ASV INC /MN/ - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SEPTEMBER 30, 2002

Commission file number: 0-25620

A.S.V., INC.
(Exact name of registrant as specified in its charter)

MINNESOTA 41-1459569
------------------------------ ----------------------------------
State or other jurisdiction of I.R.S. Employer Identification No.
incorporation of organization

840 LILY LANE
GRAND RAPIDS, MN 55744 (218) 327-3434
- -------------------------------------- -----------------------------
Address of principal executive offices Registrant's telephone number

Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes[X] No [ ]

As of November 4, 2002, 10,111,737 shares of registrant's $.01 par
value Common Stock were outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

A.S.V., INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

See notes to consolidated financial statements.

2

A.S.V., INC.

CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

See notes to consolidated financial statements.

3

A.S.V., INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30,

See notes to consolidated financial statements.

4

A.S.V., INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2002

(UNAUDITED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied
in the preparation of the accompanying unaudited, consolidated financial
statements follows:

REVENUE RECOGNITION
The Company generally recognizes revenue on its product sales when
persuasive evidence of an arrangement exists, delivery has occurred, the price
is fixed or determinable and collectibility is reasonable assured. The Company
considers delivery to have occurred at the time of shipment.

WARRANTIES
Provision for estimated warranty costs is recorded at the time of sale
and periodically adjusted to reflect actual experience.

RESEARCH AND DEVELOPMENT
All research and development costs are expensed as incurred.

INTERIM FINANCIAL INFORMATION
The accompanying unaudited, consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America (US GAAP) for interim financial information.
Accordingly, they do not include all of the footnotes required by US GAAP for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal, recurring adjustments) considered necessary for a fair
presentation have been included. Results for the interim periods are not
necessarily indicative of the results for an entire year.

NOTE 2. INVENTORIES

Inventories consist of the following:

NOTE 3. LINE OF CREDIT

During October 2002, the Company amended its $10 million line of credit
agreement with its primary bank. The amended portion of the line of credit
reduces the level of tangible net worth the Company must maintain at the end of
each calendar quarter to provide for an increased level of repurchases under the
Company's stock repurchase plan adopted in October 2002. All other terms and
conditions of the line of credit remain the same. As of September 30, 2002, the
Company was in compliance with all requirements of the line of credit agreement.

NOTE 4. RECENTLY PASSED LEGISLATION

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley
Act of 2002 (the Act), which immediately impacts Securities and Exchange
Commission registrants, public accounting firms, lawyers and securities
analysts. This legislation is the most comprehensive since the passage of the
Securities Acts of 1933 and 1934. It has far reaching effects on the standards
of integrity for corporate management, board of directors, and executive
management. Additional disclosures, certifications and possible procedures will
be required of the Company. The Company does not expect any material adverse
effect as a result of the passage of this legislation; however, the full scope
of the Act has not been determined. The Act provides for additional regulations
and requirements of publicly-traded companies many of which have yet to be
issued.

5

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

The following discussion and analysis of the Company's financial
condition and results of operations is based upon its financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires management to make estimates and judgments that affect the reported
amounts of assets, liabilities and expenses, and related disclosures. On an
on-going basis, management evaluates its estimates and judgments, including
those related to accounts receivable, inventories and warranty obligations. By
their nature, these estimates and judgments are subject to an inherent degree of
uncertainty. Management bases its estimates and judgments on historical
experience, observance of trends in the industry, information provided by
customers and other outside sources and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the amount of expenses and the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions.

Management believes the following critical accounting policies, among
others, affect its more significant judgments and estimates used in the
preparation of its consolidated financial statements.

Revenue Recognition and Accounts Receivable. Revenue is recognized when
persuasive evidence of an arrangement exists, delivery has occurred, the price
is fixed or determinable and collectibility is reasonably assured. The Company
generally obtains oral or written purchase authorizations from customers for a
specified amount of product at a specified price and considers delivery to have
occurred at the time of shipment. ASV maintains an allowance for doubtful
accounts for estimated losses resulting from the inability of its customers to
make required payments. If the financial condition of ASV's customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required.

Inventories. Inventories are stated at the lower of cost or market,
cost being determined on the first-in, first-out method. Adjustments to slow
moving and obsolete inventories to the lower of cost or market are provided
based on historical experience and current product demand. The Company evaluates
the adequacy of the inventories carrying value quarterly.

Warranties. ASV provides for the estimated cost of product warranties
at the time revenue is recognized. While ASV engages in extensive product
quality programs and processes, including actively monitoring and evaluating the
quality of its component suppliers, ASV's warranty obligation is affected by
product failure rates, material usage and service delivery costs incurred in
correcting a product failure. Should actual product failure rates, material
usage or service delivery costs differ from ASV's estimates, revisions to the
estimated warranty liability may be required.

RESULTS OF OPERATIONS

The following table sets forth certain Statement of Earnings data as a
percentage of net sales:

6

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001.

Net Sales. Net sales for the three months ended September 30, 2002
decreased 4.8% to approximately $11,475,000, compared with approximately
$12,053,000 for the same period in 2001. The decrease in sales was due to a
change in the mix of products sold during the third quarter of 2002. First, the
Company had reduced shipments of certain undercarriages to Caterpillar Inc.
(Caterpillar) for the jointly developed Multi-Terrain Loader (MTL) product line
manufactured by Caterpillar. The reduced shipments were a result of a production
issue experienced by Caterpillar unrelated to ASV's undercarriages. Caterpillar
believes this issue has now been resolved and limited production of the affected
models is expected to resume in the fourth quarter of 2002, with full production
expected in the first quarter of 2003. Second, the Company had no sales of the
private label version of its RCo30 product, the ASL-300, to Polaris Industries
Inc. (Polaris) during the third quarter of 2002. ASL-300 sales accounted for
approximately $1.8 million in the third quarter of 2001. The Company does not
anticipate any ASL-300 sales to Polaris for the remainder of 2002. Third, the
Company experienced decreased sales of its ASV branded products during the third
quarter of 2002. The Company believes these decreased sales were due to an
overall softening in the construction equipment market and the introduction of
two additional models in the MTL product line in the third quarter of 2002.
Offsetting these decreases were increased undercarriage shipments to Caterpillar
for the MTL models that were introduced during the third quarter of 2002. In
addition, the Company experienced increased parts sales during the third quarter
of 2002 as the number of machines in the field continues to increase.

Gross Profit. Gross profit for the three months ended September 30,
2002 was approximately $2,122,000, or 18.5% of net sales, compared to
approximately $2,205,000, or 18.3% of net sales, for the same period in 2001.
The slight increase in gross profit percentage for the third quarter of 2002 was
due primarily to no sales of the ASL-300 product to Polaris during the third
quarter of 2002. The ASL-300 was sold on a cost plus basis which was lower than
the gross profit on an RCo30.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased from approximately $1,429,000, or 11.9% of net
sales, in the third quarter of 2001, to approximately $1,121,000, or 9.8% of net
sales, in the third quarter of 2002. The decreases were due primarily to
decreased marketing costs including decreased commissions paid to Caterpillar
from the change in sales mix experienced in 2002. ASV pays no commission to
Caterpillar on the sale of any MTL undercarriages or any product in the R-Series
product line.

Research and Development Expenses. Research and development expenses
decreased from approximately $794,000 in the third quarter of 2001 to
approximately $249,000 in the third quarter of 2002. The decrease was a result
of the Company nearing the completion of the development of undercarriages for
Caterpillar's MTL product line in 2002.

The Company anticipates research and development expenses will return
to its historical level of approximately 1% of net sales in 2003.

Other Income (Expense). Interest expense decreased from approximately
$37,000 for the third quarter of 2001 to approximately $32,000 for the third
quarter of 2002. The decrease was due to the Company refinancing approximately
$784,000 of its long-term debt from 9.0% to 6.5% for a five-year term in
December 2001. Other income decreased approximately $59,000 in the third quarter
of 2002 due to lower interest income from decreased short-term investments as
the Company used these investments to fund operations in 2002.

Net Earnings. Net earnings for the third quarter of 2002 were
approximately $527,000, compared with approximately $93,000 for the third
quarter of 2001. The increase was primarily a result of increased gross profit
percentage on slightly lower sales and decreased operating expenses.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001.

Net Sales. Net sales for the nine months ended September 30, 2002
decreased 17.5%, to approximately $32,366,000 compared with approximately
$39,234,000 for the same period in 2001. This decrease was the result of a shift
in product sales mix in 2002. First, the Company had no sales of the ASL-300
under its alliance with Polaris during 2002. These machines accounted for
approximately 34% of ASV's unit sales for the nine months ended September 30,
2001. Second, sales of the Company's RCo30 All Surface Loader decreased in 2002,
due in part to the introduction of the RCo50 in the first quarter of 2002.
Third, the Company experienced decreased sales of its model 4810 Posi-Track in
2002. The Company believes this decrease was attributable to the overall
softening of the construction equipment market and the introduction of the MTL
products. Offsetting these decreases were increases in 2002 in sales of the
Company's shipment of MTL undercarriages to Caterpillar, the RCo50 and parts.

7

Gross Profit. Gross profit for the nine months ended September 30, 2002
was approximately $7,019,000, or 21.7% of net sales, compared with approximately
$6,460,000, or 16.5% of net sales, for the nine months ended September 30, 2001.
The reasons for the increased gross profit and gross profit percentage for the
nine month period ended September 30, 2002 were due to the change in mix of
machines sold as described more fully above.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased from approximately $4,303,000, or 11.0% of net
sales, for the nine months ended September 30, 2001, to approximately
$3,706,000, or 11.4% of net sales, for the nine months ended September 30, 2002.
This decrease in expenses was due primarily to two factors. First, the Company
had decreased commissions to Caterpillar of approximately $225,000 as a result
of the change in sales mix experienced during the first nine months of 2002. The
Company pays no commission to Caterpillar on the sale of any MTL undercarriages
or any R-Series product. Second, the reduction of the Company's previously
established sales return reserve caused selling general and administrative
expenses to decrease approximately $148,000 in 2002. The Company had previously
established a remarketing reserve of $250,000 for any expected costs associated
with remarketing existing machines at one customer's locations, some of which
were ultimately returned to the Company. ASV had originally anticipated these
machines would be remarketed to other dealers, but instead chose to have certain
of these machines returned to ASV for use in its rental program which began in
the second quarter of 2002. As these machines were returned to ASV and reflected
as sales returns with a corresponding decrease in gross profit of approximately
$148,000, a portion of the remarketing reserve was no longer needed. The Company
reversed the portion of the remarketing reserve that related to the returned
machines, which decreased selling, general and administrative expenses by
approximately $148,000 during the second quarter of 2002.

Research and Development Expenses. Research and development expenses
decreased from approximately $1,950,000 for the nine months ended September 30,
2001 to approximately $1,631,000 for the nine months ended September 30, 2002.
The decrease was due to the Company nearing the completion of the development of
undercarriages for Caterpillar's MTL product line in 2002.

Other Income (Expense). Interest expense decreased from approximately
$111,000 for the first nine months of 2001 to approximately $95,000 for the
first nine months of 2002. The decrease was due to the Company refinancing
approximately $784,000 of its long-term debt from 9.0% to 6.5% for a five-year
term in December 2001. Other income decreased to approximately $173,000 in the
first nine months of 2002 from approximately $409,000 for the first nine months
of 2001. This decrease was due primarily to lower interest income from decreased
short-term investments as the Company used these investments to fund operations
in 2002.

Net Earnings. Net earnings for the nine months ended September 30, 2002
increased to approximately $1,175,000 from approximately $388,000 for the nine
months ended September 30, 2001. The increase was primarily a result of
increased gross profit percentage on decreased sales along with decreased
operating expenses, offset in part by decreased non-operating income.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2002, the Company had working capital of approximately
$48,461,000 compared with approximately $47,790,000 at December 31, 2001. While
overall working capital remained relatively the same during the period, several
components changed. First, cash and short-term investments decreased
approximately $4,298,000 due primarily to funding operations during the first
nine months of 2002. Second, accounts receivable increased approximately
$1,295,000 as 46% of the sales for the third quarter of 2002 occurred during the
final month of the quarter. Third, inventories increased approximately
$6,347,000 from December 31, 2001. Included in this increase is an increase in
finished goods of approximately $3,827,000 due to lower than anticipated sales
in the first and third quarter of 2002. In addition, the Company elected to
produce the majority of the RCo30s and 2800 series Posi-Tracks it expects to
need for 2002 when it could not complete MTL undercarriages during the first
quarter. Raw materials also increased approximately $2,344,000 at September 30,
2002 compared with December 31, 2001 due to the lower than expected sales and
related production levels. Accounts payable increased approximately $1,724,000
at September 30, 2002 compared with December 31, 2001 due primarily to increased
raw material levels. The Company also had outstanding advances of $440,000 on
its line of credit at September 30, 2002. These advances were paid in full on
October 1, 2002.

8

In October 2000, the Company and Caterpillar Inc. (Caterpillar) entered
into an alliance agreement pursuant to which they plan to jointly develop and
manufacture a new product line of Caterpillar rubber track skid steer loaders
called Multi-Terrain Loaders (MTL). The product line, which is expected to
include five new models, will feature Caterpillar's patented skid steer loader
technology and ASV's patented Maximum Traction Support System rubber track
undercarriage. The machines are expected to complement existing models in both
ASV's and Caterpillar's current product lines. They are being sold through the
Caterpillar dealer network.

The Company recognizes as sales its cost for the undercarriage, as
defined in the agreement, plus a portion of the gross profit that Caterpillar
will recognize upon sale of the MTL to Caterpillar dealers, when the Company
ships undercarriages to Caterpillar. The MTLs are not a commissionable product
under the Company's Commercial Alliance Agreement with Caterpillar.

In December 2000, the Company made a sale to one customer totaling
approximately $4.0 million. During 2001, this customer did not make payments in
accordance with the terms of its agreement with the Company, including
approximately $800,000 of machines sold by the customer for which payment was
not remitted to the Company.

The Company has been working closely with this customer to develop a
plan for the payment of the amounts owed. In January 2002, the Company and the
customer entered into a note agreement for the value of the machines that had
been previously sold by the customer for which payment was not remitted to the
Company. The amount of the note is $800,000 and is due in 48 monthly
installments plus interest at the prime rate plus 2%, beginning March 15, 2002.
The customer has made payments on a timely basis under this note. Should the
customer be successful in raising a minimum of $2.5 million through a private
placement offering, the Company has agreed to convert $500,000 of the note
balance to shares of convertible preferred stock in the private placement. The
Company has also obtained a security interest in the machines that have not yet
been sold by the customer. In addition, the customer has agreed to remit payment
to the Company for any machines it sells, which the customer has been doing.

In September 2002, the Company's stock buy-back program expired. Under
that program, the Company repurchased 71,780 shares of its common stock at an
aggregate purchase price of approximately $753,000.

On October 7, 2002, the Company announced the implementation of a new
stock buy-back program whereby ASV may repurchase up to $5 million of its common
stock in the open market. The Company is funding the repurchases with available
funds. The repurchase program is expected to last to October 7, 2003 or until
such amount of stock is repurchased. As of November 4, 2002, the Company had
repurchased 59,900 shares of its common stock under this new buy-back program at
an aggregate purchase price of approximately $534,000.

In October 2002, the Company began a new program to market directly to
rental facilities. Under this new program, ASV identifies rental facilities that
will lease ASV machines from an independent finance company. ASV records the
sale of the machines to the finance company when they are delivered to the
rental facility and receives payment from the finance company at that time. ASV
provides the rental facility a 90-day period during which any rental income
generated is split between the rental facility and ASV. After the 90-day period
has expired, the rental facility has the option of terminating the lease, in
which case ASV is responsible for the costs associated with transferring the
machines to another rental facility. If the rental facility elects to continue
the lease, ASV will refund any rental payments received during the 90-day
period. At the end of the four-year lease, should the rental facility elect not
to purchase the leased machines, ASV has guaranteed a residual value equal to
approximately 25% of the original selling price.

During 2001 and 2000, the Company provided extended term financing
programs, generally not exceeding 180 days, to its customers. This extended term
financing program contributed to the increase in the Company's accounts
receivable balance in 2001. The Company is not utilizing this type of program in
2002. Instead, the Company has affiliated itself with several finance companies
that will be financing the sale of the Company's products. By using these
finance companies, the Company will be receiving payment for its products
shortly after their shipment. The Company pays a portion of the interest cost
associated with financing these shipments that would normally be paid by the
customer, generally ranging from three to twelve months, depending on the amount
of down payment made by the customer. The Company is also providing twelve month
terms for one machine to be used for demonstration purposes for each qualifying
dealer.

The Company believes this change in how the Company expects to receive
payment for the sale of its products, its existing cash and marketable
securities, together with its available, unused $10 million credit line, will
satisfy the Company's projected working capital needs and other cash
requirements for the next twelve months and for the foreseeable future.

9

The statements set forth above under "Liquidity and Capital Resources"
and elsewhere in this Form 10-Q regarding ASV's plans to jointly develop and
manufacture rubber-tracked machines with Caterpillar, including the number of
models to be developed, the timing of their planned introduction, ASV's future
product mix and ASV's future profitability and expense levels are
forward-looking statements based on current expectations and assumptions, and
entail various risks and uncertainties that could cause actual results to differ
materially from those expressed in such forward-looking statements. Certain
factors may affect whether these anticipated events occur including ASV's
ability to successfully manufacture the machines, unanticipated delays, costs or
other difficulties in the development and manufacture of the machines, market
acceptance of the machines, general market conditions, corporate developments at
ASV, Polaris or Caterpillar and ASV's ability to realize the anticipated
benefits from its alliances with Polaris and Caterpillar. Any forward-looking
statements provided from time-to-time by the Company represent only management's
then-best current estimate of future results or trends. Additional information
regarding these risk factors and uncertainties is detailed in the Risk Factors
filed as Exhibit 99 to the Current Report on Form 10-Q for the period ended June
30, 2002.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has no history of, and does not anticipate in the future,
investing in derivative financial instruments, derivative commodity instruments
or other such financial instruments. Transactions with international customers
are entered into in US dollars, precluding the need for foreign currency hedges.
Additionally, the Company invests in money market funds and fixed rate U.S.
government and corporate obligations, which experience minimal volatility. Thus,
the exposure to market risk is not material.

ITEM 4. CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on their evaluation within 90 days of the filing date of this
report, that the Company's disclosure controls and procedures are adequately
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Securities and Exchange Act of
1934, as amended, is recorded, processed, summarized and reported, within the
time periods specified in applicable rules and forms. There have not been any
significant changes in the Company's internal controls or in other factors that
could significantly affect those controls, subsequent to the date of such
evaluation, including any corrective actions taken with regard to significant
deficiencies and material weaknesses.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ASV is a party to certain claims arising in the ordinary course of
business. In the opinion of management, the outcome of such claims will not
materially affect ASV's current or future financial position or results of
operation.

ITEM 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

10

Exhibit
Number Description
------ -----------

3.1 Second Restated Articles of Incorporation of the Company (a)

3.1a Amendment to Second Restated Articles of Incorporation of the
Company filed January 6, 1997 (d)

3.1b Amendment to Second Restated Articles of Incorporation of the
Company filed May 4, 1998 (g)

3.2 Bylaws of the Company (a)

3.3 Amendment to Bylaws of the Company adopted April 13, 1999 (l)

4.1 Specimen form of the Company's Common Stock Certificate (a)

4.3* 1994 Long-Term Incentive and Stock Option Plan (a)

4.4 Warrant issued to Leo Partners, Inc. on December 1, 1996 (d)

4.5* 1996 Incentive and Stock Option Plan (e)

4.6* 1996 Incentive and Stock Option Plan, as amended (f)

4.7* 1998 Non-Employee Director Stock Option Plan (f)

4.8* Amendment to 1998 Non-Employee Director Stock Option Plan (m)

4.9 Securities Purchase Agreement dated October 14, 1998 between
Caterpillar Inc. and the Company (h)

4.10 Warrant issued to Caterpillar Inc. on January 29, 1999 (i)

4.11 Securities Purchase Agreement dated October 31, 2000 between
Caterpillar Inc. and the Company (n)

4.12 Replacement Warrant issued to Caterpillar Inc. on October 31,
2000 (n)

10.1 Development Agreement dated July 14, 1994 among the Iron Range
Resources and Rehabilitation Board, the Grand Rapids Economic
Development Authority ("EDA") and the Company (b)

10.2 Lease and Option Agreement dated July 14, 1994 between the EDA
and the Company (b)

10.3 Option Agreement dated July 14, 1994 between the EDA and the
Company (b)

10.4 Supplemental Lease Agreement dated April 18, 1997 between the
EDA and the Company (e)

10.5 Supplemental Development Agreement dated April 18, 1997
between the EDA and the Company (e)

10.6 Line of Credit dated May 22, 1997 between Norwest Bank
Minnesota North, N.A. and the Company (e)

10.7* Employment Agreement dated October 17, 1994 between the
Company and Thomas R. Karges (c)

10.8 Consulting Agreement between the Company and Leo Partners,
Inc. dated December 1, 1996 (d)

10.9 Extension of Lease Agreement dated May 13, 1998 between the
EDA and the Company (g)

10.10 First Amendment to Credit Agreement dated June 30, 1998
between Norwest Bank Minnesota North, N.A. and the Company (g)

10.11 Commercial Alliance Agreement dated October 14, 1998 between
Caterpillar Inc. and the Company (h)

11

10.12 Management Services Agreement dated January 29, 1999 between
Caterpillar Inc. and the Company (j)

10.13 Marketing Agreement dated January 29, 1999 between Caterpillar
Inc. and the Company (j)

10.14 Third Amendment to Credit Agreement dated June 9, 1999 between
Norwest Bank Minnesota North, N.A. and the Company (k)

10.15 Fourth Amendment to Credit Agreement dated June 1, 2000
between Norwest Bank Minnesota North, N.A. and the Company (m)

10.16** Multi-Terrain Rubber-Tracked Loader Alliance Agreement dated
October 31, 2000 between Caterpillar Inc. and the Company (n)

10.17** Manufacturing and Distribution Agreement dated January 2, 2001
between Polaris Industries Inc. and the Company (o)

10.18 Fifth Amendment to Credit Agreement dated June 1, 20021
between Wells Fargo Bank Minnesota, N.A. and the Company (p)

10.19 Sixth Amendment to Credit Agreement dated June 1, 2002 between
Wells Fargo Bank Minnesota, N.A. and the Company (q)

10.20 Seventh Amendment to Credit Agreement dated June 1, 2002
between Wells Fargo Bank Minnesota, N.A. and the Company

11 Statement re: Computation of Per Share Earnings

22 List of Subsidiaries (a)

99.1 Risk Factors (q)

99.2 Certification of the Chief Executive Officer

99.3 Certification of the Chief Financial Officer

--------------------------------

(a) Incorporated by reference to the Company's
Registration Statement on Form SB-2 (File No.
33-61284C) filed July 7, 1994.

(b) Incorporated by reference to the Company's
Post-Effective Amendment No. 1 to Registration
Statement on Form SB-2 (File No. 33-61284C) filed
August 3, 1994.

(c) Incorporated by reference to the Company's Quarterly
Report on Form 10-QSB for the quarter ended September
30, 1994 (File No. 33-61284C) filed November 11,
1994.

(d) Incorporated by reference to the Company's Annual
Report on Form 10-KSB for the year ended December 31,
1996 (File No. 0-25620) filed electronically March
28, 1997.

(e) Incorporated by reference to the Company's Quarterly
Report on Form 10-QSB for the quarter ended June 30,
1997 (File No. 0-25620) filed electronically August
13, 1997.

(f) Incorporated by reference to the Company's Definitive
Proxy Statement for the year ended December 31, 1997
(File No. 0-25620) filed electronically April 28,
1998.

(g) Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1998 (File No. 0-25620) filed electronically August
12, 1998.

(h) Incorporated by reference to the Company's Current
Report on Form 8-K (File No. 0-25620) filed
electronically October 27, 1998.

12

(i) Incorporated by reference to the Company's Current
Report on Form 8-K (File No. 0-25620) filed
electronically February 11, 1999.

(j) Incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31,
1998 (File No. 0-25620) filed electronically March
26, 1999.

(k) Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1999 (File No. 0-25620) filed electronically August
9, 1999.

(l) Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended September
30, 1999 (File No. 0-25620) filed electronically
November 12, 1999.

(m) Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
2000 (File No. 0-25620) filed electronically August
10, 2000.

(n) Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended September
30, 2000 (File No. 0-25620) filed electronically
November 13, 2000.

(o) Incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31,
2000 (File No. 0-25620) filed electronically March
30, 2001.

(p) Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
2001 (File No. 0-25620) filed electronically August
13, 2001.

(q) Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
2002 (File No. 0-25620) filed electronically August
14, 2002.

* Indicates management contract or compensation plan or
arrangement.

** Certain information contained in this document has
been omitted and filed separately accompanied by a
confidential request pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934.

(b) REPORTS ON FORM 8-K

The following current Report on Form 8-K was filed by the Company
during the quarter ended September 30, 2002:

Current Report on Form 8-K dated July 25, 2002 reporting under Item 9.
"Regulation FD Disclosure" that on July 25, 2002, ASV issued a press release
disclosing its financial results for the three and six months ended June 30,
2002. In addition, the press release contained information regarding a
conference call held July 25, 2002 during which ASV discussed its financial
results for the three and six months ended June 30, 2002 and its outlook for the
year ending December 31, 2002.

13

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

A.S.V., INC.

Dated: November 14, 2002 By /s/ Gary Lemke
--------------------------------------------
Gary Lemke
President

Dated: November 14, 2002 By /s/ Thomas R. Karges
--------------------------------------------
Thomas R. Karges
Chief Financial Officer
(principal financial and accounting officer)

14

CERTIFICATIONS

I, Gary Lemke, President of A.S.V., Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of A.S.V., Inc.;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiary, is made known to us by
others within those entities, particularly during the period
in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date: November 14, 2002 /s/ Gary Lemke
------------------ ----------------------------
President

15

I, Thomas R. Karges, Chief Financial Officer of A.S.V., Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of A.S.V., Inc.;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiary, is made known to us by
others within those entities, particularly during the period
in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date: November 14, 2002 /s/ Thomas R. Karges
------------------ ------------------------------
Chief Financial Officer

16

EXHIBIT INDEX