TABLE OF CONTENTS




|                                                  |                                                                                                |                                            |  |  |  |  |  | 
|------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                    
|                                                  | ITEM 1. Financial Statements.                                                                 
|                                                  |                                                                                                | CONSOLIDATED BALANCE SHEET                
|                                                  |                                                                                                | CONSOLIDATED STATEMENT OF INCOME          
|                                                  |                                                                                                | CONSOLIDATED STATEMENT OF CASH FLOWS      
|                                                  |                                                                                                | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                  | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                                                  | ITEM 3. Quantitative and Qualitative Disclosure About Market Risk.                            
|PART II. OTHER INFORMATION                       
|                                                  | Item 1. Legal Proceedings.                                                                    
|                                                  | Item 6. Exhibits and Reports on Form 8-K.                                                     
|SIGNATURES                                       
|EX-11 Statement Re Computation/Per Share Earnings



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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-Q

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2001

OR

[   ]Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Commission File Number 1-9965

|                                                                                
|--------------------------------------------------------------------------------
|KEITHLEY INSTRUMENTS, INC.(Exact name of registrant as specified in its charter)

|                                |  |                    
|------------------------------- |  | -------------------
|Ohio                            |  | 34-0794417         
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

|                                                                                        
|----------------------------------------------------------------------------------------
|28775 Aurora Road, Solon, Ohio 44139
(Address of principal executive offices) (Zip Code)

Registrants telephone number, including area code: (440) 248-0400

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

As of February 12, 2002 there were outstanding 13,581,706 Common Shares,
without par value, and 2,150,502 Class B Common Shares, without par value.

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PART I. FINANCIAL INFORMATION




ITEM 1. Financial Statements.

KEITHLEY INSTRUMENTS, INC.




|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |        |        |        | 
|------------------------------------------ | --------------------------------------- | -------------------------- | -------------------- | ------ | ------------ | ------ | ------------- | ------ | ------ | ------ | ------- | ------ | ------ | ------ | 
|                                           |                                         |                            |                      |        | DECEMBER 31, |        | SEPTEMBER 30,
|                                           |                                         |                            |                      |        |              |        |              
|Assets                                     |                                         | 2001                       |                      | 2000   |              | 2001  
|                                           |                                         |                            |                      |        |              |       
|Current assets:                            |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|                                           | Cash and cash equivalents               |                            | $                    | 20,938 |              |        | $             | 30,745 |        |        | $       | 30,091 |       
|                                           | Short-term investments                  |                            |                      | 26,919 |              |        |               |       |        |        |         | 20,884 |       
|                                           | Refundable income taxes                 |                            |                      | 6,112  |              |        |               | 57     |        |        |         | 6,196  |       
|                                           | Accounts receivable and other, net      |                            |                      | 11,953 |              |        |               | 29,901 |        |        |         | 14,787 |       
|                                           | Inventories:                            |                            |                      |        |              |        |               |        |        |        |         |        |       
|                                           |                                         | Raw materials              |                      |        | 9,902        |        |               |        | 11,294 |        |         |        | 11,057 |       
|                                           |                                         | Work in process            |                      |        | 2,011        |        |               |        | 3,886  |        |         |        | 2,236  |       
|                                           |                                         | Finished products          |                      |        | 2,355        |        |               |        | 4,409  |        |         |        | 2,402  |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|                                           |                                         |                            | Total inventories    |        |              | 14,268 |               |        |        | 19,589 |         |        |        | 15,695 | 
|                                           | Deferred income taxes                   |                            |                      | 10,251 |              |        |               | 14,551 |        |        |         | 7,382  |       
|                                           | Other current assets                    |                            |                      | 1,415  |              |        |               | 789    |        |        |         | 653    |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|                                           |                                         |                            | Total current assets |        |              | 91,856 |               |        |        | 95,632 |         |        |        | 95,688 | 
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|Property, plant and equipment, at cost     |                                         |                            | 42,010               |        |              |        | 40,563        |        |        |        | 41,207  |       
|Less-Accumulated depreciation              |                                         |                            | 28,283               |        |              |        | 27,439        |        |        |        | 27,573  |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|Net property, plant and equipment          |                                         |                            | 13,727               |        |              |        | 13,124        |        |        |        | 13,634  |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|Deferred income taxes                      |                                         |                            | 5,662                |        |              |        | 6,026         |        |        |        | 5,681   |       
|Other assets                               |                                         |                            | 8,954                |        |              |        | 7,040         |        |        |        | 8,597   |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|Total assets                               |                                         | $                          | 120,199              |        |              | $      | 121,822       |        |        | $      | 123,600 |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|Liabilities and Shareholders Equity       |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|Current liabilities:                       |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|                                           | Accounts payable                        |                            | $                    | 5,731  |              |        | $             | 10,130 |        |        | $       | 5,906  |       
|                                           | Accrued payroll and related expenses    |                            |                      | 4,650  |              |        |               | 5,649  |        |        |         | 7,213  |       
|                                           | Other accrued expenses                  |                            |                      | 3,844  |              |        |               | 6,844  |        |        |         | 4,826  |       
|                                           | Income taxes payable                    |                            |                      | 1,609  |              |        |               | 5,180  |        |        |         | 3,227  |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|                                           |                                         | Total current liabilities  |                      |        | 15,834       |        |               |        | 27,803 |        |         |        | 21,172 |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|Long-term debt                             |                                         |                            | 3,000                |        |              |        | 3,000         |        |        |        | 3,000   |       
|Other long-term liabilities                |                                         |                            | 5,994                |        |              |        | 5,417         |        |        |        | 5,475   |       
|Deferred income taxes                      |                                         |                            | 7                    |        |              |        | 7             |        |        |        | 7       |       
|Shareholders equity:                      |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|                                           | Paid-in-capital                         |                            |                      | 26,532 |              |        |               | 19,732 |        |        |         | 22,893 |       
|                                           | Earnings reinvested in the business     |                            |                      | 75,250 |              |        |               | 68,694 |        |        |         | 77,454 |       
|                                           | Accumulated other comprehensive loss    |                            |                      | (914   | )            |        |               | (572   | )      |        |         | (708   | )     
|                                           | Unamortized portion of restricted stock |                            |                      | (141   | )            |        |               | (185   | )      |        |         | (152   | )     
|                                           | Common shares held in treasury, at cost |                            |                      | (5,363 | )            |        |               | (2,074 | )      |        |         | (5,541 | )     
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|                                           |                                         | Total shareholders equity |                      |        | 95,364       |        |               |        | 85,595 |        |         |        | 93,946 |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       
|Total liabilities and shareholders equity |                                         | $                          | 120,199              |        |              | $      | 121,822       |        |        | $      | 123,600 |       
|                                           |                                         |                            |                      |        |              |        |               |        |        |        |         |       

The accompanying notes are an integral part of the financial statements.

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KEITHLEY INSTRUMENTS, INC.




|                                             |  |                      |        |      |  |   |        |  
|-------------------------------------------- |  | -------------------- | ------ | ---- |  | - | ------ | -
|                                             |  | FOR THE THREE MONTHS
|                                             |  | ENDED DECEMBER 31,  
|                                             |  |                     
|                                             |  | 2001                 |        | 2000
|                                             |  |                      |        |     
|Net sales                                    |  | $                    | 20,424 |      |  | $ | 44,508 |  
|Cost of goods sold                           |  |                      | 9,181  |      |  |   | 16,534 |  
|Selling, general and administrative expenses |  |                      | 10,390 |      |  |   | 13,434 |  
|Product development expenses                 |  |                      | 3,576  |      |  |   | 3,883  |  
|Net financing income                         |  |                      | (266   | )    |  |   | (297   | )
|                                             |  |                      |        |      |  |   |        |  
|(Loss) income before income taxes            |  |                      | (2,457 | )    |  |   | 10,954 |  
|Income (benefit) taxes                       |  |                      | (823   | )    |  |   | 4,053  |  
|                                             |  |                      |        |      |  |   |        |  
|Net (loss) income                            |  | $                    | (1,634 | )    |  | $ | 6,901  |  
|                                             |  |                      |        |      |  |   |        |  
|Basic (loss) earnings per share              |  | $                    | (0.10  | )    |  | $ | 0.44   |  
|                                             |  |                      |        |      |  |   |        |  
|Diluted (loss) earnings per share            |  | $                    | (0.10  | )    |  | $ | 0.42   |  
|                                             |  |                      |        |      |  |   |        |  
|Cash dividends per Common Share              |  | $                    | 0.0375 |      |  | $ | 0.0275 |  
|                                             |  |                      |        |      |  |   |        |  
|Cash dividends per Class B
Common Share      |  | $                    | 0.0300 |      |  | $ | 0.0220 |  
|                                             |  |                      |        |      |  |   |        |  

The accompanying notes are an integral part of the financial statements.

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KEITHLEY INSTRUMENTS, INC.




|                                                     |                                                     |              |        |                      |     |      |        |       |       | 
|---------------------------------------------------- | --------------------------------------------------- | ------------ | ------ | -------------------- | --- | ---- | ------ | ----- | ----- | 
|                                                     |                                                     |              |        | FOR THE THREE MONTHS
|                                                     |                                                     |              |        | ENDED DECEMBER 31,  
|                                                     |                                                     |              |        |                     
|                                                     |                                                     |              |        | 2001                 |     | 2000
|                                                     |                                                     |              |        |                      |     |     
|Cash flows from operating activities:                |                                                     |              |        |                      |     |      |        |      
|                                                     | Net (loss) income                                   |              | $      | (1,634               | )   |      | $      | 6,901 |      
|                                                     | Expenses not requiring outlay of cash               |              |        | 955                  |     |      |        | 953   |      
|                                                     | Changes in working capital                          |              |        | (1,024               | )   |      |        | 1,822 |      
|                                                     | Other operating activities                          |              |        | 96                   |     |      |        | 80    |      
|                                                     |                                                     |              |        |                      |     |      |        |      
|                                                     | Net cash (used in) provided by operating activities |              |        | (1,607               | )   |      |        | 9,756 |      
|                                                     |                                                     |              |        |                      |     |      |        |      
|Cash flows from investing activities:                |                                                     |              |        |                      |     |      |        |      
|                                                     | Payments for property, plant, and equipment         |              |        | (969                 | )   |      |        | (778  | )    
|                                                     | Purchase of investments                             |              |        | (6,035               | )   |      |        |      |      
|                                                     | Other investing activities, net                     |              |        | 4                    |     |      |        |      |      
|                                                     |                                                     |              |        |                      |     |      |        |      
|                                                     | Net cash used in investing activities               |              |        | (7,000               | )   |      |        | (778  | )    
|                                                     |                                                     |              |        |                      |     |      |        |      
|Cash flows from financing activities:                |                                                     |              |        |                      |     |      |        |      
|                                                     | Decrease in short-term debt                         |              |        |                     |     |      |        | (222  | )    
|                                                     | Cash dividends                                      |              |        | (570                 | )   |      |        | (418  | )    
|                                                     | Purchase of treasury stock                          |              |        |                     |     |      |        |      |      
|                                                     | Proceeds from employee stock purchase plans         |              |        | 54                   |     |      |        | 594   |      
|                                                     | Other                                               |              |        | 67                   |     |      |        | 110   |      
|                                                     |                                                     |              |        |                      |     |      |        |      
|                                                     | Net cash (used in) provided by financing activities |              |        | (449                 | )   |      |        | 64    |      
|                                                     |                                                     |              |        |                      |     |      |        |      
|Effect of changes in foreign currency exchange rates |                                                     |              | (97    | )                    |     |      | 295    |      
|                                                     |                                                     |              |        |                      |     |      |        |      
|(Decrease) increase in cash and cash equivalents     |                                                     |              | (9,153 | )                    |     |      | 9,337  |      
|Cash and cash equivalents at beginning of period     |                                                     |              | 30,091 |                      |     |      | 21,408 |      
|                                                     |                                                     |              |        |                      |     |      |        |      
|Cash and cash equivalents at end of period           |                                                     | $            | 20,938 |                      |     | $    | 30,745 |      
|                                                     |                                                     |              |        |                      |     |      |        |      
|Supplemental disclosures of cash flow information    |                                                     |              |        |                      |     |      |        |      
|                                                     | Cash paid during the period for:                    |              |        |                      |     |      |        |       |      
|                                                     |                                                     | Income taxes |        | $                    | 316 |      |        | $     | 1,240 | 
|                                                     |                                                     | Interest     |        |                      | 27  |      |        |       | 27    | 

|                                                                                                                                                                   |  |  |  | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | 
|Disclosure of accounting
policy                                                                                                                                    |  |  |  | 
|For
purposes of this statement, the company considers all highly liquid
investments with maturities of three months or less when purchased to
be cash equivalents.

The accompanying notes are an integral part of the financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands of dollars, except for share data)



|A. |  | Management Representation
The consolidated financial statements at December 31, 2001 and 2000, and for
the three month periods then ended have not been examined by independent
accountants, but in the opinion of the management of Keithley Instruments,
Inc., all adjustments necessary to a fair statement of the consolidated
balance sheet, consolidated statement of income and consolidated statement
of cash flows for those periods have been included. All adjustments
included are of a normal recurring nature.                                                                                                                                  
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|B. |  | Earnings per share denominator
The weighted average number of shares and share equivalents used in
determining basic earnings per share and diluted earnings per share was
15,624,502 for the quarter ended December 31, 2001, and 15,574,631 and
16,570,709 for the quarter ended December 31, 2000, respectively. Both
Common Shares and Class B Common Shares are included in calculating the
weighted average number of shares outstanding.                                                                                                                                                                                                               
|  
|C. |  | Stock repurchase programs
On December 11, 2000, the company announced its Board of Directors had
approved an open market stock repurchase program to replace the existing
program, which expired in December 2000. Under the new program, the company
may purchase up to 2,000,000 Common Shares, or approximately 13 percent of
shares outstanding, over a three-year period. The purpose of the repurchase
program is to offset the dilutive effect of stock option and stock purchase
plans. Common Shares held in treasury may be reissued in settlement of
stock purchases under these plans.                                                            
|  
|   |  | The company did not purchase shares during the first quarter of fiscal 2002
or the first quarter of fiscal 2001. At December 31, 2001, 280,420 Common
Shares purchased under the companys share repurchase programs remained in
treasury at an average cost of $16.11 per share including commissions.
Also, included in the Common shares held in treasury, at cost caption of
the consolidated balance sheets are shares repurchased to settle
non-employee Directors fees deferred pursuant to the Keithley Instruments,
Inc. 1996 Outside Directors Deferred Stock Plan. The total number of shares
held in treasury at December 31, 2001 was 405,713.
|  
|E. |  | Accounting for Derivatives and Hedging Activities
The company adopted Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS 133)
on October 1, 2000. The transition amount recorded upon adoption of SFAS
133 was not material to the consolidated financial results or financial
position of the company.                                                                                                                                                                                                                                                                              
|  
|   |  | In accordance with the provisions of SFAS 133, all of the companys
derivative instruments are recognized on the balance sheet at their fair
value. To hedge sales, the company currently utilizes foreign exchange
forward contracts or option contracts to sell foreign currencies to fix the
exchange rates related to near-term sales and effectively fix the companys
margins. Underlying hedged transactions are recorded at hedged rates,
therefore realized and                                                                                                                                                                                      

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|   |  | unrealized gains and losses are recorded when the operating revenues and expenses are recorded. The company also currently
utilizes an interest rate swap instrument to mitigate the risk of interest
rate changes. The estimated fair value of the swap instrument is determined
through quotes from the related financial institutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | On the date the derivative contract is entered into, the company designates
its derivative as either a hedge of the fair value of a recognized asset or
liability (fair value hedge), as a hedge of the variability of cash flows
to be received (cash flow hedge), or as a foreign-currency cash flow hedge
(foreign currency hedge). Changes in the fair value of a derivative that
is highly effective as, and that is designated and qualifies as, a fair
value hedge, along with the gain or loss on the hedged asset or liability
that is attributable to the hedged risk are recorded in current-period
earnings. Changes in the fair value of a derivative that is highly
effective and that is designed and qualifies as a cash flow hedge are
recorded in other comprehensive income until earnings are affected by the
transaction in the underlying asset. Changes in the fair value of
derivatives that are highly effective and that qualify as foreign currency
hedges are recorded in either current period income or other comprehensive
income, depending on whether the hedge transaction is a fair value hedge or
a cash flow hedge. At December 31, 2001, all the companys derivative
instruments were designed as cash flow hedges.
|  
|   |  | The company documents all relationships between hedging instruments and
hedged items, as well as its risk-management objective and strategy for
undertaking various hedge transactions. The company also assesses whether
the derivatives that are used in hedging transactions are highly effective
in offsetting changes in cash flows of hedged items. When it is determined
that a derivative is not highly effective as a hedge, the company
discontinues hedge accounting prospectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|F. |  | Comprehensive income
Comprehensive income for the three months ended December 31, 2001 and 2000
is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                                                            |  |              |        |      |  |   |       |  
|----------------------------------------------------------- |  | ------------ | ------ | ---- |  | - | ----- | -
|                                                            |  | December 31,
|                                                            |  |             
|                                                            |  | 2001         |        | 2000
|                                                            |  |              |        |     
|Net (loss) income                                           |  | $            | (1,634 | )    |  | $ | 6,901 |  
|Unrealized gains (losses) on value
of derivative securities |  |              | 91     |      |  |   | (212  | )
|Net unrealized investment losses                            |  |              | (108   | )    |  |   |      |  
|Foreign currency translation
adjustments                    |  |              | (189   | )    |  |   | 459   |  
|                                                            |  |              |        |      |  |   |       |  
|Comprehensive (loss) income                                 |  | $            | (1,840 | )    |  | $ | 7,148 |  
|                                                            |  |              |        |      |  |   |       |  

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|G. |  | Segment and Geographic Information
The Companys business is to develop test and measurement-based solutions to
verify customers product performance or aid in their product development
process. The Companys customers are engineers, technicians and scientists
in manufacturing, product development and research functions within a range
of industries. Although the Companys products vary in capability,
sophistication, use, size and price, they basically test, measure and
analyze electrical and physical properties, and in some cases RF or light.
As such, the Companys management has determined that the Company operates
in a single industry segment. The operations by geographic area are
presented below. The basis for attributing revenues from external customers
to a geographic area is the location of the customer.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|              |  |                            |        |      |  |   |        | 
|------------- |  | -------------------------- | ------ | ---- |  | - | ------ | 
|              |  | For the Three Months Ended
|              |  | December 31,              
|              |  |                           
|              |  | 2001                       |        | 2000
|              |  |                            |        |     
|Net sales:    |  |                            |        |      |  |   |        | 
|United States |  | $                          | 7,480  |      |  | $ | 21,025 | 
|Europe        |  |                            | 8,246  |      |  |   | 12,184 | 
|Pacific Basin |  |                            | 3,591  |      |  |   | 8,097  | 
|Other         |  |                            | 1,108  |      |  |   | 3,202  | 
|              |  |                            |        |      |  |   |        | 
|              |  | $                          | 20,425 |      |  | $ | 44,508 | 
|              |  |                            |        |      |  |   |        | 

|                   |  |                 |        |      |  |   |        | 
|------------------ |  | --------------- | ------ | ---- |  | - | ------ | 
|                   |  | At December 31,
|                   |  |                
|                   |  | 2001            |        | 2000
|                   |  |                 |        |     
|Long-lived assets: |  |                 |        |      |  |   |        | 
|United States      |  | $               | 19,406 |      |  | $ | 17,108 | 
|Germany            |  |                 | 2,817  |      |  |   | 2,751  | 
|Other              |  |                 | 458    |      |  |   | 305    | 
|                   |  |                 |        |      |  |   |        | 
|                   |  | $               | 22,681 |      |  | $ | 20,164 | 
|                   |  |                 |        |      |  |   |        | 

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ITEM 2. Managements
Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations  In
Thousands of Dollars Except for Per Share Data

First Quarter Fiscal 2002 Compared
with First Quarter Fiscal 2001

The company reported a net loss for the first quarter of fiscal 2002 of $1,634,
or $0.10 per share, versus record income of $6,901, or $0.42 per share, in last
years first quarter.

Net sales of $20,424 for the first quarter of fiscal 2002 decreased 54 percent
from record sales of $44,508 in the prior years first quarter.
Geographically, domestic sales were down 64 percent, Pacific Basin sales were
down 56 percent, and Europe was down 32 percent. Sequentially, sales decreased
21 percent from the fourth quarter of fiscal 2001. Orders of $20,080 for the
first quarter decreased 60 percent from last years record orders of $49,782.
Geographically, orders were down 66 percent in the United States, 62 percent in
the Pacific Basin, and 49 percent in Europe when compared to the prior year.
Compared to the fourth quarter of fiscal 2001, orders decreased 7 percent:
semiconductor industry orders declined 46 percent, optoelectronics industry
orders declined 34 percent, telecommunications industry orders were down 5
percent, while orders from the companys research and education customers
increased 30 percent. For the first quarter, semiconductor and
telecommunications orders each comprised approximately 15 percent of the total
$20,080, optoelectronics orders made up 5 percent, while research and education
made up about 25 percent. Order backlog remained virtually unchanged at
$12,003 million at December 31, 2001.

Cost of goods sold as a percentage of net sales increased to 44.9 percent from
37.2 percent in the prior years first quarter. Approximately three-fourths of
the percentage increase was due to spreading fixed manufacturing costs over
lower sales volumes, and the remaining portion was due to a less favorable
product mix. The effect of foreign exchange hedging on cost of goods sold was
immaterial in both periods.

Selling, general and administrative expenses of $10,390 decreased $3,044, or 23
percent, from last years first quarter, although such expenses increased as a
percentage of net sales to 50.9 percent from 30.2 percent last year. The
decrease in dollars was due to lower commissions and incentive programs as a
result of lower sales, and lower discretionary spending resulting from the
companys cost cutting measures. Additionally, the company is on schedule to
establish a direct sales and support organization in Japan, and expects this
office to be operational on April 1, 2002. This initiative increased selling,
general and administrative expenses by approximately $300 for the first quarter
of fiscal 2002. The large increase as a percentage of sales was due to the
decrease in revenues in 2002.

Product development expenses for the quarter were $3,576, or 17.5 percent of
sales, down $307, or 8 percent, from last years $3,883 million, or 8.7 percent
of sales.

The company generated net financing income during the quarter of $266 versus
$297 in the prior year. Despite higher levels of cash and short-term
investments, lower interest rates caused financing income to decrease from the
prior year.

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The company recorded a tax benefit for the quarter at a 33.5 percent rate.
Last years first quarter tax rate was 37.0 percent.

Liquidity and Capital Resources

During the first quarter, net cash used in operations was $1,607.
Additionally, the company used $6,035 to purchase short-term investments, $969
for capital equipment and $570 to pay dividends during the quarter. Total cash
and cash equivalents decreased $9,153 during the quarter to $20,938 at December
31, 2001. Total short-term investments increased $6,035 during the quarter to
$26,919 at December 31, 2001. Total debt was $3,000 at December 31, 2001, and
the total debt-to-capital ratio was 3.0 percent at December 31, 2001.

The company expects to finance debt service, capital spending, and working
capital requirements through cash and cash equivalents. At December 31, 2001,
the company had available unused lines of credit with domestic and foreign
banks aggregating $12,000 of which $5,000 were short-term and $7,000 were
long-term.

Outlook

The company believes conditions in the electronics industry are beginning to
stabilize. Based on current expectations, management believes sales for the
second quarter of fiscal 2002 will range between $19,000 and $23,000. Based on
these sales levels, management would expect to report a pretax loss as a
percentage of sales in a range of upper single digits to upper teens.

Additionally, the company expects to spend approximately three-quarters of a
million dollars during the second quarter to open a direct sales and support
organization in Japan. These charges will be reflected in selling, general and
administrative expenses.

Factors That May Affect Future Results

Statements included in the Liquidity and Capital Resources section and the
Outlook section of Managements Discussion and Analysis of Financial Condition
and Results of Operations or elsewhere in this report constitute
forward-looking statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those projected. Some of the factors that may affect future results are
discussed below.

The company is subject to global economic and market conditions, including the
current conditions affecting the results of the companys customers in the
semiconductor, telecommunications, optoelectronics and other markets. During
in the second quarter of fiscal year 2001, the company experienced a slowdown
in orders, primarily from its semiconductor, telecommunications and
optoelectronics customers. The companys results have been and could continue
to be adversely affected depending on the length and severity of the current

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downturn in these as well as the overall broadband industry. In addition,
orders are cancelable by customers and consequently orders outstanding at the
end of a reporting period may not result in realized sales in the future. The
company may experience a further decline in sales as a result of the current
economic conditions and the lack of visibility relating to future orders. In
response to the current economic conditions, the company is managing its cost
structure to reduce spending where appropriate. A failure by the company to
reduce expenses in a timely manner could adversely affect the companys future
operating results. In addition, notwithstanding such cost control measures, a
continuing decline in the economy that adversely affects the companys
customers would likely adversely affect the company.

The companys business relies on the development of new high technology
products and services to provide solutions to customers complex measurement
needs. This requires anticipation of customers changing needs and emerging
technology trends. The company must make long-term investments and commit
significant resources before knowing whether its expectations will eventually
result in products that achieve market acceptance. The company incurs
significant expenses developing new products that may or may not result in
significant sources of revenue and earnings in the future.

In many cases the companys products compete directly with those offered by
other manufacturers. If any of the companys competitors were to develop
products or services that are more cost-effective or technically superior,
demand for the companys product offerings could slow.

The companys success depends to a significant degree upon the continued
service of its key executive, sales, development, marketing and operational
personnel. Although management believes the company offers competitive
salaries and benefits, there can be no assurance that it will be successful in
retaining its existing key personnel. Failure to retain key personnel could
have a material adverse effect on the companys results of operations.

The companys products contain large volumes of electronic components and
subassemblies that in some cases are supplied through sole or limited source
third-party suppliers. Although the company does not anticipate any problems
procuring supplies in the near-term, there can never be any assurance that
parts and supplies will be available in a timely manner and at reasonable
prices. Additionally, the companys inventory is subject to risk due to
changes in market demand for particular products. The resulting excess and/or
obsolete inventory could have an adverse impact on the companys results of
operations.

The company currently has subsidiaries or sales offices located in
approximately 15 countries outside the United States, and non-U.S. sales
accounted for 63 percent of the companys revenue during the first quarter of
fiscal 2002. The companys future results could be adversely affected by
several factors, including changes in foreign currency exchange rates, changes
in a countrys or regions political or economic conditions, trade protection
measures, import or export licensing requirements, unexpected changes in
regulatory requirements and natural disasters.

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For over 40 years, the company has been distributing its products in Japan
utilizing sales representatives. Beginning on April 1, 2002, the company will
utilize its own sales force. The companys sales and earnings could be
adversely affected due to a loss of sales during fiscal 2002 because of the
transition, as well as the actual costs incurred to open direct sales offices.
Additionally, the companys results could be adversely affected if it is unable
to develop an effective sales and support organization in Japan.

The company pays taxes in several jurisdictions throughout the world. The
company utilizes available tax credits and other tax planning strategies in an
effort to minimize the companys overall tax liability. The companys
estimated tax rate for fiscal 2002 could change from what is currently
anticipated due to changes in tax laws of various countries, changes in the
companys overall tax planning strategy, or the actual level of pretax earnings
or losses the company may report.

The company has been notified of the commencement of purported class action
litigation alleging violations of federal securities laws by the company. The
actions were consolidated and recaptioned In re: Keithley Instruments, Inc.,
Securities Litigation. While the company believes the litigation is without
merit, the companys defense of this litigation could result in substantial
costs and a diversion of managements attention and resources, which could
adversely affect the business, results of operations and financial condition.

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ITEM 3. Quantitative and Qualitative Disclosure About Market Risk.

The company is exposed to a variety of risks, including foreign currency
fluctuations, interest rate fluctuations and changes in the market value of its
short-term investments. In the normal course of business, the company employs
established policies and procedures to manage its exposure to fluctuations in
foreign currency values and interest rates.

The company is exposed to foreign currency exchange rate risk primarily through
transactions denominated in foreign currencies. The company currently utilizes
foreign exchange forward contracts or option contracts to sell foreign
currencies to fix the exchange rates related to near-term sales and effectively
fix the companys margins. Generally, these contracts have maturities of three
months or less. The companys policy is to only enter into derivative
transactions when the company has an identifiable exposure to risk, thus not
creating additional foreign currency exchange rate risk. In managements
opinion, a 10 percent adverse change in foreign currency exchange rates would
not have a material effect on these instruments and therefore the companys
results of operations, financial position or cash flows.

The company currently utilizes an interest rate swap instrument to mitigate the
risk of interest rate changes related to long-term debt. The agreement
effectively fixes the interest rate on a notional $3,000 of variable rate debt.
The instrument expires September 19, 2005. In managements opinion, a 10
percent adverse change in interest rates would not have a material effect on
these instruments and therefore the companys results of operations, financial
position or cash flows.

The company maintains a short-term investment portfolio consisting of U.S.
government backed notes and bonds, corporate notes and bonds, and mutual funds
consisting primarily of government notes and bonds. An increase in interest
rates would decrease the value of certain of these investments. However, a 10
percent increase in interest rates would not have a material impact on the
companys results of operations, financial position or cash flows.

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings.

See Item 3  Legal Proceedings in the companys annual report on Form
10-K for the fiscal year ended September 30, 2001, for a description of current
legal proceedings. There have been no material changes with respect to these
matters since that report was filed.




Item 6. Exhibits and Reports on Form 8-K.



|(a) |  | Exhibits. The following exhibits are filed herewith:
|--- |  | ----------------------------------------------------

|        |  |                                               
|------- |  | ----------------------------------------------
|Exhibit |  |                                               
|Number  |  | Exhibit                                       
|11      |  | Statement Re Computation of Per Share Earnings
|       



|(b) |  | Reports on Form 8-K. No reports on Form 8-K were filed
during the quarterly period ended December 31, 2001.
|--- |  | -----------------------------------------------------------------------------------------------------------
|   




SIGNATURES

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

|                        |  |                                                                                                                        
|----------------------- |  | -----------------------------------------------------------------------------------------------------------------------
|                        |  | KEITHLEY INSTRUMENTS, INC.
(Registrant)                                                                                
|                       
|                       
|Date: February 13, 2002 |  | /s/  Joseph P. KeithleyJoseph P. Keithley
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
|                       
|                       
|Date: February 13, 2002 |  | /s/  Mark J. PlushMark J. Plush
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

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