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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

As filed with the Securities and Exchange Commission on February 13, 2012

Registration No. 333-173841

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 3

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

ESCO CORPORATION
(Exact name of registrant as specified in its charter)


Oregon (State or other jurisdiction of incorporation or organization)		3532 (Primary Standard Industrial Classification Code Number)		93-0989423 (I.R.S. Employer Identification Number)

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
Senior 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)


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

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):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

CALCULATION OF REGISTRATION FEE

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

(1): Includes shares of Class A Common Stock that the underwriters have the option to purchase.
(2): Estimated solely for purposes of determining the registration fee in accordance with Rule 457(o) under the Securities Act of 1933.
(3): $20,317.50 previously paid.

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.

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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.

Subject to Completion. Dated February 13, 2012.

ESCO Corporation

Class A Common Stock

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 directors 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.


	Per Share	Total
Initial public offering price	$	$
Underwriting discounts	$	$
Proceeds, before expenses, to ESCO Corporation	$	$
Proceeds, before expenses, to the selling shareholders	$	$

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 , 2012.


Goldman, Sachs & Co.		Morgan Stanley


Wells Fargo Securities		Baird		KeyBanc Capital Markets		BMO Capital Markets

Prospectus dated , 2012.

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TABLE OF CONTENTS

		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 Notes Regarding Forward-Looking and Other 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		41
Industries		76
Business		81
Management		102
Compensation of Executive Officers		108
Certain Relationships and Related Person Transactions		130
Principal and Selling Shareholders		132
Description of Employee Stock Ownership Plan		136
Description of Capital Stock		137
Shares Eligible for Future Sale		144
Material United States Federal Income Tax Consequences to Non-U.S. Holders		147
Underwriting		151
Legal Matters		156
Experts		156
Where You Can Find More Information		156
Index to Financial Statements		F-1

Through and including , 2012 (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.

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PROSPECTUS SUMMARY

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.

Our Company

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 February 1, 2012 we had 49 U.S. patents and 511 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.

We have two operating groups:


		*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 offer an extensive portfolio 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. We have a global network of 27 EPG manufacturing facilities and 48 EPG sales and distribution offices in 20 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.

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Our Industries

•: EPG. Growth in demand for our EPG products is primarily driven by growing populations and urbanization in emerging markets. These macro trends are driving significant demand for a wide range of commodities. According to the LME Copper Index, the TSI Iron Ore Index and the West Texas Intermediate crude oil market price, from December 2008 to December 2011 prices for copper, iron ore and crude oil were up 150%, 93% and 41%, respectively. The capital expenditure budgets for the top five global mining companies by market capitalization have increased an average of 62% in 2011 over 2010.

Our EPG net sales are also driven by demand for new infrastructure in emerging markets and the need to replace aging infrastructure in developed markets. According to Business Monitor International, infrastructure spending globally is expected to grow at a compound annual growth rate of 10% from 2011 to 2015.
•: TTG. Growth in the aerospace market is driven by new aircraft builds and airline traffic. With the recovery in the global economy and growth in airline traffic, aircraft OEMs are increasing production rates and consequently, according to Airline Monitor, engine deliveries are expected to grow 15.0% in 2012 and 6.4% in 2013. Economic growth and increasing urbanization are expected to drive growth for components supporting the power OEM markets. According to Frost & Sullivan, gas turbine sales are expected to increase at a compound annual growth rate of 5.1% from 2010 through 2015.

Our Strengths

•: Well Positioned in Attractive, Diverse and Growing Markets. We serve more than 1,000 customers in the mining, infrastructure development, power generation, aerospace and industrial markets, including the 10 largest global mining companies, and are positioned to benefit from positive secular trends in commodities markets and global infrastructure spending.
•: Broad Portfolio of Innovative, Mission-Critical Products. We sell mission-critical wear parts essential to the productivity of our customers' capital equipment in mining and infrastructure development applications where downtime is expensive. As of February 1, 2012, we had 49 U.S. patents and 511 foreign patents, including foreign counterparts to our U.S. patents.
•: Significant and Growing Installed Base Generates Recurring Sales. We estimate that our EPG products are installed on approximately one-third of the world's surface mining machines. Our consumable, often patented, wear parts are generally an operating requirement for our customers and can require replacement as often as every few weeks, generating recurring sales as parts wear.
•: Well-Established Brand with a Loyal, Diverse Customer Base. 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. We have served each of our top 10 customers in 2010 for at least 15 years.
•: Global Operations with Local Presence. We have an expansive network of 34 manufacturing facilities, including 17 foundries, and 48 sales and distribution offices. We operate in 21 countries on six continents and maintain a local presence in most of the major mining regions we serve, enabling us to develop deep customer relationships, enhance our logistical capabilities and cross-sell a wide range of products and solutions.
•: Management Team and Organizational Capability. Our executive officers have an average of over 16 years of experience in our business.

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Our Strategies

•: Customer-Driven Innovation. Through ongoing contact with our customers in the field, we intend to continue to develop close relationships that allow us to solve our customers' challenging problems.
•: Expand Our Global Presence. We plan to continue to grow our global operations by expanding alongside customers into key mining and infrastructure development regions, growing our direct sales channel and expanding our manufacturing capacity.
•: Expand Direct Distribution, Selling a Broader Range of Products and Solutions. We continue to focus on building a direct sales channel in markets where there is a high concentration of mining activity, which we believe will allow us to manage how our products are positioned with customers, provide significant opportunities to cross-sell products and solutions and position us to capture incremental growth and profitability.
•: Increase Our Installed Base. In EPG, we will continue to pursue a "push/pull" strategy to increase first fitments of our branded products on capital equipment, working with OEMs to develop products for first fitment on their machines and with end-customers to create pull through demand for our products.
•: Pursue Strategic Acquisitions. We plan to continue our successful identification, acquisition and integration of businesses 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.
•: Focus on Continuous Improvement and Lean Processes. We will continue to focus on lean processes to drive continuous improvements in all aspects of our business, which we expect will allow us to continue 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.

Selected Risk Factors

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:

•: our business is subject to changes in general economic conditions;
•: our business is affected by cyclicality in the end markets we serve;
•: inventory stocking decisions by our customers can exaggerate the effects of changing economic and market conditions on our financial results;
•: our production capacity may not be sufficient to meet customer demand;
•: we are subject to government regulation, including under environmental laws and regulations, and any violation of or liabilities under these laws and regulations could adversely affect us;
•: we operate in highly competitive industries;
•: our continued global expansion efforts may not be successful;
•: the expansion of our direct sales model may have negative consequences;
•: a material disruption to one or more of our manufacturing plants could adversely affect our ability to generate revenue;

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•: OEM customers may develop their own product lines or work with our competitors to develop products that compete with ours;
•: our business could be adversely affected by our failure to effectively manage proprietary product life cycles and to develop new and innovative products;
•: our continued success depends on our ability to protect our intellectual property rights;
•: we expect to pay lower dividends than we have historically paid, and we may not pay any dividends; and
•: the holders of our Class B Common Stock have the right to approve or reject change in control transactions presented to shareholders for approval and may otherwise have the ability to control the outcome of matters submitted to shareholders.

Corporate Information

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 December 31, 2011, we had 5,362 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.

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EXPLANATORY NOTE REGARDING CHANGES IN OUR CAPITAL STOCK

In connection with the offering made by this prospectus, we will amend our articles of incorporation to:

•: rename our existing authorized Class A Common Stock "Legacy Class A Common Stock";
•: authorize the class of common stock, "Class A Common Stock", that is offered by this prospectus;
•: authorize blank-check preferred stock;
•: amend the terms of the Legacy Class A Common Stock to provide that each share (a) sold in an underwritten public offering (including the offering made by this prospectus) will automatically convert into one share of Class A Common Stock immediately upon the sale, (b) outstanding on the date that is 180 days after the date of this prospectus (the first "Automatic Conversion Date") will automatically convert on that date into one-half share of new Class A Common Stock and one-half share of Legacy Class A Common Stock and (c) outstanding on the date that is 360 days after the date of this prospectus (the second "Automatic Conversion Date") will automatically convert on that date into one share of new Class A Common Stock (subject, in each case, to adjustment for stock splits, stock dividends, recapitalizations and similar events occurring after the offering made by this prospectus); and
•: amend the terms of the existing Class B Common Stock to provide that each share will automatically convert upon transfer to a person other than those described below (a) if transferred before the first Automatic Conversion Date, into one share of Legacy Class A Common Stock; (b) if transferred after the first but before the second Automatic Conversion Date, into one-half share of Legacy Class A Common Stock and one-half share of Class A Common Stock; and (c) if transferred on or after the second Automatic Conversion Date, into one share of Class A Common Stock (subject, in each case, to adjustment for any stock splits, stock dividends, recapitalizations and similar events occurring after the offering made pursuant to this prospectus). The shares of Class B Common Stock are owned by Henry T. Swigert as trustee of the Swigert 2000 Trust and may be transferred without automatic conversion to Henry T. Swigert; any trustee, in the capacity of trustee, of the Swigert 2000 Trust; or any trustee, in the capacity of trustee, of any trust created under the Swigert 2000 Trust. Mr. Swigert is a member of our board of directors.

Before completing the offering made by this prospectus, 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, all shares of our outstanding Class C Preferred Stock, all of 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 , 2012 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.

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THE OFFERING


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 will convert into a total of shares of Class A Common Stock after the offering 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 will convert into a total of shares of Class A Common Stock after the offering 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 purposes, including working capital and capital expenditures. We expect to use approximately $50 million of the net proceeds for capital expenditures, including expanding foundry and manufacturing capacity and direct sales and distribution capability. We may also use a portion of the proceeds for acquisitions of businesses to complement or enhance our product offerings and manufacturing capacity. 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.

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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 Class A Common Stock outstanding after the offering made by this prospectus is based on 887,536 shares of Legacy Class A Common Stock outstanding as of September 30, 2011 and excludes:

•: 18,037 shares issuable upon exercise of options outstanding as of September 30, 2011 to purchase Legacy Class A Common Stock at a weighted average exercise price of $58.66 per share;
•: up to 58,664 shares issuable upon the exercise of stock-settled stock appreciation rights, the number of which will depend upon the fair value of our Class A Common Stock at the time of exercise ( shares assuming a fair value of $ per share, the midpoint of the range set forth on the cover of this prospectus);
•: up to 16,266 shares issuable pursuant to performance units, the number of which will depend upon the achievement of specified performance measures; and
•: 190,503 additional shares of Legacy Class A Common Stock reserved for issuance under our 2010 Stock Incentive Plan.

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

•: the amendment of our articles of incorporation described in "Explanatory Note Regarding Changes in Our Capital Stock";
•: the -for-one stock split of Legacy Class A Common Stock and Class B Common Stock by means of a stock dividend before the offering made by this prospectus;
•: the conversion of all shares of our Class C Preferred Stock and Legacy Class A Common Stock into Class A Common Stock as described in "Explanatory Note Regarding Changes in Our Capital Stock";
•: no exercise of outstanding options or stock-settled stock appreciation rights, and no issuance of stock pursuant to performance units;
•: no exercise of the put rights described in "Description of Capital Stock — Shareholder Agreements"; and
•: no exercise by the underwriters of their option to purchase up to additional shares of Class A Common Stock from us in the offering made by this prospectus.

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SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

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 nine months ended September 30, 2010 and 2011 and the summary consolidated balance sheet data as of September 30, 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.

		Nine months ended						Fiscal year ended

(dollars in thousands, except per share data)		September 30, 2011			September 30, 2010			December 31, 2010			December 31, 2009			December 26, 2008
Statement of earnings data:
Net sales		$	815,760		$	614,540		$	849,481		$	680,390		$	939,913
Cost of goods sold(1)			594,604			451,380			626,883			507,115			724,921

Gross profit			221,156			163,160			222,598			173,275			214,992
Operating expenses
	Selling and administrative expenses(1), (2)		146,999			99,018			147,881			112,535			132,719
	Restructuring and other(3)		338			409			748			6,332			1,792

Operating profit			73,819			63,733			73,969			54,408			80,481
Interest expense, net			10,167			18,791			23,710			26,226			26,736
Loss on early extinguishment of debt(4)			—			—			13,013			—			—
Other (income) expense(5)			964			399			(731	)		(1,091	)		4,259

Earnings from continuing operations before income taxes			62,688			44,543			37,977			29,273			49,486
Income tax expense			21,807			14,700			9,423			8,487			13,297

Earnings from continuing operations, net of tax			40,881			29,843			28,554			20,786			36,189
Earnings from discontinued operations, net of tax(6)			—			—			—			306			443
Net earnings			40,881			29,843			28,554			21,092			36,632
Less: net earnings attributable to the non-controlling interest — continuing operations			(4,567	)		(3,489	)		(4,634	)		(2,537	)		(5,073	)
Less: net earnings attributable to the non-controlling interest — discontinued operations			—			—			—			(141	)		(343	)

Net earnings attributable to ESCO shareholders from continuing operations			36,314			26,354			23,920			18,249			31,116
Valuation adjustment of Class C Preferred Stock(7)			6,300			(1,757	)		(16,521	)		7,933			13,287

Net earnings attributable to ESCO common shareholders from continuing operations		$	42,614		$	24,597		$	7,399		$	26,182		$	44,403

Pro forma earnings from continuing operations attributable to ESCO shareholders(8)

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			Nine months ended				Fiscal year ended

(dollars in thousands, except per share data)			September 30, 2011		September 30, 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		$	38.92	$	22.67	$	6.81	$	24.18	$	41.08
	Diluted earnings per share from continuing operations allocated to ESCO common shareholders(10)		$	29.05	$	21.57	$	6.62	$	15.16	$	26.21
	Weighted average shares outstanding
		Basic		1,095		1,085		1,086		1,083		1,081
		Diluted		1,250		1,222		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

	As of

	September 30, 2011 pro forma(12)		September 30, 2011		December 31, 2010
Balance sheet data:
Cash and cash equivalents	$	47,284	$	47,284	$	114,101
Current assets, excluding cash and cash equivalents		382,660		382,660		268,166
Property and equipment, net		187,913		187,913		167,446
Total assets		807,232		807,232		723,622
Current liabilities, excluding the current portion of debt		173,033		173,033		133,854
Total debt, including current portion		276,981		276,981		273,314
Contingently redeemable equity securities(12)		2,578		250,847		232,184
Total equity/(deficit)(12)		280,776		32,507		(4,622	)

	Nine months ended						Fiscal year ended

	September 30, 2011			September 30, 2010			December 31, 2010			December 31, 2009			December 26, 2008
Other data:
Adjusted EBITDA(13)	$	124,583		$	96,312		$	127,780		$	99,497		$	130,853
Adjusted EBITDA margin(13)		15.3	%		15.7	%		15.0	%		14.6	%		13.9	%
Adjusted net earnings from continuing operations(14)	$	53,245		$	34,615		$	49,493		$	31,234		$	48,136

(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 $6.0 million and $0.8 million for the nine months ended September 30, 2011 and September 30, 2010, is included in selling and administrative expenses.
(3): Restructuring and other costs included: in 2011, expenses related to reductions in force to eliminate redundancies related to a partial facility relocation and acquisitions; 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.

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(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)

The pro forma column gives effect to changes to "contingently redeemable preferred equity securities" that result from the offering made by this prospectus. 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 161,791 shares of the Legacy Class A Common Stock, upon completion of the offering made by this prospectus and (b) with respect to the remaining 3,458 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 GAAP disclosure; and

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•: 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.

		Nine months ended					Fiscal year ended

(dollars in thousands)		September 30, 2011		September 30, 2010			December 31, 2010			December 31, 2009			December 26, 2008
Earnings from continuing operations, net of tax		$	40,881	$	29,843		$	28,554		$	20,786		$	36,189
Add/(Subtract):
	Interest (net) and loss on early extinguishment of debt		10,167		18,791			36,723			26,226			26,736
	Income tax expense		21,807		14,700			9,423			8,487			13,297
	Depreciation and amortization(a)		24,718		19,868			27,479			25,113			24,187
	Other (income) expense		964		399			(731	)		(1,091	)		4,259
	ESOP non-cash compensation expense(b)		14,896		12,238			17,259			16,504			20,248
	Mark to market on SARs(c)		6,041		774			7,678			—			(260	)
	Unrealized (gains) losses on long-term investments(d)		1,918		(710	)		(1,953	)		(2,860	)		4,405
	Restructuring and other(e)		3,191		409			748			6,332			1,792
	Port Hope reclamation(f)		—		—			2,600			—			—

	Adjusted EBITDA	$	124,583	$	96,312		$	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 costs included: in 2011, expenses related to reductions in force to eliminate redundancies related to a partial facility relocation and acquisitions; in 2010, restructuring expenses related to the closure of our Saskatoon, Saskatchewan foundry; in 2009, restructuring expenses related to personnel reductions and the closure of our West Jordan, Utah plant and the Saskatoon, Saskatchewan foundry; and in 2008, 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.

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The most closely comparable GAAP measure to Adjusted EBITDA margin is operating profit margin, which is operating profit divided by net sales. The following table shows how each of operating profit margin and Adjusted EBITDA margin is calculated.

		Nine months ended						Fiscal year ended

(dollars in thousands)		September 30, 2011			September 30, 2010			December 31, 2010			December 31, 2009			December 26, 2008
Net sales		$	815,760		$	614,540		$	849,481		$	680,390		$	939,913
Operating profit			73,819			63,733			73,969			54,408			80,481
Adjusted EBITDA			124,583			96,312			127,780			99,497			130,853

	Operating profit margin		9.0	%		10.4	%		8.7	%		8.0	%		8.6	%
	Adjusted EBITDA margin		15.3	%		15.7	%		15.0	%		14.6	%		13.9	%

	Nine months ended				Fiscal year ended

(dollars in thousands)	September 30, 2011		September 30, 2010		December 31, 2010			December 31, 2009			December 26, 2008
Operating profit	$	73,819	$	63,733	$	73,969		$	54,408		$	80,481
Interest expense, net		10,167		18,791		23,710			26,226			26,736
Loss on early extinguishment of debt(4)		—		—		13,013			—			—
Other (income) expense(5)		964		399		(731	)		(1,091	)		4,259

Earnings from continuing operations before income taxes	$	62,688	$	44,543	$	37,977		$	29,273		$	49,486

(14): We define adjusted net earnings from continuing operations as net earnings from continuing operations attributable to ESCO shareholders plus loss on early extinguishment of debt, net of tax; mark to market on SARs expense, net of tax; and ESOP non-cash compensation expense, net of tax. The adjustments assume a 35% tax rate. We have included adjusted net earnings from continuing operations 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.

The following table reconciles net earnings from continuing operations attributable to ESCO shareholders to adjusted net earnings from continuing operations.

	Nine months ended					Fiscal year ended

(dollars in thousands)	September 30, 2011		September 30, 2010			December 31, 2010			December 31, 2009			December 26, 2008
Net earnings from continuing operations attributable to ESCO shareholders	$	36,314	$	26,354		$	23,920		$	18,249		$	31,116
Loss on early extinguishment of debt, net of tax		—		—			8,458			—			—
Mark to market on SARs, net of tax		3,926		503			4,991			—			(169	)
ESOP non-cash compensation expense, net of tax		9,683		7,954			11,218			10,728			13,161
Unrealized (gain) loss on investments, net of tax		1,247		(462	)		(1,270	)		(1,859	)		2,863
Restructuring and other, net of tax		2,075		266			2,176			4,116			1,165

Adjusted net earnings from continuing operations	$	53,245	$	34,615		$	49,493		$	31,234		$	48,136

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RISK FACTORS

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.

Risks Related to Our Business

Our business is subject to changes in general economic conditions.

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.

Our business is affected by cyclicality in the end markets we serve.

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, level of air traffic 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

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

Our production capacity may not be sufficient to meet customer demand.

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 about eight weeks; at the end of 2011, the average lead time was about 16 weeks, and the lead time for some products was as long as 29 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 business and results of operations.

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 operate in highly competitive industries.

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.

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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

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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.

Our continued global expansion efforts may not be successful.

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. 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.

The expansion of our direct sales model may have negative consequences.

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.

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.

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Our operations may be affected by government policies and spending.

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 may incur penalties and experience other adverse effects on our business for a violation of OFAC regulations.

In June 2011, we learned that a foundry operated by one of our foreign subsidiaries had been purchasing and using material from a distributor that obtained the material from a supplier that procured the source material from Cuba. The purchase and sale of material originating in Cuba by a subsidiary of a U.S. corporation, wherever the subsidiary is located, is prohibited by laws and regulations governing the U.S. embargo of Cuba, which are administered by the Office of Foreign Asset Control of the U.S. Department of the Treasury (OFAC). We voluntarily reported the violation to OFAC, stopped purchasing from the distributor, temporarily halted production at the foundry and sequestered all inventory containing Cuban material pending receipt of an OFAC license to sell the inventory. In July 2011, we resumed production at the foundry with material provided by another supplier and subsequently received a license to sell most of the inventory that contained Cuban material.

OFAC has been investigating the violation, and we continue to work with OFAC and respond to its requests for additional information. Penalties for violations of OFAC regulations can be significant because they are determined on a per violation basis; each separate purchase of the material and each separate sale of a product containing the material in the five years before the assessment of the penalty could subject us to a penalty of up to $65,000. OFAC has wide discretion to settle claims for violations. We have not established a reserve for a potential penalty and we do not know if OFAC will assess a penalty. See Note 13 to our Consolidated Financial Statements for the nine months ended September 30, 2011. If we are penalized, we believe, after consultation with legal counsel, the penalty would not exceed approximately $5.5 million; however, any assessed penalty could be materially higher. Further, the OFAC investigation may take many months to complete, and we do not know when OFAC will make a final determination. We may suffer other adverse effects on our business as a result of the violation and our efforts to improve our compliance procedures, including legal costs and harm to our reputation.

Although we have enhanced our compliance procedures in response to this violation, the enhanced procedures do not guarantee compliance, and any future violations could have adverse effects on our business.

We may be adversely affected by government regulations.

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

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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 and regulations, the policies and procedures do not guarantee compliance and our employees, contractors and agents could take actions in violation of our policies, which could have an adverse effect on our business. For example, we recently discovered an OFAC violation at a foundry operated by one of our foreign subsidiaries. See "— We may incur penalties and experience other adverse effects on our business for a violation of OFAC regulations." We took immediate action when we became aware of the violation, and we have enhanced our compliance procedures in response to this recent experience.

Approximately 57% 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 many uncertainties.

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 foreign currency risks.

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

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gains and losses, primarily related to 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 the effect of 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 $2 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

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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.

Regulatory effects of climate change could adversely affect our business.

Our operations emit carbon dioxide and other greenhouse gases (GHG). Laws and regulations with respect to GHG emissions 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. 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 regulates GHG emissions under the Clean Air Act. Under EPA regulations finalized in May 2010, the EPA regulates GHG emissions from certain stationary sources. 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. Finally, the EPA could reduce the 75,000 tons per year GHG threshold referenced above. 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.

Our operations and products expose us to potential liability.

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.

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Our business involves risks associated with complex manufacturing.

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, some of 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 some of its 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

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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.

We are exposed to credit risk in our sales practices.

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.

Labor disputes and increasing labor costs could adversely affect us.

Collective bargaining agreements or similar types of arrangements cover approximately 18.6% of our employees. When these collective bargaining agreements expire, we may not be able to reach new agreements with our employees. Four agreements covering approximately 10.3% of our employees expired in 2011, one of which is under negotiation and three of which were renegotiated and will expire in 2012, 2013 and 2014. In addition, we entered into an initial agreement, which expires in 2012, covering 1.7% of our employees in Parauapebas, Brazil. Excluding arrangements in Belgium, four agreements covering 11% of our employees will expire in 2012. 2.9% of our employees, who are located in Belgium, are subject to agreements that expire at different times and are typically implemented following the expiration date: four expired at the end of 2011 and are

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under negotiation and one expires in 2013. An additional 6.6% 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 in the future. 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.

Risks Related to This Offering

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:

•: our operating performance and the performance of other similar companies;
•: the overall performance of the equity markets;
•: publication of unfavorable research reports about us or our industry or withdrawal of research coverage by securities analysts;
•: speculation in the press or investment community; and
•: global economic, political, legal and regulatory factors unrelated to our performance.

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.

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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

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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 an investor in this offering, you will incur immediate and substantial dilution.

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 may not pay dividends on the Class A Common Stock.

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 future dividends, 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 completion 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

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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:

•: authorize "blank check" preferred stock, which could be issued without shareholder approval and could have voting, liquidation, dividend and other rights superior to the Class A Common Stock;
•: create a classified board of directors whose members serve staggered three-year terms, resulting in the election of one-third of the directors in any year;
•: provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and
•: require supermajority votes of the holders of our common stock, voting as a single group, to amend specified provisions of our articles of incorporation and bylaws.

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.

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SPECIAL NOTES REGARDING FORWARD-LOOKING AND OTHER STATEMENTS

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:

•: general economic conditions, including any economic downturn in the markets in which we operate;
•: fluctuations in worldwide or regional demand for (i) engineered metal parts and components, (ii) commodities, energy and infrastructure and (iii) air travel and engineered replacement parts for jet engines;
•: consolidation within our customer base and the resulting increased concentration of our net sales;
•: the effectiveness of our cost management and productivity measures and our continued utilization of our lean initiatives;
•: changes in practices or policies of our customers related to their requirements for the products we manufacture and sell;
•: changes in the sourcing and pricing practices of our customers, including demands for price concessions as a condition to retaining current business or obtaining new business;
•: fluctuations in foreign currency exchange rates;
•: fluctuations in interest rates that may affect our borrowing costs;
•: fluctuations in the cost and availability of raw materials, labor and energy, and our ability to pass those costs on to our customers;
•: fluctuations in shipping costs and our ability to pass those costs on to our customers;
•: work stoppages or other labor disputes that could disrupt production at our facilities or those of our suppliers or customers;
•: factors or presently unknown circumstances that may affect the charges related to the impairment of our assets;
•: changes in environmental laws and regulations (or the implementation or enforcement thereof);

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•: our ability to improve our products and manufacturing processes to meet customer demands and to successfully implement new technologies and manufacturing processes when launching new products;
•: constraints on our ability to shift production between our plants in response to customer needs;
•: our ability to attract and retain key employees;
•: industry innovation and our own product development and engineering efforts and our ability to obtain patent protection on our key products;
•: changes in our exposure to product liability and warranty claims;
•: our ability to meet the financial covenants in our debt agreements;
•: liabilities arising from litigation; and
•: our ability to integrate acquired businesses and realize anticipated benefits.

See "Risk Factors" beginning on page 13 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.

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 internal studies, which rely on, among other things, (1) independent data, available publicly or by subscription, regarding market size, machine production, equipment in use in various applications, and OEM market share, (2) market surveys we commissioned or conducted, which may include customer interviews and anecdotal evidence, (3) internal 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. We make estimates and judgments in interpreting the data from these sources to determine our leadership positions. Although we believe these studies are thorough, objective and based on reliable information, an independent party might reach different conclusions.

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USE OF PROCEEDS

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 and capital expenditures. We expect to use approximately $50 million of the net proceeds for capital expenditures, including expanding foundry and manufacturing capacity and direct sales and distribution capability, particularly in major mining clusters near customers. 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."

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DIVIDEND POLICY

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:

•: $11.00 per share on Legacy Class A Common Stock and Class B Common Stock in January 2012;
•: $11.00 per share on Legacy Class A Common Stock and Class B Common Stock in December 2010;
•: $10.00 per share on Legacy Class A Common Stock and Class B Common Stock in January 2010;
•: $16,298,578 in the aggregate on Class C Preferred Stock in 2010;
•: $11.00 per share on Legacy Class A Common Stock and Class B Common Stock in January 2009; and
•: $16,419,345 in the aggregate on Class C Preferred Stock in 2009.

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 declared a dividend to common shareholders in 2011 and paid that dividend in 2012.

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.

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CAPITALIZATION

The table below sets forth our capitalization as of September 30, 2011:

•: on an actual basis;
•: on a pro forma basis to give effect to the -for-one stock split, the authorization of the Class A Common Stock and the conversion of Class C Preferred Stock into Class A Common Stock, all as described under "Explanatory Note Regarding Changes in Our Capital Stock"; and
•: on a pro forma as adjusted basis to give effect to the sale by us of shares of Class A Common Stock in the offering made by this prospectus (at an estimated initial public offering price of $ per share, the midpoint of the price range set forth on the cover of this prospectus) less the underwriting discounts and estimated offering expenses payable by us, and the use of proceeds received by us from the offering made by this prospectus as disclosed under "Use of Proceeds", and the sale by selling shareholders of shares of Class A Common Stock converted from Legacy Class A Common Stock.

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 September 30, 2011

			Actual			Pro forma			Pro forma as adjusted(5)
			(in thousands)
Total debt, including current portion			$	276,981		$	276,981		$
Contingently redeemable equity securities(1)
	Class C Preferred Stock, 205,000 shares authorized, 188,354 outstanding, actual(2)			118,053			—
	Legacy Class A Common Stock, 5,000,000 shares authorized, 887,536 shares outstanding, actual(3)			132,794			2,578
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, 887,536 shares outstanding, actual; shares authorized, pro forma and pro forma as adjusted, shares outstanding, pro forma and shares outstanding, pro forma as adjusted(4)			—			248,269
	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
	Retained earnings			26,761			26,761
	Accumulated other comprehensive loss			(22,875	)		(22,875	)
	Non-controlling interests			18,278			18,278

		Total shareholders' equity/(deficit)	$	32,507		$	280,776		$
Total capitalization			$	560,335		$	560,335		$

(1): Contingently redeemable equity securities are redeemable upon a shareholder's retirement at age 65, death or disability. See "Description of Capital Stock — Shareholder Agreements". Upon completion of the offering made by this prospectus, the contingent redemption feature terminates with respect to all of the Class C Preferred Stock and most of the Legacy Class A Common Stock. See notes 2 and 3 below.

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(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 165,249 shares (on a pre-split basis) 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 165,249 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 3,458 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 161,791 shares (on a pre-split basis) of Legacy Class A Common Stock not subject to repurchase obligations. See note 3.
(5): 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 Class A Common Stock to be outstanding after the offering made by this prospectus is based on 887,536 shares of Legacy Class A Common Stock outstanding as of September 30, 2011 and excludes:

•: 18,037 shares issuable upon exercise of options outstanding as of September 30, 2011 to purchase Legacy Class A Common Stock at a weighted average exercise price of $58.66 per share;
•: up to 58,664 shares issuable upon the exercise of stock-settled stock appreciation rights, the number of which will depend upon the fair value of our Class A Common Stock at the time of exercise ( shares assuming a fair value of $ per share, the midpoint of the range set forth on the cover of this prospectus);
•: up to 16,266 shares issuable pursuant to performance units, the number of which will depend upon the achievement of specified performance measures; and
•: 190,503 additional shares of Legacy Class A Common Stock reserved for issuance under our 2010 Stock Incentive Plan.

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DILUTION

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 the offering made by this prospectus. 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 September 30, 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 the offering made by this prospectus 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 September 30, 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.

The following table illustrates this dilution on a per share basis:


Assumed initial public offering price per share			$
	Pro forma net tangible book value per share as of September 30, 2011	$
	Increase in net tangible book value per share attributable to new investors	$
Pro forma as adjusted net tangible book value per share after the offering made by this prospectus			$

Dilution per share to new investors			$

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 the offering made by this prospectus would be $ per share, and the dilution in pro forma net tangible book value per share to new investors in the offering made by this prospectus would be $ per share.

The following table sets forth, as of September 30, 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

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payable by us, based upon a price of $ per share, the midpoint of the price range set forth on the cover of this prospectus.

	Shares Purchased		Total Consideration

	Shares Purchased		Total Consideration		Average Price Per Share
	Number	%	Amount	%	Average Price Per Share
Existing shareholders
New investors

Total

Sales by the selling shareholders in the offering made by this prospectus 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 the offering would be reduced to % of the total number of shares of our Class A Common Stock outstanding after the offering.

The above discussion and tables are based on a pro forma as adjusted basis of 887,536 shares of Legacy Class A Common Stock issued and outstanding as of September 30, 2011, and excludes:

•: 18,037 shares issuable upon exercise of options outstanding as of September 30, 2011 to purchase Legacy Class A Common Stock at a weighted average exercise price of $58.66 per share;
•: up to 58,664 shares issuable upon the exercise of stock-settled stock appreciation rights, the number of which will depend upon the fair value of our Class A Common Stock at the time of exercise ( shares assuming a fair value of $ per share, the midpoint of the range set forth on the cover of this prospectus);
•: up to 16,266 shares issuable pursuant to performance units, the number of which will depend upon the achievement of specified performance measures; and
•: 190,503 additional shares of Legacy Class A Common Stock reserved for issuance under our 2010 Stock Incentive Plan.

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

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

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 nine months ended September 30, 2010 and 2011 and the selected consolidated balance sheet data as of September 30, 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.

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			Nine months ended						Fiscal year ended

(dollars in thousands, except per share data)			September 30, 2011			September 30, 2010			December 31, 2010			December 31, 2009			December 26, 2008			December 28, 2007			December 29, 2006
Statement of earnings data:
Net sales			$	815,760		$	614,540		$	849,481		$	680,390		$	939,913		$	790,514		$	690,919
Cost of goods sold(1)				594,604			451,380			626,883			507,115			724,921			608,028			544,432

Gross profit				221,156			163,160			222,598			173,275			214,992			182,486			146,487
Operating expenses
	Selling and administrative expenses(1), (2)			146,999			99,018			147,881			112,535			132,719			116,750			110,053
	Restructuring and other(3)			338			409			748			6,332			1,792			—			—

Operating profit				73,819			63,733			73,969			54,408			80,481			65,736			36,434
Interest expense, net				10,167			18,791			23,710			26,226			26,736			27,816			7,561
Loss on early extinguishment of debt(4)				—			—			13,013			—			—			—			—
Other (income) expense(5)				964			399			(731	)		(1,091	)		4,259			(2,610	)		450

Earnings from continuing operations before income taxes				62,688			44,543			37,977			29,273			49,486			40,530			28,423
Income tax expense				21,807			14,700			9,423			8,487			13,297			14,013			11,416

Earnings from continuing operations, net of tax				40,881			29,843			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				40,881			29,843			28,554			21,092			36,632			27,885			27,378
Less: net earnings attributable to the non-controlling interest-continuing operations				(4,567	)		(3,489	)		(4,634	)		(2,537	)		(5,073	)		(2,393	)		(138	)
Less: net earnings attributable to the non-controlling interest-discontinued operations				—			—			—			(141	)		(343	)		(182	)		—

Net earnings attributable to ESCO shareholders from continuing operations				36,314			26,354			23,920			18,249			31,116			24,124			16,869
Valuation adjustment of Class C Preferred Stock(7)				6,300			(1,757	)		(16,521	)		7,933			13,287			803			7,461

Net earnings attributable to ESCO common shareholders from continuing operations			$	42,614		$	24,597		$	7,399		$	26,182		$	44,403		$	24,927		$	24,330

Pro forma earnings from continuing operations attributable to ESCO shareholders(8)
Earning per weighted average share outstanding(9)
		Basic earnings per share from continuing operations allocated to ESCO common shareholders	$	38.92		$	22.67		$	6.81		$	24.18		$	41.08		$	23.14		$	156.32
		Diluted earnings per share from continuing operations allocated to ESCO common shareholders(10)	$	29.05		$	21.57		$	6.62		$	15.16		$	26.21		$	20.74		$	12.62
	Weighted average shares outstanding
		Basic		1,095			1,085			1,086			1,083			1,081			1,077			106
		Diluted		1,250			1,222			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

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	Nine months ended

	Nine months ended				As of
	September 30, 2011 pro forma(12)				As of
(dollars in thousands)	September 30, 2011 pro forma(12)		September 30, 2011		December 31, 2010			December 31, 2009		December 26, 2008		December 28, 2007		December 29, 2006
Balance sheet data:
Cash and cash equivalents	$	47,284	$	47,284	$	114,101		$	168,487	$	113,167	$	84,070	$	92,230
Current assets, excluding cash and cash equivalents		382,660		382,660		268,166			203,854		231,169		240,043		201,423
Property and equipment, net		187,913		187,913		167,446			161,919		164,237		171,640		148,191
Total assets		807,232		807,232		723,622			675,745		646,111		619,489		538,711
Current liabilities, excluding the current portion of debt		173,033		173,033		133,854			101,162		121,767		115,831		95,391
Total debt, including current portion		276,981		276,981		273,314			306,498		304,096		305,753		309,529
Contingently redeemable equity securities(12)		2,578		250,847		232,184			144,064		132,038		135,653		97,471
Total equity/(deficit)(12)		280,776		32,507		(4,622	)		44,699		17,259		16,563		10,262

	Nine months ended				Fiscal year ended

(dollars in thousands)	September 30, 2011		September 30, 2010		December 31, 2010		December 31, 2009		December 26, 2008		December 28, 2007		December 29, 2006
Other data:
Adjusted EBITDA(13)	$	124,583	$	96,312	$	127,780	$	99,497	$	130,853	$	105,903	$	90,182
Adjusted EBITDA margin(13)		15.3%		15.7%		15.0%		14.6%		13.9%		13.4%		13.1%
Adjusted net earnings from continuing operations(14)	$	53,245	$	34,615	$	49,493	$	31,234	$	48,136	$	35,503	$	39,331

(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 $6.0 million and $0.8 million for the nine months ended September 30, 2011 and September 30, 2010, is included in selling and administrative expenses.
(3): Restructuring and other costs included: in 2011, expenses related to reductions in force to eliminate redundancies related to a partial facility relocation and acquisitions; 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

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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)

(11)

See "Dividend Policy".

(12)

(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.

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

	Nine months ended					Fiscal year ended

(dollars in thousands)	September 30, 2011		September 30, 2010			December 31, 2010			December 31, 2009			December 26, 2008			December 28, 2007			December 29, 2006
Earnings from continuing operations, net of tax	$	40,881	$	29,843		$	28,554		$	20,786		$	36,189		$	26,517		$	17,007
Add/(Subtract):
Interest (net) and loss on early extinguishment of debt		10,167		18,791			36,723			26,226			26,736			27,816			7,561
Income tax expense		21,807		14,700			9,423			8,487			13,297			14,013			11,416
Depreciation and amortization(a)		24,718		19,868			27,479			25,113			24,187			22,661			19,191
Other (income) expense		964		399			(731	)		(1,091	)		4,259			(2,610	)		450
ESOP non-cash compensation expense(b)		14,896		12,238			17,259			16,504			20,248			19,682			34,315
Mark to market on SARs expense(c)		6,041		774			7,678			—			(260	)		266			—
Unrealized (gains) losses on long-term investments(d)		1,918		(710	)		(1,953	)		(2,860	)		4,405			(1,142	)		(1,758	)
Restructuring and other(e)		3,191		409			748			6,332			1,792			(1,300	)		2,000
Port Hope reclamation(f)		—		—			2,600			—			—

Adjusted EBITDA	$	124,583	$	96,312		$	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 costs included: in 2011, expenses related to reductions in force to eliminate redundancies related to a partial facility relocation and acquisitions; in 2010, restructuring expenses related to the closure of our Saskatoon, Saskatchewan foundry; in 2009, restructuring expenses related to personnel reductions and the closure of our West Jordan, Utah plant and the Saskatoon, Saskatchewan foundry; in 2008, 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; in 2007, 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; and in 2006, 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.

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		Nine months ended				Fiscal year ended

(dollars in thousands)		September 30, 2011		September 30, 2010		December 31, 2010		December 31, 2009		December 26, 2008		December 28, 2007		December 29, 2006
Net sales		$	815,760	$	614,540	$	849,481	$	680,390	$	939,913	$	790,514	$	690,919
Operating profit			73,819		63,733		73,969		54,408		80,481		65,736		36,434
Adjusted EBITDA			124,583		96,312		127,780		99,497		130,853		105,903		90,182

	Operating profit margin		9.0%		10.4%		8.7%		8.0%		8.6%		8.3%		5.3%
	Adjusted EBITDA margin		15.3%		15.7%		15.0%		14.6%		13.9%		13.4%		13.1%

(14): We define adjusted net earnings from continuing operations as net earnings from continuing operations attributable to ESCO shareholders plus loss on early extinguishment of debt, net of tax; mark to market on SARs expense, net of tax; and ESOP non-cash compensation expense, net of tax. The adjustments assume a 35% tax rate. We have included adjusted net earnings from continuing operations 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.

The following table reconciles net earnings from continuing operations attributable to ESCO shareholders to adjusted net earnings from continuing operations.

	Nine months ended					Fiscal year ended

(dollars in thousands)	September 30, 2011		September 30, 2010			December 31, 2010			December 31, 2009			December 26, 2008			December 28, 2007			December 29, 2006
Net earnings from continuing operations attributable to ESCO shareholders	$	36,314	$	26,354		$	23,920		$	18,249		$	31,116		$	24,124		$	16,869
Loss on early extinguishment of debt, net of tax		—		—			8,458			—			—			—			—
Mark to market on SARs expense, net of tax		3,926		503			4,991			—			(169	)		173			—
ESOP non-cash compensation expense, net of tax		9,683		7,954			11,218			10,728			13,161			12,793			19,770
Unrealized (gain) loss on investments, net of tax		1,247		(462	)		(1,270	)		(1,859	)		2,863			(742	)		(1,143	)
Restructuring and other, net of tax		2,075		266			2,176			4,116			1,165			(845	)		3,835

Adjusted net earnings from continuing operations	$	53,245	$	34,615		$	49,493		$	31,234		$	48,136		$	35,503		$	39,331

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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.

Overview

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 have two operating groups:

•: Engineered Products Group, or EPG, designs, develops and manufactures wear parts and wear part carriers and attachments and provides solutions for mining, infrastructure development and other challenging industrial wear applications. EPG accounted for $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.

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 5,300 employees and operations in 21 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 $815.8 million in the first nine months of 2011, an increase of $201.3 million, or 32.8%, from $614.5 million in the same period of 2010. Net earnings attributable to ESCO shareholders were $36.3 million in the first nine months of 2011, an increase of $9.9 million, or 37.5%, from $26.4 million in the first nine months of 2010. Adjusted EBITDA (as defined in "Selected Consolidated Financial and Other Data") increased to $124.6 million in the first nine months of 2011 from $96.3 million in the first nine months of 2010.

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Trends, Opportunities and Challenges

Recent Activity

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 through 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:

•: efficiently managing the rapid turnaround in EPG from the recession in 2009 and supply chain restocking;
•: executing our geographic expansion and direct distribution strategies through strategic acquisitions of Swift Engineering and Austcast in Australia, which added foundry and fabrication capabilities and additional products, including a patented truck body, to our EPG product portfolio; and
•: expanding manufacturing and distribution in Brazil, Canada, China, Indonesia, South Africa and the United States.

In the first nine months of 2011, growth in mining and infrastructure development continued, our aerospace markets experienced increasing sales and our power generation markets showed signs of slow recovery through the third quarter of 2011.

In the first nine months of 2011, we focused on:

•: effectively managing the continued strong demand from EPG customers;
•: managing capital resources for strategic growth initiatives;
•: expanding manufacturing and distribution in Australia, Brazil, Canada, China, Indonesia, Peru, South Africa and the United States; and
•: executing our geographic expansion and direct distribution strategies through strategic acquisitions of Trans Equipment in the United States and Hydra Mining Tools International Limited in the UK and China, which also added new products for the underground mining segment to our EPG product portfolio.

As a result of improved economic conditions and our expansion initiatives, we increased our global workforce to 5,362 employees at December 31, 2011 from approximately 4,600 employees at

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the end of 2010. We have experienced increased EPG lead times in 2011 because customer demand has outstripped our ability to supply products on a timely basis. We estimate customer demand has led to extended lead times for products representing approximately 45% of EPG net sales in 2010. For 2010, we estimate the average lead time for mining GET products, for example, was about eight weeks; as of December 31, 2011, the average lead time was about 16 weeks. See "Risk Factors — Our production capacity may not be sufficient to meet customer demand." We believe some of our competitors also face increased lead times. We have taken steps to address lead time issues, including incremental expansion of certain existing facilities, some of which has been implemented and some of which is scheduled for early 2012. We continue to ramp up production of ESCO products at our acquired Austcast facilities in Australia and New Zealand; and our Chilean joint venture facility is scheduled to be operational in 2012.

Market Outlook

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, China, 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 affect our operating margin in the short term.

TTG. Continued growth in air traffic, which began in 2010, can be expected to increase demand for aerospace components for original equipment build and engine repair and overhaul. We expect improved sales of components driven by new programs such as Boeing's 787 and 747-8 and the Airbus A380 and improved replacement part sales on legacy aircraft. While visibility remains limited, our industrial gas turbine, or IGT, markets improved slightly in recent months. We believe these markets will continue to show improvements in the near term, but at a lower rate than in past recoveries. We expect growth in orders for power turbine components to be driven by new turbine builds, restocking in the supply chain, and shorter maintenance cycles as energy consumption grows.

We may incur penalties for a violation of OFAC regulations.

In 2011, we voluntarily reported to the Office of Foreign Asset Control of the U.S. Department of the Treasury (OFAC) a violation of OFAC regulations. See "Risk Factors — We may incur penalties and experience other adverse effects on our business for a violation of OFAC regulations." OFAC violations may result in significant penalties. We have not established a reserve for a potential penalty. See Note 13 to our Consolidated Financial Statements for the nine months ended September 30, 2011. Although we have not determined that imposition of a penalty is probable, if we were penalized, we believe the penalty would not exceed approximately $5.5 million; however, any assessed penalty could be materially higher.

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Key Metrics

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

	Nine months ended				Fiscal year ended

(dollars in millions)	September 30, 2011		September 30, 2010		December 31, 2010		December 31, 2009		December 26, 2008
Net sales	$	815.8	$	614.5	$	849.5	$	680.4	$	939.9
Operating profit	$	73.8	$	63.7	$	74.0	$	54.4	$	80.5
Operating profit margin		9.0%		10.4%		8.7%		8.0%		8.6%
Net earnings attributable to ESCO shareholders	$	36.3	$	26.4	$	23.9	$	18.4	$	31.2
Adjusted net earnings from continuing operations*	$	53.2	$	34.6	$	49.5	$	31.2	$	48.1
Adjusted EBITDA*	$	124.6	$	96.3	$	127.8	$	99.5	$	130.9
Adjusted EBITDA Margin*		15.3%		15.7%		15.0%		14.6%		13.9%
Cash from operations	$	16.6	$	40.3	$	78.3	$	88.8	$	88.5

*: These measures are non-GAAP financial measures. See "Selected Consolidated Financial and Other Data" where these measures are discussed and where non-GAAP financial measures are reconciled to the most comparable GAAP measure.

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. Costs of key materials continued to increase in the first nine months of 2011, but at a lower rate than in 2010. 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, an increase in 2010 relative to 2009, and further increases in 2011 driven by increasing demand trends on alloy and other raw materials. 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.

Basis of Presentation of Our Results of Operations

Net Sales

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

Cost of goods sold includes raw materials; employee compensation and benefits, including ESOP non-cash compensation expense; and other costs, including distribution expenses,

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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

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

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

Operating Results

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.

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Nine Months Ended September 30, 2011 Compared to Nine Months ended September 30, 2010

Statement of Earnings Data (dollars in millions)		Nine months ended September 30, 2011					Nine months ended September 30, 2010

Net sales		$	815.8		100.0	%	$	614.5		100.0	%
Cost of goods sold(1)			594.6		72.9	%		451.4		73.5	%
Gross profit			221.2		27.1	%		163.1		26.5	%
Selling and administrative expenses(1)			147.0		18.0	%		99.0		16.0	%
Restructuring and other			0.4		0.1	%		0.4		0.1	%
Operating profit			73.8		9.0	%		63.7		10.4	%
Interest expense, net			10.1		1.2	%		18.8		3.1	%
Other expense, net			1.0		0.1	%		0.4		0.1	%

Earnings from continuing operations before income taxes			62.7		7.7	%		44.5		7.2	%
Income tax expense			21.8		2.7	%		14.7		2.4	%

Earnings from continuing operations, net of tax			40.9		5.0	%		29.8		4.8	%
Less: net earnings attributable to the non-controlling interest — continuing operations			(4.6	)	(0.6	)%		(3.4	)	(0.5	)%

	Net earnings attributable to ESCO shareholders	$	36.3		4.4	%	$	26.4		4.3	%

(1): ESOP non-cash compensation expense included in these line items is as follows:


Cost of goods sold		$	10.2	1.2	%	$	8.3	1.4	%
Selling and administrative expenses			4.7	0.6			3.9	0.6

	Total	$	14.9	1.8	%	$	12.2	2.0	%

	Nine months ended

Statement of Earnings Data (dollars in millions)	September 30, 2011			September 30, 2010			$ Change			% Change
Net sales	$	815.8		$	614.5		$	201.3			32.8	%
Cost of goods sold(1)		594.6			451.4			143.2			31.7	%
Gross profit		221.2			163.1			58.1			35.6	%
Selling and administrative expenses(1)		147.0			99.0			48.0			48.5	%
Restructuring and other		0.4			0.4			—			—
Operating profit		73.8			63.7			10.1			15.9	%
Interest expense, net		10.1			18.8			(8.7	)		(46.3	)%
Other expense, net		1.0			0.4			0.6			150.0	%

Earnings from continuing operations before income taxes		62.7			44.5			18.2			40.9	%
Income tax expense		21.8			14.7			7.1			48.3	%

Earnings from continuing operations, net of tax		40.9			29.8			11.1			37.2	%
Less: net earnings attributable to the noncontrolling interest — continuing operations		(4.6	)		(3.4	)		(1.2	)		35.3	%

Net earnings attributable to ESCO shareholders.	$	36.3		$	26.4		$	9.9			37.5	%

(1): ESOP non-cash compensation expense included in these line items is as follows:


Cost of goods sold		$	10.2	$	8.3	$	1.9	22.9	%
Selling and administrative expenses			4.7		3.9		0.8	20.5

	Total	$	14.9	$	12.2	$	2.7	22.1	%

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Net sales

(dollars in millions)		Nine months ended September 30, 2011		Nine months ended September 30, 2010		$ Change

Net Sales		$	815.8	$	614.5	$	201.3	32.8	%
	EPG		700.2		511.4		188.8	36.9
	TTG		115.6		103.1		12.5	12.1	%

For the nine months ended September 30, 2011, net sales were $815.8 million, an increase of $201.3 million, or 32.8%, from $614.5 million for the nine months ended September 30, 2010. The increase was driven by higher sales in both EPG and TTG segments. Net sales directly or indirectly outside of the United States made up 60.9% of net sales in the first nine months of 2011 and 55.2% of net sales in the first nine months of 2010. Our top 10 customers generated 26.5% of our net sales in the first nine months of 2011 and 25.6% in the first nine months of 2010. No single customer accounted for 10% or more of our net sales in the first nine months of 2011 or the first nine months of 2010.

EPG. Net sales increased $188.8 million, or 36.9%, to $700.2 million for the nine months ended September 30, 2011, from $511.4 million for the nine months ended September 30, 2010. The $188.8 million increase was composed of a $139.7 million, or 45.5%, increase in mining product sales across all geographies, including $34.3 million contributed by the two Australian businesses acquired in 2010 and $16.9 million from the Wyoming business acquired in the first quarter of 2011; a $49.0 million, or 30.0%, increase in infrastructure development product sales across all geographies; and a $0.1 million, or 0.2%, increase in industrial product sales. Included in the increases is the net effect of a $26.1 million benefit due to favorable foreign exchange rates and $15.6 million attributable to price increases for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. In the first nine months of 2011, 53.1% of our EPG net sales were made directly to end-users, 31.8% were generated through our EPG global dealer distribution networks and 15.1% were sales to OEMs. In the first nine months of 2010, 48.3% of EPG net sales were directly to end-users, 35.7% were generated through our EPG global dealer distribution network and 16.0% were sold to OEMs. The increase in net sales directly to end-users or direct channels was primarily driven by our two Australian acquisitions, our ESCO supply channels in North America and our strength in the global mining and hard rock dredging markets, in which we primarily sell direct.

TTG. Net sales were $115.6 million for the nine months ended September 30, 2011, an increase of $12.5 million, or 12.1%, from $103.1 million for the nine months ended September 30, 2010, due to higher aerospace engine component and IGT sales.

Gross profit

(dollars in millions)		Nine months ended September 30, 2011					Nine months ended September 30, 2010					$ Change

Gross profit		$	221.2		27.1	%	$	163.1		26.5	%	$	58.1		35.6	%
	EPG		212.4		30.3	%		152.3		29.8	%		60.1		39.5	%
	TTG		19.1		16.5	%		19.1		18.5	%		—		—
	Other		(10.3	)				(8.3	)				(2.0	)	24.1	%

Gross profit was $221.2 million for the nine months ended September 30, 2011, an increase of $58.1 million, or 35.6%, from $163.1 million for the nine months ended September 30, 2010, primarily due to an increase in gross profit in our EPG segment. Gross profit margin increased

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slightly to 27.1% for the nine months ended September 30, 2011 from 26.5% for the nine months ended September 30, 2010, due to an increase in EPG gross margin that was partially offset by a decrease in TTG's gross margin.

EPG. Gross profit increased $60.1 million, or 39.5%, to $212.4 million for the nine months ended September 30, 2011 compared to $152.3 million for the nine months ended September 30, 2010 primarily due to an increase in net sales volumes and price increases. The increase was partially offset by increased raw material costs, supply chain costs associated with the higher volumes and under-absorbed manufacturing costs due to the retooling of the Australian foundries acquired in December 2010. EPG gross profit margin increased to 30.3% in the first nine months of 2011 from 29.8% for the first nine months of 2010.

TTG. Gross profit remained flat at $19.1 million for the nine months ended September 30, 2011 and 2010. TTG gross profit margin declined to 16.5% in the first nine months of 2011 from 18.5% in the first nine months of 2010, due primarily to aerospace engine components sales mix and manufacturing development costs at certain facilities.

Other. Other primarily represents the ESOP non-cash compensation expense of $10.2 million and $8.3 million for the nine months ended September 30, 2011 and 2010, respectively.

Selling and administrative expenses

(dollars in millions)		Nine months ended September 30, 2011				Nine months ended September 30, 2010				$ Change

Selling and administrative		$	147.0	18.0	%	$	99.0	16.0	%	$	48.0	48.5	%
	EPG		99.7	14.2	%		71.9	14.1	%		27.8	38.7	%
	TTG		12.5	10.8	%		12.3	11.9	%		0.2	1.6	%
	Other		34.8				14.8				20.0	135.1	%

Selling and administrative expenses were $147.0 million for the nine months ended September 30, 2011, an increase of $48.0 million, or 48.5%, compared to the nine months ended September 30, 2010. Selling and administrative expenses as a percentage of net sales increased to 18.0% for the nine months ended September 30, 2011 from 16.0% for the nine months ended September 30, 2010. Excluding the $4.7 million and $3.9 million of ESOP non-cash compensation expense for the nine months ended September 30, 2011 and September 30, 2010, respectively, selling and administrative expenses increased $47.2 million, or 49.6%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. Also excluding the ESOP non-cash compensation expense, selling and administrative expenses as a percentage of net sales increased to 17.4% for the nine months ended September 30, 2011 from 15.5% for the nine months ended September 30, 2010.

EPG. Selling and administrative expenses for the nine months ended September 30, 2011 were $99.7 million, an increase of $27.8 million from $71.9 million for the nine months ended September 30, 2010. The increase in expenses was primarily due to $16.4 million of expansion-related expenses, particularly the continued investment in our Australian and South African organizational infrastructure and the EPG acquisitions in 2010 and 2011, and $17.4 million attributable to increased sales volumes, including travel and outbound freight expenses. These increases were partially offset by $6.0 million of net proceeds from a settlement with Bradken Resources Pty Ltd.

TTG. Selling and administrative expenses for TTG were $12.5 million for the nine months ended September 30, 2011 compared to $12.3 million for the nine months ended September 30, 2010. Selling and administrative expenses remained almost flat despite higher sales volumes, which

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led to improvement in selling and administrative expenses as a percentage of net sales. TTG selling and administrative expenses as percentage of TTG net sales decreased to 10.8% in the first nine months of 2011 from 11.9% in the first nine months of 2010.

Other. Increased selling and administrative expenses for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 were primarily related to an $11.8 million increase in incentive compensation expense, a $3.8 million increase in personnel costs and purchased services and a $2.6 million increase in mark-to-market expenses for non-qualified employee benefit plans. The increase in incentive compensation expense primarily related to a $7.5 million mark-to-market expense on outstanding SARs, which had no related expense in 2010 because the exercise prices exceeded the value of the underlying shares, including $1.1 million due to the acceleration of share-based compensation expense on retiring executives' SARs. The increase in purchased services was primarily caused by non-capitalized expenses related to our initial public offering and by litigation expenses related our dispute with Bradken Resources Pty Ltd.

Operating profit

(dollars in millions)		Nine months ended September 30, 2011					Nine months ended September 30, 2010					$ Change

Operating Profit		$	73.8		9.0	%	$	63.7		10.4	%	$	10.1		15.9	%
	EPG		112.6		16.1	%		80.3		15.7	%		32.3		40.2	%
	TTG		6.7		5.8	%		6.9		6.7	%		(0.2	)	(2.9	)%
	Other		(45.5	)				(23.5	)				(22.0	)	93.6	%

EPG. Operating profit increased $32.3 million to $112.6 million, or 16.1% of EPG net sales, for the nine months ended September 30, 2011, compared to $80.3 million, or 15.7% of EPG net sales, for the nine months ended September 30, 2010. The increase in operating profit was primarily due to increased sales volumes and price increases. The increase in EPG's operating profit margin was primarily due to these price increases and a $6.0 million net settlement received from Bradken Resources Pty Ltd. in the third quarter of 2011.

TTG. Operating profit decreased to $6.7 million, or 5.8% of TTG net sales, for the nine months ended September 30, 2011, compared to $6.9 million, or 6.7% of TTG net sales, for the nine months ended September 30, 2010. The decrease in operating profit and operating profit margin was driven primarily by increased manufacturing costs during the first nine months of 2011.

Other. Operating loss increased to $45.4 million for the nine months ended September 30, 2011, compared to $23.5 million for the nine months ended September 30, 2010. The increase in operating loss was driven primarily by increased selling and administrative expenses during the first nine months of 2011.

Interest expense, net.

For the nine months ended September 30, 2011, net interest expense was $10.1 million, compared to $18.8 million for the nine months ended September 30, 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.

Income tax expense was $21.8 million and $14.7 million for the nine months ended September 30, 2011 and 2010, respectively. The increase in tax expense was primarily due to the

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increase in earnings from continuing operations in the first nine months of 2011 compared to the 2010 period. The effective tax rate from continuing operations for the first nine months of 2011 was 34.8% compared to 33.0% for the first nine months of 2010. The effective tax rate for the first nine months of 2010 was lower than the effective tax rate for the first nine months of 2011 due primarily to the release of FIN 48 liability in the first nine months of 2010. This release decreased the effective tax rate by 3.0% for the first nine months of 2010 and was partially offset by a greater impact of unfavorable permanent items in the first nine months of 2010. The greater impact of unfavorable permanent items in the first nine months of 2010 compared to the first nine months of 2011 arose mainly because income was lower in the first nine months of 2010 versus the first nine months of 2011.

Non-controlling interest.

Non-controlling interest reflects the net after-tax profits in our less-than-100%-owned subsidiary companies allocable to the non-ESCO shareholders. Non-controlling interest was $4.6 million in the nine months ended September 30, 2011, compared to $3.4 million in the nine months ended September 30, 2010, reflecting slightly higher sales for those subsidiaries and the acquisition of an interest in a joint venture company in China in connection with our acquisition of Hydra Mining Tools International Limited in the third quarter of 2011.

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

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 non-controlling interest — continuing operations			(4.7	)	(0.6	)%		(2.5	)	(0.4	)%
Less: net earnings attributable to the non-controlling interest — discontinued operations			—		—			(0.2	)	—

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

(1): ESOP non-cash compensation expense included in these line items is as follows:


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	%

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		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 non-controlling interest — continuing operations			(4.7	)		(2.5	)		(2.2	)		88.0	%
Less: net earnings attributable to the non-controlling interest — discontinued operations			—			(0.2	)		0.2			(100.0)	%

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

(1): ESOP non-cash compensation expense included in these line items is as follows:


Cost of goods sold		$	11.9	$	11.1	$	0.8	7.2	%
Selling and administrative expenses			5.4		5.4		—	—

	Total	$	17.3	$	16.5	$	0.8	4.8	%

Net sales

(dollars in millions)		2010		2009		$ Change

Net Sales		$	849.5	$	680.4	$	169.1		24.9	%
	EPG	$	712.6	$	530.5	$	182.1		34.3	%
	TTG	$	136.9	$	149.9	$	(13.0	)	(8.7	)%

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

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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 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

(dollars in millions)		2010					2009					$ Change

Gross profit		$	222.6		26.2	%	$	173.3		25.5	%	$	49.3		28.4	%
	EPG	$	209.8		29.4	%	$	154.1		29.0	%	$	55.7		36.1	%
	TTG	$	24.8		18.1	%	$	30.4		20.3	%	$	(5.6	)	(18.4	)%
	Other	$	(12.0	)			$	(11.2	)			$	(0.8	)	(7.1	)%

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.

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Selling and administrative expenses

(dollars in millions)		2010				2009				$ Change

Selling and administrative		$	147.9	17.4	%	$	112.5	16.5	%	$	35.4	31.5	%
	EPG	$	101.6	14.3	%	$	81.6	15.4	%	$	20.0	24.5	%
	TTG	$	16.1	11.8	%	$	15.8	10.5	%	$	0.3	1.9	%
	Other	$	30.2			$	15.1			$	15.1

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.

Restructuring and other

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.

Operating profit

(dollars in millions)		2010					2009					$ Change

Operating Profit		$	74.0		8.7	%	$	54.4		8.0	%	$	19.6		36.0	%
	EPG	$	108.2		15.2	%	$	72.5		13.7	%	$	35.7		49.2	%
	TTG	$	8.7		6.4	%	$	14.6		9.7	%	$	(5.9	)	(40.4	)%
	Other	$	(42.9	)			$	(32.7	)			$	(10.2	)	31.2	%

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

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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

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.

Loss on early extinguishment of debt

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.

Income tax expense

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.

Non-controlling interest

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

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Year Ended December 31, 2009 Compared to Year Ended December 26, 2008

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 non-controlling interest — continuing operations			(2.5	)	(0.4	)%		(5.1	)	(0.6	)%
Less: net earnings attributable to the non-controlling interest — discontinued operations			(0.2	)	—			(0.3	)	—

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


(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	%

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		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 non-controlling interest — continuing operations			(2.5	)		(5.1	)		2.6			(51.0	)%
Less: net earnings attributable to the non-controlling 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	)%


(1) ESOP non-cash compensation expense included in these line items is as follows:
	Cost of goods sold		$	11.1	$	14.0	$	(2.9	)	(20.7	)%
	Selling and administrative expenses			5.4		6.3		(0.9	)	(14.3	)%

		Total	$	16.5	$	20.3	$	(3.8	)	(18.7	)%

Net sales

(dollars in millions)		2009		2008		$ Change

Net Sales		$	680.4	$	939.9	$	(259.5	)	(27.6	)%
	EPG	$	530.5	$	752.0	$	(221.5	)	(29.5	)%
	TTG	$	149.9	$	187.9	$	(38.0	)	(20.2	)%

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.

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Gross profit

(dollars in millions)		2009					2008					$ Change

Gross Profit		$	173.3		25.5	%	$	215.0		22.9	%	$	(41.7	)	(19.4	)%
	EPG	$	154.1		29.0	%	$	196.5		26.1	%	$	(42.4	)	(21.6	)%
	TTG	$	30.4		20.3	%	$	32.5		17.3	%	$	(2.1	)	(6.5	)%
	Other	$	(11.2	)			$	(14.0	)			$	2.8		20.0	%

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

(dollars in millions)		2009				2008				$ Change

Selling and Administrative		$	112.5	16.5	%	$	132.7	14.1	%	$	(20.2	)	(15.2	)%
	EPG	$	81.6	15.4	%	$	92.4	12.3	%	$	(10.8	)	(11.7	)%
	TTG	$	15.8	10.5	%	$	18.5	9.8	%	$	(2.7	)	(14.6	)%
	Other	$	15.1			$	21.8			$	(6.7	)	(30.7	)%

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

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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.

Restructuring and other

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.

Operating profit

(dollars in millions)		2009					2008					$ Change

Operating Profit		$	54.4		8.0	%	$	80.5		8.6	%	$	(26.1	)	(32.4	)%
	EPG	$	72.5		13.7	%	$	104.1		13.8	%	$	(31.6	)	(30.4	)%
	TTG	$	14.6		9.7	%	$	14.0		7.5	%	$	0.6		4.3	%
	Other	$	(32.7	)			$	(37.6	)			$	4.9		13.0	%

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

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.

Income tax expense

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.

Other expense (income)

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.

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Non-controlling interest

Non-controlling interest reflects the net after tax profits in our less than 100%-owned subsidiary companies allocable to the non-ESCO shareholders. Non-controlling 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.

Quarterly Operating Results

The following unaudited quarterly financial data for the seven quarters ended September 30, 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

	September 30, 2011					June 30, 2011					March 31, 2011					December 31, 2010						September 30, 2010					June 30, 2010					March 31, 2010
(dollars in millions)	$		% of net sales			$		% of net sales			$		% of net sales			$			% of net sales			$		% of net sales			$		% of net sales			$		% of net sales
Net sales		288.1		100.0	%		273.8		100.0	%		253.8		100.0	%		234.9			100.0	%		228.1		100.0	%		201.2		100.0	%		185.3		100.0	%
Gross profit		76.5		26.6	%		74.1		27.1	%		70.5		27.8	%		59.4			25.3	%		59.0		25.9	%		55.1		27.4	%		49.1		26.5	%
Selling and administrative expenses (including restructuring)		51.2		17.7	%		49.4		18.0	%		46.7		18.4	%		49.2			20.9	%		32.9		14.4	%		35.0		17.4	%		31.5		17.0	%
Operating profit		25.3		8.8	%		24.7		9.0	%		23.8		9.4	%		10.2			4.3	%		26.1		11.4	%		20.1		10.0	%		17.6		9.5	%
Net earnings (loss) attributable to ESCO shareholders		10.3		3.6	%		13.2		4.8	%		12.9		5.1	%		(2.4)	(a),(b)		(1.0	)%		11.8		5.2	%		8.7		4.3	%		6.0		3.2	%
Adjusted net earnings from continuing operations(c)		17.2		6.0	%		17.8		6.5	%		18.2		7.0	%		14.9			6.3	%		13.7		6.0	%		12.6		6.3	%		8.4		4.5	%
Adjusted EBITDA(d)		44.7		15.5	%		40.1		14.7	%		39.8		15.4	%		31.5			13.4	%		35.8		15.7	%		32.7		16.2	%		27.8		15.0	%

(a): The net loss in the fourth quarter of 2010 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. Additional expense on our long-term cash incentives awards also affected fourth quarter results. The remaining cash-settled SARS will be marked to market value. 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. 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)	September 30, 2011		June 30, 2011			March 31, 2011			December 31, 2010			September 30, 2010			June 30, 2010		March 31, 2010
Net earnings (loss) from continuing operations attributable to ESCO shareholders	$	10.3		13.2		$	12.9		$	(2.4	)	$	11.8		$	8.6	$	6.0
Loss on early extinguishment of debt, net of tax		—		—			—			8.5			—			—		—
Mark to market on SARs expense, net of tax		0.6		1.0			2.3			4.5			0.3			0.2		—
ESOP non-cash compensation expense, net of tax		3.1		3.2			3.3			3.2			2.6			2.7		2.6
Unrealized (gain) loss on investments, net of tax		1.9		(0.2	)		(0.5	)		(0.8	)		(1.0	)		1.0		(0.4	)
Restructuring and other, net of tax		1.3		0.6			0.2			1.9			—			0.1		0.2

Adjusted net earnings from continuing operations	$	17.2	$	17.8		$	18.2		$	14.9		$	13.7		$	12.6	$	8.4

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(d): Adjusted EBITDA is a non-GAAP measure. See "Selected Consolidated Financial and Other Data" and the reconciliation to earnings from continuing operations, net of tax below.

Adjusted EBITDA Reconciliation

		Quarter ended

(dollars in millions)		September 30, 2011		June 30, 2011			March 31, 2011			December 31, 2010			September 30, 2010			June 30, 2010		March 31, 2010
Earnings from continuing operations, net of tax		$	12.2	$	14.3		$	14.4		$	(1.3	)	$	13.2		$	9.6	$	7.1
Add/(Subtract):
	Interest (net) and loss on early extinguishment of debt		3.6		3.5			3.1			17.9			6.1			6.3		6.4
	Income tax expense (benefit)		7.3		7.1			7.4			(5.3	)		7.3			3.7		3.7
	Depreciation and amortization		8.7		8.2			7.8			7.6			6.8			6.5		6.5
	Non-operating expense (income)		2.2		(0.2	)		(1.1	)		(1.1	)		(0.6	)		0.5		0.5
	ESOP non-cash compensation expense		4.8		5.0			5.1			5.1			4.1			4.2		4.0
	Mark to market on SARs expense		0.9		1.6			3.5			6.9			0.5			0.3		—
	Unrealized (gains) losses on long term investments		2.9		(0.2	)		(0.7	)		(1.2	)		(1.6	)		1.5		(0.6	)
	Restructuring and other		2.1		0.8			0.3			2.9			—			0.1		0.2

Adjusted EBITDA		$	44.7	$	40.1		$	39.8		$	31.5		$	35.8		$	32.7	$	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".

Liquidity and Capital Resources

Our principal sources of liquidity are cash provided by operations, existing cash and cash equivalents, and our revolving credit facility. At September 30, 2011, we had $47.3 million of cash and cash equivalents and $255.8 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.

	Nine months ended						Year ended

(dollars in millions)	September 30, 2011			September 30, 2010			December 31, 2010			December 31, 2009			December 26, 2008
Earnings from continuing operations, net of tax	$	40.9		$	29.8		$	28.6		$	20.8		$	36.2
Depreciation and amortization		25.5			21.1			29.2			26.8			25.9
ESOP non-cash compensation and SARs expense		23.3			12.2			24.9			16.5			20.2
Changes in operating assets and liabilities		(86.0	)		(31.4	)		(13.6	)		28.9			7.8
Other		12.9			8.6			9.2			(4.4	)		(2.6	)
Discontinued operations		—			—			—			0.2			1.0

Net cash provided by operating activities	$	16.6		$	40.3		$	78.3		$	88.8		$	88.5

Capital expenditures		(37.3	)		(13.1	)	$	(20.5	)	$	(14.1	)	$	(29.7	)
Business acquisitions		(31.8	)		(17.8	)		(33.8	)		(0.2	)		0
Other		(8.6	)		(2.9	)		(2.4	)		9.4			(6.7	)
Discontinued operations		—			—			—			(0.3	)		(1.1	)

Net cash used in investing activities	$	(77.7	)	$	(33.8	)	$	(56.7	)	$	(5.2	)	$	(37.5	)

Proceeds from debt issuance		18.2			3.3		$	271.4		$	2.7		$	1.5
Payments on debt		(16.8	)		(3.3	)		(306.7	)		(6.5	)		(4.0	)
Dividends paid		(4.0	)		(12.3	)		(26.9	)		(26.1	)		(14.6	)
Other		(4.8	)		(1.1	)		(14.3	)		(2.1	)		(0.7	)

Net cash used in financing activities	$	(7.4	)	$	(13.4	)	$	(76.5	)	$	(32.0	)	$	(17.8	)

Working Capital and Cash Flow

Nine Months Ended September 30, 2011 Compared to Nine Months Ended September 30, 2010

Cash Provided by Operating Activities. Cash provided by operating activities from continuing operations for the nine months ended September 30, 2011 was $16.6 million compared

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to cash provided by operating activities of $40.3 million for the nine months ended September 30, 2010. The decrease was due to the change in operating assets, primarily inventories, and liabilities of $54.6 million required to support increased sales and production in 2011 partially offset by the increase in earnings of $11.1 million, the increase in non-cash compensation of $11.1 million, the increase in the non-cash mark-to-market on non-qualified employee benefit plans of $2.6 million, the increase in depreciation and amortization of $4.4 million and the increase in deferred taxes of $1.8 million.

Cash Used in Investing Activities. Cash used in investing activities from continuing operations for the nine months ended September 30, 2011 was $77.7 million and $33.8 million for the nine months ended September 30, 2010. During the first nine months of 2011, we acquired Trans Equipment for $8.4 million, acquired Hydra Mining Tools International Limited for $21.8 million and paid an additional $1.6 million purchase price adjustment on our Austcast acquisition made in December 2010. Capital expenditures increased to $37.3 million for the nine months ended September 30, 2011 from $13.1 million for the nine months ended September 30, 2010. Capital expenditures increased as a result of global foundry and supply store expansion projects in Latin America, Australia and China that were initiated in 2011 and, to a lesser degree, information technology projects to support our growth. The $5.7 million increase in other expenditures for investing activities for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 was due to our additional investment in our Chilean joint venture foundry.

Cash Used in Financing Activities. Cash used in financing activities for the nine months ended September 30, 2011 was $7.4 million compared to $13.4 million for the nine months ended September 30, 2010. This $6.0 million decrease in cash used by financing activities is primarily related to an increase in proceeds from debt issuance of $15.1 million and a decrease in dividends paid of $8.3 million, partially offset by an increase in net debt payments of $13.5 million, an increase in common stock retired of $2.4 million and an increase in capitalized offering costs relating to the offering made by this prospectus of $1.9 million.

2010 Compared to 2009

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

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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.

2009 Compared to 2008

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 non-controlling shareholder of ESCO Soldering prior to our purchase of the shareholder's 40% equity interest in May 2009.

Capital expenditure commitments

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 $80.0 million, $50.0 million of which will be funded equally by us and Elecmetal ($25.0 million each). The remaining approximately 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 September 30, 2011 of $7.6 million from each of us and Elecmetal. We funded $17.5 million through the third quarter of 2011 and $6.1 million in the fourth quarter of 2011. We expect to fund the remaining $1.4 million in 2012.

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Pension Plan and Post-Retirement Benefits

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 to the Consolidated Financial Statements for the period ended September 30, 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
	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
	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	%

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Description of Indebtedness

Credit Agreement

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 September 30, 2011, we had $255.8 million available for borrowing under our credit facility, net of $15.2 million in outstanding letters of credit and $79.0 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.

At September 30, 2011, we were in compliance with our covenants under the facility.

Contractual Obligations and Contingencies

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.

	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

(1): We contributed 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 2012: $1.1 million per year under the ESCO Ltd. Hourly Plan and $3.7 million under the ESCO Ltd. National Plan. Actual contributions to the plans will depend on the actual membership (for the Hourly Plan) and payroll (for the National Plan). 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

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levels under those plans for 2013 through 2015. We contributed $9.7 million under our U.S. pension plan in 2011. We estimate we will contribute $10.9 million to our U.S. pension plan in 2012. 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 $0.8 million under ASC 740-10 (formerly, FIN 48). We classified $0.4 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 $0.4 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 161,791 shares, pre-split, or approximately 98% 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."

In the fourth quarter of 2011, we paid $1.5 million contingent consideration related to our acquisition of Austcast Pty Ltd. and we paid $5.2 million for final settlement of our acquisition of Hydra Mining Tools International Limited. As of September 30, 2011, we estimated these payments to be $6.6 million and included these amounts in current liabilities on our financial statements as of September 30, 2011. These amounts are not included in the above table.

In 2011, we voluntarily reported to OFAC a violation of OFAC regulations. See "Risk Factors — We may incur penalties and experience other adverse effects on our business for a violation of OFAC regulations." OFAC violations may result in significant penalties. We have not established a reserve for a potential penalty. See Note 13 to our Consolidated Financial Statements for the period ended September 30, 2011. Although we have not determined that imposition of a penalty is probable, if we were penalized, we believe the penalty would not exceed approximately $5.5 million; however, any assessed penalty could be materially higher.

Off-Balance Sheet Arrangements

At September 30, 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.

Critical Accounting Policies and Estimates

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

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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.

Revenue Recognition

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 when the 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. Fifteen 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 r

ESCO Corp S-1/A