Dear Fellow Shareholders,

The results from our activities in 2002 were stable, if unexceptional, in synch with the general economies in North America and Europe. We were able to maintain productivity and margins on a global basis and to realize modest improvements in working capital, which helped us to reduce debt by 12 percent by year’s end.

At $608.0 million, net sales for the year ended December 31, 2002 were flat compared to the prior year. Net income was $24.0 million, an increase of 58 percent from $15.2 million in 2001. Net income per share was $.80, a 57 percent increase from the $.51 reported in 2001.

Net sales for the fourth quarter ended December 31, 2002, were $159.3 million, an increase of 7 percent from the $148.5 million reported in 2001. Net income was $4.0 million, an increase of 73 percent compared to $2.3 million in the prior year's fourth quarter. Net income per share was $.13, an increase of 63 percent compared with $.08 in the fourth quarter of 2001.

Our adoption of Statement of Financial Accounting Standards No. 142, which discontinued the amortization of goodwill, affected results positively in both the fourth quarter and for the full year. Goodwill amortization in the comparable quarter and year ended December 31, 2001, reduced income before taxes by $2.3 million and $9.2 million respectively, and earnings per share by $.06 and $.24.

Favorable foreign currency translation, mainly in the strength of the euro, increased reported sales by $3.6 million in the fourth quarter and by $6.1 million for the year. The effect of foreign currency translation had no material effect on income for either period.

Business Segments Overview

Although sales in our manufacturing segment increased 8 percent compared to the fourth quarter of 2001, they decreased slightly year-over-year. Industrial markets, into which we sell material handling products and other items, remained anemic through most of the year in both North America and Europe. During the fourth quarter, however, demand in our niches of automotive markets and some areas of heavy-duty manufacturing began to show slight improvements.

The volatility of the price of plastic resin, as businesses struggle to improve profits in an environment of intense competition and great uncertainty, was a factor affecting our performance in the manufacturing segment. Resin prices were favorable in a year-over-year comparison through the second quarter, began to increase in the third quarter, and rose further in the fourth quarter. At this writing, the upward movement in resin prices continues with indications of some scarcity of certain resins in 2003. We are examining several options to help mitigate the effects of these price swings on our business.

In our distribution segment, sales increased 5 percent in the fourth quarter and 2 percent for the year, in comparison to 2001. Demand for consumable supplies was steady throughout the year. Customers’ requirements for capital equipment revived towards the end of the year.

According to industry statistics, independent tire dealers sold approximately two-thirds of the estimated 205 million replacement tires bought by car owners in 2002. The remainder of tire sales occur through tire manufacturers' retail stores, mass merchandisers, wholesale clubs, service centers, and car dealers. We service all of those niches, but independents of all sizes form our largest customer base. While consolidation of independent tire dealers into larger entities is creating fewer customers, Myers is uniquely positioned to service the emerging national accounts programs. We believe that Myers Tire Supply's status as the leading supplier for tire, wheel, and undervehicle service professionals remains a solid basis for growth.

Cash Flow, Debt Reduction, and Capital Expenditures

Cash flow from operations, totaling $65.5 million at the end of the year, allowed us to reduce total debt by $32.0 million for 2002. We finished the year with total debt of $232.9 million, a decrease of 12 percent from $264.9 million at the start of the year. Debt-to-total capitalization was 48 percent at the end of 2002 versus 55 percent at the end of 2001.

In August, the Board of Directors declared a five-for-four stock split and a $.05 cash dividend on the split shares, making 2002 the 27th consecutive year in which we have increased the cash payment to shareholders. Shareholders’ equity increased 18 percent to $255.7 million from $217.5 million in 2001, and book value per share was $8.50 at the end of 2002, an increase of 16 percent from $7.30 at the end of 2001.

New Chief Operating Officer

On February 14, 2003, the Board of Directors approved the promotion of John C. Orr to the newly created position of chief operating officer. John joined Myers Industries in 2000 as general manager of our Buckhorn subsidiary, following distinguished service at The Goodyear Tire and Rubber Company where he was formerly vice president of manufacturing for the North American Tire Division. We expect that his operational and leadership excellence will contribute positively to the Company's worldwide operations.

Summary

The uncertainty, both economic and political, before us indicates that continued focus on debt reduction seems prudent. Although we are not completely sanguine about immediate prospects for material improvement of business conditions, we know that our business fundamentals are solid.

We fully expect that the talented employees of the Company will continue to create new products and services to strengthen relationships with our valued customers. They will contribute to improving our performance by focusing on latent synergies across operational, sales, and marketing platforms within our organization.

We thank you, our shareholders, for your continuing confidence in Myers Industries.