LUFKIN, Texas, Oct. 16

Lufkin Industries, Inc. (Nasdaq: LUFK) today announced results for the third quarter and nine months ended September 30, 2002. Net earnings per share (diluted) of $0.56 for the third quarter slightly exceeded the Company's guidance of $0.25 to $0.55, compared with $1.01 for the third quarter ended September 30, 2001. Net income for the third quarter was $3.8 million compared with $6.6 million for the third quarter of 2001. Net sales for the third quarter were $60.8 million compared with $75.6 million for the third quarter last year.

For the nine months ended September 30, 2002, net income was $7.4 million, or $1.10 per share (diluted), compared with net income of $14.9 million, or $2.33 per share (diluted), for the nine months ended September 30, 2001. Net sales were $172.7 million for the first nine months of 2002 compared with net sales of $212.3 million in the same period a year ago.

Douglas V. Smith, president and chief executive officer, commented, "We were pleased to report these results for the third quarter, especially in the face of the continued uncertainty in the global oil markets. The impact of this uncertainty was reflected in our oil field products business, which, despite a significant increase in oil prices, remained soft domestically and somewhat below expectations in certain international markets. In response, we have focused on continued cost containment efforts within the oil field division. We also benefited during the third quarter from ongoing strength in our power transmission bookings, while our trailer division produced its third consecutive increase in comparable quarter revenues."

Third-quarter revenue from Lufkin's oil field division was $31.1 million compared with $49.5 million for the third quarter last year. Power transmission revenue increased 16.4% for the quarter to $19.8 million from $17.0 million for the third quarter of 2001, and trailer revenue increased 8.5% to $9.9 million from $9.2 million.

Although the Company's total backlog declined sequentially to $63.9 million at September 30, 2002, from $68.6 million at the end of the second quarter of 2002, it improved from the backlog of $61.1 million at September 30, 2001, as a result of consistent growth in power transmission demand and a rebound in trailer demand after a substantial fall in the trailer backlog at the end of last year's third quarter. The backlog for the oil field division was $18.3 million at the end of the third quarter compared with $21.9 million at June 30, 2002, and $26.0 million at September 30, 2002. The backlog for the power transmission division increased to $33.6 million at the quarter's end from $33.1 million at the end of the second quarter of 2002 and $30.3 million at the end of last year's third quarter. The trailer division backlog was $12.0 million at September 30, 2002, $13.6 million at June 30, 2002, and $4.8 million at September 30, 2001.

Mr. Smith added, "As reported last week, our Lufkin, Texas, facilities are experiencing a work stoppage because of unresolved health care expense issues that have prevented us from successfully renegotiating the Company's three- year union contracts. This strike is Lufkin's first in 26 years, and we hope to resolve it soon and resume normal operations. To that end, the first meeting between the unions and Lufkin under the auspices of a mediator is scheduled for later today.

"As a result of the uncertainty about the timing for settling the strike, we are suspending our previous guidance for earnings per share (diluted) of $1.05 to $1.65 for full-year 2002. We intend to re-establish our guidance once the strike and its impact have been resolved."

Lufkin will discuss its results for the third quarter ended September 30, 2002, in a teleconference call today at 9:00 a.m. (central time). To listen to the call, participants should dial (719) 457-2629 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 10:00 a.m. (central time) October 16, 2002, through 6:00 p.m. (central time) October 17, 2002, by dialing (719) 457-0820 and entering reservation number 659011.

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         Nine Months Ended
                                September 30,              September 30,
                             2002          2001         2002          2001

    Net sales            $  60,807     $  75,640   $  172,724    $  212,285
    Cost of sales           46,605        56,640      136,253       160,283
     Gross profit           14,202        19,000       36,471        52,002
    Selling, general and
     administrative
     expenses                8,197         8,274       24,676        26,554
     Operating income        6,005        10,726       11,795        25,448
    Other income (expense),
     net
                               247           231          495          (744)
     Earnings before income
      taxes                  6,252        10,957       12,290        24,704
    Income tax provision     2,470         4,397        4,855         9,758
     Net earnings        $   3,782     $   6,560   $    7,435    $   14,946

    Net earnings per share:
     Basic               $    0.57     $    1.04   $     1.13    $     2.39
     Diluted             $    0.56     $    1.01   $     1.10    $     2.33

    Weighted average shares outstanding:
     Basic               6,647,279     6,320,272    6,593,681     6,260,959
     Diluted             6,807,479     6,498,239    6,748,889     6,404,159

    Cash dividends per
     share               $    0.18     $    0.18   $     0.54    $     0.54

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)


                                                     Sept. 30,      Dec. 31,
                                                       2002           2001
    Current assets                                $   97,080     $   98,393
    Total assets                                     247,374        246,069
    Current liabilities                               30,788         37,049
    Shareholders' equity                             178,445        170,999
    Working capital                                   66,292         61,344
    Long-term debt, net of current portion               202            339


                             Division Performance
                            (Thousands of dollars)


                             Three Months Ended          Nine Months Ended
                           9/30/02       9/30/01      9/30/02       9/30/01
    Revenue:
     Oil field           $  31,085     $  49,484    $  91,380     $  140,836
     Power transmission     19,785        16,994       51,748         45,708
     Trailer                 9,937         9,162       29,596         25,741
      Total              $  60,807     $  75,640    $ 172,724     $  212,285


                                                      Sept. 30,     June 30,
                                                        2002          2002
    Backlog:
     Oil field                                      $  18,300     $   21,900
     Power transmission                                33,600         33,100
     Trailer                                           12,000         13,600
      Total                                         $  63,900     $   68,600

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