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sale of this facility would have given us a $19 million gain and eliminated violation of the cov- enants of our lending agreement. With the purchase of the John Deere facility, the Case line, and the expenses incurred with moving the equipment, we have expended approximately $20 million to purchase and to get the new Loudon facility into operation. While we will contiue to at- tempt to sell the Trencor plant in 2003, our debt has increased an additional $20 million without the sale of the Grapevine property. In essence the plan was good, but the timing was terrible. However, we believe that long-range this will prove to be a very good move for our Company. 

We believe our industry has a great future and we are positioning Astec to continue in its market leader position. On the following pages we talk about the vision for our industry along with the vision and model for our Company. We believe that building trust with our customers, giving the best service in the industry, and building the most innovative products are essential for the long- range success and growth of our companies. 

While 2002 was a disappointing year we continued to develop new products. We produced a new state-of-the-art computerized control system for our asphalt facility line, and a similar system for our crushing plants. We developed a new state-of-the-art line of burners for our as- phalt facilities which will meet the most stringent environmental requirements in California. Our Systems Group obtained a major project at the Atlanta Airport and large projects in Georgia and Arkansas. Our Kolberg-Pioneer and JCI operations developed a highly portable crushing plant capable of being erected and placed into operation in four hours after arriving at the job site. We completed the sale and installation of two of these facilities during the year. Roadtec developed two new models of milling machines and two new models of pavers. Each of our Companies continues to make product improvements in an effort to provide more value to our customers and lower customersGLYPH<146> operating costs. 

During the year we had one of the largest exhibits at the ConExpo/ConAgg exhibition. ConEx- po is the largest equipment show held every three years in Las Vegas, Nevada. Approximately 120,000 visitors came to the exhibits. 

We operate in a cyclic business. While the present cycle has lasted much longer than any of us expected, we believe this too will pass and we will come through it a much stronger Company for the future. With the uncertainties of Iraq, the U.S. economy, corporate scandals, Venezue- laGLYPH<146>s oil situation and the questionable highway funding, it is difficult to be too optimistic for 2003. However, with a replacement parts business of approximately $100 million per year, the most innovative equipment in the industry, the most dedicated employees, and our loyal customers, we believe that we will see improvement in 2003 and again be able to grow in 2004. 

We appreciate the patience and support of each of you as stockholders of the Company and as- sure you that the management group is doing everything in their power to operate as efficiently as possible. 

Yours very truly, 

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