content_image/103111.jpg content_image/103110.jpg content_image/103109.jpg
## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

The provision (benefit) for income taxes consisted of the following: 

<img src='content_image/103111.jpg'>

Year Ended December 31, 

A reconciliation of the provision for income taxes at the statutory federal rate to the amount provided is as follows: 

Year Ended December 31, 

<img src='content_image/103110.jpg'>

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. 

Significant components of the Company’s deferred tax liabilities and assets are as follows: 

<img src='content_image/103109.jpg'>

## 12. Contingencies 

Year Ended December 31, 

Management has reviewed all claims and lawsuits and, upon the advice of counsel, has made adequate provi- sion for any estimable losses. However, the Company is unable to predict the ultimate outcome of the out- standing claims and lawsuits. 

Certain customers have financed purchases of the Company’s products through arrangements in which the Company is contingently liable for customer debt and residual value guarantees aggregating $14,749,000 and $12,137,000 at December 31, 2002 and 2001, respectively. These obligations average three years in duration and have minimal risk. Astec Financial Services, Inc. sold both finance and operating leases with limited recourse, generally not exceeding 15% of the purchase price, subject to elimination of recourse responsibilities through remarketing of equipment. 

## 13. Shareholders’Equity 

The Company has elected to follow APB 25 and related interpretations in accounting for its employee stock options. Under APB 25, when the exercise price of the Company’s employee stock options equals or exceeds the market price of the underlying stock on the date of grant, no compensation expense is generally recognized. 

Under terms of the Company’s stock option plans, officers and certain other employees may be granted options to purchase the Company’s common stock at no less than 100% of the market price on the date the option is granted. The Company has reserved shares of common stock for exercise of outstanding non- qualified options and incentive options of officers and employees of the Company and its subsidiaries at prices 

