IN THIS REPORT:                                         REPORT OVERVIEW:

EXECUTIVE SUMMARY

OPERATING RESULTS

   Sales and Operations Analysis
   Sales Analysis
   Research and Development
   Capital Expenditures
   First Half 2006 Net Sales | Gross Profit
   The Caterpillar Connection
   Employment
   Manufacturing
   Marketing and Distribution
   Corporate Leadership

CORPORATE STRATEGY

PRODUCT ANALYSIS

   North American Machinery Sales
   North American Machinery Production  
   Compact Track Loaders
   Other Products
   Rubber Tracked Undercarriages
   Scout Utility Vehicle

ASV, Inc. (ASV) was founded in 1983 by Edgar Hetteen and Gary Lemke in Marcell, Minnesota. That year the company engineered and manufactured the Track Truck, a year-round all-terrain vehicle used by utility companies and ski resorts. In 1987, using similar engineering, the company pioneered compact track loader technology and built its first "compact construction machine with a track system". This system evolved into ASV's Posi-Track line of rubber-tracked, all-purpose crawlers. In 1997 ASV introduced its "Maximum Traction and Support System" undercarriage, catching the attention of Caterpillar.

In 1998 ASV signed its first agreement with Caterpillar wherein Caterpillar purchased approximately nine percent of ASV and began to offer ASV Posi-Track machines through its North American dealer network. In October 2000, Caterpillar increased its ownership in ASV to fifteen percent and created a strategic alliance between the two companies; ASV was to assist in the development of five new Caterpillar models of compact, rubbertracked equipment: Multi-Terrain Loaders (MTLs). In 2001, ASV started to ship Caterpillar undercarriages for those machines, and it continues to manufacture MTL undercarriages for Caterpillar today. In October 2004, the company acquired all the outstanding Common Stock of Loegering Mfg. Inc. of Casselton, North Dakota, and Loegering became a wholly-owned subsidiary of ASV, Inc. Caterpillar currently owns twenty-three percent of ASV.