NWPX Infrastructure, Inc. Annual Report 2015

FY2015 Annual Report · NWPX Infrastructure, Inc.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

For the Fiscal Year Ended: December 31, 2015
OR

☒

☐

For the transition period from to
Commission File Number: 0-27140

NORTHWEST PIPE COMPANY

(Exact name of registrant as specified in its charter)

OREGON
(State or other jurisdiction of incorporation or organization)

93-0557988
(I.R.S. Employer Identification No.)

5721 SE Columbia Way, Suite 200
Vancouver, WA 98661
(Address of principal executive offices and zip code)
360-397-6250
(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class of Stock
Common Stock, par value $0.01 per share
Preferred Stock Purchase Rights

Name of Each Exchange on Which Registered
Nasdaq Global Select Market
Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K, or any amendment to this Form 10-K. ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the
Act. (Check one):

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the common equity that was held by non-affiliates of the Registrant was $171,160,045 as of June 30,

2015 based upon the last sales price as reported by Nasdaq.

The number of shares outstanding of the Registrant’s common stock as of February 26, 2016 was 9,573,289 shares.

The registrant has incorporated into Parts II and III of Form 10-K by reference certain portions of its Proxy Statement for its 2016

Annual Meeting of Shareholders.

Documents Incorporated by Reference

NORTHWEST PIPE COMPANY
2015 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

Cautionary Statement Regarding Forward-Looking Statements ....................................................................................

Page
1

Part I

Item 1
Business ..........................................................................................................................................................
Item 1A Risk Factors ....................................................................................................................................................
Item 1B Unresolved Staff Comments ...........................................................................................................................
Properties ........................................................................................................................................................
Item 2
Item 3
Legal Proceedings ..........................................................................................................................................
Item 4 Mine Safety Disclosures .................................................................................................................................

Part II

Item 5 Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities ........................................................................................................................................................
Item 6
Selected Financial Data ..................................................................................................................................
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations .........................
Item 7A Quantitative and Qualitative Disclosures About Market Risk ........................................................................
Financial Statements and Supplementary Data ..............................................................................................
Item 8
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .........................
Item 9A Controls and Procedures .................................................................................................................................
Item 9B Other Information ...........................................................................................................................................

Part III

Item 10 Directors, Executive Officers and Corporate Governance .............................................................................
Item 11 Executive Compensation ................................................................................................................................
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .......
Item 13 Certain Relationships and Related Transactions, and Director Independence ...............................................
Item 14 Principal Accountant Fees and Services .........................................................................................................

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31
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Item 15 Exhibits and Financial Statement Schedules ..................................................................................................

Part IV

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form
10-K”), other than purely historical information, are “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) that are based on current expectations, estimates and projections about our business, management’s beliefs,
and assumptions made by management. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” “forecasts,” “should,” “could,” and variations of such words and similar expressions are intended to identify
such forward-looking statements. These statements are not guarantees of future performance and involve a number of risks
and uncertainties that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or
forecasted in such forward-looking statements as a result of a variety of important factors. While it is impossible to identify
all such factors, those that could cause actual results to differ materially from those estimated by us include the important
factors discussed in Part I—Item 1A, “Risk Factors.” Such forward-looking statements speak only as of the date they are
made and we do not undertake any obligation to update any forward-looking statements to reflect events or circumstances
after the date of this 2015 Form 10-K. If we do update one or more forward-looking statements, investors and others should
not conclude that we will make additional updates or corrections with respect thereto or with respect to other forward-looking
statements.

Item 1.

Business

Overview

PART I

We are the largest manufacturer of engineered steel pipe water systems in North America. With eight Water
Transmission manufacturing facilities, we are positioned to meet North America’s growing needs for water and wastewater
infrastructure. We serve a wide range of markets and our solutions-based products are a good fit for applications including
water transmission, plant piping, tunnels and river crossings. With a history that dates back more than 100 years, we have
established a prominent position based on a strong and widely recognized reputation for quality, service and an extensive
range of products engineered and manufactured to meet expectations in all categories of performance including highly
corrosive environments.

We manufacture water infrastructure steel pipe products through our Water Transmission Group, which in 2015, 2014,
and 2013 generated approximately 73%, 59%, and 63%, respectively, of our net sales from continuing operations. The Water
Transmission Group produces large diameter, high pressure, engineered welded steel pipe products for use in water
transmission applications. Our sales have historically been driven by the need for new water infrastructure, which is based
primarily on overall population growth and population movement between regions. More recently, we are seeing increased
demand driven by drought conditions, which are causing a dwindling water supply from developed water sources.

We also manufacture smaller diameter electric resistance welded (“ERW”) steel pipe through our Tubular Products
Group at our Atchison, Kansas facility, although the facility is currently idled due to difficult market conditions. Our smaller
diameter pipe is used for applications in the energy sector, as well as for structural, commercial and industrial uses. Since the
sale in March 2014 of our oil country tubular goods (OCTG) business, the Atchison facility is the sole remaining operating
facility in our Tubular Products Group. In 2015, 2014, and 2013 our Tubular Products Group generated approximately 27%,
41%, and 37%, respectively, of our net sales from continuing operations.

Recent Business Developments

On July 20, 2015 we announced that we retained Raymond James & Associates as financial advisors to assist in the
process of exploring the sale of our remaining Tubular Products business. The decision to explore a sale reflects our long-
term objective to focus on our core Water Transmission business through organic growth initiatives as well as through merger
and acquisition activity. The Atchison facility operated at reduced levels from April 2015 to January 2016, when we idled
the facility to reduce operating expenses until market conditions improve or a sale is completed. We are continuing to sell
previously manufactured tubular products inventory.

Our Industries

Water Transmission. Much of the United States water infrastructure is antiquated and many authorities, including the
United States Environmental Protection Agency (the “EPA”), believe the United States water infrastructure is in critical need
of updates, repairs or replacements. The current contaminated water supply situation in Flint, Michigan, and reports of
contaminated drinking water in other cities in the Midwest and Northeast regions of the United States illustrate the impact of
infrastructure replacement delays on aging water supply systems. In its 2011 Drinking Water Infrastructure Needs Survey
and Assessment released in June 2013, the EPA estimates the nation will need to spend $384 billion in infrastructure
investments by 2030 to continue to provide safe drinking water to the public. The American Society of Civil Engineers has
given poor ratings to many aspects of the United States water infrastructure in their 2013 Report Card for America’s
Infrastructure. In its most recent Failure to Act study of current infrastructure, the American Society of Civil Engineers
estimates there will be an $84 billion funding gap for water and wastewater infrastructure by 2020, and a $144 billion gap by
2040.

Within this market, we focus on large diameter, engineered welded steel pipeline systems utilized in water, energy,
structural and plant piping applications. Our core market is the large diameter, high-pressure portion of a water transmission
pipeline that is typically at the “upper end” of a pipeline system. This is the portion of the overall water pipeline that generally
transports water from the source to a treatment plant or from a treatment plant into the distribution system, rather than the
small lines that deliver water directly into households. We believe the addressable market for the products sold by our Water
Transmission Group will total approximately $1.2 billion over the next three years.

A combination of population growth, movement to new population centers, dwindling supplies from developed water
sources, substantial underinvestment in water infrastructure over the past several decades, and an increasingly stringent
regulatory environment are driving demand for water infrastructure projects in the United States. These trends are increasing
the need for new water infrastructure as well as the need to upgrade, repair and replace existing water infrastructure. While
we believe this offers the potential for increased demand for our water infrastructure products and other products related to
water transmission, we also expect current governmental and public water agency budgetary pressures will impact near-term
demand.

The primary drivers of growth in new water infrastructure installation are population growth and movement as well as
dwindling supplies from developed water sources. According to the United States Census Bureau, the population of the
United States will increase by approximately 74 million people between 2016 and 2050. The resulting increase in demand
will require substantial new infrastructure, as the existing United States water infrastructure is not equipped to provide water
to millions of new residents. In addition, many current water supply sources are in danger of being exhausted. The
development of new sources of water at greater distances from population centers will drive the demand for new water
transmission lines. Our eight Water Transmission manufacturing facilities are well located to take advantage of the
anticipated growth and demand.

Increased public awareness of problems with the quality of drinking water and efficient water usage has resulted in
more stringent application of federal and state environmental regulations. The need to comply with these regulations in an
environment of heightened public awareness towards water issues is expected to contribute to demand in the water
infrastructure industry over the next several years as water systems will need to be installed, upgraded and replaced. In
November 2014, the State of California approved the Water Quality, Supply and Infrastructure Improvement Act (Proposition
1). Proposition 1 authorizes $7.5 billion in general obligation bonds to fund state water supply infrastructure projects, such
as public water system improvements, surface and groundwater storage, drinking water protection, water recycling and
advanced conveyance, wastewater treatment, drought relief, emergency water supplies, and ecosystem and watershed
protection and restoration.

In January 2015, U.S. President Barack Obama announced new initiatives to improve the conditions of the aging water
infrastructure, in which he noted that the U.S. needs $600 billion for drinking water and wastewater management over the
next 20 years. These initiatives included a new Water Finance Agency at the EPA and a Rural Opportunity Investment
Initiative at the U.S. Department of Agriculture. The White House proposal to create Qualified Public Infrastructure Bonds
and the proposed Move America Bonds as part of the Move America Act of 2015 introduced in Congress in May 2015 are
both intended to encourage more public-private partnerships.

Tubular Products. The tubular products industry encompasses a wide variety of products serving a diverse group
of end markets. We have been active in several of these markets, including energy, construction, agricultural, commercial,
and industrial systems. With the sale of our OCTG business in March 2014, the segment’s remaining operating facility is
located in Atchison, Kansas, primarily producing line pipe used to connect oil and gas wells to larger diameter pipelines. We
are attempting to sell the remaining assets in our Tubular Products business.

We expect demand from the energy markets to continue to be weak in 2016, due to recent decreases in energy prices.
After trading near $100 per barrel for most of the period since 2011, the price of crude oil started dropping in the summer of
2014 and decreased sharply in the fourth quarter of 2014 to approximately $53 per barrel at December 31, 2014. The price
of crude oil fluctuated during 2015, but by December 2015 had dropped to less than $40 per barrel. Natural gas prices have
also dropped significantly during 2015. The decrease in oil and natural gas prices has led to a significant reduction in energy
exploration activity in the United States. Domestic rig counts have dropped steadily over the past 18 months, and in December
2015 were at their lowest level since 1999.

Products

Water Transmission. Water transmission pipe is used for high-pressure applications, typically requiring pipe to
withstand pressures in excess of 150 pounds per square inch. Most of our water transmission products are made to custom
specifications for fully engineered, large diameter, high-pressure water infrastructure systems. Other uses include pipe for
piling and hydroelectric projects, wastewater treatment plants and other applications. Our primary manufacturing process has
the capability to manufacture water transmission pipe in diameters ranging from 24 inches to 156 inches with wall thickness
of 0.135 inch to 1.00 inch. We also have the ability to manufacture even larger and heavier pipe with other processes. We
can coat and/or line these products with cement mortar, polyethylene tape, polyurethane paints, epoxies, Pritec®, and coal
tar enamel according to our customers’ specifications. We maintain fabrication facilities that provide installation contractors
with custom fabricated sections as well as straight pipe sections. We typically deliver a complete pipeline system to the

installation contractor. We also manufacture Permalok® steel casing pipe, which is a proprietary pipe joining system that
employs a press-fit interlocking connection system. The Permalok® product is generally installed in trenchless construction
projects.

Tubular Products. The tubular products we produce at our Atchison facility range in size from 4.500 inches to 16
inches in diameter with wall thickness from 0.134 inch to 0.375 inch. These products are typically sold to distributors or
original equipment manufacturers and are used for a wide variety of applications, including energy, construction, agriculture,
and other commercial and industrial uses. As previously discussed, our Atchison facility is currently idled until market
conditions improve or a sale is completed.
Marketing

Water Transmission. The primary customers for water transmission products are installation contractors for projects
funded by public water agencies. One customer accounted for 16% of total net sales from continuing operations in 2014 and
15% of total net sales from continuing operations in 2013. No customer accounted for 10% or more of our total net sales in
2015. Our plant locations in Oregon, Colorado, California, West Virginia, Texas, Missouri, Utah and Mexico, allow us to
efficiently serve customers throughout the United States, as well as Canada and Mexico. Our Water Transmission marketing
strategy emphasizes early identification of potential water projects, promotion of specifications consistent with our
capabilities and close contact with the project designers and owners throughout the design phase. Our in-house sales force is
comprised of sales representatives, engineers and support personnel who work closely with public water agencies, contractors
and engineering firms, often years in advance of projects being bid. This allows us to identify and evaluate planned projects
at early stages, participate in the engineering and design process, and ultimately promote the advantages of our systems. After
an agency completes a design, they publicize the upcoming bid for a water transmission project. We then obtain detailed
plans and develop our estimate for the pipe portion of the project. We typically bid to installation contractors who include
our bid in their proposals to public water agencies. A public water agency generally awards the entire project to the contractor
with the lowest responsive bid.

Tubular Products. Our tubular products have been marketed through an in-house sales force, which has been reduced
in conjunction with the recent idling of the Atchison plant. Our tubular products are primarily sold to distributors. Our
marketing strategy focuses on quality, customer service and customer relationships. One customer of our Tubular Products
business accounted for 10% of our total net sales from continuing operations in 2014. No customer accounted for more than
10% of our total net sales from continuing operations during 2015 or 2013.

Manufacturing

Water Transmission. Water transmission manufacturing begins with the preparation of engineered drawings of each
unique piece of pipe in a project. These drawings are prepared on our proprietary computer-aided design system and are used
as blueprints for the manufacture of the pipe. After the drawings are completed and approved, manufacturing begins by
feeding steel coil continuously at a specified angle into a spiral weld mill which cold-forms the band into a tubular
configuration with a spiral seam. Automated arc welders, positioned on both the inside and the outside of the tube, are used
to weld the seam. The welded pipe is then cut at the specified length. After completion of the forming and welding phases,
the finished cylinder is tested and inspected in accordance with project specifications, which may include 100% radiographic
analysis of the weld seam. The cylinders are then coated and lined as specified. Possible coatings include coal tar enamel,
polyethylene tape, polyurethane paint, epoxies, Pritec® and cement mortar. The inside of the pipe cylinders can be lined with
cement mortar, polyurethane or epoxies. Following coating and lining, certain pieces may be custom fabricated as required
for the project. This process is performed in our fabrication facilities. Typically, completed pipe segments are evaluated for
structural integrity with a hydrotester. Upon final inspection, the pipe is prepared for shipment. We ship our products to
project sites principally by truck.

Tubular Products. Tubular products are manufactured by an ERW process in diameters ranging from 4.500 inches to
16 inches. This process begins by unrolling and slitting steel coils into narrower bands sized to the circumference of the
finished product. Each band is re-coiled and fed into the material handling equipment at the front end of the ERW mill and
fed through a series of rolls that cold-form it into a tubular configuration. The resultant tube is welded by high-frequency
electric resistance welders. After exiting the mill, the products are straightened, inspected, tested and end-finished. Certain
products are coated.

Technology. Advances in technology help us produce high quality products at competitive prices. We have invested
in modern welding and inspection equipment to improve both productivity and product quality. With the purchase of
Permalok Corporation in December 2013, the Company acquired certain technologies with respect to an interlocking pipe
joining system (Permalok®) that provides an alternate joint solution used for connecting steel pipes. To stay current with

technological developments in the United States and abroad, we participate in trade shows, industry associations, research
projects and vendor trials of new products.

Quality Assurance. We have quality management systems in place that assure we consistently provide products that
meet or exceed customer and applicable regulatory requirements. All of our quality management systems in the United States
are registered by the International Organization for Standardization, or ISO, under a multi-site registration. In addition to ISO
qualification, the American Institute of Steel Construction, American Petroleum Institute, American Society for Mechanical
Engineers, Factory Mutual, National Sanitation Foundation, and Underwriters Laboratory have certified us for specific
products or operations. The Quality Assurance department is responsible for monitoring and measuring characteristics of the
product. Inspection capabilities include, but are not limited to, visual, dimensional, liquid penetrant, magnetic particle,
hydrostatic, ultrasonic, real-time imaging enhancement, real-time radioscopic, base material tensile, yield and elongation,
sand sieve analysis, coal-tar penetration, concrete compression, lining and coating dry film thickness, adhesion, absorption,
guided bend, charpy impact, hardness, metallurgical examinations, chemical analysis, spectrographic analysis and finished
product final inspection. Product is not released for shipment to our customers until there is verification that all product
requirements have been met.

Product Liability. The manufacturing and use of our products involves a variety of risks. Certain losses may result, or
be alleged to result, from defects in our products, thereby subjecting us to claims for damages, including consequential
damages. We warrant our products to be free of certain defects for one year. We maintain insurance coverage against potential
product liability claims in the amount of $51 million, which we believe to be adequate. Historically, product liability claims
against us have not been material. However, there can be no assurance that product liability claims exceeding our insurance
coverage will not be experienced in the future or that we will be able to maintain such insurance with adequate coverage.

Backlog

Our backlog includes confirmed orders, including the balance of projects in process, and projects for which we have
been notified that we are the successful bidder even though a binding agreement has not been executed. Projects for which a
binding contract has not been executed could be cancelled. Binding orders received by us may be subject to cancellation or
postponement; however, cancellation would generally obligate the customer to pay the costs incurred by us. As of
December 31, 2015, the backlog of orders for our Water Transmission Group was approximately $116 million. Binding
contracts had been executed for approximately 75% of the Water Transmission backlog as of February 10, 2016. At
December 31, 2014, the backlog of orders for our Water Transmission Group was approximately $121 million. Backlog as
of any particular date may not be indicative of actual operating results for any fiscal period. There can be no assurance that
any amount of backlog ultimately will be realized.

Competition

Water Transmission. We have several regional competitors in the Water Transmission business. Most water
transmission projects are competitively bid and price competition is vigorous. Price competition may reduce the gross margin
on sales, which may adversely affect overall profitability. Other competitive factors include timely delivery, ability to meet
customized specifications and high freight costs which may limit the ability of manufacturers located in other market areas
to compete with us.

With Water Transmission manufacturing facilities in Oregon, Colorado, California, West Virginia, Texas, Missouri,
Utah, and Mexico, we believe we can more effectively compete throughout the United States, Canada and Mexico. Our
primary competitor in the Water Transmission business in the western United States and southwestern Canada is NOV
Ameron, a business unit of National Oilwell Varco, Inc. East of the Rocky Mountains, our primary competition includes:
American Cast Iron Pipe Company and U.S. Pipe, which manufacture ductile iron pipe; American Spiral Weld Pipe
Company, Mid America Pipe Fabricating and Supply Inc. and Jindal Steel and Power Limited, which manufacture spiral
welded steel pipe; and Hanson Pipe & Precast, which manufactures concrete pressure pipe and spiral welded steel pipe.

No assurance can be given that other new or existing competitors will not establish new facilities or expand capacity
within our market areas. New or expanded facilities or new competitors could have a material adverse effect on our ability
to capture market share and maintain product pricing.

Tubular Products. The market for our tubular products has been highly fragmented and diversified with over 100
manufacturers in the United States alone. We have competed with TMK Ipsco, Energex Tube, Tex Tube Co., Tenaris, Evraz
North America, California Steel Industries Inc., Paragon Industries, Inc., Welspun Tubular, LLC, and Axis Pipe and Tube,
Inc., as well as foreign competitors. Domestic demand for our tubular products has decreased dramatically in 2015 with the

reduction in domestic rig counts spurred by the drop in crude oil prices. This pressure is accentuated by the increased
competition our tubular products had already faced from foreign-based manufacturers that export tubular products into the
United States which has resulted in imported steel pipe becoming a very significant percentage of the domestic line pipe
market. In December 2015, the United States Department of Commerce concluded the trade case filed in October 2014
requesting an investigation of imports of welded API line pipe from Korea and Turkey for possible imposition of antidumping
and countervailing duties. Under the final order, duties will be assessed on welded line pipe imported from Korea and Turkey.
However, we do not expect these duties to materially reduce the volume of imported line pipe, or to ease the difficult
conditions in the tubular products market in the near term. As previously discussed, in January 2016 we idled the Atchison
facility to reduce operating expenses until market conditions improve or a sale is completed.

Raw Materials and Supplies

We purchase hot rolled and galvanized steel coil from both domestic and foreign steel mills. Domestic suppliers include
Steel Dynamics, Inc., Nucor Corporation, California Steel Industries, Inc., Evraz North America, ArcelorMittal USA and
SSAB. Foreign suppliers include Posco America Corporation and BlueScope Steel. Steel for the Water Transmission business
is normally purchased only after a project has been awarded to us. From time to time, we may purchase additional steel when
it is available at favorable prices. Purchased steel represents a substantial portion of our cost of sales. The steel industry is
highly cyclical in nature and steel prices fluctuate significantly, influenced by numerous factors beyond our control, including
general economic conditions, availability of raw materials, energy costs, import duties, other trade restrictions and currency
exchange rates.

We also rely on certain suppliers of coating materials, lining materials and certain custom fabricated items. We have
at least two suppliers for most of our raw materials. We believe our relationships with our suppliers are positive and have no
indication that we will experience shortages of raw materials or components essential to our production processes or that we
will be forced to seek alternative sources of supply. Any shortages of raw materials may result in production delays and costs,
which could have a material adverse effect on our financial position, results of operations or cash flows.

Environmental and Occupational Safety and Health Regulation

We are subject to federal, state, local and foreign environmental and occupational safety and health laws and
regulations, violation of which could lead to fines, penalties, other civil sanctions or criminal sanctions. These environmental
laws and regulations govern emissions to air; discharges to water (including stormwater); and the generation, handling,
storage, transportation, treatment and disposal of waste materials. We operate under numerous governmental permits and
licenses relating to air emissions, stormwater run-off and other environmental matters, and we are also subject to
environmental laws requiring the investigation and cleanup of environmental contamination at properties we presently own
or operate and at third-party disposal or treatment facilities to which these sites send or arrange to send hazardous waste. For
example, we have been identified as a potentially responsible party at the Portland Harbor Site discussed in Part 1—Item 3,
“Legal Proceedings” of this 2015 Form 10-K. We believe we are in material compliance with these laws and regulations and
do not currently believe that future compliance with such laws and regulations will have a material adverse effect on our
financial position, results of operations or cash flows.

Based on our assessment of potential liability, we have established a reserve for an ongoing environmental assessment
and potential remediation project at our former Tubular Products manufacturing facility in Houston, Texas. At this time, we
have no other reserves for environmental investigations and cleanup. However, estimating liabilities for environmental
investigations and cleanup is complex and dependent upon a number of factors beyond our control which may change
dramatically. Accordingly, although we believe our current environmental reserves are appropriate based on current
information, we cannot provide assurance that our future environmental investigation and cleanup costs and liabilities will
not result in a material expense.

Employees

As of February 10, 2016, we had approximately 676 full-time employees. Approximately 35% were salaried and
approximately 65% were employed on an hourly basis. All of our employees are non-union, with exception of the hourly
employees at our Monterrey, Mexico facility, which represent approximately 8% of our employees. We consider our relations
with our employees to be good.

Geographic Information

The Company sold principally all of its products in the United States, Canada and Mexico. As of December 31, 2015,
all material long-lived assets are located in the United States. See Note 16 to the consolidated financial statements in Part II
-- Item 8. “Financial Statements and Schedules” of this 2015 Form 10-K.

Executive Officers of the Registrant

Information regarding the Company’s executive officers is set forth under the caption “Directors, Executive Officers

and Corporate Governance” in Part III—Item 10 of this 2015 Form 10-K and is incorporated herein by reference.

Available Information

Our internet website address is www.nwpipe.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-
Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the
Exchange Act are available through our internet website as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange Commission (“SEC”). All statements made in any of our securities
filings, including all forward-looking statements or information, are made as of the date of the document in which the
statement is included, and we do not assume or undertake any obligation to update any of those statements or documents
unless we are required to do so by law. Our internet website and the information contained therein or connected thereto are
not incorporated into this 2015 Form 10-K.

Additionally, the public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room
at 100 F Street, NE, Washington D.C. 20549. The public may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

Item 1A. Risk Factors

You should carefully consider the following factors, together with all the other information included in this 2015 Form
10-K, in evaluating our Company and our business. If any of the following risks actually occur, our business, financial
condition, results of operations, or cash flows could be materially and adversely affected, and the value of our stock could
decline. The risks and uncertainties described below are those that we currently believe may materially affect our Company.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our
business operations. As such, you should not consider this list to be a complete statement of all potential risks or
uncertainties.

Risks Related to our Business

A downturn in government spending related to public water transmission projects would adversely affect our
business. Our Water Transmission business accounted for approximately 73% of our net sales from continuing operations in
2015. Our Water Transmission business is primarily dependent upon spending on public water transmission projects,
including water infrastructure upgrades, repairs and replacement and new water infrastructure spending, which, in turn,
depends on, among other things:

•

the need for new or replacement infrastructure;

the priorities placed on various projects by governmental entities;

federal, state and local government spending levels, including budgetary constraints related to capital projects
and the ability to obtain financing; and

the ability of governmental entities to obtain environmental approvals, right-of-way permits and other required
approvals and permits.

Decreases in the number of, or government funding of, public water transmission projects would adversely affect our

business, financial position, results of operations, or cash flows.

Our Water Transmission business faces an overcapacity situation due to recent capacity expansions as well as
the potential for increased competition from substitute products from manufacturers of concrete, ductile iron,
polyvinyl chloride (“PVC”) and high density polyethylene (“HDPE”) pipe. Orders in the Water Transmission business
are competitively bid, and price competition can be vigorous. The recent increases in capacity have negatively affected our
gross margins and overall profitability. Other competitive factors include timely delivery, ability to meet customized
specifications and high freight costs. Although our Water Transmission manufacturing facilities in Oregon, Colorado,
California, West Virginia, Texas, Missouri, Utah, and Mexico allow us to compete throughout the United States, Canada and
Mexico, we cannot assure you that new or existing competitors will not establish new facilities or expand capacity further
within our market areas. New or expanded facilities or new competitors could have a material adverse effect on our market
share and product pricing in our Water Transmission business.

Water transmission pipe is manufactured generally from steel, concrete, HDPE, PVC or ductile iron. Each pipe material
has advantages and disadvantages. Steel and concrete are more common materials for larger diameter water transmission
pipelines because ductile iron pipe generally is limited in diameter due to the manufacturing process. The public agencies
and engineers who determine the specifications for water transmission projects analyze these pipe materials for suitability
for each project. Individual project circumstances normally dictate the preferred material. If we experience cost increases in
raw materials, labor and overhead specific to our industry or the location of our facilities, while competing products or
companies do not experience similar changes, we could experience an adverse change in the demand, price and profitability
of our products, which could have a material adverse effect on our business, financial position, results of operations or cash
flows.

Project delays in public water transmission projects could adversely affect our business. The public water
agencies constructing water transmission projects generally announce the projects well in advance of the bidding and
construction process. It is not unusual for projects to be delayed and rescheduled. Projects are delayed and rescheduled for a
number of reasons, including changes in project priorities, difficulties in complying with environmental and other government
regulations, changes in ability to obtain adequate project funding, and additional time required to acquire rights-of-way or
property rights. Delays in public water transmission projects may occur with insufficient notice to allow us to replace those
projects in our manufacturing schedules. As a result, our business, financial position, results of operations or cash flows may
be adversely affected by unplanned downtime.

Fluctuations in steel prices may affect our future results of operations. Purchased steel represents a substantial
portion of our cost of sales. The steel industry is highly cyclical in nature, and, at times, pricing can be highly volatile due to
a number of factors beyond our control, including general economic conditions, import duties, other trade restrictions and
currency exchange rates. Over the past three years, steel prices have fluctuated significantly. Our cost for a ton of steel from
continuing operations was approximately $573 per ton in 2015, $746 per ton in 2014, and $707 per ton in 2013. In 2015, our
monthly average steel purchasing costs ranged from a high of approximately $706 per ton to a low of approximately $488
per ton. This volatility can significantly affect our gross profit. Although we seek to recover increases in steel prices through
price increases in our products, we have not always been successful. Any increase in steel prices that is not offset by an
increase in our prices could have an adverse effect on our business, financial position, results of operations or cash flows.

Our Water Transmission backlog is subject to reduction and cancellation. Backlog represents products or services
that our customers have committed to purchase from us and projects for which we have been notified that we are the
successful bidder even though a binding agreement has not been executed. Projects for which a binding contract has not been
executed could be cancelled. Our backlog of orders for our Water Transmission segment was approximately $116 million at
December 31, 2015. Our backlog is subject to fluctuations; moreover, cancellations of purchase orders, change orders on
contracts, or reductions of product quantities could materially reduce our backlog and, consequently, future revenues. Our
failure to replace canceled or reduced backlog could result in lower revenues, which could adversely affect our business,
financial position, results of operations or cash flows.

We may be unable to develop or successfully market new products or our products might not obtain necessary
approvals or achieve market acceptance, which could adversely affect our growth. We will continue to actively seek to
develop new products and to expand our existing products into new markets, but we cannot assure you that we will be
successful in these efforts. If we are unsuccessful in developing and marketing new products, expanding into new markets,
or we do not obtain or maintain requisite approvals for our products, the demand for our products could be adversely affected,
which could affect our business, financial position, results of operations or cash flows.

The success of our business is affected by general economic conditions, and our business may be adversely
affected by an economic slowdown or recession. Periods of economic slowdown or recession in the United States, or the
public perception that one may occur, have and could further decrease the demand for our products, affect the price of our

products and adversely impact our business. We have been impacted in the past by the general slowing of the economy, and
the economic slowdown has had an adverse impact on our business, financial position, results of operations or cash flows. In
particular, our Tubular Products Group is exposed to the energy exploration, non-residential construction, and agriculture
markets, and a significant downturn in any one of these markets could cause a reduction in our revenues that could be difficult
to offset.

Increased levels of imports have and could continue to adversely affect pricing and demand for our products.
We believe import levels are affected by, among other things, overall worldwide demand, lower cost of production in other
countries, the trade practices of foreign governments, government subsidies to foreign producers and governmentally imposed
trade restrictions in the United States. The level of imports of tubular products has historically impacted the domestic tubular
products market and reduced the demand for our tubular products, a situation we expect to continue. While imported pipe
has historically most affected our Tubular Products business, imported pipe could have a greater effect on our Water
Transmission business in the future. Additionally, high levels of imported tubular products have led at least one domestic
manufacturer of tubular products to recently enter the water transmission market, and other tubular products manufacturers
could do the same in the future. Increased imports in the United States and Canada which compete with our Water
Transmission products could reduce demand for our products in the future and adversely affect our business, financial
position, results of operations or cash flows.

Operating problems in our business could adversely affect our business, financial position, results of operations
or cash flows. Our manufacturing operations are subject to typical hazards and risks relating to the manufacture of similar
products such as:

•

explosions, fires, inclement weather and natural disasters;

mechanical failure;

unscheduled downtime;

labor difficulties;

loss of process control and quality;

disruptions to supply;

raw materials quality defects;

service provider delays or failures;

transportation delays or failures;

an inability to obtain or maintain required licenses or permits; and

environmental hazards such as chemical spills, discharges or releases of toxic or hazardous substances or gases
into the environment or workplace.

The occurrence of any of these operating problems at our facilities may have a material adverse effect on the
productivity and profitability of a particular manufacturing facility or on our operations as a whole, during and after the
period of these operating difficulties. These operating problems may also cause personal injury and loss of life, severe damage
to or destruction of property and equipment, and environmental damage. In addition, individuals could seek damages for
alleged personal injury or property damage. Furthermore, we could be subject to present and future claims with respect to
workplace injury, exposure to hazardous materials, workers’ compensation and other matters. Although we maintain property
and casualty insurance of the types and in the amounts that we believe are customary for our industries, we cannot assure you
that our insurance coverage will be adequate for liability that may be ultimately incurred or that such coverage will continue
to be available to us on commercially reasonable terms. Any claims that result in liability exceeding our insurance coverage
could have an adverse effect on our business, financial position, results of operations or cash flows.

Our quarterly results of operations are subject to significant fluctuation. Our net sales and operating results may

fluctuate significantly from quarter to quarter due to a number of factors, including:

•

the commencement, completion or termination of contracts during any particular quarter;

unplanned down time due to project delays or mechanical failure;

underutilized capacity or factory productivity;

adverse weather conditions;

fluctuations in the cost of steel and other raw materials; and

competitive pressures.

Results of operations in any period are not indicative of results for any future period, and comparisons between any

two periods may not be meaningful.

We face risks in connection with potential acquisitions and divestitures. Acquiring businesses that expand and/or
complement our operations has been an important element of our business strategy, and we continue to evaluate potential
acquisitions that may expand and/or complement our business. We may not be able to successfully identify attractive
acquisition candidates or negotiate favorable terms in the future. Furthermore, our ability to effectively integrate any future
acquisitions will depend on, among other things, the adequacy of our implementation plans, the ability of our management
to oversee and operate effectively the combined operations and our ability to achieve desired operational efficiencies. We
may also consider other alternatives for our business units in order to strategically position our business and continue to
compete in our markets, which may include joint-ventures and/or divestitures. Our failure to successfully integrate the
operations of any businesses that we may acquire in the future or our inability to attract a business partner in which to enter
into a joint-venture or a buyer willing to purchase our business units (including our remaining Tubular Products business, for
which we are exploring a divestiture) may adversely affect our business, financial position, results of operations or cash
flows.

We may be subject to claims for damages for defective products, which could adversely affect our business,
financial position, results of operations or cash flows. We warrant our products to be free of certain defects. We have,
from time to time, had claims alleging defects in our products. We cannot assure you that we will not experience material
product liability losses in the future or that we will not incur significant costs to defend such claims. While we currently have
product liability insurance, we cannot assure you that our product liability insurance coverage will be adequate for liabilities
that may be incurred in the future or that such coverage will continue to be available to us on commercially reasonable terms.
Any claims relating to defective products that result in liabilities exceeding our insurance coverage could have an adverse
effect on our business, financial position, results of operations or cash flows.

We may not be able to recover costs and damages from vendors that supply defective materials. We may receive
defective materials from our vendors that are incorporated into our products during the manufacturing process. The cost to
repair, remake or replace defective products could be greater than the amount that can be recovered from the vendor. Such
excess costs could have an adverse effect on our business, financial position, results of operations or cash flows.

We have a foreign operation which exposes us to the risks of doing business abroad. Our facility in Monterrey,
Mexico primarily exports products to the United States. We may operate in additional countries in the future. Any material
changes in the quotas, regulations or duties on imports imposed by the United States government and our agencies or on
exports imposed by these foreign governments and their agencies could adversely affect our foreign operations.

We also sell some of our products internationally. Our foreign activities are also subject to various other risks of doing

business in a foreign country, including:

•

currency fluctuations;

transportation delays and interruptions;

political, social and economic instability and disruptions;

•

government embargoes or foreign trade restrictions;

the imposition of duties, tariffs and other trade barriers;

import and export controls;

labor unrest and current and changing regulatory environments;

limitations on our ability to enforce legal rights and remedies; and

potentially adverse tax consequences.

No assurance can be given that our operations may not be adversely affected in the future. Any of these events could
have an adverse effect on our operations in the future by reducing the demand for our products and services, decreasing the
prices at which we can sell our products or increasing costs such that there would be an adverse effect on our business,
financial position, results of operations or cash flows. We cannot assure you that we will continue to operate in compliance
with applicable customs, currency exchange control regulations, transfer pricing regulations or any other laws or regulations
to which we may be subject, or that any such regulations or laws will not be modified. Any failure by us to comply with any
such applicable regulations or laws, or any changes in any such regulations or laws could have a material adverse effect on
our business, financial position, results of operations or cash flows.

Our use of the percentage-of-completion method of accounting includes estimates. Revenue from construction
contracts in our Water Transmission segment is recognized on the percentage-of-completion method, measured by the costs
incurred to date as a percentage of the estimated total costs of each contract (the cost-to-cost method). Estimated total costs
of each contract are reviewed on a monthly basis by project management and operations personnel for all active projects. All
cost revisions that result in the gross profit as a percent of sales increasing or decreasing by more than two percent are
reviewed by senior management personnel.

The use of estimated cost to complete each contract is a significant variable in the process of determining income
earned and is a significant factor in the accounting for contracts. The cumulative impact of revisions in total cost estimates
during the progress of work is reflected in the period in which these changes become known. Due to the variability of events
affecting our estimates which have a material impact on our contract accounting, actual results could differ from those
estimates, which could adversely affect our financial position, results of operations or cash flows.

We are subject to stringent environmental and health and safety laws, which may require us to incur substantial
compliance and remediation costs, thereby reducing our profits. We are subject to many federal, state, local and foreign
environmental and health and safety laws and regulations, particularly with respect to the use, handling, treatment, storage,
discharge and disposal of substances and hazardous wastes used or generated in our manufacturing processes. Compliance
with these laws and regulations is a significant factor in our business. We have incurred, and expect to continue to incur,
significant expenditures to comply with applicable environmental laws and regulations. Our failure to comply with applicable
environmental laws and regulations and permit requirements could result in civil or criminal fines or penalties or enforcement
actions, including regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, installation
of pollution control equipment or remedial actions.

We are currently, and may in the future be, required to incur costs relating to the environmental assessment or
environmental remediation of our property, and for addressing environmental conditions, including, but not limited to, the
issues associated with our Portland, Oregon and Houston, Texas facilities as discussed in Part I—Item 3, “Legal Proceedings”
below. Some environmental laws and regulations impose liability and responsibility on present and former owners, operators
or users of facilities and sites for contamination at such facilities and sites without regard to causation or knowledge of
contamination. Consequently, we cannot assure you that existing or future circumstances, the development of new facts or
the failure of third parties to address contamination at current or former facilities or properties will not require significant
expenditures by us.

We expect to continue to be subject to increasingly stringent environmental and health and safety laws and regulations.
It is difficult to predict the future interpretation and development of environmental and health and safety laws and regulations
or their impact on our future earnings and operations. We anticipate that compliance will continue to require capital
expenditures and operating costs. Any increase in these costs, or unanticipated liabilities arising, for example, out of discovery
of previously unknown conditions or more aggressive enforcement actions, could adversely affect our results of operations,

and there is no assurance that they will not have a material adverse effect on our business, financial position, results of
operations or cash flows.

Our information technology systems can be negatively affected by cyber security threats. Increased global
information technology security requirements, vulnerabilities, threats and a rise in sophisticated and targeted computer crime
pose a risk to the security of our systems, networks and the confidentiality, availability and integrity of our data. Despite our
efforts to protect sensitive information and confidential and personal data, our facilities and systems and those of our third-
party service providers may be vulnerable to security breaches. This could lead to disclosure, modification or destruction of
proprietary, employee, and other key information, and operational disruptions, which in turn could adversely affect our
reputation, competitiveness and results of operations.

Risks Specifically Related to Our Tubular Products Business

Our Tubular Products business faces difficult market conditions. Our Tubular Products business is exposed to the
energy markets. Our line pipe products, which serve the energy market, comprise 58%, 77%, and 71% of our tons sold in
2015, 2014, and 2013, respectively, for our continuing operations in the Tubular Products Group. Sales of these products are
tied to the exploration, development, and production of natural gas and oil reserves. Decreasing oil prices, particularly since
late 2014, have resulted in weaker demand for our line pipe products. With recent further declines in oil prices, we expect
demand for these products to continue to be weak in 2016. Additionally, the market for our tubular products is over-supplied,
driven by high levels of imported product and increased domestic capacity and production in the United States and Canada.
The Atchison facility operated at reduced levels from April 2015 to January 2016, when we idled the facility to reduce
operating expenses until market conditions improve or a sale is completed. A protracted weak market for our tubular products
could adversely affect our business, financial position, results of operations or cash flows.

Our Tubular Products business has incurred past operating losses, and could generate operating losses for an
extended period. The Tubular Products business has incurred operating losses in the past, and is likely to do so until the
Atchison plant is either restarted or sold. Some fixed costs will continue to be incurred while the plant is idled, generating
ongoing operating losses. An accumulation of operating losses could result in an impairment of our Tubular Products assets
or a loss on the sale of those assets. If the Atchison facility remains idle for an extended period, our business, financial
position, results of operations or cash flows could be adversely affected.

Our plan to explore the sale of our remaining Tubular Products business may not result in a transaction or a
transaction may cause us to recognize a loss. We announced on July 20, 2015 that we are exploring the sale of our remaining
Tubular Products business to focus on our core Water Transmission business. The process to explore this sale is subject to a
number of uncertainties, some of which are not in our control. As a result, we cannot provide assurance that the process will
result in a transaction or, if it does, that it would occur within any specified period of time or under what terms. Our evaluation
of potential transactions may cause us to incur substantial costs and divert management’s time from other business activities.

In addition, the fact that we are exploring the sale of our Tubular Products business may damage our relationship with
that business’ customers, suppliers, employees and other business partners, which may result in a reduction of net sales and
market position that we may not be able to regain if we are unable to successfully complete a transaction.

Even if the process results in a transaction, we cannot predict how the market price for our common stock would be
affected by the announcement of a transaction. In addition, the market price of our common stock could be highly volatile
during the period in which we explore the sale and may continue to be more volatile if and when a transaction is announced
or if we announce that we are no longer exploring a sale.

Any eventual sale of the Tubular Products business is subject to negotiation of a final agreement and a negotiated
transaction price could be below the current carrying value of Tubular Products’ net assets. This could result in recognition
of a material loss on the disposition of that business which could adversely affect our financial position, results of operations
or cash flows.

Risks Related to Our Financial Condition

The restrictions under which we operate as a result of our debt agreements could have a material adverse effect
on our business, financial condition, results of operations or cash flows. We have financed our operations through cash
flows from operations, available borrowings and other financing arrangements. As of December 31, 2015, we had
approximately $1.1 million of capital lease obligations, and no outstanding borrowings on our line of credit. However, we

could incur borrowings on our line of credit in the future to finance increases in working capital, fund capital expenditures,
fund negative operating cash flows, or for other corporate purposes. These borrowings could become significant in the future.

Our current and future debt and debt service obligations could:

•

limit our ability to obtain additional financing for working capital or other purposes in the future;

reduce the amount of funds available to finance our operations, capital expenditures and other activities;

increase our vulnerability to economic downturns, illiquid capital markets, and adverse industry conditions;

limit our flexibility in responding to changing business and economic conditions, including increased
competition;

place us at a disadvantage when compared to our competitors that have less debt; and

with respect to our borrowings that bear interest at variable rates, cause us to be vulnerable to increases in interest
rates.

Our ability to make scheduled payments on our current and future debt will depend on our future operating performance
and cash flows, which are subject to prevailing economic conditions, prevailing interest rate levels and other financial,
competitive and business factors, many of which are beyond our control. Our inability to make scheduled payments on our
debt or any of the foregoing factors would have a material adverse effect on our business, financial condition, results of
operations, or cash flows.

We will need to substantially increase working capital if market conditions and customer order levels improve.
If market conditions and customer order levels improve, we will have to increase our working capital substantially, as it will
take several months for new orders to be translated into cash receipts. In general, borrowings under our Credit Agreement
are limited to the lesser of $60 million or availability under a borrowing base, which is subject to various sublimits and
borrowing restrictions as determined under our Credit Agreement. As of December 31, 2015, we had $23.2 million available
to borrow under our Credit Agreement. We may not have sufficient availability under our Credit Agreement to borrow the
amounts we need, and other opportunities to borrow additional funds or raise capital in the equity markets may be limited or
nonexistent. A shortage in the availability of working capital would have a material adverse effect on our business, financial
condition, results of operations, or cash flows.

Our failure to comply with covenants in our debt agreements could result in our indebtedness being immediately
due and payable, which would have a material adverse effect on our business, financial condition, results of operations
or cash flows. The agreements governing our current and future debt include covenants that impose certain requirements
with respect to our financial condition and results of operations and general business activities. These covenants place
restrictions on, among other things, our ability to incur certain additional debt and to create liens or other encumbrances on
assets, and our ability to experience material adverse events.

Our ability to comply with the covenants under our debt instruments in the future is uncertain and will be affected by
our results of operations and financial condition as well as other events and circumstances beyond our control. If market and
other economic conditions do not improve, our ability to comply with these covenants may be impaired. A failure to comply
with the requirements of these covenants, if not waived or cured, could permit acceleration of the related debt. If any of our
debt is accelerated, we cannot assure you that we would have sufficient assets to repay such debt or that we would be able to
refinance such debt on commercially reasonable terms or at all. The acceleration of a significant portion of our debt would
have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Disruptions in the financial markets and the general economic slowdown could cause us to be unable to obtain
financing and expose us to risks related to the overall macro-economic environment, which could have a material
adverse effect on our business, financial condition, results of operations or cash flows. The United States equity and
credit markets have experienced significant price volatility, dislocations and liquidity disruptions, which have caused market
prices of many equities to fluctuate substantially and the spreads on prospective debt financings to widen considerably. These
circumstances have materially impacted liquidity in the financial markets, making terms for certain financings less attractive,
and in some cases have resulted in the unavailability of financing, even for companies who are otherwise qualified to obtain
financing. These events may make it less likely that we will be able to obtain additional financing and also may make it more
difficult or prohibitively costly for us to raise capital through the issuance of debt or equity securities.

Risks Related to Our Internal Control Over Financial Reporting

We have identified material weaknesses in internal control in prior years. For the years ended December 31, 2013
and 2014, a material weakness in our internal control over financial reporting related to goodwill was identified. A “material
weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of our annual or interim consolidated financial statements would not be
prevented or detected. This material weakness was remediated as of September 30, 2015.

No material weaknesses were identified as of December 31, 2015. However, we cannot assure you that additional
material weaknesses in our internal control over financial reporting will not be identified in the future. Any failure to maintain
or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in
additional material weaknesses, or could result in material misstatements in our financial statements. These misstatements
could result in a restatement of financial statements, cause us to fail to meet our reporting obligations or cause investors to
lose confidence in our reported financial information, leading to a decline in our stock price.

Risks Related to Our Common Stock

The relatively low trading volume of our common stock may limit your ability to sell your shares. Although our
shares of common stock are listed on the Nasdaq Global Select Market (“Nasdaq”), we have historically experienced a
relatively low trading volume. If we have a low trading volume in the future, holders of our shares may have difficulty selling
a large number of shares of our common stock in the manner or at a price that might otherwise be attainable.

The market price of our common stock could be subject to significant fluctuations. The market price of our
common stock has experienced, and may continue to experience, significant volatility. Among the factors that could affect
our stock price are:

•

our operating and financial performance and prospects;

quarterly variations in the rate of growth of our financial indicators, such as earnings per share, net income and
net sales;

changes in revenue or earnings estimates or publication of research reports by analysts;

loss of any member of our senior management team;

speculation in the press or investment community;

strategic actions by us or our competitors, such as acquisitions or restructuring;

sales of our common stock by shareholders;

relatively low trading volume;

general market conditions and market expectations for our industry and the financial health of our customers;
and

domestic and international economic, legal and regulatory factors unrelated to our performance.

The stock markets in general have experienced broad fluctuations that have often been unrelated to the operating
performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common
stock.

Certain provisions of our governing documents and Oregon law could discourage potential acquisition

proposals. Our articles of incorporation contain provisions that:

•

classify the board of directors into three classes, each of which serves for a three-year term with one class elected
each year;

•

provide that directors may be removed by shareholders only for cause and only upon the affirmative vote of
75% of the outstanding shares of common stock; and

permit the board of directors to issue preferred stock in one or more series, fix the number of shares constituting
any such series and determine the voting powers and all other rights and preferences of any such series, without
any further vote or action by our shareholders.

In addition, we are subject to the Oregon Business Combination Act, which imposes certain restrictions on business
combination transactions and may encourage parties interested in acquiring us to negotiate in advance with our board of
directors. We also have a shareholder rights plan that acts to discourage any person or group from making a tender offer for,
or acquiring, more than 15% of our common stock without the approval of our board of directors. Any of these provisions
could discourage potential acquisition proposals, could deter, delay or prevent a change in control that our shareholders
consider favorable and could depress the market value of our common stock.

Item 1B. Unresolved Staff Comments

None.

Item 2.

Properties

The following table provides certain information about our operating facilities as of December 31, 2015:

Water Transmission Group

Portland, Oregon ..........................
Adelanto, California .....................
Denver, Colorado .........................
Parkersburg, West Virginia ..........
Saginaw, Texas (2 facilities) ........
Monterrey, Mexico .......................
St Louis, Missouri ........................
Salt Lake City, Utah .....................

Manufacturing
Space
(approx. sq. ft.)
300,000
200,000
182,000
145,000
170,000
40,000
100,000
47,000

Property Size
(approx. acres)
25
100
40
90
50
5
20
1

Number and Type of Mills

3 Spiral mills
3 Spiral mills, 1 Plate roll
2 Spiral mills
2 Spiral mills
2 Spiral mills
Multiple line fabrication capability
2 Plate rolls
2 Plate rolls

As of December 31, 2015, we owned all of our Water Transmission facilities except for one of our Saginaw, Texas
facilities, our St. Louis facility, and our Salt Lake City facility, which are leased. Additionally, land adjacent to our Portland
facility used for parking and pipe storage is leased.

Tubular Products Group

Location
Atchison, Kansas ..........................

Manufacturing
Space
(approx. sq. ft.)
106,000

Property Size
(approx. acres)
60

Number and Type of Mills

2 Electric resistance mills

Our facilities serve regional markets, which vary in the number and sizes of projects year-over-year. Consequently, we
have excess manufacturing capacity from time to time at each of our facilities. We believe the quality and productive capacity
of our facilities are sufficient to maintain our competitive position for the foreseeable future.

Item 3.

Legal Proceedings

Portland Harbor Superfund

On December 1, 2000, a section of the lower Willamette River known as the Portland Harbor Site was included on the
National Priorities List at the request of the United States Environmental Protection Agency (the “EPA”). While the
Company’s Portland, Oregon manufacturing facility does not border the Willamette River, an outfall from the facility’s
stormwater system drains into a neighboring property’s privately owned stormwater system and slip. Since the listing of the
site, the Company was notified by the EPA and the Oregon Department of Environmental Quality (“ODEQ”) of potential
liability under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). In 2008, the
Company was asked to file information disclosure reports with the EPA (CERCLA 104 (e) information request). A remedial
investigation and feasibility study (“RI/FS”) of the Portland Harbor Site has been directed by a group of 14 potentially
responsible parties known as the Lower Willamette Group (the “LWG”) under agreement with the EPA. The final draft
remedial investigation (“RI”) was submitted to the EPA by the LWG in fall of 2011 and a draft feasibility study (“FS”) was
submitted by the LWG to the EPA in March 2012. The revised draft FS submitted in 2015 identifies six possible remedial
alternatives which range in estimated cost from approximately $790 million to $2.5 billion and estimates it will take up to 18
years to implement the remedial work, depending on the selected alternative. The report does not determine who is
responsible for the costs of cleanup or how the cleanup costs will be allocated among the potentially responsible parties. As
of the date of this filing, the final RI and the revised FS are pending approval of the EPA.

In 2001, groundwater containing elevated volatile organic compounds (“VOCs”) was identified in one localized area
of leased property adjacent to the Portland facility furthest from the river. Assessment work was conducted in 2002 and 2003
to further characterize the groundwater.

In February 2005, the Company entered into a Voluntary Agreement for Remedial Investigation and Source Control
Measures (the “Agreement”) with ODEQ. The Company performed RI work required under the Agreement and submitted a
draft RI/Source Control Evaluation Report (“SCE”) in December 2005, a revised draft RI/SCE Report in January 2014, and
a further revised RI/SCE Report in March 2015. The conclusions of the report include: (1) the VOCs found in the groundwater
do not present an unacceptable risk to human or ecological receptors in the Willamette River; (2) there is no evidence at this
time showing a connection between detected VOCs in groundwater and Willamette River sediments; (3) the interim remedial
measure to conduct a limited excavation of soil and full paving of the site was completed; (4) a state-of-the art stormwater
treatment system was installed; and (5) an area of stained soil was characterized and remediated. In May 2015, and
subsequently in August and October 2015, the Company received the EPA’s and ODEQ’s comments, respectively, requesting
additional information and modifications to the revised RI/SCE Report, including the request to conduct additional
groundwater sampling. The Company is working with consultants to address the comments and questions from the EPA and
ODEQ, and in December 2015 submitted a Supplemental Groundwater Sampling Work Plan to the EPA and ODEQ.

The Company spent $0.2 million for further Source Control work in 2015, and spent $0.1 million in 2014 and less than
$0.1 million in 2013.

Concurrent with the activities of the EPA and ODEQ, the Portland Harbor Natural Resources Trustee Council
(“Trustees”) sent some or all of the same parties, including the Company, a notice of intent to perform a Natural Resource
Damage Assessment (“NRDA”) for the Portland Harbor Site to determine the nature and extent of natural resource damages
under CERCLA section 107. The Trustees for the Portland Harbor Site consist of representatives from several Northwest
Indian Tribes, three federal agencies and one state agency. The Trustees act independently of the EPA and ODEQ. The
Trustees have encouraged potentially responsible parties to voluntarily participate in the funding of their injury assessments
and several of those parties have agreed to do so. In June 2014, the Company agreed to participate in the injury assessment
process, which included funding $0.4 million of the assessment; of this amount, $0.2 million was paid in July 2014 and the
remainder was paid in January 2015. The Company has not assumed any additional payment obligations or liabilities with
the participation with the NRDA.

The Company’s potential liability is a portion of the costs of the remedy the EPA will select for the entire Portland
Harbor Superfund Site. The cost of that remedy is expected to be allocated among more than 100 potentially responsible
parties. Because of the large number of responsible parties and the variability in the range of remediation alternatives, the
Company is unable to estimate an amount or an amount within a range of costs for its obligation with respect to the Portland
Harbor Site matters, and no further adjustment to the consolidated financial statements has been recorded as of the date of
this filing. The Company has insurance policies for defense costs, as well as indemnification policies it believes will provide
reimbursement for any share of the remediation assessed. However, the Company can provide no assurance that those policies
will cover all of the costs which the Company may incur.

In December 2014, a federal district court approved settlements between the Company and two of its insurance carriers.
The Company released its interests in the related insurance policies, and received $2.6 million in January 2015 for
reimbursement of past indemnification and defense costs incurred by the Company associated with the Portland Harbor Site,
substantially all of which reduced cost of sales in 2014. Notwithstanding these settlements, the Company continues to have
insurance coverage for indemnification and defense costs related to the Portland Harbor Site as described above.

Houston Environmental Issue

In connection with the Company’s sale of its OCTG business, a Limited Phase II Environmental Site Assessment was
conducted at the Houston, Texas plant and completed in March 2014, which revealed the presence of VOCs in the
groundwater and certain metals in the soil. In June 2014, the Company was accepted into the Texas Commission on
Environmental Quality (“TCEQ”) Voluntary Cleanup Program (“VCP”) to address these issues and obtain a Certificate of
Completion from TCEQ. The cost of any potential cleanup will not be covered by insurance. However, any costs incurred
will be reimbursed by the purchaser of the OCTG business discussed in Note 2, “Disposition of OCTG Business” if the
purchaser of the OCTG business exercises its option to purchase the property under certain circumstances after the Certificate
of Completion is obtained.

While the final remediation approach has not yet been determined, the Company has completed an initial assessment
and currently estimates the future costs associated with the VCP to be between $0.2 million and $2.2 million. At December
31, 2015, the Company has a $0.3 million accrual for remediation costs based on the low-end estimate of future costs using
a probability-weighted analysis of remediation approaches and estimates closure of the issue to occur between the first quarter
of 2017 and the third quarter of 2018.

The proposed remediation approach includes a municipal ordinance to prevent consumption of shallow groundwater
from beneath the property, thereby eliminating the need for more costly remediation measures. Site assessment and
monitoring activities are currently underway to satisfy the requirements of the City of Houston and TCEQ for implementation
of the municipal ordinance.

All Sites

The Company operates its facilities under numerous governmental permits and licenses relating to air emissions, storm
water run-off, and other environmental matters. The Company’s operations are also governed by many other laws and
regulations, including those relating to workplace safety and worker health, principally the Occupational Safety and Health
Act and regulations there under which, among other requirements, establish noise and dust standards. The Company believes
it is in material compliance with its permits and licenses and these laws and regulations, and the Company does not believe
that future compliance with such laws and regulations will have a material adverse effect on its financial position, results of
operations or cash flows.

Other Contingencies

From time to time, the Company is involved in litigation relating to claims arising out of its operations in the normal
course of its business. The Company maintains insurance coverage against potential claims in amounts that are believed to
be adequate. To the extent that insurance does not cover legal, defense, and indemnification costs associated with a loss
contingency, such costs will be expensed as incurred. The Company believes that it is not presently a party to any other
litigation, the outcome of which would have a material adverse effect on its business, financial condition, results of
operations or cash flows.

Item 4.

Mine Safety Disclosures

Not applicable.

PART II

Item 5.

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Market Information

Our common stock is quoted on the Nasdaq under the symbol “NWPX.” The price range per share of common stock
presented below represents the highest and lowest closing sales prices for the Company’s common stock on the Nasdaq
during each quarter of the two most recent years.

2015
First Quarter ............................................................................................................................ $
Second Quarter ........................................................................................................................
Third Quarter ...........................................................................................................................
Fourth Quarter .........................................................................................................................

2014
First Quarter ............................................................................................................................ $
Second Quarter ........................................................................................................................
Third Quarter ...........................................................................................................................
Fourth Quarter .........................................................................................................................

Low

High

22.24 $
19.94
12.65
10.03

33.12 $
33.96
34.10
26.77

28.84
24.95
19.99
15.43

37.97
40.33
40.92
35.78

There were 40 shareholders of record at February 17, 2016. A substantially greater number of holders of our common
stock are beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. There were
no cash dividends declared or paid in fiscal years 2015 or 2014, and we do not intend to pay cash dividends in the foreseeable
future. We have not issued any securities during the past three years that were not registered under the Securities Act.

Stock Performance Graph

The following graph compares the performance of our common stock to the performance of the Russell 2000 Index
and a weighted composite index of certain peer companies selected by us. The Russell 2000 Index measures the performance
of the small-cap segment of the U.S. equity markets. The Old Peer Group was comprised of Mueller Water Products, Lindsay
Corporation and Valmont Industries. The New Peer Group is comprised of Mueller Water Products, Lindsay Corporation
and Aegion Corp. This change reflects the Company’s significant reduction of its Tubular Products business and its primary
focus on the Water Transmission business.

The comparisons in the chart below are provided in response to SEC disclosure requirements and, therefore, are not

intended to forecast or be indicative of future performance of our common stock.

Indexed Return

Northwest
Pipe
Company

Russell 2000

New Peer

Index

Group

Old Peer
Group

December 31, 2010 ..............................................................
December 31, 2011 ..............................................................
December 31, 2012 ..............................................................
December 31, 2013 ..............................................................
December 31, 2014 ..............................................................
December 31, 2015 ..............................................................

100.00
95.13
99.29
157.14
125.34
46.57

100.00
95.82
111.49
154.78
162.35
155.18

100.00
69.15
114.62
140.75
143.97
128.02

100.00
93.6
149.36
176.47
166.91
141.57

Securities Authorized for Issuance under Equity Compensation Plans

The information with respect to equity compensation plans is included under Part III—Item 12, “Security Ownership

of Certain Beneficial Owners and Management and Related Stockholder Matters” of this 2015 Form 10-K.

Item 6.

Selected Financial Data

The following tables include selected summary financial data for each of our last five years and should be read in
conjunction with Part II—Item 8, “Financial Statements and Supplementary Data,” and Part II—Item 7, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” included in this 2015 Form 10-K.

The following selected consolidated financial data as of December 31, 2015 and 2014 and for the years ended December
31, 2015, 2014 and 2013 are derived from our audited consolidated financial statements included in this 2015 Form 10-K.
For the year ended December 31, 2011, income activity related to the disposed OCTG business is presented as discontinued
operations, consistent with the years ended December 31, 2015, 2014, 2013, and 2012. While this 2011 data is derived from
the Company’s historical audited financial statements for that year, discontinued operations reporting for that year has not
been audited.

2015

As of December 31,
2013
(In thousands, except per share amounts)

2012

2014

2011

Consolidated Statement of Operations Data:
Net sales ............................................................... $ 236,608 $ 403,298 $ 359,445 $ 388,902 $ 396,994
59,513
(12,625)
Gross profit ..........................................................
12,544
(29,388)
Income (loss) from continuing operations ............
116
Income (loss) from discontinued operations ........
-
12,660
(29,388) $
Net income (loss) ................................................. $

60,236
21,676
(22,599)
(923) $

40,576
(6,173)
(11,714)
(17,887) $

59,108
17,501
(1,257)
16,244 $

Earnings per Common Share :
Basic - Income (loss) from continuing operations $

Income (loss) from discontinued

(3.07) $

(0.65) $

2.29 $

1.87 $

1.35

operations ................................................
Net Income (loss) per share ....................... $

-
(3.07) $

(1.23)
(1.88) $

(2.39)
(0.10) $

(0.14)
1.73 $

0.01
1.36

Diluted - Income (loss) from continuing

operations ........................................................... $

(3.07) $

(0.65) $

2.27 $

1.85 $

1.34

Income (loss) from discontinued

operations ................................................

(1.23)

(2.37)

(0.13)

0.01

Net Income (loss) per share assuming

dilution .................................................... $

(3.07) $

(1.88) $

(0.10) $

1.72 $

1.35

2015

2014

As of December 31,
2013
(In thousands)

2012

2011

Consolidated Balance Sheet Data:
Working capital .................................................... $
Total assets ...........................................................
Long-term debt and capital lease obligations, less

93,709 $ 165,683 $ 195,357 $ 167,392 $ 170,614
413,373
433,459
259,380

422,422

351,882

current portion ...................................................
Stockholders' equity .............................................

718
217,560

45,812
245,635

94,241
261,850

63,069
259,432

86,418
240,267

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of
this 2015 Form 10-K contain forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995
and Section 21E of the Exchange Act that are based on current expectations, estimates and projections about our business,
management’s beliefs, and assumptions made by management. Words such as “expects,” “anticipates,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” “forecasts,” “should,” “could” and variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve
risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements as a result of a variety of important factors. While it is impossible
to identify all such factors, those that could cause actual results to differ materially from those estimated by us include the
important factors discussed in Part 1—Item 1A, “Risk Factors.” Such forward-looking statements speak only as of the date
on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events
or circumstances after the date of this 2015 Form 10-K. If we do update or correct one or more forward-looking statements,
investors and others should not conclude that we will make additional updates or corrections with respect thereto or with
respect to other forward-looking statements.

Overview

Water Transmission Group. We are the largest manufacturer of engineered steel pipe water systems in North
America. With eight Water Transmission manufacturing facilities, we are positioned to meet North America’s growing needs
for water and wastewater infrastructure. We serve a wide range of markets and our solutions-based products are a good fit
for applications including water transmission, plant piping, tunnels and river crossings. With a history that dates back more
than 100 years, we have become a leading manufacturer in the welded steel pipe industry. These pipeline systems are
produced by our Water Transmission Group from eight manufacturing facilities, which are located in Portland, Oregon;
Denver, Colorado; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas; Salt Lake City, Utah; St. Louis,
Missouri; and Monterrey, Mexico. Our Water Transmission Group accounted for approximately 73% of net sales from
continuing operations in 2015.

Our water infrastructure products are sold generally to installation contractors, who include our products in their bids
to municipal agencies or privately-owned water companies for specific projects. We believe our sales are substantially driven
by spending on new water infrastructure with a recent trend towards spending on water infrastructure replacement, repair and
upgrade. Within the total range of pipe products, our products tend to fit the larger diameter, higher-pressure applications.

Tubular Products Group. Our Tubular Products Group manufactures ERW steel pipe at our Atchison, Kansas facility,
producing a range of line pipe products used in several different applications including energy, industrial, construction, and
agricultural. Our Tubular Products Group generated approximately 27% of our net sales from continuing operations in 2015.
Our Tubular Products Group’s sales volume is typically driven by energy spending, non-residential construction spending
and general economic conditions. The OCTG business, formerly part of our Tubular Products Group, was sold in March
2014, as discussed in Item 1. We announced on July 20, 2015 that we are in the process of exploring the sale of our remaining
Energy Tubular Products business, which includes line, structural and standard pipe, and is located in Atchison, Kansas. The
decision to explore a sale of our remaining Energy Tubular Products business reflects our long-term objective to focus on
our core Water Transmission business through organic growth initiatives as well as through merger and acquisition activity.
The Atchison facility operated at reduced levels from April 2015 to January 2016, when we idled the Atchison facility to
reduce operating expenses until market conditions improve or a sale is completed. We are continuing to sell previously
manufactured tubular products inventory.

Our Current Economic Environment

We operate our Water Transmission Group with a long-term time horizon. Projects are often planned for many years
in advance, and are sometimes part of fifty-year build out plans. Long-term demand for water infrastructure projects in the
United States appears strong. However, in the near term, we expect strained governmental and water agency budgets and
increased capacity from competition to impact the Water Transmission Group. Fluctuating steel costs will be a factor in both
our Tubular Products Group and our Water Transmission Group, as the ability to adjust our selling prices as steel costs
fluctuate will depend on market conditions.

Demand for line pipe, the primary product of our Tubular Products Group, is correlated to oil and gas exploration
activity in the United States, which is itself correlated to global oil prices. Historically low oil prices have led to reduced
demand in 2015, and we continue to expect weak demand in 2016.

In addition to the macroeconomic factors described above, we continue to face pressures from significant volumes of
foreign imports of tubular products. We also face increased pressures due to recent domestic capacity expansions by our
competitors.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the United
States.

Management Estimates:

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We base our
estimates on historical experience and on various other assumptions that are believed to be reasonable under the
circumstances. On an on-going basis, we evaluate all of our estimates, including those related to revenue recognition,
allowance for doubtful accounts, goodwill, property and equipment, including depreciation and amortization, inventories,
income taxes, and litigation and other contingencies. Actual results may differ from these estimates under different
assumptions or conditions. We believe the following critical accounting policies and related judgments and estimates affect
the preparation of our consolidated financial statements.

Revenue Recognition:

Revenue from construction contracts in our Water Transmission Group is recognized on the percentage-of-completion
method. For a majority of contracts, revenue is measured by the costs incurred to date as a percentage of the estimated total
costs of each contract (cost-to-cost method). For a small number of contracts, revenue is measured using units of delivery as
progress is best estimated by the number of units delivered under the contract. Contract costs include all direct material and
labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and
depreciation. Selling, general and administrative costs are charged to expense as incurred. The cost of steel is recognized as
a project cost when the steel is introduced into the manufacturing process. Estimated total costs of each contract are reviewed
on a monthly basis by project management and operations personnel for all active projects. All cost revisions that result in
the gross profit as a percent of sales increasing or decreasing by more than two percent are reviewed by senior management
personnel.

We begin recognizing revenue on a project when persuasive evidence of an arrangement exists, recoverability is
reasonably assured, and project costs are incurred. Costs may be incurred before we have persuasive evidence of an
arrangement. In those cases, if recoverability from that arrangement is probable, the project costs are deferred and revenue
recognition is delayed.

Changes in job performance, job conditions and estimated profitability, including those arising from contract change
orders, contract penalty provisions, foreign currency exchange rate movements, changes in raw materials costs, and final
contract settlements may result in revisions to estimates of revenue, costs and income and are recognized in the period in
which the revisions are determined. Provisions for losses on uncompleted contracts are made in the period such losses become
known.

Inventories:

Inventories are stated at the lower of cost or market. Determining market value of inventories involves judgments and
assumptions made by us, including projecting selling prices and cost of sales. To project market value, we review recent sales
and gross profit history, existing customer orders, current contract prices, industry supply and demand, forecasted steel prices,
replacement costs, seasonal factors, general economic trends and other information, as applicable. If future market conditions
are less favorable than those projected by us, inventory write-downs may be required. At December 31, 2015, the inventory
balance of $30.3 million is reported net of lower of cost or market reserves totaling $8.6 million. Raw material inventories
of steel are stated at cost either on a specific identification basis or on an average cost basis. All other raw materials, as well
as supplies, are stated on an average cost basis. Finished goods are stated at cost using the first-in, first-out method of

accounting. Due to recent volatility of energy markets, it is at least reasonably possible that these lower of cost or market
reserves will materially change in the near term.

Property and Equipment:

Property and equipment are recorded at cost, and are depreciated using either the units of production method or a
straight-line method depending on the classification of the asset. Depreciation expense calculated under the units of
production method may be less than, equal to, or greater than depreciation expense calculated under the straight-line method.
We evaluate historical and projected units of production at each plant to reassess the units of production expected on an
annual basis.

We assess impairment of property and equipment whenever changes in circumstances indicate that the carrying values
of the asset group may not be recoverable. The recoverable value of long-lived assets is determined by estimating future
undiscounted cash flows using assumptions about our expected future operating performance. Estimates of future cash flows
used in the recoverability test incorporate our own assumptions about the use of the asset group and shall consider all available
evidence. Our estimates of undiscounted cash flows may differ from actual cash flow due to, among other things,
technological changes, economic conditions, or changes to our business operations. If we determine the carrying value of the
property and equipment will not be recoverable, we calculate and record an impairment loss. This analysis is performed prior
to assessing goodwill for impairment.

Due to continued difficult market conditions for our Tubular Products business, and our exploration of a sale of this
business during this difficult market, it is at least reasonably possible that property and equipment associated with the Tubular
Products business will be impaired and/or a loss on disposal incurred at some point in the future.

In conjunction with the preparation of its financial statements for the year ended December 31, 2015, the Company
determined that an impairment triggering event as defined in ASC 360-10 had occurred for the Atchison asset group included
within the Tubular Products segment due to continued operating losses and our plans to idle the facility in January 2016. The
Company performed a recoverability test for the asset group, in which the carrying value of the asset group was compared
against associated undiscounted future cash flows. This analysis determined that the undiscounted future cash flows
substantially exceeded the carrying value of the asset group; thus, the carrying value of the asset group was not impaired at
December 31, 2015.

In conjunction with the preparation of its financial statements for the quarter ended June 30, 2015, the Company
determined that an impairment triggering event as defined in ASC 360-10 had occurred for the asset group included within
the Water Transmission segment due to the impairment of its Water Transmission goodwill. The Company performed a
recoverability test for the asset group, in which the carrying value of the asset group was compared against associated
undiscounted future cash flows. This analysis determined that the undiscounted future cash flows substantially exceeded the
carrying value of the asset group; thus, the carrying value of the asset group was not impaired at June 30, 2015. Subsequent
to June 30, 2015, no triggering events for the Water Transmission asset group have occurred, and therefore a quantitative
recoverability test for this asset group was not performed at December 31, 2015.

Business Combinations and Valuation of Goodwill and Other Acquired Intangible Assets:

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible
assets acquired based on their estimated fair values. Goodwill is recorded for the excess of the fair value of purchase
consideration over the fair values of these identifiable assets and liabilities. Such valuations require management to make
significant estimates and assumptions, especially with respect to intangible assets. Contingent consideration is calculated and
recorded at the date of the acquisition. During the measurement period, which does not exceed one year from the acquisition
date, we may record adjustments to the assets acquired and liabilities assumed as a result of information received regarding
the valuation of assets and liabilities after the acquisition date, with the corresponding offset to goodwill. Upon the conclusion
of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill is reviewed for impairment annually at December 31 or whenever events occur or circumstances change that
indicate goodwill may be impaired. Goodwill is tested for impairment at the reporting unit level. A reporting unit is an
operating segment or one level below an operating segment (also known as a component). Our reporting units are equivalent
to our operating segments as the individual components meet the criteria for aggregation.

Fair value of goodwill is first evaluated under a qualitative approach which takes into account industry and market
conditions, cost factors, overall financial performance, and other relevant entity specific events and changes. In the evaluation

of our operating segments, we look at the long-term prospects for the reporting units and recognize that current performance
may not be the best indicator of future prospects or value, which requires management judgment. If this analysis determines
that it is more likely than not that the fair value of goodwill is above its carrying value, no further analysis is required.
Alternatively, we may choose to unconditionally bypass the qualitative analysis in favor of a two-step quantitative impairment
test.

The first step of this analysis calculates the business enterprise value of the reporting unit by using a combination of
income and market approaches. The income approach is based upon projected future after-tax cash flows discounted to
present value using factors that consider the timing and risk associated with the future after-tax cash flows. The market
approach is based upon historical and/or forward-looking measures using multiples of revenue or earnings before interest,
tax, depreciation, and amortization (“EBITDA”). We utilize a weighted average of the income and market approaches, with
a heavier weighting on the income approach because of the relatively limited number of direct comparable entities for which
relevant multiples are available. If the carrying value of the reporting unit exceeds its calculated enterprise value, then the
Company continues to assess the fair value of individual assets and liabilities, other than goodwill. The difference between
the reporting unit enterprise value and the fair value of its identifiable net assets is the implied fair value of the reporting
unit’s goodwill. A goodwill impairment loss is recorded for the difference between the implied fair value and its carrying
value.

Goodwill of $4.4 million related to the sale of the Company’s discontinued OCTG business in March 2014 was written

off as part of the loss on sale of business.

Goodwill related to the Company’s Tubular Products Group of $16.1 million was evaluated using a quantitative
impairment test as of December 31, 2014. We concluded that there was no implied fair value of the Tubular Products Group
goodwill and that it should be completely written off as of December 31, 2014.

Goodwill related to the Company’s Water Transmission Group of $5.3 million was evaluated using a quantitative
impairment test as of June 30, 2015, due to declining Water Transmission market conditions. We concluded that there was
no implied fair value of the Water Transmission Group goodwill and that it should be completely written off as of June 30,
2015. As of December 31, 2015, we have no goodwill assets.

Stock-based Compensation:

We recognize the compensation cost of employee and director services received in exchange for awards of equity
instruments based on the grant date estimated fair value of the awards. Share-based compensation cost is recognized over the
period during which the employee or director is required to provide service in exchange for the award, and as forfeitures
occur, the associated compensation cost recognized to date is reversed.

We estimate the fair value of Restricted Stock Units (“RSUs”) and Performance Stock Awards (“PSAs”) using the
value of the Company’s stock on the date of grant, with the exception of market-based PSAs, for which a Monte Carlo
simulation model is used. The Monte Carlo simulation model calculates many potential outcomes for an award and estimates
fair value based on the most likely outcome.

Income Taxes:

We account for income taxes using an asset and liability approach that requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial
statements or tax returns. Valuation allowances are established when necessary to reduce deferred income tax assets to the
amount expected to be realized. The determination of our provision for income taxes requires significant judgment, the use
of estimates and the interpretation and application of complex tax laws. Our provision for income taxes primarily reflects a
combination of income earned and taxed in the various United States federal and state and, to a lesser extent, foreign
jurisdictions. Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items,
accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and our change in the mix of
earnings from these taxing jurisdictions all affect the overall effective tax rate.

We record tax reserves for federal, state, local and international exposures relating to periods subject to audit. The
development of reserves for these exposures requires judgments about tax issues, potential outcomes and timing, and is a
subjective estimate. We assess our tax positions and record tax benefits for all years subject to examination based upon
management’s evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions
where it is more-likely-than-not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with

a greater than 50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant
information. For those tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit
has been recognized in the consolidated financial statements.

Allowance for Doubtful Accounts:

We maintain allowances for estimated losses resulting from the inability of our customers to make required payments
based on historical experience and management’s judgment. The extension and revision of credit is established by obtaining
credit rating reports or financial information on the customer. An allowance is recorded based on a variety of factors,
including our historical collection experience and our historical product quality claims. At least monthly, we review past due
balances to identify the reasons for non-payment. We will write down or write off a receivable account once the account is
deemed uncollectible for reasons such as customer quality claims, a contract dispute, deterioration in the customer’s financial
position, a bankruptcy filing or other events. We believe the reported allowances at December 31, 2015 are adequate. If the
customer’s financial conditions were to deteriorate resulting in their inability to make payments, additional allowances may
need to be recorded which would result in additional expense being recorded for the period in which such determination was
made.

Results of Operations

The following table sets forth, for the periods indicated, certain financial information regarding costs and expenses
from continuing operations expressed in dollars (in thousands) and as a percentage of total net sales from continuing
operations and net sales of our business segments.

Year Ended
December 31, 2015

Year Ended
December 31, 2014

Year Ended
December 31, 2013

% of Net
Sales

Net sales:

Water transmission .................... $
Tubular products ........................
Total net sales ................................
Cost of sales ..................................
Gross profit (loss)...................

173,160
63,448
236,608
249,233
(12,625)

73.2 % $
26.8
100.0
105.3
(5.3 )

238,545
164,753
403,298
362,722
40,576

59.1 % $ 226,427
133,018
40.9
359,445
100.0
299,209
89.9
60,236
10.1

Selling, general and

administrative expenses .............
Impairment of goodwill .................
Operating (loss) income ................
Other income (expense) .............
Interest income ..........................
Interest expense .........................
Income (loss) before income taxes
Income tax (benefit) expense ........

Income (loss) from

22,303
5,282
(40,210)
88
173
(1,390)
(41,339)
(11,951)

9.5
2.2
(17.0 )
0.0
0.1
(0.6 )
(17.5 )
(5.1 )

24,316
16,066
194
108
466
(2,290)
(1,522)
4,651

6.0
4.0
0.1
0.0
0.1
(0.6)
(0.4)
1.1

22,701
-
37,535
(289)
409
(3,621)
34,034
12,358

63.0 %
37.0
100.0
83.2
16.8

6.3
0.0
10.5
(0.1 )
0.1
(1.0 )
9.5
3.5

continuing operations...........

(29,388)

(12.4 )

(6,173)

(1.5)

21,676

6.0

Discontinued operations:
Loss from operations of

discontinued business .................

Impairment of fixed assets ........
Loss on sale of business ............
Income tax benefit .....................

Loss on discontinued operations
$

Net loss ......................................

-
-
-
-
-
(29,388)

0.0
0.0
0.0
0.0
0.0
(12.4) % $

(2,151)
-
(13,497)
(3,934)
(11,714)
(17,887)

(0.5)
0.0
(3.4)
(1.0)
(2.9)
(4.4)% $

(9,583)
(27,500)
-
(14,484)
(22,599)
(923)

Segment gross profit (loss) as a

percentage of net sales:
Water transmission ....................
Tubular products ........................

0.3 %
(20.9 )

16.6 %
0.6

(2.7 )
(7.6 )
0.0
(4.0 )
(6.3 )
(0.3) %

20.7 %
10.0

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Net sales. Net sales from continuing operations decreased by $166.7 million to $236.6 million in 2015 from $403.3
million in 2014. There were no customers accounting for 10% of net sales from continuing operations in 2015. One customer
accounted for 16% and another customer accounted for 10% of net sales from continuing operations in 2014.

Water Transmission sales decreased 27.4% to $173.2 million in 2015 from $238.5 million in 2014. The decrease in net
sales from continuing operations was due to a 16% decrease in tons produced and a 14% decrease in average selling price
per ton. The decrease in tons produced was due to reduced demand and project timing during the year compared to 2014. The
decrease in selling prices per ton was due in part to a very competitive bidding environment, and in part to a 23% decrease
in steel costs per ton. Lower material costs generally lead to lower contract values and, therefore, lower net sales as contractors
and municipalities are aware of the input costs and market conditions. The lower selling prices in 2015 were partially offset
by a change in product mix, which included more downstream fabrication work. Bidding activity, backlog and production
levels may vary significantly from period to period affecting sales volumes.

Tubular Products sales from continuing operations decreased 61.5% to $63.4 million in 2015 from $164.8 million in
2014. The sales decrease was due to a 55% decrease in tons sold from 164,600 tons to 74,000 tons and a 14% decrease in
average selling price per ton. The decrease in volume was directly related to the decreased demand for line pipe in the oil and
gas industry due to lower oil prices in 2015 compared to 2014. Energy pipe represented 58% of tons sold in 2015 compared
to 77% in 2014. Revenues from sales of energy pipe decreased 68% in 2015 compared with 2014.

Gross profit (loss). Gross profit decreased 131.1% to a $12.6 million gross loss (negative 5.3% of total net sales from
continuing operations) in 2015 from a $40.6 million gross profit (10.1% of total net sales from continuing operations) in
2014.

Water Transmission gross profit decreased 98.5% to $0.6 million (0.3% of segment net sales from continuing
operations) in 2015 from $39.6 million (16.6% of segment net sales from continuing operations) in 2014. The decrease in
gross profit was primarily due to the impact of significant competition on recent project bids and the mix of projects produced.
Another significant factor in the decrease in gross profit in 2015 was the decreased volume described above, which had a
negative effect on the fixed portion of our cost of goods sold as a percent of sales. Also, rapidly decreasing coil costs caused
us to take an additional $1.1 million of lower of cost or market inventory adjustments in 2015.

Tubular Products gross profit from continuing operations decreased to negative $13.2 million (negative 20.9% of
segment net sales from continuing operations) in 2015 from $1.0 million (0.6% of segment net sales from continuing
operations) in 2014. Gross loss in 2015 was negatively impacted by lower volume primarily due to lower demand for line
pipe, which resulted in lower selling prices. Reduced demand for line pipe reduced our steel purchases in 2015, leading to
consumption of higher cost steel inventories in 2015 production. Also contributing to the gross loss in 2015 was an additional
$0.3 million of lower of cost or market inventory adjustments and $0.5 million in severance expense related to the production
curtailment. The decrease in gross profit and gross profit as a percent of net sales from continuing operations in 2015 was
partially offset by a 20% decrease in steel coil cost per ton.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased 8.3%, to $22.3
million (9.5% of net sales from continuing operations) in 2015 from $24.3 million (6.0% of net sales from continuing
operations) in 2014. The decrease of $2.0 million compared to the prior year was primarily due to lower wages, incentive
compensation and benefits of $2.1 million and a $0.9 million reduction in travel, entertainment and other administrative
expenses, partially offset by a $0.9 million increase in professional and outside services primarily related to legal and auditing
expenses.

Impairment of goodwill. Goodwill related to the Company’s Water Transmission segment of $5.3 million was
evaluated for impairment in the second quarter of 2015 due to then current market conditions. We concluded that the business
enterprise value of the Water Transmission segment was less than its carrying amount at June 30, and engaged a consultant
to assist the Company in calculating implied fair value of goodwill for the reporting unit. As a result of that analysis, the
entire balance of Water Transmission segment goodwill was written off. In the fourth quarter of 2014, goodwill related to the
Company’s Tubular Products Group of $16.1 million was evaluated for impairment due to the significant decrease in crude
oil prices in December 2014. We concluded that the business enterprise value of the Tubular Products Group was less than
its carrying amount at December 31, and engaged a consultant to assist the Company in calculating implied fair value of
goodwill for the reporting unit. As a result of that analysis, the entire balance of Tubular Products Group goodwill was written
off in 2014.

Interest expense. Interest expense decreased to $1.4 million in 2015 from $2.3 million in 2014. The decrease was due
to lower average borrowings and lower capital lease balances in 2015 compared to 2014, and the payoff of our high interest
bearing Term Notes in June 2014. Interest expense in 2015 included the write-off of unamortized financing costs totaling
$0.4 million associated with the termination of a bank line of credit agreement.

Income taxes. The tax benefit from continuing operations was $12.0 million in 2015, an effective tax benefit rate of
28.9%. The effective tax rate for 2015 included the recognition of $2.5 million of research and development (R&D) tax
credits for 2014 based on a study completed in 2015. Additionally in 2015, after considering the guidance for accounting for
income taxes, and weighing the positive and negative evidence including our recent history of cumulative losses, we recorded
a $5.2 million valuation allowance on a portion of our deferred tax assets, primarily related to federal and state tax credits
and state net operating loss carry forwards. Another factor reducing the effective tax benefit rate in 2015 was the $5.3 million
impairment of Water Transmission goodwill we recorded, which is not deductible for tax purposes.

Despite a loss before income taxes of $1.5 million for continuing operations in 2014, income tax expense from
continuing operations was $4.7 million. The effective income tax rate for 2014 was negatively affected by the $16.1 million
impairment of Tubular Products goodwill we recorded, which is not deductible for income tax purposes; therefore, we did
not record any tax benefit for the charge.

Our effective income tax rate can change significantly depending on the relationship of permanent income tax
deductions and tax credits to pre-tax income or loss. In 2015, the impact of the recognition of R&D tax credits increased the
effective benefit rate, while the non-deductibility of expense related to the impairment of goodwill and deferred tax valuation
allowances recorded decreased the effective benefit rate. Accordingly, the comparison of effective rates between periods is
not necessarily meaningful in all situations.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Net sales. Net sales from continuing operations increased by $43.9 million to $403.3 million in 2014 from $359.4
million in 2013. One customer accounted for 16% and another customer accounted for 10% of net sales from continuing
operations in 2014. One customer also accounted for 15% of net sales from continuing operations in 2013.

Water Transmission sales increased 5.4% to $238.5 million in 2014 from $226.4 million in 2013. The increase in net
sales from continuing operations was due to a 36% increase in tons produced partially offset by a 23% decrease in average
selling price per ton. The increase in tons produced was partially due to the addition of Permalok in 2014 as well as the timing
of production and mix of projects produced during the year compared to 2013. Projects produced in 2013 required more
fabrication, which increased the average selling price per ton in 2013 compared to 2014. In addition, a 12% decrease in
materials cost per ton also led to a decrease in average selling prices. Lower material costs generally lead to lower contract
values, and therefore lower net sales as contractors and municipalities are aware of the input costs and market conditions.
Bidding activity, backlog and production levels may vary significantly from period to period affecting sales volumes.

Tubular Products sales from continuing operations increased 23.9% to $164.8 million in 2014 from $133.0 million in
2013. The sales increase was due to a 24% increase in tons sold from 132,800 tons to 164,600 tons. The increase in volume
is directly related to our capacity expansion project in Atchison. Selling prices per ton in 2014 were relatively even with
2013. Energy pipe represented 77% of tons sold in 2014 compared to 71% for the same period of 2013. The selling price for
energy pipe decreased 3% in 2014 compared with 2013.

Gross profit. Gross profit decreased 32.6% to $40.6 million (10.1% of total net sales from continuing operations) in

2014 from $60.2 million (16.8% of total net sales from continuing operations) in 2013.

Water Transmission gross profit decreased 15.7% to $39.6 million (16.6% of segment net sales from continuing
operations) in 2014 from $47.0 million (20.7% of segment net sales from continuing operations) in 2013. The decrease in
gross profit was primarily due to the decrease in selling price per ton, partially offset by the increase in tons produced as
discussed above. We have experienced significant competition on recent project bids, which has also contributed to decreased
gross profit. The mix of projects produced also contributed to the decrease in gross profit. The decrease was partially offset
by our cost reduction initiatives, which have reduced overhead costs and labor hours per ton, as well as improvements in
quality. Also partially offsetting the above was a $2.6 million reduction of cost of sales primarily related to insurance
settlements, which reimbursed the Company for past costs incurred for Portland Harbor Site. (See Item 3, Legal proceedings,
and Note 13 of the accompanying consolidated financial statements for additional information on the settlements).

Tubular Products gross profit from continuing operations decreased 92.7% to $1.0 million (0.6% of segment net sales
from continuing operations) in 2014 from $13.3 million (10.0% of segment net sales from continuing operations) in 2013.
The decrease in gross profit was primarily the result of a 7% increase in steel costs per ton while total average selling prices
remained flat. As steel comprises 85% to 90% of Tubular Products costs, this had a significant negative impact on gross
profit. Increased imports of energy pipe, low natural gas prices, and volatility of steel prices have negatively impacted gross
profits, particularly in energy pipe. In addition, there was a $2.5 million lower of cost or market inventory adjustment recorded
during 2014, compared to a $2.2 million lower of cost or market inventory adjustment recorded during 2013. The decrease
was partially offset by cost reduction initiatives successfully implemented at our Atchison facility.

Selling, general and administrative expenses. Selling, general and administrative expenses increased 7.1%, to $24.3
million (6.0% of net sales from continuing operations) in 2014 from $22.7 million (6.3% of net sales from continuing
operations) in 2013. The increase of $1.6 million compared to the prior year was primarily due to additional selling, general
and administrative expenses included with the Permalok acquisition.

Impairment of goodwill. Goodwill related to the Company’s Tubular Products Group of $16.1 million was evaluated
for impairment due to the significant decrease in crude oil prices in December 2014. As a result of that analysis, the entire
balance of Tubular Products Group goodwill was written off in 2014. There were no goodwill impairment charges recorded
in 2013.

Interest expense. Interest expense decreased to $2.3 million in 2014 from $3.6 million in 2013. The decrease was due
to the payoff of our high interest bearing Term Notes in June 2014, and lower borrowings on our line of credit in 2014
compared to 2013.

Income taxes. Despite a loss before income taxes of $1.5 million for continuing operations in 2014, income tax expense
from continuing operations is $4.7 million. This compares to income tax expense of $12.4 million, or 36.3% of income before
income taxes from continuing operations of $34.0 million in 2013. The effective income tax rate for 2014 was negatively
impacted by the $16.1 million goodwill impairment charge we recorded, which is not deductible for income tax purposes;
therefore, we did not record any tax benefit for the charge. Our effective income tax rate can change significantly depending
on the relationship of permanent income tax deductions and tax credits to pre-tax income or loss. Accordingly, the comparison
of effective rates between periods is not necessarily meaningful in all situations.

Liquidity and Capital Resources

Sources and Uses of Cash

Our principal sources of liquidity generally include operating cash flows and our line of credit. From time to time our
long-term capital needs may be met through the issuance of long-term debt or additional equity. Our principal uses of liquidity
generally include capital expenditures, working capital and debt service. Information regarding our cash flows for the twelve
months ended December 31, 2015 is presented in our consolidated statements of cash flows contained in this 2015 Form 10-
K, and is further discussed below. The 2014 and 2013 consolidated statements of cash flows include discontinued operations.

As of December 31, 2015, our working capital (current assets minus current liabilities) was $93.7 million as compared
to $165.7 million as of December 31, 2014. The primary reasons for the decrease in working capital were decreases in trade
and other receivables and inventories due to lower sales, billings and production in 2015 compared to 2014, as well as
additions to inventory lower of cost or market reserves during 2015. In addition, our Tubular Products accounts receivable
and inventories have decreased following the production curtailment at the Atchison plant, which began in April 2015. Cash
and cash equivalents totaled $10.3 million as of December 31, 2015 and $0.5 million as of December 31, 2014. There were
no borrowings under our line of credit agreement at December 31, 2015 compared to borrowings of $45.6 million at
December 31, 2014.

Fluctuations in our working capital accounts result from timing differences between production, shipment, invoicing,
and collection, as well as changes in levels of production and costs of materials. We typically have a relatively large
investment in working capital, as we generally pay for materials, labor, and other production costs in the initial stages of a
project, while payments from our customers are generally received after finished product is delivered. Our revenues in the
Water Transmission segment are recognized on a percentage-of-completion method; therefore, cash receipts typically occur
subsequent to when revenue is recognized and the elapsed time between when revenue is recorded and when cash is received
can be significant. As such, our payment cycle is a significantly shorter interval than our collection cycle, although the effect
of this difference in the cycles may vary by project, and from period to period.

Net Cash Provided by Operating Activities

Net cash provided by operating activities in 2015 was $55.2 million. This was primarily the result of our net loss
adjusted for charges of $9.1 million for depreciation and $5.3 million for impairment of goodwill, and the net positive cash
flow effect of a decrease in our working capital of $72.0 million. The decrease in working capital was primarily driven by
decreases in accounts receivable of $26.8 million and inventories of $43.7 million, partially offset by a net decrease in
accounts payable and accrued liabilities of $5.2 million.

Net cash provided by operating activities in 2014 was $35.0 million. This was primarily the result of our net loss,
adjusted by noncash charges of $16.1 million for goodwill impairment, $13.6 million for depreciation and the positive cash
flow effect of a decrease in working capital.

Net cash provided by operating activities in 2013 was $20.1 million. This was primarily the result of our net loss,
adjusted by noncash charges of $13.3 million for depreciation and $27.5 million for fixed asset impairment charges, partially
offset by an overall increase in working capital at December 31, 2013 compared to December 31, 2012.

Net Cash (Used in) Provided by Investing Activities

Net cash provided by investing activities in 2015 was $3.1 million. Capital expenditures of $8.5 million in 2015 were
primarily standard capital replacement. Offsetting the cash used for additions to property plant and equipment was $4.3
million provided by an escrow that was released to the Company in April 2015 related to the March 2014 disposition of the
OCTG business and $7.2 million collected on a note receivable. Capital expenditures in 2016 are expected to be
approximately $4 million to $5 million for standard capital replacement.

Net cash provided by investing activities in 2014 was $15.5 million, primarily due to net proceeds of $29.8 million
received from the sale of substantially all of the assets and liabilities associated with the OCTG business, partially offset by
capital expenditures of $14.3 million. Capital expenditures in 2014 included $2.5 million for the replacement of the existing
front end of our 16 inch mill and $1.8 million for a new hydro tester at our Atchison plant. Net cash used for investing
activities for discontinued operations in 2014 was not material.

Net cash used in investing activities in 2013 was $48.3 million, primarily related to capital expenditures of $28.4
million for previously disclosed strategic investment projects, $15.7 million for the acquisition of Permalok, and funds
disbursed under a notes receivable arrangement of $5.7 million. Previously disclosed strategic investment projects include
the installation of an additional horizontal accumulator and hydrotester, and the replacement of the existing front end of the
16 inch mill at our Atchison plant, as well as expansion at our Saginaw plant, which will enable production of pipe up to 126
inches in diameter as well as increase overall capacity. Expenditures for these strategic investments during 2013 included
$7.1 million for the replacement of the existing front end of the 16 inch mill and $1.7 million for a new hydrotester at our
Atchison plant, and $9.2 million for expansion projects at our Saginaw plant. This was partially offset by proceeds received
from the sale of property and equipment of $1.7 million.

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities in 2015 was $48.5 million, which resulted primarily from net repayments under

our line of credit and capital lease payments totaling $47.8 million.

Net cash used in financing activities in 2014 was $50.6 million, which resulted primarily from net repayments under

our Credit Agreement, long-term debt and capital lease payments totaling $49.9 million.

Net cash provided by financing activities in 2013 was $28.7 million, which resulted primarily from net borrowings of

$40.4 million under our Credit Agreement, offset by long-term debt and capital lease payments of $11.0 million.

We anticipate that our existing cash and cash equivalents, cash flows expected to be generated by operations, and
amounts available under our Credit Agreement will be adequate to fund our working capital and capital expenditure
requirements for at least the next twelve months. To the extent necessary, we may also satisfy capital requirements through
additional bank borrowings, senior notes, term notes, subordinated debt, and capital and operating leases, if such resources
are available on satisfactory terms. We have from time to time evaluated and continue to evaluate opportunities for
acquisitions and expansion. Any such transactions, if consummated, may use a portion of our working capital or necessitate
additional bank borrowings or other sources of funding.

Borrowings on Line of Credit

On October 26, 2015, we entered into a Loan and Security Agreement (the “Credit Agreement”) with Bank of America,
N.A. The Agreement expires on October 25, 2018 and provides for revolving loans and letters of credit up to the maximum
principal amount (the Revolver Commitment) of $60 million, subject to a borrowing base. We have the ability to increase
the Revolver Commitment to $100 million, subject to the provisions of the Credit Agreement. As of December 31, 2015, we
had no outstanding borrowings, and $2.1 million of outstanding letters of credit.

The borrowing base is calculated by applying various advance rates to eligible accounts receivable, costs and expected
earnings in excess of billings, inventories, and fixed assets, subject to various exclusions, adjustments, and sublimits by asset
class. Additionally, the Agreement effectively limits availability under the borrowing base during times when our Fixed
Charge Coverage Ratio, as defined in the Credit Agreement, is not met for the previous 12-month period. As of December
31, 2015, the Fixed Charge Coverage Ratio was not met, and therefore the availability limit applied. Including the effect of
this limit, we had additional borrowing capacity of $23.2 million, net of outstanding letters of credit, under the Agreement at
December 31, 2015. Based on our business plan and forecasts of operations, we expect to have sufficient credit availability
to support our operations in 2016.

In conjunction with entering into the Credit Agreement, the Company terminated the Second Amended and Restated
Credit Agreement dated as of October 24, 2012. The Company incurred incremental interest expense of approximately $0.4
million during the fourth quarter of 2015 related to the write-off of unamortized financing costs associated with the terminated
agreement.

Capital Lease Obligations

We had a total of $1.1 million in capital lease obligations outstanding at December 31, 2015. The weighted average
interest rate on all of our capital leases was 4.87%. Our capital leases are for certain equipment used in the manufacturing
process.

Contractual Obligations, Commitments and Off-Balance Sheet Arrangements

The following table sets forth our scheduled contractual commitments that will affect our future liquidity as of

December 31, 2015 (in thousands):

Payments due by period

Total

Less than
1 year

1 - 3 years

3 - 5 years

More than
5 years

Capital leases .................................... $
Operating leases ................................
Contingent consideration ...................
Interest payments (1) .........................
Total obligations ............................... $

1,058 $
9,913
2,974
92
14,037 $

340 $
2,664
1,211
41
4,256 $

448 $
3,734
1,763
41
5,986 $

270 $
1,683
-
10
1,963 $

-
1,832
-
-
1,832

1)
2)

These amounts represent estimated future interest payments related to our capitalized leases.
Excludes liabilities associated with our pension and our deferred compensation plan as we are unable to reasonably
estimate the ultimate amount or timing of settlement of such obligations. As of December 31, 2015, liabilities
associated with our pension and deferred compensation plan are $1.9 million and $6.4 million, respectively and are
recorded in pension and other long-term liabilities within the consolidated balance sheets.
Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits
at December 31, 2015, we are unable to make reasonably reliable estimates of the period of cash settlement with the
respective taxing authorities. Therefore, approximately $4.9 million in uncertain tax positions has been excluded
from the contractual table above. For further information, see Note 14 in Part II—Item 8, “Financial Statements and
Supplementary Data” of the consolidated financial statements.

We also have entered into stand-by letters of credit that total approximately $2.1 million as of December 31, 2015. The
stand-by letters of credit relate to workers’ compensation insurance. Based on the nature of these arrangements and our
historical experience, we do not expect to make any material payments under these arrangements.

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future material effect

on our financial position, results of operations or cash flows.

Adoption of New Accounting Pronouncements

The Company adopted ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” prospectively in the fourth
quarter of 2015, and prior periods were not retrospectively adjusted. For further information about our adoption of new
accounting pronouncements, see Note 1 in Part II – Item 8, “Financial Statements and Supplementary Data” of the
consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The primary market risks affecting our business relate to our exposure to commodity risk, interest rate risk, and foreign

currency exchange rate risk.

Commodity Risk

Certain materials we use in our business are classified as commodities traded in the worldwide markets, of which the
most significant commodity is steel, used in the manufacturing of pipe. We do not hedge our commodity risk and do not enter
into any transactions in commodities for trading purposes. The impact of volatility in steel prices to each of our operating
segments varies significantly. This volatility can significantly affect our gross profit. Although we seek to recover increases
in steel prices through price increases in our products, we have not always been successful.

Steel comprises approximately 25% to 35% of Water Transmission project costs. As steel represents a substantial
portion of our cost of sales, we generally place orders for steel as soon as possible after a project is awarded. Most projects
are awarded within thirty to ninety days of the bid date, and thus we are subject to some market fluctuations involving steel.
In order to minimize our risk exposure to steel volatility, we typically submit bids based on general assumptions of the price
of steel when we would receive a purchase order or contract. In addition, we typically order steel at the beginning of the
project in order to minimize our exposure to fluctuations in steel prices.

By contrast, steel comprises approximately 85% to 90% of total product costs for Tubular Products. Historically, we
have been able to adjust our selling prices to reflect fluctuations in our cost of steel; however, we are exposed to volatile steel
prices in those instances in which we carry steel inventory that is not already assigned to sales orders. As a result of our
decision to idle our Tubular Products facility, our steel inventories are significantly reduced from normal operating levels
and our steel commodity price exposure at December 31, 2015 is not material.

Interest Rate Risk

At December 31, 2015, we had no debt outstanding accruing interest at a variable rate as compared to $45.6 million
at December 31, 2014. Our capital leases bear fixed rates of interest. Assuming average interest rates and borrowings on
variable rate debt, a hypothetical 1.0%, or 100 basis point, change in interest rates would not have a material impact on our
interest expense in either year.

Foreign Currency Exchange Rate Risk

We transact business in various foreign countries, and, from time to time, settle our transactions in foreign currencies.
We have established a program that utilizes foreign currency forward contracts to offset the risk associated with the effects
of certain foreign currency exposures, typically arising from sales contracts denominated in Canadian currency. These
contracts are not used for trading or for speculative purposes. Foreign currency forward contracts are consistent with our
strategy for financial risk management and have maturities generally less than one year. There were no derivative contracts
not designated as hedges as of December 31, 2015 and 2014. The total notional amount of these derivative contracts at
December 31, 2015 and 2014 was $6.3 million (CAD$8.7 million) and $1.3 million (CAD$1.5 million), respectively At
December 31, 2015, all of the Company’s contracts had a remaining maturity of less than 12 months except one contract with
a notional amount of $4.4 million (CAD$5.9 million) which had a remaining maturity of 15 months.

A hypothetical 10% change in the Canadian Dollar foreign currency exchange rate would not have a material impact

on our reported 2015 or 2014 net sales from continuing operations.

Item 8.

Financial Statements and Supplementary Data

The consolidated financial statements required by this item are included on pages F-1 to F-34 at the end of this 2015
Form 10-K. The financial statement schedule required by this item is included on page S-1. The quarterly information
required by this item is included under the caption Quarterly Data (unaudited) in Note 19 of the Notes to Consolidated
Financial Statements in Part II—Item 8, “Financial Statements and Supplementary Data” of this 2015 Form 10-K.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (“Exchange Act”)) are designed to provide reasonable assurance that information required to be disclosed
in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management,
including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions
regarding required disclosures.

Our management, with the participation of the CEO and CFO, evaluated the effectiveness of the Company’s disclosure
controls and procedures as of December 31, 2015. Based on their evaluation, as of December 31, 2015, the Company’s CEO
and CFO have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-
15(e) under the Exchange Act) were effective to provide reasonable assurance that information required to be disclosed in
reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management,
including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles
(“GAAP”). Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide
reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of
management and our directors; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an
assessment of our internal control over financial reporting as of December 31, 2015. In making this assessment, we used the
criteria set forth in “Internal Control-Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Based on this evaluation, management concluded that the Company’s internal control
over financial reporting was effective as of December 31, 2015.

Remediation of Prior Material Weaknesses

As previously disclosed in our Form 10-Q for the quarter ended September 30, 2015, we have remediated the previously

reported material weaknesses in our internal control over financial reporting related to accounting for goodwill.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 has been audited
by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears
herein.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December

31, 2015 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Item 9B. Other Information

None.

Item 10.

Directors, Executive Officers and Corporate Governance

Directors, Executive Officers, Promoters and Control Persons

PART III

The information required by Paragraph (a), and Paragraphs (c) through (g) of Item 401 of Regulation S-K (except for
information required by Paragraph (e) of that Item to the extent the required information pertains to our executive officers)
and Item 405 of Regulation S-K is hereby incorporated by reference from our definitive proxy statement for the 2016 Annual
Meeting of Shareholders under the captions Election of Directors and Section 16(A) Beneficial Ownership Reporting
Compliance.

Name
Scott Montross ..............
Robin Gantt .................
Martin Dana ..................
William Smith ..............
Vicki Taylor ..................

Age
51
44
50
60
50

Current Position with Company
Director, President and Chief Executive Officer
Senior Vice President, Chief Financial Officer and Corporate Secretary
Executive Vice President, Sales and Marketing
Executive Vice President, Operations
Vice President, Human Resources

Scott Montross has served as our Director, President and CEO since January 1, 2013. Mr. Montross joined the Company
in May, 2011 and served as our Executive Vice President and Chief Operating Officer. Mr. Montross has served in Senior
Vice President level positions since 2003 with commercial, operational, and planning responsibilities and has spent a total of
24 years in the steel industry prior to joining the Company. Mr. Montross previously served as the Executive Vice President
of the Flat Products Group for Evraz Inc. NA's Oregon Steel Division from 2010 to 2011, as the Vice President and General
Manager of Evraz, Inc. NA from 2007 to 2010, as the Vice President of Marketing and Sales for Oregon Steel Mills, Inc.
from 2003 to 2006, and as the Vice President of Marketing and Sales for National Steel Corporation from 2002 to 2003.

Robin Gantt has served as our Senior Vice President and CFO since January 2011 and Corporate Secretary since June
2015, after joining the Company in July 2010. Ms. Gantt served as the CFO and Treasurer of Evraz Inc. NA from September
2007 through January 2010. From July 2005 through August 2007, Ms. Gantt served as Corporate Controller of Oregon Steel
Mills, Inc., which became Evraz Inc. NA after its acquisition by Evraz Group SA in January 2007. Ms. Gantt joined Oregon
Steel Mills, Inc. in 1999, holding several finance and accounting positions of increasing responsibility before being appointed
to Controller in 2005.

Martin Dana has served as our Executive Vice President, Sales and Marketing since April 2014. Previous positions at
the Company held by Mr. Dana include Executive Vice President, Tubular Products Group, Vice President of Operations for
Tubular Products, Vice President of Sales and Marketing for the Water Transmission Group, and other management and Vice
President level positions since joining the Company in 1999. Prior to joining the Company, Mr. Dana held positions at Oregon
Steel Mills.

William Smith has served as our Executive Vice President, Operations since April 2014. Prior to that, Mr. Smith served
as our Executive Vice President, Water Transmission Group, and as Vice President of Operations for Water Transmission.
Prior to joining the Company in 2010, Mr. Smith spent 14 years with Ameron International Corporation, holding several key
positions including President, Water Transmission. A 39-year veteran of the steel pipe business, Mr. Smith has held positions
with United Concrete Pipe, Thompson Steel Pipe and LB Foster.

Vicki Taylor has served as our Vice President of Human Resources since November 2014. Prior to joining the Company
in 2014, Ms. Taylor spent a year as an advocate for CASA, an organization dedicated to helping children, along with assisting
other nonprofits with their human resource needs. Prior to that, Ms. Taylor served seven years as Vigor Industrial’s Senior
Vice President of Human Resources. Vigor specializes in ship repair, marine fabrication, industrial coating and specialty
machine construction and repair.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics for all employees and a Code of Ethics for Senior Financial
Officers. Copies can be found on our website at www.nwpipe.com in the Corporate Governance area of the Investor Relations
section or by writing to Northwest Pipe Company, attn. Corporate Secretary, 5721 SE Columbia Way, Suite 200, Vancouver,
WA 98661. None of the material on our website is part of this 2015 Form 10-K. If there is any waiver from any provision of

either the Code of Business Conduct and Ethics or the Code of Ethics for Senior Financial Officers, we will disclose the
nature of such waiver on our website or in a Current Report on Form 8-K.

Corporate Governance

The information required by Items 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is hereby incorporated by reference
from our definitive proxy statement for the 2016 Annual Meeting of Shareholders under the captions Nominating and
Governance Committee; Nominations by Shareholders and Audit Committee.

Item 11.

Executive Compensation

The information required by this Item is hereby incorporated by reference from our definitive proxy statement for the
2016 Annual Meeting of Shareholders under the captions Executive Compensation, Compensation Committee Interlocks and
Insider Participation, and Compensation Committee Report.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table provides information as of December 31, 2015, with respect to the shares of our common stock

that may be issued under our existing equity compensation plans.

Number of
securities to
be issued upon
exercise
of outstanding
options, warrants
and rights
(a) (1)

Weighted-
average
exercise price of
outstanding
options, warrants
and rights
(b) (2)

Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column
(a))
(c)

Plan Category
Equity compensation plans approved by security

holders ........................................................................

155,852

25.21

690,889

Equity compensation plans not approved by security

holders (3) ...................................................................
Total ...............................................................................

-
155,852

-
25.21

-
690,889

(1) Consists of our 2007 Stock Incentive Plan and the 1995 Stock Option Plan for Nonemployee directors. Approximately
110,000 Performance Stock Awards (“PSAs”) have been included at a target level. The vesting of these awards is
subject to the achievement of specific performance-based or market-based conditions, and the actual number of
common shares that will ultimately be issued will be determined by multiplying this number of PSAs by a payout
percentage ranging from 0% to 200%.
The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock units
and PSAs, since recipients are not required to pay an exercise price to receive the shares subject to these awards.

(2)

(3) We do not have any equity compensation plans or arrangements that have not been approved by shareholders.

The information required by Item 403 of Regulation S-K is included in our definitive proxy statement for the 2016
Annual Meeting of Shareholders under the caption Stock Owned by Management and Principal Shareholders and is
incorporated herein by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is hereby incorporated by reference from our definitive proxy statement for the
2016 Annual Meeting of Shareholders under the captions Certain Relationships and Related Transactions and Election of
Directors.

Item 14.

Principal Accountant Fees and Services

The information required by this Item is hereby incorporated by reference from our definitive proxy statement for the

2016 Annual Meeting of Shareholders under the caption Independent Registered Public Accounting Firm.

Item 15.

Exhibits and Financial Statement Schedule

(a) (1) Consolidated Financial Statements

PART IV

The consolidated financial statements, together with the reports thereon of PricewaterhouseCoopers LLP are included

on the pages indicated below.

Reports of Independent Registered Public Accounting Firm ...........................................................................................

Page
F-1

Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013 ..................................

F-2

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2015, 2014 and 2013 ...

F-3

Consolidated Balance Sheets as of December 31, 2015 and 2014 ...................................................................................

F-4

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2015, 2014 and 2013 ..................

F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013 .................................

F-6

Notes to Consolidated Financial Statements ....................................................................................................................

F-7

(a) (2) Financial Statement Schedule

The following schedule is filed herewith:

Schedule II Valuation and Qualifying Accounts ........................................................................................................

Page
S-1

Schedules not listed above have been omitted because the information required to be set forth therein is not applicable

or is included in the consolidated financial statements or notes thereto.

(a) (3) Exhibits included herein:

Exhibit
Number Description

2.1

3.1

3.2

Asset Purchase Agreement by and between Northwest Pipe Company and Centric Pipe, LLC, incorporated by reference to the
Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on April 1, 2014.

Second Restated Articles of Incorporation, incorporated by reference to Exhibits to the Company’s Registration Statement on
Form S-1, as amended, effective November 30, 1995, Commission Registration No. 33-97308 (“the S-1”)

First Amendment to Second Restated Articles of Incorporation, incorporated by reference to Exhibits to the Company’s
Registration Statement on Form S-3, as amended, effective November 1, 2006, Commission Registration No. 333-137923
(“the S-3”)

3.3

Second Amended and Restated Bylaws, incorporated by reference to Exhibits to the S-1

3.4

4.1

First Amendment to Second Amended and Restated Bylaws of Northwest Pipe Company, incorporated by reference to
Exhibits to the Company’s Report on Form 8-K as filed with the Securities and Exchange Commission on November 19, 2007

Amended and Restated Rights Agreement, dated as of June 18, 2009, between the Company and Mellon Investor Services
LLC as Rights Agent, incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the Securities
and Exchange Commission on June 19, 2009

10.1

1995 Stock Option Plan for Nonemployee Directors, incorporated by reference to Exhibits to the S-1*

10.2

10.3

Northwest Pipe NQ Retirement Savings Plan, dated July 1, 1999, incorporated by reference to Exhibits to the Company’s
Quarterly Report Form 10-Q for the quarter ended June 30, 2000, as filed with the Securities and Exchange Commission on
August 11, 2000*

Amended and Restated Note Purchase and Private Shelf Agreement dated as of May 31, 2007 by and among Northwest Pipe
Company, Prudential Investment Management, Prudential Retirement Insurance and Annuity Company and Prudential
Insurance Company of America and certain affiliates, incorporated by reference to the Company’s Current Report on Form 8-
K, as filed with the Securities and Exchange Commission on June 6, 2007

10.4

Northwest Pipe Company 2007 Stock Incentive Plan, incorporated by reference to Appendix A to the Company’s Definitive
Proxy Statement dated April 20, 2007, as filed with the Securities and Exchange Commission on April 26, 2007*

10.5

10.6

10.7

10.8

10.9

First Amendment and Limited Waiver to the Amended and Restated Note Purchase and Private Shelf Agreement dated as of
October 14, 2008 by and among Northwest Pipe Company and Prudential Investment Management, Inc. and certain affiliates
(certain schedules to the Agreement have been omitted), incorporated by reference to the Company’s Current Report on Form
8-K, as filed with the Securities and Exchange Commission on October 20, 2008

Third Amendment to the Amended and Restated Note Purchase and Private Shelf Agreement dated as of February 12, 2010
by and among Northwest Pipe Company and Prudential Investment Management, Inc. and certain affiliates, incorporated by
reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on February
19, 2010

Fourth Amendment to the Amended and Restated Note Purchase and Private Shelf Agreement dated as of April 15, 2010 by
and among Northwest Pipe Company and Prudential Investment Management, Inc. and certain affiliates, incorporated by
reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on April 26,
2010

Fifth Amendment and Limited Consent to the Amended and Restated Note Purchase and Private Shelf Agreement dated as of
July 23, 2010 by and among Northwest Pipe Company and Prudential Investment Management, Inc. and certain affiliates,
incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange
Commission on July 29, 2010

Sixth Amendment and Temporary Waiver to the Amended and Restated Note Purchase and Private Shelf Agreement dated as
of July 30, 2010 by and among Northwest Pipe Company and Prudential Investment Management, Inc. and certain affiliates,
incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange
Commission on August 5, 2010

Exhibit
Number
10.10

Description
Seventh Amendment and Limited Waiver to the Amended and Restated Note Purchase and Private Shelf Agreement dated as
of September 16, 2010 by and among Northwest Pipe Company and Prudential Investment Management, Inc. and certain
affiliates, incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange
Commission on October 5, 2010

10.11

Eighth Amendment and Limited Waiver to the Amended and Restated Note Purchase and Private Shelf Agreement dated as
of October 15, 2010 by and among Northwest Pipe Company and Prudential Investment Management, Inc. and certain
affiliates, incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange
Commission on October 27, 2010

10.12

Change in Control Agreement between Northwest Pipe Company and Robin Gantt dated as of April 21, 2011, incorporated
by reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on April
25, 2011

10.13

Form of grant of restricted stock units by Northwest Pipe Company to certain Named Officers, incorporated by reference to
the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on October 12, 2011*

10.14

Form of grant of performance share units by Northwest Pipe Company to certain Named Officers, incorporated by reference
to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on October 12, 2011*

10.15

10.16

10.17

10.18

10.19

10.20

Amended and Restated Credit Agreement dated October 24, 2012, by and among Northwest Pipe Company, Bank of America,
N.A., US Bank National Association, Wells Fargo Bank, National Association and Bank of the West, incorporated by
reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on October
29, 2012

Third Amended and Restated Intercreditor and Collateral Agency Agreement dated as of October 24, 2012 by and between
Northwest Pipe Company, Bank of America, N.A., US Bank National Association, Wells Fargo Bank, National Association,
Bank of the West, and Prudential Investment Management, Inc. and certain of its affiliates, incorporated by reference to the
Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on October 29, 2012

Executive Employment Agreement dated December 19, 2012 between Northwest Pipe Company and Richard A. Roman,
incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange
Commission on December 20, 2012*

Ninth Amendment to the Amended and Restated Note Purchase and Private Shelf Agreement dated as of September 16, 2010
by and among Northwest Pipe Company and Prudential Investment Management, Inc. and certain affiliates, incorporated by
reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on October
29, 2012

10.21

10.22

Exhibit
Number
10.23

10.24

10.25

Description

Change in Control Agreement between Northwest Pipe Company and William Smith dated as of October 15, 2013,
incorporated by reference to Exhibits to the Company’s Quarterly Report on Form 10-Q for the quarter ended September
30, 2013, as filed with the Securities and Exchange Commission concurrently on November 5, 2013*

Change in Control Agreement between Northwest Pipe Company and Martin Dana dated as of October 15, 2013,
incorporated by reference to Exhibits to the Company’s Quarterly Report on Form 10-Q for the quarter ended September
30, 2013, as filed with the Securities and Exchange Commission concurrently on November 5, 2013*

Northwest Pipe Company 2014 Short Term Incentive Plan, incorporated by reference to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on March 17,
2014*

10.26

Executive Employment Agreement between Northwest Pipe Company and Gary A. Stokes, incorporated by reference to
the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on April 4, 2014*

10.27

Form of Restricted Stock Unit Agreement, incorporated by reference to the Company’s Current Report on Form 8-K, as

filed with the Securities and Exchange Commission on June 4, 2014*

10.28

Form of Performance Share Award Agreement, incorporated by reference to the Company’s Current Report on Form 8-K,

as filed with the Securities and Exchange Commission on June 4, 2014*

10.29

10.30

Change in Control Agreement between Northwest Pipe Company and Scott Montross dated as of May 29, 2014,
incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange
Commission on June 4, 2014*

Northwest Pipe Company 2015 Short Term Incentive Plan dated as of February 26, 2015, incorporated by reference to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange
Commission on March 16, 2015*

10.31

Temporary Waiver Agreement (incorporated by reference to the Company’s Current Report on Form 8-K as filed with the

Securities and Exchange Commission on October 13, 2015)

10.32

Loan and Security Agreement (incorporated by reference to the Company’s Current Report on Form 8-K as filed with the

Securities and Exchange Commission on October 29, 2015)

21.1

Subsidiaries of the Registrant, filed herewith

23.1

Consent of PricewaterhouseCoopers LLP, filed herewith

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,

filed herewith

32.2

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,

filed herewith

101.INS

XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

* This exhibit constitutes a management contract or compensatory plan or arrangement.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Northwest Pipe Company

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations,
comprehensive income (loss), stockholders’ equity and cash flows present fairly, in all material respects, the financial position
of Northwest Pipe Company and its subsidiaries at December 31, 2015 and 2014, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Company's management is responsible for these financial statements and financial statement schedule, for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under
Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule and on
the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement
and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the
financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.

/s/ PricewaterhouseCoopers LLP
Portland, Oregon
March 4, 2016

F-1

NORTHWEST PIPE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

Year Ended December 31,
2014

2013

2015

Net sales ............................................................................................................... $ 236,608 $
249,233
Cost of sales .........................................................................................................
(12,625)
Gross profit (loss) .............................................................................................
22,303
Selling, general and administrative expense ........................................................
5,282
Impairment of goodwill ........................................................................................
(40,210)
Operating (loss) income ....................................................................................
88
Other income (expense) .......................................................................................
173
Interest income .....................................................................................................
(1,390)
Interest expense ....................................................................................................
(41,339)
Income (loss) before income taxes ...................................................................
(11,951)
Income tax (benefit) expense ...............................................................................
(29,388)
Income (loss) from continuing operations ........................................................

Discontinued operations:
Loss from operations of discontinued business ....................................................
Impairment of fixed assets ...................................................................................
Loss on sale of business .......................................................................................
Income tax benefit ................................................................................................
Loss on discontinued operations .......................................................................
Net loss ................................................................................................................. $

-
-
-
-
-
(29,388) $

403,298 $
362,722
40,576
24,316
16,066
194
108
466
(2,290)
(1,522)
4,651
(6,173)

(2,151)
-
(13,497)
(3,934)
(11,714)
(17,887) $

359,445
299,209
60,236
22,701
-
37,535
(289)
409
(3,621)
34,034
12,358
21,676

(9,583)
(27,500)
-
(14,484)
(22,599)
(923)

Basic earnings (loss) per share

Continuing operations ....................................................................................... $
Discontinued operations ...................................................................................
Net loss per share .............................................................................................. $

Diluted earnings (loss) per share

Continuing operations ....................................................................................... $
Discontinued operations ...................................................................................
Net loss per share assuming dilution ................................................................ $

(3.07) $
-
(3.07) $

(0.65) $
(1.23)
(1.88) $

2.29
(2.39)
(0.10)

2.27
(2.37)
(0.10)

Shares used in per share calculations:

Basic .................................................................................................................
Diluted ..............................................................................................................

9,560
9,560

9,515
9,515

9,445
9,534

The accompanying notes are an integral part of these consolidated financial statements.

F-2

NORTHWEST PIPE COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)

Year Ended December 31,
2014

2013

2015

Net loss .......................................................................................................... $

(29,388 ) $

(17,887) $

(923)

Other comprehensive income (loss):

Pension liability adjustment, net of tax .......................................................
Deferred gain on cash flow derivatives, net of tax .....................................
Other comprehensive income (loss) ...........................................................
Comprehensive income (loss) ........................................................................ $

238
57
295
(29,093 ) $

(587)
15
(572)
(18,459) $

913
99
1,012
89

The accompanying notes are an integral part of these consolidated financial statements.

F-3

NORTHWEST PIPE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except share and per share amounts)

December 31,

2015

2014

Assets

Current assets:

Cash and cash equivalents ........................................................................................... $
Trade and other receivables, less allowance for doubtful accounts of $751 and $755 .
Costs and estimated earnings in excess of billings on uncompleted contracts .............
Inventories ...................................................................................................................
Refundable income taxes .............................................................................................
Deferred income taxes .................................................................................................
Prepaid expenses and other ..........................................................................................
Total current assets ...............................................................................................
Property and equipment, net ...............................................................................................
Goodwill .............................................................................................................................
Other assets .........................................................................................................................
Total assets ........................................................................................................... $

10,309 $
27,567
42,592
29,475
3,413
-
1,923
115,279
131,848
-
12,253
259,380 $

527
58,310
45,847
72,779
5,031
5,487
7,258
195,239
132,595
5,282
18,766
351,882

Liabilities and Stockholders’ Equity

Current liabilities:

Current portion of capital lease obligations ................................................................. $
Accounts payable .........................................................................................................
Accrued liabilities ........................................................................................................
Billings in excess of costs and estimated earnings on uncompleted contracts .............
Total current liabilities ..........................................................................................
Borrowings on line of credit ................................................................................................
Capital lease obligations, less current portion .....................................................................
Deferred income taxes ........................................................................................................
Pension and other long-term liabilities ................................................................................
Total liabilities ......................................................................................................

340 $
4,739
15,971
520
21,570
-
718
5,124
14,408
41,820

2,170
15,480
9,071
2,835
29,556
45,587
225
14,015
16,864
106,247

Commitments and contingencies (Note 13)

Stockholders’ equity:

Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued or

outstanding ................................................................................................................

Common stock, $.01 par value, 15,000,000 shares authorized, 9,564,752 and

9,520,067 shares issued and outstanding ....................................................................
Additional paid-in-capital ............................................................................................
Retained earnings .........................................................................................................
Accumulated other comprehensive loss ........................................................................
Total stockholders’ equity ........................................................................................
Total liabilities and stockholders’ equity .................................................................. $

96
117,819
101,183
(1,538)
217,560
259,380 $

95
116,802
130,571
(1,833)
245,635
351,882

The accompanying notes are an integral part of these consolidated financial statements.

F-4

NORTHWEST PIPE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollar amounts in thousands)

Additional

Accumulated
Other
Comprehensive
Common Stock
Shares Amount Capital Earnings (Loss) Income
94 $ 112,230 $ 149,381 $
(923)
-

Paid In Retained

(2,273) $
-

Total
Stockholders'
Equity

259,432
(923)

Balances, December 31, 2012 ..................... 9,382,994 $
Net loss .......................................................
-
Other comprehensive income:

Foreign currency cash flow hedge, net of

tax expense of $59 .................................

Pension liability adjustment, net of tax

expense of $540 .....................................

Issuance of common stock under stock

compensation plans ...................................

66,305

Tax deficiency from stock compensation

-
plans ..........................................................
-
Stock-based compensation expense ............
Balances, December 31, 2013 ..................... 9,449,299
Net loss ........................................................
-
Other comprehensive income (loss):

(730)

-
-

-
(1)
-
3,060
94 114,559 148,458
- (17,887)

913

(730)

-
-
(1,261)
-

(1)
3,060
261,850
(17,887)

Foreign currency cash flow hedge, net of

tax expense of $9 ...................................

Pension liability adjustment, net of tax

benefit of $285 ......................................

Issuance of common stock under stock

(587)

70,768
compensation plans ...................................
-
Tax benefit from stock compensation plans
Stock-based compensation expense ............
-
Balances, December 31, 2014 ..................... 9,520,067
-
Net loss ........................................................
Other comprehensive income:

1
-
-

-
(1,256)
-
553
2,946
-
95 116,802 130,571
- (29,388)

Foreign currency cash flow hedge, net of

tax expense of $34 .................................

Pension liability adjustment, net of tax

benefit of $237 ......................................

Issuance of common stock under stock

compensation plans ...................................
Tax benefit from stock compensation plans
Tax deficiency from stock compensation

44,685
-

1
-

(424)
19

-
-

-
-
-
(1,833)
-

(1,255)
553
2,946
245,635
(29,388)

238

-
-

238

(423)
19

-
plans ..........................................................
Stock-based compensation expense ............
-
Balances, December 31, 2015 ..................... 9,564,752 $

-
-

-
(352)
1,774
-
96 $ 117,819 $ 101,183 $

-
-
(1,538) $

(352)
1,774
217,560

The accompanying notes are an integral part of these consolidated financial statements.

F-5

NORTHWEST PIPE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)

Cash flows from operating activities:

Net loss ....................................................................................................................................... $
Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation ..........................................................................................................................
Impairment of goodwill .........................................................................................................
Loss on sale of business ........................................................................................................
Impairment of fixed assets ....................................................................................................
Amortization of intangible assets ..........................................................................................
Amortization of debt issuance costs......................................................................................
Provision for doubtful accounts ............................................................................................
Deferred income taxes ...........................................................................................................
Loss on disposal of property and equipment ........................................................................
Stock-based compensation expense ......................................................................................
Excess tax benefit from stock compensation plans ..............................................................
Adjustments to contingent consideration ..............................................................................
Unrealized loss (gain) on foreign currency forward contracts .............................................
Other, net ...............................................................................................................................

Changes in operating assets and liabilities, net of acquired assets and assumed liabilities

Trade and other receivables, net ...........................................................................................
Insurance settlement ..............................................................................................................
Costs and estimated earnings in excess of billings on uncompleted contracts, net .............
Inventories .............................................................................................................................
Refundable income taxes ......................................................................................................
Prepaid expenses and other assets .........................................................................................
Accounts payable ..................................................................................................................
Deferred revenue ...................................................................................................................
Accrued and other liabilities .................................................................................................
Net cash provided by operating activities ...............................................................

Cash flows from investing activities:

Additions to property and equipment ........................................................................................
Proceeds from sale of business ..................................................................................................
Acquisition of businesses, net of cash acquired ........................................................................
Proceeds from sale of property and equipment .........................................................................
Issuance of notes receivable ......................................................................................................
Collections on notes receivable .................................................................................................
Other investing activities ...........................................................................................................
Net cash provided by (used in) investing activities ................................................

Cash flows from financing activities:

Proceeds from issuance of common stock ................................................................................
Tax withholdings related to net share settlements of restricted share awards and
performance shares ....................................................................................................................
Excess tax benefit from stock compensation plans ...................................................................
Payments on long-term debt ......................................................................................................
Borrowings on line of credit ......................................................................................................
Repayments on line of credit .....................................................................................................
Payments of debt issuance costs ................................................................................................
Payments on capital lease obligations .......................................................................................
Net cash (used in) provided by financing activities ................................................
Change in cash and cash equivalents ......................................................................
Cash and cash equivalents, beginning of period .......................................................................
Cash and cash equivalents, end of period .................................................................................. $

Year Ended December 31,
2014

2013

2015

(29,388) $

(17,887) $

(923)

9,092
5,282
-
-
523
598
(4)
(3,560)
105
1,774
(19)
(211)
295
-

26,780
2,625
940
43,695
1,285
896
(9,894)
(271)
4,663
55,206

(8,515)
4,300
-
55
-
7,219
-
3,059

13,606
16,066
13,497
-
540
377
70
2,894
489
2,946
(553)
(1,746)
(13)
25

7,984
-
4,088
6,039
(3,405)
754
(5,273)
(4,573)
(881)
35,044

(14,289)
29,791
-
8
-
56
(25)
15,541

13,272
-
-
27,500
27
634
(1,063)
(7,994)
256
3,060
-
-
(195)
249

(24,212)
-
19,736
8,261
(1,073)
307
1,374
(3,901)
(15,226)
20,089

(28,447)
-
(15,689)
1,711
(5,700)
124
(250)
(48,251)

(424)
19
-
79,250
(124,837)
(302)
(2,190)
(48,483)
9,782
527
10,309 $

(1,283)
553
(6,357)
230,581
(272,913)
-
(1,255)
(50,646)
(61)
588
527 $

(802)
-
(5,714)
220,721
(180,334)
-
(5,239)
28,704
542
46
588

3,277

9,592

1,656
-

Supplemental disclosure of cash flow information:

Cash paid during the period for interest, net of amounts capitalized ........................................ $
Cash (received) paid during the period for income taxes

846 $

2,271 $

(net of refunds of $7,949, $393, and $311) ............................................................. $

(7,743) $

1,982 $

Non-cash investing and financing activities:

Accrued property and equipment purchases ............................................................................. $
Capital lease additions ............................................................................................................... $

397 $
854 $

1,243 $
804 $

The accompanying notes are an integral part of these consolidated financial statements.

F-6

NORTHWEST PIPE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company operates in two business segments, Water Transmission and Tubular Products. The Water Transmission
segment primarily produces steel pipeline systems for use in drinking water infrastructure, and has eight manufacturing
facilities, located in Portland, Oregon; Denver, Colorado; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas;
St. Louis, Missouri; Salt Lake City, Utah and Monterrey, Mexico. The Tubular Products segment primarily produces steel
line pipe products for energy applications, and has a manufacturing facility located in Atchison, Kansas.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The Company bases its estimates on historical experience and on various assumptions
that are believed to be reasonable under the circumstances at that time. On an on-going basis, the Company evaluates all of
its estimates, including those related to revenue recognition, allowance for doubtful accounts, long-lived assets (including
depreciation and amortization), inventories, income taxes, and litigation and other contingencies. Actual results could differ
from those estimates under different assumptions or conditions.

Basis of Consolidation and Presentation

The consolidated financial statements include the accounts of Northwest Pipe Company and its subsidiaries over which
the Company exercises control as of the financial statement date. Intercompany accounts and transactions have been
eliminated.

On March 30, 2014, the Company completed the sale of substantially all of the assets and liabilities associated with its
oil country tubular goods (“OCTG”) business, as discussed in more detail below. The Company’s results of operations for
its disposed OCTG business have been presented as discontinued operations for all periods presented within the consolidated
statements of operations.

Certain amounts from the prior year financial statements have been reclassified in order to conform to the current year

presentation.

Lucid Energy Inc. (“Lucid”), over which the Company exercises significant influence but does not control, is accounted
for under the cost method of accounting. Lucid is a clean energy company based in Portland, Oregon. The carrying value of
our investment is $0 at both December 31, 2015 and 2014 due to a history of net losses by Lucid.

Business Acquisitions and Disposals

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and
intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over
the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make
significant estimates and assumptions, especially with respect to intangible assets. Contingent consideration is calculated and
recorded at the date of the acquisition. During the measurement period, which does not exceed one year from the acquisition
date, the Company may record adjustments to the assets acquired and liabilities assumed as a result of information received
regarding the valuation of assets and liabilities after the acquisition date, with the corresponding offset to goodwill. Upon the
conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Disposal of OCTG Business

On March 30, 2014 the Company completed the sale of substantially all of the assets and liabilities associated with its
OCTG business, which was conducted by the Company at its manufacturing facilities in Bossier City, Louisiana and Houston,
Texas, excluding the real property located in Houston, Texas. These facilities were previously included within the Company’s
Tubular Products Group. Total consideration of $42.7 million was paid by the buyer, resulting in a loss on sale of $13.5
million. The calculation of the loss on sale included a write down of $4.4 million of goodwill. Of the proceeds received, $4.3
million was placed in escrow to secure the Company’s indemnification obligations under the purchase agreement, $5.0

F-7

million was used to repay capital leases related to and secured by certain assets at the Bossier City, Louisiana manufacturing
facility, $1.8 million was used to pay for transaction costs and $1.8 million was used to pay a net working capital adjustment
made in September 2014, resulting in net proceeds of $29.8 million. In April 2015, the $4.3 million escrow was released to
the Company.

The table below presents the operating results for the Company’s discontinued operations (in thousands). These
operating results for 2014 and 2013 and do not necessarily reflect what they would have been had the OCTG business not
been classified as a discontinued operation.

Year Ended December 31,

2014

2013

Net sales .................................................................................................................................. $
Cost of sales ............................................................................................................................
Gross loss ................................................................................................................................
Selling, general, and administrative ........................................................................................
Impairment of fixed assets ......................................................................................................
Operating loss..........................................................................................................................
Loss on sale of business ..........................................................................................................
Interest income ........................................................................................................................
Interest expense .......................................................................................................................
Loss before income taxes ........................................................................................................
Income tax benefit ...................................................................................................................
Loss on discontinued operations ............................................................................................. $

22,225 $
23,881
(1,656)
396
-
(2,052)
(13,497)
-
(99)
(15,648)
(3,934)
(11,714) $

116,111
123,888
(7,777)
1,509
27,500
(36,786)
-
47
(344)
(37,083)
(14,484)
(22,599)

Acquisition of Permalok Corporation

On December 30, 2013 the Company acquired 100% of the outstanding shares of capital stock of Permalok
Corporation, a fabricator of steel piping utilizing the Permalok® interlocking pipe joining system. Permalok®’s rolled and
welded steel pipe products provide an alternate joint solution which complements and expands the Company’s product
offerings in the Water Transmission segment. Total consideration (net of cash received) of $15.7 million was paid to the
owners of the business, resulting in the recording of $5.3 million of goodwill, which was included in the Water Transmission
segment. As discussed in Note 5, this goodwill was fully impaired in 2015. Contingent consideration of $3.0 million and $2.7
million was recorded in liabilities as of December 31, 2015 and December 31, 2014, respectively, which represents the
probability weighted contingent payment as a percentage of high, mid, and low revenue projections for years 2014, 2015 and
2016. The Company paid $1.2 million in January 2016 (included in accrued liabilities at December 31, 2015) for the
contingent consideration earned on 2015 revenues. There was no payment on the contingent consideration obligation for
2014 revenues.

Pro forma results of operations related to our acquisition during the year ended December 31, 2013 have not been
presented because they are not material to our Consolidated Statements of Operations, either individually or in the aggregate.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and short term highly liquid investments with remaining maturities of three
months or less when purchased. At times, the Company will have outstanding checks in excess of related bank balances (a
book overdraft). If this occurs, the amount of the book overdraft will be reclassified to accounts payable, and changes in the
book overdraft will be reflected as a component of operating activities in the consolidated statement of cash flows. The
Company had a book overdraft of $0.9 million at December 31, 2014 and no overdraft at December 31, 2015.

Receivables and Allowance for Doubtful Accounts

Trade receivables are reported on the consolidated balance sheet net of any doubtful accounts. The Company maintains
allowances for estimated losses resulting from the inability of its customers to make required payments or from contract
disputes. The amounts of such allowances are based on Company history and management’s judgment. At least monthly, the
Company reviews past due balances to identify the reasons for non-payment. The Company will write off a receivable account
once the account is deemed uncollectible. The Company believes the reported allowances at December 31, 2015 and 2014
are adequate. If the customers’ financial conditions were to deteriorate resulting in their inability to make payments, or if
contract disputes were to escalate, additional allowances may need to be recorded which would result in additional expenses
being recorded for the period in which such determination was made.

F-8

Inventories

Inventories are stated at the lower of cost or market. Raw material inventories of steel are stated at cost, either on a
specific identification basis or on an average cost basis. All other raw material inventories, as well as supplies, are stated on
an average cost basis. Finished goods are stated at cost using the first-in, first-out method of accounting.

Property and Equipment

Property and equipment is stated at cost. Maintenance and repairs are expensed as incurred, and costs of new equipment
and buildings, as well as costs of expansions or refurbishment of existing equipment and buildings, including interest where
applicable, are capitalized. Depreciation and amortization are determined by the units of production method for most
equipment and by the straight-line method for the remaining assets based on the estimated useful lives of the related assets.
Estimated useful lives by major classes of property and equipment are as follows: Land improvements (15 – 30 years);
Buildings (20 – 40 years); Machinery and equipment (3 – 30 years). Depreciation expense calculated under the units of
production method may be less than, equal to, or greater than depreciation expense calculated under the straight-line method
due to variances in production levels. Upon disposal, costs and related accumulated depreciation of the assets are removed
from the accounts and resulting gains or losses are reflected in operating expenses. The Company leases certain equipment
under long-term capital leases, which are being amortized on a straight-line basis over the shorter of its useful life or the lease
term.

The Company assesses impairment of property and equipment whenever changes in circumstances indicate that the
carrying values of the asset or asset group(s) may not be recoverable. The asset group is the lowest level at which identifiable
cash flows are largely independent of the cash flows of other groups of assets or liabilities. The recoverable value of long-
lived asset group is determined by estimating future undiscounted cash flows using assumptions about the expected future
operating performance of the Company.

In conjunction with the preparation of the financial statements for the year ended December 31, 2013, the Company
determined that an impairment triggering event as defined in ASC 360-10 had occurred for the assets located at its Bossier
City, Louisiana facility. See Note 4, “Property and Equipment” for further discussion of the property and equipment
impairment recorded during 2013.

Goodwill and Intangible Assets

Goodwill represents the excess of purchase price over the assigned fair values of the net assets in connection with an
acquisition. Goodwill is reviewed for impairment annually at December 31 or whenever events occur or circumstances
change that indicate goodwill may be impaired. Goodwill is tested for impairment at the reporting unit level. A reporting unit
is an operating segment or one level below an operating segment (also known as a component). Our reporting units are
equivalent to our operating segments as the individual components meet the criteria for aggregation. At December 31, 2015
the Company had no goodwill.

In evaluating goodwill, the Company looks at the long-term prospects for the reporting unit and recognizes that current
performance may not be the best indicator of future prospects or value, which requires management judgment. The income
approach is based upon projected future after-tax cash flows discounted to present value using factors that consider the timing
and risk associated with the future after-tax cash flows. The market approach is based upon historical and/or forward-looking
measures using multiples of revenue or EBITDA. The Company utilizes a weighted average of the income and market
approaches, with a heavier weighting on the income approach because of the relatively limited number of comparable entities
for which relevant multiples are available. If the carrying value of the reporting unit exceeds its calculated enterprise value,
then the Company continues to assess the fair value of individual assets and liabilities, other than goodwill. The difference
between the reporting unit enterprise value and the fair value of its identifiable net assets is the implied fair value of the
reporting unit’s goodwill. A goodwill impairment loss is recorded for the difference between the implied fair value and its
carrying value.

F-9

Intangible assets consist primarily of customer relationships, patents, and trade names and trademarks recorded as the
result of acquisition activity. Intangible assets are amortized using the straight-line method over estimated useful lives ranging
from 3 to 15 years.

See Note 5, “Goodwill and Intangible Assets” for further discussion of the Company’s goodwill and intangible asset

balances.

Workers Compensation

The Company is self-insured, or maintains high deductible policies, for losses and liabilities associated with workers
compensation claims. Losses are accrued based upon the Company’s estimates of the aggregate liability for claims incurred
using historical experience and certain actuarial assumptions followed in the insurance industry. At December 31, 2015,
workers compensation reserves of $4.4 million were recorded, of which $1.2 million was included in accrued liabilities and
$3.2 million was included in pension and other long-term liabilities.

Accrued Liabilities

The Company’s accrued liabilities include payroll related liabilities, reserves for health and workers’ compensation
claims, property and sales tax payable, and other liabilities expected to be paid within one year of the balance sheet date. At
December 31, 2015 and 2014, accrued vacation payable of $3.0 million and $2.2 million, respectively, was included in
accrued liabilities. At December 31, 2015, accrued liabilities also included reserves for expected losses on uncompleted
contracts of $5.9 million and accrued property taxes of $1.3 million.

Pension Benefits

The Company has two defined benefit pension plans that have been frozen since 2001. The Company funds these plans
to cover current plan costs plus amortization of the unfunded plan liabilities. To record these obligations, management uses
estimates relating to investment returns, mortality, and discount rates. Management reviews all of these assumptions on an
annual basis.

Derivative Instruments

The Company conducts business in foreign countries, and, from time to time, settles transactions in foreign currencies.
The Company has established a program that utilizes foreign currency forward contracts to offset the risk associated with the
effects of certain foreign currency exposures, typically arising from sales contracts denominated in Canadian currency.
Foreign currency forward contracts are consistent with the Company’s strategy for financial risk management. The Company
utilizes cash flow hedge accounting treatment for qualifying foreign currency forward contracts. Instruments that do not
qualify for cash flow hedge accounting treatment are remeasured at fair value at each balance sheet date and resulting gains
and losses are recognized in net income (loss).

Foreign Currency Transactions

Assets and liabilities subject to foreign currency fluctuations are translated into United States dollars at the period-end
exchange rate, and revenue and expenses are translated at exchange rates representing an average for the period. Translation
adjustments from designated hedges are included in accumulated other comprehensive loss as a separate component of
stockholders’ equity. Gains or losses on all other foreign currency transactions are recognized in the consolidated statement
of operations. The functional currency of the Company’s Mexican operations is the United States dollar.

Revenue Recognition

Revenue from construction contracts in the Company’s Water Transmission Group is recognized on the percentage-
of-completion method. For a majority of contracts, revenue is measured by the costs incurred to date as a percentage of the
estimated total costs of each contract (cost-to-cost method). For a small number of contracts, revenue is measured using units
of delivery as progress is best estimated by the number of units delivered under the contract. Contract costs include all direct
material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs
and depreciation. Selling, general and administrative costs are charged to expense as incurred. The cost of steel is recognized
as a project cost when the steel is introduced into the manufacturing process. Estimated total costs of each contract are
reviewed on a monthly basis by project management and operations personnel for all active projects. All cost revisions that

F-10

result in the gross profit as a percent of sales increasing or decreasing by more than two percent are reviewed by senior
management personnel.

The Company begins recognizing revenue on a project when persuasive evidence of an arrangement exists,
recoverability is reasonably assured, and project costs are incurred. Costs may be incurred before the Company has persuasive
evidence of an arrangement. In those cases, if recoverability from that arrangement is probable, the project costs are deferred
and revenue recognition is delayed.

Revenue from the Company’s Tubular Products Group is recognized when all four of the following criteria have been
satisfied: persuasive evidence of an arrangement exists, the price is fixed or determinable, delivery has occurred, and
collectability is reasonably assured. Deferred revenue is recorded when the manufacturing process is complete and customers
are invoiced prior to physical delivery of the product.

Income Taxes

Income taxes are recorded using an asset and liability approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements
or tax returns. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount
expected to be realized. The determination of the provision for income taxes requires significant judgment, the use of
estimates and the interpretation and application of complex tax laws. The provision for income taxes primarily reflects a
combination of income earned and taxed in the various United States federal and state and, to a lesser extent, foreign
jurisdictions. Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items,
accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and the change in the mix of
earnings from these taxing jurisdictions all affect the overall effective tax rate.

The Company records tax reserves for federal, state, local and international exposures relating to periods subject to
audit. The development of reserves for these exposures requires judgments about tax issues, potential outcomes and timing,
and is a subjective estimate. The Company assesses tax positions and records tax benefits for all years subject to examination
based upon management’s evaluation of the facts, circumstances, and information available at the reporting dates. For those
tax positions where it is more-likely-than-not that a tax benefit will be sustained, the largest amount of tax benefit with a
greater than 50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant
information has been recorded. For those tax positions where it is not more-likely-than-not that a tax benefit will be sustained,
no tax benefit has been recognized in the financial statements.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss includes unrealized gains and losses on derivative instruments related to the
effective portion of cash flow hedges and changes in the funded status of the defined benefit pension plans, both net of the
related income tax effect. For further information, refer to Note 15, “Accumulated Other Comprehensive Loss”.

F-11

Loss per Share

Loss per basic and diluted weighted average common shares outstanding was calculated as follows for the years ended

December 31 (in thousands, except per share data):

Income (loss) from continuing operations ............................................................ $
Loss from discontinued operations .......................................................................
Net loss ................................................................................................................. $
Basic weighted-average common shares outstanding ..........................................
Effect of potentially dilutive common shares(1) ....................................................
Diluted weighted-average common shares outstanding .......................................
Earnings (loss) per basic common share:
Continuing operations .......................................................................................... $
Discontinued operations .......................................................................................
Total ..................................................................................................................... $
Earnings (loss) per diluted common share:
Continuing operations .......................................................................................... $
Discontinued operations .......................................................................................
Total ..................................................................................................................... $

2015

2014

2013

(29,388) $
-
(29,388) $
9,560
-
9,560

(6,173) $
(11,714)
(17,887) $
9,515
-
9,515

21,676
(22,599)
(923)
9,445
89
9,534

(3.07) $
-
(3.07) $

(0.65) $
(1.23)
(1.88) $

2.29
(2.39)
(0.10)

2.27
(2.37)
(0.10)

Antidilutive shares excluded from net earnings per diluted common share

calculation ..........................................................................................................

(1) Represents the effect of the assumed exercise of stock options and the vesting of restricted stock units and

performance stock awards, based on the treasury stock method.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of
trade receivables, derivative contracts, the escrow account related to the sale of the OCTG business, and deferred
compensation plan assets. Trade receivables generally represent a large number of customers, including municipalities,
manufacturers, distributors and contractors, dispersed across a wide geographic base. At December 31, 2015, no customer
had a balance in excess of 10% of total accounts receivable. At December 31, 2014, one customer had a balance in excess of
10% of total accounts receivable. Derivative contracts are with a financial institution whose short-term investments are rated
A-1 by Standard and Poor’s. The Company’s deferred compensation plan assets, also included in other assets, are invested
in a diversified portfolio of stock and bond mutual funds.

Share-based Compensation

The Company recognizes the compensation cost of employee and director services received in exchange for awards
of equity instruments based on the grant date estimated fair value of the awards. Share-based compensation cost is recognized
over the period during which the employee or director is required to provide service in exchange for the award, and as
forfeitures occur, the associated compensation cost recognized to date is reversed.

The Company estimates the fair value of Restricted Stock Units (“RSUs”) and Performance Stock Awards (“PSAs”)
using the value of the Company’s stock on the date of grant, with the exception of market-based PSAs, for which a Monte
Carlo simulation model is used. The Monte Carlo simulation model requires the use of subjective and complex assumptions
including the price volatility of the underlying stock. The expected stock price volatility assumption was determined using
the historical volatility of the Company’s and a comparator group of companies’ stock over the most recent historical period
equivalent to the expected life. The Monte Carlo simulation model calculates many potential outcomes for an award and
estimates fair value based on the most likely outcome.

See Note 11, “Share-based Compensation Plans” for further discussion of the Company’s share-based compensation.

F-12

Recent Accounting and Reporting Developments

Accounting Changes

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes.” As a result of
this Update, companies will be required to classify all deferred tax assets and liabilities, along with any related valuation
allowance, as noncurrent on the balance sheet. This is a change from the prior requirement to present deferred taxes for each
jurisdiction as a net current asset or liability and net noncurrent asset or liability. The ASU is effective for public business
entities beginning January 1, 2017, including interim periods in 2017, and allows for both retrospective and prospective
methods of adoption. Early adoption is permitted as of the beginning of an interim or annual period. The Company adopted
this ASU prospectively in the fourth quarter of 2015 and prior periods were not retrospectively adjusted.

In April 2014, the FASB issued ASU 2014-08, which changes the criteria for when the disposal of a component of an
entity may be presented as discontinued operations. The guidance requires that the disposal be considered a strategic shift
(such as the disposal of a major geographical area, a major line of business, a major equity method investment, or other major
part of an entity) which will have a major effect on a reporting entity’s operating and financial results in order to be presented
as discontinued operations. Disposals which qualify for discontinued operations presentation will require expanded
disclosures. The Company adopted this guidance on January 1, 2015 for any future disposals qualifying for discontinued
operations presentation.

Recent Accounting Standards

In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial
Statements – Going Concern.” This standard requires management to evaluate for each annual and interim reporting period
whether it is probable that the reporting entity will not be able to meet its obligations as they become due within one year
after the date that the financial statements are issued. If the entity is in such a position, the standard provides for certain
disclosures depending on whether or not the entity will be able to successfully mitigate its going concern status. This guidance
is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after
December 15, 2016. Early application is permitted. The Company does not expect a material impact to the Company’s
financial condition, results of operations or cash flows from the adoption of this guidance.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with
Customers,” which will replace most existing revenue recognition guidance in accordance with U.S. GAAP. The core
principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that
it expects to be entitled to receive for those goods or services. The ASU requires additional disclosure about the nature,
amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments
and changes in judgments. The ASU will be effective for the Company beginning January 1, 2018, including interim periods
in 2018, and allows for both retrospective and prospective methods of adoption. The Company is in the process of evaluating
its revenue streams to determine accounting treatment under the ASU.

In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidation Analysis.” The changes in
this ASU revise consolidation analysis and affect reporting entities that are required to evaluate whether they should
consolidate certain legal entities. The changes become effective for the Company on January 1, 2016. The Company has
determined that these changes will not have a material impact on the Company's condensed consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This ASU
simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability
be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt
discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in the
update. The ASU will be effective for the Company beginning January 1, 2016 including interim periods in 2016. When
implemented by the Company, the balance of debt issuance costs related to term debt will be netted against the Company’s
term debt included in long-term liabilities. Debt issuance costs related to the Company’s revolving line of credit will continue
to be classified as a deferred charge and amortized over the term of the revolving line of credit arrangement. The Company
currently does not have any term debt. Implementation will be on a retrospective basis, wherein the balance sheet of each
individual period presented will be adjusted to reflect the period-specific effects of applying the new guidance. The Company
does not expect a material impact to the Company’s financial position, results of operations or cash flows from adoption of
this guidance.

F-13

In May 2015, the FASB issued ASU 2015-07, “Disclosures for Investments in Certain Entities That Calculate Net
Asset Value per Share (or Its Equivalent).” The amendments in this ASU remove the requirement to categorize within the
fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient.
The ASU will be effective for the Company beginning January 1, 2016. The Company does not expect a material impact to
the Company’s financial position, results of operations or cash flows from adoption of this guidance.

In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” As a result of this ASU,
companies will be required to measure inventory at the lower of cost and net realizable value. This is a change from the prior
requirement to value inventory at the lower of cost or market. Net realizable value is the estimated selling prices in the
ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventory valued
using the LIFO or retail inventory method is exempt from this Update. The ASU will be effective for the Company beginning
January 1, 2017. The Company is in the process of evaluating the Update to determine its expected future effect on the
Company’s financial position, results of operations or cash flows from adoption of this guidance.

In August 2015, the FASB issued ASU 2015-15, “Interest – Imputation of interest (Subtopic 835-30).” This ASU
amends Subtopic 835-30, adding SEC staff guidance regarding the presentation and subsequent measurement of debt issuance
costs associated with line of credit arrangement. The SEC staff will not object to an entity deferring and presenting debt
issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line of
credit arrangement. The ASU will be effective for the Company beginning January 1, 2016. The Company does not expect a
material impact to the Company’s financial position, results of operations or cash flows from adoption of this guidance.

In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period
Adjustments.” This ASU eliminates the requirement to restate prior period financial statements for measurement period
adjustments in a business combination. The new guidance requires that the cumulative impact of a measurement adjustment
(including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The ASU
will be effective for the Company beginning January 1, 2016. The Company does not expect a material impact to the
Company’s financial position, results of operations or cash flows from adoption of this guidance.

In January 2016, the FASB issued ASU 2016-1, “Financial Instruments- Overall: Recognition and Measurement of
Financial Assets and Financial Liabilities.” This ASU makes changes to the accounting for equity investments and financial
liabilities accounted for under the fair value option, and changes presentation and disclosure requirements for financial
instruments. The ASU will be effective for the Company beginning January 1, 2018. The Company does not expect a material
impact to the Company’s financial position, results of operations or cash flows from adoption of this guidance.

In February 2016, the FASB issued ASU 2016-2, “Leases (Topic 842).” This ASU makes changes to U.S. GAAP,
requiring the recognition of lease assets and lease liabilities by lessees for those leases previously classified as operating
leases. For operating leases, the lease asset and lease liability will be initially measured at the present value of the lease
payments in the balance sheet. The cost of the lease is then allocated over the lease term on a generally straight-line basis.
All cash payments will be classified within operating activities in the statement of cash flows. For financing leases, the lease
asset and lease liability will be initially measured at the present value of the lease payments in the balance sheet. Interest on
the lease liability will be recognized separately from amortization of the lease asset in the statement of comprehensive income.
In the statement of cash flows, repayments of the principal portion of the lease liability will be classified within financing
activities, and payments of interest on the lease liability and variable payments will be classified within operating activities.
For leases with terms of 12 months or less, a lessee is permitted to make an accounting policy election by asset class not to
recognize lease assets and lease liabilities. Lease expense for such leases will be generally recognized straight-line basis over
the lease term. The accounting applied by a lessor is largely unchanged from previous U.S. GAAP. The ASU requires
qualitative disclosures along with specific quantitative disclosures and will be effective for the Company beginning January
1, 2019, including interim periods. The ASU provides for a transitional adoption, with lessees and lessors required to
recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Early
adoption is permitted. The Company is assessing the impact of this ASU on its consolidated financial statements.

F-14

COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS
AND BILLINGS IN EXCESS OF COSTS AND ESTIMATED EARNINGS:

Costs and estimated earnings in excess of billings on uncompleted contracts represents revenue earned under the
percentage-of-completion method but not yet billable based on the terms of the contracts. These amounts are billed based on
the terms of the contracts, which include achievement of milestones, partial shipments or completion of the contracts. Billings
in excess of costs and estimated earnings on uncompleted contracts represents amounts billed based on the terms of the
contracts in advance of costs incurred and revenue earned.

Costs incurred on uncompleted contracts ........................................................................ $
Estimated earnings ..........................................................................................................

Less billings to date .........................................................................................................
$

Amounts are presented in the Consolidated Balance Sheets as follows:
Costs and estimated earnings in excess of billings on uncompleted contracts ................ $
Billings in excess of costs and estimated earnings on uncompleted contracts ................
$

December 31,

2015

2014

(in thousands)

210,716 $
31,921
242,637
(200,565)
42,072 $

42,592 $
(520)
42,072 $

265,552
53,744
319,296
(276,284)
43,012

45,847
(2,835)
43,012

INVENTORIES:

Inventories are stated at the lower of cost or market and consist of the following (in thousands):

Short-term inventories:

Raw materials .............................................................................................................. $
Work-in-process ..........................................................................................................
Finished goods .............................................................................................................
Supplies .......................................................................................................................

Long-term inventories:

Finished goods .............................................................................................................
Total inventories .......................................................................................................... $

December 31,

2015

2014

21,486 $
1,901
3,641
2,447
29,475

823
30,298 $

48,005
1,741
20,663
2,370
72,779

1,214
73,993

Inventory balances are net of lower of cost or market reserves of $8.6 million and $6.6 million at December 31, 2015

and 2014, respectively.

Long-term inventories are recorded in other assets.

F-15

PROPERTY AND EQUIPMENT:

Property and equipment consists of the following (in thousands):

December 31,

2015

2014

Land and improvements ................................................................................... $
Buildings ..........................................................................................................
Machinery and equipment ................................................................................
Equipment under capital lease ..........................................................................
Construction in progress...................................................................................

Less accumulated depreciation and amortization .............................................
Property and equipment, net ............................................................................. $

23,903 $
44,409
146,704
924
2,359
218,299
(86,451)
131,848 $

23,689
42,368
140,578
6,001
4,183
216,819
(84,224)
132,595

Depreciation expense, which includes amortization of capital lease assets, was $9.1 million, $13.6 million, and $13.3
million for the years ended December 31, 2015, 2014, and 2013, respectively. Accumulated amortization associated with
property and equipment under capital leases was $0.3 million and $4.2 million at December 31, 2015 and 2014, respectively.

In conjunction with the preparation of its financial statements for the year ended December 31, 2015, the Company
determined that an impairment triggering event as defined in ASC 360-10 had occurred for the Atchison asset group included
within the Tubular Products segment, due to continued operating losses and plans to idle the Atchison facility in January
2016. The Company performed a recoverability test for the asset group, in which the carrying value of the asset group was
compared against associated undiscounted future cash flows. This analysis determined that the undiscounted future cash
flows substantially exceeded the carrying value of the asset group; thus, the carrying value of the asset group was not impaired
at December 31, 2015.

In conjunction with the preparation of its financial statements for the year ended December 31, 2014, the Company
determined that an impairment triggering event as defined in ASC 360-10 had occurred for the asset groups included within
the Tubular Products segment due to the impairment of its Tubular Products goodwill (see Note 5, “Goodwill and Intangible
Assets”). The Company performed a recoverability test for each asset group, in which the carrying value of the asset group
was compared against associated undiscounted future cash flows. This analysis determined that the carrying values of the
asset groups were recoverable at December 31, 2014.

In conjunction with the preparation of its financial statements for the year ended December 31, 2013, the Company
determined that an impairment triggering event as defined in ASC 360-10 had occurred for the assets located at its Bossier
City, Louisiana facility due to increased competition in the OCTG market, pricing pressures from imported pipe, and growing
inventory balances. This facility was included within our Tubular Products Group. The Company performed a recoverability
test in which the carrying values of the asset groups were compared against the probability weighted undiscounted future
cash flows of various future scenarios using Company-specific assumptions. The analysis determined that the carrying value
of the asset group was not recoverable as the undiscounted cash flows were less than the carrying value of the asset group.
The Company then compared the carrying value to the fair market value of the asset group. Management determined fair
value using third-party appraisals, as discussed in Note 8. This analysis resulted in an impairment charge of $27.5 million,
which is included in discontinued operations for 2013 as the related assets were sold as part of the sale of the OCTG business
in March 2014.

F-16

GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of purchase price over the assigned fair values of the assets and liabilities assumed in
conjunction with an acquisition. As discussed in Note 1, goodwill is reviewed for impairment annually at December 31 or
whenever events occur or circumstances change that indicate goodwill may be impaired.

Goodwill related to the Company’s Water Transmission Group of $5.3 million was quantitatively evaluated with
consideration of the income and market approaches as applicable. Due to Water Transmission market conditions in 2015, the
Company determined that its Water Transmission Group goodwill was impaired at June 30, 2015, and was completely written
off in the second quarter of 2015.

Goodwill related to the Company’s Tubular Products Group of $16.1 million was quantitatively evaluated with
consideration of the income and market approaches as applicable. Due to negative impacts on our Tubular Products business
as a result of the worldwide turmoil in crude oil markets, which became significant in the fourth quarter of 2014, we concluded
that there was no implied fair value of the Tubular Products Group goodwill and that it should be completely written off as
of December 31, 2014. The Company had allocated $4.4 million of goodwill to the two OCTG plants disposed in March
2014, and recorded the related write-off of that goodwill as part of the loss on sale of business in the Company’s consolidated
statement of operations.

Goodwill assigned to the Company’s Water Transmission and Tubular Products Groups is as follows (in thousands):

Water
Transmission

Tubular
Products

Total

Goodwill balance, December 31, 2012 .................................. $
Additions ................................................................................
Goodwill balance, December 31, 2013 ..................................
Adjustment for the sale of OCTG business ............................
Impairment adjustment ...........................................................
Goodwill balance, December 31, 2014 ..................................
Impairment adjustment ...........................................................
Goodwill balance, December 31, 2015 .................................. $

- $
5,282
5,282
-
-
5,282
(5,282)
- $

20,478 $
-
20,478
(4,412 )
(16,066 )
-
-
- $

20,478
5,282
25,760
(4,412)
(16,066)
5,282
(5,282)
-

Intangible Assets

Intangible assets consist of the following at December 31, 2015 (in thousands):

Gross
Carrying
Amount

Accumulated
Amortization

Intangible
Assets, Net

Remaining
Weighted-
Average
Amortization
Period
(in years)

Customer relationships ......................................... $
Patents ..................................................................
Trade names and trademarks ................................
Other (1) ...............................................................
Total ..................................................................... $

1,378 $
1,162
1,132
295
3,967 $

(275) $
(465)
(151)
(155)
(1,046) $

1,103
697
981
140
2,921

8.0
3.0
13.0
2.0
8.2

(1) Other intangibles consist of favorable lease contracts and non-compete agreements

F-17

The Company recorded amortization expense of $0.5 million, $0.5 million and zero in 2015, 2014 and 2013,

respectively. The estimated amortization expense for the next five fiscal years is as follows (in thousands):

523
495
459
213
213
1,018
2,921

LINE OF CREDIT:

On October 26, 2015, the Company entered into a Loan and Security Agreement (the “Agreement”) with Bank of
America, N.A. The Agreement expires on October 25, 2018 and provides for revolving loans and letters of credit in the
aggregate amount of up to $60 million, subject to a borrowing base. The borrowing base is calculated by applying various
advance rates to eligible accounts receivable, costs and expected earnings in excess of billings, inventories, and fixed assets,
subject to various exclusions, adjustments, and sublimits.

Borrowings under the Agreement bear interest at rates related to LIBOR plus 1.75% to 2.25%, or at Bank of America’s
prime rate plus 0.75% to 1.25%. Borrowings under the Agreement are secured by substantially all of the Company’s assets.
On December 31, 2015, there were no outstanding borrowings, and the Company’s borrowing capacity was $23.2 million,
net of outstanding letters of credit, under the Agreement.

The Agreement also contains customary representations, warranties and events of default, which include the
occurrence of events or circumstances which have a Material Adverse Effect, as defined in the Agreement. Payment of
outstanding advances may be accelerated, at the option of Bank of America, should the Company default in its obligations
under the Agreement.

In conjunction with entering into the Loan and Security Agreement, the Company terminated the Second Amended
and Restated Credit Agreement dated as of October 24, 2012. The Company incurred incremental interest expense of
approximately $0.4 million during the fourth quarter of 2015 related to the write-off of unamortized financing costs associated
with the terminated agreement.

At December 31, 2014, the Company had $45.6 million of borrowings on its former line of credit agreement. Under
that agreement, the Company’s borrowings bore interest at LIBOR plus 1.75% to 2.75%, or the lending institution’s prime
rate plus 0.75% to 1.75%. The Company was able to borrow at LIBOR plus 2.0% at December 31, 2014. The Credit
Agreement had a weighted average rate of 2.43% at December 31, 2014.

Interest expense for continuing operations from Line of Credit borrowings, Term Notes, and capital leases was $1.4
million, net of amounts capitalized of $0.1 million in 2015, $2.3 million, net of amounts capitalized of $0.2 million in 2014
and $3.6 million, net of amounts capitalized of $0.4 million in 2013.

F-18

LEASES:

Capital Leases

The Company leases certain equipment used in the manufacturing process. The future minimum payments under the

Company’s capital leases are as follows (in thousands):

2016 ................................................................................................................................................................... $
2017 ...................................................................................................................................................................
2018 ...................................................................................................................................................................
2019 ...................................................................................................................................................................
2020 ...................................................................................................................................................................
Thereafter ..........................................................................................................................................................
Total minimum lease payments .........................................................................................................................
Amount representing interest ....................................................................................................................
Present value of minimum lease payments with average interest rates of 4.87% .............................................
Current portion of capital lease obligation ................................................................................................
Capital lease obligation, less current portion .................................................................................................... $

381
280
209
188
92
-
1,150
(92)
1,058
340
718

We had a total of $1.1 million in capital lease obligations outstanding at December 31, 2015. The weighted average
interest rate on all of the Company’s capital leases is 4.87%. The Company’s capital leases are for certain equipment used in
the manufacturing process. Interest expense on discontinued operations was zero in 2015, $0.1 million in 2014, and $0.3
million in 2013, which was related to a capital lease at our former Bossier, Louisiana facility.

Operating Leases

The Company has entered into various equipment and property leases with terms of ten years or less. Total rental
expense from continuing operations for 2015, 2014, and 2013 was $3.2 million, $3.2 million, and $2.8 million, respectively.
Certain of the Company’s operating lease agreements include renewals and/or purchase options set to expire at various dates.
Future minimum payments as of December 31, 2015 for operating leases with initial or remaining terms in excess of one year
are (in thousands):

2,664
2,425
1,309
893
790
1,832
9,913

FAIR VALUE MEASUREMENTS:

Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The Company records its financial assets and liabilities at fair value, which is defined as the price that would be received
to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an
orderly transaction between market participants at the measurement date. The guidance for fair value measurements also
applies to nonrecurring fair value measurements of nonfinancial assets and nonfinancial liabilities.

The authoritative guidance establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used
to measure fair value into three broad levels. These levels are: Level 1 (inputs are quoted prices in active markets for identical
assets or liabilities); Level 2 (inputs are other than quoted prices that are observable, either directly or indirectly through
corroboration with observable market data); and Level 3 (inputs are unobservable, with little or no market data that exists,
such as internal financial forecasts). The Company is required to maximize the use of observable inputs and minimize the
use of unobservable inputs when measuring fair value.

F-19

The following table summarizes information regarding the Company’s financial assets and financial liabilities that are

measured at fair value on a recurring basis (in thousands):

Description

Financial assets

Balance at
December 31,
2015

Level 1

Level 2

Level 3

Deferred compensation plan ......................... $
Derivatives ....................................................
Total assets ....................................................... $

6,357 $
296
6,653 $

5,075 $
-
5,075 $

1,282 $
296
1,578 $

-
-
-

Financial liabilities ...........................................
Contingent consideration .............................. $

(2,974) $

- $

(2,974 )

Description

Financial assets

Balance at
December 31,
2014

Level 1

Level 2

Level 3

Deferred compensation plan ......................... $
Derivatives ....................................................
Total assets ....................................................... $

6,237 $
32
6,269 $

4,953 $
-
4,953 $

1,284 $
32
1,316 $

-
-
-

Financial liabilities

Contingent consideration .............................. $
Derivatives ....................................................
Total liabilities .................................................. $

(2,679 ) $
(5 )
(2,684 ) $

- $
-
- $

- $
(5)
(5) $

(2,679)
-
(2,679)

The deferred compensation plan assets consists of cash and several publicly traded stock and bond mutual funds, valued
using quoted market prices in active markets classified as Level 1 within the fair value hierarchy, as well as securities that
are not actively traded on major exchanges, valued using the net asset value of the underlying investments classified as Level
2 within the fair value hierarchy. The Company’s derivatives consist of foreign currency forward contracts, which are
accounted for as cash flow hedges, and are valued using various pricing models or discounted cash flow analyses that
incorporate observable market parameters, such as interest rate yield curves and currency rates, classified as Level 2 within
the valuation hierarchy. Derivative valuations incorporate credit risk adjustments that are necessary to reflect the probability
of default by the counterparty or the Company.

The contingent consideration liability represents the probability weighted contingent payment as a percentage of high,
mid, and low revenue projections for the following three fiscal years following the acquisition of Permalok® on December
30, 2013. Our fair value estimate of this liability was $3.0 million at December 31, 2015 and $2.7 million at December 31,
2014. The inputs used to measure contingent consideration are classified as Level 3 within the valuation hierarchy. The
valuation is not supported by market criteria and reflects the Company’s internal revenue forecasts. Changes in the fair value
of the contingent consideration payment will be reflected in cost of sales during the period which the change in the estimated
fair value is calculated.

The net carrying amounts of cash and cash equivalents, trade and other receivables, accounts payable, accrued liabilities

and borrowings on line of credit approximate fair value due to the short-term nature of these instruments.

Assets Measured and Recorded at Fair Value on a Non-Recurring Basis

The Company measures its financial assets, including loans receivable and non-marketable equity method investments,
at fair value on a non-recurring basis when they are determined to be other-than-temporarily impaired. The fair value of these
assets is determined using Level 3 unobservable inputs due to the absence of observable market inputs, and because the
valuations require management judgment. There were no material impairment charges recorded on investments in 2015 and
2014. During 2013, there was a $0.3 million impairment charge recorded on investments. Impairment charges recorded on
investments were included in other expense (income) in the consolidated statement of operations.

F-20

If required as part of its goodwill impairment assessments, the Company calculates the business enterprise value of
applicable reporting units. This calculation uses a weighted average of income and market approaches, and is classified as
Level 3 in the valuation hierarchy. The income approach is primarily driven by inputs from the Company’s internal financial
forecasts. The market approach incorporates inputs from market participant data, as well as inputs derived from Company
assumptions.

Due to Water Transmission market conditions in 2015, the Company determined that its Water Transmission Group
goodwill of $5.3 million was impaired at June 30, 2015, and it was completely written off. For 2014, the goodwill impairment
assessment analysis resulted in the impairment of Tubular Products goodwill of $16.1 million at December 31, 2014. There
were no goodwill impairments in 2013.

As part of its analysis of impairment of long lived asset groups as of December 31, 2013, the Company determined the
fair value of two of its asset groups using third party appraisals. The inputs used in the third party appraisals are classified as
Level 3 in the valuation hierarchy, due to limited observed market data and because the valuations require significant
judgments. The analysis resulted in a long-lived asset group impairment of $27.5 million, which is included in loss from
discontinued operations for 2013.

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES:

The Company conducts business in various foreign countries and, from time to time, settles transactions in foreign
currencies. The Company has established a program that utilizes foreign currency forward contracts to offset the risk
associated with the effects of certain foreign currency exposures, typically arising from sales contracts denominated in
Canadian dollars. Instruments that do not qualify for cash flow hedge accounting treatment are re-measured at fair value on
each balance sheet date and resulting gains and losses are recognized in net income. There were no derivative contracts not
designated as hedges as of December 31, 2015 and 2014. As of December 31, 2015 and 2014, the total notional amount of
the derivative contracts designated as hedges was $6.3 million (CAD$8.7 million) and $1.3 million (CAD$1.5 million),
respectively. Derivative assets are included within prepaid expenses and other and derivative liabilities are included within
accrued liabilities within the consolidated balance sheets. All of the Company’s foreign currency forward contracts are subject
to an enforceable master netting arrangement. The Company presents its foreign currency forward contract assets and
liabilities within the consolidated balance sheet at their gross fair values.

For each derivative contract entered into in which the Company seeks to obtain cash flow hedge accounting treatment,
the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk
management objective and strategy for undertaking the hedge transaction, the nature of the risk being hedged, how the
hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a
description of the method of measuring ineffectiveness. This process includes linking all derivatives to specific firm
commitments or forecasted transactions and designating the derivatives as cash flow hedges. The Company also formally
assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative contracts that are used in hedging
transactions are highly effective in offsetting changes in cash flows of hedged items. The effective portion of these hedged
items is reflected in other comprehensive income on the consolidated statement of stockholders’ equity. If it is determined
that a derivative contract is not highly effective, or that it has ceased to be a highly effective hedge, the Company will be
required to discontinue hedge accounting with respect to that derivative contract prospectively.

All of the Company’s Canadian dollar forward contracts have maturities less than 12 months as of December 31, 2015,
except one contract with a notional value of $4.4 million (CAD $5.9 million) which has a remaining maturity of 15 months.

For the years ended December 31, 2015, 2014 and 2013, gains (losses) of $0.4 million, $0.1 million and ($0.1) million,
respectively, from derivative contracts not designated as hedging instruments were recognized in net sales from continuing
operations. At December 31, 2015, there was $0.1 million of unrealized pretax gain on outstanding derivatives included in
accumulated other comprehensive loss, substantially all of which is expected to be reclassified to net sales from continuing
operations within the next 12 months as a result of underlying hedged transactions also being recorded in net sales from
continuing operations. See Note 15, “Accumulated Other Comprehensive Loss” for additional quantitative information
regarding derivative gains and losses.

F-21

10. RETIREMENT PLANS:

Defined Contribution Plan

The Company has a defined contribution retirement plan that covers substantially all of its employees and provides for
a Company match of up to 50% of the first 6% of employee contributions to the plan, subject to certain limitations. The
defined contribution retirement plan offers 15 investment options.

Defined Benefit Plans

The Company has two noncontributory defined benefit plans. Effective 2001, both plans were frozen, and participants
were fully vested in their accrued benefits as of the date each plan was frozen. No additional participants can be added to the
plans and no additional service can be earned by participants subsequent to the date the plans were frozen. The funding policy
for both of these plans is based on current plan costs plus amortization of the unfunded plan liability. All current employees
covered by these plans are now covered by the defined contribution retirement plan.

As of December 31, 2015, the Company had recorded, in accordance with the actuarial valuation, an accrued pension
liability of $1.9 million and an unrecognized actuarial loss, net of tax, of $1.6 million in accumulated other comprehensive
loss. As of December 31, 2014 the Company had recorded, in accordance with the actuarial valuation, an accrued pension
liability of $2.1 million and an unrecognized actuarial loss, net of tax, of $1.9 million in accumulated other comprehensive
loss. Additionally, as of December 31, 2015 and 2014, the projected and accumulated benefit obligation was $6.4 million
and $6.9 million, respectively, and the fair value of plan assets was $4.5 million and $4.8 million, respectively.

The net periodic benefit cost was $0.4 million for the year ended December 31, 2015, $0.2 million for the year ended
December 31, 2014, and $0.4 million for the year ended December 31, 2013. The weighted average discount rates used to
measure the projected benefit obligation were 3.91% and 3.54% as of December 31, 2015 and 2014, respectively.

The plan assets are invested in growth mutual funds, consisting of a mix of debt and equity securities, which are
categorized as Level 2 under the fair value hierarchy. The expected weighted average long-term rate of return on plan assets
was 7.5% as of December 31, 2015 and 2014.

Non-qualified Retirement Savings Plan

The Company has a deferred compensation plan that covers officers and selected highly compensated employees. The
deferred compensation plan generally matches up to 50% of the first $10,000 of officer contributions to the plan and the first
$5,000 of other selected highly compensated employee contributions, subject to certain limitations. It also provides officers
with a Company funded component with a retirement target benefit, however this component of the plan was frozen in 2015.
The retirement target benefit amount is an actuarially estimated amount necessary to provide 35% of final base pay after a
35-year career with the Company or 1% of final base pay per year of service. The actual benefit, however, assumes an
investment growth at 8% per year. Should the investment growth be greater than 8%, the benefit will be more, but if it is less
than 8%, the amount will be less and the Company does not make up any deficiency. At December 31, 2015 and 2014, the
Company had recorded liabilities for deferred compensation of $6.4 million and $6.6 million, respectively.

Total expense for all retirement plans in 2015, 2014 and 2013 was $1.5 million, $1.8 million and $1.8 million,

respectively.

F-22

11.

SHARE-BASED COMPENSATION PLANS:

The Company has one active stock incentive plan for employees and directors, the 2007 Stock Incentive Plan, which
provides for awards of stock options to purchase shares of common stock, stock appreciation rights, restricted and unrestricted
shares of common stock, restricted stock units (“RSUs”) and performance share awards (“PSAs”). In addition, the Company
has one inactive stock option plan, the 1995 Stock Options Plan for Nonemployee Directors, under which previously granted
options remain outstanding. The plans provide that options become exercisable according to vesting schedules, which range
from immediate to ratably over a 60-month period. Options terminate 10 years from the date of grant. The plans also provide
for other equity instruments, such as RSUs and PSAs, which grant the right to receive a specified number of shares over a
specified period of time. RSUs are service-based awards and vest according to vesting schedules, which range from
immediate to ratably over a three-year period. PSAs are service-based awards with a market-based vesting condition. Vesting
of the market-based PSAs is dependent upon the performance of the market price of the Company’s stock relative to a
comparator group of companies and ranges from two to three years. The following summarizes share-based compensation
expense recorded:

2015

Year ended December 31,
2014
(in thousands)

2013

Cost of sales ................................................................................................... $
Selling, general and administrative expenses .................................................
Total .................................................................................................... $

412 $
1,362
1,774 $

337 $
2,609
2,946 $

662
2,398
3,060

As of December 31, 2015, unrecognized compensation expense related to the unvested portion of the Company’s RSUs

and PSAs was $1.1 million, which is expected to be recognized over a weighted average period of 1.0 years.

There were no options granted during 2015, 2014 or 2013. There were 690,889 shares of common stock available for

future issuance under the Company’s stock compensation plans at December 31, 2015.

Stock Options Awards

A summary of status of the Company’s stock options as of December 31, 2015 and changes during the three years then

ended is presented below:

Weighted
Average
Exercise
Price

Options

Weighted
Average
Remaining
Contractual
Life
(in years)

Aggregate

Intrinsic
Value
(in thousands)

Balance, December 31, 2013 ....................................
Options granted ........................................................
Options exercised ....................................................
Options cancelled .....................................................
Balance, December 31, 2014 ....................................
Options granted ........................................................
Options exercised ....................................................
Options cancelled .....................................................
Balance, December 31, 2015 ....................................
Exercisable and Outstanding, December 31, 2015 ...

40,000 $
-
(2,000)
-
38,000
-
(2,000)
(8,000)
28,000
28,000

25.44
-
14.00
-
26.05
-
22.07
29.98
25.21
25.21

3.77 $

The total intrinsic value, defined as the difference between the current market value and the grant price, of options

exercised during the years ended December 31, 2015, 2014 and 2013 was $2,000, $43,000 and $0.1 million, respectively.

F-23

The following table summarizes information about stock options outstanding at December 31, 2015:

Options Outstanding

Options Exercisable

Exercise Price Per Share
$ 24.15 .....................................
28.31 .....................................
34.77 .....................................

Number of
Options

24,000
2,000
2,000
28,000

Weighted
Average
Remaining
Contractual Life
(years)
4.25
0.36
1.41
3.77

Weighted
Average
Exercise Price
Per Share
$24.15
28.31
34.77
25.21

Number of
Options

24,000
2,000
2,000
28,000

Restricted Stock Units and Performance Awards

2014

2013

Expected stock price volatility ....................................................................
Risk free interest rate ..................................................................................
Expected dividend yield ..............................................................................

23.7% - 65.0%
0.61%
0%

24.6% - 60.1%
0.41%
0%

A summary of status of the Company’s RSUs and PSAs as of December 31, 2015 and changes during the three years

then ended is presented below:

Number of
RSUs and
PSAs (1)

Weighted
Average Grant
Date Fair
Value

Unvested RSUs and PSAs at December 31, 2013 ...........................................................
RSUs and PSAs granted ..............................................................................................
Unvested RSUs and PSAs cancelled ...........................................................................
RSUs and PSAs vested (2) ..........................................................................................
Unvested RSUs and PSAs at December 31, 2014 ...........................................................
RSUs and PSAs granted ..............................................................................................
Unvested RSUs and PSAs cancelled ...........................................................................
RSUs and PSAs vested ...............................................................................................
Unvested RSUs and PSAs at December 31, 2015 ...........................................................

257,087 $
87,353
(32,756)
(80,469)
231,215
-
(53,960)
(49,403)
127,852 $

30.69
41.76
32.36
25.81
36.34
-
36.12
30.01
38.87

(1) The number of shares disclosed in this table are at the target level of 100%.
(2) 13,161 additional shares were vested for performance share awards that were granted in 2011 for the three-year
performance period ended December 31, 2013, based on achievement of an actual payout percentage of 143%.

The unvested balance of RSUs and PSAs at December 31, 2015 includes approximately 110,000 PSAs included at a
target level. The vesting of these awards is subject to the achievement of specified market-based conditions, and the actual
number of common shares that will ultimately be issued will be determined by multiplying this number of PSAs by a payout
percentage ranging from 0% to 200%.

The total fair value of RSUs and PSAs vested during the years ended December 31, 2015, 2014, and 2013 was $1.6

million, $3.5 million and $2.1 million, respectively.

F-24

Stock Awards

For the years ended December 31, 2015, 2014 and 2013, stock awards were granted to non-employee directors, which
vested immediately upon issuance, as follows: 10,464 shares; 9,150 shares; and 4,912 shares, respectively. The Company
recorded compensation expense based on the fair market value per share of the awards on the grant dates of $21.02 in 2015,
$36.00 and $36.41 in 2014, and $27.49 in 2013.

12.

SHAREHOLDER RIGHTS PLAN:

In June 1999, the Board of Directors adopted a Shareholder Rights Plan (the “Plan”) designed to ensure fair and equal
treatment for all shareholders in the event of a proposed acquisition of the Company by enhancing the ability of the Board of
Directors to negotiate more effectively with a prospective acquirer, and reserved 150,000 shares of Series A Junior
Participating Preferred Stock (“Preferred Stock”) for purposes of the Plan. In connection with the adoption of the Plan, the
Board of Directors declared a dividend distribution of one non-detachable preferred stock purchase right (a “Right”) per share
of common stock, payable to shareholders of record on July 9, 1999. Each Right represents the right to purchase one one-
hundredth of a share of Preferred Stock at a price of $83.00, subject to adjustment. The Rights will be exercisable only if a
person or group acquires, or commences a tender offer to acquire, 15% or more of the Company’s outstanding shares of
common stock. Subject to the terms of the Plan and upon the occurrence of certain events, each Right would entitle the holder
to purchase common stock of the Company, or of an acquiring company in certain circumstances, having a market value
equal to two times the exercise price of the Right. The Company may redeem the Rights at a price of $0.01 per Right under
certain circumstances.

On June 18, 2009, the Company and Computershare (“Rights Agent”) entered into an Amended and Restated Rights
Agreement (the “Amended and Restated Rights Agreement”). The Amended and Restated Rights Agreement amended and
restated the Rights Agreement dated as of June 28, 1999 between the Company and ChaseMellon Shareholder Services,
L.L.C. (predecessor to the Rights Agent). The Amended and Restated Rights Agreement extended the final expiration date
of the Rights from June 28, 2009 to June 28, 2019. The Amended and Restated Rights Agreement also reflected certain
changes in the rights and obligations of the Rights Agent and certain changes in procedural requirements under the Amended
and Restated Rights Agreement.

13. COMMITMENTS AND CONTINGENCIES:

Portland Harbor Superfund

F-25

time showing a connection between detected VOCs in groundwater and Willamette River sediments; (3) the interim remedial
measure to conduct a limited excavation of soil and full paving of the site was completed; (4) a state-of-the art stormwater
treatment system was installed; and (5) an area of stained soil was characterized and remediated. In May 2015, and
subsequently in August and October 2015, the Company received the EPA’s and ODEQ’s comments, respectively, requesting
additional information and modifications to the revised RI/SCE Report, including the request to conduct additional
groundwater sampling. The Company is working with consultants to address the comments and questions from the EPA and
ODEQ, and in December 2015 submitted a Supplemental Groundwater Sampling Work Plan to the EPA and ODEQ.

The Company spent $0.2 million for further Source Control work in 2015, and spent $0.1 million in 2014 and less

than $0.1 million in 2013.

Houston Environmental Issue

In connection with the Company’s sale of its OCTG business, a Limited Phase II Environmental Site Assessment was
conducted at the Houston, Texas plant and completed in March 2014, which revealed the presence of VOCs in the
groundwater and certain metals in the soil. In June 2014, the Company was accepted into the Texas Commission on
Environmental Quality (“TCEQ”) Voluntary Cleanup Program (“VCP”) to address these issues and obtain a Certificate of
Completion from TCEQ. The cost of any potential cleanup will not be covered by insurance. However, any costs incurred
will be reimbursed by the purchaser of the OCTG business (see Note 1, under Disposal of OCTG Business) if the purchaser
of the OCTG business exercises its option to purchase the property under certain circumstances after the Certificate of
Completion is obtained.

F-26

All Sites

Other Contingencies

Guarantees

The Company has entered into certain stand-by letters of credit that total $2.1 million at December 31, 2015. The

stand-by letters of credit relate to workers’ compensation insurance.

14.

INCOME TAXES:

The components of income tax expense for continuing operations are as follows:

2015

Year Ended December 31,
2014
(in thousands)

2013

Current:

Federal ........................................................................................................ $
State ............................................................................................................
Total current tax expense (benefit) ..........................................................

(5,076) $
26
(5,050)

Deferred:

Federal ........................................................................................................
State ............................................................................................................
Total deferred tax expense (benefit) ........................................................
$

(8,855)
1,954
(6,901)
(11,951) $

4,336 $
334
4,670

305
(324)
(19)
4,651 $

9,097
690
9,787

2,631
(60)
2,571
12,358

F-27

The difference between the Company’s effective income tax rates and the statutory United States federal income tax

rate of 35% is explained as follows:

2015

Year Ended December 31,
2014
(in thousands)

2013

Provision (benefit) at statutory rate of 35% .................................................. $
State provision (benefit), net of federal tax effect .........................................
Federal and state tax credits ..........................................................................
Disallowed domestic manufacturing deduction ............................................
Change in valuation allowance......................................................................
Uncertain tax positions ..................................................................................
Goodwill impairment (nondeductible) ..........................................................
Nondeductible expenses ................................................................................
Nontaxable adjustment to contingent consideration ......................................
Other..............................................................................................................
$
Effective tax rate ...........................................................................................

(14,470) $
(866)
(6,684)
630
5,210
2,082
1,849
91
103
104
(11,951) $
(28.9)%

(532) $
(96)
(91)
-
9
5
5,623
207
(611)
137
4,651 $
305.6%

11,921
370
(525)
(641)
954
(7)
-
345
-
(59)
12,358

36.3%

The Company completed a research and development (R&D) tax credit study for 2014 in the third quarter of 2015,
resulting in a significantly higher credit than previously estimated; therefore, a discrete benefit of $2.5 million was recorded
in the third quarter of 2015. In 2015, the Company also recorded a $5.2 million valuation allowance on a portion of its
deferred tax assets, primarily related to federal and state tax credits and state net operating loss carryforwards.

The tax effect of temporary differences that give rise to significant portions of deferred tax assets and liabilities is

presented below:

Deferred tax assets:

Costs and estimated earnings in excess of billings on uncompleted contracts, net ...... $
Accrued employee benefits ..........................................................................................
Inventories ...................................................................................................................
Trade receivable, net ....................................................................................................
Net operating loss carryforwards .................................................................................
Tax credit carryforwards..............................................................................................
Other assets ..................................................................................................................
Other ............................................................................................................................

Valuation allowance ....................................................................................................

Deferred tax liabilities:

Property and equipment ...............................................................................................
Intangible assets ...........................................................................................................
Prepaid expenses..........................................................................................................

December 31,

2015

2014

(in thousands)

2,888 $
5,946
2,618
266
7,843
4,791
2,737
520
27,609
(7,057)
20,552

(24,229)
(980)
(467)
(25,676)

2,186
5,324
1,937
372
582
996
6,067
1,441
18,905
(1,858 )
17,047

(23,903 )
(1,150 )
(522 )
(25,575 )

Net deferred tax liabilities ............................................................................................... $

(5,124) $

(8,528 )

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon
the generation of future taxable income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in
carryback periods and tax planning strategies in making this assessment. Because the Company has a recent history of
generating cumulative losses, management did not consider projections of future taxable income as persuasive evidence for

F-28

the recoverability of its deferred tax assets. The Company believes it is more likely than not it will realize the benefits of its
deductible differences as of December 31, 2015, net of any valuation allowance.

As of December 31, 2015, the Company had approximately $19 million of federal net operating loss carryforwards,
which expire in 2035, and $3.1 million of federal tax credit carryforwards, which expire on various dates between 2023 and
2035. As of December 31, 2015, the Company also had approximately $34 million of state net operating loss carryforwards,
which expire on various dates between 2019 and 2035, and state tax credit carryforwards of $2.8 million, which begin to
expire in 2016.

The Company considers the earnings of its Mexican subsidiary to be indefinitely reinvested outside the United States
on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs. Should
the Company decide to repatriate the foreign earnings, the income tax provision would be adjusted in the period it is
determined that the earnings will no longer be indefinitely reinvested outside the United States, and a deferred tax liability of
approximately $0.8 million related to the United States federal and state income taxes and foreign withholding taxes on
approximately $2.3 million of undistributed foreign earnings would be recorded.

The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign
jurisdictions, and in many state jurisdictions. Internal Revenue Service examinations have been completed for years prior to
2011. With few exceptions, the Company is no longer subject to United States Federal or state income tax examinations for
years before 2011. The Company is currently under Colorado income tax audit for the years 2009 to 2013. It is reasonably
possible that the Company will close the audit within the next 12-month period. Such resolution is not anticipated to have a
significant impact on our results of operations. There are no other income tax audits in progress.

A summary of the changes in the unrecognized tax benefits during the years ended December 31, 2015, 2014 and 2013

is presented below (in thousands):

2015

2014

2013

Unrecognized tax benefits, beginning of year ............................................ $
Decreases for settlements .......................................................................
Decreases for lapse in statute of limitations ...........................................
Decreases for positions taken in current year .........................................
Increases for positions taken in prior years .............................................
Decreases for positions taken in prior years ...........................................
Increases for positions taken in the current year .....................................
Unrecognized tax benefits, end of year ...................................................... $

2,313 $
-
(1,199)
-
3,716
-
44
4,874 $

6,207 $
(3,265)
(115)
(615)
101
-
-
2,313 $

5,245
-
-
-
646
(696)
1,012
6,207

The Company does not believe it is reasonably possible that the total amounts of unrecognized tax benefits will change
in the following twelve months; however, actual results could differ from those currently expected. Of the balance of
unrecognized tax benefits, $4.5 million, which includes interest, would affect the Company’s effective tax rate if recognized
at some point in the future.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of
December 31, 2015 and 2014, the Company had approximately $0.1 million of accrued interest related to uncertain tax
positions. Total interest for uncertain tax positions decreased by approximately $0.1 million in 2015 and 2014, and increased
by approximately $0.1 million in 2013.

15. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consists of the following (in thousands):

Pension liability adjustment, net of tax benefit of $966 and $1,108 ............................ $
Deferred gain on cash flow derivatives, net of tax expense of $49 and benefit of $14
Total .............................................................................................................. $

(1,624) $
86
(1,538) $

(1,862)
29
(1,833)

December 31,

2015

2014

F-29

The following table summarizes changes in the components of accumulated other comprehensive loss during the twelve

months ended December 31, 2015 and December 31, 2014 (in thousands). All amounts are net of tax:

Defined
Benefit
Pension Items

Gains (Losses)
on Cash Flow
Hedges

Total

Balance, December 31, 2013 .............................................................. $
Other comprehensive income (loss) before reclassifications ..........
Amounts reclassified from accumulated other comprehensive loss

Net current period adjustments to other comprehensive income

(loss) ................................................................................................
Balance, December 31, 2014 ..............................................................
Other comprehensive income before reclassifications ....................
Amounts reclassified from accumulated other comprehensive loss

Net current period adjustments to other comprehensive income

(loss) ................................................................................................
Balance, December 31, 2015 .............................................................. $

(1,275) $
(701)
114

(587)
(1,862)
17
221

238
(1,624) $

14 $
17
(2 )

15
29
150
(93 )

57
86 $

(1,261 )
(684 )
112

(572 )
(1,833 )
167
128

295
(1,538 )

The following table provides additional detail about accumulated other comprehensive income (loss) components
which were reclassified to the consolidated statement of operations during the twelve months ended December 31, 2015,
2014 and 2013 (in thousands):

Amount reclassified from Accumulated Other
Comprehensive Income (Loss)

Details about Accumulated Other
Comprehensive Income (Loss)
Components

Defined Benefit Pension Items .............
Net periodic pension cost .................. $
Associated tax benefit .......................

Deferred gain on cash flow derivatives
Gain on cash flow derivatives ...........
Hedge ineffectiveness ......................
Associated tax expense ....................

Total reclassifications for the period ... $

16.

SEGMENT INFORMATION:

2015

2014

2013

Affected line item in the
Consolidated Statements
of Operations

(352) $
131
(221)

147
2
(56)
93
(128) $

(182) $
68
(114)

6
(3)
(1)
2
(112) $

(372) Cost of sales
133 Income tax expense
(239) Net of tax

114 Net sales
- Net sales

(42) Income tax expense
72 Net of tax

(167)

The operating segments reported below are based on the nature of the products sold by the Company and are the
segments of the Company for which separate financial information is available and for which operating results are regularly
evaluated by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment
and assess its performance. Management evaluates segment performance based on operating income.

The Company’s Water Transmission segment manufactures and markets large diameter, high-pressure steel pipe used
primarily for water transmission. The Company’s Water Transmission products are manufactured at its eight manufacturing
facilities located in Portland, Oregon; Denver, Colorado; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas;
St. Louis, Missouri; Salt Lake City, Utah and Monterrey, Mexico. Products are sold primarily to public water agencies either
directly or through an installation contractor.

The Company’s Tubular Products segment manufactures and markets smaller diameter, ERW steel pipe for use in a
wide range of applications, including energy, construction, agricultural, and industrial systems. On March 30, 2014 the
Company completed the sale of substantially all of the assets and liabilities associated with the OCTG business conducted
by the Company’s Tubular Products segment at its former manufacturing facilities in Bossier City, Louisiana and Houston,

F-30

Texas, excluding the real property located in Houston, Texas. The Tubular Products remaining manufacturing facility is
located in Atchison, Kansas. As a result of the decrease in crude oil prices in 2015, the Company curtailed production at the
Atchison facility beginning in April 2015.Tubular Products are marketed through a team of direct sales force personnel.

Based on the location of the customer, the Company sold principally all products in the United States, Canada and
Mexico. In 2015, no customer accounted for 10% or more of total net sales from continuing operations. One customer
accounted for 16% and another customer accounted for 10% of total net sales from continuing operations in 2014. One
customer accounted for 15% of total net sales from continuing operations in 2013. As of December 31, 2015, all material
long-lived assets are located in the United States.

2015

Year Ended December 31,
2014
(in thousands)

2013

Net sales from continuing operations:

Water transmission ..................................................................................... $
Tubular products .........................................................................................
Total ........................................................................................................ $

173,160 $
63,448
236,608 $

238,545 $
164,753
403,298 $

226,427
133,018
359,445

Gross profit (loss) from continuing operations:

606 $
(13,231 )
(12,625 ) $

39,601 $
975
40,576 $

46,953
13,283
60,236

Operating income (loss) from continuing operations:

Water transmission (1) ................................................................................ $
Tubular products (2) ...................................................................................

Corporate ....................................................................................................
Total ........................................................................................................ $

(11,592 ) $
(15,699 )
(27,291 )
(12,919 )
(40,210 ) $

31,490 $
(16,677)
14,813
(14,619)
194 $

40,343
11,943
52,286
(14,751 )
37,535

Net sales from continuing operations by geographic region:

United States ............................................................................................... $
Other ...........................................................................................................
Total ........................................................................................................ $

224,691 $
11,917
236,608 $

383,344 $
19,954
403,298 $

308,345
51,100
359,445

(1) Operating loss for Water transmission for 2015 includes the write-off of goodwill of $5.3 million.
(2) Operating loss for Tubular products for 2014 includes the write-off of goodwill of $16.1 million.

F-31

The following includes discontinued operations within Tubular products in 2014 and 2013:

2015

Year Ended December 31,
2014
(in thousands)

2013

Depreciation and amortization expense:

Corporate ....................................................................................................

7,318 $
1,859
9,177
438

8,716 $
5,090
13,806
340

7,082
5,963
13,045
254

Total ........................................................................................................ $

9,615 $

14,146 $

13,299

Capital expenditures:

Corporate ....................................................................................................

6,313 $
1,879
8,192
323

6,190 $
7,526
13,716
573

13,204
14,354
27,558
889

Total ........................................................................................................ $

8,515 $

14,289 $

28,447

December 31,

2015

2014

(in thousands)

Goodwill:

Water transmission .............................................................................................................. $
Tubular products ..................................................................................................................
Total ................................................................................................................................. $

- $
-
- $

5,282
-
5,282

Total assets:

Corporate .............................................................................................................................
Total ................................................................................................................................. $

185,607 $ 222,365
102,449
48,785
324,814
234,392
24,988
27,068
259,380 $ 351,882

All property and equipment is located in the United States, except for a total of $4.3 million and $4.2 million which is

located in Mexico as of December 31, 2015 and 2014, respectively.

17. RESTRUCTURING

During 2015, the Company initiated a production curtailment at its Atchison, Kansas facility within the Tubular
Products Group. Severance related restructuring costs associated with the production curtailment were approximately
$560,000, of which $515,000 was included in cost of sales and $45,000 was included in selling, general and administrative
expense. Of these restructuring costs, $58,000 was payable at December 31, 2015 and is included in accrued liabilities on the
consolidated balance sheet. This amount is expected to be paid by March 31, 2016.

F-32

18. RELATED PARTY TRANSACTION

In the second quarter of 2015, the Company engaged Raymond James & Associates, an affiliate of Eagle Asset
Management, to provide investment banking services related to a possible disposition of the Company’s Tubular Products
business. Eagle Asset Management was a substantial stockholder of the Company (owning more than 10 percent of the
Company’s common stock) until September 30, 2015, when Eagle Asset Management reported that it then owned less than
5 percent of the Company’s common stock.

A nominal amount of reimbursable expenses were incurred by Raymond James during 2015. Professional fees payable

to Raymond James will be contingent upon completion of a future transaction, which may or may not occur.

During 2014, the Company paid $1.2 million to Raymond James & Associates for investment banking services related
to the Company’s sale of its former OCTG business. Eagle Asset Management owned more than 10 percent of the Company’s
common stock at the time of the payment.

19. QUARTERLY DATA (UNAUDITED):

Summarized quarterly financial data for 2015 and 2014 is as follows (dollars in thousands, except per share).

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Total

For the year ended December 31, 2015
Net sales:

Water transmission ........................................... $
Tubular products ...............................................
Total .............................................................. $

56,242 $
28,623
84,865 $

38,445 $
15,401
53,846 $

39,792 $
12,543
52,335 $

38,681 $
6,881
45,562 $

173,160
63,448
236,608

Gross profit (loss):

7,519 $
(3,628)
3,891 $

1,255 $
(3,848)
(2,593) $

(725) $
(1,786)
(2,511) $

(7,443) $
(3,969)
(11,412) $

606
(13,231)
(12,625)

Operating income (loss):

Water transmission (1) ...................................... $
Tubular products ...............................................
Corporate ..........................................................
Total .............................................................. $

5,633 $
(4,617)
(4,099)
(3,083) $

(5,815) $
(4,254)
(3,258)
(13,327) $

(2,384) $
(2,298)
(2,602)
(7,284) $

(9,026) $
(4,530)
(2,960)
(16,516) $

(11,592)
(15,699)
(12,919)
(40,210)

Net loss ................................................................. $

(2,101) $

(12,079) $

(1,515) $

(13,693) $

(29,388)

Basic loss per share:

Continuing Operations ...................................... $
Discontinued Operations ..................................
Total .............................................................. $

(0.22) $
-
(0.22) $

(1.26) $
-
(1.26) $

(0.16) $
-
(0.16) $

(1.43) $
-
(1.43) $

Diluted loss per share:

Continuing Operations ...................................... $
Discontinued Operations ..................................
Total .............................................................. $

(0.22) $
-
(0.22) $

(1.26) $
-
(1.26) $

(0.16) $
-
(0.16) $

(1.43) $
-
(1.43) $

(3.07)
-
(3.07)

(1) Operating loss for Water transmission for the second quarter of 2015 includes the write-off of goodwill of $5.3

million.

F-33

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Total

For the year ended December 31, 2014
Net sales:

62,205 $
42,999 $
39,648
39,783
82,647 $ 101,988 $

76,857 $
39,648
116,505 $

56,484 $
45,674
102,158 $

238,545
164,753
403,298

Gross profit (loss):

1,668 $
2,646
4,314 $

11,491 $
(174)
11,317 $

16,559 $
(739)
15,820 $

9,883 $
(758)
9,125 $

39,601
975
40,576

Operating income (loss):

Water transmission ........................................... $
Tubular products (1) .........................................
Corporate ..........................................................
Total .............................................................. $

(299) $
2,294
(3,121)
(1,126) $

9,543 $
(589)
(3,555)
5,399 $

14,429 $
(1,155)
(3,943)
9,331 $

7,817 $
(17,227)
(4,000)
(13,410) $

31,490
(16,677)
(14,619)
194

Net income (loss) ................................................. $

(12,104) $

3,192 $

5,021 $

(13,996) $

(17,887)

Basic Earnings (loss) per share:

Continuing Operations ...................................... $
Discontinued Operations ..................................
Total .............................................................. $

(0.13) $
(1.14)
(1.27) $

0.34 $
-
0.34 $

0.62 $
(0.09)
0.53 $

(1.47) $
-
(1.47) $

Diluted Earnings (loss) per share:

Continuing Operations ...................................... $
Discontinued Operations ..................................
Total .............................................................. $

(0.13) $
(1.14)
(1.27) $

0.33 $
-
0.33 $

0.61 $
(0.09)
0.52 $

(1.47) $
-
(1.47) $

(0.65)
(1.23)
(1.88)

(1) Operating loss for Tubular products for the fourth quarter of 2014 includes the write-off of goodwill of $16.1 million

F-34

NORTHWEST PIPE COMPANY
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)

Schedule II

Balance at
Beginning
of Period

Charged to
Profit and
Loss

Deduction
from
Reserves

Balance at
End of
Period

Year ended December 31, 2015:

Allowance for doubtful accounts ...................................... $
Valuation allowance for deferred tax assets .....................

755 $
1,858

416 $
5,217

(420) $
(18)

751
7,057

Year ended December 31, 2014:

Allowance for doubtful accounts ...................................... $
Valuation allowance for deferred tax assets .....................

685 $
1,894

411 $
26

(341) $
(62)

755
1,858

Year ended December 31, 2013:

Allowance for doubtful accounts ...................................... $
Valuation allowance for deferred tax assets .....................

1,748 $
940

124 $
954

(1,187) $
-

685
1,894

S-1

Pursuant to the requirements of Section 13 or 15(d) 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, on the 4th day of March 2016.

SIGNATURES

NORTHWEST PIPE COMPANY

/S/ SCOTT MONTROSS
Scott Montross
Director, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the Registrant in the capacities indicated, on the 4th day of March 2016.

Signature

Title

/S/ RICHARD A. ROMAN
Richard A. Roman

/S/ SCOTT MONTROSS
Scott Montross

Director and Chairman of the Board

Director, President and Chief Executive Officer

/S/ ROBIN GANTT
Robin Gantt

Senior Vice President, Chief Financial Officer and Corporate
Secretary (Principal Financial Officer)

/S/ MICHELLE APPLEBAUM
Michelle Applebaum

/S/ JAMES E. DECLUSIN
James E. Declusin

/S/ HARRY L. DEMOREST
Harry L. Demorest

/S/ KEITH R. LARSON
Keith R. Larson

Director