2141 NW 25th Avenue
Portland, Oregon 97210
(503) 228-2141
(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)

Kevin S. Thomas
Vice President, General Counsel and Corporate Secretary
ESCO Corporation
2141 NW 25th Avenue
Portland, Oregon 97210
(503) 228-2141
(Name, address, including zip code and telephone number,
including area code, of agent for service)

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

This is an initial public offering of shares of Class A Common Stock of ESCO Corporation.

ESCO Corporation is offering of the shares to be sold in the offering. The selling shareholders identified in this prospectus, who include some of our executive officers and shareholders affiliated with some of our directors, are offering an additional shares. ESCO Corporation will not receive any of the proceeds from the sale of the shares by the selling shareholders.

Before this offering, there has been no public market for the Class A Common Stock. We estimate the initial public offering price per share will be between $ and $ . We have applied to list our Class A Common Stock on the NASDAQ Global Market under the symbol "ESCO".

See "Risk Factors" on page 13 to read about factors you should consider before buying shares of the Class A Common Stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

To the extent that the underwriters sell more than shares of Class A Common Stock, the underwriters have the option to purchase up to an additional shares from us at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on , 2011.

Through and including , 2011 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

Neither we, the selling shareholders, nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby but only in circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date. Our business, financial condition, results of operations and prospects may have changed since that date.

In this prospectus, we reference our leadership position in specific markets. For example, we state our belief that we are the global market leader in ground engaging tool (GET) tooth systems used in surface mining and infrastructure development, dragline buckets for coal mining, and first fitment lip systems to mining original equipment manufacturers (OEMs) for hydraulic excavators. We also make statements regarding the wear life of many of our products, which are often used by customers continuously in harsh, abrasive environments. These statements are based on Company studies, which rely on, among other things, (1) independent data that is publicly available or available by subscription, (2) market surveys that we commissioned or conducted, which may include customer interviews and anecdotal evidence, (3) Company sales data and laboratory tests to evaluate the wear performance of materials, and (4) publicly available competitor data, including filings under the federal securities laws. Although we believe these Company studies are thorough, objective, and based on reliable information, they necessarily involve estimates and are subject to judgments and interpretation, and an independent party might reach different conclusions.

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. Before investing in our Class A Common Stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes and the information under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". In this prospectus, unless otherwise indicated or the context otherwise requires, references to "we", "us", "our", the "Company", and "ESCO" refer to ESCO Corporation and its subsidiaries on a consolidated basis.

We are an independent designer, developer and manufacturer of highly engineered wear parts and replacement products used in surface mining, infrastructure development, power generation, aerospace and industrial applications. Our products are often essential to the performance of our customers' capital equipment, which frequently operates continuously in harsh environments and is subject to abrasion, impact, corrosion or extreme temperatures. We have focused on product innovation throughout our nearly 100-year history and as of June 15, 2011, we had 46 U.S. patents and 500 foreign patents (including foreign counterparts to our U.S. patents). We believe our expertise in metallurgy, tribology (the science of wear), design engineering, manufacturing processes and distribution are our core competencies.

Investing in our Class A Common Stock involves risks. You should carefully read "Risk Factors" beginning on page 13 for an explanation of these risks before investing in our common stock. These risks include:

We were founded in 1913 in Portland, Oregon and are an Oregon corporation. Our principal executive office is at 2141 NW 25th Avenue, Portland, Oregon 97210, and our telephone number is (503) 228-2141. Our website address is www.escocorp.com. Information contained on or accessible through our website is not incorporated by reference into this prospectus, and should not be considered part of this prospectus. Our website address included in this prospectus is an inactive textual reference only. As of March 31, 2011, we had more than 4,600 employees worldwide.

The ESCO logos and other trademarks or service marks of ESCO appearing in this prospectus are the property of ESCO. Trade names, trademarks and service marks of other companies appearing in this prospectus are the property of the holders.

In connection with this offering, we will amend our articles of incorporation to:

Before completing this offering, we will effect a -for-one stock split of Legacy Class A Common Stock and Class B Common Stock by means of a stock dividend. Each share of these classes of stock converts automatically into shares of new Class A Common Stock on the conditions specified in our articles of incorporation and described above. In addition, upon completion of the offering made by this prospectus, each share of our outstanding Class C Preferred Stock, which are held by a trustee on behalf of our Employee Stock Ownership Plan, will convert automatically into shares of the new Class A Common Stock.

After giving pro forma effect to the automatic conversion of all shares of Class C Preferred Stock and Legacy Class A Common Stock into Class A Common Stock and the -for-one stock split of the Legacy Class A Common Stock and Class B Common Stock, as of , 2011 we would have had outstanding shares of new Class A Common Stock, shares of Class B Common Stock convertible into shares of new Class A Common Stock and no shares of preferred stock.


Class A Common Stock offered by us		shares
Class A Common Stock offered by selling shareholders		shares
Class A Common Stock outstanding after this offering		shares or shares if the underwriters exercise their option to purchase additional shares in full (including shares of Legacy Class A Common Stock that convert to Class A Common Stock as described in the "Explanatory Note Regarding Changes to Our Capital Stock")
Class B Common Stock outstanding after this offering		shares
Total Class A Common Stock and Class B Common Stock outstanding after this offering		shares or shares if the underwriters exercise their option to purchase additional shares in full (including shares of Legacy Class A Common Stock that convert to Class A Common Stock as described in the "Explanatory Note Regarding Changes to Our Capital Stock")
Underwriters' option to purchase additional shares of Class A Common Stock		shares from us and no shares from the selling shareholders
Use of proceeds		We estimate that we will receive net proceeds from our sale of shares of Class A Common Stock of approximately $ million, assuming an initial public offering price of $ per share, the midpoint of the price range set forth on the cover of this prospectus, after deducting underwriting discounts and estimated offering expenses payable by us. We will not receive any of the proceeds from the sale of shares by selling shareholders. We intend to use the proceeds for general corporate and working capital purposes, including possible acquisitions of businesses to complement or enhance our product offerings and manufacturing capacity and repayment of debt. See "Use of Proceeds" for additional information.
Proposed NASDAQ Global Market symbol		ESCO
Risk factors		See "Risk Factors" and the other information included in this prospectus for a discussion of factors you should carefully consider before investing in shares of our Class A Common Stock.

Without taking into account the -for-one stock split that will occur before completion of the offering made by this prospectus, the number of shares of Legacy Class A Common Stock outstanding after this offering is based on 885,714 shares outstanding as of March 31, 2011 and excludes:

Unless otherwise indicated, all information in this prospectus reflects and assumes the following:

We derived the summary consolidated statement of earnings data for the years ended December 26, 2008 and December 31, 2009 and 2010 and the summary consolidated balance sheet data as of December 31, 2009 and 2010 from our audited consolidated financial statements and related notes included in this prospectus. Before 2009, we reported on a 52/53-week fiscal year consisting of four 13-week periods and ending on the last Friday of the calendar year. Effective December 27, 2008, we changed to a calendar year. Our fiscal year 2009, however, began on December 27, 2008 and ended on December 31, 2009, resulting in a 370-day year.

We derived the summary consolidated statement of earnings data for the three months ended March 31, 2010 and 2011 and the summary consolidated balance sheet data as of March 31, 2011 from our unaudited condensed consolidated financial statements and notes thereto included elsewhere in the prospectus. These unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of our management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information set forth herein. Interim financial results are not necessarily indicative of results that may be expected for the full fiscal year or any future period.

The results indicated below and elsewhere in this prospectus are not necessarily indicative of our future performance. You should read this information together with "Capitalization", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

		Three months ended						Fiscal year ended

(dollars in thousands, except per share data)		March 31, 2011			March 31, 2010			December 31, 2010			December 31, 2009			December 26, 2008
Statement of earnings data:
Net sales		$	253,843		$	185,256		$	849,481		$	680,390		$	939,913
Cost of goods sold(1)			183,299			136,174			626,883			507,115			724,921

Gross profit			70,544			49,082			222,598			173,275			214,992
Operating expenses
	Selling and administrative expenses(1), (2)		46,729			31,189			147,881			112,535			132,719
	Restructuring and other(3)		20			281			748			6,332			1,792

Operating profit			23,795			17,612			73,969			54,408			80,481
Interest expense, net			3,079			6,354			23,710			26,226			26,736
Loss on early extinguishment of debt(4)			—			—			13,013			—			—
Other (income) expense(5)			(1,079	)		458			(731	)		(1,091	)		4,259

Earnings from continuing operations before income taxes			21,795			10,800			37,977			29,273			49,486
Income tax expense			7,420			3,689			9,423			8,487			13,297

Earnings from continuing operations, net of tax			14,375			7,111			28,554			20,786			36,189
Earnings from discontinued operations, net of tax(6)			—			—			—			306			443
Net earnings			14,375			7,111			28,554			21,092			36,632
Less: net earnings attributable to the noncontrolling interest — continuing operations			(1,491	)		(1,161	)		(4,634	)		(2,537	)		(5,073	)
Less: net earnings attributable to the noncontrolling interest — discontinued operations			—			—			—			(141	)		(343	)
Net earnings attributable to ESCO shareholders from continuing operations			12,884			5,950			23,920			18,249			31,116
Valuation adjustment of Class C Preferred Stock(7)			(1,154	)		(771	)		(16,521	)		7,933			13,287
Net earnings attributable to ESCO common shareholders from continuing operations			11,730			5,179			7,399			26,182			44,403
Pro forma earnings from continuing operations attributable to ESCO shareholders(8)			12,884						23,920

			Three months ended				Fiscal year ended

(dollars in thousands, except per share data)			March 31, 2011		March 31, 2010		December 31, 2010		December 31, 2009		December 26, 2008
Earnings per weighted average share outstanding(9)
	Basic earnings per share from continuing operations allocated to ESCO common shareholders		$	10.69	$	4.78	$	6.81	$	24.18	$	41.08
	Diluted earnings per share from continuing operations allocated to ESCO common shareholders(10)		$	10.42	$	4.64	$	6.62	$	15.16	$	26.21
	Weighted average shares outstanding
		Basic		1,097		1,084		1,086		1,083		1,081
		Diluted		1,236		1,117		1,118		1,204		1,187
	Pro forma earnings per share from continuing operations attributable to ESCO shareholders
		Basic	$				$
		Diluted	$				$
	Pro forma weighted average shares outstanding
		Basic
		Diluted
Cash dividends declared per common share(11)							$	11.00	$	10.00	$	11.00

(1): Non-cash ESOP compensation costs are included in cost of goods sold and selling and administrative expenses. See "Description of Employee Stock Ownership Plan."
(2): The mark to market on stock-appreciation rights (SARs), an expense of $7.7 million and $0.0 million and income of $0.3 million in 2010, 2009 and 2008, respectively, is included in selling and administrative expenses. The mark to market on SARs, an expense of $3.5 million and $0.0 million in the three months ended March 31, 2011 and March 31, 2010, is included in selling and administrative expenses.
(3): Restructuring and other costs included: in 2010, expenses related to the closure of our Saskatoon, Saskatchewan foundry; in 2009, personnel reductions and the closure of our West Jordan, Utah plant and the Saskatoon, Saskatchewan foundry; and in 2008, personnel reductions, the closure of our West Jordan, Utah plant and curtailment costs related to freezing benefits for our U.S. defined benefit plans.
(4): Loss on early extinguishment of debt primarily includes the write-off of $4.0 million of unamortized loan costs and the early redemption call premium of $8.6 million paid upon redemption of $300.0 million principal amount of senior unsecured notes in December 2010 as part of our debt refinancing. Debt extinguishment costs also include $0.4 million of unamortized costs associated with our asset-backed line of credit cancelled in November 2010 as part of our debt refinancing.

(5)

Other (income) expense primarily includes foreign exchange losses and gains on settlement transactions of foreign denominated accounts receivable and accounts payable. Other expense in each of 2009 and 2008 includes $0.3 million of insurance retention expenses.

(6)

Discontinued operations for 2009 and 2008 included earnings from ESCO Soldering Locacoes de Marquinas e Equipmentos Ltda, which we divested in June 2009 as part of the transaction that resulted in our acquisition of 100% ownership of ESCO Soldering, now known as ESCO Brazil.

(7)

Valuation adjustment of Class C Preferred Stock is the mark to market change of the redemption value of the shares of Class C Preferred Stock classified as contingently redeemable equity securities on our balance sheet. The corresponding offset is a change in our retained earnings. Upon the conversion of Class C Preferred Stock into Class A Common Stock in connection with the offering made by this prospectus, the stock will be reclassified from contingently redeemable equity securities to shareholders' equity and this valuation adjustment will no longer be included in our financial statements.

(8)

Pro forma earnings from continuing operations attributable to ESCO shareholders reflects the reclassification from contingently redeemable equity securities to shareholders' equity of Class C Preferred Stock and Legacy Class A Common Stock subject to contingent repurchase obligations. See "Description of our Employee Stock Ownership Plan" and "Description of Capital Stock."

(9)

Share data reflect the changes in our capital structure that will occur before we complete the offering described in this prospectus; other per share data do not. See "Explanatory Note Regarding Changes in Our Capital Stock".

(10)

Diluted earnings per share includes the weighted average number of Class C Preferred Stock outstanding and the incremental shares that would be issued upon the assumed exercise of stock options for the period they were outstanding.

(11)

See "Dividend Policy".

(12)

Contingently redeemable equity securities are redeemable upon the holder's retirement at age 65, death or disability. See "Description of Capital Stock — Shareholder Agreements" and "Description of Employee Stock Ownership Plan". The presentation reflects shares of Class C Preferred Stock and Legacy Class A Common Stock at their redemption value. Shares of Class C Preferred Stock automatically convert on a one-for-one basis into shares of the Class A Common Stock upon the completion of the offering made by this prospectus. Shares of Legacy Class A Common Stock automatically convert on a one-for-one basis into shares of the Class A Common Stock over a period of up to 360 days as described in "Explanatory Note Regarding Changes in Our Capital Stock". Upon the termination of our repurchase obligation, which will occur (a) with respect to approximately 161,730 shares of the Legacy Class A Common Stock, upon completion of the offering made by this prospectus and (b) with respect to the remaining 4,443 shares of Legacy Class A Common Stock subject to the repurchase obligation and all of the shares of Class C Preferred Stock, upon their conversion into Class A Common Stock, the stock will be reclassified from contingently redeemable equity securities to shareholders' equity.

(13)

Adjusted EBITDA is earnings from continuing operations, net of tax, before interest, taxes, depreciation and amortization and non-operating expense (income), adjusted to add back ESOP non-cash compensation expenses, mark to market on SARs expense, unrealized (gains) losses on long-term investments and certain restructuring charges. Adjusted EBITDA margin is adjusted EBITDA divided by net sales. Adjusted EBITDA and Adjusted EBITDA margins have limitations as analytical tools. Adjusted EBITDA is not intended to represent net earnings, earnings from continuing operations, net of tax, or cash flow from operating activities as these terms are defined by generally accepted accounting principles in the United States and should not be used as an alternative to net earnings as an indicator of operating performance or to cash flow as a measure of liquidity. Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies because other companies may not calculate those measures in the same manner we do. We have included Adjusted EBITDA and Adjusted EBITDA Margin in this prospectus because they are used by our management to assess financial performance and may provide a more complete understanding of the factors and trends affecting our business. We believe Adjusted EBITDA and Adjusted EBITDA margin are useful to investors in evaluating our operating performance for the following reasons:

•: Our management uses these measures in conjunction with GAAP financial measures as part of our assessment of our business and in communications with our board of directors concerning our financial performance;

		Three months ended						Fiscal year ended

(dollars in thousands)		March 31, 2011			March 31, 2010			December 31, 2010			December 31, 2009			December 26, 2008
Earnings from continuing operations, net of tax		$	14,375		$	7,111		$	28,554		$	20,786		$	36,189
Add/(Subtract):
	Interest (net) and loss on early extinguishment of debt		3,079			6,354			36,723			26,226			26,736
	Income tax expense		7,420			3,689			9,423			8,487			13,297
	Depreciation and amortization(a)		7,774			6,492			27,479			25,113			24,187
	Other (income) expense		(1,079	)		458			(731	)		(1,091	)		4,259
	ESOP non-cash compensation expense(b)		5,101			4,020			17,259			16,504			20,248
	Mark to market on SARs(c)		3,513			—			7,678			—			(260	)
	Unrealized (gains) losses on long-term investments(d)		(746	)		(567	)		(1,953	)		(2,860	)		4,405
	Restructuring and other(e)		20			281			748			6,332			1,792
	Port Hope reclamation(f)		—			—			2,600			—			—

	Adjusted EBITDA	$	39,457		$	27,838		$	127,780		$	99,497		$	130,853

(a): Depreciation and amortization excludes the amortization of debt issuance costs, which are included in interest (net).
(b): We recognize non-cash compensation expense equal to the fair value of the Class C Preferred Stock released as security for the loan to the ESOP and allocated to participant accounts. A portion of the non-cash ESOP compensation expense is allocated to cost of goods sold and a portion is allocated to selling and administrative expenses, based on the number of shares allocated to the accounts of manufacturing employees and other employees. See "Description of Employee Stock Ownership Plan."
(c): Each quarter, we record the mark to market change in the value of our SARs. Our determination of fair value includes, among other factors, the valuation determined by the independent valuation firm used by the ESOP trustee. We add this back to derive Adjusted EBITDA because it is a non-cash expense. In 2011, we changed our SARs long-term incentive program to stock-settled grants. The grant date fair value of an award will be amortized over the required service period. 92.6% of our existing cash-settled SARs were converted to stock-settled SARs in 2011. As a result, beginning in the second quarter of 2011, those awards are no longer required to be marked to market. Any impact to expense from this conversion will be amortized over the remaining service period for the unvested awards.
(d): Unrealized (gains) and losses on long-term investments represent the mark to market on our investments held to fund our deferred compensation and supplemental executive retirement programs.
(e): Restructuring and other activity in 2010 included restructuring expenses related to the closure of our Saskatoon, Saskatchewan foundry. Restructuring activity in 2009 included restructuring expenses related to personnel reductions and the closure of our West Jordan, Utah plant and the Saskatoon, Saskatchewan foundry. Restructuring activity in 2008 included restructuring expenses related to personnel reductions, the closure of our West Jordan, Utah plant and curtailment costs related to freezing benefits for our U.S. defined benefit plans.
(f): The expense in 2010 represents the estimated cost of removing an accumulation of solid waste at our Port Hope, Ontario, Canada facility. We plan to complete the removal within a five-year period. This expense is included in selling and administrative expenses in our consolidated financial statements.

Investing in our Class A Common Stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus, including our consolidated financial statements and the related notes, before making a decision to invest. If any of the events or circumstances described below occurs, our business, operating results, financial condition or growth prospects could be materially and adversely affected. In those cases, the trading price of our Class A Common Stock could decline and you may lose all or part of your investment.

Our results of operations are materially affected by the conditions in the global economy and in the global capital and credit markets. Recessions, downturns and other negative economic conditions around the world may significantly affect our profits as a result of increases in costs of materials, reduced sales, restructuring costs and challenges in receivables collections and other important elements of our business. The effect of changing economic conditions may not be immediate. For example, in 2009 our net sales decreased by $260 million compared to 2008, which we believe resulted primarily from the economic downturn that began in 2008. Similarly, changes in a local economy's business conditions, exchange rates or inflation can affect our customers and their decisions and ability to purchase products, which in turn affects our net sales. Further, market volatility, unpredictable government interventions in various industries and financial markets, increased regulation and difficult economic conditions may also make it harder or impossible for us to access capital and credit markets to fund operating needs on acceptable terms.

We make significant decisions based on our outlook on business activity in the mining, infrastructure development, power generation, aerospace and industrial markets we serve. These decisions include the levels of business that we seek and accept, production schedules, raw materials and other component commitments, personnel needs and other resource requirements. Each of the principal end markets we serve is cyclical, and our outlook on business activity in our markets may fail to predict accurately the timing, nature and extent of changing market conditions. Many factors affect these markets, including, for example, the level of production, levels and locations of mineral deposits, commodity prices, substitution of new or competing inputs and methods, and government regulations and tax policies. As a result of cyclicality in the end markets we serve, we have experienced, and we will experience, significant fluctuation in our net sales and operating profit. Further, the end markets for EPG and TTG vary substantially, and improvements in one may not be accompanied by similar changes in the other.

Inventory stocking decisions by our customers can exaggerate the effects of changing economic and market conditions on our financial results.

Many of our customers maintain an inventory of our products for use or resale. Purchases of our products by these customers may differ materially, at least for periods measured in months rather than years, from amounts required to maintain a steady level of inventory. As a result, their purchases from us may be at a lower rate than the rate of their sale or use of the product as they "destock" in anticipation of a downturn in the economy generally or in their particular market. Conversely, when they purchase products from us to build inventory levels, because they anticipate future increased net sales or for other reasons, the resulting growth in our net sales may be temporary and a misleading indicator of future results. For example, we believe the decrease in net sales from 2008 to 2009 and subsequent increase from 2009 to 2010 were exaggerated by

inventory destocking and restocking by our customers in response to significant changes in most commodity prices.

Many of the products we supply are mission-critical parts, the loss of which may result in lost productivity and significant costs for our customers. If we are unable to anticipate production demand for these parts or adequately increase production if demand increases, our delivery times could be delayed. We have experienced increased lead times, the times at which commitments for deliveries to customers can be made by our sales representatives, because customer demand is outstripping our ability to supply products on a timely basis. We estimate that customer demand has led to extended lead times for products that represented approximately 45% of EPG net sales in 2010. In 2010, we estimate the average lead time for mining GET products, for example, was less than 10 weeks; as of June 1, 2011, average lead time was over 20 weeks. We have not experienced significant order cancellations to date; however, if our lead times are significantly longer than those of our competitors, that may place us at a disadvantage and could adversely affect our sales and results of operations. If we continue to experience significant delays in product delivery, our customer relationships and reputation for reliability could suffer, and current and potential customers may purchase parts from one of our competitors as a result.

A material disruption to one or more of our manufacturing plants could adversely affect our ability to generate revenue.

We produce our products at manufacturing plants around the world. If operations at one or more plants are disrupted as a result of equipment failures, natural disasters, work stoppages, power outages, acts of terrorism or other reasons, our business and results of operations could be adversely affected. Acts of terrorism, for example, have caused in the past and may in the future cause a decline in the airline industry, which is likely to affect our TTG business. Interruptions in production would increase costs and reduce sales. Our facilities are also subject to the risk of catastrophic loss due to earthquakes, fires, explosions or adverse weather conditions, including hurricanes and tornadoes. Any interruption in production capability could require us to make large capital expenditures to remedy the interruption, which could negatively affect our profitability and cash flows. These events could affect our manufacturing and distribution capabilities and, because we specialize our manufacturing processes at our foundries and fabrication facilities and often have limited backup operations, an event that affects one facility could have an exaggerated effect on our ability to meet production demands and our sales. In addition, these events also could result in delays or cancellations of customer orders, or the delay in the manufacture, deployment or shipment of our products, which would adversely affect our business, financial condition and results of operations. Lost sales may not be recoverable under our insurance policies and longer-term business disruptions could result in a loss of customers. If this occurred, future sales could be adversely affected.

We compete on a variety of factors, including productivity, design and performance, technology, metallurgical expertise, reliability, customer relationships, delivery lead times and price. Some of our competitors are larger, have greater financial resources and are less leveraged than we are or may develop products or services that put us at a disadvantage. Our effectiveness in managing our manufacturing efficiency and our costs are key factors in determining our future profitability and competitiveness.

OEM customers may develop their own product lines or work with our competitors to develop products that compete with ours.

Some of our products compete with products manufactured and sold by our OEM customers. This competition could damage our relationships with those OEMs. OEMs may also develop new product lines or work with our competitors to develop product lines. If that occurs, our results of operations could suffer due to lost sales to the OEMs and increased competition.

Our business could be adversely affected by our failure to effectively manage proprietary product life cycles and to develop new and innovative products.

Many of our products are protected by patents in key regions around the world. We manage product life cycles by managing the patent life of our products and by focusing research and development spending to develop proprietary products to replace those that will lose their patent protection. Our effectiveness in managing this process is a key factor in determining our future profitability and competitiveness.

In addition, to remain competitive, we must continue to develop new and innovative products that meet our customers' changing requirements. Our future growth will depend, in part, on our ability to address the increasingly demanding needs of our customers by enhancing our products and timely developing and selling new products. If we are not successful in these efforts, if we experience difficulties that delay or prevent these efforts, or if our new products or enhancements do not achieve market acceptance, our business could be adversely affected.

Our continued success depends on our ability to protect our intellectual property rights.

We rely on a combination of nondisclosure, confidentiality, invention assignment and other types of agreements, and trade secret, trademark, copyright and patent law to establish, maintain, protect and enforce our intellectual property rights. These measures may be inadequate to protect our intellectual property rights, and any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated by others. For example, some of our patent applications may not be approved, some issued patents may not adequately protect our intellectual property or provide us with a competitive advantage, or may be challenged by others. Furthermore, our contracts may not effectively prevent disclosure or use of our confidential information or provide an adequate remedy in the event of unauthorized disclosure or use of our confidential information. In addition, when terminated, these contracts provide for continued protection of our confidential information and trade secrets only for a limited period of time. Others may independently discover our trade secrets and proprietary information or exploit our trade secrets after the expiration of contractual protections for those trade secrets, and in those cases we could not assert any trade secret rights against those parties or others to whom those parties disclose our trade secrets. To the extent our employees, contractors or other parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to determine the scope of and enforce our intellectual property rights, and even litigation we initiate could result in the narrowing or invalidation of the intellectual property rights we seek to enforce. In addition, the laws of some countries do not protect intellectual property rights to the same extent as the laws in the United States. Our expansion into some emerging markets may increase the risk of intellectual property infringement due to, among other things, the presence of independent firms called "will-fitters" that may produce copies of our products. Therefore, in some jurisdictions, we may be unable to adequately protect our intellectual property, even if intellectual property laws purport to offer adequate protection, against unauthorized copying or use, which could adversely affect our competitive position. The inability to protect our proprietary information and enforce our

intellectual property rights could have an adverse effect on our business, financial condition and results of operations.

In addition, parties may claim that we, our customers, licensees or other parties indemnified by us are infringing upon their intellectual property rights. Even if we believe claims are without merit, they can be time-consuming and costly to defend. Claims of intellectual property infringement also might require us to redesign affected products or technologies, enter into costly settlement or license agreements or pay costly damage awards, or face a temporary or permanent injunction prohibiting us from using certain of our technologies or marketing or selling certain of our products. Even if another party has agreed to indemnify us against these costs, it may not be able to do so. If we cannot or do not license the infringed technology on reasonable pricing terms or at all, or substitute similar technology from another source, our business, financial condition and results of operations could be adversely affected.

We intend to continue to pursue expansion of our international operations and international sales and marketing activities. Expansion in international markets requires significant management attention and resources. We may form relationships with local partners in connection with our international expansion. Disputes with local partners may adversely affect our business.

In addition, we may be unable to scale our infrastructure effectively in these markets, which would cause our results to suffer. We may not be able to hire, train, retain and manage required personnel, which may limit our international growth. We will also face significant competition from multinational and local companies. Local companies may have a substantial competitive advantage because of their greater understanding of, and focus on, local customers and more established local brand names.

We have taken steps to expand our direct presence in Australia and in South Africa, where our relationships with licensees have recently expired or soon will expire. Our investments in these areas, including investments in foundry capacity and in personnel, may not be sufficient to allow us to compete effectively in those markets or with our former licensees. In addition, if we are not able to build our operations in these territories to meet customer demand, including customers that have operations in other areas of the world, our reputation and results of operations in these areas and in other geographies may suffer.

We employ a diversified distribution model that includes direct sales, a network of independent dealers, licensees and OEMs. Our network of independent dealers and our licensees are important to our success. In recent years, however, we have grown our direct sales channel, particularly in markets where there is a high concentration of mining activity. The percentage of our EPG net sales through direct channels grew from approximately 31% in 2007 to approximately 48% in 2010. This increased direct sales effort may be unsuccessful or adversely affect our relationships with dealers and licensees, which could harm our business.

We will begin competing with Bradken Resources Pty Ltd. in Australia, New Zealand and Papua New Guinea when our licensee relationship with Bradken ends on June 30, 2011. Royalty income from Bradken, which contributes directly to our net earnings, was $2.4 million for the first quarter of 2011, $8.7 million in 2010, $7.2 million in 2009 and $7.4 million in 2008. If we are not able to make sales sufficient to replace the royalty income from Bradken, or if we fail to fulfill customer demands as we replace licensee sales with direct sales, our relationships with customers and our results of operations will suffer.

Our ability to recover increased costs resulting from price increases in raw materials may be limited.

Price increases for steel and other raw materials have occurred and will occur again. Prices for raw materials may be influenced by competitors, trends in our markets, private or government cartels, world politics, natural disasters, unstable governments in exporting nations and inflation. We may not be able to adjust product prices, especially in the short term, to recover the costs resulting from price increases.

Government policies on taxes and spending affect our businesses. Throughout the world, government spending finances infrastructure development, such as highways, airports, sewer and water systems and dams. Tax regulations determine depreciation lives and the amount of money potential customers can retain, both of which influence spending decisions. Developments more unfavorable than anticipated, such as declines in government revenues, decisions to reduce public spending or increases in taxes, could negatively affect our results.

Our business plans typically reflect assumptions about the stability or strength of local economies and the interest rates, exchange rates and inflation in a number of countries. To the extent government intervention is different than we anticipate, the fiscal and monetary mechanisms can cause market demand to change materially from our forecasts. For example, interest rates affect the ability of customers to finance capital equipment purchases and can change the optimal time to keep capital equipment in operation. As a result, monetary policies, such as increases in interest rates higher than those assumed by us, could result in lower net sales than anticipated.

We are subject to government regulations in the countries where we operate. We incur additional legal compliance costs associated with our international operations and could become subject to penalties in foreign countries if we do not comply with local laws and regulations, which may be substantially different from those in the United States. We are also subject to U.S. government laws and regulations affecting our international activities, including those relating to bribery of foreign government officials, import-export control, trade sanctions and repatriation of earnings. Although we have policies and procedures designed to ensure compliance with these laws, our employees, contractors and agents could take actions in violation of our policies, which could have an adverse effect on our business.

Approximately 56% of our employees are located outside the United States. We are subject to changes in foreign laws governing our relationships with our employees, including wage and hour laws and regulations, fair labor standards, unemployment tax rates, workers' compensation rates, citizenship requirements and payroll and other taxes.

We engage primarily in heavy industrial manufacturing. Our customers are engaged primarily in industrial activities, including mining, infrastructure development, power generation and aerospace. As a result of the wide array of applicable regulations and laws, our and our customers' operations could be disrupted or curtailed. The high cost of compliance with environmental, health, safety and other regulations may also induce us or our customers to discontinue or limit operations. As a result of these factors, our ability to operate and our customers' demand for our products could be substantially and adversely affected.

Our international operations are subject to political, economic, legal and other uncertainties that could adversely affect our business. A key part of our long-term strategy is to increase our manufacturing, distribution and sales presence in international markets. In 2010, 55.7% of our sales were to customers outside the United States.

In addition to other general business risks, risks faced by our international operations include, among others, political, regulatory, judicial and business instability; less reliable or nonexistent physical, financial and legal infrastructures; differing environmental standards; currency exchange fluctuations; and restrictive trade rules, such as tariffs and currency controls.

We take steps to monitor and respond to these risks. However, the fixed nature of the capital investments at many of our facilities and the fixed locations of many of our customers, in particular those in the mining industry, limit our ability to quickly alter our sales, supply chain, operational and purchasing efforts in response to political, regulatory or economic changes. As a result, we may suffer an impairment or loss of facilities or investment or we may find our ability to access and use our capital significantly restrained.

We are exposed to fluctuations in foreign currencies for transactions denominated in other currencies. We conduct a significant number of transactions in currencies other than the U.S. dollar. Changes in the value of major foreign currencies, particularly the Australian dollar, Brazilian Real, Canadian dollar, Chinese Renminbi, Euro and South African Rand, relative to the U.S. dollar can significantly affect net sales and our operating results. Generally, our revenues and operating results are adversely affected when the U.S. dollar strengthens relative to other currencies and are positively affected when the U.S. dollar weakens. In addition, we incur foreign currency transaction gains and losses, primarily related to intercompany transactions with and between our subsidiaries. If we increase our international sales, the percentage of our net sales denominated in local currencies will increase. Although we may engage in exchange rate hedging to mitigate exchange rate fluctuations, hedging transactions may not be available or may be ineffective. In addition to the direct effect of changes in exchange rates, those changes also indirectly affect the unit sales volume and foreign currency pricing of our products as we compete with products that are affected differently by the same currency exchange rate fluctuations. To the extent our related costs are denominated in other currencies, our margins may be affected by fluctuations in those currencies. We do not engage in cash flow hedging to mitigate this risk. Furthermore, currency controls, devaluations, trade restrictions and other disruptions in currency convertibility and in the market for currency exchange could limit our ability to convert sales earned abroad into U.S. dollars in a timely way. This could adversely affect our ability to service our U.S. dollar indebtedness, fund our U.S. dollar costs, finance capital expenditures and pay dividends on our capital stock.

We are subject to environmental laws and regulations, and any violation of, litigation relating to or liabilities under these laws and regulations could adversely affect us.

We are subject to federal, state, provincial, regional, local and foreign laws and regulations relating to the protection of health, safety and the environment, including those governing emissions and discharges to the ground, air and water; handling and disposal practices for solid and hazardous wastes; the cleaning of contaminated sites; and the maintenance of a safe workplace. We are also required to obtain environmental permits from governmental authorities for some aspects of our foundry and manufacturing operations. These permits typically have terms of several years and are subject to renewal and modification, which could include additional requirements or restrictions. We may be unable to comply with all permit terms or renew our permits on a timely basis or at all.

Furthermore, we could incur substantial costs or suffer reduced production capacity as a result of noncompliance with, or liability for cleanup or other costs or damages under, these permits or under environmental laws. We have in the past been required to pay fines in connection with permit violations. We could also be held liable for any consequences arising out of human exposure to hazardous materials, including asbestos, or other environmental damage.

The U.S. Superfund law and similar state and foreign laws and regulations impose liability on entities that own or operate, or previously owned or operated, contaminated property; cause or caused contamination; or send or sent wastes to disposal facilities that become contaminated. The cleanup of contaminated sites can be expensive, and these laws may impose liability for the entire cost on any one party, particularly if other parties are unable to pay. As a result of our current and former ownership and operation of facilities and our disposal of wastes, we could incur substantial liability even if we are unaware of, or are not responsible for, releases of hazardous materials at our current or former sites, or we could suffer reduced production capacity or other costs or damages. We may be required to expend amounts for investigation and cleanup of contamination, which amounts we cannot determine at the present time but may ultimately prove to be significant. For example, in January 2008 we received a questionnaire from the Environmental Protection Agency, or the EPA, regarding historical operational practices in connection with the Portland Harbor Superfund site. The EPA sent the questionnaire to approximately 300 businesses located along the Willamette River in Oregon. The EPA named us as one of more than 100 businesses to date that are potentially responsible parties for this site in March 2010. The current aggregate clean-up cost to be allocated among responsible parties is estimated to be approximately $1.0 billion. We have entered into a participation agreement with a group of named potentially responsible parties and other companies under which we admit to no liability. The agreement provides a framework to determine how to allocate cleanup costs among the parties to the agreement if the EPA finds them responsible. The inability of a party to pay its portion of assessed costs may result in increased costs to other parties. We are also participating in a process with other potentially responsible parties to quantify and potentially allocate natural resource damages claims with respect to the site. We cannot predict our ultimate liability with respect to the Portland Harbor Superfund site at this time, but it could be substantial if the EPA determines we are a responsible party for this site.

Environmental laws are complex, change frequently and have tended to become more stringent over time. Our costs of complying with current and future environmental laws, and our liabilities arising from past or future releases of, or exposure to, hazardous materials may adversely affect our business, financial condition or results of operations. In addition, increased environmental regulation of the industries to which we market could increase our customers' costs and adversely affect our net sales.

Our operations emit carbon dioxide and other greenhouse gases (GHG). Laws and regulations have been, and may be, adopted at the federal, state, provincial, regional and local levels in the United States and other countries where we operate with respect to GHG emissions. These laws, regulations and initiatives could result in additional costs to us, in the form of taxes or emission allowances, or could otherwise adversely affect our operations. For example, the EPA is proceeding with regulation of GHG emissions under the Clean Air Act. Under EPA regulations finalized in May 2010, the EPA began regulating GHG emissions from certain stationary sources in January 2011. Under these regulations, any source that emits at least 75,000 tons per year of GHGs will be required to have a Title V operating permit under the Clean Air Act. Sources that already have a Title V permit, including our U.S. EPG foundries, will have GHG reporting provisions added to their permits upon renewal. Title V permits require renewal every five years. The permit for our Portland, Oregon foundries is currently in the renewal process; the permit for our Newton, Mississippi foundry

is subject to renewal in 2014. Additionally, construction permits for new major sources of GHG emissions and GHG sources that undergo major modifications require the implementation of best available control technology for the control of GHG emissions. The effect of any current or future GHG regulation or initiatives on our global businesses and products could be significant, could require us to incur substantial costs and could otherwise affect our business, financial condition and results of operations.

Loss of or failure to recruit and develop skilled personnel could have an adverse effect on our business.

Our ability to provide high-quality products and services depends in part on our ability to recruit and retain skilled personnel in the areas of management, product engineering and manufacturing, service and sales. The loss of the services of key personnel, or the failure to effectively implement succession plans, could have a significant negative effect on our business, particularly if we are unable to retain the customer relationships and technical expertise provided by our management team and personnel.

We engage primarily in heavy industrial manufacturing. Some of our manufacturing processes involve high pressures, hot metal and other materials and equipment that present safety risks to our employees. Although we employ safety procedures in the design and operation of our facilities, accidents involving death or serious injury could occur. Any uninsured liability resulting from an accident could have an adverse effect on our business, financial condition or results of operations.

Our business exposes us to possible claims for personal injury or death and property damage resulting from the use of products we manufacture. We maintain product liability and other insurance to cover claims of this nature. Our policies, however, are subject to deductible and recovery limitations and do not cover every contingency. Claims brought against us that our insurance does not cover or that exceed our insurance coverage could have an adverse effect on our business, financial condition or results of operations.

Few suppliers can provide the sophisticated and high-value equipment we use in our manufacturing plants. For example, at our TTG facilities, some of our investment casting furnaces and spare parts can only be purchased from a limited number of suppliers. Moreover, the competitive nature of our businesses requires us to periodically implement process changes to improve products and manufacturing efficiencies. These process changes may result in production delays, quality concerns and increased costs. Equipment failures or disruption of operations at our facilities, particularly at facilities where we do not have redundant capacity, may result in production delays, sales loss and significant costs.

Our manufacturing operations rely on the continued supply of a number of raw materials and manufactured components.

To reduce costs and inventories, we sometimes rely on preferred vendors as a sole source for raw materials and manufactured components. In addition, we use some raw materials that are only found in a few locations in the world, including metals such as cobalt, nickel, tantalum and molybdenum required for the alloys used in some of our castings.

In EPG, we have single suppliers for the cast and rubber components for the pins for locking systems for some of our tooth system, and sleeves for rigging casting. Disruptions in the supply of these products could affect our operations and require us to incur additional costs to identify those

supplies or, in the case of cast components for locking pins, produce them ourselves. We typically purchase our commodity supplies on a purchase order basis, even where we have a written contract that governs the general terms of purchases.

Delays in delivery of raw materials by TTG's suppliers could affect our business or our results of operations. Under typical arrangements with customers, TTG's manufacturing processes, including its supply sources for critical materials, are "fixed" once the production processes are approved by the customer. TTG may not change suppliers without customer approval; if the supplier does not make timely delivery, delivery of products and our recognition of net sales could be delayed. Changing suppliers may be difficult because there are limited alternate suppliers in the market for some alloys, such as cobalt and nickel based super-alloys. Approximately 83% of TTG's purchases of alloys in 2010 were directly from suppliers owned by competitors of TTG which also sell alloys in the open market to TTG and to other investment castings manufacturers.

While we regularly assess the ability of these vendors to deliver as contracted and their viability as going concerns, because we maintain relatively low raw material inventories, even brief unanticipated delays in delivery by suppliers may adversely affect our ability to satisfy our customers' demands and could thereby affect our business or our results of operations.

Acquisitions present many risks, and we may not realize our financial and strategic goals for those transactions.

We intend to continue to acquire businesses we believe will enhance our operations and profitability. We may not, however, be able to find suitable businesses to purchase or to obtain the financing to complete future strategic transactions. Acquisitions may present financial, managerial and operational challenges, including diversion of management attention from existing businesses, difficulty integrating personnel, acquired technologies or products and financial and other systems, increased expenses, failure to retain customers, assumption of unknown liabilities and indemnities and potential disputes with the sellers. Our use of cash to pay for acquisitions may limit other potential uses of our cash, including stock repurchases, dividend payments and retirement of outstanding indebtedness. If we are unable to complete these transactions, or successfully integrate and grow acquisitions and achieve contemplated synergies, net sales growth and cost savings, our financial results could be adversely affected. We may significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition. To the extent we issue equity securities in connection with future acquisitions, existing shareholders may be diluted and earnings per share may decrease.

To remain competitive, we often offer customers short-term credit on sales. We extend credit based on an assessment of a customer's financial condition, generally without requiring collateral beyond the products sold. A slowdown in applicable markets or a recession could have an adverse effect on the financial health of our customers, which in turn could have an adverse effect on our results of operations. We monitor our customers' creditworthiness, but we bear the risk of a significant delay in payment or default if a customer becomes insolvent or enters bankruptcy.

The conditions of the U.S. and international capital markets may adversely affect supplier financial viability, customer demand and our ability to draw on our credit facility.

Recent volatility in credit and capital markets caused a significant decline in and restricted access to liquidity and financing for many businesses. If these conditions return or continue for extended periods, the liquidity of our suppliers and customers could be adversely affected. As a result, their ability to supply raw materials to us or purchase products from us could be negatively affected, and our business could suffer.

In addition, if financial institutions that have extended credit commitments to us are adversely affected by the conditions of the U.S. and international capital markets, they may be unable or unwilling to fund borrowings under their credit commitments to us, which could have an adverse effect on our ability to borrow additional funds for working capital, capital expenditures, acquisitions, research and development and other corporate purposes.

Our indebtedness could adversely affect our financial condition and impair our ability to operate our business.

Our senior secured credit agreement contains covenants that limit our ability to incur indebtedness and acquire other businesses and impose other restrictions. These covenants could affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise. In addition, our credit agreement requires us to maintain financial ratios and satisfy financial conditions. Our ability to comply with the provisions of our credit agreement may be affected by changes in economic or business conditions beyond our control. We may be unable to comply with the financial ratios or covenants and, if we fail to comply, we may be unable to obtain waivers from our lenders.

Collective bargaining agreements or similar types of arrangements cover approximately 18.4% of our employees. When these collective bargaining agreements expire, we may not be able to reach new agreements with our employees. Two agreements covering approximately 3.6% of our employees expired in May and June 2011, one of which is under negotiation and the other of which is subject to a vote; two agreements covering approximately 8.2% of our employees will expire in the second half of 2011; and two agreements covering 4.2% of our employees will expire in 2012. 2.4% of our employees, who are located in Belgium, are subject to agreements that expire at different times: one in June 2011; two in December 2011; one in part in 2011 and in part in 2012; and one in 2012. An additional 6.4% of our employees are members of unions that are not subject to collective bargaining agreements or similar types of arrangements; those employees may elect to become subject to a collective bargaining agreement. New agreements may be on substantially different terms and may result in increased direct and indirect labor costs. Disputes with our employees could adversely affect our business, financial condition or results of operations.

Our stock price is likely to be volatile and could decline following this offering, resulting in a substantial loss on your investment.

Before this offering, there has not been a public market for our Class A Common Stock. An active trading market for our Class A Common Stock may never develop or be sustained, which could affect your ability to sell your shares and could depress the market price of your shares. In addition, the initial public offering price has been determined through negotiations between us and the representatives of the underwriters and may not reflect the price at which our Class A Common Stock will trade after the offering.

The stock market in general has been highly volatile. As a result, the market price of our Class A Common Stock is likely to be volatile, and investors in our Class A Common Stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. The price of our Class A Common Stock could be subject to wide fluctuations in response to a number of factors, including those described in this "Risk Factors" section and others, such as:

Fluctuations or decreases in the trading price of our Class A Common Stock may adversely affect your ability to trade your shares. In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert management's attention and resources that would otherwise be used to benefit the future performance of our operations. Securities class action costs may not be covered by insurance.

If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our Class A Common Stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If no or few securities or industry analysts cover our business, the trading price for our Class A Common Stock would be negatively affected. If one or more of the analysts who covers us downgrades our Class A Common Stock or publishes incorrect or unfavorable research about our business, our stock price could decline. If one or more of these analysts stops covering our business or fails to publish reports on us regularly, demand for our Class A Common Stock could decrease, which could cause our stock price or trading volume to decline.

We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our operating results.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting and corporate governance requirements. These requirements include compliance with Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, and rules promulgated by the Securities and Exchange Commission, or SEC, and The NASDAQ Stock Market LLC. In addition, our management team will have to adapt to the requirements of our public company status. We expect that complying with these rules and regulations will substantially increase our legal and financial compliance costs and make some activities more time-consuming and costly.

The increased costs associated with operating as a public company will decrease our net earnings or increase our net loss and may require us to reduce costs in other areas of our business or increase the prices of our products. Additionally, if these requirements divert management's attention from other business concerns, they could have an adverse effect on our business, prospects, financial condition and operating results.

There may be sales of a substantial number of shares of our Class A Common Stock after this offering, which could cause our Class A Common Stock price to decline significantly.

Additional sales of our Class A Common Stock in the public market after this offering, or the expectation that sales may occur, could cause the price of our Class A Common Stock to decline. Upon the completion of the offering, we will have shares of Class A Common Stock outstanding, shares of Legacy Class A Common Stock, all of which will convert into Class A Common Stock no later than 360 days after the date of this prospectus, and shares of

Class B Common Stock outstanding, which are convertible into shares of Class A Common Stock or Legacy Class A Common Stock depending on the date of transfer.

The shares of Class A Common Stock sold in this offering will be freely tradable in the public market unless held by our affiliates. The remaining shares of Class A Common Stock held by our ESOP will be eligible for sale in the public market upon completion of our initial public offering, subject to the restrictions regarding distributions and diversification under the terms of our ESOP, ERISA regulations and restrictions under securities laws.

Only the shares of Legacy Class A Common Stock owned by our officers and directors and all of the shares of Class B Common Stock will be subject to lock-up agreements with the underwriters of our public offering. We expect that the remaining shares of Legacy Class A Common Stock outstanding will be freely tradable following the offering, subject to any volume restrictions imposed by Rule 144 on shares held by affiliates, although no public market for those shares exists and we do not plan to list the Legacy Class A Common Stock on any exchange or create a market for those shares.

Most of the holders of Legacy Class A Common Stock and Class B Common Stock have owned shares of our stock for many years and have not had access to a public market in which to sell their shares. Following conversion, a significant number of holders of our Legacy Class A Common Stock and Class B Common Stock may take advantage of the public market in our Class A Common Stock and sell shares.

Pursuant to our equity incentive plans, options to purchase shares of Class A Common Stock will be outstanding upon completion of this offering. After the offering, we intend to file a registration statement under the Securities Act that will cover the shares available for issuance under our equity incentive plans (including shares underlying the outstanding options) as well as shares held for resale by our existing shareholders that were previously issued under our equity incentive plans. See "Shares Eligible for Future Sale".

Sales of Class A Common Stock by existing shareholders in the public market, the availability of these shares for sale, our issuance of securities or the perception that any of these events might occur could materially and adversely affect the market price of our Class A Common Stock. In addition, the sale of these shares by these shareholders could impair our ability to raise capital through the sale of additional stock.

As a new investor, you will incur immediate and substantial dilution as a result of this offering.

Investors purchasing shares of our Class A Common Stock in this offering will pay more for their shares than the amount paid by shareholders who acquired shares before this offering. If you purchase Class A Common Stock in this offering, you will incur immediate dilution in pro forma net tangible book value of $ per share. In addition, the exercise of outstanding options and stock appreciation rights, the settlement of performance unit awards and grants of restricted stock will, and future equity issuances may, result in further dilution to investors.

We have paid dividends on our common stock in the past and expect to do so in the future, although at a lower rate than we have historically paid. Any determination to pay dividends in the future, however, will be at the discretion of our board of directors, will be subject to compliance with covenants in current and future agreements governing our indebtedness, and will depend upon our results of operations, financial condition, capital requirements and other factors our board of directors deems relevant.

The Class B Common Stock is held by a single shareholder, will have a significant number of votes and has separate approval rights for change in control transactions presented to shareholders for approval.

The Class B Common Stock will represent approximately % of the voting securities outstanding after the offering made by this prospectus, and will be able to influence the vote on matters requiring shareholder approval, may have interests and goals that differ from yours and may vote shares differently than you would. In addition, the Class B Common Stock votes as a separate voting group on a company conversion, merger requiring shareholder approval or share exchange; a sale of all or substantially all of our assets; and dissolution. Our Class B Common Stock is held by Henry T. Swigert as sole trustee of the Swigert 2000 Trust. Upon Mr. Swigert's death, Robert C. Warren, Jr. and Peter F. Adams, who are directors of ours, are designated to become co-trustees of the trust. If they do so, each must agree to vote the shares in trust in favor of a change in control transaction for the transaction to be approved. These voting rights may delay or prevent a change in control or sale of our business, including a transaction approved by our board of directors, and discourage tender offers for our shares. In the event of a change in control, the Class B Common Stock may have an opportunity to receive a premium for the Class B Common Stock that may not be available to the Class A Common Stock, which may affect the market price of our Class A Common Stock.

The trustee of our ESOP has the discretion to vote a large block of shares on matters presented to shareholders for approval.

Upon the closing of the offering made by this prospectus, each participant in our ESOP may direct the ESOP trustee (North Star Trust Company, an independent trust company) how to vote the shares of stock allocated to the participant's ESOP account. The trustee must vote any unallocated shares held by the ESOP or allocated shares for which no direction has been given by the participant. Consequently, the trustee has the ability to vote a significant block of shares on important matters, which could delay or prevent a change in control or sale of our business, including a transaction approved by our board of directors.

We have broad discretion to determine how to use the funds raised in this offering, and may use them in ways that do not enhance our operating results or the price of our Class A Common Stock.

We could spend the proceeds from this offering in ways our shareholders may not agree with or that do not yield a favorable return. We plan to use the net proceeds from this offering for general corporate purposes, which may include working capital, general and administrative matters, capital expenditures and acquisitions of businesses to complement or enhance our product offerings and manufacturing capacity. Until we use the proceeds of this offering, we plan to invest the net proceeds in interest-bearing securities. If we do not invest or apply the proceeds of this offering in ways that enhance shareholder value, our stock price could decline.

Provisions in our articles of incorporation and bylaws, Oregon law, and our credit agreement may delay or prevent an acquisition of our business.

Our articles of incorporation, bylaws and Oregon law contain provisions that may delay or prevent a change in control transaction or changes in our management. Our articles of

incorporation and bylaws, which will be amended before the completion of this offering, will include provisions that:

In addition, the separate vote of the Class B Common Stock, as described above, is required for certain change in control transactions. These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

Because we are incorporated in Oregon, we are governed by the provisions of the Oregon Business Corporation Act, which, among other things, limits the ability of shareholders owning in excess of 15% of our outstanding voting stock to merge or combine with us and regulates the process by which persons may acquire control of our business without the consent and cooperation of our board of directors.

In addition, under our credit agreement certain changes in the majority of our directors over a two-year period or specified changes or accumulations of ownership of our voting stock could result in an event of default, which may delay or prevent a change in control or sale of our business.

Any provision of our articles of incorporation or bylaws, Oregon law or our credit agreement that has the effect of delaying or deterring a change in control could limit the opportunity for our shareholders to receive a premium for their shares of our Class A Common Stock, and could also affect the price that some investors are willing to pay for our Class A Common Stock.

This prospectus includes forward-looking statements, which can be identified by the use of forward-looking terminology, including, but not limited to, the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will", "would" or "should" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements appear in a number of places throughout this prospectus and include statements regarding our plans, estimates, outlook, beliefs or expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements in this prospectus. In addition, even if our historical or future results of operations, financial condition and liquidity and the development of the industries in which we operate are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in other future periods. Important factors that could cause those differences include, but are not limited to:

See "Risk Factors" beginning on page 14 for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. These and other risk factors described in this offering prospectus may not be all of the factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could affect our results. Given these uncertainties and risks, readers are cautioned not to place undue reliance on these forward-looking statements. We disclaim any obligation to update any risk factors or to publicly announce the result of any revisions to any of the forward-looking statements contained in this prospectus to reflect future results, events or developments.

We estimate that we will receive net proceeds from the sale of shares of Class A Common Stock in this offering of approximately $ million or approximately $ million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus) after deducting underwriting discounts and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds to us by $ million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same, and after deducting the underwriting discounts and estimated offering expenses payable by us.

The principal purposes of this offering are to increase our financing flexibility, provide shareholders an opportunity to sell shares to the public and create a public market for our Class A Common Stock. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us of this offering. We intend to use the net proceeds to us from this offering primarily for general corporate purposes, including working capital, general and administrative matters and capital expenditures. We may also use a portion of the net proceeds for acquisitions of businesses to complement or enhance our product offerings and manufacturing capacity. We have no commitments or agreements to make any acquisitions or plans to repay indebtedness. We plan to invest the net proceeds of this offering in interest-bearing securities until used. We will not receive any proceeds from the sale of shares by the selling shareholders. See "Principal and Selling Shareholders."

Without taking into account the -for-one stock split that will occur before completion of the offering made by this prospectus, we paid cash dividends of:

We have typically paid a single annual dividend on our Legacy Class A Common Stock and Class B Common Stock in January of each year. In 2010, in addition to a $10.00 per share dividend paid in January, we declared and paid another dividend of $11.00 per share in December rather than in January 2011 due to uncertainty about the tax treatment of dividends in 2011. We have not declared or paid a dividend to common shareholders in 2011.

We have been required to pay quarterly dividends on the Class C Preferred Stock held by our employee stock ownership plan, or ESOP, at an annualized rate of 7.428% of the original issue price of $1,161.36 per share of Class C Preferred Stock. The Class C Preferred Stock will convert into Class A Common Stock upon completion of the offering made by this prospectus. See "Description of Employee Stock Ownership Plan".

We expect to pay quarterly cash dividends on all classes of our capital stock, subject to applicable law. Initially, we expect the annual dividend rate will be approximately % of the initial public offering price of the Class A Common Stock. Any determination to pay dividends and the amount of any dividends, however, will be at the discretion of our board of directors, subject to compliance with covenants in current and future agreements governing our indebtedness, and will depend upon our results of operations, financial condition, capital requirements and other factors that our board of directors deems relevant. Class A Common Stock, Legacy Class A Common Stock and Class B Common Stock will share equally and ratably in any dividends we pay or set aside.

Our senior secured credit agreement contains covenants that limit our ability to pay dividends or make other distributions to our shareholders. We are permitted to pay dividends as long as (i) no default exists under the agreement immediately before and after giving effect to the dividend and (ii) we would both (A) be in compliance with the financial covenants set forth in our credit agreement on a pro forma basis and (B) maintain a consolidated net leverage ratio at least 0.25 less than the maximum net leverage ratio then permitted under the agreement. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Description of Indebtedness". Our credit agreement is filed as an exhibit to the registration statement of which this prospectus is a part.

You should read the table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus.

			As of March 31, 2011

			Actual			Pro forma			Pro forma as adjusted(6)
			(in thousands)
Total debt, including current portion			$	271,760		$	271,760		$
Contingently redeemable equity securities(1)
	Class C Preferred Stock, 205,000 shares authorized, 188,354 outstanding, actual(2)			114,500			—
	Legacy Class A Common Stock, 5,000,000 shares authorized, 885,714 shares outstanding, actual(3)			139,744			3,521
Shareholders' equity/(deficit)
	Class A Common Stock, no shares authorized or outstanding, actual; shares authorized, pro forma and pro forma as adjusted, shares outstanding, pro forma; shares outstanding, pro forma as adjusted			—
	Legacy Class A Common Stock, 5,000,000 shares authorized, 885,714 shares outstanding, actual; shares authorized, pro forma and pro forma as adjusted, shares outstanding, pro forma and shares outstanding, pro forma as adjusted(4)			—			250,723
	Class B Common Stock, 243,737 shares authorized, 208,395 shares outstanding, actual; shares authorized, pro forma and pro forma as adjusted, shares outstanding, pro forma and pro forma as adjusted			10,343			10,343
	Class C Preferred Stock, 205,000 shares authorized, 188,354 outstanding, actual; 205,000 shares authorized, none outstanding, pro forma and pro forma as adjusted(2)			—			—
	Preferred stock, no shares authorized or outstanding, actual; 205,000 shares authorized, none outstanding, pro forma and pro forma as adjusted
	Accumulated deficit(5)			(26,641	)		(26,641	)
	Accumulated other comprehensive loss			(2,623	)		(2,623	)
	Noncontrolling interests			11,857			11,857

		Total shareholders' equity/(deficit)	$	(7,064	)	$	247,180		$
Total capitalization			$	518,940		$	518,940		$

(2): The actual presentation reflects shares of Class C Preferred Stock at their redemption value. Shares of Class C Preferred Stock automatically convert on a one-for-one basis into shares of Class A Common Stock upon our initial public offering as described in "Explanatory Note Regarding Changes in Our Capital Stock", and will no longer be subject to redemption.
(3): The actual presentation reflects on a pre-split basis, 169,434 shares of Legacy Class A Common Stock subject to repurchase obligations at their redemption value. Shares of Legacy Class A Common Stock automatically convert on a one-for-one basis into shares of Class A Common Stock over a period of up to 360 days as described in "Explanatory Note Regarding Changes in Our Capital Stock". Until conversion, the holders of approximately 169,434 shares (on a pre-split basis) of Legacy Class A Common Stock may require us to purchase shares upon retirement at age 65, death or disability. Upon the termination of the repurchase obligation, which will occur with respect to all but 4,443 shares (on a pre-split basis) immediately upon completion of the offering made by this prospectus and with respect to all remaining shares upon their conversion into Class A Common Stock, the stock will be reclassified from contingently redeemable equity securities to shareholders' equity. We expect that few, if any, shares of Legacy Class A Common Stock will be redeemed. See "Description of Capital Stock — Shareholders Agreements".
(4): The actual presentation reflects shares of Legacy Class A Common Stock not subject to repurchase obligations. See note 3.
(5): Accumulated deficit is caused by the periodic revaluation of our contingently redeemable equity securities to their current redemption value.
(6): A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) each of total shareholders' equity and total capitalization by $ million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same, and after deducting the underwriting discounts and estimated offering expenses payable by us.

The number of shares of Legacy Class A Common Stock to be outstanding after this offering is based on shares outstanding as of March 31, 2011 and excludes:

If you invest in our Class A Common Stock, your interest will be diluted to the extent of the difference between the public offering price per share of our Class A Common Stock and the pro forma as adjusted net tangible book value per share of our Class A Common Stock immediately after this offering. Pro forma historical net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the number of shares of our common stock outstanding at March 31, 2011, after giving effect to the pro forma adjustments referenced under "Capitalization".

After giving effect to the pro forma adjustments referenced under "Capitalization" and the sale by us of shares of Class A Common Stock in this offering at a price of $ per share, the midpoint of the price range set forth on the cover of this prospectus, and after deducting the underwriting discounts and estimated offering expenses payable by us, our pro forma net tangible book value as of March 31, 2011 would have been $ million, or $ per share. This represents an immediate increase in net tangible book value of $ per share to existing shareholders and an immediate dilution in net tangible book value of $ per share to new investors purchasing Class A Common Stock in the offering.

A $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) our pro forma as adjusted net tangible book value per share by $ , and increase (decrease) the dilution per share to new investors by $ , assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same, and after deducting the underwriting discounts and estimated offering expenses payable by us.

If the underwriters exercise their option to purchase additional shares of our Class A Common Stock in full, based upon a price of $ per share, the midpoint of the price range set forth on the cover of this prospectus, the pro forma as adjusted net tangible book value per share after this offering would be $ per share, and the dilution in pro forma net tangible book value per share to new investors in this offering would be $ per share.

The following table sets forth, as of March 31, 2011, on a pro forma as adjusted basis, the differences between existing shareholders and new investors with respect to the total number of shares of Class A Common Stock purchased from us, the total consideration paid, and the average price per share paid before deducting the underwriting discounts and estimated offering expenses payable by us, based upon a price of $ per share, the midpoint of the price range set forth on the cover of this prospectus.

Sales by the selling shareholders in this offering will cause the number of shares held by existing shareholders to be reduced to shares, or % of the total number of shares of our Class A Common Stock outstanding after this offering. If the underwriters' option to purchase additional shares is exercised in full, the number of shares held by existing shareholders after this offering would be reduced to % of the total number of shares of our Class A Common Stock outstanding after this offering.

The above discussion and tables are based on a pro forma as adjusted basis of shares of Legacy Class A Common Stock issued and outstanding as of March 31, 2011, and excludes:

To the extent that any outstanding options are exercised, new investors will experience further dilution.

We derived the selected consolidated statement of earnings data for the years ended December 26, 2008 and December 31, 2009 and 2010 and the selected consolidated balance sheet data as of December 31, 2009 and 2010 from our audited consolidated financial statements and related notes included in this prospectus. We derived the selected statement of earnings data for the years ended December 29, 2006 and December 28, 2007 and the balance sheet data as of December 29, 2006, December 28, 2007 and December 26, 2008 from our audited consolidated financial statements not included in this prospectus. Before 2009, we reported on a 52/53-week fiscal year consisting of four 13-week periods and ending on the last Friday of the calendar year. Effective December 27, 2008, we changed to a calendar year. Our fiscal year 2009, however, began on December 27, 2008 and ended on December 31, 2009, resulting in a 370-day year.

We derived the selected consolidated statement of earnings data for the three months ended March 31, 2010 and 2011 and the selected consolidated balance sheet data as of March 31, 2011 from our unaudited condensed consolidated financial statements and notes thereto included elsewhere in the prospectus. These unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of our management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information set forth herein. Interim financial results are not necessarily indicative of results that may be expected for the full fiscal year or any future period.

			Three months ended						Fiscal year ended

(dollars in thousands, except per share data)			March 31, 2011			March 31, 2010			December 31, 2010			December 31, 2009			December 26, 2008			December 28, 2007			December 29, 2006
Statement of earnings data:
Net sales			$	253,843		$	185,256		$	849,481		$	680,390		$	939,913		$	790,514		$	690,919
Cost of goods sold(1)				183,299			136,174			626,883			507,115			724,921			608,028			544,432

Gross profit				70,544			49,082			222,598			173,275			214,992			182,486			146,487
Operating expenses
	Selling and administrative expenses(1), (2)			46,729			31,189			147,881			112,535			132,719			116,750			110,053
	Restructuring and other(3)			20			281			748			6,332			1,792			—			—

Operating profit				23,795			17,612			73,969			54,408			80,481			65,736			36,434
Interest expense, net				3,079			6,354			23,710			26,226			26,736			27,816			7,561
Loss on early extinguishment of debt(4)										13,013			—			—			—			—
Other (income) expense(5)				(1,079	)		458			(731	)		(1,091	)		4,259			(2,610	)		(450	)

Earnings from continuing operations before income taxes				21,795			10,800			37,977			29,273			49,486			40,530			28,423
Income tax expense				7,420			3,689			9,423			8,487			13,297			14,013			11,416
Earnings from continuing operations, net of tax				14,375			7,111			28,554			20,786			36,189			26,517			17,007
Earnings from discontinued operations, net of tax(6)				—			—			—			306			443			1,368			10,371

Net earnings				14,375			7,111			28,554			21,092			36,632			27,885			27,378
Less: net earnings attributable to the noncontrolling interest-continuing operations				(1,491	)		(1,161	)		(4,634	)		(2,537	)		(5,073	)		(2,393	)		(138	)
Less: net earnings attributable to the noncontrolling interest-discontinued operations				—			—			—			(141	)		(343	)		(182	)		—
Net earnings attributable to ESCO shareholders from continuing operations				12,884			5,950			23,920			18,249			31,116			24,124			16,869
Valuation adjustment of Class C Preferred Stock(7)				(1,154	)		(771	)		(16,521	)		7,933			13,287			803			7,461
Net earnings attributable to ESCO common shareholders from continuing operations				11,730			5,179			7,399			26,182			44,403			24,927			24,330
Pro forma earnings from continuing operations attributable to ESCO shareholders(8)				12,884						23,920
Earning per weighted average share outstanding(9)
		Basic earnings per share from continuing operations allocated to ESCO common shareholders	$	10.69		$	4.78		$	6.81		$	24.18		$	41.08		$	23.14		$	156.32
		Diluted earnings per share from continuing operations allocated to ESCO common shareholders(10)	$	10.42		$	4.64		$	6.62		$	15.16		$	26.21		$	20.74		$	12.62
	Weighted average shares outstanding
		Basic		1,097			1,084			1,086			1,083			1,081			1,077			106
		Diluted		1,236			1,117			1,118			1,204			1,187			1,163			1,337
	Pro forma earnings per share from continuing operations attributable to ESCO shareholders
		Basic	$						$
		Diluted	$						$
	Pro forma weighted average shares outstanding
		Basic
		Diluted
Cash dividends declared per common share(11)									$	11.00		$	10.00		$	11.00		$	12.00		$	10.52

	Three months ended

	Three months ended					As of
	March 31, 2011 pro forma					As of
(dollars in thousands)	March 31, 2011 pro forma		March 31, 2011			December 31, 2010			December 31, 2009		December 26, 2008		December 28, 2007		December 29, 2006
Balance sheet data:
Cash and cash equivalents	$	81,078	$	81,078		$	114,101		$	168,487	$	113,167	$	84,070	$	92,230
Current assets, excluding cash and cash equivalents		314,321		314,321			268,166			203,854		231,169		240,043		201,423
Property and equipment, net		173,788		173,788			167,446			161,919		164,237		171,640		148,191
Total assets		748,337		748,337			723,622			675,745		646,111		619,489		538,711
Current liabilities, excluding the current portion of debt		144,641		144,641			133,854			101,162		121,767		115,831		95,391
Total debt, including current portion		271,760		271,760			273,314			306,498		304,096		305,753		309,529
Contingently redeemable equity securities(12)		3,521		254,244			232,184			144,064		132,038		135,653		97,471
Total equity/(deficit)(12)		247,180		(7,064	)		(4,622	)		44,699		17,259		16,563		10,262

(1): Non-cash ESOP compensation costs are included in cost of goods sold and selling and administrative expenses. See "Description of Employee Stock Ownership Plan."
(2): The mark to market on SARs, an expense of $7.7 million and $0.0 million, income of $0.3 million and an expense of $0.3 million in 2010, 2009, 2008 and 2007, respectively, is included in selling and administrative expenses. No SARs were outstanding in 2006. The mark to market on SARs, an expense of $3.5 million and $0.0 million in the three months ended March 31, 2011 and March 31, 2010, is included in selling and administrative expenses.
(3): Restructuring and other costs included: in 2010, expenses related to the closure of our Saskatoon, Saskatchewan foundry; in 2009, personnel reductions and the closure of our West Jordan, Utah plant and the Saskatoon, Saskatchewan foundry; and in 2008, personnel reductions, the closure of our West Jordan, Utah plant and curtailment costs related to freezing benefits for our U.S. defined benefit plans.
(4): Loss on early extinguishment of debt primarily includes the write-off of $4.0 million of unamortized loan costs and the early redemption call premium of $8.6 million paid upon redemption of $300.0 million principal amount of senior unsecured notes in December 2010 as part of our debt refinancing. Debt extinguishment costs also include $0.4 million of unamortized debt costs associated with our asset-backed line of credit cancelled in November 2010 as part of our debt refinancing.
(5): Other (income) expense primarily includes foreign exchange losses and gains on settlement transactions of foreign denominated accounts receivable and accounts payable. Other expense in each of 2009 and 2008 includes $0.3 million of insurance retention expenses.
(6): Discontinued operations for 2009, 2008 and 2007 included earnings from ESCO Soldering Locacoes de Marquinas e Equipmentos Ltda, which we divested in June 2009 as part of the transaction that resulted in our acquisition of 100% ownership of ESCO Soldering, now known as ESCO Brazil. Discontinued operations for the periods ended December 28, 2007 and December 29, 2006 included earnings from our Integrated Manufacturing (IMG) and Engineered Metals (EMG) groups, which were divested in the fourth quarter of 2006, except certain assets and the related income stream that we retained.
(7): Valuation adjustment of Class C Preferred Stock is the mark to market change of the redemption value of the shares of Class C Preferred Stock classified as contingently redeemable equity securities on our balance sheet. The corresponding offset is a change in our retained earnings. Upon the conversion of Class C Preferred Stock into Class A Common Stock in connection with the offering made by this prospectus, the stock will be reclassified from contingently redeemable equity securities to shareholders' equity and this valuation adjustment will no longer be included in our financial statements.
(8): Pro forma earnings from continuing operations attributable to ESCO shareholders reflects the reclassification from contingently redeemable equity securities to shareholders' equity of Class C Preferred Stock and Legacy Class A Common Stock subject to contingent repurchase obligations. See "Description of our Employee Stock Ownership Plan" and "Description of Capital Stock."
(9): Per share data reflect the changes in our capital structure that will occur before we complete the offering described in this prospectus; other per share data do not. See "Explanatory Note Regarding Changes in Our Capital Stock". Per share data in 2006 reflect our 2006 ESOP transaction. The Legacy Class A Common Stock and the Class B Common Stock were converted from preferred stock when we implemented our ESOP, which occurred on December 27, 2006. The weighted average common shares outstanding in 2006 was minimal due to the short time the Legacy Class A Common Stock and Class B Common Stock existed in 2006.
(10): Diluted earnings per share includes the weighted average number of Class C Preferred Stock outstanding and the incremental shares that would be issued upon the assumed exercise of stock options for the period they were outstanding.
(11): See "Dividend Policy".
(12): Contingently redeemable equity securities are redeemable upon the holder's retirement at age 65, death or disability. See "Description of Capital Stock — Shareholder Agreements" and "Description of Employee Stock Ownership Plan". The presentation reflects shares

of Class C Preferred Stock and Legacy Class A Common Stock at their redemption value. Shares of Class C Preferred Stock automatically convert on a one-for-one basis into shares of the Class A Common Stock upon the completion of the offering made by this prospectus. Shares of Legacy Class A Common Stock automatically convert on a one-for-one basis into shares of the Class A Common Stock over a period of up to 360 days as described in "Explanatory Note Regarding Changes in Our Capital Stock". Upon the termination of our repurchase obligation, which will occur (a) with respect to approximately 161,730 shares of the Legacy Class A Common Stock, upon completion of the offering made by this prospectus and (b) with respect to the remaining 4,443 shares of Legacy Class A Common Stock subject to the repurchase obligation and all of the shares of Class C Preferred Stock, upon their conversion into Class A Common Stock, the stock will be reclassified from contingently redeemable equity securities to shareholders' equity.

(13)

Adjusted EBITDA is earnings from continuing operations, net of tax, before interest, taxes, depreciation and amortization and non-operating expense (income) adjusted to add back ESOP non-cash compensation expenses, mark to market on SARs expense, unrealized (gains) losses on long-term investments and certain restructuring charges. Adjusted EBITDA margin is adjusted EBITDA divided by net sales. Adjusted EBITDA and Adjusted EBITDA margins have limitations as analytical tools. Adjusted EBITDA is not intended to represent net earnings, earnings from continuing operations, net of tax, or cash flow from operating activities as these terms are defined by generally accepted accounting principles in the United States and should not be used as an alternative to net earnings as an indicator of operating performance or to cash flow as a measure of liquidity. Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies because other companies may not calculate those measures in the same manner we do. We have included Adjusted EBITDA and Adjusted EBITDA Margin in this prospectus because they are used by our management to assess financial performance and may provide a more complete understanding of the factors and trends affecting our business. We believe Adjusted EBITDA and Adjusted EBITDA margin are useful to investors in evaluating our operating performance for the following reasons:

•: Our management uses these measures in conjunction with GAAP financial measures as part of our assessment of our business and in communications with our board of directors concerning our financial performance;
•: These measures provide consistency and comparability with our past financial performance, facilitate period-to-period comparisons of operations and facilitate comparisons with peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and
•: These measures exclude non-cash charges, such as depreciation, amortization, ESOP compensation expense and mark to market on SARs expense, and those non-cash charges in any specific period may not directly correlate to the underlying performance of our business operations and can vary significantly from period to period.

The following table reconciles earnings from continuing operations, net of tax to Adjusted EBITDA for the periods indicated below.

	Three months ended						Fiscal year ended

(dollars in thousands)	March 31, 2011			March 31, 2010			December 31, 2010			December 31, 2009			December 26, 2008			December 28, 2007			December 29, 2006
Earnings from continuing operations, net of tax	$	14,375		$	7,111		$	28,554		$	20,786		$	36,189		$	26,517		$	17,007
Add/(Subtract):
Interest (net) and loss on early extinguishment of debt		3,079			6,354			36,723			26,226			26,736			27,816			7,561
Income tax expense		7,420			3,689			9,423			8,487			13,297			14,013			11,416
Depreciation and amortization(a)		7,774			6,492			27,479			25,113			24,187			22,661			19,191
Other (income) expense		(1,079	)		458			(731	)		(1,091	)		4,259			(2,610	)		450
ESOP non-cash compensation expense(b)		5,101			4,020			17,259			16,504			20,248			19,682			34,315
Mark to market on SARs expense(c)		3,513			—			7,678			—			(260	)		266			—
Unrealized (gains) losses on long-term investments(d)		(746	)		(567	)		(1,953	)		(2,860	)		4,405			(1,142	)		(1,758	)
Restructuring and other(e)		20			281			748			6,332			1,792			(1,300	)		2,000
Port Hope reclamation(f)		—			—			2,600			—			—

Adjusted EBITDA	$	39,457		$	27,838		$	127,780		$	99,497		$	130,853		$	105,903		$	90,182

(a): Depreciation and amortization excludes the amortization of debt issuance costs, which are included in interest (net).
(b): We recognize non-cash compensation expense equal to the fair value of the Class C Preferred Stock released as security for the loan to the ESOP and allocated to participant accounts. A portion of the non-cash ESOP compensation expense is allocated to cost of goods sold and a portion is allocated to selling and administrative expenses, based on the number of shares allocated to the accounts of manufacturing employees and other employees. See "Description of Employee Stock Ownership Plan". ESOP non-cash compensation expense in 2006 includes $3.9 million of ESOP-related expenses.
(c): Each quarter, we record the mark to market change in the value of our SARs. Our determination of fair value includes, among other factors, the valuation determined by the independent valuation firm used by the ESOP trustee. We add this back to derive Adjusted EBITDA because it is a non-cash expense. In 2011, we changed our SARs long-term incentive program to stock-settled grants. The grant date fair value of an award will be amortized over the required service period. 92.6% of our existing cash-settled SARs were converted to stock-settled SARs in 2011. As a result, in the second quarter of 2011, those awards are no longer required to be marked to market. Any impact to expense from this conversion will be amortized over the remaining service period for the unvested awards.

(d): Unrealized (gains) and losses on long-term investments represent the mark to market on our investments held to fund our deferred compensation and supplemental executive retirement programs.
(e): Restructuring and other activity in 2010 included restructuring expenses related to the closure of our Saskatoon, Saskatchewan foundry. Restructuring activity in 2009 included restructuring expenses related to personnel reductions and the closure of our West Jordan, Utah plant and the Saskatoon, Saskatchewan foundry. Restructuring activity in 2008 included restructuring expenses related to personnel reductions, the closure of our West Jordan, Utah plant and curtailment costs related to freezing benefits for our U.S. defined benefit plans. Other activity in 2007 included insurance recovery from a fire in our U.K. facility in 2006 and estimated lost earnings before interest and taxes due to a work stoppage at our Herstal, Belgium facility. Other activity in 2006 included estimated costs and business interruption expenses associated with a fire in our U.K. facility, net of partial insurance recovery received in 2006.
(f): The expense in 2010 represents the estimated cost of removing an accumulation of solid waste at our Port Hope, Ontario, Canada facility. We plan to complete the removal within a five-year period. This expense is included in selling and administrative expenses in our consolidated financial statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included in this prospectus. In addition to historical financial information, this discussion contains forward-looking statements reflecting our plans, estimates, outlook, beliefs and expectations that involve risks and uncertainties. As a result of many factors, particularly those under "Risk Factors" and "Special Note Regarding Forward-Looking Statements" in this prospectus, our actual results and the timing of events may differ materially from those anticipated in these forward-looking statements.

We design, develop and manufacture highly engineered wear and replacement parts and related products used in mining, infrastructure development, industrial, power generation and aerospace applications. Our consumable wear and replacement products, which accounted for more than 75% of our 2010 net sales, generate recurring sales for us as these items wear and are required to be replaced. We employ a diversified distribution model for product sales that includes direct sales, a network of independent dealers, licensees and OEMs.

We were founded in 1913 in Portland, Oregon. Through nearly a century of operations, we have focused on product innovation and on growing our business to serve customer needs. Our business has been built on creating solutions to customer problems through metallurgy, foundry casting capabilities and innovative product design that emphasizes value, durability and safety. We were an early innovator in earthmoving wear parts, producing the industry's first two-piece ground engaging tool, or GET, tooth system. Since then we have introduced new generations of two- and three-piece tooth systems, making us the global leader in GET tooth systems used in surface mining and infrastructure development, and expanded our EPG product portfolio to over 25,000 SKUs. Over time we also diversified our business to include the production of superalloy precision investment castings for gas turbine engines used in aerospace and power generation applications. We have expanded geographically and grown our business, and are now a global company with more than 1,000 customers and 4,600 employees and operations in 19 countries on six continents.

Our net sales were $849.5 million, $680.4 million and $939.9 million in 2010, 2009 and 2008, respectively. More than half of our net sales were from outside of the United States in each of these years. We generated net earnings attributable to ESCO shareholders of $23.9 million, $18.4 million and $31.2 million and Adjusted EBITDA (as defined in "Selected Consolidated Financial and Other Data") of $127.8 million, $99.5 million and $130.9 million in 2010, 2009 and 2008, respectively.

Our net sales were $253.8 million in the three months ended March 31, 2011, a 37% increase from $185.3 million in the three months ended March 31, 2010. Net earnings attributable to ESCO shareholders were $12.9 million in three months ended March 31, 2011, an increase of $6.9 million, or 115%, from $6.0 million in the three months ended March 31, 2010. Adjusted EBITDA increased

to $39.5 million in the three months ended March 31, 2011, a 42.1% increase from $27.8 million in the three months ended March 31, 2010.

Our customers maintain inventories of our parts to use or resell in the short term based on their expectations of market activity. As a result, their purchases from us may be at a higher or lower rate than the rate of their use or sale of our products as they "stock up" or "destock" in anticipation of upswings or downturns in the economy generally or in their particular market. Throughout much of 2008, customers built elevated inventory levels in anticipation of continuing strong market conditions. In late 2008, however, activity in our customers' end markets decreased significantly, which resulted in some customers holding excess levels of inventory of our products and led to destocking of our parts. In 2009, the recession further decreased activity in the mining, infrastructure development and industrial markets served by EPG and in the power generation and aerospace markets served by TTG. This resulted in further supply chain destocking and lower demand for our products. In late 2009, our bookings and net sales began to increase, which we believe was driven by increased market activity in our customers' end markets and a need to replenish inventory of our parts. In TTG, we believe there was a similar destocking that started later and continued in 2010 because of the order lead time and the length of the supply chain in the power generation market, mitigated by recovery in the aerospace market.

In 2010, we saw a return to the secular growth trends in mining and infrastructure development due to the continued urbanization and infrastructure development in emerging markets, and resulting increased demand for commodities. We believe these market dynamics, as well as some customer inventory restocking, led to increased demand for our EPG wear parts and attachments. In 2010, we focused on:

As a result of the economic turnaround and our expansion initiatives, we increased our global workforce to more than 4,600 employees at March 31, 2011 from fewer than 3,800 employees in 2009. We have experienced increased EPG lead times in 2011 because customer demand is outstripping our ability to supply products on a timely basis. We estimate that customer demand has led to extended lead times for products that represented approximately 45% of EPG net sales in 2010. In 2010, we estimate the average lead time for mining GET products, for example, was less than 10 weeks; as of June 1, 2011, average lead time was over 20 weeks. See "Risk Factors — Our production capacity may not be sufficient to meet customer demand." We believe our competitors also face increased lead times. We have taken steps to address lead time issues, and expected increased orders in Australia when our license with Bradken terminates, including incremental expansion of certain existing facilities, some of which has been implemented and some of which is scheduled for the second half of 2011 and early 2012; the expansion of our acquired Austcast facilities in Australia scheduled for the second half of 2011; and the start-up of our Chilean joint venture facility scheduled for 2012.

EPG. We believe we are well positioned to capitalize on our investments in foundry capacity, direct distribution and global expansion as the mining and infrastructure development markets grow.

Demand for mined commodities is expected to increase as the global economy grows and consumption of raw materials in connection with urbanization and development in emerging markets increases. These dynamics can be expected to drive increased demand for mining capital equipment on which we expect to have first fitment opportunities; increased restocking of inventories of our products; and increased use of wear parts, particularly as ore grades decline and shallow ore deposits are depleted, requiring more earth excavation.

As a result of market activity levels and expected trends, we plan to continue to invest in our geographic expansion in key mining regions in countries such as Australia, Brazil, Canada, Peru, Indonesia, South Africa and the United States. We also plan to continue to build our direct distribution model and grow our product offering in markets where there is a high concentration of mining activity. These investments in our growth may negatively impact our operating margin in the short term.

TTG. Continued growth in global air traffic, which began in 2010, can be expected to cause OEMs to increase production and increase demand for aerospace components. We expect improved sales of components for new OEM equipment driven by increased production in aircraft programs such as Boeing's 787 and 747-8 and the Airbus A380. While visibility remains limited, we also believe our industrial gas turbine, or IGT, markets may begin to improve in late 2011, but at a lower rate than in past recoveries. We expect growth in orders for power turbine components, including in the aftermarket, to be driven by new turbine builds, restocking in the supply chain, and shorter maintenance cycles as energy consumption grows.

We regularly review a number of metrics, including the following, to evaluate our business, measure our performance, indentify trends affecting our business, formulate financial projections and make strategic decisions.

In addition to the measures above, we review monthly key raw material costs and pricing trends. In EPG, we track, among other things, the price of scrap steel, plate steel, nickel and molybdenum, which prices affect the cost of our products. The average cost for these raw materials increased in 2008 compared to 2007. Beginning in the fourth quarter of 2008 and through 2009, average costs declined, but increased again in 2010 and in the first quarter of 2011. In TTG, we track, among other things, the price of key alloys, such as nickel, cobalt, molybdenum, and tantalum, used in TTG products. In TTG, we experienced lower raw material prices in 2009 compared to 2008, and saw an increase in most of those costs in 2010. Our long-term TTG customer agreements have price escalation provisions for critical alloys, which allow us to pass costs through to customers. We generally seek to pass raw material cost increases to our customers through EPG product price increases and through surcharges or escalator provisions in our long-term agreements with TTG customers. Historically, there is a delay of several months between raw material cost increases and our realization of price increases.

EPG net sales primarily consist of sales of wear parts and attachments serving as wear part carriers for mining, infrastructure development and other industrial markets and royalties from a limited number of licensees from sales of our products in some geographies. EPG sales are made to OEMs and end-users directly and indirectly through a network of independent dealers.

TTG net sales primarily consist of sales of replacement parts and structural components for turbines used in the aerospace and power generation markets. TTG net sales are derived from products that are developed by our customers, and almost all TTG net sales are direct.

Cost of goods sold includes raw materials; employee compensation and benefits, including ESOP non-cash compensation expense; and other costs, including distribution expenses, depreciation, product development costs, insurance, taxes, operating supplies, utilities and warranty costs. Manufacturing development expense and a portion of foundry pattern amortization, which we consider part of our product development cost, are included in cost of goods sold rather than in research and development.

Selling and administrative expenses include employee compensation and benefits, including ESOP non-cash compensation expense and long-term incentive accruals; research and development costs; product optimization costs; outbound freight not invoiced to the customer; professional fees; insurance; mark to market gains or losses on our long-term investments held to fund our deferred compensation and supplemental executive retirement programs and certain facility costs. All long-term incentive performance awards and SARs expenses are recorded in selling and administrative expenses. See "— Critical Accounting Policies and Estimates — Share-Based Compensation".

Product optimization, part of which we consider part of our product development cost, is included in selling and administrative expenses in addition to research and development expense.

Restructuring and other represents costs associated with plant shutdowns and reduction in force programs initiated in 2008 and 2009 and other non-routine expenses.

Dollar amounts are in millions and are derived from the consolidated financial statements included in this prospectus, which present amounts in thousands. Small rounding differences may be reflected in the percentage of net sales and percentage change columns below.

Three Months Ended March 31, 2011 Compared to Three Months ended March 31, 2010

Statement of Earnings Data (dollars in millions)		Three months ended March 31, 2011					Three months ended March 31, 2010

Net sales		$	253.8		100.0	%	$	185.3		100.0	%
Cost of goods sold(1)			183.3		72.2			136.2		73.5
Gross profit			70.5		27.8			49.1		26.5
Selling and administrative expenses(1)			46.7		18.4			31.2		16.8
Restructuring and other			—		—			0.3		0.2
Operating profit			23.8		9.4			17.6		9.5
Interest expense, net			3.1		1.2			6.4		3.5
Other income, net			(1.1	)	(0.4	)		0.4		0.2

Earnings from continuing operations before income taxes			21.8		8.6			10.8		5.8
Income tax expense			7.4		2.9			3.7		2.0

Earnings from continuing operations, net of tax			14.4		5.7			7.1		3.8
Less: net earnings attributable to the noncontrolling interest — continuing operations			(1.5	)	(0.6	)		(1.1	)	(0.6	)

	Net earnings attributable to ESCO shareholders	$	12.9		5.1	%	$	6.0		3.2	%

	Three months ended

Statement of Earnings Data (dollars in millions)	March 31, 2011			March 31, 2010			$ Change			% Change
Net sales	$	253.8		$	185.3		$	68.5			37.0	%
Cost of goods sold(1)		183.3			136.2			47.1			34.6
Gross profit		70.5			49.1			21.4			43.6
Selling and administrative expenses(1)		46.7			31.2			15.5			49.7
Restructuring and other		—			0.3			(0.3	)		(100.0	)
Operating profit		23.8			17.6			6.2			35.2
Interest expense, net		3.1			6.4			(3.3	)		(51.6	)
Other income, net		(1.1	)		0.4			(1.5	)		(375.0	)

Earnings from continuing operations before income taxes		21.8			10.8			11.0			101.9
Income tax expense		7.4			3.7			3.7			100.0

Earnings from continuing operations, net of tax		14.4			7.1			7.3			102.8
Less: net earnings attributable to the noncontrolling interest — continuing operations		(1.5	)		(1.1	)		(0.4	)		36.4

Net earnings attributable to ESCO shareholders.	$	12.9		$	6.0		$	6.9			115.0	%

For the first quarter of 2011, net sales were $253.8 million, an increase of $68.5 million, or 37.0%, from $185.3 million for the first quarter of 2010. This increase was driven by higher sales in both EPG and TTG. The increase in EPG net sales was due to strengthening markets and additional net sales of $20.2 million from the Australian businesses we acquired in late 2010 and the Wyoming distributor we acquired in the first quarter of 2011. Both TTG aerospace engine component and industrial gas turbine (IGT) net sales also increased. The combined net sales of EPG and TTG wear parts and replacement components represented approximately 75% of our net sales for the first quarters of 2010 and 2011. Net sales directly or indirectly outside of the United States made up 60.6% of net sales in the first quarter of 2011 and 55.8% of net sales in the first quarter of 2010. Our top 10 customers generated 25.0% of our net sales in the first quarter of 2011 and 25.6% in the first quarter of 2010. No single customer accounted for 10% or more of our net sales in either quarter.

EPG. Net sales increased $64.8 million, or 42.1%, to $218.8 million for the first quarter of 2011 from $154.0 million for the first quarter of 2010. The $64.8 million increase was composed of a $50.4 million, or 57.1%, increase in mining product sales across all geographies, including $16.3 million contributed by the two Australian businesses acquired in 2010 and $3.9 million from the Wyoming business acquired in the first quarter of 2011; a $17.5 million, or 34.4%, increase in infrastructure development product sales across all geographies; and a $3.1 million, or 20.9%, decrease in industrial product sales. Included in these increases is the net effect of a $5.4 million

benefit and a $4.4 million benefit due to favorable foreign exchange rates and product price increases, respectively, in the first quarter of 2011 compared to the first quarter of 2010. In the first quarter of 2011, 51.7% of our EPG net sales were made directly to end-users, 33.3% were generated through our EPG global dealer distribution network and 15.0% were sales to original equipment manufacturers (OEMs), compared to 48.8% of EPG net sales directly to end-users; 36.4% generated through our EPG global dealer distribution network and 14.8% sold to OEMs in the first quarter of 2010. The increase in net sales directly to end-users or direct channels was primarily driven by our two Australian acquisitions, increased sales in North America and the continued strength in global mining markets.

TTG. Net sales were $35.0 million for the first quarter of 2011, an increase of $3.7 million, or 11.8%, from $31.3 million for the first quarter of 2010, due to higher aerospace engine component and IGT sales.

Gross profit was $70.5 million for the first quarter of 2011, an increase of $21.4 million, or 43.8%, from $49.1 million for the first quarter of 2010. This increase was driven primarily by stronger sales in both operating groups in the first quarter of 2011, which resulted in a $26.8 million favorable impact on gross profit. The favorable volume impact was partially offset by $4.5 million of increased operating costs, including distribution expenses and other expenses due to higher volumes and the addition of manufacturing costs from the Australian operations acquired in the second half of 2010, and $0.8 million of increased non-cash ESOP compensation. Excluding ESOP non-cash compensation expense of $3.5 million for the first quarter of 2011 and $2.7 million for the first quarter of 2010, gross profit as a percentage of sales increased to 29.2% in the first quarter of 2011 from 28.0% in the first quarter of 2010.

EPG. Gross profit increased $21.5 million, or 45.8%, to $68.4 million for the first quarter of 2011 compared to $46.9 million for the first quarter of 2010, primarily due to an increase in net sales. EPG gross profit margin improved to 31.3% in the first quarter of 2011 from 30.5% in the first quarter of 2010.

TTG. Gross profit increased $0.8 million, or 16.3%, to $5.7 million for the first quarter of 2011 from $4.9 million for the first quarter of 2010 primarily due to an increase in net sales. TTG gross profit margin improved to 16.3% in the first quarter of 2011 from 15.7% in the first quarter of 2010, primarily due to improved operating efficiencies and volume leverage at certain manufacturing facilities.

Other. Other represents primarily the ESOP non-cash compensation expense of $3.5 million and $2.7 million in the first quarter of 2011 and 2010, respectively.

Selling and administrative expenses were $46.7 million for the first quarter of 2011, an increase of $15.5 million, or 49.7%, from $31.2 million of selling and administrative expenses for the first quarter of 2010. Selling and administrative expenses as a percentage of net sales increased to 18.4% in the first quarter of 2011 from 16.8% in the first quarter of 2010. Excluding ESOP non-cash compensation expense, selling and administrative expenses increased $15.2 million in the first quarter of 2011 compared to the first quarter of 2010 and, as a percentage of net sales, selling and administrative expenses increased to 17.8% from 16.1%.

EPG. Selling and administrative expenses for the first quarter of 2011 were $32.3 million, an increase of $9.4 million, or 41.0%, from $22.9 million for the first quarter of 2010. The increase was primarily due to $4.6 million of expansion-related expenses, particularly the continued investment in our Australian and South African organizational infrastructure and the Australian businesses and Wyoming distributor we acquired in late 2010 and in the first quarter of 2011, and $3.6 million attributable to increased sales volumes, including travel and outbound freight expenses. EPG selling and administrative expenses as a percentage of net sales decreased to 14.8% in the first quarter of 2011 from 14.9% in the first quarter of 2010.

TTG. Selling and administrative expenses for the first quarter of 2011 were $4.1 million compared to $4.2 million for the first quarter of 2010. Selling and administrative expenses remained flat despite higher sales volumes, which led to improvement in selling and administrative expenses as a percentage of net sales. TTG selling and administrative expenses as percentage of net sales decreased to 11.7% in the first quarter of 2011 from 13.4% in the first quarter of 2010.

Other. Increased selling and administrative expenses in the first quarter of 2011 was primarily related to a $4.9 million increase in our incentive compensation accrual, including a $3.5 million mark-to-market change on cash-settled SARs.

EPG. Operating profit increased 50.0% to $36.0 million, or 16.5% of net sales, for the first quarter of 2011 compared to $24.0 million, or 15.6% of net sales, for the first quarter of 2010. The increase in operating profit was primarily due to increased net sales and gross profit margin improvement in the first quarter of 2011.

TTG. Operating profit increased to $1.6 million, or 4.6% of net sales, for the first quarter of 2011 compared to $0.7 million, or 2.3% of net sales, for the first quarter of 2010. The increase in operating profit was driven primarily by higher net sales in the first quarter of 2011.

Operating loss increased to $13.8 million in the first quarter of 2011 compared to $7.1 million in the first quarter of 2010. The primary drivers were the $4.9 million increase in our incentive compensation accrual and $1.1 million additional non-cash ESOP compensation expense.

Interest expense, net was $3.1 million for the first quarter of 2011 compared to $6.4 million for the first quarter of 2010. The decrease in net interest expense reflects the lower average effective interest rates and reduced debt as a result of our debt refinancing in December 2010.

Income tax expense was $7.4 million and $3.7 million for the first quarter of 2011 and 2010, respectively. The increase in tax expense was primarily due to the increase in earnings. The effective tax rate was 34.0% for the first quarter of 2011 and 34.2% for the first quarter of 2010.

Noncontrolling interest reflects the portion of net after-tax profits from our less-than-100%-owned subsidiaries allocable to non-ESCO shareholders. Noncontrolling interest was $1.5 million for the first quarter of 2011 compared to $1.2 million for the first quarter of 2010, reflecting slightly higher sales for those entities in the first quarter of 2011.

Statement of Earnings Data (dollars in millions)		Year ended December 31, 2010					Year ended December 31, 2009

Net sales		$	849.5		100.0	%	$	680.4		100.0	%
Cost of goods sold(1)			626.9		73.8	%		507.1		74.5	%
Gross profit			222.6		26.2	%		173.3		25.5	%
Selling and administrative expenses(1)			147.9		17.4	%		112.5		16.5	%
Restructuring and other			0.7		0.1	%		6.4		0.9	%

Operating profit			74.0		8.7	%		54.4		8.0	%
Interest expense, net			23.7		2.8	%		26.2		3.9	%
Loss on early extinguishment of debt			13.0		1.5	%		—		—
Other income, net			(0.7	)	(0.1	)%		(1.1	)	(0.2	)%

Earnings from continuing operations before income taxes			38.0		4.5	%		29.3		4.3	%
Income tax expense			9.4		1.1	%		8.5		1.2	%

Earnings from continuing operations, net of tax			28.6		3.4	%		20.8		3.1	%
Earnings from discontinued operations, net of tax			—		—			0.3		—

Net earnings			28.6		3.4	%		21.1		3.1	%
Less: net earnings attributable to the noncontrolling interest — continuing operations			(4.7	)	(0.6	)%		(2.5	)	(0.4	)%
Less: net earnings attributable to the noncontrolling interest — discontinued operations			—		—			(0.2	)	—

	Net earnings attributable to ESCO shareholders	$	23.9		2.8	%	$	18.4		2.7	%

		Year ended

Statement of Earnings Data (dollars in millions)		December 31, 2010			December 31, 2009			$ Change			% Change
Net sales		$	849.5		$	680.4		$	169.1			24.9	%
Cost of goods sold(1)			626.9			507.1			119.8			23.6	%
Gross profit			222.6			173.3			49.3			28.4	%
Selling and administrative expenses(1)			147.9			112.5			35.4			31.5	%
Restructuring and other			0.7			6.4			(5.7	)		(89.1)	%

Operating profit			74.0			54.4			19.6			36.0	%
Interest expense, net			23.7			26.2			(2.5	)		(9.5)	%
Loss on early extinguishment of debt			13.0			—			13.0			n/m
Other income, net			(0.7	)		(1.1	)		0.4			(36.4)	%

Earnings from continuing operations before income taxes			38.0			29.3			8.7			29.7	%
Income tax expense			9.4			8.5			0.9			10.6	%

Earnings from continuing operations, net of tax			28.6			20.8			7.8			37.5	%
Earnings from discontinued operations, net of tax			—			0.3			(0.3	)		(100.0)	%

Net earnings			28.6			21.1			7.5			35.5	%
Less: net earnings attributable to the noncontrolling interest — continuing operations			(4.7	)		(2.5	)		(2.2	)		88.0	%
Less: net earnings attributable to the noncontrolling interest — discontinued operations			—			(0.2	)		0.2			(100.0)	%

	Net earnings attributable to ESCO shareholders.	$	23.9		$	18.4		$	5.5			29.9	%

For 2010, net sales were $849.5 million, an increase of $169.1 million, or 24.9%, from $680.4 million for 2009. The combined net sales of EPG and TTG wear parts and replacement components represented more than 75% of our net sales for both 2010 and 2009. Net sales directly or indirectly outside of the United States made up 55.7% of our 2010 net sales and 52% of our 2009 net sales. Our top 10 customers generated 26% of our net sales in 2010 and 23% of our net sales in 2009. No single customer accounted for 10% or more of our net sales in 2010 or 2009.

EPG. Net sales increased $182.1 million, or 34.3%, to $712.6 million for 2010 from $530.5 million for 2009. The $182.1 million increase was composed of a $130.2 million, or 40.9%, increase in mining product sales across all geographies, including $30.5 million contributed by the two Australian businesses acquired in 2010; a $41.3 million, or 24.3%, increase in infrastructure development product sales driven by customer inventory restocking and market growth; and a $10.6 million, or 25.0%, increase in industrial products sales. Included in these increases is the net effect of a $14.0 million benefit in 2010 compared to 2009 due to favorable foreign exchange rates. In 2010, 48% of our EPG net sales were sales directly to end-users, 36% were generated through our EPG global dealer distribution network and 16% were sales to OEMs. In 2009, 44% of our EPG net sales were sales directly to end customers, 43% were generated through our EPG global dealer

distribution network and 13% were sales to OEMs. The increase in net sales generated through our direct channel in 2010 was primarily driven by the acquisition of two Australian businesses and the secular recovery of global mining markets. The increase in net sales generated by our OEMs was primarily driven by supply chain restocking.

TTG. Net sales were $136.9 million for 2010, a decrease of $13.0 million, or 8.7%, from $149.9 million for 2009. The decrease was primarily composed of a $19.6 million decrease in IGT sales driven by late cycle destocking, particularly with our maintenance, repair and overhaul ("MRO") customers, and a $2.5 million decrease in industrial/other sales. The IGT decrease was mitigated by a $9.1 million increase in our aerospace engine component sales, which we believe was driven by increased airline traffic.

Gross profit was $222.6 million for 2010, an increase of $49.3 million from $173.3 million for 2009 driven primarily by EPG sales volume impact of $55.6 million and increased utilization efficiencies of the EPG manufacturing cost base of $14.4 million, partially offset by EPG sales volume-related costs, such as increased distribution and other expenses of $12.2 million, lower TTG sales volume and lower TTG capacity utilization of $5.6 million and a $2.9 million LIFO decrement. This decrement was the effect of reduced inventories in 2009, resulting in a liquidation of LIFO inventory carried at the lower costs prevailing in prior years than the cost of 2009 purchases. Gross profit as a percentage of net sales increased to 26.2% for 2010 from 25.5% for 2009. Excluding ESOP non-cash compensation expense of $11.9 million for 2010 and $11.1 million for 2009, gross profit as a percentage of net sales increased for 2010 to 27.6% from 27.1% for 2009.

EPG. Gross profit increased $55.7 million, or 36.1%, to $209.8 million in 2010 from $154.1 million in 2009, primarily due to an increase in net sales volumes and increased utilization efficiencies of EPG manufacturing cost base. EPG gross profit margin increased to 29.4% for 2010 from 29.0% for 2009, primarily as the result of higher production volumes, which better leveraged manufacturing capacities, and manufacturing cost reductions that focused on utilities and operating supplies. Partially offsetting the increase in gross profit percentage were increased raw material costs in 2010. We did not initiate pricing increases to pass on raw material costs until the second half of 2010.

TTG. Gross profit decreased $5.6 million, or 18.4%, to $24.8 million in 2010 from $30.4 million in 2009 due to lower sales volumes, lower manufacturing capacity utilization and manufacturing development and product trial expenses associated with new parts and a higher aerospace product mix, which generally have lower margins than IGT, as a result of the late cycle destocking in the IGT markets.

Other. Other represents principally the ESOP non-cash compensation expense of $11.9 million in 2010 and $11.1 million in 2009.

Selling and administrative expenses were $147.9 million for 2010, an increase of $35.4 million, or 31.5%, over 2009. Selling and administrative expenses as a percentage of net sales increased to 17.4% for 2010 from 16.5% for 2009. Excluding ESOP non-cash compensation expense, selling and administrative expenses increased $35.4 million, or 32.9%, for 2010 compared to 2009 and, as a percentage of net sales, selling and administrative expenses increased to 16.8% for 2010 from 15.8% for 2009.

EPG. Increased selling and administrative expenses for 2010 resulted from increased sales volume activity due to improved market conditions, growth-related hiring and our entry into Australia in anticipation of the expiration of our Australian license agreement on June 30, 2011, expansion of our global direct distribution model and recovery in our markets. Our entry into Australia in the second half of 2010 increased selling and administrative expenses by $6.6 million, which primarily consisted of operational costs and acquisition related costs of $1.1 million. EPG selling and administrative expenses as a percentage of net sales decreased to 14.3% in 2010 from 15.4% in 2009.

TTG. Increased selling and administrative expenses was due to customer-related travel expenses. Selling and administrative expenses as a percentage of net sales increased to 11.8% in 2010 from 10.5% in 2009.

Other. Increased selling and administrative expenses for 2010 resulted primarily from a $10.1 million increase in our long-term incentive compensation cash awards accrual due to a mark to market change on our cash-settled SARs, a $2.6 million charge to remove accumulation of solid waste at a Canadian plant and a $0.9 million increase from a less favorable unrealized gain on our long-term investment assets.

In 2010 we incurred $0.7 million of restructuring costs associated with a restructuring plan initiated in prior years for the shutdown of our West Jordan, Utah blades facility in 2008 and our Saskatoon, Saskatchewan foundry in 2009. These restructuring costs were primarily composed of impairment losses and on-going facility costs. In 2009, we incurred $6.3 million of restructuring costs associated with the shutdown of these facilities and severance and other costs as a result of our global workforce reduction of 17.6% in 2009.

EPG. Operating profit increased 49.2% to $108.2 million, or 15.2% of net sales, for 2010 from $72.5 million, or 13.7% of net sales, for 2009. The increase in operating profit was caused by

increased sales volumes in 2010. Operating profit margin increased in 2010 to 15.2% from 13.7% in 2009 as the result of the leveraging of manufacturing expenses and selling and administrative expenses.

TTG. Operating profit decreased to $8.7 million, or 6.4% of net sales, for 2010 compared to $14.6 million, or 9.7% of net sales, for 2009. The decrease in operating profit was caused by lower IGT sales volumes and the associated reduced capacity utilization as that market recovered more slowly from the global economic downturn and its supply chain destocking experienced over the past two years.

Interest expense, net was $23.7 million for 2010 compared to $26.2 million for 2009. The decrease in interest expense, net reflects lower average effective interest rates on our floating rate notes during 2010, a two-week benefit of the refinancing of our fixed and floating rate notes at lower interest rates, a net reduction in debt of $35.3 million and higher interest income of $0.3 million, resulting from improved yields on our invested cash funds.

During the fourth quarter of 2010, we refinanced $300 million of fixed and floating rate notes that we issued in 2006 through a five-year term loan and a revolving credit facility. As a result, we incurred $8.6 million in prepayment fees on the notes and a write-off of $4.0 million unamortized loan costs for the remaining 2006 transaction fees.

During the fourth quarter of 2010, we terminated our U.S. asset-backed line of credit agreement and recorded a $0.4 million loss on an early extinguishment of debt for the unamortized loan costs on the line of credit.

The effective tax rate from continuing operations for 2010 was 24.8% compared to 29.0% for 2009. The effective tax rate decreased in 2010 due to the reversal of uncertain tax provisions from prior years and lower state income tax.

Noncontrolling interest reflects the net after tax profits in our three less than 100%-owned subsidiary companies allocable to the non-ESCO shareholders. Noncontrolling interest was $4.7 million for 2010 compared to $2.5 million for 2009. The increase in 2010 reflects increased sales for those entities.

Statement of Earnings Data (dollars in millions)		Year ended December 31, 2009					Year ended December 26, 2008

Net sales		$	680.4		100.0	%	$	939.9		100.0	%
Cost of goods sold(1)			507.1		74.5	%		724.9		77.1	%
Gross profit			173.3		25.5	%		215.0		22.9	%
Selling and administrative expense(1)			112.5		16.5	%		132.7		14.1	%
Restructuring and other			6.4		0.9	%		1.8		0.2	%

Operating profit			54.4		8.0	%		80.5		8.6	%
Interest expense, net			26.2		3.9	%		26.7		2.8	%
Other (income) expense, net			(1.1	)	(0.2	)%		4.3		0.5	%

Earnings from continuing operations before income taxes			29.3		4.3	%		49.5		5.3	%
Income tax expense			8.5		1.2	%		13.3		1.4	%

Earnings from continuing operations, net of tax			20.8		3.1	%		36.2		3.9	%
Earnings from discontinued operations, net of tax			0.3		—			0.4		—

Net earnings			21.1		3.1	%		36.6		3.9	%
Less: net earnings attributable to the noncontrolling interest — continuing operations			(2.5	)	(0.4	)%		(5.1	)	(0.6	)%
Less: net earnings attributable to the noncontrolling interest — discontinued operations			(0.2	)	—			(0.3	)	—

	Net earnings attributable to ESCO shareholders	$	18.4		2.7	%	$	31.2		3.3	%

		Year ended

Statement of Earnings Data (dollars in millions)		December 31, 2009			December 26, 2008			$ Change			% Change
Net sales		$	680.4		$	939.9		$	(259.5	)		(27.6	)%
Cost of goods sold(1)			507.1			724.9			(217.8	)		(30.0	)%
Gross profit			173.3			215.0			(41.7	)		(19.4	)%
Selling and administrative expenses(1)			112.5			132.7			(20.2	)		(15.2	)%
Restructuring and other			6.4			1.8			4.6			255.6	%

Operating profit			54.4			80.5			(26.1	)		(32.4	)%
Interest expense, net			26.2			26.7			(0.5	)		(1.9	)%
Other (income) expense, net			(1.1	)		4.3			(5.4	)		(125.6	)%

Earnings from continuing operations before income taxes			29.3			49.5			(20.2	)		(40.8	)%
Income tax expense			8.5			13.3			(4.8	)		(36.1	)%

Earnings from continuing operations, net of tax			20.8			36.2			(15.4	)		(42.5	)%
Earnings from discontinued operations, net of tax			0.3			0.4			(0.1	)		(25.0	)%

Net earnings			21.1			36.6			(15.5	)		(42.3	)%
Less: net earnings attributable to the noncontrolling interest — continuing operations			(2.5	)		(5.1	)		2.6			(51.0	)%
Less: net earnings attributable to the noncontrolling interest — discontinued operations			(0.2	)		(0.3	)		0.1			(33.3	)%

	Net earnings attributable to ESCO shareholders	$	18.4		$	31.2		$	(12.8	)		(41.0	)%

For 2009, net sales decreased $259.5 million, or 27.6%, to $680.4 million from $939.9 million for 2008. The decrease in net sales was principally driven by the recession and the supply chain destocking that began in the third quarter of 2008. EPG and TTG respectively represented 78% and 22% of our net sales in 2009 and 80% and 20% of our net sales for 2008.

EPG. Net sales decreased $221.5 million, or 29.5%, to $530.5 million for 2009 from $752.0 million for 2008. The decrease in net sales was due to the global economic crisis that began in the third quarter of 2008 and continued throughout 2009 that reduced demand for EPG products. The $221.5 million decrease was composed of a $110.3 million, or 25.7%, decrease in mining sales across all geographies; a $85.6 million, or 33.5%, decrease in infrastructure development product sales; and a $25.6 million, or 37.7%, decrease in industrial product sales. Included in these decreases is the net effect of unfavorable foreign exchange of $17.0 million on net sales and pricing increases of $14.2 million.

TTG. Net sales decreased $38.0 million, or 20.2%, to $149.9 million for 2009 from $187.9 million for 2008. The decrease was composed of decreases of $12.8 million in IGT sales,

$7.3 million in industrial/other and $17.9 million in aerospace. The decreases were the result of the recession and late cycle destocking.

Gross profit decreased $41.7 million, or 19.4%, to $173.3 million in 2009 from $215.0 million for 2008. Gross profit as a percentage of net sales increased to 25.5% for 2009 from 22.9% for 2008. Excluding ESOP non-cash compensation expense of $11.1 million in 2009 and $14.0 million in 2008, gross profit as a percentage of net sales also increased to 27.1% for 2009 from 24.4% for 2008. The increase in gross profit as a percentage of net sales was primarily a result of cost reduction and containment measures taken early in the year in response to the global reduction in demand caused by the economic crisis, firm market pricing, lower raw material costs and a $2.9 million LIFO decrement. This decrement was the effect of reduced inventories in 2009, resulting in a liquidation of LIFO inventory carried at the lower costs prevailing in prior years than the cost of 2009 purchases.

EPG. Gross profit decreased $42.4 million, or 21.6%, to $154.1 million in 2009 from $196.5 million in 2008, primarily as a result of reduced volumes that negatively impacted our manufacturing cost base. EPG's gross profit margin increased to 29.0% from 26.1% as a result of lower input commodity costs during the year and pricing increases of $14.2 million.

TTG. Gross profit decreased $2.1 million, or 6.5%, to $30.4 million in 2009 from $32.5 million in 2008. The primary driver was sales volume reduction.

Selling and administrative expenses decreased $20.2 million, or 15.2%, to $112.5 million in 2009 from $132.7 million in 2008. Selling and administrative expenses as a percentage of net sales increased to 16.5% for 2009 from 14.1% for 2008. ESOP non-cash compensation expense contributed $5.4 million and $6.3 million to selling and administrative expenses for 2009 and 2008, respectively. Excluding these charges, selling and administrative expenses decreased $19.2 million, or 15.2%, for 2009 over 2008 and, as a percentage of net sales, selling and administrative expenses increased to 15.8% for 2009 from 13.4% in 2008. The compensation expense effect of SARs on selling and administrative expenses during 2009 was negligible due to then-current market conditions and results that negatively affected the fair value of the Legacy Class A Common Stock.

EPG. Selling and administrative expenses decreased $10.8 million, or 11.7%, to $81.6 million in 2009 from $92.4 million in 2008. The decrease in selling and administrative expenses in EPG for 2009 was due to cost reductions, including workforce reductions, undertaken as part of our response to the global economic crisis and generally less favorable market conditions.

TTG. Selling and administrative expenses decreased $2.7 million, or 14.6%, to $15.8 million in 2009 from $18.5 million in 2008. The decrease in selling and administrative expenses in TTG for 2009 was due to cost reductions, including workforce reductions, undertaken as part of our response to the global economic crisis and generally less favorable market conditions.

Other. Selling and administrative expenses decreased $6.7 million, or 30.7%, to $15.1 million in 2009 from $21.8 million in 2008 primarily due to favorable swings in unrealized gain in our long-term investment assets.

In 2009, we incurred $6.3 million of restructuring costs associated with the shutdown of our West Jordan, Utah blades facility and our Saskatoon, Saskatchewan foundry, and layoff and severance costs. Restructuring activity in 2008 included $1.8 million of restructuring costs associated with severance costs resulting from our reduction in force due to economic conditions, the closure of our West Jordan, Utah plant and curtailment costs related to freezing benefits for our U.S. defined benefit plans.

EPG. Operating profit decreased 30.4% to $72.5 million, or 13.7% of net sales, for 2009 from $104.1 million, or 13.8% of net sales, for 2008. The lower operating profit was driven by decreased sales volumes in 2009 and was partially offset by lower raw material costs, market pricing discipline and cost reduction and containment measures taken in the year.

TTG. Operating profit increased to $14.6 million, or 9.7% of net sales, for 2009 from $14.0 million, or 7.5% of net sales, for 2008. The increase in operating profit in actual dollars and as a percentage of net sales was driven by cost reduction measures, lower alloy costs and pricing increases of $0.3 million.

Interest expense, net was $26.2 million for 2009 compared to $26.7 million for 2008. The lower net interest expense was due to the lower average variable rate of 4.8% in 2009 compared to 7.1% in 2008 on then outstanding floating rate senior notes, partially offset by $1.7 million lower interest income on our invested cash funds due to lower interest rates.

The effective tax rate from continuing operations was 29.0% for 2009 compared to 26.9% for 2008. The effective tax rate was higher for 2009 due primarily to a higher percentage of income earned in the United States than in 2008, which is taxed at a higher rate than income earned in foreign jurisdictions, and reduced foreign tax credits earned during the year.

For 2009, we had other income due to foreign exchange gains on settlement of our foreign currency denominated accounts receivable and accounts payable partially offset by a $0.3 million

insurance claim retention expense. For 2008, we had other expense due to foreign exchange losses on settlement of our foreign currency denominated accounts receivable and accounts payable partially offset by a $0.3 million insurance claim retention expense.

Noncontrolling interest reflects the net after tax profits in our less than 100%-owned subsidiary companies allocable to the non-ESCO shareholders. Noncontrolling interest was $2.5 million in 2009 compared to $5.1 million in 2008 due to our purchase in May 2009 of the remaining 40% interest in Soldering.

The following unaudited quarterly financial data for the nine quarters ended March 31, 2011 have been prepared on a basis consistent with our audited consolidated annual financial statements, and in management's opinion, include all normal recurring adjustments necessary for the fair statement of the financial information contained in those statements. The period-to-period comparison of financial results is not necessarily indicative of future results. You should read this data together with our consolidated financial statements and the related notes included elsewhere in this prospectus.

	Quarter ended

	March 31, 2011					December 31, 2010						September 30, 2010					June 30, 2010					March 31, 2010					December 31, 2009					September 30, 2009					June 30, 2009					March 31, 2009
(dollars in millions)	$		% of net sales			$			% of net sales			$		% of net sales			$		% of net sales			$		% of net sales			$		% of net sales			$		% of net sales			$		% of net sales			$		% of net sales
Net sales		253.8		100.0	%		234.9			100.0	%		228.1		100.0	%		201.2		100.0	%		185.3		100.0	%		177.9		100.0	%		159.2		100.0	%		161.9		100.0	%		181.4		100.0	%
Gross profit		70.5		27.8	%		59.4			25.3	%		59.0		25.9	%		55.1		27.4	%		49.1		26.5	%		48.0		27.0	%		38.3		24.1	%		42.9		26.5	%		44.1		24.3	%
Selling and administrative expenses (including restructuring)		46.7		18.4	%		49.2			20.9	%		32.9		14.4	%		35.0		17.4	%		31.5		17.0	%		35.7		20.0	%		26.1		16.4	%		27.3		16.9	%		29.8		16.4	%
Operating profit		23.8		9.4	%		10.2			4.3	%		26.1		11.4	%		20.1		10.0	%		17.6		9.5	%		12.3		6.9	%		12.2		7.7	%		15.6		9.7	%		14.3		7.9	%
Net earnings (loss) attributable to ESCO shareholders		12.9		5.1	%		(2.4)	(a),(b)		(1.0	)%		11.8		5.2	%		8.7		4.3	%		6.0		3.2	%		3.2		1.8	%		4.3		2.7	%		6.7		4.2	%		4.2		2.3	%
Adjusted net earnings from continuing operations(c)		18.5		7.3	%		13.9			5.9	%		14.7		6.4	%		11.6		5.8	%		8.6		4.6	%		5.7		3.2	%		7.0		4.4	%		9.3		5.7	%		7.1		3.9	%
Adjusted EBITDA(d)		39.5		15.6	%		31.5			13.4	%		35.8		15.7	%		32.7		16.2	%		27.8		15.0	%		22.9		12.9	%		22.8		14.3	%		26.1		16.1	%		27.8		15.3	%

(a): The net loss in the fourth quarter is attributable to our debt refinancing expense of $13.0 million, a mark to market on our SARs expense of $6.9 million and a $2.6 million provision to remove an accumulation of solid waste at a Canadian facility. The debt refinancing expense was $13.0 million, which consisted of $8.6 million call premium and $4.4 million acceleration of our unamortized expenses associated with our 2006 bond offering and asset-backed line of credit.
(b): This reflects a mark to market adjustment on our cash settlement SARs awards due to improved markets and forecasts. In 2011, we changed our SARs long-term incentive program to feature a stock settlement grant rather than a cash settlement grant. 92.6% of our existing cash settled SARs were converted to stock settled SARs in 2011. The mark to market liability accounting for those SARs will not occur after the first quarter of 2011. Additional expense on our long-term cash incentives awards also affected fourth quarter results. Combined, the net impact was $9.2 million in the fourth quarter of 2010. Our 2011 long-term incentive awards incentive program is an equity awards program.
(c): Adjusted net earnings from continuing operations is a non-GAAP measure. We have included adjusted net earnings in this prospectus because it represents a basis upon which our management assesses financial performance and may provide a more complete understanding of the factors and trends affecting our business. See "Selected Consolidated Financial and Other Data" and the reconciliation to net earnings (loss) from continuing operations attributable to ESCO shareholders below.

Adjusted Net Earnings Reconciliation

		Quarter ended

(dollars in millions)		March 31, 2011			December 31, 2010			September 30, 2010			June 30, 2010		March 31, 2010			December 31, 2009			September 30, 2009			June 30, 2009			March 31, 2009
Earnings from continuing operations, net of tax		$	14.4		$	(1.3	)	$	13.2		$	9.6	$	7.1		$	4.4		$	4.7		$	7.0		$	4.7
Add/(Subtract):
	Interest (net) and loss on early extinguishment of debt		3.1			17.9			6.1			6.3		6.4			6.4			6.6			6.3			6.9
	Income tax expense (benefit)		7.4			(5.3	)		7.3			3.7		3.7			1.6			1.9			2.2			2.8
	Depreciation and amortization		7.8			7.6			6.8			6.5		6.5			6.4			6.3			6.2			6.2
	Non-operating expense (income)		(1.1	)		(1.1	)		(0.6	)		0.5		0.5			(0.1	)		(1.0	)		—			0.1
	ESOP non-cash compensation expense		5.1			5.1			4.1			4.2		4.0			3.8			4.2			4.1			4.4
	Mark to market on SARs expense		3.5			6.9			0.5			0.3		—			—			—			—			—
	Unrealized (gains) losses on long term investments		(0.7	)		(1.2	)		(1.6	)		1.5		(0.6	)		(0.5	)		(1.6	)		(1.5	)		0.8
	Restructuring and other		—			2.9			—			0.1		0.3			0.9			1.7			1.8			2.0

Adjusted EBITDA		$	39.5		$	31.5		$	35.8		$	32.7	$	27.8		$	22.9		$	22.8		$	26.1		$	27.8

Our operations are not significantly affected by seasonality. For a discussion of trends affecting our results of operations, see "— Trends, Opportunities and Challenges — Recent Activity".

Our principal sources of liquidity include cash provided by operations, existing cash and cash equivalents, and our revolving credit facility. At March 31, 2011, we had $81.1 million of cash and cash equivalents and $271.9 million available under our revolving credit facility, net of outstanding letters of credit. Based upon our current and planned level of operations, we believe these sources of liquidity are sufficient to fund our operations and contractual obligations for at least the next 12 months.

Both our liquidity and access to additional capital improved in 2010. We internally funded $35.3 million in debt reduction, $13.7 million in debt issuance costs and premium paid on early debt extinguishment, $33.8 million (net of cash acquired) in acquisition consideration and $26.9 million in shareholder dividends while our cash balance remained strong at $114.1 million at December 31, 2010. We refinanced our senior notes with a new credit facility, which, had it been in

place during 2010, would have reduced our annual interest expense by approximately $11.0 million in 2010.

	Fiscal quarter ended						Fiscal year ended

(dollars in millions)	March 31, 2011			March 31, 2010			December 31, 2010			December 31, 2009			December 26, 2008
Earnings from continuing operations, net of tax	$	14.4		$	7.1		$	28.6		$	20.8		$	36.2
Depreciation and amortization		8.0			6.9			29.2			26.8			25.9
ESOP non-cash compensation and SARs expense		8.9			4.0			24.9			16.5			20.2
Changes in operating assets and liabilities		(39.2	)		(0.3	)		(13.6	)		28.9			7.8
Other		2.5			—			9.2			(4.4	)		(2.6	)
Discontinued operations		—			—			—			0.2			1.0

Net cash provided by operating activities	$	(5.4	)	$	17.7		$	78.3		$	88.8		$	88.5

Capital expenditures	$	(8.7	)	$	(2.7	)	$	(20.5	)	$	(14.1	)	$	(29.7	)
Business acquisitions		(8.2	)		—			(33.8	)		(0.2	)		0
Other		(5.3	)		(3.6	)		(2.4	)		9.4			(6.7	)
Discontinued operations		—			—			—			(0.3	)		(1.1	)

Net cash used in investing activities	$	(22.2	)	$	(6.3	)	$	(56.7	)	$	(5.2	)	$	(37.5	)

Proceeds from debt issuance	$	1.9		$	—		$	271.4		$	2.7		$	1.5
Payments on debt		(4.1	)		(0.3	)		(306.7	)		(6.5	)		(4.0	)
Dividends paid		(2.2	)		(11.2	)		(26.9	)		(26.1	)		(14.6	)
Other		(0.1	)		(0.2	)		(14.3	)		(2.1	)		(0.7	)

Net cash used in financing activities	$	(4.5	)	$	(11.7	)	$	(76.5	)	$	(32.0	)	$	(17.8	)

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010.

Cash Used by Operating Activities. Cash used by operating activities during the first quarter of 2011 was $5.4 million compared to $17.7 million cash provided by operating activities during the first quarter of 2010. Net earnings plus non-cash items of $14.4 million provided net cash of $33.8 million in the first quarter of 2011. These operating cash inflows were offset by $39.2 million used to support higher sales levels, including a $13.2 million net increase in trade receivables, a $19.5 million net increase in inventories and a $4.9 million net decrease in accounts payable, accrued expense and other. The increase in cash used by operating activities in the first quarter of 2011 compared to the same period in 2010 was primarily due to increased working capital to support increased sales levels. The decrease in accounts payable, accrued expenses and other reflects our U.S. pension contribution in the first quarter of 2011.

Cash Used in Investing Activities. Cash used in investing activities during the first quarter of 2011 was $22.2 million compared to $6.3 million during the first quarter of 2010. In the 2011 period, cash used was primarily for purchases of property, plant and equipment of $8.7 million, business acquisitions (net of cash acquired) of $8.2 million, investment in an unconsolidated affiliate of $4.0 million and increases in other assets of $1.3 million. The increase in the first quarter of 2011 compared to the same period in 2010 was due to increased capital expenditures, our acquisition of a distributor in Wyoming and additional investment in our Chilean joint venture.

Cash Used in Financing Activities. Cash used for financing activities during the first quarter of 2011 was $4.5 million compared to $11.7 million during the first quarter of 2010. The difference was primarily due to payment in the first quarter of 2010 of a dividend and no dividend payment to our Legacy Class A Common Stock holders in the first quarter of 2011. (We paid a dividend in

December 2010 due to uncertainty regarding tax changes that could have affected shareholders if the dividend had been paid in 2011.) In the first quarter of 2011, cash used consisted primarily of $4.1 million of debt payments and $2.2 million of dividend payments to our noncontrolling interests, partially offset by $1.9 million of proceeds from debt financing.

Cash Provided by Operating Activities. Cash provided by operating activities for 2010 was $78.3 million compared to $88.8 million for 2009. The decrease was primarily due to increased use of working capital in 2010 to support the increased sales and production levels in EPG.

The year-over-year change of $42.5 million in our operating assets and liabilities is due to an increase of $13.6 million in 2010 due to an increased need for working capital caused by increased sales and production levels in EPG compared to a decrease of $28.9 million in 2009 that was the result of decreased sales. The year-over-year change of $8.4 million in non-cash ESOP compensation and SARs expense was due to improvement in our operating performance, which increased the fair value of our Class C Preferred Stock and Class A Common Stock.

The year-over-year change of $13.6 million in "other" category in the net cash provided by operating activities is due primarily to the loss on early extinguishment of debt in 2010.

Cash Used in Investing Activities. Cash used in investing activities increased $51.5 million in 2010 to $56.7 million compared to $5.2 million in 2009. This increase was driven by our 2010 acquisitions of the Engineering and Mining Products divisions of Swift Group Holdings Pty Ltd and Austcast Pty Ltd. for an aggregate purchase price of $33.8 million (net of cash acquired). $2.4 million of other net cash used in investing activities in 2010 related to investments in our Chilean joint venture. No investment was made in the joint venture in 2009. Capital expenditures in 2010 increased to $20.5 million from $14.1 million in 2009 as we returned to normal capital expenditure levels. In 2009, we made only those capital expenditures we believed were critical for maintaining our facilities.

Cash Used in Financing Activities. Cash used in financing activities increased $44.5 million in 2010 compared to 2009. The increase was primarily a result of net pay down of debt of $35.3 million in 2010 compared to $3.8 million in 2009, and refinancing costs of $13.7 million in 2010.

Cash Provided by Operating Activities. Cash provided by operating activities for 2009 was $88.8 million compared to $88.5 million for 2008. The slight increase was due to lower working capital requirements required to support lower sales and production in 2008, which was partially offset by the decline in net earnings from continuing operations in 2009.

Cash Used in Investing Activities. Cash used in investing activities was $5.2 million in 2009 compared to $37.5 million in 2008. Other net cash used in investing activities in 2009 was the beginning cash balance of a previously unconsolidated affiliate that we included in our consolidated accounts. Other net cash used in investing activities in 2008 was $6.2 million and related to investment in our Chilean joint venture. No investment was made in the joint venture in 2009. In addition, during 2009, we reduced our capital expenditures to a maintenance level in line with our focus on protecting margin, liquidity and cash flow. Capital expenditures totaled $14.1 million during 2009 and $29.7 million during 2008.

Cash Used in Financing Activities. Cash used for financing activities, which is primarily cash dividends paid and payments on long-term debt for 2009, was $32.0 million compared to $17.8 million for 2008. The majority of the increase was due to a $10.4 million dividend paid to the noncontrolling shareholder of ESCO Soldering prior to our purchase of the shareholder's 40% equity interest in May 2009.

On July 13, 2007, we entered into a 50/50 joint venture (JV) agreement with our Chilean licensee, Compañía Electro Metalurgica S.A. (Elecmetal), to build an EPG foundry in Chile scheduled to be operational in 2012. The JV will supply wear parts exclusively to Elecmetal for sale in Chile and to us for sales into other countries in South America and elsewhere. We delayed the foundry's construction during the 2009 economic downturn and restarted construction in 2010. As a result of the delay, the increased demand for construction resources in Chile and new building codes following the 2009 Chilean earthquake, the foundry's construction costs have increased an estimated 40% from the 2007 start of the project. Construction of the foundry is estimated to cost approximately $76 million, $48.0 million of which will be funded equally by us and Elecmetal ($24.0 million each). The remaining 40% will be financed by a construction loan that will convert to a seven-year term loan at completion of the foundry. The loan is secured by property, equipment and standby letters of credit in the amount at December 31, 2010 of $7.6 million from each of us and Elecmetal. We have funded $8.8 million through December 31, 2010 and will fund the remaining $15.2 million of the estimated costs in 2011.

We have various pension and other post-retirement plans, including defined benefit and defined contribution plans that cover most employees worldwide. The defined benefit pension plans for most salaried employees provide pension benefits that are based on years of service and the average of the employee's earnings, as defined. Plans for hourly employees generally provide benefits of stated amounts based on years of service. The amount and timing of our contributions to the plans are determined in consultation with plan actuaries based on legal requirements. Funding-related assumptions include projected salary increases, employment trends, mortality assumption and expected investment returns. We adjust contributions based on actual experience with accruals, payments and forfeitures of benefits, ages of participants and investment results. We froze our U.S. defined benefit pension plan effective December 31, 2008.

Our defined benefit post-retirement plan provides medical coverage for certain employees. We do not fund retiree health care benefits in advance, and we have the right to modify this plan in the future. For employees retiring before 1993, our contribution toward the cost of coverage will increase to reflect plan experience, but will not increase more than 5% per year. For employees retiring after 1992, our contribution is fixed in the year of retirement and does not change over the life of the participant. The amount of employer contribution, however, depends on the year of retirement. For retirements in 2000 and after, there is no employer contribution toward the program.

The difference between a plan's funded status and the balance sheet position is recognized, net of tax, as a component of Accumulated Other Comprehensive Income. See Note 12 of Notes to Consolidated Financial Statements for the period ended March 31, 2011.

The table below sets forth information for our benefit plans, including our defined benefit plan in the U.S., our Supplemental Executive Retirement Plan, and our benefit plans for our Canadian subsidiary (ESCO Ltd.), as of December 31, 2010.

		Pension Plan

		Pension Plan									Other Plans
					ESCO Ltd National			ESCO Ltd Hourly			Other Plans
		ESCO			ESCO Ltd National			ESCO Ltd Hourly			Ret Med			SERP
Projected Benefit Obligation			138,896,048			46,622,662			10,314,031			1,109,282			16,132,893
Fair value of plan assets			107,857,668			42,630,263			11,123,112			—			—
Net periodic postretirement benefit cost			1,946,272			2,059,809			414,837			61,110			958,093
Accumulated Benefit Obligation			138,823,575			40,163,016			10,314,031			1,109,282			16,132,893
Rates used to calculate obligation			ESCO US									Ret Med			SERP
	Discount rate		5.77	%		5.60	%		5.60	%		5.77	%		5.77	%
	Future compensation levels		3.75	%		3.50	%		3.50	%
Rates used to calculate pension costs			ESCO US									Ret Med			SERP
	Discount rate		6.00	%		6.50	%		6.50	%		6.00	%		6.00	%
	Return on assets		7.00	%		7.25	%		7.25	%
	Future compensation levels		3.75	%		3.50	%		3.50	%

On November 18, 2010, we entered into a credit agreement with a bank syndicate led by Bank of America, N.A., which includes a $200 million term loan facility and a revolving credit facility of up to $350 million. It also permits letters of credit with sublimits of up to $50 million and swing line loans with sublimits of up to $25 million. Subject to the terms of the credit agreement, we may request an increase in the revolving credit facility of up to $100 million on the same terms. If we request an increase, the increase must be a minimum of $10 million.

We used the proceeds from the credit agreement to pay off our floating rate senior notes and 8.625% senior notes, which we issued in 2006.

The interest rate on our loans is calculated based on LIBOR or a base rate, plus a margin rate depending on our consolidated net leverage ratio. The base rate is the highest of (a) the federal funds rate plus 0.50%, (b) the publicly announced Bank of America "prime rate" and (c) the rate for the LIBOR-based rate loans plus 1%. Consolidated net leverage ratio is the ratio of (a) funded debt less the sum of our unencumbered cash and cash equivalents greater than $20 million to (b) consolidated Adjusted EBITDA for the most recently completed four quarters. In addition, we pay a quarterly unused commitment fee equal to 0.375% of the unused portion of the revolving credit facility.

At March 31, 2011, we had availability under our credit facility of $271.9 million, net of $13.1 million in outstanding letters of credit and $65.0 million drawn under the facility.

Our obligations under the credit agreement are secured by a lien on substantially all of our assets and by a pledge of the stock in our directly held subsidiaries.

We are obligated to make future payments under various contracts such as debt agreements and leases. The following table sets forth our contractual obligations as of December 31, 2010.

(1): We intend to contribute an aggregate of $14.5 million to our pension plans in 2011. Because we are unable to estimate our aggregate pension plan obligations in future years, we did not otherwise include those pension plan obligations in the table above. We estimate that we will be required to make the following minimum pension contributions in 2011: $1.1 million per year under our POHO Hourly and $3.7 million per year million under the Canadian National plan. Actual contributions to the plans will depend on the actual membership (for the POHO Hourly Plan) and payroll (for the National Plan) for each year. In 2013, our contribution level for those two plans will change and will not be determined until the next tri-annual valuation is completed at December 31, 2012. The December 31, 2012 valuation will determine our contribution levels under those plans for 2013 through 2015. We estimate our contribution under our U.S. pension plan will be $9.7 million in 2011, of which we have already contributed $7.4 million. We expect to make the remaining contribution in October 2011. We cannot determine our contributions under the U.S. pension plan after 2011 because the contribution amount is calculated based on factors that have not yet been determined, including our return on assets, the discount rate for our liabilities and any changes in the Pension Protection Act. We froze our U.S. defined benefit pension plan, U.S. pension plan and Supplemental Executive Retirement Plan effective December 31, 2008, except for a small group of older employees accruing transition benefits.

As of December 31, 2010, we recorded liabilities for tax uncertainties of $0.78 million under ASC 740-10 (formerly, FIN 48). We classified $0.44 million of this amount, which related to state income tax risk, as short-term because we expect it to be resolved within one year. We expect the remaining $0.34 million to be resolved within two to five years. Because we are not able to determine the portion of the liability that will result in actual payments, we did not include these amounts in the above table.

We may be obligated to purchase Legacy Class A Common Stock under our restated stock transfer restriction agreements (RSTRAs) and stock purchase agreements (SPA) to the extent shareholders subject to those agreements tender their shares to us for repurchase. We are unable to estimate the amount or timing of payment under the RSTRAs or SPAs and, as a result, we did not include our repurchase obligations under those agreements in the table above. With respect to the RSTRAs, the timing of payment depends on the date of the shareholder's death, disability or retirement and the amount of payment depends on the fair value of the shares at the time of exercise. With respect to the SPAs, the timing of payment depends on the date the shareholder dies or terminates employment, and the amount is calculated based on adjusted book value. Shareholders holding 161,730 shares, pre-split, or approximately 97% of the shares subject to the RSTRAs or SPAs, have agreed to terminate those agreements upon completion of the offering made by this prospectus. Our repurchase obligations under the RSTRAs and SPAs that are not terminated upon completion of the offering will terminate, with respect to a given shareholder, upon the conversion of that holder's shares into Class A Common Stock, which will occur no later than

360 days after the date of this prospectus. See "Description of Capital Stock — Shareholder Agreements."

We may be required to pay contingent consideration on October 15, 2011 in connection with our acquisition of Austcast Pty Ltd of up to $1.5 million. The amount of payment, which is not included in the table above, depends on the completion of tooling builds during a measurement period of April 1, 2011 through September 30, 2011. Although not determinable, our financial statements reflect the full payment of the contingent consideration.

At March 31, 2011, we had outstanding a $7.6 million standby letter of credit to secure construction loan obligations of our unconsolidated Chilean joint venture entity. See "— Liquidity and Capital Resources — Capital expenditure commitments". Other than this, we have no off-balance sheet arrangements as that term is defined by SEC regulations.

The preparation of our consolidated financial statements in accordance with generally accepted accounting principles is based on the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain. This requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and their related disclosures. Our estimates and judgments are based on historical experience and various assumptions that we believe to be reasonable. Actual results could differ from our estimates and assumptions, and any differences could be material to our consolidated financial statements. We consider the accounting policies discussed below to be critical to the understanding of our financial statements.

We recognize net sales on customer and distributor sales when persuasive evidence of an arrangement exists, delivery has occurred or the services have been rendered, the sales price is fixed or determinable and collection of the related receivable is reasonably assured. Title and risk of loss generally pass to the customer at the time product is transferred to a common carrier. We have allowances for product returns and cash discounts which are calculated based on historical experience.

Our EPG parts return policy allows certain distributors to return product with a value of credit up to 4% of their net purchases during the previous calendar year for certain approved products. Returned items are generally accepted if they were purchased during the previous two calendar years or the current calendar year and the distributor's account with us is current. The value of the credit will be the distributor's lowest purchase price for that part during the previous two calendar years or the current calendar year, less a 10% restocking charge, and returned parts must be in saleable condition. From EPG customers other than distributors, we may approve returns if permitted under the customer contract. In each of 2009 and 2010, we experienced total EPG product returns of approximately 0.57% of net sales, and we accrue a reserve at this level. We review the reserve each quarter and adjust it as necessary. Our agreements with EPG distributors, do not contain price protection or repurchase provisions.

We have arrangements with some EPG distributors and customers, based on sales levels during a specified period, under which we pay rebates to those distributors and customers. These rebates are accrued each month as an offset to net sales, reviewed quarterly and adjusted as necessary.

We review each quarter discounts granted to TTG customers. Discount amounts are annualized and subsequently a 'Discounts per Day' figure is calculated. 15 days of outstanding discounts are estimated and booked as a reserve. Because TTG sales returns have historically been infrequent and immaterial, we do not carry a sales return accrual for TTG returns.

We have licensee agreements under which we receive royalty revenue. Royalty revenue is accounted for based on royalty percentages of actual sales by licensees. We receive payments from each of our licensees every two months covering licensee sales for a prior two month period. Included with these payments is a report from the licensee disclosing the licensee sales and related royalty calculation which supports the royalty payment amount. We estimate and record projected royalty revenue on an accrual basis as it is earned and subsequently adjust our net sales for the period to the amount of actual royalty income received from that licensee during the quarter. The difference between the amounts accrued and the amounts reported by the licensees has historically not been material.

Trade receivables, reduced by an allowance for doubtful accounts, are recorded at the invoiced amount less discounts and do not bear interest. The collectability of trade receivable balances is regularly evaluated based on a combination of factors such as customer credit-worthiness, past transaction history with the customer, economic industry trends and changes in customer payment terms. If we become aware of circumstances that may impair a specific customer's ability to meet its financial obligations, a specific reserve is recorded to reduce the related receivable to the amount expected to be recovered. For all other trade receivable balances we maintain a reserve that is based on our historical uncollectible accounts as a percentage of net sales.

Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out method (LIFO) at ESCO Corporation and one of its U.S. subsidiaries. Cost is determined using the first-in, first-out method (FIFO) or average cost method for all other subsidiaries of ESCO. Cost of inventory includes raw materials, employee compensation and benefits, outside processing, depreciation of manufacturing machinery and equipment, operating supplies and manufacturing overhead directly attributable to the manufacturing of goods.

Inventories with quantities on hand that have not been sold during the prior 12 months or are in excess of forecasted usage are reviewed quarterly for obsolescence by operations personnel. We evaluate the value of our inventory quarterly based on a combination of factors including, but not limited to, the following: forecasted sales or usage, historical usage rates, future selling prices, product end-of-life dates, estimated current and future market values and new product introductions. If we determine we have obsolete inventory in excess of our reserve for obsolete inventory, a charge equal to the book value of this excess inventory would increase our cost of goods sold and decrease our operating profit.

In accordance with ASC 350-20-35, we assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. We determine our reporting units by first identifying our operating segments and then assessing whether any component of these segments constitutes a business for which discrete financial information is available and the operating results of which are regularly reviewed by the segment management.

We aggregate components that have similar economic characteristics within an operating segment. For our annual impairment assessment, we have identified our reporting units to be two operating segments: EPG and TTG. For each of these operating segments, all components exhibit similar economic characteristics, such as the nature of the business, customers, revenue streams and production processes.

Goodwill is tested for impairment annually or more frequently if an indicator of impairment exists. We conduct that impairment testing at the end of May after completing our annual strategic planning process. Such indicators may include a decline in expected cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition or slower growth rates, among others. It is important to note that fair values that could be realized in an actual transaction may differ from those used to evaluate the potential impairment of goodwill. Goodwill is allocated among and evaluated for impairment at the reporting unit level. For our company, a reporting unit is defined as an operating segment.

The evaluation of impairment involves the comparison of the fair value of each reporting unit to its carrying value, including goodwill. We use a discounted cash flow ("DCF") model as well as a comparison to peer company multiples to estimate the fair value of our reporting units when testing for impairment, as management believes these methods are the best indicators of such fair value. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including markets and market share, sales volumes and prices, costs to produce, tax rates, capital spending, discount rate and working capital changes. Our reporting units' fair value has historically been significantly above their carrying values. In the event the estimated fair value of a reporting unit is less than the carrying value, additional analysis would be required. The additional analysis would compare the carrying amount of the reporting unit's goodwill with the implied fair value of that goodwill. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of that unit as if the reporting unit was acquired in a business combination and the fair value of the reporting unit represented the purchase price. If the value of goodwill exceeds its implied fair value, an impairment loss equal to such excess would be recognized, which could significantly and adversely impact reported results of operations and stockholders' equity.

Long-lived assets, principally property, equipment and identifiable definite-lived intangibles, are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the assets may not be recoverable. We evaluate recoverability of assets by comparing the carrying amount of the asset to estimated future net undiscounted cash flows generated by the asset. If such assets are considered not to be recoverable, the impairment recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Significant judgment is required in determining income tax provisions as well as deferred tax asset and liability balances, including the estimation of valuation allowances and the evaluation of uncertain tax positions. Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In determining the need for valuation allowances, we have considered and made judgments and estimates regarding estimated future taxable income and ongoing prudent and feasible tax planning strategies. These estimates and judgments include some degree of uncertainty, and changes in these estimates and assumptions could require us to adjust the valuation allowances for our deferred tax assets. Historically, changes to valuation allowances have been caused by major changes in the business cycle in certain countries, and the associated profitability in our business, and changes in local country law. The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income in the applicable taxing jurisdictions.

Our income tax provision is determined using the asset and liability approach of accounting for incomes taxes. Under this approach, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates expected to apply in future years to differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The provision for income taxes represents income taxes paid or payable for the year plus the change in deferred taxes during the year. Valuation allowances based on our judgments and estimates are established when necessary to reduce deferred tax assets to the amount expected to be realized based on expected future operating results and available tax alternatives. Our estimates are based on facts and circumstances in existence as well as interpretations of existing tax regulations and laws applied to the facts and circumstances.

We are subject to income taxes in the United States and numerous foreign jurisdictions and as a result, we are subject to the jurisdiction of numerous domestic and foreign tax authorities. Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of deductions; permissible revenue recognition methods under the tax law; and the sources and character of income and tax credits. Changes in tax laws, regulations, agreements and treaties; foreign currency exchange restrictions; or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes that we incur during any given year.

Share-Based Compensation, Accounting Effects of Our SARs and ESOP, and Share Valuation

We have adopted the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718, Compensation-Stock Compensation. This guidance generally requires that compensation expense be determined based on the grant date fair value of the share-based compensation awards and that the expense be recognized over the required service period of the award.

Because no stock options have been grantedDecember 30, 2005, we have continued to apply the intrinsic value method in accounting for stock options. Under the intrinsic value method, compensation expense for employee stock options is not recognized if the exercise price of the option equals or exceeds the fair value of the stock on the date of grant. As a result, no compensation expense has been recorded for options vesting during the reporting periods presented in the consolidated financial statements.

We classify our awards of cash-settled stock appreciation rights ("SARs") as liabilities. Until amended effective March 31, 2011, all of the SARs were settled in cash for the difference between fair value of our Legacy Class A Common Stock on the date of grant and its fair value on the date of exercise.

Through the third quarter of 2010, we used the current method described below to estimate the fair value of SARs awards on the date of grant and recognize expense on a straight-line basis over the required service period. At December 31, 2010, and for the quarter then ended, we changed our valuation method to a Black-Scholes option pricing method as described below. At each period end after grant, the related liability balance is adjusted to reflect any changes in our stock value and our payout liability. Any impact to expense from these period end adjustments is recognized as incurred for fully vested awards and amortized over the remaining service period for unvested awards. Fluctuations in the value of our Class A Common Stock have significantly affected our financial results.

In the first quarter of 2011 we changed our SARs long-term incentive program to feature a stock settlement grant rather than the previous cash settlement grant. The award's grant date fair value will be amortized over the required service period. In addition, effective March 31, 2011 we converted 92.6% of our cash-settled SARs to stock-settled SARs. The revaluation of cash-settled SARs at March 31, 2011 will be amortized over the remaining service period for the unvested awards and was recognized immediately for vested awards.

Quarterly changes in the fair value of our Class A Common Stock and our Class C Preferred Stock affects our financial statements, including a quarterly non-cash compensation expense related to (1) a "mark to market" compensation expense from the adjustment of the value of the shares of Class A Common Stock underlying our SARs and (2) the fair value of the shares of Class C Preferred Stock released each quarter as collateral securing the ESOP's indebtedness to us, which is allocated to cost of goods sold, based on the number of ESOP shares allocated to the accounts of manufacturing employees, or to selling and administrative expense, based on the number of ESOP shares allocated to the accounts of other employees. Because of the contingent redemption feature of the Class C Preferred Stock, changes in the fair value of these shares are reflected in adjustments to contingently redeemable equity securities and corresponding changes to retained earnings, which affects our earnings per share calculation. Differences in the fair value of the Class C Preferred Stock upon allocation to employees compared to the fair value at inception of the ESOP Trust are credited or debited to additional paid-in capital. 92.6% of our outstanding SARs were amended effective March 31, 2011 to permit settlement in stock. As a result, beginning in the second quarter of 2011, those awards are no longer required to be marked to market.

In determining the fair value of the Class C Preferred Stock, we consider a number of factors, including the valuation performed by the independent financial adviser to the ESOP trustee to establish the contractual repurchase price under the terms of the ESOP Trust. As bases for determining the fair value of our Class A Common Stock and Class C Preferred Stock, we value the enterprise at the arithmetic average of the values derived through a guideline company method and a discounted cash flow method. We select public companies comparable to ESCO in respect to investment risk and return and derive an estimated enterprise value after making adjustments for size, growth, profitability, global structure and risk considerations. Under the discounted cash flow method, we assume a weighted average cost of capital and determine an enterprise value based on a detailed cash flow forecast for the next five years and a terminal value discounted to present value. At December 31, 2010, our assumptions for this method were a weighted average cost of capital of 12.5% based on required return on equity of 17.1% (70% weight), a cost of debt after tax of 2% (30% weight) and a termination value after the sixth year assuming an exit EBITDA multiple of 7.0x, based on observations of pricing multiples from the guideline company method, discounted to present value.

Through the third quarter of fiscal 2010, we determined the fair value of our Class C Preferred Stock using the current method. This method allocates the enterprise value to the Class A Common Stock and Class C Preferred Stock based on their conversion values, which differs between these classes of stock primarily due to the value of the future dividend streams of the Class C Preferred Stock. Also, we included a 5% marketability discount when valuing the Class C Preferred Stock, but no such discount when valuing the Class A Common Stock. At December 31, 2010 and for the quarter then ended, we changed our valuation method to a Black-Scholes option pricing method because we believed this method was more appropriate given the increased likelihood of completing an initial public offering. The option pricing method of allocating enterprise value among

common stock and preferred stock treats each class of stock as a call option on all or part of the enterprise's value. At December 31, 2010, we believed the probability of completing a public offering was 20%, and therefore we believed the Black-Scholes option pricing method, rather than a probability-weighted expected return method, was the appropriate valuation method. Under the Black-Scholes method, we used the enterprise value derived as described above and made assumptions for volatility, expected life and likely risk-free interest rates. We established the volatility assumption based on a review of the historical stock volatility of peer companies and consideration of other adjusting factors, including historical volatility for financial markets generally and those related to differences in volatility for public companies and private companies. Our assumption for expected life was based on our estimate of the likely date of an initial public offering. We used the U.S. Treasury rate as of December 31, 2010 corresponding to the applicable expected life as an approximation of the risk-free interest rate.

Applying the Black-Scholes method, we determined that, before taking into consideration the stock split described in "Explanatory Note Regarding Changes in Our Capital Stock", at December 31, 2010 the value of the Class C Preferred Stock was $891.65 per share and the value of the Class A Common Stock was $688.20 per share. We used these amounts for financial reporting purposes, including to calculate the compensation expense recognized for the fourth quarter of fiscal 2010.

At March 31, 2011, we changed our valuation method to the Probability Weighted Expected Average Method (PWERM) because we determined this method was more appropriate given the increased likelihood of completing an initial public offering by the end of 2011. We used the guideline company method to calculate enterprise value under a successful completion of an initial public offering and based the calculation on our projected 2011 Adjusted EBITDA with the midpoint multiple of our guideline companies. We used a Black-Scholes model to calculate enterprise value under the assumption of remaining private. The model included assumptions on volatility, expected life and risk free interest rate. Applying the PWERM model at March 31, 2011 and the current method at March 31, 2010, the value of the Class C Preferred Stock was $905.80 and $734.10 per share, respectively, and the value of the Legacy Class A Common Stock was $792.57 and $473.05 per share, respectively.

We have an employee savings plan under the provisions of Section 401(k) of the Internal Revenue Code. We also have defined benefit plans in the U.S. and certain foreign subsidiaries. In accordance with accounting guidance, we use actuarial valuations that are based on assumptions, including discount rates, long-term rates of return on plan assets and rates of change in participant compensation levels. We evaluate funded status of each plan using these assumptions and consider applicable regulatory requirements, tax deductibility, reporting consideration and other relevant factors, and thereby determine the appropriate funding level for each period. The discount rate used to calculate the present value of the pension and post-retirement benefit obligations is assessed at least annually. The discount rate represents the rate inherent in the price at which the plans' obligations are intended to be settled at the measurement date.

The weighted-average assumptions used to determine benefit obligations at December 31, 2010 and 2009 were as follows:

The weighted-average assumptions used to determine net periodic cost for fiscal years ending December 31, 2010, December 31, 2009 and December 26, 2008 were as follows:

We used the following health care cost inflation rate assumptions in measuring the accumulated post-retirement benefit obligations as of December 31, 2010, December 31, 2009 and December 26, 2008:

A 1% increase in assumed health care cost trend rates would have a minimal impact on total service and interest cost components as well as the post-retirement benefit obligation. A 1% decrease in assumed health care cost trend rates would have a minimal impact on total service and interest cost components as well as the post-retirement benefit obligation.

In June 2009, new guidance was issued on the accounting for transfers of financial assets, which is intended to improve the relevance and comparability of information about transfers of financial assets. We adopted this guidance as of the beginning of fiscal year 2010, and it did not have a material impact on our consolidated financial position results of operations or cash flows.

In June 2009, new guidance was issued on variable interest entities. This guidance modifies the definition of a primary beneficiary in a variable interest entity. We adopted this guidance as of the beginning of fiscal year 2010. This guidance did not have a material impact on our consolidated financial position results of operations or cash flows.

In January 2010, new guidance was issued that clarifies existing disclosures and requires new disclosures for fair value measurements. The clarifications relate to the level of disaggregation a company uses for the disclosure and calls for further details in the valuation techniques used to measure fair value for fair value measurements that fall into Level 2 and 3 categories. Disclosure of significant transfers in and out of Levels 2 and 3 and a description of the reason for the transfers are required. Our adoption of this guidance at the beginning of 2010 did not have a material impact on our consolidated financial position, results of operations or cash flows.

In January 2010, new guidance was issued that requires new disclosures for fair value measurements. In the reconciliation for Level 3 fair value measurements, the disclosures should present separately information about purchases, sales, issuances and settlements (gross rather than net amounts). This guidance is effective for reporting periods beginning after December 15, 2010. Our adoption of this guidance at the beginning of 2011 did not have a material impact on our consolidated financial position, results of operations or cash flows.

In December 2010, new guidance was issued that clarified required additional disclosures for business combinations. This guidance requires supplemental pro forma information to disclose net sales and earnings of the combined entities for all periods presented. This guidance is effective for fiscal years beginning after December 15, 2010. We adopted these additional disclosure

requirements for all material acquisitions beginning in fiscal 2011. See Note 3 to our audited Consolidated Financial Statements.

We are exposed to market risk from changes in interest rates, foreign currency exchange rates and commodity prices. We manage our exposure to these market risks through our regular operating and financing activities, and, when deemed appropriate, through the use of derivatives. When utilized, derivatives are used as risk management tools and not for trading purposes. See "Interest Rate Risk" and "Commodity Price Risk" below for discussion of expectations regarding future use of interest rate and commodity price derivatives.

We monitor our ratio of fixed-rate debt to variable-rate debt with the objective of achieving a mix that management believes is appropriate. Historically, we have, on occasion, entered into interest rate swap agreements to exchange fixed and variable interest rates based on agreed upon notional amounts. In December 2010, we entered into interest rate swaps to manage a portion of our exposure to changes in LIBOR-based interest rates on our variable rate debt, effectively fixing the interest payments on $200.0 million and subsequent amortization value of our term loan. All of the swaps in place at March 31, 2011 and December 31, 2010 have been designated as cash flow hedges of LIBOR-based interest payments. At December 31, 2009 and December 26, 2008 we did not have any outstanding interest rate derivatives. Historically, if market interest rates had averaged 10% higher than actual levels for 2010, 2009 or 2008, the effect on our interest expense and net earnings would not have been material. We have fixed the rate on our term loan at 2.04% plus our credit risk spread for the duration of the loan. A variance of 0.125% in the rate on our variable rate line of credit at March 31, 2011 borrowing levels would impact interest expense by approximately $82,000 per year and would not be material.

Financial instruments that potentially subject us to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable and derivative financial instruments used in hedging activities. A majority of cash and cash equivalents are maintained with major financial institutions in the United States, Canada and Europe. Balances in these institutions exceeded the regions' respective insurance amounts as of December 31, 2010 and 2009.

Concentration of credit risk with respect to accounts receivable is limited because a large number of geographically diverse customers make up our customer base. We control credit risk through credit approvals, credit limits and monitoring processes.

We are also exposed to credit loss in the event of non-performance by counterparties on the derivative financial instruments used in hedging activities. These counterparties are large international financial institutions domiciled in the United States and to date, no such counterparty has failed to meet its financial obligations to us, and we do not anticipate non-performance by these counterparties.

We are exposed to fluctuations in foreign currency for transactions denominated in other currencies, primarily related to receivables generated from foreign currency-denominated sales and payments in foreign currencies. Approximately 43% of our sales in 2010 and the first quarter of 2011 were not denominated in U.S. dollars. We had foreign currency derivatives in place, except for our non-deliverable currencies, at March 31, 2011 and December 31, 2010 to reduce such exposure. Our foreign currency exchange rate risk management program reduces, but does not entirely eliminate, the impact of foreign currency exchange rate movements. The aggregate notional amount of our foreign currency forward contracts outstanding in our exchange rate risk management program was $18 million, $9 million and $11 million at March 31, 2011, December 31, 2010 and 2009, respectively. The potential loss in fair value on such financial instruments from a hypothetical 10% adverse change in quoted foreign currency exchange rates would not have been material to our financial position as of March 31, 2011, December 31, 2010 or December 31, 2009.

We are exposed to fluctuations in foreign currency that could impact future forecast transactions at March 31, 2011, December 31, 2010 and December 31, 2009. We did not engage in cash flow hedging to mitigate this risk.

In addition to the direct effects of changes in exchange rates on certain financial instruments, such changes also may indirectly affect unit sales volume and foreign currency pricing of our products as we compete with products that are affected differently by the same currency exchange rate fluctuations. Our sensitivity analysis of our exposures to effects of changes in foreign currency exchange rates does not factor such potential indirect impacts on our operations, competitive behavior or product prices expressed in local currencies.

We secure raw materials through purchasing functions at each operating division. These functions are staffed by professionals who determine the sourcing of materials by assessing quality, availability, price and service of potential vendors. When possible, multiple vendors are utilized to ensure competitive prices and to minimize risk of lack of availability of materials.

We purchase scrap, various grades of steel and nickel at market prices, which are subject to price volatility over time. Generally, we have been able to pass any increases through price increases on our products or the assessment of surcharges or escalator provisions in our long-term agreements with customers; however, typically there has been a historical time lag of several months between the time a price increase is effective and our ability to realize a price increase in the market. This historical time lag could increase in more volatile time periods. As a result, our gross margin percentage may decline, and we may not be able to implement other price increases for our products. Both operating segments review raw material cost to pricing relationships on a regular basis. We have not hedged against the price volatility of any raw materials within our operating segments with any derivative instruments.

Our suppliers and sources of raw materials are based in the United States, Asia, Latin America, Australia and Europe. We believe that our sources are adequate for our needs in the foreseeable future, that there exist alternative suppliers for our raw materials and that in most cases those materials are readily available. We have not experienced any work stoppage or supply stoppage due to raw material availability.


*Engineered Products Group* EPG provides wear parts and wear part carriers to the mining and infrastructure development markets, as well as the industrial market. Mining The mining industry consists of a series of closely linked operating activities that begins with identifying possible ore reserves and ends with delivering a refined product. These activities consist of exploration, mine development, extraction, materials handling, crushing and grinding, concentration and refining into usable product. Extraction, the activity most relevant to our business, is divided into surface mining and underground mining.
Surface mining involves the excavation of commodities such as copper, iron ore, oil sands and coal. Underground mining involves the extraction of commodities, predominantly coal, that are deep below the surface. Surface mining requires the use of numerous types of heavy equipment, which require wear parts and wear part carriers. Sales of new surface mining equipment are closely tied to fluctuations in the prices of their related commodities and global macroeconomic conditions. The aftermarket for parts and services for mining equipment, in contrast, tends to be less volatile and is linked to mining production. Once a mine is opened, it is unlikely to be shut down due to the high fixed costs associated with its operation. There are also high switching costs, including lost revenues, to replace aftermarket parts and their related fitments installed on mining capital equipment.

Mining products include ground engaging tools, or GET, products such as tooth systems and cutting edges; crusher wear parts; dragline rigging; and wear part carriers such as dragline buckets, cable shovel buckets, excavator buckets and wheel loaders. Wear parts typically generate recurring sales as the parts are used in mining and regular replacement is required. In most market conditions, this recurring business provides a base level of demand because wear parts are generally required to operate mining equipment and are not discretionary capital expenditures.

Demand Drivers. The demand for wear parts in the mining industry is driven by the demand for mined commodities. As commodity demand rises and commodity prices increase, it becomes economical for mining companies to extract lower grade ores in more challenging extraction environments, which typically requires greater use of wear parts. We estimate that in 2010 the mining commodities below represented over 90% of our mining net sales.

Copper. Copper is a basic material used in residential and commercial construction, electrical equipment, transportation, industrial machinery and durable consumer goods. Demand for copper is driven by accelerating economic growth in the developing world and continued consumption in the developed world. According to a 2011 report by AME Mineral Economics, worldwide mine production of copper was 16.0 million tons in 2010 and is projected to be 18.9 million tons by 2012.

Iron Ore. Iron ore is one of the few sources of primary iron used to make steel and is mined in about 50 countries, according to the U.S. Geological Survey. The market for iron ore is largely a

function of the demand for steel. According to a 2011 report by AME Mineral Economics, worldwide production of iron ore in 2010 was 2.58 billion tons and is estimated to be 3.03 billion tons in 2012.

Oil Sands. Oil sands are a viscous mixture of sand, bitumen, clay and water. According to the Canadian Energy Resources Conservation Board, oil production from surface mining of oil sands in Canada was estimated at 0.86 million barrels per day in 2010 and is projected to be 1.05 million barrels per day in 2012.

Coal. Coal is the world's most abundant low-cost energy source and is responsible for over 40% of the world's power generation, according to the 2010 International Energy Outlook report of the U.S. Energy Information Administration, or EIA. We believe the large amount of coal reserves and significant coal infrastructure present difficulties for transition from coal to other energy sources. Additionally, new clean coal technologies, flue gas desulphurization and carbon capture and storage may help to mitigate environmental and regulatory concerns with the use of coal for power generation. New technologies, such as gasification and liquefaction, create opportunities for future growth in the use of coal. According to the same EIA report, worldwide production of coal in 2010 was 130.4 quadrillion Btu; this is forecasted to increase to 139.4 quadrillion Btu in 2015.

Gold. The price of gold is determined through trading in the gold and derivatives markets and is affected by factors such as consumer sentiment, interest rates and inflation expectations. Production of gold in 2010 was 2,653 tons and is expected to grow to 2,693 tons in 2012, according to a 2011 report by the Australian Bureau of Agricultural and Resource Economics and Sciences.

Growth in demand for these commodities is a function of economic activity, population growth and continuing improvements in living standards in many areas of the world. China and India, which together accounted for 37% of the world's population as of December 15, 2009, have fast-growing economies and rapidly urbanizing populations and have had a significant positive impact on secular trends in commodity production. One of the key drivers of the demand for commodity ore has been growth in construction in China, which experienced a 15% compound annual growth rate from 1998 to 2010, according to IHS Global Insight. This increased demand has created a corresponding increase in mining activity in resource-rich areas of the world, especially the United States, Brazil, Australia and Russia. We have significant operations in the United States, Brazil and Australia, including manufacturing sites and sales and distribution offices in each of those countries. We also have sales and distribution offices in Russia. The capital expenditure budgets for the top five global mining companies by market capitalization have increased an average of 73% in 2011 over 2010. The chart below illustrates the movement in certain commodity prices over the two years ended March 31, 2011.

Source: TSI iron ore index; LME Copper index; West Texas Intermediate crude oil market price; McCloskey Newcastle spot price; NYMEX.

The major participants in the mining industry are mine operators, mining OEMs, parts manufacturers and independent distributors. Most mine operators, which are the end-users of mining products, are state-owned enterprises or large multinational corporations with operations in the major mining markets throughout the world. Increasingly, large multinational mine operators have reduced operating costs by employing larger, costlier and more efficient and sophisticated machines. These mine operators generally have high-throughput operating processes, with high fixed costs and high costs of downtime in the form of lost revenues and costs of storage. As a result, these mining companies generally operate 24 hours a day, seven days a week, under demanding conditions. To maximize profits under these conditions, these companies require high quality wear parts that they can quickly and safely replace, and frequently purchase wear parts and replacement products for their capital equipment in the aftermarket.

The global infrastructure development industry, as it relates to EPG, consists primarily of heavy construction and underwater hard rock dredging activities. Like the mining sector, infrastructure development involves the use of numerous types of heavy equipment that require wear parts and wear part carriers.

Heavy Construction. Heavy construction involves the development and repair of buildings, sewers, pipelines, highways, dams, harbors and other manmade structures. Many EPG products for heavy construction are the same as those used in mining, but typically are smaller.

Underwater Hard Rock Dredging. Underwater hard rock dredging includes harbor expansion and deepening projects.

The chart below illustrates the infrastructure industry growth rate from 2010 through 2014 for Brazil, Russia, India and China (BRIC countries) and non-BRIC countries.

Demand Drivers. The demand for infrastructure products is tied to maintenance activities in developed nations and infrastructure development in developing countries. In developed countries, drivers of demand include the required maintenance and rebuilding of aging infrastructure. For example, the American Society of Civil Engineers' 2009 Report Card for America's Infrastructure estimates the United States needs to spend $2.2 trillion over the next five years to return the country's infrastructure to "good condition". There is significant government support for infrastructure build in the United States. For example, the American Recovery and Reinvestment Act

of 2009 set aside over $100 billion for infrastructure construction-related spending in the United States. Urbanizing populations are one of the key drivers of the growth in construction in developing countries such as China, which experienced a 15% compound annual growth rate in construction activity from 1998 to 2010 (according to IHS Global Insight), and other emerging economies such as India and Brazil.

Unlike mining, heavy construction is fragmented across a large number of local and regional firms. Other major participants in the global infrastructure development industry are OEMs, parts manufacturers and independent distributors. Underwater hard rock dredging is concentrated among a small number of dredging companies.

EPG industrial products include specialty castings for scrap metal recycling, locomotive engines and track work, offshore oil platform moorings, wire rope rigging, structural sockets, aircraft forming dies and conveying chain systems. The primary market drivers in these areas are the global economy, North American industrial production and the demand for lumber, aluminum, recycled scrap steel and pulp and paper products.

TTG manufactures precision investment cast components for the aerospace and power generation (or industrial gas turbine, or IGT) and other industrial markets.

Replacement castings demand is primarily driven by aircraft engine maintenance cycles, which depend on miles flown. As the global economy has recovered, air traffic has rebounded and, according to Airline Monitor, airline passenger miles surpassed 2008 levels in 2010, rising 5.5% from 2009. According to Airline Monitor, revenue passenger miles are forecast to increase at a 6.1% compound annual growth rate from 2010 through 2015, as airlines add new aircraft and increase flight hours to satisfy passenger demand. This should drive growth in the market for aircraft engine replacement parts.

The market participants in the aeroengine business are OEMs, including General Electric, Pratt & Whitney and Rolls Royce; OEM revenue sharing partners, or RSPs; and numerous tiers of suppliers, like TTG, to OEMs and RSPs.

The chart below illustrates the forecast for engine delivery and revenue passenger miles from 2010 through 2015.

The IGT casting market is driven by the demand for new gas turbines and maintenance requirements for the existing installed base of turbines. According to Frost & Sullivan, gas turbine sales are expected to increase at a compound annual growth rate of 5.1% from 2010 through 2015.

Gas turbines are generally designed for a useful life of over 30 years, which contributes to a resilient industrial gas turbine maintenance, repair and overhaul (MRO) market. The typical replacement cycle for "hot gas path" turbine parts is between three and seven years. The large installed base of IGT castings provides a platform for considerable aftermarket opportunities.

The market participants for industrial gas turbines are OEMs, parts manufacturers and aftermarket suppliers of MRO parts and services.

We have focused on product innovation throughout our nearly 100-year history and, as of June 15, 2011, we had 46 U.S. patents and 500 foreign patents worldwide (including foreign counterparts to our U.S. patents). We believe our expertise in metallurgy, tribology (the science of wear), design engineering, manufacturing processes and distribution are our core competencies.

EPG focuses primarily on wear products and solutions for mining, infrastructure development and other challenging industrial applications. EPG wear parts include GET such as mechanically attached teeth on buckets for earth moving, crusher parts, scrap recycling hammers and dragline rigging. We believe we are the global market leader in GET tooth systems used in surface mining and infrastructure development, with an extensive offering of patented GET products. Our wear parts, which typically are consumed in less than a year, represented 80% of EPG net sales in 2010. In addition to wear parts, we also design and manufacture capital equipment attachments that serve as wear part carriers, such as dragline buckets for coal mining where we believe we are the global market leader.

We have a global network of 21 manufacturing facilities and 36 sales and distribution offices in 18 countries, with a presence in nearly every major mining region around the globe. We employ a diversified distribution model that includes direct sales, a network of independent dealers, licensees and OEMs. We increasingly focus on building our direct sales channel in markets with a high concentration of mining activity. Our on-site field technical experts and sales representatives work directly with end-users to develop first-hand knowledge of their needs. Drawing on our extensive expertise in solving wear problems at mining and infrastructure projects around the world, these local teams deliver our customers solutions from our broad portfolio of products. Once our products are installed on a customer's equipment, the customer can access our global multi-channel distribution network to purchase replacement wear parts.

We believe we have a differentiated business model in EPG, focused on developing close relationships with both OEMs and the end-users of our products. We "push" first fitment of our

products on new machines by working closely with mining OEMs to develop products that meet their requirements. For example, when mining OEMs adopt our products as first fitment for the buckets on their capital equipment, such as hydraulic excavators, electric cable shovels and wheel loaders, our wear parts are typically used for the life of the bucket. In addition, our close customer relationships allow us to provide products and solutions to address a customer's critical wear problems, increase productivity, reduce total cost of ownership and improve safety, creating a "pull" as our customers request that OEMs fit our products on their equipment. As a result, our EPG business is characterized by a significant installed base — we estimate that our products are on approximately one-third of the surface mining machines worldwide. This, in conjunction with the high cost of switching to other suppliers and the consumable nature of our wear products, creates recurring sales.

EPG's success is grounded in its core competencies: innovative product design; metallurgy; tribology; manufacturing; a global sales, distribution and service network; and a culture of continuous improvement. Leveraging these core competencies, EPG has become an innovation leader in the design and manufacture of wear parts, which we provide to diverse customers around the world. Although EPG has large customers, including the 10 largest mining companies in the world, no single customer accounted for 10% or more of our EPG net sales in any of the last five years. In addition, EPG benefits from diversity in the industries and geographies where we operate and from the diversity in commodities that our customers mine.

TTG manufactures superalloy precision investment cast components used in the aerospace and power generation markets such as blades, vanes and complex structural parts used in aircraft engines and industrial gas turbines. Broad manufacturing and metallurgical capabilities, responsiveness and extensive engineering expertise, backed by the strength of our brand, have enabled TTG to become an important supplier in these markets. Our engineers work closely with OEMs and their revenue sharing partners to manufacture new and modified products that provide high turbine efficiencies and component performance. Our rapid product development process aligns us closely with our customers to bring new products to market faster.

Investment casting is a technical, multi-step process that uses ceramic molds in the manufacture of metal components with more complex shapes, tighter tolerances and finer surface finishes than parts manufactured using other casting methods. TTG's engineering expertise and manufacturing know-how are critical to the production of parts to the exacting tolerances and high metallurgical standards necessary to withstand extreme heat and other severe operating stresses. TTG employs conventional casting processes to produce fine grain castings; equiaxed castings, in which metal grains are oriented randomly throughout the casting; directionally solidified ("DS") castings, in which metal grains are aligned longitudinally; and single crystal ("SX") castings, which consist of one large superalloy crystal without grain boundaries. Grain boundaries and alignment affect the strength and performance characteristics of metal castings. TTG also offers value-added services to its customers including precision machining, stem drilling and vacuum heat treating services. In 2010, 70% of TTG net sales were from products used in the "hot gas path" of turbines and considered replacement parts.

We believe we are well-positioned to benefit from positive secular trends in the industries we serve, and that the following competitive strengths will enable us to maintain our leadership position, grow our market share and generate returns for our shareholders.

We are an independent global provider of highly engineered wear products and solutions in the surface mining and infrastructure development markets. Within these markets, we believe we are the global market leader in GET tooth systems used in surface mining and infrastructure development projects, with an extensive offering of patented GET products; dragline buckets for coal mining; and first fitment for mining hydraulic excavators.

We are positioned to benefit from positive secular trends in commodities markets and global infrastructure spending. Production of copper, iron ore and oil sands is expected to grow at compound annual growth rates of 8.6%, 8.4% and 10.9%, respectively, over the next two years (according to AME Mineral Economics and the Canadian Energy Resources Conservation Board); global infrastructure build activity is expected to grow at a compound annual growth rate of 13.0% through 2014 (Business Monitor International). Similarly, we expect our TTG business to benefit from expected aerospace compound annual growth rates of 6.1% in global passenger and cargo traffic (The Airline Monitor) and 5.1% for industrial gas turbines over the next five years (Frost & Sullivan).

We believe we are well-positioned to maintain or improve our market position in these markets given the strength and breadth of our product portfolio, proprietary technologies, strong brand, broad manufacturing presence, extensive distribution platform and long-term relationships with industry-leading customers.

We sell mission-critical wear parts essential to the productivity of our customers' capital equipment. This equipment operates in harsh conditions, often continuously, where downtime is expensive due to lost production time. For example, we estimate that lost revenue from downtime for a large mining cable shovel in a U.S. copper mine can be as high as $300,000 per hour. As a result, our customers highly value our product innovation, quality and performance, as well as the breadth of our product offerings.

The installed base of equipment that uses our wear parts has grown significantly in recent years — we estimate our products are installed on approximately one-third of the world's surface mining machines; specifically, draglines, excavators, cable shovels and wheel loaders. We believe we are well-positioned to benefit from aftermarket wear parts sales as growth in mining and growth in infrastructure development in emerging markets outpace global economic growth generally, and as the demand for mined commodities makes it profitable for our customers to extract lower grade ore, which typically requires greater use of wear parts. Our consumable wear parts generate recurring sales for us as the parts wear and are required to be replaced. For example, in the mining industry, GET teeth can last for tens of thousands of tons of production before requiring replacement, which can occur as often as every week depending on the product and the application. This recurring business provides a base level of demand because our parts are generally an operating requirement for our customers and not a discretionary capital expenditure. In addition, many of our wear parts attach to our proprietary fitments, such as lip systems, installed on our customers' capital equipment. Replacing these fitments is time consuming and expensive. As a result, there is a natural, recurring demand associated with EPG wear parts that is generally more stable than the underlying demand for the related capital-intensive equipment to which our parts attach. Our large portfolio of EPG products provides significant recurring sales from aftermarket sales of wear parts to service the large installed base of capital equipment that uses our products. In 2010, wear parts represented 80% of EPG net sales.

In 2010, 70% of TTG net sales were from products used in the "hot gas path" of aerospace and industrial gas turbines where they are subjected to extreme heat and operating stresses. This results in the need for periodic replacement as part of the turbine maintenance, repair and overhaul cycle and generates recurring sales for us.

For nearly a century we have built our brand with responsive service, productivity improvement and customer-driven innovation. Today, the ESCO brand is globally recognized for quality, durability, reliability, safety and superior performance in the most demanding operating conditions, from the high stress and impact of hard rock dredging and the severe abrasion of oil sands, to the extreme temperature ranges of a jet engine.

Our reputation has earned brand loyalty from over 1,000 customers across more than a dozen industries. We have served each of our top 10 customers in 2010 for at least 15 years. Our customers, which include the 10 largest mining companies as well as major aircraft engine and IGT manufacturers, operate in circumstances where the failure of a component can expose them to significant costs. Many customers rely on us as their primary source for mission-critical products. Many of our relationships with OEM customers and dealers in North America and Europe have lasted for decades.

We have an expansive network of 28 manufacturing facilities, including 16 foundries, and 36 sales and distribution offices. We operate in 19 countries on six continents, which allows us to develop strong expertise in solving the world's most challenging mining and infrastructure problems and helps us maintain an advantage in developing new products and technologies that we can offer to customers. Our worldwide reach allows us to efficiently leverage common manufacturing systems and processes across our business. In addition, our local presence in many key mining regions benefits our business in the following ways.

Our executive officers have an average of over 20 years of experience in our business. Over the last 20 years, our team has grown ESCO from a company with operations only in North America and Western Europe to a global business with operations in 19 countries on six continents and a broad, diverse and growing product portfolio. Our operations across the world are managed by regional executives and operated by local personnel following standard policies and procedures. Our highly skilled team of engineers with expertise in metallurgy, tribology, design engineering, and manufacturing processes helps us maintain our market position by improving the wear life and ease of use of our products.

Customer-driven innovation is a critical aspect of our growth strategy, and has resulted in, as of June 15, 2011, 46 U.S. patents, with an average remaining life of approximately 11 years, and 500 foreign patents worldwide (including foreign counterparts to our U.S. patents). Through ongoing contact with our customers in the field, we will continue to develop close relationships that allow us to determine firsthand the new products and wear solutions our customers need. In many cases we are the first point of contact when unique and challenging problems arise, even at remote customer locations. In addition, we employ a global Voice of the Customer program, through which we obtain a detailed understanding of our customers' requirements and gain key inputs for designing new products and services. Through these relationships, we are able to solve our customers' problems using our design engineering, metallurgical and manufacturing expertise to create new and, in many cases, proprietary products that can then be applied across multiple geographies. These products and services developed in close collaboration with customers can deliver greater value and command higher prices, and are not easily displaced because of the risk of productivity loss and prohibitive switching costs. We continue to invest heavily in new product development.

We will continue to grow our global operations by expanding alongside customers into key regions. In 2004 we had 6 manufacturing facilities and 4 sales and distribution offices outside of North America. We now have a presence in nearly every major surface mining region around the globe with 13 manufacturing facilities and 21 sales and distribution offices outside of North America. This reflects our investment in establishing or expanding our presence in Australia, Brazil, and China, where we have manufacturing sites and sales and distribution offices, and Indonesia, Peru, South Africa and Russia, where we have sales and distribution offices, as each of these regions experiences significant growth in mining and infrastructure development markets.

Our global expansion strategy is driven by our desire to serve the fastest growing mining and infrastructure development markets and to expand our direct sales channel. For example, we entered China 12 years ago through a joint venture company, Shanxi Changfeng Wearparts, or SCW, that we formed with Taiyuan Heavy Machinery Group in Taiyuan, China, to develop a local presence in China's fast growing infrastructure development and mining market and a low-cost manufacturing base close to important customers in the Asia Pacific region. Having gained insight into operating in China through SCW, in 2006 we built a wholly owned, low-cost, state of the art foundry in China, which helps us serve our customers in that region.

Expand Direct Distribution, Selling a Broader Range of Products and Solutions

We employ a diversified distribution model for product sales in the aftermarket that includes direct sales, a network of independent dealers, licensees and OEMs. We focus on building a direct sales channel in markets where there is a high concentration of mining activity. Our direct sales channel allows us to manage how our products are positioned with customers, provides us with significant opportunities to cross-sell products and solutions and positions us to capture incremental growth and profitability. Our assessment of whether to build direct sales in a particular region is based on the ability of a dealer or licensee to serve customer requirements, potential profit margins and return on invested capital and competitive dynamics.

We will continue to expand and transition to direct sales distribution in some large mining regions especially in North America, Australia, Indonesia, South America and South Africa. We have established direct sales channels in the Canadian oil sands, Wyoming Powder River Basin and

Brazil. Additionally, we recently decided to pursue a direct sales channel in Australia and South Africa, rather than renew licensing arrangements there.

In EPG, we will continue to pursue a "push/pull" strategy to increase first fitments of our branded products. Our product development and engineering staff work closely with OEMs to develop products that match the requirements of their new machines. For example, when mining OEMs adopt our products as first fitment on their buckets, our wear parts are typically used for the life of the bucket. This strong "push" for our parts creates a recurring sales stream as the end-user purchases our wear products that are attached to our proprietary fitments on machines on an ongoing basis in the aftermarket. Our wear products are not easily displaced, as doing so would require significant investment in the installation of an alternative fitment, as well as lengthy downtime of critical equipment and lost productivity. In addition, our close customer relationships have allowed us to provide products and solutions to address customers' critical problems, increase productivity, reduce total cost of ownership and improve safety, creating a "pull" through demand for our products. Customers often request that OEMs deliver their new equipment fitted with our products. We plan to use this combined push/pull dynamic to grow our installed base at the OEM level, providing us a solid base for long-term net sales growth.

In TTG, we are focused on strengthening our existing relationships with key OEMs in aerospace and IGT markets and with aerospace OEM revenue sharing partners. Our engineers work closely with OEMs and revenue sharing partners to manufacture new and modified products that provide high turbine efficiencies and component performance. Our rapid product development process aligns us closely with our customers to quickly bring new products to market.

Since 2005 we have acquired five companies to build our EPG business for an aggregate consideration of approximately $100 million. See "— Acquisitions and Divestitures." We plan to continue our successful identification, acquisition and integration of businesses that we believe will provide us with some or all of the following: foundry capacity in strategic regions, proximity to key customers and enhanced distribution capabilities and complementary products or technologies. We will continue to focus on expanding our presence in the top mining regions globally as well as emerging markets and low-cost regions where we expect to benefit from significant growth in the mining and infrastructure development markets and increasing adoption of sophisticated machinery and operating practices. For example, our 2010 acquisitions of Swift Engineering and Austcast in Australia have provided foundry capacity, improved access to customers and distribution and new, innovative products that can be distributed to customers in other geographies. We will continue to evaluate acquisitions based on synergy potential, return on invested capital and earnings accretion.

We focus on lean processes to drive continuous improvements in all aspects of our business. Our lean system, which we refer to as QVS, or "Quality, Value and Speed", has allowed us to improve process cycle times, increase quality and customer service and reduce capital requirements, including working capital and capital deployed to increase foundry tonnage. By continually improving productivity and our cost structure, we have created a more nimble organization that can more rapidly respond to market and customer needs.

We believe our enterprise-wide QVS initiative has improved our operating efficiency through standardized processes and increased accountability. In addition, QVS initiatives have allowed us to reduce manufacturing cycle times in some of our key foundries. For example, at one of our key

foundries, we reduced cycle times by 39% from 2007 to 2010. In addition, we have improved our net working capital as a percentage of net sales from 30% in 2000 to 21% in 2010.

As we continue to expand our global operations, we believe ample opportunities continue to exist to shorten product development cycles, enhance margins and improve customer service.

EPG focuses primarily on wear products and solutions for global mining, infrastructure development and other challenging industrial applications. EPG's longstanding presence in these markets has resulted in an extensive proprietary knowledge base, which we utilize to design, engineer and manufacture innovative proprietary products. We believe we are the global market leader in GET tooth systems used in surface mining and infrastructure development projects, with an extensive offering of patented GET products. We believe we are well-positioned to maintain or improve our market position in these markets given the strength and breadth of our product portfolio, proprietary technologies, strong brand, broad manufacturing presence, extensive distribution platform and long-term relationships with industry-leading customers.

We believe we are the leading provider of first fitment lip systems to mining OEMs for hydraulic excavators that serve as wear part carriers, which has allowed us to build a significant installed base. Many of our lip systems and GET products include patented fit relationships and locking systems that require the use of our replacement wear parts, generating recurring sales for us once our lip systems are installed. OEMs choose to install our systems because of the value our solutions bring to their machines and their customers. Compared to competing products, we believe the advantages of our wear products that improve economics for our customers include superior wear life, increased productivity and performance and quick change times for replacement parts. There are high switching costs associated with retrofitting a machine after our wear part carriers and adapters have been installed, which can include removal time and costs and decreased productivity and performance.

We own and operate 21 manufacturing facilities and 36 sales and distribution offices in 18 countries across six continents, with a foundry near most of the major markets we serve. We use capital-intensive manufacturing equipment and specialized manufacturing processes in the casting, welding and assembly of our wear parts and wear part carriers. Our diverse, efficient and experienced manufacturing operations are core to our global footprint with local presence. This global manufacturing platform allows us to leverage our considerable resources and common manufacturing processes to provide products and solutions to our multinational clients wherever they operate. Local manufacturing presence near most of the world's major mining regions provides us with significant operating benefits, including reduced transit times, lower shipping costs and improved feedback between manufacturing and wear parts technicians and the customers they serve. On-site wear part expertise is a fundamental component of our service to our customers.

In 2010, net sales by region were 55% from North America, 17% from EAMER (Europe Africa Middle East Region), 15% from Latin America, and 13% from Asia Pacific.

Many of our locations' quality management systems are ISO 9001 certified. Our continuous improvement initiative allows us to improve process cycle times, improve safety, increase quality and customer service, and reduce capital requirements, including working capital and capital deployed to increase foundry tonnage. The success of our continuous improvement culture has shown itself through increased incremental capacity with minimal capital cost, shorter cycle times to better serve our customers' needs and a more nimble cost structure.

EPG provides thousands of innovative and reliable wear products designed specifically to perform in the harsh environments where our customers' machines operate. EPG sales over the past five years included over 25,000 SKUs. We provide an extensive offering of GET, complete cast and plate lip systems and other wear parts for mining equipment and crushing applications.

Sales of mining products represented 63% of EPG net sales in 2010, infrastructure development products 30% and industrial products 7%. Mining, infrastructure development and industrial wear parts represented approximately 80% of EPG's net sales in 2010; wear part carriers represented approximately 10%; and industrial and other components represented approximately 10%. Over 45% of our EPG net sales in 2010 were from our patented products.

The pictures below show how some of our products work together and are used on capital equipment.

Wear and replacement parts. Most of EPG's net sales are from sales of consumable wear products, which we define as products with a typical wear life of less than one year. Wear cycles vary widely. The teeth on dredge cutterheads used to cut through hard rock, for example, can be replaced as often as every few hours. Net sales from wear and replacement parts was $611.0 million, $422.2 million and $568.3 million in 2008, 2009 and 2010, respectively. Consumable EPG wear parts include the following:

Product	Applications	Machines / Price

GET Cutting Edges	Used to push earth, rock and snow and protect the moldboard of the machines.	• Dozers • Graders • Snow plows • Prices from $50 to $1,250
Crusher Wear Parts	Used to crush and size rock (aggregate) in quarry operations and to crush ore in mining operations.	• Jaw crushers • Gyratory crushers • Cone crushers • Impact crushers • Prices from $1,600 to $32,000
Dragline Rigging	Used for hoisting and loading dragline buckets that are typically used in coal mining operations to remove overburden (rock and dirt) to uncover coal seams.	• Draglines • Prices from $250 to $75,000
Universal Wear Solutions	Used to protect high wear areas in a variety of mining and infrastructure development applications.	• Processing plants • Cable shovels • Draglines • Excavators • Wheel loaders • Dozers • Graders • Scrapers • Truck bodies • Prices from $10 to $850
Scrap Recycling Hammers	Used to shred metal products during the recycling process.	• Metal recycling machines • Prices from $200 to $1,350

Attachments and wear part carriers. EPG manufactures attachments and wear part carriers used in mining and infrastructure development, including lip systems, dragline buckets, cable shovel buckets, hydraulic excavator buckets and face shovels, wheel loader buckets, truck bodies and dredge cutterheads. These products typically have a wear life of five to 20 years, with regular

maintenance cycles to replace wear components. Net sales from attachments and wear part carriers were $71.3 million, $57.2 million and $66.0 million in 2008, 2009 and 2010, respectively.

Product	Application	Machine / Price

Lip Systems	Installed on buckets that are used to excavate and move earth and cut through rock.	• Excavators • Wheel loaders • Cable shovels • Draglines • Prices from $5,000 to $350,000
Buckets	Used in construction sites, pipeline and other general construction, aggregate quarries and mining applications.	• Excavators • Cable shovels • Wheel loaders • Draglines • Prices from $2,400 to $1,200,000
Dredge Cutterheads	Used to deepen ports and shipping lanes in hard rock dredging and sand and clay dredging operations.	• Dredger • Prices from $80,000 to $675,000

Industrial and other components and services. EPG manufactures and supplies a variety of industrial products and services including castings for locomotive engines and track work, offshore oil platform moorings, wire rope rigging, structural sockets, aircraft forming dies and conveying chain systems. EPG also provides services, including specialty casting and bucket repair services. Net sales from industrial and other components and services were $69.7 million, $51.1 million and $78.3 million in 2008, 2009 and 2010, respectively.

We employ a diversified distribution model for EPG product sales in the aftermarket that includes direct sales, a network of independent dealers, licensees and OEMs. In 2010, 36% of EPG's net sales were generated through our EPG global dealer distribution network, 48% sold directly to end customers and 16% to OEMs.

We use a "push/pull" strategy to increase first fitments of EPG products globally. We work closely with OEMs to develop new products that meet evolving requirements. In addition, our technical specialists and sales representatives work directly with the end-users of our products, and we use formal surveys to develop first-hand knowledge of users' needs. As a result, OEMs often use our wear parts as first fitment on their capital equipment and customers often prefer our wear parts on the capital equipment they purchase. OEM adoption of our products as first fitment on their capital equipment creates a "push" for our products, and customer requests for our products on the capital equipment create a "pull" for our products. Once our products are installed on the end-users' equipment, end-users can access our global multi-channel distribution network to purchase wear parts and other replacement parts.

Our authorized dealer and expanding direct supply and service network allow us to strategically expand our reach into new regional markets and establish close contact with key customers. These distribution channels allow us to leverage our common manufacturing systems and business processes on a local distribution, sales and service network, which provides us with deep customer relationships, opportunities to develop better solutions and a reputation as a local product solution specialist. We believe our global distribution, sales and service network is a competitive advantage that strengthens our ability to benefit from strong positive trends in global resource demand, infrastructure development in emerging markets, as well as infrastructure development projects in North America and Western Europe. At March 31, 2011, we had 191 independent dealers in 60 countries, some of which operate in multiple locations, and 34 direct sales locations. The majority of our dealers are party to our form of dealer agreement, which is terminable by either party on 90 days' notice.

Our licensees help us maintain relationships with regional customers, providing localized availability of parts and service, and work in partnership with us to serve the needs of global customers. Our licensing relationships with manufacturers Compañía Electro Metalúrgica S.A., in Chile, and Mitsubishi Steel Mfg. Co., Ltd., in Japan were established approximately 50 years ago. Each of our licensees manufactures and sells a range of our products using our designs, patents, alloys, manufacturing and metallurgical know-how and brand name, and pays us a royalty from sales. Through design and manufacturing controls and the use of standard gauging tools provided by us, we assure interchangeability of wear parts to customers around the world. For example, a mining customer in Chile can, for its European OEM machine, obtain aftermarket wear parts from our Chilean licensee to replace worn teeth on a lip system we built in the United States. Our products' global interchangeability allows our customers to purchase reliable products directly from us, the OEMs we serve, our licensees and our authorized dealers.

In some regions, we have moved from licensee relationships to direct manufacture and sale. For example, we will not renew our license in Australia with Bradken Resources Pty Ltd. when it expires on June 30, 2011. In anticipation of the license termination, we have taken steps to expand our direct presence in the attractive Australian market. During 2010, we acquired Swift Engineering, a provider of mining site services and fabrication in Australia with facilities in Mackay and Kingaroy, Queensland, and Austcast, with foundries in Northgate, Queensland and Dunedin, New Zealand primarily serving the mining markets. The Swift acquisition also expanded our product offering through an innovative line of mining haul truck bodies. Beginning in 2010, we introduced and expanded our direct supply and service capability in key Australian mining regions. The combination of these two acquisitions, the establishment of independent dealers and the development and deployment of other resources position us to serve the Australian market with products and services when the license expires.

We are also a partner in three joint ventures. We jointly own our Taiyuan, China manufacturing facility with a minority owner, Taiyuan Heavy Machinery Group. We also have a joint venture with Elecmetal, our Chilean licensee, to build and operate a foundry in Chile to produce wear parts for the Chilean market and for our global distribution outside Chile. Finally, we have a sales and distribution joint venture with ESS Holdings, Inc. to serve our oil sands customers in Fort McMurray, Alberta, Canada.

EPG customers consist of OEMs and dealers of capital equipment in the mining, infrastructure development and industrial markets, as well as the end-users of that capital equipment. Although EPG has large customers, including the 10 largest mining companies in the world, no single customer accounted for 10% or more of its net sales in any of the last five years.

EPG operates in the mining, infrastructure development and industrial wear parts markets. EPG competes on a variety of factors, including equipment productivity, design and performance, technology, metallurgical expertise, reliability, customer relationships, delivery lead times and price. EPG's competitors range from some of the world's largest multi-national equipment manufacturers to small single-product niche manufacturers. Competitors include Hensley Industries, Inc., a division of Komatsu, Ltd.; Berkeley Forge & Tool Inc.; Columbia Steel Castings; Metalogenia S.A.; CQMS Pty Ltd.; and Van Reenen Steel Ltd. When our licensee relationship with Bradken Resources Pty Ltd. expires on June 30, 2011, it may also compete with EPG.

The mining and infrastructure development wear parts market has substantial barriers to entry. We believe that successful participation in the industry requires (i) extensive experience in metallurgy, tribology and advanced manufacturing processes; (ii) a broad portfolio of products; (iii) significant capital expenditures to establish the necessary global operations and the local distribution infrastructure; and (iv) brand recognition, which is generally promoted by a long-term track record of innovation, quality, client relationships and an active installed base. We have developed these capabilities over a nearly 100-year history and believe we are well-positioned in the wear parts industry.

TTG operates in the aerospace and power generation markets. TTG serves customers that require superalloy precision investment castings for gas turbines that generate power for cities and jet engines that keep airliners flying. Due to the highly complex nature of the investment casting process for turbine components and structures, and the exacting standards required so that products can withstand intense heat and operating stresses, few manufacturers can compete in this space.

TTG's metallurgical castings include fine grain castings; equiaxed castings; directionally solidified ("DS") castings; and single crystal ("SX") castings. TTG employs conventional casting processes to produce equiaxed castings, in which the metal grains are oriented randomly throughout the casting. A more advanced process enables us to produce DS castings, in which the metal grains are aligned longitudinally. This alignment decreases the internal stress on the weakest portion of a metal part where the various grains adjoin, thereby providing increased strength and improved efficiencies in engine performance over equiaxed parts. An even more advanced process enables us to produce SX castings, which consist of one large superalloy crystal without grain boundaries. SX castings provide greater strength and performance characteristics than either equiaxed or DS castings, as well as longer engine life. We believe our ability to manufacture a broad range of part sizes and configurations, using DS/SX and equiax manufacturing processes, makes TTG one of the few investment castings suppliers to the aerospace and IGT markets capable of meeting a wide range of customer needs with facilities in the United States, Mexico and Europe.

TTG's aerospace offerings include blades, vanes and complex structural parts used in commercial and military aircraft engines. In 2010, approximately 71% of our aerospace engine component net sales were from products for commercial usage. Over 55% of our aerospace engine products net sales in 2010 were from products used in the "hot gas path" of aircraft turbines and, as a result, are considered replacement parts, while the balance are high-specification structural castings typically associated with new engine builds. Net sales from replacement parts sold in the aerospace market was $27.4 million, $25.3 million and $38.8 million in 2008, 2009 and 2010,

respectively; net sales from all other aerospace products was $47.5 million, $31.9 million and $27.4 million in 2008, 2009 and 2010, respectively.

Our power generation products are similar to the products we produce for aerospace engines, but are much larger. While a vane casting for an aircraft engine may weigh as little as 0.5 pounds, a vane casting for a large IGT turbine can weigh as much as 200 pounds. In the power generation market, TTG produces a range of "hot gas path" components, including blades, vanes and multi-vanes. Over 90% of our IGT net sales in 2010 were from products used in the "hot gas path" of turbines and, as a result, are considered replacement parts. Net sales from replacement parts sold in the IGT market was $85.6 million, $73.1 million and $50.0 million in 2008, 2009 and 2010, respectively; net sales from all other IGT products was $0.4 million, $0.1 million and $3.6 million in 2008, 2009 and 2010, respectively.

TTG is also an important supplier of superalloy precision investment castings sold to the locomotive and marine turbocharger markets, and participates in other niche industrial markets. Net sales from these products were $27.0 million, $19.5 million and $17.1 million in 2008, 2009 and 2010, respectively.

TTG produces complex superalloy castings used in civil and military aircraft engines and IGT at facilities in the United States, Mexico and Europe.

TTG's core customers are IGT OEMs and MRO replacement part providers, and aerospace engine manufacturers and their revenue share partners. All sales are generated through our highly technical direct sales force. Due to the sophisticated nature of the TTG products, sales efforts require both sales and engineering personnel to work closely with customers to identify and assist in the development of new and modified products. TTG customers frequently visit manufacturing sites to work with TTG product and process engineers in developing new programs or to audit quality systems and production capabilities. Our sales staff works with our customers to identify and develop growth opportunities that will develop over three to five years with our strategic customers.

TTG's largest competitors by sales are Precision Castparts Corp., Howmet Corporation, a wholly owned subsidiary of Alcoa Inc., and Doncasters Group Limited. TTG typically focuses on niche opportunities with its aerospace and IGT customers while its three largest competitors typically focus on the highest volume and highest technology opportunities. TTG also has numerous smaller competitors. TTG can produce metallurgical structures ranging from equiax to fine grain to DS/SX and can manufacture small simple blades to large complex cored IGT blades, large IGT multi-vanes and medium-size aero engine structural components. As a result, other than TTG's three largest competitors, to our knowledge, none of the other superalloy investment casting suppliers have the range of technical, metallurgical and manufacturing capabilities offered by TTG combined with its manufacturing footprint in the United States and Europe, including lower-cost sites in Mexico and Slovakia.

The following table lists our principal properties as of March 31, 2011, the segment that uses each property and related information.

Location		Type	Owned/Leased

Portland, OR, USA:
Headquarters	HQ	Executive Offices	Owned
Main Plant	EPG	Foundry/EPG HQ	Owned
Portland Plant 3	EPG	Foundry	Owned
Newton, MS, USA	EPG	Foundry	Owned
Covington, KY, USA	EPG	Fabrication	Owned
Phoenix, AZ, USA	EPG	Fabrication	Leased
Bucyrus, OH, USA	EPG	Blade production	Owned
Nisku, Alberta, Canada	EPG	Foundry	Owned
Port Hope, Ontario, Canada	EPG	Foundry	Owned
Port Coquitlam, BC, Canada	EPG	Foundry	Owned
Edmonton, Alberta, Canada	EPG	Casting overlays	Owned
Steinbach, Manitoba, Canada	EPG	Blade production	Leased
Altacomulco, Mexico	EPG	Blade production	Owned
Guisborough, England, UK	EPG	Foundry	Owned
Brisbane, Queensland, Australia	EPG	Asia Pacific HQ	Leased
Kingaroy, Queensland, Australia	EPG	Fabrication	Leased
Mackay, Queensland, Australia	EPG	Fabrication	Leased
Northgate, Queensland, Australia	EPG	Foundry	Leased
Dunedin, New Zealand	EPG	Foundry	Leased
Taiyuan, Peoples' Republic of China	EPG	Foundry	Leased
Xuzhou, Peoples' Republic of China	EPG	Foundry	Land — Leased Building — Owned
Frameries, Belgium	EPG	Distribution/Europe HQ	Owned
Betim, Minas Gerais, Brazil	EPG	Fabrication/Latin America HQ	Owned
Chittenango, NY, USA	TTG	Foundry/TTG HQ	Owned
Eastlake, OH, USA	TTG	Foundry	Leased
Guaymas, Mexico	TTG	Foundry	Leased
Herstal, Belgium	TTG	Foundry	Owned
Povaszska Bystrica, Slovak Republic	TTG	Foundry	Owned

A core team of our product engineers works to improve the value of our products to customers, focusing on features such as ease of use, installation and removal, safety, reliability, productivity and increased wear life in field applications. Often, these engineers work directly with customers and end-users in the field to gain a first-hand understanding of wear and productivity improvement opportunities. Before field testing any new designs, our engineers analyze product prototypes using computer-aided design technology and rapid prototype systems for design, pre-manufacture and field testing processes. Much of this work is not reflected in research and development in our financial statements, which includes only new product development and applied research expenses. Our research and development costs in 2010 were $5.9 million. Not included in that amount are product optimization expenses, annual new pattern spending, manufacturing development and trial lot expenses, which are allocated to the cost of goods sold and selling and administrative expenses.

We often seek U.S. and foreign patent protection on innovations in our EPG business. As of June 15, 2011, we held 46 U.S. patents, with an average remaining life of approximately 11 years, and 22 U.S. patent applications. Worldwide, including the United States, we held 546 patents and had 535 patent applications, which includes foreign counterparts to our U.S. patents and patent applications, as of the same date. We have federal registrations for many of our trademarks in the United States and other foreign jurisdictions.

We also have entered into exclusive licensing arrangements in certain jurisdictions pursuant to which licensees may use our intellectual property in the manufacture and sale of products in those jurisdictions. We receive royalties for licensees' use of our intellectual property, but they are not otherwise permitted to exploit our intellectual property during the terms of the license agreements. See "Business — Our Segments — Engineered Products Group — Sales and Distribution".

As of March 31, 2011, we had 4,854 employees, consisting of 3,754 employees in EPG and corporate and 1,060 employees in TTG. As of March 31, 2011, unions or workers counsels represented 116 employees in Belgium, 381 employees in Brazil, 308 employees in Canada, 270 factory employees in China, 23 employees in Mexico, and 65 employees in Australia and New Zealand. Two agreements covering approximately 3.6% of our employees expired in May and June 2011, one of which is under negotiation and the other of which is subject to a vote; two agreements covering approximately 8.2% of our employees will expire in the second half of 2011; and two agreements covering 4.2% of our employees will expire in 2012. 2.4% of our employees, who are located in Belgium, are subject to agreements that expire at different times: one in June 2011; two in December 2011; one in part in 2011 and in part in 2012; and one in 2012. An additional 6.4% of our employees are members of unions that are not subject to collective bargaining agreements or similar types of arrangements; those employees may elect to become subject to a collective bargaining agreement. Our unionized employees in China are not subject to a collective bargaining agreement or similar types of arrangement.

Backlog in EPG is composed of bookings derived from orders received from our customers. Most EPG orders are not cancellable, and when we allow cancellations we typically charge a restocking fee. We believe EPG backlog is useful to project sales for two to four months, but does not provide a reliable long-term forecast of sales. In addition, EPG backlog can be affected by changes to customer lead-times and our ability to meet production demands, which can limit the usefulness of backlog as a projection of sales even in the short term. EPG backlog at March 31, 2011 reflects longer lead-times resulting from increased mining activity and approximately $40.0 million contributed by Swift and Austcast in Australia, which we acquired in 2010.

Backlog in TTG is composed of orders received under long-term agreements or purchase orders. TTG orders are cancellable with the customer typically obligated to pay for any costs incurred by us on the associated orders.

The backlog of unfilled orders believed to be firm at March 31, 2011, compared to the prior year, is listed below.

We anticipate that approximately 90% of EPG backlog and 83% of TTG backlog will be filled and invoiced in 2011.

We purchase plate and scrap steel, alloys such as nickel, cobalt, molybdenum, tantalum and titanium and other materials from numerous suppliers with no single source being dominant. Each of our EPG and TTG businesses secures raw materials through its own purchasing function, where the quality, availability, pricing and service from potential vendors is assessed. We generally seek to pass raw material cost increases to our customers through EPG product price increases and through surcharges or escalator provisions in our long-term agreements with TTG customers. Historically, there is a delay of several months between raw material cost increases and our realization of price increases.

Some of our TTG products are manufactured and sold to customers who are parties to U.S. government contracts or subcontracts. Approximately 29% of TTG's aerospace net sales in 2010 were derived from sales to engine manufacturers for military-based platforms. Consequently, we are indirectly subject to various U.S. federal rules, regulations and orders applicable to government contractors. Violation of applicable government rules and regulations could result in civil liability, cancellation or suspension of existing contracts or ineligibility for future contracts or subcontracts funded in whole or in part with federal funds. Generally, our customers are able to recover costs if a government contract is cancelled and, as a result, we are generally able to recover costs from our customers in that event.

Due to the international scope of our operations, we are subject to complex United States and foreign laws, regulations and procurement policies and practices governing, among other things, anti-corruption matters, export controls, economic sanctions, and investment and currency exchange controls, including the following:

We are subject to federal, state, local, provincial, regional and foreign environmental laws and regulations concerning, among other things, ground water discharges, air emissions, waste management, toxic use reduction and environmental clean-up. Environmental laws and regulations continue to evolve. As a result, it is likely we will be subject to increasingly stringent environmental standards in the future, particularly with respect to air and water quality, and we may be required to make additional expenditures, which could be significant, relating to environmental matters on an ongoing basis. If we violate or fail to comply with these laws and regulations, we could be fined or otherwise sanctioned by regulators. These environmental laws also require us to obtain permits for some of our operations from governmental authorities. These authorities can deny, modify or revoke our permits and can enforce compliance through fines and injunctions.

We could also be held liable for any consequences arising out of human exposure to hazardous materials or other environmental damage. We own, lease and operate properties, and have owned, leased and operated properties, or conduct or have conducted operations at properties, where hazardous materials have been used for many years, including during periods before management standards for these materials were required or generally believed to be necessary. Consequently, we are subject to environmental laws that impose liability for historical releases of hazardous materials.

See "Legal Proceedings — Portland Harbor Superfund Site" below and "Risk Factors — We are subject to environmental laws, and any violation of, litigation relating to or liabilities under these laws could adversely affect us" above for a discussion of our potential liability with respect to the Portland Harbor Superfund site and "Risk Factors — Regulatory effects of climate change could adversely affect our business" for more details.

In 2010, we committed to remove an accumulation of solid waste at our Port Hope, Ontario plant. We estimate the removal will cost $2.6 million and we plan to perform this removal within five years.

Our financial statements include reserves for estimated costs for resolving claims that have been asserted with respect to environmental issues relating to our properties and operations. At March 31, 2011, we had accrued aggregate environmental reserves of $3.1 million. Our actual future expenditures, however, relating to compliance matters and clean-up of environmental conditions cannot be conclusively determined.

In addition to these acquisitions, we entered into a joint venture in 2007 to build and operate a foundry in Chile to produce wear parts for the Chilean market and for our global distribution outside Chile. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital expenditure commitments".

In 2006, we sold our Integrated Manufacturing Group (IMG) for approximately $50 million and our Engineered Metals Group (EMG) for approximately $23 million. We considered these businesses non-core to our overall business strategy. IMG manufactured highly machined products for the semiconductor, flat panel display, medical instrumentation and aerospace industries; EMG was a distributor of stainless steel and stainless steel products. See note 6 to "Selected Consolidated Financial and Other Data."

We are subject to claims and litigation arising in the ordinary course of business, including those relating to exposure to hazardous materials, and regularly assert our patent rights against parties that may be infringing those rights. Although we cannot predict the final outcome of pending

legal proceedings with certainty, we do not expect the ultimate disposition of these matters will have a material adverse effect on our financial position, results of operations or cash flows.

In March 2008, we began an arbitration proceeding against our Australian licensee, Bradken Resources Pty Ltd. In the arbitration, we sought a declaration of our rights and obligations under our 1999 agreement, as amended, with Bradken, under which we granted Bradken the exclusive right to distribute and manufacture some of our products in Australia, New Zealand and Papua New Guinea. In the arbitration, we sought to resolve disputes regarding (i) whether Bradken was obliged to use our trademarks in connection with the manufacture and sale of our products, (ii) whether Bradken could use customer field trials to promote its competing products, (iii) whether the agreement's prohibition on Bradken selling products similar to or in competition with our products was enforceable and (iv) whether the agreement's prohibition on Bradken from using our know-how, product designs and special alloys for a three-year period following termination of our agreement with Bradken was enforceable. In addition, we sought termination of the agreement prior to its scheduled expiration on June 30, 2011.

Bradken filed counterclaims against us alleging, among other things, that we (i) violated U.S. antitrust laws, (ii) breached the agreement with Bradken and (iii) misused certain patent rights, and seeking a large damage award.

On June 17, 2010, an International Chamber of Commerce arbitrator issued a final award in our favor on all issues presented to the arbitrator with the exception of our request that the agreement be terminated before June 30, 2011. Bradken was awarded nothing. The arbitrator affirmed our contract positions, including that Bradken must continue to apply our trademarks as we direct during the term of the license, Bradken cannot sell parts that compete with our licensed products anywhere in the world during the term of the license, and Bradken cannot use our know-how or alloys nor make any of our patented or non-patented products for a period of three years after the end of the license. Finally, the arbitrator awarded us our share of the ICC administrative expenses and arbitrator's remuneration and substantially all of our legal expenses. In the proceeding we began in United States District Court to confirm the final award and secure a judgment so that we may collect the amount awarded to us, Bradken has challenged the award of legal expenses. The District Court confirmed the award, and Bradken has appealed.

We received a questionnaire dated January 18, 2008 from the EPA regarding historical operational practices in connection with the Portland Harbor Superfund site. The EPA also named us as one of more than 100 businesses that are potentially responsible parties for this site in a letter dated March 12, 2010. Consequently, we may be responsible for clean-up or other costs related to the site under the Comprehensive Environmental Response, Compensation, and Liability Act, also known as CERCLA or the Superfund law. The current aggregate clean-up costs to be allocated among responsible parties is estimated to be approximately $1.0 billion. We have entered into a participation agreement with a group of named potentially responsible parties and other companies under which we admit to no liability. The agreement provides a framework to determine how to allocate cleanup costs among the parties to the agreement if the EPA finds them responsible. The inability of a party to pay its portion of assessed costs may result in increased costs to other parties. We are also participating in a process with other potentially responsible parties to quantify and potentially allocate natural resource damages claims with respect to the site. We cannot predict our ultimate liability with respect to the Portland Harbor Superfund Site at this time, but it could be substantial if the EPA determines that we are a responsible party for this site.

The following table is a list of our executive officers, key employees and directors (ages are as of June 15, 2011).

Steven D. Pratt is our Chief Executive Officer and Chairman of the ESCO board of directors. Mr. Pratt has been employed with us for his entire career, beginning in 1972. His 39 years of service includes plant management roles, President of the Engineered Products Group, and Executive Vice President and Chief Operating Officer. He became President and Chief Executive Officer in 1995 and Chairman of the board of directors in 2003, and has been a member of our board of directors since 1993. Mr. Pratt is a director of Stimson Lumber Company, Inc., where he serves as chairman of the compensation committee and as a member of the nominating and governance committee and the executive committee. The specific experience, qualifications, attributes and skills that Mr. Pratt brings to our board of directors include his 39 years of experience with with the company, his perspective as our Chief Executive Officer and his extensive experience in our industry. Mr. Pratt has announced he will retire as Chief Executive Officer at the end of 2011 or shortly thereafter. Mr. Pratt is expected to remain a director and Chairman of the Board after his retirement as an executive.

Calvin W. Collins is our President and Chief Operating Officer and he continues to serve as President of our Engineered Products Group, a position he has held since September 2009. Mr. Collins was elected to the board of directors in May 2011. Mr. Collins joined us in November 2000 as Assistant General Counsel. In October 2001, he became Vice President, General Counsel and Corporate Secretary. In 2003, he became Vice President of Administration with responsibilities for human resources, tax and risk management. In his role as Vice President of Administration, General Counsel and Corporate Secretary, he was involved in our significant financing, acquisition and divestiture transactions and our corporate strategy. Mr. Collins was named Group Vice President — Engineered Products, North American Operations in April 2007 and in September 2009 he was named President — Engineered Products. In January 2011, he was named the Company's President and Chief Operating Officer. Before joining us, Mr. Collins was an attorney in private

practice focusing on general business and corporate matters. The specific experience, qualifications, attributes and skills that Mr. Collins brings to our board of directors are his perspective as Chief Operating Officer of the Company, his prior work on significant financing, acquisition and divestiture transactions for us, his expertise gained from providing guidance and counsel to a wide variety of companies and his experience in our industry. The board of directors has appointed Calvin W. Collins Chief Executive Officer effective upon Mr. Pratt's retirement from that position, which is expected to occur at the end of 2011 or shortly thereafter.

Ray Verlinich was appointed Vice President — Finance and Chief Financial Officer in April 2011. Mr. Verlinich joined us in February 1996, beginning as Finance Director and Finance Project Manager for our global Oracle ERP implementation. He became Corporate Controller in July 1997, Assistant Treasurer in May 2010 and Vice President, Finance in February 2011. In those roles, he had responsibility for global tax and treasury management. Before joining us Mr. Verlinich served in various financial management positions, including expatriate assignments at PPG Industries Inc, a coatings and specialty products supplier.

Gene K. Huey began his career with us in 1970 and held a series of positions that included responsibilities for financial accounting, taxes, administration services, information systems, treasury, and financial analysis and planning. Mr. Huey has been involved in our strategic planning and our significant financing, acquisition and divestiture transactions. He served as Chief Financial Officer from 1984 until his resignation from that position in April 2011 and now serves as our Vice President and Treasurer. Mr. Huey expects to retire in December 2011.

Nickolas L. Blauwiekel was appointed Vice President of Human Resources in June 2005. Mr. Blauwiekel has over 30 years of human resources experience. Prior to joining us, Mr. Blauwiekel worked for Ingersoll Rand as the vice president of human resources for the infrastructure sector and for Teledyne Technologies Incorporated and Shiloh Industries, Inc. as a senior human resources executive. He also worked for Cooper Industries, Inc. in a senior human resources role.

Kevin S. Thomas joined us in February 2003 as corporate counsel. In April 2007, he was named General Counsel and Corporate Secretary. In May 2009, he also became a Vice President. Mr. Thomas oversees our legal affairs, as well as fulfilling additional responsibilities and obligations as assigned by our board of directors. Before joining us, Mr. Thomas was in private practice focusing on mergers, acquisitions and public and private securities offerings.

François Baril joined us in February 1997, beginning as District Manager for our Industrial Casting Division. He also served as Business Unit Leader for the Industrial Casting Division, Site Manager for ESCO Ltd. in Port Hope, Ontario, and Managing Director for ESCO Engineered Products Europe. In October 2005, Mr. Baril was named Vice President of ESCO Turbine Technologies Group and in January 2007, he was promoted to President of the Group.

F. Patrick Fonner joined us in June 1976 and held sales positions throughout the United States in the early years of his tenure. Mr. Fonner has served as General Manager for a variety of our products and markets, including expendables, attachments, sales, marketing and product development. Mr. Fonner also served as General Manager of our construction business unit from June 2000 through December 2004. He became Group Vice President, Engineered Product Group in January 2005.

Jon V. Owens joined us in May 1986 and has held various positions in product management, sales and marketing, manufacturing and supply chain management, including responsibility for the Asia Pacific Region, global operations, the mining division, global supply chain and the European division. He became a Vice President in April 2007, a Group Vice President of Engineered Products in August 2009 and Vice President of Marketing and Global Business Processes in January 2011 with corporate responsibility for strategy, marketing, business development, information technology

and corporate communications. Mr. Owens is Chairman of the board of directors of Shanxi Changfeng Wearparts, our joint venture in China, and an executive committee member of ESCO Elecmetal Fundicion Limitada, our joint venture in Chile.

Peter F. Adams became a director in 1983. Mr. Adams is the president and an owner of Farmington Landfill Inc., a quarry reclamation and construction materials recycling company. As a private investor, Mr. Adams is an owner of companies in a variety of fields, including wine-grape growing and vineyard management, wine production and marketing, and emergency vehicle manufacturing. Mr. Adams is also a director of several private companies. The specific experience, qualifications, attributes and skills that Mr. Adams brings to our board of directors are his strategic, managerial and corporate governance experience from service on the boards and as an executive of other corporations and his strategic insights and financial experience gained as an investor and owner of companies in diverse industries. Upon Henry T. Swigert's death or resignation as trustee, Mr. Adams and Robert C. Warren, Jr. will become co-trustees of the Swigert 2000 Trust.

Frank Alvarez became a director in 2001. Mr. Alvarez joined Intel Corporation in 1979 and served as Vice President of the Technology and Manufacturing Group until his retirement in 2000. The specific experience, qualifications, attributes and skills that Mr. Alvarez brings to our board of directors are his manufacturing experience and his ability to make important contributions to our growth strategy due to his extensive experience in a capital-intensive global industry.

Stephen E. Babson became a director in 2003 and is chairman of the nominating and governance committee of the board of directors. Mr. Babson is a managing director of Endeavour Capital, a private equity firm in the Pacific Northwest. Before joining Endeavour Capital, Mr. Babson was a partner focusing on mergers, acquisitions and public and private securities offerings and the chairman of Stoel Rives LLP. He also serves on the boards of Columbia Sportswear Company, New Seasons Market LLC, Bristol Farms LLC, Northland Transportation Company, Tidewater Holdings, Inc., Columbus Foods, LLC, Little Red Services Inc. and National Frozen Foods Corporation. The specific experience, qualifications, attributes and skills that Mr. Babson brings to our board of directors are primarily derived from his experience in mergers and acquisitions and his insights gained through his role as an investment professional. In addition, Mr. Babson's significant financial expertise and experience contribute to our board of directors' understanding and ability to analyze complex issues.

Peter F. Bechen became a director in 2000 and is chairman of the audit committee of the board of directors. Mr. Bechen has served as the president and chief executive officer of Pacific Realty Associates since 1983 and was president of its predecessor from 1975 until 1983. Mr. Bechen has served as a director of Capmark Financial Group Inc. since March 2006 and is a member of the Industrial and Office Park Development Council of the Urban Land Institute. The specific experience, qualifications, attributes and skills that Mr. Bechen brings to our board of directors are his years of managerial experience which enables him to provide meaningful advice and guidance to management and the board and his extensive experience in the real estate industry.

Frank Jungers became a director in 1984 and is chairman of the compensation committee of the board of directors. Mr. Jungers retired as Chief Executive Officer and Chairman of Arabian American Oil Company (ARAMCO) in 1978. Mr. Jungers has been an independent investor, consultant and director since that time. Mr. Jungers serves on the board of directors for Vero Corporation and Pacific Star Communications and served as a director of Horizon Lines, Inc. until 2008. He is also a trustee of the board of trustees of Oregon Health and Science University Foundation. The specific experience, qualifications, attributes and skills that Mr. Jungers brings to our board of directors include his extensive executive experience in a large international company which enables him to advise management and the board on a wide range of strategic and financial

matters. In addition, Mr. Jungers' knowledge of our business and its operations, gained through serving on our board of directors for more than 25 years, enables him to provide valuable guidance to management and the board.

Henry T. Swigert became a director in 1958. He began working at ESCO in 1955 as a molder's helper and later moved on to be a sales representative before being promoted to Vice President of Finance. Mr. Swigert served as Chairman of the board from 1979 until 2003 when he retired. Mr. Swigert has been a member of our board of directors for over 50 years and is familiar with our business and strategy. Mr. Swigert is the uncle of Robert C. Warren, Jr., a director. The specific experience, qualifications, attributes and skills that Mr. Swigert brings to our board of directors are his extensive experience in our industry and knowledge of our business which allow him to provide valuable guidance to the board.

Robert C. Warren, Jr. became a director in 1986. Mr. Warren is the president and chief executive officer of Cascade Corporation, a manufacturer of material handling equipment for lift trucks, where he has worked for more than 35 years. Prior to that, Mr. Warren was Vice President-Marketing at Cascade Corporation. Mr. Warren is also a member of the board of directors of Cascade Corporation. Mr. Warren is the nephew of Henry T. Swigert, a director. The specific experience, qualifications, attributes and skills that Mr. Warren brings to our board of directors are his strategic, operational and corporate governance experience as the chief executive officer of a publicly traded corporation enables him to provide meaningful input and guidance to the board. Upon Henry T. Swigert's death or resignation as trustee, Peter F. Adams and Mr. Warren will become co-trustees of the Swigert 2000 Trust.

John W. Wood, Jr. became a director in 2001. Mr. Wood was formerly the president and chief executive officer of Analogic Corporation, a maker of medical imaging and airport security products, from 2003 to 2006. Prior to joining Analogic Corporation, Mr. Wood held senior executive positions over a 22-year career at Thermo Electron Corporation. Mr. Wood served as president of Peek Ltd., a division of Thermo Electron Corporation, and as a senior vice president of the parent company. He previously served as president and chief executive officer of Thermedics, a subsidiary of Thermo Electron Corporation. Mr. Wood is a member of the board of directors of American Superconductor Corporation, a provider of electric power infrastructure, and FLIR Systems, Inc., a provider of thermal imaging equipment. The specific experience, qualifications, attributes and skills that Mr. Wood brings to our board of directors are his experience as a director and executive of large, diverse corporations which enables him to provide meaningful input and guidance to the board and our management.

Our board of directors consists of ten members. After completion of the offering made by this prospectus, our articles of incorporation will provide that directors will be elected by the Class A Common Stock, Legacy Class A Common Stock and Class B Common Stock, voting together as a single class. Our board of directors has determined, after taking into consideration each director's direct and indirect relationships, that eight of our directors will qualify as "independent" under NASDAQ rules and regulations. Our bylaws permit our board of directors to establish by resolution the authorized number of directors; and 10 directors are authorized.

After completion of the offering made by this prospectus, our articles of incorporation will provide that our board of directors is divided into three classes with staggered three-year terms. Only one class of directors will be elected at each annual meeting of shareholders, with the other

classes continuing for the remainder of their three-year terms. Our directors will be divided among the three classes as follows:

Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that each class will be as nearly equal in number of directors as possible.

Our board of directors has an audit committee, a compensation committee and a nominating and governance committee, each of which has the composition and responsibilities described below.

Our audit committee is composed of Messrs. Bechen, Adams and Babson. Our board of directors has determined that each of these directors is "independent" according to the rules and regulations of the SEC and of NASDAQ. Our board of directors has also determined that each of these directors is financially literate as required by the rules and regulations of NASDAQ and that Mr. Bechen is an audit committee "financial expert" as defined by SEC rules. Mr. Bechen is the chairman of our audit committee. The audit committee operates under a written charter that satisfies the applicable SEC and NASDAQ standards.

Our compensation committee is composed of Messrs. Jungers, Alvarez, Warren and Wood. Our board of directors has determined that each of these directors is an "independent" director according to the rules and regulations of NASDAQ, a "non-employee director" as defined under the Securities Exchange Act of 1934, and an "outside director" as defined in Internal Revenue Code regulations. Mr. Jungers is the chairman of our compensation committee. The compensation committee is responsible for, among other things:

Our nominating and governance committee is composed of Messrs. Babson, Bechen and Wood. Our board of directors has determined that each of these directors is an "independent" director according to the rules and regulations of the SEC and of NASDAQ. Mr. Babson is the chairman of our nominating and governance committee. The nominating and governance committee is responsible for, among other things:

None of the members of our compensation committee are, or have been at any time during the past year, our officers or employees. None of our executive officers serve, or in the past year have served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

We have adopted a code of business conduct that applies to all of our employees, officers and directors, including those officers responsible for financial reporting, and a code of conduct for financial managers that applies specifically to those officers responsible for financial reporting. The code of business conduct and ethics will be available on our website at www.escocorp.com after we complete this offering. We plan to disclose any amendments to the code, or any waivers of its requirements, on our website or in a filing with the SEC to the extent required by applicable SEC or NASDAQ standards.

Non-employee directors receive the following fees in cash: (i) an annual retainer of $40,000 for board service; (ii) $1,500 for each board meeting attended; (iii) $1,000 for each committee meeting attended, except that the attendance fees for the chairs of the audit, compensation and nominating and governance committees are $2,000 per meeting; and (iv) a $7,500 annual fee for service as chair of the audit committee and a $5,000 annual fee for service as chair of the compensation committee and of the nominating and governance committee. In addition, each non-employee director who was a director on May 8, 2010 received stock appreciation rights for 311 shares of

Legacy Class A Common Stock. For 2011, non-employee directors received a grant of 76 shares of Class A Common Stock instead of stock appreciation rights.

The information in the following table reflects compensation we paid to non-employee directors for 2010:

(1): Amounts represent the grant date fair value of stock appreciation rights based on a value of $196.15 per share for stock appreciation rights granted on May 8, 2010 calculated using the Black-Scholes option pricing method. Assumptions made in determining this grant date fair value are disclosed in footnote 3 to the Summary Stock Compensation Table below, except that the risk-free interest rate was 3.57%. Each non-employee director received stock appreciation rights for 311 shares with a base value of $438.55 per share, representing the fair market value of a share of Legacy Class A Common Stock on the grant date as determined by the board of directors. The stock appreciation rights vest in full on May 8, 2013. The compensation committee approved amendments to the stock appreciation rights reflected in this table in March 2011 to provide for settlement in shares of Legacy Class A Common Stock rather than cash to qualify the awards for equity accounting treatment, and the non-employee directors have signed the amendments. At December 31, 2010, each non-employee director held outstanding stock appreciation rights with respect to 1,007 shares of Legacy Class A Common Stock, including SARs granted in prior years at a weighted average base value of $238.97.

This Compensation Discussion and Analysis presents information about the compensation of our executive officers, including the Chief Executive Officer, the Chief Financial Officer in 2010 and the three other most highly compensated executive officers who were serving as executive officers on December 31, 2010 as listed in the Summary Compensation Table below (the "NEOs").

To achieve these objectives, the compensation committee (the "Committee") selected the following elements to be included in the compensation program for our executive officers:

Our executive compensation program implements our performance objective by rewarding executive officers for achieving annual performance targets and long-term performance targets and for long-term increases in the value of our stock. The program implements our retention objective by offering base pay, incentives and benefits that are competitive with those provided to executive officers of companies with which we compete for executive talent.

Pursuant to authority delegated by the board of directors, the Committee develops our executive compensation policies and programs and determines the compensation of each of our executive officers. In 2010, the board of directors determined the compensation of our Chief Executive Officer based on the Committee's recommendation.

The Committee directly retains the services of a compensation consulting firm. The Committee retained Towers Watson in this capacity from 2006 through 2010. The compensation consulting firm provides information and data to the Committee from its surveys, proprietary databases and other sources, which the Committee uses along with information provided by management and obtained from other sources. For 2010, Towers Watson provided the Committee with survey data from the Watson Wyatt 2009/2010 Top Management Survey, the 2009 Mercer Executive Survey and the Watson Wyatt 2009/2010 Report on Long Term Incentives, Policies and Practices, as well as data on executive compensation from proxy statements for the following peer companies: Agco Corporation, Alamo Group Inc., Astec Industries Inc., Barnes Group Inc., Bucyrus International Inc., Cascade Corporation, Joy Global Inc., Kennametal Inc., Ladish Co. Inc., LMI Aerospace Inc., Northwest Pipe Company, Precision Castparts Corp., Sifco Industries Inc., Triumph Group, Inc. and Woodward Governor Company. The Committee used these companies because they are publicly held and similar to us in terms of markets served or business model. The Committee reviews the survey data and publicly reported information and results for our peer companies to assist in its determination of individual compensation plans for our NEOs where applicable. Towers Watson did not make any recommendations to the Committee in 2010 regarding the form or amount of executive compensation. The Chief Executive Officer makes recommendations to the Committee regarding the compensation of all executive officers other than himself and attended each

Committee meeting in 2010 except for portions of meetings in which his compensation was discussed.

Total Direct Compensation. For each executive officer, the Committee sets target total direct compensation consisting of base salary and an annual performance-based cash bonus. The Committee generally targets the total direct compensation to be at approximately the median of the total direct compensation for similarly situated executive officers at the companies in the peer group and survey data, but it also takes into account the experience level and performance of each executive officer. In arriving at the median target, for those executive officers for whom there are at least three comparable positions (including Messrs. Pratt, Huey, Collins and Fonner), the survey data is weighted at 75% and peer company data from proxy statements is weighted at 25%, while for all other executives (including Mr. Huget) the survey data is weighted at 100%.

Base Salaries. The Committee generally targets base salaries to be near the median for comparable positions at the peer and survey companies. The Committee establishes base salaries for executive officers at various times during the year so that an executive officer's change in base salary is effective approximately one year after the executive officer's prior change in base salary.

The Committee recommended the 2010 base salary for the Chief Executive Officer following its review of Mr. Pratt's performance, the compensation information from the peer companies and the survey data. The board established a base salary for Mr. Pratt for 2010 that represented a 3.9% increase above his prior base salary and was near the median of the combined survey group and peer company data. Mr. Pratt was awarded this raise for his effort and performance during a difficult recessionary year. For the other executive officers, the Committee established, taking into account compensation information for the peer companies and survey data and Mr. Pratt's recommendations, base salaries for 2010 that were near the median of the survey and peer group companies. Salary increases for the other NEOs for 2010 were: 3.6% for Mr. Huey, 3.2% for Mr. Fonner and 0% for Messrs. Huget and Collins. Messrs. Huey and Fonner were awarded raises on the same basis as for Mr. Pratt. Messrs. Huget and Collins were subject to a salary freeze initiated in 2009 that remained in effect for them throughout 2010.

Performance-Based Cash Bonuses. We use annual performance-based cash bonuses under our Annual Bonus Plan to motivate and reward executive officers for achieving corporate and operating unit annual performance targets (80% of the incentive) and individual objectives (20% of the incentive). The performance criteria applicable to each executive differ based on the portion of our operations for which the executive is responsible. Target bonus levels as a percentage of base salary are determined based on the executive's position. For there to be any payout under the Annual Bonus Plan, performance under at least one financial measure must be at the threshold level or above, and bonuses are subject to a maximum amount.

The target Annual Bonus Plan payouts for 2010 as a percentage of salary were 85% for Mr. Pratt, 60% for Mr. Huget, 55% for Messrs. Huey and Collins and 50% for Mr. Fonner. All bonus targets were set at approximately the median for comparable positions in the peer and survey companies. The financial objectives for Messrs. Pratt, Huget and Huey were based on Company EBIT and Company Net Working Capital Turnover, each as defined in the table below, and for Messrs. Collins and Fonner were based on EPG EBIT and EPG Net Working Capital Turnover, each as defined in the table below.

The following table indicates the performance level for each financial metric required to achieve payouts at the threshold, target and maximum levels.

(1): We define Company EBIT as operating profit as reflected in our audited financial statements or the related notes, subject to adjustments approved by the Committee. We define EPG EBIT as EPG operating profit, subject to adjustments approved by the Committee.
(2): "Company Net Working Capital Turnover" and "EPG Net Working Capital Turnover" are calculated for each quarter during the year as of the end of the quarter based on our financial statements, subject to certain adjustments, as follows: total net sales for the quarter divided by (trade receivables at the end of the quarter plus inventory on the basis of FIFO at the end of the quarter minus trade payables at the end of the quarter). The average of these quarterly amounts is the net working capital turnover for the year.
(3): For Mr. Pratt and Mr. Huey, the Company EBIT measure was weighted at 75% and the Company Net Working Capital Turnover measure was weighted at 25%. For Mr. Huget, the Company EBIT measure was weighted at 70% and the Company Net Working Capital Turnover measure was weighted at 30%. For Mr. Collins and Mr. Fonner, the EPG EBIT measure was weighted at 70% and the EPG Net Working Capital Turnover measure was weighted at 30%.

In 2010 we achieved Company EBIT of $94.8 million, Company Net Working Capital Turnover of 4.1%, EPG EBIT of $109 million and EPG Net Working Capital Turnover of 3.9%, in each case with adjustments made by the Committee. Company EBIT reflects adjustments to operating profit to eliminate the effects of non-cash compensation expenses relating to the ESOP, transaction costs and operating profits relating to the Swift Engineering and Austcast acquisitions and the environmental reserve accrued in 2010. EPG EBIT reflects similar adjustments to operating profit except that no adjustment was made for the environmental reserve. This performance resulted in Annual Cash Bonuses relating to financial performance for 2010 equal to 169% of target bonuses for Messrs. Pratt and Huey and 162% of target bonuses for Messrs. Huget, Collins and Fonner.

For each NEO, 20% of the target Annual Cash Bonus was based on individual performance objectives. The possible payout percentage for achieving individual goals ranged from 0 to 100%. However, if both financial measures are satisfied at the target level or above and the individual goals are achieved at the 100% level, a multiplier is applied to the payout for achieving the individual goals. In that event, the target amount for achieving individual goals is multiplied by the payout percentage for achieving the EBIT goal.

For each NEO, the Committee approved three individual objectives supportive of key corporate strategies and assigned a weight to each objective. For each individual objective, the Committee approved more specific objectives and measures. The specific individual objectives and measures were based on objective criteria, subjective criteria or a combination of objective and subjective criteria.

The individual objectives for Mr. Pratt were to (i) grow sales and market share (weighted at 40%), with specific objectives and measures to increase sales of non-licensed products by $5 million and sales of acquired products by $10 million in Australia, establish six to eight new ESCO supply and service locations and capture $30 million in new tool orders for TTG; (ii) drive operational performance (weighted at 30%), with specific objectives and measures to reduce by 5% manufacturing costs as a percentage of casting sales for TTG, reduce TTG scrap by 10% and reduce EPG unfavorable manufacturing variance; and (iii) build personnel depth in positions critical to strategy (weighted at 30%), with specific objectives and measures relating to management succession planning.

The individual objectives for Mr. Huget were to (i) grow sales and market share (weighted at 35%), with specific objectives and measures to conduct quarterly performance reviews with TTG and EPG executives focused on driving improvement towards goals relating to increasing the capabilities of the TTG sales team, to capture $30 million in new TTG tool orders, satisfy EPG customer demand in Australia by increasing sales of non-licensed products by $5 million and of acquired products by $10 million and increase capability to establish six to eight new ESCO supply and service locations globally; (ii) drive operational performance (weighted at 35%), with specific objectives and measures to reduce key controllable TTG manufacturing costs as a percentage of sales by 5%, reduce TTG scrap by 10%, deploy the QVS Process Management System across identified TTG manufacturing areas and reduce unfavorable EPG manufacturing variance; and (iii) build organizational capability (weighted at 30%), with specific objectives and measures to identify personnel positions critical to strategy and relating to management succession planning.

The individual objectives for Mr. Huey were to (i) support focused growth (weighted at 40%), with specific objectives and measures relating to assessment of capital structure and risk tolerance and preparation for access to debt and equity capital markets, as appropriate; (ii) support an Australia growth strategy (weighted at 30%), with specific objectives and measures relating to acquisitions, integration of corporate financial and accounting systems and the development of an Australia growth plan model and its integration into the corporate strategic plan; and (iii) provide investment analysis for strategic plans (weighted at 30%), with specific objectives and measures relating to our ESCO supply and service strategy and reduction of manufacturing cost variance.

The individual objectives for Messrs. Collins and Fonner were to (i) grow sales and market share (weighted at 40%), with specific objectives and measures to establish six to eight new ESCO supply and service locations globally and improve the EPG proprietary product portfolio; (ii) drive operational performance (weighted at 30%), with specific objectives and measures including the reduction of manufacturing variance and achieving 95% on time delivery "packed to promise" date; and (iii) ensure that EPG has the people to execute on business objectives and strategies (weighted at 30%), with specific objectives and measures relating to succession planning and people development.

The following table indicates the extent to which the financial and individual measures described above were achieved and the amounts received by the NEOs under the Annual Bonus Plan for 2010.

Name	Measure	Target Payout				Payout Amount

Steven D. Pratt	Financial	$	460,360	169	%	$	776,282
	Individual	$	115,090	75	%	$	85,742

	Total	$	575,450	150	%	$	862,024

Larry Huget	Financial	$	186,833	162	%	$	303,323
	Individual	$	46,708	91	%	$	42,575

	Total	$	233,541	148	%	$	345,898

Gene K. Huey	Financial	$	163,959	169	%	$	276,475
	Individual	$	40,990	90	%	$	36,686

	Total	$	204,949	153	%	$	313,161

Calvin W. Collins	Financial	$	127,600	162	%	$	207,159
	Individual	$	31,900	100	%	$	31,900

	Total	$	159,500	150	%	$	239,059

F. Patrick Fonner	Financial	$	110,881	162	%	$	180,016
	Individual	$	27,720	100	%	$	27,720

	Total	$	138,601	150	%	$	207,736

Long-Term Incentive Compensation. Our long-term incentive compensation for executive officers consists of two components: stock appreciation rights and performance units. Annual long-term award values are split equally between the two components. Target total long-term compensation amounts, as a percentage of base salary, were determined by the Committee for each executive officer based on a review of the prior year grant levels; market-based long-term incentive plan grant levels, as assessed by Towers Watson; the relative scope of the business responsibilities and the individual performance and experience of each executive officer; and, in the case of executive officers other than the Chief Executive Officer, the recommendations by the Chief Executive Officer. Our target levels, as a percentage of base salary, were established in 2006 and have not changed substantially in subsequent years. In 2011 the Committee will review the target levels, as a percentage of base salary, and determine if adjustments are appropriate. Target total long-term compensation amounts, as a percentage of base salary, for the NEOs for 2010 were: 175% for Mr. Pratt, 150% for Mr. Huget, 140% for Mr. Huey and 120% for Messrs. Collins and Fonner. Half of the target total long-term compensation was established as the cash amount to be paid at target performance under the performance units. The other half was awarded in stock appreciation rights.

Stock Appreciation Rights. The Committee believes stock appreciation rights strongly and directly align the interests of our executive officers with those of our shareholders because stock appreciation rights only have realizable value if the value of our stock increases after the stock appreciation rights are granted, and the Committee believes stock appreciation rights are an effective mechanism for optimizing executive officers' long-term performance incentives given the cyclical nature of our industry. All stock appreciation rights vest in full three years after grant, contingent upon continued employment, with vesting subject to acceleration in the limited circumstances described below under "Potential Payments upon Change in Control". The board of directors has historically determined the base value of all stock appreciation rights granted to

executive officers on the date of grant. For stock appreciation rights granted after the offering made pursuant to this prospectus, the base value will be the closing market price of our Class A Common Stock on the date of grant. See "Grants of Plan-Based Awards in 2010" below for information regarding SARs granted to each NEO in 2010.

Performance Units. Our performance units are designed to focus executive officers on the achievement of long-term objective performance goals established by the Committee and vest only to the extent those performance goals are met. The Committee makes annual awards of performance units covering three-year performance periods.

For the awards granted in 2010, the Committee established performance targets based on cash flow and sales growth over 2010, 2011 and 2012. The following table indicates the performance level for each criterion required to achieve payouts at the end of the three-year period at the threshold, target and maximum levels.

See "Grants of Plan-Based Awards in 2010" below for information regarding performance units granted to each NEO in 2010.

For 2011, the Committee granted performance units based on a target number of shares of Legacy Class A Common Stock rather than a target dollar amount. At the end of the performance period, if at least one performance goal has been achieved at the threshold level of performance or above, a participant would receive shares of Legacy Class A Common Stock. The number of shares received depends on the level of achievement of the performance goals, with the maximum number of shares equal to the number of target shares for the participant multiplied by three.

The three-year performance period for the performance units granted in 2008 ended on December 31, 2010. These awards used cash flow (weighted at 40%) and net sales growth (weighted at 60%) as performance measures. The aggregate cash flow performance goals were approximately $324 million for a 60% (threshold) payout, $336 million for a 100% (target) payout and $360 million for a 300% (maximum) payout. The aggregate net sales growth performance goals were approximately $150 million for a 60% (threshold) payout, $213 million for a 100% (target) payout and $413 million for a 300% (maximum) payout. Our aggregate cash flow for 2008, 2009 and 2010 was approximately $261 million, resulting in no payout under the cash flow performance measure, and our aggregate net sales growth for 2008, 2009 and 2010 was approximately $61 million, resulting in no payout under the net sales growth performance measure.

Restricted Stock Awards in Connection with Initial Public Offering. In connection with the offering made by this prospectus, in April 2011 the Committee reviewed the amount of unvested equity held by key employees, including Messrs. Collins and Fonner, and discussed the need to provide additional retention incentives. In June 2011, the board of directors, on the recommendation of the Committee, approved restricted stock awards for 26 key employees based on a range of long-term incentive multiples. In determining the amount of the awards, the Committee and the board of directors considered each participant's position, contributions and retention risk. The aggregate value of the restricted stock awards will be $6.9 million at the date of award. The restricted stock awards will be granted on the date the public offering price of our

Class A Common Stock is determined and will vest as to 100% of the shares five years after the grant date, subject to continued employment. The number of restricted shares awarded to a participant will be determined by dividing the monetary value of the participant's award by the per share initial public offering price.

The following table shows the restricted stock awards approved for Messrs. Collins and Fonner, and for Ray Verlinich, who was appointed our Chief Financial Officer in February 2011.

Our standard benefit package for executive officers includes ERISA-qualified retirement benefits, our ESOP, nonqualified supplemental retirement benefits, compensation deferral opportunities and perquisites the Committee believes are reasonable and competitive with benefits provided to executive officers of companies we compete with for executive talent. For more information about our ESOP, see "Description of Employee Stock Ownership Plan".

We sponsor a retirement pension plan covering a majority of our employees, including all of our executive officers. In December 2008, the pension plan was frozen to new participants and no benefits were earned for current participants, including the NEOs, after that date. Supplemental retirement benefits are provided to each NEO under supplemental executive retirement plans. In December 2008, the supplemental retirement plan was frozen and no new benefits were earned following that date for any NEO. For details regarding the determination and payment of benefits under our pension plan and supplemental executive retirement plans and the present value of accumulated benefits for each NEO, see "Pension Benefits at December 31, 2010" below.

We maintain a tax-qualified retirement savings plan ("401(k) Plan") under which all U.S.-based employees, including the NEOs, are able to make pre-tax contributions from their cash compensation, subject to limitations imposed by the Internal Revenue Code. We make specified matching contributions. Our executive officers participate in our ESOP on the same basis as other employees. Our contributions for the benefit of the NEOs under the 401(k) Plan and the ESOP are included under the "All Other Compensation" column in the Summary Compensation Table below.

To further help our executive officers save for retirement, we make available deferred compensation plans that allow executive officers to voluntarily defer the receipt of salary and earned cash bonuses. In addition, the executive officers participate in a 401(k) restoration plan and ESOP restoration plan on the same basis as any other eligible employee whose salary level, under IRS regulations, limits our contributions to the qualified plans. See "Nonqualified Deferred Compensation at December 31, 2010" below for details about the deferred compensation and restoration plans and accumulated balances for each NEO.

In 2010, we provided perquisites to the NEOs and selected other executive officers. Total perquisite costs for the NEOs for 2010 are included under the "All Other Compensation" column in the Summary Compensation Table below.

Under the terms of the stock appreciation rights granted before 2011, any unvested awards would vest upon a change in control of the Company as described below under "Potential Payments upon Change in Control". This provision recognized that a change in control has the potential to cause a significant disruption or change in employment relationships and thus treated all participants the same regardless of their employment status after the transaction. In addition it provided our executives with the same opportunities as our other shareholders to participate in any transaction resulting in a change in control.

Stock appreciation rights granted in 2011 are subject to accelerated vesting only when two events (a "double trigger") occur. Vesting of these grants will generally be accelerated (and the exercise period extended for up to one year) only if there is a change in control of the Company and either the acquiring entity fails to assume the awards or the executive's employment is terminated by the acquirer without cause or by the executive for good reason within two years following a change in control. This double trigger was adopted to encourage executive retention through a period of uncertainty and a subsequent integration with an acquirer. The Committee believes that this approach is appropriate for a publicly held company, will enhance shareholder value in the context of an acquisition and will align executives with the interests of investors.

The award agreements relating to performance units provide for an accelerated payout upon a change in control prior to the end of the three-year performance period as described below under "Potential Payments upon Change in Control". The Committee believes that it is appropriate to terminate the performance period at the time of the change in control and calculate the benefits based on the shorter period because the financial performance measures used in the grants may not be appropriate in the context of the Company's business or the acquirer's business following a change in control.

After the closing of the offering made pursuant to this prospectus, Section 162(m) of the Internal Revenue Code will generally limit our federal income tax deduction to $1 million per person for compensation paid to our Chief Executive Officer and certain other highly compensated executive officers in any year. Qualifying performance-based compensation is not subject to this limit on deductibility. The Committee will consider the impact of Section 162(m) when developing and implementing our executive compensation program.

(1): On January 1, 2011, Mr. Huget retired and Mr. Collins became President and Chief Operating Officer. On April 15, 2011, Mr. Huey resigned as Chief Financial Officer and became Vice President and Treasurer in anticipation of his retirement scheduled to begin on January 1, 2012.
(2): Represents the aggregate grant date fair value of stock appreciation right awards computed in accordance with Accounting Standards Codification ("ASC") Topic 718. The fair value of stock appreciation rights is estimated using the Black-Scholes option pricing method, using the following assumptions: risk-free interest rate — 3.67%, expected dividend yield — 0, term — 10 years and expected volatility — 30%. See "— Base Salaries, Annual Performance-Based Cash Bonuses, Long-Term Incentives". The stock appreciation rights reflected in this table were modified in March 2011 to provide for settlement in shares of Class A Common Stock rather than cash in order to qualify the awards for equity accounting treatment.
(3): Consists of amounts paid under the Annual Bonus Plan. See "— Base Salaries, Annual Performance-Based Cash Bonuses, Long-Term Incentives".
(4): Represents changes in the actuarial present value of accumulated benefits under the Pension Plan and Supplemental Executive Retirement Plans (Mr. Pratt — $509,134; Mr. Huget — $286,551; Mr. Huey — $222,612; Mr. Collins — $19,335 and Mr. Fonner — $145,847) and interest under the Deferred Compensation Plans (Mr. Pratt — $147,449; Mr. Huget — $166,311; Mr. Huey — $249,921; Mr. Collins — $36,088 and Mr. Fonner — $40,535).
(5): Includes (i) tax preparation services, (ii) club dues and memberships, (iii) automobile allowance and fuel purchase benefits, (iv) physicals and (v) Company contributions to the NEO accounts under the 401(k) Plan, the 401(k) Restoration Plan, the ESOP and the ESOP Restoration Plan, including the following amounts:

The following table contains information concerning cash bonus opportunities and stock appreciation rights and performance units granted in 2010.



			Estimated Future Payouts Under Non-Equity Incentive Plan Awards							Exercise or Base Price of Option Awards ($/Sh)
												Grant Date Fair Value of Option Awards($)(4)
Name	Grant Date		Threshold ($)		Target ($)		Maximum ($)					Grant Date Fair Value of Option Awards($)(4)
Steven D. Pratt		2/2/2010(1)		402,815		575,450		1,150,900
		2/2/2010(2)		359,880		599,800		1,799,400
		2/2/2010(3)							4,299		422.80		860,703
Larry R. Huget		2/2/2010(1)		163,479		233,541		467,082
		2/2/2010(2)		175,140		291,900		875,700
		2/2/2010(3)							2,092		422.80		418,839
Gene K. Huey		2/2/2010(1)		143,464		204,949		408,898
		2/2/2010(2)		158,340		267,500		791,700
		2/2/2010(3)							1,917		422.80		383,803
Calvin W. Collins		2/2/2010(1)		111,650		159,500		319,000
		2/2/2010(2)		109,800		186,000		549,000
		2/2/2010(3)							1,333		422.80		266,880
F. Patrick Fonner		2/2/2010(1)		97,021		138,601		277,202
		2/2/2010(2)		102,180		165,000		510,900
		2/2/2010(3)							1,183		422.80		236,848

(1): Amounts reported for these awards represent the potential bonuses payable for performance in 2010 under the Annual Bonus Plan. The Committee annually approves target bonus levels as a percentage of base salary paid during the year. The total target bonus under the Annual Bonus Plan, as a percentage of base salary, were as follows: Mr. Pratt — 85%, Mr. Huget — 60%, Mr. Huey — 55%, Mr. Collins — 55% and Mr. Fonner — 50%. See "— Base Salaries, Annual Performance-Based Cash Bonuses, Long-Term Incentives". Actual bonus amounts paid for 2010 are included in the "Summary Compensation Table".
(2): Amounts reported for these awards represent performance units granted in 2010 and are based on performance during years 2010-2012. See "— Base Salaries, Annual Performance-Based Cash Bonuses, Long-Term Incentives".
(3): Amounts reported for these awards represent grants of stock appreciation rights. The base value of all stock appreciation rights reflected in this table was equal to the fair market value of the Legacy Class A Common Stock on the grant date as determined by the board of directors. The stock appreciation rights become 100% vested three years after the grant date, based on continued employment. Vesting may also be accelerated in the circumstances described below under "Potential Payments upon Change in Control". Each stock appreciation right has a maximum term of 10 years, subject to earlier termination upon the employee's termination of employment. The Committee approved amendments to the stock appreciation rights reflected in this table in March 2011 to provide for settlement in shares of Legacy Class A Common Stock rather than cash in order to qualify the awards for equity accounting treatment. If the holders of the stock appreciation rights agree to the amendments,

the amendments will be effective as of March 25, 2011. Holders of 92.6% of our stock appreciation rights agreed to the amendments, which will be accounted for in the second quarter of 2011.

(4): Represents the grant date fair value of stock appreciation rights granted in 2010 based on a value of $200.21 per share, calculated using the Black-Scholes option pricing method. Assumptions made in determining the grant date fair value are disclosed in footnote 3 to the Summary Compensation Table. When the stock appreciation rights were granted in 2010, there was no public market for our stock, and we valued the stock appreciation rights at $139.52 per share by discounting the value of the Legacy Class A Common in our most recent valuation and did not base the stock appreciation rights grant date value on a Black-Scholes calculation. In connection with the public offering, we calculated the grant date fair value for purposes of the financial statements using a Black-Scholes calculation, which resulted in the higher grant date fair value ($200.21 per share) for the stock appreciation rights reflected in this table.

The following table sets forth information concerning outstanding equity awards of the NEOs as of December 31, 2010.

	Option Awards

Name	Grant Date		Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date
Steven D. Pratt		3/7/2007(1)		2,490		—		439.55		3/7/2017
		2/5/2008(2)		—		3,400		477.05		2/5/2018
		2/3/2009(3)		—		3,381		517.60		2/3/2019
		2/2/2010(4)		—		4,299		422.80		2/2/2020
Larry R. Huget		3/7/2007(1)		1,319		—		439.55		3/7/2017
		2/5/2008(2)		—		1,620		477.05		2/5/2018
		2/3/2009(3)		—		1,710		517.60		2/3/2019
		2/2/2010(4)		—		2,092		422.80		2/2/2020
Gene K. Huey		3/7/2007(1)		1,267		—		439.55		3/7/2017
		2/5/2008(2)		—		1,500		477.05		2/5/2018
		2/3/2009(3)		—		1,492		517.60		2/3/2019
		2/2/2010(4)		—		1,917		422.80		2/2/2020
Calvin W. Collins		3/7/2007(1)		745		—		439.55		3/7/2017
		2/5/2008(2)		—		940		477.05		2/5/2018
		2/3/2009(3)		—		931		517.60		2/3/2019
		2/2/2010(4)		—		1,333		422.80		2/2/2020
		10/23/2001(5)		187		—		9.68		10/23/2011
		2/4/2003(5)		385		—		9.87		2/4/2013
		2/3/2004(5)		387		—		13.34		2/3/2014
		8/9/2005(5)		2,566		—		65.51		8/9/2015
F. Patrick Fonner		3/7/2007(1)		750		—		439.55		3/7/2017
		2/5/2008(2)		—		900		477.05		2/5/2018
		2/3/2009(3)		—		967		517.60		2/3/2019
		2/2/2010(4)		—		1,183		422.80		2/2/2020
		8/9/2005(5)		684		—		65.51		8/9/2015

The following table sets forth information concerning the exercise of stock options by the NEOs in 2010.

Each of the NEOs participates in the ESCO Corporation Pension Plan, our qualified pension plan, and in the ESCO Corporation 2005 Supplemental Executive Retirement Plan (the "2005 SERP") and the ESCO Corporation Supplemental Executive Retirement Plan (the "SERP").

The following table provides information regarding accumulated benefits under these plans at December 31, 2010. No payments were made to NEOs under these plans in 2010.

Name	Plan Name

Steven D. Pratt	Pension Plan	36.95	900,157
	2005 SERP	4	2,081,964
	SERP	32.95	3,108,666
Larry R. Huget	Pension Plan	36.39	987,677
	2005 SERP	4	1,334,611
	SERP	32.39	1,163,675
Gene K. Huey	Pension Plan	38.06	827,520
	2005 SERP	4	879,812
	SERP	34.06	859,201
Calvin W. Collins	Pension Plan	8.16	126,035
	2005 SERP	4	54,794
	SERP	4.16	0
F. Patrick Fonner	Pension Plan	32.53	760,997
	2005 SERP	4	720,807
	SERP	28.53	159,003

We maintain the Pension Plan, a tax-qualified defined benefit retirement plan, to provide income for retirees. The Pension Plan includes five different benefit schedules that provide varying benefits to different employee groups. The NEOs participate in the National Benefit Schedule under the Pension Plan on the same terms as all other participating employees in the National Benefit Schedule.

Participation in and benefit accruals under the Pension Plan were generally frozen as of December 31, 2008. However, participants in the National Benefit Schedule who were at least 45 years old and who had at least 10 years of credited service as of December 31, 2008 continued to accrue benefits under special terms of the Pension Plan. All of the NEOs except Mr. Collins qualified for these benefits.

Benefits become 100% vested after five years of service. The National Benefit Schedule in effect on and before December 31, 2008 provided a monthly benefit following retirement based on a final average pay formula that takes into account years of credited service, average annual compensation and estimated Social Security benefits. Average annual compensation for purposes of calculating benefits under the National Benefit Schedule generally consists of a participant's highest average compensation for the five consecutive calendar years in the last 10 calendar years

during which the participant rendered any service to us or any of our subsidiaries, but not including calendar years after 2008. The amount of annual compensation taken into account is limited to $230,000 in 2008, under the Internal Revenue Code ("Code").

Under the terms of the National Benefit Schedule in effect on and before December 31, 2008, a monthly normal retirement benefit is payable upon retirement at age 65 and is equal to one-twelfth of the greater of (i) 1% of the participant's average annual compensation multiplied by the participant's years of credited service (up to 30) plus $60 for each year of credited service in excess of 30; and (ii) 45% of the participant's average annual compensation less 50% of the participant's annual primary insurance amount determined under the Social Security Act on the date of retirement, multiplied by a fraction, the numerator of which is the number of years (including partial years) of credited service (not to exceed 30 years) and the denominator of which is 30; provided that the annual retirement benefit payable to any retired participant not exceed 40% of the participant's average annual compensation.

Participants in the National Benefit Schedule who were at least 45 years old and who had at least 10 years of credited service as of December 31, 2008 and continued as employees after December 31, 2008 are entitled to an additional monthly normal retirement benefit equal to one-twelfth of 0.9% times the participant's compensation paid prior to attaining a maximum of 30 years of credited service. This benefit accrues at the end of each pay period with respect to compensation paid during the pay period. The amount of annual compensation taken into account is limited to $245,000 in 2010 under the Code.

The basic benefit form for normal and early retirement under the National Benefit Schedule is a monthly annuity for life. A participant may choose among different annuity forms that are the actuarial equivalent of the basic benefit form, but a lump sum is not available.

Under the National Benefit Schedule, a participant who is age 55 or older with at least 10 years of service is eligible to elect an early retirement benefit, which is the normal retirement benefit after reduction for early commencement of benefits. Under the National Benefit Schedule, for each month that a participant's early retirement benefits start prior to the participant's 65th birthday, the participant's monthly retirement benefit is reduced by 0.5%. Mr. Huget retired on January 1, 2011. All of the NEOs other than Mr. Collins are eligible for early retirement.

Under the Pension Plan: (i) if a participant becomes totally and permanently disabled after attaining age 55 and completing five years of service, and before attaining age 65, the participant is entitled to a monthly disability benefit for the rest of the participant's life equal to the normal retirement benefit that would have been payable at age 65 based on actual years of credited service (adjusted actuarially for form of payment); and (ii) if a participant becomes totally and permanently disabled before attaining age 55, but after completing five years of service, the participant is entitled to an ancillary monthly disability benefit payable until attaining age 55, equal to the normal retirement benefit that would have been payable at age 65 based on actual years of credited service, and upon attaining age 55 shall be entitled to a monthly disability benefit for the rest of his or her life equal to the normal retirement benefit that would have been payable at age 65 based on actual years of credited service (adjusted actuarially for form of payment).

We maintain the 2005 SERP and the SERP to provide for retirement benefits above amounts available under the Pension Plan. All NEOs are eligible to participate in the SERPs. Participants are 100% vested in their SERP benefits.

To calculate normal retirement benefits under the SERPs, a target monthly retirement benefit in the form of a single life annuity is determined for each participant based on final average pay and

years of service, which is then reduced by (i) the participant's estimated monthly primary Social Security benefit assuming commencement at age 65, (ii) the participant's monthly single life annuity benefit under the Pension Plan, assuming commencement at age 65 and (iii) the monthly single life annuity amount that is actuarially equivalent to the balances or distributions under any defined contribution plan, which the Committee has determined to take into consideration and which are deemed to be employer-provided.

The target retirement benefit under the SERPs upon retirement at age 65 is equal to 60% of the participant's monthly final average compensation (without the limitation applied to compensation in the Pension Plan, and including any compensation deferred by the participant but disregarding compensation after December 31, 2008), multiplied by a fraction, the numerator of which is the participant's years of service ending on or before December 31, 2008, not to exceed 30, and the denominator of which is 30.

A participant who has attained age 55 and who has at least 10 years of service at separation from service is eligible for early retirement benefits under the SERPs. For each month that the benefit commencement date is prior to age 65, the normal retirement benefit is reduced by 0.5% under the SERPs. For purposes of calculating an early retirement benefit, the primary Social Security benefit offset is the monthly benefit payable at age 62, or the benefit commencement date if later (determined as if the participant terminated no later than December 31, 2008) and determined as if the participant has zero earnings between the early retirement date and age 62. Mr. Huget retired on January 1, 2011. All of the NEOs except Mr. Collins are eligible for early retirement.

The normal or early retirement benefit under the SERPs is paid as a monthly annuity for life if the participant is not married, and is paid as an actuarially equivalent 100% joint and survivor annuity if the participant is married. A participant may elect an alternative actuarially equivalent annuity form of payment.

Under the SERP (but not under the 2005 SERP) a participant or beneficiary is entitled to an immediate distribution of a lump sum actuarially equivalent to 90% of his or her vested accrued benefit within 24 months following a change in control or any time following termination of employment, forfeiting the remaining 10%. Under the SERP change in control is generally defined to include certain mergers, the sale of substantially all of our assets and transactions whereby a person acquires 50% of our voting stock.

Under the SERPs, if a participant separates from service as a result of disability, the participant is entitled to an unreduced monthly benefit equal to the benefit that would have been payable at age 65, calculated using the estimated Social Security benefit payable to the participant at age 65 (calculated under current law at time benefits commence and assuming zero earnings to age 65), and calculated using the Pension Plan benefit and defined contribution plan benefits payable on the date the SERP benefits commence.

Name	Plan(1)(2)

Steven D. Pratt	DCP II	—		—	38,054	—	528,296
	DCP	—		—	109,395	—	1,518,699
	401(k)	—		68,730	14,764	—	155,010
	Restoration Plan
	ESOP	—		145,056	174,091	—	293,884
	Restoration Plan
Larry R. Huget	DCP II	319,978	(3)	—	75,582	—	1,252,715
	DCP	—		—	90,729	—	1,259,567
	401(k)	—		47,361	3,392	—	81,273
	Restoration Plan
	ESOP	—		93,725	106,824	—	160,869
	Restoration Plan
Gene K. Huey	DCP II	—		—	72,440	—	1,005,660
	DCP	—		—	177,481	—	2,463,914
	401(k)	—		26,276	2,698	—	55,491
	Restoration Plan
	ESOP	—		56,338	67,154	—	111,782
	Restoration Plan
Calvin W. Collins	DCP II	—		—	21,870	—	303,620
	DCP	—		—	14,218	—	197,382
	401(k)	—		13,960	1,240	—	24,997
	Restoration Plan
	ESOP	—		30,996	37,738	—	65,555
	Restoration Plan
F. Patrick Fonner	DCP II	65,396	(4)	—	38,420	16,605	560,804
	DCP	—		—	2,115	—	29,367
	401(k)	—		13,561	3,110	—	33,320
	Restoration Plan
	ESOP	—		30,680	37,678	—	66,549
	Restoration Plan

All NEOs are eligible to participate in the DCP and the DCP II, which are unfunded plans for management or highly compensated employees who are designated for participation by the board. The DCP and DCP II enable participants to defer receipt of compensation. The DCP provides for

deferrals prior to January 1, 2005, and the DCP II provides for deferrals on and after January 1, 2005. The DCP allowed and the DCP II allows participants to elect in advance of earning salary and bonuses to defer a percentage of salary and bonuses and have the deferred amount credited to a plan account. Each plan account is credited with earnings each month at a rate equal to the nominal annual yield of Moody's Average Corporate Bond Yield for the preceding month or any substantially similar index selected by the board, plus 2%. The maximum allowed deferral percentage under the DCP II is 25% of salary and 50% of bonuses.

Benefits accrued after January 1, 2005, are generally paid pursuant to election made by the participant prior to earning the compensation. The form of payment is specified in the participant's deferral election and is either a cash lump sum, monthly installments not to exceed 180 or any combination of the two. A participant may withdraw amounts deferred under the DCP (including earnings) at any time, subject to forfeiture of 10% of the balance. If elected prior to earning the compensation, participants may withdraw amounts deferred under the DCP II (but not the earnings thereon) prior to separation from service. The DCP and DCP II provide for distribution upon retirement, termination of employment, death, disability or financial hardship.

The NEOs participate in two additional nonqualified deferred compensation plans: the 401(k) Restoration Plan and the ESOP Restoration Plan. These unfunded plans are designed to provide benefits that would have been provided in our tax-qualified 401(k) Plan and ESOP, had the compensation of the participant not been limited under the Code, and had the participant not made elective deferrals under the DCP.

In the 401(k) Restoration Plan, participants receive quarterly notional account credits equal to the nonelective employer contributions that would have been allocated to their accounts in the 401(k) Plan had their compensation not been limited or deferred. Nonelective contributions vest after a three-year period of employment. Accounts are credited with earnings based on participant election among various investment options. Account balances are distributed on termination of employment or death. Account balances of $5,000 or more are paid in 60 monthly installments. Account balances of less than $5,000 are paid in a lump sum.

In the ESOP Restoration Plan, a participant's account is credited with notional phantom Class C Preferred Stock units for each quarter, which are equal in value to (i) the number of shares of Class C Preferred Stock that would have been allocated to the participant's account in the ESOP had the participant's compensation not been limited or deferred and (ii) the amount that would have been allocated to the participant's account in the ESOP from dividends if those shares had been allocated to the participant's account in the ESOP. Accounts vest according to a six-year graded schedule. Account balances are distributed on termination or death in five annual installments.

We have agreed, in connection with a change in control of the Company, to (i) accelerate the vesting of stock appreciation rights granted in 2008, 2009 and 2010 and (ii) provide for an accelerated payout of performance units. A change in control would occur if any person or group acquires stock possessing the right to elect a majority of the board of directors.

Under the terms of the stock appreciation rights granted to the NEOs in 2008, 2009 and 2010, any unvested awards would become exercisable in the event of a change in control of the Company. This acceleration of vesting will occur whether or not the officer's employment is terminated.

We granted performance units to the NEOs in fiscal 2009 and 2010 pursuant to which cash payments will be made based on the Company's performance during the applicable three-year performance periods relating to the awards. The award agreements relating to the performance units provide for an accelerated payout upon a change in control. An accelerated payout of performance units would occur even if the named executive officer's employment was not terminated in connection with the change in control.

The following table sets forth the estimated change in control benefits that would have been payable to each NEO if a change in control had occurred on December 31, 2010.

(1): See "Outstanding Equity Awards at December 31, 2010" for information regarding outstanding unexercisable stock appreciation rights held by each NEO. The amounts in the table above represent the spread between $688.20 (the value of the Legacy Class A Common Stock on December 31, 2010 for purposes of the financial statements) and the value of the Legacy Class A Common Stock at the date of grant of the stock appreciation right as determined by the board of directors for each outstanding stock appreciation right granted in 2008, 2009 and 2010 and held by the applicable NEO on December 31, 2010.
(2): Under the terms of the performance unit award agreements granted to the NEOs in 2009 and 2010, upon a change in control an NEO would receive a payout in an amount equal to the payout calculated as if the performance period had ended on the last day of our most recently completed fiscal quarter prior to the date of the change in control, taking into account provisions in the award agreements for calculating performance for a shorter performance period. The amounts in the table above represent the estimated value of outstanding performance unit awards that would vest and be paid out pursuant to the terms of the award agreements.

The performance unit award agreements provide for the payment of awards in the event of the retirement, death or disability of an NEO prior to end of the three-year performance period. The following table sets forth the estimated benefits that would have been payable to the NEOs under the performance units if each officer's employment had been terminated on December 31, 2010 because of retirement, disability or death.

Under the terms of the Restated Stock Transfer Restriction Agreement between the Company and each NEO, upon the death, disability or retirement at age 65 of the officer, the officer or his representative could require us to purchase over time shares of Legacy Class A Common Stock held by the officer. The officer or his representatives could require us to repurchase the shares over a three-year period in the event of disability or retirement and over a two-year period in the event of death. These agreements, including our repurchase obligations, will terminate on completion of the offering made by this prospectus. The following table sets forth the estimated amounts that would have been payable to the NEOs for the purchase of shares if each officer's employment had been terminated on December 31, 2010 because of retirement, disability or death and the officer or his representative had exercised the right to require us to purchase the maximum number of shares.

This section describes relationships between the company and our directors, executive officers, beneficial holders of 5% or more of our Class A Common Stock, Legacy Class A Common Stock or Class B Common Stock, or any member of their immediate family or entities affiliated with them("Insiders"). Other than as described below, since January 1, 2008, none of the Insiders has had or will have a direct or an indirect material interest in any transaction or series of similar transactions in which we were a party or will be a party in which:

We have granted incentive stock options and stock appreciation rights to our non-employee directors and executive officers in addition to other officers and employees. The forms of those agreements are filed as exhibits to the registration statement that includes this prospectus.

Effective March 30, 2011, we entered into an agreement with Gene K. Huey in connection with his retirement. We agreed to provide additional benefits to Mr. Huey in exchange for his agreement, among other things, to remain an officer until December 31, 2011. Under the agreement, we amended Mr. Huey's SARs to provide that (i) they will continue to vest following his retirement and (ii) the exercise period will be extended until the date that is 10 years after the grant date. In addition, Mr. Huey will be entitled to participate in the annual bonus plan in 2011 at a bonus target of 60%. For purposes of Mr. Huey's RSTRA and performance unit awards, he will be deemed to have retired on January 1, 2011.

Effective March 30, 2011, we amended each stock appreciation right granted to Steven D. Pratt prior to 2011 to (i) provide that the rights continue to vest following Mr. Pratt's retirement and (ii) extend the exercise period until the date that is 10 years after the grant date.

We have indemnification agreements with each of our current directors and executive officers, a form of which is filed as an exhibit to the registration statement that includes this prospectus.

142 shareholders who hold an aggregate of 169,434 shares of Legacy Class A Common Stock before the -for-one stock split are parties to agreements with us that give the shareholder the right to require to us to purchase the shareholder's shares upon disability or death. In addition, with respect to shares, those agreements include a repurchase obligation upon retirement. The agreements do not apply to Class A Common Stock issuable upon conversion of Legacy Class A Common Stock. As a result, all of the agreements will terminate 360 days after the date of this prospectus. See "Description of Capital Stock — Shareholder Agreements". All Insiders have amended their agreements to terminate them upon completion of the offering made by this prospectus.

We sponsor an employee stock ownership plan, or ESOP, that holds all of our Class C Preferred Stock, representing 14.4% of our Class A Common Stock on a pro forma basis before the offering and after giving effect to the events described in "Explanatory Note Regarding Changes in Our Capital Stock". The ESOP covers all U.S. employees who meet service requirements, including

our executive officers. See "Description of Employee Stock Ownership Plan" for a description of our arrangements with the ESOP and "Principal and Selling Shareholders" for a description of voting provisions under the ESOP.

Our nominating and governance committee will review any transactions with related persons, as defined in Item 404 of Regulation S-K, or in which a related person has a direct or an indirect interest, and determine whether to ratify or approve the transaction. A transaction may only be ratified or approved if the committee determines that it is fair to us or otherwise in our interest. The committee has pre-approved some types of transactions under our pre-approval policy. These pre-approved transactions include:

No director may participate in the approval of a transaction for which he or she is a related party.

The following table sets forth information regarding beneficial ownership of our capital stock as of March 31, 2011 for

We determined beneficial ownership according to the SEC rules. Generally, a person has beneficial ownership of a security if the person possesses sole or shared voting or investment power of the securities. The table below includes shares issuable upon exercise of options and stock-settled stock appreciation rights held by the person exercisable within 60 days of March 31, 2011 and shares allocated to the person's account under our ESOP that vest within 60 days of March 31, 2011. To calculate the shares issuable upon the exercise of stock-settled stock appreciation rights, we have used $ per share, the midpoint of the price range set forth on the cover of this prospectus. Except as indicated in the footnotes below, based on the information furnished to us, each of the shareholders listed below has sole voting and investment power with respect to all shares of common stock shown are beneficially owned, subject to community property laws where applicable.

The table lists beneficial ownership before the offering on a pro forma basis after giving effect to the events described under "Explanatory Note Regarding Changes in Our Capital Stock", including the conversion of Class C Preferred Stock into Class A Common Stock but excluding the conversion of the Legacy Class A Common Stock into Class A Common Stock.

All shares of Class B Common Stock outstanding are owned by Henry T. Swigert as Trustee of the Swigert 2000 Trust. Shares of Legacy Class A Common Stock and Class B Common Stock will be convertible one-for-one into Class A Common Stock.

Unless otherwise noted below, the address for each of the shareholders in the table below is c/o ESCO Corporation, 2141 NW 25th Avenue, Portland, Oregon 97210.

	Shares of Common Stock Beneficially Owned Before the Offering													Shares of Common Stock Beneficially Owned After the Offering								Percentage of Common Stock Beneficially Owned After the Offering If Underwriters Exercise Option in Full

Name of Beneficial Owner	Legacy Class A Number	%			Class A Number	%	Class B Number	%			Total %			Number of shares offered	Legacy Class A Number	%	Class A Number	%	Class B Number	%	Total %	%
Calvin W. Collins(4)			*									*
Ray Verlinich(5)			*									*
Gene K. Huey(6)			2.37	%								1.62	%
Nickolas L. Blauwiekel(7)			*									*
F. Patrick Fonner(8)			*									*
Jon V. Owens(9)			*									*
Peter F. Adams(10)			1.00	%								*
Frank Alvarez(11)			*									*
Stephen E. Babson(12)			*									*
Peter F. Bechen(13)			*									*
Frank Jungers(14)			*									*
Henry T. Swigert(15)			2.76	%					100	%		17.76	%
Robert C. Warren, Jr.(16)			3.08	%								2.09	%
John W. Wood, Jr.(17)			*									*
All directors and executive officers as a group (17 persons)(15)			16.07	%								26.92	%
Other Selling Shareholders
Robert P. Acheson			*									*
Adams SWH Ltd Partnership(18)			1.87	%								1.26	%
Carol C. Adams			*									*
Charles A. Adams			*									*
Amy Pratt Alexander, Trustee of the Amy Pratt Alexander Trust DTD 6/20/07			*									*
Charles H. Anderson			*									*
U.S. Bank, Trustee of the Becker 99 Trust			1.03	%								*
U.S. Bank, Trustee of The Becker 2005 Grandchildren Trust u/a/d 12/23/05			*									*
U.S. Bank, Trustee of the David E. Becker Trust			*									*
U.S. Bank, Trustee of the Mark A. Becker Trust			*									*
U.S. Bank, Trustee of the Mary C. Becker Trust.			*									*
Scott R. Becker, Trustee of the Scott R. Becker Trust			*									*
Jodi Walder-Biesanz			*									*
Margaret J. Biskar			*									*
Eric A. Blackburn			*									*
Curtis Wyld Bonelli			1.19	%								*
Kenneth Swigert Bonelli			1.40	%								*
Sandra Wyld Bonelli			1.40	%								*
Terry L. Briscoe			*									*
Christopher M. Carpenter			*									*
Denise Louise-Ward Carroll			*									*
James V. Corso			*									*
Debora Susan Crandall			*									*
Angela Shawn Cunningham, Trustee of the Angela Shawn Cunningham Trust DTD 6/20/07			*									*
Daniel P. Devlin			*									*
John R. Dillon			*									*
Nancy C. Edwards			*									*
Richard L. Edwards			*									*
Timothy J. Elbel			*									*
David K. Ellas			*									*
Catherine M. Finlayson			*									*
Dale N. Gehring			*									*
Frederick C. Goeth, III			*									*
Stephen E. Herbert			*									*
Larry R. Huget(19)			1.39	%								*
Matthew A. Huget, Trustee of the Matthew Adam Huget Trust DTD 07/21/07			*									*
Matthew A. Huget			*									*
Peter J. Huget, Trustee of the Peter Jason Huget Trust DTD 07/21/07			*									*
Peter J. Huget			*									*
Jeffrey W. Kershaw			*									*
Elizabeth M. King			*									*
John S. Kreitzberg			*									*
Daniel A. Kucera			*									*
Mary Bonelli Lane			1.29	%								*
Tara Long			*									*
Douglas H. MacGowan			*									*
Douglas E. Malkasian			*									*
Mark Mallory			*									*
Larry E. McCoy			*									*
U.S. Bank, Trustee of the Anne J. Miller Revocable Living Trust			*									*

	Shares of Common Stock Beneficially Owned Before the Offering											Shares of Common Stock Beneficially Owned After the Offering								Percentage of Common Stock Beneficially Owned After the Offering If Underwriters Exercise Option in Full

Name of Beneficial Owner	Legacy Class A Number	%			Class A Number	%	Class B Number	%	Total %			Number of shares offered	Legacy Class A Number	%	Class A Number	%	Class B Number	%	Total %	%
Timothy B. Myers			*							*
Hung (Jeff) C. Nguyen			*							*
Gary L. Ogier			*							*
Christopher S. Ohland			*							*
Juan C. Parra			*							*
Janet Hahn Peterson			*							*
Alan Phillips			*							*
Steven A. Pickering			*							*
Daniel W. Pizzuto			*							*
Paul W. Pope			*							*
William H. Prather			*							*
Dorine A. Real & Lee Tepper as Trustees of the Tepper — Real Millennial Trust DTD 05/11/00.			6.03	%						4.08	%
Richard G. Reiten			*							*
Elizabeth Ward Ricks			*							*
Robert M. Ronald & Susan K. Ronald as Tenants in Common			*							*
James A. Rowzee			*							*
Stephen P. Schad			*							*
James E. Snook			*							*
James Edward Songer			*							*
Sarah A. Stanton			*							*
Sugamatt Management LP(20)			*							*
Katie Swanson			*							*
Mason Dorn Swigert(21)			*							*
Soula Jule Capital LLC(21)			5.62	%						3.81	%
William G. Swigert, Jr., Trustee of the William G. Swigert, Jr. Living Trust UTA DTD 02/28/97			*							*
Raymond P. Sykes			*							*
Amy A. Tessier			*							*
T & J Anderson Family Investments LLC(22)			2.05	%						1.39	%
Helen Voigt			*							*
William E. Walton			*							*
David M. Ward & Mary V. Ward(23)(24)			*							*
David M. Ward Family LLC(23)			2.84	%						1.92	%
Douglas Glenn Ward(25)			3.12	%						2.11	%
Michael James Ward			*							*
Terii Christine Ward			*							*
Wendy W. Warren			2.87	%						1.95	%
The Newman & Zeneth Ward Family Foundation(24)			1.64	%						1.11	%
The Zeneth F. Ward & Lanetta S. Ward Foundation Inc.(25)			1.64	%						1.11	%
Alayne Swigert Weber			*							*
Joseph T. Weber			*							*
William A. Weber, Jr.			*							*
James P. Whalen			*							*
Craig D. Wihtol			*							*
Margaret W. Wood			*							*
Remaining selling shareholders(26)			*							*

(1): Includes shares of Legacy Class A Common Stock over which Charles F. Snow exercises voting control under a family trust, shares of Legacy Class A Common Stock beneficially owned by Charles F. Snow under the Partnership Agreement of 'Nchiawana Enterprises, L.P. and shares of Legacy Class A Common Stock beneficially owned by Charles F. Snow as a general partner of Sugamatt Management LP.
(2): The ESOP holds Class C Preferred Stock, which generally does not have the right to vote except as required by law. At the completion of the offering made by this prospectus, the shares will convert into Class A Common Stock. The trustee of the ESOP will vote shares that are held by the ESOP and not allocated to any participant's account. An ESOP participant may direct the trustee how to vote shares allocated to the participant's account. Undirected shares are voted by the ESOP trustee in the trustee's discretion. The ESOP trustee is North Star Trust Company. As of , 2011, of the shares held by the ESOP trustee had been allocated to participant accounts and shares were unallocated. Each ESOP participant is entitled to receive a distribution of vested shares allocated to the participant's account upon death, disability, retirement at age 65 or other termination of employment, subject to the restrictions specified in the ESOP. The ESOP trustee has the ability to sell shares to cover administrative costs, including its fees, that are not paid by the Company.
(3): Includes shares beneficially owned under the ESOP and an estimated shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(4): Includes exercisable options to purchase shares of Legacy Class A Common Stock shares beneficially owned under the ESOP and an estimated shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(5): Includes exercisable options to purchase shares of Legacy Class A Common Stock.
(6): Includes shares beneficially owned under the ESOP and an estimated shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(7): Includes exercisable options to purchase shares of Legacy Class A Common Stock, shares beneficially owned under the ESOP and shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.

(8): Includes shares of Legacy Class A Common Stock beneficially owned by F. Patrick Fonner as Trustee of the F. Patrick Fonner and B. Lynne Fonner Trust U/A dated August 6, 2009, exercisable options to purchase shares of Legacy Class A Common Stock and an estimated shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(9): Includes exercisable options to purchase shares of Legacy Class A Common Stock and an estimated shares beneficially owned under the ESOP.
(10): Includes shares of Legacy Class A Common Stock beneficially owned by Peter F. Adams as Trustee of the Peter F. Adams Family Trust and an estimated shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(11): Includes shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(12): Includes shares of Legacy Class A Common Stock beneficially owned by Stephen E. Babson as an officer of Babson EC LLC and an estimated shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(13): Includes an estimated shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(14): Includes shares of Legacy Class A Common Stock beneficially owned by Frank Jungers as Trustee of the Francis Jungers Trust U/A dtd 11/13/03 and an estimated shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(15): Includes shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights. All shares of Class B Common Stock are held by Henry T. Swigert as Trustee of the Swigert 2000 Trust.
(16): Includes shares beneficially owned by Robert C. Warren Jr. as Trustee of the Lucy Christenson Warren Trust and shares of Legacy Class A Common Stock issuable upon exercise of exercisable stock-settled stock appreciation rights.
(17): Includes shares of Legacy Class A Common Stock beneficially owned by John W. Wood as Trustee of the John W. Wood, Jr. Revocable Trust of 2008 DTD 10-10-08 as Amended from Time to Time and shares of Legacy Class A Common Stock issuable upon settlement of stock-settled stock appreciation rights.
(18): Sandra A. Beebe is the general partner of Adams SWH Ltd Partnership.
(19): Includes shares beneficially owned under the ESOP. Mr. Huget was President and Chief Operating Officer of ESCO Corporation from 2005 to 2010.
(20): Charles F. Snow is the general partner of Sugamatt Management LP.
(21): Mason Dorn Swigert is the Manager of Soula Jule Capital LLC.
(22): Judith B. Anderson is the Manager of T & J Anderson Family Investments LLC.
(23): David M. Ward and Mary V. Ward are the Managers of David M. Ward Family LLC.
(24): David M. Ward, Mary V. Ward, Michael Ward, Steven W. Bennett and Michael Staffieri are the trustees of The Newman and Zeneth Ward Family Foundation.
(25): Douglas Glenn Ward, Lanetta S. Ward, Roger Miller, Cheryl Johnson and Dan Kristensen are the directors of The Zeneth F. Ward and Lanetta S. Ward Foundation Inc.
(26): Represents shares held by 41 shareholders not listed elsewhere in the table who, in the aggregate, own less than 1% of the outstanding shares of Legacy Class A Common Stock prior to this offering.

We sponsor an employee stock ownership plan, or ESOP, that covers all of our U.S. employees who meet service requirements. We implemented the ESOP on December 27, 2006 by borrowing money which we loaned to the ESOP. The ESOP used that money to buy Class C Preferred Stock from us and from our shareholders in proportion to their shareholdings. The ESOP transaction provided a one-time, tax-efficient payment to our shareholders and an ownership stake in the company to our employees, and it continues to generate tax savings for us. Each quarter, we pay dividends on the Class C Preferred Stock of approximately $4.1 million and make contributions to the ESOP of approximately $3.2 million, and the ESOP pays that amount back to us to service the loan. The loan is secured by a pledge of the Class C Preferred Stock purchased by the ESOP. As a portion of the loan is paid each quarter:

An ESOP participant is entitled to an account balance distribution upon termination of employment, retirement at age 65 or because of death or disability, and we have been obligated to offer to repurchase the shares allocated to that former ESOP participant at the fair value determined by an independent financial adviser to the ESOP trustee.

We add the ESOP compensation expense back to the financial measures we monitor, including operating profit and EBITDA, because it is a non-cash charge that can significantly affect our reported financial results and, because it depends on quarterly fair value appraisals, can fluctuate significantly between quarters. The ESOP compensation expense is not ongoing share-based compensation and we believe our employees receive competitive compensation excluding the shares allocated to them under the ESOP.

Our articles of incorporation, as in effect upon the completion of the offering made by this prospectus, authorize us to issue up to 300,000,000 shares of Class A Common Stock, 100,000,000 shares of Legacy Class A Common Stock, 21,000,000 shares of Class B Common Stock and 50,000,000 shares of "blank check" preferred stock, which could be issued by the board without shareholder approval and could have voting, liquidation, dividend and other rights superior to the Class A Common Stock. The Class C Preferred Stock, all of which is held by our ESOP, will convert automatically into Class A Common Stock upon completion of this offering and will no longer be outstanding. Upon the completion of this offering, the outstanding shares of capital stock will be:

The two-step conversion of the Legacy Class A Common Stock into publicly tradeable Class A Common Stock is in lieu of requiring contractual lockup agreements between the underwriters and shareholders generally. See "Shares Eligible for Future Sale".

Our articles of incorporation authorize us to amend the articles of incorporation without shareholder approval to remove the references to Legacy Class A Common Stock, Class B Common Stock, and Class C Preferred Stock upon the conversion of all outstanding shares of the class to Class A Common Stock and to make related grammatical and ministerial changes. As a result of those amendments, following the conversion of all outstanding shares of Legacy Class A Common Stock, Class B Common Stock, and Class C Preferred Stock, we would be authorized to issue up to 300,000,000 shares of common stock, all of which would be designated Class A

Common Stock; 50,000,000 shares of "blank check" preferred stock; and no shares of Legacy Class A Common Stock or Class B Common Stock.

As of March 31, 2011, we had 246 holders of record of our Legacy Class A Common Stock, one holder of record of our Class B Common Stock and one holder of record of our Class C Preferred Stock. No shares of Class A Common Stock will be outstanding until issued in connection with the sale of stock in the offering made by this prospectus.

Each holder of our Class A Common Stock is entitled to one vote per share. Each holder of Legacy Class A Common Stock and Class B Common Stock is entitled to the number of votes per share equal to the number of shares of Class A Common Stock into which the holder's shares are convertible; the conversion ratio will be one-for-one upon completion of the offering. Except described below, holders of Class A Common Stock, Legacy Class A Common Stock and Class B Common Stock vote together as a single voting group on all matters submitted to shareholders for a vote. Legacy Class A Common Stock and the Class A Common Stock, as a single voting group, and the Class B Common Stock vote separately on the following matters:

In addition, under the Oregon Business Corporation Act, any proposed amendment to the articles of incorporation that would:

requires approval of the holders of a majority of the outstanding shares of the affected class, voting as a separate voting group, in addition to the approval of a majority of the shares entitled to vote on that proposed amendment. In addition, the Oregon Business Corporation Act generally requires a separate class vote on (a) any plan of merger that, if contained in an amendment to the articles of incorporation, would require action by one or more voting groups and (b) on a plan of share exchange by the classes included in the exchange.

All shares of Class B Common Stock will convert automatically into shares of Class A Common Stock or Legacy Class A Common Stock, depending on the conversion date, when the number of shares of Class B Common Stock outstanding is less than (subject to adjustment for any stock split or dividend).

Class A Common Stock, Legacy Class A Common Stock and Class B Common Stock share equally and ratably, on an as-converted basis, in any dividends we pay or set aside on our common stock.

Class A Common Stock, Legacy Class A Common Stock and Class B Common Stock share ratably, on an as-converted basis, in all assets we distribute as a result of our liquidation, dissolution or winding up.

Our articles of incorporation, as in effect upon the completion of the offering made by this prospectus, authorize 50,000,000 shares of "blank check" preferred stock, with respect to which our board of directors can, without shareholder approval, (1) fix the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, terms of redemption, liquidation preference, subscription rights and the number of shares constituting any series, and (2) cause the company to issue preferred stock in one or more series. Our board of directors may designate preferred stock with voting and conversion rights that could adversely affect the voting power of the holders of common stock.

136 shareholders who hold an aggregate of 166,836 shares of Legacy Class A Common Stock before the -for-one stock split are parties to restated stock transfer restriction agreements ("RSTRA") and 6 shareholders who hold an aggregate 2,598 shares before the -for-one stock split of Legacy Class A Common Stock are parties to stock purchase agreements ("SPA"). Each RSTRA and SPA gives a shareholder the right to require us to purchase the shareholder's shares upon retirement or death. In addition, the RSTRA also gives a shareholder the right to require us to purchase the shares upon disability and the SPA requires us to repurchase shares upon the termination of the shareholder's employment with us. Holders of 161,730 shares of Legacy Class A Common Stock before the -for-one stock split subject to the RSTRA or SPA have agreed to terminate those agreements upon completion of the offering made by this prospectus; after completion of the offering, 4,443 shares will remain subject to the RSTRA or SPA.

The RSTRA and SPA only apply to shares of Legacy Class A Common Stock. As a result, all of the agreements will terminate when the underlying Legacy Class A Common Stock converts to Class A Common Stock, which will occur no later than 360 days after the date of this prospectus. Holders of 161,730 of the shares (pre-split) subject to RSTRAs or SPAs have agreed to terminate the agreements effective upon the completion of the offering made by this prospectus. In 2009 and 2010, we repurchased shares under the RSTRA for aggregate consideration of $1.0 million and $0.7 million, respectively. We repurchased no shares under the SPA in those years. We cannot predict with certainty the extent to which repurchase obligations will occur or the future fair market value of our stock.

Each shareholder subject to a RSTRA has the right to sell all or some shares to us upon retirement or disability. If that right is exercised, the sale will take place in three installments over a two-year period: up to one-third of the shares on the first on the date of the retirement or disability; between one-third and two-thirds of the shares on the second on the first anniversary of the retirement or disability; and any remaining shares on the third on the second anniversary of the retirement or disability. If a shareholder sells more than $1.0 million of shares back to us at any of those installments, we may, at our option, pay $1.0 million on that closing date and half of the remaining amount on each of the first and second anniversaries of the closing date.

In addition, successors in interest to shareholders subject to the RSTRA may, upon the death of a shareholder, sell up to half of the shares held by the shareholder at death to us and any remaining shares on the first anniversary of the shareholder's death. When a repurchase right is exercised after a shareholder's death, we have the option of paying the purchase price in two equal annual installments.

Our repurchase obligation under the RSTRA is based on the fair market value of the shares subject to the RSTRA at the time of exercise, which is measured as of the last day of the fiscal quarter immediately preceding the quarter in which the retirement, death or disability occurred or in which the applicable anniversary of the retirement, death or disability occurs. After completion of the offering made by this prospectus, we expect to measure the fair market value of the shares by the trading value of the Class A Common Stock. Our obligation to repurchase shares under the RSTRA is subject to restrictions under Oregon corporate law and our credit facility, which may also impact the priority in which we purchase shares if multiple shareholders exercise their put options at once.

We have a right of first refusal to purchase the shares subject to the RSTRA on the same terms, including price, as those on which a shareholder subject to the RSTRA attempts to sell his or her shares to a bona fide purchaser.

If a shareholder retires, dies or is disabled, under some circumstances the Company has the option to purchase any or all of the shares held by the shareholder or the shareholder's successor on the terms and subject to the conditions of the RSTRA. If a shareholder leaves the service of the Company for any reason other than death, retirement or disability, the Company has 90 days from the date of shareholder's departure to require the shareholder to sell the shares to the Company at the per share price then in effect for repurchases under the RSTRA.

For shareholders who have not agreed to terminate the RSTRA upon the completion of the offering made by this prospectus, the RSTRA terminates on the earlier of (1) conversion of the Legacy Class A Common into Class A Common Stock or (2) the closing date of a sale of assets or merger pursuant to which our shareholders receive publicly traded securities.

Shares subject to a SPA may only be sold or transferred in accordance with that SPA. Each shareholder subject to a SPA must sell his or her shares back to us upon death or termination of the shareholder's employment or service as a director. The repurchase price is based on the book value of the shares on the last day of each fiscal year, as adjusted under an established formula that excludes items such as LIFO and accumulated other comprehensive loss for pension accounting. Unless otherwise agreed, we must pay the repurchase price for the shares within 30 days of death or termination. The repurchase price is determined annually at December 31 based on our audited financial statements and remains in effect for the following year. The repurchase price at December 31, 2010, which will apply for 2011, is $317.09 per share.

Our articles of incorporation and bylaws, as in effect upon the completion of this offering, contain provisions that may delay or prevent a change in control of our company or changes in our management, including provisions that:

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

We are subject to the Oregon Business Combination Act, which prohibits an Oregon corporation from engaging in any business combination with any interested shareholder for three

years after the date the shareholder became an interested shareholder, with the following exceptions:

In general, the Oregon Business Combination Act defines "business combination" to include the following:

In general, the Oregon Business Combination Act defines an "interested shareholder" as an entity or a person who, together with the person's affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested shareholder status owned, 15% or more of the outstanding voting stock of the corporation.

We are subject to the Oregon Control Share Act, which regulates the process by which a person may acquire control of certain Oregon-based corporations without the consent and cooperation of the corporation's board of directors. Under the Oregon Control Share Act a person who acquires voting stock in a transaction that results in the person holding more than 20%,

33 ¹/3% or 50% of the total voting power cannot vote the shares it acquires in the acquisition. This restriction does not apply if voting rights are given to the control shares by:

To retain the voting rights attached to acquired shares, these approvals are required at the time an acquirer's holdings first exceed 20% of the total voting power, and again at the times the acquiring person's holdings first exceed 33 ¹/3% and 50%. An acquiring person includes persons acting as a group.

The acquirer may, but is not required to, submit to the target company an "acquiring person statement" including specific information about the acquirer and its plans for the corporation. The acquiring person statement may also request that the corporation call a special meeting of shareholders to determine whether the control shares will be allowed to have voting rights. If the acquirer does not request a special meeting of shareholders, the issue of voting rights of control shares will be considered at the next annual or special meeting of shareholders that is held more than 60 days after the date of the acquisition of control shares. If the acquirer's control shares are allowed to have voting rights and represent a majority or more of all voting power, shareholders who do not vote in favor of voting rights for the control shares will have the right to receive the appraised fair value of their shares, which may not be less than the highest price paid per share by the acquirer for the control shares.

Shares are not deemed to be acquired in a control share acquisition if, among other things, they are acquired from the issuing corporation, or are issued pursuant to a plan of merger or exchange effected in compliance with the Oregon Business Corporation Act and the issuing corporation is a party to the merger or exchange agreement.

We have applied to list our common stock on The NASDAQ Global Market under the symbol "ESCO".

The transfer agent and registrar for our Class A Common Stock is American Stock Transfer & Trust Company, LLC. The transfer agent's address is Operations Center, 6201 15th Avenue, Brooklyn, NY 11219.

The Class A Common Stock to be sold in the offering made by this prospectus is a new class of common stock, none of which will be outstanding until issuance in connection with the offering made by this prospectus. There has not been a public market for our Class A Common Stock. Nevertheless, future sales of substantial amounts of our Class A Common Stock, including shares issued upon exercise of options of stock appreciation rights or conversion of our Legacy Class A Common Stock or Class B Common Stock, or the possibility of these sales, in the public market, could cause the market price of our Class A Common Stock to fall or impair our ability to raise equity capital. In addition, future sales of shares of substantial amounts of our Legacy Class A Common Stock could also cause the market price of our Class A Common Stock to fall or impair our ability to raise equity capital, although there is no public market for our Legacy Class A Common Stock and we do not plan to list the shares of Legacy Class A on any exchange or otherwise facilitate the creation of a public market.

Based on the number of shares of Legacy Class A Common Stock and Class B Common Stock outstanding as of December 31, 2010, upon completion of this offering and assuming no exercise by the underwriters of their option to purchase additional shares, we will have shares of Class A Common Stock, shares of Legacy Class A Common Stock and shares of Class B Common Stock outstanding.

The shares of our Class A Common Stock sold in this offering will be freely tradable in the public market without restriction or further registration under the Securities Act, unless these shares are held by our affiliates, as that term is defined in Rule 144 under the Securities Act. The remaining shares of Class A Common Stock not sold in this offering, the shares of our Legacy Class A Common Stock and the shares of our Class B Common Stock held by our existing holders will be "restricted securities", as that term is defined in Rule 144, and will only be available for public sale if they are registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 of the Securities Act, which are summarized below.

shares of Class A Common Stock will be held by our ESOP as a result of the conversion of each share of the outstanding Class C Preferred Stock into shares of Class A Common Stock in connection with the offering and the amendment of our articles of incorporation. Shares allocated to an ESOP participant's account are not distributed to ESOP participants before death, disability, retirement at age 65 or other termination of employment. Of these shares, have been allocated to persons that have entered into lockup agreements described below. The remaining shares will be immediately eligible for sale following this offering in the public market under Rule 144 or Rule 701 upon the distribution of the shares to an ESOP participant pursuant to the terms of the ESOP.

All of the Legacy Class A Common Stock outstanding after this offering will automatically convert on a one-for-one basis into shares of the Class A Common Stock in equal installments on a pro rata basis at dates that are 180 days and 360 days after the date of this prospectus. Only the shares of Legacy Class A Common Stock owned by our executive officers and directors and all of the shares of Class B Common Stock will be subject to lock-up agreements described below. We expect the remaining shares of Class A Common Stock issuable upon the conversion of the Legacy Class A Common Stock, will be eligible for sale in the public market pursuant to Rule 144 or Rule 701, subject to some limitations on the shares held by our affiliates. There is, however, no public market for our Legacy Class A Common Stock and we do not plan to list the shares of Legacy Class A on any exchange or otherwise facilitate the creation of a public market.

In addition, upon transfer to a person other than those specified in the articles of incorporation, shares of Class B Common Stock outstanding will convert on a one-for-one

basis into shares of Legacy Class A Common Stock or Class A Common Stock depending on the date of transfer. The shares of Class B Common Stock, and any shares of Class A Common Stock or Legacy Class A Common Stock issuable upon conversion of the Class B Common Stock, will be eligible for sale pursuant to Rule 144 upon the expiration of lockup agreements entered into with the holders of all of the shares of our Class B Common Stock, subject to limitations on the shares held by our affiliates.

All of our officers and directors who, following this offering, together will beneficially own shares, or %, of our Class A Common Stock, shares, or %, of our Legacy Class A Common Stock and shares, or %, of our Class B Common Stock (or % of our total Class A Common Stock, assuming the conversion of the Legacy Class A Common Stock and Class B Common Stock) have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their Class A Common Stock or securities convertible into or exchangeable for shares of Class A Common Stock (including Legacy Class A Common Stock and Class B Common Stock) during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of each of the representatives of the underwriters. This agreement is subject to certain exceptions, and is also subject to extension for up to an additional 34 days, as described in "Underwriting".

In general, a person who beneficially owns restricted shares of any class of our common stock (shares other than those purchased in a registered public offering) for at least six months is entitled to sell those restricted securities, if that person is not an affiliate of ours at the time of, or at any time during the 90 days preceding, the sale. A person who beneficially owns restricted shares of our common stock for at least six months and who is our affiliate at the time of, or was our affiliate any time during the 90 days preceding, a sale is subject to additional restrictions on the sale of securities. Those additional restrictions limit the number of securities the person may sell within any three-month period to the number of securities that do not exceed the greater of the following:

Sales by or on behalf of affiliates under Rule 144 must also comply with the manner of sale, current public information, and notice provisions of Rule 144.

In general, Rule 701 allows a shareholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not an affiliate of ours during the immediately preceding 90 days to sell these shares under Rule 144, but without compliance with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits our affiliates to sell Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling shares pursuant to Rule 701. The shares that may be sold in compliance with Rule 701 that are subject to lock-up agreements described

above and under "Underwriting" below will not be eligible for sale until expiration or waiver of the restrictions set forth in those agreements.

We plan to file a registration statement on Form S-8 to cover shares of Class A Common Stock under our 2000 Stock Incentive Plan, our 2010 Stock Incentive Plan and our ESOP. Resale of these registered shares may occur only after conversion of the shares underlying plan awards into Class A Common Stock and the expiration of any contractual lock-up periods.

The following is a summary of the material United States federal income tax consequences to non-U.S. holders (as defined below) of the acquisition, ownership and disposition of our Class A Common Stock issued pursuant to this offering. This discussion is not a complete analysis of all the potential United States federal income tax consequences relating thereto, nor does it address any estate and gift tax consequences or any tax consequences arising under any state, local or foreign tax laws, or any other United States federal tax laws. This discussion is based on the Internal Revenue Code of 1986, as amended, the Treasury Regulations promulgated thereunder, judicial decisions and published rulings and administrative pronouncements of the Internal Revenue Service ("IRS"), all as in effect as of the date of this offering. These authorities may change, possibly retroactively, resulting in United States federal income tax consequences different from those discussed below.

This discussion is limited to non-U.S. holders who purchase our Class A Common Stock issued pursuant to this offering and who hold our Class A Common Stock as a "capital asset" within the meaning of the Internal Revenue Code (generally, property held for investment). This discussion does not address all of the United States federal income tax consequences that may be relevant to a particular holder in light of such holder's particular circumstances. This discussion also does not consider any specific facts or circumstances that may be relevant to holders subject to special rules under the United States federal income tax laws, including, without limitation, shareholders, partners, beneficiaries or other owners of a person holding our Class A Common Stock; former citizens or residents of the United States subject to tax as expatriates; partnerships or other entities treated as partnerships for U.S. federal income tax purposes; corporations that accumulate earnings to avoid United States federal income tax; financial institutions; insurance companies; brokers, dealers or traders in securities, commodities or currencies; tax-exempt organizations; tax-qualified retirement plans; persons that own, or have owned, actually or constructively, more than 5% of our Class A Common Stock; and persons holding our Class A Common Stock as part of a hedging or conversion transaction or straddle, or a constructive sale, or other risk reduction strategy.

PROSPECTIVE INVESTORS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING AND DISPOSING OF OUR CLASS A COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL, OR FOREIGN TAX LAWS OR ANY OTHER UNITED STATES FEDERAL TAX LAWS OR UNDER ANY APPLICABLE TAX TREATY.

For purposes of this discussion, a non-U.S. holder is a person that is not a "U.S. person" for United States federal income tax purposes. A U.S. person is any of the following:

An individual may be treated as a resident of the United States in any calendar year by being present in the United States for at least 31 days in that calendar year and for an aggregate of at least 183 days during the three-year period ending in that calendar year. For purposes of determining days present in the United States, certain days that an individual is actually present in the United States are not taken into account. In addition, the 183-day test is determined by counting all of the days the individual is treated as being present in the current year, one-third of such days in the immediately preceding year and one-sixth of such days in the second preceding year.

If we make distributions of cash or other property on our Class A Common Stock, such distributions will constitute dividends for United States federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of our current and accumulated earnings and profits generally will constitute a return of capital and will first be applied against and reduce a non-U.S. holder's tax basis in the Class A Common Stock, but not below zero. Any excess will be treated as gain realized on the sale or other disposition of the Class A Common Stock and will be treated as described under "Gain on Disposition of Our Class A Common Stock" below.

Dividends paid to a non-U.S. holder of our Class A Common Stock, except as provided below with respect to dividends that are treated as effectively connected with the non-U.S. holder's conduct of a trade or business in the United States, will be subject to United States federal withholding tax at a rate of 30% of the gross amount of the dividends, or such lower rate specified by an applicable income tax treaty. To receive the benefit of a reduced treaty rate, a non-U.S. holder must furnish to us or our paying agent a valid IRS Form W-8BEN (or applicable successor form) certifying such holder's qualification for the reduced rate. This certification must be provided to us or our paying agent prior to the payment of dividends and must be updated periodically. Non-U.S. holders that do not timely provide us or our paying agent with the required certification, but that qualify for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

Dividends we pay to a non-U.S. holder that are treated as effectively connected with such holder's United States trade or business (and, if required by an applicable income tax treaty, attributable to a permanent establishment maintained by the non-U.S. holder in the United States) are not subject to United States federal withholding tax. Instead, such dividends generally will be subject to United States federal income tax on a net income basis at regular graduated United States federal income tax rates in much the same manner as if such holder were a resident of the United States. To inform us that dividends are not subject to United States federal withholding tax, the non-U.S. holder generally must furnish to us or our paying agent a properly executed IRS Form W-8ECI (or applicable successor form). This certification must be provided to us or our paying agent prior to the payment of dividends and must be updated periodically. A non-U.S. holder that is a foreign corporation also may be subject to an additional branch profits tax equal to 30% (or such lower rate specified by an applicable income tax treaty) of its effectively connected earnings and profits for the taxable year, as adjusted for certain items. Non-U.S. holders are encouraged to consult their tax advisors regarding any applicable income tax treaties that may provide for different rules.

A non-U.S. holder who claims the benefit of an income tax treaty generally will be required to satisfy applicable certification and other requirements prior to the distribution date. Non-U.S. holders

are encouraged to consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty.

Subject to the discussion below regarding backup withholding, a non-U.S. holder generally will not be subject to United States federal income tax on any gain realized upon the sale or other disposition of our Class A Common Stock, unless:

Gain realized on a sale of our Class A Common Stock by a non-U.S. holder described in the first bullet point above will be subject to United States federal income tax at a flat 30% rate (or such lower rate specified by an applicable income tax treaty), but may be offset by United States source capital losses (even though the individual is not considered a resident of the United States), provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.

Gain described in the second and third bullet points above will be subject to United States federal income tax on a net income basis at regular graduated United States federal income tax rates in the same manner as if such holder were a resident of the United States. A non-U.S. holder that is a foreign corporation that realizes gain described in the second bullet point above also may be subject to an additional branch profits tax equal to 30% (or such lower rate specified by an applicable income tax treaty) of its effectively connected earnings and profits for the taxable year, as adjusted for certain items. In addition, if we are determined to be a USRPHC and our Class A Common Stock has ceased to be traded on an established securities market, as described in the third bullet point above, then a purchaser may be required to withhold 10% of the proceeds payable to a non-U.S. holder from a sale or other taxable disposition of our Class A Common Stock. This 10% withholding, if applicable, is not an additional tax, and amounts withheld may be credited against the non-U.S. holder's federal income tax liability. Non-U.S. holders are encouraged to consult their tax advisors regarding any applicable income tax treaties that may provide for different rules.

We generally must report annually to the IRS and to each non-U.S. holder the amount of distributions on our Class A Common Stock paid to such holder and the amount of any tax withheld with respect to those distributions. These information reporting requirements apply even if no withholding was required. This information also may be made available under a specific treaty or agreement with the tax authorities in the country in which the non-U.S. holder resides or is established.

The gross amount of dividends paid to a non-U.S. holder subject to information reporting that fails to certify its non-U.S. holder status in accordance with applicable Treasury Regulations may be subject to backup withholding, currently at a 28% rate. In addition, information reporting and backup withholding may apply to the proceeds from a sale or other disposition of our Class A Common Stock, if the non-U.S. holder fails to certify its non-U.S. status. Generally, a non-U.S. holder furnishes the required certification by providing a valid IRS Form W-8BEN or IRS Form W-8ECI, as applicable. Notwithstanding the foregoing, backup withholding may apply if the payor has actual knowledge, or reason to know, that the holder is a U.S. person that is not an exempt recipient.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's United States federal income tax liability, provided the required information is timely furnished to the IRS.

Recent Legislation Imposing Withholding Tax on Foreign Entities That Do Not Comply with New Disclosure Requirements.

Recently enacted U.S. legislation generally will impose a 30% withholding tax on certain payments to non-U.S. financial institutions and certain other non-U.S. nonfinancial entities after December 31, 2012. The types of payments subject to the new tax will include dividends in respect of our Class A Common Stock and gross proceeds from the sale or other disposition of our Class A Common Stock. The tax will not apply, however, if the applicable non-U.S. entity satisfies certain due diligence and disclosure requirements (generally relating to ownership by U.S. persons in or accounts with the non-U.S. entity). Other exceptions also may apply. Non-U.S. holders are encouraged to consult their own tax advisors regarding the potential application of the new withholding tax based upon their particular circumstances.

We, the selling shareholders and the underwriters named below, have entered into an underwriting agreement with respect to the shares of Class A Common Stock being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co. and Morgan Stanley & Co. LLC are the representatives of the underwriters.

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional shares from us. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts to be paid to the underwriters by us and the selling shareholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $ per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject

to receipt and acceptance, and subject to the underwriters' right to reject any order in whole or in part.

Our officers, directors and the holder of our Class B Common Stock have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their Class A Common Stock or securities convertible into or exchangeable for shares of Class A Common Stock (including shares of Legacy Class A Common Stock and Class B Common Stock), and we have agreed not to issue shares of Class A Common Stock, during the period from the date of this prospectus through 180 days after the date of this prospectus, except with the prior written consent of each of the representatives. These agreements are subject to exceptions, including issuances of securities under existing stock incentive plans or as consideration in acquisitions, provided that the aggregate number of shares of Class A Common Stock issued or issuable in acquisitions may not exceed % of the shares offered by this prospectus and that the recipient of those securities must agree to be bound by the lock-up restrictions described in this paragraph. See "Shares Eligible for Future Sale" for a discussion of certain transfer restrictions.

The 180-day restricted period described in the preceding paragraph will be automatically extended if (1) during the last 17 days of the 180-day restricted period the Company issues an earnings release or announces material news or a material event; or (2) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event.

Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

We have applied to have our Class A Common Stock listed on The NASDAQ Global Market under the symbol "ESCO".

In connection with the offering, the underwriters may purchase and sell shares of Class A Common Stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares from us in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. "Naked" short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Class A Common Stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of Class A Common Stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our Class A Common Stock and, together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our Class A Common Stock. As a result, the price of our Class A Common Stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on The NASDAQ Global Market, in the over-the-counter market or otherwise.

The underwriters do not expect sales to discretionary accounts to exceed 5% of the total number of shares offered.

We estimate that the total expenses of the offering that we expect to pay, excluding underwriting discounts, but including certain expenses of the selling shareholders, will be approximately $ .

We and the selling shareholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.

The underwriters and their respective affiliates are full-service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. Goldman Sachs was the initial purchaser in a Rule 144A offering of our debt securities and provided investment banking services to us in connection with the divestiture of our Integrated Manufacturing Group, each of which occurred in 2006. Morgan Stanley was also an initial purchaser in our Rule 144A offering and provided advice to us in connection with the creation of our Employee Stock Ownership Plan in 2006. Wells Fargo Bank N.A. and KeyBank National Association have lending commitments under our senior secured credit facility. KeyBank also advised us in our 2006 divestiture of our Engineered Metals Group.

In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve our securities and/or instruments. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "Relevant Implementation Date") it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the

publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

For the purposes of this provision, the expression an "offer of shares to the public" in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued to or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong

(except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder.

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"); (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except (1) to an institutional investor under Section 274 of the SFA or a relevant person, or to any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the "Financial Instruments and Exchange Law"), and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Certain legal matters with respect to the legality of the shares of Class A Common Stock offered in this prospectus will be passed upon for us by Stoel Rives LLP, Portland, Oregon. The underwriters are being represented by Davis Polk & Wardwell LLP, Menlo Park, California, in connection with the offering.

The consolidated financial statements as of December 31, 2009 and 2010 and for each of the three years in the period ended December 31, 2010 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our Class A Common Stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our Class A Common Stock, we refer you to the registration statement, including the exhibits and the financial statements and notes filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract (or other document) are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.

You may obtain copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers that file electronically with the SEC. The address of that website is www.sec.gov.

After this offering, we will file with the SEC periodic reports, proxy statements and other information required by the Securities Exchange Act of 1934. We also maintain a website at www.escocorp.com at which, following the completion of this offering, you may access these materials after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, cash flows, and contingently redeemable equity securities and shareholders' equity present fairly, in all material respects, the financial position of ESCO Corporation and its subsidiaries at December 31, 2010 and December 31, 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

ESCO Corporation

CONSOLIDATED STATEMENTS OF EARNINGS

For the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008

(in thousands, except per share data)			2010			2009			2008

Net sales			$	849,481		$	680,390		$	939,913
Cost of goods sold				626,883			507,115			724,921

Gross profit				222,598			173,275			214,992
Operating expenses
	Selling and administrative expenses			147,881			112,535			132,719
	Restructuring and other			748			6,332			1,792

Operating profit				73,969			54,408			80,481
Interest income				(704	)		(420	)		(2,068	)
Interest expense				24,414			26,646			28,804
Loss on early extinguishment of debt				13,013			—			—
Other (income) expense				(731	)		(1,091	)		4,259

Earnings from continuing operations before income taxes				37,977			29,273			49,486
Income tax expense				9,423			8,487			13,297

Earnings from continuing operations, net of tax				28,554			20,786			36,189
Earnings from discontinued operations, net of tax				—			306			443

Net earnings				28,554			21,092			36,632
Less: net earnings attributable to the noncontrolling interests — continuing operations				(4,634	)		(2,537	)		(5,073	)
Less: net earnings attributable to the noncontrolling interests — discontinued operations				—			(141	)		(343	)

Net earnings attributable to ESCO shareholders				23,920			18,414			31,216
Valuation adjustment on Class C preferred shares				(16,521	)		7,933			13,287

Net earnings attributable to ESCO common shareholders			$	7,399		$	26,347		$	44,503

Earnings per weighted average share outstanding (Note 26)
	Basic:
		Earnings from continuing operations allocated to ESCO common shareholders	$	6.81		$	24.18		$	41.08
		Earnings from discontinued operations allocated to ESCO common shareholders		—			0.15			0.09

		Net earnings allocated to ESCO common shareholders	$	6.81		$	24.33		$	41.17

	Diluted:
		Earnings from continuing operations allocated to ESCO common shareholders	$	6.62		$	15.16		$	26.21
		Earnings from discontinued operations allocated to ESCO common shareholders		—			0.14			0.08

		Net earnings allocated to ESCO common shareholders	$	6.62		$	15.30		$	26.29

	Weighted average shares outstanding (Note 26)
		Basic		1,086			1,083			1,081
		Diluted		1,118			1,204			1,187
Amounts attributable to ESCO common shareholders
		Earnings from continuing operations, net of tax	$	7,399		$	26,182		$	44,403
		Earnings from discontinued operations, net of tax		—			165			100

		Net earnings attributable to ESCO common shareholders	$	7,399		$	26,347		$	44,503

Pro forma earnings per share from continuing operations allocated to ESCO shareholders (unaudited)
	Basic		$
	Diluted
Pro forma weighted average shares outstanding (unaudited)
	Basic
	Diluted
Pro forma earnings from continuing operations attributable to ESCO shareholders (unaudited)			$	23,920

ESCO Corporation

CONSOLIDATED BALANCE SHEETS

As of December 31, 2010 and December 31, 2009

(in thousands)				2010			2009

ASSETS
Current assets
	Cash and cash equivalents			$	114,101		$	168,487
	Trade accounts receivable, net of reserves of $1,232 and $1,238				140,000			106,478
	Inventories				105,435			77,054
	Deferred income taxes				7,631			4,081
	Prepaid expenses and other current assets				15,100			16,241

			Total current assets		382,267			372,341
Property and equipment, net					167,446			161,919
Intangibles, net					14,379			6,558
Goodwill					57,608			40,072
Deferred income taxes					55,875			51,688
Long-term investments					30,749			27,518
Other noncurrent assets					14,181			12,974
Assets held for sale					1,117			2,675

TOTAL ASSETS				$	723,622		$	675,745

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Accounts payable			$	65,693		$	47,133
	Accrued payroll, payroll taxes and benefits				36,908			28,163
	Other accrued liabilities				30,227			13,511
	Dividends payable				1,026			12,355
	Short-term debt				70,338			1,541
	Current portion of long-term debt				11,502			965

			Total current liabilities		215,694			103,668
Long-term debt, net of current portion					191,474			303,992
Accrued pension and other retirement costs					76,192			75,968
Other long-term liabilities					12,700			3,354

TOTAL LIABILITIES					496,060			486,982

Commitments and contingencies — See Note 19
Contingently redeemable equity securities:
	Preferred Stock-Class C, 205,000 authorized, 188,354 and 189,325 outstanding				107,691			71,211
	Common Stock-Class A, 5,000,000 authorized, 890,294 and 875,516 outstanding				124,493			72,853
Equity:
	ESCO shareholders' equity (deficit)
		New Common Stock-Class A, no shares authorized and outstanding actual, shares authorized, shares outstanding pro forma (unaudited)
		Preferred Stock-Class C unallocated ESOP shares, 67,577 and 90,104 actual, no shares authorized or outstanding pro forma (unaudited)			78,482			104,643
		Common Stock-Class A, 5,000,000 authorized, 890,294 and 875,516 outstanding actual, shares authorized, shares outstanding pro forma (unaudited)			—			—
		Common Stock-Class B, 243,737 authorized, 208,395 and 208,395 outstanding actual, shares authorized or outstanding pro forma (unaudited)			10,343			10,343
		Preferred Stock-Class C unallocated ESOP shares, 67,577 and 90,104			(78,482	)		(104,643	)
		(Accumulated deficit)/retained earnings			(19,944	)		36,222
		Accumulated other comprehensive loss			(9,802	)		(15,133	)

			Total ESCO shareholders' equity (deficit)		(19,403	)		31,432
	Noncontrolling interests				14,781			13,267

Total equity (deficit)					(4,622	)		44,699

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY				$	723,622		$	675,745

ESCO Corporation

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008

(in thousands)				2010			2009			2008

Cash flows from operating activities
	Earnings from continuing operations, net of tax			$	28,554		$	20,786		$	36,189
	Adjustments to reconcile earnings from continuing operations, net of tax, to net cash provided by operating activities:
		Depreciation and amortization			29,204			26,817			25,892
		Loss on early extinguishment of debt			13,013			—			—
		Non-cash compensation			24,937			16,504			20,248
		Loss on asset dispositions			787			2,778			1,084
		Unrealized (gains) losses on long term investments			(1,953	)		(2,860	)		4,405
		Tax benefit on stock compensation plans			3,440			3,718			2,227
		Deferred income taxes			(6,090	)		(5,898	)		(8,897	)
		Interest in earnings (loss) of unconsolidated affiliates, net of distributions			57			(2,110	)		(1,482	)
	Change in operating assets and liabilities:
		Trade accounts receivable			(18,840	)		37,203			(22,766	)
		Inventories			(19,438	)		24,101			3,633
		Prepaid expenses and other assets			1,557			949			(11,927	)
		Accounts payable, accrued expenses and other			23,100			(33,329	)		38,846
		Net cash provided by operating activities — discontinued operations			—			166			1,008

			Net cash provided by operating activities		78,328			88,825			88,460

Cash flows from investing activities
	Capital expenditures				(20,516	)		(14,114	)		(29,691	)
	Proceeds from sale of property and equipment				1,349			1,408			403
	Business acquisitions, net of cash acquired				(33,770	)		(165	)		—
	Investment in unconsolidated affiliates				(2,255	)		9,383			(6,170	)
	Insurance proceeds received				—			—			481
	Investment in other assets				(1,528	)		(1,481	)		(1,416	)
	Net cash used in investing activities — discontinued operations				—			(271	)		(1,060	)

			Net cash used in investing activities		(56,720	)		(5,240	)		(37,453	)

For the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008

(in thousands)			2010			2009			2008

Cash flows from financing activities
	Proceeds from short-term debt		$	70,775		$	2,135		$	834
	Payments on short-term debt			(5,553	)		(4,344	)		—
	Proceeds from long-term debt			200,575			529			658
	Payments on long-term debt			(301,114	)		(2,189	)		(3,989	)
	Debt issuance costs			(5,116	)		—			—
	Bond premium paid on debt extinguishment			(8,626	)		—			—
	Dividends paid			(26,873	)		(26,097	)		(14,571	)
	Common stock issued			857			129			133
	Common stock retired			(710	)		(1,010	)		—
	Preferred stock retired			(727	)		(1,105	)		(857	)

		Net cash used in financing activities		(76,512	)		(31,952	)		(17,792	)

Effect of exchange rate changes				518			3,687			(4,118	)

		Net increase (decrease) in cash and cash equivalents		(54,386	)		55,320			29,097
Cash and cash equivalents at beginning of year				168,487			113,167			84,070

Cash and cash equivalents at end of year			$	114,101		$	168,487		$	113,167

Cash paid during the year for
	Interest		$	21,876		$	22,206		$	23,177
	Income taxes		$	4,258		$	15,393		$	21,601
Non-cash activities
	Cash dividends declared, not yet paid		$	1,026		$	12,355		$	12,123

ESCO Corporation

CONSOLIDATED STATEMENT OF CONTINGENTLY REDEEMABLE EQUITY SECURITIES AND SHAREHOLDERS' EQUITY

For the fiscal years ended December 31, 2010, December 31, 2009, and December 26, 2008

	CONTINGENTLY REDEEMABLE EQUITY SECURITIES

	Number of Shares						Preferred Stock			Common Stock
(in thousands, except share data)	Class C Preferred Allocated ESOP shares			Class A Common Stock shares			Class C Preferred Stock ESOP			Class A Common Stock
Balance, December 28, 2007		56,723			161,129		$	51,697		$	83,956
Net earnings
Foreign currency translation
Change in employee benefit plan liability, net of tax of $9,252
Amortization of employee benefit plan liability, net of tax of ($280)
Change in measurement date for pension plans, net of tax of $372
Comprehensive income (loss)
Cash dividends declared $11.00 per common share
Stock issued upon exercise of options					3,805						133
Stock retired for cash		(1,025	)					(857	)
Tax benefit on stock incentive awards											25
Contingently redeemable shares valuation adjustment								(13,287	)		(12,104	)
Release of ESOP shares		22,524						20,248
Tax benefit of allocation of ESOP stock								2,227

Balance, December 26, 2008		78,222			164,934		$	60,028		$	72,010

Net earnings
Foreign currency translation
Change in employee benefit plan liability, net of tax of $2,075
Amortization of employee benefit plan liability, net of tax of ($265)
Comprehensive income (loss)
Cash dividends declared $10.00 per common share
Stock issued upon exercise of options					3,415						129
Stock retired for cash		(1,526	)		(2,230	)		(1,105	)		(34	)
Acquisition of non-controlling interest in Soldering
Non-controlling interest of previously unconsolidated subsidiary
Tax benefit on stock incentive awards											20
Contingently redeemable shares valuation adjustment								(7,933	)		728
Release of ESOP shares		22,525						16,504
Tax benefit of allocation of ESOP stock								3,717

Balance, December 31, 2009		99,221			166,119		$	71,211		$	72,853

Net earnings
Foreign currency translation
Change in employee benefit plan liability, net of tax of $1,062
Amortization of employee benefit plan liability, net of tax of ($503)
Derivatives, net of tax of $237
Comprehensive income
Cash dividends declared $11.00 per common share
Stock issued upon exercise of options					16,575						857
Stock retired for cash		(971	)		(1,797	)		(727	)		(37	)
Tax benefit on stock incentive awards											13
Contingently redeemable shares valuation adjustment								16,521			50,807
Release of ESOP shares		22,527						17,259
Tax benefit of allocation of ESOP stock								3,427

Balance, December 31, 2010		120,777			180,897		$	107,691		$	124,493

CONSOLIDATED STATEMENT OF CONTINGENTLY REDEEMABLE EQUITY SECURITIES AND SHAREHOLDERS' EQUITY (Continued)

For the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008

	ESCO SHAREHOLDERS' EQUITY

	Number of Shares							Preferred Stock						Common Stock
(in thousands, except share data)	Class C Preferred Unallocated ESOP shares			Class A Common Stock shares		Class B Common Stock Shares		Class C Preferred Allocated ESOP			Class C Preferred Unallocated ESOP			Class A Common Stock			Class B Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
Balance, December 28, 2007		135,153			709,397		208,395	$	156,961		$	(156,961	)	$	—		$	11,814		$	(13,524	)	$	7,362		$	5,652
Net earnings																					31,216						31,216
Foreign currency translation																								(28,583	)		(28,583	)
Change in employee benefit plan liability, net of tax of $9,252																								(14,641	)		(14,641	)
Amortization of employee benefit plan liability, net of tax of ($280)																								501			501
Change in measurement date for pension plans, net of tax of $372																					(712	)					(712	)

Comprehensive loss																											(12,219	)

Cash dividends declared $11.00 per common share																					(13,780	)					(13,780	)
Stock issued upon exercise of options																											—
Stock retired for cash																											—
Tax benefit on stock incentive awards																											—
Contingently redeemable shares valuation adjustment																					25,391						25,391
Release of ESOP shares		(22,524	)						(26,158	)		26,158															—
Tax benefit of allocation of ESOP stock																											—

Balance, December 26, 2008		112,629			709,397		208,395	$	130,803		$	(130,803	)	$	—		$	11,814		$	28,591		$	(35,361	)	$	5,044

Net earnings																					18,414						18,414
Foreign currency translation																								21,313			21,313
Change in employee benefit plan liability, net of tax of $2,075																								(3,330	)		(3,330	)
Amortization of employee benefit plan liability, net of tax of ($265)																								691			691

Comprehensive income																											37,088

Cash dividends declared $10.00 per common share																					(10,839	)					(10,839	)
Stock issued upon exercise of options																											—
Stock retired for cash																					(977	)					(977	)
Acquisition of non-controlling interest in Soldering															(6,172	)		(1,471	)					1,554			(6,089	)
Non-controlling interest of previously unconsolidated subsidiary																											—
Tax benefit on stock incentive awards																											—
Contingently redeemable shares valuation adjustment															6,172						1,033						7,205
Release of ESOP shares		(22,525	)						(26,160	)		26,160															—
Tax benefit of allocation of ESOP stock																											—

Balance, December 31, 2009		90,104			709,397		208,395	$	104,643		$	(104,643	)	$	—		$	10,343		$	36,222		$	(15,133	)	$	31,432

Net earnings																					23,920						23,920
Foreign currency translation																								7,073			7,073
Change in employee benefit plan liability, net of tax of $1,062																								(2,437	)		(2,437	)
Amortization of employee benefit plan liability, net of tax of ($503)																								1,074			1,074
Derivatives, net of tax of $237																								(379	)		(379	)

Comprehensive income																											29,251

Cash dividends declared $11.00 per common share																					(12,085	)					(12,085	)
Stock issued upon exercise of options																											—
Stock retired for cash																					(673	)					(673	)
Tax benefit on stock incentive awards																											—
Contingently redeemable shares valuation adjustment																					(67,328	)					(67,328	)
Release of ESOP shares		(22,527	)						(26,161	)		26,161															—
Tax benefit of allocation of ESOP stock																											—

Balance, December 31, 2010		67,577			709,397		208,395	$	78,482		$	(78,482	)	$	—		$	10,343		$	(19,944	)	$	(9,802	)	$	(19,403	)

CONSOLIDATED STATEMENT OF CONTINGENTLY REDEEMABLE EQUITY SECURITIES AND SHAREHOLDERS' EQUITY (Continued)

For the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008

		NONCONTROLLING INTERESTS

(in thousands)		Noncontrolling Interests			Other Comprehensive Income (Loss)			Total Allocated to Noncontrolling Interests			Total Equity
Balance, December 28, 2007		$	9,124		$	1,787		$	10,911		$	16,563
	Net earnings		5,416						5,416			36,632
	Foreign currency translation					(4,112	)		(4,112	)		(32,695	)
	Change in employee benefit plan liability, net of tax of $9,252											(14,641	)
	Amortization of employee benefit plan liability, net of tax of ($280)											501
	Change in measurement date for pension plans, net of tax of $372											(712	)

	Comprehensive income (loss)								1,304			(10,915	)

	Cash dividends declared $11.00 per common share											(13,780	)
	Stock issued upon exercise of options											—
	Stock retired for cash											—
	Tax benefit on stock incentive awards											—
	Class A share valuation adjustment											25,391
	Release of ESOP shares											—
	Tax benefit of allocation of ESOP stock											—

Balance, December 26, 2008		$	14,540		$	(2,325	)	$	12,215		$	17,259

	Net earnings		2,678						2,678			21,092
	Foreign currency translation					1,967			1,967			23,280
	Change in employee benefit plan liability, net of tax of $2,075											(3,330	)
	Amortization of employee benefit plan liability, net of tax of ($265)											691

	Comprehensive income								4,645			41,733

	Cash dividends declared $10.00 per common share		(13,263	)					(13,263	)		(24,102	)
	Stock issued upon exercise of options											—
	Stock retired for cash											(977	)
	Acquisition of non-controlling interest in Soldering		1,269			(1,554	)		(285	)		(6,374	)
	Non-controlling interest of previously unconsolidated subsidiary		8,746			1,209			9,955			9,955
	Tax benefit on stock incentive awards											—
	Class A share valuation adjustment											7,205
	Release of ESOP shares											—
	Tax benefit of allocation of ESOP stock											—

Balance, December 31, 2009		$	13,970		$	(703	)	$	13,267		$	44,699

	Net earnings		4,634						4,634			28,554
	Foreign currency translation					351			351			7,424
	Change in employee benefit plan liability, net of tax of $1,062											(2,437	)
	Amortization of employee benefit plan liability, net of tax of ($503)											1,074
	Derivatives, net of tax of $237											(379	)

	Comprehensive income								4,985			34,236

	Cash dividends declared $11.00 per common share		(3,471	)					(3,471	)		(15,556	)
	Stock issued upon exercise of options											—
	Stock retired for cash											(673	)
	Tax benefit on stock incentive awards											—
	Class A share valuation adjustment											(67,328	)
	Release of ESOP shares											—
	Tax benefit of allocation of ESOP stock											—

Balance, December 31, 2010		$	15,133		$	(352	)	$	14,781		$	(4,622	)

ESCO Corporation (ESCO or the Company) is a global provider of highly engineered metal wear parts and replacement products used in mining, infrastructure development, power generation, aerospace and specialized industrial markets. The Company uses its expertise in metallurgy and foundry operations to design, engineer, manufacture and deliver solutions to its customers.

The Company operates in two reporting segments: the Engineered Products Group (EPG) and the Turbine Technologies Group (TTG). The Chief Executive Officer has been identified as the chief operating decision-maker. See Note 27 — Segment Reporting.

The Company was founded in 1913 and is headquartered in Portland, Oregon. The Company has subsidiaries in the United States, Canada, the United Kingdom, Belgium, Germany, France, Slovakia, Hong Kong, Indonesia, Australia, South Africa, Argentina, Brazil, Peru, Chile, Mexico, Russia and China.

The accompanying consolidated financial statements include the accounts of ESCO Corporation and its majority owned and wholly owned subsidiaries. Investments in affiliates in which ESCO has a non-controlling ownership interest are accounted for under the equity method. All intercompany accounts and transactions have been eliminated. Management also evaluates whether an ESCO entity or interest is a variable interest entity and whether ESCO is the primary beneficiary. Consolidation is required if both of these criteria are met. The Company does not have any variable interest entities requiring consolidation.

Prior to fiscal year 2009, the Company reported on a 52 or 53-week fiscal year consisting of four thirteen-week periods and ending on the last Friday of the calendar year. Fiscal 2008, which ended on December 26, 2008, was a 52-week fiscal year which included 364 days. Effective December 27, 2008, the Company changed to a calendar year. The Company's fiscal year 2009 began on December 27, 2008 and ended on December 31, 2009, resulting in a 370-day year. The Company's fiscal year 2010 began on January 1, 2010 and ended on December 31, 2010, resulting in a 365-day year. All references to years are references to fiscal years unless otherwise noted.

The Company made certain reclassifications to the prior years' financial statements to conform them to the presentation as of and for the year ended December 31, 2010. These reclassifications had no effect on consolidated net earnings, shareholders' equity or net cash flows for any of the periods presented.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Examples include revenue recognition, inventory valuation, product warranty reserves, allowance for doubtful accounts, fair

value measurements, goodwill valuation, estimates of contingencies, intangible asset valuations, pension plan and share-based compensation assumptions, and the assessment of the valuation of deferred income taxes and income tax contingencies. Management believes the estimates used are reasonable. Actual results may differ from those estimates.

All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

Trade accounts receivables, net of reserves for doubtful accounts, are recorded at the invoiced amount less discounts and do not bear interest. The collectability of trade accounts receivable is regularly evaluated based on a combination of factors such as customer credit-worthiness, past transaction history with the customer, current industry economic trends and changes in customer payment terms. If the Company becomes aware of circumstances that may impair a customer's ability to meet its financial obligations, a specific reserve is recorded to reduce the related receivable to the amount expected to be recovered. For all other trade accounts receivable, the Company maintains a reserve based on the Company's historical uncollectible accounts as a percentage of sales.

Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out method (LIFO) for the majority of inventories in the U.S. Cost is determined using the first-in, first-out method (FIFO) or average cost method for all subsidiaries outside of the U.S. Cost of inventory includes raw materials, employee compensation and benefits, outside processing, depreciation of manufacturing machinery and equipment, operating supplies and manufacturing overhead directly attributable to the manufacturing of goods.

Property and equipment are recorded at historical cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Expenditures for repairs and maintenance are expensed as incurred. When assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included as a component of operating expenses.

Long-lived assets, principally property, equipment and identifiable definite-lived intangibles, are reviewed for impairment when events or circumstances indicate that the carrying amount of the assets may not be recoverable. The Company evaluates recoverability of assets by comparing the carrying amount of the asset to estimated future net undiscounted cash flows generated by the asset. If such assets are considered not to be fully recoverable, the impairment recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives, with a weighted average useful life of 11 years at December 31, 2010.

Goodwill is not amortized; it is tested for impairment annually (in the second quarter) or more frequently if indicators of impairment exist or if a decision is made to sell a business. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a decline in expected cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, slower growth rates, and others. Fair values that could be realized in an actual transaction may differ from those used to evaluate the potential impairment of goodwill. Goodwill is allocated to and evaluated for impairment at the reporting unit level (also defined as the operating segment).

The evaluation of impairment involves the comparison of the current fair value of each reporting unit to its carrying value, including goodwill. The Company uses a discounted cash flow (DCF) model as well as a comparison to peer company multiples to estimate the current fair value of its reporting units when testing for impairment because management believes these methods are the best indicators of such fair value. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including markets and market share, sales volumes and prices, costs to produce, tax rates, capital spending, discount rate, and working capital changes. If the estimated fair value of a reporting unit is less than the carrying value, additional analysis would be required. The additional analysis would compare the carrying amount of the reporting unit's goodwill with the implied fair value of that goodwill. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of that unit as if the reporting unit was acquired in a business combination and the fair value of the reporting unit represented the purchase price. If the current value of goodwill exceeds its implied fair value, an impairment loss equal to the excess would be recognized, which could significantly and adversely impact reported results of operations and shareholders' equity.

The Company accounts for business combinations under the acquisition accounting method. The Company allocates the purchase price of acquisitions to identified tangible and intangible assets acquired and liabilities assumed based on their fair values at the acquisition date, with any residual amounts allocated to goodwill. The determination of fair values of assets and liabilities acquired requires the Company to make estimates and use valuation techniques when the market value is not readily available. The transaction costs associated with business combinations are expensed as incurred. Operating results of all acquisitions are included in the consolidated statement of earnings from the date of acquisition.

The carrying amounts reflected in the balance sheet for cash and cash equivalents, receivables and payables approximate, in all material respects, their fair values due to the short-term nature of these items.

Current and non-current marketable securities are recorded at fair market value. When developing fair value measurements, the Company uses quoted market prices when available and when not available, the Company seeks to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company did not choose the fair value option for financial liabilities; therefore, its long-term debt is not reported at fair value. See Note 12 — Fair Value Measurements for additional information.

The Company's primary objectives for holding derivative financial instruments are to manage foreign currency risk and variable interest rate risk. The Company's accounting policies for these instruments are based on whether the instruments are designated as a hedge or non-hedge instrument. The criteria for designating a derivative as a hedge include the instrument's effectiveness in risk reduction and, in most cases, a one-to-one matching of the derivative instrument to its underlying transaction.

All derivatives are recorded at fair value on the balance sheet and changes in the fair value of derivative financial instruments are either recognized in other comprehensive income (a component of shareholders' equity), or net earnings depending on the nature of the underlying exposure, whether the derivative is formally designated as a hedge, and, if designated, the extent to which the hedge is effective. The changes in fair value of the Company's undesignated foreign currency derivatives are marked to market through earnings in foreign currency gains/losses.

The Company classifies the cash flows from settlement of derivatives in the same category as the cash flows from the related hedged items. For undesignated hedges and designated cash flow hedges, this is within the cash provided by operations component of the consolidated statement of cash flows. The cash flows associated with these derivative instruments are periodic interest payments while the swaps are outstanding, which are reflected in net earnings within the cash provided by operations component of the cash flow statement.

Assets and liabilities of foreign operations are translated into U.S. dollars at the period-end rate of exchange. Related revenues and expenses are translated at average monthly exchange rates. Translation adjustments are recorded in accumulated other comprehensive income, a separate component of shareholders' equity. Foreign currency transactions gains and losses are generated from the effect of exchange rate changes on transactions denominated in a currency other than the functional currency of the entity. Gains and losses on foreign currency transactions are generally recognized in the determination of net earnings or loss for the period. The Company records these gains and losses in other (income) expense. Foreign exchange transaction gains (losses) were $0.7 million, $1.3 million and ($4.0) million for the years ended December 31, 2010, December 31, 2009 and December 26, 2008.

The Company accounts for the repurchase of shares by recording the difference between the amount paid for the shares and the amount recorded upon issuance as an adjustment to retained earnings.

Comprehensive income/loss includes net earnings or loss and "other comprehensive income," which includes charges or credits to equity that are not the result of transactions with shareholders. Comprehensive loss within these consolidated financial statements includes cumulative foreign currency translation adjustments, certain gains and losses on derivatives used for hedging forecasted transactions and net periodic benefit cost not yet recognized in earnings.

Basic earnings per share (EPS) is computed based on earnings attributable to ESCO common shareholders and utilizing the weighted average number of shares outstanding during the period. Diluted EPS also considers common stock equivalents, such as stock options, stock-settled stock appreciation rights (SARs) and shares of Class C Preferred Stock allocated to the employee stock ownership plan, to the extent that they are not antidilutive.

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or the services have been rendered, the sales price is fixed or determinable and collection of the related receivable is reasonably assured. Title and risk of loss generally pass to the customer at the time product is transferred to a common carrier.

The Company has licensee agreements under which the Company receives royalty revenue. Royalty revenue is accounted for based on royalty percentages of actual sales by licensees. The Company has an allowance for product returns and cash discounts. These reserves are calculated based on historical returns and cash discounts.

Research and development costs are expensed as incurred. These costs include personnel and project-related expenses related to developing new products and improving existing products or processes. The Company recognized $5.9 million, $5.4 million and $6.5 million of research and development costs classified in selling and administrative expenses in fiscal 2010, 2009 and 2008, respectively.

The Company expenses advertising costs as incurred. Advertising expenses were not material for any of the periods presented.

Shipping and handling expenses incurred for customer sales are often billed to customers, which are included in sales and cost of sales. Amounts not billed to customers are included in selling and administrative expenses and were not material for fiscal 2010, 2009 and 2008.

In the ordinary course of business, the Company warrants its products against defects in design, materials and workmanship over various time periods. A standard one-year warranty from the date of acceptance is provided on most products. The Company evaluates obligations related to product warranties quarterly. Warranty charges are comprised of costs to service the warranty, including labor to repair the product and replacement parts for defective items, as well as other costs incidental to the repairs. The Company estimates average warranty cost per product or part type based on historical experience and records the provision for such charges as an element of cost of goods sold upon recognition of the related revenue. Accrued product warranty is included on the consolidated balance sheets as a component of accrued liabilities. The warranty program as of December 31, 2010, December 31, 2009 and December 26, 2008 was not material to the Company's consolidated financial position, results of operations or cash flows.

Certain leases contain payment escalation clauses which provide stated increases in the payments over the term of the lease. Rent expense is recorded on a straight-line basis over the lease term.

The Company has adopted the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718—Compensation-Stock Compensation (ASC Topic 718). This guidance generally requires that compensation expense be determined based on the grant-date fair value of the share-based compensation awards and that the expense be recognized over the requisite service period of the award. The guidance was effective for the Company's fiscal year 2006, which began on December 31, 2005.

The Company has granted no stock options since the effective date of the guidance; therefore, the Company has continued to apply the intrinsic value method of accounting for options granted before that date. Under the intrinsic value method, compensation expense for employee stock options is not recognized if the exercise price of the option equals or exceeds the fair value of the stock on the date of grant. As a result, no compensation expense has been recorded for options vesting during the reporting periods presented.

The Company classifies its awards of cash-settled stock appreciation rights (SARs) as liabilities. SARs are settled in cash for the difference between fair value of the Company's Class A common stock on the date of grant and its fair value on the date of exercise. The Company uses the Black-Scholes model to estimate the fair value of SAR awards on the date of grant and recognizes expense on a straight-line basis over the requisite service period. At each period end after grant, the related liability balance is adjusted to reflect changes in the Company's stock value and its actual payout liability. Any impact to expense from these period-end adjustments is recognized as incurred for fully vested awards and amortized over the remaining service period for unvested awards.

The Company sponsors an employee stock ownership plan (ESOP) that covers all U.S. employees who meet service requirements. The Company makes annual contributions to the ESOP equal to the ESOP's debt service to the Company less dividends received by the ESOP on unallocated shares. All dividends and contributions received by the ESOP are used to pay debt service. The ESOP shares are pledged as collateral for its debt. As the debt is repaid, shares are released from collateral and allocated to active employees. The Company accounts for its ESOP in accordance with the guidance on stock compensation. Accordingly, the shares pledged as collateral are reported as unearned ESOP shares in the balance sheet. As shares are released from collateral, the Company reports compensation expense equal to the current fair value of the shares.

The Company's income tax provision is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates expected to apply in future years to differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Valuation allowances based on the Company's judgments and estimates are established when necessary to reduce deferred tax assets to the amount expected to be realized based on expected future operating results and available tax alternatives. The Company's estimates are based on facts and circumstances in existence as well as interpretations of tax regulations and laws applied to the facts and circumstances.

The Company has an employee savings plan under the provisions of Section 401(k) of the Internal Revenue Code. The Company also has defined benefit plans in the U.S. and certain non-U.S. jurisdictions. The Company accounts for these plans based on the provisions of ASC Topic 715 — Compensation-Retirement Benefits and accordingly uses actuarial valuations that are based on assumptions, including discount rates, long-term rates of return on plan assets, and rates of change in participant compensation levels. The Company evaluates the funded status of each plan using these assumptions and considers applicable regulatory requirements, tax deductibility, reporting consideration and other relevant factors to determine the appropriate funding level for each period. The discount rate used to calculate the present value of the pension and post-retirement benefit obligations is assessed at least annually. The discount rate represents the rate inherent in the price at which the plans' obligations are intended to be settled at the measurement date.

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable and derivative financial instruments used in hedging activities. A majority of cash and cash equivalents is maintained with

major financial institutions in the United States, Canada and Europe. Balances in these institutions exceeded the regions' respective insurance amounts as of December 31, 2010 and 2009.

Concentration of credit risk with respect to accounts receivable is limited because a large number of geographically diverse customers make up the Company's customer base. The Company controls credit risk through credit approvals, credit limits and monitoring processes.

The Company is also exposed to credit loss in the event of non-performance by counterparties on the derivative financial instruments used in hedging activities. These counterparties are large international financial institutions domiciled in the United States and to date no such counterparty has failed to meet its financial obligations to the Company, and the Company does not anticipate non-performance by these counterparties.

In June 2009, new guidance was issued on the accounting for transfers of financial assets, which is intended to improve the relevance and comparability of information about transfers of financial assets. The Company adopted this guidance as of the beginning of fiscal 2010; it did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In June 2009, new guidance was issued on variable interest entities. This guidance modifies the definition of a primary beneficiary in a variable interest entity. The Company adopted this guidance as of the beginning of its fiscal 2010; it did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In January 2010, new guidance was issued that clarifies existing disclosures and requires new disclosures for fair value measurements. The clarifications relate to the level of disaggregation a company uses for the disclosure and calls for further details in the valuation techniques used to measure fair value for fair value measurements that fall into Level 2 and 3 categories. Disclosure of significant transfers in and out of Levels 2 and 3 and a description of the reason for the transfers are required. The Company adopted this guidance at the beginning of fiscal 2010; it did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In December 2010, new guidance was issued that clarified required disclosures for business combinations. This guidance requires supplemental pro-forma information to disclose revenue and earnings of the combined entities for all periods presented. This guidance is effective for fiscal years beginning after December 15, 2010. The Company will adopt these additional disclosure requirements for all material acquisitions beginning in 2011.

In January 2010, new guidance was issued that requires new disclosures for fair value measurements. In the reconciliation for Level 3 fair value measurements, disclosures should present separately information about purchases, sales, issuances and settlements (gross rather than net amounts). This guidance is effective for reporting periods beginning after December 15, 2010. The Company's adoption of this guidance at the beginning of 2011 did not have a material impact on its consolidated financial position, results of operations or cash flows.

Inventories of $30.8 million and $19.1 million are stated at LIFO cost at December 31, 2010 and 2009, respectively.

During the fiscal year ended December 31, 2009, certain inventory quantities were reduced, resulting in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years. The effects of this decrease are presented in the table below.

During the year ended December 31, 2010 and the fiscal year ended December 26, 2008, there were no LIFO liquidations.

Prepaid expenses and other current assets consisted of the following as of December 31:

Depreciation expense for the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008 was $25.9 million, $24.2 million and $23.3 million, respectively.

The carrying amounts of intangible assets as of December 31, 2010 and 2009 were as follows:

Amortization expense for the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008 was $1.5 million, $0.9 million and $0.9 million, respectively. Of these amounts, $0.7 million, $0.1 million and $0.1 million, respectively, were included in selling and administrative expenses and $0.8 million, $0.8 million and $0.8 million, respectively, were included in cost of goods sold for those years. Estimated amortization expense for the years ending December 31, 2011 through December 31, 2015 is as follows: 2011 — $2.2 million, 2012 — $2.2 million, 2013 — $2.1 million, 2014 — $1.9 million, and 2015 — $1.5 million.

The Company entered into joint ventures to take advantage of strategic business opportunities. As of December 31, 2010 and 2009, the Company was participating in the following joint ventures:

ASC Topic 810 — Consolidation requires companies to evaluate the qualitative nature of joint ventures to determine (1) whether they represent variable interest entities, (2) whether the Company is the primary beneficiary of the joint venture and (3) whether the entities should be consolidated into the Company's financial statements.

A variable interest entity (VIE) is an entity that either (1) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (2) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could be significant to the VIE.

The Company has evaluated its joint ventures and determined that its joint ventures in China and Canada do not meet the criteria of a VIE; however, these joint ventures should be consolidated based on the Company's ability to control the entities' operations. The Company has consolidated the results of these joint ventures into its financial statements as of December 31, 2010 and 2009.

The Company has determined the Elecmetal joint venture did not have sufficient capital to permit the entity to finance its activities without additional financial support from the equity holders and therefore is a VIE. Also, because the Company does not have the power to direct the entity's economic performance or the obligation to absorb losses or the right to receive benefits from the entity that would be significant to that entity, the Company has determined that it is not the primary beneficiary of this VIE. Because the results of the VIE are not consolidated into the Company's consolidated financial statements, the Company uses the equity method to account for the joint venture. Under the equity method, a proportionate share of the net earnings or loss of the joint venture is recognized in the Company's consolidated statement of earnings. For the years ended December 31, 2010 and 2009, these amounts were insignificant.

The Company's maximum exposure to loss from the VIE of which it is not the primary beneficiary at December 31 is presented below.

Assets held for sale were $1.1 million and $2.7 million at December 31, 2010 and 2009, respectively. These amounts represent the land and building of the Company's Saskatoon, Saskatchewan facility, which was closed in May 2009 as part of the Company's restructuring activity ($1.0 million and $2.6 million at December 31, 2010 and 2009, respectively), and three apartments in Taiyuan, China ($0.1 million at December 31, 2010 and 2009). See Note 29 — Restructuring. All assets classified as held for sale are in the EPG segment. These assets are listed for sale and the Company expects to receive net proceeds approximately equal to the carrying value.

The Company applied the guidance in ASC Topic 820—Fair Value Measurements and Disclosures (ASC Topic 820) which defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the

measurement date. This guidance also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, which requires the reporting entity to develop its own assumptions.

The following table presents the Company's financial assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2010.

The Company's Level 3 assets (assets held for sale with a carrying value of $1.3 million) were written down to their fair value of $1.2 million (less $0.1 million in selling costs) resulting in a loss of

$0.2 million, which was included in selling and administrative expenses for the year ended December 31, 2010.

The Company's Level 3 assets (assets held for sale with a carrying value of $3.1 million) were written down to their fair value of $2.8 million (less $0.1 million in selling costs) resulting in a loss of $0.4 million, which was included in selling and administrative expenses for the year ended December 31, 2009.

The Company's assessment of the significance of an input to the fair value measurement requires judgment and involves consideration of factors specific to the asset or liability. The Company's financial assets and liabilities are classified in their entirety based on the most significant level of input into the fair value measurement. Marketable securities are valued based on the net asset value from active to less active markets and the reliability of available financial information. The fair value for foreign currency forward contracts and utilities futures contracts is determined using observable market inputs. Fair values of assets held for sale are derived internally and are based on observed sales transactions and are adjusted for estimated selling costs. Assets

held for sale are written down to fair value and are not subsequently adjusted to fair value unless further impairment occurs.

The Company did not choose the fair value option for financial liabilities; therefore, its long-term debt is not reported at fair value. There were no transfers between Level 1, Level 2 and Level 3 categories during 2010 and 2009.

At December 31, 2009, the Company had a secured $110.0 million U.S.-based line of credit and a $5.5 million foreign-based line of credit, none of which was drawn down. At December 31, 2009, the interest rate on the U.S.-based line of credit (set at LIBOR) was 3.3% per annum, and the line of credit was reduced by the collateral base to $51.7 million. The fixed interest rate on the foreign-based line of credit was 11.9%. The weighted-average interest rate on short-term borrowings in 2009 was 11.1%.

At December 31, 2009, the Company had $200.0 million principal amount of 8.625% secured senior notes and $100.0 million principal amount of floating rate senior notes outstanding. The Company issued these notes in 2006 in a private transaction. The interest rate on the floating rate notes was reset quarterly equal to LIBOR plus 3.875%. At December 31, 2009, the interest rate on the floating rate notes was 4.129%. At December 31, 2009, the carrying value of these notes was $300.0 million and the fair value was $283.0 million, based on the most recently quoted market prices in the PORTAL Alliance.

In November 2010, the Company terminated its U.S.-based line of credit agreement and recorded a $0.4 million loss on early extinguishment of debt for the remaining unamortized loan costs. The Company entered into a $550.0 million Senior Secured Syndicated Credit Facility, which consists of a five-year $200.0 million term loan and a $350.0 million line of credit. The term loan and line of credit have a floating LIBOR interest rate that is set quarterly based upon a consolidated net leverage ratio matrix. The Company's credit risk spread ranges from 1.75% to 2.50% depending on the consolidated net leverage ratio matrix. In 2010, the Company capitalized $5.1 million in loan

costs related to its debt restructuring. Deferred loan costs are amortized on a straight-line basis over the term of the loan, which approximates the effective interest rate method. The debt balance recorded on the Company's balance sheet as of December 31, 2010 represents fair value.

On December 17, 2010, the Company called its senior notes. The Company paid a premium of $8.6 million related to the early extinguishment and also recorded a $4.0 million loss for the remaining unamortized loan costs related to the notes. These amounts were recorded in loss on early extinguishment of debt in the consolidated statement of earnings for the year ended December 31, 2010.

At December 31, 2010, the Company had total authorized lines of credit in the amount of $359.0 million. At December 31, 2010, the interest rate on the U.S.-based line of credit, which had $350.0 million authorized of which $65.0 million drawn down and outstanding, was 2.51% (credit risk spread of 2.25% plus LIBOR of .26%) and the interest rate on the foreign-based line of credit, which had $9.0 million authorized of which $2.1 million drawn down and outstanding, was 15.03%. During the second quarter of 2010, the authorized amount of the foreign-based line of credit was increased by $4.0 million. The weighted average interest rate on short-term borrowings in 2010 was 4.46%.

The Company enters into derivative financial instruments in order to manage foreign currency risk and variable interest rate risk.

The Company hedges material non-functional currency monetary asset and liability balances. The gains and losses from foreign exchange contracts are recognized at the end of each fiscal period in the Company's results of operations. Such gains and losses are typically offset by the corresponding changes to the related underlying hedged item. Cash flows from derivative financial instruments are classified in the same category as the cash flows from the items being hedged.

In December 2010, the Company entered into interest rate swaps to manage a portion of its exposure to changes in LIBOR-based interest rates on the Company's variable rate debt, effectively fixing the interest payments on $200.0 million of the Company's term loan. All of the swaps in place at December 31, 2010 have been designated as cash flow hedges of LIBOR-based interest payments. Accordingly, the change in fair value was included in accumulated other comprehensive loss as of December 31, 2010.

The net losses on interest rate swaps included in accumulated other comprehensive loss were $0.6 million for the year ended December 31, 2010. The accumulated other comprehensive loss, net of tax benefit, related to interest rate swaps was $0.4 million at December 31, 2010. For derivatives that are designated in a cash flow hedging relationship, the effective portion of the change in fair value of the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same classification as the earnings effect of the hedged transaction. There were no amounts of gain (loss) reclassified from accumulated other comprehensive income into income for the year ended December 31, 2010. The Company had no interest rate swaps in effect during the fiscal years ended December 31, 2009 and December 26, 2008.

The pre-tax fair value of the Company's interest rate swaps and foreign currency forward contracts and the accounts in the consolidated balance sheets in which the gross amounts are included as of December 31, 2010 and December 31, 2009 were as follows:

The amount of gain (loss) recognized in other income (expense) on foreign currency forward contracts during the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008 was $0.3 million, $(0.1) million and $(2.5) million, respectively.

Income before income taxes for the fiscal years ended December 31, 2010, December 31, 2009, and December 26, 2008 was:

Income tax expense from continuing operations consisted of the following for the fiscal years ended December 31, 2010, December 31, 2009, and December 26, 2008:

The deferred tax assets (liabilities) were comprised of the following as of December 31:

(in thousands)			2010			2009

Deferred tax assets
	Deferred compensation		$	16,583		$	11,874
	Warranty reserves			1,070			718
	Employee benefits			11,616			13,893
	Tax credits			27,803			26,008
	Net operating losses			4,141			1,695
	Reserves and accrued liabilities			14,400			11,970

		Total deferred tax assets		75,613			66,158
	Valuation allowance			(3,461	)		(1,695	)

		Total deferred tax assets after valuation allowance		72,152			64,463
Deferred tax liabilities
	Depreciation			(8,646	)		(8,694	)

		Total deferred tax liability		(8,646	)		(8,694	)

Net deferred tax asset			$	63,506		$	55,769

As of December 31, 2010, the Company had approximately $27.8 million of tax credit carryforwards for federal income tax purposes. These credits primarily consist of foreign tax credits of $16.7 million that will expire beginning in 2017 if not used and alternative minimum tax credits of $10.3 million that have an indefinite carryforward.

Deferred tax assets as of December 31, 2010 and December 31, 2009 were reduced by a valuation allowance related to tax benefits of certain subsidiaries with operating losses where it is more likely than not that the deferred tax asset will not be recognized. The net change in the valuation allowance was an increase of $1.8 million for the year ended December 31, 2010, which consisted of a decrease of approximately $0.2 million reflected in the tax rate and an increase of $2.0 million recorded as a portion of purchase price accounting. Increases of $0.3 million and $0.2 million were recorded for the fiscal years ended December 31, 2009 and December 26, 2008, respectively, which affected the tax rate.

As of December 31, 2010, the cumulative unremitted earnings of the Company's foreign subsidiaries were approximately $114.0 million. The Company has concluded that predominantly all of these unremitted earnings have been and will be indefinitely reinvested in its foreign operations and, therefore, the recording of deferred tax liabilities for these unremitted earnings is not required. It is impracticable to determine the total amount of unrecognized deferred taxes with respect to these permanently reinvested earnings; however, foreign tax credits would be available to partially reduce U.S. income taxes in the event of a distribution.

The Company and its subsidiaries file federal U.S., state and foreign income tax returns. With a few minor exceptions, the Company is no longer subject to income tax examinations by tax authorities for tax years prior to 2006. All U.S. tax years prior to 2009 have been audited by the U.S. Internal Revenue Service or are closed by statute except 2007. Various state and foreign jurisdictions are examining the Company's tax returns for various years through 2009. The Company is not aware of any material adjustments that could arise from these examinations.

The Company completed a Canadian federal tax audit and related administrative review for the tax years prior to 2006. Issues related to provincial allocation and reassessments resulting from the conclusion of the federal audit are still outstanding; however, the Company does not anticipate any material adjustments.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is shown below as of December 31, 2010, December 31, 2009 and December 26, 2008.

During 2010, the Company decreased its reserve related to state and local taxes. This overall net decrease in the reserve for state and local taxes resulted from decreases related to the expiration of statutes and settlements offset by increases related to new positions. The Company's policy is to accrue interest and penalties related to potential underpayment of income and withholding taxes within the provision for income taxes. In fiscal year 2010, there was $0.1 million reduction of amounts accrued in the income tax provision for interest and penalties. The liability for accrued interest and penalties as of December 31, 2010, December 31, 2009 and December 26, 2008 was $0.5 million, $0.6 million and $0.3 million, respectively. Interest and penalties are computed on the difference between the Company's uncertain tax benefit positions and the amount provided on the Company's tax returns.

The Company has various pension and other post-retirement plans, including defined benefit and defined contribution plans that cover most employees worldwide.

The defined benefit pension plans for most salaried employees provide pension benefits that are based on years of service and the average of the employee's earnings as defined. Plans for hourly employees generally provide benefits of stated amounts based on years of service. The Company's funding policy is to make contributions necessary to maintain funding of the plans during the participants' working lifetimes.

The Company's defined benefit post-retirement plan provides medical coverage for certain employees. The Company does not fund retiree health care benefits in advance, and it has the right to modify this plan in the future. For employees retiring before 1993, the Company's contribution toward the cost of coverage will increase to reflect plan experience, but will not increase more than 5% per year. For employees retiring after 1992, the Company's contribution is fixed in the year of retirement and does not change over the life of the participant. The amount of employer contribution, however, depends on the year of retirement. For retirements in 2000 and after, there is no employer contribution toward the program.

The Company froze its U.S. defined benefit pension plan effective December 31, 2008. The freeze was communicated to all employees in the fourth quarter of 2008. As a result of the freeze, the Company incurred costs related to termination benefits in 2008.

The difference between the plans' funded status and the balance sheet position is recognized, net of tax, as a component of Accumulated Other Comprehensive Income as of the measurement date.

New accounting guidance was effective for the Company's fiscal year ended December 26, 2008 that requires measurement of plan assets and benefit obligations as of the date of an employer's fiscal year-end. The Company previously had used a measurement date of September 30. The net periodic benefit cost for the fiscal year ended December 26, 2008 was prepared using the simplified 15-month transition option. The following table reflects the impact of the adoption of this change in measurement date.

The U.S. pension plans and the Supplemental Executive Retirement Plan were frozen effective December 31, 2008, and a transition benefit was added for certain participants under the U.S. pension plans. The transition benefit is prospective and did not increase the December 31, 2008 projected benefit obligation. The curtailment resulted in a curtailment gain of $12.5 million for the fiscal year ended December 26, 2008.

The following table is a summary of the curtailment accounting as of December 26, 2008.

The Post-retirement Benefit Plan reflects a curtailment event which resulted from a plan amendment that eliminates life insurance coverage for future retirees. The plan amendment resulted

in a decrease to the December 31, 2009 accumulated post-retirement benefit obligation of $0.3 million. This also resulted in a curtailment gain of $0.3 million for the fiscal year ended December 31, 2009.

The following table is a summary of the curtailment accounting as of December 31, 2009.

(in thousands)		Immediately before Amendment			Effect of Amendment		Immediately after Amendment			Effect of Curtailment			Immediately after Curtailment

Assets and obligations
	Projected benefit obligation	$	(1,518	)	$	288	$	(1,230	)	$	—		$	(1,230	)
	Fair value of plan assets		—			—		—			—			—

	Funded status — net amount recognized	$	(1,518	)	$	288	$	(1,230	)	$	—		$	(1,230	)

Reconciliation of net amount recognized
	Unrecognized prior service credit (cost)	$	298		$	288	$	586		$	(292	)	$	294
	Unrecognized net gain (loss)		(340	)		—		(340	)		—			(340	)

	Amounts recognized in accumulated other comprehensive income (loss)		(42	)		288		246			(292	)		(46	)
	Accumulated contributions less net periodic benefit cost		(1,476	)		—		(1,476	)		292			(1,184	)

	Net amount recognized in statement of financial position	$	(1,518	)	$	288	$	(1,230	)	$	—		$	(1,230	)

The following tables provide information on the status of the plans as of December 31.

		Pension Benefits						Other Benefits

(in thousands)		2010			2009			2010			2009
Change in benefit obligation
	Benefit obligation — beginning of year	$	179,853		$	157,936		$	16,373		$	15,616
	Service cost		3,078			1,817			—			12
	Interest cost		10,854			10,205			964			963
	Employee contributions		300			262			—			—
	Foreign exchange rate changes		2,566			5,976			—			—
	Plan amendments and curtailments		398			—			—			(288	)
	Actuarial (gain) loss		7,721			11,828			286			435
	Benefits paid		(8,936	)		(8,171	)		(381	)		(365	)

Benefit obligation — end of year		$	195,834		$	179,853		$	17,242		$	16,373

Change in plan assets
	Fair value of plan assets — beginning of year	$	142,115		$	125,209		$	—		$	—
	Actual return on plan assets		16,009			17,377			—			—
	Foreign exchange rate changes		2,402			5,421			—			—
	Contributions		10,021			2,279			381			365
	Benefits paid		(8,936	)		(8,171	)		(381	)		(365	)

Fair value of plan assets — end of year		$	161,611		$	142,115		$	—		$	—

Funded status		$	(34,223	)	$	(37,738	)	$	(17,242	)	$	(16,373	)

Amounts recognized in the consolidated balance sheets consist of:
	Current liabilities	$	—		$	—		$	(724	)	$	(569	)
	Non-current liabilities		(34,223	)		(37,738	)		(16,518	)		(15,804	)

Net amount recognized		$	(34,223	)	$	(37,738	)	$	(17,242	)	$	(16,373	)

The following table represents amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income at December 31.

The accumulated benefit obligations for the plans at December 31, 2010, and 2009, were as follows.

The weighted-average assumptions used to determine benefit obligation at December 31, 2010 and 2009 were as follows.

The weighted-average assumptions used to determine net periodic cost for fiscal years ending December 31, 2010, December 31, 2009 and December 26, 2008 were as follows.

The discount rate is based on settling the pension obligation with high-grade, high-yield corporate bonds, and the rate of compensation increase is based on actual experience and future expectations. The expected return on plan assets is based on historical performance as well as expected future rates of return on plan assets considering the current investment portfolio and investment strategy.

The Company used the following health care cost inflation rate assumptions in measuring the accumulated post-retirement benefit obligations as of December 31, 2010, December 31, 2009 and December 26, 2008:

A one percentage-point increase in assumed health care cost trend rates would have a minimal impact on total service and interest cost components as well as the post-retirement benefit obligation. A one percentage-point decrease in assumed health care cost trend rates would have a minimal impact on total service and interest cost components as well as the post-retirement benefit obligation.

The plans have been designed and adopted by the Company and certain of its affiliates as plan sponsor to provide qualifying employees with a meaningful foundation of retirement income. Benefits are defined by the plan terms with reference to employment-related factors including length of service. Employer contributions fund benefits and pay plan expenses.

The primary objectives for investment of plan funds are to preserve and to grow the assets as the foundation for the long-term payment of benefits the plan is designed to provide. The objectives include achieving consistency of investment returns through both capital appreciation and current income. Diversification is intended to reduce the risk of large losses and to enhance opportunities for appropriate appreciation along with current income. Appropriate liquidity is designed to meet the plan's foreseeable benefit payment and administrative obligations.

The Company's overall investment strategy is to achieve a mix of approximately 70% of investments for long-term growth and 30% for near-term benefit payments, with wide diversification of asset types, fund strategies, and fund managers. The target allocations for plan assets are 36% equity securities, 57% fixed income securities, and 7% to all other types of investments. Equity securities include investments in large-cap and small-cap companies located in the U.S. and internationally. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities, and U.S. treasuries. Other types of investments include investments in private real estate funds and absolute return funds that follow several different strategies.

Public equity securities made directly through separate account structures are valued based upon closing prices reported in active trading markets and are classified as Level 1. Equity securities made indirectly via liquid pooled funds are valued at the net asset value ("NAV") of the fund and are classified as Level 2.

Fixed income securities made directly through separate account structures are valued based upon closing prices reported in the active trading markets and are classified as Level 1.

International balanced investments made directly through separate account structures are valued based upon closing prices reported in the active trading markets and are classified as Level 1.

Investments in real estate funds are valued at the NAV of the fund. Investments are classified as Level 3 due to a 90 day restriction on liquidity and the valuation of the investments are based on internal factors.

Absolute return strategies are investments with managers who seek specified levels of absolute returns with minimal correlation to market movements. Investments are typically made in limited partnerships and are valued at the NAV of the fund. Investments are classified as Level 3 due to a 90 day restriction on liquidity.

The following table provides information on the fair value measurements of the plan assets as of December 31, 2010.

(in thousands)		Total		Quoted prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Cash and cash equivalents		$	735	$	735	$	—	$	—
Equity securities:
	Domestic small cap(a)		5,712		—		5,712		—
	Domestic large cap(b)		28,247		11,792		16,455		—
	International equity(c)		21,243		9,810		11,433		—
Fixed income securities:
	Long duration fixed income(d)		56,193		56,193		—		—
Other types of investments:
	International balanced(e)		33,830		33,830		—		—
	Real estate(f)		5,635		—		—		5,635
	Absolute return(g)		10,016		—		—		10,016

Total		$	161,611	$	112,360	$	33,600	$	15,651

The following table provides information on the fair value measurements of the plan assets as of December 31, 2009.

(in thousands)		Total		Quoted prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Cash and cash equivalents		$	643	$	643	$	—	$	—
Equity securities:
	Domestic small cap(a)		4,229		—		4,229		—
	Domestic large cap(b)		29,355		14,800		14,555		—
	International equity(c)		33,291		21,402		11,889		—
Fixed income securities:
	Long duration fixed income(d)		59,967		59,967		—		—
Other types of investments:
	Real estate(e)		5,130		—		—		5,130
	Absolute return(f)		9,500		—		499		9,001

Total		$	142,115	$	96,812	$	31,172	$	14,131

		Changes in Fair Value Measurements of Level 3 Plan Assets

(in thousands)		Real Estate			Absolute Return		Total
Beginning balance, December 26, 2008		$	8,095		$	4,783	$	12,878
	Realized (losses)		(134	)		—		(134	)
	Unrealized gains (losses) relating to instruments still held in the reporting period		(1,967	)		716		(1,251	)
	Purchases, sales, issuances and settlements (net)		(864	)		3,502		2,638

Ending balance, December 31, 2009			5,130			9,001		14,131

	Realized (losses)		(60	)		—		(60	)
	Unrealized gains relating to instruments still held in the reporting period		509			515		1,024
	Purchases, sales, issuances and settlements (net)		56			500		556

Ending balance, December 31, 2010		$	5,635		$	10,016	$	15,651

The Company expects to contribute $14.1 million to its pension plans in 2011. Cash contributions in subsequent years will depend on a number of factors, including performance of plan assets and legislative changes.

Administrative expenses of the plans were $1.0 million, $0.8 million, and $1.0 million in 2010, 2009, and 2008, respectively. Future benefit payments expected to be paid to participants for years ending December 31 are shown below:

The Company has 12 defined contribution retirement savings plans (Savings Plans) which provide for pension, disability and death benefits. Eligible employees are permitted to defer a portion of their compensation up to a maximum amount. The Company may match, at its discretion, a portion of each employee's contribution, subject to the Savings Plans' limitations. In addition, the Company may make annual discretionary contributions to the Savings Plans approved by the Board of Directors. The Company contributed $6.1 million, $5.9 million, and $2.6 million to the Savings Plans in 2010, 2009, and 2008, respectively.

In 2009, the Company began providing a 401(k) restoration and/or an ESOP restoration plan to selected participants. Both plans are non-qualified benefit plans. The Company recorded

expense of $0.2 million and $0.2 million for the 401(k) plan and $0.2 million and $0.5 million for the ESOP plan in 2010 and 2009, respectively.

Long-term investments at December 31, 2010 and 2009 were $30.7 million and $27.5 million, respectively. These investments included assets held by the Company to fund its non-qualified benefit plans (Supplemental Employee Retirement Plan and defined compensation plans). The Company funds its plans through insurance policies which are in turn funded by equity and fixed income mutual funds. The Company recognized unrealized gains/losses related to these investments for the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008 of $1.5 million, $2.4 million, and $(4.9) million, respectively, in selling and administrative expenses. The associated liability included in accrued pension and other retirement costs was $23.8 million and $21.3 million as of December 31, 2010 and 2009, respectively.

The Company has operating leases that contain renewal options. Minimum rental commitments on non-cancellable operating leases for years ending December 31 are shown below:

The Company's rent expense in 2010, 2009, and 2008, was $7.3 million, $6.3 million, and $5.9 million, respectively. The Company also has capital lease obligations related to computer equipment, vehicles and equipment that are not material to these consolidated financial statements.

The Company has a contingent liability for letters of credit outstanding in the amount of $13.0 million at December 31, 2010 and $6.5 million at December 31, 2009. These letters of credit primarily relate to the guarantee of a loan to the Company's Chilean joint venture and letters of credit required for various state workers' compensation programs.

On July 13, 2007, the Company entered into a 50/50 joint venture with its Chilean licensee, Compañía Electro Metalurgica S.A. (Elecmetal), to build an EPG foundry in Chile. The foundry's construction was delayed during the 2009 economic downturn; however, construction resumed during 2010 and the foundry is expected to be operational in 2012. As a result of the delay, the increased demand for construction resources in Chile and new building codes following the Chilean

earthquake, the foundry's construction costs have increased an estimated 40% from the 2007 start of the project. Construction of the foundry is estimated to cost approximately $76 million, $48 million of which will be funded equally by the Company and its joint venture partner ($24 million each). The remaining balance will be financed by a construction loan that will convert to a seven-year term loan upon completion of the foundry. The loan is secured by property, equipment and standby letters of credit in the amounts of $7.6 million from each partner at December 31, 2010. The Company has funded $8.8 million through December 31, 2010 and will fund the remaining $15.2 million of the estimated costs in 2011.

The Company is subject to claims and litigation arising in the ordinary course of business, including those relating to exposure to hazardous materials, and regularly asserts its patent rights against parties that may be infringing those rights. Although the Company cannot predict the final outcome of pending legal proceedings with certainty, it does not expect the ultimate disposition of these matters to have a material adverse effect on its financial position, results of operations or cash flows.

In March 2008, the Company began an arbitration proceeding against its Australian licensee, Bradken Resources Pty Ltd. In the arbitration, the Company sought a declaration of its rights and obligations under its 1999 agreement, as amended, with Bradken, under which the Company granted Bradken the exclusive right to distribute and manufacture some of its products in Australia, New Zealand and Papua New Guinea. In the arbitration, the Company sought to resolve disputes regarding (i) whether Bradken was obliged to use the Company's trademarks in connection with the manufacture and sale of the Company's products, (ii) whether Bradken could use customer field trials to promote its competing products, (iii) whether the agreement's prohibition on Bradken selling products similar to or in competition with the Company's products was enforceable and (iv) whether the agreement's prohibition on Bradken using the Company's know-how, product designs and special alloys for a three-year period following termination of its agreement with Bradken was enforceable. In addition, the Company sought termination of the agreement prior to its scheduled expiration on June 30, 2011. Bradken filed counterclaims against the Company alleging, among other things, that the Company had (i) violated U.S. antitrust laws, (ii) breached the agreement with Bradken and (iii) misused certain patent rights, and seeking a damage award.

On June 17, 2010, an International Chamber of Commerce arbitrator issued a final award in the Company's favor on all issues presented to the arbitrator with the exception of the Company's request that the agreement be terminated before June 30, 2011. Bradken was awarded no damages. The arbitrator affirmed our contract positions, including that Bradken must continue to apply the Company's trademarks as the Company directed during the term of the license, Bradken cannot sell parts that compete with the Company's licensed products anywhere in the world during the term of the license, and Bradken cannot use the Company's know-how or alloys nor make any of the Company's patented or non-patented products for a period of three years after the end of the license. Finally, the arbitrator awarded the Company its share of the ICC administrative expenses, and arbitrator's remuneration and substantially all of the Company's legal expenses. In the proceeding the Company began in United States District Court to confirm the final award and

secure a judgment to collect the amount awarded to us, Bradken has challenged the award of legal expenses.

The Company received a questionnaire dated January 18, 2008 from the Environmental Protection Agency (EPA) regarding historical operational practices in connection with the Portland Harbor Superfund site. The EPA also named the Company as one of more than 100 businesses that are potentially responsible parties for this site in a letter dated March 12, 2010. Consequently, the Company may be responsible for clean-up or other costs related to the site under the Comprehensive Environmental Response, Compensation, and Liability Act, also known as CERCLA or the Superfund law. The current aggregate clean-up costs to be allocated among responsible parties is estimated to be approximately $1.0 billion. The Company has entered into a participation agreement with a group of named potentially responsible parties and other companies under which the Company admits to no liability. The agreement provides a framework to determine how to allocate cleanup costs among the parties to the agreement if the EPA finds them responsible. The inability of a party to pay its portion of assessed costs may result in increased costs to other parties. The Company is also participating in a process with other potentially responsible parties to quantify and potentially allocate natural resource damages claims with respect to the site. The Company cannot predict its ultimate liability with respect to the Portland Harbor Superfund site at this time, but it could be substantial if the EPA determines that the Company is a responsible party for this site.

Certain employee and director holders of Class A common stock are party to Restated Stock Transfer Restriction Agreements (RSTRA) or a Stock Purchase Agreement (SPA) and have the right to sell back shares to the Company upon death or retirement (for employees), subject to restrictions contained within credit facilities and relevant state laws, as applicable. In addition, the RSTRA also gives a shareholder the right to require the Company to purchase the shares upon disability and the SPA requires the Company to repurchase shares upon the termination of the shareholder's employment. The price for any shares purchased by the Company is (1) if purchased under the RSTRA, the fair value of the shares as of the last day of the fiscal quarter immediately preceding the quarter in which the death, disability or retirement occurs or (2) if purchased under the SPA, an amount based on an adjusted book value calculation.

Put options under the RSTRA may be exercised by written notice to the Company within 90 days of the date of the death, disability or retirement. The price for any shares purchased by the Company is the fair value of the shares as of the last day of the fiscal quarter immediately preceding the quarter in which the death, disability or retirement (Triggering Event) occurs or in which the applicable anniversary of the Triggering Event occurs. Accordingly, the Company classifies shares subject to the RSTRA as contingently redeemable equity securities and revalues them each quarter. Put options may be exercised by written notice to the Company in specified periods. Notice must be given to the Company within 90 days of the Triggering Event and the purchase must be completed between 45 and 60 days after the end of the 90-day notice period.

Since 2009, upon retirement or disability, each shareholder with a RSTRA has had a right to sell to the Company a portion or all shares held by that shareholder in three installments over a two-year period. Upon retirement or disability, the shareholder may exercise a put option for up to 1/3 of the shares held by the shareholder as of retirement or disability. On the first anniversary of the retirement or disability, the shareholder may exercise a put option for between 1/3 and 2/3 of the shares held by the shareholder as of retirement or disability. On the second anniversary of the date of the retirement or disability, shareholder may exercise a put option for any remaining shares. For put option exercises by a shareholder with an aggregate purchase price not exceeding $1 million, the Company must pay the total purchase price on the exercise closing date. For put option exercises by a shareholder with an aggregate purchase price exceeding $1 million, the Company may pay $1 million on the closing date for the exercise of the put option and 1/2 of the remaining amount on each of the first and second anniversaries of the Triggering Event.

Since 2009, upon the death of a shareholder, the shareholder's successor may exercise the put option for up to 1/2 of the shares held by the shareholder on the date of death. On the first anniversary of that date, the shareholder's successor may exercise the put option for any remaining shares. For put option exercises within one year for more than 1/2 of the shares subject to the option as of the date of death, the Company may pay the repurchase price in two equal annual installments, with the first installment payable on the exercise closing date and the remaining amount payable on the first anniversary of that date. For put option exercises with respect to up to 1/2 of the shares held by a shareholder as of the date of death, the Company must pay the total purchase price at the applicable closing date.

Shares subject to the Stock Purchase Agreement (SPA) may only be sold or transferred in accordance with the SPA. Each shareholder subject to the SPA must sell his or her shares back to us upon death or termination of employment or service as a director. Unless otherwise agreed, the Company must repurchase the shares within 30 days of the date of death or separation from service.

The authorized number of shares of Class C preferred stock is 205,000. The ESOP owns all of the Class C preferred stock. The Class C preferred stock is nonvoting, except for certain protective voting rights and except where required by law. Each share of the Class C preferred stock is convertible into one share of Class A common stock at the discretion of the holder of the Class C preferred stock. The Class C preferred stock will automatically convert into Class A common stock when the ESOP has fully repaid its loan to the Company or upon an initial public offering of the Company's stock. See Note 22 — ESOP.

All holders of Class C preferred stock have the right to sell back shares to the Company upon death, disability or separation (for employees) pursuant to a distribution schedule that is determined by the reason for separation and the value of shares in an account. The price for any shares purchased by the Company is the fair value of the shares as of the last day of the fiscal quarter immediately preceding the quarter in which the shares are repurchased. Accordingly, the Company classifies shares as contingently redeemable equity securities and revalues them each quarter. The repurchase obligation terminates upon an initial public offering of the Company's stock when the

Class C preferred stock converts to publicly tradable stock. At that time, the Class C preferred stock will be included in shareholders' equity.

To determine the fair value of the Class A common stock and the Class C preferred stock, the Company values the enterprise at the arithmetic average of the values derived through a guideline company method and a discounted cash flow method. The Company selects public companies comparable to the Company in respect to investment risk and return perspective and derives an estimated enterprise value after making adjustments for size, growth, profitability, global structure and risk considerations. Under the discounted cash flow method, assumptions included a weighted average cost of capital of 12.5% based on required return on equity of 17.1% (70% weight), a cost of debt after tax of 2% (30% weight) and a termination value after the sixth year assuming an exit EBITDA multiple of 7.0x, based on observations of pricing multiples from the guideline company method, discounted to present value.

In fiscal periods 2008, 2009 and through the third quarter of fiscal 2010, the Company determined the fair value of its Class C preferred stock using the Current Method. This method allocates the enterprise value to the Class A common stock and Class C preferred stock based on their conversion values, which differ between these two classes of stock primarily due to the value of the future dividend streams of the Class C preferred stock attributed to such class. Furthermore, the Company included a discount for lack of marketability of 5% in valuing the Class C preferred stock, but applies no discount in valuing the Class A common stock. At December 31, 2010 and for the quarter then ended, the Company changed its valuation method to a Black-Scholes option pricing model because this method was more appropriate given the increased likelihood of completing an initial public offering. The option pricing model of allocating enterprise value among common stock and preferred stock treats each class of stock as a call option on all or part of the enterprise's value. The Black-Scholes model uses the enterprise value derived as described above and made assumptions for volatility (20%), expected life (.75 years) and risk-free interest rate (.29%).

Applying the Black-Scholes model at December 31, 2010 and the Current Method at December 31, 2009, the value of the Class C preferred stock was $891.65 and $717.70 per share and the value of the Class A common stock was $688.20 and $438.56 per share, respectively.

Reclassification of Contingently Redeemable Equity Securities as Shareholders' Equity

When the Company's repurchase obligation terminates, which will occur upon the conversion of the subject class of stock into publicly tradable securities, the subject stock is reclassified as shareholders' equity. This will occur, with respect to the Class C preferred stock, when the Company completes an underwritten public offering and, with respect to the Class A common stock, (1) immediately prior to the sale of those shares in the offering, (2) with respect to 1/2 of any remaining shares, 180 days after the completion of the offering, and (3) with respect to the remaining shares, 360 days after the completion of the offering.

The Company's share-based compensation awards include options and cash-settled stock appreciation rights (SARs). The Company also sponsors an employee stock ownership plan (ESOP) that is discussed in more detail in Note 22 — ESOP.

As of December 31, 2010, the Company had 2000 and 2010 Stock Incentive Plans (the "Plans") under which there were 175,000 and 162,500 shares of common stock reserved for issuance, respectively. The Plans were adopted by the Board of Directors and approved by the shareholders and provide for the grant of incentive options, non-qualified options and other stock-based compensation grants. The 2000 Stock Incentive Plan expired in 2010 and all remaining shares available rolled into the 2010 plan. At December 31, 2010, there were 180,336 shares available for grant in the 2010 Stock Incentive Plan and no shares available for grant in the 2000 Stock Incentive Plan. As of December 31, 2010, all outstanding options were granted under the 2000 Stock Incentive Plan and no options had been granted under the 2010 Stock Incentive Plan. Unless terminated earlier, the 2010 Incentive Award Plan will continue in effect until all shares available for issuance under the plan have been issued and all restrictions on the shares have lapsed.

Effective December 31, 2005, the Company adopted the fair value method of recognizing expense for stock based compensation prescribed by ASC Topic 718. The Company applied the modified prospective approach to adoption in which expense is recognized prospectively for previously granted but unvested options and new option grants. Under this transition method, options granted prior to adoption continue to be reported under the intrinsic value method of expense recognition, under which compensation expense for employee stock options was not recognized if the exercise price of the option equaled or exceeded the fair value of the stock on the date of grant. Because the Company has granted no stock options since adoption of this method, no compensation expense has been recorded for options vesting during the reporting periods presented.

A summary of option activity for the year ended December 31, 2010 is presented below.

During 2010, 3,595 options became exercisable and, as of December 31, 2010, all outstanding options were fully exercisable. The intrinsic value of options exercised during 2010 was

$10.6 million. As of December 31, 2010, the aggregate intrinsic value of outstanding options was $12.7 million and the weighted average remaining contractual term was 4.3 years.

During the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008, the Company granted no options. There was no share-based compensation expense recognized or capitalized for stock options in fiscal years 2010, 2009 and 2008. Cash received for option exercises during 2010 was $0.9 million.

The Plans also permit stock appreciation rights (SARs) to be granted to employees and directors. The Company's SARs vest at the end of a three-year period and expire no more than ten years after the grant date. SARs are settled in cash for the difference between the exercise price (which reflects fair value of the Company's Class A common stock on the date of the grant) and the fair value of such stock upon exercise. As a result, SARs are recorded in the Company's consolidated balance sheet as a liability until exercise.

A summary of SARs activity for the fiscal year ended December 31, 2010 is presented below.

The Black-Scholes option pricing model is utilized to determine the fair value of SARs granted for disclosure purposes. The following weighted average assumptions were used in calculating the fair value during the periods presented:

Information pertaining to SARs awards for the fiscal years ended December 31, 2010, December 31, 2009, and December 26, 2008 is presented below:

At December 31, 2010, the aggregate intrinsic value of exercisable awards was $2.3 million and the weighted average remaining contractual term was 7.0 years. At December 31, 2010, the Company had $3.5 million of unrecognized SARs-related compensation expense yet to recognize for unvested awards, net of immaterial estimated forfeitures. This expense is expected to be recognized over a weighted-average period of two years. The impact of any change in the payout liability for vested awards will be recognized as incurred.

Total SARs compensation expense recognized in fiscal years ended December 31, 2010, December 31, 2009, and December 26, 2008 is presented below.

At December 31, 2010, the Company had accrued $7.7 million in other long-term liabilities for SARs payout liability. No share-based compensation expense related to SARs was capitalized during fiscal 2010, 2009 and 2008. Because no SARs were exercised in 2010, no cash was used to settle these awards during 2010.

On March 25, 2011, the Compensation Committee of the Company's Board of Directors approved the conversion of previously awarded SARs from cash settlement to equity settlement. The Company has sent conversion consent forms to award recipients and expects all affected employees to consent to the conversion.

ESOP non-cash compensation expense was $17.3 million, $16.5 million and $20.2 million for 2010, 2009, and 2008, respectively.

The noncontrolling interest for three subsidiaries classified as a separate component of equity was $14.8 million and $13.3 million as of December 31, 2010 and 2009, respectively. Net earnings attributable to the noncontrolling interests from continuing operations were $4.6 million, $2.5 million, and $5.1 million for 2010, 2009, and 2008, respectively. These amounts are net of income tax of $1.2 million, $0.6 million, and $1.4 million for 2010, 2009, and 2008, respectively.

The authorized number of shares of Class A common stock and Class B common stock are 5,000,000 and 243,737, respectively. The Company's Class A and Class B common stock have one vote per share. Each share of Class B common stock automatically converts into one share of Class A common stock if transferred to other than specified persons. The Class A common stock and Class B common stock share equally and ratably with identical rights and preferences in any dividends, except those paid to Class C preferred stock shareholders.

Upon liquidation, holders of Class A common stock and Class B common stock are entitled to receive ratably any distribution of assets after payment of a certain preferential amounts to holders of Class C preferred stock. Each class votes separately on any amendment to the Company's Articles of Incorporation if the action would (1) adversely affect the rights, preferences and privileges of that class or (2) increase the number of authorized shares of that class. In addition, holders of Class A common stock and Class B common stock vote separately on a change in control or sale of the Company as long as a minimum number of shares of Class B common stock are outstanding.

Certain holders of Class A common stock are party to the Restated Stock Transfer Restriction Agreement (RSTRA) or the Stock Purchase Agreement (SPA). See Note 20 — Contingently Redeemable Equity Securities. When the shares subject to those agreements convert to publicly tradable stock, those shares will be included in shareholders' equity.

The authorized number of shares of Class C preferred stock is 205,000. The ESOP owns all of the Class C preferred stock. The Class C preferred stock is nonvoting, except for certain protective

voting rights and except where required by law. Each share of the Class C preferred stock is convertible into one share of Class A common stock at the discretion of the holder of the Class C preferred stock. The Class C preferred stock will automatically convert into Class A common stock when the ESOP has fully repaid its loan to the Company or upon an initial public offering of the Company's stock. See Note 22 — ESOP.

Accumulated other comprehensive income (loss) represents primarily unrealized foreign currency translation gains and losses. These gains and losses are excluded from net earnings and exclude income tax expense or benefit because the Company has reinvested the associated earnings of its non-U.S. subsidiaries for an indefinite period of time. These foreign currency gains and losses will be realized when a foreign subsidiary is liquidated or sold. Other amounts recorded in other comprehensive income (loss) include adjustments related to pension and other retirement plans and derivative gains and losses related to interest rate hedges.

The following reflects the balances included in other comprehensive income (loss), net of tax, for the fiscal years presented.

Basic earnings per share is computed by dividing the net earnings available to common shareholders by the weighted average number of shares of common stock outstanding. The net earnings available to common shareholders includes an adjustment to revalue Class C preferred shares to the current redemption value. For purposes of calculating diluted earnings per share, the denominator includes the weighted average number of shares of common stock outstanding, the weighted average number of preferred shares outstanding, and the number of dilutive common stock equivalents, such as stock options and Class C preferred stock, as determined using the treasury stock method and "as-if-converted," respectively.

(in thousands, except per share data)	2010		2009			2008

Basic weighted average shares outstanding — common		1,086		1,083			1,081
Dilutive effect of employee stock options		32		35			41
Weighted average shares outstanding — Class C preferred shares		—		86			65

Weighted average shares outstanding assuming dilution		1,118		1,204			1,187

Net earnings from continuing operations attributable to ESCO common shareholders	$	7,399	$	26,182		$	44,403
Valuation adjustment on Class C preferred shares		—		(7,933	)		(13,287	)

Net earnings from continuing operations attributable to ESCO common shareholders	$	7,399	$	18,249		$	31,116

Basic earnings per share from continuing operations allocated to ESCO common shareholders	$	6.81	$	24.18		$	41.08

Diluted earnings per share from continuing operations allocated to ESCO common shareholders	$	6.62	$	15.16		$	26.21

For purposes of calculating earnings per share, the Company uses the "if converted" method. As both classes of common stock share the same rights in dividends, basic and diluted earnings per share are the same for both classes under both the "if converted" method and the "two-class" method. For 2010, the Class C preferred stock is anti-dilutive and excluded from dilutive EPS.

Pro forma basic and diluted net earnings per share of common stock (unaudited) has been computed to give effect to the assumed conversion of the Class C preferred stock into common stock, the expiration of the put options associated with the Class A common stock and the Class C preferred stock that will occur in connection with the IPO and through the first 360 days thereafter, and the -for-one stock split. Also, the numerator in the pro forma basic and diluted net earnings per share calculation has been adjusted to remove changes resulting from re-measurements of the outstanding Class C preferred stock through December 31, 2010.

The following table sets forth the computation of our pro forma basic and diluted net earnings per share of common stock (unaudited):

The Company's reporting segments are based on the nature of business activities (types of products and production processes) from which each earns net sales and incurs expenses, financial information reviewed by the chief operating decision maker (the Company's CEO), capital allocation and performance assessment process, organizational structure and financial information presented to the Board of Directors and investors.

EPG: This segment designs, develops and manufactures wear parts, wear part carriers and attachments for capital equipment primarily used in the mining, infrastructure development, and industrial markets. EPG's products are comprised of wear parts (including ground engagement tools (GET) and lip systems, crusher wear parts, dragline rigging and cutting edges), wear parts carrier systems (including dragline buckets, cable shovel buckets, hydraulic excavator buckets and shovel fronts, wheel loader buckets, truck bodies and dredge cutterheads) and industrial components (including wear parts for waste and metal recycling hammers, conveying systems).

TTG: This segment manufactures superalloy precision investment cast components for the aerospace and power generation markets. TTG's products include complex superalloy metal components and products for airplane engines and industrial gas turbines.

The following list presents the more significant items related to segment measurement and reconciliation between the Company's segment reporting and its external reporting:

The following table presents information regarding operations and assets by segment for the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008:

(in thousands)			Total Net Sales		Depreciation and Amortization		Operating Income (Loss)			Capital Expenditures

Year ended December 31, 2010:
	Engineered Products		$	712,625	$	23,086	$	108,183		$	18,603
	Turbine Technologies			136,856		4,244		8,695			1,913

		Total Operating Segments		849,481		27,330		116,878			20,516
	All Other			—		1,874		(42,909	)		—

		Total Company	$	849,481	$	29,204	$	73,969		$	20,516

Year ended December 31, 2009:
	Engineered Products		$	530,517	$	20,484	$	72,452		$	13,379
	Turbine Technologies			149,873		4,407		14,604			735

		Total Operating Segments		680,390		24,891		87,056			14,114
	All Other			—		1,926		(32,648	)		—

		Total Company	$	680,390	$	26,817	$	54,408		$	14,114

Year ended December 26, 2008:
	Engineered Products		$	752,006	$	19,588	$	104,051		$	24,701
	Turbine Technologies			187,907		4,383		13,986			4,990

		Total Operating Segments		939,913		23,971		118,037			29,691
	All Other			—		1,921		(37,556	)		—

		Total Company	$	939,913	$	25,892	$	80,481		$	29,691

The following table presents segment accountable asset information for the fiscal years ended, December 31, 2010, December 31, 2009 and December 26, 2008:

(in thousands)			Trade Receivables			Inventories		Trade Payables			Property and Equipment			Total Assets

Year ended December 31, 2010:
	Engineered Products		$	121,186		$	87,266	$	48,966		$	135,588		$	408,689
	Turbine Technologies			18,795			18,169		17,115			32,010			86,617

		Total operating segments		139,981			105,435		66,081			167,598			495,306
	All Other			19			—		(388	)		(152	)		228,316

		Total Company	$	140,000		$	105,435	$	65,693		$	167,446		$	723,622

Fiscal year ended December 31, 2009:
	Engineered Products		$	86,404		$	59,456	$	28,806		$	126,029		$	309,281
	Turbine Technologies			20,055			17,598		16,417			35,477			91,438

		Total operating segments		106,459			77,054		45,223			161,506			400,719
	All Other			19			—		1,910			413			275,026

		Total Company	$	106,478		$	77,054	$	47,133		$	161,919		$	675,745

Fiscal year ended December 26, 2008:
	Engineered Products		$	107,064		$	62,964	$	35,010		$	124,632		$	336,427
	Turbine Technologies			25,069			23,466		23,053			38,868			105,516

		Total operating segments		132,133			86,430		58,063			163,500			441,943
	All Other			(55	)		—		2,717			737			204,168

		Total Company	$	132,078		$	86,430	$	60,780		$	164,237		$	646,111

The following table presents segment net sales and long-lived assets by geographic area for the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008:

No single customer accounts for 10% of more of the Company's net sales or accounts receivable in the fiscal years ended December 31, 2010, December 31, 2009 and December 26, 2008.

On July 1, 2010, the Company acquired 100% of the Engineering and Mining Products divisions of Swift Group Holdings Pty Ltd, an Australian company. These divisions (Swift) provide equipment, truck and wear part fabrication and refurbishment services, including on-site maintenance services, in the Bowen and Surat Basins of Australia.

The results of Swift's operations have been included in the consolidated financial statements since the acquisition date. The Company paid $17.5 million ($17.8 million cash less $0.3 million receivable from the former owners related to purchase price adjustments) net of $2.1 million cash acquired, which resulted in goodwill in the EPG reporting unit of $3.9 million. This goodwill is deductible for income tax purposes. The Swift acquisition expands our footprint to provide a more direct presence throughout Australia's mining regions and enhances our product offering through its fabrication facilities and its patented mining truck body offering.

The following table presents a summary of the results of the Swift operations since the acquisition date:

The following table summarizes the fair value of the assets acquired and liabilities assumed at the date of acquisition.

On December 1, 2010, the Company acquired 100% of the issued and outstanding shares of Austcast Pty Ltd in Brisbane, Australia, and its subsidiary Newlcast in Dunedin, New Zealand (collectively, Austcast). Austcast manufactures certain industrial products and the Company plans to adjust its operations in 2011 to include ESCO's Ground Engaging Tools (GET) and other mining and infrastructure wear parts.

The results of Austcast's operations have been included in the consolidated financial statements since the acquisition date. The total acquisition price was $17.4 million ($15.9 million cash and $1.5 million of contingent consideration) less $1.0 million cash acquired, which resulted in goodwill in the EPG reporting unit of $12.2 million. This goodwill is deductible for income tax purposes.

Contingent consideration of up to $1.5 million is payable October 15, 2011, provided certain tooling builds are completed during the measurement period of April 1, 2011 through September 30, 2011. The Company expects to pay out $1.5 million.

The following table presents a summary of the results of operation of the Austcast operations since the acquisition date.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition, December 1, 2010. The Company is finalizing certain valuations of assets purchased and liabilities assumed; therefore, the allocation shown below is preliminary and subject to refinement.

The following table is a summary of the restructuring activities during the fiscal years presented:

To align cost structures with lower capacity utilization, the Company closed its West Jordan, Utah plant in 2008 and its Saskatoon, Saskatchewan foundry in 2009. Both of these facilities were part of the EPG segment. In 2009 the Company reduced its overall workforce by 17.6%, which resulted in employee severance costs. In 2010 the Company incurred additional shutdown costs and fair value adjustments related to the Saskatoon foundry, a portion of which is still held for sale.

For the periods presented in the consolidated financial statements, businesses classified as discontinued operations included the Integrated Manufacturing (IMG) and Engineered Metals (EMG) groups, which were divested in the fourth quarter of 2006, and included a portion of Soldering Rental, which was divested in the second quarter of 2009 as part of the transaction which resulted in the Company's acquisition of 100% of Soldering. The IMG and EMG groups were each reported in their own segments, which were discontinued. Soldering Rental was in the EPG segment.

There were no discontinued operations for 2010. The following table shows selected financial information for the businesses included in discontinued operations as of December 31, 2009 and December 26, 2008:

In preparing the audited financial statements, the Company has reviewed events that occurred after December 31, 2010, the balance sheet date, up until May 2, 2011, the date the accompanying audited financial statements were available to be issued.

On February 1, 2011, the Company acquired the assets of Trans Equipment for $6.7 million. Trans Equipment has operated as a full-line equipment and supply company for the mining, infrastructure development and industrial markets. This acquisition will offer direct supply and service capabilities to key mining and infrastructure customers in Wyoming. The acquisition's operating results will be integrated into the EPG reporting segment. The Company is finalizing certain valuations included in the purchase agreement.

On March 25, 2011, the Compensation Committee of the Company's Board of Directors approved the conversion of previously awarded long-term incentive stock appreciation rights from cash settlement to equity settlement. The Company has sent conversion consent forms to award recipients and expects all affected employees to consent to the conversion.

			Three months ended Mar 31,

(in thousands, except per share data)			2011			2010
Net sales			$	253,843		$	185,256
Cost of goods sold				183,299			136,174

Gross profit				70,544			49,082
Operating expenses
	Selling and administrative expenses			46,729			31,189
	Restructuring and other			20			281

Operating profit				23,795			17,612
Interest income				(98	)		(105	)
Interest expense				3,177			6,459
Other (income) expense				(1,079	)		458

Earnings from continuing operations before income taxes				21,795			10,800
Income tax expense				7,420			3,689

Net earnings				14,375			7,111
Less: net earnings attributable to noncontrolling interests				(1,491	)		(1,161	)
Net earnings attributable to ESCO shareholders				12,884			5,950
Valuation adjustment on Class C preferred shares				(1,154	)		(771	)

Net earnings attributable to ESCO common shareholders			$	11,730		$	5,179

Earnings per weighted average share outstanding (Note 19)
	Net earnings allocated to ESCO common shareholders
		Basic	$	10.69		$	4.78

		Diluted	$	10.42		$	4.64

	Weighted average shares outstanding (Note 19)
		Basic		1,097			1,084

		Diluted		1,236			1,117

Pro forma earnings per share from continuing operations allocated to ESCO shareholders
	Basic		$
	Diluted
Pro forma weighted average shares outstanding
	Basic
	Diluted
Pro forma earnings from continuing operations attributable to ESCO shareholders

(in thousands)			Mar 31, 2011			Dec 31, 2010			Mar 31, 2011 Pro Forma Shareholders' Equity

ASSETS
Current assets
	Cash and cash equivalents		$	81,078		$	114,101
	Trade accounts receivable, net of reserves of $932 and $1,232			158,557			140,000
	Inventories			131,512			105,435
	Deferred income taxes			7,283			7,631
	Prepaid expenses and other current assets			16,969			15,100

		Total current assets		395,399			382,267
Property and equipment, net				173,788			167,446
Intangibles, net				18,556			14,379
Goodwill				56,602			57,608
Deferred income taxes				53,624			55,875
Long-term investments				31,495			30,749
Other noncurrent assets				17,728			14,181
Assets held for sale				1,145			1,117

TOTAL ASSETS			$	748,337		$	723,622

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Accounts payable		$	74,064		$	65,693
	Accrued payroll, payroll taxes and benefits			34,391			36,908
	Other accrued liabilities			32,525			30,227
	Dividends payable			3,661			1,026
	Short-term debt			5,720			70,338
	Current portion of long-term debt			11,630			11,502

		Total current liabilities		161,991			215,694
Long-term debt, less current portion				254,410			191,474
Accrued pension and other retirement costs				71,728			76,192
Other long-term liabilities				13,028			12,700

TOTAL LIABILITIES				501,157			496,060

Commitments and contingencies — See Note 13
Contingently redeemable equity securities:
	Preferred Stock-Class C, 205,000 authorized, 188,354 and 188,354 outstanding			114,500			107,691
	Common Stock-Class A, 5,000,000 authorized, 885,714 and 890,294 outstanding			139,744			124,493
Equity:
ESCO shareholders' equity (deficit)
	Preferred Stock-Class C unallocated ESOP shares, 61,945 and 67,577			71,942			78,482
	Common Stock-Class A, 5,000,000 authorized, 885,714 and 890,294 outstanding			—			—
	Common Stock-Class B, 243,737 authorized, 208,395 and 208,395 outstanding			10,343			10,343
	Preferred Stock-Class C unallocated ESOP shares, 61,945 and 67,577			(71,942	)		(78,482	)
	Accumulated deficit			(26,641	)		(19,944	)
	Accumulated other comprehensive loss			(2,623	)		(9,802	)

		Total ESCO shareholders' deficit		(18,921	)		(19,403	)
	Noncontrolling interests			11,857			14,781

Total deficit				(7,064	)		(4,622	)	$

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	748,337		$	723,622		$

				Three months ended Mar 31,

(in thousands)				2011			2010
Cash flows from operating activities
	Net earnings			$	14,375		$	7,111
	Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities:
		Depreciation and amortization			8,033			6,918
		Non-cash compensation			8,911			4,020
		Deferred income taxes			2,225			(528	)
		Other non-cash operating activities			254			523
	Change in operating assets and liabilities:
		Trade accounts receivable			(13,180	)		(5,712	)
		Inventories			(19,503	)		443
		Prepaid expenses and other assets			(1,603	)		(1,236	)
		Accounts payable, accrued expenses and other			(4,914	)		6,133

			Net cash (used in) provided by operating activities		(5,402	)		17,672

Cash flows from investing activities
	Capital expenditures				(8,708	)		(2,708	)
	Proceeds from sale of property and equipment				63			—
	Business acquisitions, net of cash acquired				(8,193	)		—
	Investment in unconsolidated affiliate				(4,009	)		(2,255	)
	Investment in other assets				(1,324	)		(1,312	)

			Net cash used in investing activities		(22,171	)		(6,275	)

Cash flows from financing activities
	Net payments on debt				(2,240	)		(329	)
	Debt issuance costs				(85	)		—
	Dividends paid				(2,207	)		(11,173	)
	Common stock issued				42			11
	Common stock retired				—			(178	)

			Net cash used in financing activities		(4,490	)		(11,669	)

Effect of exchange rate changes					(960	)		918

			Net (decrease) increase in cash and cash equivalents		(33,023	)		646
Cash and cash equivalents at beginning of period					114,101			168,487

Cash and cash equivalents at end of period				$	81,078		$	169,133

Cash paid during the period for
	Interest			$	2,037		$	1,042
	Income taxes			$	6,813		$	2,453
Non-cash activities
	Cash dividends declared, not yet paid			$	2,616		$	—

ESCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS

OF CONTINGENTLY REDEEMABLE SECURITIES AND SHAREHOLDERS' EQUITY

(unaudited)

	CONTINGENTLY REDEEMABLE SECURITIES

	Number of Shares					Preferred Stock		Common Stock
(in thousands, except share data)	Class C Preferred Allocated ESOP shares		Class A Common Stock shares			Class C Preferred Stock ESOP		Class A Common Stock
Balance, December 31, 2009		99,221		166,119		$	71,211	$	72,853
Net earnings
Foreign currency translation
Change in employee benefit plan liability
Amortization of employee benefit plan liability
Derivatives
Comprehensive income (loss)
Cash dividends declared
Stock issued upon exercise of options				540					11
Stock retired for cash				(456	)				(30	)
Tax benefit on stock incentive awards
Contingently redeemable shares valuation adjustment							771		5,788
Release of ESOP shares		5,632					4,019
Tax benefit of allocation of ESOP stock							971

Balance, March 31, 2010		104,853		166,203		$	76,972	$	78,622

Balance, December 31, 2010		120,777		180,897		$	107,691	$	124,493
Net earnings
Foreign currency translation
Change in employee benefit plan liability, net of tax of $8
Derivatives, net of tax of $272
Comprehensive income
Cash dividends declared
Stock issued upon exercise of options				852					42
Stock retired				(5,432	)		—		—
Tax benefit on stock incentive awards									0
Contingently redeemable shares valuation adjustment							1,154		15,209
Release of ESOP shares		5,632					5,101
Tax benefit of allocation of ESOP stock							554

Balance, March 31, 2011		126,409		176,317		$	114,500	$	139,744

ESCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS

OF CONTINGENTLY REDEEMABLE SECURITIES AND SHAREHOLDERS' EQUITY

(unaudited)

	ESCO SHAREHOLDERS' EQUITY (DEFICIT)

	Number of Shares							Preferred Stock						Common Stock
(in thousands, except share data)	Class C Preferred Unallocated ESOP shares			Class A Common Stock shares		Class B Common Stock shares		Class C Preferred Allocated ESOP			Class C Preferred Unallocated ESOP			Class A Common Stock		Class B Common Stock		(Accumu lated Deficit) Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity (Deficit)
Balance, December 31, 2009		90,104			709,397		208,395	$	104,643		$	(104,643	)	$	—	$	10,343	$	36,222		$	(15,133	)	$	31,432
Net earnings																			5,950						5,950
Foreign currency translation																						(961	)		(961	)
Change in employee benefit plan liability																									—
Amortization of employee benefit plan liability																									—
Derivatives																									—

Comprehensive income																									4,989

Cash dividends declared																									—
Stock issued upon exercise of options																									—
Stock retired for cash																			(148	)					(148	)
Tax benefit on stock incentive awards																									—
Contingently redeemable shares valuation adjustment																			(6,559	)					(6,559	)
Release of ESOP shares		(5,632	)						(6,541	)		6,541													—
Tax benefit of allocation of ESOP stock																									—

Balance, March 31, 2010		84,472			709,397		208,395	$	98,102		$	(98,102	)	$	—	$	10,343	$	35,465		$	(16,094	)	$	29,714

Balance, December 31, 2010		67,577			709,397		208,395	$	78,482		$	(78,482	)	$	—	$	10,343	$	(19,944	)	$	(9,802	)	$	(19,403	)
Net earnings																			12,884						12,884
Foreign currency translation																						6,732			6,732
Change in employee benefit plan liability, net of tax of $8																						13			13
Derivatives, net of tax of $272																						434			434

Comprehensive income																									20,063

Cash dividends declared																			(199	)					(199	)
Stock issued upon exercise of options																									—
Stock retired																			(3,019	)					(3,019	)
Tax benefit on stock incentive awards																									—
Contingently redeemable shares valuation adjustment																			(16,363	)					(16,363	)
Release of ESOP shares		(5,632	)						(6,540	)		6,540													—
Tax benefit of allocation of ESOP stock																									—

Balance, March 31, 2011		61,945			709,397		208,395	$	71,942		$	(71,942	)	$	—	$	10,343	$	(26,641	)	$	(2,623	)	$	(18,921	)

ESCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS

OF CONTINGENTLY REDEEMABLE SECURITIES AND SHAREHOLDERS' EQUITY

(unaudited)

		NONCONTROLLING INTERESTS

(in thousands)		Noncontrolling Interests			Other Comprehensive Income (Loss)			Total Allocated to Noncontrolling Interests			Total Equity (Deficit)
Balance, December 31, 2009		$	13,970		$	(703	)	$	13,267		$	44,699
	Net earnings		1,161						1,161			7,111
	Foreign currency translation					44			44			(917	)
	Change in employee benefit plan liability											—
	Amortization of employee benefit plan liability											—
	Derivatives											—

	Comprehensive income								1,205			6,194

	Cash dividends declared											—
	Stock issued upon exercise of options											—
	Stock retired for cash											(148	)
	Tax benefit on stock incentive awards											—
	Contingently redeemable shares valuation adjustment											(6,559	)
	Release of ESOP shares											—
	Tax benefit of allocation of ESOP stock											—

Balance, March 31, 2010		$	15,131		$	(659	)	$	14,472		$	44,186

Balance, December 31, 2010		$	15,133		$	(352	)	$	14,781		$	(4,622	)
	Net earnings		1,491						1,491			14,375
	Foreign currency translation					200			200			6,932
	Change in employee benefit plan liability, net of tax of $8											13
	Derivatives, net of tax of $272											434

	Comprehensive income								1,691			21,754

	Cash dividends declared		(4,615	)					(4,615	)		(4,814	)
	Stock issued upon exercise of options											—
	Stock retired											(3,019	)
	Tax benefit on stock incentive awards											—
	Contingently redeemable shares valuation adjustment											(16,363	)
	Release of ESOP shares											—
	Tax benefit of allocation of ESOP stock											—

Balance, March 31, 2011		$	12,009		$	(152	)	$	11,857		$	(7,064	)

ESCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The accompanying unaudited consolidated financial statements of ESCO have been prepared pursuant to generally accepted accounting principles in the United States of America ("US GAAP") for interim financial information. The year-end consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by US GAAP. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all normal, recurring adjustments considered necessary for a fair presentation have been included. Management believes the disclosures made are adequate to ensure the information presented is not misleading; however, these unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Consolidated Financial Statements for the year ended December 31, 2010. The results for the three months ended March 31, 2011 and 2010 are not necessarily indicative of the results of operations for the entire year.

The Company made certain reclassifications to the prior years' financial statements to conform them to the presentation as of and for the quarter ended March 31, 2011. These reclassifications had no effect on consolidated net earnings, shareholders' equity or net cash flows for any of the periods presented.

At March 31, 2011, the Company changed its methodology for valuing its Class C Preferred Stock and Class A Common Stock to the Probability Weighted Expected Average Method because it determined this method was more appropriate given the increase likelihood of completing an initial public offering by the end of 2011.

Except as noted above, there have been no significant changes to the Company's significant accounting policies from those presented in Note 2 — Summary of Significant Accounting Policies included with the consolidated financial statements for the year ended December 31, 2010.

The pro forma shareholders' equity column (unaudited) reflects the conversion of the Class C preferred stock to the new Class A common stock upon the Company's initial public offering (IPO),

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

the conversion of a portion of the historical Class A common stock to new Class A common stock upon such IPO, and the agreement by certain holders of Class A common stock to terminate the repurchase obligation upon completion of the Company's IPO, as well as the -to-one stock split to be effected prior to the Company's IPO. Upon conversion, the put feature associated with the Class C preferred stock and historical Class A common stock will expire and the respective shares reclassified to permanent equity.

No new guidance was issued during the first quarter of 2011 that affected the Company.

Inventories consist of the following as of March 31, 2011 and December 31, 2010:

Inventories of $45.9 million and $30.8 million are stated at LIFO cost at March 31, 2011 and December 31, 2010, respectively.

During the three months ended March 31, 2011 and 2010, there were no LIFO liquidations.

The carrying amounts of intangible assets as of March 31, 2011 and December 31, 2010 were as follows:

Amortization expense for the three months ended March 31, 2011 and 2010 was $0.8 million and $0.2 million, respectively. For the three months ended March 31, 2011, $0.6 million was included in selling and administrative expenses and $0.2 million was included in cost of goods

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

sold. For the three months ended March 31, 2010, the amortization expense was included in cost of goods sold.

The Company has determined its Elecmetal joint venture does not have sufficient capital to permit the entity to finance its activities without additional financial support from the equity holders and therefore is a variable interest entity (VIE). The Company's maximum exposure to loss from the VIE of which it is not the primary beneficiary at March 31, 2011 is presented below. The Company accounts for its 50% interest using the equity method.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The Company applied the guidance in ASC Topic 820, Fair Value Measurements and Disclosures (ASC Topic 820) which defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This guidance also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

The Company's Level 3 assets (assets held for sale with a carrying value of $1.3 million) are recorded at their fair value of $1.2 million (less $0.1 million in selling costs).

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

In November 2010, the Company entered into a $550.0 million Senior Secured Syndicated Credit Facility, which consists of a five-year $200.0 million term loan and a $350.0 million line of credit. The term loan and line of credit have a floating LIBOR interest rate that is set monthly based upon a consolidated net leverage ratio matrix. The Company's credit risk spread ranges from 1.75% to 2.50% depending on the consolidated net leverage ratio matrix. The debt balance recorded on the Company's balance sheet as of March 31, 2011 and December 31, 2010 represents fair value.

At March 31, 2011, the Company had total authorized lines of credit in the amount of $363.1 million. At March 31, 2011, the interest rate on the U.S.-based line of credit, which had $350.0 million authorized and $65.0 million drawn down and outstanding, was 2.50% (credit risk spread of 2.25% plus LIBOR of .25%) and the interest rate on the foreign-based line of credit, which had $13.1 million authorized and $2.5 million drawn down and outstanding, was 11.79%. During the

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

first quarter of 2011, the authorized amount of the foreign-based line of credit was increased by $3.9 million. The weighted average interest rate on short-term borrowings for the three months ended March 31, 2011 was 2.98%. At March 31, 2011, the outstanding amount on the U.S.-based line of credit was included in long-term debt in the Consolidated Balance Sheet as the Company does not intend to repay the balance within one year.

At December 31, 2010, the Company had total authorized lines of credit in the amount of $359.0 million. At December 31, 2010, the interest rate on the U.S.-based line of credit, which had $350.0 million authorized and $65.0 million drawn down and outstanding, was 2.51% (credit risk spread of 2.25% plus LIBOR of .26%) and the interest rate on the foreign-based line of credit, which had $9.0 million authorized and $2.1 million drawn down and outstanding, was 15.03%. The weighted average interest rate on short-term borrowings in 2010 was 4.46%.

The Company enters into derivative financial instruments in order to manage foreign currency risk and variable interest rate risk.

The Company hedges material non-functional currency monetary asset and liability balances. The gains and losses from foreign exchange contracts are recognized at the end of each fiscal period in other (income) expense in the Company's results of operations. Such gains and losses are typically offset by the corresponding changes to the related underlying hedged item. Cash flows from derivative financial instruments are classified in the same category as the cash flows from the items being hedged.

In December 2010, the Company entered into interest rate swaps to manage a portion of its exposure to changes in LIBOR-based interest rates on the Company's variable rate debt, effectively fixing the interest payments on $200.0 million of the Company's term loan. All of the swaps in place at March 31, 2011 have been designated as cash flow hedges of LIBOR-based interest payments. Accordingly, the change in fair value was included in accumulated other comprehensive loss as of March 31, 2011. The swaps mature quarterly through 2015.

The net losses on interest rate swaps included in accumulated other comprehensive loss were $0.4 million, net of tax of $0.3 million, for the three months ended March 31, 2011. The accumulated other comprehensive loss, net of tax benefit, related to interest rate swaps was $0.1 million at March 31, 2011. For derivatives that are designated in a cash flow hedging relationship, the effective portion of the change in fair value of the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same classification as the earnings effect of the hedged transaction. There were no amounts of gain (loss) reclassified from accumulated other comprehensive income into income for the three months ended March 31, 2011.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The pre-tax fair value of the Company's interest rate swaps and foreign currency forward contracts and the accounts in the consolidated balance sheets in which the gross amounts are included as of March 31, 2011 and December 31, 2010 were as follows:

The amount of gain (loss) recognized in other income (expense) on foreign currency forward contracts during the three months ended March 31, 2011 and March 31, 2010 was $(0.3) million and $0.7 million, respectively.

On a quarterly basis, the Company estimates what its effective tax rate will be for the full fiscal year and records a quarterly income tax provision based on the anticipated rate. As the year progresses, the Company refines its estimate based on the facts and circumstances for each tax jurisdiction. If a material event impacts the Company's profitability, a change in the effective rate may occur and may impact the income tax provision.

The effective tax rate from continuing operations for the quarter ended March 31, 2011 was 34.0% compared with 34.15% for the quarter ended March 31, 2010.

The effective tax rate from continuing operations for the quarter ended March 31, 2011 was 34.0% compared with 24.8% for the year ended December 31, 2010. The increase in the Company's effective tax rate was primarily driven by an increase in the projected percentage of pretax income related to operations in the United States. The United States statutory tax rate is generally higher than the tax rate on operations outside the United States. In addition, during the prior year, the Company recognized a decrease in the reserve for unrecognized tax positions resulting in a decrease to the effective tax rate for the prior year of 3.2%.

No material adjustments to the Company's reserve for uncertain tax positions occurred during the quarter ended March 31, 2011. Uncertain tax positions have been classified as short-term or long-term depending on the Company's estimate for resolution of each uncertain tax position. The classification is reviewed on a quarterly basis and necessary classification adjustments are recorded by the Company.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The Company has various pension and other post-retirement plans, including defined benefit and defined contribution plans that cover most employees worldwide.

The difference between the plans' funded status and the balance sheet position is recognized, net of tax, as a component of Accumulated Other Comprehensive Income.

The components of net periodic benefit cost for the quarters ended March 31, 2011 and March 31, 2010 are as follows:

The Company has a contingent liability for letters of credit outstanding in the amount of $13.1 million at March 31, 2011 and $13.0 million at December 31, 2010. These letters of credit primarily relate to the guarantee of a loan to the Company's Chilean joint venture and letters of credit required for various state workers' compensation programs.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

To determine the fair value of the Class A common stock and the Class C preferred stock, the Company values the enterprise at the arithmetic average of the values derived through a guideline company method and a discounted cash flow method. The Company selects public companies comparable to the Company in respect to investment risk and return perspective and derives an estimated enterprise value after making adjustments for size, growth, profitability, global structure and risk considerations. Under the discounted cash flow method, assumptions included a weighted average cost of capital of 12.5% based on required return on equity of 17.2% (70% weight), a cost of debt after tax of 2% (30% weight) and a termination value after the fifth year assuming an exit EBITDA multiple of 7.5x, based on observations of pricing multiples from the guideline company method, discounted to present value.

Through the third quarter of fiscal 2010, the Company determined the fair value of its Class C preferred stock using the Current Method. This method allocates the enterprise value to the Class A common stock and Class C preferred stock based on their conversion values, which differs between these two classes of stock primarily due to the value of the future dividend streams of the Class C preferred stock attributed to such class. Furthermore, the Company included a discount for lack of marketability of 5% in valuing the Class C preferred stock, but applies no discount in valuing the Class A common stock. At December 31, 2010 and for the quarter then ended, the Company changed its valuation method to a Black-Scholes option pricing model because this method was more appropriate given the increased likelihood of completing an initial public offering (IPO). The option pricing model of allocating enterprise value among common stock and preferred stock treats each class of stock as a call option on all or part of the enterprise's value. The Black-Scholes model uses the enterprise value derived as described above and made assumptions for volatility (20%), expected life (.75 years) and risk-free interest rate (.29%).

At March 31, 2011, the Company changed its valuation method to the Probability Weighted Expected Average Method (PWERM) because it determined the likelihood of completing an IPO was 50% by the end of 2011. The PWERM model used a 50% probability weighting of the Company completing a successful IPO by the end of 2011 and a 50% probability weighting of remaining private. The Company used the guideline company method to calculate enterprise value under a successful completion of an IPO and based the calculation on the Company's projected 2011 Adjusted EBITDA with the midpoint multiple of its guideline companies. The Company used a Black-Scholes model to calculate enterprise value under the assumption of remaining private. The model included assumptions on volatility (35%), expected life (2.67 years) and risk free interest rate (1.25%).

Applying the PWERM model at March 31, 2011 and the Current Method at March 31, 2010, the value of the Class C preferred stock was $905.80 and $734.10 per share and the value of the Class A common stock was $792.57 and $473.05 per share, respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

A summary of option activity for the quarter ended March 31, 2011 is presented below.

The intrinsic value of options exercised during the three months ended March 31, 2011 was $0.6 million. As of March 31, 2011, the aggregate intrinsic value of outstanding options was $14.1 million and the weighted average remaining contractual term was 4.2 years.

During the quarter ended March 31, 2010, the Company granted no options. There was no share-based compensation expense recognized or capitalized for stock options in 2010.

The Company's stock appreciation rights (SARs) vest at the end of a three-year period and expire no more than ten years after the grant date. SARs issued in 2007 through 2010 are settled in cash for the difference between the exercise price (which reflects fair value of the Company's Class A common stock on the date of the grant) and the fair value of such stock upon exercise. Cash-settled SARs are recorded in the Company's consolidated balance sheet as a liability until exercise. SARs issued in 2011 will be settled in an equivalent number of shares for the difference between the exercise price (which reflects fair value of the Company's Class A common stock on the date of the grant) and the fair value of such stock upon exercise. Stock-settled SARs are recorded in the Company's consolidated balance sheet as shareholders' equity.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

A summary of SARs activity for the quarter ended March 31, 2011 is presented below.

The Black-Scholes option pricing model is utilized to determine the fair value of SARs granted. The following weighted average assumptions were used in calculating the fair value during the periods presented:

At March 31, 2011, the Company had $7.0 million of SARs-related compensation expense yet to recognize for unvested awards, net of immaterial estimated forfeitures. This expense is expected to be recognized over a weighted-average period of two years and includes $5.1 million related to cash-settled SARs and $1.9 million related to stock-settled SARs. The impact of any change in the payout liability for vested awards will be recognized as incurred.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Share-based compensation expense was included in the Company's condensed consolidated statements of earnings as shown below.

At March 31, 2011, the Company had accrued $11.2 million in other long-term liabilities for SARs payout liability. On March 25, 2011, the Compensation Committee of the Company's Board of Directors approved the conversion of previously awarded SARs from cash settlement to equity settlement. The Company has sent conversion consent forms to award recipients and recipients holding 92.6% of the SARs consented to the conversion. Any change in fair value from March 31, 2011 through the date of the receipt of the conversion consent forms will be reflected for vested shares in the statement of earnings. Unvested shares will be revalued on date of conversion and recognized in expense through the remainder of the conversion period.

The Company sponsors an employee stock ownership plan (ESOP) that covers all U.S. employees who meet service requirements. The Company makes annual contributions to the ESOP equal to the ESOP's debt service to the Company less dividends received by the ESOP on unallocated shares. All dividends and contributions received by the ESOP are used to pay debt service. The ESOP shares are pledged as collateral for its debt. As the debt is repaid, shares are released from collateral and allocated to active employees. The Company accounts for its ESOP in accordance with the guidance on stock compensation. Accordingly, the shares pledged as collateral are reported as unearned ESOP shares on the balance sheet. As shares are released from collateral, the Company reports compensation expense equal to the current fair value of the shares. ESOP non-cash compensation expense was $5.1 million and $4.0 million for the three months ended March 31, 2011 and 2010, respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The noncontrolling interest for three subsidiaries classified as a separate component of equity was $11.9 million and $14.8 million as of March 31, 2011 and December 31, 2010, respectively. Net earnings allocated to the noncontrolling interests from continuing operations were $1.5 million and $1.2 million for the three months ended March 31, 2011 and 2010, respectively. These amounts are net of income tax of $0.3 million each for the three months ended March 31, 2011 and 2010.

Accumulated other comprehensive income (loss) includes unrealized foreign currency translation gains and losses. These gains and losses are excluded from net earnings and exclude income tax expense or benefit because the Company has reinvested the associated earnings of its non-U.S. subsidiaries for an indefinite period of time. These foreign currency gains and losses will be realized when a foreign subsidiary is liquidated or sold. Other amounts recorded in other comprehensive income (loss) include adjustments related to pension and other retirement plans and derivative gains and losses related to cash flow hedges.

The following reflects the balances included in other comprehensive income (loss), net of tax, as of March 31, 2011 and March 31, 2010.

Basic earnings per share is computed by dividing the net earnings available to common shareholders by the weighted average number of shares of common stock outstanding. The net earnings available to common shareholders includes an adjustment to revalue Class C preferred shares to the current redemption value. For purposes of calculating diluted earnings per share, the denominator includes the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents, such as shares subject to stock options and Class C preferred stock, as determined using the treasury stock method and "as-if-converted", respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Basic and diluted net earnings per share were as follows for the three months ended:

	Three months ended Mar 31,

(in thousands, except per share data)	2011		2010
Basic weighted average shares outstanding — common		1,097		1,084
Weighted average shares outstanding — preferred		121		—
Dilutive effect of employee stock options		18		33

Weighted average shares outstanding assuming dilution		1,236		1,117

Net earnings from continuing operations attributable to ESCO common shareholders — basic	$	11,730	$	5,179
Valuation adjustment on Class C preferred shares		1,154		—

Net earnings from continuing operations attributable to ESCO common shareholders — diluted	$	12,884	$	5,179

Basic earnings per share from continuing operations allocated to ESCO common shareholders	$	10.69	$	4.78

Diluted earnings per share from continuing operations allocated to ESCO common shareholders	$	10.42	$	4.64

For purposes of calculating earnings per share, the Company uses the "if converted" method. As both classes of common stock share the same rights in dividends, basic and diluted earnings per share are the same for both classes under both the "if converted" method and the "two-class" method. For the three months ended March 31, 2011, 4,682 unexercised SARs are anti-dilutive and excluded from diluted EPS. For the three months ended March 31, 2010, the Class C preferred stock is anti-dilutive and excluded from dilutive EPS.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table sets forth the computation of our pro forma basic and diluted net earnings per share of common stock (unaudited):

TTG: This segment manufactures super alloy precision investment cast components for the aerospace and power generation markets. TTG's products include complex super-alloy metal components and products for airplane engines and industrial gas turbines.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following list presents the more significant items related to segment measurement and reconciliation between the Company's segment reporting and its external reporting:

The following table presents information regarding segment net sales and operating income(loss) for the three months ended March 31, 2011 and March 31, 2010:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table presents segment accountable asset information as of March 31, 2011 and December 31, 2010:

(in thousands)			Trade Receivables		Inventories		Trade Payables			Property and Equipment			Total Assets

As of March 31, 2011:
	Engineered Products		$	137,183	$	108,505	$	52,480		$	141,716		$	458,426
	Turbine Technologies			21,364		23,007		22,152			32,234			94,795

		Total operating segments		158,547		131,512		74,632			173,950			553,221
	All Other			10		—		(568	)		(162	)		195,116

		Total Company	$	158,557	$	131,512	$	74,064		$	173,788		$	748,337

As of December 31, 2010:
	Engineered Products		$	121,186	$	87,266	$	48,966		$	135,588		$	408,689
	Turbine Technologies			18,795		18,169		17,115			32,010			86,617

		Total operating segments		139,981		105,435		66,081			167,598			495,306
	All Other			19				(388	)		(152	)		228,316

		Total Company	$	140,000	$	105,435	$	65,693		$	167,446		$	723,662

The following table presents segment net sales by geographic area for the three months ended March 31, 2011 and March 31, 2010 and long-lived assets by geographic area as of March 31, 2011 and December 31, 2010:

No single customer accounted for 10% or more of the Company's net sales or accounts receivable in either of the three-month periods ended March 31, 2011 and March 31, 2010, or in the fiscal year ended December 31, 2010.

On February 1, 2011, the Company acquired the assets of Trans Equipment, a U.S. company based in Wyoming, for $8.4 million ($6.7 million cash plus $1.7 million preliminary payable for purchase price adjustments). Trans Equipment is a full-line equipment and supply company for the mining, infrastructure development and industrial markets. The purchase resulted in goodwill in the

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

EPG reporting segment of $1.1 million. This goodwill is deductible for income tax purposes. The Trans Equipment acquisition allows the Company to offer direct supply and service to key mining and construction customers in Wyoming. The results of Trans Equipment's operations have been included in the consolidated financial statements since the acquisition date and are presented below.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition. The Company is finalizing certain valuations of assets purchased and liabilities assumed; therefore, the allocation information provided below is preliminary and subject to refinement.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The following table is a summary of the restructuring activities during the periods presented:

To align cost structures with lower capacity utilization, the Company closed its Saskatoon, Saskatchewan foundry in 2009, which was part of the EPG segment. In 2009, the Company reduced its overall workforce by 17.6%, which resulted in employee severance costs. In 2010, the Company incurred additional shutdown costs and fair value adjustments related to the Saskatoon foundry, a portion of which is still held for sale.

In preparing the financial statements, the Company has reviewed events that occurred after March 31, 2011, the balance sheet date, up until June 6, 2011, the date the accompanying financial statements were available for issuance.

On May 2, 2011, the Company filed a Registration Statement on Form S-1 under the Securities Act of 1933 with the U.S. Securities and Exchange Commission. The registration statement covered an undetermined number of shares of new Class A Common Stock at an aggregate offering price of $175.0 million.

The following table sets forth the costs and expenses, other than underwriting discounts, payable by us in connection with the sale and distribution of the securities being registered. All amounts are estimated except the SEC registration fee and the FINRA filing fee.

Under Section 60.047(2)(d) of the Oregon Business Corporation Act, a corporation's articles of incorporation may limit the personal liability of directors under some circumstances. In accordance with Oregon law, our 2011 Restated Articles of Incorporation filed as an exhibit to this registration statement, to be in effect upon the completion of this offering, limit a director's personal liability to us and our shareholders for monetary damages for conduct as a director, except for liability arising from any act or omission for which elimination of liability is not permitted under the Oregon Business Corporation Act.

Under Section 60.391 of the Oregon Business Corporation Act, a corporation may indemnify a person who is made a party to a proceeding because the person is or was a director against liability incurred in the proceeding if (i) the person acted in good faith; (ii) the person reasonably believed the conduct was in the corporation's best interests, or at least was not opposed to its best interests; and (iii) in the case of a criminal proceeding, the person had no reasonable cause to believe the conduct was unlawful. In addition, a person who is wholly successful, on the merits or otherwise, in the defense of a proceeding in which the person was a party because the person was a director, is entitled to indemnification for expenses actually and reasonably incurred by the person in connection with the proceeding. Our 2011 Restated Articles of Incorporation, to be in effect upon the completion of this offering, requires us to indemnify, to the fullest extent permitted by the Oregon Business Corporation Act, any current or former officer or director made, or threatened to be made, a party to or a witness or other participant in, any proceeding, by reason of the fact that the person is or was our director or officer, against liability and expenses of a type indemnified against under the Oregon Business Corporation Act. We must also advance expenses to or for any current or former director in advance of the final disposition of an indemnifiable proceeding upon the person's compliance with the advancement provisions of the Oregon Business Corporation Act.

In addition, we have entered into indemnification agreements, a form of which is filed as an exhibit to this registration statement, with our directors, officers and some employees, which contain provisions that are in some respects broader than the specific indemnification provisions contained in the Oregon Business Corporation Act. The indemnification agreements may require us, among

other things, to indemnify our directors against certain liabilities that may arise by reason of their status or service as directors and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified.

Reference is also made to the underwriting agreement filed as an exhibit to this registration statement, which, under certain conditions, provides for indemnification by the underwriters of our officers and directors against certain liabilities.

The following sets forth all securities issued by us within the past three years without registration under the Securities Act. No underwriters were involved in any of the stock issuances and, unless otherwise noted, no commissions were paid in connection therewith. In each of the following transactions, we relied on the exemption from registration under the Securities Act set forth in Rule 701.

Certain of our employees have participated in a deferred compensation plan which allows participants to elect in advance of earning salary and bonuses to defer a percentage of salary and bonuses and have the deferred amount credited to a plan account. Employees elected to defer $1.3 million, $1.7 million and $2.1 million in 2010, 2009 and 2008, respectively, into the deferred compensation plan.

In the last three years, our employees and directors have exercised options to purchase an aggregate of 32,614 shares of Legacy Class A Common Stock, with exercise prices ranging from $2.37 to $65.51 per share, depending upon the date of grant.

Exhibit No.			Description of Exhibit

	*1.1		Form of Underwriting Agreement
	**3.1		Form of Restated 2011 Articles of Incorporation of ESCO Corporation
	**3.2		Form of Restated 2011 Bylaws of ESCO Corporation
	**3.3		Third Restated Articles of Incorporation of ESCO Corporation
	**3.4		Amended and Restated Bylaws of ESCO Corporation, as amended
	*5.1		Form of Opinion of Stoel Rives LLP
	10.1		Credit Agreement Between ESCO Corporation, subsidiaries of ESCO Corporation named therein, as guarantors, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association, as Syndication Agent, Union Bank, N.A., as Documentation Agent, U.S. Bank National Association, as Co-Agent, and the Other Lenders named therein, dated November 18, 2010. Portions of this exhibit have been redacted and filed separately with the SEC pursuant to a confidential treatment request.
	**10.2		Form of Restated Indemnity Agreement between ESCO Corporation and each of its directors and executive officers+
	10.3		2010 Stock Incentive Plan, as amended+
	**10.4		2000 Stock Incentive Plan, as amended+
	10.5		Form of Restated Stock Transfer Restriction Agreement and related form of amendment and schedule of parties
	10.6		[Reserved]
	10.7		Form of Stock Option Agreement and related schedule+
	10.8		Form of Stock Appreciation Rights Agreement for grants after 2010 and related schedule+
	10.9		Form of Stock Appreciation Rights Agreement and form of amendment for grants prior to 2011 and related schedule+
	10.10		Form of Performance Unit Award Agreement and related schedule for grants after 2010+

Exhibit No.			Description of Exhibit

	10.11		Form of Performance Unit Award Agreement and related schedule for grants prior to 2011+
	**10.12		ESCO Corporation Deferred Compensation Plan, as amended+
	**10.13		ESCO Corporation Deferred Compensation Plan II, as amended+
	**10.14		ESCO Corporation 401(k) Restoration Plan, as amended+
	**10.15		ESCO Corporation Supplemental Executive Retirement Plan, as amended+
	**10.16		ESCO Corporation 2005 Supplemental Executive Retirement Plan, as amended+
	**10.17		Annual Cash Bonus Plan, as amended+
	**10.18		ESCO Corporation ESOP Restoration Plan, as amended+
	**10.19		ESCO Corporation Employee Stock Ownership Plan 2011 Restatement (As Amended and Restated Effective as of June 1, 2011)+
	**10.20		Letter Agreement with Gene K. Huey+
	**10.21		Stock Appreciation Rights Agreement for Steven D. Pratt+
	**10.22		Amendments to Stock Appreciation Rights Agreement for Steven D. Pratt for grants prior to 2011+
	10.23		Form of Stock Award Agreement for non-employee directors and related schedule+
	10.24		Amendment No. 1 to Credit Agreement dated June 1, 2011 between ESCO Corporation and Bank of America, N.A., as Administrative Agent for the Lenders+
	10.25		Short-Term Incentive Plan+
	10.26		Amendments to SAR Award Agreements with Larry R. Huget+
	10.27		First Amendment to the ESCO Corporation Employee Stock Ownership Plan+
	**21.1		Subsidiaries of the registrant.
	23.1		Consent of PricewaterhouseCoopers LLP
	*23.2		Consent of Stoel Rives LLP (included in Exhibit 5.1)
	**24.1		Powers of Attorney (included on the prior signature pages of this Registration Statement)

(b) Financial Statement Schedules. Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted as to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 14, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes to provide the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Pursuant to the requirements of the Securities Act of 1933, we have duly caused this Amendment No. 2 to Registration Statement on Form S-1 to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Portland, State of Oregon, on the 28 day of June, 2011.

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 2 to Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Exhibit No.			Description of Exhibit

	*1.1		Form of Underwriting Agreement
	**3.1		Form of Restated 2011 Articles of Incorporation of ESCO Corporation
	**3.2		Form of Restated 2011 Bylaws of ESCO Corporation
	**3.3		Third Restated Articles of Incorporation of ESCO Corporation
	**3.4		Amended and Restated Bylaws of ESCO Corporation, as amended
	*5.1		Form of Opinion of Stoel Rives LLP
	10.1		Credit Agreement Between ESCO Corporation, subsidiaries of ESCO Corporation named therein, as guarantors, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association, as Syndication Agent, Union Bank, N.A., as Documentation Agent, U.S. Bank National Association, as Co-Agent, and the Other Lenders named therein, dated November 18, 2010. Portions of this exhibit have been redacted and filed separately with the SEC pursuant to a confidential treatment request.
	**10.2		Form of Restated Indemnity Agreement between ESCO Corporation and each of its directors and executive officers+
	10.3		2010 Stock Incentive Plan as amended+
	**10.4		2000 Stock Incentive Plan, as amended+
	10.5		Form of Restated Stock Transfer Restriction Agreement and related form of amendment and schedule of parties
	10.6		[Reserved]
	10.7		Form of Stock Option Agreement and related schedule+
	10.8		Form of Stock Appreciation Rights Agreement for grants after 2010 and related schedule+
	10.9		Form of Stock Appreciation Rights Agreement and form of amendment for grants prior to 2011 and related schedule+
	10.10		Form of Performance Unit Award Agreement and related schedule for grants after 2010+
	10.11		Form of Performance Unit Award Agreement and related schedule for grants prior to 2011+
	**10.12		ESCO Corporation Deferred Compensation Plan, as amended+
	**10.13		ESCO Corporation Deferred Compensation Plan II, as amended+
	**10.14		ESCO Corporation 401(k) Restoration Plan, as amended+
	**10.15		ESCO Corporation Supplemental Executive Retirement Plan, as amended+
	**10.16		ESCO Corporation 2005 Supplemental Executive Retirement Plan, as amended+
	**10.17		Annual Cash Bonus Plan, as amended+
	**10.18		ESCO Corporation ESOP Restoration Plan, as amended+
	**10.19		ESCO Corporation Employee Stock Ownership Plan 2011 Restatement (As Amended and Restated Effective as of June 1, 2011)+
	**10.20		Letter Agreement with Gene K. Huey+
	**10.21		Stock Appreciation Rights Agreement for Steven D. Pratt+
	**10.22		Amendments to Stock Appreciation Rights Agreement for Steven D. Pratt for grants prior to 2011+
	10.23		Form of Stock Award Agreement for non-employee directors and related schedule+
	10.24		Amendment No. 1 to Credit Agreement dated June 1, 2011 between ESCO Corporation and Bank of America N.A., as Administrative Agent for the Lenders
	10.25		Short-Term Incentive Plan+
	10.26		Amendments to SAR Award Agreements with Larry R. Huget+
	10.27		First Amendment to the ESCO Corporation Employee Stock Ownership Plan+
	**21.1		Subsidiaries of the registrant.
	23.1		Consent of PricewaterhouseCoopers LLP


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee(3)




Class A Common Stock	$175,000,000	$20,317.50


	Per Share	Total
Initial public offering price	$	$
Underwriting discounts	$	$
Proceeds, before expenses, to ESCO Corporation	$	$
Proceeds, before expenses, to the selling shareholders	$	$


Wells Fargo Securities		Baird		KeyBanc Capital Markets		BMO Capital Markets


Assumed initial public offering price per share			$
	Pro forma net tangible book value per share as of March 31, 2011	$
	Increase in net tangible book value per share attributable to new investors	$
Pro forma as adjusted net tangible book value per share after this offering			$

Dilution per share to new investors			$


Oregon (State or other jurisdiction of incorporation or organization)		3532 (Primary Standard Industrial Classification Code Number)		93-0989423 (I.R.S. Employer Identification Number)


Copies To:
Robert J. Moorman James M. Kearney Stoel Rives LLP 900 SW Fifth Avenue, Ste. 2600 Portland, Oregon 97204 Tel: (503) 224-3380 Fax: (503) 220-2480		Sarah K. Solum Davis Polk & Wardwell LLP 1600 El Camino Real Menlo Park, California 94025 Tel: (650) 752-2011 Fax: (650) 752-3611

		Page

Prospectus Summary		1
Explanatory Note Regarding Changes in Our Capital Stock		5
The Offering		6
Summary Consolidated Financial and Other Data		8
Risk Factors		13
Special Note Regarding Forward-Looking Statements		27
Use of Proceeds		29
Dividend Policy		30
Capitalization		31
Dilution		33
Selected Consolidated Financial and Other Data		35
Management's Discussion and Analysis of Financial Condition and Results of Operations		40
Industries		74
Business		79
Management		100
Compensation of Executive Officers		107
Certain Relationships and Related Person Transactions		127
Principal and Selling Shareholders		129
Description of Employee Stock Ownership Plan		133
Description of Capital Stock		134
Shares Eligible for Future Sale		141
Material United States Federal Income Tax Consequences to Non-U.S. Holders		144
Underwriting		148
Legal Matters		153
Experts		153
Where You Can Find More Information		153
Index to Financial Statements		F-1


		*Engineered Products Group*, or EPG, designs, develops and manufactures wear parts and wear part carriers and provides wear solutions for mining, infrastructure development and other challenging industrial wear applications. EPG wear parts include ground engaging tools, or GET, such as mechanically attached teeth on buckets for earth moving, crusher parts, scrap recycling hammers and dragline rigging. We believe we are the global market leader in GET tooth systems used in surface mining and infrastructure development, with an extensive offering of patented GET products. Our wear parts, which typically are consumed in less than one year, represented 80% of EPG net sales in 2010. In addition to wear parts, we also design and manufacture wear part carriers, such as dragline buckets for coal mining where we believe we are the global market leader. We have a global network of 21 EPG manufacturing facilities and 36 EPG sales and distribution offices in 18 countries. EPG represented $712.6 million, or 84%, of our net sales in 2010.


		*Turbine Technologies Group*, or TTG, manufactures superalloy precision investment cast components used in the aerospace, power generation and other industrial markets, such as blades, vanes and complex structural parts used in aircraft engines and industrial gas turbines. Broad manufacturing and metallurgical capabilities and extensive engineering expertise, backed by the strength of our brand, have enabled TTG to become an important supplier in these markets. In 2010, 70% of TTG net sales were from products used in the "hot gas path" of turbines and considered replacement parts. TTG represented $136.9 million, or 16%, of our net sales in 2010.

	As of

	March 31, 2011 pro forma		March 31, 2011			December 31, 2010
Balance sheet data:
Cash and cash equivalents	$	81,078	$	81,078		$	114,101
Current assets, excluding cash and cash equivalents		314,321		314,321			268,166
Property and equipment, net		173,788		173,788			167,446
Total assets		748,337		748,337			723,622
Current liabilities, excluding the current portion of debt		144,641		144,641			133,854
Total debt, including current portion		271,760		271,760			273,314
Contingently redeemable equity securities(12)		3,521		254,244			232,184
Total equity/(deficit)(12)		247,180		(7,064	)		(4,622	)

	Shares Purchased		Total Consideration

	Shares Purchased		Total Consideration		Average Price Per Share
	Number	%	Amount	%	Average Price Per Share
Existing shareholders
New investors

Total


Cost of goods sold		$	3.5	$	2.7	$	0.8	29.6	%
Selling and administrative expenses			1.6		1.3		0.3	23.1

	Total	$	5.1	$	4.0	$	1.1	27.5	%

(dollars in millions)		Three months ended March 31, 2011				Three months ended March 31, 2010				$ Change

Selling and administrative		$	46.7	18.4	%	$	31.2	16.8	%	$	15.5		49.7	%
	EPG		32.3	14.8			22.9	14.9			9.4		41.0
	TTG		4.1	11.7			4.2	13.4			(0.1	)	(2.4	)
	Other		10.3				4.1				6.2		151.2


Cost of goods sold		$	11.9	1.4	%	$	11.1	1.6	%
Selling and administrative expenses			5.4	0.6	%		5.4	0.8	%

	Total	$	17.3	2.0	%	$	16.5	2.4	%


Goldman, Sachs & Co.		Morgan Stanley


(1) ESOP non-cash compensation expense included in these line items is as follows:
	Cost of goods sold		$	11.1	1.6	%	$	14.0	1.5	%
	Selling and administrative expenses			5.4	0.8	%		6.3	0.7	%

		Total	$	16.5	2.4	%	$	20.3	2.2	%

	Payments Due

(in millions)	Total		Less than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Long-term debt obligations	$	200.2	$	10.0	$	20.1	$	170.1	$	—
Interest on long-term debt		14.1		5.1		4.8		4.2		—
Operating lease obligations		18.6		5.1		4.0		3.0		6.5
Capital lease obligations		2.8		1.5		1.2		0.1		—
Chilean foundry construction obligations		15.2		15.2		—		—		—
Pension plan obligation(1)		14.5		14.5

	$	265.4	$	51.4	$	30.1	$	177.4	$	6.5



Rate assumed for next year	8.4	%	8.7	%	9.0	%
Ultimate rate	4.5	%	4.5	%	4.5	%
Year in which ultimate rate is reached	2028		2028		2028


The demand for aerospace castings is driven by new aircraft build rates and global airline traffic. Aircraft manufacturers grew their backlog at a 29% compound annual growth rate from 2004 through 2008, but backlog decreased by 3% in 2009 because new orders did not offset deliveries. With the recovery in the global economy and growth in airline traffic leading to a rebound in backlog, aircraft OEMs are increasing production rates and consequently, according to Airline Monitor, engine deliveries are expected to grow 6.8% in 2011 and 13.0% in 2012. This long-term positive trend is also supported by the launch and ramp of programs such as Boeing's 787 and 747-8 and Airbus' A380.


	Engine Delivery Forecast Number of Engines		World Airline Traffic Revenue Passenger Miles Billion

	Source: Airline Monitor		Source: Airline Monitor


		Engineered Products Group, or EPG, designs, develops and manufactures wear parts and wear part carriers, and provides solutions for mining, infrastructure development and other challenging industrial wear applications. We believe we are the global market leader in ground engaging tools, or GET tooth systems, used in surface mining and infrastructure development, with an extensive offering of patented GET products. EPG represented $712.6 million, or 84%, of our net sales in 2010. Turbine Technologies Group, or TTG, manufactures superalloy precision investment cast components used in the power generation and aerospace markets. TTG represented $136.9 million, or 16%, of our net sales in 2010.

(dollars in thousands)	March 31, 2010		March 31, 2011

Total	$	218,747	$	350,506
*EPG*		123,211		253,232
Mining		67,694		163,090
Infrastructure development		41,982		68,951
Industrial		13,535		21,191
*TTG*		95,536		97,274

Name	Age	Position

Steven D. Pratt	64	Chief Executive Officer and Chairman of the Board of Directors
Calvin W. Collins	52	President and Chief Operating Officer and Director
Ray Verlinich	55	Vice President — Finance and Chief Financial Officer
Gene K. Huey	63	Vice President and Treasurer
Nicholas L. Blauwiekel	55	Vice President of Human Resources
Kevin S. Thomas	37	Vice President, General Counsel and Corporate Secretary
François Baril	45	President, Turbine Technologies Group
F. Patrick Fonner	61	Group Vice President, Engineered Products Group
Jon V. Owens	49	Vice President of Marketing and Global Business Processes
Peter F. Adams	67	Director
Frank Alvarez	65	Director
Stephen E. Babson	60	Director
Peter F. Bechen	64	Director
Frank Jungers	84	Director
Henry T. Swigert	80	Director
Robert C. Warren, Jr.	63	Director
John W. Wood, Jr.	67	Director

Name	Fees Earned or Paid in Cash		Option Awards(1)		Total

Peter F. Adams	$	40,000	$	61,003	$	101,003
Frank Alvarez		37,000		61,003		98,003
Stephen E. Babson		48,500		61,003		109,503
Peter F. Bechen		56,500		61,003		117,503
Frank Jungers		45,000		61,003		106,003
Henry T. Swigert		39,000		61,003		100,003
Robert C. Warren, Jr.		37,000		61,003		98,003
John W. Wood, Jr.		38,500		61,003		99,503

Performance Criteria		Performance for 70% Threshold Bonus Payout		Performance for 100% Target Bonus Payout		Performance for 200% Maximum Bonus Payout

Company EBIT(1)	70-75%	$	73,700,000	$	81,300,000	$	92,000,000
Company Net Working Capital Turnover(2)	25-30%		4.1		4.3		4.6
EPG EBIT(1)	70%	$	79,100,000	$	85,300,000	$	94,000,000
EPG Net Working Capital Turnover(2)	30%		3.9		4.1		4.4

Performance Criteria			Performance for 60% Threshold Bonus Payout		Performance for 100% Target Bonus Payout		Performance for 300% Maximum Bonus Payout

Cash Flow(1)	40	%	$	216,210,000	$	254,670,000	$	321,960,000
Net Sales Growth(2)	60	%	$	130,700,000	$	193,810,000	$	290,720,000

Name	Current Base Salary					Value of IPO Restricted Stock Award(1)

Calvin W. Collins	$	400,000	140.0	%	2.5	$	1,400,000
F. Patrick Fonner	$	283,800	80.0	%	1.0	$	227,000
Ray Verlinich	$	300,000	125.0	%	2.5	$	937,500

Name and Principal Position(1)

Steven D. Pratt Chief Executive Officer	2010	677,000	860,703	862,024	656,583	300,299	3,356,609
Larry R. Huget Chief Operating Officer	2010	389,235	418,839	345,898	452,862	232,544	1,839,378
Gene K. Huey Vice President & Chief Financial Officer	2010	372,633	383,803	313,161	472,533	162,330	1,704,460
Calvin W. Collins President, Engineered Products Group	2010	290,000	266,880	239,059	55,423	121,800	973,162
F. Patrick Fonner Vice President, Engineered Products Group	2010	276,836	236,848	207,736	186,382	117,062	1,024,864

	401(k)		401(k) Restoration		ESOP		ESOP Restoration

Steve D. Pratt	$	18,988	$	68,730	$	39,951	$	145,056
Larry R. Huget		18,988		47,361		39,951		93,725
Gene K. Huey		18,988		26,276		39,951		56,338
Calvin W. Collins		18,988		13,960		39,951		30,996
F. Patrick Fonner		18,988		13,561		39,617		30,680

	Option Awards(1)

Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)
Steven D. Pratt		6,156		2,179,347
Larry R. Huget		3,078		1,089,674
Gene K. Huey		2,770		980,635
Calvin W. Collins		—		—
F. Patrick Fonner		—		—

Name	Acceleration of Stock Appreciation Rights(1)		Accelerated Payout of Performance Units(2)		Total

Steven D. Pratt	$	2,435,663	$	1,283,498	$	3,719,161
Gene K. Huey	$	1,080,032	$	571,444	$	1,651,476
Calvin W. Collins	$	711,088	$	390,927	$	1,102,015
F. Patrick Fonner	$	668,973	$	355,280	$	1,024,253

Name	Payment of Performance Units(1)

Steven D. Pratt	$	1,052,744
Gene K. Huey	$	466,213
Calvin W. Collins	$	302,370
F. Patrick Fonner	$	297,357

	Disability or Retirement(1)				Death(2)

Name	Maximum Shares Purchased		Purchase Price		Maximum Shares Purchased		Purchase Price
Steven D. Pratt		7,654	$	4,064,657		11,481	$	6,096,985
Gene K. Huey		6,680	$	3,547,414		10,020	$	5,321,121
Calvin W. Collins		1,189	$	631,418		1,784	$	947,393
F. Patrick Fonner		1,225	$	650,536		1,837	$	975,539

			Number of Shares

Goldman, Sachs & Co.
Morgan Stanley & Co. LLC
Wells Fargo Securities, LLC
Robert W. Baird & Co. Incorporated
KeyBanc Capital Markets Inc.
BMO Capital Markets Corp.

	Total

		Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-2
CONSOLIDATED FINANCIAL STATEMENTS:
	STATEMENTS OF EARNINGS	F-3
	BALANCE SHEETS	F-4
	STATEMENTS OF CASH FLOWS	F-5
	STATEMENT OF CHANGES IN CONTINGENTLY REDEEMABLE EQUITY SECURITIES AND SHAREHOLDERS' EQUITY	F-7
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-10
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
	STATEMENTS OF EARNINGS	F-57
	BALANCE SHEETS	F-58
	STATEMENTS OF CASH FLOWS	F-59
	STATEMENT OF CHANGES IN CONTINGENTLY REDEEMABLE EQUITY SECURITIES AND SHAREHOLDERS EQUITY	F-60
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-63