Northwest Pipe Company
Annual Report 2017

Plain-text annual report

Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 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, 2017 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, Washington 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 className 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 of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, andwill not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K, or any amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growthcompany” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any newor revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐ 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 $134,068,871 as of June 30, 2017 based upon thelast sales price as reported by Nasdaq. The number of shares outstanding of the registrant’s common stock as of February 23, 2018 was 9,723,883 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 2018 Annual Meeting ofShareholders. Table of Contents NORTHWEST PIPE COMPANY2017 ANNUAL REPORT ON FORM 10-KTABLE OF CONTENTS PageCautionary Statement Regarding Forward-Looking Statements1 Part I Item 1Business2Item 1ARisk Factors6Item 1BUnresolved Staff Comments12Item 2Properties13Item 3Legal Proceedings13Item 4Mine Safety Disclosures13 Part II Item 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities14Item 6Selected Financial Data16Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations17Item 7AQuantitative and Qualitative Disclosures About Market Risk24Item 8Financial Statements and Supplementary Data24Item 9Changes in and Disagreements With Accountants on Accounting and Financial Disclosure24Item 9AControls and Procedures24Item 9BOther Information25 Part III Item 10Directors, Executive Officers and Corporate Governance26Item 11Executive Compensation27Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters27Item 13Certain Relationships and Related Transactions, and Director Independence27Item 14Principal Accounting Fees and Services27 Part IV Item 15Exhibits, Financial Statement Schedules28Item 16Form 10-K Summary30 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 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 changes in demandand market prices for our products, product mix, bidding activity, the timing of customer orders and deliveries, production schedules, the price andavailability of raw materials, price and volume of imported product, excess or shortage of production capacity, international trade policy and regulations,our ability to identify and complete internal initiatives and/or acquisitions in order to grow our Water Transmission business, the impacts of the Tax Cutsand Jobs Act of 2017 and other risks discussed in Part I — Item 1A. “Risk Factors” of this 2017 Form 10-K and from time to time in our other Securitiesand Exchange Commission filings and reports. Such forward-looking statements speak only as of the date on which they are made, and we do notundertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this 2017 Form 10-K. If we doupdate or correct one or more forward-looking statements, investors and others should not conclude that we will make additional updates or correctionswith respect thereto or with respect to other forward-looking statements. 1Table of Contents PART I Item 1.Business Unless otherwise indicated, the terms “the Company,” “we,” “our” and “us” are used in this 2017 Form 10-K to refer to Northwest Pipe Company orone of our consolidated subsidiaries or to all of them taken as a whole. We were incorporated in the state of Oregon in 1966. Overview We are the largest manufacturer of engineered welded steel pipe water systems in North America. With our strategically located manufacturingfacilities, we are well-positioned to meet North America’s growing needs for water and wastewater infrastructure. We serve a wide range of markets and oursolutions-based products are a good fit for applications including water transmission, plant piping, tunnels and river crossings. We have established aprominent position based on a strong and widely-recognized reputation for quality, service and an extensive range of products engineered andmanufactured to meet expectations in all categories of performance including highly corrosive environments. We manufacture large-diameter, high-pressure, engineered welded steel pipeline systems for use in water transmission applications. Our sales havehistorically been driven by the need for new water infrastructure, which is based primarily on overall population growth and population movementbetween regions, as well as by drought conditions, which are causing a dwindling water supply from developed water sources. More recently, we haveseen a trend towards spending on water infrastructure replacement, repair and upgrade. Recent Business Developments On December 26, 2017, we completed the sale of substantially all of the assets associated with our manufacturing facility in Atchison, Kansas (the“Atchison facility”), including all of the real and tangible personal property located at the site of that manufacturing facility. Total consideration of$37.2 million in cash was paid by the buyer, resulting in a nominal gain recognized on the sale. Of the proceeds received, $0.75 million was placed inescrow until February 2018 and approximately $3.7 million was placed in escrow for twelve months to secure our indemnification obligations under theagreement. In March 2018, we announced our plans to close our leased Permalok® manufacturing facility in Salt Lake City, Utah and move the production tothe Permalok® production facility in St. Louis, Missouri during the second quarter of 2018. This will eliminate duplicate overhead and increaseproduction flexibility. In addition, we will begin producing Permalok® product at our Adelanto, California location, which will increase utilization ofexisting assets and give us better access to the West Coast trenchless market. In March 2018, we also announced our plans to close our manufacturing facility in Monterrey, Mexico, and to cease production early in the secondquarter of 2018. Our Industry Much of the United States water infrastructure is antiquated and many authorities, including the United States Environmental Protection Agency(the “EPA”), believe the United States water infrastructure is in critical need of updates, repairs or replacements. In its 2011 Drinking Water InfrastructureNeeds Survey and Assessment released in June 2013, the EPA estimated the nation will need to spend $384 billion in infrastructure investments by 2030to continue to provide safe drinking water to the public. The American Society of Civil Engineers (the “ASCE”) has given poor ratings to many aspects ofthe United States water infrastructure in their 2017 Infrastructure Report Card for Drinking Water, and in its Failure to Act: Closing the InfrastructureInvestment Gap for America’s Economic Future study published in 2016, the ASCE concludes that significant portions of many municipal water systemsare 40 to 50 years old and are nearing the end of their useful lives, and estimates there will be $150 billion in capital investment needs for water andwastewater infrastructure by 2025 and $204 billion in capital investment needs by 2040. The American Water Works Association concluded in their 2012report, Buried No Longer: Confronting America’s Water Infrastructure Challenge, that from 2011 to 2035 more than $1 trillion will be needed to repairand 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 soldwill 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. 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 72 millionpeople between 2018 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. The 2018 Dodge Construction Outlook forecasts public works construction starts willgrow by 3% from 2017 levels. 2Table of Contents 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 mid-20th century with a lifespan of 75 to 100 years. In its 2017Infrastructure Report Card for Drinking Water, the ASCE estimates there are 240,000 water main breaks per year in the United States, wasting over twotrillion gallons of treated drinking water, which equates to 14% to 18% of each day’s treated water. The ASCE also reports that with utilities averaging apipe replacement rate of 0.5% per year, it will take an estimated 200 years to replace the system – nearly double the useful life of the pipes. These agingwater 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. Federal initiatives to improve the conditions of the aging water infrastructure include the Water Infrastructure and Resiliency Finance Center at theEPA and the Water and Environmental Programs at the U.S. Department of Agriculture. The U.S. Senate passed the latest Water Resources DevelopmentAct, which was included in the Water Infrastructure Improvements for the Nation Act signed by the President in December 2016, which authorizes newinfrastructure projects around the country and contains substantive provisions in regards to drinking water infrastructure. Additionally, the EPA’s WaterInfrastructure Finance and Innovation Act (“WIFIA”) program provides approximately $1 billion in credit assistance for water infrastructure projects. In aJune 2017 EPA press release, EPA Administrator Scott Pruitt said “Improvements are needed to address drinking and waste water infrastructure, and EPA’sWIFIA program offers opportunities to provide credit assistance to spur innovative investments that address water infrastructure needs.” In addition to the Federal initiatives, individual states are also taking action. In November 2014, the State of California approved the WaterQuality, Supply and Infrastructure Improvement Act (“Proposition 1”). Proposition 1 authorizes $7.5 billion in general obligation bonds to fund statewater supply infrastructure projects, such as public water system improvements, surface and groundwater storage, drinking water protection, waterrecycling and advanced water treatment technology, water supply management and conveyance, wastewater treatment, drought relief, emergency watersupplies and ecosystem and watershed protection and restoration. The State of Texas has earmarked $27 billion of future bond funding for state waterprojects over the next 50 years through their State Water Implementation Fund for Texas (SWIFT). This program provides low-interest and deferred loansto state agencies making approved investments in water infrastructure projects. Our strategically located manufacturing facilities are well-positioned totake advantage of the anticipated growth in demand. Products Water transmission pipe is used for high-pressure applications, typically requiring pipe to withstand pressures in excess of 150 pounds per squareinch. Most of our water transmission products are made to custom specifications for fully engineered, large diameter, high-pressure water infrastructuresystems. Other uses include pipe for piling and hydroelectric projects, wastewater treatment plants and other applications. Our primary manufacturingprocess has the capability to manufacture water transmission pipe in diameters ranging from 24 inches to 156 inches with wall thickness of 0.135 inch to1.00 inch. We also have the ability to manufacture even larger and heavier pipe with other processes. We can coat and/or line these products with cementmortar, polyethylene tape, polyurethane paints, epoxies, Pritec® and coal tar enamel according to our customers’ specifications. We maintain fabricationfacilities that provide installation contractors with custom fabricated sections as well as straight pipe sections. We typically deliver a complete pipelinesystem to the installation contractor. We also manufacture Permalok® steel casing pipe, which is a proprietary pipe joining system that employs a press-fit interlocking connection system. The Permalok® product is generally installed in trenchless construction projects. Marketing Our plant locations in Oregon, California, West Virginia, Texas, Missouri, Utah and Mexico, allow us to efficiently serve customers throughout theUnited States, as well as Canada and Mexico. Our marketing strategy emphasizes early identification of potential water projects, promotion ofspecifications consistent with our capabilities and close contact with the project designers and owners throughout the design phase. Our in-house salesforce is comprised of sales representatives, engineers and support personnel who work closely with public water agencies, contractors and engineeringfirms, often years in advance of projects being bid. This allows us to identify and evaluate planned projects at early stages, participate in the engineeringand design process, and ultimately promote the advantages of our systems. After an agency completes a design, they publicize the upcoming bid for awater transmission project. We then obtain detailed plans and develop our estimate for the pipe portion of the project. We typically bid to installationcontractors who include our bid in their proposals to public water agencies. A public water agency generally awards the entire project to the contractorwith the lowest responsive bid. 3Table of Contents As such, the primary customers for our water transmission products are installation contractors for projects funded by public water agencies. Nocustomer accounted for 10% or more of total Net sales from continuing operations in 2017. One customer accounted for 28% of total Net sales fromcontinuing operations in 2016 and two customers accounted for 16% and 13% of total Net sales from continuing operations in 2015; we do not believethe potential loss of these customers would have had an adverse effect on our business due to the nature of the industry and the competition betweeninstallation contractors. Manufacturing Water transmission manufacturing begins with the preparation of engineered drawings of each unique piece of pipe in a project. These drawings areprepared on our proprietary computer-aided design system and are used as blueprints for the manufacture of the pipe. After the drawings are completedand approved, manufacturing begins by feeding steel coil continuously at a specified angle into a spiral weld mill which cold-forms the band into atubular configuration with a spiral seam. Automated arc welders, positioned on both the inside and the outside of the tube, are used to weld the seam. Thewelded pipe is then cut at the specified length. After completion of the forming and welding phases, the finished cylinder is tested and inspected inaccordance with project specifications, which may include 100% radiographic analysis of the weld seam. The cylinders are then coated and lined asspecified. Possible coatings include coal tar enamel, polyethylene tape, polyurethane paint, epoxies, Pritec® and cement mortar. The inside of the pipecylinders can be lined with cement mortar, polyurethane or epoxies. Following coating and lining, certain pieces may be custom fabricated as required forthe project. This process is performed in our fabrication facilities. Typically, completed pipe segments are evaluated for structural integrity with ahydrotester. Upon final inspection, the pipe is prepared for shipment. We ship our products to project sites principally by truck. 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. We own interlocking pipe joining system technologies (Permalok®) thatprovide an alternate joint solution used for connecting steel pipes. To stay current with technological developments in the United States and abroad, weparticipate in trade shows, industry associations, research projects and vendor trials of new products. Quality Assurance. We have quality management systems in place that assure we consistently provide products that meet or exceed customer 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. 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 We measure backlog as a key metric to evaluate the commercial health of our business. Backlog represents the balance of remaining performanceobligations under signed contracts. Binding agreements received by us may be subject to cancelation or postponement; however, cancelation wouldobligate the customer to pay the contract consideration proportional to the costs we have incurred through the cancelation date. As of December 31, 2017and 2016, backlog was approximately $53 million and $57 million, respectively. Backlog as of any particular date may not be indicative of actualoperating results for any fiscal period. There can be no assurance that any amount of backlog ultimately will be realized. We also have projects for whichwe have been notified that we are the successful bidder, but a binding agreement has not been executed (“confirmed orders”). As of December 31, 2017and 2016, backlog and confirmed orders combined were approximately $88 million and $66 million, respectively. Projects for which a bindingagreement has not been executed could be canceled. Competition We have several regional competitors. Most water transmission projects are competitively bid and price competition is vigorous. Price competitionmay reduce the gross margin on sales, which may adversely affect overall profitability. Other competitive factors include timely delivery, ability to meetcustomized specifications and high freight costs which may limit the ability of manufacturers located in other market areas to compete with us. 4Table of Contents With manufacturing facilities in Oregon, California, West Virginia, Texas, Missouri, Utah and Mexico, we believe we can more effectively competethroughout the United States, Canada and Mexico. Our primary competitor in the western United States and southwestern Canada is the WaterTransmission Group of Ameron International Corporation, a wholly owned subsidiary of National Oilwell Varco, Inc. East of the Rocky Mountains, ourprimary competition includes: Thompson Pipe Group, which manufactures concrete pressure pipe, fiberglass reinforced polymer pressure pipe and spiralwelded steel pipe; and AMERICAN SpiralWeld Pipe Company, LLC and Mid America Pipe Fabricating and Supply Co., Inc., which manufacture spiralwelded 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. InFebruary 2017, a competitor announced it was building a new spiral-welded steel pipe mill in California. In December 2017, another competitorannounced its plans to build a new spiral-welded steel pipe mill in either Oklahoma or Texas. New or expanded facilities or new competitors could have amaterial adverse effect on our ability to capture market share and maintain product pricing. Raw Materials and Supplies We have historically purchased hot rolled and galvanized steel coil from both domestic and foreign steel mills, however in 2017 all steel purchaseswere from domestic steel mills. Domestic suppliers include Nucor Corporation, EVRAZ Inc. North America, Steel Dynamics, Inc., ArcelorMittal USA LLC,SSAB, and Big River Steel. Steel is normally purchased only after a project has been awarded to us. From time to time, we may purchase additional steelwhen it is available at favorable prices. Purchased steel represents a substantial portion of our cost of sales. The steel industry is highly cyclical in natureand steel prices fluctuate significantly, influenced by numerous factors beyond our control, including general economic conditions, availability of rawmaterials, 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 15 of the Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements andSupplementary Data” of this 2017 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. Estimating liabilities for environmental investigations and cleanup is complex and dependent upon a number of factors beyond our control whichmay change dramatically. We have no reserves for environmental investigation or cleanup, and we believe this is appropriate based on currentinformation; however, we cannot provide assurance that our future environmental investigation and cleanup costs and liabilities will not result in amaterial expense. Employees As of January 31, 2018, we had approximately 540 full-time employees. Approximately 34% were salaried and approximately 66% 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 9% 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, 2017, all material long-lived assets are located in theUnited States. See Note 2 and Note 6 of the Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements and SupplementaryData” of this 2017 Form 10-K for revenue by geographic region and property and equipment information. Executive Officers of the Registrant Information regarding our executive officers is set forth under the caption “Directors, Executive Officers, Promoters and Control Persons” inPart III — Item 10. “Directors, Executive Officers and Corporate Governance” of this 2017 Form 10-K and is incorporated herein by reference. 5Table of Contents 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 2017 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. Item 1A.Risk Factors You should carefully consider the following factors, together with all the other information included in this 2017 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 business faces an overcapacity situation due to recent capacity expansions as well as the potential for increased competition fromsubstitute products from manufacturers of concrete, ductile iron, polyvinyl chloride (“PVC”) and high density polyethylene (“HDPE”) pipe. Ordersin our business are competitively bid and price competition can be vigorous. In a market that already has overcapacity issues, the recent increases incapacity have negatively affected our sales, gross margins and overall profitability. Other competitive factors include timely delivery, ability to meetcustomized specifications and high freight costs. Although our manufacturing facilities in Oregon, California, West Virginia, Texas, Missouri, Utah andMexico allow us to compete throughout the United States, Canada and Mexico, we cannot assure you that new or existing competitors will not establishnew facilities or expand capacity further within our market areas. In February 2017, a competitor announced it was building a new spiral-welded steelpipe mill in California. In December 2017, another competitor announced its plans to build a new spiral-welded steel pipe mill in either Oklahoma orTexas. New or expanded facilities or new competitors could have a material adverse effect on our market share, product pricing, sales, gross margins andoverall profitability in our 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 business isprimarily dependent upon spending on public water transmission projects, including water infrastructure upgrades, repairs and replacement and new waterinfrastructure 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. 6Table of Contents 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 and availability may affect our future results of operations. Purchased steel represents a substantial portion of ourcost of sales. The steel industry is highly cyclical in nature, and at times, pricing can be highly volatile due to a number of factors beyond our control,including general economic conditions, import duties, other trade restrictions and currency exchange rates. Over the past three years, steel prices havefluctuated significantly. Our cost for a ton of steel was approximately $650 per ton in 2017, $474 per ton in 2016 and $573 per ton in 2015. In 2017, ourmonthly average steel purchasing costs ranged from a high of approximately $768 per ton to a low of approximately $627 per ton. This volatility cansignificantly affect our gross profit. On March 8, 2018, President Trump signed a proclamation imposing a 25% tariff on all imported steel products for anindefinite amount of time under Section 232 of the Trade Expansion Act of 1962. The tariff will be imposed on all steel imports with the exception ofsteel imported from Canada, Mexico and Australia, and the administration is considering exemption requests from other countries. We expect theseactions to increase steel costs and decrease supply availability. Prior to the announcement, we had already experienced domestic price increases andlimited steel availability since the beginning of 2018. Although we seek to recover increases in steel prices through price increases in our products, we have not always been successful. Any increase insteel 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 cashflows. In addition, if we are unable to acquire timely steel supplies, we may need to decline bid and order opportunities, which could also have an adverseeffect on our business, financial position, results of operations or cash flows. Our backlog is subject to reduction and cancelation. Backlog, which represents the balance of remaining performance obligations under signedcontracts, was approximately $53 million as of December 31, 2017. Our backlog is subject to fluctuations; moreover, cancelations of purchase orders,change orders on contracts or reductions of product quantities could materially reduce our backlog and, consequently, future revenues. Our failure toreplace canceled or reduced backlog could result in lower revenues, which could adversely affect our business, financial position, results of operations orcash flows. 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 assets may adversely affect our business, financialposition, 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. 7Table of Contents 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. 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 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. 8Table of Contents 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. Our use of the percentage-of-completion method of accounting includes estimates. Revenue from construction contracts is recognized on thepercentage-of-completion method, measured by the costs incurred to date as a percentage of the estimated total costs of each contract (the cost-to-costmethod). Estimated total costs of each contract are reviewed on a monthly basis by project management and operations personnel for all active projects.All cost revisions that result in the gross profit as a percent of sales increasing or decreasing by more than two percent are reviewed by senior managementpersonnel. 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. See Note 2 of the Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements and Supplementary Data” of this 2017Form 10-K for discussion regarding the expected impact of our adoption of new guidance for revenue recognition effective in the first quarter of 2018. 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. 9Table of Contents 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 facility as discussedin Note 15 of the Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements and Supplementary Data” of this 2017 Form 10-K. Some environmental laws and regulations impose liability and responsibility on present and former owners, operators or users of facilities and sites forcontamination at such facilities and sites without regard to causation or knowledge of contamination. Consequently, we cannot assure you that existingor future circumstances, the development of new facts or the failure of third parties to address contamination at current or former facilities or propertieswill 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. Our information technology systems can be negatively affected by cybersecurity 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. To the extent that any disruption or security breach results in a loss or damage to our data, or an inappropriatedisclosure of confidential or protected personal information, it could cause significant damage to our reputation, affect our relationships with ourcustomers, suppliers and employees, lead to claims against us and ultimately harm our business. Additionally, we may be required to incur significantcosts to protect against damage caused by these disruptions or security breaches in the future. 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. Increased imports in the United States andCanada which compete with our products could reduce demand for our products in the future and adversely affect our business, financial position, resultsof operations or cash flows. Risks Related to Our Financial Condition 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. 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 the 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 theAgreement. As of December 31, 2017, we had $19.1 million available to borrow under the Agreement. We may not have sufficient availability under theAgreement 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, 2017, we had approximately $1.1 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. 10Table of Contents Our current and future debt and debt service obligations could: •limit our ability to obtain additional financing for working capital or other purposes in the future; •reduce the amount of funds available to finance our operations, capital expenditures and other activities; •increase our vulnerability to economic downturns, illiquid capital markets and adverse industry conditions; •limit our flexibility in responding to changing business and economic conditions, including increased competition; •place us at a disadvantage when compared to our competitors that have less debt; and •with respect to our borrowings that bear interest at variable rates, cause us to be vulnerable to increases in interest rates. Our ability to make scheduled payments on our current and future debt will depend on our future operating performance and cash flows, which 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, whichcould 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 current and future debtcould have a material adverse effect on our business, financial condition, results of operations or cash flows. Risks Related to Our Internal Control Over Financial Reporting We have identified material weaknesses in internal control in prior years. No material weaknesses were identified as of December 31, 2017,2016 or 2015. However, we cannot assure you that material weaknesses in our internal control over financial reporting will not be identified in the future.Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in materialweaknesses, or could result in material misstatements in our financial statements. These misstatements could result in a restatement of financialstatements, cause us to fail to meet our reporting obligations or cause investors to lose confidence in our reported financial information, leading to adecline 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. 11Table of Contents 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; •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. 12Table of Contents 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, 2017: 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 rollParkersburg, 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, 2017, we owned all of our facilities except for one of our Saginaw, Texas facilities, our St. Louis, Missouri facility and our SaltLake City, Utah facility, which are leased. Additionally, land adjacent to our Portland, Oregon facility used for parking and pipe storage is leased. 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 15 ofthe Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements and Supplementary Data” of this 2017 Form 10-K. Item 4.Mine Safety Disclosures Not applicable. 13Table 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 2017 First Quarter $15.31 $19.39 Second Quarter 12.67 17.03 Third Quarter 14.57 19.17 Fourth Quarter 16.94 21.08 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 There were 28 shareholders of record as of February 20, 2018. A substantially greater number of holders of our common stock are beneficialholders, whose shares of record are held by banks, brokers and other financial institutions. There were no cash dividends declared or paid in fiscal years2017 or 2016, and we do not intend to pay cash dividends in the foreseeable future. We have not issued any securities during the past three years thatwere not registered under the Securities Act. On March 17, 2017, we filed a registration statement on Form S-3 (Registration No. 333-216802) with the SEC covering the potential future sale ofup to $120 million of our equity and/or debt securities or combinations thereof. The registration statement was amended on August 18, 2017 and declaredeffective by the SEC on September 15, 2017. This registration statement provides another potential source of capital, in addition to other alternativesalready in place. We cannot be certain that funding will be available on favorable terms or available at all. To the extent that we raise additional funds byissuing equity securities, our shareholders may experience significant dilution. As of the date of this 2017 Form 10-K, we have not yet sold any securitiesunder this registration statement, nor do we have an obligation to do so. Please refer to the factors discussed in Part I – Item 1A. “Risk Factors” of this2017 Form 10-K. 14Table 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 compositeindex of 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 2000Index PeerGroup December 31, 2012 100.00 100.00 100.00 December 31, 2013 158.26 138.82 122.87 December 31, 2014 126.24 145.62 125.69 December 31, 2015 46.90 139.19 111.77 December 31, 2016 72.17 168.85 149.55 December 31, 2017 80.22 193.58 154.24 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 2017 Form 10-K. 15Table 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 2017Form 10-K. The consolidated financial data as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015 are derived fromour audited Consolidated Financial Statements included in this 2017 Form 10-K. The consolidated financial data as of December 31, 2015, 2014 and2013 and for the years ended December 31, 2014 and 2013 are derived from audited Consolidated Financial Statements which are not included in this2017 Form 10-K and are adjusted for discontinued operations. Year Ended December 31, 2017 2016 2015 2014 2013 (In thousands, except per share amounts) Consolidated Statement of Operations Data: Net sales $132,780 $149,387 $173,160 $238,545 $226,427 Gross profit (loss) 5,823 (317) 606 39,601 46,953 Income (loss) from continuing operations (8,392) (6,741) (17,812) 10,439 13,481 Loss on discontinued operations (1,771) (2,522) (11,576) (28,326) (14,404)Net loss (10,163) (9,263) (29,388) (17,887) (923) Earnings per Common Share: Basic - Income (loss) from continuing operations $(0.88) $(0.71) $(1.86) $1.10 $1.43 Loss on discontinued operations (0.18) (0.26) (1.21) (2.98) (1.53)Net loss per share $(1.06) $(0.97) $(3.07) $(1.88) $(0.10) Diluted - Income (loss) from continuing operations $(0.88) $(0.71) $(1.86) $1.09 $1.41 Loss on discontinued operations (0.18) (0.26) (1.21) (2.95) (1.51)Net loss per share assuming dilution $(1.06) $(0.97) $(3.07) $(1.86) $(0.10) December 31, 2017 2016 2015 2014 2013 (In thousands) Consolidated Balance Sheet Data: Total assets $230,324 $241,555 $259,380 $351,882 $433,459 Long-term debt and capital lease obligations, less currentportion 737 602 676 45,701 93,581 Stockholders' equity 200,264 209,213 217,560 245,635 261,850 16Table 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 andresults of operations during the periods included herein. This discussion should be read in conjunction with our historical Consolidated FinancialStatements and Notes to Consolidated Financial Statements in Part II – Item 8. “Financial Statements and Supplementary Data” of this 2017 Form 10-K.This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differmaterially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I – Item 1A. “RiskFactors” or in other parts of this 2017 Form 10-K. Overview We are the largest manufacturer of engineered steel pipe water systems in North America. With our strategically located manufacturing facilities,we are well-positioned to meet North America’s growing needs for water and wastewater infrastructure. We serve a wide range of markets and oursolutions-based products are a good fit for applications including water transmission, plant piping, tunnels and river crossings. We have established aprominent position based on a strong and widely-recognized reputation for quality, service and an extensive range of products engineered andmanufactured to meet expectations in all categories of performance including highly corrosive environments. These pipeline systems are produced fromseveral manufacturing facilities, which are located in Portland, Oregon; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas; Salt Lake City,Utah; St. Louis, Missouri; and Monterrey, Mexico. 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. Our Current Economic Environment We operate our business with a long-term time horizon. Projects are often planned for many years in advance, and are sometimes part of 50-yearbuild out plans. Long-term demand for water infrastructure projects in the United States appears strong. However, in the near term, we expect that strainedgovernmental and water agency budgets and increased capacity from competition could impact the business. 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. Purchased steel represents a substantial portion of ourcost of sales, and changes in our selling prices often correlate directly to changes in steel costs. 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 2017 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. Revenue Recognition: Revenue from construction contracts is recognized on the percentage-of-completion method. For a majority of contracts, revenue is measured bythe 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 materialand labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation. Selling, generaland administrative costs are charged to expense as incurred. The cost of steel is recognized as a project cost when the steel is introduced into themanufacturing process. Estimated total costs of each contract are reviewed on a monthly basis by project management and operations personnel for allactive projects. All cost revisions that result in the gross profit as a percent of sales increasing or decreasing by more than two percent are reviewed bysenior management personnel. 17Table of Contents 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. See Note 2 of the Notes to Consolidated Financial Statements in Part II — Item 8. “Financial Statements and Supplementary Data” of this 2017Form 10-K for discussion regarding the expected impact of our adoption of new guidance for revenue recognition effective in the first quarter of 2018. Inventories: Inventories are stated at the lower of cost and net realizable value. Determining net realizable value of inventories involves judgments andassumptions, including projecting selling prices and cost of sales. To estimate net realizable value, we review recent sales and gross profit history,existing customer orders, current contract prices, industry supply and demand, forecasted steel prices, replacement costs, seasonal factors, generaleconomic trends and other information, as applicable. If future market conditions are less favorable than those projected by us, inventory write-downsmay be required. The cost of raw material inventories of steel is either on a specific identification basis or on an average cost basis. The cost of all otherraw material inventories, as well as work-in-process and supplies is on an average cost basis. The cost of finished goods uses the first-in, first-out methodof 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 notbe recoverable. 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. 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, withthe exception 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. 18Table of Contents 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. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal RevenueCode. Changes include, but are not limited to, a federal corporate income tax rate decrease from 35% to 21% effective for tax years beginning afterDecember 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on themandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. We have estimated our provision for income taxes in accordancewith the Act and guidance available as of the date of this filing and as a result have recorded $0.9 million as additional income tax expense in the fourthquarter of 2017, the period in which the legislation was enacted. The provisional amount related to the remeasurement of certain deferred income taxassets and liabilities, based on the rates at which they are expected to reverse in the future, was $0.6 million. The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $0.2 million based on cumulative foreign earnings of $1.1 million. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of United States generally acceptedaccounting principles in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations)in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, we have determined that the$0.6 million of the deferred income tax expense recorded in connection with the remeasurement of certain deferred tax assets and liabilities and the$0.2 million of current tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings was aprovisional amount and a reasonable estimate as of December 31, 2017. Additional work is necessary for a more detailed analysis of our deferred incometax assets and liabilities and our historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts willbe recorded to current income tax expense when the analysis is complete. 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 determined 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, 2017 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. 19Table of Contents Results of Operations The following table sets forth, for the periods indicated, certain financial information regarding costs and expenses expressed in dollars (inthousands) and as a percentage of total Net sales from continuing operations. Year Ended December 31, 2017 Year Ended December 31, 2016 Year Ended December 31, 2015 $ % of Net Sales $ % of Net Sales $ % of Net Sales Net sales $132,780 100.0% $149,387 100.0% $173,160 100.0%Cost of sales 126,957 95.6 149,704 100.2 172,554 99.7 Gross profit (loss) 5,823 4.4 (317) (0.2) 606 0.3 Selling, general and administrativeexpense 14,143 10.6 16,921 11.3 20,378 11.7 Impairment of goodwill - 0.0 - 0.0 5,282 3.1 Gain on sale of facility - 0.0 (7,860) (5.3) - 0.0 Restructuring expense 881 0.7 990 0.7 - 0.0 Operating loss (9,201) (6.9) (10,368) (6.9) (25,054) (14.5)Other income 193 0.1 24 0.0 58 0.0 Interest income 6 0.0 14 0.0 1 0.0 Interest expense (490) (0.3) (509) (0.4) (1,340) (0.7)Loss from continuing operationsbefore income taxes (9,492) (7.1) (10,839) (7.3) (26,335) (15.2)Income tax benefit (1,100) (0.8) (4,098) (2.8) (8,523) (4.9)Loss from continuing operations (8,392) (6.3) (6,741) (4.5) (17,812) (10.3)Discontinued operations: Loss from operations of discontinuedoperations (1,779) (1.4) (3,180) (2.1) (15,004) (8.7)Gain on sale of facility 6 0.0 - 0.0 - 0.0 Income tax benefit (2) 0.0 (658) (0.4) (3,428) (2.0)Loss on discontinued operations (1,771) (1.4) (2,522) (1.7) (11,576) (6.7)Net loss $(10,163) (7.7)% $(9,263) (6.2)% $(29,388) (17.0)% We have one operating segment, Water Transmission, which manufactures large-diameter, high-pressure steel pipeline systems for use in waterinfrastructure applications, which are primarily related to drinking water systems. These products are also used for hydroelectric power systems,wastewater systems and other applications. In addition, we make products for industrial plant piping systems and certain structural applications. SeeNote 3 of the Notes to Consolidated Financial Statements in Part II – Item 8. “Financial Statements and Supplementary Data” of this 2017 Form 10-K forinformation on discontinued operations, which includes the results of the Atchison facility which were historically reported in the Tubular Productssegment. Year Ended December 31, 2017 Compared to Year Ended December 31, 2016 Net sales. Net sales from continuing operations decreased 11.1% to $132.8 million in 2017 from $149.4 million in 2016. No customer accountedfor 10% or more of total Net sales from continuing operations in 2017. One customer accounted for 28% of total Net sales from continuing operations in2016; we do not believe the potential loss of this customer would have had an adverse effect on our business due to the nature of the industry and thecompetition between installation contractors. The decrease in sales was due to a 45% decrease in tons produced, offset by a 62% increase in selling price per ton. The decrease in tons producedwas due to project timing. The increase in selling prices per ton was due to improved market conditions and a change in product mix, combined with a42% increase in material costs per ton. Higher material costs generally lead to higher contract values and, therefore, higher net sales as contractors andmunicipalities are aware of the input costs and market conditions. Bidding activity, backlog and production levels may vary significantly from period toperiod affecting sales volumes. Gross profit (loss). Gross profit increased to a $5.8 million gross profit (4.4% of Net sales from continuing operations) in 2017 from a $0.3 milliongross loss (negative 0.2% of Net sales from continuing operations) in 2016. During 2017, we did not pursue projects that did not meet our gross profitgoals, which contributed to the lower volumes noted in Net sales above. The increase in gross profit was due to improved pricing as well this focus onmargin over volume. Selling, general and administrative expense. Selling, general and administrative expense decreased 16.4% to $14.1 million (10.6% of Net salesfrom continuing operations) in 2017 from $16.9 million (11.3% of Net sales from continuing operations) in 2016. The decrease was due primarily to$2.4 million in lower wages and benefits due to lower headcount and a $0.8 million decrease in professional fees. Restructuring expense. In response to adverse market conditions, the decision was made in the second quarter of 2016 to close the Denver,Colorado facility, which was subsequently sold in October 2016. In 2017 and 2016, we incurred restructuring expenses of $0.9 million and $1.0 million,respectively, which includes employee severance and termination related restructuring expenses of $0 and $0.5 million, respectively, and expense relatedto demobilization activities of $0.9 million and $0.5 million, respectively. We completed the demobilization project and vacated the facility in the firstquarter of 2017. 20Table of Contents Income taxes. The Income tax benefit from continuing operations was $1.1 million in 2017 (an effective income tax benefit rate of 11.6%)compared to an Income tax benefit from continuing operations of $4.1 million in 2016 (an effective income tax benefit rate of 37.8%). The effectiveincome tax rate for 2017 was lower than statutory rates primarily because a significant portion of our net operating losses from the period are subject to avaluation allowance. In addition, the estimated effective income tax rate for 2017 was affected by the accounting change discussed in Note 2 of the Notesto Consolidated Financial Statements in Part II – Item 8. “Financial Statements and Supplementary Data” of this 2017 Form 10-K, under which werecognized $0.8 million of excess tax deficiencies from share-based compensation as an income tax expense from continuing operations, as well as theimpact of $0.9 million from the Tax Cuts and Jobs Act of 2017 discussed in Note 16 of the Notes to Consolidated Financial Statements in Part II —Item 8. “Financial Statements and Supplementary Data” of this 2017 Form 10-K. These amounts were slightly offset by the favorable impact of a decreasein unrecognized income tax benefits due to a lapse in the statute of limitations. The effective income tax rate can change significantly depending on therelationship of permanent income tax deductions and tax credits to estimated pre-tax income or loss and 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, 2016 Compared to Year Ended December 31, 2015 Net sales. Net sales from continuing operations decreased 13.7% to $149.4 million in 2016 from $173.2 million in 2015. One customer accountedfor 28% of total Net sales from continuing operations in 2016 and two customers accounted for 16% and 13% of total Net sales from continuingoperations in 2015. We do not believe the potential loss of these customers would have had an adverse effect on our business due to the nature of theindustry and the competition between installation contractors. The decrease in sales was due to a 27% decrease in average selling price per ton offset in part by a 19% increase in tons produced. The decrease inselling prices per ton was due to a 15% decrease in material costs per ton and increased competition, as well as a change in product mix. Bidding activity,backlog and production levels may vary significantly from period to period affecting sales volumes. Gross profit (loss). Gross profit decreased 152.3% to a $0.3 million gross loss (negative 0.2% of Net sales from continuing operations) in 2016 froma $0.6 million gross profit (0.3% of Net sales from continuing operations) in 2015. The decrease in gross profit was due to the significant competition thatwe experienced on our project bids, which led to decreased selling prices, combined with the mix of projects produced in 2016. Selling, general and administrative expense. Selling, general and administrative expense decreased 17.0% to $16.9 million (11.3% of Net salesfrom continuing operations) in 2016 from $20.4 million (11.7% of Net sales from continuing operations) in 2015. The decrease was due primarily to$1.4 million in lower wages and benefits due to lower headcount and a $1.4 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. Interest expense. Interest expense decreased to $0.5 million in 2016 from $1.3 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 from continuing operations was $4.1 million in 2016 (an effective income tax benefit rate of 37.8%)compared to an Income tax benefit from continuing operations of $8.5 million in 2015 (an effective income tax benefit rate of 32.4%). The effectiveincome tax benefit rate from continuing operations for 2015 includes the impact of the recognition of research and development tax credits (whichincreased the effective income tax benefit rate) as well as non-deductibility of expense related to the impairment of goodwill and the valuation allowancerecorded (both of which decreased the effective income tax benefit rate). The effective income tax rate can change significantly depending on therelationship of permanent income tax deductions and tax credits to estimated pre-tax income or loss and the changes in valuation allowances.Accordingly, the comparison of effective income tax rates between periods is not meaningful in all situations. Liquidity and Capital Resources Sources and Uses of Cash Our principal sources of liquidity generally include operating cash flows and the Agreement with Bank of America, N.A. From time to time ourlong-term capital needs may be met through the issuance of long-term debt or additional equity. Our principal uses of liquidity generally include capitalexpenditures, working capital and debt service. Information regarding our cash flows for the years ended December 31, 2017, 2016 and 2015 arepresented in our Consolidated Statements of Cash Flows contained in this 2017 Form 10-K, and are further discussed below. 21Table of Contents As of December 31, 2017, our working capital (current assets minus current liabilities) excluding current assets held for sale was $123.8 millioncompared to $93.2 million as of December 31, 2016. Cash and cash equivalents totaled $43.6 million and $21.8 million as of December 31, 2017 and2016, respectively. This increase is primarily attributable to the cash proceeds received in December 2017 from the sale of substantially all of the assets ofthe Atchison facility. There were no borrowings under the Agreement as of December 31, 2017 and 2016. 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 are recognized on a percentage-of-completion method; therefore, cash receipts typically occur subsequent to whenrevenue is recognized and the elapsed time between when revenue is recorded and when cash is received can be significant. As such, our payment cycle isa significantly shorter interval than our collection cycle, although the effect of this difference in the cycles may vary by project, and from period toperiod. Net Cash Provided by (Used in) Operating Activities From Continuing Operations Net cash used in operating activities from continuing operations in 2017 was $5.8 million. This was primarily the result of fluctuations in workingcapital accounts that included increases in trade and other receivables and decreases in accrued and other liabilities, offset by decreases in inventories andincreases in accounts payable. Net cash used in operating activities from continuing operations in 2016 was $1.8 million. This was primarily the result of our net loss fromcontinuing operations adjusted for noncash charges of $8.8 million for depreciation and capital lease amortization offset by $7.9 million for the gain onsale of facility and the net positive cash flow effect of a decrease in our working capital accounts, other than cash and cash equivalents. The decreasesconsisted primarily of the reduction in our inventories 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 from continuing operations in 2015 was $20.8 million. This was primarily the result of our net loss fromcontinuing operations adjusted for noncash charges of $7.3 million for depreciation and capital lease amortization and $5.3 million for impairment ofgoodwill, and the net positive cash flow effect of a decrease in our working capital. The decrease in working capital was primarily driven by decreases inaccounts receivable of $15.7 million and inventories of $9.9 million, partially offset by a net decrease in accounts payable and accrued liabilities of$4.5 million. Net Cash Provided by (Used in) Investing Activities From Continuing Operations Net cash used in investing activities from continuing operations in 2017 was $2.7 million. Capital expenditures of $2.9 million in 2017 wereprimarily standard capital replacement. Capital expenditures in 2018 are expected to be approximately $8.6 million for standard capital replacement. Net cash provided by investing activities from continuing operations in 2016 was $11.7 million. This was primarily due to net proceeds of$13.9 million received from the sale of our Denver, Colorado facility on October 4, 2016. Capital expenditures of $2.3 million in 2016 were primarilystandard capital replacement. Net cash provided by investing activities from continuing operations in 2015 was $4.7 million. Capital expenditures of $6.8 million in 2015 wereprimarily standard capital replacement. Offsetting the cash used for additions to property and equipment was $4.3 million provided by an escrow that wasreleased to us in April 2015 related to the March 2014 disposition of the oil country tubular goods business and $7.2 million collected on a notereceivable. Net Cash Used in Financing Activities From Continuing Operations Net cash used in financing activities from continuing operations in 2017 was $0.5 million, primarily due to the capital lease payments totaling$0.3 million and the $0.1 million payment of contingent consideration in February 2017 for amounts earned on 2016 revenues from PermalokCorporation. Net cash used in financing activities from continuing operations in 2016 was $1.5 million, primarily from the payment of contingent considerationin January 2016 for amounts earned on 2015 revenues of Permalok Corporation. Net cash used in financing activities from continuing operations in 2015 was $47.6 million, which resulted primarily from net repayments underour line of credit and capital lease payments totaling $46.9 million. We anticipate that our existing cash and cash equivalents, cash flows expected to be generated by operations and amounts available under theAgreement 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. 22Table of Contents On March 17, 2017, we filed a registration statement on Form S-3 (Registration No. 333-216802) with the SEC covering the potential future sale ofup to $120 million of our equity and/or debt securities or combinations thereof. The registration statement was amended on August 18, 2017 and declaredeffective by the SEC on September 15, 2017. This registration statement provides another potential source of capital, in addition to other alternativesalready in place. We cannot be certain that funding will be available on favorable terms or available at all. To the extent that we raise additional funds byissuing equity securities, our shareholders may experience significant dilution. As of the date of this 2017 Form 10-K, we have not yet sold any securitiesunder this registration statement, nor do we have an obligation to do so. Please refer to the factors discussed in Part I – Item 1A. “Risk Factors” of this2017 Form 10-K. Borrowings on Line of Credit As of December 31, 2017, we had no outstanding borrowings and $2.0 million of outstanding letters of credit under the Agreement with Bank ofAmerica, N.A. dated October 26, 2015, as amended on October 19, 2016. The Agreement expires on October 25, 2018 and provides for revolving loansand letters of credit in the aggregate of up to the maximum principal amount (the “Revolver Commitment”) of $60 million, subject to a borrowing base.We have the ability to increase the Revolver Commitment to $100 million, subject to the provisions of the Agreement. The borrowing base is calculated by applying various advance rates to eligible accounts receivable, costs and estimated 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, 2017, 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 $19.1 million, net of outstanding letters of credit, under the Agreement as of December 31,2017. Based on our business plan and forecasts of operations, we expect to have sufficient credit availability to support our operations for at least the nexttwelve months. 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 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, 2017 (in thousands): Payments due by period Total Less than1 year 1 - 3years 3 - 5years More than5 years Capital leases $1,055 $318 $526 $211 $- Operating leases 6,272 1,698 2,350 1,179 1,045 Interest payments (1) 98 43 45 10 - Total obligations (2) (3) $7,425 $2,059 $2,921 $1,400 $1,045 (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, 2017, liabilities associated with our pension and deferred compensation plan are$1.7 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, 2017, weare unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, approximately$4.1 million in uncertain tax positions has been excluded from the contractual table above. For further information, see Note 16 of the Notes toConsolidated Financial Statements in Part II — Item 8. “Financial Statements and Supplementary Data” of this 2017 Form 10-K. We also have entered into letters of credit that total approximately $2.0 million as of December 31, 2017. 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. 23Table of Contents 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 2017 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 varies significantly. This volatility can significantly affect our gross profit. Although we seek to recover increasesin steel prices through price increases in our products, we have not always been successful. Steel comprises approximately 20% to 30% of project costs. As this raw material represents a substantial portion of our cost of sales, we attempt tominimize our risk exposure to steel price volatility by submitting bids based on general assumptions of the expected price of steel when we will receive apurchase order or contract, which is typically awarded within 30 to 90 days of the bid date, as well as ordering steel as soon as possible after a project isawarded. Interest Rate Risk As of December 31, 2017 and 2016, 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 conduct 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. Foreign currency forward contracts are consistent with our strategy for financial riskmanagement and are not used for trading or for speculative purposes. As of December 31, 2017, the total notional amount of these derivative contractswas $2.3 million (CAD$2.9 million), of which we applied hedge accounting to $2.1 million (CAD$2.7 million). As of December 31, 2017, all of ourcontracts had a remaining maturity of less than twelve months except two contracts with a combined notional amount of $2.1 million (CAD$2.7 million)which have remaining maturities of 15 to 17 months. 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). A hypothetical 10% change in the Canadian Dollar foreign currency exchange rate would not have a material impact on our reported 2017 or 2016Net sales from continuing operations. Item 8.Financial Statements and Supplementary Data The Consolidated Financial Statements required by this item are included on pages F-1 to F-29 at the end of this 2017 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 (the“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 Securities and Exchange Commission(the “SEC”) and that such information is accumulated and communicated to our management, including the Chief Executive Officer (“CEO”) and ChiefFinancial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures. 24Table of Contents Our management, with the participation of the CEO and CFO, evaluated the effectiveness of the Company’s disclosure controls and procedures asof December 31, 2017. Based on their evaluation, as of December 31, 2017, 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 (“U.S. 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 U.S. GAAP, and that our receiptsand expenditures are being made only in accordance with authorizations of management and our directors; and (iii) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financialstatements. 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, 2017. 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, 2017. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 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, 2017 that materiallyaffected or are reasonably likely to materially affect our internal control over financial reporting. Item 9B.Other Information None. 25Table 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 2018 Annual Meeting of Shareholders under the captions Election of Directors and Section 16(a)Beneficial Ownership Reporting Compliance. Name Age as ofDecember31, 2017 Current Position with Company Scott Montross 53 Director, President and Chief Executive OfficerRobin Gantt 46 Senior Vice President, Chief Financial Officer and Corporate SecretaryMartin Dana 52 Executive Vice President, Business Development and StrategyWilliam Smith 62 Executive Vice President, Water TransmissionAaron Wilkins 43 Vice President of Finance and Corporate Controller Scott Montross has served as our Director, President and CEO since January 1, 2013. Mr. Montross joined the Company in May 2011 and served asour Executive Vice President and Chief Operating Officer. Mr. Montross has served in Senior Vice President level positions since 2003 with commercial,operational and planning responsibilities and has spent a total of 24 years in the steel industry prior to joining the Company. Mr. Montross previouslyserved as the Executive Vice President of the Flat Products Group for EVRAZ Inc. North America's Oregon Steel Division from 2010 to 2011, as the VicePresident and General Manager of EVRAZ Inc. North America from 2007 to 2010, as the Vice President of Marketing and Sales for Oregon Steel Mills,Inc. from 2003 to 2007 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. North America from September 2007 through January 2010. From July2005 through August 2007, Ms. Gantt served as Corporate Controller of Oregon Steel Mills, Inc., which became EVRAZ Inc. North America after itsacquisition by Evraz Group S.A. in January 2007. Ms. Gantt joined Oregon Steel Mills, Inc. in 1999, holding several finance and accounting positions ofincreasing responsibility before being appointed to Controller in 2005. Martin Dana served as our Executive Vice President, Business Development and Strategy from April 2016 until his resignation in January 2018.Previous positions at the Company held by Mr. Dana include Executive Vice President, Sales and Marketing, Executive Vice President, Tubular ProductsGroup, Vice President of Operations for Tubular Products, Vice President of Sales and Marketing for the Water Transmission Group and othermanagement and Vice President level positions since joining the Company in 1999. Prior to joining the Company, Mr. Dana held positions at OregonSteel Mills, Inc. William Smith has served as our Executive Vice President, Water Transmission since April 2016. Prior to that, Mr. Smith served as our ExecutiveVice President, Operations and as Vice President of Operations for Water Transmission. Prior to joining the Company in 2010, Mr. Smith spent 14 yearswith Ameron International Corporation, holding several key positions including President, Water Transmission. A 41-year veteran of the steel pipebusiness, 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. North America holding several finance andaccounting positions including Corporate Controller and Assistant Treasurer and Director of Finance of EVRAZ Inc. North America’s Flat ProductsGroup. 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 2017 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 2018 Annual Meeting of Shareholders under the captions Nominating and Governance Committee, Nominations by Shareholders andAudit Committee. 26Table of Contents Item 11.Executive Compensation The information required by this Item is hereby incorporated by reference from our definitive proxy statement for the 2018 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, 2017, with respect to the shares of our common stock that may be issued under ourexisting equity compensation plans. Number of securities tobe issued upon exerciseof outstanding options,warrants and rights Weighted-averageexercise price ofoutstandingoptions, warrantsand rights Number of securitiesremaining available for futureissuanceunder equity compensationplans (excluding securitiesreflected in column (a)) Plan Category (a) (1) (b) (2) (c) Equity compensation plans approved by securityholders 193,583 $24.15 589,142 Equity compensation plans not approved bysecurity holders (3) - - - Total 193,583 $24.15 589,142 (1)Consists of our 2007 Stock Incentive Plan. (2)The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock units, since recipients are notrequired 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 2018 Annual Meeting ofShareholders under the caption Stock Owned by Management and Principal Shareholders and is incorporated herein by reference. Item 13.Certain Relationships and Related Transactions, and Director Independence The information required by this Item is hereby incorporated by reference from our definitive proxy statement for the 2018 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 2018 Annual Meeting ofShareholders under the caption Independent Registered Public Accounting Firm. 27Table 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, 2017, 2016 and 2015F-3 Consolidated Statements of Comprehensive Loss for the years ended December 31, 2017, 2016 and 2015F-4 Consolidated Balance Sheets as of December 31, 2017 and 2016F-5 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2017, 2016 and 2015F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015F-7 Notes to Consolidated Financial StatementsF-9 (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. (a) (3) Exhibits included herein: ExhibitNumber Description2.1 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. 2.2 Asset Purchase Agreement between Northwest Pipe Company and Almacenadora Afirme, S.A. de C.V., Organización Auxiliar del Crédito,Afirme Grupo Financiero, dated as of December 22, 2017, incorporated by reference to the Company’s Current Report on Form 8-K, asfiled with the Securities and Exchange Commission on December 29, 2017 2.3 Real Estate Purchase Agreement between Northwest Pipe Company and Almacenadora Afirme, S.A. de C.V., Organización Auxiliar delCrédito, Afirme Grupo Financiero, dated as of December 22, 2017, incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on December 29, 2017 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 3.3 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 Commissionon June 19, 2009 28Table of Contents ExhibitNumber Description10.1 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 Amendment to the Northwest Pipe Company 2007 Stock Incentive Plan dated April 12, 2013, incorporated by reference to Appendix A tothe Company’s Definitive Proxy Statement, as filed with the Securities and Exchange Commission on April 17, 2013* 10.6 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* 10.7 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* 10.8 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* 10.9 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 10.10 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* 10.11 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 andExchange Commission on August 3, 2016* 10.12 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* 10.13 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 10.14 Change in Control Agreement between Northwest Pipe Company and Aaron Wilkins dated August 1, 2016, incorporated by reference tothe Company’s Form 10-Q for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commission onNovember 2, 2016* 10.15 Form of Performance Share Unit Agreement, incorporated by reference to the Company’s Current Report on Form 8-K, as filed with theSecurities and Exchange Commission on January 17, 2018* 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 29Table of Contents ExhibitNumber Description32.1 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. 30Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders ofNorthwest Pipe Company Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Northwest Pipe Company and subsidiaries (the “Company”) as of December 31, 2017and 2016, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the years ended December 31,2017 and 2016, and the related notes and schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of theCompany as of December 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for the years ended December 31, 2017 and2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in allmaterial respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - IntegratedFramework (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on InternalControl over Financial Reporting included in Item 9A. Our responsibility is to express an opinion on the Company’s consolidated financial statementsand an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the PublicCompany Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance withthe U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effectiveinternal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a testbasis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also include evaluating the accountingprinciples used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the riskthat a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our auditsalso included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis forour opinions. Definition and Limitations of Internal Control Over Financial Reporting 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. /s/ Moss Adams LLP Portland, OregonMarch 16, 2018 We have served as the Company’s auditor since 2016. F-1Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Northwest Pipe Company In our opinion, the consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the period endedDecember 31, 2015 present fairly, in all material respects, the results of operations and cash flows of Northwest Pipe Company and its subsidiaries for theyear ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion,the financial statement schedule for the year ended December 31, 2015 presents fairly, in all material respects, the information set forth therein when readin conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility ofthe Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on ouraudit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Portland, OregonMarch 4, 2016, except for the effects of discontinued operations discussed in Note 3 to the consolidated financial statements, as to which the date isMarch 16, 2018 F-2Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts) Year Ended December 31, 2017 2016 2015 Net sales $132,780 $149,387 $173,160 Cost of sales 126,957 149,704 172,554 Gross profit (loss) 5,823 (317) 606 Selling, general and administrative expense 14,143 16,921 20,378 Impairment of goodwill - - 5,282 Gain on sale of facility - (7,860) - Restructuring expense 881 990 - Operating loss (9,201) (10,368) (25,054)Other income 193 24 58 Interest income 6 14 1 Interest expense (490) (509) (1,340)Loss from continuing operations before income taxes (9,492) (10,839) (26,335)Income tax benefit (1,100) (4,098) (8,523)Loss from continuing operations (8,392) (6,741) (17,812)Discontinued operations: Loss from operations of discontinued operations (1,779) (3,180) (15,004)Gain on sale of facility 6 - - Income tax benefit (2) (658) (3,428)Loss on discontinued operations (1,771) (2,522) (11,576)Net loss $(10,163) $(9,263) $(29,388) Basic and diluted loss per share: Continuing operations $(0.88) $(0.71) $(1.86)Discontinued operations (0.18) (0.26) (1.21)Net loss per share $(1.06) $(0.97) $(3.07) Shares used in per share calculations: Basic and diluted 9,613 9,588 9,560 The accompanying notes are an integral part of these consolidated financial statements. F-3Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(In thousands) Year Ended December 31, 2017 2016 2015 Net loss $(10,163) $(9,263) $(29,388) Other comprehensive income (loss), net of tax: Pension liability adjustment 57 131 238 Unrealized gain (loss) on cash flow hedges (19) (76) 57 Other comprehensive income, net of tax 38 55 295 Comprehensive loss $(10,125) $(9,208) $(29,093) The accompanying notes are an integral part of these consolidated financial statements. F-4Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Dollar amounts in thousands, except per share amounts) December 31, 2017 2016 Assets Current assets: Cash and cash equivalents $43,646 $21,829 Trade and other receivables, less allowance for doubtful accounts of $477 and $515 28,990 25,555 Costs and estimated earnings in excess of billings on uncompleted contracts 44,502 43,663 Inventories 17,055 18,645 Prepaid expenses and other 6,562 2,096 Assets held for sale - 36,822 Total current assets 140,755 148,610 Property and equipment, net 78,756 81,671 Other assets 10,813 11,274 Total assets $230,324 $241,555 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $7,521 $5,267 Accrued liabilities 6,563 10,925 Billings in excess of costs and estimated earnings on uncompleted contracts 2,599 2,038 Current portion of capital lease obligations 318 325 Total current liabilities 17,001 18,555 Capital lease obligations, less current portion 737 602 Deferred income taxes 941 1,282 Other long-term liabilities 11,381 11,903 Total liabilities 30,060 32,342 Commitments and contingencies (Note 15) 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, 9,619,755 and 9,601,011 sharesissued and outstanding 96 96 Additional paid-in-capital 119,856 118,680 Retained earnings 81,757 91,920 Accumulated other comprehensive loss (1,445) (1,483)Total stockholders’ equity 200,264 209,213 Total liabilities and stockholders’ equity $230,324 $241,555 The accompanying notes are an integral part of these consolidated financial statements. F-5Table 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 Equity 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: Unrealized gain on cash flow hedges,net of 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): Unrealized loss on cash flow hedges,net of 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 Net loss - - - (10,163) - (10,163)Other comprehensive income (loss): Unrealized loss on cash flow hedges,net of tax benefit of $6 - - - - (19) (19)Pension liability adjustment, net of taxexpense of $21 - - - - 57 57 Issuance of common stock under stockcompensation plans 18,744 - (24) - - (24)Share-based compensation expense - - 1,200 - - 1,200 Balances, December 31, 2017 9,619,755 $96 $119,856 $81,757 $(1,445) $200,264 The accompanying notes are an integral part of these consolidated financial statements. F-6Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Year Ended December 31, 2017 2016 2015 Cash flows from operating activities: Net loss $(10,163) $(9,263) $(29,388)Loss on discontinued operations (1,771) (2,522) (11,576)Loss from continuing operations (8,392) (6,741) (17,812)Adjustments to reconcile loss from continuing operations to net cash provided by(used in) operating activities: Depreciation and capital lease amortization 6,060 8,768 7,332 Impairment of goodwill - - 5,282 Gain on sale of facility - (7,860) - Amortization of intangible assets 495 523 523 Amortization of debt issuance costs 168 166 598 Provision for doubtful accounts 638 289 (374)Deferred income taxes (341) (4,750) (3,560)(Gain) loss on disposal of property and equipment (51) 19 105 Share-based compensation expense 1,200 1,809 1,743 Excess tax benefit from stock compensation plans - - (19)Adjustments to contingent consideration 27 (1,657) (211)Unrealized loss on foreign currency forward contracts 90 170 295 Changes in operating assets and liabilities: Trade and other receivables (4,073) 80 15,717 Insurance settlements - - 2,625 Costs and estimated earnings in excess of billings on uncompleted contracts,net (278) 447 940 Inventories 1,543 5,728 9,934 Refundable income taxes (77) 3,254 1,285 Prepaid expenses and other assets (138) (630) 1,196 Accounts payable 2,128 1,048 (8,199)Deferred revenue - - (271)Accrued and other liabilities (4,792) (2,456) 3,694 Net cash provided by (used in) operating activities from continuingoperations (5,793) (1,793) 20,823 Net cash provided by (used in) operating activities from discontinuedoperations (1,727) 3,312 34,383 Net cash provided by (used in) operating activities (7,520) 1,519 55,206 Cash flows from investing activities: Additions to property and equipment (2,851) (2,292) (6,831)Proceeds from sale of business - - 4,300 Proceeds from sale of facility - 13,914 - Proceeds from sale of property and equipment 146 33 55 Collections on notes receivable - - 7,219 Net cash provided by (used in) investing activities from continuingoperations (2,705) 11,655 4,743 Net cash provided by (used in) investing activities from discontinuedoperations 32,505 - (1,684)Net cash provided by investing activities 29,800 11,655 3,059 F-7Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS, Continued(In thousands) Year Ended December 31, 2017 2016 2015 Cash flows from financing activities: Proceeds from issuance of common stock $- $- $1 Tax withholdings related to net share settlements of restricted stock andperformance share awards (24) (31) (424)Excess tax benefit from stock compensation plans - - 19 Borrowings on line of credit - - 79,250 Repayments on line of credit - - (124,837)Payments of debt issuance costs - - (302)Payments on capital lease obligations (327) (279) (1,270)Payments of contingent consideration (112) (1,233) - Net cash used in financing activities from continuing operations (463) (1,543) (47,563)Net cash used in financing activities from discontinued operations - (111) (920)Net cash used in financing activities (463) (1,654) (48,483)Change in cash and cash equivalents 21,817 11,520 9,782 Cash and cash equivalents, beginning of period 21,829 10,309 527 Cash and cash equivalents, end of period $43,646 $21,829 $10,309 Supplemental disclosure of cash flow information: Cash paid during the period for interest, net of amounts capitalized $258 $283 $846 Cash received during the period for income taxes (net of refunds of $213, $3,427and $7,949) $(153) $(3,322) $(7,743)Noncash investing and financing activities: Accrued property and equipment purchases $184 $59 $397 Capital lease additions $455 $259 $854 Proceeds from sale of facility placed in escrow $4,465 $- $- The accompanying notes are an integral part of these consolidated financial statements. F-8Table of Contents NORTHWEST PIPE COMPANY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.ORGANIZATION: Northwest Pipe Company (collectively with its subsidiaries, the “Company”) operates in one business segment, Water Transmission, whichprimarily produces steel pipeline systems for use in drinking water infrastructure and has manufacturing facilities located in Portland, Oregon; Adelanto,California; Parkersburg, West Virginia; Saginaw, Texas; St. Louis, Missouri; Salt Lake City, Utah and Monterrey, Mexico. 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. Lucid Energy Inc. (“Lucid”) is accounted for under the cost-method of accounting. Lucid is a clean energy company based in Portland, Oregon.The carrying value of this investment is $0 as of December 31, 2017 and 2016 due to a history of net losses by Lucid. 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, 2017 and 2016. 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, 2017 and 2016 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 As of December 31, 2016, inventories were stated at the lower of cost or market. Upon adoption of Accounting Standards Update No. 2015-11,“Inventory (Topic 330): Simplifying the Measurement of Inventory” on January 1, 2017, which did not result in a change in the Company’s inventoryvalues, inventories are stated at the lower of cost and net realizable value. The cost of raw material inventories of steel is either on a specific identificationbasis or on an average cost basis. The cost of all other raw material inventories, as well as work-in-process and supplies is on an average cost basis. Thecost of finished goods uses the first-in, first-out method of accounting. F-9Table of Contents 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. Goodwill 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, 2017 and 2016, the Company’s goodwill was fully impaired. Due to market conditions in 2015, goodwill of$5.3 million was quantitatively evaluated using a weighted average of the income and market approaches. The Company determined that its goodwillwas impaired as of June 30, 2015, and it was completely written off in the second quarter of 2015. 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 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 4 to 15 years. See Note 7, “Intangible Assets” for further discussion of the Company’s 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. During the fourth quarter of 2017, as a result of a change in estimate to its workers compensation reserves,the Company recorded a charge of $1.2 million to Cost of sales. During 2016 and 2015, there were no significant changes in estimates recorded to adjustworkers compensation reserves. As of December 31, 2017 and 2016, workers compensation reserves recorded were $3.7 million and $3.4 million,respectively, of which $0.4 million and $0.6 million, respectively, were included in Accrued liabilities and $3.3 million and $2.8 million, respectively,were included in Other long-term liabilities. F-10Table of Contents Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, 2017 2016 Accrued liabilities: Accrued vacation payable $1,886 $2,313 Reserves for expected losses on uncompleted contracts 911 1,409 Accrued property taxes 898 1,096 Workers compensation reserves 422 569 Litigation accrual - 1,750 Other 2,446 3,788 Total accrued liabilities $6,563 $10,925 Derivative Instruments 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. 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 on each balance sheet date and resulting gains and losses arerecognized in earnings. 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. 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 is recognized on the percentage-of-completion method. For a majority of contracts, revenue is measured bythe 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 ismeasured using units of delivery as progress is best estimated by the number of units delivered under the contract. Contract costs include all directmaterial and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation. Selling,general and administrative costs are charged to expense as incurred. The cost of steel is recognized as a project cost when the steel is introduced into themanufacturing 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. See “Recent Accounting and Reporting Developments” below for discussion regarding the expected impact of the adoption of new guidance forrevenue recognition effective in the first quarter of 2018. No customer accounted for 10% or more of total Net sales from continuing operations for the year ended December 31, 2017. One customeraccounted for 28% of total Net sales from continuing operations for the year ended December 31, 2016 and two customers accounted for 16% and 13% oftotal Net sales from continuing operations for the year ended December 31, 2015. F-11Table of Contents Net sales from continuing operations by geographic region, based on the location of the customer, were as follows (in thousands): Year Ended December 31, 2017 2016 2015 Net sales from continuing operations by geographic region: United States $122,179 $137,411 $161,243 Canada 10,601 11,976 11,917 Total $132,780 $149,387 $173,160 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 is 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 13, “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. 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 17, “Accumulated Other Comprehensive Loss.” F-12Table of Contents Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during theperiod. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options, restricted stock units andperformance share awards, to the extent dilutive. Since the Company was in a loss position for all periods presented, basic and diluted net loss per sharewas the same for each period presented as the inclusion of all potential common shares outstanding would have been antidilutive. Loss per basic and diluted weighted-average common share outstanding was calculated as follows (in thousands, except per share data): Year Ended December 31, 2017 2016 2015 Loss from continuing operations $(8,392) $(6,741) $(17,812)Loss on discontinued operations (1,771) (2,522) (11,576)Net loss $(10,163) $(9,263) $(29,388) Basic weighted-average common shares outstanding 9,613 9,588 9,560 Effect of potentially dilutive common shares(1) - - - Diluted weighted-average common shares outstanding 9,613 9,588 9,560 Basic and diluted loss per common share: Continuing operations $(0.88) $(0.71) $(1.86)Discontinued operations (0.18) (0.26) (1.21)Net loss per share $(1.06) $(0.97) $(3.07) (1)The weighted-average number of antidilutive shares not included in the computation of diluted loss per share was approximately 196,000,198,000 and 179,000 for the years ended December 31, 2017, 2016 and 2015, respectively. 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, 2017 and 2016, two customers had a balance inexcess of 10% of total accounts receivable. Derivative contracts are with a high quality financial institution. The Company’s deferred compensation planassets, included in Other assets, are invested in a diversified portfolio of stock and bond mutual funds. Recent Accounting and Reporting Developments Accounting Changes In July 2015, the Financial Accounting Standards Board (“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 are required to measure inventory at the lower ofcost and net realizable value. This is a change from the prior requirement to value inventory at the lower of cost or market. Net realizable value is theestimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Inventory valuedusing the last-in, first-out or retail inventory method is exempt from ASU 2015-11. The Company adopted this guidance prospectively on January 1, 2017and the impact was not material to the Company’s financial position, results of operations or cash flows. 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. As a result of the adoption of this guidance on January 1, 2017, on a prospective basis, the Company recognized $0.8 million of excess taxdeficiencies from share-based compensation in Income tax benefit from continuing operations for the year ended December 31, 2017. Historically, theseamounts were recorded as Additional paid-in capital. F-13Table of Contents 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 accountingprinciples (“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 theamount that it expects to be entitled to receive for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timingand uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09 iseffective for the Company beginning January 1, 2018. During 2016 and 2017, the FASB issued several ASUs that clarify the implementation guidance forASU 2014-09 but do not change the core principle of the guidance. The Company has finalized its analysis of the adoption of ASU 2014-09, which is not expected to have a material impact on its internal controlsover financial reporting or its revenue recognition patterns as compared to revenue recognition under the previous revenue guidance. Revenues generatedwill continue to be recognized over time utilizing costs to measure progress of performance obligations which is consistent with previous practice. TheCompany will adopt ASU 2014-09 on January 1, 2018 using the modified retrospective method and will recognize the cumulative effect ofapproximately $1 million from initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The adjustmentto the opening balance of retained earnings is the result of a change in the timing of revenue recognition on certain costs under the new standard, as wellas, to a lesser extent, a change in the costs included in the provisions for losses on uncompleted contracts. Previously reported results will not be restatedunder this transition method. Additionally, upon adoption of ASU 2014-09, the Company will expand its financial statement disclosures around thenature and timing of the Company’s performance obligations, deferred revenue contract liabilities, deferred contract cost assets, as well as significantjudgments and practical expedients used by the Company in applying the five-step revenue model. 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. ASU2016-01 is effective for the Company beginning January 1, 2018. In February 2018, the FASB issued Accounting Standards Update No. 2018-03,“Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets andFinancial Liabilities” (“ASU 2018-03”). ASU 2018-03 clarifies certain aspects of the guidance issued in ASU 2016-01. ASU 2018-03 is effective for theCompany beginning July 1, 2018. Early adoption is permitted once ASU 2016-01 has been adopted. The Company does not expect a material impact tothe 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 generally on a 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 twelve 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.ASU 2016-02 requires qualitative disclosures along with specific quantitative disclosures and will be effective for the Company beginning January 1,2019, including interim periods in 2019. ASU 2016-02 provides for a transitional adoption, with lessees and lessors required to recognize and measureleases at the beginning of the earliest period presented using a modified retrospective approach. Early adoption is permitted, however the Company doesnot anticipate early adoption. The Company continues to evaluate ASU 2016-02, including the review and implementation of the necessary changes toexisting processes and systems that will be required to implement this new standard. While the Company expects the adoption of ASU 2016-02 willmaterially increase its assets and liabilities on the Consolidated Balance Sheet, it currently does not expect ASU 2016-02 will have a material effect on itsresults of operations or cash flows. 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. ASU 2016-15 is effective forthe Company beginning January 1, 2018. The Company does not expect a material impact to the Company’s financial position, results of operations orcash flows from adoption of this guidance. In March 2017, the FASB issued Accounting Standards Update No. 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving thePresentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”), which requires that the service costcomponent of net benefit cost be presented in the same income statement line as other employee compensation costs, while the other components of netbenefit cost are to be presented outside income from operations. ASU 2017-07 is effective for the Company on a retrospective basis beginning January 1,2018. The effect of adopting ASU 2017-07 will be the reclassification of the non-service cost components from Cost of sales to Other expense, resultingin an increase to Gross profit and Operating income. There is no impact to Income before income taxes or Net income, so therefore no impact to Netincome per share. Upon adoption, the Company expects a decrease to Cost of sales and an increase to Other expense of approximately $0 and$0.4 million for the years ended December 31, 2017 and 2016, respectively. F-14Table of Contents In August 2017, the FASB issued Accounting Standards Update No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements toAccounting for Hedging Activities” (“ASU 2017-12”), which better aligns risk management activities and financial reporting for hedging relationships,simplifies hedge accounting requirements, and improves disclosures of hedging arrangements. ASU 2017-12 will be effective for the Company beginningJanuary 1, 2019. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. The Company is currentlyassessing the impact of ASU 2017-12 on its Consolidated Financial Statements. In February 2018, the FASB issued Accounting Standards Update No. 2018-02, “Income Statement—Reporting Comprehensive Income(Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which allows a reclassificationfrom accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 and requirescertain disclosures about stranded tax effects. ASU 2018-02 will be effective for the Company beginning January 1, 2019. Early adoption is permitted forany interim and annual financial statements that have not yet been issued. The Company is currently assessing the impact of ASU 2018-02, but does notexpect a material impact to the Company’s financial position, results of operations or cash flows from adoption of this guidance. 3.DISCONTINUED OPERATIONS: On December 26, 2017, the Company completed the sale of substantially all of the assets associated with the Company’s manufacturing facility inAtchison, Kansas (the “Atchison facility”), including all of the real and tangible personal property located at the site of that manufacturing facility. Totalconsideration of $37.2 million in cash was paid by the buyer, resulting in a nominal gain recognized on the sale. Of the proceeds received, $0.75 millionwas placed in escrow until February 2018 and approximately $3.7 million was placed in escrow for twelve months to secure the Company’sindemnification obligations under the agreement. In accordance with applicable accounting guidance, the related assets of the Company’s Atchison facility are classified as current Assets held forsale in the Consolidated Balance Sheets for periods presented prior to the sale, and the financial results of the Atchison facility are presented asdiscontinued operations in the Consolidated Statements of Operations for all periods. Cash flows from the Company’s discontinued operations arepresented separately in the Consolidated Statements of Cash Flows. As the Atchison facility was the remaining Tubular Products business, the Companynow operates in only one business segment, Water Transmission. The table below presents the components of the balance sheet accounts associated with the Atchison facility which were reported as current Assetsheld for sale on the Consolidated Balance Sheets (in thousands). December 31, 2017 2016 Assets Inventories $- $392 Property and equipment, net - 36,430 Total assets $- $36,822 F-15Table of Contents The table below presents the operating results for the Company’s discontinued operations (in thousands). Year Ended December 31, 2017 2016 2015 Net sales $12 $6,869 $63,448 Cost of sales 1,792 9,777 76,679 Gross loss (1,780) (2,908) (13,231)Selling, general and administrative expense (1) 257 1,925 Gain on sale of facility (6) - - Operating loss (1,773) (3,165) (15,156)Other income (expense) - (1) 30 Interest income - - 172 Interest expense - (14) (50)Loss before income taxes (1,773) (3,180) (15,004)Income tax benefit (2) (658) (3,428)Net loss $(1,771) $(2,522) $(11,576) In April 2015, the Company initiated a production curtailment at the Atchison facility. Severance related restructuring expenses associated withthe production curtailment during the year ended December 31, 2015 were $0.6 million, of which $0.5 million was included in cost of sales and$0.1 million was included in selling, general and administrative expense in the table of operating results for discontinued operations above. 4.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, 2017 2016 (in thousands) Costs incurred on uncompleted contracts $227,048 $238,050 Estimated earnings 9,722 7,247 236,770 245,297 Less billings to date (194,867) (203,672) $41,903 $41,625 Amounts are presented in the Consolidated Balance Sheets as follows: Costs and estimated earnings in excess of billings on uncompleted contracts $44,502 $43,663 Billings in excess of costs and estimated earnings on uncompleted contracts (2,599) (2,038) $41,903 $41,625 F-16Table of Contents 5.INVENTORIES: Inventories consist of the following (in thousands): December 31, 2017 2016 Short-term inventories: Raw materials $13,700 $15,411 Work-in-process 1,268 1,235 Finished goods 464 40 Supplies 1,623 1,959 Total short-term inventories 17,055 18,645 Long-term inventories: Finished goods 820 773 Total inventories $17,875 $19,418 Long-term inventories are recorded in Other assets. 6.PROPERTY AND EQUIPMENT: Property and equipment, net consists of the following (in thousands): December 31, 2017 2016 Land and improvements $20,185 $19,787 Buildings 30,301 30,219 Machinery and equipment 100,438 99,485 Equipment under capital lease 1,171 1,126 Construction in progress 972 531 153,067 151,148 Less accumulated depreciation and amortization (74,311) (69,477)Property and equipment, net $78,756 $81,671 Accumulated amortization associated with equipment under capital lease was $0.5 million and $0.6 million as of December 31, 2017 and 2016,respectively. All property and equipment is located in the United States, except for $3.8 million and $4.1 million of property and equipment which is located inMexico as of December 31, 2017 and 2016, 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. F-17Table of Contents 7.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, 2017 Customer relationships $1,378 $(551) $827 Patents 1,162 (929) 233 Trade names and trademarks 1,132 (302) 830 Other (1) 176 (163) 13 Total $3,848 $(1,945) $1,903 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 (1) Other intangibles consist of favorable lease contracts and non-compete agreements. The estimated amortization expense for each of the next five years and thereafter is as follows (in thousands): Year ending December 31, 2018 $459 2019 213 2020 213 2021 213 2022 213 Thereafter 592 $1,903 8.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 of up to the maximum principal amount (the “Revolver Commitment”) of $60 million,subject to a borrowing base. The borrowing base is calculated by applying various advance rates to eligible accounts receivable, costs and estimatedearnings in excess of billings, inventories and fixed assets, subject to various exclusions, adjustments and sublimits by asset class. The Company has theability to increase the Revolver Commitment to $100 million, subject to the provisions of the Agreement. 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, 2017 and2016, there were no outstanding borrowings. As of December 31, 2017, the Company’s borrowing capacity under the Agreement was $19.1 million, net ofoutstanding letters of credit. The Agreement also contains customary representations, warranties and events of default, which include the occurrence of events or circumstanceswhich have a Material Adverse Effect, as defined in the Agreement. Payment of outstanding advances may be accelerated, at the option of Bank ofAmerica, should the Company default in its obligations under the Agreement. In October 2015, the Company terminated its previous credit agreement and incurred incremental interest expense of $0.4 million related to thewrite-off of unamortized financing costs associated with the terminated agreement. Interest expense from continuing operations from line of credit borrowings and capital leases was $0.5 million, net of a nominal amount capitalizedin 2017, $0.5 million in 2016 and $1.3 million, net of amounts capitalized of $0.1 million in 2015. No interest was capitalized in 2016. F-18Table of Contents 9.LEASES: Capital Leases The Company leases certain equipment used in the manufacturing process. The Company had a total of $1.1 million in capital lease obligationsoutstanding as of December 31, 2017. The weighted-average interest rate on all of the Company’s capital leases was 4.68%. The future minimumpayments under the Company’s capital leases as of December 31, 2017 are as follows (in thousands): 2018 $361 2019 333 2020 238 2021 121 2022 100 Total minimum lease payments 1,153 Amount representing interest (98)Present value of minimum lease payments 1,055 Current portion of capital lease obligations 318 Capital lease obligations, less current portion $737 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, 2017, 2016 and 2015 was $3.0 million, $3.0 million and $3.1 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, 2017 are as follows (in thousands): 2018 $1,698 2019 1,242 2020 1,108 2021 798 2022 381 Thereafter 1,045 $6,272 10.FAIR VALUE MEASUREMENTS: 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 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-19Table of Contents Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis 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, 2017 Total Level 1 Level 2 Level 3 Financial assets: Deferred compensation plan $6,244 $5,251 $993 $- Financial liabilities: Derivatives $(60) $- $(60) $- As of December 31, 2016 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) $- The deferred compensation plan assets consist 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 usingvarious pricing models or discounted cash flow analyses that incorporate observable market parameters, such as interest rate yield curves and currencyrates, classified as Level 2 within the fair value hierarchy. Derivative valuations incorporate credit risk adjustments that are necessary to reflect theprobability of default by the counterparty or the Company. The net carrying amounts of cash and cash equivalents, trade and other receivables, accounts payable and accrued liabilities approximate fair valuedue 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 non-marketable cost-method investments, at fair value on a nonrecurring basis when they aredetermined to be other-than-temporarily impaired. The fair value of these assets is determined using Level 3 unobservable inputs due to the absence ofobservable market inputs, and because the valuations require management judgment. There were no material impairment charges recorded on investmentsduring the years ended December 31, 2017, 2016 and 2015. 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. 11.DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES: 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 Unrealized gain (loss) on cash flow hedges on theConsolidated Statements of Comprehensive Loss. If it is determined that a derivative contract is not highly effective, or that it has ceased to be a highlyeffective hedge, the Company will be required to discontinue hedge accounting with respect to that derivative contract prospectively. F-20Table of Contents As of December 31, 2017 and 2016, the total notional amount of the derivative contracts designated as cash flow hedges was $2.1 million(CAD$2.7 million) and $3.4 million (CAD$4.5 million), respectively. Derivative assets are included within Prepaid expenses and other and derivativeliabilities are included within Accrued liabilities in the Consolidated Balance Sheets. All of the Company’s foreign currency forward contracts are subjectto an enforceable master netting arrangement. The Company presents the assets and liabilities associated with its foreign currency forward contracts attheir gross fair values in the Consolidated Balance Sheets. All of the Company’s Canadian forward contracts have maturities less than twelve months as of December 31, 2017, except two contracts with acombined notional amount of $2.1 million (CAD$2.7 million) which have remaining maturities of 15 to 17 months. As of December 31, 2017 and 2016, the total notional amount of the derivative contracts not designated as cash flow hedges was $0.2 million(CAD$0.2 million) and $0.9 million (CAD$1.3 million), respectively. For the years ended December 31, 2017, 2016 and 2015, gains recognized in Netsales from continuing operations from derivative contracts not designated as hedging instruments were approximately $0, $0 and $0.4 million,respectively. As of December 31, 2017, unrealized pretax losses on outstanding derivatives in Accumulated other comprehensive loss was approximately$0. Typically, outstanding derivatives balances in Accumulated other comprehensive loss are expected to be reclassified to Net sales from continuingoperations within the next twelve months as a result of underlying hedged transactions also being recorded in Net sales from continuing operations. SeeNote 17, “Accumulated Other Comprehensive Loss” for additional quantitative information regarding derivative gains and losses. 12.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, 2017 and 2016, the Company had recorded, in accordance with the actuarial valuations, an accrued pension liability of$1.7 million and $1.9 million, respectively, in Other long-term liabilities and an unrecognized actuarial loss, net of tax, of $1.4 million and $1.5 million,respectively, in Accumulated other comprehensive loss. Additionally, as of December 31, 2017 and 2016, the projected and accumulated benefitobligation was $6.6 million and $6.5 million, respectively, and the fair value of plan assets was $4.9 million and $4.6 million, respectively. The net periodic benefit cost for the years ended December 31, 2017, 2016 and 2015 was approximately $0, $0.4 million and $0.4 million,respectively. The weighted-average discount rates used to measure the projected benefit obligation were 3.36% and 3.74% as of December 31, 2017 and2016, 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, 2017 and2016. F-21Table of Contents Non-qualified Retirement Savings Plan The Company has a deferred compensation plan that covered officers and selected highly compensated employees until it was frozen in 2016. Thedeferred compensation plan generally matched up to 50% of the first $10,000 of officer contributions to the plan and the first $5,000 of other selectedhighly compensated employee contributions, subject to certain limitations. It also provided officers with a Company funded component with a retirementtarget benefit, until this component of the deferred compensation plan was frozen in 2015. The retirement target benefit amount was an actuariallyestimated amount necessary to provide 35% of final base pay after a 35-year career with the Company or 1% of final base pay per year of service. Theactual benefit, however, assumed an investment growth at 8% per year. Should the investment growth be greater than 8%, the benefit will be more, but ifit is less than 8%, the amount will be less and the Company does not make up any deficiency. As of December 31, 2017 and 2016, $6.2 million for thedeferred compensation plan was recorded in Other assets and Other long-term liabilities. Total expense for all retirement plans for the years ended December 31, 2017, 2016 and 2015 was $0.9 million, $1.4 million and $1.5 million,respectively. Included in these amounts was $0.1 million reported in Loss from operations of discontinued operations for the year ended December 31,2015. 13.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 had one inactive stock option plan, the 1995 Stock Option Plan for Nonemployee Directors, under which remaining previously grantedoptions expired unexercised during the year ended December 31, 2017. The plans provide that options become exercisable according to vestingschedules, which range from immediate to ratably over a 60-month period. Options terminate ten years from the date of grant. The plans also provide forother equity instruments, such as RSUs and PSAs, which grant the right to receive a specified number of shares over a specified period of time. RSUs areservice-based awards and vest according to vesting schedules, which range from immediate to ratably over a three-year period. PSAs are service-basedawards that vest according to the terms of the grant and may have performance- or market-based payout conditions. The following table summarizes share-based compensation expense recorded (in thousands): Year Ended December 31, 2017 2016 2015 Cost of sales $292 $422 $412 Selling, general and administrative expense 908 1,387 1,331 Loss from operations of discontinued operations - (8) 31 Total $1,200 $1,801 $1,774 As of December 31, 2017, the remaining nominal amount of unrecognized compensation expense related to the unvested portion of the Company’sRSUs is expected to be recognized over a weighted-average period of one month. There were no options granted during the years ended December 31, 2017, 2016 or 2015. There were 589,142 shares of common stock available forfuture issuance under the Company’s stock compensation plan as of December 31, 2017. Stock Options Awards A summary of option activity under the Company’s stock option plans is presented below: OptionsOutstanding Weighted-AverageExercisePrice Weighted-AverageRemainingContractualLife AggregateIntrinsicValue (in years) (in thousands) Balance, December 31, 2016 26,000 $24.97 Options granted - - Options exercised - - Options canceled (2,000) 34.77 Balance, December 31, 2017 24,000 24.15 Exercisable, December 31, 2017 24,000 24.15 2.24 $- F-22Table of Contents The total intrinsic value, defined as the difference between the current market value and the grant price, of options exercised during the year endedDecember 31, 2015 was approximately $0. No options were exercised in 2017 or 2016. 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 ofmarket-based PSAs, for which a Monte Carlo simulation model is used. A summary of activity under the Company’s RSUs and PSAs is presented below: Number ofRSUs andPSAs (1) Weighted-Average GrantDate FairValue Unvested RSUs and PSAs as of December 31, 2016 221,791 $17.36 RSUs and PSAs granted - - Unvested PSAs canceled (46,988) 43.68 RSUs vested (5,220) 36.00 Unvested RSUs as of December 31, 2017 169,583 9.50 (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 included approximately 47,000 market-based PSAs at a target level ofperformance. Vesting of these PSAs was dependent upon the performance of the market price of the Company’s stock relative to a peer group ofcompanies. In the year ended December 31, 2017, these PSAs were canceled because the market-based conditions were not achieved, and the actualnumber of common shares that were issued was determined by multiplying the PSAs by a payout percentage of 0%. The weighted-average grant date fair value of RSUs granted during the year ended December 31, 2016 was $9.50. There were no RSUs grantedduring the years ended December 31, 2017 or 2015 and no PSAs granted during the years ended December 31, 2017, 2016 or 2015. The total fair value ofRSUs and PSAs vested during the years ended December 31, 2017, 2016 and 2015 was $0.1 million, $0.1 million and $1.6 million, respectively. Stock Awards For the years ended December 31, 2017, 2016 and 2015, stock awards of 14,944 shares, 27,640 shares and 10,464 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 $14.72 in 2017, $9.95 in 2016 and $21.02 in 2015. 14.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 “Amendedand Restated 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-23Table of Contents 15.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 was directed by a group of 14 potentially responsible parties known as the Lower Willamette Group under agreement with the EPA. The remedialinvestigation report was finalized in February 2016. The feasibility study was finalized in June 2016 by the EPA, and identified multiple remedialalternatives. The EPA issued the Record of Decision in January 2017 selecting the remedy for cleanup at the Portland Harbor Site, which it believes willcost approximately $1 billion and 13 years to complete. The Record of Decision did not determine who is responsible for the costs of cleanup or how thecleanup costs will be allocated among the potentially responsible parties. In 2001, groundwater containing elevated volatile organic compounds was identified in one localized area of leased property adjacent to thePortland facility furthest from the river. Assessment work was conducted in 2002 and 2003 to further characterize the groundwater. In February 2005, theCompany entered into a Voluntary Agreement for Remedial Investigation and Source Control Measures (the “Voluntary Agreement”) with the ODEQ,and has performed remedial investigation work required under the Voluntary Agreement. In 2016, the EPA and the ODEQ requested additionalgroundwater sampling, which was completed in the third quarter of 2017. The results, which were communicated to the ODEQ and the EPA in August2017, have been generally consistent with previous sampling and modeling work. The Company is currently awaiting a response from the ODEQ, butanticipates it will file a final Remedial Investigation/Source Control Evaluation report with the ODEQ and the EPA in 2018. Concurrent with the activities of the EPA and the ODEQ, the Portland Harbor Natural Resources Trustee Council (“Trustees”) sent some or all ofthe same 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 theODEQ. The Trustees have encouraged potentially responsible parties to voluntarily participate in the funding of their injury assessments and several ofthose parties have agreed to do so. In June 2014, the Company agreed to participate in the injury assessment process, which included funding$0.4 million of the assessment; of this amount, $0.2 million was paid in July 2014 and the remainder was paid in January 2015. The Company has notassumed any additional payment obligations or liabilities with the participation with the NRDA. In January 2017, the Confederated Tribes and Bands ofthe Yakama Nation, a Trustee until they withdrew from the council in 2009, filed a complaint against the potentially responsible parties including theCompany to recover 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 for the entire Portland Harbor Superfund Site. The cost of that remedy isexpected to be allocated among more than 100 potentially responsible parties. Because of the large number of responsible parties and the variability inthe range of remediation alternatives, the Company is unable to estimate an amount or an amount within a range of costs for its obligation with respect tothe Portland Harbor Site matters, and no further adjustment to the Consolidated Financial Statements has been recorded as of the date of this filing. TheCompany has insurance policies for defense costs, as well as indemnification policies it believes will provide reimbursement for any share of theremediation assessed. However, the Company can provide no assurance that those policies will cover all of the costs which the Company may incur. Houston Environmental Issue In connection with the Company’s sale of its oil country tubular goods (“OCTG”) business, a Limited Phase II Environmental Site Assessment wasconducted at the Houston, Texas plant and completed in March 2014, which revealed the presence of volatile organic compounds in the groundwater andcertain metals in the soil. In June 2014, the Company was accepted into the Texas Commission on Environmental Quality (“TCEQ”) Voluntary CleanupProgram (“VCP”) to address these issues and obtain a Certificate of Completion from the TCEQ. The cost of any potential assessment and cleanup will notbe covered by insurance. The Company believes these costs are likely to be recovered from the purchaser of the OCTG business upon future sale of theHouston property. F-24Table of Contents The Company implemented a remediation plan that included a groundwater assessment, which was completed in December 2016, as well asobtaining a municipal setting designation ordinance to prevent consumption of shallow groundwater from beneath the property, thereby eliminating theneed for more costly remediation measures. In December 2017, the TCEQ issued the Certificate of Completion. 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. The Company believes that it is not presently a party to litigation, the outcome of which would have a material adverse effect on itsbusiness, financial condition, 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, 2017. The letters of credit relate to workers’compensation insurance. 16.INCOME TAXES: The components of Income tax benefit from continuing operations are as follows (in thousands): Year Ended December 31, 2017 2016 2015 Current: Federal $(454) $(740) $(5,076)State 49 (102) 35 Total current income tax benefit (405) (842) (5,041)Deferred: Federal (766) (2,883) (5,524)State 71 (373) 2,042 Total deferred income tax benefit (695) (3,256) (3,482) $(1,100) $(4,098) $(8,523) On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law making significant changes to the Internal Revenue Code. Changesinclude, but are not limited to, a federal corporate income tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017,the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemedrepatriation of cumulative foreign earnings as of December 31, 2017. The Company has estimated its provision for income taxes in accordance with theAct and guidance available as of the date of this filing and as a result has recorded $0.9 million as additional income tax expense in the fourth quarter of2017, the period in which the legislation was enacted. The provisional amount related to the remeasurement of certain deferred income tax assets andliabilities, based on the rates at which they are expected to reverse in the future, was $0.6 million. The provisional amount related to the one-timetransition tax on the mandatory deemed repatriation of foreign earnings was $0.2 million based on cumulative foreign earnings of $1.1 million. F-25Table of Contents On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of U.S. GAAP in situations when aregistrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete theaccounting for certain income tax effects of the Act. In accordance with SAB 118, the Company has determined that the $0.6 million of the deferredincome tax expense recorded in connection with the remeasurement of certain deferred tax assets and liabilities and the $0.2 million of current taxexpense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings was a provisional amount and areasonable estimate as of December 31, 2017. Additional work is necessary for a more detailed analysis of the Company’s deferred income tax assets andliabilities and its historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded tocurrent income tax expense when the analysis is complete. 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, 2017 2016 2015 Income tax benefit at federal statutory rate of 35% $(3,322) $(3,755) $(9,133)State benefit, net of federal income tax effect (472) (286) (440)Federal and state income tax credits 36 (154) (5,060)Disallowed domestic manufacturing deduction - - 630 Change in valuation allowance 1,570 585 2,059 Excess income tax shortfall on share-based compensation 765 - - Effect of Tax Cuts and Jobs Act of 2017 874 - - Uncertain income tax positions (562) (4) 1,275 Goodwill impairment (nondeductible) - - 1,849 Nondeductible expenses 63 63 91 Nontaxable adjustment to contingent consideration - (580) 103 Other (52) 33 103 Income tax benefit $(1,100) $(4,098) $(8,523)Effective income tax rate (11.6)% (37.8)% (32.4)% 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, 2017 2016 Deferred income tax assets: Costs and estimated earnings in excess of billings on uncompleted contracts, net $- $1,270 Accrued employee benefits 2,806 5,025 Inventories 296 563 Trade receivable, net 105 199 Net operating loss carryforwards 9,850 15,637 Tax credit carryforwards 5,478 5,069 Other assets 1,201 1,830 Other 81 1,018 19,817 30,611 Valuation allowance (10,413) (8,217) 9,404 22,394 Deferred income tax liabilities: Costs and estimated earnings in excess of billings on uncompleted contracts, net (110) - Property and equipment (9,524) (22,380)Intangible assets (433) (819)Prepaid expenses (278) (477) (10,345) (23,676) Net deferred income tax liabilities $(941) $(1,282) F-26Table of Contents 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, 2017, net of any valuation allowance. As of December 31, 2017, the Company had approximately $35.9 million of federal net operating loss carryforwards, which expire on various datesbetween 2035 and 2036, and $3.0 million of federal income tax credit carryforwards, which expire on various dates between 2023 and 2036. As ofDecember 31, 2017, the Company also had approximately $51.5 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 2018. 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. With few exceptions, the Company is no longer subject to United States Federal, state or foreign income tax examinations for years before2013. A summary of the changes in the unrecognized income tax benefits is presented below (in thousands): Year Ended December 31, 2017 2016 2015 Unrecognized income tax benefits, beginning of year $4,874 $4,874 $2,313 Decreases for lapse in statute of limitations (520) - (1,199)Increases for positions taken in prior years - - 3,716 Decreases for positions taken in prior years (238) - - Increases for positions taken in the current year - - 44 Unrecognized income tax benefits, end of year $4,116 $4,874 $4,874 The Company does not believe it is reasonably possible that the total amounts of unrecognized income tax benefits will change in the followingtwelve months; however, actual results could differ from those currently expected. Effectively all of the unrecognized income tax benefits would affectthe 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, 2017 and2016, the Company had $0 and $0.1 million, respectively, of accrued interest related to uncertain income tax positions. Total interest for uncertainincome tax positions did not change materially in 2017 or 2016 and decreased by approximately $0.1 million in 2015. 17.ACCUMULATED OTHER COMPREHENSIVE LOSS: Accumulated other comprehensive loss consists of the following (in thousands): December 31, 2017 2016 Pension liability adjustment, net of income tax benefit of $866 and $886 $(1,436) $(1,493)Unrealized gain (loss) on cash flow hedges, net of income tax expense (benefit) of $(1) and $6 (9) 10 Total $(1,445) $(1,483) F-27Table of Contents The following table summarizes changes in the components of Accumulated other comprehensive loss (in thousands). All amounts are net ofincome tax: Pension LiabilityAdjustment Unrealized Gain(Loss) on CashFlow Hedges Total 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 131 (76) 55 Balance, December 31, 2016 (1,493) 10 (1,483) Other comprehensive income (loss) before reclassifications 54 (16) 38 Amounts reclassified from Accumulated other comprehensive loss 3 (3) - Net current period adjustments to Other comprehensive income 57 (19) 38 Balance, December 31, 2017 $(1,436) $(9) $(1,445) The following table provides additional detail about Accumulated other comprehensive loss components that were reclassified to the ConsolidatedStatements of Operations (in thousands): Year Ended December 31, 2017 2016 2015 Details about Accumulated OtherComprehensive Loss Components Amount reclassified from Accumulated OtherComprehensive Loss Affected line item in theConsolidated Statementsof Operations Pension liability adjustment: Net periodic pension cost $(3) $(392) $(352)Cost of salesAssociated income tax benefit - 136 131 Income tax benefit (3) (256) (221)Net of taxUnrealized gain on cash flow hedges: Gain on cash flow hedges 5 45 147 Net salesHedge ineffectiveness - - 2 Net salesAssociated income tax expense (2) (17) (56)Income tax benefit 3 28 93 Net of taxTotal reclassifications for the period $- $(228) $(128) 18.RESTRUCTURING: In October 2016, the Company sold the Denver, Colorado facility and leased the property back from the buyer through March 1, 2017 in order toconclude production at the facility, complete final shipments and transfer certain equipment assets to other Company facilities. The Company incurredrestructuring expenses of $0.9 million and $1.0 million during the years ended December 31, 2017 and 2016, respectively, which includes employeeseverance and termination related restructuring expenses of $0 and $0.5 million, respectively and expense related to demobilization activities of$0.9 million and $0.5 million, respectively. The Company completed the demobilization project and vacated the facility in the first quarter of 2017. 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. F-28Table of Contents 20.QUARTERLY DATA (UNAUDITED): Summarized quarterly financial data, adjusted for discontinued operations, is as follows (in thousands, except per share amounts). FirstQuarter SecondQuarter ThirdQuarter FourthQuarter Total For the Year Ended December 31, 2017 Net sales $29,657 $28,692 $38,804 $35,627 $132,780 Gross profit (1) 1,165 667 1,915 2,076 5,823 Operating loss (3,556) (2,904) (1,508) (1,233) (9,201)Net loss (3,868) (2,068) (2,069) (2,158) (10,163) Basic and diluted loss per share: Continuing operations $(0.37) $(0.15) $(0.16) $(0.20) $(0.88)Discontinued operations (0.03) (0.07) (0.05) (0.03) (0.18)Net loss per share $(0.40) $(0.22) $(0.21) $(0.23) $(1.06) FirstQuarter SecondQuarter ThirdQuarter FourthQuarter Total For the Year Ended December 31, 2016 Net sales $29,358 $39,775 $41,075 $39,179 $149,387 Gross profit (loss) (5,750) (1,272) 2,939 3,766 (317)Operating income (loss) (2) (10,192) (5,257) (1,253) 6,334 (10,368)Net income (loss) (9,583) (6,242) 727 5,834 (9,263) Basic income (loss) per share: Continuing operations $(1.01) $(0.55) $0.15 $0.71 $(0.71)Discontinued operations 0.01 (0.10) (0.07) (0.10) (0.26)Net income (loss) per share $(1.00) $(0.65) $0.08 $0.61 $(0.97) Diluted income (loss) per share: Continuing operations $(1.01) $(0.55) $0.15 $0.70 $(0.71)Discontinued operations 0.01 (0.10) (0.07) (0.10) (0.26)Net income (loss) per share assuming dilution $(1.00) $(0.65) $0.08 $0.60 $(0.97) (1)Gross profit for the fourth quarter of 2017 includes a charge of $1.2 million to cost of sales as a result of a change in estimate to workerscompensation reserves. (2)Operating income for the fourth quarter of 2016 includes the gain on sale of facility of $7.9 million. F-29Table of Contents Schedule II NORTHWEST PIPE COMPANYVALUATION AND QUALIFYING ACCOUNTS(Dollars in thousands) Balance atBeginning ofPeriod Charged toProfit andLoss DeductionfromReserves Balance atEnd ofPeriod Year Ended December 31, 2017: Allowance for doubtful accounts $515 $637 $(675) $477 Valuation allowance for deferred tax assets 8,217 2,196 - 10,413 Year Ended December 31, 2016: Allowance for doubtful accounts $751(1) $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(1) $416 $(420) $751(1)Valuation allowance for deferred tax assets 1,858 5,217 (18) 7,057 (1) Includes amounts that were classified as held for sale. S-1Table 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 16th day of March 2018. NORTHWEST PIPE COMPANY By/S/ SCOTT MONTROSS Scott MontrossDirector, 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 16th day of March 2018. Signature Title /S/ RICHARD A. ROMAN Director and Chairman of the BoardRichard A. Roman /S/ SCOTT MONTROSS Director, President and Chief Executive Officer (principal executiveofficer)Scott Montross /S/ ROBIN GANTT Senior Vice President, Chief Financial Officer and Corporate Secretary(principal financial and accounting officer)Robin Gantt /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-3 (No. 333-216802) and Form S-8 (Nos. 333-190854, 333-20165,and 333-152573) of Northwest Pipe Company of our report dated March 16, 2018, relating to the consolidated financial statements and the financialstatement schedule of Northwest Pipe Company and Subsidiaries (the “Company”) as of and for the year ended December 31, 2017, and the effectivenessof the Company’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Northwest Pipe Company for the year endedDecember 31, 2017. /s/ Moss Adams LLP Portland, OregonMarch 16, 2018  EXHIBIT 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on Forms S-3 (No. 333-216802) and S-8 (Nos. 333-190854, 333-20165, and 333-152573) of Northwest Pipe Company of our report dated March 4, 2016 (except with respect to our opinion on the consolidated financialstatements insofar as it relates to the effects of discontinued operations discussed in Note 3, as to which the date is March 16, 2018), relating to thefinancial statements and financial statement schedule, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLPPortland, OregonMarch 16, 2018  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 makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects, the financial 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 (asdefined in Exchange 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 oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, 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 underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes 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 aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably 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 financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalentfunctions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely 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’sinternal control over financial reporting. Date: March 16, 2018 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 makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects, the financial 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 (asdefined in Exchange 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 oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, 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 underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes 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 aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably 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 financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalentfunction): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely 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’sinternal control over financial reporting. Date: March 16, 2018 By:/s/ ROBIN GANTT Robin GanttSenior Vice President, Chief Financial Officer and CorporateSecretary(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, 2017 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Montross, Director, President and Chief Executive Officerof 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 results of operations of the Company. /s/ SCOTT MONTROSS Scott MontrossDirector, President and Chief Executive Officer March 16, 2018  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, 2017 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robin Gantt, Senior Vice President, Chief Financial Officer andCorporate Secretary 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 and CorporateSecretary March 16, 2018

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