10-Q

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

               QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the Quarterly Period Ended December 31, 2001

                          Commission File Number I-4383


                         ESPEY MFG. & ELECTRONICS CORP.
           -----------------------------------------------------------
               (Exact name of registrant as specified in charter)


          NEW YORK                                    14-1387171
 ----------------------------           ---------------------------------------
 (State of Incorporation)               (I.R.S. Employer's Identification No.)


233 Ballston  Avenue,  Saratoga  Springs,  New York            12866
--------------------------------------------------------------------------------
(Address of principal executive offices)                     (Zip Code)


Registrant's telephone number, including area code     518-584-4100
                                                   --------------------

Number of shares  outstanding  of issuer's  class of common  stock  $.33-1/3 par
value as of February 13, 2002: 1,029,461.

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  [  ]






<PAGE>





                         ESPEY MFG. & ELECTRONICS CORP.

                                    I N D E X


PART I      FINANCIAL INFORMATION                                       PAGE

            Item 1  Financial Statements:

                         Consolidated Balance Sheets -
                         December 31, 2001 and June 30,  2001             1


                             Consolidated Statements of Income -
                         Three and Six Months Ended
                         December 31, 2001 and  2000                      3


                         Consolidated Statements of Cash Flows -
                         Six Months Ended December 31, 2001 and 2000      4


                         Notes to Consolidated Financial Statements       5


            Item 2  Management's Discussion and Analysis of               5
                    Financial Condition and Results of Operations


PART II     OTHER INFORMATION                                             7


            SIGNATURES                                                    7



<PAGE>



<TABLE>
<CAPTION>

                         ESPEY MFG. & ELECTRONICS CORP.

                           Consolidated Balance Sheets

                       December 31, 2001 and June 30, 2001
                       -----------------------------------
                                     ASSETS


                                                                            Unaudited
                                                                              2001             2001
                                                                           December 31        June 30
                                                                         --------------    --------------
<S>                                                                         <C>               <C>
CURRENT ASSETS:

          Cash and cash equivalents                                         $ 7,561,910       $ 5,200,736
          Investment securities                                                 369,600           737,600


          Trade accounts receivable, net                                      3,189,763         2,537,310
          Other receivables                                                       3,906            31,179
                                                                         --------------    --------------
                                    Total Receivables                         3,193,669         2,568,489
                                                                         --------------    --------------
          Inventories:

                  Raw materials and supplies                                  1,078,622         1,036,726
                  Work-in-process                                             4,711,769         2,658,436
                  Costs relating to contracts in process, net of advance
                    payments of $956,220 at December 31, 2001 and
                    $289,000 at June 30, 2001                                 7,753,143        11,237,515
                                                                         --------------    --------------
                                    Total Inventories                        13,543,534        14,932,677
                                                                         --------------    --------------


          Deferred income taxes                                                 134,409           145,609
          Prepaid expenses and other current assets                             233,172           151,880
                                                                         --------------    --------------

                                    Total Current Assets                     25,036,294        23,736,991
                                                                         --------------    --------------

          Property, plant and equipment, net                                  3,482,533         3,491,890
                                                                         --------------    --------------

                                    Total Assets                            $28,518,827       $27,228,881
                                                                         ==============    ==============
</TABLE>




See accompanying notes to the consolidated financial statements.
                                                                     (Continued)
                                       1

<PAGE>

<TABLE>
<CAPTION>


                         ESPEY MFG. & ELECTRONICS CORP.

                     Consolidated Balance Sheets, Continued

                       December 31, 2001 and June 30, 2001
                      ------------------------------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                Unaudited
                                                                                  2001             2001
                                                                               December 31        June 30
                                                                            ---------------- ----------------
<S>                                                                         <C>                 <C>
CURRENT LIABILITIES:

          Accounts payable                                                  $   1,203,705       $   334,772
          Accrued expenses:
                  Salaries, wages and commissions                                 118,743           124,081
                  Vacation                                                        322,098           345,546
                  Employees' insurance costs                                          271            61,798
                  ESOP payable                                                    269,876                --
                  Dividend payable                                                154,419                --
                  Other                                                            21,241            37,711
          Payroll and other taxes withheld and accrued                             64,313            39,397
          Income taxes payable                                                    141,633            61,440
          Deferred income taxes                                                    58,752            58,752
                                                                          ---------------   ---------------
                               Total Current Liabilities                        2,355,051         1,063,497
                                                                          ---------------   ---------------


STOCKHOLDERS' EQUITY:

          Common stock, par value .33-1/3 per share.
          Authorized 10,000,000 shares;
          Issued 1,514,937 shares on December 31, 2001 and June 30, 2001,
              outstanding 1,029,461 on December 31, 2001 and June 30, 2001        504,979           504,979

          Capital in excess of par value                                       10,496,287        10,496,287
          Accumulated other comprehensive loss                                    (29,481)          (50,281)


          Retained earnings                                                    24,584,831        24,607,239
                                                                         ----------------   ---------------
                                                                               35,556,616        35,558,224

          Less Common stock subscribed                                         (1,675,987)       (1,675,987)

          Cost of 485,476 shares on December 31, 2001 and
              June 30, 2001 of common stock in treasury                        (7,716,853)       (7,716,853)
                                                                          ---------------   ---------------
                               Total Stockholders' Equity                      26,163,776        26,165,384
                                                                          ---------------   ---------------
                                        Total Liabilities And
                                        Stockholders' Equity                  $28,518,827      $ 27,228,881
                                                                          ===============   ===============
</TABLE>



        See accompanying notes to the consolidated financial statements.


                                       2

<PAGE>

<TABLE>
<CAPTION>
                         ESPEY MFG. & ELECTRONICS CORP.

                        Consolidated Statements of Income

              Three and Six Months Ended December 31, 2001 and 2000
              -----------------------------------------------------


                                                         Unaudited                    Unaudited
                                                       Three Months                   Six Months
                                                    2001          2000            2001           2000
                                                --------------------------   ----------------------------
<S>                                             <C>           <C>              <C>           <C>
Net Sales                                       $ 5,199,517   $ 4,184,993      $ 9,785,032   $ 8,352,228

Cost of sales                                     4,605,948     3,295,985        8,583,878     6,774,958
                                                ------------  ------------     ------------  ------------
       Gross profit                                 593,569       889,008        1,201,154     1,577,270

Selling, general and
   administrative expenses                          527,101       543,992          921,134     1,004,244
                                                ------------  ------------     ------------  ------------
       Operating income                              66,468       345,016          280,020       573,026
                                                ------------  ------------     ------------  ------------

Other income

       Interest and dividend income                  48,726        68,556          115,205       133,746
       Sundry income                                  1,940         8,499           12,895        25,624
                                                ------------  ------------     ------------  ------------
                                                     50,666        77,055          128,100       159,370
                                                ------------  ------------     ------------  ------------

Income before income taxes                          117,134       422,071          408,120       732,396

Provision for income taxes                           35,135       152,802          122,431       259,708
                                                ------------  ------------     ------------  ------------


                  Net Income                    $    81,999   $   269,269      $   285,689   $   472,688
                                                ============  ============     ============  ============

Income per share:

Basic and dilutive
   income per share                             $       .08   $       .26      $       .28   $       .46
                                                ------------  ------------     ------------  ------------


Weighted average common
   shares outstanding

           Basic                                  1,029,461      1,032,996       1,029,461     1,033,314
           Diluted                                1,034,640      1,035,399       1,033,658     1,035,494
                                                ===========   ============     ============  ============
</TABLE>




See accompanying notes to the consolidated financial statements

                                       3

<PAGE>

<TABLE>
<CAPTION>

                         ESPEY MFG. & ELECTRONICS CORP.
                      Consolidated Statements of Cash Flows
                   Six Months Ended December 31, 2001 and 2000

                                                                                             Unaudited
                                                                                             December 31,
                                                                                        2001               2000
                                                                                     -----------        -----------
<S>                                                                                  <C>                <C>
Cash Flows From Operating Activities:

       Net income                                                                    $   285,689        $   472,688

       Adjustments to reconcile net income to net cash provided by operating
       activities:

       Depreciation                                                                      247,505            345,273
       (Gain)/Loss on disposal of assets                                                     250            (14,721)
       Deferred income tax benefit                                                           872                 --
       Changes in assets and liabilities:
              Decrease (Increase) in receivables                                        (625,180)           960,219
              Decrease (Increase) in inventories                                       1,389,143           (844,910)
              Decrease (Increase) in prepaid expenses and other current assets           (81,292)            44,294
              Increase (Decrease) in accounts payable                                    868,933           (204,395)
              Decrease in accrued salaries, wages and commissions                         (5,338)           (53,421)
              Increase (Decrease) in accrued employee insurance costs                    (61,527)            50,191
              Increase (Decrease) in other accrued expenses                              (16,470)            10,254
              Increase (Decrease) in vacation accrual                                    (23,448)             5,117
              Increase in payroll & other taxes withheld and accrued                      24,916             38,346
              Increase in income taxes payable                                            80,193            118,398
              Increase in ESOP payable                                                   269,876            275,129
                                                                                     -----------        -----------
                      Net cash provided by
                      operating activities                                             2,354,122          1,202,462
                                                                                     -----------        -----------
Cash Flows From Investing Activities:

       Proceeds from maturity of investment securities                                   399,128                 --
       Additions to property, plant & equipment                                         (238,448)          (268,397)
       Proceeds on Sale of Assets                                                             50             14,750
                                                                                     -----------        -----------
                      Net cash provided by (used in)
                      investing activities                                               160,730           (253,647)
                                                                                     -----------        -----------
Cash Flows From Financing Activities:

       Dividends paid on common stock                                                   (153,678)           (51,682)
       Purchase of treasury stock                                                             --            (70,891)
                                                                                     -----------        -----------
                      Net cash used in
                      financing activities                                              (153,678)          (122,573)
                                                                                     -----------        -----------
Increase in cash and cash equivalents                                                  2,361,174            826,242

Cash and cash equivalents, beginning of period                                         5,200,736          2,367,191
                                                                                     -----------        -----------
Cash and cash equivalents, end of period                                             $ 7,561,910        $ 3,193,433
                                                                                     ===========        ===========
Income Taxes Paid                                                                    $    42,238        $   135,000
                                                                                     ===========        ===========
Noncash Financing Activities
       Dividend payable                                                              $   154,419        $    51,682
                                                                                     ===========        ===========
</TABLE>

See accompanying notes to the consolidated financial statements

                                       4

<PAGE>

                         ESPEY MFG. & ELECTRONICS CORP.

                   Notes to Consolidated Financial Statements
                   ------------------------------------------

1.   In the  opinion  of  management  the  accompanying  unaudited  consolidated
     financial  statements  contain all  adjustments  (consisting of only normal
     recurring adjustments) necessary for a fair presentation of the results for
     such  periods.  The  results  for any  interim  period are not  necessarily
     indicative of the results to be expected for the full fiscal year.  Certain
     information  and  footnote   disclosures  normally  included  in  financial
     statements  prepared  in  accordance  with  generally  accepted  accounting
     principles  generally  accepted in the United States have been condensed or
     omitted.  These financial statements should be read in conjunction with the
     Company's most recent  audited  financial  statements  included in its 2001
     Form 10-K.

2.   Other income  consists  principally of interest on Certificates of Deposit,
     Treasury Bills, money market accounts and dividends on equity securities.

3.   For purposes of the  statements  of cash flows,  the Company  considers all
     liquid debt instruments with original maturities of three months or less to
     be cash equivalents.

4.   Basic  earnings  per share  excludes  dilution  and is computed by dividing
     income  available to common  stockholders by the weighted average number of
     common  shares  outstanding  for the  period.  Diluted  earnings  per share
     reflects the  potential  dilution  that could occur if  securities or other
     contracts  to issue Common  Stock were  exercised or converted  into Common
     Stock or resulted in the  issuance of Common  Stock that then shared in the
     Income of the Company.

5.   In fiscal 1989 the Company  established an Employee Stock  Ownership a Plan
     (ESOP) for eligible non-union employees. The ESOP used the proceeds of loan
     from the Company to purchase  316,224 shares of the Company's  common stock
     for approximately  $8.4 million and the Company  contributed  approximately
     $400,000 to the ESOP which was used by the ESOP to  purchase an  additional
     15,000 shares of the Company's  common stock. As of December 31, 2001 there
     were 199,876 shares allocated to participants.

6.   Total comprehensive income consists of:

<TABLE>
<CAPTION>
                                                       Three Months Ended            Six Months Ended
                                                          December 31,                 December 31,
                                                      2001           2000           2001           2000
                                                    --------       --------       --------       --------
<S>                                                 <C>            <C>            <C>            <C>
Net income                                          $ 81,999       $269,269       $285,689       $472,688

Other comprehensive income                             9,880         14,950         20,800         33,800
                                                    --------       --------       --------       --------
Total comprehensive income                          $ 91,879       $284,219       $306,489       $506,488
                                                    ========       ========       ========       ========
</TABLE>


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

Results of Operations

Net sales for the six  months  ended  December  31,  2001,  (fiscal  2002)  were
$9,785,032  as  compared  to  $8,352,228  for the same  period  in  2000,  a 17%
increase. Net sales for the three months ended December 31, 2001 were $5,199,517
as  compared to  $4,184,993  for the same period in 2000,  a 24%  increase.  The
Company's  increase in sales for the three and six month periods ended  December
31, 2001,  as compared to December  31, 2000,  is due to an increase in antenna,
radar transmitter, and transmitter component shipments.

During the first six  months of fiscal  2002 gross  profits as a  percentage  of
sales  decreased  approximately  6.6% as  compared  with the first six months of
fiscal  2001.  For the three  months  ended  December 31, 2001 gross profit as a
percentage of sales decreased 33% as compared to the same period in 2000.

Net income for the six months  ended  December 31, 2001 was $285,689 or $.28 per
share compared to $472,688 or $.46 per share for the corresponding  period ended
December 31, 2000.  For the three months ended  December 31, 2001 net income was
$81,999 or $.08 per share  compared  to  $285,689 or $.28 per share for the same
period in 2000.

The decrease in gross profit and net income for the three and six-month  periods
ended  December  31,  2001,  was a result of the Company  investing  engineering
resources  in  several  new  customer  specific  programs  and  products.  These
engineering  and  prototype  developmental  expenditures,  which have a negative
impact on current  operations,  in  management's  estimate,  should  improve the
operating  results of the Company when future  production  orders are  received.
Management  continues  to  evaluate  the  Company's  workforce  to  ensure  that
production   and  overall   execution  of  the  backlog  orders  and  additional
anticipated orders are successfully  performed.  Employment at December 31, 2001
was 190 people compared to December 31, 2000 when 222 people were employed.


                                       5

<PAGE>


The backlog at December 31, 2001 was approximately  $25.9 million as compared to
$25.8 at December 31, 2000.  New orders for the six-month  period ended December
31, 2001 were approximately $8.2 million.


Selling,  general and  administrative  expenses were $921,134 for the six months
ended  December  31,  2001,  a decrease of $83,110 as compared to the six months
ended  December  31,  2000.  The  decrease  is  primarily  due to a decrease  in
employees, selling expenses and professional fees.

Other income for the three and six months ended  December 31, 2001  decreased as
compared  to the three  and six  months  ended  December  31,  2000 due to lower
interest  income for both  periods.  The Company  does not believe  there is any
significant risk associated with its investment policy,  since a majority of the
investments  are represented by preferred  equity  securities and a money market
account.

Liquidity and Capital Resources

As of December  31,  2001,  the Company  had  working  capital of $22.7  million
compared to $21.6 million at December 31, 2000. The Company meets its short-term
financing  needs  through  cash from  operations  and when  necessary,  from its
existing cash and short term investments.

<TABLE>
<CAPTION>

The table below presents the summary of cash flow for the periods indicated:

                                                             Six Months Ended December 31,
                                                                2001             2000
                                                            -------------    -------------
<S>                                                        <C>               <C>
Net cash provided by operating activities                  $ 2,354,122       $ 1,202,462
Net cash provided by (used in) investing activities            160,730          (253,647)
Net cash (used in) financing activities                       (153,678)         (122,573)
</TABLE>


Net cash provided by operating  activities  fluctuates between periods primarily
as a result of  differences  in net  income,  the  timing of the  collection  of
accounts  receivable,  changes  in  inventory,  level of sales  and  payment  of
accounts  payable.  The  increase in net cash  provided  by (used in)  investing
activities is due to the sale of an investment security in 2001. The increase in
net cash used in financing activities is due to an increase in dividends paid on
common stock.

The Company currently  believes that the cash generated from operations and when
necessary,  from  cash  and cash  equivalents,  will be  sufficient  to meet its
long-term funding requirements.  Management, if necessary, has at its disposal a
$3,000,000  line of credit to help fund  further  growth.  For the first half of
fiscal 2002 capital expenditures were approximately $238,000.

Since the debt of the Company's  ESOP is not to an outside party the Company has
eliminated from the  Consolidated  Statements of Income the offsetting  items of
interest income and interest expenses relating to the ESOP.

During the six months  ended  December  31, 2001 the Company did not  repurchase
shares of its common stock. Under existing Board authorizations,  as of December
31, 2001, $854,860 could be utilized to repurchase the Company's common stock.


    CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

It  should  be  noted  that in this  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations are  "forward-looking  statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the  Securities  Exchange Act of 1934,  as amended,  and are made
pursuant to the safe harbor  provisions  of the  Private  Securities  Litigation
Reform  Act of  1995.  The  terms  "believe,"  "anticipate,"  "intend,"  "goal,"
"expect," and similar expressions may identify forward-looking statements. These
forward-looking  statements  represent the  Company's  current  expectations  or
beliefs  concerning  future events.  The matters covered by these statements are
subject to certain risks and  uncertainties  that could cause actual  results to
differ  materially  from  those  set  forth in the  forward-looking  statements,
including  the  Company's  dependence on timely  development,  introduction  and
customer  acceptance  of new  products,  the  impact  of  competition  and price
erosion,  as well as supply and  manufacturing  constraints  and other risks and
uncertainties. The foregoing list should not be construed as exhaustive, and the
Company  disclaims any  obligation  subsequently  to revise any  forward-looking
statements to reflect events or circumstances  after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events. The Company
wishes  to  caution   readers   not  to  place   undue   reliance  on  any  such
forward-looking statements, which speak only as of the date made.


                                       6

<PAGE>



                         ESPEY MFG. & ELECTRONICS CORP.

                    PART II: Other Information and Signatures


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

          a)   The  Company's  Annual  Meeting  of  Shareholders   (the  "Annual
               Meeting") was held on December 7, 2001.

          b)   Proxies  for  the  Annual  Meeting  were  solicited  pursuant  to
               Regulation  14A under the  Securities  Exchange  Act of 1934,  as
               amended.   There  were  no   solicitations   in   opposition   to
               management's  nominees  listed  in the proxy  statement.  All two
               nominees listed in the proxy statement were elected.

          c)   The following matters were voted upon at the annual meeting:  The
               election  of two  Class  B  directors.  The  votes  were  cast as
               follows:

                    Nominee:                         Shares Voted For:
                    -------------                    -----------------------
                    William Greene                   873,097
                    Symour Saslow                    897,860

                   Ratification of PricewaterhouseCoopers LLP, as independent
                   auditors for the Corporation for the fiscal year ending June
                   30, 2002. The votes were cast as follows:

                    Shares IN FAVOR                  999,230
                    Shares AGAINST                   2,600
                    ABSTENTIONS                      900
                    ------------------------------------------------------------

Item-5. Other Information

        None

Item 6. Exhibits and Reports on Form 8-K

        Report on Form 8-K
        Form 8-K filed November 9, 2001 announcing the death of a director.




                               S I G N A T U R E S

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                 ESPEY MFG. & ELECTRONICS CORP.


                                                 /s/ Howard Pinsley
                                                 ------------------------------
                                                 Howard Pinsley, President and
                                                 Chief Executive Officer

                                                 /s/ David O'Neil
                                                 ------------------------------
                                                 David O'Neil, Treasurer and
                                                 Principal Financial Officer

13 February 2001
----------------
 Date