Dear Fellow Shareholders,

2001 was our worst year in a long time. The fourth quarter, typically a strong one for us, was particularly weak. The recession that began in 2000 accelerated and eroded activity in nearly every market.

Despite the challenges, the Company remained profitable. We reduced working capital and employment; we constrained investment and expenditure; we began activity based costing reviews in some operations to better control our performance in the faster-moving, more competitive environment; and we paid down our debt, reducing it by 12 percent over the course of the year.

Fourth Quarter and Full Year Financial Results

Net sales for the fourth quarter ended December 31, 2001, were $148.5 million, a decrease of 13 percent from the $171.3 million reported in 2000. Net income was $2.3 million, a decrease of 48 percent compared to $4.5 million in last year’s fourth quarter. Net income per share of $.10 was down 47 percent compared with $.19 in the fourth quarter of 2000.

At $608.0 million, net sales for the year ended December 31, 2001 were 7 percent below the prior year's record results of $652.7 million. Net income was $15.2 million, a decrease of 37 percent from $24.0 million in 2000. Net income per share was $.64, also a decrease of 37 percent from the $1.01 reported in 2000.

Excluding contributions from acquisitions, net sales would have decreased 14 percent for the fourth quarter and 9 percent for the full year of 2001. The translation effect of foreign currencies had no material impact on sales and earnings for neither the quarter nor the year.

Manufacturing Segment Overview

In the manufacturing segment, net sales were down 15 percent for the fourth quarter and 7 percent for the year, compared to the same periods in 2000. Excluding contributions from the RB Manufacturing Company and Best Plastics acquisitions, made early in the fourth quarter of 2000, manufacturing segment net sales would have been 16 percent lower for the fourth quarter and 10 percent lower for the year.

2001 was a tough year to be a manufacturer. As economic conditions declined during the course of the year, industrial markets served by our manufacturing segment were affected most severely. Heavy-truck, recreational vehicle, and other manufacturing-based businesses experienced a squeeze on their own revenues and profits. Most companies responded by cutting spending, producing less, and reducing inventories.

The effects of widespread consolidation, both within the markets we serve and among competitors, further exacerbated already-intense pressure on pricing within our product lines. Although price variances for high-density polyethylene, the primary raw material for the plastic products we manufacture, were favorable throughout 2001, they were insufficient to offset lower demand within the context of the intense price competition that resulted from the overcapacity within the marketplace.

Distribution Segment Overview

Compared to 2000's fourth quarter and full year results, sales in the distribution segment were down 6 percent for the quarter and 5 percent for the year. Lower sales of both passenger and truck original equipment and replacement tires, plus weak demand for service to both tires and wheels, as well as related undervehicle components which our products support, hurt our performance in this segment.

Product mix was consistent with that of the previous year, weighted more toward consumable supplies than capital equipment. During last year, we worked at expanding relationships with national accounts to achieve exclusive or preferred supplier status. The modest sales and profit decline in the distribution segment, when compared to the manufacturing segment, particularly in the fourth quarter, illustrates its relative stability.

We believe Myers Tire Supply’s single-source supplier strategy is sound. We possess extensive knowledge of the tire service industry. We have the nationwide coverage to speed new and existing products to market, and we enjoy close relationships that our customers depend upon for training and support to help them advance their business.

Cash Flow, Debt Reduction, and Capital Expenditures

Cash flow from operations was a record $76.8 million for the year, an increase of 14 percent compared to $67.3 million in 2000. We reduced our total debt by $35.3 million for the year, from $300.2 million at the start of the year to $264.2 million at December 31, 2001. Debt as a percentage of capitalization was 54.9 percent at the end of the year, down 6 percent from the previous year.

Capital expenditures for the year totaled $25.2 million, 42 percent lower than in 2000. Investments for tooling and equipment over the last several years increased our capacity, not a necessary commodity during a period of weakened sales.

Stock Performance and Return to Shareholders

Myers stock appreciated 3.6 percent during 2001, closing out the year at $13.65 and outperforming most major market indexes. On May 1, the shares of the Company began trading on the New York Stock Exchange. Continuing in our belief that shareholders deserve an ongoing return on their investment, in August the Board of Directors declared a 10 percent stock dividend, marking the 26th consecutive year in which they have increased the cash payout to shareholders. Compared to 2000, shareholders’ equity increased to $217.5 million, up 2 percent, and book value per share rose to $9.12, an increase of 1 percent.

Summary

We hope that we have seen the worst of the economic obstacles, and approach 2002 with cautious optimism.

In addition to the other areas of operational improvement, we continue to review our manufacturing capacity needs and constraints, deciding how best to align our product requirements, manufacturing capabilities, and geographies for market needs going forward.

Board of Directors

The task of an outside Director has never been an easy one. It takes many board meetings to get a sense of a business in which one has no day-to-day involvement. Both management and shareholders of Myers Industries have been fortunate in the intelligence, knowledge, commitment, and dedication of its Board of directors.

It is with respect and appreciation that we acknowledge the great contributions to the Company of Edwin P. Schrank and Samuel Salem, who retire from the Board of Directors this term: Ed with more than 30 years of service and Sam with over 15 years of service. Both have aided the Company and its shareholders immeasurably. I thank them for their valuable service, will miss their wise counsel and companionship, and wish them good health and happiness.

We thank you, our shareholders, for continued confidence in Myers Industries; our suppliers for their support; and our employees for their commitment to serving our customers, building value, and strengthening our business.