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, 2000

                          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, 2001: 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, 2000 and June 30, 2000                 1


                          Consolidated Statements of Income -
                          Three and Six Months Ended
                          December 31, 2000 and 1999                          3


                          Consolidated Statements of Cash Flows -
                          Six Months Ended December 31, 2000 and 1999         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                                                    8

                          SIGNATURES                                          8



<PAGE>


                         ESPEY MFG. & ELECTRONICS CORP.

                           Consolidated Balance Sheets

                       December 31, 2000 and June 30, 2000
                      ------------------------------------
                                   A S S E T S


<TABLE>
<CAPTION>
                                                            Unaudited
                                                              2000            2000
                                                           December 31       June 30
                                                           -----------     -----------
<S>                                                       <C>             <C>
CURRENT ASSETS:

         Cash and cash equivalents                        $ 3,193,433     $ 2,367,191

         Investment securities                                702,000         650,000
         Trade accounts receivable, net                     3,178,745       4,105,028
         Other receivables                                     12,501          46,435

         Inventories:

            Raw materials and supplies                        905,777         822,814
            Work-in-process                                 3,274,236       3,113,708
            Costs relating to contracts in
            Process, net of advance payments of
              $181,888 at December 31, 2000 and

              $537,468 at June 30, 2000                    11,491,350      10,889,930
                                                          -----------     -----------

                           Total Inventories               15,671,363      14,826,452
                                                          -----------     -----------

         Deferred income taxes                                281,509         299,709
         Prepaid expenses and other current assets            201,206         245,501
                                                          -----------     -----------

                           Total Current Assets            23,240,757      22,540,316
                                                          -----------     -----------

Deferred Income Taxes                                           6,516           6,516

Property, Plant and Equipment, net                          3,494,300       3,571,205
                                                          -----------     -----------

                           Total Assets                   $26,741,573     $26,118,037
                                                          ===========     ===========
</TABLE>


See accompanying notes to the consolidated financial statements
                                                                     (Continued)

                                       1
<PAGE>

                         ESPEY MFG. & ELECTRONICS CORP.

                     Consolidated Balance Sheets, Continued

                       December 31, 2000 and June 30, 2000
                      ------------------------------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY



                                                       Unaudited
                                                         2000            2000
                                                      December 31       June 30
                                                     ------------     ----------
CURRENT LIABILITIES:

   Accounts Payable                                  $   337,240     $   541,636
   Accrued expenses:
      Salaries, wages and commissions                    191,444         244,865
      Vacation                                           285,610         280,493
      Employees' insurance costs                         115,384          65,194
      ESOP payable                                       275,129            --
      Dividends payable                                   51,682            --
      Other                                               13,625           3,372
      Payroll and other taxes withheld
           and accrued                                   107,883          69,536
      Income taxes payable                               242,472         124,075
                                                     ------------     ----------
                  TOTAL CURRENT LIABILITIES            1,620,469       1,329,171
STOCKHOLDERS' EQUITY:

  Common   stock,   par  value  .33-1/3  per  share.
  Authorized  10,000,000  shares;  issued  1,514,937
  shares at  December  31,  2000 and June 30,  2000.
  Outstanding 1,029,461 and 1,033,631 at
  December 31, 2000 and June 30, 2000, respectively      504,979        504,979

  Capital in excess of par value                      10,496,287     10,496,287

  Accumulated other comprehensive income (loss)          (73,421)      (107,221)

  Retained earnings                                   24,144,761     23,775,433
                                                    -------------  ------------
                                                      35,072,606     34,669,478

  Less:  Common stock subscribed                      (2,234,649)    (2,234,650)

  Cost of 485,476 and 481,306 shares at
  December 31, 2000 and June 30, 2000,
  respectively, of common stock in treasury           (7,716,853)    (7,645,962)
                                                    -------------  ------------
                 TOTAL STOCKHOLDERS' EQUITY           25,121,104     24,788,866
                                                    -------------  ------------

                           TOTAL LIABILITIES AND
                           STOCKHOLDERS' EQUITY     $ 26,741,573   $ 26,118,037
                                                    =============  ============


See accompanying notes to the consolidated financial statements


                                       2
<PAGE>




                         ESPEY MFG. & ELECTRONICS CORP.

                        Consolidated Statements of Income

              Three and Six Months Ended December 31, 2000 and 1999
             ------------------------------------------------------


<TABLE>
<CAPTION>
                                        Unaudited                       Unaudited
                                       Three Months                    Six Months
                                   2000            1999            2000           1999
                                 ------------------------       -------------------------
<S>                           <C>             <C>             <C>             <C>
Net Sales                     $ 4,184,993     $ 3,412,424     $ 8,352,228     $ 6,711,404
Cost of sales                   3,295,985       2,918,399       6,774,958       5,803,765
                              -----------     -----------     -----------     -----------
    Gross profit                  889,008         494,025       1,577,270         907,639

Selling, general and

 administrative expenses          543,992         533,327       1,004,244       1,025,951
                              -----------     -----------     -----------     -----------
    Operating income (loss)       345,016         (39,302)        573,026        (118,312)
                              -----------     -----------     -----------     -----------

Other income

    Interest and dividend income   68,556         111,922         133,746         202,587
    Sundry income (loss)            8,499            (528)         25,624          52,413
                              -----------     -----------     -----------     -----------
                                   77,055         111,394         159,370         255,000
                              -----------     -----------     -----------     -----------

Income before income taxes        422,071          72,092         732,396         136,688

Provision for income taxes        152,802          25,000         259,708          50,000
                              -----------     -----------     -----------     -----------


            Net Income        $   269,269     $    47,092     $   472,688     $    86,688
                              ===========     ===========     ===========     ===========

Income per share:


Basic and dilutive

income per share              $       .26     $       .04     $       .46     $       .08
                              -----------     -----------     -----------     -----------


Weighted average common
shares outstanding

    Basic                       1,032,996       1,048,631       1,033,314       1,050,754
    Diluted                     1,035,399       1,048,631       1,035,494       1,050,754
                              ===========     ===========     ===========     ===========
</TABLE>


See accompanying notes to the consolidated financial statements

                                       3

<PAGE>

                         ESPEY MFG. & ELECTRONICS CORP.
                      Consolidated Statements of Cash Flows
                   Six Months Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>
                                                                       Unaudited
                                                                      December 31,
                                                                  2000             1999
                                                             -----------      -----------
<S>                                                         <C>               <C>
Cash Flows From Operating Activities:

   Net income                                               $   472,688       $    86,688

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

   Depreciation                                                 345,273           226,510
   (Gain)/Loss on disposal of assets                            (14,721)                -
   Changes in assets and liabilities:
            Decrease in receivables                             960,219         2,501,964
            Increase in inventories                            (844,910)         (913,976)
            Decrease in prepaid expenses and other
              current assets                                     44,294            38,835
            (Decrease)Increase in accounts payable             (204,395)          143,052
            Decrease in accrued salaries,
              wages and commissions                             (53,421)         (134,155)
            Increase in accrued employee insurance costs         50,191             3,779
            Increase(Decrease) in other accrued expenses         10,254           (29,067)
            Increase in vacation accrual                          5,117             5,675
            Increase(Decrease) in payroll & other taxes
              withheld and accrued                               38,346            (5,439)
            Increase(Decrease) in income taxes payable          118,398           (35,390)
            Increase in ESOP contributions                      275,129           274,078
                                                            -----------       -----------

                           Net cash provided by
                           operating activities               1,202,462         2,162,554
                                                            -----------       -----------

Cash Flows From Investing Activities:

   Proceeds from maturity of investment securities                   --         2,915,161
   Additions to property, plant & equipment                    (268,397)         (361,342)
   Proceeds on Sale of Assets                                    14,750                 -
                                                            -----------       -----------
                           Net cash provided by (used in)
                           investing activities                (253,647)        2,553,819
                                                            -----------       -----------

Cash Flows From Financing Activities:

   Dividends paid on common stock                               (51,682)         (104,862)
   Purchase of treasury stock                                   (70,891)         (193,222)
                                                            -----------       -----------
                           Net cash used in
                           financing activities                (122,573)         (298,084)
                                                            -----------       -----------
Increase in cash and cash equivalents                           826,242         4,418,289

Cash and cash equivalents, beginning of period                2,367,191         2,364,335
                                                            -----------       -----------
Cash and cash equivalents, end of period                    $ 3,193,433       $ 6,782,624
                                                            -----------       -----------

Income Taxes Paid                                           $   135,000       $    80,000
                                                            ===========       ===========
Noncash Financing Activities

   Dividend payable                                         $    51,682       $         -
                                                            ===========       ===========
</TABLE>

See accompanying notes to the consolidated financial statements

                                       4
<PAGE>

                         ESPEY MFG. & ELECTRONICS CORP.

                          Notes to 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  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 2000 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.     In fiscal 1989 the Company  established an Employee Stock  Ownership 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, 2000 there were 192,367 shares allocated to participants.

5.       Total comprehensive income consists of:



                                      Three Months Ended     Six Months Ended
                                         December 31,          December 31,
                                      2000        1999       2000        1999
                                   --------    --------    --------    --------

Net income                       $ 269,269       47,092     472,688      86,688

Accumulated other comprehensive

  income/(loss)                     14,950      (28,165)     33,800     (61,445)
                                  --------     --------    ---------   --------

Total comprehensive income         284,219       18,927     506,488      25,243
                                  ========     ========    ========    ========




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,  2000,  (fiscal  2001)  were
$8,352,228  as  compared  to  $6,711,404  for the same  period  in  1999,  a 24%
increase. Net sales for the three months ended December 31, 2000 were $4,184,993
as  compared to  $3,412,424  for the same period in 1999,  a 23%  increase.  The
Company's  increase in sales for the three and six month periods ended  December
31, 2000,  as compared to December  31,  1999,  is largely due to an increase in
radar transmitter component sales.


                                       5
<PAGE>

During the first six  months of fiscal  2001 gross  profits as a  percentage  of
sales  increased  approximately  5.4% as  compared  with the first six months of
fiscal 2000.

Net income for the six months  ended  December 31, 2000 was $472,688 or $.46 per
share compared to $86,688 or $.08 per share for the  corresponding  period ended
December 31, 1999.

The primary reason for the increase in gross profit and net income for the three
and six month period ended  December  31,  2000,  was contract  mix. The current
contracts the Company has for radar  transmitter  components have improved gross
profit. The Company is presently investing in several new programs and products.
These  expenditures,  which have a negative  impact on  current  operations,  in
managements  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,  2000 has  leveled  off at 222 people  compared to
December 31, 1999 when 225 people were employed.

The Company  continues to  diversify  its customer  base and product  line.  The
backlog at December  31,  2000 was  approximately  $25.8  million as compared to
$28.6 at December 31, 1999. New orders for the six-month  period ending December
31, 2000 were approximately $2.7 million.

Selling,  general and administrative expenses were $1,004,243 for the six months
ended  December  31,  2000,  a decrease of $21,709 as compared to the six months
ended  December 31, 1999. The decrease is primarily due to a decrease in selling
expenses.

Other income for the three and six months ended  December 31, 2000  decreased as
compared  to the three  and six  months  ended  December  31,  1999 due to lower
interest income for both periods associated with lower investment balances.  The
Company  does not believe  there is any  significant  risk  associated  with its
investment policy, since a majority of the investments are represented by United
States Government Treasury Securities,  preferred equity securities, and a money
market account.

Liquidity and Capital Resources

As of December  31,  2000,  the Company  had  working  capital of $21.6  million
compared to $20.4 million at December 31, 1999. The Company meets its short-term
financing  needs  through  cash from  operations  and when  necessary,  from its
existing cash and short term investments.

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

<TABLE>
<CAPTION>
                                                        Six Months Ended December 31,
                                                       -----------------------------
                                                            2000           1999
                                                          --------       --------
<S>                                                     <C>              <C>
Net cash provided by operating activities               $ 1,202,462      2,162,554
Net cash provided by (used in) investing activities        (253,647)     2,553,819
Net cash (used in) financing activities                    (122,573)      (298,084)
</TABLE>

Net cash provided by (used in) 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


                                       6
<PAGE>


accounts  payable.  The  decrease in net cash  provided  by (used in)  investing
activities  is due to the  maturity  of  investment  securities  in 1999 with no
offsetting  purchase  of new  investments.  The  decrease  in net  cash  used in
financing activities is due to decreased treasury stock purchases.

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 2000 capital expenditures were approximately $268,000.

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 ESOP.

During the six months  ended  December  31, 2000 the Company  repurchased  4,170
shares of its  common  stock  from the  Company's  ESOP.  Under  existing  Board
authorizations,  as  of  December  31,  2000,  $854,859  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.



                                       7
<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 8, 2000.

              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
                     three nominees listed in the proxy statement were elected.

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

                     Nominee:                      Shares Voted For:
                     --------                      -----------------
                     Howard Pinsley                    951,089
                     Alvin O. Sabo                     951,358
                     Carl Helmetag                     951,558

                     Ratification of PricewaterhouseCoopers  LLP, as independent
                     auditors  for the  Corporation  for the fiscal  year ending
                     June 30, 2001. The votes were cast as follows:

                     Shares IN FAVOR                   951,358
                     Shares AGAINST                      2,632
                     ABSTENTIONS                           500



Item-5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K
          None


                                       8
<PAGE>


                               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 2000
 ----------------
 Date