We are unable to assess the amount of the impact attributable to the TEA-21 legislation, which became effec- tive in October 1998. While the backlog reflects a decline in sales, management believes that this is reflective of the current economic conditions in the United States and the current hesitancy of the Company’s customers to commit to capital equipment purchases. The hesitancy is a result of uncertainty of our customers regarding economic conditions, concern relating to highway funding by the states, lack of sufficient TEA-21 federal fund- ing, concern over possible war impacts and concern over the increase in the price of oil. TEA-21 funding in 2003 has been set at $31.6 billion as compared to $31.8 billion in 2002. Unquestionably, increased funding is needed to restore the nation’s highways to a quality level required for safety, fuel efficiency and mitigation of congestion. Asphalt Group: For 2002, this segment had sales of $165,951,000, compared to $142,674,000 for 2001, an increase of $23,277,000, or 16.3%. Segment profit decreased $1,895,000, or 37.7%, to $3,127,000 for 2002 compared to a segment profit of $5,022,000 for 2001. The primary reason for the increase in sales is the increase in domestic equipment sales, parts sales, used equipment and international sales of $6,059,000. Competitive price pressure and lack of utilization of capacity significantly impacted gross profits and segment income. Negative gross margins on highly specialized and customized jobs, especially in the construction and installation phase of the jobs, impacted gross margins substantially. Aggregate and Mining Group: For 2002 sales for this segment increased $16,492,000, or 9.0%, to $199,360,000 compared to $182,868,000 for 2001. The increase in domestic sales of $29,995,000 was pri- marily due to increased Systems sales. Segment profit for 2002 increased $447,000, or 6.0%, to $7,908,000 from $7,461,000 for 2001. Construction and manufacturing cost overruns on systems jobs, competitive price pressure, lack of utilization of capacity and product mix impacted gross profit and segment income. Interna- tional sales declined $13,503,000. Mobile Asphalt Paving Group: For 2002 sales in this segment decreased $6,582,000, or 8.4%, to $71,906,000 from $78,488,000 in 2001. Both domestic and international sales decreased from 2001. International sales during 2002 declined $1,771,000 from 2001. Segment profit for 2002 decreased $4,869,000 or 54.0% to $4,152,000 from $9,021,000 for 2001. Product mix, lack of utilization of capacity and increased SG&A expens- es impacted the 2002 profit. SG&A included increased selling, legal and exhibition expenses. Underground Group: For 2002 sales in this segment decreased by $9,200,000, or 18.9%, to $39,455,000 from $48,655,000 for 2001, primarily due to fewer small machine sales to the communications industry. International sales declined $2,889,000. Segment losses for 2002 increased $3,623,000, or 74.9%, to a loss of $8,460,000 from a loss of $4,837,000 during 2001, primarily from lack of utilization of capacity and expenses of approximately $3,277,000 for moving the Trencor operation from Texas to Tennessee, relocating the Case New Holland product line from Kansas to Tennessee and the associated start up costs in a new location. Results of Operations; 2001 vs. 2000 Net income for 2001 was $1,992,000, or $.10 per diluted share, a decrease of $24,289,000, or 92.4%, compared to net income of $26,281,000, or $1.33 per diluted share in 2000. The weighted average number of common shares outstanding at December 31, 2001 was 19,753,226, compared to 19,721,288 at December 31, 2000. Net sales for 2001 were $455,839,000, a decrease of $64,849,000, or 12.5%, compared to net sales of $520,688,000 in 2000. Excluding acquisitions, total sales declined $87,380,000, or 16.8%, to $433,308,000 in 2001 from $520,688,000 in 2000. The 2001 domestic sales decreased from $457,189,000 to $364,428,000, a decrease of $92,761,000, or 20.3%, from 2000. Domestic sales are generated primarily from equipment purchases made by customers for use in construction for privately funded infrastructure development and public sector spending on infrastructure development. During 2001, domestic sales were negatively impacted by a general economic slowdown and delays in capital expenditures by our customers whom the Company believes were concerned as to when the economy would improve. The Company believes that the terrorist attacks somewhat paralyzed sales order activity for six to eight weeks. The negative impact from the economic slowdown was felt throughout the year. International sales in 2001 increased $27,912,000, or 44.0%, to $91,411,000, compared to 2000 international sales of $63,499,000. Increased sales in South Africa (Osborn acquisition), Europe, Central America, China, Korea, Japan and South America comprise most of the increase over 2000. Excluding acquisitions in South Africa, international sales increased $10,875,000, or 17.1%. Sales in the asphalt, mobile asphalt paving and aggregate segments accounted for the increase in Europe. The increase in Central America was due to aggregate, underground and mobile asphalt paving segment sales. MANAGEMENT’S DISCUSSION AND ANALYSIS  (CONTINUED)