July 18, 2001

Lufkin Industries, Inc. Announces Second Quarter Net Income Increases 154%

LUFKIN, Texas--(BUSINESS WIRE)--July 18, 2001-- Lufkin Industries, Inc. (Nasdaq:LUFK) today announced results for the second quarter and six months ended June 30, 2001. For the second quarter, Lufkin's reported net income increased 154% to $5.3 million, or $0.83 per share (diluted), compared with net income of $2.1 million, or $0.33 per share (diluted), for the second quarter ended June 30, 2000. Sales for the second quarter increased 8% to $73.2 million compared with $67.8 million for the second quarter of fiscal 2000.

Lufkin's net income for the six months ended June 30, 2001, increased 264% to $8.4 million, or $1.32 per share (diluted), compared with net income of $2.3 million, or $0.37 per share (diluted), for the six months ended June 30, 2000. Sales for the first half of 2001 increased 10% to $136.6 million compared with $124.6 million for the first six months of 2000.

Commenting on the announcement, Douglas V. Smith, president and chief executive officer, said, "The continued strong results in our oil field products produced greater than expected results for the second quarter and first half of fiscal 2001. We are achieving good operating efficiencies in the oil field area and our other three areas are meeting our earlier expectations.

"Our total backlog at June 30, 2001, rose to $69.3 million from $68.6 million at March 31, 2001. The backlog for oil field products and power transmission products increased from March 31, 2001, to $27.6 million compared with $23.9 million and to $28.9 million compared with $26.7 million, respectively. The backlog for foundry products and trailers decreased from March 31, 2001, to $5.9 million compared with $6.4 million and to $6.9 million compared with $11.6 million, respectively."

Smith went on to say, "We are very pleased with the results achieved during the first half of fiscal 2001. Based on these results and the upturn in oil field activity continuing, earnings per share (diluted) for the quarter ending September 30, 2001, are currently forecast to be in the range of $0.56 to $0.85 per share (diluted) compared with $0.36 per share (diluted) a year ago."

Lufkin will discuss its results for the second quarter ended June 30, 2001, in a teleconference call today at 9:00 a.m. (central time). To listen to the call, participants should dial 913/981-5507 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 10:00 a.m. (central time) July 18, 2001, through 6:00 p.m. (central time) July 19, 2001, by dialing 719/457-0820 and entering reservation number 736520.

Lufkin Industries, Inc. sells and services oil field pumping units, power transmission products, foundry castings and highway trailers throughout the world. The Company has vertically integrated all vital technologies required to design, manufacture and market its products.

This release contains forward-looking statements and information that are based on management's beliefs as well as assumptions made by and information currently available to management. When used in this release, the words "anticipate," "believe," "estimate," "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect the Company's current views with respect to certain events and are subject to certain assumptions, risks and uncertainties, many of which are outside the control of the Company. These risks and uncertainties include, but are not limited to, (i) oil prices, (ii) capital spending levels of oil producers, (iii) availability and prices for raw materials and (iv) general industry and economic conditions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company does not intend to update these forward-looking statements and information.




                        LUFKIN INDUSTRIES, INC.
                         Financial Highlights
             (Thousands of dollars, except per share data)
                              (Unaudited)
                                               Three Months Ended
                                                    June 30,
                                           --------------------------
                                              2001            2000
                                           -----------    -----------
Net sales                                      $73,185        $67,847
Cost of sales                                   54,910         55,713
                                           -----------    -----------
     Gross profit                               18,275         12,134
Selling, general and
   administrative expenses                       9,238          8,325
                                           -----------    -----------
    Operating income                             9,037          3,809
Other expense, net                                (227)          (234)
                                           -----------    -----------
     Earnings before income taxes                8,810          3,575
Income tax provision                             3,480          1,479
                                           -----------    -----------
     Net earnings                               $5,330         $2,096
                                           ===========    ===========
Net earnings per share:
    Basic                                        $0.85          $0.33
                                           ===========    ===========
    Diluted                                      $0.83          $0.33
                                           ===========    ===========
Weighted average shares outstanding:
     Basic                                   6,248,121      6,290,413
     Diluted                                 6,431,741      6,306,386

Cash dividends per share                         $0.18          $0.18
                                           ===========    ===========


                                               Six Months Ended
                                                    June 30,
                                           --------------------------
                                              2001           2000
                                           -----------    -----------
Net sales                                     $136,644       $124,618
Cost of sales                                  103,643        104,181
                                           -----------    -----------
     Gross profit                               33,001         20,437
Selling, general and
   administrative expenses                      18,280         16,429
                                           -----------    -----------
    Operating income                            14,721          4,008
Other expense, net                                (974)          (101)
                                           -----------    -----------
     Earnings before income taxes               13,747          3,907
Income tax provision                             5,361          1,605
                                           -----------    -----------
     Net earnings                               $8,386         $2,302
                                           ===========    ===========
Net earnings per share:
    Basic                                        $1.35          $0.37
                                           ===========    ===========
    Diluted                                      $1.32          $0.37
                                           ===========    ===========
Weighted average shares outstanding:
     Basic                                   6,231,076      6,294,500
     Diluted                                 6,356,893      6,307,663

Cash dividends per share                         $0.36          $0.36
                                           ===========    ===========

    Prior year periods have been restated to reflect the
reclassification of freight charges billed to customers as revenue and
the related expenses as cost of sales in accordance with EITF Issue
00-10. The Company previously accounted for freight charged to
customers as a reduction of cost of sales. Gross profit, operating
income and net earnings for these periods were not affected by this
reclassification.

                        LUFKIN INDUSTRIES, INC.
                       Balance Sheet Highlights
                        (Thousands of dollars)

                                        June 30,         Dec. 31,
                                          2001             2000
                                        -------          -------
Current assets                          $93,086          $85,642
Total assets                            243,024          235,445
Current liabilities                      42,491           40,441
Shareholders' equity                    159,175          152,651
Working capital                          50,595           45,201


                         Division Performance
                        (Thousands of dollars)

                                Three Months Ended    Six Months Ended
                                 6/30/01   6/30/00   6/30/01   6/30/00
                                 -------   -------   -------   -------
Revenue:
     Oil field                   $43,325   $21,773   $79,315   $37,325
     Power transmission           14,489    16,385    28,714    30,475
     Foundry                       5,704     5,650    12,036    11,020
     Trailer                       9,667    24,039    16,579    45,798

                                     June 30,         March 31,
                                       2001             2001
                                      -------         -------
Backlog:
Oil field                             $27,600         $23,900
Power transmission                     28,900          26,700
Foundry                                 5,900           6,400
Trailer                                 6,900          11,600

Contact:
     Lufkin Industries Inc., Lufkin
     R. D. Leslie, 936/637-5325


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