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Organizational Chart

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Secretary ofTransportation

Trustee

IndependentAuditors

GeneralCounsel

ConsultingEngineer

TrafficEngineers

Maintenance Engineering

HighwayPatrol

PIKEPASSCustomer

ServiceController General

Admin.

Revenueand

Finance

InformationTechnology

TollOperations

Executive

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Series 2002 A&BBondholders

Series 92 F&GBondholders

Series 98 A&BBondholders

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Director ofPlanning andOperations

InternalAudit

Acting Directorand CFO

Governor

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Seated left to right: Alan Freeman – Director of General Admin-istration; Holly Lowe – Acting Director and CFO; Tim Stewart –Director of Planning and Operations;

Standing left to right: Wendy Smith – Director of Finance &Revenue; Duane Griffith – Director of Maintenance; Gary Brown –Director of Information Technology; Eric Strong – Chief Engineer;David Machamer – Director of Toll Operations; Lori Scott –Controller; Randy Moore – Director of PIKEPASS Customer Service;Captain Gerald Davidson – Oklahoma Highway Patrol (not pictured)

Oklahoma Transportation AuthorityMembers

The Oklahoma Transportation Authority’s (OTA) governingbody (the Authority) consists of the Governor (ex-officio) and sixmembers. The members are appointed by the Governor and ap-proved by the State Senate. They serve eight-year, uncompen-sated terms and may be reappointed.

The Authority appoints the Director of the OTA. Ms. HollyLowe is the Acting Director and Chief Financial Officer of theOTA, and Mr. Phil Tomlinson has been appointed as Oklahoma’sSecretary of Transportation.

The Acting Director and Chief Financial Officer, with the man-agement staff, supervises the daily operations of the organization.Authority members provide oversight and policy direction. Theyappoint various consulting entities with national reputations forexcellence, including the General Counsel, Bond Counsel, Con-sulting Engineers, Consulting Traffic Engineers, Financial Advi-sor, Bond Underwriter(s) and Independent Auditor(s).

All action taken by Authority members and staff must be instrict compliance with the provisions of the OTA’s Trust Agree-ment.

GovernorBrad HenryEx-Officio

Fred J. HallChairmanDistrict 1

Albert C.(Kell) Kelly, Jr.Vice-Chairman

District 3

Dewey F.Bartlett, Jr.

District 4

Steve LaForgeSecretary &TreasurerDistrict 5

James W.Caudle

District 6

Senior Management

Phil TomlinsonSecretary of

Transportation

Robert M.(Bob) Kane

District 2

Holly LoweActing Director

and CFO

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Description OfThe Oklahoma Turnpike System

Turner TurnpikeAuthorized by the State Legislature in 1947 andopened in 1953. Four-lane, limited accesshighway extending 86.0 miles from Tulsa toOklahoma City. Interchanges at Sapulpa,Kellyville, Bristow, Stroud, Chandler andWellston. Service station and/or restaurant withfree restrooms at Heyburn, Bristow, Stroud,Chandler and Wellston.

Chickasaw TurnpikeAuthorized by the State Legislature in 1987and opened in 1991. Two-lane, limited ac-cess highway extending 27.1 miles fromS.H. 7 west of Sulphur to S.H. 1 near Ada.Only 17.3 miles tolled, with interchangesat S.H. 7, U.S. 177 and Roff.

Muskogee TurnpikeAuthorized by the State Legislature in 1965and opened in 1969. Four-lane, limited ac-cess highway extending 53.1 miles fromTulsa to I-40 near Webber Falls. Inter-changes at Coweta, Muskogee and U.S. 64near Webber Falls. Service station and res-taurant with free restrooms at Muskogee.

John Kilpatrick TurnpikeAuthorized by the State Legislature in 1987,the original 9.5 miles opened in 1991, andthe 15.8 mile extension opened in sectionsduring 2000 and 2001. Four-lane, limitedaccess, urban highway extending 25.3 milesfrom the Oklahoma City interchange of theTurner Turnpike and I-35 to I-40 betweenMustang and Sara Road. The route is gen-erally along Memorial Road on the north,turning south parallel to Sara Road just westof County Line Road, passing by LakeOverholser on its west side parallel to Mor-gan Road to an interchange at I-40, givingaccess to traffic traveling east and west onthe interstate system. Interchanges at East-ern Ave., U.S. 77/Broadway Extension,Western Ave., Pennsylvania Ave., MayAve., Portland Ave./Lake Hefner Parkway,Meridian Ave., MacArthur Blvd., RockwellAve., NW Expressway, Wilshire Blvd., S.H.66 and N.W. 10th.

Will Rogers TurnpikeAuthorized by the State Legislature in 1953 andopened in 1957. Four-lane, limited accesshighway extending 88.5 miles from Tulsa to theOklahoma-Missouri state line about 1,000 feetsouth of the southeast corner of Kansas.Interchanges at Claremore, Adair (S.H. 28), BigCabin, Vinita, Afton and Miami. Service stationand/or restaurant with free restrooms at Vinitaand Miami.

H.E. Bailey TurnpikeAuthorized by the State Legislature in 1953, theoriginal 86.4 miles opened in 1964, and the 8.2mile extension authorized in 1987 opened in2001. The original four-lane, limited access,highway extending 86.4 miles opened in twosections: north section (61.4 miles) fromOklahoma City to U.S. 277 north of Lawton;south section (25.0 miles) from U.S. 277 southof Lawton to U.S. 70, 5.2 miles north of the Texasstate line. Interchanges at Chickasha, Cyril, Elginand Walters. Service station and/or restaurantwith free restrooms at Chickasha and Walters.The four-lane, limited access extension runs 8.2miles within Grady County from an interchangeof the original H.E. Bailey Turnpike to S.H. 9.The route generally extends east and westthrough a rural area west of Norman.

Indian Nation TurnpikeAuthorized by the State Legislature in 1955,north section (41.1 miles) opened in 1966 andsouth section (64.1 miles) opened in 1970. Four-lane, limited access highway extending 105.2miles from U.S. 75/I-40 near Henryetta to U.S.70 near Hugo. Interchanges at Eufaula, Ulan,McAlester, Daisy and Antlers. Service stationand restaurant with free restrooms at Eufaula andAntlers.

Cherokee TurnpikeAuthorized by the State Legislature in 1987 andopened in 1991. Four-lane, limited access high-way extending 32.8 miles from U.S. 412 at Lo-cust Grove to U.S. 412 west of West SiloamSprings. Interchanges at Locust Grove, U.S. 412and S.H. 10. Restaurant and service station withfree restrooms at Leach.

Cimarron TurnpikeAuthorized by the State Legislature in 1965 andopened in 1975. Four-lane, limited access high-way extending 59.2 miles on main route fromI-35/U.S. 64 east of Enid to Tulsa, and 8.5 mileson a spur connecting the main route withStillwater and Oklahoma State University. In-terchanges at U.S. 77, U.S. 177, Stillwater,Morrison, S.H.18, Hallett and S.H. 48. Servicestation and restaurant with free restrooms atLone Chimney.

Creek TurnpikeAuthorized by the State Legislature in 1987, theoriginal 7.4 miles opened in 1992, the 4.9 mileCreek West Extension opened in 2000, the 13.1mile Broken Arrow South Loop opened in sec-tions during 2001 and 2002 and the 9.0 mileCreek East Extension opened in 2002. Four-lane, limited access, urban highway extending34.4 miles from the Turner Turnpike at S.H. 66to the I-44 interchange of the Will Rogers Turn-pike, providing access to traffic traveling eastinto Tulsa and south to Okmulgee; continuesgenerally through the city of Broken Arrow tothe Muskogee Turnpike; then north to the WillRogers Turnpike. Interchanges at South 49thWest Avenue, U.S. 75, Peoria Avenue, River-side Drive, Yale Avenue, U.S. 64/MemorialDrive, U.S. 169, South 129th East Avenue,South 161st East Avenue, South 193rd EastAvenue, East 101st Street, S.H. 51, MuskogeeTurnpike, 71st Street, 51st Street, 31st Street,11th Street, Highway 412 and Pine Street.

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2002HIGHLIGHTS

Building a comprehensive transportation infrastructurefor the entire state of Oklahoma -- its people, its visitors, itscommerce -- is the number one mission of the OTA. This trans-portation backbone provides power to enrich the lives of Okla-homans and builds commerce and economic development op-portunities that will continue to attract business to the state.The OTA makes majorcontributions to Okla-homa’s economic healthand growth by providinginternationally recognizedleadership in turnpike andtransportation manage-ment.

The OTA ful-filled its commitment toconstruct an urban corri-dor around Tulsa andOklahoma City with theopening of the Creek EastTurnpike Extension in Tulsa on September 18, 2002.The $622 million construction program began in 1998to extend not only the Creek Turnpike, but also theJohn Kilpatrick Turnpike in Oklahoma City and theH.E. Bailey Turnpike’s Norman Spur. This historicachievement was commemorated with a patrioticdedication ceremony that included Oklahoma’s Gov-ernor and Lieutenant Governor, the OTA’s Authoritymembers, staff, consultants and contractors as wellas mayors, city officials and chamber of commercerepresentatives from the surrounding cities of Bixby,Broken Arrow, Catoosa, Glenpool, Jenks, Sapulpaand Tulsa.

The construction of the new extensions has resulted inan economic explosion along each of these roadways. Com-munities surrounding Tulsa have expressed support for the newCreek Turnpike Extensions. The former president of the SapulpaChamber of Commerce commended the Creek West TurnpikeExtension for raising the overall awareness of Sapulpa and whatit has to offer businesses, industries and residents. The exten-sion has been a catalyst for economic development in the areaand has helped to promote more broadly Sapulpa’s positiveimage. At the ribbon-cutting ceremony to open the new Bro-ken Arrow branch of the Arkansas Valley State Bank, the Bro-ken Arrow South Loop was credited for bringing the bank intoan area that is poised for growth. A new Wal-Mart store andshopping center are already under construction in this area. InGlenpool, a major trucking company elected to relocate to thisarea primarily for easy access to several turnpikes. That com-pany is now a major employer in Glenpool.

The OTA celebrated thecompletion of the urbancorridors around Tulsaand Oklahoma City on

September 18, 2002.

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Towns surroundingOklahoma City have also en-joyed benefits from the new ex-tensions. According to Yukon’sCity Manager, the recent exten-sion to the John KilpatrickTurnpike has brought newbusiness and new interest toYukon. The highway hasstimulated new housing devel-opment, which in turn hasspurred retail development.The turnpike also has enhanceddevelopment around Route 66,Yukon’s Main Street. Some ofthe new commercial develop-ments include a retail strip cen-

ter, regional hospital and dental office. Developers hope thiswill become an area-wide draw, attracting shoppers from sur-rounding towns. Another growth area is in far northwest Okla-homa City in the Piedmont School District where a large num-ber of houses have been platted since construction began on theJohn Kilpatrick Turnpike Extension.

Oklahoma’s turnpikes are among the smoothest roadsin the nation, according to the American Concrete PavementAssociation, and have received countless awards for excellencein highway construction. The newly constructed urban turn-

pikes are no exception. During 2002, the American Con-crete Paving Association selected a section of the CreekBroken Arrow South Loop as Runner Up for their Excel-lence in Concrete Paving Award. To receive this type ofnational recognition, the pavement can deviate from per-fection by less than one inch per mile. The OTA recentlyreceived notification that it has been selected to receivenational recognition for asphalt smoothness on the H.E.Bailey Norman Spur. The Oklahoma Asphalt PavementAssociation recognized the OTA with two prestigious stateawards. The first was Winner of the Full Depth Awardfor the asphalt pavement section of the Creek East Turn-pike Extension including its tie-in with the Will RogersTurnpike. The second award was Runner Up for the Ru-ral Overlay Award for asphalt overlay on the Indian Na-tion Turnpike.

Nearly 50 years ago, the Oklahoma Legislatureempowered the OTA to engage in the most leading edge,entrepreneurial means possible to bring contemporarycommerce, employment and enhanced lifestyle opportu-nities to the people of Oklahoma. Through this empow-erment, the Turner Turnpike was constructed. The con-tribution the Turner Turnpike has made to Oklahoma’sinfrastructure was recognized in 2002 by the American

Oklahoma’s turnpikesare among the

smoothest roads in thenation.

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Road and Transportation Builders Asso-ciation (ARTBA) during their 100th An-niversary celebration. Commemoratingtheir anniversary, the ARTBA conducteda national survey to identify the top trans-portation infrastructure projects and pub-lic officials of the 20th century in all 50states. The Turner Turnpike was selectedas one of Oklahoma’s top two transpor-tation infrastructure projects, and NealA. McCaleb, the former Oklahoma Sec-retary of Transportation and Director ofOTA, was chosen as one of Oklahoma’stop two public officials. The award cer-emony was held on August 22, 2002 atthe OTA’s Neal A. McCaleb Transporta-tion Building.

No tax appropriations are used to operate Oklahoma’sturnpikes. The System pays its debt service and manages itsoperations strictly with revenue from toll collections. Annualtoll revenues for 2002 generated over $176.4 million and rep-resented a 7.5% growth over 2001 toll revenues. The newturnpike extensions contributed to outstanding revenue growthrates of 20.5% on the John Kilpatrick Turnpike and 46.0% onthe Creek Turnpike above 2001. The six turnpikes constructedbefore 1990 reported a 4.0% increase in annual tollrevenues over those of 2001. The annual revenuegrowth for the four newer turnpikes was 24.6%over 2001 annual toll revenues. Toll transactionssurpassed 111.3 million in 2002, a substantial13.0% increase over transactions in 2001.

Net revenues in 2002 exceeded projectionsby 7.1%. Revenue fund operating expenses for2002 were a significant 7.9% below the annual op-erating budget through cooperation and continuedeffort among the divisions to monitor costs underthe direction of the Authority’s Acting Director andChief Financial Officer. The efforts to monitorcosts have also contributed to the senior and totaldebt service ratios continuing to achieve anticipatedresults.

The OTA received improved bond ratingsfrom three municipal credit research companies onNew York’s Wall Street. Standard & Poor’s up-graded the OTA’s bonds from an A to an AA-;Moody’s Investors Services upgraded the bondsfrom an A1 to an Aa3; and Fitch, rating the OTA’sbonds for the first time, gave the bonds an AA-rating. Moody’s upgrade report stated the OTA’shigh rating was a result of primary credit strength

The Turner Turnpikewas selected as one ofOklahoma’s top two

infrastructure projectsof the 20th century.

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derived from its strong financial and operational per-formance and strong emphasis on cost containment.Moody’s also stated that the OTA exhibits by far thelowest operating costs relative to its size of anyMoody’s Aa3 rated toll roads. The Standard & Poor’sreport attributed the upgraded bond rating to an ex-perienced and strong management team that has his-torically demonstrated sound fiscal policies and pru-dent business decisions. The Fitch report stated thatthe OTA’s financial performance is strong, provid-ing ample debt service coverage on existing bondsas well as funding ongoing significant capital needs.All three firms refer as key to the OTA’s positiveratings the OTA’s five-year plan to use net incomeremaining after debt service to fully fund its capitalimprovement plan. Because of these ratings up-grades, the OTA attained substantial savings on bondinsurance and in coupon savings on the 2002 bondrefunding.

Spotless audits and a bond rating excellentby Wall Street standards provide the OTA the buy-ing power to make healthy investments. On May

14, 2002, bids were opened for the Series 2002A and 2002BRefunding Second Senior Revenue Bonds. These bonds wereissued to refund $577,810,000 in Revenue Bonds from the re-maining Series 1989 Bonds, the Series 1992A-E Bonds andportions of the Series 1992F&G Bonds. Following the bid open-

ing, the bonds were resized to provide theamount of proceeds necessary to cover costsand the exact amount of the proceeds requiredto fund the refunding escrow from the dateof closing, May 23, 2002, to July 1, 2002,the call date of the refunded bonds. The paramount of the new bonds was $314,065,000for the Series 2002A Bonds and $255,575,000for the Series 2002B Bonds. Bidders in-cluded Merrill Lynch, JP Morgan, SalomonSmith Barney, Morgan Stanley/Dean Witterand A.G. Edwards. Both issues were verycompetitively bid with the bids on the Series2002A within one basis point and the bids onthe Series 2002B within three basis points.The successful bidder on both the Series2002A and 2002B was Merrill Lynch with atrue interest cost for the Series 2002A of4.819692% and a true interest cost for theSeries 2002B of 4.832711%. The sale was

very favorable resulting in gross savings, net of all costs forboth series, of $50,923,956 or approximately $2.5 million peryear from 2003 until 2022. The net present value savings was$32,583,380.

The OTA savedapproximately $2.5

million per yearfrom 2003-2022 byrefunding bonds.

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The OTA is comprised of many in-dividuals that possess outstanding leader-ship abilities. Mr. Tim Stewart, the OTA’sDirector of Planning and Operations, re-ceived the highly esteemed GovernmentOfficial of the Year Award for the innova-tive use of diamond grinding and area widemaintenance contracting in Oklahoma bythe International Grooving and GrindingAssociation. Mr. David Machamer, theOTA’s Toll Division Director, was ap-pointed to the board of directors of the In-ternational Bridge, Tunnel and TurnpikeAssociation (IBTTA), an international as-sociation that promotes safety and conve-nience through toll financing. Mr. CarlSelby, the OTA’s Chief Internal Auditor, serves his country as ahelicopter pilot for the Oklahoma National Guard where, if ac-tivated, he will fly Black Hawk helicopters to deploy Medevacunits and collect injured soldiers. During 2002, Mr. Eric Strongjoined the OTA’s management team as the OTA’s Chief Engi-neer. As a professional engineer, Mr. Strong’s experience priorto coming to the OTA includes designing for turnpike construc-tion; cleaning-up asbestos, fuel spills, and water pollution; anddesigning engineering projects for the Air Force.

The intuitiveness of the OTA’s leadership isessential in the success of the five-year Capital Planfor maintenance, rehabilitation and improvements,first adopted in 1994. The plan identifies the Turn-pike System’s needs over the next 20-30 years andthen prioritizes the needs into five-year segments toachieve the goals of the Authority. The OTA reviewsthe plan annually and makes updates, if necessary.Through this comprehensive asset management ef-fort, the OTA annually invests in System rehabilita-tion at a rate that approximates the 30-year straight-line depreciation of its infrastructure. When the nextfive-year segment of the Capital Plan is complete,Oklahoma motorists will travel over more than 100miles of revitalized pavement and as many as 25 re-conditioned bridges.

Significant improvements identified in the2002 portion of the Capital Plan to extend pavementlife and improve the ride quality include diamondgrinding, dowel-bar retrofit and replacement ofcracked slabs on 17 miles of the Cherokee Turnpikeand concrete overlay on the Will Rogers Turnpike atthe Vinita concession area. Shoulder reconstructionto prevent erosion and preserve roadway integrity hasbeen performed along ten miles of the MuskogeeTurnpike. Bridge rehabilitations include four bridges

The OTA’s five yearplan for using netincome after debt

service to fundcapital improvements

is key to the OTA’spostive bond ratings.

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on the H.E. Bailey Turnpike, two bridges on the WillRogers Turnpike and one bridge each on the Muskogeeand Turner Turnpikes. Minor substructure repairs arecontinually addressed, and preventive maintenance isperformed to extend the length of time between majorrehabilitation projects.

The 2003 portion of theCapital Plan proposes funding fromcash resources of over $55.9 million.Approximately 77.8% of this fund-ing is apportioned to road and bridgerehabilitation projects, and the re-maining 22.2% is apportioned toother capital projects. Planned roadand bridge improvements includepavement rehabilitation of sections ofthe Turner, Will Rogers andChickasaw Turnpikes, bridge reha-bilitation on the Muskogee, Turner,H.E. Bailey, Will Rogers and Chero-kee Turnpikes, toll plaza reconstruc-tion at Sapulpa on the Turner Turn-pike, slope and shoulder rehabilita-

tion and scour counter measures on the Cherokee andIndian Nation Turnpikes and the construction of salt stor-age buildings on the H.E. Bailey and Will Rogers Turn-pikes. Other capital projects include the purchase ofnew PIKEPASS transponders, PIKEPASS refurbishmentand the purchase of Oklahoma Highway Patrol (OHP)cars.

Throughout the System, crews routinely per-form maintenance to roads and existing drainage struc-tures. Inmates, supervised by turnpike employees, as-sist with trash removal, mowing, weed control, fencerepair/replacement and brush removal. The outsourcingof this work through inmate labor remains a key ele-ment to decreasing the cost of the maintenance programby requiring fewer full time equivalent employees.

Maintenance crews are readyto respond, as dispatched, to urgentsituations throughout the System suchas motorist assists, motorist accidents,chemical spills, fires and snow re-moval. During 2002, maintenancecrews worked long hours battling se-vere winter storms. As a result, crewsplowed and sanded over 91,800 lanemiles and treated over 3,500 lane mileswith magnesium chloride. The totalspent for these winter storms exceeded$1.5 million.

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With the nation at “high” risk for a terrorist attack, theOTA places a very high priority on safety. To provide the trav-eling public the safest possible roadways, the OTA contractswith the Oklahoma Departmentof Public Safety for the servicesof the OHP. The presence of theOHP troopers enforcing trafficlaws, regulating and directingtraffic movement and assistingcitizens safeguards the public.The OHP’s cooperation withother law enforcement officersand public off icials providestimely, relevant information in theevent of an emergency. The OHPtroopers do an outstanding jobpromoting turnpike safetythrough various programs includ-ing the special enforcement em-phasis program, speed monitoring awareness radar trailers, air-craft traffic enforcement program, size and weights enforce-ment and the use of lasers for speed enforcement.

The commercial vehicle enforcement troopers possessa great knowledge of the size and weights laws and performcommercial vehicle tasks in their general enforcement programs.These troopers not only preserve the safety on the highway, butalso preserve the highways themselves since trucks that are over-weight by 20% deteriorate the pavement life exponentially. Be-cause of this effort, accidents involving com-mercial vehicles have declined, and the de-cline can be attributed to safer and more re-sponsible driving habits being displayed bythis portion of the traveling public in re-sponse to the efforts of the OTA troopers.

In response to customer requests,the OTA initiated a speed limit study to in-crease turnpike speed limits to match thoseof intersecting interstates. On August 16,2002, Commissioner Bob Ricks of the Okla-homa Department of Public Safety approvedOTA’s initiative to increase the speed limiton the John Kilpatrick Turnpike in Okla-homa City from 65 to 70 miles per hour.This increase affects all of the JohnKilpatrick Turnpike. Commissioner Ricksalso approved an increased speed limit on asmall section of the Creek Turnpike in Tulsafrom 65 to 75 miles per hour. The area thatexperienced the increased speed is approxi-mately a 4-mile stretch extending from theTurner Turnpike to U.S. 75.

OTA’s troopersnot only preservethe safety on the

highways, but alsopreserve thehighways.

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The OTA demonstrates its dedication toexcellence in customer service by providing effi-cient collection of tolls, courteous disbursementof information and assistance to the traveling pub-lic. The OTA’s toll collectors are ambassadorsfor the state of Oklahoma and continually enhancetheir services through training and operational en-hancements.

Mr. Don Quickle and Mr. Willard Parishare outstanding examples of the character amongthe OTA’s toll attendants. Mr. Quickle, toll col-lector at the Walters Toll Plaza on the H.E. BaileyTurnpike, retired this year after 38 years of dedi-cated service as the OTA’s longest-tenured activeToll Division employee at the time of his retire-ment. Mr. Quickle believes the key to his suc-cess is in his philosophy to always try to treatpeople right. Mr. Quickle has seen everythingfrom tornadoes passing over the turnpike to frayedfathers-to-be and expectant mothers on their wayto the hospital. Mr. Parish, toll collector at theBristow Toll Plaza on the Turner Turnpike, earned

a Silver Star for his heroic actions during the Vietnam War. Mr.Parish was key in the success of the first major battle in the war.The movie “We Were Soldiers Once...” was based on the storyof the battle Mr. Parish was involved in and of the soldiers whofought there. The OTA believes it is important to honor the“heroes among us” whether they are soldiers, policemen, fire-

men or people doing heroic things in their ordinarycourse of life.

The OTA opened the first two of 11 renovatedside gates featuring updated toll collector booths, free-flowing PIKEPASS lanes and aesthetically pleasingcanopies at Bristow on the Turner Turnpike and BigCabin on the Will Rogers Turnpike. These new sidegates provide patrons with faster and more efficientservice.

The OTA is focused on the enhancement of itselectronic toll collection system for the over half-a-million users that utilize the automatic toll collectionlanes each day. The new program refines the enforce-ment process, adding airtight integrity to the entire sys-tem. Customers save time and money by usingPIKEPASS tags, while improving the efficiency ofhighway travel by eliminating the inconvenience anddelays associated with paying tolls manually.PIKEPASS customers with 20 or more qualifying tolltransactions in a month, save an additional 5% throughparticipation in the volume discount program. During2002, over $2.1 million in PIKEPASS volume discountswere given to customers, a 19.2% increase over 2001.

The OTA openedrenovated side

gates at Bristowand Big Cabinduring 2002.

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The customer service agent program wassuccessful during 2002. Program participants is-sued approximately 65,000 PIKEPASS tags,roughly 45% of all PIKEPASS tags issued for theyear. Customers can select from two PIKEPASSstores, six commercial partnerships or 69 tagagencies throughout Oklahoma that are authorizedPIKEPASS agents and have the ability to providecustomer service functions. A new service calledTransponder Replacement Program (TRiP) isavailable for PIKEPASS customers on the OTAwebsite at www.pikepass.com. Customers entertheir PIKEPASS tag number to determine if it istime for their PIKEPASS tag to be recycled. If itis time, TRiP offers the customer an option to re-cycle by means of the OTA website or to locatedirections to the nearest PIKEPASS outlet. As ofDecember 31, 2002, active PIKEPASS tags to-taled 582,742, and active PIKEPASS accounts to-taled 328,846, an approximate 11.8% increaseover the number of active PIKEPASS accounts asof December 31, 2001.

Hundreds of miles of fiber optic cable runthroughout right-of-way easements alongOklahoma’s roadways, providing a means oftransportation for many forms of digital communication. TheOTA is connecting its toll collection facilities to the OTA’s fi-ber optic network. Since the implementation of the fiber opticnetwork, the OTA has eliminated the cost of many externallyprovided telephone circuits by utilizing this fiber optic network.The OTA’s Internal AuditBranch also utilizes this fiberoptic network to obtain videoimages digitally and expeditethe toll audit process. Thiseliminates the need for VCRsat each toll plaza, which werea considerable expense and la-bor intensive to maintain.

Another form of tech-nology utilized by the OTA isdocument imaging. As of De-cember 31, 2002, the OTA hasscanned and placed over 1.7million documents into elec-tronic storage. This docu-ment-imaged information hasalso been placed on DVD atthe Oklahoma Department ofLibraries.

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At this time, it is still uncertain how the current warwith Iraq will affect the United States’ economy. The countryhas begun recovery from the economic devastation of the Sep-tember 11th terrorist attacks, but with scandals in corporateAmerica shaking the trust of the American people, economicrecovery is slow. However, according to the “2003 OklahomaEconomic Outlook” published by the College of Business Ad-ministration of Oklahoma State University (OSU), the U.S.economy is already on an upswing with recovery well under-way. The report cautions, however, that this recovery contin-ues to be jobless as unemployment increased to 6% during thefinal two months of 2002. This trend is not atypical, as the1990’s recession that ended in March 1991 did not show month-to-month job gains start to materialize until March 1992. Thestudy predicts that consistent month-to-month job gains are justaround the corner. This optimism is contingent on a quick andsuccessful war with Iraq and the absence of any large-scaleterrorist attacks on the home front.

The publication “Global Insight” agrees, stating that ifthe war is quick and successful in the early part of 2003, theimpact might be a boost to the economy resulting from higherdefense spending. The publication cautions that if the war takeslonger, the result could be the opposite: higher oil prices, lowerconsumer confidence, and a hit to the stock market resulting ina deeper recession.

The Congressional Budget Office(CBO) states in its January 2003 report en-titled “The Budget and Economic Outlook:Fiscal Years 2004-2013” that there are indeedsome indicators pointing to a brighter out-look for the economy this year. The reportstates that the stock market has moved slowlyupward since its low point in October 2002and that business spending on equipment andsoftware has strengthened. The CBO reportconcurs with the report from OSU, expect-ing the recovery to continue at about the samepace as the recession recovery of 1990-1991.

Although Oklahoma is in the midstof a fiscal crisis with revenue collections coming in substan-tially below budget, the State is not alone. State budgets haverarely, if ever, been in worse condition than they are today. Ac-cording to the National Association of State Budget Officers(NASBO), the cumulative national deficit for state budgetsstands at $40 billion in this fiscal year alone. Along with otherstates, Oklahoma has been growing its spending faster than theunderlying population growth and inflation. Even as theeconomy turned down and revenue growth began to sag, spend-ing growth continued to accelerate. This growth in govern-ment spending is difficult to turn around.

ECONOMICTRENDS AND

OUTLOOK

Northeastern StateUniversity in Broken

Arrow was constructedalong the BrokenArrow South Loop

Extension.

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According to OSU’s 2003 report, Oklahoma postedan increase in the number of jobs during 2002 despite thenational decline. Growth of .44% from November 2001 toNovember 2002 gave Oklahoma the 11th best job growthperformance in the nation. Thismade Oklahoma one of only twentystates that posted job gains duringthat period. Other economic indi-cators also looked good for Okla-homa. Per capita income increased4.3% in Oklahoma compared to just2.4% nationally. With the depen-dence on the energy sector and thediversif ication of the State’seconomy, Oklahoma’s economy re-lies heavily on and mirrors the na-tional economy. Even as the Okla-homa economy has shown clearsigns of improvement, the result-ing boost to the State revenues willtake time to catch up.

With the State’s disparity between rev-enues and outlays, the State legislature and theGovernor have the challenging task of develop-ing long-term solutions to weather the State’s fis-cal crisis and stimulating the State’s economic de-velopment. The OTA has stimulated economicdevelopment throughout the State with its $622million urban turnpike construction program thatwas completed in the latter part of 2002. Thebuilding of the John Kilpatrick Turnpike has re-sulted in millions of dollars in commercial build-ing permits being issued by the City of OklahomaCity along its corridor. This demonstrates the im-pact that improved access in growing areas canhave on local economies. The east end of theTurner Turnpike is the most heavily traveled sec-tion. Because the Creek West Extension has beenconstructed, traffic previously traveling throughthe central, more congested, section of Tulsa willnow be diverted to south Tulsa. South Tulsa hasseen a boon in the economy in this area due to theconstruction of the Creek West Turnpike. TheCreek East and Broken Arrow South Extensionsthat extend the current Creek Turnpike to the WillRogers Turnpike opened to traffic in August of2002. These infrastructures will provide easieraccess for industries that are contemplating lo-cating in various parts of Oklahoma, which in turncould bring new sources of much needed revenuesto the State of Oklahoma.

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Internal Controls

It is necessary to establish and maintain internal con-trols designed to provide reasonable assurance that assets aresafeguarded against loss, theft or misuse and to ensure thatreliable and adequate accounting records are maintained. Infulfilling this responsibility, estimates and judgments are re-quired to assess the expected benefits and related costs ofinternal control structure policies and procedures. The Au-thority believes that the organization’s internal control struc-ture adequately safeguards assets and provides reasonable as-surance of proper recording of financial transactions.

Fiduciary Operations

The OTA’s Trustee, Bank of Oklahoma, works closelywith financial management and staff to ensure that the OTAis in compliance with the terms and covenants of its TrustAgreement and that all financial and operational decisionsare made in the best interest of the OTA’s bondholders.

Debt Administration

As of December 31, 2002, the OTA’soutstanding debt, net of unamortized discountand net deferred debit on refundings, was ap-proximately $1,245,000,000. The currentportion of this debt totals $10,155,000. Fi-nal maturity on this debt is scheduled for theyear 2028.

Cash Management

All deposits were either insured byfederal depository insurance or collateralized.Throughout the year, available cash was in-vested in U.S. Government obligations, re-purchase agreements, and guaranteed invest-ment contracts. All investments, other thanthe guaranteed investment contracts, wereclassified in the category of highest qualityrating of credit risk, as defined by the Gov-ernmental Accounting Standards Board

(GASB). The guaranteed investment contracts were either ratedwithin the two highest quality ratings of credit risk by Moody’sInvestors Service and Standard and Poor’s Corporation (S&P)or collateralized by U.S. Government securities in an amountequal to 105% of the outstanding principal. At the direction ofthe Authority, all investments were made by the Trustee in strictcompliance with the provisions of the Trust Agreement.

FINANCIALINFORMATION

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Risk Management

The OTA maintains an aggressive safety and lossprevention program that is staffed by a full-time safety of-ficer. Insurance policies are purchased for normal businessrisk at favorable rates through the Oklahoma State Office ofRisk Management. All major areas of operations are cov-ered, including buildings and contents, bridges,workers’ compensation, and general, personal in-jury and auto liability. The OTA also maintainssurety bonds covering Authority Members, and adirectors’ and officers’ insurance policy that pro-vides a broad range of coverage against liabilityto the OTA, its Authority Members, managementand staff.

Flow of Funds

Section 507 of the Trust Agreement datedFebruary 1, 1989, establishes the flow of fundswith which the OTA must comply. The OTA mustdeposit toll and other revenues from its opera-tions into the Revenue Fund on a daily basis. Allmonies in the Revenue Fund at the end of themonth (less a reserve for current operating ex-pense not to exceed 20% of the amount of cur-rent operating expenses shown in the OTA’s lat-est budget) are transferred and deposited as fol-lows: 1) bond service accounts in accordance withtheir respective lien hierarchy for the purpose ofpaying bond principal and interest; 2) bond re-serves in accordance with their respective lien hi-erarchy for the purpose of ensuring sufficientmonies are available to make bond principal andinterest payments in the event that current rev-enues are insufficient; 3) the Reserve MaintenanceFund for the purpose of paying special maintenance expensesto keep the Turnpike System in good repair; 4) the balanceto the General Fund for any other lawful purpose.

Under the OTA’s Enabling Act and amendmentsthereto, a portion of the motor fuel excise taxes collected onfuels consumed on the turnpikes is made available to theOTA from the Oklahoma Tax Commission. Since July 1,1992, the motor fuel tax monies have been apportioned tothe OTA on the first day of each calendar month. All motorfuel taxes apportioned to the OTA are available to fund debtservice to the extent monies are not otherwise available. Ifsuch motor fuel excise taxes apportioned to the OTA are notnecessary in such month, the fuel tax monies shall be paidimmediately to the Oklahoma Department of Transporta-tion (ODOT). During 2002, the OTA received, and

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immediately remitted to ODOT, all of the$32,804,885 of motor fuel excise taxes apportionedto the OTA during the year.

Basis of Accounting

The operations of the Authority are ac-counted for as an enterprise fund on an accrual ba-sis in order to recognize the flow of economic re-sources. Under this basis, revenues are recognizedin the period in which they are earned, expensesare recognized in the period in which they are in-curred, depreciation of assets is recognized, andall assets and liabilities associated with the opera-tion of the Authority are included in the Statementsof Net Assets. The prevailing Trust Agreement andsupplements thereto dated February 1, 1989 requirethat the Authority adopt accounting principles gen-erally accepted in the United States of America(GAAP) for government entities; but it also re-quires that certain funds and accounts be estab-lished and maintained. The Authority consolidatesthese funds and accounts for the purpose of enter-prise fund presentation in its external financialstatements.

Financial Results From Operations

Annual toll revenues generated over $176.4 mil-lion in 2002, a strong 7.5% growth over 2001. Toll trans-actions surpassed 111.3 million for 2002, resulting in animpressive 13.0% increase over 2001. Concession revenuesgenerated approximately $1.2 million.

Total operating expenses were approximately $48.8million in 2002, a 6.4% increase over total operating ex-penses in 2001. Revenue Fund operating expenses for 2002were held to a significant 7.9% below the annual operatingbudget. Increased operating costs related to the new turn-pike extensions include the operation and maintenance ofthe new attended lane locations, road maintenance includ-ing privatization contracts and additional OHP troopers topatrol the new extensions. Engineering expenditures de-creased 32.4% primarily due to the completion of two non-capitalizable projects in 2001. Feasibility studies wereconducted in 2001 but the projects were not undertaken,and therefore the projects were not capitalized. The OTA’sefforts to minimize operating costs have also contributedto the senior and total debt service ratios continuing toachieve budgeted results. These results exceed trust re-quirements on a rolling twelve-month basis by approxi-mately 60.0%.

Toll revenues for 2002generated over $176.4million and were 7.5%higher than 2001 toll

revenues.

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BUDGETARY CONTROL

The OTA prepares an annual budget of cur-rent operating expenses and monthly deposits to theReserve Maintenance Fund in compliance with theTrust Agreement and adopts a capital improvement planeach year. The budget is adopted on a modified ac-crual (non-GAAP) basis wherein expenditures are rec-ognized on a cash basis and depreciation is not bud-geted as an expenditure. Budgets are controlled at thedivision level, and the object of the budgetary controlsis to ensure compliance with the provisions of the TrustAgreement. The Director may approve changes withinthe budget at any level, but an increase in the total bud-get must be approved by the Authority. Monthly re-ports of actual expenses versus budgeted expenses areprovided to the Authority and management. Unex-pended budget balances lapse at fiscal year end.Project-length financial plans are maintained for capi-tal projects.

During November 2002, the Au-thority adopted the calendar year 2003 An-nual Budget. The 2003 Annual Budget foroperating and maintenance of the TurnpikeSystem is $51,852,000. The Operating andMaintenance Budget reflected a minimalincrease over the 2002 Budget, increasingonly 3.75%. The Existing System Budgetfor the turnpikes constructed prior to 1998increased a mere $194,170, or .44%. Thebalance of the Operating and MaintenanceBudget increase is necessary for the opera-tion of the new extensions and other newprograms. The 2003 Annual Budget also in-cludes $55,905,861 in funding for theprojects identified for 2003 in the five-yearCapital Plan.

INDEPENDENT AUDIT

The Trust Agreement requires anannual audit of the financial statements byan independent accounting firm. The re-quired audit has been performed for the yearended December 31, 2002 by our indepen-dent auditors, KPMG LLP.

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The Government Finance Officers Association of theUnited States and Canada (GFOA) presented an award for Dis-tinguished Budget Presentation to the Authority for its annualbudget for the year beginning January 1, 2002.

In order to receive this award, a governmental unit mustpublish a budget document that meets program criteria as apolicy document, as an operations guide, as a financial planand as a communication device.

The award is valid for a period of one year only. Thisis the eleventh consecutive year that the OTA has earned thisaward. The OTA is one of the only two state agencies in Okla-homa to receive this award.

The GFOA awarded a Certificate of Achievement forExcellence in Financial Reporting to the Oklahoma Transpor-tation Authority for its Comprehensive Annual Financial Re-port (CAFR) for the year ended December 31, 2001. The Cer-tificate of Achievement is a prestigious national award, recog-nizing conformance with the highest standards for preparationof state and local government financial reports. In order to beawarded a Certificate of Achievement, a governmental unitmust publish an easily readable and efficiently organized CAFRthat conforms to program standards. Such CAFR must satisfyboth accounting principles generally accepted in the UnitedStates of America and applicable legal requirements.

A Certificate of Achievement is valid for a period ofone year only. The OTA has received a Certificate of Achieve-ment for the last twelve consecutive years (years ended De-cember 31, 1990-2001). The OTA’s award is among 26 awardedthroughout the state and is one of only six received by stateagencies in Oklahoma. The Authority believes its current re-port continues to conform to the Certificate of Achievementprogram requirements, and it will be submitted to the GFOA.

Grateful appreciation is extended to the entire man-agement staff of the OTA for their professional contributionsto this report. Thanks also to the Controller Division and Fi-nance and Revenue Division staff who prepared the report, tothe Oklahoma Department of Transportation Office ServicesDivision who provided photography services and to our inde-pendent auditors for their participation in the review of thisreport.

Special appreciation is extended to Governor BradHenry, the Authority Members and Acting Director and ChiefFinancial Officer Holly Lowe. To all of you, your support ofthe Authority’s efforts to excel in the operational and financialmanagement of the OTA is sincerely appreciated.

ACKNOWLEDGMENTS

SPECIAL AWARDS