<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended                             Commission File Number
     September 30, 2001                                      0-15045

                            BHA Group Holdings, Inc.
      --------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                                                       <C>
               Delaware                                                                   43-1416730
----------------------------------------                                  --------------------------------------------
    (State or other jurisdiction of                                          (I.R.S. Employer Identification No.)
    incorporation or organization)

       8800 East 63rd Street, Kansas City, Missouri                                                        64133
------------------------------------------------------------------------------------------------------ ---------------
         (Address of principal executive offices)                                                        (Zip Code)

Registrant's telephone number, including area code:                                  (816) 356-8400
                                                                   ---------------------------------------------------

Securities registered pursuant to Section 12(b) of the Act:

                                                                                        Name of Each Exchange
          Title of each class                                                            on Which Registered
          -------------------                                                         ----------------------
                 None                                                                         - - - - -
</TABLE>

Securities registered pursuant to Section 12(g) of the Act:

            Common Stock, $.01 par value per share
----------------------------------------------------------------
                       (Title of class)

Indicate by checkmark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:

               Yes    [X]            No       [ ]

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

As of October 26, 2001, the number of shares outstanding of the Registrant's
Common Stock was 6,106,275 shares.

The aggregate market value of the voting stock held by non-affiliates* of the
Registrant's Common Stock was $42,043,380, computed by reference to the closing
price of $15.00 as reported to Registrant at which such stock was quoted by the
NASDAQ National Market on October 26, 2001.

The Registrant's definitive proxy statement for the annual meeting of
stockholders to be held on February 19, 2002 (which will be filed within 120
days after the end of the fiscal year covered by the Form 10-K) is incorporated
to Part III, items 10, 11, 12 and 13, by reference.

*Excludes value of shares held by present officers, directors and principal
stockholders of the Registrant. The determination of "affiliate" status for
purposes of this Annual Report on Form 10-K shall not be deemed a determination
as to whether a person is an affiliate of the Registrant for any other purpose.

                                      -1-

<PAGE>

The statements contained in this Report on Form 10-K that are not purely
historical are forward looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of
1934, including statements regarding the Company's expectations, hopes,
intentions or strategies regarding the future. Forward-looking statements are
included in the "Factors Affecting Earnings and Stock Price" section,
"Management's Discussion and Analysis," and may be included in other sections
throughout the report. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or those anticipated. The words "should," "believe,"
"anticipate," "expect," "see," and other expressions that indicate future events
and trends identify forward-looking statements. Actual future results and trends
may differ materially from historical results or those anticipated depending on
a variety of factors, including, but not limited to, the performance of newly
established domestic and international operations, demand and price for the
Company's products and services, and other factors. Certain of these factors are
discussed throughout this report on Form 10-K.

PART I

ITEM 1 - BUSINESS

BHA Group Holdings, Inc. (together with its domestic and international
subsidiaries, the "Company" or "BHA") is a global filtration company. Its
principal business is the design, manufacture and sale of replacement parts and
the performance of rehabilitation conversion services for the types of
industrial air pollution control ("APC") equipment known as "baghouses",
"cartridge collectors" and "electrostatic precipitators" ("ESPs"). This
equipment is used to eliminate particulate from the air by passing particulate
laden gases through fabric filters (filter bags) or pleated media filter
elements, in the case of baghouses, and between electrically charged collector
plates, in the case of electrostatic precipitators. The Company's business also
includes the maintenance, conversion and rebuilding of this equipment through a
network of employees and independent contractors. The Company's products and
services are marketed throughout North America, South America, Europe, the Near
East, the Pacific Rim and China. While definitive industry statistics are not
available, based upon Dun & Bradstreet reports and other financial information
available to it, the Company believes it is a leader in worldwide sales of air
pollution control replacement parts and services.

The Company has also established BHA Technologies, Inc. ("BHA Technologies") as
a wholly-owned subsidiary that supplies expanded polytetrafluoroethylene
("ePTFE") membrane products for use in its APC product lines. Through BHA
Technologies, the Company is also supplying ePTFE membrane products to a new
base of customers for use outside of air pollution control.

DOMESTIC BUSINESS AND CORPORATE STRUCTURE

The following outlines a chronology relating to the establishment of the
Company's various domestic business units. The Company's international business
units are described below in the section entitled "International Business."

The Company was organized as an unincorporated division of Standard Havens, Inc.
("Standard Havens") in 1975 and was incorporated in Delaware as a wholly-owned
subsidiary of Standard Havens in 1986. The Company became publicly-owned when it
completed its initial public offering of common stock in November 1986. Net
proceeds from this public



                                      -2-





<PAGE>



offering amounted to approximately $3.6 million, which was applied to
outstanding bank debt. The Company completed a second public offering of common
stock in February 1989. Net proceeds from that public offering (approximately
$8.3 million) were used for working capital purposes and to finance several
acquisitions.

In April 1989, the Company formed PrecipTech, Inc. ("PrecipTech"), a Delaware
corporation, as a wholly-owned subsidiary. PrecipTech, which had previously been
a division of BHA, was formed for the purpose of conducting and expanding the
Company's business as it relates to replacement parts, accessories and services
for electrostatic precipitators.

During 1989, BHA and PrecipTech completed several acquisitions in efforts to
expand their product lines and services. In June 1989, BHA acquired the business
of developing and manufacturing acoustic horns for use in both baghouses and
electrostatic precipitators from Saracco Acoustic Sciences Corporation. Also in
1989, PrecipTech completed three acquisitions of privately held companies or
their operating assets. Such acquisitions included ESP Specialties, Inc., a
company that manufactured and sold replacement parts for electrostatic
precipitators; Kinetic Controls, Inc., a company that manufactured and sold
automatic voltage controllers for electrostatic precipitators; and Midwest Power
Corporation, a company that manufactured and sold replacement parts and
accessories and provided services for electrostatic precipitators.

During 1994, the Company established BHA Technologies as a Delaware Corporation.
This wholly-owned subsidiary was formed for the purpose of developing ePTFE
membranes. BHA Technologies successfully developed its own ePTFE membrane, which
it manufactures and markets for various applications both within and outside the
Company's traditional air pollution control equipment markets. In the air
pollution control market, ePTFE membrane is laminated using a thermal process to
a fabric substrate, which is then converted into a replacement filter and
marketed under the trade name BHA-TEX(R). The benefits of this product line to
the customer include improved collection efficiency, increased throughput and
lower operating costs. The ePTFE membranes are widely used outside of air
pollution control applications. These applications include, but are not limited
to, wet filtration, industrial, electrical insulation, medical and apparel. Some
of the products and processes in these applications are currently under patent
protection. In addition to supplying the Company's air pollution control
business with ePTFE membranes for use on filter elements, BHA Technologies has
also identified other market niches and product opportunities. Products
currently being sold include membrane fabrics for use in high performance
outerwear marketed under the eVENT (TM) trade name, high efficiency (HEPA)
filter media used in household appliances and industrial applications, cleanroom
garments, military outerwear, and allergy relief products.

In November 1996, the Board of Directors approved certain changes to the
Company's corporate structure. The Board determined that servicing the domestic
APC customers of its corporate business through one company, instead of through
various subsidiaries, would yield the greatest sales, marketing and operational
efficiencies. To achieve this objective, three wholly-owned subsidiaries of the
Company that were involved in various air pollution control businesses were
merged into PrecipTech to form one company. On February 18, 1997, the
shareholders of the Company approved an amendment to the Certificate of
Incorporation of the Company to change PrecipTech's name to BHA Group, Inc. and
the Company's name to BHA Group Holdings, Inc.

                                      -3-

<PAGE>


The Company has been doing business internationally since 1982 and has expanded
its presence throughout the world as seen in the chart below:

<TABLE>
<CAPTION>
Date                                            Company Name (1)                                                   Location
----                                            ----------------                                                   --------
<S>                                   <C>                                                       <C>
September 1982                                   BHA Group GmbH                                              Ahlen, Germany
August 1994                                       BHA Group AG                                   Klus/Balsthal, Switzerland
March 1997                            BHA Environmental Technology Co. Ltd.                                 Shanghai, China
April 1997                            BHA Group International Pvt. Ltd. (2)                                     Pune, India
August 1997                                     BHA U.K. Limited                                 Birmingham, United Kingdom
November 1997                                  BHA Purfilter S.L.                                          Barcelona, Spain
March 1998                                     BHA Technologies AG                               Klus/Balsthal, Switzerland
August 1998                           BHA Group International Holdings B.V.                          Amsterdam, Netherlands
November 1998                                  BHA do Brazil Ltda.                                        Sao Paulo, Brazil
December 1998                            BHA Group Philippines, Inc. (2)                                Manila, Philippines
June 1999                                     BHA Technologies K.K.                                            Tokyo, Japan
</TABLE>

1)     Each company is a wholly-owned subsidiary of BHA Group Holdings, Inc. or
       one of its subsidiaries.
2)     The Company's presence in the Philippines originated in 1997 and in
       India in 1994 as Representative and Liaison offices, respectively.

INTERNATIONAL BUSINESSES

The Company sells products and services in several geographical areas.
Operations of the domestic business are based in the United States (U.S.). The
domestic business provides products and services to the U.S. markets and exports
to Canada, Latin America, the Near East, the Pacific Rim and People's Republic
of China ("China"). The European business operations manufacture and sell
products and services in Europe, the Middle East, and North Africa. The
financial data for the Company's domestic and foreign businesses is disclosed in
note 9 to the consolidated financial statements. Each of the entities identified
below is 100% owned, either directly or indirectly, by the Company.

EUROPE
------
BHA GROUP GMBH
BHA Group GmbH ("GmbH"), formerly Filtra GmbH, is a German corporation that
operates from Ahlen, Germany as an air pollution control replacement parts
marketer, selling products throughout Europe, the Middle East, and Northern
Africa. Until September 1999, GmbH manufactured APC parts, however, such
operations are now consolidated into the BHA Purfilter S.L. facility in
Barcelona, Spain.

BHA GROUP AG
------------
BHA Group AG, formerly SF Air Filtration AG, is a Swiss corporation that designs
and produces high efficiency replacement cartridge filter elements. This
wholly-owned subsidiary manufactures the pleated media filter elements in
Klus/Balsthal, Switzerland and sells these products throughout Europe.

BHA UK LIMITED
--------------
BHA UK Limited sells industrial air pollution control parts and services to
customers throughout the United Kingdom and supports product sales from the
manufacturers in Spain and Switzerland helping the Company to expand its
presence in Europe.

                                      -4-
<PAGE>

BHA PURFILTER S.L.
BHA Purfilter S.L. ("Purfilter") is a Spanish corporation that manufactures and
sells replacement filters for industrial air pollution equipment. Purfilter
manufactures air pollution control replacement parts in Barcelona, Spain for the
European market and provides a sales presence in Southern Europe.

BHA TECHNOLOGIES AG
BHA Technologies AG, a Swiss corporation, is a wholly-owned subsidiary of BHA
Technologies that markets ePTFE membrane products for a wide variety of
applications both within and outside of the air pollution control industry. BHA
Technologies AG sells ePTFE membrane products throughout Europe and Asia.

BHA GROUP INTERNATIONAL HOLDINGS B.V.
BHA Group International Holdings B.V. is a holding corporation for the
Company's international businesses.  It is based in the Netherlands, which
maintains an extensive tax treaty network throughout the world.

LATIN AMERICA
BHA DO BRAZIL LTDA.
BHA do Brazil Ltda. ("BHA Brazil") is a Brazilian corporation that warehouses
and markets industrial air pollution control parts and services. BHA Brazil
stores the air pollution control parts in Sao Paulo, Brazil and sells them to
customers in Brazil and surrounding countries.

In addition to the office in Brazil, the Company supports the Latin American
operations through telemarketing and support services managed from its Kansas
City, Missouri headquarters.

ASIA
----
BHA GROUP PHILIPPINES, INC.
BHA Group Philippines, Inc. ("BHA Philippines") is located in Manila,
Philippines and operates as BHA's Asia-Pacific regional sales office to support
the export sales from the United States to customers in the Pacific Rim and
Australia.

BHA ENVIRONMENTAL TECHNOLOGY COMPANY, LTD.
BHA Environmental Technology Company, Ltd. ("BHA China") is a corporation
established in China. BHA China assembles and sells APC products and provides
after-sale services and relevant technical support to customers throughout China
and surrounding regions.

BHA GROUP INTERNATIONAL PRIVATE LIMITED
BHA Group International Private Limited ("BHA India") is an Indian corporation
that provides sales and service assistance to customers in India including
support for exported product sales from the Company's manufacturing units in the
United States.

BHA TECHNOLOGIES K.K.
BHA Technologies K.K. ("BHA Technologies Japan"), a Japanese corporation, is a
wholly-owned subsidiary of BHA Technologies, Inc. that markets ePTFE membrane
products for a wide variety of applications both within and outside the air
pollution control industry. BHA Technologies Japan also provides support for
BHA's non-ePTFE APC business in Japan.

                                      -5-
<PAGE>

COMPETITION

Based upon Dun & Bradstreet reports and other publicly available financial
information, the Company believes that it is a global leader in the APC
equipment aftermarket. A number of regional offices have been established in
Asia and Latin America. As a result of this movement into the international
market, the Company is facing increased competition from competitors in those
specific markets, as well as existing competitors from the U.S. and Europe.
Several of the Company's competitors are, or are part of, large integrated
companies, which have greater resources than the Company. The competition also
includes several dozen small to mid-size filter bag manufacturers that compete
in local and regional geographic markets. Generally, original equipment
manufacturers in the U.S. have not effectively competed in the aftermarket for
baghouses, but have been a significant factor in the aftermarket for
electrostatic precipitators.

The domestic market for electrostatic precipitators has been competitive in
recent years due largely to the utility industry, which has been restructuring
in response to deregulation. During the past year, tight energy supplies have
led to a surge in replacement parts and service business for ESPs. An ESP is the
prevalent piece of air pollution control equipment on coal-fired boilers for the
U. S. electrical utility industry. Due to tight supplies of electricity, many
customers in the industry have been focusing on increasing the capacity or
utilization of their coal-fired boilers while maintaining compliance with
environmental regulations. The electric utilities are looking to reduce downtime
and improve efficiency of their coal-fired generating capacity. The company
believes that it is well positioned in this market and is benefiting from
opportunities to work with these electric utility customers. Outside of the
U.S., it is important to note that electrostatic precipitators are currently
more prevalent than baghouses for use in air pollution control systems. The
Company continues to position itself for additional growth in the international
marketplace.

The market in which BHA Technologies competes is much less fragmented than the
APC business. The primary competitors include the industry leader, W. L. Gore,
which developed the process for expanded PTFE in 1958. Other competitors include
Tetratec and Nitto Denko. Competition is based upon brand name, quality,
innovation and pricing.

FACTORS AFFECTING EARNINGS AND STOCK PRICE

General Business Conditions
---------------------------
The current business environment around the world is challenging. Planning has
become more complex as the uncertainties and threats associated with war,
terrorist activities and a global recession must be considered. The Company is
not immune from these significant external factors and a serious business
downturn resulting from any of those factors would have a material adverse
impact on its operating results.

The Company continues to monitor the global business environment very closely
and its potential impact on BHA's business. While the current environment poses
a serious threat to near term operating results, the Company believes it is well
positioned in its markets to generate positive earnings and consistent cash
flows during a period of slower business. The Company will use its free cash
flows to invest in its business to strengthen its competitive position. The
following briefly summarizes a few of the Company's key strategies and
competitive advantages:

                                      -6-
<PAGE>

o    The Company is a global leader in the APC replacement parts and service
     market and is looking to expand market share through its ability to deliver
     value to its customers.
o    The Company has a stronger financial position than many of its competitors
     and will use its free cash flow to invest in its people, new products,
     technology and its common stock repurchase program.
o    The Company is a world leader in the supply of innovative filtration
     products. Its business includes a diverse product line across numerous
     filtration applications. The business is also diverse from a geographic and
     industry perspective.
o    The Company is working to expand these and other competitive advantages
     during this period of economic uncertainty.

Although the Company has confidence in its strategies and business plans, it is
important to note that there are a number of risk factors that could have a
material adverse impact on future results. These factors are discussed in more
detail below.

Domestic Air Pollution Control (APC) Segment
--------------------------------------------
U.S. Fabric Filter
The Company is the leader in the supply of replacement parts and service to U.S.
operators of fabric filter dust collectors. During the Company's fiscal year
ended September 30, 2001 ("fiscal 2001"), its sales were $86 million in this
market, representing a 5% decrease from the prior year. Industry data indicates
that the U.S. market for these products contracted as much as 20% during that
period. Factors contributing to the market decline include customer efforts to
reduce on-hand inventories, delays in spending for major equipment upgrades and
reduced plant utilization. For its fiscal year ending September 30, 2002
("fiscal 2002"), the Company will be focused on further expanding its share in
this market. Although the Company believes it will be successful in expanding
its market presence, a severe and protracted downturn in the U.S. economy would
have a material adverse impact on the Company's near-term operating results due
to the cyclical nature of many of the industries its customers operate in. Such
weakness in the U.S. market could result in a further decline in sales and
possibly gross margin compression due to competitive pressures in the
marketplace.

U.S. Electrostatic Precipitator (ESP)
The fiscal 2001 results in this area were very strong as sales of $36 million
represented a 29% increase over the prior year. The electric utility industry
represents the primary industry group serviced by this portion of the Company's
business. The Company believes it is a leader in this market. ESP's are the
primary air pollution control technology utilized on coal-fired boilers at
electric utilities. The Company's internal project tracking system indicates
that in the near-term there appear to be good opportunities for large project
work. Demand for the Company's products and services are influenced in part by
the price of coal relative to natural gas and other alternatives. Demand is also
influenced by regulatory pressure. The longer-term dynamics for both of these
factors appear to be favorable for the Company. Any shorter-term volatility
would impact near-term results. A substantial portion of the sales derived in
this area is fixed price work on major field installations that carry their own
sets of risks. Any decline in fiscal 2002 sales in this area relative to fiscal
2001 results or substantial project cost overruns on fixed-price work would have
a material adverse impact on the Company's short-term operating results.

                                      -7-
<PAGE>

U.S. Exports to Latin America and Asia
The Company exports fabric filter and ESP replacement parts and service to
customers in Latin America and Asia. During fiscal 2001, sales were $21 million,
up 5% from the prior year. Although the Company does not have a substantial
investment in property, plant and equipment in either of these regions, the
uncertainty associated with world events holds additional risks for this portion
of the business. Specifically, the economies of many of the countries BHA sells
to in Latin America follow closely the U.S. economy. A severe and protracted
downturn in the U.S. economy would negatively impact many of the countries the
Company serves throughout Latin America. With respect to Asia, the primary
concerns relate to a decline in business that could occur if tensions and
conflict in the region continue to escalate. In the event that business
conditions remain uncertain in Latin America or Asia for an extended period of
time, the large project portion of exports to these markets could decline. Such
a decline, would have a material adverse impact on the Company's operating
results.

Europe APC Segment
------------------
The Company's Europe APC Segment posted a substantial turnaround in operating
results from fiscal 2000 to 2001. Sales for this segment were $22 million in
fiscal 2001. Moving into fiscal 2002, a significant risk factor relates to the
potential softening of the market in Europe as part of an overall deterioration
of the global economy. Approximately 15% of Europe's fiscal 2001 sales relate to
ESP project work. A substantial portion of this work is for customers in North
Africa and the Middle East and could be negatively impacted by world events.
Another risk to the Europe APC segment would be any substantial or prolonged
strengthening of the U.S. dollar as many of the products and raw materials sold
to customers in this market are sourced from the U.S. Any one or combination of
the above noted factors could have a material adverse impact on the Company's
operating results.

BHA Technologies Segment
------------------------
Through BHA Technologies, the Company has established a business to supply ePTFE
membrane products for use in applications outside of air pollution control. BHA
Technologies reduced its pre-tax losses from $0.6 million in fiscal 2000 to $0.2
million in fiscal 2001. In fiscal 2001, sales by BHA Technologies to
non-affiliates were $10.8 million, up from $6.6 million in fiscal 2000. The
Company is focused on establishing through BHA Technologies a business segment
that provides it with an additional vehicle for higher technology products and
for long-term growth. In the near-term, eliminating losses and improving cash
flows within this business segment is a priority. Moving into fiscal 2002, BHA
Technologies' supply contract for the supply of HEPA rated vacuum filters has
been restructured, which will result in a reduction in gross margin dollars. The
Company also expects that competitive factors will put some pressure on gross
margins related to the sale of inter-company and third party APC roll goods.
Success in fiscal 2002 requires the establishment of several new sales channels
and the expansion of sales through relationships that were established in fiscal
2001. The Company expects to achieve this goal and generate modest positive
earnings for this segment in fiscal 2002.

The Company believes that its core competency with respect to third party sales
for ePTFE membrane products outside of air pollution control will be in the
areas of new product development and manufacturing. The Company believes that a
substantial portion of its future business will be transacted through supply
agreements with third parties. The Company will be responsible for the product
and manufacturing issues. Its customers will incorporate the




                                      -8-




<PAGE>



Company's products into other product offerings that will then be sold to third
parties. BHA Technologies' success in this regard is also tied in part to its
customers' success in delivering product through their supply chains. The nature
of this business will be to work with fewer customers on larger supply
agreements. The Company's future success is dependent upon its ability to
continue to develop, establish and maintain its existing and targeted new supply
arrangements. Failure to execute this strategy or the termination of a major
supply contract could have a material adverse impact on the Company's operating
results. Failure to execute its strategy could also impact the carrying value of
the Company's investment in BHA Technologies' property, plant and equipment.

Corporate
---------

The Company is in the process of implementing enterprise resource planning
("ERP") software for its primary air pollution control business. The planned
"Go-Live" for this project is the summer of fiscal 2002. During fiscal 2001, the
Company expended $2.2 million on this project of which $0.5 million was expensed
and $1.7 million has been capitalized. During fiscal 2002, the Company
anticipates spending an additional $3.3 million to $3.8 million. The objective
of the new information technology system is to improve BHA's profitability by
achieving a number of specific financial and operational measures. The goal of
the system is to improve working capital management and lower operating costs.
The new information technology system will also provide the Company with a
stable, long-term platform enabling the business to deliver value to its
customers through information sharing and electronic commerce as these issues
become more important in future periods.

ERP implementations are challenging initiatives that carry substantial project
risk in the areas of cost overruns, project delays and business interruption.
The Company has a number of risk management programs in place designed to
mitigate these risks. Notwithstanding these efforts, failure to properly
implement the new information technology systems could have a material adverse
impact on the Company's operating results.

Impact of Risk Factors on the Company's Outlook
-----------------------------------------------

The Company believes that its expectations for the first quarter of fiscal 2002
included in the "Outlook" section of "Management's Discussion and Analysis" of
this Annual Report on Form 10-K are reasonable. Achievement of those targets is
subject to certain risks and uncertainties including the above noted risk
factors and other risks described elsewhere in this report. Any of such risks
could cause the Company to fall short of its financial targets.

Such conditions may cause the Company to re-evaluate its longer-term strategies
with respect to certain product and market opportunities. In these instances, it
may be necessary to reduce expenses and take other steps to rationalize the
costs of these areas to make them profitable. These actions could result in
restructuring expenses that would impact future results.

PRODUCTS AND SERVICES

The Company believes it has the broadest product line in the air pollution
control equipment aftermarket. This, combined with its proprietary telemarketing
system, and database of customer equipment specifications enables it to respond
promptly to customer requests, thus providing it with a competitive advantage.

                                      -9-
<PAGE>

The Company manufactures and sells a wide variety of filter bags, replacement
parts and accessories for the industrial air pollution control equipment
aftermarket. Filter bags are manufactured by the Company from fabric purchased
in bulk from fabric manufacturers. The Company manufactures industry standard
bags, as well as bags for customer specific applications. Most filter bags are
produced from fiberglass, polyester, aramid, acrylic, and polypropylene fabrics.
A market shift towards higher efficiency filtration has led to increased usage
of filters that have ePTFE membrane applied to the fabric and other more
specialized materials. The Company's wholly-owned subsidiary, BHA Technologies,
manufactures the expanded PTFE membrane (BHA-TEX(R)) used on its filter bags and
elements. The Company is one of the few filter bag suppliers that manufactures
its own expanded PTFE membrane (see "Business"), which the Company believes
provides it a competitive advantage as it is able to control availability, raw
material costs, quality and product development. Baghouse replacement parts
include support cages for the filter bags, clamps, spring tensioning systems,
continuous particulate monitoring systems and gaskets. Electrostatic
precipitator replacement parts include collecting plates, wires, discharge
electrodes, transformer/rectifiers, rappers and electronic controls.

In addition to standard replacement parts, the Company continues to aggressively
introduce new products and accessories that enhance the performance of a dust
collection system. These new products include continued enhancements to the
Company's electrical products for both baghouses and precipitators and the
introduction of pleated media filter elements and evaporative gas cooling
product lines. The Company is also uniquely positioned for potentially
significant revenues from conversions of precipitators to baghouses or cartridge
collectors. With expertise in each type of air pollution control equipment, BHA
can work with its customers to maximize the efficiency of their air pollution
control to meet regulatory standards or to increase plant operating
efficiencies. Internal product development continues to be supplemented with
strategic acquisitions such as the Drayton Corporation's sound-off acoustic
cleaner product line acquired in January 1999. By combining the Drayton horn
line with the Company's other acoustic products, BHA now has the most
comprehensive line of acoustic horns in the industry.

Product profitability varies considerably over different product groups, with
standard products typically providing a lower profit margin than replacement
parts and accessories.

The Company's business also includes the maintenance, conversion and rebuilding
of industrial air pollution control equipment through a network of independent
contractors and its own service crews. A comprehensive safety program enables
both the Company and customer to control costs from a risk management
perspective. Conversion and rebuilding services involve retrofitting a partial
or entire baghouse or electrostatic precipitator to restore it to original
operating parameters or improve overall performance. BHA is capable of supplying
a variety of other services specifically fitted to its customers' requirements,
including preventive maintenance, system/equipment analysis, inspections,
supervision of customer personnel and training. Information gathered during
preventive maintenance, analysis and inspections is stored in the Company's
database for future reference, and thus is a valuable source of important
customer information. In addition, knowledge gained in solving one customer's
problems is stored in the Company's database and made available on-line to the
Company's salespeople to enable them to respond promptly to similar problems
encountered by other customers. BHA believes it is one of the world leaders in
providing these services.

                                      -10-
<PAGE>

BHA Technologies provides BHA-TEX fabrics to BHA Group and to other air
pollution control companies for use in fabric filter bags and pleated media
filter elements. Additionally, BHA Technologies has developed numerous other
applications for its ePTFE membrane. These include outerwear and footwear for
consumers, as well as for military and industrial users. Other product
applications include High Efficiency Particulate Air filtration (HEPA) rated
vacuum cleaner filters, clean room apparel, allergen barriers such as mattress
encasings and other industrial applications.

CUSTOMER BASE

The Company's APC customer base is diverse both industrially and geographically,
and includes customers in virtually all sectors of the industrial economy.
International markets include Canada, Europe, Latin America, the Near East, the
Pacific Rim and China. The Company's products and services are used in major
industrial environments such as cement kilns, asphalt plants, steel and iron
foundries, aluminum and copper smelters, rock and gypsum dryers, chemical
plants, grain and food processing plants, refuse to energy plants, waste and
hazardous waste incinerators and electric utilities, as well as many other
areas. In recent years, there has been an emergence of multinational companies
expanding their worldwide presence in BHA's traditional target industries.
Management believes that over the longer term, this trend could have a positive
impact on its international business.

The vast majority of the Company's baghouse sales represent small transactions
with numerous customers. Precipitator replacement parts sales frequently
accompany conversion or rebuild services. No customer accounted for more than
10% of the Company's annual sales during any of its last three fiscal years. The
Company does not believe that it is dependent upon any single customer or group
of customers and has no unusual geographical or industry concentrations of
business or credit risk.

The Company established its APC business with a strategy of marketing and
selling directly to the end user of the product. By contrast, BHA Technologies
does not sell to the end user of the product. Strategic alliances have been
formed with major companies in several markets. Under these relationships, BHA
Technologies is the exclusive supplier of ePTFE membrane goods to its partners.
These partners incorporate the membrane into their products which are then sold
to a third party. The Company's strategic alliance partners include Mitsui & Co.
Ltd. and Radici Tessuti SPA for consumer apparel, Tiong Liong Industrial Co.,
Ltd. for footwear, Fibrotek Industries, Inc. for industrial apparel and Salu,
Inc. for allergen barrier products.

                                      -11-
<PAGE>

SALES AND MARKETING

One of the Company's principal competitive APC advantages is its proprietary
telesales system, the core of which is a computer database containing detailed
information on over 135,000 pieces of pollution control equipment (baghouses and
electrostatic precipitators) at over 65,000 accounts. Because of the large
number of different original equipment manufacturers and varying maintenance
procedures, many pieces of customer equipment have unique features. Included in
the Company's database is information on the location of the equipment; a phone
contact for the individuals responsible for maintaining the equipment; the type
of equipment (by manufacturer, design and unique attributes); date of
installation; fabric type, size and design of filter bags used; when the bags
were last serviced; additional accessories that were installed; application and
temperature requirements; as well as other detailed pieces of useful information
about the equipment and the customer. This information has been gathered since
the Company was established in 1975, and is continually updated following
customer calls, site inspections and maintenance jobs.

The ongoing population of the customer database is an important part of the
Company's sales strategy. In recent years, a substantial portion of the growth
in the customer database relates to the international marketplace and segments
of the U.S. market where the Company's newer fine filtration products have
application.

The Company keeps information in a central computer database that is accessed
on-line by its telesales representatives. The computer tracks customer calls and
pending orders, which helps make efficient use of the representative's time.
Each day, a list of the most important customer calls is provided to the
representative. This list includes contracts and orders in negotiation, as well
as reminders for calls to customers that have not been serviced for some time.
Once an order is taken, the information is routed electronically to the
operations department where invoices and contracts are generated. Invoice and
technical data about the filter bags, cages, precipitator replacement parts and
accessories is sent via computer connection to the Company's manufacturing
facilities. There the bags are sewn, the support cages and precipitator
replacement parts are manufactured, and the accessories are consolidated for
shipment. The order is packaged and sent to the customer according to a priority
schedule.

Each telesales representative is furnished with data to evaluate their
performance and enable them to focus on high opportunity sales calls. Historical
sales data is made available to each telesales representative showing (i)
performance by the month and year toward targeted goals (broken down by product
category) for sales volume and profit margin, (ii) the sales history for each
customer, as well as the sales potential for such customer, and (iii) a summary
of each contact with each customer and its results, including notes of any
useful information for further follow-up opportunities. The Company believes
that the system provides effective feedback to telesales personnel to meet their
sales goals.

In addition to its use on a customer-by-customer basis, the Company's telesales
system and database is used to develop industry statistics and analyze market
trends. Information is also extracted for marketing and advertising campaigns
and new product evaluations.

GOVERNMENT REGULATION AND INITIATIVES

The Company is not subject to direct environmental protection regulation with
respect to the manufacture or sale of its products other than regulations
applicable to manufacturers




                                      -12-




<PAGE>



generally. The Company's customers are required to meet national primary and
secondary ambient air quality standards for specific pollutants, including
particulate matter, which have been promulgated under the Clean Air Act, as
amended (the "Act"). Title V, the cornerstone of the Act, establishes a national
operating permit program. Title V requires appropriate and sufficient record
keeping, monitoring and reporting requirements to assure compliance with the
standards established by the permitting authorities. Also included in the Act is
the Maximum Achievable Control Technology ("MACT") program. Under MACT, the EPA
develops hazardous air pollutant emissions limitations for various categories of
pollutants that sharply reduce allowable emissions. The states have primary
responsibility for implementing these standards, and in some cases, have adopted
standards which are more stringent than those adopted by the Environmental
Protection Agency ("EPA") under the Act. Revisions to the Act have expanded the
type of emissions monitored and provided the regulatory agencies more authority
to enforce permits and issue fines. These regulations will impact producers of
cement, aluminum, chemicals, steel and other industries. It is anticipated that
efforts by industry to comply with MACT standards may increase demand for the
Company's fine filtration and emissions monitoring products.

In November 1996, the EPA announced its intentions to promulgate new National
Ambient Air Quality Standards (NAAQS) for the control of particulate matter
("PM"), which includes lead, ground-level ozone, sulfur dioxide, nitrogen
dioxide, carbon monoxide and other fine particulate matter. Currently, the
states do not monitor for small particulate (less than 2.5 microns), therefore
very little data has been collected to determine which areas meet or do not meet
the revised PM-fine standards. On December 1, 1996, the EPA proposed new and
more stringent monitoring requirements for PM-2.5 in conjunction with the
proposed NAAQS for fine particles. On July 18, 1997, the EPA further revised
these standards and since that time, PM-2.5 monitoring networks are being
installed and each state will have to prepare a State Implementation Plan that
documents its approach to meeting the new NAAQS. The network of required
monitors will be phased in over a three to four year period. When considering
the proposed regulations, the industries most likely to be impacted by the
changing air quality standards are the utility, automotive, chemical, petroleum
and manufacturing industries. The Company believes that the growing awareness of
the importance for better air quality and the adoption of the proposed
regulations are positive long-term indicators of the Company's growth potential.
Further, the Company is not aware of any likely statutory changes that may have
a negative impact on its business.

Additionally, the Company manufactures and sells its products in Europe, Latin
America, Canada, the Near East, the Pacific Rim and China. The Company's
domestic and international customers are required to operate in compliance with
certain standards established and promulgated by their respective permitting
authorities.

BACKLOG

On September 30, 2001, the Company's backlog of orders was $46.4 million
compared to $52.7 million at September 30, 2000 and $47.2 million at September
30, 1999. The lower backlog primarily relates to a decline in orders for fabric
filter parts and services in the U.S. which results from the economic
environment as well as an increased tendency of the Company's customers to
provide shorter lead times with their orders. This decline was partly offset by
a strong backlog for the domestic ESP group. The backlog in Europe declined
slightly as the prior year numbers included an order for a significant ESP
rebuild project. BHA Technologies experienced a decline in its backlog related
to a restructuring of its supply agreement with a vacuum cleaner manufacturer.

                                      -13-
<PAGE>

EMPLOYEES

As of September 30, 2001, the Company employed approximately 1,050 persons, none
of whom are represented by labor unions. The Company restricts access to its
database and customarily requires its employees having access to proprietary
systems and information to execute confidentiality agreements and covenants not
to compete. The Company believes that its relations with its employees are good.

PATENTS, TRADEMARKS, COPYRIGHTS, AND PROPRIETARY INFORMATION

The Company owns patents, trademarks, copyrights, and proprietary information
and has pending applications for patents and trademarks for parts, accessories,
and electrical controls for industrial air pollution control equipment and
non-air pollution control markets. The Company considers such patents,
trademarks, copyrights, and proprietary information and applications for patents
and trademarks to be important. The business of the Company, however, is not
dependent on such patents, trademarks, copyrights, and proprietary information.
Patents owned by the Company expire at various dates from 2002 through 2016.

                                      -14-
<PAGE>


ITEM 2 - PROPERTIES

CORPORATE HEADQUARTERS
The Company owns the facility in Kansas City, Missouri, which serves as its
Corporate Headquarters (approximately 66,000 square feet).

The table below provides certain information with respect to the domestic and
foreign properties owned and leased by the company.

<TABLE>
<CAPTION>
Location                                               Use                       Owned/Leased            Square Feet
--------                                               ---                       ------------            -----------
<S>                                           <C>                                <C>                     <C>
Kansas City, Missouri                         Corporate Headquarters                Owned                    66,000
Lee's Summit, Missouri (7)                     Production/Warehouse                Leased                    37,500
Slater, Missouri (1)                                Production                      Owned                   170,000
Slater, Missouri (7)                                Production                      Owned                    28,000
Slater, Missouri (1)                                Warehouse                       Owned                    10,000
Slater, Missouri (2)                            Leased to Supplier                  Owned                    54,000
Salisbury, Missouri (1)                             Production                      Owned                    20,000
Salisbury, Missouri (1)                             Production                      Owned                    65,000
Folkston, Georgia (3)                               Production                      Owned                   105,000
Newport News, Virginia (4)                          Production                     Leased                    21,000
Fredericksburg, Virginia (5)                        Warehouse                      Leased                     3,200
Covington, Kentucky (5)                             Warehouse                      Leased                     5,000
Germany (6)                                      Office/Warehouse                   Owned                    30,000
Switzerland (1)                                 Office/Production                  Leased                    20,000
Philippines (6)                                    Office Space                    Leased                     1,000
China (6)                                    Office/Product Assembly               Leased                    17,000
India (6)                                          Office Space                    Leased                     3,000
Brazil (6)                                       Office/Warehouse                  Leased                     5,100
Spain (1)                                       Office/Production                  Leased                    26,300
Japan (6)                                          Office Space                    Leased                     1,000
</TABLE>

1)       Operations include the manufacture of traditional and pleated filter
         elements, spot welding of metal cages, and warehouse and assembly
         operations.
2)       Leased to a raw material supplier of the Company.
3)       Operations include the manufacture of parts and accessories for
         electrostatic precipitators.
4)       Operations include the manufacture and assembly of computer based
         voltage control systems for electrostatic precipitators.
5)       Warehouse and office space for the Company's field service crews.
6)       Warehouse and office space for sales and service support in certain
         international markets.
7)       Operations include the manufacture of ePTFE membranes. The Lee's Summit
         facility is subject to a capital lease related to an industrial revenue
         bond obligation. The Slater facility is owned by the Company.

The facilities and office space owned and leased by the Company are considered
adequate for its present needs and, with modest ongoing capital expenditures,
are suitable for any foreseeable expansion.

ITEM 3 - LEGAL PROCEEDINGS

The Company is involved in no legal proceedings other than ordinary litigation
incidental to the Company's business.

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

No matters were submitted during the fourth quarter of fiscal year ended
September 30, 2001 to a vote of security holders through the solicitation of
proxies or otherwise.

                                      -15-
<PAGE>


PART II
-------

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS

The Company's common stock is traded in the over-the-counter market and quoted
under the symbol "BHAG" on the NASDAQ National Market ("NASDAQ").

The information set forth in response to Item 201 of Regulation S-K is included
in this Form 10-K in Part II Item 8, Financial Statement, and Supplementary Data
as Note 10, Quarterly Financial Data (Unaudited) ("Note 10"), and is
incorporated by reference in partial response to this Item 5. The prices set
forth in Note 10 do not include commissions and do not necessarily represent
actual transactions. The closing price of the Company's common stock on the
NASDAQ on October 26, 2001 was $15.00.

HOLDERS
As of October 26, 2001, there were 8,816,292 shares issued and 2,710,017 shares
in treasury. At October 26, 2001, the Company had 6,106,275 shares outstanding
that were owned by approximately 2,500 beneficial owners.

DIVIDENDS
During the years ended September 30, 1999, 2000 and 2001, the Company declared
and paid quarterly dividends each year aggregating $.12 per share to
shareholders. The Company's Board of Directors ("Board of Directors") has since
declared a dividend of $.03 per share, payable on November 26, 2001 to
shareholders of record on November 16, 2001.

The Company does not have a formal policy for paying cash dividends on its
stock. Future determinations concerning dividends will be made, at the
discretion of the Board of Directors, based upon the Company's earnings, its
capital requirements, its financial condition, restrictions placed against
payment of dividends under any financing agreements and such other factors as
the Board of Directors, at its discretion, may from time to time deem relevant.

RECENT SALES OF UNREGISTERED SECURITIES
The company has not sold any equity securities during the reporting period that
were not registered under the Securities Exchange Act of 1933, as amended.

TREASURY STOCK
The Company has periodically repurchased shares of BHA Common Stock since an
initial stock repurchase plan was authorized by the Board of Directors in 1994.
In the aggregate, the Company has repurchased 2,480,331 shares out of a total of
3,500,000 shares authorized by the Board of Directors. During fiscal 2001,
485,287 shares were repurchased at an average price of $13.58.


                                      -16-
<PAGE>


ITEM 6 - SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth in the table below have been
derived from the consolidated financial statements of the Company and related
notes thereto. The selected income statement data for the years ended September
30, 1999, 2000 and 2001, and the selected balance sheet data as of September 30,
2000 and 2001, are derived from the consolidated financial statements of the
Company and the related notes thereto, which have been audited by KPMG LLP,
independent auditors and which are included in Item 8 in this Form 10-K. This
data should be read in conjunction with and is qualified by reference to,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in Item 7 in this Form 10-K and the Company's audited
consolidated financial statements, including the related notes and the
independent auditors' report thereon and the other financial information
included in Item 8 in this Form 10-K.

<TABLE>
<CAPTION>
                                                                         Years Ended September 30,
                                                          2001         2000         1999*        1998        1997
                                                          ----         ----         -----        ----        ----
<S>                                                    <C>          <C>          <C>           <C>         <C>
                                                                   (In Thousands, Except per Share Data)
Selected Income Statement Data
   Net Sales                                           $ 174,923    $164,550     $159,047      $ 145,494    $133,407
   Gross Margin                                           52,688      49,351       41,940         44,033      40,786
   Operating Expense                                      40,173      37,894       38,297         31,853      28,196
   Interest Expense, Net                                   1,614       1,951        1,984          1,423       1,009
   Earnings Before Income Taxes                           10,901       9,506        1,659         10,757      11,581
   Net Earnings                                        $   7,223    $  6,016     $  1,084      $   7,332  $    8,101
   Basic Earnings per Share                            $    1.17    $    .91     $    .15      $    1.02  $     1.12
   Weighted Average Shares Outstanding--Basic              6,199       6,601        7,028          7,171       7,226
   Diluted Earnings per Share                          $    1.11    $    .90     $    .15      $     .97  $     1.06
   Weighted Average Shares Outstanding--Diluted            6,482       6,672        7,134          7,552       7,676

Selected Balance Sheet Data
   Working Capital                                     $  45,236    $ 42,275     $ 43,285      $  42,223     $32,132
   Total Assets                                          111,162     112,232      108,148        107,574      87,605
   Current Portion of Long-Term Debt and Capital Lease
     Obligations                                           2,499       2,669        2,922          3,988          62
   Long-Term Debt (Less Current Portion)                  17,769      17,638       20,345         23,029      12,415
   Capital Lease Obligations (Less Current Portion)        6,637       7,200        7,600             --          --
   Shareholders' Equity                                   61,134      59,807       58,892         61,953      56,918
   Cash Dividends Declared per Common Share            $     .12    $    .12     $    .12      $     .12  $      .11
</TABLE>

*Operating expenses for the year ended September 30, 1999 include $2,167,000 of
restructuring charges ($1,408,000 after taxes or $0.20 per share). Additionally,
cost of goods sold for the year ended September 30, 1999 includes unusual
charges of $4,200,000 ($2,730,000 after taxes or $0.38 per share).

                                      -17-
<PAGE>


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

GENERAL

For purposes of this "Management's Discussion and Analysis" as well as the
segment reporting information included in Note 9 to the Audited Financial
Statements, the Domestic Air Pollution Control ("Domestic APC") segment
represents all APC business for which the products or services are sold or
managed from the United States. Generally, this includes revenues to customers
in the U.S. and exports to customers in Canada, Latin America, and Asia. The
Europe APC segment represents all business for which the products or services
are sold or managed primarily from Europe. Such revenues are typically generated
in Europe and Northern Africa. BHA Technologies, a subsidiary engaged in the
production and sale of ePTFE membrane for both APC and non-APC applications,
represents BHA's third business segment.

FISCAL 2001 COMPARED TO FISCAL 2000
-----------------------------------

NET SALES
Consolidated net sales during the year ended September 30, 2001 ("fiscal 2001")
were $174.9 million compared to $164.6 million during the year ended September
30, 2000 ("fiscal 2000"), an increase of 6%. Sales in the Domestic APC segment
increased 3% from $137.9 million to $142.4 million. Sales in the Europe APC
segment increased 8% from $20.1 million to $21.7 million. The BHA Technologies
business segment generated fiscal 2001 third party sales of $10.8 million
compared to prior year sales of $6.6 million.

Within the Domestic APC segment, fabric filter replacement parts and service
sales to customers in the U.S. declined 5% to $85.6 million. The decline in
these product lines was the result of the economic contraction in the industrial
and manufacturing sectors of the U.S. economy and the decision by many customers
to defer expenditures for capital improvements and increases in production
capacity. The Company's domestic ESP sales increased 29% from $28.0 million to
$36.1 million as this portion of the business benefited from favorable business
conditions within the U.S. electric utility market for operators of coal-fired
boilers. Export sales increased 5% to $21.7 million as shipments into Asia and
the Pacific Rim more than offset a modest decline in shipments to Latin America
which resulted from lack of major project work in that region.

The Europe APC segment's sales increased 8% when expressed in U.S. dollars.
Sales for the year rose 20% on a local currency basis. The sales growth
primarily reflects work completed on two large ESP projects during the current
fiscal year together with modestly higher shipments of the Company's fabric
filter products.

Shipments of ePTFE membrane from BHA Technologies to third party customers
increased by 65% to $10.8 million. The increase reflects higher shipments of
HEPA rated filters to a major consumer products manufacturer under a contract
which commenced in the third quarter of fiscal 2000. Additional increases relate
to sales of membrane for apparel to be sold under the eVENT(R) brand name as
well as membrane sold for use in non-consumer apparel applications and clean
room products.

                                      -18-
<PAGE>

GROSS MARGIN
Consolidated gross margin was 30.1% in fiscal 2001 compared to 30.0% in fiscal
2000. In the Domestic APC segment, margins declined slightly. Despite the
adjustments made by the Company to its cost structure in the fabric filter
production facilities, the lower production volumes resulted in higher per unit
costs for these products. Gross margins improved in the Europe APC segment due
to the improved plant utilization. In the BHA Technologies segment, gross
margins declined slightly as a result of higher costs related to a second
manufacturing facility that was brought on line during the year and which was
not fully utilized.

OPERATING EXPENSES
Selling and advertising expenses were $20.8 million (11.9% of sales) in fiscal
2001 compared to $19.7 million (12.0% of sales) in fiscal 2000. General and
administrative expenses were $19.4 million (11.1% of sales) in fiscal 2001
compared to $18.2 million (11.0% of sales) in fiscal 2000. In total, operating
expenses increased 6.0% from $37.9 million to $40.2 million. Although the
personnel levels in fiscal 2001 were slightly lower than the prior year, there
were increases in operating expenses relative to per person salaries and health
care costs. Additionally, the Company incurred higher costs in its information
technology department including approximately $0.5 million related to training
and consulting for the enterprise resource planning software which will be
installed in fiscal 2002. The provision for bad debt expense was increased by
$0.3 million in fiscal 2001 as compared to the prior year as a result of the
higher sales together with the potential impact of the weakening U.S. economy on
the Company's industrial customers' ability to pay.

INTEREST EXPENSE
Interest expense for fiscal 2001 was $1.8 million compared to $2.0 million in
fiscal 2000. The decline was the result of a decrease in average borrowings from
$32.7 million to $30.0 million together with lower average interest rates which
were approximately 6.2% annually in fiscal 2000 compared to 5.8% in fiscal 2001.

EARNINGS BEFORE INCOME TAXES
Pre-tax earnings for the Domestic APC segment were $10.4 million (7.3% of sales)
in fiscal 2001 compared to $10.9 million (7.9% of sales) in fiscal 2000. The
decline in profitability for this segment is the result of lower profits in the
domestic fabric filter business resulting from the 5% decline in sales. This was
partially offset by improved profits from ESP and export sales.

The Europe APC segment generated pre-tax earnings in fiscal 2001 of $0.7 million
compared to a pre-tax loss of $0.8 million in fiscal 2000. Of the improvement,
approximately $0.6 million was the result of foreign exchange as the Company
incurred exchange rate gains in fiscal 2001 of approximately $0.2 million and
exchange rate losses of approximately $0.4 million in fiscal 2000. The balance
of the improvement was the result of the 20% increase in sales, expressed in
local currencies, which were generated with substantially the same overhead
structure.

BHA Technologies' pre-tax loss was $0.2 million in fiscal 2001 compared to a
pre-tax loss of $0.6 million in fiscal 2000. During fiscal 2001, sales increased
to $10.8 million from $6.6 million in the prior year. The cost structure also
increased as a second manufacturing facility was brought on line during the
year.

                                      -19-
<PAGE>

INCOME TAXES
The effective income tax rate was 33.7% in fiscal 2001 compared to 36.7% in
fiscal 2000. The effective tax rate in 2001 was lower than the statutory rate
due to credits for research and development, tax benefits on export sales and
net operating loss carry-forwards utilized by certain foreign subsidiaries. The
fiscal 2000 rate was higher than the Company's historical rate due to losses on
certain foreign subsidiaries for which the Company did not recognize any tax
benefits.

NET EARNINGS
Net earnings were $7.2 million ($1.11 per diluted share) in fiscal 2001 compared
to $6.0 million ($0.90 per diluted share) in fiscal 2000. The improved earnings
were the result of the turn-around in Europe and lower losses in BHA
Technologies combined with reduced interest expense. Improved earnings per share
were also partially the result of fewer average shares outstanding. Weighted
average common and common equivalent shares outstanding decreased from 6.7
million shares to 6.5 million shares due common stock repurchases.

FISCAL 2000 COMPARED TO FISCAL 1999
-----------------------------------

Consolidated net sales during fiscal 2000 were $164.6 million compared to $159.0
million during the year ended September 30, 1999 ("fiscal 1999"), an increase of
3%. Sales in the Domestic APC segment increased 0.6% from $137.2 million to
$137.9 million. Sales in the Europe APC segment were essentially unchanged at
$20.1 million for each fiscal year. The BHA Technologies business segment
generated fiscal 2000 third party sales of $6.6 million compared to prior year
sales of $1.8 million

Within the Domestic APC segment, fabric filter replacement parts and service
sales to customers in the U.S. grew 12% to $90.3 million, and export sales
increased 11% to $19.7 million. Export sales into Latin America increased 8% led
by higher sales of fabric filter replacement parts. Shipments to the Pacific Rim
and Asia also increased as the economies in those markets showed some signs of
improvement. Sales of fine filtration products were especially strong across
both the Company's domestic and international markets. The strong growth in
these portions of the business was largely offset by a $10.6 million sales
decline in domestic ESP parts and services. The decline in ESP sales was
anticipated as fiscal 1999 included a number of larger rebuild projects.

Sales for the Europe APC segment on a U.S. dollar basis were essentially
unchanged. Expressed in local currencies, sales of the Europe APC segment
increased 14%. Within the BHA Technologies segment, the noted increase in sales
was largely driven by a multi-year contract to supply high efficiency (HEPA)
filters to a major household vacuum cleaner manufacturer.

GROSS MARGIN
Consolidated gross margin was 30.0% of sales in fiscal 2000 compared to 26.4% in
fiscal 1999. Excluding unusual charges of $4.2 million, the fiscal 1999 gross
margin was 29.0%. The higher gross margin percentage in fiscal 2000 reflects an
improved mix of business emphasizing the Company's fine filtration products.
Increased sales volume also resulted in improved utilization of the Company's
fabric filter and ePTFE membrane production facilities. The noted gross margin
percentage improvement was offset in part by a decrease in the utilization of
ESP production facilities relating to the decline in sales volume of large
rebuild projects.


                                      -20-


<PAGE>

OPERATING EXPENSES
Selling and advertising expenses were $19.7 million (12.0% of sales) in fiscal
2000 compared to $20.2 million (12.7% of sales) in fiscal 1999. General and
administrative expenses were $18.2 million (11.0% of sales) in fiscal 2000
compared to $15.9 million (10.0% of sales) in fiscal 1999. Fiscal 1999 operating
expenses also included $2.2 million in restructuring charges. In total,
operating expenses exclusive of restructuring items increased 4.9% from $36.1
million to $37.9 million. The increase in operating expenses in part relates to
higher compensation and retirement plan funding costs that are tied to the
overall improvement in the results of the business. During fiscal 2000, the
Company also incurred incremental consulting expenses relating to an information
technology initiative and costs associated with foreign exchange losses
resulting from the weakening Euro.

INTEREST EXPENSE
Interest expense for fiscal 2000 was $2.0 million compared to $2.1 million in
fiscal 1999. The decline was the result of lower borrowings which more than
offset increasing interest rates. Strong cash flows during the year enabled the
Company to reduce the amounts outstanding under its bank lines. The majority of
the Company's borrowings are from banks at variable interest rates. The
Company's weighted average cost of borrowing during the year increased as U.S.
interest rates rose.

INCOME TAXES
The effective income tax rate was 36.7% in fiscal 2000 compared to 34.7% in
fiscal 1999. The higher income tax rate was the result of losses by certain
foreign subsidiaries for which the Company did not recognize income tax benefits
during the year.

NET EARNINGS
Net earnings were $6.0 million ($0.90 per diluted share) in fiscal 2000 and $1.1
million ($0.15 per diluted share) in fiscal 1999. The improved earnings was the
result of the higher sales and improved gross margins addressed above together
with the elimination of the adverse impact that restructuring and unusual
charges had on fiscal 1999 results. Weighted average common and common
equivalent shares outstanding decreased from 7.1 million shares to 6.7 million
shares primarily due to treasury stock repurchases.

OTHER
-----

The U.S. inflation rate grew at a moderate pace during fiscal 2001. BHA believes
that its business is not affected by inflation except to the extent the economy
in general is affected.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Net working capital was $45.2 million at September 30, 2001 compared to $43.3
million at September 30, 2000. The current ratio was 3.0 in fiscal 2001 compared
to a current ratio of 2.8 in fiscal 2000. Cash provided by operating activities
was $16.5 million in fiscal 2001 compared to $15.3 million in fiscal 2000. The
cash flow provided by operating activities in fiscal 2001 reflects net earnings
of $7.2 million combined with depreciation and amortization of $5.8 million.
Additionally, reductions in accounts receivable and inventories generated
additional cash from operations which was partially offset by lower accounts
payable and income tax accruals.


                                      -21-
<PAGE>

Investing activities have resulted in a net use of cash during each of the past
three years. Capital expenditures were $4.4 million, $4.5 million, and $5.8
million, in fiscal 2001, 2000, and 1999, respectively. Capital expenditures over
the past three years have been used to expand capacity for ePTFE membrane,
invest in improved information systems, and develop new products and increased
manufacturing capacity for BHA's APC products. In fiscal 2000, the Company
received $1.1 million from the sale of assets relative to the Allergydirect.com
division of BHA Technologies. Additional investments made in recent years
include the acquisition of product rights relative to Drayton's sound-off
acoustic cleaner product line in 1999.

During fiscal 2001, the Company used $7.4 million for financing activities
including $6.6 million to repurchase BHA common stock and $0.7 million for the
payment of cash dividends. The Company also repaid $0.6 million in borrowings,
net. During fiscal 2000, the company used $7.8 million for financing activities
including $3.6 million to repurchase BHA common stock and $0.8 million for the
payment of cash dividends. The Company also repaid $3.4 million in borrowings,
net. During fiscal 1999, the Company used a nominal amount of cash for financing
activities as cash generated from operations was generally sufficient to support
the Company's investing activities. The incremental borrowings of $3.9 million
during fiscal 1999 were largely used to repurchase BHA common stock.

Cash balances, including short-term investments increased from $3.9 million at
September 30, 2000 to $9.5 million at September 30, 2001.

At September 30, 2001, BHA had unused lines of credit of $15.2 million. The debt
structure includes commitments for: an $18.0 million revolving credit facility
maturing on April 30, 2004; $11.9 million under an amortizing term loan with a
final maturity in 2006; a European revolving credit facility of $5.0 million
with a maturity on April 30, 2004; and a capital lease related to an industrial
revenue bond transaction for $7.2 million with annual sinking fund payments and
a final maturity in 2018.

The domestic term loans and revolving credit facility include financial
covenants regarding minimum net worth, minimum fixed charge coverage ratios, and
maximum borrowing to EBITDA ratios. The Company was in compliance with all such
covenants at September 30, 2001. With the exception of the capital lease
transaction, no assets of the Company are pledged to secure any indebtedness.
BHA Group Holdings, Inc. and its primary U. S. affiliates have guaranteed the
European revolving credit facility. The company believes that cash flows from
operations and available credit lines will be sufficient to meet its capital
needs for the foreseeable future.

OUTLOOK
-------

The Company is focused on achieving consistent earnings growth and increasing
returns to its shareholders. Its specific longer-term financial goals are as
follows:

o        Increase compounded earnings per diluted share at a 12% to 15% annual
         rate over time.
o        Increase return on average equity to 15% by fiscal 2004. Moving beyond
         fiscal 2004, the longer-term goal is a 20% return on average equity.

Economic conditions around the world are challenging as businesses are faced
with the uncertainties and threats associated with war, terrorist activities and
the current recession. The Company is not immune from these significant external
factors and a substantial downturn in



                                      -22-

<PAGE>


business resulting from any of the above noted factors would negatively impact
financial results. The Company's record fiscal 2001 earnings per diluted share
represented a 23% increase over the previous year. Although the Company has
confidence in its business strategies and believes that its longer-term earnings
growth rate targets are achievable, it remains cautious about near-term
operating results.

The company does not believe it is appropriate to provide specific guidance with
respect to a range of sales or profits for fiscal 2002. Management anticipates
that sales and meaningful profit growth during the upcoming fiscal year will be
difficult and plans to continue to proactively manage the cost side of its
business. Although visibility with respect to future results is a challenge, the
Company expects to operate profitably, maximize cash flows and execute
strategies to strengthen its competitive position across key business lines.
Management believes that BHA is well positioned to weather a global recession
and emerge from it stronger than its competitors due to its diverse product
offerings, global presence and strong financial position.

FIRST QUARTER OF FISCAL 2002
o    Consolidated net sales will likely be lower than the first quarter of
     fiscal 2001 by as much as 5%
o    Earnings per diluted share are expected to be in the range of $0.24 to
     $0.29 before the impact of the $1.2 million pre-tax charge related to
     adoption of SFAS No. 142

IMPACT OF SFAS NO. 142
o    As discussed in more detail below, the Company will adopt Statement of
     Financial Accounting Standard (SFAS) 142 "Accounting for Goodwill and Other
     Intangible Assets" during the first quarter of fiscal 2002.
o    In the first quarter, the Company will recognize a pre-tax charge of $1.2
     million related to impairment of goodwill in its Europe APC segment. This
     charge will be presented as the cumulative effect of a change in accounting
     principle.
o    Amortization expense related to goodwill and other intangibles is expected
     to decrease by approximately $0.6 million in fiscal 2002 as compared to
     fiscal 2001 as a result of implementing SFAS 142.

Readers should refer to "Factors Affecting Earnings and Share Price" and other
information included in this Annual Report on Form 10-K.

NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standard (SFAS) No. 142. "Accounting for
Goodwill and Other Intangible Assets" was issued in July 2001 and must be
adopted by the Company in either the year beginning October 1, 2001 or 2002.
SFAS No. 142 will require that goodwill and intangible assets with indefinite
useful lives no longer be amortized, but instead tested for impairment at least
annually in accordance with the provisions of SFAS No. 142. This statement will
also require that intangible assets with estimable useful lives be amortized
over their respective estimated useful lives and reviewed for impairment in
accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
to be Disposed of.

The Company has determined that it will adopt SFAS No. 142 effective October 1,
2001. As such, it will be required to reassess the useful lives and residual
values of all intangible assets acquired, and make any necessary amortization
period adjustments by the end of its first fiscal





                                      -23-

<PAGE>

quarter at December 31, 2001. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
SFAS No. 142 prior to December 31, 2001. Any impairment loss will be measured as
of the date of adoption and recognized as the cumulative effect of a change in
accounting principle in the first interim period.

In connection with the SFAS 142 transitional goodwill impairment evaluation, the
Statement requires that the Company perform an assessment of whether there is an
indication that goodwill is impaired as of the date of adoption. To accomplish
this, the Company must identify its reporting units and determine the carrying
value of each reporting unit by assigning the assets and liabilities, including
the existing goodwill and intangible assets to those reporting units as of the
date of adoption. The Company has performed this evaluation and has determined
that the carrying value of its Europe APC reporting unit exceeds it fair value
and as such the related goodwill is impaired. As a result, the Company
anticipates recognizing a pre-tax charge of approximately $1.2 million during
the quarter ending December 31, 2001 as the cumulative effect of the change in
accounting principle.

As of the date of adoption, the Company has unamortized and unimpaired goodwill
of $4.0 million, all of which relates to its Domestic APC reporting unit.
Additionally, it has other unamortized intangible assets with indeterminative
lives totaling $1.3 million and other intangibles with estimable lives of $1.0
million. As a result of the adoption of SFAS No. 142, it is anticipated that
amortization expense related to goodwill and other intangible assets will be
approximately $0.6 million lower for fiscal 2002 than that which would have been
recognized under the prior accounting rules. The lower amortization expense will
be more than offset by the aforementioned pre-tax charge of $1.2 million that
will be recognized as a result of the impairment of goodwill in the Europe APC
reporting unit.

FORWARD LOOKING INFORMATION

This report contains forward-looking statements that reflect BHA's current views
with respect to future events and financial performance. The statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from historical results or those anticipated. The words
"should," "believe," "anticipate," "expect," and other expressions that indicate
future events and trends identify forward-looking statements. Actual future
results and trends may differ materially from historical results or those
anticipated depending on a variety of factors, including, but not limited to,
competition, the performance of newly established domestic and international
operations, demand and price for BHA's products and services, general U.S. and
international business conditions and other factors. You should consult the
section entitled "Factors Affecting Earnings and Stock Price." The Company
cautions that the foregoing lists of important factors is not exclusive.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATES
All of the Company's indebtedness is at variable rates of interest. The Company
has not used derivative financial instruments to hedge its exposure to interest
rate changes. Based upon borrowings outstanding at September 30, 2001, a 1%
fluctuation in market rates would impact interest expense by approximately
$250,000 annually.

                                      -24-

<PAGE>

EXCHANGE RATES
The Company views its equity investment in a foreign subsidiary as a long-term
commitment and does not hedge the translation exposures relative to such equity
investments.

In addition to its equity investment, the Company from time-to-time has U. S.
dollar denominated trade payables and advances due from its European affiliates.
Such amounts are subject to translation exposure. At September 30, 2001, the
amount of such unhedged exposures was approximately $1.0 million, substantially
all of which is related to its affiliates in the European Common Market.

FORWARD EXCHANGE CONTRACTS
BHA periodically enters into forward exchange contracts with commercial banks in
order to fix the currency exchange rate related to intercompany transactions
with its foreign subsidiaries. Changes in the value of these instruments due to
currency movements offset the foreign exchange gains and losses of the
corresponding intercompany transactions. At September 30, 2001, the aggregate
amount of such forward exchange contracts was approximately $2.6 million, and
the market value of these contracts was $136,000 lower than their face value.






                                      -25-
<PAGE>


ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEPENDENT AUDITORS' REPORT

The Board of Directors of BHA Group Holdings, Inc.:

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

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

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

                                       [GRAPHIC OMITTED]

                                       KPMG LLP

November 2, 2001
Kansas City, Missouri





                                      -26-

<PAGE>


                            BHA GROUP HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                                SEPTEMBER 30,
                                                                                           2001               2000
                                                                                           ----               ----
<S>                                                                                  <C>                <C>
ASSETS

Current assets:

    Cash and cash equivalents                                                         $       9,471        $     3,877
    Accounts receivable, less allowance for doubtful
       receivables of $1,385 in 2001 and $1,039 in 2000                                      29,803             31,569
    Inventories (note 1)                                                                     22,845             26,357
    Income taxes receivable                                                                     379                 --
    Prepaid expenses                                                                          2,187              2,495
    Deferred income taxes (note 5)                                                            2,655              2,510
                                                                                      ---------------    ---------------
           TOTAL CURRENT ASSETS                                                              67,340             66,808
                                                                                      ---------------    ---------------

Property, plant and equipment, at cost:
    Land and improvements                                                                     1,044              1,044
    Buildings and improvements                                                               18,416             18,221
    Machinery and equipment                                                                  40,976             41,103
    Office furniture, fixtures and equipment                                                  3,886              4,923
                                                                                      ---------------    ---------------
                                                                                             64,322             65,291
    Less accumulated depreciation and amortization                                           36,043             36,411
                                                                                      ---------------    ---------------
           NET PROPERTY, PLANT AND EQUIPMENT                                                 28,279             28,880
                                                                                      ---------------    ---------------

Property held under capital leases, net (note 1)                                              5,830              5,809
Intangible and other assets, less accumulated amortization (note 1)                           4,551              5,378
Excess of cost over net assets of businesses acquired,
    less accumulated amortization                                                             5,162              5,357
                                                                                      ---------------    ---------------
                                                                                           $111,162           $112,232
                                                                                      ===============    ===============

</TABLE>

See accompanying notes to consolidated financial statements.

                                      -27-
<PAGE>

                            BHA GROUP HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                SEPTEMBER 30,
                                                                                           2001               2000
                                                                                           ----               ----
<S>                                                                                    <C>                 <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

    Current installments of long-term debt (note 3)                                     $     1,936        $     2,269
    Current lease obligations (note 4)                                                          563                400
    Accounts payable                                                                          8,946             10,357
    Accrued compensation and employee benefit costs                                           4,436              4,342
    Accrued expenses and other current liabilities                                            3,356              3,372
    Reserve for warranty and product service                                                  2,867              2,553
    Income taxes payable                                                                         --                240
                                                                                      ---------------    ----------------
           TOTAL CURRENT LIABILITIES                                                         22,104             23,533
                                                                                      ---------------    ----------------

Deferred income taxes (note 5)                                                                1,984              2,096

Long-term debt, excluding current installments (note 3)                                      17,769             17,638
Long-term lease obligations, excluding current installments (note 4)                          6,637              7,200

Other long-term liabilities                                                                   1,534              1,958

Shareholders' equity:
    Common stock $.01 par value, authorized 20,000,000 shares:
          Issued 8,814,492 and 8,752,895 shares, respectively                                    88                 87
    Additional paid-in capital                                                               62,536             61,854
    Retained earnings                                                                        34,916             28,440
    Accumulated other comprehensive income                                                     (856)            (1,634)
    Less cost of 2,706,417 and 2,236,552 shares, respectively,
       of common stock in treasury                                                          (35,550)           (28,940)
                                                                                      ---------------    ----------------
           TOTAL SHAREHOLDERS' EQUITY                                                        61,134             59,807
                                                                                      ---------------    ----------------

Commitments and contingent liabilities (notes 4 and 7)
                                                                                      $     111,162        $   112,232
                                                                                      ===============    ================
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -28-
<PAGE>

                            BHA GROUP HOLDINGS, INC.
                       CONSOLIDATED STATEMENTS OF EARNINGS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                    FOR THE YEARS ENDED SEPTEMBER 30,
                                                              2001                 2000                 1999
                                                              ----                 ----                 ----
<S>                                                       <C>                  <C>                  <C>
Net sales                                                 $   174,923          $   164,550          $   159,047
Cost of sales (note 8)                                        122,235              115,199              117,107
                                                        -----------------    -----------------    -----------------
    GROSS MARGIN                                               52,688               49,351               41,940
                                                        -----------------    -----------------    -----------------

Operating expenses:
    Selling and advertising expense                            20,807               19,721               20,212
    General and administrative expense                         19,366               18,173               15,918
    Restructuring expense (note 8)                                 --                   --                2,167
                                                        -----------------    -----------------    -----------------
           TOTAL OPERATING EXPENSES                            40,173               37,894               38,297
                                                        -----------------    -----------------    -----------------

           OPERATING INCOME                                    12,515               11,457                3,643

Interest expense                                               (1,753)              (2,022)              (2,069)
Other income, net                                                 139                   71                   85
                                                        -----------------    -----------------    -----------------

           EARNINGS BEFORE INCOME TAXES                        10,901                9,506                1,659
                                                        -----------------    -----------------    -----------------

Income taxes (note 5):
    Current                                                     4,001                3,977                1,321
    Deferred                                                     (323)                (487)                (746)
                                                        -----------------    -----------------    -----------------
           TOTAL INCOME TAXES                                   3,678                3,490                  575
                                                        -----------------    -----------------    -----------------

           NET EARNINGS                                   $     7,223          $     6,016          $     1,084
                                                        =================    =================    =================

Basic earnings per common share                           $      1.17          $      0.91          $     0.15

Diluted earnings per common share                         $      1.11          $      0.90          $     0.15
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -29-
<PAGE>

                            BHA GROUP HOLDINGS, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                                 FOR THE YEARS ENDED SEPTEMBER 30,
                                                                           2001               2000                 1999
                                                                           ----               ----                 ----
<S>                                                                   <C>                <C>                 <C>
COMMON STOCK:
    Balance at beginning of year                                        $        87        $        87         $        87
    Issuance of 61,597 shares of common stock in 2001,
       6,915 shares of common stock in 2000,
       and 79,627 shares in 1999                                                  1                 --                  --
                                                                      ---------------    ----------------    -----------------
    BALANCE AT END OF YEAR                                                       88                 87                  87
                                                                      ---------------    ----------------    -----------------

ADDITIONAL PAID-IN CAPITAL:
    Balance at beginning of year                                             61,854             61,792              61,310
    Excess over par value of common stock issued                                618                 62                 653
    Stock issued from treasury for stock option exercises                      (194)                --                (303)
    Income tax benefit from stock option exercises                              258                 --                 132
                                                                      ---------------    ----------------    -----------------
    BALANCE AT END OF YEAR                                                   62,536             61,854              61,792
                                                                      ---------------    ----------------    -----------------

RETAINED EARNINGS:
    Balance at beginning of year                                             28,440             23,219              22,983
    Net earnings                                                              7,223              6,016               1,084
    Payment of cash dividends on common stock                                  (747)              (795)               (848)
                                                                      ---------------    ----------------    -----------------
    BALANCE AT END OF YEAR                                                   34,916             28,440              23,219
                                                                      ---------------    ----------------    -----------------

ACCUMULATED OTHER COMPREHENSIVE INCOME:
    Balance at beginning of year                                             (1,634)              (899)               (293)
    Equity adjustment from foreign currency translation and
       derivative instruments                                                   778               (735)               (606)
                                                                      ---------------    ----------------    -----------------
    BALANCE AT END OF YEAR                                                     (856)            (1,634)               (899)
                                                                      ---------------    ----------------    -----------------

UNEARNED COMPENSATION:
    Balance at beginning of year                                                 --                 (4)               (108)
    Recognition of compensation expense                                          --                  4                 104
                                                                      ---------------    ----------------    -----------------
    BALANCE AT END OF YEAR                                                       --                 --                  (4)
                                                                      ---------------    ----------------    -----------------

TREASURY STOCK:
    Balance at beginning of year                                            (28,940)           (25,303)            (22,026)
    Acquisition of 485,287, 398,084, and 319,500 shares in 2001,
       2000 and 1999, respectively                                           (6,590)            (3,637)             (3,476)
    Issuance of 15,422 shares in 2001 and 8,888 shares in 1999
       for stock option exercises, net                                          (20)                --                 199
                                                                      ---------------    ----------------    -----------------
    BALANCE AT END OF YEAR                                                  (35,550)           (28,940)            (25,303)
                                                                      ---------------    ----------------    -----------------
           TOTAL SHAREHOLDERS' EQUITY                                   $    61,134        $    59,807         $    58,892
                                                                      ===============    ================    =================
</TABLE>

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                 FOR THE YEARS ENDED SEPTEMBER 30,
                                                                           2001               2000                 1999
                                                                           ----               ----                 ----
<S>                                                                   <C>                  <C>                 <C>
Net earnings                                                            $     7,223        $     6,016         $     1,084
Other comprehensive income:
    Foreign currency translation adjustments                                    914               (735)               (606)
    Foreign exchange gains deferred on
       implementation of FAS 133                                                144                 --                  --
    Net change in foreign exchange gains
       deferred in accordance with FAS 133                                     (280)                --                  --
                                                                      ---------------    ----------------    -----------------
Comprehensive income                                                    $     8,001        $     5,281         $       478
                                                                      ===============    ================    =================
</TABLE>


See accompanying notes to consolidated financial statements.

                                      -30-

<PAGE>


                            BHA GROUP HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>


                                                                        2001           2000            1999
                                                                        ----           ----            ----
<S>                                                                   <C>           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net earnings                                                       $ 7,223       $ 6,016          $ 1,084
    Adjustments to reconcile net earnings to net cash
       provided by operating activities:
           Depreciation and amortization                                 5,846         5,576            6,052
           Non-cash restructuring charges                                   --            --            1,713
           Provision for deferred income taxes                            (257)          231             (911)
           Issuance of common stock to directors, officers
               and employees                                                88            62              105

    Changes in assets and liabilities:
           Accounts receivable                                           1,766        (3,213)           2,982
           Inventories                                                   3,512         1,686             (680)
           Prepaid expenses                                                 64          (506)            (161)
           Income taxes                                                   (619)          559             (546)
           Accounts payable                                             (1,411)        1,476              (14)
           Accrued expenses and other current liabilities                  256         3,412             (351)
                                                                      ----------    -----------     -----------
       NET CASH PROVIDED BY OPERATING ACTIVITIES                        16,468        15,299            9,273
                                                                      ----------    -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions to property, plant and equipment                          (4,439)       (4,531)          (5,836)
    Net assets of businesses or product rights acquired                     --            --             (718)
    Assets sold                                                             --         1,100               --
    Change in other assets                                                  15          (341)          (1,399)
                                                                      ----------    -----------     -----------
       NET CASH USED IN INVESTING ACTIVITIES                            (4,424)       (3,772)          (7,953)
                                                                      ----------    -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock                                 531            --              548
    Payment of cash dividends on common stock                             (747)         (795)            (848)
    Purchase of treasury stock                                          (6,590)       (3,637)          (3,476)
    Stock option exercise - net payments                                    44            --             (104)
    Proceeds from long-term obligations                                     --            --           25,997
    Repayments of long-term obligations                                 (2,900)       (3,525)          (5,064)
    Borrowings (repayments) on lines of credit, net                      2,298           165          (17,083)
                                                                      ----------    -----------     -----------
       NET CASH USED IN FINANCING ACTIVITIES                            (7,364)       (7,792)             (30)
Equity adjustment from foreign currency translation                        914          (735)            (606)
                                                                      ----------    -----------     -----------
    Net increase in cash and cash equivalents                            5,594         3,000              684
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                           3,877           877              193
                                                                      ----------    -----------     -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR                              $  9,471       $ 3,877        $     877
                                                                      ==========    ===========     ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
    Interest                                                           $ 1,764       $ 2,105         $  2,058
    Income taxes                                                       $ 4,554       $ 2,699         $  2,032

Supplemental disclosure of non-cash investing and financing activities:
    Accrual of additional purchase price                                    --            --         $    800
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -31-

<PAGE>


                            BHA Group Holdings, Inc.
                   Notes to Consolidated Financial Statements


1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       PRESENTATION
       The consolidated financial statements include the accounts of BHA Group
       Holdings, Inc. (BHA) and its wholly-owned foreign and domestic
       subsidiaries. All significant intercompany balances and transactions have
       been eliminated in consolidation.

       REVENUE RECOGNITION
       BHA recognizes revenue at the time products are shipped or services are
       performed. In the case of contracts for certain ESP and baghouse
       rebuilds, the Company recognizes revenues using the percentage of
       completion method based upon its estimate of the completion of each
       project.

       SHIPPING AND HANDLING
       Several accounting and financial pronouncements were recently adopted by
       the Financial Accounting Standards Board and by the Securities and
       Exchange Commission relating to the recognition and measurement of
       revenues and the classifications of shipping and handling costs.

       In order to comply with these standards, the Company has, in the
       accompanying financial statements, recognized freight which has been paid
       by the Company and invoiced to the customer ("prepay and add freight") as
       revenue and cost of sales. Previously, prepay and add freight billed to
       customers was netted with cost of sales. During the year ended September
       30, 2001, prepay and add freight billed by the Company was $3.7 million.
       In order to present the financial statements on a consistent basis,
       revenues and cost of sales were each increased for fiscal 2000 and fiscal
       1999 in the amount of $3.5 million and $3.3 million, respectively.

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

       INVENTORIES
       BHA values its inventory at the lower of cost or market. Cost is
       determined using the first-in, first-out (FIFO) method. Components of
       inventories at September 30, 2001 and 2000 were as follows:

($ IN THOUSANDS)                     2001                2000
                               -----------------    ----------------
Raw materials                     $  15,593             $  16,760
Work-in-process                         946                 1,168
Finished goods                        6,306                 8,429
                               -----------------    ----------------
TOTAL                             $  22,845             $  26,357
                               =================    ================

                                      -32-
<PAGE>

       PROPERTY, PLANT AND EQUIPMENT
       Property, plant and equipment are carried at cost. Major renewals and
       betterments are charged to the property accounts; replacements,
       maintenance and repairs that do not improve or extend the life of the
       respective assets are charged to expense as incurred.

       PROPERTY HELD UNDER CAPITAL LEASES
       The Company's BHA Technologies' facility in Lee's Summit, Missouri is
       subject to a capital lease related to an industrial revenue bond
       obligation. The assets held under this lease at September 30, 2001 and
       2000 were as follows:

<TABLE>
<CAPTION>
                                                             2001                 2000
                                                       -----------------    -----------------
<S>                                                    <C>                  <C>
Land                                                      $     300             $     300
Building                                                      4,712                 4,712
Equipment                                                     1,883                 1,461
Less accumulated amortization                                (1,065)                 (664)
                                                       -----------------    -----------------
PROPERTY HELD UNDER CAPITAL LEASES, NET                   $   5,830             $   5,809
                                                       =================    =================
</TABLE>


       DEPRECIATION AND AMORTIZATION
       Depreciation and amortization of property, plant and equipment are
       computed using the straight-line method with estimated useful lives by
       major asset class as follows:

                 Buildings and improvements                          30 years
                 Machinery and equipment                             4-8 years
                 Office furniture, fixtures and equipment            3-10 years

       During fiscal 2001, the Company recognized the retirement of $5.1 million
       in fully depreciated assets.

       INCOME TAXES
       Deferred tax assets and liabilities are recognized for the future tax
       consequences attributable to differences between the financial statement
       carrying amounts of existing assets and liabilities and their respective
       tax bases. Deferred tax assets and liabilities are measured using enacted
       tax rates expected to be recovered or settled. The effect on deferred tax
       assets and liabilities of a change in tax rates is recognized in earnings
       in the period that includes the enactment date.

       No provision is made for income taxes on undistributed earnings of the
       foreign subsidiaries because such earnings are considered permanently
       invested in the foreign subsidiaries.

       WARRANTY AND PRODUCT SERVICE
       BHA provides a reserve for estimated warranty and product service claims
       based on historical experience and consideration of changes in products,
       technology and warranty terms.

                                      -33-
<PAGE>

       FOREIGN CURRENCY TRANSLATION
       Financial statements of BHA's foreign subsidiaries are translated into
       U.S. dollars at current and average exchange rates. Translation gains and
       losses are included in other comprehensive income. Transaction gains and
       losses resulting from fluctuations in exchange rates between the
       functional currency (U.S. dollars) and the currency in which a foreign
       currency transaction is denominated are included in net earnings.
       Transaction gains (losses) included in the consolidated statements of
       earnings for 2001, 2000, and 1999 amounted to $124,000, ($354,000), and
       $71,000, respectively.

       ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
       On October 1, 2000, the Company adopted Statement of Financial Accounting
       Standard (SFAS) No. 133, "Accounting for Derivative Instruments and
       Hedging Activities," as amended. SFAS 133 establishes accounting and
       reporting standards for derivative instruments and requires that all
       derivative instruments be recognized on the balance sheet at their fair
       value. The adoption of SFAS 133 impacts the Company's accounting for
       foreign currency forward exchange contracts.

       The company has entered into forward exchange contracts with commercial
       banks in order to fix the currency exchange rate related to intercompany
       transactions with its foreign subsidiaries. Changes in the value of these
       instruments due to currency movements offset the foreign exchange gains
       and losses of the corresponding intercompany transactions which primarily
       relate to the purchases by the Company's European subsidiaries of
       inventory from their U. S. affiliates. In accordance with SFAS 133, these
       transactions have been determined to be effective hedges. Subsequent to
       adoption of SFAS 133, the fair value of these contracts have been
       recognized in prepaid expenses or accrued liabilities in the consolidated
       balance sheet. The related gains and losses are deferred in shareowners'
       equity (as a component of comprehensive income). These deferred gains and
       losses are recognized in income in the period in which the related
       purchases being hedged are acquired. The notional amount of such
       contracts at September 30, 2001 was $2.6 million and the market value of
       these contracts was $136,000 lower than the face value. All of the
       deferred gains or losses under these contracts will be reclassified into
       net earnings within the next twelve months.

       COMPREHENSIVE INCOME
       Comprehensive income consists of net income and foreign currency
       translation adjustments and is presented in the Statement of
       Comprehensive Income. Comprehensive income has no impact on net earnings
       of the Company.

       TREASURY STOCK
       The Board of Directors of BHA have periodically approved the purchase of
       shares of the Company's common stock. The total shares authorized is
       3,500,000 of which approximately 2,480,000 have been purchased. The
       purchases of common stock are recorded at cost on the date of purchase.
       Issuance of common stock from the treasury is recorded at the average
       cost of common stock held in the treasury.

       EARNINGS PER COMMON SHARE
       Basic earnings per share is computed by dividing net earnings available
       to common shareholders by the weighted average number of common shares
       outstanding for the period. Diluted earnings per share is computed based
       upon the weighted average number of common shares and dilutive common
       equivalent shares outstanding. Stock




                                      -34-
<PAGE>




       options, which are common stock equivalents, have a dilutive effect on
       earnings per share in all periods presented and are therefore included in
       the computation of diluted earnings per share. Stock options are
       described in Note 6. A reconciliation of the numerators and the
       denominators of the basic and diluted earnings per-share computations is
       as follows:

<TABLE>
<CAPTION>
                                                         (IN THOUSANDS, EXCEPT PER SHARE DATA.)
                                           2001                            2000                             1999
                              -------------------------------  ---------------------------------  --------------------------------
                                Net         Shares   Per-Share     Net        Shares   Per-Share     Net        Shares   Per-Share
                               Earnings    (Denom.)    Amt.      Earnings    (Denom.)    Amt.      Earnings    (Denom.)    Amt.
                              (Numerator)  -------     ---      (Numerator)  -------    -----     (Numerator)  --------    ---
                              -----------                      -----------                       -----------
<S>                           <C>        <C>        <C>         <C>        <C>        <C>         <C>        <C>         <C>
    Basic earnings per share:
    Earnings available to
    common shareholders         $7,223     6,199      $1.17       $6,016     6,601      $0.91       $1,084     7,028       $0.15

    Effect of dilutive
    securities--stock options     --         283                      --        71                      --       106

    Diluted earnings per
    share:  Earnings
    available to common
    shareholders and assumed
    conversion                $  7,223     6,482      $1.11       $6,016     6,672      $0.90       $1,084     7,134       $0.15
                              ========     =====      =====       ======     =====      =====       ======     =====       =====
</TABLE>

       Options to purchase 211,590 shares of common stock at prices ranging from
       $15.23 to $16.82 per share were outstanding at the end of 2001 but were
       not included in the computation of diluted earnings per share because the
       options' exercise price was greater than the average market price of the
       common shares. In 2000 and 1999, options to purchase 849,252 shares and
       571,688 shares, respectively, were similarly excluded from the
       calculation.

       COST IN EXCESS OF NET ASSETS ACQUIRED AND INTANGIBLE ASSETS
       Cost in excess of net assets acquired is being amortized over periods
       ranging from thirty to forty years, and is presented in the accompanying
       consolidated balance sheets net of accumulated amortization of $1,750,000
       and $1,555,000 at September 30, 2001 and 2000, respectively.

       Other intangible assets are being amortized over periods ranging from
       five to seventeen years and are presented in the accompanying
       consolidated balance sheets net of accumulated amortization of $7,097,000
       and $6,464,000 at September 30, 2001 and 2000, respectively.

       IMPAIRMENT OF LONG-LIVED ASSETS
       Long-lived assets and certain identifiable intangibles are reviewed for
       impairment whenever events or changes in circumstances indicate that the
       carrying amount may not be recoverable. Recoverability of assets to be
       held and used is measured by comparison of the carrying amount of the
       asset to future net cash flows expected to be generated by the asset. If
       such assets are considered to be impaired, the impairment to be
       recognized is measured by the amount by which the carrying amount of the
       assets exceed the fair value of the assets. Assets to be disposed of are
       reported at the lower of the carrying amount or fair value less costs to
       sell.

       STATEMENTS OF CASH FLOWS
       For purposes of the consolidated statements of cash flows, BHA considers
       overnight invested cash and investments in marketable securities, with
       maturities of three months or less to be cash equivalents.


                                      -35-
<PAGE>

       FAIR VALUE OF FINANCIAL INSTRUMENTS
       The carrying amounts of cash, accounts receivable and accounts payable
       approximate fair value because of the short maturities of these
       instruments. The fair value of long-term obligations are estimated by
       discounting future cash flows using current market rates. The carrying
       amounts of long-term debt and lease obligations approximate fair value at
       September 30, 2001.

2.     ACQUISITIONS AND DISPOSITIONS OF ASSETS

       In September 2000, BHA Technologies sold certain assets of its
       Allergydirect.com division to Salu, Inc. and simultaneously entered into
       a supply agreement through which BHA Technologies will supply bedding
       encasements with ePTFE membrane to Salu. Under the terms of the
       agreement, the Company received cash of $1.1 million together with
       warrants to purchase Salu stock and additional future consideration of up
       to $300,000 contingent upon meeting volume targets. The value of the
       total consideration received in excess of net assets transferred is being
       recognized over the three-year term of the exclusive supply agreement.

       In January 1999, the Company acquired certain assets, including patents,
       trademarks, and other intangibles related to Drayton Corporation's
       Sound-Off Acoustic Cleaner product line. The purchase price consisted of
       a cash payment of $700,000 plus additional contingent payments to be made
       over the next five years based upon revenues of the product line. During
       fiscal 1999, the Company recorded additional purchase price of $800,000
       at the date of acquisition based on their assessment of the likelihood of
       attaining such additional revenues. During fiscal 2000, the Company
       negotiated an amendment to this purchase agreement under which the
       parties agreed to total additional payments of $950,000 (including the
       $800,000 recorded at the date of acquisition) to be made through 2004 in
       lieu of the contingent payment schedule in the original contract. The
       total purchase price of $1,650,000 is being amortized on a straight-line
       basis over ten years.

       The proforma effect of these transactions are not material to the
       Company.

3.     NOTES PAYABLE TO BANKS AND LONG-TERM DEBT

       A summary of notes payable to banks and long-term debt at September 30,
       2001 and 2000 are as follows:

<TABLE>
<CAPTION>
       ($ IN THOUSANDS)                                                               2001           2000
                                                                                   -----------    ------------
<S>                                                                                <C>            <C>
       Unsecured domestic line of credit with variable interest rate               $   3,028      $      --
       Foreign line of credit with variable interest rate, secured by
            guarantees of U. S. affiliates                                             4,741             --
       Foreign line of credit with variable interest rate, secured by a
            standby letter of credit                                                      --          2,877
       Term loan payable to a domestic bank with variable interest rate               11,875         14,375
       Notes payable to a foreign bank with a fixed interest rate of 4.75%
            secured by a standby letter of credit                                         --          2,260
       Other notes payable                                                                61            395
       Less current installments                                                      (1,936)        (2,269)
                                                                                   -----------    ------------
       LONG-TERM DEBT, EXCLUDING CURRENT INSTALLMENTS                                $17,769        $17,638
                                                                                   ===========    ============
</TABLE>

                                      -36-
<PAGE>

       BHA has a domestic unsecured bank line of credit of $18,000,000,
       including approximately $3,000,000 which can be borrowed in foreign
       currencies, for working capital purposes, letters of credit and other
       corporate matters. This line of credit bears interest at variable rates
       based on either the prime rate, LIBOR or Euribor and expires in April
       2004. This facility is a revolving credit agreement on which BHA pays a
       0.25% commitment fee on the unused portion. At September 30, 2001,
       borrowings under this revolving credit facility where Euro 3,300,000 (USD
       3,028,000) at an average interest rate of approximately 5.3%. At
       September 30, 2000, there were no outstanding borrowings under this
       revolving credit facility, however, a standby Letter of Credit had been
       issued in the amount of $5,500,000 to secure the Company's foreign bank
       lines of credit.

       BHA's German subsidiary maintains a foreign bank line of credit for
       borrowings in local currencies up to the U. S. equivalent of $5,000,000.
       This credit facility is secured by the guarantees of BHA Group Holdings,
       Inc. This facility is a revolving credit agreement on which the Company
       pays a 0.25% commitment fee on the unused portion. At September 30, 2001,
       borrowings under this revolving credit facility were Euro 5,168,000 (USD
       4,741,000) at an average interest rate of 6.25%.

       At September 30, 2000, BHA's German subsidiary maintained a revolving
       credit facility and a term loan, each of which were secured by a standby
       Letter of Credit. Borrowings under the revolver at September 30, 2000
       were DM 6,364,000 (USD 2,877,000) at an average interest rate of 5.79%.
       Borrowings under the term loan at September 30, 2000 were DM 5,000,000
       (USD 2,260,000) at a fixed interest rate of 4.75%. These borrowings were
       repaid with the proceeds from a replacement credit facility negotiated
       during fiscal 2001.

       BHA's foreign subsidiary located in Switzerland maintains a line of
       credit with a foreign bank in the amount of CHF 600,000 (approximately
       USD 372,000 at September 30, 2001). As of September 30, 2001 and 2000,
       there were no borrowings outstanding under this line of credit.

       In September 1999, BHA entered into a $15 million unsecured term loan,
       the proceeds of which were used to repay existing long-term debt and
       provide for general corporate matters. This term loan has a variable
       interest rate based on LIBOR (3.49% at September 30, 2001) and matures in
       October 2006. Quarterly principal payments are required in the amount of
       $625,000.

       At September 30, 2001, the Company had unused commitments under its bank
       facilities totaling $15.2 million. The term loans and domestic bank line
       of credit require BHA, among other things, to maintain minimum levels of
       net worth, minimum fixed charge coverage, minimum current ratio, and
       maximum debt to cash flow ratio. BHA was in compliance with all covenants
       at September 30, 2001. Under the most restrictive of these covenants, at
       September 30, 2001, $13.3 million of retained earnings were available for
       cash dividends.

                                      -37-
<PAGE>

       Scheduled payments on long-term debt for the next five fiscal years are
       as follows:

        YEAR               $ IN THOUSANDS
---------------------      --------------------
        2002                  $    1,936
        2003                       2,500
        2004                      10,269
        2005                       2,500
        2006                       2,500
     Thereafter                       --
                           --------------------
                              $   19,705
                           ====================

4.     LEASES
       In December 1998, BHA Technologies, Inc., a wholly-owned subsidiary,
       entered into a capital lease in the form of a sale-leaseback transaction
       with the City of Lee's Summit, Missouri. In connection with this lease,
       the city issued tax-exempt Industrial Development Revenue Bonds ("Bonds")
       totaling $8,000,000 and placed the proceeds in a trust to fund future
       capital expenditures at the Lee's Summit manufacturing facility. BHA
       Technologies is obligated, through its lease, for the repayment of these
       bonds over the next 20 years. Annual lease payments of $400,000 commenced
       in December 1999. The interest rate on the tax-exempt Bonds is variable
       based on a weekly published index that is approximately 67% of LIBOR
       (2.4% as of September 30, 2001). As of September 30, 2001 and 2000, BHA
       Technologies had $0.7 million and $1.1 million, respectively in
       restricted cash held in trust for the exclusive use for qualified capital
       expenditures in Lee's Summit. The restricted cash is included in
       Intangible and Other Assets in the accompanying Consolidated Balance
       Sheets.

       The Company also enters into operating leases from time-to-time relative
       to its facilities, office equipment and manufacturing equipment.

       At September 30, 2001, future minimum lease payments for capital leases
       and for noncancelable, long-term operating leases for the next five
       fiscal years were as follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                    MINIMUM LEASE PAYMENTS
                   YEAR                     CAPITAL LEASES         OPERATING LEASES
                   ----                     --------------         ----------------
                 <S>                         <C>                    <C>
                   2002                        $      563             $    1,224
                   2003                               554                    783
                   2004                               544                    521
                   2005                               534                    440
                   2006                               525                    440
                Thereafter                          5,949                    403
                                               ----------             ----------
Total                                               8,669             $    3,811
                                                                      ==========
Less imputed interest                               1,469
                                               ----------
Present value of capital leases                     7,200
Less current portion                                  563
                                               ----------
Obligations under capital leases,
     less current portion                      $    6,637
                                               ==========
</TABLE>

       Total rental expense on noncancelable, long-term operating leases
       amounted to approximately $1,776,000, $1,855,000, and $2,780,000 for the
       years ended September 30, 2001, 2000, and 1999, respectively.

                                      -38-
<PAGE>

5.     INCOME TAXES

       The components of total income tax expense for the years ended September
       30, 2001, 2000, and 1999 are as follows:

<TABLE>
<CAPTION>
($ IN THOUSANDS)                                        2001            2000             1999
                                                    -------------    ------------    --------------
<S>                                                 <C>              <C>             <C>
Current income tax expense (benefit):
     Federal                                          $ 3,175          $ 3,230         $ 1,621
     Foreign                                              352              269            (552)
     State and local                                      474              478             252
Deferred income tax expense (benefit):
     Federal                                             (272)            (428)           (683)
     State                                                (51)             (59)            (63)
                                                    -------------    ------------    --------------
                                                      $ 3,678          $ 3,490         $   575
                                                    =============    ============    ==============
</TABLE>

      The effective tax rate differs from the expected tax rate for the
      respective years as follows:
<TABLE>
<CAPTION>
                                                        2001             2000             1999
                                                    -------------    -------------    -------------
<S>                                                 <C>              <C>              <C>
Expected income tax expense                            34.0%            34.0%            34.0%
State income taxes, net                                 2.6              2.9              7.5
Foreign subsidiaries                                   (2.0)             1.9              14.1
Research and experimentation credits                   (2.3)            (2.6)            (12.1)
Other, net                                              1.4               .5             (8.8)
                                                    -------------    -------------    -------------
   EFFECTIVE INCOME TAX RATE                           33.7%            36.7%            34.7%
                                                    =============    =============    =============
</TABLE>

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

<TABLE>
<CAPTION>
($ IN THOUSANDS)                                            2001                  2000
                                                       ----------------      ----------------
<S>                                                    <C>                   <C>
Deferred tax assets:
     Reserves and accruals not
        currently deductible                               $  2,242              $  1,946
     Inventories                                                336                   353
     Other, net                                                 552                   613
                                                       ----------------      ----------------
     Total gross deferred tax assets                          3,130                 2,912
                                                       ----------------      ----------------
Deferred tax liabilities:
     Intangible and other assets                                468                   519
     Property, plant and equipment                            1,304                 1,186
     Prepaid expenses                                            63                   141
     Other, net                                                 624                   652
                                                       ----------------      ----------------
     Total gross deferred tax liabilities                     2,459                 2,498
                                                       ----------------      ----------------
     NET DEFERRED TAX ASSET                                $    671              $    414
                                                       ================      ================
</TABLE>
                                      -39-
<PAGE>

       At September 30, 2001 and 2000, deferred tax assets and liabilities are
       classified in the accompanying consolidated balance sheets as follows:

<TABLE>
<CAPTION>
($ IN THOUSANDS)                                                 2001                 2000
                                                           -----------------     ----------------
<S>                                                        <C>                   <C>
Current deferred income tax asset                              $  2,655              $  2,510
Non-current deferred income tax liability                         1,984                 2,096
                                                           -----------------     ----------------
NET DEFERRED TAX ASSET                                         $    671              $    414
                                                           =================     ================
</TABLE>

       BHA has not recorded a valuation allowance relating to deferred tax
       assets, as taxable temporary differences are expected to be offset by
       deductible temporary differences and future taxable income.

       BHA has not provided deferred taxes on the cumulative undistributed
       earnings of its foreign subsidiaries, which approximated $106,000 at
       September 30, 2001 as management considers these earnings to be
       permanently invested. At September 30, 2000, the Company had a cumulative
       deficit for its foreign subsidiaries. Net earnings (losses) of these
       foreign subsidiaries were approximately $942,000, $(167,000), and
       $(3,449,000) for the years ended September 30, 2001, 2000, and 1999,
       respectively. During fiscal 2001, the Company utilized net operating loss
       carry-forwards ("NOLs") which had the effect of reducing income tax
       expense by approximately $53,000 as compared to the expense that would
       have been incurred without the benefit of such NOLs.

6.     INCENTIVE STOCK PLAN

       BHA has an incentive stock plan for key employees, officers and
       directors. The plan provides for 2,221,084 shares of common stock (as
       adjusted for the dilutive effect of stock dividends) available for
       issuance of stock options, restricted stock and payment to outside
       directors in lieu of cash. Stock options are granted at a price equal to
       the fair market value of BHA Common Stock at the date of grant for terms
       of up to ten years.

       BHA accounts for its stock-based employee compensation plans pursuant to
       Statement of Financial Accounting Standard No. 123, "Accounting for
       Stock-Based Compensation" (SFAS 123). SFAS 123 establishes a fair
       value-based method of accounting. BHA has chosen to adopt the pro-forma
       disclosure requirements of SFAS 123, and continue to record stock
       compensation in accordance with Accounting Principles Board Opinion No.
       25, "Accounting for Stock Issued to Employees" (APB 25), as amended,
       which is permitted under SFAS 123. Under APB 25 compensation expense is
       recorded on the date of grant for stock options granted only if the
       current market price of the underlying stock exceeds the exercise price.

                                      -40-
<PAGE>

       A summary of transactions in the incentive stock plan is as follows:

<TABLE>
<CAPTION>

                                      2001                           2000                            1999
                                          WEIGHTED-                       WEIGHTED-                       WEIGHTED-
                             NUMBER        AVERAGE          NUMBER         AVERAGE          NUMBER         AVERAGE
                            OF SHARES  EXERCISE PRICE      OF SHARES   EXERCISE PRICE      OF SHARES   EXERCISE PRICE
                           ----------------------------  ------------------------------  ------------------------------
<S>                        <C>         <C>               <C>           <C>               <C>           <C>
Outstanding at beginning
of year                      1,273,569      $11.06         1,077,150        $11.35         1,087,057        $10.63
  Granted                       31,500       13.12           197,750          9.48           312,800         13.37
  Expired                           --         --                 --           --             (3,492)         9.86
  Canceled                     (41,000)      12.25            (1,331)        12.77          (200,312)        12.67
  Exercised                   (152,056)      10.52                --           --           (118,903)         7.90
                           --------------------------------------------------------------------------------------------
Outstanding at end of
year                         1,112,013      $11.19         1,273,569        $11.06         1,077,150        $11.35
                           ----------------------------  ------------------------------  ------------------------------
Exercisable at end of yr.      456,673     $  8.59           396,317       $  7.82           505,462       $  8.27
                           ============================  ==============================  ==============================

                           OPTIONS OUTSTANDING                                         OPTIONS EXERCISABLE
 -------------------------------------------------------------------------    --------------------------------------
                          NUMBER          WEIGHTED-         WEIGHTED-              NUMBER            WEIGHTED-
 RANGE OF EXERCISE     OUTSTANDING     AVG. CONTRACTED    AVG. EXERCISE          EXERCISABLE          AVERAGE
       PRICES           AT 9/30/01       LIFE IN YRS.         PRICE              AT 9/30/01        EXERCISE PRICE
 -------------------------------------------------------------------------    --------------------------------------
   $6.20 - 10.47          604,839            4.57              8.63                409,589               8.12
   $12.02 - 16.82         507,174            6.45             14.25                 47,084              12.67
                     -----------------
                        1,112,013
                     =================
</TABLE>

       The per share weighted-average fair value of stock options granted during
       2001, 2000, and 1999 was $5.80, $4.03, and $5.36, respectively, on the
       date of grant using the Black Scholes option-pricing model with the
       following assumptions: expected dividend yield of 0.80% for 2001, 1.24%
       for 2000, and 1.15% for 1999; weighted average risk-free interest rate of
       4.60% for 2001, 5.80% for 2000, and 5.90% for 1999; expected volatility
       factor of 34.74%, 32.36%, and 29.38% for 2001, 2000, and 1999,
       respectively; and a weighted-average expected life of eight years.

       Since BHA applies APB 25 in accounting for its incentive stock plan, no
       compensation expense has been recognized for stock options in net
       earnings. Stock-based compensation expense, if recorded under SFAS 123
       would have reduced net earnings by $373,000 or $0.05 per diluted share in
       2001, $613,000 or $.09 per diluted share in 2000, and $738,000 or $.10
       per diluted share in 1999.

7.     COMMITMENTS AND CONTINGENT LIABILITIES

       EMPLOYEE BENEFIT PLANS
       BHA has a noncontributory Employee Stock Ownership Plan (ESOP) and a
       non-contributory Profit Sharing Plan. These plans include substantially
       all domestic employees. BHA, with approval of its Board of Directors,
       makes discretionary contributions to the ESOP and Profit Sharing Plans.
       Benefits become vested according to years of service. Contributions
       charged to operating expense were $1,166,000, $1,330,000, and $435,000
       for the years ended September 30, 2001, 2000, and 1999, respectively.

       BHA's eligible domestic employees participate in a voluntary 401(k)
       employee benefit plan (401(k) Plan). For 2001, the Company matched 150%
       of a participant's contribution subject to a maximum contribution of $900
       per employee. BHA matching contributions become vested based on years of
       service. BHA made matching contributions of $ 557,000, $462,000, and
       $330,000 for the years ended September 30, 2001, 2000, and 1999,
       respectively.

                                      -41-
<PAGE>

       LETTERS OF CREDIT
       The terms of certain contracts require that BHA issue standby letters of
       credit to assure performance. Open standby letters of credit (excluding
       those issued to secure indebtedness as disclosed in Note 3) amounted to
       $55,000 and $798,000 at September 30, 2001 and 2000, respectively.

       LITIGATION
       In the normal course of business, BHA is party to certain actions arising
       out of various allegations of product or professional liability. BHA has
       insurance coverage for substantially all such actions, subject to
       coverage limitations and deductibles for each claim. In the opinion of
       management, the amount of loss, if any, from the final outcome of these
       actions will not have a material adverse impact on the consolidated
       financial statements.

8.     RESTRUCTURING AND UNUSUAL CHARGES

       The Company recognized restructuring expenses in the amount of $2,167,000
       on a pretax basis during fiscal 1999. A charge of $1,713,000 was taken as
       a result of the decision by BHA Technologies to discontinue its in-house
       adhesive lamination efforts. Future efforts to sell PTFE membrane for
       apparel and other uses involving adhesive lamination will either be
       outsourced or will be in the form of unlaminated film. Additionally,
       severance cost of $454,000 was expensed and paid during fiscal 1999
       relative to the consolidation of manufacturing operations in Europe.

       In addition, fiscal 1999 cost of sales includes unusual charges of
       $4,200,000 consisting of (1) a cost overrun on a large fixed-price ESP
       rebuild project on which a loss of $2,400,000 was recognized, (2)
       substantial experimentation and testing performed by BHA Technologies
       totaling $1,400,000 related to adhesive lamination to develop products
       for non-APC markets and (3) inventory write-downs of $400,000
       attributable to the Company's consolidation of manufacturing operations
       in Europe.

9.     BUSINESS SEGMENTS

       SEGMENT REPORTING
       Effective September 30, 1999, BHA adopted Statement of Financial
       Accounting Standard No. 131, "Disclosures about Segments of an Enterprise
       and Related Information," (SFAS No. 131). SFAS No. 131 requires reporting
       of segment information that is consistent with the way in which
       management operates the Company.

                                      -42-
<PAGE>

       BHA reports its operations as three business segments, Domestic Air
       Pollution Control (Domestic APC), Europe Air Pollution Control (Europe
       APC), and BHA Technologies. Domestic APC consists of the air pollution
       control products and services sold or managed from the United States.
       Such sales include shipments and services throughout North America, Latin
       America, Asia, and the Pacific Rim as such revenues are derived from
       BHA's U.S. based management group. The Europe APC segment represents
       sales of products and services managed from BHA's European manufacturing,
       distribution, and sales offices. BHA Europe generally services customers
       throughout Europe, as well as in Northern Africa. BHA Technologies
       supplies ePTFE membrane products for APC applications, primarily to BHA,
       and is also selling such products outside of the air pollution control
       market.

       The accounting policies for the segments are the same as those described
       in the summary of significant accounting policies. BHA manages these
       segments as strategic business units. Europe APC represents a distinct
       business unit as it maintains its own manufacturing, sales, marketing,
       and project management resources. Sales to other international locations
       are included in the Domestic APC business segment, as most or all of the
       key manufacturing, engineering, and sales support functions are performed
       from the United States. BHA Technologies operates as a distinct entity
       due to its unique technologies, as well as the marketing of products
       unrelated to air pollution control.

       Reportable segment data for the years ended September 30, 2001, 2000, and
       1999 were as follows:

       NET SALES

<TABLE>
<CAPTION>
    ($ IN THOUSANDS)            2001                   2000                  1999
                          ------------------     -----------------     -----------------
<S>                       <C>                    <C>                   <C>
Domestic APC                    $142,421               $137,940              $137,168
Europe APC                        21,693                 20,056                20,076
BHA Technologies                  10,809                  6,554                 1,803
                          ------------------     ---------------------------------------
TOTAL                           $174,923               $164,550              $159,047
                          ==================     =================     =================
</TABLE>

       Net sales represent revenues from sales to unaffiliated customers.

       INTEREST EXPENSE

<TABLE>
<CAPTION>
    ($ IN THOUSANDS)            2001                   2000                  1999
                          ------------------     -----------------     -----------------
<S>                       <C>                    <C>                   <C>
Domestic APC                     $1,196                 $1,328                $1,014
Europe APC                          292                    222                   369
BHA Technologies                    265                    472                   686
                          ------------------     ---------------------------------------
TOTAL                            $1,753                 $2,022                $2,069
                          ==================     =================     =================
</TABLE>

       EARNINGS (LOSS) BEFORE INCOME TAXES

<TABLE>
<CAPTION>
    ($ IN THOUSANDS)            2001                   2000                  1999
                          ------------------     -----------------     -----------------
<S>                       <C>                    <C>                   <C>
Domestic APC                    $10,363                $10,893               $10,925
Europe APC                          737                   (761)               (2,744)
BHA Technologies                   (199)                  (626)               (6,522)
                          ------------------     ---------------------------------------
TOTAL                           $10,901               $  9,506              $  1,659
                          ==================     =================     =================
</TABLE>

                                      -43-
<PAGE>

       The aggregate amount of all corporate expenses is allocated to the three
       business segments based upon the judgement of management. The fiscal 1999
       pretax loss for Europe APC includes restructuring charges of $0.5 million
       related to the closure of German manufacturing operations. The fiscal
       1999 pretax loss for BHA Technologies includes a restructuring charge in
       the amount of $1.7 million related to the discontinuation of its adhesive
       lamination efforts.

       Additionally, the unusual charges recognized in fiscal 1999 as discussed
       in Note 8 are included in the preceding summary and reduced fiscal 1999
       pretax earnings of the segments by: Domestic APC, $2,400,000; Europe APC,
       $400,000; and BHA Technologies, $1,400,000.

       ASSETS

<TABLE>
<CAPTION>
    ($ IN THOUSANDS)            2001                   2000                  1999
                          ------------------     -----------------     -----------------
<S>                       <C>                    <C>                   <C>
Domestic APC                  $  55,560              $  63,502             $  66,829
Europe APC                       16,759                 16,673                16,234
BHA Technologies                 17,581                 18,932                14,153
Corporate                        21,262                 13,125                10,932
                          ------------------     ---------------------------------------
TOTAL                          $111,162               $112,232              $108,148
                          ==================     =================     =================
</TABLE>

       DEPRECIATION AND AMORTIZATION

<TABLE>
<CAPTION>
    ($ IN THOUSANDS)            2001                   2000                  1999
                          ------------------     -----------------     -----------------
<S>                       <C>                    <C>                   <C>
Domestic APC                     $2,765                 $2,886                $3,100
Europe APC                          473                    597                   690
BHA Technologies                  1,166                    783                   843
Corporate                         1,442                  1,310                 1,419
                          ------------------     ---------------------------------------
TOTAL                            $5,846                 $5,576                $6,052
                          ==================     =================     =================
</TABLE>

       CAPITAL EXPENDITURES

<TABLE>
<CAPTION>
    ($ IN THOUSANDS)            2001                   2000                  1999
                          ------------------     -----------------     -----------------
<S>                       <C>                    <C>                   <C>
Domestic APC                   $    421                $   208                $1,493
Europe APC                          182                    424                   665
BHA Technologies                    992                  2,711                 2,600
Corporate                         2,844                  1,188                 1,078
                          ------------------     ---------------------------------------
TOTAL                            $4,439                 $4,531                $5,836
                          ==================     =================     =================
</TABLE>

       Certain corporate assets including intangibles and computer equipment are
       not allocated to specific business segments and are thus included in the
       above tables of assets, depreciation and amortization, and capital
       expenditures as "Corporate."

                                      -44-
<PAGE>

       GEOGRAPHIC INFORMATION BY COUNTRY

       NET SALES

       The following table presents revenues by country based on the location of
       the use of the product or service. No single country, other than the
       United States, comprised more than 10% of BHA's net sales.

<TABLE>
<CAPTION>
    ($ IN THOUSANDS)            2001                   2000                  1999
                          ------------------     -----------------     -----------------
<S>                       <C>                    <C>                   <C>
United States                  $127,948               $120,551              $116,797
All Other Countries              46,975                 43,999                42,250
                          ------------------     -----------------     -----------------
TOTAL                          $174,923               $164,550              $159,047
                          ==================     =================     =================
</TABLE>

       LONG-LIVED ASSETS

       The following table presents all non-current tangible assets by country
       based on the location of the asset. No single country, other than the
       United States, comprised more than 10% of the Company's long-lived
       assets.

     ($ IN THOUSANDS)           2001                   2000
                          ------------------     -----------------
United States                   $32,055                $32,445
All Other Countries               4,066                  4,461
                          ------------------     -----------------
TOTAL                           $36,121                $36,906
                          ==================     =================

10.    QUARTERLY FINANCIAL DATA (UNAUDITED)

       Summarized quarterly financial data are as follows:

<TABLE>
<CAPTION>
                                                    DEC. 31         MARCH 31          JUNE 30         SEPT. 30
THREE MONTHS ENDED                              --------------- ------------------ --------------- ----------------
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                             <C>             <C>                <C>             <C>
2001
Net sales                                         $   44,351      $    49,868        $   41,930      $   38,774
Gross margin                                          13,272           14,134            12,629          12,653
Net earnings                                           1,933            2,169             1,671            1,450
Diluted earnings per share                        $     0.29      $      0.34        $    0.26       $     0.23

Common Stock Price Range, High Low                $    17.19      $     18.75        $   17.75       $    16.49
                                                  $    12.25      $     11.38        $   13.05       $    12.95

2000
Net sales                                            $39,733          $45,144           $40,716          $38,957
Gross margin                                          11,622           13,514            11,732           12,483
Net earnings                                           1,255            1,983             1,324            1,454
Diluted earnings per share                            $ 0.18           $ 0.30            $ 0.20           $ 0.22

Common Stock Price Range, High Low                    $10.00           $ 9.75            $10.50           $14.25
                                                      $ 7.38           $ 6.53            $ 7.63           $ 9.25

</TABLE>

                                      -45-
<PAGE>

                    BHA GROUP HOLDINGS, INC. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                                 Charged to
                                                               Beginning         Costs and                             Ending
                                                                Balance           Expenses         Deductions          Balance

<S>                                                      <C>                   <C>                <C>            <C>
ALLOWANCE FOR DOUBTFUL RECEIVABLES:
Year ended September 30, 2001                            $          1,039                896               550   $        1,385
                                                             ==============    ===============    ==============    ==============

Year ended September 30, 2000                            $          1,238                341               540   $        1,039
                                                             ==============    ===============    ==============    ==============

Year ended September 30, 1999                            $          1,139                837               738   $        1,238
                                                             ==============    ===============    ==============    ==============

RESERVE FOR WARRANTY AND PRODUCT SERVICE:
Year ended September 30, 2001                            $          2,553              2,020             1,706   $        2,867
                                                             ==============    ===============    ==============    ==============

Year ended September 30, 2000                            $          1,414              2,724             1,585   $        2,553
                                                             ==============    ===============    ==============    ==============

Year ended September 30, 1999                            $          1,140              1,533             1,259   $        1,414
                                                             ==============    ===============    ==============    ==============

</TABLE>


                                      -46-

<PAGE>


ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There were no disagreements with the Company's principal accountants, which
require disclosure pursuant to this item.

PART III

Part III (Items 10, 11, 12 and 13) is omitted by the Company in accordance with
General Instruction G to Form 10-K. The Company intends to file with the
Commission a definitive proxy statement pursuant to Regulation 14A not later
than 120 days following the close of its fiscal year ending September 30, 2001,
which is incorporated herein by reference.

PART IV

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

(a) (1)  Financial Statements: See accompanying Index to Consolidated Financial
         Statements and Schedules.

(a) (2)  Financial Statement Schedules: See accompanying Index to Consolidated
         Financial Statements and Schedules. All schedules not listed have been
         omitted because they are not applicable or the information has been
         otherwise supplied in the Registrant's Financial Statements and
         Schedules.

(a) (3)  Exhibits:

         (3a)  Certificate of Incorporation, as amended (7).

         (3b)  By-Laws, as amended (6).

         (10a) BHA Group, Inc. 1986 Stock Option Plan as amended, including form
               of Option Agreement (2).

         (10b) Second Amendment to the BHA Group, Inc. 1986 Stock Option Plan
               (3).

         (10c) Employee Stock Ownership Plan of BHA as amended on May 1, 2000
               (9).

         (10d) 401(K) Plan of BHA (1).

         (10e) Employment Agreement dated February 1, 2000 between BHA Group,
               Inc. and Lamson Rheinfrank, Jr. (4).

         (10f) Employment Agreement dated February 1, 2000 between BHA Group,
               Inc. and James E. Lund (4).

         (10g) Employment Agreement dated February 1, 2000 between BHA Group,
               Inc. and James J. Thome (4).

         (10h) Employment Agreement dated February 1, 2000 between BHA Group,
               Inc. and James C. Shay (4).

         (10i) Rights Agreement dated as of December 13, 1995, between BHA
               Group, Inc., and Boatmen's Trust Company, including Form of
               Rights Certificate (Exhibit A) and Summary of Rights to
               Purchase Common Stock (Exhibit B) (5).

                                      -47-
<PAGE>

         (10j) $15,000,000 Term Loan Agreement between BHA Group Holdings, Inc.
               and Commerce Bank N.A. dated as of September 20, 1999 (8).

         (10k) $18,000,000 Amended and Restated Credit Agreement between BHA
               Group Holdings, Inc. and Bank of America, N.A. dated as
               of May 7, 2001 (10).

         (21)  Subsidiaries of the Registrant (10).

         (23)  Independent Auditors' Consent (10).

(b)      Reports on Form 8-K:  No reports on Form 8-K were filed by the Company
         during the quarter ended September 30, 2001.

(c)      Exhibits:  See (a) (3) above.

(d)      Financial Statement Schedules:  See (a) (2) above.

NOTES TO INDEX
(1)      Filed as an exhibit to the Company's Registration Statement on Form
         S-1, as amended (Registration No. 33-8644) which exhibit is
         incorporated herein by reference.

(2)      Filed as an exhibit to the Company's Annual Report on Form 10-K for the
         fiscal year ended September 30, 1990, which exhibit is incorporated
         herein by reference.

(3)      Filed as an exhibit to the Company's Annual Report on Form 10-K for the
         fiscal year ended September 30, 1992, which exhibit is incorporated
         herein by reference.

(4)      Filed as an exhibit to the Company's Form 10-Q for the quarter ended
         March 31, 2000, which exhibit is incorporated herein by reference.

(5)      Filed as an exhibit to the Company Current Report on Form 8-K filed
         with the Securities and Exchange Commission on December 15, 1995, which
         exhibit is incorporated herein by reference.

(6)      Filed as an exhibit to the Company's Annual Report on Form 10-K for the
         fiscal year ended September 30, 1995, which exhibit is incorporated
         herein by reference.

(7)      Filed as an exhibit to the Company's Annual Report on Form 10-K for the
         fiscal year ended September 30, 1996, which exhibit is incorporated
         herein by reference.

(8)      Filed as an exhibit to the Company's Annual Report on Form 10-K for the
         fiscal year ended September 30, 1999, which exhibit is incorporated
         herein by reference.

(9)      Filed as an exhibit to the Company's Annual Report on Form 10-K for the
         fiscal year ended September 30, 2000, which exhibit is incorporated
         herein by reference.

(10)     Filed as an exhibit hereto.

                                      -48-

<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                            BHA GROUP HOLDINGS, INC.

<TABLE>
<CAPTION>
<S>           <C>                                 <C>     <C>
Dated:        November 6, 2001                    By:     /s/ James E. Lund
                                                          ------------------------------------------------------------
                                                          James E. Lund, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the Registrant and in
the capacities and on the dates indicated.

Dated:        November 6, 2001                    By:     /s/ James E. Lund
                                                          ------------------------------------------------------------
                                                          James E. Lund, President
                                                          Principal Executive Officer and Director

Dated:        November 6, 2001                    By:     /s/ Lamson Rheinfrank, Jr.
                                                          ------------------------------------------------------------
                                                          Lamson Rheinfrank, Jr.
                                                          Chairman of the Board

Dated:        November 6, 2001                    By:     /s/ Don H. Alexander
                                                          ------------------------------------------------------------
                                                          Don H. Alexander
                                                          Director

Dated:        November 6, 2001                    By:     /s/ Robert Freeland
                                                          ------------------------------------------------------------
                                                          Robert Freeland
                                                          Director

Dated:        November 6, 2001                    By:     /s/ Thomas A. McDonnell
                                                          ------------------------------------------------------------
                                                          Thomas A. McDonnell
                                                          Director

Dated:        November 6, 2001                    By:     /s/ James J. Thome
                                                          ------------------------------------------------------------
                                                          James J. Thome
                                                          Executive Vice President,
                                                          Principal Operating Officer and Director

Dated:        November 6, 2001                    By:     /s/ Richard C. Green, Jr.
                                                          ------------------------------------------------------------
                                                          Richard C. Green, Jr.
                                                          Director

Dated:        November 6, 2001                    By:     /s/ James C. Shay
                                                          ------------------------------------------------------------
                                                          James C. Shay
                                                          Senior Vice President, Finance and Administration,
                                                          Principal Financial & Accounting Officer
</TABLE>


                                      -49-

<PAGE>


                            BHA Group Holdings, Inc.
                                  Exhibit Index

<TABLE>
<CAPTION>
     EXHIBIT NO.                                      DESCRIPTION
<S>                     <C>
         10k            Amended and Restated Credit Agreement between BHA Group Holdings, Inc.,
                                   and Bank of America N.A. dated as of May 7, 2001.

          21                            Subsidiaries of BHA Group Holdings, Inc.

          23                                  Independent Auditors' Report
</TABLE>






                                      -50-