Lufkin Announces Court Decision Regarding Racial Discrimination

Lufkin Industries, Inc. (Nasdaq: LUFK) today announced that on January 13, 2005 the U.S. District Court for the Eastern District of Texas - Lufkin Division entered its decision
finding that Lufkin discriminated against African-American employees when
awarding initial assignments and promotions. The court also concluded that the
discrimination resulted in a shortfall in income for those employees and
ordered that Lufkin pay those employees back pay to remedy such shortfall,
together with pre-judgment interest in the amount of 10%, compounded annually.
The Company's preliminary estimate is that the total amount of back pay that
it would be required to pay to the class of affected employees could total up
to $6 million (including interest). In addition to back pay with interest, the
Court (i) enjoined and ordered the Company to cease and desist all racially
biased assignment and promotion practices, (ii) ordered the Company to pay
court costs and (iii) agreed to consider a request for awarding plaintiffs'
attorneys' fees against the Company.

The case arose from a lawsuit originally filed in 1997 by Sylvester
McClain and others against the Company for employment discrimination. The
plaintiffs' claims were certified as a class action in 1999. The case was
closed from 2001-2003 while the parties unsuccessfully attempted mediation.
The only claims made at trial were those of discrimination in initial
assignments, promotions and compensation.

Lufkin is disappointed with the Court's conclusions and decisions, and
believes them to be contrary to the evidence and the law. The Company has
reviewed this decision with its outside counsel and intends to appeal the
decision to the United States Court of Appeals for the Fifth Circuit. The
Company believes that after a full and fair review by the appeals court of the
evidence, the Court of Appeals will determine that the plaintiffs have not
established their claims of discrimination by the Company against the
plaintiffs and will enter a decision to that effect and will dismiss the case
against Lufkin. If the District Court's decision is reversed and remanded for
a new trial, Lufkin will vigorously defend itself on retrial.

While the ultimate outcome and impact of these claims against Lufkin
cannot be predicted with certainty, Lufkin believes that the resolutions of
these proceedings will not have a material adverse effect on its consolidated
financial position. However, should the Company be unsuccessful in its appeal,
the final determination could have a material impact on the Company's reported
earnings and cash flows in a future reporting period.

Lufkin is proud of its record in providing equal employment opportunity to
all persons regardless of race. The Company appreciates the support we have
received from our employees and the community and look forward to the ultimate
dismissal of these allegations against Lufkin.

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 may contain certain forward-looking statements, including by
way of illustration and not of limitation, statements relating to the ultimate
outcome of pending litigation and the impact on the Company's financial
position and liquidity of the ultimate resolution of such pending litigation.
The Company strongly encourages readers to note that some or all of the
assumptions, upon which such forward-looking statements are based, are beyond
the Company's ability to control or estimate precisely and may in some cases
be subject to rapid and material changes.