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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
(MARK ONE)
    (X)           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     FOR THE FISCAL YEAR ENDED JUNE 30, 2001

                                       OR

    ( )         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                         FOR THE TRANSITION PERIOD FROM
                                ______TO_______

                          COMMISSION FILE NUMBER 1-9125

                        AMERICAN TECHNICAL CERAMICS CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                    DELAWARE                               11-2113382
          (STATE OR OTHER JURISDICTION                  (I.R.S. EMPLOYER
        OF INCORPORATION OR ORGANIZATION)              IDENTIFICATION NO.)

     17 STEPAR PLACE, HUNTINGTON STATION, NY                  11746
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (631) 622-4700
           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

    TITLE OF EACH CLASS                NAME OF EACH EXCHANGE ON WHICH REGISTERED
    -------------------                -----------------------------------------
COMMON STOCK, PAR VALUE $.01                    AMERICAN STOCK EXCHANGE

        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 SUCH
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 THE 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. [X]

         ON SEPTEMBER 4, 2001, THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S
COMMON STOCK (BASED UPON THE CLOSING SALES PRICE OF THE REGISTRANT'S COMMON
STOCK ON THE AMERICAN STOCK EXCHANGE ON SUCH DATE) HELD BY NONAFFILIATES OF THE
REGISTRANT WAS APPROXIMATELY $ 31,141,318. (FOR PURPOSES OF THIS REPORT, ALL
OFFICERS AND DIRECTORS HAVE BEEN CLASSIFIED AS AFFILIATES, WHICH CLASSIFICATION
SHALL NOT BE CONSTRUED AS AN ADMISSION OF THE AFFILIATE STATUS OF ANY SUCH
PERSON.)

         ON SEPTEMBER 4, 2001, THE REGISTRANT HAD OUTSTANDING 8,017,993 SHARES
OF COMMON STOCK.

         DOCUMENTS INCORPORATED BY REFERENCE: PORTIONS OF THE REGISTRANT'S
PROXY STATEMENT RELATING TO ITS ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
NOVEMBER 15, 2001 ARE INCORPORATED INTO PART III OF THIS REPORT BY REFERENCE.

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                                     PART 1

ITEM 1.  BUSINESS

         GENERAL

         The Registrant was incorporated in New York in 1966 as Phase
Industries, Inc., and changed its name to American Technical Ceramics Corp. in
June 1984. Unless the context indicates otherwise, references to the Registrant
herein include American Technical Ceramics Corp., a Delaware corporation, and
its subsidiaries, all of which are wholly-owned.

         The Registrant designs, develops, manufactures and markets
RF/Microwave/Millimeter-Wave ceramic capacitors, thin film products, and other
passive components. The Registrant's products are focused primarily in the high
reliability market for ultra-high frequency ("UHF") and microwave applications,
including wireless electronics, fiber optics, medical electronics, semiconductor
equipment and satellite equipment. Capacitors function within electronic
circuits by storing and discharging precise amounts of electrical power. The
Registrant believes that it is a leading manufacturer of multilayer capacitors
("MLCs") for UHF and microwave applications. Selling prices for the Registrant's
MLCs typically range from $.15 to $7.50 or higher, whereas selling prices for
commodity-type MLC units typically range from $.005 to $.10. Thin film products
are ceramic substrates on which circuit patterns are printed by means of thin
film processes, and are used by customers as building blocks in electronic
circuits. Management believes the Registrant operates in only one industry
segment - the electronic components industry.

         During the fiscal year ended June 30, 2001, the electronic components
industry operated in two very different business climates. During the first six
months of the fiscal year, the Registrant experienced unprecedented demand for
its products principally from the telecommunications markets. The Registrant
responded to this situation by increasing capacity, strengthening infrastructure
and increasing investment in new product initiatives. During the second half of
the fiscal year, the Registrant experienced a significant slowdown in the demand
for its products, principally in the telecommunications, semiconductor
manufacturing and fiber optic markets. This slow-down resulted in the
cancellation of certain existing orders and a substantially reduced rate of
incoming orders. The Registrant responded to this situation by reducing costs,
including through significant reductions in the number of employees. See "Item
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS".

         PRODUCTS

         The Registrant's traditional line of MLCs are available in
predominantly four physical sizes designated "A" (.055 inch cube), "B" (.110
inch cube), "C" (.250 inch cube) and "E" (.380 inch cube); in three types of
dielectrics: low-loss porcelain (the 100 series), zero temperature coefficient
(the 700 series) and high dielectric constant (the 200 series); and in a variety
of capacitance values. The 100 series, the Registrant's basic product line, is
widely used in microwave equipment and is one of the three product lines that
accounts for more than 10% of the Registrant's consolidated revenue, accounting
for 42%, 46% and 48% of the Registrant's revenues in fiscal years 2001, 2000 and
1999, respectively. The 700 series has a slightly higher dissipation factor
(i.e., is slightly less energy-efficient) than the 100 series. Because of its
lower temperature coefficient, it is used in certain UHF/Microwave and lower
frequency applications. The 700 series sales accounted for 8%, 11% and 13% of
the Registrant's revenues in fiscal years 2001, 2000 and 1999, respectively. The
200 series has high packaging density and is used in microcircuits where high
capacitance value is needed in a small space.

                                        2
<PAGE>

         The Registrant's MLCs are generally designed for critical performance
applications, and are characterized by a high degree of reliability, low power
dissipation and ruggedness. The MLCs can be broadly classified as either
commercial or "hi-rel", based primarily upon the amount of testing involved. All
are subject to precise measurement of capacitance, dissipation factor and
insulation resistance. The Registrant's products are used in commercial and
military applications, including wireless cellular and personal communications
systems (PCS), medical imaging (i.e., magnetic resonance imaging), radio
frequency power sources for semiconductor manufacturing, satellite
communications, numerous aerospace systems, including radar and electronic
warfare, and certain high-speed digital processing equipment.

         Approximately 93%, 92% and 87% of the Registrant's sales in fiscal
years 2001, 2000 and 1999, respectively, were to commercial (i.e., applications
other than hi-rel) customers. For the fiscal years ended June 30, 2001, 2000 and
1999, the Registrant estimates that approximately 7%, 8% and 13% of the
Registrant's sales, respectively, were sales of hi-rel products. See "Item 1.
BUSINESS -- CUSTOMERS AND MARKETING -- FOREIGN SALES" and Note 9 of Notes to
Consolidated Financial Statements.

         Hi-rel MLCs are principally utilized in applications such as satellites
(including commercial communications satellites), high performance military
aircraft, spacecraft and missiles, and other defense applications such as radar
and electronic countermeasures. The Registrant produces its hi-rel MLCs to
precise customer specifications and subjects each hi-rel MLC to a battery of
performance and environmental tests. Such performance tests measure capacitance,
dissipation factor, insulation resistance and dielectric withstanding voltage.
The environmental tests are either designated by customers or specified by the
military and include temperature shock tests, humidity tests and tests of life
expectancy at elevated temperature and voltage levels.

         For commercial applications, the Registrant produces MLCs to precise
performance specifications similar to hi-rel MLCs, individually tests them for
certain electrical performance characteristics and conducts additional tests on
samples from production lots. However, the Registrant does not subject all such
commercial MLCs to environmental tests.

         The Registrant has historically pursued the high-performance MLC market
in which its products are typically applied in the manufacture of high-value
capital equipment and which has commanded higher unit selling prices. The MLCs
required for many of these applications constitute a small part of the circuit
cost and, because performance requirements are stringent and the cost of
component failure high, customers have been willing to pay the price premium
associated with higher performance products such as those the Registrant makes.
In recent years, the Registrant has automated its manufacturing processes to
enable it to produce certain of its existing MLCs for the medium - priced niche
market driven by wireless base-station infrastructure applications.

         Recently, the Registrant began marketing new capacitor products
targeted toward higher volume markets. The first of these new products is the
600S which is targeted toward the high-performance, lower priced segment of the
wireless industry. The 600S capacitor is smaller (.06" x .03" rectangle) and
lower priced (approximately two-thirds the price of the lowest-priced comparable
part) than the Registrant's traditional MLC's, and uses a new ATC-developed
ceramic formulation to optimize performance for cellular and PCS operating
frequencies. Sales from this product line, which was formally launched on June
16, 2000, amounted to 4% of the Registrant's revenues in fiscal year 2001 and
less than 1% in the fiscal year ended June 30, 2000.

         The Registrant also offers specialized capacitors designed to perform
at frequencies higher than the useful range of typical microwave MLCs. The
Registrant's Microcap(R), a single layer ceramic capacitor, was developed to
meet certain applications where small size is critical and which operate at
frequencies extending higher than those for which MLCs are typically chosen.
Manufactured and sold in both hi-rel and commercial versions, these products are
used in wideband wireless data communications, satellite communications,
military systems and other microwave and millimeter-wave applications. Another
product tailored to the same market, the 500S Broadband Microwave Capacitor
(BMC), was introduced in June 1998. This product is based on a patented
construction designed to be compatible with customers' high-volume surface-mount
assembly technologies. Sales of these two product types combined amounted to 6%
of the Registrant's revenues in the fiscal year ended June 30, 2001. In each of
the fiscal years ended June 30, 2000 and 1999, sales of these two product types
combined amounted to less than 5% of the Registrant's revenues.

                                       3

<PAGE>


         The Registrant has diversified its product line in recent years through
the development of custom product capability based on thin film technologies.
The Registrant produces metallized circuits and passive components on
high-quality ceramic substrates to customers' drawings and specifications. Thin
film layers deposited on the ceramic substrate may consist of a variety of
materials with specific conductive, resistive, capacitive, and other properties
enabling the build-up of the desired circuit pattern. As with a typical circuit
board, the customer may then attach discrete components and chips to complete
the circuit. Thin film products are used by the Registrant's customers in a
broad range of applications, including microwave components, fiber optic
repeaters and high-density packaging of devices, typically where requirements
for high reliability, small size and dimensional precision are paramount. In the
fiscal years ended June 30, 2001, 2000 and 1999, thin film sales of $20,060,000,
$16,015,000 and $4,555,000, respectively, represented approximately 24%, 24% and
12% of the Registrant's revenues, respectively.

         In June 2000, the Registrant introduced a line of high power, passive
resistive products. The Registrant's products, including standard resistors,
terminations, attenuators and other customized products, consist of resistive
and conductive layers deposited on a substrate of aluminum nitride, a base
material chosen for its high thermal conductivity and its non-toxic properties.
High power resistive products are used in many of the same types of equipment as
are the Registrant's capacitor products. Other applications for these products,
which reflect an expansion of the Registrant's customer base, include RF and
microwave products, including power amplifiers, up and down converters, and high
power combiner/dividers. The markets for these products include the wireless and
telecommunication markets, including base station and satellite communications,
and a broad range of medical, military and other commercial applications. In the
fiscal year ended June 30, 2001, resistive product sales represented less than
1% of the Registrant's revenues. See "Item 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS".

         MANUFACTURING

         The manufacturing process for MLCs involves four primary stages. The
first, or "white room" stage, includes tape casting, multi-layer lamination,
dicing and firing of ceramic chips. In this phase, layers of electrically
conducting material are printed onto ceramic tape in patterns, which eventually
form the electrodes of the capacitor. The screen-printing technology used for
the printing of such layers is referred to as "thick film". In the second, or
"termination" stage, the ceramic chips are coated with silver. In the third, or
"finishing" stage, the parts are then customized to specific order requirements
for commercial applications. This stage includes, but is not limited to, chip
plating, soldering of leads, laser marking and chip packaging. The chips are
tested electrically and inspected throughout the entire process. If the
customer's specifications call for a higher level of performance assurance, the
parts are put through a fourth stage, the hi-rel stage, where additional testing
is performed.

         The Registrant currently manufactures MLCs at its facilities in
Huntington Station, New York and Jacksonville, Florida. Its primary MLC
manufacturing site is Huntington Station, consisting of three facilities which
aggregate approximately 54,000 square feet. Two of these facilities house the
Registrant's state-of-the-art chip fabrication operations. These facilities are
designed to provide optimum control of the Registrant's manufacturing processes
and product quality, while substantially increasing its output capability.

         During fiscal year 2000, the Registrant completed capacity expansion
projects which increased chip unit throughput approximately threefold during the
18 months ended June 2000. Additional capacity expansion projects completed
prior to the third quarter of fiscal year 2001 increased chip volume production
capability by another 50% over production levels possible at the end of fiscal
year 2000. In addition, in August of fiscal year 2001, the Registrant purchased
another building next to its existing facilities in New York which can add a
minimum of 22,000 additional square feet of production space to the New York
facility complex as such space is required.

         The Registrant also manufactures capacitors at its facilities in
Jacksonville, Florida. During fiscal year 2001, the Registrant manufactured the
500S and 600S series capacitors at its Jacksonville facility. The Jacksonville
facility is also the site of manufacture for the Registrant's thin film,
resistor and Microcap(R) SLC product lines, and serves as the Registrant's new
product technology center.

                                       4

<PAGE>


         Portions of the Jacksonville facility have been redesigned over the
last few years in order to accommodate what the Registrant refers to as its
"Factory of the Future". Utilizing recently developed and acquired materials,
processes and equipment, the Registrant can manufacture MLC products at this
facility at higher degrees of precision and control and at a substantially lower
cost with accompanying high output. Moreover, the manufacturing operations at
this facility are flexible, enabling the Registrant to produce ceramic
structures of a wide variety of sizes, shapes and internal configurations.

         As differentiated from the "thick film" technology used in MLC
manufacture, the manufacture of thin film circuits involves a method for the
deposition of layers of conducting and other materials using "sputtering"
technology. Also key to the manufacture of these products is the use of laser
machining of ceramic substrates. Unlike the manufacture of capacitors, where all
products flow through the same manufacturing sequences, manufacturing processes
for custom thin film products vary significantly in accordance with each
customer's specifications. The thin film product line has grown rapidly during
the last several years. The Registrant has recently completed construction of a
22,000 square foot facility on its Jacksonville Campus to expand its thin film
manufacturing space. This facility, which should be adequate to triple capacity,
is expected to come on line during the first half of fiscal year 2002. The
Registrant plans to acquire additional equipment as required to meet production
needs, and toward this end, recently acquired an advanced dual beam laser
machining system as well as some other new equipment.

         Resistive products, Microcap(R) SLCs and BMCs all utilize various
combinations of the production methods described in the preceding discussions.
The manufacture of each product line typically involves dedicated equipment as
well as certain manufacturing capabilities shared with the product lines
previously discussed. During fiscal year 2001, the Registrant expanded its
production capabilities for the Microcap(R) SLCs and established an initial
production line for resistive products.

         In order to realize the potential of its expanding and diversifying
product lines and to more fully integrate all facets of its operations, the
Registrant is in the process of replacing its existing information system with a
modern Enterprise Resource Planning System. Utilizing modern, commercially
available information technology, the new system is intended to provide improved
functionality and efficiency for better planning, control and responsiveness.

         The Registrant utilizes a wide variety of specialized equipment for the
fabrication, handling and testing of its products, including equipment which it
has designed and constructed. The Registrant considers its capability to create
its own unique equipment solutions tailored to the particular needs of its
product lines and technologies to be a competitive advantage.

         Before full market introduction of a new product, the Registrant
generally establishes a production line for the product and manufactures
substantial quantities to evaluate and verify its ability to consistently meet
quality and performance standards. Such efforts involve the dedication of
equipment, materials and labor, and to the extent that these efforts do not
result in saleable product, all costs are expensed. During fiscal year 2001, the
Registrant's resistive product line was in this phase of development.

         In fiscal year 2001, the Registrant completed the qualification of the
600S product line, shipped in excess of 14 million pieces, and established a
complete inventory staged for 24 hour delivery. In addition, the resistor
product line has been extended to contain terminations and attenuators, products
which complement the Registrant's overall product offering.

         To complement its own manufacturing efforts and to provide a wide
variety of product offerings to its customers, the Registrant has from time to
time entered into arrangements with other manufacturers to produce certain
products to the Registrant's specifications. These products accounted for
approximately 5% of the Registrant's revenues in fiscal year 2001 and 2% in each
of fiscal years 2000 and 1999.


                                       5
<PAGE>

         Although the Registrant was able during fiscal year 2001 to selectively
raise prices to cover increased costs of palladium see "Item 1. BUSINESS -- RAW
MATERIALS", the historical pattern of industry price declines has largely
prevented MLC producers, including the Registrant, from increasing prices and
has forced the Registrant and competitors to rely on advances in productivity
and efficiency in order to improve profit margins. Accordingly, the Registrant
continuously looks to improve the production yields and efficiency of its
manufacturing processes. The Registrant conducts continuous improvement programs
targeted at streamlining manufacturing processes and increasing yields, and has
established statistical process control techniques for maintaining key process
steps within specified bounds and providing data to support continuous
improvement. For additional information with respect to yields and efficiencies,
see "Item 1. BUSINESS -- RESEARCH AND DEVELOPMENT".

         During fiscal year 2001, the Registrant's manufacturing facilities were
operated under ISO-9002 registration.

         CUSTOMERS AND MARKETING

         The Registrant markets its products primarily to customers in the
wireless base-station infrastructure, fiber optic telecommunications, military,
medical, semiconductor manufacturing and aerospace industries. The customers
included within these industries are manufacturers of microwave, high frequency
and fiber optic systems, subsystems and equipment, including original equipment
manufacturers and suppliers thereto, and government contractors and
subcontractors. Most of the Registrant's products are used in the manufacture of
capital equipment.

         The Registrant promotes its products through specialized trade shows,
industry trade journal advertisements, a site on the Internet's World Wide Web
and catalog direct mail programs. In fiscal year 2000, the Registrant started
taking orders, on a limited basis, via its web site.

         In fiscal year 2001, the Registrant shipped to over 1,900 customers as
compared to approximately 1,800 and 1,700 customers in fiscal years 2000 and
1999, respectively. The top ten customers combined accounted for approximately
29%, 35% and 27% of net sales in fiscal years 2001, 2000 and 1999, respectively.
Sales to Tyco International LTD., a major telecommunications OEM, accounted for
approximately 15% of the Registrant's net sales in fiscal year 2000. No customer
accounted for more than 10% of the Registrant's net sales in fiscal years 1999
and 2001.

         The Registrant is a qualified producer of capacitors with the Defense
Logistics Agency of the United States Department of Defense. This qualified
status covers several varieties and types of capacitors. Maintenance of its
qualified producer status is critical in order for the Registrant to continue to
sell its hi-rel military product line. To date, the Registrant has not
encountered any difficulty in maintaining its status as a qualified producer,
and the Registrant believes it is presently the only supplier with such
qualification for some of these product types.

         The Registrant typically sells its products through a combination of
logistics arrangements and a large number of individual purchase orders. The
individual purchase orders are often subject to pricing agreements. Neither
pricing agreements nor logistics arrangements are firm purchase orders, but each
still requires that the Registrant commit to produce semi-finished or finished
goods inventory in anticipation of receiving a purchase order for immediate
shipment. The supply shortage for electronic components that had begun during
fiscal year 2000 continued into the first half of fiscal year 2001. The
shortage, which was exacerbated by historically high capital expenditure
spending as a percentage of revenue by telecommunications service providers,
caused customers to alter their buying behaviors in an attempt to ensure a
source of supply. As the shortage eased in the second half of fiscal year 2001,
customers began to utilize their inventories of parts resulting in a decline in
orders. See "Item 1. BUSINESS -- SALES BACKLOG" and "Item 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS".


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         Customers are invoiced simultaneously with merchandise shipments, and
invoices are generally payable on a 30-day basis. Customers may also charge
their purchases through the use of a credit/debit card. Sales returns are
authorized and accepted by the Registrant in the normal course of business. An
evaluation of the returned product is performed and typically results in either
a credit or a shipment of replacement product to customers. The Registrant
believes that it has provided an adequate reserve for returns in the
accompanying consolidated financial statements.

         In the United States, the Registrant principally sells its products
through independent sales representatives who are compensated on a commission
basis. In foreign countries, the Registrant historically has utilized both
resellers, who purchase products from the Registrant for resale, and sales
representatives. Sales in the United Kingdom are made through a wholly-owned
subsidiary of the Registrant. In July 1999, the Registrant established a
wholly-owned subsidiary in Sweden to directly serve customers in the Nordic
countries (Sweden, Finland, Denmark and Norway). During fiscal year 2000, the
Registrant expanded the scope of the Swedish subsidiary's activities serving
most of the Registrant's customers in Europe, reducing the Registrant's reliance
on resellers and sales representatives in this area. The Registrant continues to
rely primarily on local independently-owned resellers in all other foreign
markets.

         At June 30, 2001, the Registrant utilized approximately 18 sales
representative organizations in the United States and approximately 11 sales
representative and reseller organizations in foreign countries, principally
Western Europe, Canada and the Far East. The Registrant's sales representatives
and resellers generally have substantial engineering expertise, which enables
them to assist the Registrant in providing a high level of service to assist
customers in generating product specifications and in providing applications
assistance and maintaining contact with key customers. The Registrant employs
regional sales managers to supervise its sales representatives and resellers and
a staff of sales and applications specialists to provide direct contact with and
support to customers. See "Item 1. BUSINESS -- FOREIGN SALES" and Note 9 of
Notes to Consolidated Financial Statements.

         FOREIGN SALES

         In fiscal years 2001, 2000 and 1999, sales to customers located outside
the United States constituted 28%, 26% and 30% of net sales, respectively. The
Registrant's foreign customers are located primarily in Western Europe, Canada
and the Far East. See "Item 1. BUSINESS -- CUSTOMERS AND MARKETING" and Note 9
of Notes to Consolidated Financial Statements. Export sales are made through the
Registrant's foreign sales corporation subsidiary. All foreign sales, except
sales by the Registrant's wholly-owned subsidiaries with offices in Sussex,
England and Stockholm, Sweden, are denominated in United States dollars. In
certain circumstances, the Registrant attempts to reduce the risk of doing
business in foreign countries through the use of prepayment and by working
closely with its foreign representatives and distributors in assessing business
environments.

         SALES BACKLOG

         The Registrant's sales backlog was $16,153,000, $26,130,000 and
$10,370,000 at June 30, 2001, 2000 and 1999, respectively. Backlog generally
consists of a combination of the Registrant's standard products and custom
manufactured parts that require a longer lead time to produce. The long-term
trend in customer requirements for the Registrant's standard products was toward
shorter lead times. However, during fiscal year 2000 and the first half of
fiscal year 2001, a supply shortage in the electronics component marketplace
caused customers to change their typical buying behavior to ensure an adequate
source of supply. The buying pattern changed abruptly in the latter half of the
fiscal year, primarily as a result of the slowdown in the wireless
infrastructure, fiber optic and semiconductor manufacturing equipment sectors.
The Registrant has experienced order cancellations and decreased bookings from
its customers in these industries as they attempt to rationalize their inventory
levels to the demand for their products. Thus backlog as a percentage of sales
is expected to decrease in the near term. See "Item 1. BUSINESS -- CUSTOMERS AND
MARKETING".

                                        7
<PAGE>

         The Registrant offers its Quik-Pick 48 Hour System(R) program pursuant
to which products are shipped within 48 hours from the time the order is placed.
This program has consistently gained in popularity with its customers. In order
to offer this program, the Registrant has to maintain higher inventory levels of
certain products in proportion to total sales than it had in the past and higher
than those maintained by some other capacitor manufacturers. The future
contribution of the Quik-Pick program to the financial results of the Registrant
depends critically on the Registrant's ability to accurately predict customer
demand for the various products offered through the program. During fiscal year
2001, the Registrant was able to replenish the inventory levels required to
support the Quik-Pick program that had been depleted during fiscal year 2000.

         RESEARCH AND DEVELOPMENT

         The technology upon which the Registrant's products are based is
subject to continued development of materials and processes to meet the demands
of new applications and increased competition. The Registrant pursues a
process-oriented strategy in which it conducts efforts aimed at developing
integrated sets of materials and associated processes and equipment to provide
the capability to create new or enhanced classes of products. Once a new set of
technologies is established, the Registrant then seeks to develop and introduce
various products using such technologies. The Registrant believes its future
successes depend upon its ability to identify the requirements for future
products and product enhancements, and to define, implement and successfully
employ the technologies needed to meet those requirements. Accordingly, the
Registrant believes that its research and development efforts are critical to
its continued success.

         The Registrant conducts most of its research and development activities
at its facility in Jacksonville, Florida. Activities are focused on the
development of new products and improvement of existing products. Improvements
in materials and process technology, and the development of specialized
production equipment, are directed toward reducing product cost, as well as
enhancing performance requirements that are identified through frequent customer
contacts by the Registrant's sales and technical personnel. Products are
introduced after extensive in-house testing and evaluations at selected customer
sites. See "Item 1. BUSINESS -- MANUFACTURING".

         The Registrant often pursues programs with individual customers whom it
considers to be leaders in their respective industries to develop special
products to meet their specific requirements. The Registrant typically conducts
such programs when it believes such products have potential applications
reaching well beyond the initial customer's requirements. The Registrant's 500S
product line arose from one such program conducted in past years.

         During fiscal year 2001, the Registrant continued development
activities on its new resistive product line and on enhancing its line of
specialty higher frequency capacitors. See "Item 1. BUSINESS -- PRODUCTS". The
Registrant also continued the development of a new high-density electronic
packaging technology for radio frequency (RF) and microwave frequency broadband
applications. This technology, commonly referred to as Low Temperature Co-fired
Ceramic (LTCC), is based on high performance dielectric ceramic materials, some
manufactured by the Registrant and others purchased from leading electronic
materials manufacturers. Traditional RF and microwave circuits have been limited
in size and performance by the use of only two dimensions to incorporate all RF
elements and passive components, such as inductors, capacitors and resistors.
LTCC technology enables the user to design circuits in the third dimension with
the integration of the RF elements and passive components in the body of the
electronic circuit. LTCC technology also provides the ability to design circuits
with integrated RF components such as couplers, power dividers/combiners,
filters and impedance transformers, and passive devices.

         In fiscal year 2001, the Registrant also expanded the efficiency of the
manufacturing methodology for its 600S product line, which was formally
introduced in June 2000. Extensive resources have been expended in reviewing and
enhancing process steps, lot sizing and developing the equipment necessary to
manufacture this product. To leverage such expenditures, the above efficiencies
have been extended through additional case sizes.

         Expenditures for research and development were approximately
$4,180,000, $2,770,000 and $1,981,000 in fiscal years 2001, 2000 and 1999,
respectively, representing approximately 5%, 4% and 5% of net sales,
respectively. The Registrant anticipates that research and development
expenditures in fiscal year 2002, expressed as a percentage of net sales, will
increase somewhat compared to fiscal year 2001.


                                       8
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         RAW MATERIALS

         The principal raw materials used by the Registrant include silver,
palladium, gold, other precious metals and titanate and other powders which are
used in ceramic manufacture. Precious metals are available from many sources,
although palladium is generally available only from a limited number of metal
dealers who obtain their product requirements from the Republic of South Africa
or the Russian Federation. The major consumers of palladium are the automotive
and electronics industries. Prices for palladium fluctuated widely during fiscal
year 2001, ranging from under $500 to over $1,000, primarily due to demand
fluctuations from these industries. The Registrant believes that, based upon its
current levels of production and inventories of palladium, it will not have to
buy additional quantities of palladium for at least the next year. The
Registrant's newer products are being designed to minimize or eliminate the
usage of palladium.

         COMPETITION

         Competition in the broad MLC industry continues to be intense and, in
general, is based primarily on price. In the hi-rel and UHF/Microwave market
segment, where price has historically been less important, competition has been
based primarily on high performance product specifications, achieving consistent
product reliability, fast deliveries and high levels of customer service. The
Registrant believes any competitive advantage it may have results from its
ability to achieve consistent quality and reliability, fast deliveries and high
levels of customer service. Potential growth of some commercial market
applications may in the future increase the competitive importance of price in
this market. The Registrant believes it competes in the UHF/Microwave market
with several other manufacturers, both domestically and abroad, including AVX
Corporation, Dover Corporation, Tekelek, Spectrum Control, Murata Electronics
North America and Taiyo Yuden, most of which are larger and have broader product
lines and greater financial, marketing and technical resources than the
Registrant. There are other large commodity-type MLC manufacturers who have
attempted to develop products for the UHF/Microwave market segment. While the
Registrant believes these efforts have not produced significant results to date,
there can be no assurance that such efforts will not be successful in the
future. New product developments may lead the Registrant into markets where
there are existing competitors that may have significantly greater financial and
technical resources and greater expertise in mass production techniques than the
Registrant.

         ENVIRONMENTAL COMPLIANCE

         The Registrant produces hazardous waste in limited quantities in the
production of its products. Accordingly, the Registrant's manufacturing
operations are subject to various federal, state and local laws restricting the
discharge of such waste into the environment. The Registrant recycles some of
its hazardous wastes and disposes of the remainder through licensed carriers,
which are required to deposit such waste at licensed waste sites. The Registrant
believes that it is in material compliance with all applicable federal, state
and local environmental laws and does not currently anticipate having to make
material capital expenditures to remain in material compliance therewith.

         PATENTS AND PROPRIETARY INFORMATION

         Although the Registrant has manufacturing and design patents and
pending patent applications, and although the Registrant will continue to seek
the supplemental protection afforded by patents, the Registrant generally
considers protection of its products, processes and materials to be more
dependent upon proprietary knowledge and on rapid assimilation of innovations
than on patent protection. The Registrant's porcelain and ceramic formulations
are considered trade secrets, which are protected by internal non-disclosure
safeguards and employee confidentiality agreements. There can be no assurance
that the steps taken by the Registrant to protect its rights will be adequate to
deter misappropriation, or that an independent third party will not develop
functionally equivalent technology.

                                       9
<PAGE>

         EMPLOYEES

         At June 30, 2001, the Registrant employed 368 persons at its facilities
in New York, of which 7 were employed on a part-time basis; 278 persons at its
facilities in Florida, of which 3 were employed on a part-time basis; and 14
persons in sales offices in Europe. Of the 660 persons employed by the
Registrant, 48 were involved in research and development activities, 521 in
manufacturing, testing and as support personnel and 91 in selling and general
administrative activities. None of the Registrant's employees are covered by
collective bargaining agreements. The Registrant considers its relations with
its employees to be satisfactory.

         CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

         Statements in this Annual Report on Form 10-K under the captions
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations", as well as statements made in press releases and oral
statements that may be made by the Registrant or by officers, directors or
employees of the Registrant acting on the Registrant's behalf that are not
statements of historical fact, constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause the actual results of the Registrant to be
materially different from the historical results or from any future results
expressed or implied by such forward-looking statements. The cautionary
statements set forth below identify certain factors that could cause such
differences. In addition to statements which explicitly describe risks and
uncertainties, readers are urged to consider statements labeled with terms such
as "believes", "belief", "expects", "plans", "anticipates", or "intends" to be
uncertain and forward-looking. All cautionary statements made in this Annual
Report on Form 10-K should be read as being applicable to all related
forward-looking statements wherever they appear. Any forward-looking statement
represents the Registrant's expectations or forecasts only as of the date it was
made and should not be relied upon as representing its expectations or forecasts
as of any subsequent date. The Registrant undertakes no obligation to correct or
update any forward-looking statements, whether as a result of new information,
future events or otherwise, even if its expectations or forecasts change.

         The Registrant's products are used in the production of a variety of
highly complex electronic products manufactured for the military and for
commercial use. Accordingly, demand for the Registrant's products is highly
dependent upon demand for the products in which they are used. From time to
time, the Registrant's results have been negatively impacted by a general
decrease in demand for technology and electronic products in the United States
and abroad. There can be no assurance that the demand for such products will
increase or that, even if it does increase, the demand for the Registrant's
products will increase. In addition, there can be no assurance that the
Registrant will not receive order cancellations after orders are booked into
backlog.

         The Registrant offers a broad variety of products to its customers.
Gross margins can vary significantly from product to product and across product
lines. Accordingly, a change in the mix of products sold by the Registrant
during a particular period could lead to distinctly different financial results
for that period as compared to other periods.

         The Registrant expects that international sales will continue to
constitute a substantial portion of its total sales. These sales expose the
Registrant to certain risks, including, without limitation, barriers to trade,
fluctuations in foreign currency exchange rates (which may make the Registrant's
products less price competitive), political and economic instability, changes in
monetary policy, tariff regulations and other United States and foreign laws and
regulations that may apply to the export of the Registrant's products, as well
as the generally greater difficulties of doing business abroad.

         During the Registrant's fiscal year ended June 30, 2001, the
Registrant's ten largest customers accounted for approximately 29% of net sales.
The Registrant expects that sales to a relatively small number of customers will
continue to account for a significant portion of its net sales for the
foreseeable future. A loss of one or more of such key customers could affect the
Registrant's profitability. See "Item 1. BUSINESS -- CUSTOMERS AND MARKETING."

                                       10
<PAGE>

         The technology upon which the Registrant's products are based is
subject to continuous development of materials and processes. The Registrant's
business is in large part contingent upon the continuous refinement of its
technological and engineering expertise and the development of new or enhanced
products and technologies to meet the rapidly developing demands of new
applications and increased competition. There can be no assurance that the
Registrant will continue to be successful in its efforts to develop new or
refine existing products, that such new products will meet with anticipated
levels of market acceptance or that the Registrant will otherwise be able to
timely identify and respond to technological improvements made by its
competitors. Significant technological breakthroughs by others could also have a
material adverse effect on the Registrant's business.

         The Registrant's business may be adversely affected by difficulties in
obtaining raw materials and other items needed for the production of its
products, the effects of quality deviations in raw materials and fluctuations in
prices of such materials. Palladium, a precious metal used in the production of
the Registrant's capacitors, is currently available from a limited number of
metal dealers who obtain product from the Republic of South Africa or the
Russian Federation. Although the Registrant currently has adequate inventories
of palladium, a prolonged cessation or reduction of exports of palladium by the
Republic of South Africa or the Russian Federation could have a material adverse
effect on the Registrant's business. See "Item 1. BUSINESS -- RAW MATERIALS".

         Certain raw materials used by the Registrant may fluctuate in price.
See "Item 1. BUSINESS -- RAW MATERIALS" for information concerning recent
fluctuations in prevailing market prices for palladium. To the extent that the
Registrant is unable to pass on increases in the costs of such materials to its
customers, this may adversely affect the gross profit margins of those products
using such materials.

         Competition in the MLC industry is intense and, in general, is based
primarily on price. In the hi-rel and UHF/Microwave market segments, where price
has historically been less important, competition has been based primarily on
high performance product specifications, achieving consistent product
reliability, fast deliveries and high levels of customer service. The Registrant
competes with a number of large MLC manufacturers who have broader product lines
and greater financial, marketing and technical resources than the Registrant.
Growth of some commercial market applications has increased, and is expected to
continue to increase, the competitive importance of price. There can be no
assurance that the Registrant will be able to improve the productivity and
efficiency of its manufacturing processes in order to respond to pricing
pressures, or to successfully design new processes and products, and the failure
to do so could have a material adverse effect on the Registrant's business.

         The Registrant produces limited quantities of hazardous wastes in the
production of its capacitors. Accordingly, the inherent risks of environmental
liability and remediation costs associated with the Registrant's manufacturing
operations may result in substantial unforeseen liabilities.

         The Registrant has not received any claims that its products or the
technologies upon which they are based infringe the intellectual property rights
of others. Any such claims in the future may result in the Registrant being
required to enter into royalty arrangements, cease manufacturing the infringing
products or utilizing the infringing technologies, pay damages or defend
litigation, any of which could have a material adverse effect on the
Registrant's business.

         The Registrant's business may also be adversely affected by matters and
events affecting businesses generally, including, without limitation, political
and economic events, labor unrest, acts of God, war and other events outside of
the Registrant's control.

                                       11
<PAGE>

ITEM 2.  PROPERTIES

         The Registrant's primary production facilities are located in
Huntington Station, New York and Jacksonville, Florida. The Registrant's
principal executive office is located in Huntington Station, New York, and its
principal research and development facility is located in Jacksonville, Florida.
The following table sets forth the address of each facility, its primary
function, the square footage occupied by the Registrant and whether the facility
is leased or owned.

<TABLE>
<CAPTION>
ADDRESS OF FACILITY               PRIMARY FUNCTION                  SQUARE FOOTAGE OCCUPIED         TYPE OF OCCUPANCY
-------------------               ----------------                  -----------------------         -----------------
<S>                               <C>                                         <C>                  <C>
10 Stepar Place
Huntington Station, New York      Production                                  10,900               Owned
11 - 13 Stepar Place              Purchased in August 2000.
Huntington Station, New York      Future use to be determined.                22,000               Owned
15 Stepar Place                                                                                    Leased from Principal
Huntington Station, New York      Production                                  35,000               Stockholder(1)
One Norden Lane
Huntington Station, New York      Production                                   8,400               Owned
17 Stepar Place
Huntington Station, New York      Corporate, sales, administration            18,000               Owned
2201 Corporate Square Blvd.       Production, research                                             Leased from Principal
Jacksonville, Florida             and development                             61,500               Stockholder(1)
8810 Corporate Square Court
Jacksonville, Florida             Production                                   7,500               Leased
Unit 5, Redkiln Way               Sales and distribution
Sussex, England                   office                                       2,400               Owned
Ellipsvaegen 5
SE-141 75                         Sales and distribution
Kugens Kurva, Sweden              office                                       2,400               Leased
</TABLE>

         (1) See "Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" and
             Notes 4 and 7 of Notes to Consolidated Financial Statements.

         In fiscal year 1999, the Registrant renovated part of its facility at
One Norden Lane, which provided increased capabilities for its manufacturing
operations.

         In fiscal year 2000, the Registrant began additional renovation on its
facility at One Norden Lane in order to move part of its production into the
facility and increase capacity. This renovation was completed in fiscal year
2001.

         In fiscal year 2001, the Registrant purchased a 22,000 square foot
facility adjacent to its existing New York facilities. This new facility is
currently idle.

         In fiscal year 2002, the Registrant intends to add approximately 31,000
square feet to its Jacksonville facilities in order to expand its thin film
capacity and accommodate commercial manufacture of its new resistive product
line. See "Item 1. BUSINESS -- PRODUCTS -- MANUFACTURING -- RESEARCH AND
DEVELOPMENT".

ITEM 3.  LEGAL PROCEEDINGS

         The Registrant is not currently a party to any material legal
proceedings.

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

            No matters were submitted to a vote of security holders during the
quarter ended June 30, 2001.

                                       12
<PAGE>

         EXECUTIVE OFFICERS

         The executive officers of the Registrant are as follows:

         Victor Insetta, age 61, co-founded the Registrant in 1966 and has
served as President and Chief Executive Officer and a director of the Registrant
since its organization.

         Richard Monsorno, age 49, has been employed by the Registrant in
various capacities since 1983. In August 1996, he was appointed Senior Vice
President - Technology.

         Kathleen M. Kelly, age 47, has been employed by the Registrant in
various capacities since 1974. She has served as Vice President - Administration
and as corporate Secretary since November 1989.

         David P. Ott, age 59, joined the Registrant in June 1999 as Vice
President - New York Manufacturing, and in December 2000, was appointed Senior
Vice President, New York Manufacturing. From 1997 until his employment by the
Registrant, he served as Chief Operating Officer of Great Lakes Industries, LLC,
a manufacturer of metal and ceramic materials. In 1997, prior to joining Great
Lakes, he was a Senior Management Consultant for Murak and Associates, LLC, an
executive consulting firm. From 1985 to 1996, he was the Vice President of
Operations for the Tam Ceramics unit of Cookson, plc (UK), a manufacturer of
ceramic capacitor materials.

         Judah Wolf, age 55, has been managing the Registrant's thin film
operations in Jacksonville, Florida since 1993. In 1999, he was appointed Vice
President - Thin Film Operations. In August 2001, he was appointed Senior Vice
President, Thin Film Products.

         Stephen Beyel, age 37, joined the Registrant as a RF Engineer in 1988.
Since 1991, he has held various managerial positions within the Registrant's
Sales Department. He was appointed Vice President, Sales in November 2000.

         Andrew R. Perz, age 42, has been with the Registrant as Controller
since 1998, and was appointed Vice President, Controller in November 2000. Prior
to his employment by the Registrant, he held a financial management position at
Lumex Inc. from July 1989 to January 1998.

         Harrison Tarver, age 55, has been employed by the Registrant in various
capacities since 1973, principally in positions relating to quality assurance.
He was appointed Vice President, Quality Assurance in December 2000.

         The officers serve at the discretion of the Board of Directors and
there are no family relationships among the officers listed and any directors of
the Registrant.

                                       13
<PAGE>

                                     PART II

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

         MARKET INFORMATION

         The Registrant's common stock is traded on the American Stock Exchange
("AMEX") under the symbol "AMK". The table below sets forth the quarterly high
and low sales prices for the common stock on the AMEX for the fiscal years ended
June 30, 2001 and June 30, 2000, as adjusted for the 2-for-1 stock split of the
Registrant's common stock effected in the form of a 100 percent stock dividend
effective April 24, 2000.


                       FISCAL 2001           FISCAL 2000
                       -----------           -----------
Quarter Ended:       High       Low        High       Low
--------------      ------     ------     ------     ------
September           $35.88     $11.50     $ 6.69     $ 3.75
December             18.60       8.40       8.50       3.75
March                18.50       8.70      22.38       6.50
June                 13.40       6.65      53.75      15.50

         NUMBER OF STOCKHOLDERS

         As of September 4, 2001, there were approximately 316 holders of record
of the Registrant's common stock. The Registrant believes numerous shares are
held of record by brokerage and other institutional firms for their customers.

         DIVIDENDS

         During fiscal year 2000, the Registrant declared a 2-for-1 stock split
of the Registrant's common stock, which was effected in the form of a 100
percent stock dividend effective April 24, 2000. The Registrant has not paid any
cash dividends on its common stock during the past two fiscal years. It is the
present policy of the Registrant's Board of Directors to retain earnings to
finance the expansion of the Registrant's operations and not to pay cash
dividends on its common stock.

         SALES OF UNREGISTERED SECURITIES

         Pursuant to an employment agreement with an officer entered into in
1996 in connection with the commencement of his employment, the Registrant
issued to the officer an aggregate of 5,704 shares of common stock during the
fiscal year ended June 30, 1999.

         Pursuant to the employment agreement between the Registrant and its
President and Chief Executive Officer, the officer is entitled to an annual
bonus based upon the Registrant's net income. In September 1998, the Registrant
amended the employment agreement, effective for fiscal years beginning with the
fiscal year ended June 30, 1998, to allow the Registrant, at its option, to pay
such bonus in stock, cash or a combination thereof, subject to certain
limitations. For the fiscal year ended June 30, 1998, the Registrant elected to
pay 50% of such bonus in shares of common stock. Accordingly, on September 11,
1998, the Registrant issued 40,908 shares of common stock to this officer in
partial payment of such bonus.

                                       14
<PAGE>

         Pursuant to the terms of an employment agreement with another officer,
in September 1998, the Registrant elected to purchase from the officer certain
inventories of ceramic substrate owned by the officer and to pay for such
inventories in part by the issuance of 25,400 shares of common stock.

         In November 1998, the Registrant issued 2,000 shares of common stock to
each of four employees as a stock bonus.

         In March 1999, and again in June 1999, the Registrant issued 20,000
shares of common stock to each of two officers as a stock bonus.

         In May 1999, the Registrant issued 1,500 shares of common stock to one
employee, and 1,000 shares of common stock to each of two employees, as a stock
bonus.

         In June 1999, the Registrant issued 4,000 shares of common stock to an
employee as a stock bonus.

         In July 2000, the Registrant issued an aggregate of 18,000 shares of
common stock to seven officers and two other employees as stock bonuses.

         In July 2000, the Registrant issued 2,000 shares of common stock to
each of its five non-employee directors as a stock bonus.

         In March 2001 and in June 2001, the Registrant issued an aggregate of
9,750 shares, of common stock to twelve employees as a stock bonus.

         In June 2001, pursuant to the terms of employment agreements between
the Registrant and three key employees, the Registrant issued 1,000 shares of
common stock to each of such employees.

         In June 2001, the Registrant awarded 1,000 shares of common stock to
each of its five non-employee directors and 1,000 shares of common stock to each
of six officers as stock bonuses. The shares were issued in July 2001.

         None of the shares listed above were registered under the Securities
Act of 1933 in reliance on the exemption provided by Section 4(2) thereunder or
because they were issued in a transaction that did not constitute a sale
requiring registration under the Securities Act of 1933.

                                       15
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

         The following information should be read in conjunction with the
Consolidated Financial Statements and Notes thereto and other information set
forth following Item 14 of this report. The Consolidated Financial Statements
include the operations of the Registrant and its wholly-owned subsidiaries,
American Technical Ceramics (Florida), Inc., ATC International Technical
Ceramics, Inc., Phase Components Ltd. and ATC Nordic AB.

<TABLE>
<CAPTION>
                                                     FISCAL YEARS ENDED JUNE 30,
                                              (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                            2001      2000      1999      1998      1997
                                            ----      ----      ----      ----      ----
<S>                                       <C>       <C>       <C>       <C>       <C>
INCOME STATEMENT DATA:

Net sales (1) .........................   $84,585   $66,692   $37,688   $40,516   $36,636
                                          -------   -------   -------   -------   -------
Gross profit (1) ......................   $36,350   $29,946   $13,838   $16,941   $14,183
                                          -------   -------   -------   -------   -------
Income from operations ................   $16,167   $14,065   $ 3,136   $ 6,499   $ 5,578
                                          -------   -------   -------   -------   -------
Net income ............................   $10,332   $ 9,071   $ 2,129   $ 4,202   $ 3,429
                                          -------   -------   -------   -------   -------
Basic net income per common share (2) .   $  1.30   $  1.18   $  0.28   $  0.54   $  0.44
                                          -------   -------   -------   -------   -------
Diluted net income per common share (2)   $  1.24   $  1.11   $  0.28   $  0.52   $  0.44
                                          -------   -------   -------   -------   -------
Cash dividends paid per common share ..   $    --   $    --   $    --   $    --   $    --
                                          -------   -------   -------   -------   -------
BALANCE SHEET DATA:
Property, plant and equipment, net ....   $32,089   $22,902   $18,791   $17,703   $15,404
                                          -------   -------   -------   -------   -------
Total assets ..........................   $76,576   $59,787   $43,622   $42,329   $37,124
                                          -------   -------   -------   -------   -------
Long-term debt, less current portion ..   $ 7,211   $ 3,486   $ 3,691   $ 3,338   $ 3,825
                                          -------   -------   -------   -------   -------
Working capital .......................   $33,662   $27,087   $19,160   $18,119   $16,293
                                          -------   -------   -------   -------   -------
</TABLE>

QUARTERLY FINANCIAL DATA:
(unaudited)
                         (In thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                         BASIC          DILUTED
                                                                    NET INCOME PER    NET INCOME
QUARTER ENDED     NET SALES (1)   GROSS PROFIT (1)   NET INCOME        SHARE (2)     PER SHARE (2)
-------------     -------------   ----------------   ----------        -----         -------------
<S>                 <C>             <C>               <C>              <C>             <C>
Fiscal 2001

September .         $20,897         $ 9,139           $ 2,595          $  0.33         $  0.31
December ..          21,326           8,858             2,445             0.31            0.30
March .....          23,359           9,974             2,959             0.37            0.35
June ......          19,003           8,379             2,333             0.29            0.28
                    -------         -------           -------          -------         -------
   Total ..         $84,585         $36,350           $10,332          $  1.30         $  1.24
                    -------         -------           -------          -------         -------
Fiscal 2000

September .         $11,902         $ 3,981           $   830          $  0.11         $  0.11
December ..          14,935           6,285             1,659             0.22            0.21
March .....          18,471           9,354             3,202             0.41            0.39
June ......          21,384          10,325             3,380             0.44            0.40
                    -------         -------           -------          -------         -------
   Total ..         $66,692         $29,945           $ 9,071          $  1.18         $  1.11
                    -------         -------           -------          -------         -------
</TABLE>

(1) Amounts for periods prior to fiscal year 2001, have been restated to reflect
    the adoption of Emerging Issues Task Force Issue No. 00-10, "Accounting for
    Shipping and Handling Fees and Costs" ("EITF No. 00-10"), effective July 1,
    2000.

(2) Per share data was revised to reflect the 2-for-1 stock split of the
    Registrant's common stock effected in the form of a 100 percent stock
    dividend effective April 24, 2000.
                                       16
<PAGE>

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

         The following information should be read in conjunction with the
Consolidated Financial Statements and Notes thereto and other information set
forth following Item 14 of this Report. Per share data has been revised to
reflect the 2-for-1 stock split of the Registrant's common stock effected in the
form of a 100 percent stock dividend effective April 24, 2000. Net sales for
fiscal years 2000 and 1999 have been restated to reflect the adoption of EITF
00-10 as discussed in Item 6. See also "CAUTIONARY STATEMENTS REGARDING
FORWARD-LOOKING STATEMENTS" in Part I of this Report.

         RESULTS OF OPERATIONS

         FISCAL YEAR 2001 COMPARED WITH FISCAL YEAR 2000

         Net sales for the fiscal year ended June 30, 2001 were $84,585,000, an
increase of 27% from the $66,692,000 recorded in the fiscal year ended June 30,
2000. Domestic sales increased by 23% to $60,964,000 in fiscal year 2001 from
$49,646,000 in fiscal year 2000. International sales increased by 39% to
$23,621,000 in fiscal year 2001 from $17,046,000 in fiscal year 2000. The
increase in total net sales resulted primarily from an increase in demand for
the Registrant's core capacitor products in both foreign and domestic markets,
primarily in the first six months of fiscal year 2001.

         During the first half of fiscal year 2001, the significant increase in
customer orders which began during fiscal year 2000 continued. This increase was
evident in all market sectors but was most pronounced in the wireless
infrastructure, fiber optic and semiconductor manufacturing equipment sectors.
In the second half of fiscal year 2001, customer orders declined significantly
due to slowdowns in these markets. As a result, total bookings in fiscal year
2001 were $76,286,000 compared to record bookings in fiscal year 2000 of
$82,521,000, a decline of approximately 8%.

         During the first half of the fiscal year ended June 30, 2001, many of
the Registrant's customers changed their ordering patterns, to protect
themselves against potential supply shortages. These customers reverted back to
prior practices of placing long-term orders to lock in supplier commitments, (in
recent years, customer ordering patterns have trended toward smaller volume
orders with shorter lead times). This trend changed abruptly in the latter half
of the fiscal year, primarily as a result of the slowdown in the wireless
infrastructure, fiber optic and semiconductor manufacturing equipment sectors.
The Registrant has experienced order cancellations and decreased bookings from
its customers in these industries as they attempt to rationalize their inventory
levels to the demand for their products.

         The Registrant expects sales to continue at lower levels in future
quarters until bookings increase. The Registrant currently expects that bookings
will increase compared to the fourth quarter of fiscal year 2001, but will
remain at significantly lower levels in fiscal year 2002 compared to the first
half of fiscal year 2001. In light of this bookings outlook, the Registrant has
instituted a program to rationalize its workforce and reduce spending. Some of
these cost cutting measures, including a workforce reduction and a reduction in
spending on research and development, were implemented during the fourth quarter
of fiscal year 2001 and have continued in the first quarter of fiscal year 2002.

         Gross margins were 43% of net sales in fiscal year 2001, compared to
45% in fiscal year 2000. The decrease in gross margins was primarily
attributable to higher costs for palladium, costs associated with initial
production of several new product initiatives and inventory write-downs to net
realizable value as a result of the economic slowdown, to and a lesser extent,
certain non-recurring charges primarily related to the retirement of certain
equipment.

         Operating expenses totaled $20,183,000, or 24% of net sales, in fiscal
year 2001, compared to $15,881,000, or 24% of net sales, in fiscal year 2000.
The increase in operating expenses from the prior fiscal year was primarily
attributable to increased staff to support the higher volume of transactions,
higher commissions related to the higher sales volume, increased research and
development spending for the development of new products.


                                       17
<PAGE>


         Net interest expense was $226,000 in fiscal year 2001, compared to net
interest expense of $40,000 in fiscal year 2000. The increase in net interest
expense was attributable to increases in loan balances during fiscal year 2001
in support of capital expansion as compared to fiscal year 2000, and a decrease
in interest income on cash and investments due to lower cash available for
investing.

         The effective income tax rate for both fiscal year 2001 and fiscal year
2000 was 35%.

         As a result of the foregoing, the Registrant reported net income of
$10,332,000, or $1.30 per common share ($1.24 per common share assuming
dilution), for fiscal year 2001, compared to net income of $9,071,000, or $1.18
per common share ($1.11 per common share assuming dilution), for fiscal year
2000.

         FISCAL YEAR 2000 COMPARED WITH FISCAL YEAR 1999

         Net sales for the fiscal year ended June 30, 2000 were $66,692,000, an
increase of 77% from the $37,688,000 recorded in the fiscal year ended June 30,
1999. Domestic sales increased by 87% to $49,646,000 in fiscal year 2000 from
$26,568,000 in fiscal year 1999. International sales increased by 53% to
$17,046,000 in fiscal year 2000 from $11,120,000 in fiscal year 1999. The
increase in total net sales resulted primarily from an increase in demand for
the Registrant's core capacitor products in both foreign and domestic markets.
Thin film products experienced steady and consistent growth throughout each
quarter of the fiscal year.

         The Registrant experienced a significant increase in customer orders
throughout fiscal year 2000. This increase was evident in all market sectors,
but was most pronounced in the wireless infrastructure, fiber optic and
semiconductor manufacturing equipment sectors. As a result of the strong
increase in demand for core capacitors and thin film products, the Registrant
recorded record high bookings of $82,521,000 in fiscal year 2000, an increase of
98% over fiscal year 1999's record bookings of $41,580,000.

         During the fiscal year ended June 30, 2000, some of the Registrant's
products were on allocation, delivery times had been extended and customers had
changed their ordering patterns. In recent years, customers have been using
various arrangements, such as rolling forecasts and kan-ban systems, to shorten
their horizons for hard orders. To protect themselves against potential supply
shortages, many reverted back to prior practice of placing long-term orders to
lock in supplier commitments. This ordering trend appeared to reach a peak in
the fourth quarter of fiscal year 2000, resulting in a large backlog for many of
the Registrant's products.

         Gross margins were 45% of net sales in fiscal year 2000 compared to 37%
in fiscal year 1999. The increase in gross margins was primarily attributable to
higher sales volume, particularly of thin film products, and the resulting
increases in efficiency.

         Operating expenses totaled $15,881,000, or 24% of net sales, in fiscal
year 2000, compared to $10,702,000, or 28% of net sales, in fiscal year 1999.
The increase in operating expenses from the prior fiscal year was primarily
attributable to increases in research and development staff due to the formation
of a dedicated Radio Frequency design group, increased sales commission expense
as a result of the increase in net sales, an increase in bonus expense due to
increases in net income, a new executive incentive plan and expenses associated
with the Registrant's sales office in Stockholm, Sweden, which commenced
operations in August 1999.

         Net interest expense was $40,000 in fiscal year 2000, compared to net
interest expense of $111,000 in fiscal year 1999. The decrease in net interest
expense was attributable to decreases in loan balances during fiscal year 2000
as compared to fiscal year 1999 and an increase in interest income on cash and
investments.

         The Registrant recorded other expense of $69,000 in fiscal year 2000,
compared to other income of $251,000 in fiscal year 1999. Other expense in
fiscal year 2000 consisted of losses on disposals of fixed assets.

         The effective income tax rate for both fiscal year 2000 and fiscal year
1999 was 35%.


                                       18
<PAGE>


         As a result of the foregoing, the Registrant reported net income of
$9,071,000, or $1.18 per common share ($1.11 per common share assuming
dilution), for fiscal year 2000, compared to net income of $2,129,000, or $0.28
per common share ($0.28 per common share assuming dilution), for fiscal year
1999.

         LIQUIDITY AND CAPITAL RESOURCES

         The Registrant's financial position at June 30, 2001 remains strong as
evidenced by working capital of $33,662,000, compared to working capital of
$27,087,000 at June 30, 2000. The Registrant's current ratio at June 30, 2001
was 4.2:1, compared to 3.8:1 at June 30, 2000. The increase in the current ratio
was primarily due to inventory increases resulting from planned increases
(discussed further below) and the recent slowdown in demand. The Registrant's
quick ratio at June 30, 2001 decreased to 1.9:1, compared to 2.1:1 at June 30,
2000 primarily due to increases in income taxes payable.

         Cash and investments decreased to $5,179,000 at June 30, 2001 compared
to $5,523,000 at June 30, 2000. The decrease in cash and investments was
primarily the result of funding additions to property, plant and equipment and
purchases of raw materials. Additions of $12,973,000 to property, plant and
equipment included expenditures for the planned replacement of information
technology systems, facility expansions and the purchase of a building adjacent
to the Registrant's existing facilities in Huntington Station, New York.
Accounts receivable decreased by $1,156,000 to $11,530,000 at June 30, 2001,
compared to $12,686,000 at June 30, 2000. The decrease in accounts receivable
was attributable to the decreasing sales volume, particularly in the fourth
quarter of fiscal year 2001. Inventories increased by $8,435,000 to $24,568,000
at June 30, 2001, compared to $16,133,000 at June 30, 2000. The increase is
primarily the result of increases in the cost of palladium, increased purchases
of palladium and gold to support higher production volume, an increase in
finished goods inventory at the Registrant's facility in Sweden, planned
increases in work in process and finished goods inventories of core capacitors
designed to shorten product delivery times and the recent slowdown in demand.

         Accounts payable decreased by $474,000 to $1,755,000 at June 30, 2001,
compared to $2,229,000 at June 30, 2000. The decrease in accounts payable was
the result of recently reduced spending for capital expenditures and raw
material due to the economic slowdown. Accrued expenses decreased by $437,000 to
$6,235,000 at June 30, 2001, compared to $6,672,000 at June 30, 2000. The
decrease in accrued expenses was due to lower commissions and bonuses payable
due to recently declining sales and income. Income taxes payable increased by
$1,539,000 at June 30, 2001 to $1,759,000, compared to $220,000 at June 30, 2000
as a result of increases in income tax liabilities resulting from higher taxable
income for fiscal year 2001 compared to fiscal year 2000.

         The Registrant leases a manufacturing facility from a partnership
controlled by the Registrant's President and Chief Executive Officer and
principal stockholder under a capital lease. The lease has been amended several
times, most recently as of May 16, 2000, primarily to reflect certain additions
to the facility. See "Item 2. PROPERTIES". Under the amended lease, the
Registrant is obligated to pay approximately $461,000 per annum. The payments
due over the remaining ten years of this capital lease, including the portion
related to interest, total approximately $4,727,000. See "Item 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS" and Note 4 of Notes to Consolidated
Financial Statements.

         In November 1998, the Registrant renewed a $2,000,000 revolving line of
credit with NationsBank, N.A. ("NationsBank"), the successor to Barnett Bank of
Jacksonville, N.A. ("Barnett Bank"), and secured a $3,500,000 line of credit
with NationsBank for equipment purchases. Both lines bear interest at 2% above
the three month rate for U. S. Dollar deposits on the London Interbank Market
("LIBOR"). Principal balances under the revolving line of credit will be
repayable in eight quarterly installments commencing upon expiration of the
revolving period. The outstanding principal under the equipment line of credit
rolls over periodically into a self-amortizing term note of not less than four
nor more than seven years. The equipment loan is secured by the related
equipment purchases. Borrowing under both lines is subject to compliance with
certain financial covenants, including maintenance of asset and liability
percentage ratios.



                                       19
<PAGE>


         In April 2000, the Registrant amended its loan agreement with Bank of
America, N.A. ("Bank of America"), the successor to NationsBank. The amendment
increased the revolving line of credit to $4,000,000 and changed the interest
rate. Both lines now bear interest at 1 1/2 % above the one month LIBOR rate.
All other terms and conditions of the loan agreement are substantially the same
as those contained in the original agreement entered into during November 1998.
At the same time, the then outstanding principal balance under the equipment
line of credit of $796,000 was rolled over into a seven-year term note.
Principal on this note is payable in quarterly installments of $28,500,
commencing July 1, 2000. As of June 30, 2001, the Registrant did not incur any
borrowings under the revolving line of credit and has borrowed an aggregate of
$984,000 under the equipment line.

         In October 2000, the Registrant amended its loan agreement with Bank of
America increasing its line of credit for capital equipment purchases to
$8,500,000 from $3,500,000. During fiscal year 2001, the Registrant borrowed an
additional $3,784,000 under the equipment line of credit and rolled over
$1,466,000 into term notes. As of June 30, 2001, the Registrant has borrowed an
aggregate of $4,630,000 under the equipment line.

         In May 2001, the Registrant entered into a credit facility with
European American Bank ("EAB"). The facility is now with Citibank, N.A.
("Citibank"), as successor to EAB. The loan makes available a $5,000,000
equipment line of credit and a $2,000,000 unsecured term loan line. Both lines
bear interest at the Registrant's option at either the Citibank prime rate or 1
1/2 % above the Reserve Adjusted LIBOR (as defined) and are subject to certain
financial covenants. Borrowings under the equipment line will be secured by the
related equipment purchases. The outstanding balance six months after the term
loan line is made available and at expiration of the line (January 2002) will
automatically convert into fully amortizing term loans with a maturity of five
years bearing interest at the same rate as the equipment loan.

         In August 2000, the Registrant secured a $795,000 mortgage loan with
EAB, secured by the recently purchased facility at 11 - 13 Stepar Place,
Huntington Station, New York. The loan is now with Citibank, as successor to
EAB. The term of the loan is 10 years to be repaid in 120 equal installments.
The mortgage is subject to certain financial covenants, including maintenance of
asset and liability percentage ratios. The mortgage loan bears interest at
1 1/2% above the six month LIBOR rate.

         The Registrant intends to use cash on hand and available lines of
credit to finance budgeted capital expenditures, primarily for equipment
acquisition and facility expansion, of approximately $3,000,000 in fiscal year
2002.

         INFLATION

         The Registrant does not expect the effects of inflation to have a
significant impact on its liquidity or results of operations.

         ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141 "Business Combinations" ("SFAS No.
141"), which is effective for business combinations initiated after June 30,
2001. SFAS No. 141 requires all business combinations initiated after June 30,
2001 to be accounted for using the purchase method. The Registrant does not
expect the adoption of SFAS No. 141 to have a material impact on its
consolidated results of operations or financial position.

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS No. 142"), which is effective for fiscal years beginning after June 15,
2001. SFAS No. 142 establishes accounting and reporting standards for goodwill
and intangible assets. Under SFAS No. 142, amortization of goodwill will be
terminated. However, goodwill will be subject to periodic assessments for
impairment by applying a fair-value-based test. Intangible assets must be
separately recognized and amortized over their useful lives. The Registrant does
not expect the adoption of SFAS No. 142 (effective July 1, 2001) to have any
impact on its consolidated results of operations or financial position.

                                       20
<PAGE>

         In July 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations," ("SFAS No. 143"). SFAS No. 143 addresses financial accounting
requirements for retirement obligations associated with retirement of tangible
long-lived assets and for the associated asset retirement costs. SFAS No. 143
requires a company to record the fair value of an asset retirement obligation in
the period in which it incurred a legal obligation associated with the
retirement of tangible long-lived assets that results from the acquisition,
construction development and/or normal use of the asset. The company is also to
record a corresponding increase to the carrying amount of the related asset and
to depreciate that cost over the life of the asset. The amount of the liability
is changed at the end of each period to reflect the passage of time and changes
in estimated future cash flows. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. The Registrant has not yet determined the impact
of its planned adoption of SFAS No. 143 (anticipated for July 1, 2002).
Currently, the Registrant does not believe that it has any asset retirement
obligations that would be subject to SFAS No. 143.

         MARKET RISKS

         The Registrant has identified four market risks relative to its
business: interest rate risk, foreign currency exchange rate risk, commodity
price risk and security price risk. The Registrant has managed its market risk
exposures in order to minimize their potential impact on its consolidated
financial condition and results of operations. Specifically:

    a)   Interest rate risk. In light of the Registrant's existing cash
         balances, its results of its operations, the terms of its debt
         obligations and its projected capital needs, it does not believe that a
         significant change in interest rates would have a significant impact on
         its consolidated financial position. See "Item 7. MANAGEMENT'S
         DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
         OPERATIONS -- LIQUIDITY AND CAPITAL RESOURCES".

    b)   Foreign currency exchange rate risk. With the exception of sales by two
         of the Registrant's wholly-owned subsidiaries, one in the United
         Kingdom (which are denominated in Pounds) and the other in Sweden
         (which are denominated in Krona), all transactions are, or are
         anticipated to be, denominated in U.S. Dollars. At the present time,
         the contribution of these subsidiaries to the Registrant's consolidated
         results of operations is not significant. See Note 9 of Notes to
         Consolidated Financial Statements. Accordingly, fluctuations in
         exchange rates would not presently have a material adverse effect on
         the Registrant's operations.

    c)   Commodity price risk. In light of recent fluctuations in the price of
         palladium, the Registrant has purchased additional inventories of this
         raw material to protect against future unavailability and unstable
         pricing. See "Item 1. BUSINESS -- RAW MATERIALS". The Registrant
         believes that, based upon its current levels of production and
         inventories of palladium, it will not have to buy any additional
         quantities of palladium for at least the next year.

    d)   Security price risk. The Registrant's current portfolio of marketable
         securities consists of U.S. Treasury notes with varying maturities of
         up to ten years. The Registrant would manage any exposure resulting
         from declining prices by holding any securities which decline
         substantially in value until maturity.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Registrant's Consolidated Financial Statements and the Notes
thereto begin on page F-2 of this report.

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

         None.

                                       21
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information set forth under the caption "Election of Directors" in
the Registrant's Proxy Statement to be furnished in connection with its Annual
Meeting of Stockholders to be held November 15, 2001 is hereby incorporated by
reference.

ITEM 11. EXECUTIVE COMPENSATION

         The information set forth under the caption "Executive Compensation" in
the Registrant's Proxy Statement to be furnished in connection with its Annual
Meeting of Stockholders to be held November 15, 2001 is hereby incorporated by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" and the information relating to
beneficial ownership of the Registrant's common stock in the table under the
caption "Election of Directors" in the Registrant's Proxy Statement to be
furnished in connection with its Annual Meeting of Stockholders to be held
November 15, 2001 is hereby incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information set forth under the caption "Certain Relationships and
Related Transactions" in the Registrant's Proxy Statement to be furnished in
connection with its Annual Meeting of Stockholders to be held November 15, 2001
is hereby incorporated by reference.

                                     PART IV

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

(A)   FINANCIAL STATEMENTS                                              PAGE NO.

      Index to Consolidated Financial Statements .......................  F
      Independent Auditors' Report .....................................  F-1
      Consolidated Financial Statements
               Balance Sheets as of June 30, 2001 and 2000..............  F-2
               Statements of Earnings
                  Years Ended June 30, 2001, 2000 and 1999..............  F-3
               Statements of Stockholders' Equity
                  Years Ended June 30, 2001, 2000 and 1999..............  F-4
               Statements of Cash Flows
                  Years Ended June 30, 2001, 2000 and 1999..............  F-5
               Notes to Consolidated Financial Statements ..............  F-6

                                       22
<PAGE>

(B)   REPORTS ON FORM 8-K

         The Registrant did not file any reports on Form 8-K during the last
quarter of the period covered by this Report.

(C)   EXHIBITS

         Unless otherwise indicated, the following exhibits were filed as part
of the Registrant's Registration Statement on Form S-18 (No. 2-96925-NY) (the
"Registration Statement") and are incorporated herein by reference to the same
exhibit thereto:

EXHIBIT NO.    DESCRIPTION
-----------    -----------

3(a)(i)     -  Certificate of Incorporation of the Registrant.

3(a)(ii)    -  Amendment to Certificate of Incorporation. (4)

3(b)(i)     -  By-laws of the Registrant.

9(a)(i)     -  Restated Shareholders' Agreement, dated April 15, 1985, among
               Victor Insetta, Joseph Mezey, Joseph Colandrea and the
               Registrant.

10(b)(i)    -  Amended and Restated Lease, dated September 25, 1998, between
               Victor Insetta, d/b/a Stepar Leasing Company, and the Registrant
               for premises at 15 Stepar Place, Huntington Station, N.Y. (9)

10(c)(i)    -  Form of 1985 Employee Stock Sale Agreement between the Registrant
               and various employees.

10(c)(ii)   -  Form of Employee Stock Bonus Agreement, dated as of July 1, 1993,
               between the Registrant and various employees. (3)

10(c)(iii)  -  Form of Employee Stock Bonus Agreement, dated as of April 19,
               1994, between the Registrant and various employees. (3)

10(c)(iv)   -  Form of Employee Stock Bonus Agreement, dated as of April 20,
               1995, between the Registrant and various employees. (4)

10(e)(i)    -  Second Amended and Restated Lease, dated as of May 16, 2000,
               between V.P.I. Properties Associates, d/b/a V.P.I. Properties
               Associates, Ltd., and American Technical Ceramics (Florida), Inc.
               (13)

10(f)       -  Purchase Agreement, dated May 31, 1989, by and among Diane LaFond
               Insetta and/or Victor D. Insetta, as custodians for Danielle and
               Jonathan Insetta, and American Technical Ceramics Corp., and
               amendment thereto, dated July 31, 1989. (4)

10(g)(iii)  -  Profit Bonus Plan, dated April 19, 1995, and effective for the
               fiscal years beginning July 1, 1994. (4)

10(g)(iv)   -  Employment Agreement, dated April 3, 1985, between Victor Insetta
               and the Registrant, and Amendments No. 1 through 4 thereto. (2)

10(g)(v)    -  Amendment No. 5, dated as of September 11, 1998, to Employment
               Agreement between Victor Insetta and the Registrant. (8)

                                       23
<PAGE>

10(g)(vi)   -  Managers Profit Bonus Plan, dated December 7, 1999, and effective
               January 1, 2000. (12)

10(h)       -  Employment Agreement, dated September 1, 2000, between the
               Registrant and Richard Monsorno. (14)

10(k)       -  Consulting Agreement, dated October 2000, between the Registrant
               and Stuart P. Litt. (14)

10(m) (i)   -  American Technical Ceramics Corp. 1997 Stock Option Plan. (7)

10(m) (ii)  -  American Technical Ceramics Corp. 2000 Incentive Stock Plan. (12)

10(o)(i)    -  Loan Agreement, dated November 25, 1998, between the Registrant
               and NationsBank, N.A. (10)

10(o)(ii)   -  Amendment to Loan Agreement, dated February 4, 1999, between the
               Registrant and NationsBank, N.A. (12)

10(o)(iii)  -  Second Amendment to Loan Agreement, dated April 13, 2000, between
               the Registrant and Bank of America, N.A., as successor to
               NationsBank, N.A. (12)

10(o)(iv)   -  Third Amendment to Loan Agreement, dated October 26, 2000,
               between the Registrant and Bank of America, N.A., as successor to
               NationsBank, N.A. (15)

10(o)(v)    -  Fourth Amendment to Loan Agreement, dated March 30, 2001, between
               the Registrant and Bank of America, N.A., as successor to
               NationsBank, N.A. (15)

10(p)       -  Amended and Restated Employment Agreement, dated as of January 1,
               1998, between Judah Wolf and the Registrant. (11)

10(q)       -  Mortgage Note between American Technical Ceramics Corp. and
               European American Bank, N.A., dated as of August 17, 2000. (13)

10(r)       -  Employment Agreement, dated April 10, 2001, between the
               Registrant and David Ott. (15)

10(s)       -  Loan Agreement, dated May 8, 2001, between the Registrant and
               European American Bank, N.A. (16)

21          -  Subsidiaries of the Registrant. (2)

23          -  Consent of KPMG LLP (16)

                                       24
<PAGE>

1.   Incorporated by reference to the Registrant's Annual Report on Form 10-K
     for the fiscal year ended June 30, 1989.

2.   Incorporated by reference to the Registrant's Annual Report on Form 10-K
     for the fiscal year ended June 30, 1993.

3.   Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
     for the fiscal year ended June 30, 1994.

4.   Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
     for the fiscal year ended June 30, 1995.

5.   Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
     for the fiscal year ended June 30, 1996.

6.   Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarterly period ended March 31, 1997.

7.   Incorporated by reference to the Registrant's Annual Report on Form 10-K
     for the fiscal year ended June 30, 1997.

8.   Incorporated by reference to the Registrant's Annual Report on Form 10-K
     for the fiscal year ended June 30, 1998.

9.   Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarterly period ended September 30, 1998.

10.  Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarterly period ended December 31, 1998.

11.  Incorporated by reference to the Registrant's Annual Report on Form 10-K
     for the fiscal year ended June 30, 1999.

12.  Incorporated by reference to the Registrant's Annual Report on Form 10-K
     for the fiscal year ended June 30, 2000.

13.  Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarterly period ended September 30, 2000.

14.  Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarterly period ended December 31, 2000.

15.  Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarterly period ended March 31, 2001.

16.  Filed herewith.

(D)  FINANCIAL STATEMENT SCHEDULES

         Schedules have been omitted since they either are not applicable, not
required or the information is included elsewhere herein.

                                       25
<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.

                                       AMERICAN TECHNICAL CERAMICS CORP.

                                       BY: /S/ VICTOR INSETTA
                                           ------------------
                                           VICTOR INSETTA
                                           President

Dated:   September 21, 2001

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT IN THE CAPACITIES AND ON THE DATES INDICATED:

        NAME                          TITLE                          DATE
        ----                          -----                          ----

/S/ VICTOR INSETTA          President and Director            September 21, 2001
------------------          (Principal Executive Officer)
Victor Insetta

/S/ ANDREW R. PERZ          Vice President, Controller        September 21, 2001
------------------          (Principal Accounting Officer)
Andrew R. Perz

/S/ STUART P. LITT          Director                          September 21, 2001
------------------
Stuart P. Litt

/S/ O. JULIAN GARRARD III   Director                          September 21, 2001
-------------------------
O. Julian Garrard III

/S/ CHESTER E. SPENCE       Director                          September 21, 2001
---------------------
Chester E. Spence

/S/ THOMAS J. VOLPE         Director                          September 21, 2001
-------------------
Thomas J. Volpe

/S/DOV S. BACHARACH         Director                          September 21, 2001
-------------------
Dov S. Bacharach

                                       26
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                     Page Number

    Independent Auditors' Report  . . . . . . . . . . . . . . . . .      F-1

    Consolidated Balance Sheets as of June 30, 2001 and 2000  . . .      F-2

    Consolidated Statements of Earnings
      Years Ended June 30, 2001, 2000 and 1999  . . . . . . . . . .      F-3

    Consolidated Statements of Stockholders' Equity
      Years Ended June 30, 2001, 2000 and 1999  . . . . . . . . . .      F-4

    Consolidated Statements of Cash Flows
      Years Ended June 30, 2001, 2000 and 1999  . . . . . . . . . .      F-5

    Notes to Consolidated Financial Statements  . . . . . . . . . .      F-6

                                        F
<PAGE>

                          Independent Auditors' Report


The Board of Directors and Stockholders
American Technical Ceramics Corp.:

We have audited the accompanying consolidated balance sheets of American
Technical Ceramics Corp. and subsidiaries (the "Company") as of June 30, 2001
and 2000, and the related consolidated statements of earnings, stockholders'
equity and cash flows for each of the years in the three-year period ended June
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 consolidated
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 American Technical
Ceramics Corp. and subsidiaries as of June 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 June 30, 2001, in conformity with accounting principles generally
accepted in the United States of America.

                                          /s/ KPMG LLP

Melville, New York
August 21, 2001

                                       F-1
<PAGE>

               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS                                     JUNE 30, 2001   JUNE 30, 2000
                                                                                ------------    -------------
<S>                                                                             <C>             <C>
CURRENT ASSETS
   Cash (including cash equivalents of $552,000 and
      $448,000, respectively) ...............................................   $  1,659,000    $  2,277,000
   Investments ..............................................................      3,520,000       3,246,000
   Accounts receivable, net .................................................     11,530,000      12,686,000
   Inventories ..............................................................     24,568,000      16,133,000
   Deferred income taxes, net ...............................................      1,722,000         693,000
   Other current assets .....................................................      1,289,000       1,661,000
                                                                                ------------    ------------
                                  TOTAL CURRENT ASSETS                            44,288,000      36,696,000
                                                                                ------------    ------------

PROPERTY, PLANT AND EQUIPMENT
   Land .....................................................................        738,000         738,000
   Buildings ................................................................      9,101,000       7,591,000
   Leasehold improvements ...................................................      4,600,000       3,620,000
   Machinery and equipment ..................................................     39,258,000      31,180,000
   Computer equipment and software ..........................................      4,509,000       2,463,000
   Furniture, fixtures and other ............................................      1,522,000       1,267,000
                                                                                ------------    ------------
                                                                                  59,728,000      46,859,000
   Less: Accumulated depreciation and amortization ..........................     27,639,000      23,957,000
                                                                                ------------    ------------
                                                                                  32,089,000      22,902,000
                                                                                ------------    ------------
OTHER ASSETS ................................................................        199,000         189,000
                                                                                ------------    ------------
                                  TOTAL ASSETS                                  $ 76,576,000    $ 59,787,000
                                                                                ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Current portion of long-term debt ........................................   $    877,000    $    488,000
   Accounts payable .........................................................      1,755,000       2,229,000
   Accrued expenses .........................................................      6,235,000       6,672,000
   Income taxes payable .....................................................      1,759,000         220,000
                                                                                ------------    ------------
                                  TOTAL CURRENT LIABILITIES                       10,626,000       9,609,000

LONG-TERM DEBT, NET OF CURRENT PORTION ......................................      7,211,000       3,486,000
DEFERRED INCOME TAXES .......................................................      2,910,000       2,371,000
                                                                                ------------    ------------
                                  TOTAL LIABILITIES                               20,747,000      15,466,000
                                                                                ------------    ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Common Stock -- $.01 par value; authorized 20,000,000 shares; issued
        8,451,433 and 8,369,528 shares,
        outstanding 8,007,293 and 7,884,638 shares, respectively ............         85,000          84,000
   Capital in excess of par value ...........................................     11,260,000      10,366,000
   Retained earnings ........................................................     46,414,000      36,082,000
   Accumulated  other comprehensive income (loss):
      Unrealized gain (loss) on investments available-for-sale, net .........         56,000         (56,000)
      Cumulative foreign currency translation adjustment ....................       (294,000)       (112,000)
                                                                                ------------    ------------
                                                                                    (238,000)       (168,000)
                                                                                ------------    ------------
    Less: Treasury stock, at cost (444,140 and 484,890 shares, respectively)       1,447,000       1,515,000
               Deferred compensation ........................................        245,000         528,000
                                                                                ------------    ------------
                                  TOTAL STOCKHOLDERS' EQUITY                      55,829,000      44,321,000
                                                                                ------------    ------------
                                                                                $ 76,576,000    $ 59,787,000
                                                                                ============    ============
</TABLE>

See accompanying notes to consolidated financial statements

                                       F-2

<PAGE>

               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                      YEARS ENDED JUNE 30, 2001, 2000, 1999

<TABLE>
<CAPTION>
                                                         2001            2000            1999
                                                         ----            ----            ----
<S>                                                  <C>             <C>             <C>
Net sales ........................................   $ 84,585,000    $ 66,692,000    $ 37,688,000
Cost of sales ....................................     48,235,000      36,746,000      23,850,000
                                                     ------------    ------------    ------------
     Gross profit ................................     36,350,000      29,946,000      13,838,000
                                                     ------------    ------------    ------------

Selling, general and administrative expenses .....     16,003,000      13,111,000       8,721,000
Research and development expenses ................      4,180,000       2,770,000       1,981,000
                                                     ------------    ------------    ------------
     Operating expenses ..........................     20,183,000      15,881,000      10,702,000
                                                     ------------    ------------    ------------
     Income from operations ......................     16,167,000      14,065,000       3,136,000
                                                     ------------    ------------    ------------
Other expense (income)
     Interest expense ............................        559,000         406,000         420,000
     Interest income .............................       (333,000)       (366,000)       (309,000)
     Other .......................................         45,000          69,000        (251,000)
                                                     ------------    ------------    ------------
                                                          271,000         109,000        (140,000)
                                                     ------------    ------------    ------------

     Income before provision for income taxes ....     15,896,000      13,956,000       3,276,000

Provision for income taxes .......................      5,564,000       4,885,000       1,147,000
                                                     ------------    ------------    ------------
     Net income ..................................   $ 10,332,000    $  9,071,000    $  2,129,000
                                                     ============    ============    ============

Basic net income per common share ................   $       1.30    $       1.18    $       0.28

Diluted net income per common share ..............   $       1.24    $       1.11    $       0.28
                                                     ------------    ------------    ------------
Basic weighted average common shares outstanding .      7,962,000       7,706,000       7,658,000
                                                     ============    ============    ============

Diluted weighted average common shares outstanding      8,315,000       8,186,000       7,658,000
                                                     ============    ============    ============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>

               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    YEARS ENDED JUNE 30, 2001, 2000, AND 1999

<TABLE>
<CAPTION>

                                                Comprehensive                                     Capital in
                                                  Income /                Common Stock             Excess of       Retained
                                                    (Loss)            Shares         Amount        Par Value       Earnings
                                                -------------------------------------------------------------------------------
<S>                                             <C>               <C>             <C>             <C>             <C>
BALANCE AT JUNE 30, 1998                                            8,135,958     $    82,000     $ 6,560,000     $24,882,000

Net income                                      $ 2,129,000             ---             ---             ---         2,129,000

Purchase of treasury stock                            ---               ---             ---             ---            ---

Issuance of shares for compensation                   ---               ---             ---           130,000          ---

Stock award compensation expense                      ---               ---             ---           162,000          ---

Issuance of shares for inventory purchase             ---               ---             ---            51,000          ---

Other comprehensive income, net of tax:

   Unrealized losses on investments
     available-for-sale, net of
     reclassification adjustment                   (181,000)            ---             ---             ---            ---

   Foreign currency translation adjustment          (89,000)            ---             ---             ---            ---
                                                ---------------
Other comprehensive loss, net of tax               (270,000)            ---             ---             ---            ---
                                                ---------------
Comprehensive income                            $ 1,859,000
                                                -------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1999                                            8,135,958     $    82,000     $ 6,903,000     $27,011,000

Net income                                      $ 9,071,000             ---             ---             ---         9,071,000

Tax benefit of stock options exercised                ---               ---             ---         1,366,000          ---

Stock award compensation                              ---               ---             ---         1,137,000          ---

Exercise of stock options                             ---             233,570           2,000         960,000          ---

Other comprehensive income, net of tax:

   Unrealized losses on investments
     available-for-sale, net of
     reclassification adjustment                    (58,000)            ---             ---             ---            ---

   Foreign currency translation adjustment          (14,000)            ---             ---             ---            ---
                                                ---------------
Other comprehensive loss, net of tax                (72,000)            ---             ---             ---            ---
                                                ---------------
Comprehensive income                            $ 8,999,000
                                                -------------------------------------------------------------------------------
BALANCE AT JUNE 30, 2000                                            8,369,528     $    84,000     $10,366,000     $36,082,000

Net income                                      $10,332,000             ---             ---             ---        10,332,000

Tax benefit of stock options exercised                ---               ---             ---           182,000          ---

Stock award compensation expense                      ---               ---             ---           369,000          ---

Exercise of stock options                             ---              81,905           1,000         343,000          ---

Other comprehensive income, net of tax:

   Unrealized gains on investments
      available-for-sale                            112,000             ---             ---             ---            ---

   Foreign currency translation adjustment         (182,000)            ---             ---             ---            ---
                                                ---------------
Other comprehensive loss, net of tax                (70,000)            ---             ---             ---            ---
                                                ---------------
Comprehensive income                            $10,262,000             ---             ---             ---            ---
                                                -------------------------------------------------------------------------------
BALANCE AT JUNE 30, 2001                                            8,451,433     $    85,000     $11,260,000     $46,414,000
                                                                  -------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                  Accumulated
                                                     Other
                                                  Comprehensive                      Deferred
                                                  Income (Loss)   Treasury Stock   Compensation       Total
                                                --------------------------------------------------------------
<S>                                                <C>             <C>             <C>             <C>
BALANCE AT JUNE 30, 1998                           $   174,000     $  (611,000)    $   (14,000)    $31,073,000

Net income                                               ---             ---             ---         2,129,000

Purchase of treasury stock                               ---        (1,198,000)          ---        (1,198,000)

Issuance of shares for compensation                      ---            84,000           ---           214,000

Stock award compensation expense                         ---           161,000          14,000         337,000

Issuance of shares for inventory purchase                ---            49,000           ---           100,000

Other comprehensive income, net of tax:

   Unrealized losses on investments
     available-for-sale, net of
     reclassification adjustment                         ---             ---             ---             ---

   Foreign currency translation adjustment               ---             ---             ---             ---

Other comprehensive loss, net of tax                  (270,000)          ---             ---          (270,000)

Comprehensive income
                                                --------------------------------------------------------------
BALANCE AT JUNE 30, 1999                           $   (96,000)    $(1,515,000)    $     ---       $32,385,000

Net income                                               ---             ---             ---         9,071,000

Tax benefit of stock options exercised                   ---             ---             ---         1,366,000

Stock award compensation                                 ---             ---          (528,000)        609,000

Exercise of stock options                                ---             ---             ---           962,000

Other comprehensive income, net of tax:

   Unrealized losses on investments
     available-for-sale, net of
     reclassification adjustment                         ---             ---             ---             ---

   Foreign currency translation adjustment               ---             ---             ---             ---

Other comprehensive loss, net of tax                   (72,000)          ---             ---           (72,000)

Comprehensive income
                                                --------------------------------------------------------------
BALANCE AT JUNE 30, 2000                          $   (168,000)    $(1,515,000)    $  (528,000)    $44,321,000

Net income                                               ---             ---             ---        10,332,000

Tax benefit of stock options exercised                   ---             ---             ---           182,000

Stock award compensation expense                         ---            68,000         283,000         720,000

Exercise of stock options                                ---             ---             ---           344,000

Other comprehensive income, net of tax:

   Unrealized gains on investments
      available-for-sale                                 ---             ---             ---             ---

   Foreign currency translation adjustment               ---             ---             ---             ---

Other comprehensive loss, net of tax                   (70,000)          ---             ---          (70,000)

Comprehensive income                                     ---             ---             ---             ---
                                                --------------------------------------------------------------
BALANCE AT JUNE 30, 2001                           $  (238,000)    $(1,447,000)    $  (245,000)    $55,829,000
                                                --------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>

               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      YEARS ENDED JUNE 30, 2001, 2000, 1999

<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:                             2001            2000            1999
                                                               ------------    ------------    ------------
<S>                                                            <C>             <C>             <C>
  Net income                                                   $ 10,332,000    $  9,071,000    $  2,129,000
  Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization                              4,367,000       3,062,000       2,542,000
       Loss (gain) on disposal of fixed assets                      114,000          69,000         (10,000)
       Stock award compensation expense                             720,000         609,000         337,000
       Provision for deferred income taxes                         (550,000)        163,000         318,000
       Provision for doubtful accounts receivable                    74,000         140,000              --
       Realized gain on sale of investments                              --          (7,000)       (257,000)
  Changes in operating assets and liabilities:
       Accounts receivable                                        1,082,000      (7,552,000)       (854,000)
       Inventories                                               (8,435,000)     (3,697,000)     (1,452,000)
       Other assets                                                 362,000      (1,295,000)         18,000
       Accounts payable, accrued expenses and
         income taxes payable                                       810,000       5,568,000        (166,000)
                                                               ------------    ------------    ------------
  Net cash provided by operating activities                       8,876,000       6,131,000       2,605,000
                                                               ------------    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
       Capital expenditures                                     (12,973,000)     (7,262,000)     (3,570,000)
       Purchase of investments                                     (102,000)     (1,810,000)       (203,000)
       Proceeds from sale of investments                                 --       1,611,000       3,356,000
       Proceeds from sale of fixed assets                            64,000          20,000          55,000
                                                               ------------    ------------    ------------
  Net cash used in investing activities                         (13,011,000)     (7,441,000)       (362,000)
                                                               ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
       Repayment of long-term debt                                 (465,000)       (447,000)       (923,000)
       Payments to acquire treasury stock                                --              --      (1,198,000)
       Proceeds from exercise of stock options                      344,000         962,000              --
       Proceeds from issuance of debt                             3,784,000         188,000         796,000
                                                               ------------    ------------    ------------
  Net cash provided by (used in) financing activities             3,663,000         703,000      (1,325,000)
                                                               ------------    ------------    ------------
       Effect of exchange rate changes on cash                     (146,000)        (14,000)        (89,000)
                                                               ------------    ------------    ------------
        Net (decrease) increase in cash and cash equivalents       (618,000)       (621,000)        829,000

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                      2,277,000       2,898,000       2,069,000
                                                               ------------    ------------    ------------
CASH AND CASH EQUIVALENTS, END OF YEAR                         $  1,659,000    $  2,277,000    $  2,898,000
                                                               ============    ============    ============
Supplemental cash flow information:
        Interest paid                                          $    486,000    $    406,000    $    420,000
        Taxes paid                                             $  4,757,000    $  3,854,000    $    648,000
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>

               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

         American Technical Ceramics Corp. and its wholly-owned subsidiaries
(the "Company") are engaged in the design, development, manufacture and sale of
ceramic multilayer capacitors for commercial and military purposes in the United
States and for export, primarily to Western Europe, Canada and the Far East.
During each of the fiscal years 2001 and 1999, no customer accounted for more
than 10% of consolidated revenues. During fiscal year 2000, Tyco International
LTD. accounted for 15% of consolidated net sales. The Company operates in one
industry segment - the electronic components industry.

         BASIS OF PRESENTATION

         The accompanying consolidated financial statements include the accounts
of American Technical Ceramics Corp. and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.

         Certain reclassifications have been made to prior year amounts to
conform to the current year presentation.

         STOCK SPLIT

         On April 11, 2000, the Company's Board of Directors declared a 2-for-1
stock split of the Company's common stock, effected in the form of a 100 percent
stock dividend. The stock dividend was paid on May 15, 2000 to holders of record
on April 24, 2000. Accordingly, all share and per share information has been
adjusted to reflect the stock split.

         REVENUE RECOGNITION

         The Company generates revenue from product sales. Revenue is recognized
when title of products sold passes to the customer, which occurs either upon
shipment or delivery. The Company provides for (as a reduction of revenue) an
allowance for sales returns based upon an analysis of historical experience and
current conditions.

         CASH EQUIVALENTS

         The Company considers all highly liquid debt instruments with a
maturity of three months or less when purchased to be cash equivalents,
including money market accounts and certificates of deposit.

         INVESTMENTS

         The Company classifies its investments in debt and equity securities as
available-for-sale. Accordingly, these investments are reported at fair value
with unrealized holding gains and losses excluded from earnings and reported as
a component of accumulated other comprehensive income within stockholders'
equity, net of tax. Classification of investments is determined at acquisition
and reassessed at each reporting date. Realized gains and losses are included in
the determination of net earnings at the time of sale and are derived using the
specific identification method for determining cost of securities sold.

         INVENTORIES

         Inventories are stated at the lower of aggregate cost (first-in,
first-out) or market.

                                       F-6
<PAGE>

         COMPREHENSIVE INCOME

         The following table sets forth the components of the change in net
unrealized gains (losses) on investments available-for-sale for the fiscal years
ended June 30, 2001, 2000 and 1999:

<TABLE>
<CAPTION>
                                                           2001        2000         1999
                                                         ---------   ---------    ---------
<S>                                                      <C>         <C>          <C>
Unrealized holding gains (losses)
           arising during the period, net of tax         $ 112,000   $ (53,000)   $ (14,000)

Less: reclassification adjustment for
           gains included in net income, net of tax             --      (5,000)    (167,000)
                                                         ---------   ---------    ---------
Change in net unrealized gains (losses) on investments
           available-for-sale                            $ 112,000   $ (58,000)   $(181,000)
                                                         =========   =========    =========
</TABLE>

         The deferred tax liability (benefit) associated with unrealized
holdings gains (losses) arising during the fiscal years 2001, 2000 and 1999 was
$60,000, ($21,000) and ($8,000), respectively. The tax benefit of the
reclassification adjustments for gains on sales of investments included in net
income during the fiscal years 2000 and 1999 was ($3,000) and ($90,000),
respectively.

         LONG-LIVED ASSETS

         Property, plant and equipment are stated at cost. Depreciation and
amortization are provided primarily using the straight-line method over the
estimated useful lives of the related assets as follows:

Buildings                                                               30 years
Leasehold improvements             Lesser of the remaining lease term or 5 years
Machinery and equipment                                                 10 years
Furniture, fixtures and other                                       3 to 8 years
Computer equipment and software                                          3 years

         The Company reviews its long-lived assets for impairment whenever
events or circumstances indicate that the carrying amount of an asset may not be
recoverable. If the sum of the expected cash flows, undiscounted and without
interest, is less than the carrying amount of the asset, an impairment loss is
recognized as the amount by which the carrying amount of the asset exceeds its
fair value. During fiscal 2001, the Company recognized impairment losses related
to its decision to take certain machinery and equipment out of service, of
$371,000, which was recorded as a component of depreciation expense.

         INCOME TAXES

         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 realized or settled. 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.

                                       F-7
<PAGE>

         FOREIGN CURRENCY TRANSLATION

         The Company translates the financial statements of its foreign
subsidiaries (located in England and Sweden) by applying the current exchange
rate as of the balance sheet date to the assets and liabilities of the
subsidiary and a weighted average rate to such subsidiary's results of
operations. The resulting translation adjustment is recorded as a component of
stockholders' equity.

         STOCK-BASED COMPENSATION

         The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", in accounting for employee
stock-based compensation and makes pro-forma disclosures of net income and net
income per share as if the fair value method under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation", had
been applied.

         EARNINGS PER SHARE

         Basic earnings per share ("EPS") is computed by dividing income
available to common stockholders (which for the Company equals its net income)
by the weighted average number of common shares outstanding, and dilutive EPS
adds the dilutive effect of stock options and other common stock equivalents.
Antidilutive shares aggregating 798,000 and 378,000, respectively, have been
omitted from the calculation of dilutive EPS for the fiscal years ended June 30,
2001 and June 30, 2000, respectively. There were no antidilutive shares for the
fiscal year ended June 30, 1999. A reconciliation between numerators and
denominators of the basic and diluted earnings per share is as follows:

<TABLE>
<CAPTION>
                               YEAR ENDED JUNE 30, 2001                          YEAR ENDED JUNE 30, 2000
                               ------------------------                          ------------------------
                         INCOME             SHARES        PER-SHARE         INCOME            SHARES        PER-SHARE
                      (NUMERATOR)       (DENOMINATOR)       AMOUNT       (NUMERATOR)      (DENOMINATOR)      AMOUNT
                      ----------        ------------        ------       ----------       ------------       ------
<S>                  <C>                  <C>                <C>         <C>                <C>                <C>
Basic EPS            $10,332,000          7,962,000          $1.30       $9,071,000         7,706,000          $1.18
                                                             =====                                             =====
Effect of Dilutive Securities:

  Stock Options              --             331,000            --              --             440,000           --
  Stock Awards               --              22,000            --              --              40,000           --
                   -----------------------------------------------------------------------------------------------------
Diluted EPS         $10,332,000           8,315,000          $1.24       $9,071,000         8,186,000          $1.11
                   =====================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                              YEAR ENDED JUNE 30, 1999
                              ------------------------
                        INCOME            SHARES        PER-SHARE
                     (NUMERATOR)      (DENOMINATOR)      AMOUNT
                     ----------       ------------       ------
<S>                  <C>                <C>                <C>
Basic EPS            $2,129,000         7,658,000          $.28
                                                           ====
Effect of Dilutive Securities:

  Stock Options            --                --             --
  Stock Awards             --                --             --
                   ------------------------------------------------
Diluted EPS          $2,129,000         7,658,000            $.28
                   ================================================
</TABLE>

         IMPACT OF NEW ACCOUNTING STANDARDS

         Effective July 1, 2000, the Company adopted EITF Issue 00-10 (EITF
00-10), "Accounting for Shipping and Handling Fees and Costs". EITF 00-10
establishes standards for income statement classification of shipping and
handling fees billed to customers and the related costs incurred. Adoption of
EITF 00-10 requires the Company to classify freight costs billed to customers as
sales. Prior period amounts have been restated to reflect a reclassification
from a net presentation in selling, general and administrative expenses. The
amounts of revenue reclassified were $184,000 and $123,000 for fiscal years
ended June 30, 2000 and 1999, respectively. The Company classifies the related
costs as cost of sales.

                                       F-8
<PAGE>

         In July 2000, the Company adopted Statement of Financial Accounting
Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities"
("SFAS No. 133"), which is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000, as amended by SFAS No. 137. In June 2000, SFAS
No. 138 was issued which amended certain provisions of SFAS No. 133. SFAS No.
133 establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. In accordance with SFAS No. 133, an entity is required to
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement and requires that a company
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting. The adoption of SFAS No. 133 did not have a material
effect on the Company's consolidated results or operations of financial
position.

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141 "Business Combinations" ("SFAS No.
141"), which is effective for business combinations initiated after June 30,
2001. SFAS No. 141 requires all business combinations initiated after June 30,
2001 to be accounted for using the purchase method. The Company does not expect
the adoption of SFAS No. 141 to have a material impact on its consolidated
results of operations or financial position.

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS No. 142"), which is effective for fiscal years beginning after June 15,
2001. SFAS No. 142 establishes accounting and reporting standards for goodwill
and intangible assets. Under SFAS No. 142, amortization of goodwill will be
terminated. However, goodwill will be subject to periodic assessments for
impairment by applying a fair-value-based test. Intangible assets must be
separately recognized and amortized over their useful lives. The Company expects
that the adoption of SFAS No. 142 (effective July 1, 2001) will not have any
impact on its consolidated results of operations or financial position.

           In July 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 143, "Accounting for Asset
Retirement Obligations," ("SFAS No. 143"). SFAS No. 143 addresses financial
accounting requirements for retirement obligations associated with retirement of
tangible long-lived assets and for the associated asset retirement costs. SFAS
No. 143 requires a company to record the fair value of an asset retirement
obligation in the period in which it incurred a legal obligation associated with
the retirement of tangible long-lived assets that results from the acquisition,
construction development and/or normal use of the asset. The company is also to
record a corresponding increase to the carrying amount of the related asset and
to depreciate that cost over the life of the asset. The amount of the liability
is changed at the end of each period to reflect the passage of time and changes
in estimated future cash flows. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. The Company has not yet determined the impact of
its planned adoption of SFAS No. 143 (anticipated for July 1, 2002).

         ACCOUNTING ESTIMATES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions 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. Such estimates include, but are not limited to, provisions for
doubtful accounts receivable and sales returns, net realizable value of
inventory, and assessments of the recoverability of the Company's deferred tax
assets. Actual results could differ from those estimates.

                                       F-9
<PAGE>

         SUPPLEMENTAL CASH FLOW INFORMATION

         During fiscal year 2001, significant non-cash activities included (i) a
tax benefit of $182,000 resulting from stock options exercised, and (ii)
securing a $795,000 mortgage to finance the acquisition of a building.

         During fiscal year 2000, significant non-cash activities included (i) a
tax benefit of $1,366,000 resulting from stock options exercised, and (ii) the
accrual of $528,000 of deferred compensation in connection with awards of an
aggregate of 12,000 shares of common stock.

         During fiscal year 1999, significant non-cash activities included (i)
the purchase of approximately $100,000 of inventory from an officer of the
Company in exchange for 25,400 shares of common stock issued from treasury, (ii)
the issuance of 40,908 shares of treasury stock to pay approximately $214,000 in
accrued compensation, and (iii) the purchase of property, plant and equipment
through an increase in capital lease obligations of approximately $105,000.

NOTE  2. INVESTMENTS

         Investments consist of the following:

<TABLE>
<CAPTION>
                                                           Gross Unrealized          Gross Unrealized
June 30, 2001                           Cost                     Gains                    Losses                  Fair Value
-------------                  ----------------------    ----------------------    ----------------------    ----------------------
<S>                            <C>                       <C>                       <C>                       <C>
U.S. Government obligations    $   3,433,000             $        89,000           $         2,000           $   3,520,000
                               ----------------------    ----------------------    ----------------------    ----------------------

<CAPTION>
                                                           Gross Unrealized          Gross Unrealized
June 30, 2000                           Cost                     Gains                    Losses                  Fair Value
-------------                  ----------------------    ----------------------    ----------------------    ----------------------
<S>                            <C>                       <C>                       <C>                       <C>
U.S. Government obligations    $   3,332,000             $          1,000          $        87,000           $   3,246,000
                               ----------------------    ----------------------    ----------------------    ----------------------
</TABLE>

         Gross realized gains of approximately $7,000 is included in other
income for fiscal year 2000.

         The Company's investments in U. S. Government obligations at June 30,
2001 contractually mature as follows:

                                COST          FAIR VALUE
                                ----          ----------
Between one and five years   $  901,000       $  932,000
Between five and ten years    2,532,000        2,588,000
                             ----------       ----------
                             $3,433,000       $3,520,000
                             ==========       ==========

NOTE  3. INVENTORIES

         Inventories consist of the following:

                           June 30, 2001     June 30, 2000
                           -------------     -------------

Raw materials               $13,388,000       $ 7,892,000
Work in process               4,717,000         5,608,000
Finished goods                6,463,000         2,633,000
                            -----------       -----------
                            $24,568,000       $16,133,000
                            ===========       ===========

                                      F-10
<PAGE>

NOTE  4. LONG-TERM DEBT

         Long-term debt consists of the following:

                                      June 30, 2001     June 30, 2000
                                      -------------     -------------

Notes payable to banks                  $5,285,000        $  984,000
Obligations under capital leases         2,803,000         2,990,000
                                        ----------        ----------
                                         8,088,000         3,974,000
Less: Current portion                      877,000           488,000
                                        ----------        ----------
     Long-term debt                     $7,211,000        $3,486,000
                                        ==========        ==========

         NOTES PAYABLE TO BANKS

         Notes payable to banks as of June 30, 2001, consist of (i) $2,045,000
outstanding under two seven-year equipment term notes, (ii) $2,505,000
outstanding under an $8,500,000 equipment line of credit, and (iii) $735,000
outstanding under a $795,000, 10 year mortgage loan that bears interest at
1 1/2% above the six-month rate for U.S. Dollar deposits on the London Interbank
Market ("LIBOR"), amounting to 5.08% at June 30, 2001.

         The equipment term notes, which mature at varying dates through 2008,
are payable in quarterly installments aggregating $80,900. The Company intends
to convert the amount outstanding under the equipment line of credit into an
additional seven-year equipment term note, payable in quarterly installments of
$89,000, beginning in October 2001. Amounts outstanding under the equipment line
and term notes bear interest at 1 1/2% above the one-month LIBOR rate, which was
5.56% at June 30, 2001.

         The Company also has $4,000,000 available under a revolving
line-of-credit with a bank. The line contains certain financial covenants and a
facility fee of 1/4% of the average unused amount. As of June 30, 2001 and June
30, 2000, the Company had no borrowings outstanding under this line.

         In May 2001, the Company entered into a credit facility with a bank,
which makes available a $5,000,000 equipment line of credit at the Company's
option and a $2,000,000 unsecured term loan line. Both lines bear interest at
either the bank's prime rate or 1.5% above the Reserve Adjusted LIBOR and are
subject to certain financial covenants. Borrowings under the equipment line will
be secured by the related equipment purchases. The outstanding balance six
months after the term loan line is made available and at expiration of the line
(January 2002) will automatically convert into fully amortizing term loans with
a maturity of five years. As of June 30, 2001, the Company had no borrowings
outstanding under these lines.

         The mortgage loan and borrowings under the lines of credit are subject
to compliance with certain financial covenants, including the maintenance of
asset and liability percentage ratios. As of June 30, 2001, the Company was in
compliance with all financial covenants applicable to its notes payable to
banks.

         The following table presents aggregate annual maturities of notes
payable to banks after fiscal year 2001:

2002                                                        $  671,000
2003                                                           761,000
2004                                                           761,000
2005                                                           761,000
2006                                                           761,000
2007 and thereafter                                          1,570,000
                                                            ----------
                                                            $5,285,000
                                                            ==========

                                      F-11

<PAGE>

         OBLIGATIONS UNDER CAPITAL LEASES

         The Company leases a manufacturing facility located in Jacksonville,
Florida from a partnership controlled by the Company's President and Chief
Executive Officer and principal stockholder under a capital lease. The leased
facility has an aggregate cost of $3,666,000 and a net book value of $1,820,000
at June 30, 2001. The lease is for a period of 30 years and was capitalized
using an interest rate of 10.5%. The lease provides for base rent of
approximately $461,000, payable in twelve monthly installments of approximately
$38,000. The lease further provides for annual increases in total annual rent
for years beginning after May 1, 1999 based on the increase in the CPI since May
1, 1998 applied to base rent. The annual increase for fiscal year 2002 results
in monthly payments of approximately $42,000 per month which increased by
approximately $1,000 from fiscal year 2001.

         The Company leases computer equipment with an unrelated party. At June
30, 2001, the equipment had an original cost of $111,000 and a net book value of
$70,000. The lease is for a period of five years beginning September 1999 and is
being capitalized using an interest rate of 8.8%.

         The following table sets forth the future minimum lease payments
(excluding rental adjustments) under these capital leases by fiscal year and the
present value of the minimum lease payments as of June 30, 2001:

2002                                                              $  489,000
2003                                                                 489,000
2004                                                                 489,000
2005                                                                 466,000
2006                                                                 461,000
2007 and thereafter                                                1,960,000
                                                                  ----------
Total minimum lease payments                                       4,354,000
Less: Amount representing interest                                 1,551,000
                                                                  ----------
Present value at June 30, 2001                                     2,803,000
Less: Current portion                                                206,000
                                                                  ----------
                                                                  $2,597,000
                                                                  ==========

NOTE 5.  INCOME TAXES

The components of income (loss) before income taxes is as follows:

                   Fiscal Years Ended June 30,
           --------------------------------------------
                2001           2000            1999
           ------------    ------------    ------------
Domestic   $ 16,085,000    $ 14,107,000    $  3,013,000
Foreign        (189,000)       (151,000)        263,000
           ------------    ------------    ------------
           $ 15,896,000    $ 13,956,000    $  3,276,000
           ============    ============    ============


                                      F-12
<PAGE>

          The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                    Years Ended June 30,
                                    --------------------
                             2001           2000          1999
                             ----           ----          ----
<S>                      <C>            <C>           <C>
CURRENT:
    Federal              $ 5,714,000    $ 4,283,000   $   645,000
    State                    304,000        272,000       103,000
    Foreign                   96,000        167,000        81,000
                         -----------    -----------   -----------
       Total Current       6,114,000      4,722,000       829,000
                         -----------    -----------   -----------

DEFERRED:
    Federal                 (470,000)       142,000       272,000
    State                    (80,000)        21,000        46,000
                         -----------    -----------   -----------
        Total Deferred      (550,000)       163,000       318,000
                         -----------    -----------   -----------
                         $ 5,564,000    $ 4,885,000   $ 1,147,000
                         ===========    ===========   ===========
</TABLE>

         The following table reconciles the Federal statutory rate to the
Company's effective tax rate:

<TABLE>
<CAPTION>
                                                               Years Ended June 30,
                                                               --------------------
                                                             2001      2000     1999
                                                             ----      ----     ----
<S>                                                           <C>      <C>      <C>
Tax provision computed at statutory rate                      35.0%    34.0%    34.0%
State tax and State tax credit, net of Federal tax effect      0.9      1.4      3.0
FSC benefit                                                   (2.8)    (1.3)    (1.3)
Tax credits and other, net                                     1.9      0.9     (0.7)
                                                            ------     ----     ----
                                                              35.0%    35.0%    35.0%
                                                            ======     ====     ====
</TABLE>

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

<TABLE>
<CAPTION>
                                                                       2001           2000
                                                                       ----           ----
<S>                                                                <C>            <C>
Deferred tax assets:
    Allowance for doubtful accounts receivable and sales returns   $   150,000    $   186,000
    Inventories                                                      1,168,000        212,000
    Accrued expenses                                                   472,000        300,000
    Unrealized depreciation on investments available-for-sale               --         30,000
                                                                   -----------    -----------
        Total deferred tax assets                                    1,790,000        728,000
                                                                   -----------    -----------

Deferred tax liabilities:
    Plant and equipment, principally due to differences
       in depreciation and capital leases                           (2,910,000)    (2,371,000)
    Unrealized appreciation on investments available-for-sale          (30,000)            --
    Other                                                              (38,000)       (35,000)
                                                                   -----------    -----------
        Total deferred tax liabilities                              (2,978,000)    (2,406,000)
                                                                   -----------    -----------
               Net deferred tax liability                          $(1,188,000)   $(1,678,000)
                                                                   ===========    ===========
</TABLE>

                                      F-13
<PAGE>

         In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, expected future
taxable income and tax planning strategies in making this assessment. Based upon
the level of historical taxable income, expected future taxable income over the
periods in which the deferred tax assets are deductible, and reversals of
deferred tax liabilities, management believes (although there can be no
assurance) that it is more likely than not that the Company will realize the
benefits of these deductible differences.

         The Company intends that undistributed earnings of the Company's
foreign subsidiaries amounting to $1,044,000 as of June 30, 2001, will be
indefinitely reinvested in these subsidiaries resulting in no accrual of U.S.
income taxes on the earnings of these subsidiaries.

NOTE  6. STOCK-BASED COMPENSATION

         STOCK OPTIONS

         On April 1, 1997, the Board of Directors approved the American
Technical Ceramics Corp. 1997 Stock Option Plan (the "1997 Option Plan")
pursuant to which the Company may grant options to purchase up to 800,000 shares
of the Company's common stock. Options granted under the 1997 Option Plan may be
either incentive or non-qualified stock options. The term of each incentive
stock option shall not exceed ten years from the date of grant (five years for
grants to employees who own 10% or more of the voting power of the Company's
common stock), and options may vest in accordance with a vesting schedule
established by the plan administrator. Unless terminated earlier by the Board,
the 1997 Option Plan will terminate on March 31, 2007.

         Options currently outstanding under the 1997 Option Plan may be
exercised for a period of ten years from the date of grant (five years for
grants to employees who own 10% or more of the voting power of the Company's
common stock), and vest 25% per year during the first four years of their term
(except for the options granted in November 1998, which vest 50% per year during
the first two years of their term).

         On April 11, 2000, the Board of Directors approved the American
Technical Ceramics Corp. 2000 Incentive Stock Plan (the "2000 Plan") pursuant to
which the Company may grant options or stock awards covering up to 1,200,000
shares of the Company's common stock. Options granted under the 2000 Plan, may
be either incentive or non-qualified stock options. The term of each incentive
stock option shall not exceed ten years from the date of grant (five years for
grants to employees who own 10% or more of the voting power of the Company's
common stock), and options may vest in accordance with a vesting schedule
established by the plan administrator. Unless terminated earlier by the Board,
the 2000 Plan will terminate on April 10, 2010.

         Options currently outstanding under the 2000 Plan may be exercised for
a period of ten years from the date of grant (five years for grants to employees
who own 10% or more of the voting power of the Company's common stock), and vest
25% per year during the first four years of their term.

         To date, all of the options granted under the 1997 Option Plan and the
2000 Plan have been incentive stock options. Accordingly, disposition of shares
acquired pursuant to the exercise of these options may not be made by the
optionees within two years following the date that the option is granted, nor
within one year after the exercise of the option, without the written consent of
the Company. Since the Company measures compensation cost under Opinion No. 25,
the Company has not recognized compensation cost for these options upon grant as
the exercise price was equal to the fair market value of the stock at the date
of grant.

                                      F-14
<PAGE>

         The Company's stock option activity for fiscal years 2001, 2000 and
1999 is as follows:

<TABLE>
<CAPTION>
                                          2001                     2000                    1999
                                  ----------------------   --------------- ------  ----------------------
                                    Shares   Weighted        Shares     Weighted    Shares     Weighted
                                     Under    Average         Under      Average     Under      Average
                                    Option     Price         Option       Price     Option       Price
                                    ------     -----         ------       -----     ------       -----
<S>                               <C>          <C>           <C>        <C>         <C>        <C>
Outstanding, beginning of year    1,263,930    $   15.28     631,000    $    4.12   497,000    $   4.13
Granted                             435,000        11.80     912,000        19.56   172,000        4.08
Canceled                           (246,000)       18.47     (42,000)        5.61   (38,000)       4.11
Expired                             (24,000)       16.94      (3,500)        4.13        --          --
Exercised                           (81,905)        4.20    (233,570)        4.12        --          --
                                  ---------                ---------                -------
Outstanding, end of year          1,347,025    $   14.22   1,263,930    $   15.28   631,000    $   4.12
                                  =========                =========                =======
</TABLE>

           The following table summarizes significant ranges of outstanding and
exercisable options at June 30, 2001.

<TABLE>
<CAPTION>
                                    Options Outstanding                             Options Exercisable
                     ----------------------------------------------------     --------------------------------
   Actual Range
   of Exercise                      Weighted-Average
   Prices 150%           Number         Remaining       Weighted-Average        Number        Weighted-Average
    increment         Outstanding     Life in Years      Exercise Price       Outstanding      Exercise Price
   ------------       -----------     -------------      --------------       -----------      --------------
<S>                     <C>                 <C>             <C>                 <C>               <C>
$ 4.00  -   5.63        378,025             6.7             $  4.18             257,525           $  4.13
  5.64  -   6.44         30,000             8.4             $  6.44               7,500           $  6.44
  6.45  -  15.75        398,000             9.4             $ 11.84                   0                 0
 15.76  -  23.50        484,000             8.8             $ 20.99             147,000           $ 21.40
      44.00              57,000             8.9             $ 44.00              14,250           $ 44.00
----------------      ---------          --------       --------------      --------------   ----------------
$ 4.00  -  44.00      1,347,025             8.4             $ 14.22             426,275           $ 11.46
                      =========                                             ==============
</TABLE>

         At June 30, 2001, 336,500 shares were available for option grant or
awards under the Company's stock plans.

         The average per-share fair value of stock options granted during fiscal
years 2001, 2000 and 1999 was $7.74, $12.15 and $1.88, respectively, as
determined by the Black-Scholes option pricing model (assuming a risk-free
interest rate of 5.33%, 6.28% and 5.15%, respectively, expected life of five
years, expected volatility of 76%, 68% and 45%, respectively, and no dividends).
The weighted average remaining contractual life of options outstanding as of
June 30, 2001 was 8.4 years.

           On a pro-forma basis, net income would have been $7,243,000,
$8,245,000 and $1,855,000; basic net income per share would have been $0.91,
$1.07 and $0.24 per share; and dilutive net income per share would have been
$0.87, $1.01 and $0.24 per share, respectively, for fiscal years 2001, 2000 and
1999 had the Company measured compensation cost using the fair value method of
SFAS No. 123.

         OTHER STOCK BASED COMPENSATION

         In fiscal year 1997, the Company agreed to award 68,000 shares of its
common stock to an employee pursuant to the terms of his employment agreement.
The shares were issued over a 24 month period. The market value of the shares
awarded was recorded as deferred compensation and was amortized to compensation
expense over the 24 month period that the shares were issued. During fiscal year
1999, 5,704 shares, were issued from treasury stock to the employee under the
agreement, such amount is net of 296 shares, which were withheld in respect of
taxes. The fair value of the withheld shares, amounting to $1,000, was recorded
as an addition to treasury stock during fiscal year 1999. This award resulted in
$14,000 in compensation expense.

                                      F-15
<PAGE>

         In fiscal years 2001 and 1999, the Company awarded 9,750 and 95,500
shares, respectively, of its common stock to employees for services rendered.
These awards resulted in compensation expense of $172,000 (including payments
made to offset tax liabilities associated with these awards of $67,000) and
$323,000, respectively, measured by the market value of the shares on the date
of grant.

         In fiscal years 2001 and 2000, the Company awarded an aggregate of
5,000 and 10,000 shares of common stock, respectively, to its non-employee
directors. These awards resulted in compensation expense of $286,000 and
$163,000, respectively (including $218,000 and $56,000, respectively, of
payments made to offset tax liabilities associated with these awards), measured
by the market value of the shares on the date of grant.

         In addition, in fiscal years 2001 and 2000, the Company awarded an
aggregate of 6,000 and 18,000 shares of common stock, respectively, to officers
and certain other employees. These awards resulted in compensation expense of
$309,000 and $777,000, respectively (including $45,000 and $275,000 of payments
made to offset tax liabilities associated with these awards), measured by the
market value of the shares at June 29, 2001 and June 30, 2000.

         In fiscal year 2000, the Company awarded an aggregate of 12,000 shares
of common stock to three employees. These awards resulted in an accrual of
deferred compensation of $528,000 to be amortized to compensation expense over
the 24 month period these shares will be earned. The awards resulted in
compensation expense of $312,000, including payments made to offset tax
liabilities associated with these awards of $29,000.

         Treasury shares with an aggregate cost basis of $68,000 and $245,000
were issued in connection with awards (described above) during fiscal years 2001
and 1999, respectively. There were no issuances of treasury stock in fiscal year
2000. Accordingly, treasury stock was reduced for the cost of the shares on a
specific identification, first-in first-out, basis.

         In June 1990, the Company announced its first stock purchase program
pursuant to which it was authorized to purchase up to $1,000,000 of its common
stock. In September 1998, the Board of Directors authorized the purchase of up
to an additional $1,000,000 of the Company's common stock under a second stock
purchase program. In fiscal year 1999, 312,000 shares were acquired for an
aggregate $1,198,000. As of June 30, 1999, the Company had expended the entire
amount available under both programs and had purchased an aggregate of 950,000
shares for an aggregate $2,016,000.

NOTE 7.  COMMITMENTS AND CONTINGENCIES

         OPERATING LEASES

         The Company has a related party operating lease, with an entity
controlled by the Company's principal shareholder, for a rented facility which,
as amended, expires December 31, 2001. Rent expense under this related party
operating lease was approximately $511,000, $495,000 and $484,000 for the fiscal
years ended June 30, 2001, 2000 and 1999, respectively. Assuming the lease is
renewed under similar terms, future minimum rent payments are estimated to be
approximately $521,000 per year.

         Rent expense to unrelated parties was approximately $118,000, $11,000
and $10,000 for the fiscal years ended June 30, 2001, 2000 and 1999,
respectively. Minimum rent payments under existing lease commitments (which
extend through 2004) are as follows for each of the years ended June 30:

                   2002                    $ 115,000
                   2003                       83,000
                   2004                        2,000

                                           ---------
                                           $ 200,000
                                           =========

                                      F-16
<PAGE>

         CONTINGENCIES

         The Company is party to certain legal matters that arose out of the
normal course of business. The Company does not believe that the resolution of
such matters will have a significant effect on the Company's financial position
or results of operations.

         EMPLOYMENT AGREEMENTS

         The Company has an employment agreement with its President, which
provides for annual base compensation of $312,000 as well as additional annual
compensation equal to 5% of net income before such additional compensation and
income taxes. In August 2000, the Company amended the employment agreement,
effective for fiscal years beginning with the fiscal year ending June 30, 2001,
to reduce the additional annual compensation component to 2.5% of net income
before such bonus and income taxes. The agreement expires March 1st of each year
but is renewed automatically for an additional one year in the absence of
written notice to the contrary by either party at least 120 days prior to the
March 1st renewal date. In addition, if there is a change in control of the
Company or the President's employment is terminated by the Company before the
expiration of the agreement other than for cause (as defined in the agreement),
the President is entitled to the greater of (a) all compensation due under the
remaining term of the agreement, or (b) a payment equal to three times his
average annual compensation (including any incentives) over the last five years.
In September 1998, the Company amended the employment agreement effective for
fiscal years beginning with the fiscal year ending June 30, 1998 to allow the
Company, at its option, to pay the additional annual compensation in stock, cash
or a combination thereof, subject to certain limitations. Such compensation for
fiscal year 1998 was paid by the issuance of 40,908 treasury shares in fiscal
year 1999.

         In September 2000, the Company entered into a three year employment
agreement with an executive officer. The agreement provides initially for annual
base compensation of $175,000, and participation in the Company's Officers'
Bonus Plan. If the officer is terminated by the Company during the term of the
agreement, (i) the officer will be entitled to receive his base salary for a
period of one year, (ii) the Company shall continue to provide family medical
coverage for a period of eighteen months, and (iii) all exercisable options may
be exercised for a period of one year after termination.

         In April 2001, the Company entered into a three year agreement with
another executive officer. The agreement provides for annual base compensation
of $150,000 and participation in the Company's Officers' Bonus Plan. If the
officer is terminated by the Company during the term of the agreement, the
officer will be entitled to receive his base salary for the lesser of one year
or remainder of the term.

         In January 1998, the Company entered into a four year employment
agreement with an officer. The agreement provides for annual base compensation
of $90,000, plus additional compensation based upon specific performance
measures. The agreement includes termination provisions providing for payout
arrangements depending on the nature of the termination.

         In April 2000, the Company entered into three-year employment
agreements with three managers. The agreement for each manager provides for
annual base compensation of $110,000, additional quarterly incentive
compensation based upon specific performance measures, and awards 4,000 shares
of the Company's common stock to the manager.

                                      F-17
<PAGE>

NOTE 8.  OTHER DATA

         ACCRUED EXPENSES

         Accrued expenses consist of the following:

                                      June 30, 2001   June 30, 2000
                                      -------------   -------------

Accrued commissions and bonuses        $3,105,000      $3,909,000
Accrued payroll and related expenses    2,742,000       2,410,000
Other                                     388,000         353,000
                                       ----------      ----------
                                       $6,235,000      $6,672,000
                                       ==========      ==========

               VALUATION AND QUALIFYING ACCOUNTS

           Valuation and qualifying accounts included in the accompanying
consolidated financial statements consist of the following:

<TABLE>
<CAPTION>
                                               Balance - Beginning   Additions Charged to    Deductions / Other     Balance - End of
Classification                                     of Period               Expense               Additions               Period
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                       <C>                   <C>                  <C>
For the year ended June 30, 2001:                  $530,000                  894,000               994,000              $ 430,000
 Allowance for doubtful accounts receivable
   and sales returns
For the year ended June 30, 2000:
 Allowance for doubtful accounts receivable
   and sales returns                               $390,000                1,142,000             1,002,000              $ 530,000
For the year ended June 30, 1999:
 Allowance for doubtful accounts receivable
   and sales returns                               $390,000                  624,000               624,000              $ 390,000
</TABLE>

         EMPLOYEE BENEFIT DEFINED CONTRIBUTION PLAN

         Effective November 1, 1985, the Company established a voluntary savings
and defined contribution plan under Section 401(k) of the Internal Revenue Code.
This Plan covers all U.S. employees meeting certain eligibility requirements and
allows participants to contribute an amount not to exceed 15% of annual
compensation. For the fiscal years ended June 30, 2001, 2000 and 1999, the
Company provided a matching contribution of $555,000, $467,000 and $371,000,
respectively, which was equal to 50% of each participant's contribution up to a
maximum of 6% of annual compensation. Employees are 100% vested in their own
contributions and become fully vested in the employer contributions over five
years.

         PROFIT BONUS PLAN

         Effective commencing in fiscal year 1995, the Company adopted a Profit
Bonus Plan for the benefit of eligible employees, as defined. The plan provides
that for each fiscal year, the Board of Directors, in its discretion, may
establish a bonus pool not to exceed 10% of pretax income of the Company for the
subject fiscal year. The bonus pool is then allocated among eligible employees
in accordance with the terms of the plan. For fiscal years 2001, 2000 and 1999,
the Company recognized related compensation expense of $1,590,000, $1,414,000
and $338,000, respectively, in respect of this plan.

            Effective January 1, 2000, the Company adopted a Managers Profit
Bonus Plan for the benefit of eligible employees, as defined. The plan provides
that for each fiscal year the Board of Directors may allocate a percentage of
the Company's pre-tax profits (not to exceed 2.5% of such profits) for equal
distribution among participants in the plan. Participants in the Managers Profit
Bonus Plan are no longer eligible to participate in the Profit Bonus Plan
described above. For fiscal years 2001 and 2000, the Company recognized
compensation expense of $397,000 and $258,000, respectively, in respect of this
plan.

                                      F-18
<PAGE>

         The Company has a bonus plan for executive officers. This plan provides
for the eligible employees to receive a cash bonus equal to at least 0.5% of the
Company's pre tax income. For fiscal years 2001, 2000 and 1999, the Company
recognized compensation expense of $1,624,000, $1,987,000 and $430,000,
respectively, pursuant to this plan.

NOTE 9.  FOREIGN OPERATIONS

         The Company markets and distributes a portion of its foreign sales
through its wholly-owned subsidiaries, Phase Components Ltd., located in the
United Kingdom, and ATC Nordic AB, located in Sweden. The following table
summarizes certain financial information covering the Company's operations in
the United States, the United Kingdom and Sweden for fiscal years 2001, 2000 and
1999. Net sales information is based upon country of origin.

                         2001          2000          1999
                         ----          ----          ----
Net sales
    United States    $77,235,000   $63,070,000   $35,803,000
    United Kingdom     2,549,000     2,992,000     1,885,000
    Sweden             4,801,000       630,000            --
                     -----------   -----------   -----------
 Total               $84,585,000   $66,692,000   $37,688,000
                     ===========   ===========   ===========


Long-lived assets
    United States    $31,934,000   $22,745,000   $18,635,000
    United Kingdom       292,000       334,000       367,000
    Sweden                62,000        12,000            --
                     -----------   -----------   -----------
 Total               $32,288,000   $23,091,000   $19,002,000
                     ===========   ===========   ===========

         U.S. sales include $16,271,000, $13,424,000 and $9,235,000 for export
in fiscal years 2001, 2000 and 1999, respectively. Export sales were primarily
to customers in Western Europe, Canada and the Far East.

NOTE 10. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

         CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE, AND
ACCRUED EXPENSES

         The carrying amount approximates fair value due to the short maturity
of these instruments.

         INVESTMENTS

         Cost and fair value of the Company's investments is presented in Note
2. Fair value is based upon quoted market prices.

         LONG-TERM DEBT

         The carrying amounts of each of the Company's long-term debt
instruments approximate fair value as the underlying variable interest rates
approximate rates which would be offered to the Company for the same or similar
instruments.

         Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

                                      F-19