Northwest Pipe Company Annual Report 2016

Plain-text annual report

Table of ContentsUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended: December 31, 2016 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 0-27140 NORTHWEST PIPE COMPANY(Exact name of registrant as specified in its charter) OREGON93-0557988(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.) 5721 SE Columbia Way, Suite 200Vancouver, 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 StockName of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per shareNasdaq Global Select MarketPreferred Stock Purchase RightsNasdaq 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 of1934 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 suchfiling 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 Filerequired 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 registrantwas 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 anyamendment 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 reportingcompany. 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 $88,579,821 as of June 30, 2016 based uponthe last sales price as reported by Nasdaq. The number of shares outstanding of the Registrant’s common stock as of February 28, 2017 was 9,604,811 shares.Documents Incorporated by Reference The registrant has incorporated into Parts II and III of Form 10-K by reference certain portions of its Proxy Statement for its 2017 Annual Meeting ofShareholders. Table of Contents NORTHWEST PIPE COMPANY2016 ANNUAL REPORT ON FORM 10-KTABLE OF CONTENTS Page Cautionary Statement Regarding Forward-Looking Statements1 Part I Item 1Business2Item 1ARisk Factors7Item 1BUnresolved Staff Comments13Item 2Properties13Item 3Legal Proceedings14Item 4Mine Safety Disclosures14 Part II Item 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities15Item 6Selected Financial Data17Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations18Item 7AQuantitative and Qualitative Disclosures About Market Risk25Item 8Financial Statements and Supplementary Data26Item 9Changes in and Disagreements With Accountants on Accounting and Financial Disclosure26Item 9AControls and Procedures26Item 9BOther Information27 Part III Item 10Directors, Executive Officers and Corporate Governance28Item 11Executive Compensation29Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters29Item 13Certain Relationships and Related Transactions, and Director Independence29Item 14Principal Accounting Fees and Services29 Part IV Item 15Exhibits, Financial Statement Schedules30Item 16Form 10-K Summary32 iTable of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”), other than purely historicalinformation, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of theSecurities 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 risks and uncertainties that are difficult to predict. Therefore, actual outcomes andresults may differ materially from what is expressed or forecasted in such forward-looking statements as a result of a variety of important factors. While itis impossible to identify all such factors, those that could cause actual results to differ materially from those estimated by us include the important factorsdiscussed in Part I — Item 1A. “Risk Factors” of this 2016 Form 10-K. 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 2016 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 orcorrections with respect thereto or with respect to other forward-looking statements. 1Table of Contents PART I Item 1.Business Overview We are the largest manufacturer of engineered steel pipe water systems in North America. With our strategically located Water Transmissionmanufacturing facilities, we are well-positioned to meet North America’s growing needs for water and wastewater infrastructure. We serve a wide range ofmarkets and our solutions-based products are a good fit for applications including water transmission, plant piping, tunnels and river crossings. We haveestablished a prominent position based on a strong and widely-recognized reputation for quality, service and an extensive range of products engineeredand 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 2016, 2015 and 2014 generatedapproximately 96%, 73% and 59%, 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 fornew water infrastructure, which is based primarily on overall population growth and population movement between regions, as well as by droughtconditions, which are causing a dwindling water supply from developed water sources. More recently, we have seen a trend towards spending on waterinfrastructure replacement, repair and upgrade. In 2016, 2015 and 2014 our Tubular Products Group generated approximately 4%, 27% and 41%, respectively, of our Net sales from continuingoperations. We are in the process of exploring the sale of our remaining Tubular Products business, which includes line, structural and standard pipe, andis located in Atchison, Kansas. This reflects our long-term objective to focus on our core Water Transmission business through organic growth initiativesas well as through merger and acquisition activity. The Atchison facility operated at reduced levels from April 2015 to January 2016, when we idled thefacility to reduce operating expenses until market conditions improve or a sale is completed. All of the remaining previously manufactured tubularproducts inventory was sold by the second quarter of 2016. In recognition of this strategic decision, the discussion in this Part 1 – Item 1. “Business” isfocused on the Water Transmission segment. Recent Business Developments On October 4, 2016, we completed the sale of our Denver, Colorado facility and recorded a gain on the sale of approximately $7.9 million in thefourth quarter of 2016. Production at the facility concluded in the fourth quarter of 2016, with final shipments and site demobilization concluding in thefirst quarter of 2017. Our Industries Water Transmission. Much of the United States water infrastructure is antiquated and many authorities, including the United States EnvironmentalProtection Agency (the “EPA”), believe the United States water infrastructure is in critical need of updates, repairs or replacements. In its 2011 DrinkingWater Infrastructure Needs Survey and Assessment released in June 2013, the EPA estimated the nation will need to spend $384 billion in infrastructureinvestments by 2030 to continue to provide safe drinking water to the public. The American Society of Civil Engineers (the “ASCE”) has given poorratings to many aspects of the United States water infrastructure in their 2013 Report Card for America’s Infrastructure, and in its Failure to Act: Closingthe Infrastructure Investment Gap for America’s Economic Future study published in 2016, the ASCE concludes that significant portions of manymunicipal water systems are 40 to 50 years old and are nearing the end of their useful lives, and estimates there will be $150 billion in capital investmentneeds for water and wastewater infrastructure by 2025 and $204 billion in capital investment needs by 2040. The American Water Works Associationconcluded in their 2012 report, Buried No Longer: Confronting America’s Water Infrastructure Challenge, that from 2011 to 2035 more than $1 trillionwill be needed to repair and expand drinking water infrastructure. Within this market, we focus on large diameter, engineered welded steel pipeline systems utilized in water, energy, structural and plant pipingapplications. Our core market is the large diameter, high-pressure portion of a water transmission pipeline that is typically at the “upper end” of a pipelinesystem. 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 intothe distribution system, rather than the small lines that deliver water directly into households. We believe the addressable market for the products sold byour Water Transmission Group will be approximately $1.4 billion over the next three years. A combination of population growth, movement to new population centers, dwindling supplies from developed water sources, substantialunderinvestment in water infrastructure over the past several decades and an increasingly stringent regulatory environment are driving demand for waterinfrastructure projects in the United States. These trends are increasing the need for new water infrastructure as well as the need to upgrade, repair andreplace existing water infrastructure. While we believe this offers the potential for increased demand for our water infrastructure products and otherproducts related to water transmission, we also expect that current governmental and public water agency budgetary pressures could impact near-termdemand. 2Table of Contents The primary drivers of growth in new water infrastructure installation are population growth and movement as well as dwindling supplies fromdeveloped water sources. According to the United States Census Bureau, the population of the United States will increase by approximately 74 millionpeople between 2016 and 2050. The resulting increase in demand will require substantial new infrastructure, as the existing United States waterinfrastructure is not equipped to provide water to millions of new residents. The development of new sources of water at greater distances from populationcenters will drive the demand for new water transmission lines. In addition, many current water supply sources are in danger of being exhausted, as water systems degrade over time and cause failures to theinfrastructure. Much of the drinking water infrastructure in major cities was built in the 1950s through 1970s, and the useful lives of component parts ofthis infrastructure ranges from 15 to 95 years. These aging water and wastewater systems will also drive demand for future investment. Finally, the increased public awareness of problems with the quality of drinking water and efficient water usage has resulted in more stringentapplication of federal and state environmental regulations. The need to comply with these regulations in an environment of heightened public awarenesstowards water issues is expected to contribute to demand in the water infrastructure industry over the next several years as water systems will need to beinstalled, upgraded and replaced. The 2017 Dodge Construction Outlook forecasts public works construction starts will grow by 6% from 2016 levels. Federal initiatives to improve the conditions of the aging water infrastructure include a new Water Finance Agency at the EPA and a RuralOpportunity Investment Initiative at the U.S. Department of Agriculture. The U.S. Senate passed the latest Water Resources Development Act, which wasincluded in the Water Infrastructure Improvements for the Nation Act signed by the President in December 2016, which authorizes new infrastructureprojects around the country and contains substantive provisions in regards to drinking water infrastructure. Additionally, the EPA announced theavailability of approximately $1 billion in credit assistance for water infrastructure projects under the new Water Infrastructure Finance and InnovationAct (“WIFIA”) program. EPA Administrator Gina McCarthy recently announced “WIFIA gives us a new opportunity to provide billions of dollars in low-interest loans to communities to build large infrastructure projects, significantly accelerating investments that benefit our nation’s public health andwater security for generations to come.” In addition to the Federal initiatives, individual states are also taking action. 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 supplyinfrastructure projects, such as public water system improvements, surface and groundwater storage, drinking water protection, water recycling andadvanced conveyance, wastewater treatment, drought relief, emergency water supplies and ecosystem and watershed protection and restoration. The Stateof Texas has earmarked $27 billion of future bond funding for state water projects over the next 50 years through their State Water Implementation Fundfor Texas (SWIFT). This program provides low-interest and deferred loans to state agencies making approved investments in water infrastructure projects.Our strategically located Water Transmission manufacturing facilities are well-positioned to take advantage of the anticipated growth in demand. Tubular Products. The tubular products industry encompasses a wide variety of products serving a diverse group of end markets. We have beenhistorically active in several of these markets, including energy, construction, agricultural, commercial and industrial systems; however, as discussed in“Overview” above, we are marketing the remaining assets in our Tubular Products business for sale. Products Water Transmission. Water transmission pipe is used for high-pressure applications, typically requiring pipe to withstand pressures in excess of 150pounds per square inch. Most of our water transmission products are made to custom specifications for fully engineered, large diameter, high-pressurewater infrastructure systems. Other uses include pipe for piling and hydroelectric projects, wastewater treatment plants and other applications. Our primarymanufacturing process has the capability to manufacture water transmission pipe in diameters ranging from 24 inches to 156 inches with wall thickness of0.135 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 productswith cement mortar, polyethylene tape, polyurethane paints, epoxies, Pritec® and coal tar enamel according to our customers’ specifications. Wemaintain fabrication facilities that provide installation contractors with custom fabricated sections as well as straight pipe sections. We typically deliver acomplete pipeline system to the installation contractor. We also manufacture Permalok® steel casing pipe, which is a proprietary pipe joining system thatemploys a press-fit interlocking connection system. The Permalok® product is generally installed in trenchless construction projects. Tubular Products. The tubular products we historically produced at our Atchison, Kansas facility ranged in size from 4.500 inches to 16 inches indiameter with wall thickness from 0.134 inch to 0.375 inch. These products were typically sold to distributors or original equipment manufacturers andwere used for a wide variety of applications, including energy, construction, agriculture and other commercial and industrial uses. As discussed in“Overview” above, we are marketing the remaining assets in our Tubular Products business for sale. 3Table of Contents Marketing Water Transmission. The primary customers for water transmission products are installation contractors for projects funded by public wateragencies. One customer accounted for 27% of total Net sales in 2016 and 16% of total Net sales from continuing operations in 2014. No customer of ourWater Transmission business accounted for 10% or more of our total Net sales in 2015. Our plant locations in Oregon, 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 Transmissionmarketing strategy emphasizes early identification of potential water projects, promotion of specifications consistent with our capabilities and closecontact with the project designers and owners throughout the design phase. Our in-house sales force is comprised of sales representatives, engineers andsupport personnel who work closely with public water agencies, contractors and engineering firms, often years in advance of projects being bid. Thisallows us to identify and evaluate planned projects at early stages, participate in the engineering and design process, and ultimately promote theadvantages of our systems. After an agency completes a design, they publicize the upcoming bid for a water transmission project. We then obtain detailedplans and develop our estimate for the pipe portion of the project. We typically bid to installation contractors who include our bid in their proposals topublic water agencies. A public water agency generally awards the entire project to the contractor with the lowest responsive bid. Tubular Products. Our tubular products were historically marketed through an in-house sales force, which has been reduced in conjunction withthe idling of the Atchison, Kansas facility. Our tubular products were primarily sold to distributors. Our marketing strategy focused on quality, customerservice and customer relationships. No customer of our Tubular Products business accounted for more than 10% of our total Net sales in 2016 or 2015.One customer of our Tubular Products business accounted for 10% of our total Net sales from continuing operations in 2014. Manufacturing Water Transmission. Water transmission manufacturing begins with the preparation of engineered drawings of each unique piece of pipe in aproject. These drawings are prepared on our proprietary computer-aided design system and are used as blueprints for the manufacture of the pipe. After thedrawings 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 usedto 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 testedand inspected in accordance with project specifications, which may include 100% radiographic analysis of the weld seam. The cylinders are then coatedand lined as specified. Possible coatings include coal tar enamel, polyethylene tape, polyurethane paint, epoxies, Pritec® and cement mortar. The insideof the pipe cylinders can be lined with cement mortar, polyurethane or epoxies. Following coating and lining, certain pieces may be custom fabricated asrequired for the project. This process is performed in our fabrication facilities. Typically, completed pipe segments are evaluated for structural integritywith 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 electric resistance welded (“ERW”) process in diameters ranging from 4.500 inches to16 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 tubularconfiguration. 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 andinspection equipment to improve both productivity and product quality. With the purchase of Permalok Corporation in December 2013, we acquiredcertain technologies with respect to an interlocking pipe joining system (Permalok®) that provides an alternate joint solution used for connecting steelpipes. To stay current with technological developments in the United States and abroad, we participate in trade shows, industry associations, researchprojects 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 andapplicable regulatory requirements. All of our quality management systems in the United States are registered by the International Organization forStandardization (“ISO”), under a multi-site registration. In addition to ISO qualification, the American Institute of Steel Construction, AmericanPetroleum Institute, American Society for Mechanical Engineers, Factory Mutual, National Sanitation Foundation and Underwriters Laboratory havecertified us for specific products or operations. The Quality Assurance department is responsible for monitoring and measuring characteristics of theproduct. Inspection capabilities include, but are not limited to, visual, dimensional, liquid penetrant, magnetic particle, hydrostatic, ultrasonic, real-timeimaging 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 allproduct requirements have been met. 4Table of Contents Product Liability. The manufacturing and use of our products involves a variety of risks. Certain losses may result, or be alleged to result, fromdefects in our products, thereby subjecting us to claims for damages, including consequential damages. We warrant our products to be free of certaindefects for one year. We maintain insurance coverage against potential product liability claims in the amount of $51 million, which we believe to beadequate. Historically, product liability claims against us have not been material. However, there can be no assurance that product liability claimsexceeding 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 thesuccessful bidder even though a binding agreement has not been executed. Projects for which a binding contract has not been executed could becanceled. Binding orders received by us may be subject to cancelation or postponement; however, cancelation would generally obligate the customer topay the costs incurred by us. As of December 31, 2016, the backlog of orders for our Water Transmission Group was approximately $66 million. Bindingcontracts had been executed for approximately 87% of the Water Transmission backlog as of February 10, 2017. As of December 31, 2015, the backlog oforders for our Water Transmission Group was approximately $116 million. Backlog as of any particular date may not be indicative of actual operatingresults 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 competitivelybid and price competition is vigorous. Price competition may reduce the gross margin on sales, which may adversely affect overall profitability. Othercompetitive factors include timely delivery, ability to meet customized specifications and high freight costs which may limit the ability of manufacturerslocated in other market areas to compete with us. With Water Transmission manufacturing facilities in Oregon, California, West Virginia, Texas, Missouri, Utah and Mexico, we believe we can moreeffectively compete throughout the United States, Canada and Mexico. Our primary competitor in the Water Transmission business in the western UnitedStates and southwestern Canada is NOV Ameron, a business unit of National Oilwell Varco, Inc. East of the Rocky Mountains, our primary competitionincludes: Forterra, Inc. (which was formerly Hanson Pipe & Precast and which acquired U.S. Pipe in 2016), which manufactures ductile iron pipe, concretepressure pipe and spiral welded steel pipe; and AMERICAN SpiralWeld Pipe Company, LLC, Mid America Pipe Fabricating and Supply Co., Inc. andJindal Steel and Power Limited, which manufacture 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. Newor 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 historically has been highly fragmented and diversified with over 100 manufacturers in theUnited States alone. Raw Materials and Supplies We have historically purchased hot rolled and galvanized steel coil from both domestic and foreign steel mills, however in 2016 all steel purchaseswere from domestic steel mills. Domestic suppliers include Steel Dynamics, Inc., Nucor Corporation, ArcelorMittal USA LLC, California Steel Industries,Inc., SSAB and United States Steel Corporation. Steel for the Water Transmission business is normally purchased only after a project has been awarded tous. From time to time, we may purchase additional steel when it is available at favorable prices. Purchased steel represents a substantial portion of our costof 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 mostof our raw materials. We believe our relationships with our suppliers are positive and have no indication that we will experience shortages of rawmaterials or components essential to our production processes or that we will be forced to seek alternative sources of supply. Any shortages of rawmaterials may result in production delays and costs, which could have a material adverse effect on our financial position, results of operations or cashflows. 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 couldlead 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 numerousgovernmental permits and licenses relating to air emissions, stormwater runoff and other environmental matters, and we are also subject to environmentallaws requiring the investigation and cleanup of environmental contamination at properties we presently own or operate and at third-party disposal ortreatment facilities to which these sites send or arrange to send hazardous waste. For example, we have been identified as a potentially responsible party atthe Portland Harbor Site discussed in Note 14 of the Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements andSupplementary Data” of this 2016 Form 10-K. We believe we are in material compliance with these laws and regulations and do not currently believe thatfuture compliance with such laws and regulations will have a material adverse effect on our financial position, results of operations or cash flows. 5Table of Contents Based on our assessment of potential liability, we have established a reserve for an ongoing environmental assessment and potential remediationproject at our former Tubular Products manufacturing facility in Houston, Texas. At this time, we have no other reserves for environmental investigationsand cleanup. However, estimating liabilities for environmental investigations and cleanup is complex and dependent upon a number of factors beyondour control which may change dramatically. Accordingly, although we believe our current environmental reserves are appropriate based on currentinformation, we cannot provide assurance that our future environmental investigation and cleanup costs and liabilities will not result in a materialexpense. Employees As of January 31, 2017, we had approximately 583 full-time employees. Approximately 66% were salaried and approximately 34% were employedon an hourly basis. All of our employees are non-union, with exception of the hourly employees at our Monterrey, Mexico facility, which representapproximately 7% of our employees. We consider our relations with our employees to be good. Geographic Information We sold principally all of our products in the United States and Canada. As of December 31, 2016, all material long-lived assets are located in theUnited States. See Note 17 of the Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements and Supplementary Data” of this2016 Form 10-K. Executive Officers of the Registrant Information regarding our executive officers is set forth under the caption “Directors, Executive Officers, Promoters and Control Persons” in Part III— Item 10. “Directors, Executive Officers and Corporate Governance” of this 2016 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-Kand 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 soonas reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). Allstatements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in whichthe 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 doso by law. Our internet website and the information contained therein or connected thereto are not incorporated into this 2016 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. TheSEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronicallywith the SEC at www.sec.gov. 6Table of Contents Item 1A.Risk Factors You should carefully consider the following factors, together with all the other information included in this 2016 Form 10-K, in evaluating ourcompany and our business. If any of the following risks actually occur, our business, financial condition, results of operations or cash flows could bematerially and adversely affected, and the value of our stock could decline. The risks and uncertainties described below are those that we currentlybelieve may materially affect our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also mayimpair 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 Our Water Transmission business faces an overcapacity situation due to recent capacity expansions as well as the potential for increasedcompetition 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. In a market that already hasovercapacity issues, the recent increases in capacity have negatively affected our sales, gross margins and overall profitability. Other competitive factorsinclude timely delivery, ability to meet customized specifications and high freight costs. Although our Water Transmission manufacturing facilities inOregon, California, West Virginia, Texas, Missouri, Utah and Mexico allow us to compete throughout the United States, Canada and Mexico, we cannotassure you that new or existing competitors will not establish new facilities or expand capacity further within our market areas. In February 2017, acompetitor announced it was building a new spiral-welded steel pipe mill in California. New or expanded facilities or new competitors could have amaterial adverse effect on our market share, product pricing, sales, gross margins and overall profitability in our Water Transmission business. Water transmission pipe is manufactured generally from steel, concrete, ductile iron, PVC or HDPE. Each pipe material has advantages anddisadvantages. Steel and concrete are more common materials for larger diameter water transmission pipelines because ductile iron pipe generally islimited in diameter due to the manufacturing process. The public agencies and engineers who determine the specifications for water transmission projectsanalyze these pipe materials for suitability for each project. Individual project circumstances normally dictate the preferred material. If we experience costincreases in raw materials, labor and overhead specific to our industry or the location of our facilities, while competing products or companies do notexperience similar changes, we could experience an adverse change in the demand, price and profitability of our products, which could have a materialadverse effect on our business, financial position, results of operations or cash flows. A downturn in government spending related to public water transmission projects would adversely affect our business. Our Water Transmissionbusiness accounted for approximately 96% of our Net sales in 2016. Our Water Transmission business is primarily dependent upon spending on publicwater 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 obtainfinancing; 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. Project delays in public water transmission projects could adversely affect our business. The public water agencies constructing watertransmission projects generally announce the projects well in advance of the bidding and construction process. It is not unusual for projects to be delayedand rescheduled. Projects are delayed and rescheduled for a number of reasons, including changes in project priorities, difficulties in complying withenvironmental 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 ourmanufacturing schedules. As a result, our business, financial position, results of operations or cash flows may be adversely affected by unplanneddowntime. Fluctuations in steel prices may affect our future results of operations. Purchased steel represents a substantial portion of our cost of sales. Thesteel industry is highly cyclical in nature, and at times, pricing can be highly volatile due to a number of factors beyond our control, including generaleconomic conditions, import duties, other trade restrictions and currency exchange rates. Over the past three years, steel prices have fluctuatedsignificantly. Our cost for a ton of steel from continuing operations was approximately $474 per ton in 2016, $573 per ton in 2015 and $746 per ton in2014. In 2016, our monthly average steel purchasing costs ranged from a high of approximately $610 per ton to a low of approximately $413 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, wehave 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. 7Table of Contents Our Water Transmission backlog is subject to reduction and cancelation. Backlog represents products or services that our customers havecommitted to purchase from us and projects for which we have been notified that we are the successful bidder even though a binding agreement has notbeen executed. Projects for which a binding contract has not been executed could be canceled. Our backlog of orders for our Water Transmission businesswas approximately $66 million as of December 31, 2016. Our backlog is subject to fluctuations; moreover, cancelations of purchase orders, change orderson contracts or reductions of product quantities could materially reduce our backlog and, consequently, future revenues. Our failure to replace canceledor 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 marketacceptance, which could adversely affect our growth. We will continue to actively seek to develop new products and to expand our existing productsinto 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 adverselyaffected, which could adversely 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 slowdownor recession. Periods of economic slowdown or recession in the United States, or the public perception that one may occur, have and could furtherdecrease the demand for our products, affect the price of our products and adversely impact our business. We have been impacted in the past by thegeneral slowing of the economy, and the economic slowdown has had an adverse impact on our business, financial position, results of operations or cashflows. Operating problems in our business could adversely affect our business, financial position, results of operations or cash flows. Ourmanufacturing 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 orworkplace. The occurrence of any of these operating problems at our facilities may have a material adverse effect on the productivity and profitability of aparticular manufacturing facility or on our operations as a whole, during and after the period of these operating difficulties. These operating problemsmay 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 withrespect to workplace injury, exposure to hazardous materials, workers’ compensation and other matters. Although we maintain property and casualtyinsurance of the types and in the amounts that we believe are customary for our industries, we cannot assure you that our insurance coverage will beadequate for liability that may be ultimately incurred or that such coverage will continue to be available to us on commercially reasonable terms. Anyclaims that result in liability exceeding our insurance coverage could have an adverse effect on our business, financial position, results of operations orcash flows. 8Table of Contents Our quarterly results of operations are subject to significant fluctuation. Our net sales and operating results may fluctuate significantly fromquarter 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 bemeaningful. We face risks in connection with potential acquisitions and divestitures. Acquiring businesses that expand and/or complement our operations hasbeen 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 toeffectively integrate any future acquisitions will depend on, among other things, the adequacy of our implementation plans, the ability of ourmanagement to oversee and operate effectively the combined operations and our ability to achieve desired operational efficiencies. We may also considerother 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 toattract a business partner in which to enter into a joint-venture or a buyer willing to purchase our business units (including our remaining TubularProducts 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 ofoperations 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 suchclaims. While we currently have product liability insurance, we cannot assure you that our product liability insurance coverage will be adequate forliabilities that may be incurred in the future or that such coverage will continue to be available to us on commercially reasonable terms. Any claimsrelating 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 ourvendors that are incorporated into our products during the manufacturing process. The cost to repair, remake or replace defective products could begreater than the amount that can be recovered from the vendor. Such excess costs could have an adverse effect on our business, financial position, resultsof 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 exportsproducts to the United States. We may operate in additional countries in the future. Any material changes in the quotas, regulations or duties on importsimposed by the United States government and our agencies or on exports imposed by these foreign governments and their agencies could adversely affectour 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 foreigncountry, 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 ouroperations in the future by reducing the demand for our products and services, decreasing the prices at which we can sell our products or increasing costssuch that there would be an adverse effect on our business, financial position, results of operations or cash flows. We cannot assure you that we willcontinue to operate in compliance with applicable customs, currency exchange control regulations, transfer pricing regulations or any other laws orregulations 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 applicableregulations or laws, or any changes in any such regulations or laws could have a material adverse effect on our business, financial position, results ofoperations or cash flows. 9Table of Contents Our use of the percentage-of-completion method of accounting includes estimates. Revenue from construction contracts in our WaterTransmission business is recognized on the percentage-of-completion method, measured by the costs incurred to date as a percentage of the estimatedtotal costs of each contract (the cost-to-cost method). Estimated total costs of each contract are reviewed on a monthly basis by project management andoperations 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 twopercent are reviewed by senior management personnel. The estimated cost to complete each contract is a significant variable in the process of determining income earned and is a significant factor in theaccounting for contracts. The cumulative impact of revisions in total cost estimates during the progress of work is reflected in the period in which thesechanges become known. Due to the variability of events affecting our estimates which have a material impact on our contract accounting, actual resultscould 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 remediationcosts, 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 ourmanufacturing processes. Compliance with these laws and regulations is a significant factor in our business. We have incurred, and expect to continue toincur, significant expenditures to comply with applicable environmental laws and regulations. Our failure to comply with applicable environmental lawsand regulations and permit requirements could result in civil or criminal fines or penalties or enforcement actions, including regulatory or judicial ordersenjoining 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 ourproperty, and for addressing environmental conditions, including, but not limited to, the issues associated with our Portland, Oregon and Houston, Texasfacilities as discussed in Note 14 of the Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements and Supplementary Data”of this 2016 Form 10-K. Some environmental laws and regulations impose liability and responsibility on present and former owners, operators or users offacilities and sites for contamination at such facilities and sites without regard to causation or knowledge of contamination. Consequently, we cannotassure you that existing or future circumstances, the development of new facts or the failure of third parties to address contamination at current or formerfacilities 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 thefuture 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 liabilitiesarising, for example, out of discovery of previously unknown conditions or more aggressive enforcement actions, could adversely affect our results ofoperations, and there is no assurance that they will not have a material adverse effect on our business, financial position, results of operations or cashflows. Increased levels of imports have and could continue to adversely affect pricing and demand for our products. We believe import levels areaffected 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 productshas historically impacted the domestic tubular products market and reduced the demand for our tubular products, a situation we expect to continue. Whileimported pipe has historically most affected our Tubular Products business, imported pipe could have a greater effect on our Water Transmission businessin the future. Additionally, high levels of imported tubular products have led at least one domestic manufacturer of tubular products to recently enter thewater transmission market, and other tubular products manufacturers could do the same in the future. Increased imports in the United States and Canadawhich compete with our Water Transmission products could reduce demand for our products in the future and adversely affect our business, financialposition, results of operations or cash flows. Our information technology systems can be negatively affected by cyber security threats. Increased global information technology securityrequirements, vulnerabilities, threats and a rise in sophisticated and targeted computer crime pose a risk to the security of our systems, networks and theconfidentiality, availability and integrity of our data. Despite our efforts to protect sensitive information and confidential and personal data, our facilitiesand systems and those of our third-party service providers may be vulnerable to security breaches. This could lead to disclosure, modification ordestruction of proprietary, employee and other key information and operational disruptions, which in turn could adversely affect our reputation,competitiveness and results of operations. 10Table of Contents Our plan to explore the sale of our remaining Tubular Products business may not result in a transaction or a transaction may cause us torecognize a loss. We are exploring the sale of our remaining Tubular Products business to focus on our core Water Transmission business. The process toexplore 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 processwill 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 potentialtransactions 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 weare 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 ofa transaction. In addition, the market price of our common stock could be highly volatile during the period in which we explore the sale and maycontinue 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 belowthe current carrying value of Tubular Products’ net assets. This could result in recognition of a material loss on the disposition of that business whichcould adversely affect our financial position, results of operations or cash flows. Our Tubular Products business faces difficult market conditions. Our Tubular Products business is exposed to the energy markets. Our line pipeproducts, which serve the energy market, comprise 65%, 58% and 77% of our tons sold in 2016, 2015 and 2014, respectively, for our continuingoperations 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. Additionally, the market for our tubularproducts is over-supplied, driven by high levels of imported product and increased domestic capacity and production in the United States and Canada.The Atchison, Kansas facility operated at reduced levels from April 2015 to January 2016, when we idled the facility to reduce operating expenses untilmarket conditions improve or a sale is completed. A protracted weak market for our tubular products could adversely affect our business, financialposition, 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 TubularProducts business has incurred operating losses in the past, and is likely to do so until the Atchison, Kansas facility is either restarted or sold. Some fixedcosts will continue to be incurred while the plant is idled, generating ongoing operating losses. An accumulation of operating losses could result in animpairment 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. Risks Related to Our Financial Condition We will need to substantially increase working capital if market conditions and customer order levels improve. If market conditions andcustomer order levels improve, we will have to increase our working capital substantially, as it will take several months for new orders to be translatedinto cash receipts. In general, borrowings under our Loan and Security Agreement (the “Agreement”) with Bank of America, N.A. are limited to the lesserof $60 million or availability under a borrowing base, which is subject to various sublimits and borrowing restrictions as determined under ourAgreement. As of December 31, 2016, we had $13.0 million available to borrow under our Agreement. We may not have sufficient availability under ourAgreement to borrow the amounts we need, and other opportunities to borrow additional funds or raise capital in the equity markets may be limited ornonexistent. A shortage in the availability of working capital would have a material adverse effect on our business, financial condition, results ofoperations or cash flows. The restrictions under which we operate as a result of our debt agreements could have a material adverse effect on our business, financialcondition, results of operations or cash flows. We have financed our operations through cash flows from operations, available borrowings and otherfinancing arrangements. As of December 31, 2016, we had approximately $0.9 million of capital lease obligations and no outstanding borrowings on ourline 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. 11Table of Contents Our ability to make scheduled payments on our current and future debt will depend on our future operating performance and cash flows, which aresubject to prevailing economic conditions, prevailing interest rate levels and other financial, competitive and business factors, many of which are beyondour 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. Our failure to comply with covenants in our debt agreements could result in our indebtedness being immediately due and payable, whichwould have a material adverse effect on our business, financial condition, results of operations or cash flows. The agreements governing our currentand future debt include covenants that impose certain requirements with respect to our financial condition and results of operations and general businessactivities. These covenants place restrictions on, among other things, our ability to incur certain additional debt and to create liens or other encumbranceson 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 andfinancial condition as well as other events and circumstances beyond our control. If market and other economic conditions do not improve, our ability tocomply with these covenants may be impaired. A failure to comply with the requirements of these covenants, if not waived or cured, could permitacceleration 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 wewould be able to refinance such debt on commercially reasonable terms or at all. The acceleration of a significant portion of our debt would have amaterial adverse effect on our business, financial condition, results of operations or cash flows. Disruptions in the financial markets and a general economic slowdown could cause us to be unable to obtain financing and expose us to risksrelated to the overall macro-economic environment, which could have a material adverse effect on our business, financial condition, results ofoperations or cash flows. The United States equity and credit markets have experienced significant price volatility, dislocations and liquiditydisruptions, which have caused market prices of many equities to fluctuate substantially and the spreads on prospective debt financings to widenconsiderably. These circumstances have materially impacted liquidity in the financial markets, making terms for certain financings less attractive, and insome cases have resulted in the unavailability of financing, even for companies who are otherwise qualified to obtain financing. These events may makeit 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 throughthe 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 year ended December 31, 2014 a material weakness in ourinternal control over financial reporting related to goodwill was identified. A “material weakness” is a deficiency, or a combination of deficiencies, ininternal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim ConsolidatedFinancial 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, 2016 or 2015. However, we cannot assure you that additional material weaknesses inour 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 ourfinancial statements. These misstatements could result in a restatement of financial statements, cause us to fail to meet our reporting obligations or causeinvestors 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 arelisted on the Nasdaq Global Select Market (“Nasdaq”), we have historically experienced a relatively low trading volume. If we have a low trading volumein 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 mightotherwise be attainable. The market price of our common stock could be subject to significant fluctuations. The market price of our common stock has experienced, andmay 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; 12Table of Contents •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 particularcompanies. 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 incorporationcontain 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 ofcommon 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 determinethe 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 andmay encourage parties interested in acquiring us to negotiate in advance with our board of directors. We also have a shareholder rights plan that acts todiscourage 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 ofdirectors. Any of these provisions could discourage potential acquisition proposals, could deter, delay or prevent a change in control that ourshareholders consider favorable and could depress the market value of our common stock. Item 1B.Unresolved Staff Comments None. Item 2.Properties Our facilities serve regional markets, which vary in the number and sizes of projects year-over-year. Consequently, we have excess manufacturingcapacity from time to time at each of our facilities. We believe the quality and productive capacity of our facilities are sufficient to maintain ourcompetitive position for the foreseeable future. The following tables provide certain information about our operating facilities as of December 31, 2016: Water Transmission Group Location ManufacturingSpace(approx. sq. ft.) Property Size(approx. acres) Number and Type of MillsPortland, Oregon 300,000 25 3 Spiral millsAdelanto, California 200,000 100 3 Spiral mills, 1 Plate rollDenver, Colorado 182,000 40 2 Spiral millsParkersburg, West Virginia 145,000 90 2 Spiral millsSaginaw, Texas (2 facilities) 170,000 50 2 Spiral millsMonterrey, Mexico 40,000 5 Multiple line fabrication capabilitySt Louis, Missouri 100,000 20 2 Plate rollsSalt Lake City, Utah 47,000 1 2 Plate rolls As of December 31, 2016, we owned all of our Water Transmission facilities except for our Denver, Colorado facility, one of our Saginaw, Texasfacilities, our St. Louis facility and our Salt Lake City facility, which are leased. The Denver, Colorado facility was sold on October 4, 2016, and under thesales agreement we leased the property back from the buyer until March 1, 2017. Additionally, land adjacent to our Portland facility used for parking andpipe storage is leased. 13Table of Contents Tubular Products Group Location ManufacturingSpace(approx. sq. ft.) Property Size(approx. acres) Number and Type of MillsAtchison, Kansas 106,000 60 2 Electric resistance mills Item 3.Legal Proceedings We are party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages.We do not believe that such normal and routine litigation will have a material impact on our consolidated financial results. We are also involved in otherkinds of legal actions, some of which assert or may assert claims or seek to impose fines, penalties and other costs in substantial amounts. See Note 14 ofthe Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements and Supplementary Data” of this 2016 Form 10-K. Item 4.Mine Safety Disclosures Not applicable. 14Table of Contents PART II Item 5.Market for 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 thehighest and lowest closing sales prices for our common stock on the Nasdaq during each quarter of the two most recent years. Low High 2016 First Quarter $7.74 $11.18 Second Quarter 8.56 10.80 Third Quarter 10.59 12.33 Fourth Quarter 11.94 18.77 2015 First Quarter $22.24 $28.84 Second Quarter 19.94 24.95 Third Quarter 12.65 19.99 Fourth Quarter 10.03 15.43 There were 38 shareholders of record as of February 16, 2017. 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 2016 or2015, 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 notregistered under the Securities Act. 15Table of Contents 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 indexof certain peer companies (the “Peer Group”) selected by us. The Russell 2000 Index measures the performance of the small-cap segment of the U.S.equity markets. The Peer Group is comprised of Mueller Water Products, Inc., Lindsay Corporation and Aegion Corporation. The comparisons in the chart below are provided in response to SEC disclosure requirements and, therefore, are not intended to forecast or beindicative of future performance of our common stock. Indexed Return Northwest PipeCompany Russell 2000 Index Peer Group December 31, 2011 100.00 100.00 100.00 December 31, 2012 104.37 116.35 165.75 December 31, 2013 165.18 161.52 203.67 December 31, 2014 131.76 169.43 208.34 December 31, 2015 48.95 161.95 185.26 December 31, 2016 75.33 196.45 247.88 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 Ownersand Management and Related Stockholder Matters” of this 2016 Form 10-K. 16Table of Contents Item 6.Selected Financial Data The following tables include selected consolidated financial data and should be read in conjunction with Part II — Item 8. “Financial Statementsand Supplementary Data,” and Part II — Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this 2016Form 10-K. The consolidated financial data as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 are derived from ouraudited Consolidated Financial Statements included in this 2016 Form 10-K. The consolidated financial data as of December 31, 2014, 2013 and 2012and for the years ended December 31, 2013 and 2012 are derived from audited Consolidated Financial Statements which are not included in this 2016Form 10-K. Year Ended December 31, 2016 2015 2014 2013 2012 (In thousands, except per share amounts) Consolidated Statement of Operations Data: Net sales $156,256 $236,608 $403,298 $359,445 $388,902 Gross profit (loss) (3,225) (12,625) 40,576 60,236 59,108 Income (loss) from continuing operations (9,263) (29,388) (6,173) 21,676 17,501 Loss from discontinued operations - - (11,714) (22,599) (1,257)Net income (loss) $(9,263) $(29,388) $(17,887) $(923) $16,244 Earnings per Common Share: Basic - Income (loss) from continuing operations $(0.97) $(3.07) $(0.65) $2.29 $1.87 Loss from discontinued operations - - (1.23) (2.39) (0.14)Net income (loss) per share $(0.97) $(3.07) $(1.88) $(0.10) $1.73 Diluted - Income (loss) from continuing operations $(0.97) $(3.07) $(0.65) $2.27 $1.85 Loss from discontinued operations - - (1.23) (2.37) (0.13)Net income (loss) per share assuming dilution $(0.97) $(3.07) $(1.88) $(0.10) $1.72 December 31, 2016 2015 2014 2013 2012 (In thousands) Consolidated Balance Sheet Data: Working capital $93,625 $93,709 $165,683 $195,357 $167,392 Total assets 241,555 259,380 351,882 433,459 422,422 Long-term debt and capital lease obligations, less currentportion 602 718 45,812 94,241 63,069 Stockholders' equity 209,213 217,560 245,635 261,850 259,432 17Table of Contents Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is management's discussion and analysis of certain significant factors that have affected our consolidated financial condition and results ofoperations during the periods included herein. This discussion should be read in conjunction with our historical Consolidated Financial Statements andNotes to Consolidated Financial Statements in Part II – Item 8. “Financial Statements and Supplementary Data” of this 2016 Form 10-K. This discussioncontains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially fromthose anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I – Item 1A. “Risk Factors” or inother parts of this 2016 Form 10-K. Overview Water Transmission Group. We are the largest manufacturer of engineered steel pipe water systems in North America. With our strategicallylocated Water Transmission manufacturing facilities, we are well-positioned to meet North America’s growing needs for water and wastewaterinfrastructure. We serve a wide range of markets and our solutions-based products are a good fit for applications including water transmission, plantpiping, tunnels and river crossings. We have established a prominent position based on a strong and widely-recognized reputation for quality, service andan extensive range of products engineered and manufactured to meet expectations in all categories of performance including highly corrosiveenvironments. These pipeline systems are produced by our Water Transmission Group from several manufacturing facilities, which are located inPortland, Oregon; Denver, Colorado (sold in October 2016); Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas; Salt Lake City, Utah; St.Louis, Missouri; and Monterrey, Mexico. Our Water Transmission Group accounted for approximately 96% of Net sales in 2016. Our water infrastructure products are sold generally to installation contractors, who include our products in their bids to municipal agencies orprivately-owned water companies for specific projects. We believe our sales are substantially driven by spending on new water infrastructure with a recenttrend towards spending on water infrastructure replacement, repair and upgrade. Within the total range of pipe products, our products tend to fit the largerdiameter, higher-pressure applications. Tubular Products Group. We are in the process of exploring the sale of our remaining Tubular Products business, which includes line, structuraland standard pipe, and is located in Atchison, Kansas. This reflects our long-term objective to focus on our core Water Transmission business throughorganic growth initiatives as well as through merger and acquisition activity. The Atchison facility operated at reduced levels from April 2015 to January2016, when we idled the facility to reduce operating expenses until market conditions improve or a sale is completed. All of the remaining previouslymanufactured tubular products inventory was sold by the second quarter of 2016. Our Tubular Products Group accounted for approximately 4% of Netsales in 2016. 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 sometimespart of 50-year build out plans. Long-term demand for water infrastructure projects in the United States appears strong. However, in the near term, weexpect that strained governmental and water agency budgets and increased capacity from competition could impact the Water Transmission Group.Fluctuating steel costs will also be a factor, as the ability to adjust our selling prices as steel costs fluctuate will depend on market conditions. Purchasedsteel represents a substantial portion of our cost of sales, and changes in our selling prices often correlate directly to changes in steel costs. 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. In addition to these macroeconomic factors, we continue to face pressures from significant volumes offoreign imports of tubular products, as well as 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 included inPart II — Item 8. “Financial Statements and Supplementary Data” of this 2016 Form 10-K, which have been prepared in accordance with accountingprinciples generally accepted in the United States of America. 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 otherassumptions that are believed to be reasonable under the circumstances. On an ongoing basis, we evaluate all of our estimates, including those related torevenue recognition, inventories, property and equipment, including depreciation and valuation, goodwill, share-based compensation, income taxes,allowance for doubtful accounts and litigation and other contingencies. Actual results may differ from these estimates under different assumptions orconditions. We believe the following critical accounting policies and related judgments and estimates affect the preparation of our ConsolidatedFinancial Statements. 18Table of Contents Revenue Recognition: Revenue from construction contracts in our Water Transmission Group is recognized on the percentage-of-completion method. For a majority ofcontracts, revenue is measured by the costs incurred to date as a percentage of the estimated total costs of each contract (the cost-to-cost method).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 costwhen the steel is introduced into the manufacturing process. Estimated total costs of each contract are reviewed on a monthly basis by projectmanagement and operations personnel for all active projects. All cost revisions that result in the gross profit as a percent of sales increasing or decreasingby 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 projectcosts are incurred. Costs may be incurred before we have persuasive evidence of an arrangement. In those cases, if recoverability from that arrangement isprobable, 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 penaltyprovisions, foreign currency exchange rate movements, changes in raw materials costs and final contract settlements may result in revisions to estimatesof revenue, costs and income and are recognized in the period in which the revisions are determined. Provisions for losses on uncompleted contracts aremade 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, includingprojecting selling prices and cost of sales. To project market value, we review recent sales and gross profit history, existing customer orders, currentcontract 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. Raw material inventoriesof steel, stated at cost, are either on a specific identification basis or on an average cost basis. All other raw material inventories, as well as work-in-processand supplies, stated at cost, are on an average cost basis. Finished goods, stated at cost, use the first-in, first-out method of accounting. 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 dependingon the classification of the asset. Depreciation expense calculated under the units of production method may be less than, equal to, or greater thandepreciation expense calculated under the straight-line method. We evaluate historical and projected units of production at each plant to reassess theunits 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 berecoverable. The recoverable value of long-lived assets is determined by estimating future undiscounted cash flows using assumptions about ourexpected future operating performance. Estimates of future cash flows used in the recoverability test incorporate our own assumptions about the use of theasset group and shall consider all available evidence. Our estimates of undiscounted cash flows may differ from actual cash flow due to, among otherthings, technological changes, economic conditions or changes to our business operations. If we determine the carrying value of the property andequipment will not be recoverable, we calculate and record an impairment loss. This analysis is performed prior to assessing goodwill for impairment. Dueto continued difficult market conditions for our Tubular Products business, and our exploration of a sale of this business during this difficult market, it isat least reasonably possible that property and equipment associated with the Tubular Products business will be impaired and/or a loss on disposalincurred at some point in the future. 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 ontheir estimated fair values. Goodwill is recorded for the excess of the fair value of purchase consideration over the fair values of these identifiable assetsand liabilities. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.Contingent consideration associated with the combination 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 ofinformation received regarding the valuation of assets and liabilities after the acquisition date, with the corresponding offset to goodwill. Upon theconclusion of the measurement period, any subsequent adjustments are recorded to earnings. As of December 31, 2016, we have no goodwill assets after recording write-offs in 2014 and 2015 as explained in greater detail below. Prior tothose write-offs, goodwill was reviewed for impairment annually as of December 31 or when events occurred or circumstances changed that indicatedgoodwill may be impaired. We tested goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or one level below anoperating segment (also known as a component). Our reporting units are equivalent to our operating segments as the individual components meet thecriteria for aggregation. 19Table of Contents Fair value of goodwill is first evaluated under a qualitative approach which takes into account industry and market conditions, cost factors, overallfinancial performance and other relevant entity specific events and changes. In the evaluation of our operating segments, we look at the long-termprospects for the reporting units and recognize that current performance may not be the best indicator of future prospects or value, which requiresmanagement judgment. If this analysis determines that it is more likely than not that the fair value of goodwill is above its carrying value, no furtheranalysis 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 marketapproaches. The income approach is based upon projected future after-tax cash flows discounted to present value using factors that consider the timingand risk associated with the future after-tax cash flows. The market approach is based upon historical and/or forward-looking measures using multiples ofrevenue or earnings before interest, tax, depreciation and amortization. We utilize a weighted average of the income and market approaches, with aheavier weighting on the income approach because of the relatively limited number of direct comparable entities for which relevant multiples areavailable. If the carrying value of the reporting unit exceeds its calculated enterprise value, then we continue to assess the fair value of individual assetsand liabilities, other than goodwill. The difference between the reporting unit enterprise value and the fair value of its identifiable net assets is theimplied fair value of the reporting unit’s goodwill. A goodwill impairment loss is recorded for the difference between the implied fair value and itscarrying value. Goodwill of $4.4 million related to the sale of our discontinued oil country tubular goods (“OCTG”) business in March 2014 was written off as partof the loss on sale of business. Goodwill related to our Tubular Products Group of $16.1 million was evaluated using a quantitative impairment test as of December 31, 2014. Weconcluded 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 our Water Transmission Group of $5.3 million was evaluated using a quantitative impairment test as of June 30, 2015, due todeclining Water Transmission market conditions. We concluded that there was no implied fair value of the Water Transmission Group goodwill and thatit should be completely written off as of June 30, 2015. Share-based Compensation: We recognize the compensation cost of employee and director services received in exchange for awards of equity instruments based on the grantdate estimated fair value of the awards. Share-based compensation cost is recognized over the period during which the employee or director is required toprovide 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 and performance share awards (“PSAs”) using the value of our stock on the date of grant, with theexception of market-based PSAs, for which a Monte Carlo simulation model is used. The Monte Carlo simulation model calculates many potentialoutcomes 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 income tax assets and liabilities for theexpected future tax consequences of events that have been recognized in our Consolidated Financial Statements or tax returns. Valuation allowances areestablished when necessary to reduce deferred income tax assets to the amount expected to be realized. The determination of our provision for incometaxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our provision for income taxesprimarily 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 forunrecognized tax benefits or valuation allowances and our change in the mix of earnings from these taxing jurisdictions all affect the overall effectiveincome tax rate. We record income tax reserves for federal, state, local and international exposures relating to periods subject to audit. The development of reservesfor these exposures requires judgments about tax issues, potential outcomes and timing, and is a subjective estimate. We assess our income tax positionsand record income tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and informationavailable at the reporting dates. For those income tax positions where it is more-likely-than-not that an income tax benefit will be sustained, we haverecorded the largest amount of income tax benefit with a greater than 50% likelihood of being realized upon settlement with a tax authority that has fullknowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that an income tax benefit will be sustained, noincome tax benefit has been recognized in the Consolidated Financial Statements. 20Table of Contents Allowance for Doubtful Accounts: We maintain allowances for estimated losses resulting from the inability of our customers to make required payments based on historicalexperience and management’s judgment. The extension and revision of credit is established by obtaining credit rating reports or financial information onthe customer. An allowance is recorded based on a variety of factors, including our historical collection experience and our historical product qualityclaims. 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 oncethe account is deemed uncollectible for reasons such as customer quality claims, a contract dispute, deterioration in the customer’s financial position, abankruptcy filing or other events. We believe the reported allowances as of December 31, 2016 are adequate. If the customer’s financial conditions wereto deteriorate resulting in their inability to make payments, additional allowances may need to be recorded which would result in additional expensebeing 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 operationsexpressed 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, 2016 Year Ended December 31, 2015 Year Ended December 31,2014 $ % of NetSales $ % of NetSales $ % of NetSales Net sales: Water Transmission $149,387 95.6% $173,160 73.2% $238,545 59.1%Tubular Products 6,869 4.4 63,448 26.8 164,753 40.9 Total net sales 156,256 100.0 236,608 100.0 403,298 100.0 Cost of sales 159,481 102.1 249,233 105.3 362,722 89.9 Gross profit (loss) (3,225) (2.1) (12,625) (5.3) 40,576 10.1 Selling, general and administrativeexpense 17,178 11.0 22,303 9.5 24,316 6.0 Impairment of goodwill - 0.0 5,282 2.2 16,066 4.0 Gain on sale of facility (7,860) (5.0) - 0.0 - 0.0 Restructuring expense 990 0.6 - 0.0 - 0.0 Operating income (loss) (13,533) (8.7) (40,210) (17.0) 194 0.1 Other income 23 0.0 88 0.0 108 0.0 Interest income 14 0.0 173 0.1 466 0.1 Interest expense (523) (0.3) (1,390) (0.6) (2,290) (0.6)Loss before income taxes (14,019) (9.0) (41,339) (17.5) (1,522) (0.4)Income tax expense (benefit) (4,756) (3.0) (11,951) (5.1) 4,651 1.1 Loss from continuing operations (9,263) (6.0) (29,388) (12.4) (6,173) (1.5)Discontinued operations: Loss from operations of discontinuedbusiness - 0.0 - 0.0 (2,151) (0.5)Loss on sale of business - 0.0 - 0.0 (13,497) (3.4)Income tax benefit - 0.0 - 0.0 (3,934) (1.0)Loss on discontinued operations - 0.0 - 0.0 (11,714) (2.9) Net loss $(9,263) (6.0)% $(29,388) (12.4)% $(17,887) (4.4)% Segment gross profit (loss) as apercentage of segment net sales: Water Transmission (0.2)% 0.3% 16.6%Tubular Products (42.3) (20.9) 0.6 Year Ended December 31, 2016 Compared to Year Ended December 31, 2015 As discussed above, we are in the process of exploring the sale of our remaining Tubular Products business, and we operated the Atchison, Kansasfacility at reduced levels from April 2015 to January 2016, at which time we idled the facility to reduce operating expenses until market conditionsimprove or a sale is completed. All of the remaining previously manufactured tubular products inventory was sold by the second quarter of 2016. Inrecognition of this strategic decision, the discussion below is focused on the Water Transmission segment. Net sales. Net sales decreased by $80.3 million to $156.3 million in 2016 from $236.6 million in 2015. One customer accounted for 27% of totalNet sales in 2016. There were no customers accounting for 10% of Net sales in 2015. Water Transmission sales decreased 13.7% to $149.4 million in 2016 from $173.2 million in 2015. The decrease in Water Transmission sales wasdue to a 27% decrease in average selling price per ton offset in part by a 19% increase in tons produced. The decrease in selling prices per ton was due toa 15% decrease in steel costs per ton and increased competition, as well as a change in product mix. Bidding activity, backlog and production levels mayvary significantly from period to period affecting sales volumes. Gross profit (loss). Gross loss decreased 74.5% to a $3.2 million gross loss (negative 2.1% of total Net sales) in 2016 from a $12.6 million gross loss(negative 5.3% of total Net sales) in 2015. 21Table of Contents Water Transmission gross profit decreased 152.3% to a $0.3 million gross loss (negative 0.2% of segment Net sales) in 2016 from $0.6 million grossprofit (0.3% of segment Net sales) in 2015. The decrease in Water Transmission gross profit was due to the significant competition that we haveexperienced on our project bids, which has led to decreased selling prices, combined with the mix of projects produced in the year. Selling, general and administrative expense. Selling, general and administrative expense decreased 23.0% to $17.2 million (11.0% of Net sales) in2016 from $22.3 million (9.5% of Net sales) in 2015. The decrease was due primarily to $2.6 million in lower wages and benefits due to lower headcountand a $1.8 million decrease in professional fees. Gain on sale of facility. On October 4, 2016, we completed the sale of our Denver, Colorado facility and recorded a gain on the sale of $7.9 millionin the fourth quarter of 2016. Restructuring expense. In response to adverse market conditions, the decision was made in the second quarter of 2016 to close the Denver,Colorado facility (part of our Water Transmission segment) and sell the property. We incurred restructuring expenses of $1.0 million during the yearended December 31, 2016, which includes employee severance and termination related restructuring expenses of $0.5 million and expense related todemobilization activities of $0.5 million. Interest expense. Interest expense decreased to $0.5 million in 2016 from $1.4 million in 2015. The decrease was a result of a decrease inborrowings under the line of credit and capital leases in 2016 compared to 2015. Interest expense in 2015 included the write-off of unamortized financingcosts totaling $0.4 million associated with the termination of a bank line of credit agreement. Income taxes. The Income tax benefit was $4.8 million in 2016 (an effective income tax benefit rate of 33.9%) compared to an Income tax benefitof $12.0 million in 2015 (an effective income tax benefit rate of 28.9%). The effective income tax benefit rate for 2015 includes the impact of therecognition of research and development tax credits (which increased the effective income tax benefit rate) as well as non-deductibility of expense relatedto the impairment of goodwill and the valuation allowance recorded (both of which decreased the effective income tax benefit rate). The effective incometax rate can change significantly depending on the relationship of permanent income tax deductions and tax credits to estimated pre-tax income or lossand the changes in valuation allowances. Accordingly, the comparison of effective income tax rates between periods is not meaningful in all situations. 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 nocustomers accounting for 10% of Net sales from continuing operations in 2015. One customer accounted for 16% and another customer accounted for10% 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 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 projecttiming during 2015 compared to 2014. The decrease in selling prices per ton was due in part to a very competitive bidding environment, and in part to a23% decrease in steel costs per ton. Lower material costs generally lead to lower contract values and, therefore, lower net sales as contractors andmunicipalities 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 periodaffecting 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 wasdue 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 wasdirectly 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 piperepresented 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 from continuing operations decreased 131.1% to a $12.6 million gross loss (negative 5.3% of total Net sales fromcontinuing 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) in 2015 from $39.6 million (16.6% of segment Netsales) in 2014. The decrease in gross profit was primarily due to the impact of significant competition on 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 fixedportion 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 ormarket inventory adjustments in 2015. Tubular Products gross profit from continuing operations decreased to negative $13.2 million (negative 20.9% of segment Net sales fromcontinuing operations) in 2015 from $1.0 million (0.6% of segment Net sales from continuing operations) in 2014. Gross loss in 2015 was negativelyimpacted by lower volume primarily due to lower demand for line pipe, which resulted in lower selling prices. Reduced demand for line pipe reduced oursteel purchases in 2015, leading to consumption of higher cost steel inventories in 2015 production. Also contributing to the gross loss in 2015 was anadditional $0.3 million of lower of cost or market inventory adjustments and $0.5 million in severance expense related to the production curtailment. Thedecrease 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 coilcost per ton. 22Table of Contents Selling, general and administrative expense. Selling, general and administrative expense decreased 8.3%, to $22.3 million (9.5% of Net sales fromcontinuing 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 theprior year was primarily due to lower wages, incentive compensation and benefits of $2.1 million and a $0.9 million reduction in travel, entertainmentand other administrative expenses, partially offset by a $0.9 million increase in professional and outside services primarily related to legal and auditingexpenses. Impairment of goodwill. Goodwill related to our Water Transmission segment of $5.3 million was evaluated for impairment in the second quarterof 2015 due to then current market conditions. We concluded that the business enterprise value of the Water Transmission segment was less than itscarrying amount as of June 30, and engaged a consultant to assist us in calculating implied fair value of goodwill for the reporting unit. As a result of thatanalysis, the entire balance of Water Transmission segment goodwill was written off. In the fourth quarter of 2014, goodwill related to our TubularProducts segment of $16.1 million was evaluated for impairment due to the significant decrease in crude oil prices in December 2014. We concluded thatthe business enterprise value of the Tubular Products segment was less than its carrying amount as of December 31, and engaged a consultant to assist usin calculating implied fair value of goodwill for the reporting unit. As a result of that analysis, the entire balance of Tubular Products segment goodwillwas 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 borrowingsand 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 2015included 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 Income tax benefit was $12.0 million in 2015, an effective income tax benefit rate of 28.9%. The effective income tax rate for2015 included the recognition of $2.5 million of research and development tax credits for 2014 based on a study completed in 2015. Additionally in2015, after considering the guidance for accounting for income taxes, and weighing the positive and negative evidence including our recent history ofcumulative losses, we recorded a $5.2 million valuation allowance on a portion of our deferred income tax assets, primarily related to federal and stateincome tax credits and state net operating loss carry forwards. Another factor reducing the effective income tax benefit rate in 2015 was the $5.3 millionimpairment of Water Transmission goodwill we recorded, which is not deductible for income tax purposes. Despite a Loss before income taxes from continuing operations of $1.5 million in 2014, Income tax expense from continuing operations was $4.7million. The effective income tax rate for 2014 was negatively affected by the $16.1 million impairment of Tubular Products goodwill we recorded, whichis not deductible for income tax purposes; therefore, we did not record any income 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-taxincome or loss. In 2015, the impact of the recognition of research and development tax credits increased the effective income tax benefit rate, while thenon-deductibility of expense related to the impairment of goodwill and deferred income tax valuation allowances recorded decreased the effectiveincome tax benefit rate. Accordingly, the comparison of effective income tax 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 Loan and Security Agreement with Bank of America, N.A. Fromtime 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 generallyinclude capital expenditures, working capital and debt service. Information regarding our cash flows for the years ended December 31, 2016, 2015 and2014 are presented in our Consolidated Statements of Cash Flows contained in this 2016 Form 10-K, and are further discussed below. The 2014Consolidated Statement of Cash Flows includes discontinued operations. As of December 31, 2016, our working capital (current assets minus current liabilities) was $93.6 million compared to $93.7 million as ofDecember 31, 2015. Cash and cash equivalents totaled $21.8 million and $10.3 million as of December 31, 2016 and 2015, respectively. There were noborrowings under our Agreement as of December 31, 2016 and 2015. Fluctuations in our working capital accounts result from timing differences between production, shipment, invoicing and collection, as well aschanges in levels of production and costs of materials. We typically have a relatively large investment in working capital, as we generally pay formaterials, labor and other production costs in the initial stages of a project, while payments from our customers are generally received after finishedproduct is delivered. Our revenues in the Water Transmission segment are recognized on a percentage-of-completion method; therefore, cash receiptstypically occur subsequent to when revenue is recognized and the elapsed time between when revenue is recorded and when cash is received can besignificant. As such, our payment cycle is a significantly shorter interval than our collection cycle, although the effect of this difference in the cycles mayvary by project, and from period to period. 23Table of Contents Net Cash Provided by Operating Activities Net cash provided by operating activities in 2016 was $1.5 million. This was primarily the result of our net loss adjusted for noncash charges of$9.4 million for depreciation offset by $7.9 million for the gain on sale of facility and the net positive cash flow effect of a decrease in our working capitalaccounts, other than cash and cash equivalents. The decreases consisted primarily of the reduction in our Tubular Products inventories following theidling of the Atchison, Kansas facility in January 2016 and income tax refunds received during the year. These were partially offset by a reduction inAccrued liabilities stemming from fewer loss margin job reserves than the prior year. Net cash provided by operating activities in 2015 was $55.2 million. This was primarily the result of our net loss adjusted for noncash 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 Investing Activities Net cash provided by investing activities in 2016 was $11.7 million. This was primarily due to net proceeds of $13.9 million received from the saleof our Denver, Colorado facility on October 4, 2016. Capital expenditures of $2.3 million in 2016 were primarily standard capital replacement. Capitalexpenditures in 2017 are expected to be approximately $6 million for standard capital replacement. Net cash provided by investing activities in 2015 was $3.1 million. Capital expenditures of $8.5 million in 2015 were primarily standard capitalreplacement. Offsetting the cash used for additions to property plant and equipment was $4.3 million provided by an escrow that was released to us inApril 2015 related to the March 2014 disposition of the OCTG business and $7.2 million collected on a note receivable. 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 ofsubstantially all of the assets and liabilities associated with the OCTG business, partially offset by capital expenditures of $14.3 million. Capitalexpenditures 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 ourAtchison, Kansas facility. Net cash used for investing activities for discontinued operations in 2014 was not material. Net Cash Used in Financing Activities Net cash used in financing activities in 2016 was $1.7 million, primarily from the payment of contingent consideration in January 2016 for amountsearned on 2015 revenues of Permalok Corporation. Net cash used in financing activities in 2015 was $48.5 million, which resulted primarily from net repayments under our line of credit and capitallease 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 line of credit, long-termdebt and capital lease payments totaling $49.9 million. We anticipate that our existing cash and cash equivalents, cash flows expected to be generated by operations and amounts available under ourAgreement 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 operatingleases, if such resources are available on satisfactory terms. We have from time to time evaluated and continue to evaluate opportunities for acquisitionsand expansion. Any such transactions, if consummated, may use a portion of our working capital or necessitate additional bank borrowings or othersources of funding. Borrowings on Line of Credit As of December 31, 2016, we had no outstanding borrowings and $2.0 million of outstanding letters of credit under our Loan and SecurityAgreement with Bank of America, N.A. dated October 26, 2015, as amended on October 19, 2016. The Agreement expires on October 25, 2018 andprovides for revolving loans and letters of credit up to the maximum principal amount (the “Revolver Commitment”) of $60 million, subject to aborrowing base. We have the ability to increase the Revolver Commitment to $100 million, subject to the provisions of the Agreement. 24Table of Contents The borrowing base is calculated by applying various advance rates to eligible accounts receivable, costs and expected earnings in excess ofbillings, inventories and fixed assets, subject to various exclusions, adjustments and sublimits by asset class. Additionally, the Agreement effectivelylimits availability under the borrowing base during times when our Fixed Charge Coverage Ratio, as defined in the Agreement, is not met for the previoustwelve-month period. As of December 31, 2016, the Fixed Charge Coverage Ratio was not met, and therefore the availability limit applied. Including theeffect of this limit, we had additional borrowing capacity of $13.0 million, net of outstanding letters of credit, under the Agreement as of December 31,2016. Based on our business plan and forecasts of operations, we expect to have sufficient credit availability to support our operations in 2017. Borrowings under the Agreement bear interest at rates related to London Interbank Offered Rate plus 1.75% to 2.25%, or at Bank of America’s primerate plus 0.75% to 1.25%. Borrowings under the Agreement are secured by substantially all of our assets. 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, 2016 (in thousands): Payments due by period Total Less than 1year 1 - 3 years 3 - 5 years More than 5years Capital leases $927 $325 $454 $148 $- Operating leases 7,265 2,427 2,210 1,283 1,345 Contingent consideration 84 84 - - - Interest payments (1) 70 33 33 4 - Total obligations (2) (3) $8,346 $2,869 $2,697 $1,435 $1,345 (1)These amounts represent estimated future interest payments related to our capitalized leases. (2)Excludes liabilities associated with our pension and our deferred compensation plan as we are unable to reasonably estimate the ultimate amountor timing of settlement of such obligations. As of December 31, 2016, liabilities associated with our pension and deferred compensation plan are$1.9 million and $6.2 million, respectively and are recorded in Other long-term liabilities in the Consolidated Balance Sheets. (3)Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits as of December 31, 2016, weare 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 15 of the Notes toConsolidated Financial Statements in Part II — Item 8. “Financial Statements and Supplementary Data” of this 2016 Form 10-K. We also have entered into letters of credit that total approximately $2.0 million as of December 31, 2016. The 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 underthese 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 For a discussion of new accounting pronouncements affecting our company, see Note 2 of the Notes to Consolidated Financial Statements inPart II – Item 8. “Financial Statements and Supplementary Data” of this 2016 Form 10-K. 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 issteel, 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 this raw material represents a substantial portion of our cost ofsales, we attempt to minimize our risk exposure to steel price volatility by submitting bids based on general assumptions of the expected price of steelwhen we will receive a purchase order or contract, which is typically awarded within 30 to 90 days of the bid date, as well as ordering steel as soon aspossible after a project is awarded. 25Table of Contents As a result of our decision to idle our Tubular Products facility, our steel inventories are significantly reduced from normal operating levels and oursteel commodity price exposure as of December 31, 2016 is not material. Interest Rate Risk As of December 31, 2016 and 2015, we had no debt outstanding accruing interest at a variable rate. Our capital leases bear fixed rates of interest.Assuming average interest rates and borrowings on variable rate debt over the past two years, a hypothetical 1.0%, or 100 basis points, change in interestrates 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 aprogram that utilizes foreign currency forward contracts to offset the risk associated with the effects of certain foreign currency exposures, typicallyarising from sales contracts denominated in Canadian currency. These contracts are not used for trading or for speculative purposes. Foreign currencyforward contracts are consistent with our strategy for financial risk management and have maturities generally less than one year. As of December 31,2016, the total notional amount of these derivative contracts was $4.3 million (CAD$5.8 million), of which we applied hedge accounting to $3.4 million(CAD$4.5 million). As of December 31, 2016, all of our contracts had a remaining maturity of less than twelve months. As of December 31, 2015, the totalnotional amount of our derivative contracts was $6.3 million (CAD$8.7 million). A hypothetical 10% change in the Canadian Dollar foreign currency exchange rate would not have a material impact on our reported 2016 or 2015Net sales. Item 8.Financial Statements and Supplementary Data The Consolidated Financial Statements required by this item are included on pages F-1 to F-29 at the end of this 2016 Form 10-K. The financialstatement schedule required by this item is included on page S-1. The quarterly information required by this item is included in Note 20 of the Notes toConsolidated Financial Statements. 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 ExchangeAct is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information isaccumulated 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 ofDecember 31, 2016. Based on their evaluation, as of December 31, 2016, the Company’s CEO and CFO have concluded that the Company’s disclosurecontrols and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective to provide reasonable assurance thatinformation required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the timeperiods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including the CEOand 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 inExchange Act Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles (“GAAP”). Internal control over financial reporting includes those policies and procedures that (i) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonableassurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts andexpenditures are being made only in accordance with authorizations of management and our directors; and (iii) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. 26Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree 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 internalcontrol over financial reporting as of December 31, 2016. In making this assessment, we used the criteria set forth in “Internal Control-IntegratedFramework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, managementconcluded that the Company’s internal control over financial reporting was effective as of December 31, 2016. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2016 has been audited by Moss Adams LLP, anindependent 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, 2016 that materiallyaffected or are reasonably likely to materially affect our internal control over financial reporting. Item 9B.Other Information None. 27Table of Contents PART III Item 10.Directors, Executive Officers and Corporate Governance Directors, Executive Officers, Promoters and Control Persons The information required by Paragraph (a) and Paragraphs (c) through (g) of Item 401 of Regulation S-K (except for information required byParagraph (e) of that Item to the extent the required information pertains to our executive officers) and Item 405 of Regulation S-K is hereby incorporatedby reference from our definitive proxy statement for the 2017 Annual Meeting of Shareholders under the captions Election of Directors and Section 16(a)Beneficial Ownership Reporting Compliance. Name Age Current Position with Company Scott Montross 52 Director, President and Chief Executive OfficerRobin Gantt 45 Senior Vice President, Chief Financial Officer and Corporate SecretaryMartin Dana 51 Executive Vice President, Sales and MarketingWilliam Smith 61 Executive Vice President, OperationsAaron Wilkins 42 Vice President of Finance and Corporate Controller Scott Montross has served as our Director, President and CEO since January 1, 2013. Mr. Montross joined Northwest Pipe Company (the“Company”) in May 2011 and served as our Executive Vice President and Chief Operating Officer. Mr. Montross has served in Senior Vice Presidentlevel positions since 2003 with commercial, operational and planning responsibilities and has spent a total of 24 years in the steel industry prior tojoining the Company. Mr. Montross previously served as the Executive Vice President of the Flat Products Group for EVRAZ Inc. NA's Oregon SteelDivision 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 andSales 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 theCompany in July 2010. Ms. Gantt served as the CFO and Treasurer of EVRAZ Inc. NA from September 2007 through January 2010. From July 2005through August 2007, Ms. Gantt served as Corporate Controller of Oregon Steel Mills, Inc., which became EVRAZ Inc. NA after its acquisition by EvrazGroup S.A. in January 2007. Ms. Gantt joined Oregon Steel Mills, Inc. in 1999, holding several finance and accounting positions of increasingresponsibility 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 byMr. Dana include Executive Vice President, Tubular Products Group, Vice President of Operations for Tubular Products, Vice President of Sales andMarketing for the Water Transmission Group and other management and Vice President level positions since joining the Company in 1999. Prior tojoining the Company, Mr. Dana held positions at Oregon Steel Mills, Inc. William Smith has served as our Executive Vice President, Operations since April 2014. Prior to that, Mr. Smith served as our Executive VicePresident, Water Transmission Group and as Vice President of Operations for Water Transmission. Prior to joining the Company in 2010, Mr. Smith spent14 years with Ameron International Corporation, holding several key positions including President, Water Transmission. A 40-year veteran of the steelpipe business, Mr. Smith has held positions with United Concrete Pipe, Thompson Steel Pipe and LB Foster. Aaron Wilkins has served as our Corporate Controller since March 2014 and was named Vice President of Finance and Corporate Controller inSeptember 2016. Prior to joining the Company, Mr. Wilkins served two years as CFO of Omega Morgan, an industrial moving and transportationcompany. Prior to that, Mr. Wilkins served seven years with Oregon Steel Mills, Inc. and then EVRAZ Inc. NA holding several finance and accountingpositions including Corporate Controller and Assistant Treasurer and Director of Finance of EVRAZ Inc. NA’s Flat Products Group. 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 foundon 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 2016 Form 10-K. Ifthere 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 willdisclose 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 proxystatement for the 2017 Annual Meeting of Shareholders under the captions Nominating and Governance Committee, Nominations by Shareholders andAudit Committee. 28Table of Contents Item 11.Executive Compensation The information required by this Item is hereby incorporated by reference from our definitive proxy statement for the 2017 Annual Meeting ofShareholders under the captions Executive Compensation, Compensation Committee Interlocks and Insider Participation, and Compensation CommitteeReport. Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table provides information as of December 31, 2016, with respect to the shares of our common stock that may be issued under ourexisting equity compensation plans. Number ofsecurities to beissued uponexercise ofoutstandingoptions, warrantsand rights Weighted-averageexercise price ofoutstandingoptions, warrantsand rights Number ofsecuritiesremainingavailable forfuture issuanceunder equitycompensationplans (excludingsecurities reflectedin column (a)) Plan Category (a) (1) (b) (2) (c) Equity compensation plans approved by security holders 247,791 $24.97 557,098 Equity compensation plans not approved by security holders (3) - - - Total 247,791 $24.97 557,098 (1)Consists of our 2007 Stock Incentive Plan and the 1995 Stock Option Plan for Nonemployee directors. Approximately 47,000 PSAs have beenincluded at a target level. The vesting of these awards is subject to the achievement of specific performance-based or market-based conditions, andthe actual number of common shares that will ultimately be issued will be determined by multiplying this number of PSAs by a payout percentageranging from 0% to 200%. (2)The weighted average exercise price set forth in this column is calculated excluding outstanding restricted stock units and PSAs, since recipientsare not required to pay an exercise price to receive the shares subject to these awards. (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 2017 Annual Meeting of Shareholdersunder 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 2017 Annual Meeting ofShareholders under the captions Certain Relationships and Related Transactions and Election of Directors. Item 14.Principal Accounting Fees and Services The information required by this Item is hereby incorporated by reference from our definitive proxy statement for the 2017 Annual Meeting ofShareholders under the caption Independent Registered Public Accounting Firm. 29Table of Contents PART IV Item 15.Exhibits, Financial Statement Schedules (a) (1) Consolidated Financial Statements The Consolidated Financial Statements, together with the reports thereon of Moss Adams LLP and PricewaterhouseCoopers LLP are included onthe pages indicated below. Page Reports of Independent Registered Public Accounting FirmsF-1 Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014F-3 Consolidated Statements of Comprehensive Loss for the years ended December 31, 2016, 2015 and 2014F-4 Consolidated Balance Sheets as of December 31, 2016 and 2015F-5 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2016, 2015 and 2014F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014F-7 Notes to Consolidated Financial StatementsF-8 (a) (2) Financial Statement Schedule The following schedule is filed herewith: Page Schedule IIValuation and Qualifying AccountsS-1 Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is included in theConsolidated Financial Statements or notes thereto. 30Table of Contents (a) (3) Exhibits included herein: ExhibitNumber Description 2.1 Asset Purchase Agreement by and between Northwest Pipe Company and Centric Pipe, LLC, incorporated by reference to the Company’sCurrent Report on Form 8-K, as filed with the Securities and Exchange Commission on April 1, 2014. 3.1 Second Restated Articles of Incorporation, incorporated by reference to Exhibits to the Company’s Registration Statement on Form S-1, asamended, effective November 30, 1995, Commission Registration No. 33-97308 (“the S-1”) 3.2 First Amendment to Second Restated Articles of Incorporation, incorporated by reference to Exhibits to the Company’s RegistrationStatement 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 First Amendment to Second Amended and Restated Bylaws of Northwest Pipe Company, incorporated by reference to Exhibits to theCompany’s Report on Form 8-K as filed with the Securities and Exchange Commission on November 19, 2007 3.5 Third Amended and Restated Bylaws, incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Securitiesand Exchange Commission on June 7, 2016 4.1 Amended and Restated Rights Agreement, dated as of June 18, 2009, between the Company and Mellon Investor Services LLC as RightsAgent, incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission onJune 19, 2009 10.1 1995 Stock Option Plan for Nonemployee Directors, incorporated by reference to Exhibits to the S-1* 10.2 Northwest Pipe NQ Retirement Savings Plan, dated July 1, 1999, incorporated by reference to Exhibits to the Company’s Quarterly ReportForm 10-Q for the quarter ended June 30, 2000, as filed with the Securities and Exchange Commission on August 11, 2000* 10.3 Northwest Pipe Company 2007 Stock Incentive Plan, incorporated by reference to Appendix A to the Company’s Definitive ProxyStatement dated April 20, 2007, as filed with the Securities and Exchange Commission on April 26, 2007* 10.4 Executive Employment Agreement dated December 19, 2012 between Northwest Pipe Company and Richard A. Roman, incorporated byreference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on December 20, 2012* 10.5 Form of grant of restricted stock units by Northwest Pipe Company to certain Named Officers, incorporated by reference to the Company’sCurrent Report on Form 8-K, as filed with the Securities and Exchange Commission on June 6, 2013* 10.6 Form of grant of performance share units by Northwest Pipe Company to certain Named Officers, incorporated by reference to theCompany’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on June 6, 2013* 10.7 Northwest Pipe Company 2014 Short Term Incentive Plan, incorporated by reference to the Company’s Annual Report on Form 10-K forthe year ended December 31, 2013, as filed with the Securities and Exchange Commission on March 17, 2014* 10.8 Executive Employment Agreement between Northwest Pipe Company and Gary A. Stokes, incorporated by reference to the Company’sCurrent Report on Form 8-K, as filed with the Securities and Exchange Commission on April 4, 2014* 10.9 Form of Restricted Stock Unit Agreement, incorporated by reference to the Company’s Current Report on Form 8-K, as filed with theSecurities and Exchange Commission on June 4, 2014* 10.10 Form of Performance Share Award Agreement, incorporated by reference to the Company’s Current Report on Form 8-K, as filed with theSecurities and Exchange Commission on June 4, 2014* 10.11 Northwest Pipe Company 2015 Short Term Incentive Plan dated February 26, 2015, incorporated by reference to the Company’s AnnualReport on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on March 16, 2015* 31Table of Contents ExhibitNumber Description 10.12 Loan and Security Agreement dated October 26, 2015, among Northwest Pipe Company, Permalok Corporation and Bank ofAmerica, N.A., incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Securities and ExchangeCommission on October 29, 2015 10.13 Form of Long Term Incentive Plan Agreement, incorporated by reference to the Company’s Current Report on Form 8-K as filed with theSecurities and Exchange Commission on April 21, 2016* 10.14 Amended and Restated Change in Control Agreement between Scott Montross and Northwest Pipe Company dated August 1, 2016,incorporated by reference to the Company’s Form 10-Q for the quarter ended June 30, 2016, as filed with the Securities and ExchangeCommission on August 3, 2016* 10.15 Form of Amended and Restated Change in Control Agreement between Northwest Pipe Company and each of Robin Gantt, Martin Danaand Bill Smith dated August 1, 2016, incorporated by reference to the Company’s Form 10-Q for the quarter ended June 30, 2016, as filedwith the Securities and Exchange Commission on August 3, 2016* 10.16 Amendment Number One to Loan and Security Agreement dated October 19, 2016, by and between Northwest Pipe Companyand Permalok Corporation, individually and collectively as borrower, and Bank of America, N.A., as agent and lender, incorporated byreference to the Company’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 24, 2016 10.17 Change in Control Agreement between Northwest Pipe Company and Aaron Wilkins dated as of August 1, 2016, incorporated byreference to the Company’s Form 10-Q for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commissionon November 2, 2016* 21.1 Subsidiaries of the Registrant, filed herewith 23.1 Consent of Moss Adams LLP, filed herewith 23.2 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. Item 16.Form 10-K Summary None. 32Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Northwest Pipe Company We have audited the accompanying consolidated balance sheet of Northwest Pipe Company and subsidiaries (the “Company”) as of December 31, 2016,and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the year ended December 31, 2016.Our audit also included the financial statement schedule for the year ended December 31, 2016, listed in the Index at Item 15(a)(2). We also have auditedthe Company’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for thesefinancial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over FinancialReporting appearing under Item 9A. Our responsibility is to express an opinion on these consolidated financial statements and financial statementschedule and an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatementand whether effective internal control over financial reporting was maintained in all material respects. Our audit of the consolidated financial statementsincluded examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accountingprinciples used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation. Our audit ofinternal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also includedperforming such other procedures as we considered necessary in the circumstances. We believe that our audit provides 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 reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internalcontrol over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accuratelyand fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures ofthe company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position ofNorthwest Pipe Company and subsidiaries as of December 31, 2016, and the consolidated results of their operations and their cash flows for the yearended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, thefinancial statement schedule for the year ended December 31, 2016, when considered in relation to the basic consolidated financial statements taken as awhole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, Northwest Pipe Company and subsidiaries,maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in InternalControl - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. /s/ Moss Adams LLP Portland, OregonMarch 9, 2017 F-1Table of Contents 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 sheet 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 atDecember 31, 2015, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2015 in conformitywith accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in theindex appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the relatedconsolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financialreporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financialstatement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control overfinancial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is toexpress opinions on these financial statements, on the financial statement schedule and on the Company's internal control over financial reporting basedon 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 materialmisstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statementsincluded examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control overfinancial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing suchother 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 financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal 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 recordedas necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expendituresof the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a materialeffect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate. /s/ PricewaterhouseCoopers LLP Portland, OregonMarch 4, 2016 F-2Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts) Year Ended December 31, 2016 2015 2014 Net sales $156,256 $236,608 $403,298 Cost of sales 159,481 249,233 362,722 Gross profit (loss) (3,225) (12,625) 40,576 Selling, general and administrative expense 17,178 22,303 24,316 Impairment of goodwill - 5,282 16,066 Gain on sale of facility (7,860) - - Restructuring expense 990 - - Operating income (loss) (13,533) (40,210) 194 Other income 23 88 108 Interest income 14 173 466 Interest expense (523) (1,390) (2,290)Loss before income taxes (14,019) (41,339) (1,522)Income tax expense (benefit) (4,756) (11,951) 4,651 Loss from continuing operations (9,263) (29,388) (6,173)Discontinued operations: Loss from operations of discontinued business - - (2,151)Loss on sale of business - - (13,497)Income tax benefit - - (3,934)Loss on discontinued operations - - (11,714) Net loss $(9,263) $(29,388) $(17,887) Basic and diluted loss per share: Continuing operations $(0.97) $(3.07) $(0.65)Discontinued operations - - (1.23)Net loss per share $(0.97) $(3.07) $(1.88)Shares used in per share calculations: Basic and diluted 9,588 9,560 9,515 The accompanying notes are an integral part of these consolidated financial statements. F-3Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(In thousands) Year Ended December 31, 2016 2015 2014 Net loss $(9,263) $(29,388) $(17,887) Other comprehensive income (loss), net of tax: Pension liability adjustment 131 238 (587)Unrealized gain (loss) on cash flow hedges (76) 57 15 Other comprehensive income (loss), net of tax 55 295 (572)Comprehensive loss $(9,208) $(29,093) $(18,459) The accompanying notes are an integral part of these consolidated financial statements. F-4Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Dollar amounts in thousands, except per share amounts) December 31, 2016 2015 Assets Current assets: Cash and cash equivalents $21,829 $10,309 Trade and other receivables, less allowance for doubtful accounts of $515 and $751 25,555 27,567 Costs and estimated earnings in excess of billings on uncompleted contracts 43,663 42,592 Inventories 19,037 29,475 Refundable income taxes 159 3,413 Prepaid expenses and other 1,937 1,923 Total current assets 112,180 115,279 Property and equipment, net 118,101 131,848 Other assets 11,274 12,253 Total assets $241,555 $259,380 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $5,267 $4,739 Accrued liabilities 10,925 15,971 Billings in excess of costs and estimated earnings on uncompleted contracts 2,038 520 Current portion of capital lease obligations 325 340 Total current liabilities 18,555 21,570 Capital lease obligations, less current portion 602 718 Deferred income taxes 1,282 5,124 Other long-term liabilities 11,903 14,408 Total liabilities 32,342 41,820 Commitments and contingencies (Note 14) 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, 9,601,011 and 9,564,752 shares issued andoutstanding 96 96 Additional paid-in-capital 118,680 117,819 Retained earnings 91,920 101,183 Accumulated other comprehensive loss (1,483) (1,538)Total stockholders’ equity 209,213 217,560 Total liabilities and stockholders’ equity $241,555 $259,380 The accompanying notes are an integral part of these consolidated financial statements. F-5Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(Dollar amounts in thousands) Accumulated Additional Other Total Common Stock Paid In Retained Comprehensive Stockholders' Shares Amount Capital Earnings (Loss) Income Equity Balances, December 31, 2013 9,449,299 $94 $114,559 $148,458 $(1,261) $261,850 Net loss - - - (17,887) - (17,887)Other comprehensive income (loss): Foreign currency cash flow hedge, netof tax expense of $9 - - - - 15 15 Pension liability adjustment, net of taxbenefit of $285 - - - - (587) (587)Issuance of common stock under stockcompensation plans 70,768 1 (1,256) - - (1,255)Tax benefit from stock compensationplans - - 553 - - 553 Share-based compensation expense - - 2,946 - - 2,946 Balances, December 31, 2014 9,520,067 95 116,802 130,571 (1,833) 245,635 Net loss - - - (29,388) - (29,388)Other comprehensive income: Foreign currency cash flow hedge, netof tax expense of $34 - - - - 57 57 Pension liability adjustment, net of taxexpense of $237 - - - - 238 238 Issuance of common stock under stockcompensation plans 44,685 1 (424) - - (423)Tax benefit from stock compensationplans - - 19 - - 19 Tax deficiency from stock compensationplans - - (352) - - (352)Share-based compensation expense - - 1,774 - - 1,774 Balances, December 31, 2015 9,564,752 96 117,819 101,183 (1,538) 217,560 Net loss - - - (9,263) - (9,263)Other comprehensive income (loss): Foreign currency cash flow hedge, netof tax benefit of $43 - - - - (76) (76)Pension liability adjustment, net of taxexpense of $82 - - - - 131 131 Issuance of common stock under stockcompensation plans 36,259 - (31) - - (31)Tax deficiency from stock compensationplans - - (909) - - (909)Share-based compensation expense - - 1,801 - - 1,801 Balances, December 31, 2016 9,601,011 $96 $118,680 $91,920 $(1,483) $209,213 The accompanying notes are an integral part of these consolidated financial statements. F-6Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Year Ended December 31, 2016 2015 2014 Cash flows from operating activities: Net loss $(9,263) $(29,388) $(17,887)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and capital lease amortization 9,446 9,092 13,606 Impairment of goodwill - 5,282 16,066 Loss on sale of business - - 13,497 Gain on sale of facility (7,860) - - Amortization of intangible assets 523 523 540 Amortization of debt issuance costs 166 598 377 Provision for doubtful accounts 295 (4) 70 Deferred income taxes (4,750) (3,560) 2,894 Loss on disposal of property and equipment 20 105 489 Share-based compensation expense 1,801 1,774 2,946 Excess tax benefit from stock compensation plans - (19) (553)Adjustments to contingent consideration (1,657) (211) (1,746)Unrealized loss (gain) on foreign currency forward contracts 170 295 (13)Other, net - - 25 Changes in operating assets and liabilities: Trade and other receivables 2,122 26,780 7,984 Insurance settlements - 2,625 - Costs and estimated earnings in excess of billings on uncompleted contracts,net 447 940 4,088 Inventories 10,488 43,695 6,039 Refundable income taxes 3,254 1,285 (3,405)Prepaid expenses and other assets (11) 896 754 Accounts payable 866 (9,894) (5,273)Deferred revenue - (271) (4,573)Accrued and other liabilities (4,538) 4,663 (881)Net cash provided by operating activities 1,519 55,206 35,044 Cash flows from investing activities: Additions to property and equipment (2,292) (8,515) (14,289)Proceeds from sale of business - 4,300 29,791 Proceeds from sale of facility 13,914 - - Proceeds from sale of property and equipment 33 55 8 Collections on notes receivable - 7,219 56 Other investing activities - - (25)Net cash provided by investing activities 11,655 3,059 15,541 Cash flows from financing activities: Proceeds from issuance of common stock - 1 28 Tax withholdings related to net share settlements of restricted share andperformance share awards (31) (424) (1,283)Excess tax benefit from stock compensation plans - 19 553 Payments on long-term debt - - (6,357)Borrowings on line of credit - 79,250 230,581 Repayments on line of credit - (124,837) (272,913)Payments of debt issuance costs - (302) - Payments on capital lease obligations (390) (2,190) (1,255)Payments of contingent consideration (1,233) - - Net cash used in financing activities (1,654) (48,483) (50,646)Change in cash and cash equivalents 11,520 9,782 (61) Cash and cash equivalents, beginning of period 10,309 527 588 Cash and cash equivalents, end of period $21,829 $10,309 $527 Supplemental disclosure of cash flow information: Cash paid during the period for interest, net of amounts capitalized $283 $846 $2,271 Cash (received) paid during the period for income taxes (net of refunds of $3,427,$7,949 and $393) $(3,322) $(7,743) $1,982 Noncash investing and financing activities: Accrued property and equipment purchases $59 $397 $1,243 Capital lease additions $259 $854 $804 The accompanying notes are an integral part of these consolidated financial statements. F-7Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.ORGANIZATION: Northwest Pipe Company (collectively with its subsidiaries, the “Company”) operates in two business segments, Water Transmission and TubularProducts. The Water Transmission segment primarily produces steel pipeline systems for use in drinking water infrastructure and has manufacturing facilitieslocated in Portland, Oregon; Denver, Colorado (sold in October 2016); 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 inAtchison, Kansas. The Atchison facility operated at reduced levels from April 2015 to January 2016, when the Company idled the facility until marketconditions improve or a sale is completed. 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Use of Estimates The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States ofAmerica requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. TheCompany bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. On anongoing basis, the Company evaluates all of its estimates, including those related to allowance for doubtful accounts, inventories, long-lived assets(including depreciation and amortization), revenue recognition, share-based compensation, income taxes and litigation and other contingencies. Actualresults may differ from these 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 exercisescontrol 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 asdiscontinued operations for all periods presented in the Consolidated Statements of Operations. Lucid Energy Inc. (“Lucid”), over which the Company exercises significant influence but does not control, is accounted for under the cost methodof accounting. Lucid is a clean energy company based in Portland, Oregon. The carrying value of this investment is $0 as of December 31, 2016 and 2015due to a history of net losses by Lucid. 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 wasconducted 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 in 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 proceedsreceived, $4.3 million was placed in escrow to secure the Company’s indemnification obligations under the purchase agreement, $5.0 million was used torepay capital leases related to and secured by certain assets at the Bossier City, Louisiana manufacturing facility, $1.8 million was used to pay fortransaction 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. F-8Table of Contents The table below presents the operating results for the Company’s discontinued operations (in thousands). These operating results for the yearended December 31, 2014 do not necessarily reflect what they would have been had the OCTG business not been classified as a discontinued operation. Net sales $22,225 Cost of sales 23,881 Gross loss (1,656)Selling, general and administrative expense 396 Operating loss (2,052)Loss on sale of business (13,497)Interest expense (99)Loss before income taxes (15,648)Income tax benefit (3,934)Loss on discontinued operations $(11,714) Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term, highly liquid investments with maturities of three months or less when purchased. Attimes, the Company will have outstanding checks in excess of related bank balances (a “book overdraft”). If this occurs, the amount of the book overdraftwill be reclassified to accounts payable, and changes in the book overdraft will be reflected as a component of operating activities in the ConsolidatedStatement of Cash Flows. The Company had no book overdraft as of December 31, 2016 and 2015. Receivables and Allowance for Doubtful Accounts Trade receivables are reported on the Consolidated Balance Sheet net of doubtful accounts. The Company maintains allowances for estimatedlosses resulting from the inability of its customers to make required payments or from contract disputes. The amounts of such allowances are based onCompany history and management’s judgment. At least monthly, the Company reviews past due balances to identify the reasons for non-payment. TheCompany will write off a receivable account once the account is deemed uncollectible. The Company believes the reported allowances as ofDecember 31, 2016 and 2015 are adequate. If the customers’ financial conditions were to deteriorate resulting in their inability to make payments, or ifcontract disputes were to escalate, additional allowances may need to be recorded which would result in additional expenses being recorded for theperiod in which such determination was made. Inventories Inventories are stated at the lower of cost or market. Raw material inventories of steel, stated at cost, are either on a specific identification basis or onan average cost basis. All other raw material inventories, as well as work-in-process and supplies, stated at cost, are on an average cost basis. Finishedgoods, stated at cost, use 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 ascosts of expansions or refurbishment of existing equipment and buildings, including interest where applicable, are capitalized. Depreciation andamortization are determined by the units of production method for most equipment and by the straight-line method for the remaining assets based on theestimated useful lives of the related assets. Estimated useful lives by major classes of property and equipment are as follows: Land improvements (15 – 30years); Buildings (20 – 40 years); and Machinery and equipment (3 – 30 years). Depreciation expense calculated under the units of production methodmay be less than, equal to, or greater than depreciation expense calculated under the straight-line method due to variances in production levels. Upondisposal, costs and related accumulated depreciation of the assets are removed from the accounts and resulting gains or losses are reflected in operatingexpenses. The Company leases certain equipment under long-term capital leases, which are being amortized on a straight-line basis over the shorter of itsuseful 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 orasset 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 ofother groups of assets or liabilities. The recoverable value of a long-lived asset group is determined by estimating future undiscounted cash flows usingassumptions about the expected future operating performance of the Company. F-9Table of Contents 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 isreviewed for impairment annually as of 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 (alsoknown as a component). The Company’s reporting units are equivalent to its operating segments as the individual components meet the criteria foraggregation. As of December 31, 2016, the Company’s goodwill was fully impaired. In evaluating goodwill, the Company looks at the long-term prospects for the reporting unit and recognizes that current performance may not bethe best indicator of future prospects or value, which requires management judgment. The income approach is based upon projected future after-tax cashflows discounted to present value using factors that consider the timing and risk associated with the future after-tax cash flows. The market approach isbased upon historical and/or forward-looking measures using multiples of revenue or earnings before interest, taxes, depreciation and amortization. TheCompany utilizes a weighted average of the income and market approaches, with a heavier weighting on the income approach because of the relativelylimited number of comparable entities for which relevant multiples are available. If the carrying value of the reporting unit exceeds its calculatedenterprise value, then the Company continues to assess the fair value of individual assets and liabilities, other than goodwill. The difference between thereporting unit enterprise value and the fair value of its identifiable net assets is the implied fair value of the reporting unit’s goodwill. A goodwillimpairment loss is recorded for the difference between the implied fair value and its carrying value. 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 6, “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. Lossesare accrued based upon the Company’s estimates of the aggregate liability for claims incurred using historical experience and certain actuarialassumptions followed in the insurance industry. As of December 31, 2016, workers compensation reserves of $3.4 million were recorded, of which$0.6 million was included in Accrued liabilities and $2.8 million was included in Other long-term liabilities. Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, 2016 2015 Accrued liabilities: Accrued vacation payable $2,313 $3,029 Reserves for expected losses on uncompleted contracts 1,409 5,933 Litigation accrual 1,750 - Accrued property taxes 1,096 1,280 Contingent consideration payable 84 1,211 Other 4,273 4,518 Total accrued liabilities $10,925 $15,971 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 costsplus amortization of the unfunded plan liabilities. To record these obligations, management uses estimates relating to investment returns, mortality anddiscount 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 hasestablished 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 strategyfor financial risk management. The Company utilizes cash flow hedge accounting treatment for qualifying foreign currency forward contracts. Instrumentsthat do not qualify for cash flow hedge accounting treatment are remeasured at fair value at each balance sheet date and resulting gains and losses arerecognized in net income (loss). F-10Table of Contents Foreign Currency Transactions Assets and liabilities subject to foreign currency fluctuations are translated into United States dollars at the period-end exchange rate, and revenueand expenses are translated at exchange rates representing an average for the period. Translation adjustments from designated hedges are included inAccumulated other comprehensive loss as a separate component of Stockholders’ equity. Gains or losses on all other foreign currency transactions arerecognized 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 amajority 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 thecontract. 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 projectcost when the steel is introduced into the manufacturing process. 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 recoverabilityfrom 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 penaltyprovisions, foreign currency exchange rate movements, changes in raw materials costs and final contract settlements may result in revisions to estimatesof revenue, costs and income and are recognized in the period in which the revisions are determined. Provisions for losses on uncompleted contracts aremade in the period such losses are known. Revenue from the Company’s Tubular Products Group is recognized when all four of the following criteria have been satisfied: persuasiveevidence of an arrangement exists, the price is fixed or determinable, delivery has occurred and collectability is reasonably assured. Deferred revenue isrecorded when the manufacturing process is complete and customers are invoiced prior to physical delivery of the product. Share-based Compensation The Company recognizes the compensation cost of employee and director services received in exchange for awards of equity instruments based onthe grant date estimated fair value of the awards. Share-based compensation cost is recognized over the period during which the employee or director isrequired 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 share awards (“PSAs”) using the value of the Company’sstock on the date of grant, with the exception of market-based PSAs, for which a Monte Carlo simulation model is used. The Monte Carlo simulationmodel requires the use of subjective and complex assumptions including the price volatility of the underlying stock. The expected stock price volatilityassumption was determined using the historical volatility of the Company’s and a comparator group of companies’ stock over the most recent historicalperiod equivalent to the expected life. The Monte Carlo simulation model calculates many potential outcomes for an award and estimates fair value basedon the most likely outcome. See Note 12, “Share-based Compensation” for further discussion of the Company’s share-based compensation. Income Taxes Income taxes are recorded using an asset and liability approach that requires the recognition of deferred income tax assets and liabilities for theexpected future income tax consequences of events that have been recognized in the Company’s financial statements or income tax returns. Valuationallowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. The determination of the provisionfor income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. The provision for incometaxes primarily reflects a combination of income earned and taxed in the various United States federal and state and, to a lesser extent, foreignjurisdictions. Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments ofaccruals for unrecognized income tax benefits or valuation allowances and the change in the mix of earnings from these taxing jurisdictions all affect theoverall effective income tax rate. F-11Table of Contents The Company records income tax reserves for federal, state, local and international exposures relating to periods subject to audit. The developmentof reserves for these exposures requires judgments about tax issues, potential outcomes and timing, and is a subjective estimate. The Company assessesincome tax positions and records income 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 income tax positions where it is more-likely-than-not that an income tax benefitwill be sustained, the largest amount of income tax benefit with a greater than 50% likelihood of being realized upon settlement with a tax authority thathas full knowledge of all relevant information has been recorded. For those income tax positions where it is not more-likely-than-not that an income taxbenefit will be sustained, no income tax benefit has been recognized in the Consolidated 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 flowhedges and changes in the funded status of the defined benefit pension plans, both net of the related income tax effect. For further information, refer toNote 16, “Accumulated Other Comprehensive Loss.” 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): 2016 2015 2014 Loss from continuing operations $(9,263) $(29,388) $(6,173)Loss from discontinued operations - - (11,714)Net loss $(9,263) $(29,388) $(17,887) Basic weighted-average common shares outstanding 9,588 9,560 9,515 Effect of potentially dilutive common shares - - - Diluted weighted-average common shares outstanding 9,588 9,560 9,515 Loss per basic and diluted common share: Continuing operations $(0.97) $(3.07) $(0.65)Discontinued operations - - (1.23)Total $(0.97) $(3.07) $(1.88) Antidilutive shares excluded from net loss per diluted commonshare calculation 27 52 65 (1)Represents the effect of the assumed exercise of stock options and the vesting of restricted stock units and performance share awards, based onthe treasury stock method. Concentrations of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade receivables, derivativecontracts 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. As of December 31, 2016, two customers had a balance in excess of10% of total accounts receivable. As of December 31, 2015, no customer had a balance in excess of 10% of total accounts receivable. Derivative contractsare with a high quality financial institution. The Company’s deferred compensation plan assets, also included in other assets, are invested in a diversifiedportfolio of stock and bond mutual funds. Recent Accounting and Reporting Developments Accounting Changes In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation ofFinancial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”(“ASU 2014-15”). ASU 2014-15 requires management to evaluate for each annual and interim reporting period whether it is probable that the reportingentity 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 insuch a position, the standard provides for certain disclosures depending on whether or not the entity will be able to successfully mitigate its goingconcern status. The Company adopted this guidance on December 31, 2016 and the impact was not material on the Company's Consolidated FinancialStatements. F-12(1)Table of Contents In May 2015, the FASB issued Accounting Standards Update No. 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments inCertain Entities That Calculate Net Asset Value per Share (or Its Equivalent)” (“ASU 2015-07”). The amendments in ASU 2015-07 remove therequirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practicalexpedient. The Company adopted this guidance on January 1, 2016 and the impact was not material to the Company’s Consolidated FinancialStatements or disclosures in Notes to Consolidated Financial Statements. Recent Accounting Standards In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) which will replace most existing revenue recognition guidance in accordance with United States generally accepted accounting principles (“U.S.GAAP”). The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that itexpects to be entitled to receive for those goods or services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty ofrevenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The ASU will be effective for theCompany beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. TheCompany is in the process of evaluating its revenue streams to determine accounting treatment under the ASU. In March 2016, the FASB issued ASUNo. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” InApril 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations andLicensing.” In May 2016, the FASB issued ASU No. 2016-11, “Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging(Topic 815)–Rescission of SEC Guidance Because of ASU 2014-09 and 2014-16” and ASU No. 2016-12, “Revenue from Contracts with Customers(Topic 606): Narrow-Scope Improvements and Practical Expedients.” In December 2016, the FASB issued ASU No. 2016-20, “Technical Corrections andImprovements to Topic 606, Revenue from Contracts with Customers.” These five ASUs do not change the core principle of the guidance in ASU 2014-09, but rather provide further clarification to improve the operability and understandability of the implementation guidance included in ASU 2014-09.The effective date for these ASUs is the same as the effective date of ASU 2014-09. The Company is currently assessing the impact of these ASUs on itsConsolidated Financial Statements. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory”(“ASU 2015-11”). As a result of ASU 2015-11, companies will be required to measure inventory at the lower of cost and net realizable value. This is achange from the prior requirement to value inventory at the lower of cost or market. Net realizable value is the estimated selling prices in the ordinarycourse of business, less reasonably predictable costs of completion, disposal and transportation. Inventory valued using the LIFO or retail inventorymethod is exempt from this ASU. The ASU will be effective for the Company beginning January 1, 2017. The Company does not expect a material impactto the Company’s financial position, results of operations or cash flows from adoption of this guidance. In January 2016, the FASB issued Accounting Standards Update No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognitionand Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). ASU 2016-01 makes changes to the accounting for equity investmentsand financial liabilities accounted for under the fair value option, and changes presentation and disclosure requirements for financial instruments. TheASU 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 Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 makeschanges 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 costof 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 thestatement 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 thebalance 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 ofinterest on the lease liability and variable payments will be classified within operating activities. For leases with terms of 12 months or less, a lessee ispermitted to make an accounting policy election by asset class not to recognize lease assets and lease liabilities. Lease expense for such leases will begenerally recognized straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from previous U.S. GAAP. The ASUrequires qualitative disclosures along with specific quantitative disclosures and will be effective for the Company beginning January 1, 2019, includinginterim periods. The ASU provides for a transitional adoption, with lessees and lessors required to recognize and measure leases at the beginning of theearliest period presented using a modified retrospective approach. Early adoption is permitted. The Company is assessing the impact of this ASU on itsConsolidated Financial Statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, “Compensation–Stock Compensation (Topic 718): Improvements toEmployee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 identifies areas for simplification involving several aspects of accountingfor share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option torecognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cashflows. The guidance will be effective for the fiscal year beginning after December 15, 2016, including interim periods within that year. The Companyexpects the revision to the accounting for income tax consequences to have an impact on the Company’s results of operations, which will be dependentupon the underlying vesting or exercise activity and future stock prices. The Company does not expect a material impact to the Company’s financialposition or cash flows from adoption of this guidance. F-13Table of Contents In August 2016, the FASB issued Accounting Standards Update No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of CertainCash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 clarifies whether eight specifically identified cash flow issues, which previous U.S.GAAP did not address, should be categorized as operating, investing or financing activities in the statement of cash flows. The guidance will be effectivefor the fiscal year beginning after December 15, 2017, including interim periods within that year. The Company is currently assessing the impact of thisASU on its Consolidated Financial Statements. 3.COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS AND BILLINGS IN EXCESS OFCOSTS AND ESTIMATED EARNINGS: Costs and estimated earnings in excess of billings on uncompleted contracts represents revenue earned under the percentage-of-completion methodbut not yet billable based on the terms of the contracts. These amounts are billed based on the terms of the contracts, which include achievement ofmilestones, partial shipments or completion of the contracts. Billings in excess of costs and estimated earnings on uncompleted contracts representsamounts billed based on the terms of the contracts in advance of costs incurred and revenue earned. December 31, 2016 2015 (in thousands) Costs incurred on uncompleted contracts $238,050 $210,716 Estimated earnings 7,247 31,921 245,297 242,637 Less billings to date (203,672) (200,565) $41,625 $42,072 Amounts are presented in the Consolidated Balance Sheets as follows: Costs and estimated earnings in excess of billings on uncompleted contracts $43,663 $42,592 Billings in excess of costs and estimated earnings on uncompleted contracts (2,038) (520) $41,625 $42,072 4.INVENTORIES: Inventories consist of the following (in thousands): December 31, 2016 2015 Short-term inventories: Raw materials $15,411 $21,486 Work-in-process 1,235 1,901 Finished goods 40 3,641 Supplies 2,351 2,447 Total short-term inventories 19,037 29,475 Long-term inventories: Finished goods 773 823 Total inventories $19,810 $30,298 Long-term inventories are recorded in Other assets. F-14Table of Contents 5.PROPERTY AND EQUIPMENT: Property and equipment, net consists of the following (in thousands): December 31, 2016 2015 Land and improvements $22,288 $23,903 Buildings 38,922 44,409 Machinery and equipment 139,189 146,704 Equipment under capital lease 1,126 924 Construction in progress 2,180 2,359 203,705 218,299 Less accumulated depreciation and amortization (85,604) (86,451)Property and equipment, net $118,101 $131,848 Accumulated amortization associated with equipment under capital lease was $0.6 million and $0.3 million as of December 31, 2016 and 2015,respectively. On October 4, 2016, the Company sold its Denver, Colorado facility for net proceeds of $13.9 million and recorded a gain on the sale of$7.9 million in the fourth quarter of 2016. Under the terms of the sale, the Company leased the property through March 1, 2017, in order to concludeproduction at the facility, complete final shipments and transfer certain equipment assets to other Company facilities. 6.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 anacquisition. As discussed in Note 2, “Summary of Significant Accounting Policies,” goodwill is reviewed for impairment annually as of December 31 orwhenever events occur or circumstances change that indicate goodwill may be impaired. Goodwill was fully impaired as of December 31, 2016 and 2015. Due to Water Transmission market conditions in 2015, goodwill of $5.3 million related to the Company’s Water Transmission Group wasquantitatively evaluated using a weighted average of the income and market approaches. The Company determined that its Water Transmission Groupgoodwill was impaired as of June 30, 2015, and it was completely written off in the second quarter of 2015. Due to negative impacts on the Tubular Products business as a result of the worldwide turmoil in crude oil markets, which became significant in thefourth quarter of 2014, goodwill of $16.1 million related to the Company’s Tubular Products Group was quantitatively evaluated using a weightedaverage of the income and market approaches. The Company concluded that there was no implied fair value of the Tubular Products Group goodwill andthat 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 disposedin 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 ofOperations. F-15Table of Contents Intangible Assets Intangible assets, included in Other assets on the Consolidated Balance Sheets, consist of the following (in thousands): Gross Carrying Accumulated Intangible Amount Amortization Assets, Net As of December 31, 2016 Customer relationships $1,378 $(413) $965 Patents 1,162 (697) 465 Trade names and trademarks 1,132 (226) 906 Other (1) 295 (233) 62 Total $3,967 $(1,569) $2,398 As of December 31, 2015 Customer relationships $1,378 $(275) $1,103 Patents 1,162 (465) 697 Trade names and trademarks 1,132 (151) 981 Other (1) 295 (155) 140 Total $3,967 $(1,046) $2,921 (1) Other intangibles consist of favorable lease contracts and non-compete agreements. Amortization expense was $0.5 million for each of the years ended December 31, 2016, 2015 and 2014. The estimated amortization expense foreach of the next five years and thereafter is as follows (in thousands): Year ending December 31, 2017 $495 2018 459 2019 213 2020 213 2021 213 Thereafter 805 $2,398 7.LINE OF CREDIT: The Company’s Loan and Security Agreement (the “Agreement”) with Bank of America, N.A, as amended, expires on October 25, 2018 andprovides for revolving loans and letters of credit in the aggregate amount of up to $60 million, subject to a borrowing base. The borrowing base iscalculated by applying various advance rates to eligible accounts receivable, costs and expected earnings in excess of billings, inventories and fixedassets, subject to various exclusions, adjustments and sublimits. Borrowings under the Agreement bear interest at rates related to London Interbank Offered Rate plus 1.75% to 2.25%, or at Bank of America’sprime rate plus 0.75% to 1.25%. Borrowings under the Agreement are secured by substantially all of the Company’s assets. As of December 31, 2016 and2015, there were no outstanding borrowings. As of December 31, 2016, the Company’s borrowing capacity under the Agreement was $13.0 million, net ofoutstanding letters of credit. The Agreement also contains customary representations, warranties and events of default, which include the occurrence of events orcircumstances which have a Material Adverse Effect, as defined in the Agreement. Payment of outstanding advances may be accelerated, at the option ofBank of America, should the Company default in its obligations under the Agreement. In conjunction with entering into the Agreement in October 2015, the Company terminated the Second Amended and Restated Credit Agreementdated as of October 24, 2012. The Company incurred incremental interest expense of approximately $0.4 million during the fourth quarter of 2015 relatedto the write-off of unamortized financing costs associated with the terminated agreement. Interest expense for continuing operations from line of credit borrowings, term notes and capital leases was $0.5 million in 2016, $1.4 million, netof amounts capitalized of $0.1 million in 2015 and $2.3 million, net of amounts capitalized of $0.2 million in 2014. No interest was capitalized in 2016.Term notes were paid off in 2014. F-16Table of Contents 8.LEASES: Capital Leases The Company leases certain equipment used in the manufacturing process. The Company had a total of $0.9 million in capital lease obligationsoutstanding as of December 31, 2016. The weighted average interest rate on all of the Company’s capital leases was 4.55%. The future minimumpayments under the Company’s capital leases as of December 31, 2016 are as follows (in thousands): 2017 $358 2018 257 2019 230 2020 134 2021 18 Total minimum lease payments 997 Amount representing interest (70)Present value of minimum lease payments 927 Current portion of capital lease obligation 325 Capital lease obligation, less current portion $602 Interest expense related to a capital lease at the Company’s former Bossier, Louisiana facility of $0.1 million in 2014 was included in Loss fromoperations of discontinued business. Operating Leases The Company has entered into various equipment and property leases with terms of ten years or less. Total rental expense from continuingoperations for the years ended December 31, 2016, 2015 and 2014 was $3.0 million, $3.2 million and $3.2 million, respectively. Certain of theCompany’s operating lease agreements include renewals and/or purchase options set to expire at various dates. The future minimum payments foroperating leases with initial or remaining terms in excess of one year as of December 31, 2016 are as follows (in thousands): 2017 $2,427 2018 1,313 2019 897 2020 794 2021 489 Thereafter 1,345 $7,265 9.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 totransfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at themeasurement date. The guidance for fair value measurements also applies to nonrecurring fair value measurements of nonfinancial assets and liabilities. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into threebroad levels. These levels are: Level 1 (inputs are quoted prices in active markets for identical assets or liabilities); Level 2 (inputs are other than quotedprices that are observable, either directly or indirectly through corroboration with observable market data); and Level 3 (inputs are unobservable, withlittle or no market data that exists, such as internal financial forecasts). The Company is required to maximize the use of observable inputs and minimizethe use of unobservable inputs when measuring fair value. F-17Table of Contents The following table summarizes information regarding the Company’s financial assets and liabilities that are measured at fair value on a recurringbasis (in thousands): As of December 31, 2016 Total Level 1 Level 2 Level 3 Financial assets: Deferred compensation plan $6,209 $5,215 $994 $- Derivatives 58 - 58 - Total assets $6,267 $5,215 $1,052 $- Financial liabilities: Derivatives $(8) $- $(8) $- As of December 31, 2015 Total Level 1 Level 2 Level 3 Financial assets: Deferred compensation plan $6,357 $5,075 $1,282 $- Derivatives 296 - 296 - Total assets $6,653 $5,075 $1,578 $- Financial liabilities: Contingent consideration $(2,974) $- $- $(2,974) The deferred compensation plan assets consists of cash and several publicly traded stock and bond mutual funds, valued using quoted market pricesin active markets, classified as Level 1 within the fair value hierarchy, as well as guaranteed investment contracts, valued at principal plus interestcredited at contract rates, 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 variouspricing 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 fair value hierarchy. Derivative valuations incorporate credit risk adjustments that are necessary to reflect the probabilityof default by the counterparty or the Company. The contingent consideration liability is associated with the acquisition of Permalok Corporation in December 2013. As of December 31, 2015, thisliability represented the probability weighted estimated obligation derived from high, mid and low revenue projections. The inputs used to measurecontingent consideration were classified as Level 3 within the fair value hierarchy. The valuation was not supported by market criteria and reflected theCompany’s internal revenue forecasts. Changes in the fair value of the contingent consideration obligation were reflected in Cost of sales during theperiod the estimate change occurred. The net carrying amounts of cash and cash equivalents, trade and other receivables, accounts payable, accrued liabilities and borrowings on line ofcredit approximate fair value due to the short-term nature of these instruments. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company measures its financial assets, including loans receivable and non-marketable equity method investments, at fair value on anonrecurring basis when they are determined to be other-than-temporarily impaired. The fair value of these assets is determined using Level 3unobservable inputs due to the absence of observable market inputs, and because the valuations require management judgment. There were no materialimpairment charges recorded on investments during the years ended December 31, 2016, 2015 and 2014. If required as part of its goodwill impairment assessments, the Company calculates the business enterprise value of applicable reporting units. Thiscalculation uses a weighted average of income and market approaches, and is classified as Level 3 within the fair value hierarchy. The income approach isprimarily driven by inputs from the Company’s internal financial forecasts. The market approach incorporates inputs from market participant data, as wellas inputs derived from Company assumptions. See Note 6, “Goodwill and Intangible Assets” for further discussion of the Company’s goodwill and intangible asset balances. 10.DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES: The Company conducts business in various foreign countries and, from time to time, settles transactions in foreign currencies. The Company hasestablished 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. Instruments that do not qualify for cash flow hedge accounting treatment areremeasured at fair value on each balance sheet date and resulting gains and losses are recognized in earnings. As of December 31, 2016 and 2015, thetotal notional amount of the derivative contracts not designated as cash flow hedges was $0.9 million (CAD$1.3 million) and $0, respectively. As ofDecember 31, 2016 and 2015, the total notional amount of the derivative contracts designated as cash flow hedges was $3.4 million (CAD$4.5 million)and $6.3 million (CAD$8.7 million), respectively. Derivative assets are included within Prepaid expenses and other and derivative liabilities are includedwithin Accrued liabilities in the Consolidated Balance Sheets. All of the Company’s foreign currency forward contracts are subject to an enforceablemaster netting arrangement. The Company presents the assets and liabilities associated with its foreign currency forward contracts at their gross fair valuesin the Consolidated Balance Sheets. F-18Table of Contents For each derivative contract entered into in which the Company seeks to obtain cash flow hedge accounting treatment, the Company formallydocuments all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking thehedge transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessedprospectively and retrospectively and a description of the method of measuring ineffectiveness. This process includes linking all derivatives to specificfirm commitments or forecasted transactions and designating the derivatives as cash flow hedges. The Company also formally assesses, both at thehedge’s inception and on an ongoing basis, whether the derivative contracts that are used in hedging transactions are highly effective in offsettingchanges in cash flows of hedged items. The effective portion of these hedged items is reflected in Other comprehensive income (loss) on the ConsolidatedStatements of Stockholders’ Equity. If it is determined that a derivative contract is not highly effective, or that it has ceased to be a highly effectivehedge, the Company will be required to discontinue hedge accounting with respect to that derivative contract prospectively. All of the Company’s Canadian forward contracts have maturities less than twelve months as of December 31, 2016. For the years ended December 31, 2016, 2015 and 2014, gains recognized in Net sales from continuing operations from derivative contracts notdesignated as hedging instruments were approximately $0, $0.4 million and $0.1 million, respectively. As of December 31, 2016 and 2015, there wereapproximately $0 and $0.1 million, respectively, of unrealized pretax gains on outstanding derivatives in Accumulated other comprehensive loss.Substantially all of the amount in Accumulated other comprehensive loss as of December 31, 2016 is expected to be reclassified to Net sales within thenext twelve months as a result of underlying hedged transactions also being recorded in Net sales. See Note 16, “Accumulated Other ComprehensiveLoss” for additional quantitative information regarding derivative gains and losses. 11.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 to50% of the first 6% of employee contributions to the plan, subject to certain limitations. The defined contribution retirement plan offers 24 investmentoptions. Defined Benefit Plans The Company has two noncontributory defined benefit plans. Effective 2001, both plans were frozen and participants were fully vested in theiraccrued 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 byparticipants subsequent to the date the plans were frozen. The funding policy for both of these plans is based on current plan costs plus amortization ofthe unfunded plan liability. All current employees covered by these plans are now covered by the defined contribution retirement plan. As of December 31, 2016, the Company had recorded, in accordance with the actuarial valuation, an accrued pension liability of $1.9 million inOther long-term liabilities and an unrecognized actuarial loss, net of tax, of $1.5 million in Accumulated other comprehensive loss. As of December 31,2015, the Company had recorded, in accordance with the actuarial valuation, an accrued pension liability of $1.9 million in Other long-term liabilitiesand an unrecognized actuarial loss, net of tax, of $1.6 million in Accumulated other comprehensive loss. Additionally, as of December 31, 2016 and2015, the projected and accumulated benefit obligation was $6.5 million and $6.4 million, respectively, and the fair value of plan assets was $4.6 millionand $4.5 million, respectively. The net periodic benefit cost for the years ended December 31, 2016, 2015 and 2014 were $0.4 million, $0.4 million and $0.2 million, respectively.The weighted average discount rates used to measure the projected benefit obligation were 3.74% and 3.91% as of December 31, 2016 and 2015,respectively. The plan assets are invested in pooled separate accounts stated at fair value based on the daily net asset value of the account and are therefore notcategorized in the fair value hierarchy. The expected weighted average long-term rate of return on plan assets was 7.5% as of December 31, 2016 and2015. Non-qualified Retirement Savings Plan The Company has a deferred compensation plan that covered officers and selected highly compensated employees. This deferred compensationplan was frozen effective as of December 31, 2016. The deferred compensation plan generally matched up to 50% of the first $10,000 of officercontributions to the plan and the first $5,000 of other selected highly compensated employee contributions, subject to certain limitations. It alsoprovided officers with a Company funded component with a retirement target benefit, until this component of the deferred compensation plan was frozenin 2015. The retirement target benefit amount was an actuarially estimated amount necessary to provide 35% of final base pay after a 35-year career withthe Company or 1% of final base pay per year of service. The actual benefit, however, assumed an investment growth at 8% per year. Should theinvestment 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 anydeficiency. As of December 31, 2016 and 2015, $6.2 million and $6.4 million, respectively, for the deferred compensation plan were recorded in Otherassets and Other long-term liabilities. F-19Table of Contents Total expense for all retirement plans for the years ended December 31, 2016, 2015 and 2014 was $1.4 million, $1.5 million and $1.8 million,respectively. 12.SHARE-BASED COMPENSATION: The Company has one active stock incentive plan for employees and directors, the 2007 Stock Incentive Plan, which provides for awards of stockoptions to purchase shares of common stock, stock appreciation rights, restricted and unrestricted shares of common stock, RSUs and PSAs. In addition,the Company has one inactive stock option plan, the 1995 Stock Option Plan for Nonemployee Directors, under which previously granted options remainoutstanding. The plans provide that options become exercisable according to vesting schedules, which range from immediate to ratably over a 60-monthperiod. Options terminate ten years from the date of grant. The plans also provide for other equity instruments, such as RSUs and PSAs, which grant theright 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 that vest over a three-year period and have a market-basedpayout condition. Vesting of the market-based PSAs is dependent upon the performance of the market price of the Company’s stock relative to a peergroup of companies. The following table summarizes share-based compensation expense recorded (in thousands): Year ended December 31, 2016 2015 2014 Cost of sales $422 $412 $337 Selling, general and administrative expense 1,379 1,362 2,609 Total $1,801 $1,774 $2,946 As of December 31, 2016, unrecognized compensation expense related to the unvested portion of the Company’s RSUs and PSAs was $1.0 million,which is expected to be recognized over a weighted average period of 1.0 year. There were no options granted during the years ended December 31, 2016, 2015 or 2014. There were 557,098 shares of common stock available forfuture issuance under the Company’s stock compensation plan as of December 31, 2016. Stock Options Awards A summary of option activity under the Company’s stock option plans as of December 31, 2016 and changes during the year then ended ispresented below: Options WeightedAverageExercise Price WeightedAverageRemainingContractualLife Aggregate IntrinsicValue (in years) (in thousands) Balance, December 31, 2015 28,000 $25.21 Options granted - - Options exercised - - Options canceled (2,000) 28.31 Balance, December 31, 2016 26,000 24.97 Exercisable, December 31, 2016 26,000 24.97 3.03 $- The total intrinsic value, defined as the difference between the current market value and the grant price, of options exercised during the yearsended December 31, 2015 and 2014 was approximately $0. No options were exercised in 2016. F-20Table of Contents Restricted Stock Units and Performance Share Awards The Company estimates the fair value of RSUs and 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. There were no PSAs granted during the years ended December 31, 2016 or 2015. Theassumptions used in the Monte Carlo simulation model for PSAs granted during the year ended December 31, 2014 were as follows: Expected stock price volatility 23.7%-65.0% Risk free interest rate 0.61% Expected dividend yield 0% A summary of activity under the Company’s RSUs and PSAs as of December 31, 2016 and changes during the year then ended is presented below: Number of RSUsand PSAs (1) Weighted AverageGrant Date FairValue Unvested RSUs and PSAs at December 31, 2015 127,852 $38.87 RSUs and PSAs granted 169,583 9.50 Unvested RSUs and PSAs canceled (63,432) 36.96 RSUs and PSAs vested (12,212) 31.50 Unvested RSUs and PSAs at December 31, 2016 221,791 $17.36 (1)The number of shares disclosed in this table are at the target level of 100%. The unvested balance of RSUs and PSAs as of December 31, 2016 includes approximately 47,000 PSAs at a target level of performance. The vestingof these awards is subject to the achievement of specified market-based conditions, and the actual number of common shares that will ultimately be issuedwill be determined by multiplying this number of PSAs by a payout percentage ranging from 0% to 200%. The weighted average grant date fair value of RSUs and PSAs granted during the year ended December 31, 2014 was $41.76. No RSUs or PSAs weregranted during the year ended December 31, 2015. The total fair value of RSUs and PSAs vested during the years ended December 31, 2016, 2015 and2014 was $0.1 million, $1.6 million and $3.5 million, respectively. Stock Awards For the years ended December 31, 2016, 2015 and 2014, stock awards of 27,640 shares, 10,464 shares and 9,150 shares, respectively, were grantedto non-employee directors, which vested immediately upon issuance. The Company recorded compensation expense based on the weighted average fairmarket value per share of the awards on the grant dates of $9.95 in 2016, $21.02 in 2015 and $36.00 and $36.41 in 2014. 13.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 shareholdersin the event of a proposed acquisition of the Company by enhancing the ability of the Board of Directors to negotiate more effectively with a prospectiveacquirer, and reserved 150,000 shares of Series A Junior Participating Preferred Stock (“Preferred Stock”) for purposes of the Plan. In connection with theadoption of the Plan, the Board of Directors declared a dividend distribution of one non-detachable preferred stock purchase right (a “Right”) per share ofcommon stock, payable to shareholders of record on July 9, 1999. Each Right represents the right to purchase one one-hundredth of a share of PreferredStock 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 toacquire, 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 marketvalue 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 andRestated Rights Agreement”). The Amended and Restated Rights Agreement amended and restated the Rights Agreement dated as of June 28, 1999between the Company and ChaseMellon Shareholder Services, L.L.C. (predecessor to the Rights Agent). The Amended and Restated Rights Agreementextended the final expiration date of the Rights from June 28, 2009 to June 28, 2019. The Amended and Restated Rights Agreement also reflected certainchanges in the rights and obligations of the Rights Agent and certain changes in procedural requirements under the Amended and Restated RightsAgreement. F-21Table of Contents 14.COMMITMENTS AND CONTINGENCIES: 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 therequest of the United States Environmental Protection Agency (the “EPA”). While the Company’s Portland, Oregon manufacturing facility does notborder the Willamette River, an outfall from the facility’s stormwater system drains into a neighboring property’s privately owned stormwater system andslip. Since the listing of the site, the Company was notified by the EPA and the Oregon Department of Environmental Quality (“ODEQ”) of potentialliability under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). In 2008, the Company was asked to fileinformation disclosure reports with the EPA (CERCLA 104 (e) information request). A remedial investigation and feasibility study of the Portland HarborSite 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 remedial investigation (“RI”) report was finalized in February 2016. The feasibility study was finalized in June 2016 by the EPA, and identifiedmultiple remedial alternatives. The EPA issued the Record of Decision in January 2017 selecting the remedy for cleanup at the Portland Harbor Site,which it believes will cost approximately $1.05 billion and 13 years to complete. The Record of Decision did not determine who is responsible for thecosts of cleanup or how the cleanup costs will be allocated among the potentially responsible parties. In 2001, groundwater containing elevated volatile organic compounds (“VOCs”) was identified in one localized area of leased property adjacent tothe 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 “Voluntary Agreement”) with ODEQ.The Company performed RI work required under the Voluntary Agreement and in 2016 the EPA and ODEQ requested additional sampling to beconducted. The Company provided a Final Supplemental Groundwater Sampling Work Plan in the third quarter of 2016, and in September 2016 theODEQ approved work to proceed. The Company initiated groundwater sampling in the fall of 2016, which will continue through the third quarter of2017, and results thus far have been generally consistent with previous sampling and modeling work. Concurrent with the activities of the EPA and ODEQ, the Portland Harbor Natural Resources Trustee Council (“Trustees”) sent some or all of thesame parties, including the Company, a notice of intent to perform a Natural Resource Damage Assessment (“NRDA”) for the Portland Harbor Site todetermine the nature and extent of natural resource damages under CERCLA Section 107. The Trustees for the Portland Harbor Site consist ofrepresentatives 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 thoseparties have agreed to do so. In June 2014, the Company agreed to participate in the injury assessment process, which included funding $0.4 million ofthe 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 anyadditional payment obligations or liabilities with the participation with the NRDA. In January 2017, the Confederated Tribes and Bands of the YakamaNation, a Trustee until they withdrew from the council in 2009, filed a complaint against the potentially responsible parties including the Company torecover costs related to their own injury assessment and compensation for natural resources damages. 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 costof that remedy is expected to be allocated among more than 100 potentially responsible parties. Because of the large number of responsible parties andthe variability in the range of remediation alternatives, the Company is unable to estimate an amount or an amount within a range of costs for itsobligation with respect to the Portland Harbor Site matters, and no further adjustment to the Consolidated Financial Statements has been recorded as ofthe date of this filing. The Company has insurance policies for defense costs, as well as indemnification policies it believes will provide reimbursementfor any share of the remediation assessed. However, the Company can provide no assurance that those policies will cover all of the costs which theCompany may incur. In December 2014, a federal district court approved settlements between the Company and two of its insurance carriers. The Company released itsinterests in the related insurance policies, and received $2.6 million in January 2015 for reimbursement of past indemnification and defense costs incurredby the Company associated with the Portland Harbor Site, substantially all of which reduced Cost of sales in 2014. Notwithstanding these settlements, theCompany 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, theCompany was accepted into the Texas Commission on Environmental Quality (“TCEQ”) Voluntary Cleanup Program (“VCP”) to address these issues andobtain a Certificate of Completion (“COC”) from TCEQ. The cost of any potential assessment and cleanup will not be covered by insurance. However,any costs incurred will be reimbursed by the purchaser of the OCTG business (see “Disposal of OCTG Business” in Note 2, “Summary of SignificantAccounting Policies”) if the purchaser exercises its option to purchase the property under certain circumstances after the COC is obtained. F-22Table of Contents The proposed remediation approach includes a municipal setting designation ordinance, approved by the City of Houston City Council in January2017, to prevent consumption of shallow groundwater from beneath the property, thereby eliminating the need for more costly remediation measures. The Company has completed an initial assessment and continues to monitor groundwater. In October 2016, the TCEQ notified the Company that aneighboring facility has asbestos contamination in its soil. In a December 2016 meeting with TCEQ, the Company was notified that it will need to assessasbestos contamination before the TCEQ will proceed with a COC. The Company expects to provide a sampling work plan in first quarter of 2017 andcollect samples soon after the work plan is approved. The Company currently estimates that the future costs associated with the VCP will be between$0.1 million and $1.7 million. As of December 31, 2016, the Company has a $0.2 million accrual for remediation costs based on the low-end estimate offuture costs using a probability-weighted analysis of remediation approaches, and estimates that completion of the VCP process will occur between thethird quarter of 2017 and the third quarter of 2019. All Sites The Company operates its facilities under numerous governmental permits and licenses relating to air emissions, stormwater runoff and otherenvironmental matters. The Company’s operations are also governed by many other laws and regulations, including those relating to workplace safetyand worker health, principally the Occupational Safety and Health Act and regulations there under which, among other requirements, establish noise anddust standards. The Company believes it is in material compliance with its permits and licenses and these laws and regulations, and the Company doesnot believe that future compliance with such laws and regulations will have a material adverse effect on its financial position, results of operations or cashflows. Other Contingencies and Legal Proceedings 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. TheCompany maintains insurance coverage against potential claims in amounts that are believed to be adequate. To the extent that insurance does not coverlegal, defense and indemnification costs associated with a loss contingency, the Company records accruals when such losses are considered probable andreasonably estimable. As of December 31, 2016, the Company has recorded a $1.8 million litigation accrual relating to a pending lawsuit. The Companybelieves that it is not presently a party to any other litigation, the outcome of which would have a material adverse effect on its business, financialcondition, results of operations or cash flows. Guarantees The Company has entered into certain letters of credit that total $2.0 million as of December 31, 2016. The letters of credit relate to workers’compensation insurance. 15.INCOME TAXES: The components of Income tax expense (benefit) from continuing operations are as follows (in thousands): Year Ended December 31, 2016 2015 2014 Current: Federal $(740) $(5,076) $4,336 State (102) 26 334 Total current income tax expense (benefit) (842) (5,050) 4,670 Deferred: Federal (3,541) (8,855) 305 State (373) 1,954 (324)Total deferred income tax benefit (3,914) (6,901) (19) $(4,756) $(11,951) $4,651 F-23Table of Contents The difference between the Company’s effective income tax rate and the federal statutory income tax rate of 35% is explained as follows (dollaramounts in thousands): Year Ended December 31, 2016 2015 2014 Income tax benefit at federal statutory rate of 35% $(4,907) $(14,470) $(532)State benefit, net of federal income tax effect (362) (866) (96)Federal and state income tax credits (154) (6,684) (91)Disallowed domestic manufacturing deduction - 630 - Change in valuation allowance 1,155 5,210 9 Uncertain income tax positions (4) 2,082 5 Goodwill impairment (nondeductible) - 1,849 5,623 Nondeductible expenses 63 91 207 Nontaxable adjustment to contingent consideration (580) 103 (611)Other 33 104 137 Income tax expense (benefit) $(4,756) $(11,951) $4,651 Effective income tax rate (33.9)% (28.9)% 305.6% The income tax effect of temporary differences that give rise to significant portions of deferred income tax assets and liabilities is presented below(in thousands): December 31, 2016 2015 Deferred income tax assets: Costs and estimated earnings in excess of billings on uncompletedcontracts, net $1,270 $2,888 Accrued employee benefits 5,025 5,946 Inventories 563 2,618 Trade receivable, net 199 266 Net operating loss carryforwards 15,637 7,843 Tax credit carryforwards 5,069 4,791 Other assets 1,830 2,737 Other 1,018 520 30,611 27,609 Valuation allowance (8,217) (7,057) 22,394 20,552 Deferred income tax liabilities: Property and equipment (22,380) (24,229)Intangible assets (819) (980)Prepaid expenses (477) (467) (23,676) (25,676) Net deferred income tax liabilities $(1,282) $(5,124) In assessing the ability to realize deferred income tax assets, management considers whether it is more likely than not that some portion or all of thedeferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxableincome during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income taxliabilities, projected future taxable income, taxable income in carryback periods and tax planning strategies in making this assessment. Because theCompany has a recent history of generating cumulative losses, management did not consider projections of future taxable income as persuasive evidencefor the recoverability of its deferred income tax assets. The Company believes it is more likely than not it will realize the benefits of its deductibledifferences as of December 31, 2016, net of any valuation allowance. As of December 31, 2016, the Company had approximately $40.0 million of federal net operating loss carryforwards, which expire on various datesbetween 2035 and 2036, and $3.3 million of federal income tax credit carryforwards, which expire on various dates between 2023 and 2036. As ofDecember 31, 2016, the Company also had approximately $46.9 million of state net operating loss carryforwards, which expire on various dates between2019 and 2036, and state income tax credit carryforwards of $4.2 million, which begin to expire in 2017. F-24Table of Contents During the year ended December 31, 2016, the Company determined that it no longer considers the earnings of its Mexican subsidiary to beindefinitely reinvested outside the United States. This change was made to allow the Company to more efficiently manage its cash balances and workingcapital. The change did not have a significant effect on the Company’s income taxes. The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign jurisdictions and in many statejurisdictions. Internal Revenue Service examinations have been completed for years prior to 2011. With few exceptions, the Company is no longersubject to United States Federal, state or foreign income tax examinations for years before 2012. A summary of the changes in the unrecognized income tax benefits is presented below (in thousands): Year Ended December 31, 2016 2015 2014 Unrecognized income tax benefits, beginning of year $4,874 $2,313 $6,207 Decreases for settlements - - (3,265)Decreases for lapse in statute of limitations - (1,199) (115)Decreases for positions taken in current year - - (615)Increases for positions taken in prior years - 3,716 101 Increases for positions taken in the current year - 44 - Unrecognized income tax benefits, end of year $4,874 $4,874 $2,313 It is reasonably possible that the total amounts of unrecognized income tax benefits will change in the following twelve months as a result of thelapse of tax statutes of limitation; however, actual results could differ from those currently expected. Effectively all of the unrecognized income taxbenefits would affect the Company’s effective income tax rate if recognized at some point in the future. The Company recognizes interest and penalties related to uncertain income tax positions in Income tax expense. As of December 31, 2016 and2015, the Company had approximately $0.1 million of accrued interest related to uncertain income tax positions. Total interest for uncertain income taxpositions did not change materially in 2016 and decreased by approximately $0.1 million in 2015 and 2014. 16.ACCUMULATED OTHER COMPREHENSIVE LOSS: Accumulated other comprehensive loss consists of the following (in thousands): December 31, 2016 2015 Pension liability adjustment, net of income tax benefit of $886 and $966 $(1,493) $(1,624)Deferred gain on cash flow derivatives, net of income tax expense of $6 and $49 10 86 Total $(1,483) $(1,538) F-25Table of Contents The following table summarizes changes in the components of Accumulated other comprehensive loss during the years ended December 31, 2016and 2015 (in thousands). All amounts are net of income tax: Defined BenefitPension Items Gains (Losses) onCash Flow Hedges Total Balance, December 31, 2014 $(1,862) $29 $(1,833)Other comprehensive income before reclassifications 17 150 167 Amounts reclassified from Accumulated other comprehensive loss 221 (93) 128 Net current period adjustments to Other comprehensive income (loss) 238 57 295 Balance, December 31, 2015 (1,624) 86 (1,538)Other comprehensive loss before reclassifications (125) (48) (173)Amounts reclassified from Accumulated other comprehensive loss 256 (28) 228 Net current period adjustments to Other comprehensive income (loss) 131 (76) 55 Balance, December 31, 2016 $(1,493) $10 $(1,483) The following table provides additional detail about accumulated other comprehensive income (loss) components that were reclassified to theConsolidated Statements of Operations (in thousands): Year Ended December 31, 2016 2015 2014 Details about Accumulated Other ComprehensiveIncome (Loss) Components Amount reclassified from Accumulated Other ComprehensiveLoss Affected line item in theConsolidated Statements ofOperations Defined benefit pension items: Net periodic pension cost $(392) $(352) $(182)Cost of salesAssociated income tax benefit 136 131 68 Income tax expense (256) (221) (114)Net of taxDeferred gain on cash flow derivatives: Gain on cash flow derivatives 45 147 6 Net salesHedge ineffectiveness - 2 (3)Net salesAssociated income tax expense (17) (56) (1)Income tax expense 28 93 2 Net of taxTotal reclassifications for the period $(228) $(128) $(112) 17.SEGMENT INFORMATION: The operating segments reported below are based on the nature of the products sold and the manufacturing process used by the Company and arethe segments of the Company for which separate financial information is available and for which operating results are regularly evaluated by theCompany’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Managementevaluates segment performance based on operating income. The Company’s Water Transmission segment manufactures large-diameter, high-pressure steel pipeline systems for use in water infrastructureapplications, which are primarily related to drinking water systems. These products are also used for hydroelectric power systems, wastewater systems andother applications. In addition, the Water Transmission segment makes products for industrial plant piping systems and certain structural applications. The Company’s Tubular Products segment manufactures and markets smaller diameter, electric resistance welded steel pipe used in a wide range ofapplications, including energy, construction, agricultural and industrial systems. On March 30, 2014 the Company completed the sale of substantially allof the assets and liabilities associated with the OCTG business conducted by the Company’s Tubular Products segment at its former manufacturingfacilities in Bossier City, Louisiana and Houston, Texas, excluding the real property located in Houston, Texas. The Company’s Tubular Productssegment’s remaining manufacturing facility is located in Atchison, Kansas. The Atchison facility operated at reduced levels from April 2015 to January2016, when the Company idled the facility to reduce operating expenses until market conditions improve or a sale is completed. F-26Table of Contents Based on the location of the customer, the Company sold principally all products in the United States and Canada. In 2016, one customer in theWater Transmission segment accounted for 27% of total Net sales. No customer accounted for 10% or more of total Net sales in 2015. One customer in theWater Transmission segment accounted for 16% and one customer in the Tubular Products segment accounted for 10% of total Net sales from continuingoperations in 2014. Year Ended December 31, 2016 2015 2014 (in thousands) Net sales from continuing operations: Water Transmission $149,387 $173,160 $238,545 Tubular Products 6,869 63,448 164,753 Total $156,256 $236,608 $403,298 Gross profit (loss) from continuing operations: Water Transmission $(317) $606 $39,601 Tubular Products (2,908) (13,231) 975 Total $(3,225) $(12,625) $40,576 Operating income (loss) from continuing operations: Water Transmission (1) $1,049 $(11,592) $31,490 Tubular Products (2) (3,336) (15,699) (16,677) (2,287) (27,291) 14,813 Corporate (11,246) (12,919) (14,619)Total $(13,533) $(40,210) $194 Net sales from continuing operations by geographic region: United States $144,280 $224,691 $383,344 Canada 11,976 11,917 19,954 Total $156,256 $236,608 $403,298 (1) Operating income for Water Transmission for 2016 includes restructuring expenses of $1.0 million and gain on sale of facility of $7.9 million.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. The following includes discontinued operations within Tubular Products in 2014: Year Ended December 31, 2016 2015 2014 (in thousands) Depreciation and amortization expense: Water Transmission $8,750 $7,318 $8,716 Tubular Products 776 1,859 5,090 9,526 9,177 13,806 Corporate 443 438 340 Total $9,969 $9,615 $14,146 Capital expenditures: Water Transmission $2,072 $6,313 $6,190 Tubular Products - 1,879 7,526 2,072 8,192 13,716 Corporate 220 323 573 Total $2,292 $8,515 $14,289 F-27Table of Contents December 31, 2016 2015 (in thousands) Total assets: Water Transmission $170,486 $185,607 Tubular Products 40,402 48,785 210,888 234,392 Corporate 30,667 24,988 Total $241,555 $259,380 All property and equipment is located in the United States, except for $4.1 million and $4.3 million of Water Transmission property and equipmentwhich is located in Mexico as of December 31, 2016 and 2015, respectively. 18.RESTRUCTURING: In June 2016, the Company made a decision to close the Denver, Colorado facility (part of the Water Transmission segment) and sell the property.The Company has incurred restructuring expenses of $1.0 million during the year ended December 31, 2016, which includes employee severance andtermination related restructuring expenses of $0.5 million. The Company expects to incur additional restructuring costs of $0.1 million related toemployee severance and termination, which will result in future cash outlays. In addition, the Company has incurred additional expense related todemobilization activities at the Denver facility of approximately $0.5 million during the year ended December 31, 2016. The Company expects futuredemobilization costs for the Denver facility of up to $1.0 million, which will also result in future cash outlays. In April 2015, the Company initiated a production curtailment at its Atchison, Kansas facility within the Tubular Products segment. Severancerelated restructuring expenses associated with the production curtailment were $0.6 million, of which $0.5 million was included in Cost of sales and $0.1million was included in Selling, general and administrative expense. Of these restructuring expenses, $0.1 million was payable as of December 31, 2015and was paid in 2016. 19.RELATED PARTY TRANSACTIONS: In the second quarter of 2015, the Company engaged Raymond James & Associates, an affiliate of Eagle Asset Management, to provide investmentbanking services related to a possible disposition of the Company’s Tubular Products business. This contract was terminated in May 2016. Eagle AssetManagement was a substantial stockholder of the Company (owning more than ten percent of the Company’s common stock) until September 30, 2015,when Eagle Asset Management reported that it then owned less than five percent of the Company’s common stock. A nominal amount of reimbursableexpenses were incurred by Raymond James during 2015. During 2014, the Company paid $1.2 million to Raymond James & Associates for investment banking services related to the Company’s sale of itsformer OCTG business. Eagle Asset Management owned more than ten percent of the Company’s common stock at the time of the payment. F-28Table of Contents 20.QUARTERLY DATA (UNAUDITED): Summarized quarterly financial data for the years ended December 31, 2016 and 2015 is as follows (in thousands, except per share amounts). First Quarter SecondQuarter Third Quarter FourthQuarter Total For the year ended December 31, 2016 Net sales: Water Transmission $29,358 $39,775 $41,075 $39,179 $149,387 Tubular Products 4,570 2,286 13 - 6,869 Total $33,928 $42,061 $41,088 $39,179 $156,256 Gross profit (loss): Water Transmission $(5,750) $(1,272) $2,939 $3,767 $(317)Tubular Products 313 (890) (816) (1,516) (2,908)Total $(5,437) $(2,162) $2,123 $2,251 $(3,225) Operating income (loss): Water Transmission (1) $(7,256) $(2,648) $1,363 $9,590 $1,049 Tubular Products 104 (1,002) (802) (1,636) (3,336)Corporate (2,884) (2,603) (2,624) (3,135) (11,246)Total $(10,036) $(6,253) $(2,063) $4,819 $(13,533) Net income (loss) $(9,583) $(6,242) $727 $5,834 $(9,263) Net earnings (loss) per share: Basic $(1.00) $(0.65) $0.08 $0.61 $(0.97)Diluted $(1.00) $(0.65) $0.08 $0.60 $(0.97) (1) Operating income for Water Transmission for the fourth quarter of 2016 includes the gain on sale of facility of $7.9 million. First Quarter SecondQuarter Third Quarter FourthQuarter Total For the year ended December 31, 2015 Net sales: Water Transmission $56,242 $38,445 $39,792 $38,681 $173,160 Tubular Products 28,623 15,401 12,543 6,881 63,448 Total $84,865 $53,846 $52,335 $45,562 $236,608 Gross profit (loss): Water Transmission $7,519 $1,255 $(725) $(7,443) $606 Tubular Products (3,628) (3,848) (1,786) (3,969) (13,231)Total $3,891 $(2,593) $(2,511) $(11,412) $(12,625) Operating income (loss): Water Transmission (1) $5,633 $(5,815) $(2,384) $(9,026) $(11,592)Tubular Products (4,617) (4,254) (2,298) (4,530) (15,699)Corporate (4,099) (3,258) (2,602) (2,960) (12,919)Total $(3,083) $(13,327) $(7,284) $(16,516) $(40,210) Net loss $(2,101) $(12,079) $(1,515) $(13,693) $(29,388) Net loss per share: Basic and diluted $(0.22) $(1.26) $(0.16) $(1.43) $(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-29Table of Contents Schedule II NORTHWEST PIPE COMPANYVALUATION AND QUALIFYING ACCOUNTS(Dollars in thousands) Balance atBeginning ofPeriod Charged toProfit andLoss Deductionfrom Reserves Balance atEnd of Period Year ended December 31, 2016: Allowance for doubtful accounts $751 $295 $(531) $515 Valuation allowance for deferred tax assets 7,057 1,160 - 8,217 Year ended December 31, 2015: Allowance for doubtful accounts $755 $416 $(420) $751 Valuation allowance for deferred tax assets 1,858 5,217 (18) 7,057 Year ended December 31, 2014: Allowance for doubtful accounts $685 $411 $(341) $755 Valuation allowance for deferred tax assets 1,894 26 (62) 1,858 S-1Table of Contents SIGNATURES 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 signedon its behalf by the undersigned, thereunto duly authorized, on the 9th day of March 2017. NORTHWEST PIPE COMPANY By:/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 theRegistrant in the capacities indicated, on the 9th day of March 2017. Signature Title /S/ RICHARD A. ROMAN Director and Chairman of the BoardRichard A. Roman /S/ SCOTT MONTROSS Director, President and Chief Executive OfficerScott Montross /S/ ROBIN GANTT Senior Vice President, Chief Financial Officer and Corporate SecretaryRobin Gantt (Principal Financial Officer) /S/ MICHELLE APPLEBAUM DirectorMichelle Applebaum /S/ HARRY L. DEMOREST DirectorHarry L. Demorest /S/ MICHAEL C. FRANSON DirectorMichael C. Franson /S/ KEITH R. LARSON DirectorKeith R. Larson EXHIBIT 21.1 NORTHWEST PIPE COMPANYSUBSIDIARIES OF THE REGISTRANT Northwest Pipe Mexico S.A. de C.V., Mexico Thompson Tank Holdings, Inc., Oregon Permalok Corporation, Missouri EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-190854, 333-20165, and 333-152573) of Northwest PipeCompany of our report dated March 9, 2017, relating to the consolidated financial statements and the financial statement schedule of Northwest PipeCompany and Subsidiaries (the “Company”) as of and for the year ended December 31, 2016, and the effectiveness of the Company’s internal control overfinancial reporting, appearing in this Annual Report on Form 10-K of Northwest Pipe Company for the year ended December 31, 2016. /s/ Moss Adams LLP Portland, OregonMarch 9, 2017 EXHIBIT 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-190854, 333-20165, 333-152573) of NorthwestPipe Company of our reportdated March 4, 2016 relating to the financial statements, financial statement schedule and the effectiveness of internal controlover financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP Portland, OregonMarch 9, 2017 EXHIBIT 31.1 CERTIFICATION I, Scott Montross, certify that: 1.I have reviewed this Annual Report on Form 10-K of Northwest Pipe Company; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 9, 2017 By:/s/ SCOTT MONTROSS Scott Montross Director, President and Chief Executive Officer EXHIBIT 31.2 CERTIFICATION I, Robin Gantt, certify that: 1.I have reviewed this Annual Report on Form 10-K of Northwest Pipe Company; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 9, 2017 By:/s/ ROBIN GANTT Robin GanttSenior Vice President, Chief Financial Officer andCorporate Secretary(Principal Financial Officer) EXHIBIT 32.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Northwest Pipe Company (the “Company”) on Form 10-K for the period ended December 31, 2016 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Montross, Director, President and Chief Executive Officer of theCompany, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that: (1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ SCOTT MONTROSS Scott MontrossDirector, President and Chief Executive Officer March 9, 2017 EXHIBIT 32.2 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Northwest Pipe Company (the “Company”) on Form 10-K for the period ended December 31, 2016 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Robin Gantt, Senior Vice President, Chief Financial Officer and CorporateSecretary of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that: (1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ ROBIN GANTT Robin GanttSenior Vice President, Chief Financial Officer andCorporate Secretary March 9, 2017

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