross proceeds of $85 million; less SEI's net book value of
            $30.6 million; less working capital adjustments of $4.0 million;
            less transaction related expenses of $4.9 million; plus the $14.4
            million curtailment gain related to pension and retiree medical
            liabilities transferred to the buyer.

                The other charges related to cost of sales noted above are
            included in the calculation of 1999 gross profit discussed above.

Forward-Looking Information

                The statements contained in the Chairman's Letter to
            Shareholders (pgs. 2-5), the business summaries (pgs. 6-11), and
            Management's Discussion and Analysis that are not strictly
            historical are "forward looking" statements within the meaning of
            the safe harbor provisions of the federal securities laws. Investors
            are cautioned that such statements are only predictions, and speak
            only as of the date of this report. The Company's actual results in
            the future may differ materially from those projected in the
            forward-looking statements due to risks and uncertainties that exist
            in the Company's operations and business environment including, but
            not limited to: further weakening of economic conditions in served
            markets; changes in customer demands or customer insolvencies;
            electricity shortages; competition; intellectual property matters;
            consolidation of internal operations; integration of recently
            acquired businesses; delivery delays or defaults by customers;
            performance issues with key suppliers and subcontractors; collective
            bargaining labor disputes; and the Company's successful execution of
            internal operating plans.


22

<PAGE>


2001 ESCO TECHNOLOGIES ANNUAL REPORT
CONSOLIDATED STATEMENTS OF OPERATIONS


<Table>
<Caption>

Years ended September 30,
(Dollars in thousands, except per share amounts)             2001          2000          1999
                                                          ----------    ----------    ----------
<S>                                                       <C>           <C>           <C>    
Net sales                                                 $  344,904       300,157       416,102
Costs and expenses:
     Cost of sales                                           236,526       208,263       317,681
     Other charges related to cost of sales                       --            --         3,927
Selling, general and administrative expenses                  71,537        61,819        74,429
     Interest expense, net                                       130           359         6,460
Other, net                                                     9,438         7,969         4,871
     Gain on sale of properties                                   --        (2,989)           --
     Restructuring charges                                        --            --         5,145
Gain on sale of SEI                                               --            --       (59,867)
                                                          ----------    ----------    ----------
Total costs and expenses                                     317,631       275,421       352,646
                                                          ----------    ----------    ----------


Earnings before income tax                                    27,273        24,736        63,456

Income tax (benefit) expense                                  (2,834)        7,917        13,001
                                                          ----------    ----------    ----------
Net earnings before accounting change                         30,107        16,819        50,455

Cumulative effect of accounting change, net of tax                --            --       (25,009)
                                                          ----------    ----------    ----------
         Net earnings                                     $   30,107        16,819        25,446
                                                          ==========    ==========    ==========
Earnings per share:
     Net earnings before accounting change:
         Basic                                            $     2.43          1.37          4.09
         Diluted                                                2.35          1.33          4.00
                                                          ----------    ----------    ----------
     Net earnings:
         Basic                                            $     2.43          1.37          2.06
         Diluted                                                2.35          1.33          2.02
                                                          ----------    ----------    ----------
Average common shares outstanding (in thousands):
         Basic                                                12,382        12,307        12,332
         Diluted                                              12,805        12,668        12,614
                                                          ==========    ==========    ==========
</Table>




See accompanying notes to consolidated financial statements.

                                                                              23

<PAGE>


2001 ESCO TECHNOLOGIES ANNUAL REPORT
CONSOLIDATED BALANCE SHEETS


<Table>
<Caption>

As of September 30,
(Dollars in thousands)                                                           2001         2000
                                                                              ----------   ----------
<S>                                                                           <C>          <C>  
ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                                $   14,506        5,620
Accounts receivable, less allowance for doubtful accounts of $1,122
      and $1,309 in 2001 and 2000, respectively                                   61,351       58,982
Costs and estimated earnings on long-term contracts, less progress
      billings of $21,913 and $15,139 in 2001 and 2000, respectively               6,637        6,141
     Inventories                                                                  48,167       44,457
Other current assets                                                              20,769       10,104
                                                                              ----------   ----------
      Total current assets                                                       151,430      125,304
                                                                              ----------   ----------



PROPERTY, PLANT AND EQUIPMENT:
     Land and land improvements                                                    2,561        2,545
Buildings and leasehold improvements                                              29,470       27,477
     Machinery and equipment                                                      71,289       65,564
Construction in progress                                                           4,620        3,821
                                                                              ----------   ----------
                                                                                 107,940       99,407
Less accumulated depreciation and amortization                                    42,902       36,844
                                                                              ----------   ----------
      Net property, plant and equipment                                           65,038       62,563

Excess of cost over net assets of purchased businesses, less accumulated
     amortization of $12,674 and $9,245 in 2001 and 2000, respectively           102,163       90,997
Deferred tax assets                                                               38,573       30,808
Other assets                                                                      18,373       21,461
                                                                              ----------   ----------
                                                                              $  375,577      331,133
                                                                              ==========   ==========
</Table>




See accompanying notes to consolidated financial statements.


24

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
CONSOLIDATED BALANCE SHEETS



<Table>
<Caption>
As of September 30,
(Dollars in thousands)                                                                2001          2000
                                                                                   ----------    ----------
<S>                                                                                <C>           <C>  
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
     Short-term borrowings and current maturities of long-term debt                $      122         4,136
     Accounts payable                                                                  35,180        31,206
Advance payments on long-term contracts, less costs incurred
      of $809 and $3,364 in 2001 and 2000, respectively                                 1,534         2,903
     Accrued expenses                                                                  27,233        24,246
                                                                                   ----------    ----------
       Total current liabilities                                                       64,069        62,491
                                                                                   ----------    ----------
Other liabilities                                                                      15,890         8,610
Long-term debt                                                                          8,338           610
                                                                                   ----------    ----------
      Total liabilities                                                                88,297        71,711
                                                                                   ----------    ----------
Commitments and contingencies                                                              --            --

SHAREHOLDERS' EQUITY:
     Preferred stock, par value $.01 per share, authorized 10,000,000 shares               --            --
     Common stock, par value $.01 per share, authorized 50,000,000 shares;
     Issued 13,409,934 and 13,224,834 shares in 2001 and 2000, respectively               134           132
     Additional paid-in capital                                                       206,282       205,514
Retained earnings since elimination of deficit at September 30, 1993                   99,649        69,542
     Accumulated other comprehensive loss                                              (6,518)       (4,766)
                                                                                   ----------    ----------
                                                                                      299,547       270,422
     Less treasury stock, at cost (985,469 and 956,527 common shares in 2001
      and 2000, respectively)                                                         (12,267)      (11,000)
                                                                                   ----------    ----------
      Total shareholders' equity                                                      287,280       259,422
                                                                                   ----------    ----------
                                                                                   $  375,577       331,133
                                                                                   ==========    ==========
</Table>



See accompanying notes to consolidated financial statements.


                                                                              25

<PAGE>


2001 ESCO TECHNOLOGIES ANNUAL REPORT
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


<Table>
<Caption>
                                                                                          Accumulated
Years ended September 30,                         Common Stock    Additional                 Other
                                              ------------------   Paid-in     Retained   Comprehensive   Treasury
(in thousands)                                 Shares    Amount    Capital     Earnings   Income (Loss)     Stock      Total
                                              --------  --------  ----------   --------   -------------   --------   ----------
<S>                                           <C>       <C>       <C>          <C>        <C>             <C>        <C>    
Balance, September 30, 1998                     12,642  $    126     200,913     27,277          (1,740)    (2,497)     224,079
                                                                                                                     ----------
Comprehensive income:
     Net earnings                                   --        --          --     25,446              --         --       25,446
     Translation adjustments                        --        --          --         --          (2,390)        --       (2,390)
     Minimum pension liability, net                 --        --          --         --           2,260         --        2,260
                                                                                                                     ----------
Comprehensive income                                --        --          --         --              --         --       25,316
                                                                                                                     ----------
Stock options and stock compen-
     sation plans                                  141         2         806         --              --         48          856
Purchases into treasury                             --        --          --         --              --     (1,562)      (1,562)
                                              --------  --------  ----------   --------   -------------   --------   ----------
Balance, September 30, 1999                     12,783       128     201,719     52,723          (1,870)    (4,011)     248,689
                                                                                                                      ---------
Comprehensive income:
     Net earnings                                   --        --          --     16,819              --         --       16,819
     Translation adjustments                        --        --          --         --          (2,896)        --       (2,896)
                                                                                                                     ----------
Comprehensive income                                --        --          --         --              --         --       13,923
                                                                                                                     ----------
Stock options and stock compen-
     sation plans                                  442         4       3,795         --              --         59        3,858
Purchases into treasury                             --        --          --         --              --     (7,048)      (7,048)
                                              --------  --------  ----------   --------   -------------   --------   ----------
Balance, September 30, 2000                     13,225       132     205,514     69,542          (4,766)   (11,000)     259,422
                                                                                                                     ----------
Comprehensive income:
     Net earnings                                   --        --          --     30,107              --         --       30,107
     Translation adjustments                        --        --          --         --            (209)        --         (209)
     Minimum pension liability, net                 --        --          --         --            (639)        --         (639)
     Interest rate swap adjustment, net             --        --          --         --            (904)        --         (904)
                                                                                                                     ----------

Comprehensive income                                --        --          --         --              --         --       28,355
                                                                                                                     ----------
Stock options and stock compen-
     sation plans                                  185         2         768         --              --        414        1,184
Purchases into treasury                             --        --          --         --              --     (1,681)      (1,681)
                                              --------  --------  ----------   --------   -------------   --------   ----------
Balance, September 30, 2001                     13,410  $    134     206,282     99,649          (6,518)   (12,267)     287,280
                                              ========  ========  ==========   ========   =============   ========   ==========
</Table>



See accompanying notes to consolidated financial statements.


26

<PAGE>


2001 ESCO TECHNOLOGIES ANNUAL REPORT
CONSOLIDATED STATEMENTS OF CASH FLOW


<Table>
<Caption>

Years ended September 30,
(Dollars in thousands)                                                 2001          2000          1999
                                                                    ----------    ----------    ----------
<S>                                                                 <C>           <C>           <C>   
Cash flows from operating activities:
     Net earnings                                                   $   30,107        16,819        25,446
     Adjustments to reconcile net earnings to net cash
      provided by operating activities:
         Depreciation and amortization                                  15,100        14,185        17,021
         Changes in operating working capital                           (9,441)      (20,532)       11,271
         Write-off of assets related to accounting change,
            net of tax                                                      --            --        25,009
         Gain on sale of SEI                                                --            --       (59,867)
         Effect of deferred taxes on tax provision                      (5,669)        6,270        11,560
         Other                                                           2,889         3,259        (4,550)
                                                                    ----------    ----------    ----------
     Net cash provided by operating activities                          32,986        20,001        25,890
                                                                    ----------    ----------    ----------

Cash flows from investing activities:
     Capital expenditures                                              (11,881)      (10,363)       (8,291)
     (Acquisition) divestiture of businesses                           (13,559)      (29,996)       85,000
                                                                    ----------    ----------    ----------
     Net cash (used) provided by investing activities                  (25,440)      (40,359)       76,709
                                                                    ----------    ----------    ----------

Cash flows from financing activities:
     Proceeds from long-term debt                                        7,356            80            96
     Principal payments on long-term debt                                 (740)      (49,322)       (8,297)
     Net decrease in short-term borrowings                              (3,988)       (8,506)       (9,494)
     Purchases of common stock into treasury                            (1,681)       (6,215)       (1,562)
     Other, including exercise of stock options                            393         2,232           126
                                                                    ----------    ----------    ----------
     Net cash provided (used by) financing activities                    1,340       (61,731)      (19,131)
                                                                    ----------    ----------    ----------
Net increase (decrease) in cash and cash equivalents                     8,886       (82,089)       83,468
Cash and cash equivalents at beginning of year                           5,620        87,709         4,241
                                                                    ----------    ----------    ----------
Cash and cash equivalents at end of year                            $   14,506         5,620        87,709
                                                                    ==========    ===========   ========== 
Changes in operating working capital:
     Accounts receivable, net                                       $    1,632       (10,907)        5,150
     Costs and estimated earnings on long-term contracts, net             (497)       (2,122)       12,891
     Inventories                                                        (1,650)        1,553        (9,230)
     Other current assets                                              (10,665)          859        (1,402)
     Accounts payable                                                    1,174          (704)          734
     Advance payments on long-term contracts, net                       (1,369)        2,221        (6,821)
     Accrued expenses                                                    1,934       (11,432)        9,949
                                                                    ----------    ----------    ----------
                                                                    $   (9,441)      (20,532)       11,271
                                                                    ==========    ===========   ========== 
Supplemental cash flow information:
     Interest paid                                                  $      425           867         6,579
     Income taxes paid                                                   4,106         1,132           254
                                                                    ==========    ===========   ========== 
</Table>





See accompanying notes to consolidated financial statements.


                                                                              27

<PAGE>
2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    Summary of significant accounting policies

            (a) PRINCIPLES OF CONSOLIDATION

                The consolidated financial statements include the accounts of
            ESCO Technologies Inc. (ESCO) and its wholly owned subsidiaries (the
            Company). All significant intercompany transactions and accounts
            have been eliminated in consolidation. Certain prior year amounts
            have been reclassified to conform with the 2001 presentation.
            Effective July 10, 2000, the Company changed its name from ESCO
            Electronics Corporation to ESCO Technologies Inc.

            (b) BASIS OF PRESENTATION

                Effective September 30, 1993, the Company implemented an
            accounting readjustment in accordance with the accounting provisions
            applicable to a "quasi-reorganization" which restated assets and
            liabilities to fair values and eliminated the deficit in retained
            earnings.

                Fair values of the Company's financial instruments are estimated
            by reference to quoted prices from market sources and financial
            institutions, as well as other valuation techniques. The estimated
            fair value of each class of financial instruments approximated the
            related carrying value at September 30, 2001 and 2000. 

            (c) NATURE OF OPERATIONS

                The Company is a leading supplier of engineered filtration
            products to the process, health care and transportation markets
            worldwide. The Company's filtration products include depth filters,
            membrane based microfiltration products and precision screen
            filters. The balance of the Company's sales is derived primarily
            from radio frequency (RF) shielding and EMC test products and
            special purpose communication systems, where the Company is well
            positioned in niche markets based on proprietary products.

                The Company operates in four principal industry segments:
            Filtration/Fluid Flow, Test, Communications and Other.

            (d) USE OF ESTIMATES

                The preparation of financial statements in conformity with
            accounting principles generally accepted in the United States of
            America requires management to make estimates and assumptions,
            including estimates of anticipated contract costs and revenues
            utilized in the earnings process, that affect the reported amounts
            of assets and liabilities and disclosure of contingent assets and
            liabilities at the date of the financial statements and the reported
            amounts of revenues and expenses during the reporting period. Actual
            results could differ from those estimates.

            (e) REVENUE RECOGNITION

                Revenue is recognized on commercial sales when products are
            shipped or when services are performed. Revenue on production
            contracts is recorded when specific contract terms are fulfilled,
            usually by delivery or acceptance (the units of production or
            delivery methods). Revenues from cost reimbursement contracts are
            recorded as costs are incurred, plus fees earned. Revenue under
            long-term contracts for which units of production or delivery are
            inappropriate measures of performance is recognized on the
            percentage-of-completion method based upon incurred costs compared
            to total estimated costs under the contract, or are based upon
            equivalent units produced. Revenue under engineering contracts is
            generally recognized as milestones are attained.

            (f) CASH AND CASH EQUIVALENTS

                Cash equivalents include temporary investments that are readily
            convertible into cash, such as EURO dollars, commercial paper and
            treasury bills with original maturities of three months or less.

            (g) COSTS AND ESTIMATED EARNINGS ON LONG-TERM CONTRACTS

                Costs and estimated earnings on long-term contracts represent
            unbilled revenues, including accrued profits and retention on
            long-term contracts accounted for under the percentage-of-completion
            method, net of progress billings.

            (h) INVENTORIES

                Inventories are carried at the lower of cost (first-in,
            first-out) or market. Inventories under long-term contracts reflect
            accumulated production costs, factory overhead, initial tooling and
            other related costs less the portion of such costs charged to cost
            of sales and any progress payments received. In accordance with
            industry practice, costs incurred on contracts in progress include
            amounts relating to programs having production cycles longer than
            one year, and a portion thereof will not be realized within one
            year.

28

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            (i) PROPERTY, PLANT AND EQUIPMENT

                Property, plant and equipment are recorded at cost. Depreciation
            and amortization are computed primarily on a straight-line basis
            over the estimated useful lives of the assets: buildings, 10-40
            years; machinery and equipment, 5-10 years; and office furniture and
            equipment, 5-10 years. Leasehold improvements are amortized over the
            remaining term of the applicable lease or their estimated useful
            lives, whichever is shorter.

           (j) EXCESS OF COST OVER NET ASSETS OF PURCHASED BUSINESSES

                Assets and liabilities related to business combinations
            accounted for as purchase transactions are recorded at their
            respective fair values. Excess of cost over the fair value of net
            assets purchased (goodwill) is amortized on a straight-line basis
            over the periods estimated to be benefited. The excess of cost over
            the fair value of net assets is primarily being amortized over a
            period not exceeding 30 years. The Company assesses the
            recoverability of this intangible asset by determining whether the
            amortization of the asset balance over its remaining life can be
            recovered through undiscounted future operating cash flows. See
            further discussion below in "New Accounting Standards."

            (k) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
                DISPOSED OF

                Recoverability of assets to be held and used is measured by a
            comparison of the carrying amount of an asset to future net cash
            flows expected to be generated by the asset. If such assets are
            considered to be impaired, the impairment to be recognized is
            measured by the amount by which the carrying amount of the assets
            exceeds the fair value of the assets. Assets to be disposed of are
            reported at the lower of the carrying amount or fair value less
            costs to dispose.

            (l) INCOME TAXES

                Income taxes are accounted for under the asset and liability
            method. Deferred tax assets and liabilities are recognized for the
            future tax consequences attributable to differences between the
            financial statement carrying amounts of existing assets and
            liabilities and their respective tax bases. Deferred tax assets and
            liabilities are measured using enacted tax rates expected to apply
            to taxable income in the years in which those temporary differences
            are expected to be recovered or settled. Deferred tax assets may be
            reduced by a valuation allowance if it is more likely than not that
            some portion or all of the deferred tax assets will not be realized.
            The effect on deferred tax assets and liabilities of a change in tax
            rates is recognized in income in the period that includes the
            enactment date.

            (m) RESEARCH AND DEVELOPMENT COSTS

                Company-sponsored research and development costs include
            research and development and bid and proposal efforts related to the
            Company's products and services. Company-sponsored product
            development costs are charged to expense when incurred.
            Customer-sponsored research and development costs incurred pursuant
            to contracts are accounted for similar to other program costs.

            (n) FOREIGN CURRENCY TRANSLATION

                The financial statements of the Company's foreign operations are
            translated into U.S. dollars in accordance with Statement of
            Financial Accounting Standards (SFAS) No. 52 "Foreign Currency
            Translation" (SFAS 52). The resulting translation adjustments are
            recorded as a separate component of accumulated other comprehensive
            income.

            (o) EARNINGS PER SHARE

                Basic earnings per share is calculated using the weighted
            average number of common shares outstanding during the period.
            Diluted earnings per share is calculated using the weighted average
            number of common shares outstanding during the period plus shares
            issuable upon the assumed exercise of dilutive common share options
            and performance shares by using the treasury stock method.


                                                                              29

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                The number of shares used in the calculation of earnings per
            share for each year presented is as follows:


<Table>
<Caption>

            (In thousands)                                       2001       2000       1999
                                                               --------   --------   --------
<S>                                                            <C>        <C>        <C>   
            Weighted Average Shares Outstanding -- Basic         12,382     12,307     12,332
            Dilutive Options and Performance Shares                 423        361        282
                                                               --------   --------   --------
            Adjusted Shares -- Diluted                           12,805     12,668     12,614
                                                               ========   ========   ========
</Table>


                Options to purchase 12,500 shares (at per share prices of $25.18
            - $27.28), 95,500 shares (at per share prices of $15.72 - $19.22)
            and 176,000 shares (at per share prices of $11.44 - $19.22) were
            outstanding during the years ended September 30, 2001, 2000 and
            1999, respectively, but were not included in the respective
            computations of diluted EPS because the options' exercise price was
            greater than the average market price of the common shares. These
            options expire in various periods through 2011. Approximately
            181,000, zero and 190,000 performance shares were outstanding but
            unearned at September 30, 2001, 2000 and 1999, respectively, and
            therefore, were not included in the respective years' computations
            of diluted EPS.

            (p) STOCK-BASED COMPENSATION

                The Company measures its compensation cost of equity instruments
            issued under employee compensation plans under the provisions of
            Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for
            Stock Issued to Employees," and related Interpretations.

            (q) COMPREHENSIVE INCOME (LOSS)

                SFAS 130, "Reporting Comprehensive Income" requires the Company
            to report separately the translation adjustments of SFAS 52 defined
            above, changes to the minimum pension liability, and changes in fair
            value of the Company's interest rate swaps designated as a cash flow
            hedge, as components of comprehensive income or loss. Management has
            chosen to disclose the requirements of this Statement within the
            Consolidated Statements of Shareholders' Equity.

            (r) ACCOUNTING CHANGE - 1999

                During the first quarter of 1999, the Company adopted Statement
            of Position (SOP) 98-5, "Reporting on the Costs of Start-up
            Activities." Precontract costs were incurred by the Company and
            capitalized under the previous guidance provided by SOP 81-1,
            "Accounting for Performance of Construction-type Contracts." As a
            result of adopting SOP 98-5 in 1999, the Company expensed these
            costs which were recognized as a cumulative effect of an accounting
            change. The effect of this accounting change was recognized in the
            1999 Consolidated Statement of Operations.

            (s) ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

                SFAS 133, "Accounting for Derivative Instruments and Hedging
            Activities" as amended by SFAS 137 and 138 (SFAS 133) requires that
            all derivative instruments be recorded on the balance sheet at their
            fair value. The accounting treatment of changes in fair value is
            dependent upon whether or not a derivative instrument is designated
            as a hedge and if so, the type of hedge. For derivatives designated
            as a fair value hedge, the changes in fair value are recognized in
            other comprehensive income until the hedged item is settled and
            recognized in earnings. The Company has interest rate exposure
            relating to floating rate lease obligations and, accordingly, during
            2001, entered into interest rate swaps totaling approximately $23
            million to mitigate this exposure. In addition, the Company has
            interest rate exposure relating to floating rate obligations
            denominated in EURO dollars, therefore, in September 2001, the
            Company entered into an interest rate swap of approximately $4
            million to mitigate this exposure. These interest rate swaps are
            accounted for as cash flow hedges under the provisions of SFAS 133
            as of and for the year ended September 30, 2001. At September 30,
            2001, other comprehensive income included an after-tax decline in
            fair value of approximately $0.9 million.


30

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            (t) NEW ACCOUNTING STANDARDS

                In July 2001, the Financial Accounting Standards Board issued
            SFAS 141, "Business Combinations", and SFAS 142, "Goodwill and Other
            Intangible Assets". SFAS 141 requires that the purchase method of
            accounting be used for all business combinations initiated or
            completed after June 30, 2001. SFAS 141 also specifies criteria
            intangible assets acquired in a purchase method business combination
            must meet to be recognized and reported apart from goodwill. SFAS
            142 requires that goodwill and intangible assets with indefinite
            useful lives no longer be amortized, but instead tested for
            impairment at least annually in accordance with the provisions of
            SFAS 142. SFAS 142 also requires that intangible assets with
            definite useful lives be amortized over their respective estimated
            useful lives to their estimated residual values, and reviewed for
            impairment in accordance with SFAS 121, "Accounting for the
            Impairment of Long-Lived Assets and for Long-Lived Assets to Be
            Disposed Of".

                The Company is required to adopt the provisions of SFAS 141
            immediately, and Management expects to adopt the provisions of SFAS
            142 effective October 1, 2001, the beginning of the Company's fiscal
            year 2002.

                SFAS 141 will require that upon adoption of SFAS 142, the
            Company evaluate its existing intangible assets and goodwill, and
            make any necessary reclassifications in order to conform with the
            new criteria in SFAS 141. Upon adoption of SFAS 142, the Company
            plans to reassess the useful lives and residual values of all
            recorded intangible assets, other than goodwill, and make any
            necessary amortization period adjustments by December 31, 2001. In
            addition, to the extent an intangible asset is identified as having
            an indefinite useful life, the Company will be required to test the
            intangible asset for impairment in accordance with the provisions of
            SFAS 142 by December 31, 2001. Any impairment loss will be measured
            as of the date of adoption and recognized as the cumulative effect
            of a change in accounting principle. Upon adoption of SFAS 141 and
            SFAS 142, the Company does not anticipate a material impact to the
            carrying value of the Company's goodwill.

2.   Acquisitions/Divestitures

                On June 8, 2001, the Company acquired all of the outstanding
            common stock of Bea Filtri S.p.A. (Bea) for approximately $13.5
            million in cash and debt. Bea, headquartered in Milan, Italy, is a
            supplier of filtration products to the pharmaceutical, food and
            beverage, healthcare, and petrochemical markets. Bea broadens the
            Company's microfiltration product offering and increases the
            Company's penetration in European markets. Bea's assets and
            liabilities, and related operating results, since the date of
            acquisition, are included within the Company's Filtration/Fluid Flow
            segment.

                On June 2, 2000, the Company purchased Holaday Industries, Inc.
            (Holaday) for approximately $4 million in cash. Holaday,
            headquartered in Eden Prairie, MN, is a leading supplier of
            specialty measurement probes to the EMC test, health and safety, and
            microwave markets. The operating results for Holaday, since the date
            of acquisition, are included within the Company's Test segment

                On April 9, 2000, the Company acquired all of the outstanding
            common stock of Lindgren RF Enclosures, Inc. (formerly known as The
            Curran Company) and Lindgren, Inc. (doing business through its
            subsidiary, Rayproof Ltd.) (collectively Lindgren) for approximately
            $22 million in cash plus additional consideration based upon the
            future operating performance of Lindgren. Lindgren is a leading
            supplier of radio frequency (RF) shielding products and components
            used by manufacturers of medical equipment, communications systems
            and electronic products. The operating results for Lindgren, since
            the date of acquisition, are included within the Company's Test
            segment.

                On March 31, 2000, the Company acquired the Eaton space products
            business (Eaton), formerly located in El Segundo, CA, for
            approximately $6 million in cash. Eaton manufactures specialty
            valves and other fluid flow components for satellite launch vehicles
            and aircraft applications and has been integrated into the Company's
            Filtration/Fluid Flow segment, since the date of acquisition.

                In February 2000, the Company completed the sale of its
            microwave antenna business, which had historically operated as part
            of Rantec Microwave & Electronics, Inc. The Company transferred the
            contract order backlog and operating assets of the microwave antenna
            business for $2.1 million in cash, and in September 2000, sold the
            related land and buildings in Calabasas, CA for approximately $6
            million.


                                                                              31

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                Assuming the acquisitions of Holaday, Lindgren and Eaton as well
           as the divestiture of the Rantec microwave antenna business had
           occurred on October 1, 1999, (the beginning of fiscal 2000), pro
           forma unaudited net sales, net earnings and diluted EPS for the year
           ended September 30, 2000 would have been approximately $325 million,
           $17.3 million and $1.36 per share, respectively. These unaudited pro
           forma amounts are not necessarily indicative of the results of
           operations that would have occurred had these actions been completed
           on October 1, 1999, or of future results of operations.

                On September 30, 1999, the Company completed the sale of its
           Systems & Electronics Inc. (SEI) subsidiary to Engineered Support
           Systems, Inc. The Company sold 100% of the common stock of SEI for
           $85 million in cash, less working capital adjustments, resulting in a
           $59.9 million gain recorded in the 1999 results of operations.
           Certain assets and liabilities of SEI were retained by the Company,
           including the net operating loss carryforward.

                Included in the 1999 consolidated statements of operations are
           the operating results of SEI prior to its divestiture as follows: net
           sales of $172.8 million; cost of sales of $139.6 million, SG&A
           expenses of $21.6 million; other costs and expenses, net, of $0.9
           million; and earnings before income taxes of $10.7 million.

                All of the Company's acquisitions have been accounted for using
           the purchase method of accounting and accordingly, the respective
           purchase prices were allocated to the assets (including intangible
           assets) acquired and liabilities assumed based on estimated fair
           values at the date of acquisition. The financial results from these
           acquisitions have been included in the Company's financial statements
           from the date of acquisition. The goodwill recorded as a result of
           the transactions is being amortized over 20 years, until the adoption
           of SFAS 142.


      3. Accounts receivable

                Accounts receivable consist of the following at September 30,
            2001 and 2000:


<Table>
<Caption>
           (Dollars in thousands)                       2001         2000
                                                     ----------   ----------
<S>                                                  <C>          <C>   
           Commercial                                $   57,513       55,619
           U. S. Government and prime contractors         3,838        3,363
                                                     ----------   ----------
           Total                                     $   61,351       58,982
                                                     ==========   ==========
</Table>


                Commercial accounts receivable increased primarily due to the
            acquisition of Bea in 2001.


      4. Inventories

                Inventories consist of the following at September 30, 2001 and
            2000:


<Table>
<Caption>

            (Dollars in thousands)                               2001          2000
                                                               ----------   ----------
<S>                                                            <C>          <C>  
            Finished goods                                     $   12,065        8,709
            Work in process-- including long-term contracts        17,089       17,258
            Raw materials                                          19,013       18,490
                                                               ----------   ----------
                Total                                          $   48,167       44,457
                                                               ==========   ==========
</Table>


                Inventories increased approximately $3.7 million mainly to
            support the near term sales demand and due to the acquisition of Bea
            in 2001.


32

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


      5. Property, plant and equipment

                Depreciation expense of property, plant and equipment for the
            years ended September 30, 2001, 2000 and 1999 was $10.3 million,
            $10.3 million and $13.6 million (including SEI), respectively.

                The Company leases certain real property, equipment and
            machinery under noncancelable operating leases. Rental expense under
            these operating leases for the years ended September 30, 2001, 2000
            and 1999 amounted to $6.8 million, $5.0 million and $6.3 million,
            respectively. Future aggregate minimum lease payments under
            operating leases that have initial or remaining noncancelable lease
            terms in excess of one year as of September 30, 2001 are: 


<Table>
<Caption>

            (Dollars in thousands)      Years ending September 30:
                                        --------------------------
<S>                                                                         <C>     
                                        2002                                $  5,628
                                        2003                                   5,188
                                        2004                                   4,676
                                        2005                                   4,171
                                        2006 and thereafter                    5,748
                                                                            --------
                                          Total                             $ 25,411
                                                                            ========
</Table>


      6. Income tax expense

                For the year ended September 30, 2001, pre-tax earnings related
            to U.S. and non-U.S. tax jurisdictions are $21.7 million and $5.6
            million, respectively. Fiscal 2000 and 1999 pre-tax earnings related
            to non-U.S. tax jurisdictions were insignificant. The principal
            components of income tax expense for the years ended September 30,
            2001, 2000 and 1999 consist of:


<Table>
<Caption>
            (Dollars in thousands)                                          2001          2000         1999
                                                                         ----------    ----------   ----------
<S>                                                                      <C>           <C>          <C>  
            Federal:
                Current (including Alternative Minimum Tax)              $      413           275           --
                Deferred (including elimination of valuation allowance)      (5,669)        6,270       11,560
            State, local and non-U.S                                          2,422         1,372        1,441
                                                                         ----------    ----------   ----------
                Total                                                    $   (2,834)        7,917       13,001
                                                                         ==========    ==========   ==========
</Table>


                The actual income tax expense for the years ended September 30,
           2001, 2000 and 1999 differs from the expected tax expense for those
           years (computed by applying the U.S. Federal corporate statutory
           rate) as follows:


<Table>
<Caption>

            (Dollars in thousands)                              2001          2000         1999
                                                             ----------    ----------   ----------
<S>                                                          <C>           <C>          <C>  
            Federal corporate statutory rate                       35.0%         35.0%        35.0%
            Change in tax valuation allowance:
               Utilization of capital loss carryforward            (2.5)         (4.3)       (19.3)
               Elimination of valuation allowance                 (46.5)           --           --
               Other                                                 --          (3.2)         5.9
           State and local, net of Federal benefits                 4.2           2.0          1.1
           Non-U.S.                                                (2.8)           .5          1.2
           Other, net                                               2.2           2.0         (3.4)
                                                             ----------    ----------   ----------
            Effective income tax rate                             (10.4)%        32.0%        20.5%
                                                             ==========    ==========   ==========
</Table>



                                                                              33

<PAGE>


2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                The tax effects of temporary differences that give rise to
            significant portions of the deferred tax assets and liabilities at
            September 30, 2001 and 2000 are presented below:


<Table>
<Caption>
            (Dollars in thousands)                                          2001          2000
                                                                         ----------    ----------
<S>                                                                      <C>           <C>  
           Deferred tax assets:
               Inventories, long-term contract accounting,
                   contract cost reserves and others                     $    4,243         2,644
               Pension and other postretirement benefits                      3,535         3,846
               Net operating loss carryforward                               45,361        48,345
               Capital loss carryforward                                         --        11,537
               Other compensation-related costs and other cost accruals       5,801           875
                                                                         ----------    ----------

                   Total deferred tax assets                                 58,940        67,247
           Deferred tax liabilities:
               Plant and equipment, depreciation methods,
                   acquisition asset allocations, and other                  (5,089)       (5,107)
                                                                         ----------    ----------

               Net deferred tax asset before valuation allowance             53,851        62,140
           Less valuation allowance                                              --       (24,237)
                                                                         ----------    ----------

               Net deferred tax assets                                   $   53,851        37,903
                                                                         ==========    ==========
</Table>



                Net deferred tax assets are classified in the Consolidated
            Balance Sheets as follows:


<Table>
<Caption>

            (Dollars in thousands)                                               2001         2000
                                                                              ----------   ----------
<S>                                                                           <C>          <C>  
            Current deferred tax assets (included in Other current assets)    $   15,278        7,095
            Noncurrent deferred tax assets                                        38,573       30,808
                                                                              ----------   ----------

                                                                              $   53,851       37,903
                                                                              ==========   ==========
</Table>



                Based on the Company's historical pretax income, together with
            the projection of future taxable income, Management believes it is
            more likely than not that the Company will realize the benefits of
            the net deferred tax asset existing at September 30, 2001. In order
            to realize the aforementioned net deferred tax asset, the Company
            will need to generate future taxable income of approximately $154
            million, of which $130 million is required to be realized prior to
            the expiration of the net operating loss (NOL) carryforward, of
            which $8 million will expire in 2006; $6 million will expire in
            2007; $23 million will expire in 2009; $38 million will expire in
            2010; $4 million will expire in 2011; $11 million will expire in
            2018; and $40 million will expire in 2019. The net operating loss
            carryforward may be used to reduce future income tax cash payments.

                In 2001, as the result of certain residual tax effects related
            to the fiscal 2000 sale of the property in Calabasas, CA, the
            Company utilized approximately $2 million of the remaining $33
            million capital loss carryforward available from the sale of its
            Hazeltine subsidiary in 1996. The remaining capital loss
            carryforward of approximately $31 million expired on September 30,
            2001.

                The valuation reserve in the amount of $10.8 million maintained
            for the deferred tax asset represented by the capital loss
            carryforward was eliminated by the expiration of the capital loss
            carryforward. In addition, in 2001, the Company eliminated its
            remaining net deferred tax valuation allowance of $12.7 million,
            which was the allowance representing the amount of the deferred tax
            asset associated with temporary differences and NOLs which
            Management believed would likely not be realized due to limitations
            on future use.



34

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


      7. Debt

                Long-term debt consists of the following at September 30, 2001
            and 2000:


<Table>
<Caption>

            (Dollars in thousands)                                          2001          2000
                                                                         ----------    ----------
<S>                                                                      <C>           <C>
            Long-term borrowings under the revolving credit facility     $    7,249            --
            Other debt                                                        1,200           746
            Less current maturities of long-term debt                          (111)         (136)
                                                                         ----------    ----------
                Long-term debt                                           $    8,338           610
                                                                         ==========    ==========
</Table>


                On April 11, 2000, the Company entered into a $75 million
            revolving credit facility, with the option to increase it to $100
            million through April 11, 2002. The credit facility was amended on
            February 28, 2001 to allow for borrowings in foreign currencies. The
            credit facility is available for direct borrowings and/or the
            issuance of letters of credit. The maturity of the bank credit
            facility is April 11, 2005, and is provided by a group of five
            banks, led by Bank of America. At September 30, 2001, the Company
            had approximately $61.7 million available to borrow under the credit
            facility as well as $14.5 million of cash on hand.

                The credit facility requires, as determined by certain financial
            ratios, a commitment fee ranging from 20-30 basis points per annum
            on the unused portion. The terms of the facility provide that
            interest on borrowings may be calculated at a spread over the London
            Interbank Offered Rate (LIBOR) or based on the prime rate, at the
            Company's election. Substantially all of the assets of the Company
            are pledged under the credit facility. The financial covenants of
            the credit facility include limitations on leverage and minimum
            consolidated EBITDA. As of September 30, 2001, the Company is in
            compliance with all bank covenants.

                During 2001 and 2000, the maximum aggregate short-term
            borrowings at any month-end were $5.5 million and $21 million,
            respectively; the average aggregate short-term borrowings
            outstanding based on month-end balances were $1.7 million and $8.1
            million, respectively; and the weighted average interest rates were
            6.4% in 2001, 7.5% in 2000 and 6.3% in 1999. The letters of credit
            issued and outstanding under the credit facility totaled $6.1
            million and $7.9 million at September 30, 2001 and 2000,
            respectively. Short-term borrowings under the credit facility
            totaled zero and $4.0 million as of September 30, 2001 and 2000,
            respectively. Long-term borrowings under the revolving credit
            facility were $7.2 million (related to the Bea acquisition and based
            in the local currency) and zero at September 30, 2001 and 2000,
            respectively. In addition, the Company has other borrowings in
            foreign countries of approximately $1.2 million, of which $0.1
            million is due within one year.


      8. Capital stock

                The 13,409,934 and 13,224,834 common shares as presented in the
            accompanying Consolidated Balance Sheets at September 30, 2001 and
            2000 represent the actual number of shares issued at the respective
            dates. The Company held 985,469 and 956,527 common shares in
            treasury at September 30, 2001 and 2000, respectively.

                In conjunction with the sale of SEI on September 30, 1999, the
            previously outstanding Deposit and Trust Agreement was terminated.
            The Company has various Stock Option Plans which permit the Company
            to grant key management employees (1) options to purchase shares of
            the Company's common stock or (2) stock appreciation rights with
            respect to all or any part of the number of shares covered by the
            options. All outstanding options were granted at prices equal to
            fair market value at the date of grant.



                                                                              35

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                Information regarding stock options awarded under the Option
            Plans is as follows:


<Table>
<Caption>
                                             FY 2001                    FY 2000                  FY 1999
                                      ----------------------    ----------------------   -----------------------
                                                  Estimated                 Estimated                 Estimated
                                       Shares     Avg. Price      Shares    Avg. Price     Shares     Avg. Price
                                      ---------   ----------    ---------   ----------   ----------   ----------
<S>                                   <C>         <C>           <C>         <C>          <C>          <C>       
October 1,                              792,699   $    10.62    1,437,442   $     9.35      953,716   $     8.61
     Granted                            175,250   $    18.65       99,250   $    12.90      522,600   $    10.76
     Exercised                         (151,298)  $     9.18     (558,738)  $     7.37      (17,270)  $     7.72
     Cancelled                          (20,003)  $    12.91     (185,255)  $    12.16      (21,604)  $    12.00
                                       --------   ----------   ----------   ----------   ----------   ----------
September 30,                           796,648   $    12.60      792,699    $   10.62    1,437,442   $     9.35

At September 30,
     Reserved for future grant          342,063                   405,566                   242,725
     Exercisable                        370,854   $    10.72      363,647    $   10.65      698,464   $     9.36
                                      =========   ==========   ==========    =========   ==========   ==========
</Table>



                Summary information regarding stock options outstanding at
            September 30, 2001 is presented below:


<Table>
<Caption>
                                                         OPTIONS OUTSTANDING
                                   -------------------------------------------------------------------
                                               NUMBER        WEIGHTED-AVERAGE                 WEIGHTED
            Range of                   OUTSTANDING AT               REMAINING                  AVERAGE
            Exercise Prices        SEPTEMBER 30, 2001        CONTRACTUAL LIFE           EXERCISE PRICE
            ---------------        ------------------        ----------------           --------------
<S>                                <C>                       <C>                        <C>
            $5.93 - $7.37                     100,797               5.0 YEARS                   $ 6.56
            $9.14 - $12.91                    446,198               7.1 YEARS                   $10.93
            $14.19 - $19.22                   206,153               8.4 YEARS                   $17.01
            $21.44 - $27.28                    43,500               9.6 YEARS                   $22.90
                                   ------------------        ----------------           --------------
                                              796,648               7.3 YEARS                   $12.60
                                   ==================        ================           ============== 
</Table>




<Table>
<Caption>
                                         EXERCISABLE OPTIONS OUTSTANDING
                                     ---------------------------------------
                                                 NUMBER             WEIGHTED
            Range of                     EXERCISABLE AT              AVERAGE
            Exercise Prices          SEPTEMBER 30, 2001       EXERCISE PRICE
            ---------------          ------------------       --------------
<S>                                  <C>                      <C>   
            $5.93 - $7.37                       100,797               $ 6.56
            $9.14 - $12.91                      216,348               $10.93
            $14.19 - $19.22                      53,709               $17.64
            $21.44 - $27.28                          --                   --
                                     ------------------       --------------
                                                370,854               $10.72
                                     ==================       ==============
</Table>


                The options have a ten year contractual life from date of
            issuance, expiring in various periods through 2011. The increase in
            exercised shares and cancelled shares in 2000 is mainly due to the
            sale of SEI. Employees of SEI had 90 days, subsequent to the
            divestiture, to exercise their exercisable stock options prior to
            their cancellation.

                In February 2001, the Company authorized a stock repurchase
            program to purchase up to 1.3 million shares of its common stock in
            the open market, subject to market conditions and other factors,
            through September 30, 2003. Approximately 77,000, 516,000 and
            177,000 shares were repurchased during fiscal years 2001, 2000 and
            1999, respectively.



36

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                During 2001, the Board of Directors authorized, and the
            shareholders approved, the Performance Share Plan (the Plan). The
            maximum number of shares available for issue under the Plan was
            532,814 shares. As of September 30, 2001, 331,831 shares have been
            awarded and 80,000 shares have been earned. At September 30, 2001,
            there were 40,000 shares of restricted stock outstanding.

                In February 2000, the Company amended and restated the Preferred
            Stock Purchase Rights Plan such that each Right entitles the holder
            to purchase one one-hundredth of a share of preferred stock at an
            initial purchase price of $60. The Rights remain in existence until
            February 3, 2010, unless renewed, redeemed earlier (at one cent per
            Right), exercised or exchanged under the terms of the plan. Under
            certain conditions involving the acquisition of, or an offer for,
            20% or more of the Company's common stock, all holders of Rights,
            except an acquiring entity, would be entitled (1) to purchase, at a
            defined price, common stock of the Company or an acquiring entity at
            a value twice the defined price, or (2) at the option of the Board,
            to exchange each Right for one share of common stock.

                The Company adopted the disclosure-only provisions of SFAS No.
            123. Under APB No. 25, no compensation cost was recognized for the
            Company's stock option plans. Had compensation cost for the
            Company's stock option plans and performance share plans been
            determined based on the fair value at the grant date for awards
            outstanding during 2001 and 2000 consistent with the provisions of
            this Statement, the Company's net earnings and net earnings per
            share would have been as shown in the table below:


<Table>
<Caption>

            Pro forma (Unaudited)
            (Dollars in thousands, except per share amounts)       2001         2000
                                                                ----------   ----------
<S>                                                             <C>          <C>   
            Net earnings                                        $   29,405       16,214
            Net earnings per share:
                Basic                                                 2.37         1.32
                Diluted                                               2.30         1.28
                                                                ==========   ==========
</Table>


                The fair value of each option grant is estimated on the date of
            grant using the Black-Scholes option-pricing model with the
            following weighted-average assumptions used for grants in 2001 and
            2000, respectively: expected dividend yield of 0% in both periods;
            expected volatility of 37.5% and 29.2%, risk-free interest rate of
            4.6% and 5.8%, and expected life based on historical exercise
            periods of 4.21 years and 4.06 years.

                To determine the fair value of grants under the Performance
            Share Plans, the probability that performance milestones would be
            met was applied to the ESCO stock price on the date of grant. This
            probability was based on an estimated average annual growth rate of
            10.0% and an annualized volatility of 37.9% and 38.3% in 2001 and
            2000, respectively.

      9. Retirement and other benefit plans

                Substantially all employees are covered by defined benefit or
            defined contribution pension plans maintained by the Company for the
            benefit of its employees. Benefits are provided to employees under
            defined benefit pay-related and flat-dollar plans, which are
            primarily noncontributory. Annual contributions to retirement plans
            equal or exceed the minimum funding requirements of the Employee
            Retirement Income Security Act or applicable local regulations. On
            September 30, 1999, the Company completed the sale of SEI to
            Engineered Support Systems, Inc. which accounts for significant
            fluctuations in amounts in 2000 as compared to 1999.


                                                                              37

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                Net periodic benefit cost for the years ended September 30,
            2001, 2000 and 1999 is comprised of the following:


<Table>
<Caption>

            (Dollars in millions)                 2001        2000        1999
                                                --------    --------    --------
<S>                                             <C>         <C>         <C>
            Defined benefit plans:
                Service cost                    $    1.4         1.4         4.1
                Interest cost                        2.5         2.1         6.7
                Expected return on plan assets      (3.0)       (2.8)       (7.5)
                Amortization of service costs         .1          .1          .3
                Net actuarial (gain) loss            (.5)        (.5)         .8
                Curtailment gain                      --         (.7)       (8.5)
                Settlement loss                       --          --         2.9
                                                --------    --------    --------
                  Net periodic benefit cost           .5         (.4)       (1.2)
            Defined contribution plans                .7          .6          .7
                                                --------    --------    --------
              Total                             $    1.2          .2         (.5)
                                                ========    ========    ========
</Table>


                The Company recognized a curtailment gain in 2000 as a result of
            the sale of the Rantec microwave business in February 2000 and also
            recognized a curtailment gain and a settlement loss in 1999 as a
            result of the sale of SEI.

                The projected benefit obligation, accumulated benefit
            obligation, and fair value of plan assets for defined benefit
            pension plans with accumulated benefit obligations in excess of plan
            assets were $5.1 million, $4.7 million and $2.6 million,
            respectively, as of September 30, 2001, and $2.1 million, $1.3
            million and zero, respectively, as of September 30, 2000.

                The net benefit obligation of the Company's defined benefit
            pension plans as of September 30, 2001 and 2000 is shown below:


<Table>
<Caption>

            (Dollars in millions)                                2001        2000
                                                               --------    --------
<S>                                                            <C>         <C>
           Change in benefit obligation--
                Net benefit obligation at beginning of year    $   29.6        27.1
                Service cost                                        1.4         1.4
                Interest cost                                       2.5         2.1
                Plan amendments                                      .1          .2
                Actuarial (gain) loss                               3.9          .3
                Gross benefits paid                                (1.0)        (.8)
                Curtailments                                         --         (.7)
                                                               --------    --------
                    Net benefit obligation at end of year      $   36.5        29.6
                                                               ========    ========
</Table>


                The plan assets of the Company's defined benefit pension plans
            at September 30, 2001 and 2000 are shown below:


<Table>
<Caption>
            (Dollars in millions)                                  2001        2000
                                                                 --------    --------
<S>                                                              <C>         <C>
           Change in plan assets:
                Fair value of plan assets at beginning of year   $   35.9        28.5
                Actual return on plan assets                         (6.8)        8.0
                Employer contributions                                 --          .2
                Gross benefits paid                                  (1.0)        (.8)
                                                                 --------    --------
                    Fair value of plan assets at end of year     $   28.1        35.9
                                                                 ========    ========
</Table>


           Pension plan assets consist principally of marketable securities
           including common stocks, bonds, and interest-bearing deposits.


38

<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                The Company's defined benefit pension plans recognized the
            following net amounts at September 30, 2001 and 2000:


<Table>
<Caption>

           (Dollars in millions)                                                               2001        2000
                                                                                             --------    --------
<S>                                                                                          <C>         <C>
           Funded status at end of year                                                      $   (8.4)        6.3
           Unrecognized prior service cost                                                         .5          .5
           Unrecognized net actuarial (gain) loss                                                 4.1       (10.2)
                                                                                             --------    --------

                  Accrued benefit cost                                                       $   (3.8)       (3.4)
                                                                                             ========    ========

           Amounts recognized in the balance sheet consist of:
                Prepaid benefit cost                                                         $     .2          .1
                Accrued benefit cost                                                             (4.0)       (3.5)
                Additional minimum liability                                                      (.8)        (.1)
                Intangible asset                                                                   .2          .1
                Accumulated other comprehensive income                                             .6          --
                                                                                             --------    --------

                             Accrued benefit liability (Included in Other liabilities)       $   (3.8)       (3.4)
                                                                                             ========    ========
</Table>


                The benefit obligations of the defined benefit plans as of
            September 30, 2001 and 2000 were based on discount rates of 7.25%
            and 7.75%, respectively, and an assumed rate of increase in
            compensation levels of 4.5% in 2001 and 2000.

                The 2001, 2000 and 1999 pension expense for the defined benefit
            plans was based on a 7.25%, 7.75% and 7.75% discount rate,
            respectively, a 4.5%, 4.5% and 4% increase in compensation levels,
            respectively, and a 9.5%, 9.5% and 10% expected long-term rate of
            return on plan assets, respectively.

                In addition to providing retirement income benefits, the Company
            provides unfunded postretirement health and life insurance benefits
            to certain retirees. To qualify, an employee must retire at age 55
            or later and the employee's age plus service must equal or exceed
            75. Retiree contributions are defined as a percentage of medical
            premiums. Consequently, retiree contributions increase with
            increases in the medical premiums. The life insurance plans are
            noncontributory and provide coverage of a flat dollar amount for
            qualifying retired employees.

                Net periodic postretirement benefit cost is comprised of the
            following:


<Table>
<Caption>

            (Dollars in millions)                                     2001        2000        1999
                                                                    --------    --------    --------
<S>                                                                 <C>         <C>         <C>
            Service cost                                            $     --          .1          .2
            Interest cost                                                 .1          .1          .7
            Net amortization and deferral                                (.2)        (.3)        (.3)
            Curtailment gain recognized                                   --         (.3)       (8.7)
                                                                    --------    --------    --------

                Net periodic postretirement benefit cost            $    (.1)        (.4)   $   (8.1)
                                                                    ========    ========    ========
</Table>


                The net benefit obligation for postretirement benefits at
            September 30, 2001 and 2000 is shown below:


<Table>
<Caption>

            (Dollars in millions)                             2001        2000
                                                              ----        ----
<S>                                                           <C>          <C>
            Net benefit obligation at beginning of year       $1.2         1.0
            Service cost                                        --          .1
            Interest cost                                       .1          .1
            Actuarial (gain) loss                               .5          .4
            Curtailments                                        --         (.3)
            Gross benefits paid                                (.1)        (.1)
                                                              ----        ----
                Net benefit obligation at end of year         $1.7         1.2
                                                              ====        ==== 
</Table>



                                                                              39


<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                The plan assets for postretirement benefits at September 30,
            2001 and 2000 are shown below:


<Table>
<Caption>

            (Dollars in millions)                                2001       2000
                                                                 ----       ----
<S>                                                             <C>        <C>
            Fair value of plan assets at beginning of year       $ --         --
            Employer contributions                                 .1         .1
            Gross benefits paid                                   (.1)       (.1)
                                                                 ----       ----
                Fair value of plan assets at end of year         $ --         --
                                                                 ====       ====
</Table>



                The Company recognized the following net amounts for
            postretirement benefits at September 30, 2001 and 2000:


<Table>
<Caption>

            (Dollars in millions)                                               2001        2000
                                                                                -----       ----
<S>                                                                             <C>         <C>  
            Funded status at end of year                                        $(1.7)      (1.2)
            Unrecognized prior service cost                                        --         --
            Unrecognized net actuarial (gain) loss                               (3.1)      (3.8)
                                                                                -----       ----

                Accrued benefit costs                                           $(4.8)      (5.0)
                                                                                -----       ----
            Amounts recognized in the balance sheet consist of--
                Accrued benefit liability (Included in Other liabilities)       $(4.8)      (5.0)
                                                                                =====       ==== 
</Table>


                The net benefit obligations of the plans as of September 30,
            2001 and 2000 were based on discount rates of 7.25% and 7.75%,
            respectively. The September 30, 2001 net benefit obligation was
            based on a health care cost trend of 5.5% for fiscal 2001. The
            September 30, 2000 net benefit obligation was based on a health care
            cost trend of 6.5% for fiscal 2000, gradually grading down to an
            ultimate rate of 5.5% by 2002. A 1% increase in the health care cost
            trend rate for each year would increase the September 30, 2001 net
            benefit obligation by approximately $45,000, while a 1% decrease in
            the health care cost trend rate for each year would decrease the
            September 30, 2001 net benefit obligation by approximately $50,000.

                The fiscal 2001 and 2000 net periodic benefit costs were based
            on discount rates of 7.25% and 7.75%, respectively. The net periodic
            benefit cost was based on an assumed health care cost trend of 5.5%
            for 2001 and 6.5% for 2000 gradually grading down to 5.5% by fiscal
            year 2002. A 1% increase in the health care cost trend rate for each
            year would increase the aggregate of the service cost and interest
            cost components of the fiscal 2001 net periodic benefit cost by
            approximately $3,900, while a 1% decrease in the health care cost
            trend rate for each year would decrease the aggregate of the service
            cost and interest cost components of the fiscal 2001 net periodic
            benefit cost by approximately $4,600.

10.  Other financial data

            Items charged to operations during the years ended September 30, 
            2001, 2000 and 1999 included the following:


<Table>
<Caption>

            (Dollars in thousands)                 2001          2000          1999
                                                  -------       -------       -------
<S>                                               <C>           <C>           <C>  
            Maintenance and repairs               $ 4,952         4,870         7,078
            Salaries and wages                     91,649        78,206       132,671
                                                  -------       -------       -------
            Research and development costs:
                 Company-sponsored                $ 9,396         6,177         7,716
                 Customer-sponsored                 5,231         3,961         8,332
                                                  -------       -------       -------
                 Total                            $14,627        10,138        16,048
                                                  =======       =======       =======
</Table>


40



<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                The increase in salaries and wages in 2001 compared to 2000 is
            due to the Company's acquisition activities. The decreases in
            salaries and wages and in research and development costs in 2000
            compared to 1999 are due to the sale of SEI in 1999. The increase in
            research and development costs in 2001 compared to 2000 is mainly
            due to the Company's acquisition activities and increased spending
            in the Company's Communications segment related to product
            enhancements and additional product offerings. Accrued expenses
            included accrued employee compensation of $9.1 million and $7.5
            million at September 30, 2001 and 2000, respectively. Other
            liabilities include the accrued benefit liabilities related to the
            Company's defined benefit pension plans, the accrued benefit
            liabilities related to the Company's postretirement benefits,
            miscellaneous tax liabilities, and liabilities related to the
            Company's cash flow hedges.

11.  Business segment information

                The Company is organized based on the products and services that
            it offers. Under this organizational structure, the Company operates
            in four principal segments: Filtration/Fluid Flow, Test,
            Communications and Other. Filtration/Fluid Flow operations consist
            of PTI Technologies Inc. (PTI) and Filtertek Inc. (Filtertek). PTI
            develops and manufactures a wide range of filtration products and is
            a leading supplier of filters to the commercial aerospace market and
            microfiltration market. Filtertek develops and manufactures a broad
            range of high-volume, original equipment manufacturer (OEM)
            filtration products at its facilities in North America, South
            America and Europe. Test segment operations represent the EMC Group,
            consisting of EMC Test Systems, L.P. (ETS) and Lindgren. The EMC
            Group is principally involved in the design and manufacture of EMC
            test equipment, test chambers, and electromagnetic absorption
            materials. The EMC Group also manufactures radio frequency (RF)
            shielding products and components used by manufacturers of medical
            equipment, communications systems, electronic products, and shielded
            rooms for high security data processing and secure communication.
            Communications operations consist of Distribution Control Systems,
            Inc. (DCSI) which is principally involved in providing two-way power
            line communication systems for the utility industry. These systems
            provide the electric utilities with a patented communication
            technology for demand-side management, distribution automation and
            automatic meter reading capabilities. Communications also includes
            the operations of Comtrak, L.L.C. 

                The Divested Business segment consists of Systems & Electronics
            Inc. (SEI). As of September 30, 1999, ESCO sold SEI to Engineered
            Support Systems, Inc. The Other segment is principally comprised of
            Rantec Power Systems Inc., formerly a part of Rantec Microwave &
            Electronics, Inc. (Rantec) which produces power supplies widely used
            in high performance displays, such as cockpit instrumentation,
            engineering workstations and medical imaging. Rantec's microwave
            antenna business was sold in February 2000. Accounting policies of
            the segments are the same as those described in the summary of
            significant accounting policies in Note 1. 

                In accordance with SFAS 131, the Company evaluates the
            performance of its operating segments based on operating profit,
            which is defined as: net sales, less cost of sales, and less SG&A
            expenses. Intersegment sales and transfers are not significant.
            Segment assets consist primarily of customer receivables,
            inventories and fixed assets directly associated with the production
            processes of the segment. Segment assets also include goodwill.
            Segment depreciation and amortization is based upon the direct
            assets listed above. 


<Table>
<Caption>

            NET SALES 
            Year ended September 30, 
            (Dollars in millions)        2001         2000         1999
                                        ------       ------       ------
<S>                                     <C>          <C>          <C>  
            Filtration/Fluid Flow       $188.2        181.7        168.9
            Test 85.5                     63.0         34.9
            Communications                59.1         42.7         25.8
            Other                         12.1         12.8         13.7
             Divested Business              --           --        172.8
                                        ------       ------       ------
            Consolidated totals         $344.9        300.2        416.1
                                        ======       ======       ======
</Table>



                                                                              41


<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



<Table>
<Caption>

           OPERATING PROFIT
           Year ended September 30,
           (Dollars in millions)                                    2001         2000         1999
                                                                    -----        -----        -----
<S>                                                                 <C>          <C>          <C> 
            Filtration/Fluid Flow                                   $16.8         16.6         11.9
            Test 9.3                                                  6.9          4.0
            Communications                                           12.6          8.9
                (.4)
            Other                                                     1.4          (.3)        (8.8)
            Divested Business                                          --           --         10.4
            Reconciliation to consolidated totals (Corporate)        (3.3)        (2.0)        (2.2)
                                                                    -----        -----        -----
            Consolidated totals                                     $36.8         30.1         14.9
                                                                    =====        =====        =====
</Table>


                Operating profit, as defined by the Company, excludes certain
            costs which are included in Other costs and expenses, net, in the
            Consolidated Statements of Operations, and which would be included
            in the determination of operating income as defined within generally
            accepted accounting principles. In fiscal 2001, these items consist
            of approximately $2.1 million of costs related to the
            Filtration/Fluid Flow segment as a result of the consolidation of
            PTI's filtration business into new facilities in Oxnard, CA;
            consolidation costs of the Stockton, CA manufacturing facility into
            the Huntley, IL facility; and other miscellaneous costs.

                In 2000, these items consist of approximately $2.0 million of
            net costs related to the Filtration/Fluid Flow segment as a result
            of the consolidation of PTI's filtration businesses into new
            facilities in Oxnard, CA; expenses related to the planned upgrade of
            production equipment to improve manufacturing efficiency at
            Filtertek; and costs related to the microfiltration business. In
            addition, related to the Test segment in 2000, are approximately
            $1.0 million of Other costs and expenses, net, primarily related to
            the write-off of an investment in a third party EMC related start-up
            company which filed bankruptcy in 2000.

                The 1999 operating profit includes $3.9 million of other charges
            related to cost of sales and $5.1 million of restructuring charges
            related to the strategic actions undertaken in 1999. The total
            nonrecurring charges included in 1999 operating profit amounted to
            $9.1 million. The Other segment in 1999 also includes $3.8 million
            of charges related to cost growth on certain development programs at
            Rantec Power Systems.

                The Company is also presenting EBITDA by segment for
            informational purposes only. EBITDA is defined as earnings before
            interest, taxes, depreciation and amortization.


<Table>
<Caption>

            EBITDA                                       2001                                  2000
                                             -------------------------------       -------------------------------
           Year ended September 30,          EBIT    DEPRECIATION/    EBITDA       EBIT     Depreciation/   EBITDA
           (Dollars in millions)                     AMORTIZATION                           Amortization
                                             -----   ------------     ------       -----    ------------    ------
<S>                                          <C>     <C>              <C>          <C>      <C>             <C> 
            Filtration/Fluid Flow            $11.5         10.8        22.3         12.4         10.7        23.1
            Test                               7.5          2.5        10.0          4.7          1.6         6.3
            Communications                    11.9          1.2        13.1          8.2          1.2         9.4
            Other (Rantec & Corporate)        (3.5)          .6        (2.9)         (.2)          .7          .5
                                             -----        -----       -----        -----        -----       -----
            Consolidated totals              $27.4         15.1        42.5         25.1         14.2        39.3
                                             =====        =====       =====        =====        =====       =====
</Table>


42


<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<Table>
<Caption>

           IDENTIFIABLE ASSETS
           As of September 30,
           (Dollars in millions)                                            2001         2000         1999
                                                                           ------       ------       ------
<S>                                                                        <C>          <C>          <C>  
            Filtration/Fluid Flow                                          $213.4        198.2        195.0
            Test                                                             62.3         61.2         22.2
            Communications                                                   22.4         21.6         14.2
            Other                                                             7.5          7.4         18.9
            Reconciliation to consolidated totals (Corporate assets)         70.0         42.7        128.0
                                                                           ------       ------       ------
            Consolidated totals                                            $375.6        331.1        378.3
                                                                           ======       ======       ======
</Table>



                Corporate assets consist primarily of deferred taxes and cash
            balances.


<Table>
<Caption>

           CAPITAL EXPENDITURES, NET
           Year ended September 30,
           (Dollars in millions)          2001        2000        1999
                                          -----       -----       -----
<S>                                       <C>         <C>         <C>
            Filtration/Fluid Flow         $ 9.4         9.0         6.3
            Test                            1.1          .3          .2
            Communications                   .9          .5          .4
            Other                            .5          .6          .3
            Divested Business                --          --         1.1
                                          -----       -----       -----
            Consolidated totals           $11.9        10.4         8.3
                                          =====       =====       =====
</Table>



                Depreciation and amortization is included in the EBITDA table,
            noted above.


<Table>
<Caption>

            GEOGRAPHIC INFORMATION
            Net sales to customers
            (Dollars in millions)      2001         2000          1999
                                      ------       ------       ------
<S>                                   <C>          <C>          <C>  
            North America             $276.3        234.6        346.9
            Europe                      43.4         46.1         37.0
            Far East                    15.0          9.5         23.5
            Other                       10.2         10.0          8.7
                                      ------       ------       ------
            Consolidated totals       $344.9        300.2        416.1
                                      ======       ======       ======
</Table>



<Table>
<Caption>


            LONG-LIVED ASSETS
            (Dollars in millions)        2001        2000        1999
                                         -----       -----       -----
<S>                                      <C>          <C>         <C> 
            North America                $53.8        55.9        63.8
            Europe                        11.2         6.7         7.5
                                         -----       -----       -----
            Consolidated totals          $65.0        62.6        71.3
                                         =====       =====       =====
</Table>


                Net sales are attributed to countries based on location of
            customer. Long-lived assets are attributed to countries based on
            location of the asset.


                                                                              43


<PAGE>

2001 ESCO TECHNOLOGIES ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



12.   Commitments and Contingencies
  
                At September 30, 2001, the Company had $6.1 million in letters
            of credit outstanding as guarantees of contract performance.

                As a normal incidence of the businesses in which the Company is
            engaged, various claims, charges and litigation are asserted or
            commenced against the Company. In the opinion of management, final
            judgments, if any, which might be rendered against the Company in
            current litigation are adequately reserved, covered by insurance, or
            would not have a material adverse effect on its financial
            statements.


13.   Quarterly financial information (Unaudited) 


<Table>
<Caption>

            Dollars in thousands,                                FIRST       SECOND       THIRD       FOURTH       FISCAL 
            except per share amounts)                           QUARTER      QUARTER     QUARTER      QUARTER       YEAR
                                                               ----------   ----------  ----------   ----------   ----------
<S>                                                            <C>          <C>         <C>          <C>          <C>    
            2001
            Net sales                                          $   82,871       86,905      87,862       87,266      344,904
            Gross profit                                           25,245       27,230      28,015       27,888      108,378
            Net earnings                                            3,978        4,287       4,557       17,285       30,107
            Earnings per share (GAAP Reported):
                 Basic                                                .32          .35         .37         1.39         2.43
                 Diluted                                              .31          .34         .35         1.33         2.35
                                                               ----------   ----------  ----------   ----------   ----------

            Earnings per share (From Operations - pro forma)
                 Basic                                                .32          .35         .37          .37         1.41
                 Diluted                                              .31          .34         .35          .36         1.36
                                                               ==========   ==========  ==========   ==========   ==========

            2000
            Net sales                                          $   65,865       70,062      79,235       84,995      300,157
            Gross profit                                           19,628       21,576      24,699       25,991       91,894
            Net earnings                                            5,056        3,517       3,708        4,538       16,819
            Earnings per share (GAAP Reported):
                 Basic                                                .41          .29         .30          .37         1.37
                 Diluted                                              .40          .28         .29          .36         1.33
                                                               ----------   ----------  ----------   ----------   ----------


            Earnings per share (From Operations - pro forma)
                 Basic                                                .22          .29         .30          .33         1.14
                 Diluted                                              .22          .28         .29          .32         1.11
                                                               ==========   ==========  ==========   ==========   ==========
</Table>



                The 2001 fourth quarter GAAP Reported reflects the elimination
            of the net deferred tax valuation allowance of approximately $12.7
            million or $0.97 per share.

                The 2001 earnings per share From Operations - pro forma excludes
            the elimination of the net deferred tax valuation allowance of
            approximately $12.7 million or $0.99 per share.

                The 2000 first quarter GAAP Reported net earnings reflects the
            impact of the after-tax gain on the sale of the Riverhead, NY
            property of approximately $2.2 million or $0.18 per share. The 2000
            fourth quarter GAAP Reported net earnings reflects the after-tax
            gain on the sale of the Calabasas, CA property of approximately $0.5
            million or $0.04 per share.

                The 2000 earnings per share From Operations pro - forma excludes
            the gains on the sale of the Riverhead, NY and the Calabasas, CA
            properties as described above.

44


<PAGE>



2001 ESCO TECHNOLOGIES ANNUAL REPORT

Independent Auditors' Report

            THE BOARD OF DIRECTORS AND SHAREHOLDERS
            ESCO TECHNOLOGIES INC.:

                We have audited the accompanying consolidated balance sheets of
            ESCO Technologies Inc. and subsidiaries as of September 30, 2001 and
            2000, and the related consolidated statements of operations,
            shareholders' equity, and cash flows for each of the years in the
            three-year period ended September 30, 2001. These consolidated
            financial statements are the responsibility of the Company's
            Management. Our responsibility is to express an opinion on these
            consolidated financial statements based on our audits.

                We conducted our audits in accordance with auditing standards
            generally accepted in the United States of America. Those standards
            require that we plan and perform the audit to obtain reasonable
            assurance about whether the financial statements are free of
            material misstatement. An audit includes examining, on a test basis,
            evidence supporting the amounts and disclosures in the financial
            statements. An audit also includes assessing the accounting
            principles used and significant estimates made by management, as
            well as evaluating the overall financial statement presentation. We
            believe that our audits provide a reasonable basis for our opinion.

                In our opinion, the consolidated financial statements referred
            to above present fairly, in all material respects, the financial
            position of ESCO Technologies Inc. and subsidiaries as of September
            30, 2001 and 2000, and the results of their operations and their
            cash flows for each of the years in the three-year period ended
            September 30, 2001, in conformity with accounting principles
            generally accepted in the United States of America.

                As discussed in note 1 to the consolidated financial statements,
            in 1999, the Company adopted Statement of Position 98-5, "Reporting
            on the Costs of Start-Up Activities".


            /s/ KPMG LLP    


            St. Louis, Missouri
            November 13, 2001



46



<PAGE>


2001 ESCO TECHNOLOGIES ANNUAL REPORT
Shareholders' Summary

            Shareholders' Annual Meeting

                The Annual Meeting of the shareholders of ESCO Technologies Inc.
            will be held at 10 a.m. Tuesday, February 5, 2002, at the Hilton St.
            Louis Frontenac Hotel, 1335 South Lindbergh Boulevard, St. Louis
            County, Missouri 63131. Notice of the meeting and a proxy statement
            were sent to shareholders with this Annual Report.

            10-K Report

                A copy of the Company's 2001 Annual Report on Form 10-K filed
            with the Securities and Exchange Commission is available to
            shareholders without charge. Direct your written request to the
            Investor Relations Department, ESCO Technologies Inc., 8888 Ladue
            Road, Suite 200, St. Louis, Missouri 63124.

            Investor Relations

                Additional investor-related information may be obtained by
            contacting the Director of Investor Relations at (314) 213-7277 or
            toll free at (888) 622-3726. Information is also available through
            the Company's website at www.escotechnologies.com or by email at
            pmoore@escotechnologies.com.

            Transfer Agent and Registrar

                Shareholder inquiries concerning lost certificates, transfer of
            shares or address changes should be directed to:

                Transfer Agent/Registrar
                  Registrar and Transfer Company
                  10 Commerce Drive
                  Cranford, NJ  07016-3572
                  1 (800) 368-5948
                  E-mail: info@rtco.com

            Capital Stock Information

                ESCO Technologies Inc. common stock shares (symbol ESE) are
            listed on the New York Stock Exchange.

                There were approximately 4,300 holders of record of shares of
            common stock at September 30, 2001.


48


<PAGE>


Common Stock Market Prices

                The Company's common stock and associated preferred stock
            purchase rights (subsequently referred to as common stock) are
            listed on the New York Stock Exchange under the symbol "ESE." The
            following table summarizes the high and low prices of the Company's
            common stock for each quarter of fiscal 2001 and 2000.


<Table>
<Caption>

                                2001                      2000
                         -------------------       -------------------
            Quarter       HIGH         LOW          High          Low
            -------      ------       ------       ------       ------
<S>                      <C>          <C>          <C>          <C>   
            First        $21.50       $16.38       $12.63       $ 9.50
            Second        26.25        19.75        17.13        11.50
            Third         32.67        23.67        20.13        15.50
            Fourth        30.45        21.90        20.00        17.06
                         ======       ======       ======       ======
</Table>



                                                                              47






<PAGE>

                                                                      EXHIBIT 21


                                 SUBSIDIARIES OF
                             ESCO TECHNOLOGIES INC.



<TABLE>
<CAPTION>
                                            STATE OR JURISDICTION OF
                                                 INCORPORATION OR                   NAME UNDER WHICH
NAME                                               ORGANIZATION                     IT DOES BUSINESS
----                                               ------------                     ----------------
<S>                                         <C>                                     <C>
Bea Filtri S.p.A.                                  Italy                               Same

Comtrak Technologies, L.L.C.                       Missouri                            Same

Distribution Control Systems Caribe, Inc.          Puerto Rico                         Same

Distribution Control Systems, Inc.                 Missouri                            Same

EMC Test Systems, L.P.                             Texas                               Same

ESCO Electronica De Mexico,                        Mexico                              Same
S.A. de C.V.

ESCO Technologies Holding Inc.                     Missouri                            Same

Euroshield OY                                      Finland                             Same

Filtertek Inc.                                     Delaware                            Same and Tek Packaging
                                                                                       Division

Filtertek BV                                       Netherlands                         Same

Filtertek de Puerto Rico, Inc.                     Delaware                            Same

Filtertek do Brazil Industria E                    Brazil                              Same
Commerico Limitada

Filtertek SA                                       France                              Same

Holaday Industries, Inc.                           Minnesota                           Same

Lindgren R.F. Enclosures, Inc.                     Illinois                            Same

PTI Advanced Filtration Inc.                       Delaware                            Same

PTI S.p.A.                                         Italy                               Same

PTI Technologies Inc.                              Delaware                            Same

PTI Technologies Limited                           England                             Same

Rantec Power Systems Inc.                          Delaware                            Same

Rayproof Ltd.                                      England                             Same

VACCO Industries                                   California                          Same
</TABLE>











<PAGE>

                                                                      Exhibit 23












                                                   Independent Auditors' Consent



The Board of Directors
ESCO Technologies Inc.:

We consent to incorporation by reference in the registration statements (Nos.
33-39737, 33-47916, 33-98112, 333-92945, 333-77887, 333-96309 and 333-63930) on
Form S-8 of ESCO Technologies Inc. of our report dated, November 13, 2001
relating to the consolidated balance sheets of ESCO Technologies Inc. and
subsidiaries as of September 30, 2001 and 2000, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
years in the three-year period ended September 30, 2001, which report appears in
the September 30, 2001 Annual Report on Form 10-K of ESCO Technologies Inc.



                                                          KPMG LLP



St. Louis, Missouri
December 20, 2001